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 nine months ended May 31, 1996.
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 33975
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 941/675-2966
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 July 12, 1996.
<PAGE>
<TABLE>
<CAPTION>
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 May 31, Nine Months Ended May 31,
1996 1995 1996 1995
_______________________________ _____________________________
<S> <C> <C> <C> <C>
Revenue:
Citrus $ 8,721,183 $ 6,104,297 $20,024,525 $16,354,582
Sugarcane 354,709 847,565 5,763,342 5,870,393
Ranch 1,533,122 1,209,980 3,263,385 2,150,968
Rock products and sand 228,429 222,144 676,065 712,832
Oil lease and land rentals 184,416 329,898 367,909 500,659
Forest products 58,660 39,040 136,080 92,982
Profit on sales of real estate 90,637 60,905 187,538 97,129
Interest and investment income 233,763 238,342 845,042 758,720
Other 35,177 12,529 120,973 58,912
___________ ___________ ___________ ___________
Total revenue 11,440,096 9,064,700 31,384,859 26,597,177
___________ ___________ ___________ ___________
Cost and expenses:
Citrus production, harvesting and
marketing 5,089,841 4,633,091 14,095,803 12,927,855
Sugarcane production and harvesting - 485,693 4,198,186 4,238,053
Ranch 3,198,471 975,349 4,871,301 1,614,161
Real estate expenses 110,792 129,156 369,646 357,587
Interest 486,524 406,694 796,228 943,299
Other, general and administrative 474,034 513,377 1,828,948 1,572,282
___________ ___________ ___________ ___________
Total costs and expenses 9,359,662 7,143,360 26,160,112 21,653,237
___________ ___________ ___________ ___________
Income before income taxes 2,080,434 1,921,340 5,224,747 4,943,940
Provision for income taxes 857,410 694,279 1,954,363 1,755,440
___________ ___________ ___________ ___________
Net income 1,223,024 1,227,061 3,270,384 3,188,500
Retained earnings beginning of period 67,701,311 61,133,759 68,113,690 60,929,277
Dividends paid - - (2,459,739) (1,756,957)
___________ ___________ ___________ ___________
Retained earnings end of period $68,924,335 $62,360,820 $68,924,335 $62,360,820
___________ ___________ ___________ ___________
___________ ___________ ___________ ___________
Weighted average number of shares outstanding 7,027,827 7,027,827 7,027,827 7,027,827
___________ ___________ ___________ ___________
___________ ___________ ___________ ___________
Per share amounts:
Net income $ .17 $ .17 $ .47 $ .45
Dividends $ - $ - $ .35 $ .25
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALICO, INC. AND SUBSIDIARY FORM 10-Q
CONDENSED CONSOLIDATED BALANCE SHEETS
(See Accountants' Review Report)
(Unaudited) (Audited)
May 31, 1996 August 31, 1995
_________________ _______________
<S>
ASSETS
<C> <C>
Current assets:
Cash and cash investments $ 913,715 $ 1,148,733
Marketable securities 10,244,884 9,410,936
Accounts and mortgage notes receivable 12,105,038 7,854,254
Inventories 9,951,200 13,057,136
Prepaid expenses 185,412 101,461
Interest receivable 277,641 163,342
____________ ____________
Total current assets 33,677,890 31,735,862
Mortgage notes receivable, non-current 2,229,552 2,229,528
Land held for development and sale 7,673,331 7,322,740
Investments 914,615 925,785
Other 44,581 42,983
Property, buildings and equipment 96,020,445 91,703,367
Less: Accumulated depreciation (27,009,020) (24,953,086)
____________ ____________
Total assets $113,551,394 $109,007,179
____________ ____________
____________ ____________
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEETS
(See Accountants' Review Report)
(Continued)
(Unaudited) (Audited)
<S> May 31, 1996 August 31, 1995
LIABILITIES _________________ _______________
<C> <C>
Current liabilities:
Accounts payable $ 1,406,733 $ 949,397
Due to profit sharing plan - 217,968
Accrued ad valorem taxes 695,930 1,076,241
Accrued donation (See Note 6) 1,240,238 1,638,038
Accrued expenses 396,953 136,597
Income taxes payable 346,457 254,393
Deferred income taxes 1,930,045 1,383,820
____________ ____________
Total current liabilities 6,016,356 5,656,454
Note payable to bank 19,600,000 16,055,000
Deferred income taxes 11,366,835 11,674,524
Deferred retirement benefits 248,655 214,945
____________ ____________
Total liabilities 37,231,846 33,600,923
____________ ____________
STOCKHOLDERS' EQUITY
Common stock $ 7,027,827 $ 7,027,827
Unrealized gains on marketable securities 367,386 264,739
Retained earnings 68,924,335 68,113,690
____________ ____________
Total stockholders' equity 76,319,548 75,406,256
____________ ____________
Total liabilities and stockholders' equity $113,551,394 $109,007,179
____________ ____________
____________ ____________
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALICO, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(See Accountants' Review Report)
(Unaudited)
Nine Months Ended May 31,
1996 1995
<S> ____________________________
Cash flows from operating activities:
<C> <C>
Net income $ 3,270,384 $ 3,188,500
Adjustments to reconcile net income to cash
provided from (used for) operating activities:
Depreciation 3,136,985 3,097,942
Accrued donation (397,800) (194,583)
Net decrease in current assets and liabilities (2,293,604) (1,123,711)
Deferred income taxes 176,605 (402,428)
Other (377,893) (341,350)
___________ ___________
Net cash provided from operating activities 3,514,677 4,224,370
___________ ___________
Cash flows from (used for) investing activities:
Purchases of property and equipment (4,604,584) (6,848,571)
Proceeds from sales of property and equipment 289,368 190,783
Purchases of marketable securities (3,490,568) (1,249,473)
Proceeds from sales of marketable securites 2,944,187 978,904
___________ ___________
Net cash used for investing activities (4,861,597) (6,928,357)
___________ ___________
Cash flows from (used for) financing activities:
Notes receivable collections 26,641 695,609
Repayment of bank loan (9,091,000) (9,570,000)
Proceeds from bank loan 12,636,000 13,449,002
Dividends paid (2,459,739) (1,756,957)
___________ ___________
Net cash provided from financing activities 1,111,902 2,817,654
___________ ___________
Net increase (decrease) in cash
and cash investments $ (235,018) $ 113,667
___________ ___________
___________ ___________
Supplemental disclosures of cash flow information:
Cash paid for interest, net of amount capitalized $ 444,378 $ 833,080
___________ ___________
___________ ___________
Cash paid for income taxes $ 1,785,000 $ 1,744,600
___________ ___________
___________ ___________
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
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 Alico, Inc. (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, 1995. In the opinion
of Management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments (consisting of
normal recurring accruals) necessary for a fair presentation of its
consolidated financial position at May 31, 1996 and the consolidated
results of operations for the three and nine months ended May 31,
ended May 31, 1996 and May 31, 1995 and cash flows for the nine months.
then ended.
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 $1,087,921 in 1996 and $1,770,146
in 1995. The results of operations for the stated periods are not
necessarily indicative of results to be expected for the full year.
2. Recognition of revenue for real estate sales
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 (in thousands) is shown below:
May 31, August 31,
1996 1995
___________ ___________
Unharvested fruit crop on trees $ 5,098 $ 6,027
Unharvested sugarcane 1,368 2,138
Beef cattle 3,457 4,429
Sod 28 463
_______ _______
Total inventories $ 9,951 $13,057
_______ _______
_______ _______
<PAGE>
<TABLE>
<CAPTION>
FORM 10-Q
4. Income taxes:
The provision for income taxes for the quarters ended May 31, 1996 and May 31, 1995
is summarized as follows:
Three Months Ended May 31, Nine Months Ended May 31,
1996 1995 1996 1995
_______________________________ _____________________________
<S> <C> <C> <C> <C>
Current:
Federal income tax $ 632,889 $ 600,190 $1,503,047 $1,579,707
State income tax 92,841 99,105 233,281 263,516
__________ __________ __________ __________
725,730 699,295 1,736,328 1,843,223
__________ __________ __________ __________
Deferred:
Federal income tax 110,725 (3,933) 188,750 (75,561)
State income tax 20,955 (1,083) 29,285 (12,222)
__________ __________ __________ __________
131,680 (5,016) 218,035 (87,783)
__________ __________ __________ __________
Total provision for
income taxes $ 857,410 694,279 $1,954,363 $1,755,440
__________ __________ __________ __________
__________ __________ __________ __________
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 May 31, 1996 and 1995:
Three Months Ended Nine Months Ended
May 31, May 31, May 31, May 31,
1996 1995 1996 1995
_______________________________ _____________________________
<S> <C> <C> <C> <C>
Expected income tax $ 707,348 $ 653,256 $1,776,414 $1,680,940
Increase (decrease) resulting
from:
State income taxes, net
of federal benefit 75,519 69,745 189,658 179,465
Nontaxable interest and
dividends (35,782) (34,748) (115,886) (134,906)
Other reconciling items,
net 110,325 6,026 104,177 29,941
__________ __________ __________ __________
Total provision for
income taxes $ 857,410 $ 694,279 $1,954,363 $1,755,440
__________ __________ __________ __________
__________ __________ __________ __________
</TABLE>
<PAGE>
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 Internal Revenue Service would result in approximately $6.9
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.
Partial settlements were made with the Internal Revenue Service during April
of 1995 and June of 1996 for the year ended August 31, 1990. The items conceded
related to the timing of recognition of certain items previously expensed. The
effect of the $385,043 payment made in April 1995 was to increase interest
expense by $124,784 and reduce the current deferred tax liability by $260,259.
The $1,000,000 payment made in June 1996 will reduce the current deferred tax
liability by $737,000. Interest totaling $263,000 was accrued at May 31, 1996.
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 1998 and up to
$3,000,000 which is due on demand. The total amount of long-term debt under
this agreement at May 31, 1996 and August 31, 1995 was $19,600,000 and
$16,055,000, respectively.
During June 1996, the Company entered into a second financing agreement with
another commercial lender. The agreement allows the Company to borrow up to
$5 million. As of May 31, 1996, the Company had not incurred any debt under
this agreement.
Interest cost expensed and capitalized during the nine months ended May 31,
1996 and May 31, 1995 was as follows:
1996 1995
__________ __________
Interest expensed $ 796,228 $ 943,299
Interest capitalized 525,867 384,946
__________ __________
Total interest cost $1,322,095 $1,328,245
__________ __________
__________ __________
6. Commitment:
During October 1992 the Company entered into an agreement to donate land, im-
provements 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, en-
gineering and planning services, assistance with utility costs and academic
chairs. The commitment was recorded as a contribution in May 1994 when the
title to the land was transferred. Costs related to road construction have
been accrued and capitalized into land. Other costs will be expensed as
incurred.
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 $27,661,534 at May 31, 1996, up from $26,079,408 at
August 31, 1995. As of May 31, 1996, the Company had cash and cash investments
of $913,715 compared to $1,148,733 at August 31, 1995. Marketable securities
increased from $9,410,936 to $10,244,884 during the same period. The ratio of
current assets to current liabilities was essentially the same, (5.61 to 1 and
5.60 to 1) at May 31, 1995 and 1996, respectively. Total assets increased by
$4,544,215 from $109,007,179 at August 31, 1995 to $113,551,394 at
May 31, 1996.
The working capital increase ($1,582,126) is largely the result of an increase
in accounts and mortgage notes receivable ($7,854,254 vs. $12,105,038 at
August 31, 1995 and May 31, 1996, respectively). An increase in the boxes of
citrus harvested, compared to the prior year, in addition to improved market
prices for citrus have combined to increase revenues and the related accounts
receivable.
In connection with financing agreements with commercial banks (See Note 5
under Notes to Condensed Consolidated Financial Statements), in addition to
an unused availability of funds of approximately $5.4 million at May 31,
1996, the Company completed a financing agreement in June 1996, providing for
an additional $5 million.
RESULTS OF OPERATIONS:
Net income varied slightly from the prior year, decreasing $4,037 when compared
to third quarter a year ago, and increasing $81,884 for the nine months ended
May 31, 1996. Income before income taxes increased $280,807 during the first
nine months and increased by $159,094 during the third quarter of fiscal 1996,
when compared to the same periods a year ago. This was largely due to earnings
from agricultural activities ($2,320,702 vs. $2,067,709 for the third quarter,
and $5,885,962 vs. $5,595,874 during the first nine months of fiscal 1996 and
1995, respectively).
Citrus earnings increased during the third quarter of fiscal 1996 when compared
to the same period last year ($3,631,342 vs. $1,471,206). Year to date earnings
are also higher for this division ($5,928,722 vs. $3,426,727 during the nine
months ended May 31, 1996 and May 31, 1995, respectively). The earnings
improvement is due to an increase in the total boxes harvested coupled with
improved market prices.
<PAGE>
FORM 10-Q
ITEM 2. Management's Discussion
RESULTS OF OPERATIONS (Continued):
Sugarcane earnings approximated those of the same period a year ago for both
the three months ended May 31, 1996 ($354,709 vs. $361,872 for May 31, 1996
and 1995, respectively) and for the nine months then ended ($1,565,156 vs.
$1,632,340 in 1996 and 1995, respectively).
The Ranch Division reported a $1,665,349 loss during the third quarter of fiscal
1996, compared to a profit of $234,631 during the third quarter of fiscal 1995.
Year to date the loss totaled $1,607,916 compared to a $536,807 profit during
the same period a year ago. A decrease in market prices for beef is the primary
cause for the loss in this division. An adjustment totaling $845,330 was re-
quired in May 1996 to write the beef inventory down to its estimated net real-
izable value (lower of cost or market). Cattle sales revenues were significant-
ly higher for both the quarter ($1,533,122 vs. $1,209,980 for the three months
ended May 31, 1996 and 1995, respectively) and year to date ($3,263,385 vs.
$2,150,968 for the nine months ended May 31, 1996 and 1995, respectively) due
to increased sales of feedlot animals.
Historically, the Company has included its sod farming activities with ranching
operations. Due to excessive rain and weed intrusion, the Company had to write
off certain sod fields in May 1996. The writeoff included approximately
$160,000 of remaining basis and $240,000 of inventoried costs, for a total loss
of approximately $400,000.
Land preparation and construction activities are underway for the new Florida
Gulf Coast University which is scheduled to open in August 1997. The Company
is continuing its marketing and permit activities for its land which surrounds
the University site.
During May of 1996, the Company agreed to sell 21,700 acres of land, in Hendry
County, Florida, to the South Florida Water Management District for $11.5
million. The closing is expected to occur by October 1996. The Company
may elect to use a portion of the sales value for a like kind property exchange.
If a like kind property exchange occurs, the Company will not recognize
revenues or profit for the portion of the property exchanged. If the
property is sold, the Company will recognize revenue totalling $11.5 million
and a pretax gain in excess of $11 million.
<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
May 31, 1996.
C. Exhibit 27 - Financial Data Schedule.
(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)
July 12, 1996 W. Bernard Lester
Date Exeuctive Vice President
and Chief Operating Officer
(Signature)
July 12, 1996 L. Craig Simmons
Date Vice President and
Chief Financial Officer
(Signature)
July 12, 1996 Patrick W. Murphy
Date Controller
(Signature)
<PAGE>
EXHIBIT A
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
______________________________________
The Stockholders and
Board of Directors
Alico, Inc:
We have reviewed the condensed consolidated balance sheet of Alico,
Inc. and subsidiary as of May 31, 1996, and the related condensed
consolidated statements of operations and retained earnings for the
three-month and nine-month periods ended May 31, 1996 and 1995
and the related condensed consolidated statements of cash flows
for the nine-month periods ended May 31, 1996 and May 31, 1995. These
condensed consolidated financial statements are the responsibility
of the Company's management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of 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.
Accordingly, 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, 1995 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 6, 1995, 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, 1995, is fairly presented, in all material respects,
in relation to the consolidated balance sheet from which it has been
derived.
KPMG PEAT MARWICK LLP
(Signature)
Orlando, Florida
June 28, 1996
<PAGE>
FORM 10-Q
ALICO, INC.
Computation of Weighted Average Shares Outstanding as of May 31,
1996:
Number of shares outstanding at August 31, 1995 7,027,827
_________
_________
Number of shares outstanding at May 31, 1996 7,027,827
_________
_________
Weighted Average 9/1/95 - 5/31/96 7,027,827
_________
_________
EXHIBIT B
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCEHDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET OF ALICO, INC. AND SUBSIDIARY AS OF MAY 31, 1996 AND THE
RELATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS AND CASH FLOWS FOR
THE NINE MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-START> SEP-01-1995
<PERIOD-END> MAY-31-1996
<CASH> 913715
<SECURITIES> 10244884
<RECEIVABLES> 12105038
<ALLOWANCES> 0
<INVENTORY> 9951200
<CURRENT-ASSETS> 33677890
<PP&E> 96020445
<DEPRECIATION> (27009020)
<TOTAL-ASSETS> 113551394
<CURRENT-LIABILITIES> 6016356
<BONDS> 0
0
0
<COMMON> 7027827
<OTHER-SE> 69291721
<TOTAL-LIABILITY-AND-EQUITY> 113551394
<SALES> 30539817
<TOTAL-REVENUES> 31384859
<CGS> 23165290
<TOTAL-COSTS> 23165290
<OTHER-EXPENSES> 2198594
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 796228
<INCOME-PRETAX> 5224747
<INCOME-TAX> 1954363
<INCOME-CONTINUING> 3270384
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3270384
<EPS-PRIMARY> .47
<EPS-DILUTED> .47
</TABLE>
