Operating income for the fiscal year 2012 fourth quarter was $458,000, compared to $843,000 in the fourth quarter of the previous fiscal year. Fourth quarter 2012 operating income was lower than the prior year due primarily to $125,000 operating loss on the Sheldon Ranch leases and increased selling, general and administrative expenses. The Sheldon Ranch leases are comprised of six operating leases for approximately 1,000 acres of lemon, orange, specialty citrus and other crop orchards. Under the terms of the lease agreements and due to growing and harvest timing, Limoneira did not share in citrus crop revenue on the Sheldon property in fiscal year 2012 but incurred certain farming costs and lease expense associated with the property, resulting in a loss from operations of $125,000 in the fourth quarter of fiscal year 2012 and $735,000 for all of 2012. The Company expects that Sheldon Ranch operations will be profitable in fiscal year 2013.
Adjusted EBITDA (defined as net income excluding interest, income taxes, depreciation and amortization, and non-cash impairment charges on real estate development) in the fourth quarter of fiscal year 2012 was $1.1 million, compared to $1.5 million in the same period of fiscal year 2011. A reconciliation of Adjusted EBITDA to the GAAP measure net income is provided at the end of this release.
Primarily as a result of a larger amount of capitalized interest on real estate development projects during the fourth quarter of fiscal year 2012, interest expense was $114,000 compared to $298,000 in the same period of fiscal year 2011. Non-cash fair value adjustments on the Company’s interest rate swap resulted in income of $212,000 in the fourth quarter of fiscal year 2012, compared to $109,000 of expense in the same period of the prior year.
Other income (expense) includes a $150,000 write off in the fourth quarter of fiscal year 2012 of a note receivable related to a coffee business that was discontinued in 2006.