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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION 
WASHINGTON, DC 20549 
FORM 10-Q 
 	 	 	
☑	 	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the quarterly period ended April 30, 2004 
OR 
 	 	 	
o	 	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
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.)	
2530 Red Hill Avenue
Santa Ana, California 92705-5542
(Address of principal executive offices) (Zip code) 
(949) 223-1111
(Registrant’s telephone number, including area code) 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 
Yes ☒    No o 
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). 
Yes ☒    No o 
Registrant’s number of shares of common stock outstanding as of April 30, 2004 was 13,506,833. 

  

Table of Contents
CALAVO GROWERS, INC. 
INDEX 
 	 	 	 	 	 	 		
 	 	 	 	PAGE		
PART I. FINANCIAL INFORMATION	 	 	 	 		
Item 1.	 	Financial Statements (unaudited):	 	 	 	 		
 	 	Consolidated Condensed Balance Sheets — April 30, 2004 and October 31, 2003	 	 	3	 		
 	 	Consolidated Condensed Statements of Income — Three Months and Six Months Ended April 30, 2004 and 2003	 	 	4	 		
 	 	Consolidated Condensed Statements of Cash Flows — Six Months Ended April 30, 2004 and 2003	 	 	5	 		
 	 	Notes to Consolidated Condensed Financial Statements	 	 	6	 		
Item 2.	 	Management's Discussion and Analysis of Financial Condition and Results of Operations	 	 	13	 		
Item 3.	 	Quantitative and Qualitative Disclosures About Market Risk	 	 	22	 		
Item 4.	 	Controls and Procedures	 	 	23	 		
PART II. OTHER INFORMATION	 	 	 	 		
Item 1.	 	Legal Proceedings	 	 	24	 		
Item 4.	 	Submission of Matters to a Vote of Security Holders	 	 	24	 		
Item 6.	 	Exhibits and Reports on Form 8-K	 	 	25	 		
 	 	Signatures	 	 	26	 		
 Exhibit 31.1	
 Exhibit 31.2	
 Exhibit 32.1	
 Exhibit 32.2	
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PART I. FINANCIAL INFORMATION 
ITEM 1. FINANCIAL STATEMENTS 
CALAVO GROWERS, INC. 
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(All amounts in thousands, except per share amounts) 
 	 	 	 	 	 	 	 	 	
 	 	April 30,	 	October 31,	
 	 	2004	 	2003	
Assets	 	 	 	 	 	 	 	 	
Current assets:	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	682	 	 	$	5,375	 	
Accounts receivable, net of allowances of $1,626 (2004) and $1,219 (2003)	 	 	27,563	 	 	 	16,560	 	
Inventories, net	 	 	12,612	 	 	 	8,021	 	
Prepaid expenses and other current assets	 	 	3,924	 	 	 	4,487	 	
Loans to growers	 	 	291	 	 	 	353	 	
Advances to suppliers	 	 	430	 	 	 	624	 	
Deferred income taxes	 	 	1,379	 	 	 	1,379	 	

 	 	
Total current assets	 	 	46,881	 	 	 	36,799	 	
Property, plant, and equipment, net	 	 	16,781	 	 	 	13,121	 	
Goodwill	 	 	3,591	 	 	 	—	 	
Other assets	 	 	4,053	 	 	 	3,769	 	

 	 	
 	 	$	71,306	 	 	$	53,689	 	

 	 	
Liabilities and shareholders’ equity	 	 	 	 	 	 	 	 	
Current liabilities:	 	 	 	 	 	 	 	 	
Payable to growers	 	$	15,783	 	 	$	3,446	 	
Trade accounts payable	 	 	1,579	 	 	 	1,534	 	
Accrued expenses	 	 	8,402	 	 	 	7,777	 	
Income taxes payable	 	 	214	 	 	 	51	 	
Short-term borrowings	 	 	1,000	 	 	 	—	 	
Dividend payable	 	 	—	 	 	 	3,232	 	
Current portion of long-term obligations	 	 	24	 	 	 	24	 	

 	 	
Total current liabilities	 	 	27,002	 	 	 	16,064	 	
Long-term liabilities:	 	 	 	 	 	 	 	 	
Long-term obligations, less current portion	 	 	42	 	 	 	61	 	
Deferred income taxes	 	 	764	 	 	 	417	 	

 	 	
Total long-term liabilities	 	 	806	 	 	 	478	 	
Commitments and contingencies	 	 	 	 	 	 	 	 	
Shareholders’ equity:	 	 	 	 	 	 	 	 	
Common stock, $0.001 par value; 100,000 shares authorized; 13,507 (2004) and 12,930 (2003) issued and outstanding	 	 	14	 	 	 	13	 	
Additional paid-in capital	 	 	28,797	 	 	 	24,727	 	
Notes receivable from shareholders	 	 	(3,179	)	 	 	(3,563	)	
Retained earnings	 	 	17,866	 	 	 	15,970	 	

 	 	
Total shareholders’ equity	 	 	43,498	 	 	 	37,147	 	

 	 	
 	 	$	71,306	 	 	$	53,689	 	

 	 	
The accompanying notes are an integral part of these consolidated condensed financial statements. 
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CALAVO GROWERS, INC. 
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(All amounts in thousands, except per share amounts) 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three months ended	 	Six months ended	
 	 	April 30,	 	April 30,	
 	 	2004	 	2003	 	2004	 	2003	
Net sales	 	$	76,421	 	 	$	57,393	 	 	$	125,464	 	 	$	101,622	 	
Cost of sales	 	 	68,625	 	 	 	50,422	 	 	 	114,556	 	 	 	90,728	 	

 	 	 	 	

Gross margin	 	 	7,796	 	 	 	6,971	 	 	 	10,908	 	 	 	10,894	 	
Special charges	 	 	—	 	 	 	98	 	 	 	—	 	 	 	98	 	
Selling, general and administrative	 	 	4,012	 	 	 	4,130	 	 	 	7,727	 	 	 	7,321	 	

 	 	 	 	

Operating income	 	 	3,784	 	 	 	2,743	 	 	 	3,181	 	 	 	3,475	 	
Other income, net	 	 	(106	)	 	 	(206	)	 	 	(220	)	 	 	(321	)	

 	 	 	 	

Income before provision for income taxes	 	 	3,890	 	 	 	2,949	 	 	 	3,401	 	 	 	3,796	 	
Provision for income taxes	 	 	1,556	 	 	 	1,214	 	 	 	1,361	 	 	 	1,561	 	

 	 	 	 	

Net income	 	$	2,334	 	 	$	1,735	 	 	$	2,040	 	 	$	2,235	 	

 	 	 	 	

Net income per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	$	0.17	 	 	$	0.13	 	 	$	0.15	 	 	$	0.17	 	

 	 	 	 	

Diluted	 	$	0.17	 	 	$	0.13	 	 	$	0.15	 	 	$	0.17	 	

 	 	 	 	

Number of shares used in per share computation:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	13,507	 	 	 	12,930	 	 	 	13,488	 	 	 	12,892	 	

 	 	 	 	

Diluted	 	 	13,589	 	 	 	12,960	 	 	 	13,571	 	 	 	12,922	 	

 	 	 	 	

The accompanying notes are an integral part of these consolidated condensed financial statements. 
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CALAVO GROWERS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) 
 	 	 	 	 	 	 	 	 	
 	 	Six months ended April 30,	
 	 	2004	 	2003	
Cash Flows from Operating Activities:	 	 	 	 	 	 	 	 	
Net income	 	$	2,040	 	 	$	2,235	 	
Adjustments to reconcile net income to net cash provided by operating activities:	 	 	 	 	 	 	 	 	
Depreciation and amortization	 	 	1,065	 	 	 	987	 	
Write-off of fixed assets	 	 	—	 	 	 	27	 	
Stock based compensation	 	 	21	 	 	 	—	 	
Provision for losses on accounts receivable	 	 	25	 	 	 	19	 	
Effect on cash of changes in operating assets and liabilities:	 	 	 	 	 	 	 	 	
Accounts receivable	 	 	(11,028	)	 	 	(5,799	)	
Inventories, net	 	 	(4,591	)	 	 	(799	)	
Prepaid expenses and other assets	 	 	1,146	 	 	 	923	 	
Loans to growers	 	 	62	 	 	 	49	 	
Advances to suppliers	 	 	194	 	 	 	521	 	
Income taxes receivable	 	 	—	 	 	 	(202	)	
Payable to growers	 	 	12,337	 	 	 	6,012	 	
Trade accounts payable and accrued expenses	 	 	560	 	 	 	(1,440	)	
Income taxes payable	 	 	163	 	 	 	—	 	

 	 	
Net cash provided by operating activities	 	 	1,994	 	 	 	2,533	 	
Cash Flows from Investing Activities:	 	 	 	 	 	 	 	 	
Direct costs of Maui acquisition	 	 	(65	)	 	 	—	 	
Acquisitions of and deposits on property, plant, and equipment	 	 	(4,611	)	 	 	(2,085	)	

 	 	
Net cash used in investing activities	 	 	(4,676	)	 	 	(2,085	)	
Cash Flows from Financing Activities:	 	 	 	 	 	 	 	 	
Payment of dividend to shareholders	 	 	(3,376	)	 	 	(2,567	)	
Proceeds from short-term borrowings, net	 	 	1,000	 	 	 	1,100	 	
Additional costs related to the rights offering	 	 	—	 	 	 	(41	)	
Collection on notes receivable from shareholders	 	 	384	 	 	 	856	 	
Payments on long-term obligations	 	 	(19	)	 	 	(338	)	
Exercise of stock options	 	 	—	 	 	 	475	 	

 	 	
Net cash used in financing activities	 	 	(2,011	)	 	 	(515	)	

 	 	
Net decrease in cash and cash equivalents	 	 	(4,693	)	 	 	(67	)	
Cash and cash equivalents, beginning of period	 	 	5,375	 	 	 	921	 	

 	 	
Cash and cash equivalents, end of period	 	$	682	 	 	$	854	 	

 	 	
Supplemental Information -	 	 	 	 	 	 	 	 	
Cash paid during the year for:	 	 	 	 	 	 	 	 	
Interest	 	$	45	 	 	$	118	 	

 	 	
Income taxes	 	$	1,089	 	 	$	1,545	 	

 	 	
Noncash Investing and Financing Activities:	 	 	 	 	 	 	 	 	
Tax benefit related to stock options	 	$	—	 	 	$	72	 	

 	 	
In November 2003, the Company acquired all of the outstanding common shares of Maui Fresh International, Inc. for 576,924 shares of the Company’s common stock, valued at $4.05 million, plus acquisition costs of $65,000. See Note 1 for further explanation. The following table summarizes the estimated fair values of the non-cash assets acquired and liabilities assumed at the date of acquisition. 
 	 	 	 	 	
 	 	April	
(in thousands)	 	2004	
Fixed assets	 	$	114	 	
Goodwill	 	 	3,526	 	
Intangible assets	 	 	867	 	

Total non-cash assets acquired	 	 	4,507	 	
Current liabilities	 	 	110	 	
Long term liabilities	 	 	347	 	

Net non-cash assets acquired	 	$	4,050	 	

The accompanying notes are an integral part of these consolidated condensed financial statements. 
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CALAVO GROWERS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 
1. Description of the business 
Business 
     Calavo Growers, Inc. (Calavo, the Company, we, us or our) procures and markets avocados and other perishable foods and prepares and distributes processed avocado products. Our expertise in marketing and distributing avocados, processed avocados, and other perishable foods allows us to deliver a wide array of fresh and processed food products to food distributors, produce wholesalers, supermarkets, and restaurants on a world-wide basis. Through our two operating facilities in Southern California and three facilities in Mexico, we sort and pack avocados procured in California and Mexico and prepare processed avocado products. Additionally, we procure avocados internationally, principally from Chile, the Dominican Republic and New Zealand, and distribute other perishable foods. We report these operations in three different business segments: California avocados, international avocados and perishable food products and processed products. 
     The accompanying consolidated condensed financial statements are unaudited. In the opinion of management, the accompanying consolidated condensed financial statements contain all adjustments necessary to present fairly our financial position, results of operations, and cash flows. Such adjustments consist of adjustments of a normal recurring nature. Interim results are subject to significant seasonal variations and are not necessarily indicative of the results of operations for a full year. Our operations are sensitive to a number of factors, including weather-related phenomena and their effects on industry volumes, prices, product quality and costs. Operations are also sensitive to fluctuations in currency exchange rates in both sourcing and selling locations, as well as economic crises and security risks in developing countries. These statements should also be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2003. 
     In order to diversify our product lines and increase synergies within the marketplace, we acquired all the outstanding common shares of Maui Fresh International, Inc. (Maui) for 576,924 shares of our common stock valued at $4.05 million in November 2003, plus acquisition costs of $65,000. Maui, which generated approximately $20 million in revenues during its fiscal year ended December 31, 2002, is a specialty produce company servicing a wide array of retail, food service, and terminal market wholesale customers with over 25 different specialty commodities. The value of our common stock issued in conjunction with the acquisition was based on the average quoted market price of our common stock for 3 days before and after the announcement date. 
     As security for certain potential contingencies, such as unrecorded liabilities, we are entitled to hold approximately 58,000 shares issued in conjunction with such acquisition for one full year from the acquisition date. In the event that these contingencies resolve as we expect them to, we will be obligated to return these shares. 
     The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition. The differences from the previously reported amounts relate to the finalization of our valuation information. 
 	 	 	 	 	
 	 	April	
(in thousands)	 	2004	
Fixed assets	 	$	114	 	
Goodwill	 	 	3,591	 	
Intangible assets	 	 	867	 	

Total assets acquired	 	 	4,572	 	
Current liabilities	 	 	110	 	
Long term liabilities	 	 	347	 	

Net assets acquired	 	$	4,115	 	

     Included in other assets in the accompanying consolidated condensed financial statements are the following intangible assets: customer-related intangibles of $590,000, brandname intangibles of $275,000 and other identified intangibles totaling $2,000. The customer-related intangibles and other identified intangibles are being amortized 
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CALAVO GROWERS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 
over 5 and 2 years. The intangible asset related to the brandname currently has an indefinite remaining useful life and, as a result, is not currently subject to amortization. Goodwill is also not subject to amortization and is generally not expected to be deductible for tax purposes. Goodwill and the brandname intangible will be tested for impairment at least annually and more frequently if an event occurs which indicates that goodwill or the brandname intangible may be impaired. We anticipate that amortization related to amortizing intangibles will be approximately $89,000 for the year ended October 31, 2004. We anticipate recording amortization expense of approximately $119,000 per annum from fiscal 2005 through fiscal 2008, with the remaining amortization expense of approximately $29,000 recorded in fiscal 2009. Pro forma statement of operations information is not presented, as the acquisition was not deemed to be a material business combination. 
Stock Based Compensation 
     As permitted by SFAS No. 123, “Accounting for Stock-Based Compensation,” (“SFAS No. 123”), which was amended by SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure,” the Company accounts for stock-based compensation under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”) and related interpretations. 
     In December 2003, our Board of Directors approved the issuance of options to acquire a total of 50,000 shares of our common stock to two members of our Board of Directors. Each option to acquire 25,000 shares vests in substantially equal installments over a 3-year period, has an exercise price of $7.00 per share, and has a term of 5 years from the grant date. The market price of our common stock at the grant date was $10.01. In accordance with APB 25, we are recording compensation expense of approximately $151,000 over the vesting period of three years from the grant date. 
     During the six month period ended April 30, 2004, we recognized $21,000 of compensation expense with respect to stock option awards pursuant to APB 25. Had compensation cost for stock option awards been determined based on the fair value of each award at its grant date, consistent with the provisions of SFAS No. 123, the Company’s pro forma net income and net income per share would have been as follows (dollars in thousands, except per share amounts): 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three months ended	 	Six months ended	
 	 	April 30,	 	April 30,	
 	 	2004	 	2003	 	2004	 	2003	
Net Income:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
As reported	 	$	2,334	 	 	$	1,735	 	 	$	2,040	 	 	$	2,235	 	
Add: Total stock-based compensation expense determined under APB 25 and related interpretations, net of tax effects	 	 	5	 	 	 	—	 	 	 	8	 	 	 	—	 	
Deduct: Total stock based compensation expense determined under fair value based method for all awards, net of tax effects	 	 	(5	)	 	 	—	 	 	 	(8	)	 	 	—	 	

 	 	 	 	

Pro forma	 	$	2,334	 	 	$	1,735	 	 	$	2,040	 	 	$	2,235	 	

 	 	 	 	

Net income per share, as reported:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	$	0.17	 	 	$	0.13	 	 	$	0.15	 	 	$	0.17	 	
Diluted	 	$	0.17	 	 	$	0.13	 	 	$	0.15	 	 	$	0.17	 	
Net income per share, pro forma:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	$	0.17	 	 	$	0.13	 	 	$	0.15	 	 	$	0.17	 	
Diluted 	 	$	0.17	 	 	$	0.13	 	 	$	0.15	 	 	$	0.17	 	
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CALAVO GROWERS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 
     For purposes of pro forma disclosures under SFAS No. 123, the estimated fair value of the options is assumed to be amortized to compensation expense over the options’ vesting period. The fair value of the options granted in 2004 has been estimated at the date of grant using the Black-Scholes option pricing model with the following assumptions: 
 	 	 	 	 	
Risk-free interest rate	 	 	3.3	%	
Expected volatility	 	 	26.9	%	
Dividend yield	 	 	20	%	
Expected life (years)	 	 	5	 	
Weighted-average fair value of options granted	 	$	3.01	 	
     The Black-Scholes and Binary option valuation models were developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. Because options held by our directors have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in our opinion, the existing models do not necessarily provide a reliable single measure of the fair value of these options. 
Recent Accounting Standards 
     In January 2003, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. (FIN) 46, “Consolidation of Variable Interest Entities,” which was amended in December 2003. We adopted FIN 46 in our second quarter ending April 30, 2004, with no impact on our financial position or results of operations. 
Reclassifications 
     Certain prior year amounts have been reclassified to conform to the current period presentation. 
2. Information regarding our operations in different segments 
     We operate and track results in three reportable segments: California avocados, international avocados and perishable foods products, and processed products. These three business segments are presented based on our management structure and information used by our president to measure performance and allocate resources. The California avocados segment includes all operations that involve the distribution of avocados grown in California. The international avocados and perishable foods products segment includes both operations related to distribution of fresh avocados grown outside of California and distribution of other perishable food items. The processed products segment represents all operations related to the purchase, manufacturing, and distribution of processed avocado products. Those costs that can be specifically identified with a particular product line are charged directly to that product line. Costs that are not segment specific are generally allocated based on five-year average sales dollars. We do not allocate assets or specifically identify them to our operating segments. 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	International	 	 	 	 	 	 	
 	 	 	 	 	 	avocados and	 	 	 	 	 	 	
 	 	California	 	perishable food	 	Processed	 	Inter-segment	 	 	
 	 	avocados	 	products	 	products	 	eliminations	 	Total	
 	 	(All amounts are presented in thousands)	
Six months ended April 30, 2004	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	54,637	 	 	$	63,275	 	 	$	15,338	 	 	$	(7,786	)	 	$	125,464	 	
Cost of sales	 	 	50,155	 	 	 	59,153	 	 	 	13,034	 	 	 	(7,786	)	 	 	114,556	 	

 	 	 	 	

 	 	
Gross margin	 	 	4,482	 	 	 	4,122	 	 	 	2,304	 	 	 	—	 	 	 	10,908	 	
Selling, general and administrative	 	 	3,401	 	 	 	2,018	 	 	 	2,308	 	 	 	—	 	 	 	7,727	 	

 	 	 	 	

 	 	
Operating income (loss)	 	 	1,081	 	 	 	2,104	 	 	 	(4	)	 	 	—	 	 	 	3,181	 	
Other income, net	 	 	(168	)	 	 	(47	)	 	 	(5	)	 	 	—	 	 	 	(220	)	

 	 	 	 	

 	 	
Income before provision for income taxes	 	 	1,249	 	 	 	2,151	 	 	 	1	 	 	 	—	 	 	 	3,401	 	
Provision for income taxes	 	 	500	 	 	 	861	 	 	 	—	 	 	 	—	 	 	 	1,361	 	

 	 	 	 	

 	 	
Net income	 	$	749	 	 	$	1,290	 	 	$	1	 	 	$	—	 	 	$	2,040	 	

 	 	 	 	

 	 	
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CALAVO GROWERS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	International	 	 	 	 	 	 	
 	 	 	 	 	 	avocados and	 	 	 	 	 	 	
 	 	California	 	perishable food	 	Processed	 	Inter-segment	 	 	
 	 	avocados	 	products	 	products	 	eliminations	 	Total	
 	 	(All amounts are presented in thousands)	
Six months ended April 30, 2003	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	47,147	 	 	$	46,180	 	 	$	14,063	 	 	$	(5,768	)	 	$	101,622	 	
Cost of sales	 	 	42,806	 	 	 	42,622	 	 	 	11,068	 	 	 	(5,768	)	 	 	90,728	 	

 	 	 	 	

 	 	
Gross margin	 	 	4,341	 	 	 	3,558	 	 	 	2,995	 	 	 	—	 	 	 	10,894	 	
Special charges	 	 	—	 	 	 	—	 	 	 	98	 	 	 	—	 	 	 	98	 	
Selling, general and administrative	 	 	3,465	 	 	 	1,519	 	 	 	2,337	 	 	 	—	 	 	 	7,321	 	

 	 	 	 	

 	 	
Operating income	 	 	876	 	 	 	2,039	 	 	 	560	 	 	 	—	 	 	 	3,475	 	
Other expense (income), net	 	 	(256	)	 	 	(74	)	 	 	9	 	 	 	—	 	 	 	(321	)	

 	 	 	 	

 	 	
Income before provision for income taxes	 	 	1,132	 	 	 	2,113	 	 	 	551	 	 	 	—	 	 	 	3,796	 	
Provision for income taxes	 	 	465	 	 	 	869	 	 	 	227	 	 	 	—	 	 	 	1,561	 	

 	 	 	 	

 	 	
Net income	 	$	667	 	 	$	1,244	 	 	$	324	 	 	$	—	 	 	$	2,235	 	

 	 	 	 	

 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	International	 	 	 	 	 	 	
 	 	 	 	 	 	avocados and	 	 	 	 	 	 	
 	 	California	 	perishable food	 	Processed	 	Inter-segment	 	 	
 	 	avocados	 	products	 	products	 	eliminations	 	Total	
 	 	(All amounts are presented in thousands)	
Three months ended April 30, 2004	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	44,409	 	 	$	28,387	 	 	$	8,278	 	 	$	(4,653	)	 	$	76,421	 	
Cost of sales	 	 	40,055	 	 	 	26,463	 	 	 	6,760	 	 	 	(4,653	)	 	 	68,625	 	

 	 	 	 	

 	 	
Gross margin	 	 	4,354	 	 	 	1,924	 	 	 	1,518	 	 	 	—	 	 	 	7,796	 	
Selling, general and administrative	 	 	1,799	 	 	 	1,022	 	 	 	1,191	 	 	 	—	 	 	 	4,012	 	

 	 	 	 	

 	 	
Operating income	 	 	2,555	 	 	 	902	 	 	 	327	 	 	 	—	 	 	 	3,784	 	
Other income, net	 	 	(85	)	 	 	(19	)	 	 	(2	)	 	 	—	 	 	 	(106	)	

 	 	 	 	

 	 	
Income before provision for income taxes	 	 	2,640	 	 	 	921	 	 	 	329	 	 	 	—	 	 	 	3,890	 	
Provision for income taxes	 	 	1,056	 	 	 	369	 	 	 	131	 	 	 	—	 	 	 	1,556	 	

 	 	 	 	

 	 	
Net income	 	$	1,584	 	 	$	552	 	 	$	198	 	 	$	—	 	 	$	2,334	 	

 	 	 	 	

 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	International	 	 	 	 	 	 	
 	 	 	 	 	 	avocados and	 	 	 	 	 	 	
 	 	California	 	perishable food	 	Processed	 	Inter-segment	 	 	
 	 	avocados	 	products	 	products	 	eliminations	 	Total	
 	 	(All amounts are presented in thousands)	
Three months ended April 30, 2003	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	34,962	 	 	$	17,891	 	 	$	7,509	 	 	$	(2,969	)	 	$	57,393	 	
Cost of sales	 	 	31,283	 	 	 	16,138	 	 	 	5,970	 	 	 	(2,969	)	 	 	50,422	 	

 	 	 	 	

 	 	
Gross margin	 	 	3,679	 	 	 	1,753	 	 	 	1,539	 	 	 	—	 	 	 	6,971	 	
Special charges	 	 	—	 	 	 	—	 	 	 	98	 	 	 	—	 	 	 	98	 	
Selling, general and administrative	 	 	1,948	 	 	 	838	 	 	 	1,344	 	 	 	—	 	 	 	4,130	 	

 	 	 	 	

 	 	
Operating income	 	 	1,731	 	 	 	915	 	 	 	97	 	 	 	—	 	 	 	2,743	 	
Other income, net	 	 	(148	)	 	 	(58	)	 	 	—	 	 	 	—	 	 	 	(206	)	

 	 	 	 	

 	 	
Income before provision for income taxes	 	 	1,879	 	 	 	973	 	 	 	97	 	 	 	—	 	 	 	2,949	 	
Provision for income taxes	 	 	771	 	 	 	402	 	 	 	41	 	 	 	—	 	 	 	1,214	 	

 	 	 	 	

 	 	
Net income	 	$	1,108	 	 	$	571	 	 	$	56	 	 	$	—	 	 	$	1,735	 	

 	 	 	 	

 	 	
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CALAVO GROWERS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 
     The following table sets forth sales by product category, by segment (in thousands): 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Six months ended April 30, 2004	 	Six months ended April 30, 2003	
 	 	 	 	 	 	International	 	 	 	 	 	 	 	 	 	 	 	 	 	International	 	 	 	 	
 	 	 	 	 	 	avocados	 	 	 	 	 	 	 	 	 	 	 	 	 	avocados	 	 	 	 	
 	 	 	 	 	 	and	 	 	 	 	 	 	 	 	 	 	 	 	 	and	 	 	 	 	
 	 	 	 	 	 	perishable	 	 	 	 	 	 	 	 	 	 	 	 	 	perishable	 	 	 	 	
 	 	California	 	food	 	Processed	 	 	 	 	 	California	 	food	 	Processed	 	 	
 	 	avocados	 	products	 	products	 	Total	 	avocados	 	products	 	Products	 	Total	
Third-party sales:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
California avocados	 	$	51,036	 	 	$	—	 	 	$	—	 	 	$	51,036	 	 	$	43,897	 	 	$	—	 	 	$	—	 	 	$	43,897	 	
Imported avocados	 	 	—	 	 	 	39,164	 	 	 	—	 	 	 	39,164	 	 	 	—	 	 	 	34,613	 	 	 	—	 	 	 	34,613	 	
Papayas	 	 	—	 	 	 	3,302	 	 	 	—	 	 	 	3,302	 	 	 	—	 	 	 	1,280	 	 	 	—	 	 	 	1,280	 	
Specialties and Tropicals	 	 	—	 	 	 	8,237	 	 	 	—	 	 	 	8,237	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Processed— food service	 	 	—	 	 	 	—	 	 	 	13,896	 	 	 	13,896	 	 	 	—	 	 	 	—	 	 	 	11,878	 	 	 	11,878	 	
Processed— retail and club.	 	 	—	 	 	 	—	 	 	 	1,982	 	 	 	1,982	 	 	 	—	 	 	 	—	 	 	 	2,516	 	 	 	2,516	 	

 	 	 	 	

 	 	 	 	

 	 	
Total fruit and product sales to third-parties	 	 	51,036	 	 	 	50,703	 	 	 	15,878	 	 	 	117,617	 	 	 	43,897	 	 	 	35,893	 	 	 	14,394	 	 	 	94,184	 	
Freight and other charges	 	 	3,357	 	 	 	7,783	 	 	 	172	 	 	 	11,312	 	 	 	3,336	 	 	 	6,536	 	 	 	122	 	 	 	9,994	 	

 	 	 	 	

 	 	 	 	

 	 	
Total third-party sales	 	 	54,393	 	 	 	58,486	 	 	 	16,050	 	 	 	128,929	 	 	 	47,233	 	 	 	42,429	 	 	 	14,516	 	 	 	104,178	 	
Less sales incentives	 	 	(62	)	 	 	(47	)	 	 	(3,356	)	 	 	(3,465	)	 	 	(86	)	 	 	(77	)	 	 	(2,393	)	 	 	(2,556	)	

 	 	 	 	

 	 	 	 	

 	 	
Total net sales to	 	 	54,331	 	 	 	58,439	 	 	 	12,694	 	 	 	125,464	 	 	 	47,147	 	 	 	42,352	 	 	 	12,123	 	 	 	101,622	 	
third-parties Intercompany sales	 	 	306	 	 	 	4,836	 	 	 	2,644	 	 	 	7,786	 	 	 	—	 	 	 	3,828	 	 	 	1,940	 	 	 	5,768	 	

 	 	 	 	

 	 	 	 	

 	 	
Net sales before eliminations	 	$	54,637	 	 	$	63,275	 	 	$	15,338	 	 	 	133,250	 	 	$	47,147	 	 	$	46,180	 	 	$	14,063	 	 	 	107,390	 	

 	 	 	 	

 	 	 	 	

 	 	
Intercompany sales eliminations	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(7,786	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(5,768	)	

 	 	
Consolidated net sales	 	 	 	 	 	 	 	 	 	 	 	 	 	$	125,464	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	101,622	 	

 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three months ended April 30, 2004	 	Three months ended April 30, 2003	
 	 	 	 	 	 	International	 	 	 	 	 	 	 	 	 	 	 	 	 	International	 	 	 	 	
 	 	 	 	 	 	avocados	 	 	 	 	 	 	 	 	 	 	 	 	 	avocados	 	 	 	 	
 	 	 	 	 	 	and	 	 	 	 	 	 	 	 	 	 	 	 	 	and	 	 	 	 	
 	 	 	 	 	 	perishable	 	 	 	 	 	 	 	 	 	 	 	 	 	perishable	 	 	 	 	
 	 	California	 	food	 	Processed	 	 	 	 	 	California	 	food	 	Processed	 	 	
 	 	avocados	 	products	 	products	 	Total	 	avocados	 	products	 	Products	 	Total	
Third-party sales:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
California avocados	 	$	41,481	 	 	$	—	 	 	$	—	 	 	$	41,481	 	 	$	32,479	 	 	$	—	 	 	$	—	 	 	$	32,479	 	
Imported avocados	 	 	—	 	 	 	15,619	 	 	 	—	 	 	 	15,619	 	 	 	—	 	 	 	11,779	 	 	 	—	 	 	 	11,779	 	
Papayas	 	 	—	 	 	 	1,662	 	 	 	—	 	 	 	1,662	 	 	 	—	 	 	 	678	 	 	 	—	 	 	 	678	 	
Specialties and Tropicals	 	 	—	 	 	 	4,258	 	 	 	—	 	 	 	4,258	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Processed— food service	 	 	—	 	 	 	—	 	 	 	7,342	 	 	 	7,342	 	 	 	—	 	 	 	—	 	 	 	6,609	 	 	 	6,609	 	
Processed— retail and club.	 	 	—	 	 	 	—	 	 	 	1,032	 	 	 	1,032	 	 	 	—	 	 	 	—	 	 	 	1,265	 	 	 	1,265	 	

 	 	 	 	

 	 	 	 	

 	 	
Total fruit and product sales to third-parties	 	 	41,481	 	 	 	21,539	 	 	 	8,374	 	 	 	71,394	 	 	 	32,479	 	 	 	12,457	 	 	 	7,874	 	 	 	52,810	 	
Freight and other charges	 	 	2,655	 	 	 	4,058	 	 	 	104	 	 	 	6,817	 	 	 	2,525	 	 	 	3,427	 	 	 	66	 	 	 	6,018	 	

 	 	 	 	

 	 	 	 	

 	 	
Total third-party sales	 	 	44,136	 	 	 	25,597	 	 	 	8,478	 	 	 	78,211	 	 	 	35,004	 	 	 	15,884	 	 	 	7,940	 	 	 	58,828	 	
Less sales incentives	 	 	(33	)	 	 	(1	)	 	 	(1,756	)	 	 	(1,790	)	 	 	(42	)	 	 	(46	)	 	 	(1,347	)	 	 	(1,435	)	

 	 	 	 	

 	 	 	 	

 	 	
Total net sales to third-parties	 	 	44,103	 	 	 	25,596	 	 	 	6,722	 	 	 	76,421	 	 	 	34,962	 	 	 	15,838	 	 	 	6,593	 	 	 	57,393	 	
Intercompany sales	 	 	306	 	 	 	2,791	 	 	 	1,556	 	 	 	4,653	 	 	 	—	 	 	 	2,053	 	 	 	916	 	 	 	2,969	 	

 	 	 	 	

 	 	 	 	

 	 	
Net sales before eliminations	 	$	44,409	 	 	$	28,387	 	 	$	8,278	 	 	 	81,074	 	 	$	34,962	 	 	$	17,891	 	 	$	7,509	 	 	 	60,362	 	

 	 	 	 	

 	 	 	 	
 	 	 	 	 	 	
Intercompany sales eliminations	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(4,653	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(2,969	)	

 	 	
Consolidated net sales	 	 	 	 	 	 	 	 	 	 	 	 	 	$	76,421	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	57,393	 	

 	 	
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CALAVO GROWERS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 
3. Inventories 
     Inventories consist of the following (in thousands): 
 	 	 	 	 	 	 	 	 	
 	 	April 30,	 	October 31,	
 	 	2004	 	2003	
Fresh fruit	 	$	7,314	 	 	$	2,918	 	
Packing supplies and ingredients	 	 	2,153	 	 	 	1,974	 	
Finished processed foods	 	 	3,145	 	 	 	3,129	 	

 	 	
 	 	$	12,612	 	 	$	8,021	 	
     During the three and six month periods ended April 30, 2004 and 2003, we were not required to, and did not, record any provisions to reduce our inventories to the lower of cost or market. 
4. Related party transactions 
     We sell papayas obtained from an entity owned by our Chairman of the Board of Directors, Chief Executive Officer and President. Sales of papayas procured from the related entity amounted to approximately $3,302,000, and $1,280,000 for the six months ended April 30, 2004 and 2003, resulting in gross margins of approximately $427,000 and $127,000. Included in trade accounts payable and accrued liabilities are approximately $192,000 and $296,000 at April 30, 2004 and October 31, 2003 due to this entity. 
     Certain members of our Board of Directors market avocados through Calavo pursuant to marketing agreements substantially similar to the marketing agreements that we enter into with other growers. During the six months ended April 30, 2004 and 2003, the aggregate amount of avocados procured from entities owned or controlled by members of our Board of Directors was $0.9 million. 
5. Other events 
Dividend payment 
     On January 5, 2004, we paid a $0.25 per share dividend in the aggregate amount of $3,376,000 to shareholders of record as of November 17, 2003. Included in this dividend payment was $144,000 related to dividends declared in November 2003 related to the shares issued in conjunction with the acquisition of Maui, as described in Note 1. 
Commitments 
     In May 2003, we entered into a commitment to purchase approximately 1.3 million pounds of processed avocado products from a supplier for a cost of approximately $1.5 million over a 12-month period. Through April 2004, we have received substantially all products subject to this commitment. 
     In June 2003, in order to facilitate the operations of one of our processed avocado product suppliers, we entered into a contract guaranteeing payment of certain invoices rendered to such supplier. The term of this guarantee is from June 2003 through December 2004, but can be cancelled at any time at our discretion. Additionally, the maximum amount subject to guarantee at any one time cannot exceed $90,000. As of April 30, 2004, no amounts or orders were outstanding and all amounts owed by such supplier related to this guarantee have been remitted. 
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CALAVO GROWERS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 
Renewal of Credit Facilities 
     In January 2004, we renewed our two short-term, non-collateralized, revolving credit facilities. These credit facilities expire in January 2006 and April 2006 and are with separate banks. Under the terms of these agreements, we are advanced funds for working capital purposes. Total credit available under the combined short-term borrowing agreements was $23,000,000 at April 30, 2004, with interest at a weighted-average rate of 2.2% at April 30, 2004. The credit facilities contain various financial covenants with which we were in compliance at April 30, 2004. 
6. Processed product segment restructuring 
     In February 2003, our Board of Directors approved a plan whereby the operations of our processed products business would be relocated. The plan calls for the closing of our Santa Paula, California and Mexicali, Baja California Norte processing facilities and the relocation of these operations to a new facility in Uruapan, Michoacan, Mexico. We believe that this restructuring will provide cost savings in the elimination of certain transportation costs, duplicative overhead structures, and savings in the overall cost of labor and services. The Uruapan facility commenced operations in February 2004. 
     We expect to pay additional employee separation costs in connection with our planned future closure of our Mexicali, Baja California Norte production facility, which will be recognized when incurred. Those costs have not yet been quantified and are expected to be accrued for and paid later in fiscal year 2004. As of April 30, 2004, we have not accrued for any charges relating to the production assets being held at our Mexicali, Baja California Norte production facility as it is anticipated that all such assets will be re-commissioned at our new facility in Uruapan, Michoacan or their carrying value is less than their net realizable value. 
     Additional restructuring related expenses are expected to be incurred during fiscal 2004, but such amounts are not yet determinable. 
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
     This information should be read in conjunction with the unaudited consolidated condensed financial statements and the notes thereto included in this Quarterly Report, and the audited consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Annual Report on Form 10-K for the year ended October 31, 2003 of Calavo Growers, Inc. (we, Calavo, or the Company). 
Recent Developments 
Dividend payment 
     On January 5, 2004, we paid a $0.25 per share dividend in the aggregate amount of $3,376,000 to shareholders of record as of November 17, 2003. Included in this dividend payment was $144,000 related to dividends declared in November 2003 related to the shares issued in conjunction with the acquisition of Maui, as described in Note 1. 
Renewal of credit facilities 
     In January 2004, we renewed our two short-term, non-collateralized, revolving credit facilities. These credit facilities expire in January 2006 and April 2006 and are with separate banks. Under the terms of these agreements, we are advanced funds for working capital purposes. Total credit available under the combined short-term borrowing agreements was $23,000,000 at April 30, 2004, with interest at a weighted-average rate of 2.2% at April 30, 2004. The credit facilities contain various financial covenants with which we were in compliance at April 30, 2004. 
Acquisition 
     In order to diversify our product lines and increase synergies within the marketplace, we acquired all the outstanding common shares of Maui Fresh International, Inc. (Maui) for 576,924 shares of our common stock valued at $4.05 million in November 2003, plus acquisition costs of $65,000. Maui, which generated approximately $20 million in revenues during its fiscal year ended December 31, 2002, is a specialty produce company servicing a wide array of retail, food service, and terminal market wholesale customers with over 25 different specialty commodities. The value of our common stock issued in conjunction with the acquisition was based on the average quoted market price of our common stock for 3 days before and after the announcement date. 
     As security for certain potential contingencies, such as unrecorded liabilities, we are entitled to hold approximately 58,000 shares issued in conjunction with such acquisition for one full year from the acquisition date. In the event that these contingencies resolve as we expect them to, we will be obligated to return these shares. 
     The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition. The differences from the previously reported amounts relate to the finalization of our valuation information. 
 	 	 	 	 	
 	 	April	
(in thousands)	 	2004	
Fixed assets	 	$	114	 	
Goodwill	 	 	3,591	 	
Intangible assets	 	 	867	 	

Total assets acquired	 	 	4,572	 	
Current liabilities	 	 	110	 	
Long term liabilities	 	 	347	 	

Net assets acquired	 	$	4,115	 	

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     Included in other assets in the accompanying consolidated condensed financial statements are the following intangible assets: customer-related intangibles of $590,000, brandname intangibles of $275,000 and other identified intangibles totaling $2,000. The customer-related intangibles and other identified intangibles are being amortized over 5 and 2 years. The intangible asset related to the brandname currently has an indefinite remaining useful life and, as a result, is not currently subject to amortization. Goodwill is also not subject to amortization and is generally not expected to be deductible for tax purposes. Goodwill and the brandname intangible will be tested for impairment at least annually and more frequently if an event occurs which indicates that goodwill or the brandname intangible may be impaired. We anticipate that amortization related to amortizing intangibles will be approximately $89,000 for the year ended October 31, 2004. Pro forma statement of operations information is not presented, as the acquisition was not deemed to be a material business combination. 
Processed product segment restructuring 
     In February 2003, our Board of Directors approved a plan whereby the operations of our processed products business would be relocated. The plan calls for the closing of our Santa Paula, California and Mexicali, Baja California Norte processing facilities and the relocation of these operations to a new facility in Uruapan, Michoacan, Mexico. We believe that this restructuring will provide cost savings in the elimination of certain transportation costs, duplicative overhead structures, and savings in the overall cost of labor and services. The Uruapan facility commenced operations in February 2004. 
     We expect to pay additional employee separation costs in connection with our planned future closure of our Mexicali, Baja California Norte production facility, which will be recognized when incurred. Those costs have not yet been quantified and are expected to be accrued for and paid later in fiscal year 2004. As of April 30, 2004, we have not accrued for any charges relating to the production assets being held at our Mexicali, Baja California Norte production facility as it is anticipated that all such assets will be re-commissioned at our new facility in Uruapan, Michoacan or their carrying value is less than their net realizable value. 
     Additional restructuring related expenses are expected to be incurred during fiscal 2004, but such amounts are not yet determinable. 
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Net Sales 
     The following table summarizes our net sales by business segment for each of the three and six month periods ended April 30, 2004 and 2003: 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three months ended April 30,	 	Six months ended April 30,	
(in thousands)	 	2004	 	Change	 	2003	 	2004	 	Change	 	2003	
Net sales to third-parties:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
California avocados	 	$	44,103	 	 	 	26.1	%	 	$	34,962	 	 	$	54,331	 	 	 	15.2	%	 	$	47,147	 	
International avocados and perishable food products.	 	 	25,596	 	 	 	61.6	%	 	 	15,838	 	 	 	58,439	 	 	 	38.0	%	 	 	42,352	 	
Processed products	 	 	6,722	 	 	 	2.0	%	 	 	6,593	 	 	 	12,694	 	 	 	4.7	%	 	 	12,123	 	

 	 	 	 	

Total net sales	 	$	76,421	 	 	 	33.2	%	 	$	57,393	 	 	$	125,464	 	 	 	23.5	%	 	$	101,622	 	

 	 	 	 	

As a percentage of net sales:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
California avocados	 	 	57.7	%	 	 	 	 	 	 	60.9	%	 	 	43.3	%	 	 	 	 	 	 	46.4	%	
International avocados and perishable food products.	 	 	33.5	%	 	 	 	 	 	 	27.6	%	 	 	46.6	%	 	 	 	 	 	 	41.7	%	
Processed products	 	 	8.8	%	 	 	 	 	 	 	11.5	%	 	 	10.1	%	 	 	 	 	 	 	11.9	%	

 	 	 	 	

 	 	 	100.0	%	 	 	 	 	 	 	100.0	%	 	 	100.0	%	 	 	 	 	 	 	100.0	%	

 	 	 	 	

     Net sales for the second quarter of fiscal 2004 compared to fiscal 2003 increased by $19.0 million, or 33.2%; whereas net sales for the six months ended April 30, 2004 compared to fiscal 2003 increased by $23.8 million, or 23.5%. Consistent with the historical seasonality of the California avocado harvest season, our California avocado business generated 57.7% of our consolidated net sales for the second quarter, as compared to 60.9% for the same prior year period. For the three and six month periods, our net sales growth reflects an increasing percentage of our business being generated from our international avocados and perishable food products segment. This increase was driven primarily by additional sales related to the acquisition of Maui, as well as increases in the volume of avocados being imported from Mexico and the Dominican Republic. Such increases, however, were partially offset by decreases in Chilean and New Zealand sourced fruit. Net sales generated by our processed products business are not generally subject to the seasonal effect experienced by our other operating segments. For the six month period, the increase in net sales to third parties delivered by our processed products business was due primarily to an increase in total pounds of product sold, combined with an increase in average prices. We anticipate that sales generated from our California avocados and international avocados and perishable food products segments will continue to represent the majority of total net sales and the percentage of total net sales generated from these segments may increase in the future. 
     Net sales to third parties by segment exclude value-added services billed by our Uruapan packinghouse, Uruapan processing plant and Mexicali processing plant to the parent company. All intercompany sales are eliminated in our consolidated results of operations. 
California avocados 
     Net sales delivered by the business increased by approximately $9.1 million, or 26.1%, for the second quarter of fiscal 2004 when compared to the same period for fiscal 2003. The increase in sales reflects a 12.2% increase in pounds of avocados sold, as well as an improvement in our average selling prices when compared to the same prior year period. The increase in pounds is consistent with the expected increase in the overall harvest of the California avocado crop for the 2003/2004 season. Our market share of first grade Hass variety avocados remained consistent at 31.6% in the second quarter of fiscal 2004, when compared to a 31.7% market share for the same prior year period. 
     Net sales delivered by the business increased by approximately $7.2 million, or 15.2%, for the first six months of fiscal 2004, compared to the same fiscal 2003 period. The increase in sales reflects a 5.4% increase in pounds of 
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avocados sold, as well as an improvement in our average selling prices when compared to the same prior year period. This increase in delivered pounds is consistent with the expected increase in the overall harvest of the California avocado crop for the 2003/2004 season. Similar to our quarterly results, our market share of first grade Hass avocados remained fairly consistent at 32.7% for the six months ended April 30, 2004, compared to 33.9% for the same period in the prior year. 
     Average selling prices, on a per carton basis, for first grade Hass variety avocados for the second quarter and the six months of fiscal 2004 were 12.2% and 5.4% higher when compared to the same prior year periods. We attribute some of the increase in these average selling prices to increasing demand for California grown avocados prevailing in the U.S. marketplace. We believe that our investments in focused marketing activities combined with promotional programs established by the California Avocado Commission have generally had a positive effect on average sales prices. Our strategy is to continue to develop marketing opportunities that favorably position avocados packed by Calavo with our customers by emphasizing existing value-added services, such as fruit bagging and ripening. We believe these and other value-added strategies are critical elements in sustaining competitive average selling prices. 
     We anticipate that our California avocado business will experience a seasonal increase during the third fiscal quarter of 2004. In addition, we believe that the absence of imported avocados in the U.S. marketplace will positively impact average selling prices during the third fiscal quarter of 2004. 
International and perishable food products 
     For the quarter ended April 30, 2004, when compared to the same period for fiscal 2003, sales to third-party customers increased by approximately $9.8 million, or 61.6%. For the quarters ended April 30, 2004 and 2003, net sales exclude approximately $2.8 million and $2.1 million of value-added services billed by our Mexican subsidiaries to the parent company, which are eliminated from our consolidated financial results. 
     For the six months of fiscal 2004, when compared to the same period for fiscal 2003, sales to third-party customers increased by approximately $16.1 million, or 38.0%. For the six months of fiscal 2004 and 2003, net sales exclude approximately $4.8 million and $3.8 million of value-added services billed by our Mexican subsidiaries to the parent company, which are eliminated from our consolidated financial results. 
     The increased sales to third-parties by our international and perishable food products business are primarily driven by the additional sales related to the acquisition of Maui in November 2003, as well as increased sales of Mexican and Dominican Republic grown avocados in the U.S., Japanese, and/or European marketplace. 
     For the quarter ended April 30, 2004, the additional sales related to the acquisition of Maui totaled approximately $5.2 million. Additionally, the volume of Mexican and Dominican Republic fruit handled increased by 2.8 million pounds, or 18.3%, and 3.1 million pounds, or 100.0%, when compared to the same prior year period. Such increases, however, were partially offset by decreases in Chilean sourced fruit. For the six months ended April 30, 2004, the volume of Chilean fruit handled decreased by 0.2 million pounds, or 25.4%, when compared to the same prior year period. 
     For the six months ended April 30, 2004, the additional sales related to the acquisition of Maui totaled approximately $10.1 million. Additionally, the volume of Mexican and Dominican Republic fruit handled increased by 5.5 million pounds, or 20.8%, and 8.1 million pounds, or 100.0%, when compared to the same prior year period. Such increases, however, were partially offset by decreases in Chilean fruit. For the three months ended April 30, 2004, the volume of Chilean fruit handled decreased by 10.7 million pounds, or 53.8%, when compared to the same prior year period. 
     We anticipate that net sales for this segment will decrease in the third fiscal quarter of 2004 as compared to the second fiscal quarter of 2004. This is consistent with the cyclical nature of the availability of foreign sourced avocados in the U.S. marketplace. We terminated the packing and importing of Mexican grown avocados into the 
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U.S. on April 15, 2004, as required by current rules established by the U.S. Department of Agriculture. We are, however, reviewing the updated assessment issued by the U.S. Department of Agriculture, which, if adopted as drafted, would lift current import limits on Hass avocados from Mexico. We do not anticipate significant sales related to New Zealand or Dominican Republic sourced fruit for the remainder of fiscal 2004. 
Processed products 
     For the quarter ended April 30, 2004, when compared to the same period for fiscal 2003, sales to third-party customers increased by approximately $0.1 million, or 2.0%. This increase is primarily related to a nominal increase in net sales prices. For the quarters ended April 30, 2004 and 2003, net sales exclude approximately $1.6 million and $1.0 million of value-added services billed by our Mexican subsidiaries to the parent company, which are eliminated from our consolidated financial results. 
     For the first six months of fiscal 2004, when compared to the same period for fiscal 2003, sales to third-party customers increased by approximately $0.6 million, or 4.7%. The increase in third-party sales is attributable to increases in both volume and in sales prices. During the first six months of fiscal 2004, we experienced an increase in pounds of product sold of approximately 60,000 pounds, or 0.1%. The average sales price increased by $0.06 per pound, representing an improvement of approximately 3.2%. For the first six months of fiscal 2004 and 2003, net sales exclude approximately $2.6 million and $1.9 million of value-added services billed by our Mexican subsidiaries to the parent company, which are eliminated from our consolidated financial results. 
     Our ultra high pressure products continue to experience solid demand. For the three and six month period ending April 30, 2004, sales of high pressure product totaled approximately $1.3 million and $2.6 million, as compared to $0.7 and $0.9 million for the same prior year period. Such sales, however, relate solely to our single ultra high pressure machine in Mexicali. We believe that when the second, much larger, high pressure machine, in our new facility in Uruapan, Michoacan, Mexico, comes online, sales related to our high pressure product will increase even further shortly thereafter. We believe that this product line will, in the long-term, successfully address a growing market segment. 
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Gross Margins 
     The following table summarizes our gross margins and gross profit percentages by business segment for each of the three and six month periods ended April 30, 2004 and 2003: 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three months ended April 30,	 	Six months ended April 30,	
(in thousands)	 	2004	 	Change	 	2003	 	2004	 	Change	 	2003	
Gross margins:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
California avocados	 	$	4,354	 	 	 	18.3	%	 	$	3,679	 	 	$	4,482	 	 	 	3.2	%	 	$	4,341	 	
International avocados and perishable food products	 	 	1,924	 	 	 	9.8	%	 	 	1,753	 	 	 	4,122	 	 	 	15.9	%	 	 	3,558	 	
Processed products	 	 	1,518	 	 	 	(1.4	)%	 	 	1,539	 	 	 	2,304	 	 	 	(23.1	)%	 	 	2,995	 	

 	 	 	 	

Total gross margins	 	$	7,796	 	 	 	11.8	%	 	$	6,971	 	 	$	10,908	 	 	 	0.1	%	 	$	10,894	 	

 	 	 	 	

Gross profit percentages:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
California avocados	 	 	9.8	%	 	 	 	 	 	 	10.5	%	 	 	8.2	%	 	 	 	 	 	 	9.2	%	
International avocados and perishable food products	 	 	7.5	%	 	 	 	 	 	 	11.1	%	 	 	7.1	%	 	 	 	 	 	 	8.4	%	
Processed products	 	 	22.6	%	 	 	 	 	 	 	23.3	%	 	 	18.2	%	 	 	 	 	 	 	24.7	%	
Consolidated	 	 	10.2	%	 	 	 	 	 	 	12.1	%	 	 	8.7	%	 	 	 	 	 	 	10.7	%	
     Our cost of goods sold consists predominantly of fruit costs, packing materials, freight and handling, labor and overhead (including depreciation) associated with preparing food products and other direct expenses pertaining to products sold. Consolidated gross margin, as a percent of sales, decreased 1.9% and 2.0% for the three and six month period ended April 30, 2004. These decreases were principally attributable to decreased profitability in all of our operating segments. 
     Our California avocados segment experienced a lower gross profit percentage principally as a result of higher fruit costs incurred by our Santa Paula and Temecula packinghouses. This increase in fruit costs had the effect of increasing our per pound packing costs, which, as a result, adversely affected gross margins. Similar to our California avocado segment, the gross profit percentages generated by our international avocados and perishable food products business were also negatively impacted by an increase in fruit costs. These increases in fruit costs, however, were partially offset by increases in fruit volume, which had the effect of reducing our per pound packing costs. The processed products gross profit percentages decreased primarily as a result of inefficiencies related to the relocation of production from Santa Paula, California and Mexicali, Mexico to our newly acquired facility in Uruapan, Mexico, as well as higher fruit costs. Such inefficiencies primarily relate to subcontracting costs and duplicative overhead costs. We anticipate that the gross profit percentage for our processed product segment will continue to experience significant fluctuations during the next fiscal quarter primarily due to the aforementioned inefficiencies and the uncertainty of fruit costs that will be used in the production process. 
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Selling, General and Administrative 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three months ended April 30,	 	Six months ended April 30,	
(in thousands)	 	2004	 	Change	 	2003	 	2004	 	Change	 	2003	
Selling, general and administrative	 	$	4,012	 	 	 	(2.9	)%	 	$	4,130	 	 	$	7,727	 	 	 	5.5	%	 	$	7,321	 	
Percentage of net sales	 	 	5.2	%	 	 	 	 	 	 	7.2	%	 	 	6.2	%	 	 	 	 	 	 	7.2	%	
     Selling, general and administrative expenses include costs of marketing and advertising, sales expenses and other general and administrative costs. Selling, general and administrative expenses decreased $0.1 million, or 2.9%, for the three months ended April 30, 2004 when compared to the same period for fiscal 2003. This decrease was primarily related to lower employee compensation expenses of approximately $565,000, partially offset by selling, general and administrative expenses related to the acquisition of Maui and additional corporate costs. For the first six months ended April 30, 2004 selling, general and administrative expenses increased by $0.4 million, or 5.5%, compared to the same period for fiscal 2003. The increased general and administrative costs related principally to selling, general and administrative expenses incurred by Maui and additional corporate costs, partially offset by reduced employee compensation expenses of approximately $504,000. Maui’s selling, general and administrative expenses totaled approximately $222,000 and $440,000 for the three and six month periods ended April 30, 2004. 
Other Income, net 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three months ended April 30,	 	Six months ended April 30,	
(in thousands)	 	2004	 	Change	 	2003	 	2004	 	Change	 	2003	
Other income, net	 	$	(106	)	 	 	(48.5	)%	 	$	(206	)	 	$	(220	)	 	 	(31.5	)%	 	$	(321	)	
Percentage of net sales	 	 	(0.1	)%	 	 	 	 	 	 	(0.4	)%	 	 	(0.2	)%	 	 	 	 	 	 	(0.3	)%	
     Other income, net includes interest income and expense generated in connection with our financing and operating activities, as well as certain other transactions that are outside of the course of normal operations. For the three and six months ended April 30, 2004, other income, net includes interest accrued on notes receivable from directors and employees of approximately $0.1 million. 
Provision for Income Taxes 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three months ended April 30,	 	Six months ended April 30,	
(in thousands)	 	2004	 	Change	 	2003	 	2004	 	Change	 	2003	
Provision for income taxes.	 	$	1,556	 	 	 	28.2	%	 	$	1,214	 	 	$	1,361	 	 	 	(12.8	)%	 	$	1,561	 	
Percentage of income before provision for income taxes	 	 	40.0	%	 	 	 	 	 	 	41.2	%	 	 	40.0	%	 	 	 	 	 	 	41.1	%	
     For the first six months of fiscal 2004, our provision for income taxes was $1.4 million, as compared to $1.6 million recorded for the comparable prior year period. We expect our effective tax rate to approximate 40.0% during fiscal 2004. 
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Liquidity and Capital Resources 
     Cash provided by operating activities was $2.0 million for the six months ended April 30, 2004, compared to $2.5 million for the similar period in fiscal 2003. Operating cash flows for the six-months ended April 30, 2004 reflect our net income of $2.0 million, net non-cash charges (depreciation and amortization, stock based compensation and provision for losses on accounts receivable) of $1.1 million and a net decrease in the noncash components of our working capital of approximately $1.1 million. 
     These working capital decreases include an increase in accounts receivable of $11.0 million and an increase in inventory of $4.6 million, partially offset by an increase in payable to growers of $12.3 million, an increase in prepaid expenses and other assets of $1.1 million, an increase in trade accounts payable and accrued expenses of 0.6 million, a decrease in advance to suppliers of $0.2 million, an increase in income taxes payable of $0.2 million, and a decrease in loans to growers of $0.1 million. 
     Increases in our accounts receivable balance as of April 30, 2004, when compared to October 31, 2003, reflect a significantly higher volume of California avocado sales recorded in the month of April 2004, as compared to October 2003. Similarly, the amounts payable to our growers also reflects the increase in the volume of California avocados marketed in the month of April 2004, as compared to October 2003. These volume increases are consistent with the harvest levels experienced in previous years. 
     Cash used in investing activities was $4.7 million for the six months ended April 30, 2004 and related principally to the purchase of capital equipment of $4.6 million. Such equipment was primarily acquired in connection with the construction of our new processed operations facility in Uruapan, Michoacan, Mexico. 
     Cash used in financing activities was $2.0 million for the six months ended April 30, 2004 related principally to $3.4 million of cash outflows from the payment of a dividend, partially offset by additional short-term borrowings of $1.0 million, and collections on notes receivable of $0.4 million. 
     Our principal sources of liquidity are our existing cash reserves, cash generated from operations, and amounts available for borrowing under our existing credit facilities. Cash and cash equivalents as of April 30, 2004 and October 31, 2003, totaled $0.7 million and $5.4 million. Our working capital at April 30, 2004 was $19.9 million compared to $20.7 million at October 31, 2003. The overall working capital decrease is primarily related to an increase in accounts receivable and inventory, and the payment of our dividend payable. Such decreases were partially offset by an increase in payable to growers and proceeds from short-term borrowings. 
     We believe that our available credit facilities, as well as expected cash flows from operations, will be sufficient to satisfy our future capital expenditures, grower recruitment efforts, working capital and other financing requirements. We will continue to evaluate grower recruitment opportunities and exclusivity arrangements with food service companies to fuel growth in each of our business segments. We recently renewed our two short-term, non-collateralized, revolving credit facilities. These credit facilities expire in January 2006 and April 2006 and are with separate banks. Under the terms of these agreements, we are advanced funds for working capital purposes. Total credit available under the combined short-term borrowing agreements was $23,000,000 at April 30, 2004. We also do not have significant long-term debt as of April 30, 2004. 
Impact of Recently Issued Accounting Pronouncements 
     See footnote 1 to the consolidated condensed financial statements that are included in this Quarterly Report on Form 10-Q. 
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CAUTIONARY STATEMENT 
     This Quarterly Report on Form 10-Q contains statements relating to our future results (including certain projections and business trends) that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the “safe harbor” created by those sections. Forward-looking statements frequently are identifiable by the use of words such as “believe,” “anticipate,” “expect,” “intend,” “will,” and other similar expressions. Our actual results may differ materially from those projected as a result of certain risks and uncertainties. These risks and uncertainties include, but are not limited to: increased competition, conducting substantial amounts of business internationally, pricing pressures on agricultural products, adverse weather and growing conditions confronting avocado growers, new governmental regulations, as well as other risks and uncertainties, including but not limited to those set forth in Part I., Item 1 under the caption “Certain Business Risks” in our Annual Report on Form 10-K for the fiscal year ended October 31, 2003, and those detailed from time to time in our other filings with the Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events, or otherwise. 
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 
     Our financial instruments include cash and cash equivalents, accounts receivable, short and long-term loans to growers, notes receivable from shareholders, payable to growers, accounts payable, current borrowings pursuant to our credit facilities with financial institutions, and long-term, fixed-rate obligations. All of our financial instruments are entered into during the normal course of operations and have not been acquired for trading purposes. The table below summarizes interest rate sensitive financial instruments and presents principal cash flows in U.S. dollars, which is our reporting currency, and weighted-average interest rates by expected maturity dates, as of April 30, 2004. 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Expected maturity date April 30,	
(All amounts in thousands)	 	2004	 	2005	 	2006	 	2007	 	2008	 	Thereafter	 	Total	 	Fair Value	
Assets:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents (1)	 	$	682	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	682	 	 	$	682	 	
Accounts receivable, net (1)	 	 	27,563	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	27,563	 	 	 	27,563	 	
Loans to growers (1)	 	 	291	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	291	 	 	 	291	 	
Long-term loans to growers (2)	 	 	—	 	 	 	180	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	180	 	 	 	182	 	
Notes receivable from shareholders (3)	 	 	3	 	 	 	211	 	 	 	211	 	 	 	2,754	 	 	 	—	 	 	 	—	 	 	 	3,179	 	 	 	3,294	 	
Liabilities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Payable to growers (1)	 	$	15,783	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	15,783	 	 	$	15,783	 	
Accounts payable (1)	 	 	1,579	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	1,579	 	 	 	1,579	 	
Current borrowings pursuant to credit facilities (1)	 	 	1,000	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	1,000	 	 	 	1,000	 	
Fixed-rate long-term obligations (4)	 	 	24	 	 	 	20	 	 	 	10	 	 	 	8	 	 	 	4	 	 	 	—	 	 	 	66	 	 	 	68	 	
(1)	 	We believe the carrying amounts of cash and cash equivalents, accounts receivable, short-term loans to growers, 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)	 	Loans to growers bear fixed interest rates of approximately 5.0%. We believe that a portfolio of loans with a similar risk profile would currently yield a return of 4.3%. 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 $3,000.	
(3)	 	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 6.25%. 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 $151,000.	
(4)	 	Fixed-rate long-term obligations bear interest rates ranging from 3.3% to 8.2% with a weighted-average interest rate of 5.4%. We believe that loans with a similar risk profile would currently yield a return of 3.5%. 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 $2,000.	
     We were not a party to any derivative instruments during the fiscal year. It is currently our intent not to use derivative instruments for speculative or trading purposes. Consequently, we do not use any hedging or forward contracts to offset market volatility. 
     Our Mexican-based operations transact business in Mexican pesos. Funds are transferred by our corporate office to Mexico on a weekly basis to satisfy domestic cash needs. Consequently, the spot rate for the Mexican peso has a moderate impact on our operating results. However, we do not believe that this impact is sufficient to warrant the use of derivative instruments to hedge the fluctuation in the Mexican peso. Total foreign currency gains and losses for each of the three years in the period ended October 31, 2003, and six month periods ended April 30, 2004 and April 30, 2003, do not exceed $0.1 million. 
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ITEM 4. CONTROLS AND PROCEDURES 
     Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”), the Company’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in ensuring that information required to be disclosed in reports that the Company files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. No change in the Company’s internal control over financial reporting occurred during the Company’s most recent fiscal quarter that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. 
23 

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PART II. OTHER INFORMATION 
ITEM 1. LEGAL PROCEEDINGS 
     We are involved in litigation in the ordinary course of business, none of which we believe will have a material adverse impact on our financial position or results from operations. 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 
     On April 19, 2004, we held the annual meeting of shareholders of Calavo Growers, Inc. at our corporate headquarters. At the meeting, the holders of our outstanding common stock acted on the following matters: 
     (1.) The shareholders voted on a cumulative basis for eleven directors, each to serve for a term of one year. Due to the death of director nominee Roy V. Keenan before the annual meeting, however, only ten individuals were elected as directors. Each nominee received the following votes: 
 	 	 	 	 	 	 	 	 	
 	 	Votes	 	Votes	
Name of Nominee	 	For	 	Withheld	
Lecil E. Cole	 	 	26,741,019	 	 	 	50,994	 	
George H. Barnes	 	 	6,857,037	 	 	 	238,145	 	
Michael D. Hause	 	 	6,594,498	 	 	 	172,673	 	
Donald M. Sanders	 	 	10,064,189	 	 	 	155,873	 	
Fred J. Ferrazzano	 	 	9,370,574	 	 	 	285,085	 	
Roy V. Keenan	 	 	6,707,048	 	 	 	292,677	 	
Alva V. Snider	 	 	8,035,386	 	 	 	316,569	 	
Scott Van Der Kar	 	 	8,576,911	 	 	 	17,252	 	
J. Link Leavens	 	 	11,639,035	 	 	 	149,858	 	
Dorcas H. McFarlane	 	 	6,641,469	 	 	 	217,972	 	
John M. Hunt	 	 	8,337,082	 	 	 	170,158	 	
(2.) The shareholders voted for the ratification of the appointment of Deloitte & Touche LLP as our independent accountants for fiscal 2004. Votes cast were as follows: 
 	 	 	 	 	
For	 	 	10,069,495	 	
Against	 	 	55,091	 	
Abstain	 	 	23,071	 	
24 

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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 
 	 	 	
(a) 	 	Exhibits:	
 	 	 	 	 	 	 	
  	 	 	31.1	 	 	Certification of Chief Executive Officer Pursuant to 15 U.S.C. § 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	
 		
	 	 	31.2	 	 	Certification of Principal Financial Officer Pursuant to 15 U.S.C. § 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	
 		
	 	 	32.1	 	 	Certification of Chief Executive Officer Pursuant to 18 U.S.C. § 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	
 		
	 	 	32.2	 	 	Certification of Principal Financial Officer Pursuant to 18 U.S.C. § 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	
 	 	 	
(b) 	 	Reports on Form 8-K	
     On March 29, 2004, we filed a Current Report on Form 8-K to report under Item 7 (Exhibits) and Item 12 (Results of Operations and Financial Conditions), a press release (attached as Exhibit 99.1) regarding our financial results for the fiscal quarter ended January 31, 2004. 
25 

Table of Contents
SIGNATURES 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. 
 	 	 	 	 	
	 	Calavo Growers, Inc.
(Registrant)	
 		
Date: June 11, 2004 	 	By 	 	/s/ Lecil E. Cole	

	 	 	 	Lecil E. Cole
Chairman of the Board of Directors, Chief Executive Officer and President
(Principal Executive Officer)	
 	 	 	 	 	
Date: June 11, 2004 	 	By 	 	/s/ Arthur J. Bruno	

	 	 	 	Arthur J. Bruno
Vice President, Finance and Corporate Secretary (Principal Financial Officer)	
26 

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INDEX TO EXHIBITS 
 	 	 	
Exhibit	 	 	
Number	 	Description	
31.1 	 	Certification of Chief Executive Officer Pursuant to 15 U.S.C. § 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	
 		
31.2 	 	Certification of Principal Financial Officer Pursuant to 15 U.S.C. § 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	
 		
32.1 	 	Certification of Chief Executive Officer Pursuant to 18 U.S.C. § 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	
 		
32.2 	 	Certification of Principal Financial Officer Pursuant to 18 U.S.C. § 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	
27 

                                                                    Exhibit 31.1

                            CERTIFICATION PURSUANT TO

                             15 U.S.C. Section 7241
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Lecil E. Cole, certify that:

1.      I have reviewed this quarterly report on Form 10-Q of Calavo Growers,
        Inc.;

2.      Based on my knowledge, this report does not contain any untrue statement
        of a material fact or omit to state a material fact necessary to make
        the statements made, in light of the circumstances under which such
        statements were made, not misleading with respect to the period covered
        by this report;

3.      Based on my knowledge, the financial statements and other financial
        information included in this report, fairly present, in all material
        respects, the financial condition, results of operations, and cash flows
        of the registrant as of, and for, the periods presented in this report;

4.      The registrant's other certifying officer and I are responsible for
        establishing and maintaining disclosure controls and procedures (as
        defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
        registrant and have:

        (a)    Designed such disclosure controls and procedures, or caused such
               disclosure controls and procedures to be designed under our
               supervision, to ensure that material information relating to the
               registrant, including its consolidated subsidiaries, is made
               known to us by others within those entities, particularly during
               the period in which this report is being prepared;

        (b)    Evaluated the effectiveness of the registrant's disclosure
               controls and procedures and presented in this report our
               conclusions about the effectiveness of the disclosure controls
               and procedures, as of the end of the period covered by this
               report based on such evaluation; and

        (c)    Disclosed in this report any change in the registrant's internal
               control over financial reporting that occurred during the
               registrant's most recent fiscal quarter that has materially
               affected, or is reasonably likely to materially affect, the
               registrant's internal control over financial reporting; and

5.      The registrant's other certifying officer and I have disclosed, based on
        our most recent evaluation of internal control over financial reporting,
        to the registrant's auditors and the audit committee of the registrant's
        Board of Directors:

        (a)    All significant deficiencies and material weaknesses in the
               design or operation of internal control over financial reporting
               which are reasonably likely to adversely affect the registrant's
               ability to record, process, summarize, and report financial
               information; and

        (b)     Any fraud, whether or not material, that involves management or
                other employees who have a significant role in the registrant's
                internal control over financial reporting.

Date:  June 11, 2004                       /s/  Lecil E. Cole
                                           -------------------------------------
                                           Lecil E. Cole
                                           Chairman of the Board of Directors,
                                           President and Chief Executive Officer

                                                                    Exhibit 31.2

                            CERTIFICATION PURSUANT TO
                             15 U.S.C. Section 7241
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Arthur J. Bruno, certify that:

1.      I have reviewed this quarterly report on Form 10-Q of Calavo Growers,
        Inc.;

2.      Based on my knowledge, this report does not contain any untrue statement
        of a material fact or omit to state a material fact necessary to make
        the statements made, in light of the circumstances under which such
        statements were made, not misleading with respect to the period covered
        by this report;

3.      Based on my knowledge, the financial statements and other financial
        information included in this report, fairly present, in all material
        respects, the financial condition, results of operations, and cash flows
        of the registrant as of, and for, the periods presented in this report;

4.      The registrant's other certifying officer and I are responsible for
        establishing and maintaining disclosure controls and procedures (as
        defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
        registrant and have:

        (a)    Designed such disclosure controls and procedures, or caused such
               disclosure controls and procedures to be designed under our
               supervision, to ensure that material information relating to the
               registrant, including its consolidated subsidiaries, is made
               known to us by others within those entities, particularly during
               the period in which this report is being prepared;

        (b)    Evaluated the effectiveness of the registrant's disclosure
               controls and procedures and presented in this report our
               conclusions about the effectiveness of the disclosure controls
               and procedures, as of the end of the period covered by this
               report based on such evaluation; and

        (c)    Disclosed in this report any change in the registrant's internal
               control over financial reporting that occurred during the
               registrant's most recent fiscal quarter that has materially
               affected, or is reasonably likely to materially affect, the
               registrant's internal control over financial reporting; and

5.      The registrant's other certifying officer and I have disclosed, based on
        our most recent evaluation of internal control over financial reporting,
        to the registrant's auditors and the audit committee of the registrant's
        Board of Directors:

        (a)    All significant deficiencies and material weaknesses in the
               design or operation of internal control over financial reporting
               which are reasonably likely to adversely affect the registrant's
               ability to record, process, summarize, and report financial
               information; and

        (b)     Any fraud, whether or not material, that involves management or
                other employees who have a significant role in the registrant's
                internal control over financial reporting.

Date:  June 11, 2004                     /s/  Arthur J. Bruno
                                         ---------------------------------------
                                         Arthur J. Bruno
                                         Vice President, Finance and Corporate
                                         Secretary (Principal Financial Officer)

                                                                    Exhibit 32.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. Section 1350
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Calavo Growers, Inc. (the "Company")
on Form 10-Q for the period ended April 30, 2004, as filed with the Securities
and Exchange Commission (the "Report"), I, Lecil E. Cole, Chief Executive
Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my
knowledge:

        (1)     The Report fully complies with the requirements of Section 13(a)
                or 15(d) of the Securities Exchange Act of 1934; and

        (2)     The information contained in the Report fairly presents, in all
                material respects, the financial condition and results of
                operations of the Company.

/s/  Lecil E. Cole
- ---------------------------------
Lecil E. Cole
Chief Executive Officer
June 11, 2004

                                                                    Exhibit 32.2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. Section 1350
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Calavo Growers, Inc. (the "Company")
on Form 10-Q for the period ended April 30, 2004, as filed with the Securities
and Exchange Commission (the "Report"), I, Arthur J. Bruno, the Chief Financial
Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my
knowledge:

        (1)     The Report fully complies with the requirements of Section 13(a)
                or 15(d) of the Securities Exchange Act of 1934; and

        (2)     The information contained in the Report fairly presents, in all
                material respects, the financial condition and results of
                operations of the Company.

/s/  Arthur J. Bruno
- --------------------------------
Arthur J. Bruno
Vice President, Finance and
Corporate Secretary
(Principal Financial Officer)
June 11, 2004