UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
__X__ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For six months ended February 28, 1995
OR
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________________ to
________________________.
Commission file number 0-261.
ALICO, INC.
(Exact name of registrant as specified in its charter)
Florida 59-0906081
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
P. O. Box 338, La Belle, FL 33935
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 813/675-2966
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 X No
There were 7,027,827 shares of common stock, par value $1.00 per
share, outstanding at April 12, 1995.
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FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ALICO, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(See Accountants' Review Report)
(Unaudited) (Unaudited)
Three Months Ended February 28, Six Months Ended February 28,
1995 1994 1995 1994
_______________________________ _______________________________
<S> <C> <C> <C> <C>
Revenue:
Citrus $ 6,802,818 $ 9,661,645 $10,250,285 $11,076,322
Sugarcane 3,860,724 4,485,172 5,022,828 5,548,741
Ranch 329,568 575,803 940,988 1,954,031
Rock products and sand 213,200 250,760 490,688 504,918
Oil lease and land rentals 116,910 86,847 170,761 162,466
Forest products 25,320 20,818 53,942 50,970
Profit on sales of real estate 16,627 60,663 36,224 160,265
Interest and investment income 274,077 253,226 520,378 596,736
Other 17,367 14,272 46,383 45,091
___________ ___________ ___________ ___________
Total revenue 11,656,611 15,409,206 17,532,477 20,099,540
___________ ___________ ___________ ___________
Cost and expenses:
Citrus production, harvesting and
marketing 5,153,275 6,884,590 8,294,764 8,281,554
Sugarcane production and harvesting 2,960,007 3,336,014 3,752,360 4,206,743
Ranch 191,871 233,914 638,812 1,147,437
Real estate expenses 113,157 127,050 228,431 342,032
Interest 318,034 145,997 536,605 292,643
Other, general and administrative 536,821 623,227 1,058,905 1,191,450
____________ ___________ ___________ ___________
Total costs and expenses 9,273,165 11,350,792 14,509,877 15,461,859
____________ ___________ ___________ ___________
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ALICO, INC. AND SUBSIDIARY FORM 10-Q
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(See Accountants' Review Report)
(Continued)
(Unaudited) (Unaudited)
Three Months Ended February 28, Six Months Ended February 28,
1995 1994 1995 1994
_______________________________ ______________________________
<S> <C> <C> <C> <C>
Income before income taxes 2,383,446 4,058,414 3,022,600 4,637,681
Provision for income taxes 843,020 1,397,476 1,061,161 1,598,436
____________ ___________ ___________ ___________
Net income 1,540,426 2,660,938 1,961,439 3,039,245
Retained earnings beginning of period 59,593,333 53,579,740 60,929,277 54,255,607
Dividends paid - - (1,756,957) (1,054,174)
___________ ___________ ___________ ___________
Retained earnings end of period $61,133,759 $56,240,678 $61,133,759 $56,240,678
___________ ___________ ___________ ___________
___________ ___________ ___________ ___________
Weighted average number of shares outstanding 7,027,827 7,027,827 7,027,827 7,027,827
___________ ___________ ___________ ___________
___________ ___________ ___________ ___________
Per share amounts:
Net income $ .22 $ .38 $ .28 $ .43
Dividends $ - $ - $ .25 $ .15
<FN>
See accompanying notes to condensed consolidated financial statements.
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ALICO, INC. AND SUBSIDIARY FORM 10-Q
CONDENSED CONSOLIDATED BALANCE SHEETS
(See Accountants' Review Report)
(Unaudited) (Audited)
February 28, 1995 August 31,1994
_________________ ______________
<S>
ASSETS
<C> <C>
Current assets:
Cash and cash investments $ 799,909 $ 967,196
Marketable Securities 8,971,390 8,693,865
Accounts and mortgage notes receivable 8,609,005 7,618,943
Inventories 9,639,769 10,681,350
Prepaid expenses 189,563 189,120
Interest receivable 322,390 190,543
____________ ____________
Total current assets 28,532,026 28,341,017
Mortgage notes receivable, non-current 2,803,227 3,131,465
Land held for development and sale 7,044,833 6,757,549
Investments 925,785 810,677
Other 43,620 40,470
Property, buildings and equipment 89,500,328 85,507,357
Less: Accumulated depreciation (24,115,608) (22,403,837)
____________ ____________
Total assets $104,734,211 $102,184,698
____________ ____________
____________ ____________
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CONDENSED CONSOLIDATED BALANCE SHEETS
(See Accountants' Review Report)
(Continued)
(Unaudited) (Audited)
<S> February 28, 1995 August 31, 1994
LIABILITIES _________________ _______________
<C> <C>
Current liabilities:
Accounts payable $ 1,150,322 $ 1,386,912
Due to profit sharing plan - 248,594
Accrued donation (See Note 6) 2,009,351 2,103,051
Accrued expenses 434,400 1,297,862
Income taxes payable 460,505 56,303
Deferred income taxes 795,646 567,426
Note payable to bank, current portion 146,998 -
____________ ____________
Total current liabilities 4,997,222 5,660,148
Note payable to bank, long-term 22,000,000 18,713,998
Deferred income taxes 9,088,446 9,424,707
Deferred retirement benefits 486,957 428,741
____________ ____________
Total liabilities 36,572,625 34,227,594
____________ ____________
STOCKHOLDERS' EQUITY
Common stock $ 7,027,827 $ 7,027,827
Retained earnings 61,133,759 60,929,277
____________ ____________
Total stockholders' equity 68,161,586 67,957,104
____________ ____________
Total liabilities and stockholders' equity $104,734,211 $102,184,698
____________ ____________
____________ ____________
<FN>
See Accompanying notes to condensed consolidated financial statements.
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FORM 10-Q
ALICO, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(See Accountants' Review Report)
(Unaudited)
Six Months Ended February 28,
1995 1994
<S> _______________________________
Cash flows from operating activities:
<C> <C>
Net income $ 1,961,439 $ 3,039,245
Adjustments to reconcile net income to cash
provided from (used for) operating activities:
Depreciation 2,049,189 1,816,446
Accrued donation (93,700) -
Net decrease in current assets and liabilities (737,115) (1,526,311)
Deferred income taxes (108,041) 344,991
Other (267,991) (26,493)
___________ ___________
Net cash provided from operating activities 2,803,781 3,647,878
___________ ___________
Cash flows from (used for) investing activities:
Purchases of property and equipment (4,409,677) (3,942,834)
Proceeds from sales of property and equipment 104,300 328,348
Purchases of marketable securities (991,022) (1,431,784)
Proceeds from sales of marketable securites 609,149 1,280,005
___________ ___________
Net cash used for investing activities (4,687,250) (3,766,265)
___________ ___________
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ALICO, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(See Accountants' Review Report)
(Continued)
(Unaudited)
Six Months Ended February 28,
1995 1994
____________________________
<S> <C> <C>
Cash flows from (used for) financing activities:
Notes receivable collections 40,139 83,207
Repayment of bank loan (6,245,000) (3,810,025)
Proceeds from bank loan 9,678,000 5,239,574
Dividends paid (1,756,957) (1,054,174)
___________ ___________
Net cash provided from financing activities 1,716,182 458,582
___________ ___________
Net increase (decrease) in cash
and cash investments $ (167,287) $ 340,195
___________ ___________
___________ ___________
Supplemental disclosures of cash flow information:
Cash paid for interest, net of amount capitalized $ 445,318 $ 294,947
___________ ___________
___________ ___________
Cash paid for income taxes $ 765,000 $ 871,361
___________ ___________
___________ ___________
<FN>
See accompanying notes to condensed consolidated financial statements.
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ALICO, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(See Accountants' Review Report)
1. Basis of financial statement presentation:
The accompanying condensed consolidated financial statements
include the accounts of the Company and its wholly owned
subsidiary, Saddlebag Lake Resorts, Inc., after elimination of all
significant intercompany balances and transactions.
The accompanying unaudited condensed consolidated financial
statements have been prepared on a basis consistent with the
accounting principles and policies reflected in the Company's
annual report for the year ended August 31, 1994. In the opinion
of Management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments (consisting only of
normal recurring accruals) necessary for a fair presentation of its
consolidated financial position at February 28, 1995 and August 31,
1994 and the consolidated results of operations and cash flows for
the six months ended February 28, 1995 and 1994.
The basic business of the Company is agriculture which is of a
seasonal nature and subject to the influence of natural phenomena
and wide price fluctuations. Fluctuation in the market prices for
citrus fruit has caused the Company to recognize additional revenue
from the prior year's crop totaling $1,770,146 in 1995 and
$1,663,549 in 1994. The results of operations for the stated
periods are not necessarily indicative of results to be expected
for the full year.
2. Accounts and mortgage notes receivable:
Mortgage notes receivable are recorded under the accrual method of
accounting. Under this method, a sale is not recognized until
payment is received, including interest, aggregating 10% of the
contract sales price for residential properties and 20% for
commercial properties.
3. Inventories:
A summary of the Company's inventories is shown below:
February 28, August 31,
1995 1994
____________ ___________
Unharvested fruit crop on trees $ 4,786,621 $ 5,936,629
Unharvested sugarcane 862,741 2,160,025
Beef cattle 3,673,975 2,227,320
Sod 316,432 357,376
___________ ___________
Total inventories $ 9,639,769 $10,681,350
___________ ___________
___________ ___________
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FORM 10-Q
4. Income taxes:
The provision for income taxes for the quarters ended February 28, 1995 and 1994 is summarized as follows:
Three Months Ended February 28, Six Months Ended February 28,
1995 1994 1995 1994
_______________________________ _____________________________
<S> <C> <C> <C> <C>
Current:
Federal income tax $ 702,407 $ 909,456 $ 979,517 $1,039,751
State income tax 135,545 181,572 164,411 213,456
__________ __________ __________ __________
837,952 1,091,028 1,143,928 1,253,207
__________ __________ __________ __________
Deferred:
Federal income tax 11,328 218,573 (71,628) 251,686
State income tax (6,260) 87,875 (11,139) 93,543
__________ __________ __________ __________
5,068 306,448 (82,767) 345,229
__________ __________ __________ __________
Total provision for
income taxes $ 843,020 $1,397,476 $1,061,161 $1,598,436
__________ __________ __________ __________
__________ __________ __________ __________
Following is a reconciliation of the expected income tax expense computed at the U.S. Federal statutory rate of 34% and the
actual income tax provision for the quarters ended February 28, 1995 and 1994:
<PAGE>
Three Months Ended February 28, Six Months Ended February 28,
1995 1994 1995 1994
_______________________________ _____________________________
<S> <C> <C> <C> <C>
Expected income Tax $ 810,372 $1,379,861 $1,027,864 $1,576,812
Increase (decrease) resulting
from:
State income taxes, net
of federal benefit 86,519 147,318 109,720 168,345
Nontaxable interest and
dividends (50,552) (45,392) (100,158) (101,648)
Other reconciling items,
net (3,319) (84,311) 23,915 (45,073)
__________ __________ __________ __________
Total provision for
income taxes $ 843,020 $1,397,476 $1,061,161 $1,598,436
__________ __________ __________ __________
__________ __________ __________ __________
The Company is currently under examination by the Internal Revenue Service for the years ended August 31, 1992, 1991 and
1990. The adjustments proposed to date by the Interanl Revenue Service would result in approximately $6 million in
additional income taxes. When the matter is resolved, any income taxes due will become currently payable. However, the
majority of the proposed adjustments relate to the timing of recognition of certain income and expense items already
provided for in the Company's deferred tax liability accounts. Management intends to vigorously oppose the proposed
adjustments and is of the opinion that the ultimate outcome will not have a significant adverse effect on the financial
position or operations of the Company.
<PAGE>
5. Indebtedness:
The Company has a financing agreement with a commercial bank that
permits the Company to borrow up to $25 million. The financing
agreement allows the Company to borrow up to $22,000,000 which is
due in January 1997 and up to $3,000,000 which is due on demand.
The total amount of long-term debt under this agreement at February
28, 1995 and August 31, 1994 was $22,000,000 and $18,713,998,
respectively.
Interest cost expensed and capitalized during the six months ended
February 28, 1995 and February 28, 1994 was as follows:
1995 1994
________ ________
Interest expensed $536,605 $292,643
Interest capitalized 241,181 146,662
________ ________
Total interest cost $777,786 $439,305
________ ________
________ ________
6. Commitment:
The Company has entered into an agreement to donate land,
improvements and other items, to the State of Florida, to be used
as a site for a new university. The gift included 975 acres of
land, road construction, engineering and planning services,
assistance with utility costs and academic chairs. Amounts for
academic chairs and planning activities were finalized during prior
years and charged against earnings. The title to the land was
transferred during May 1994, recorded as a contribution and charged
against earnings. The commitment for road construction, totaling
$2.4 million, was accrued at May 31, 1994. The portion allocable
to the university land was expensed as a donation while the
remainder was capitalized.
7. Accountants' review report:
The accompanying unaudited condensed consolidated financial
statements have been reviewed by the Company's independent auditors
in accordance with standards for such limited reviews established
by the American Institute of Certified Public Accountants. The
report of such auditors with respect to their limited review is
attached hereto as Exhibit A.
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
LIQUIDITY AND CAPITAL RESOURCES:
Working capital increased to $23,534,804 at February 28, 1995, up
from $22,680,869 at August 31, 1994. As of Feburary 28, 1995 the
Company had cash and cash investments of $799,909 compared to
$967,196 at August 31, 1994. Marketable securities increased from
$8,693,865 to $8,971,390 during the same period. The ratio of
current assets to current liabilities increased from 5.01 to 1 at
August 31, 1994 to 5.71 to 1 at February 28, 1995. Total assets
increased by $2,549,513 from $102,184,698 at August 31, 1994 to
$104,734,211 at February 28, 1995.
The working capital increase is primarily the result of the
decrease in current liabilities ($5,660,148 vs. $4,997,222 at
August 31, 1994 and February 28, 1995, respectively). Ad valorem
taxes ($1,143,204) and the profit sharing plan contribution
($248,594), accrued at August 31, 1994, were paid during the first
quarter of fiscal 1995. Income taxes deferred and currently
payable increased by $632,422 and the amount currently payable
under the financing agreement with the commercial bank increased to
$146,998 during the first six months of fiscal 1995.
In connection with a financing agreement with a commercial bank
(See Note 5 under Notes to Condensed Consolidated Financial
Statements), the Company has an unused availability of funds of
approximately $2.9 million at February 28, 1995.
RESULTS OF OPERATIONS:
When compared to the same period a year ago, net income decreased
$1,120,512 and $1,077,806 during the three and six months ended
February 28, 1995, respectively. Income before income taxes
decreased $1,615,081 during the first six months and $1,674,968
during the second quarter of fiscal 1995, when compared to the same
periods a year ago. This was largely due to the decrease in
earnings from agricultural activities ($3,528,165 vs. $4,943,360
during the first half of fiscal 1995 and 1994, respectively).
Citrus earnings decreased during the second quarter of fiscal 1995
when compared to the same period last year ($1,649,543 vs.
$2,777,055). The number of boxes harvested as of February 28, 1995
approximated the February 1994 level. However, the average revenue
per box has declined approximately 12% from the prior year,
primarily due to a decrease in the average number of pound solids
per box. This is also the primary factor in the year to date
decline in earnings for this division ($1,955,521 vs. $2,794,768
during the six months ended February 28, 1995 and 1994,
respectively).
<PAGE>
FORM 10-Q
ITEM 2. Management's Discussion
RESULTS OF OPERATIONS (Continued):
Sugarcane earnings decreased 5% during the first six months of
fiscal 1995, compared to the same fiscal 1994 period ($1,270,468
vs. $1,341,998). The gross tons yielded by this year's crop were
down 17% due to a 10% decrease in the number of producing acres.
Product quality has improved, however, as the sugar yield
percentage has increased 7%, generating a 14% increase in the gross
profit per ton harvested, significantly offsetting the decreased
production volume.
Ranch earnings decreased $504,418 during the first six months of
fiscal 1995 ($302,176 vs. $806,594), compared to the same period a
year ago. An increase in the number of animals placed in feedlots
has decreased the number of calves sold during the period. More
calves have been placed on feed in an attempt to improve the gross
profit per calf.
Construction of the new state university, on the land donated by
the Company, has been somewhat delayed. The permits necessary for
construction have been challenged by a local group in Fort Myers,
Florida. However, efforts are underway to negotiate a settlement
and a resolution appears eminent. Management is of the opinion
that this matter will be favorably resolved and construction will
begin before the end of 1995.
<PAGE>
FORM 10-Q
PART II. OTHER INFORMATION
ITEM 6. Exhibits and reports on Form 8-K.
(a) Exhibits:
A. Accountant's Report.
B. Computation of Weighted Average Shares Outstanding at
February 28, 1995.
(b) Reports on Form 8-K.
None.
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.
ALICO, INC.
(Registrant)
April 13, 1995 W. Bernard Lester
Date Exeuctive Vice President
and Chief Operating Officer
(Signature)
April 13, 1995 L. Craig Simmons
Date Vice President and
Chief Financial Officer
(Signature)
April 13, 1995 Patrick W. Murphy
Date Controller
(Signature)
<PAGE>
EXHIBIT A
INDEPENDENT ACCOUNTANT'S REVIEW REPORT
______________________________________
The Stockholders and
Board of Directors
Alico, Inc:
We have reviewed the condensed consolidated balance sheet of Alico,
Inc. and subsidiary as to February 28, 1995, and the related
condensed consolidated statements of operations and retained
earnings for the three-month and the six-month periods ended
February 28, 1995 and 1994, and the related condensed consolidated
statements of cash flows for the six-month periods ended February
28, 1995 and 1994, in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of
Certified Public Accountants.
A review of interim financial information consists principally of
obtaining an understanding of the system for the preparation of
interim financial information, applying analytical review
procedures to financial data, and making inquiries of persons
responsible for financial and accounting matters. It is
substantially less in scope than an audit in accordance with
generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements
taken as a whole. Accodingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material
modifications that should be made to the condensed consolidated
financial statements referred to above for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Alico, Inc.
and subsidiary as of August 31, 1994 and the related consolidated
statements of operations, stockholders' equity and cash flows for
the year then ended (not presented herein); and in our report dated
October 16, 1994, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information
set forth in the accompanying condensed consolidated balance sheet
as of August 31, 1994, is fairly presented, in all material
respects, in relation to the balance sheet from which it has been
derived.
KPMG PEAT MARWICK LLP
(Signature)
Orlando, Florida
April 4, 1995
<PAGE>
FORM 10-Q
ALICO, INC.
Computation of Weighted Average Shares Outstanding as of February
28, 1995:
Number of shares outstanding at August 31, 1994 7,027,827
_________
_________
Number of shares outstanding at February 28, 1995 7,027,827
_________
_________
Weighted Average 9/1/94 - 2/28/95 7,027,827
_________
_________
EXHIBIT B
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