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, 1997
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 April 11, 1997.
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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 Six Months Ended
Feb. 28, 1997 Feb. 29, 1996 Feb. 28, 1997 Feb. 29, 1996
_______________________________ _______________________________
<S> <C> <C> <C> <C>
Revenue:
Citrus $ 9,825,628 $ 7,133,182 $11,919,099 $11,303,342
Sugarcane 3,517,719 4,022,309 4,595,426 5,408,633
Ranch 1,661,053 195,692 2,499,460 1,730,263
Rock products and sand 265,317 213,244 611,262 447,636
Oil lease and land rentals 146,898 112,345 287,236 183,493
Forest products 45,066 37,970 71,994 77,420
Profit on sales of real estate 11,383,964 79,993 11,407,683 96,901
Interest and investment income 351,232 259,647 594,828 611,279
Other 37,228 65,852 58,868 85,796
___________ ___________ ___________ ___________
Total revenue 27,234,105 12,120,234 32,045,856 19,944,763
___________ ___________ ___________ ___________
Cost and expenses:
Citrus production, harvesting and
marketing 8,596,388 5,631,314 10,385,419 9,005,962
Sugarcane production and harvesting 3,263,134 3,146,714 4,091,272 4,198,186
Ranch 1,343,907 143,914 1,909,478 1,672,830
Real estate expenses 116,373 161,650 229,745 258,854
Interest 60,332 173,393 309,275 309,704
Other, general and administrative 626,462 704,327 1,328,997 1,354,914
____________ ___________ ___________ ___________
Total costs and expenses 14,006,596 9,961,312 18,254,186 16,800,450
____________ ___________ ___________ ___________
Income before income taxes 13,227,509 2,158,922 13,791,670 3,144,313
Provision for income taxes 4,970,392 758,888 5,152,521 1,096,953
____________ ___________ ___________ ___________
Net income 8,257,117 1,400,034 8,639,149 2,047,360
Retained earnings beginning of period 69,420,999 66,301,277 70,093,141 68,113,690
Dividends paid - - (1,054,174) (2,459,739)
___________ ___________ ___________ ___________
Retained earnings end of period $77,678,116 $67,701,311 $77,678,116 $67,701,311
___________ ___________ ___________ ___________
___________ ___________ ___________ ___________
Weighted average number of shares outstanding 7,027,827 7,027,827 7,027,827 7,027,827
___________ ___________ ___________ ___________
___________ ___________ ___________ ___________
Per share amounts:
Net income $ 1.17 $ .20 $ 1.23 $ .29
Dividends $ - $ - $ .15 $ .35
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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<TABLE>
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ALICO, INC. AND SUBSIDIARY FORM 10-Q
CONDENSED CONSOLIDATED BALANCE SHEETS
(See Accountants' Review Report)
(Unaudited) (Audited)
February 28, 1997 August 31, 1996
_________________ _______________
<S>
ASSETS
<C> <C>
Current assets:
Cash and cash investments $ 1,197,542 $ 1,428,059
Marketable Securities 10,650,840 9,626,025
Accounts and mortgage notes receivable 10,809,745 10,299,983
Inventories 11,812,928 13,284,527
Prepaid expenses 99,992 124,752
Interest receivable 137,173 113,286
____________ ____________
Total current assets 34,708,220 34,876,632
Mortgage notes receivable, non-current 1,462,805 1,531,947
Land held for development and sale 7,940,582 7,777,942
Investments 872,472 1,016,526
Property, buildings and equipment 98,173,314 97,029,453
Less: Accumulated depreciation (28,221,557) (27,728,927)
____________ ____________
Total assets $114,935,836 $114,503,573
____________ ____________
____________ ____________
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEETS
(See Accountants' Review Report)
(Continued)
(Unaudited) (Audited)
<S> February 28, 1997 August 31, 1996
LIABILITIES _________________ _______________
<C> <C>
Current liabilities:
Accounts payable $ 1,043,127 $ 1,070,092
Due to profit sharing plan - 223,152
Accrued ad valorem taxes 277,635 1,095,427
Accrued donation (See Note 6) 1,231,666 1,236,340
Accrued expenses 72,784 142,047
Income taxes payable 5,212,210 190,639
Deferred income taxes 990,289 1,157,169
____________ ____________
Total current liabilities 8,827,711 5,114,866
Note payable to bank 9,431,000 20,630,000
Deferred income taxes 11,220,405 11,291,936
Deferred retirement benefits 110,961 84,117
____________ ____________
Total liabilities 29,590,077 37,120,919
____________ ____________
STOCKHOLDERS' EQUITY
Common stock $ 7,027,827 $ 7,027,827
Unrealized gains on marketable securities 639,816 261,686
Retained earnings 77,678,116 70,093,141
____________ ____________
Total stockholders' equity 85,345,759 77,382,654
____________ ____________
Total liabilities and stockholders' equity $114,935,836 $114,503,573
____________ ____________
____________ ____________
<FN>
See Accompanying notes to condensed consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
ALICO, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(See Accountants' Review Report)
(Unaudited)
Six Months Ended
Feb. 28, 1997 Feb. 29, 1996
<S> ______________________________
Cash flows from operating activities:
<C> <C>
Net income $ 8,639,149 $ 2,047,360
Adjustments to reconcile net income to cash
provided from operating activities:
Depreciation 2,122,293 2,093,538
Accrued donation (4,674) (188,446)
Net increase in current assets and liabilities 5,076,945 (840,910)
Deferred income taxes (466,550) 147,446
Gain on sale of real estate (11,407,683) -
Other 289,868 (584,794)
___________ ___________
Net cash provided from operating activities 4,249,348 2,674,194
___________ ___________
Cash flows from (used for) investing activities:
Purchases of property and equipment (3,575,782) (3,584,697)
Proceeds from sales of real estate 10,952,060 -
Proceeds from sales of other property and equipment 379,415 204,693
Purchases of marketable securities (2,548,667) (3,013,372)
Proceeds from sales of marketable securites 2,469,760 2,601,252
___________ ___________
Net cash provided by (used for) investing activities 7,676,786 (3,792,124)
___________ ___________
Cash flows from (used for) financing activities:
Notes receivable collections 96,523 23,635
Repayment of bank loan (18,513,000) (6,441,000)
Proceeds from bank loan 7,314,000 9,736,000
Dividends paid (1,054,174) (2,459,739)
___________ ___________
Net cash provided from (used for) financing activities (12,156,651) 858,896
___________ ___________
Net decrease in cash
and cash investments $ (230,517) $ (259,034)
___________ ___________
___________ ___________
Supplemental disclosures of cash flow information:
Cash paid for interest, net of amount capitalized $ 372,364 $ 300,528
___________ ___________
___________ ___________
Cash paid for income taxes $ 597,500 $ 1,105,000
___________ ___________
___________ ___________
<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 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, 1996. 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, 1997 and August 31,
1996 and the consolidated results of operations and cash flows for
the six months ended February 28, 1997 and February 29, 1996.
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 $1,007,211 in 1997 and $1,087,772
in 1996. 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 (in thousands) is shown below:
February 28, August 31,
1997 1996
___________ ___________
Unharvested fruit crop on trees $ 5,212 $ 7,064
Unharvested sugarcane 491 2,231
Beef cattle 6,026 3,937
Sod 84 53
_______ _______
Total inventories $11,813 $13,285
_______ _______
_______ _______
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FORM 10-Q
4. Income taxes:
The provision for income taxes for the quarters and six months ended February
28, 1997 and February 29, 1996 is summarized as follows:
Three Months Ended Six Months Ended
Feb. 28, 1997 Feb. 29, 1996 Feb. 28, 1997 Feb. 29, 1996
_______________________________ _____________________________
<S> <C> <C> <C> <C>
Current:
Federal income tax $4,611,748 $ 521,295 $4,798,649 $ 870,158
State income tax 786,695 82,118 820,422 140,440
__________ __________ __________ __________
5,398,443 603,413 5,619,071 1,010,598
__________ __________ __________ __________
Deferred:
Federal income tax (386,761) 140,477 (421,546) 78,025
State income tax (41,290) 14,998 (45,004) 8,330
__________ __________ __________ __________
(428,051) 155,475 (466,550) 86,355
__________ __________ __________ __________
Total provision for
income taxes $4,970,392 $ 758,888 $5,152,521 $1,096,953
__________ __________ __________ __________
__________ __________ __________ __________
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 and six months ended February 28, 1997 and
February 29, 1996:
Three Months Ended Six Months Ended
February 28, February 29, February 28, February 29,
1997 1996 1997 1996
_______________________________ _____________________________
<S> <C> <C> <C> <C>
Expected income tax $4,497,353 $ 734,033 $4,689,168 $1,069,066
Increase (decrease) resulting
from:
State income taxes, net
of federal benefit 480,159 78,369 500,638 114,139
Nontaxable interest and
dividends (29,490) (38,004) (52,429) (80,104)
Other reconciling items,
net 22,370 (15,510) 15,144 (6,148)
__________ __________ __________ __________
Total provision for
income taxes $4,970,392 $ 758,888 $5,152,521 $1,096,953
__________ __________ __________ __________
__________ __________ __________ __________
</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 reduced the current deferred tax
liability by $737,000. Interest totaling $263,000 was recognized for the year
ending August 31, 1996.
5. Indebtedness:
The Company has financing agreements with commercial banks that permit the
Company to borrow up to $30 million. The financing agreements allow the
Company to borrow up to $27,000,000 which is due in 1998 and up to $3,000,000
which is due on demand. The total amount of long-term debt under these
agreements at February 28, 1997 and August 31, 1996 was $9,431,000 and
$20,630,000, respectively.
Interest cost expensed and capitalized during the six months ended
February 28, 1997 and February 29, 1996 was as follows:
1997 1996
________ ________
Interest expensed $309,275 $309,704
Interest capitalized 291,932 344,122
________ ________
Total interest cost $601,207 $653,826
________ ________
________ ________
6. Commitment:
During October 1992 the Company 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, 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 declined to $25,880,509 at February 28, 1997, down from
$29,761,766 at August 31, 1996. As of February 28, 1997, the Company had cash
and cash investments of $1,197,542 compared to $1,428,059 at August 31, 1996.
Marketable securities increased from $9,626,025 to $10,650,840 during the same
period. The ratio of current assets to current liabilities decreased from 6.82
to 1 at August 31, 1996 to 3.93 to 1 at February 28, 1997. Total assets
increased by $432,263 from $114,503,573 at August 31, 1996 to $114,935,836 at
February 28, 1997.
The working capital decrease ($3,881,257) is primarily the result of an increase
in income taxes payable ($5,212,210 at February 28, 1997 vs. $190,639 at August
31, 1996). A large real estate sale ($11,500,000 gross price) to the State of
Florida was closed in the second quarter of fiscal 1997, generating a large
portion of the tax liability. The proceeds from the sale were used to reduce
the note payable.
In connection with a financing agreement with commercial banks (See Note 5
under Notes to Condensed Consolidated Financial Statements), the Company has an
unused availability of funds of approximately $20.6 million at February 28,
1997.
RESULTS OF OPERATIONS:
Net income for the three months ending February 28, 1997 increased by $6,857,083
over the second quarter of fiscal 1996, and $6,591,789 over the six-month period
then ended. Income before income taxes increased $11,068,587 and $10,647,357
for the three and six months ended February 28, 1997, respectively, when
compared to the same periods a year ago. This was due to the sale of
approximately 21,700 acres of land in Hendry County, Florida, to the State of
Florida for $11.5 million. The pretax gain from the sale totaled $11,334,156.
Earnings from agriculture activities decreased from the prior year ($1,800,971
vs. $2,429,241 for the second quarter, and $2,627,816 vs. $3,565,260 during the
first half of fiscal 1997 and 1996, respectively).
Citrus earnings decreased both for the quarter ($1,229,240 during fiscal 1997
vs. $1,501,868 during fiscal 1996) and for the six months ($1,533,680 during
fiscal 1997 vs. $2,297,380 during fiscal 1996) ended February 28, 1997 when
compared to the prior year. Despite an increase in boxes harvested, lower
prices for citrus products is the primary reason for the decline in earnings
for this division.
Sugarcane earnings were lower for both the quarter ($254,585 during fiscal 1997
vs. $875,595 during fiscal 1996) and for the six months ended February 28, 1997
($504,154 in 1997 vs. $1,210,447 in 1996) when compared to the prior year.
Fewer tons were harvested due to the adverse effects of less than optimal
growing conditions. Specifically, we experienced a freeze during February 1996
and drought conditions during the summer months of the growing season.
<PAGE>
FORM 10-Q
ITEM 2. Management's Discussion
RESULTS OF OPERATIONS (Continued):
Ranch earnings improved substantially during both the quarter and six months
ended February 28, 1997 when compared to the prior year ($317,146 vs. $51,778
for the three months ended February 28, 1997 and February 29, 1996,
respectively), and ($589,982 vs. $57,433 for the six months ending
February 28, 1997 and February 29, 1996, respectively). Improved prices for
beef products, coupled with lower feed costs, the result of more abundant
grain supplies, have generated the improvement. The Company is cautiously
optimistic that these trends will continue.
Construction continues on the new Florida Gulf Coast University, scheduled
to open in August 1997. The Company is continuing its marketing and permit
activities for its land which surrounds the University site.
During November of 1996, the Company announced an agreement with Miromar
Development, Inc. of Montreal, Canada to sell 550 acres of land surrounding the
University site in Lee County for $9.35 million. The contract could possibly
close as early as the fall of 1997. The contract calls for 25 percent of the
purchase price to be paid at closing, with the balance payable over the next
four years. If the sale closes, it will generate a pretax gain of approximately
$8.7 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
February 28, 1997.
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)
April 11, 1997 W. Bernard Lester
Date Exeuctive Vice President
and Chief Operating Officer
(Signature)
April 11, 1997 L. Craig Simmons
Date Vice President and
Chief Financial Officer
(Signature)
April 11, 1997 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 February 28, 1997, and the related condensed consolidated
statements of operations and retained earnings for the three-month and six-month
periods ended February 28, 1997 and February 29, 1996, and the related condensed
consolidated statements of cash flows for the six-month periods ended February
28, 1997 and February 29, 1996. 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 procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted 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, 1996 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 4, 1996, 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, 1996, 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, 1997
<PAGE>
FORM 10-Q
ALICO, INC.
Computation of Weighted Average Shares Outstanding as of February 28,
1997:
Number of shares outstanding at August 31, 1996 7,027,827
_________
_________
Number of shares outstanding at February 28, 1997 7,027,827
_________
_________
Weighted Average 9/1/96 - 2/28/97 7,027,827
_________
_________
EXHIBIT B
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET OF ALICO, INC. AND SUBSIDIARY AS OF FEBRUARY 28, 1997 AND THE
RELATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS AND CASH FLOWS FOR
THE SIX MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-START> SEP-01-1996
<PERIOD-END> FEB-28-1997
<CASH> 1197542
<SECURITIES> 10650840
<RECEIVABLES> 10809745
<ALLOWANCES> 0
<INVENTORY> 11812928
<CURRENT-ASSETS> 34708220
<PP&E> 98173314
<DEPRECIATION> (28221557)
<TOTAL-ASSETS> 114935836
<CURRENT-LIABILITIES> 8827711
<BONDS> 0
0
0
<COMMON> 7027827
<OTHER-SE> 78317932
<TOTAL-LIABILITY-AND-EQUITY> 114935836
<SALES> 31451028
<TOTAL-REVENUES> 32045856
<CGS> 16386169
<TOTAL-COSTS> 16386169
<OTHER-EXPENSES> 1558742
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 309275
<INCOME-PRETAX> 13791670
<INCOME-TAX> 5152521
<INCOME-CONTINUING> 8639149
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8639149
<EPS-PRIMARY> 1.23
<EPS-DILUTED> 1.23
</TABLE>
