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 three months ended November 30, 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 January 13, 1997.
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<CAPTION>
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)
Three Months Ended November 30,
1996 1995
_______________________________
<S> <C> <C>
Revenue:
Citrus $ 2,093,471 $ 4,170,160
Sugarcane 1,077,707 1,386,324
Ranch 838,407 1,534,571
Rock products and sand 345,945 234,392
Oil lease and land rentals 140,338 71,148
Forest products 26,928 39,450
Profit on sales of real estate 23,719 16,908
Interest and investment income 243,596 351,632
Other 21,640 19,944
___________ ___________
Total revenue 4,811,751 7,824,529
___________ ___________
Cost and expenses:
Citrus production, harvesting and
marketing 1,789,031 3,374,648
Sugarcane production and harvesting 828,138 1,051,472
Ranch 565,571 1,528,916
Real estate expenses 113,372 97,204
Interest 248,943 136,311
Other, general and administrative 702,535 650,587
____________ ___________
Total costs and expenses 4,247,590 6,839,138
____________ ___________
Income before income taxes 564,161 985,391
Provision for income taxes 182,129 338,065
____________ ___________
Net income 382,032 647,326
Retained earnings beginning of period 70,093,141 68,113,690
Dividends paid (1,054,174) (2,459,739)
___________ ___________
Retained earnings end of period 69,420,999 66,301,277
___________ ___________
Weighted average number of shares outstanding 7,027,827 7,027,827
___________ ___________
___________ ___________
Per share amounts:
Net income $ .05 $ .09
Dividends $ .15 $ .35
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
ALICO, INC. AND SUBSIDIARY FORM 10-Q
CONDENSED CONSOLIDATED BALANCE SHEETS
(See Accountants' Review Report)
(Unaudited) (Audited)
November 30, 1996 August 31, 1996
ASSETS
<S> <C> <C>
Current assets:
Cash and cash investments $ 1,102,531 $ 1,428,059
Marketable Securities 10,347,222 9,626,025
Accounts and mortgage notes receivable 8,997,248 10,299,983
Inventories 15,694,511 13,284,527
Prepaid expenses 469,340 124,752
Interest receivable 110,147 113,286
____________ ____________
Total current assets 36,720,999 34,876,632
Mortgage notes receivable, non-current 1,496,685 1,531,947
Land held for development and sale 7,889,001 7,777,942
Investments 1,063,184 1,016,526
Other 44,581 -
Property, buildings and equipment 98,134,865 97,029,453
Less: Accumulated depreciation (28,292,946) (27,728,927)
____________ ____________
Total assets $117,056,369 $114,503,573
____________ ____________
____________ ____________
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEETS
(See Accountants' Review Report)
(Continued)
(Unaudited) (Audited)
<S> November 30, 1996 August 31, 1996
LIABILITIES _________________ _______________
<C> <C>
Current liabilities:
Accounts payable $ 1,210,333 $ 1,070,092
Due to profit sharing plan - 223,152
Accrued ad valorem taxes - 1,095,427
Accrued donation (See Note 6) 1,235,461 1,236,340
Accrued expenses 159,684 142,047
Income taxes payable 273,767 190,639
Deferred income taxes 212,080 1,157,169
Note payable to bank - current portion 2,550,000 -
____________ ____________
Total current liabilities 5,641,325 5,114,866
Note payable to bank 22,000,000 20,630,000
Deferred income taxes 12,363,003 11,291,936
Deferred retirement benefits 68,918 84,117
____________ ____________
Total liabilities 40,073,246 37,120,919
____________ ____________
STOCKHOLDERS' EQUITY
Common stock $ 7,027,827 $ 7,027,827
Unrealized gains on marketable securities 534,297 261,686
Retained earnings 69,420,999 70,093,141
____________ ____________
Total stockholders' equity 76,983,123 77,382,654
____________ ____________
Total liabilities and
stockholders' equity $117,056,369 $114,503,573
____________ ____________
____________ ____________
<FN>
See Accompanying notes to condensed consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
ALICO, INC. AND SUBSIDIARY FORM 10-Q
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(See Accountants' Review Report)
(Unaudited)
Three Months Ended November 30,
1996 1995
<S> _______________________________
Cash flows from operating activities:
<C> <C>
Net income $ 382,032 $ 647,326
Adjustments to reconcile net income to cash
provided from (used for) operating activities:
Depreciation 1,068,727 1,042,544
Accrued donation (879) (98,397)
Net decrease in current assets and
liabilities (2,338,635) (563,878)
Deferred income taxes (38,498) (88,159)
Other (383,944) (497,759)
__________ __________
Net cash provided from (used for)
operating activities (1,311,197) 441,677
__________ __________
Cash flows from (used for) investing activities:
Purchases of property and equipment (1,896,769) (1,698,177)
Proceeds from sales of property and equipment 230,069 40,431
Purchases of marketable securities (1,371,101) (694,369)
Proceeds from sales of marketable securites 1,097,382 1,270,199
__________ __________
Net cash used for
investing activities (1,940,419) (1,081,916)
__________ __________
Cash flows from (used for) financing activities:
Notes receivable collections 60,262 13,626
Repayment of bank loan (1,950,000) (3,270,000)
Proceeds from bank loan 5,870,000 6,805,000
Dividends paid (1,054,174) (2,459,739)
__________ __________
Net cash provided from
financing activities 2,926,088 1,088,887
__________ __________
Net increase (decrease) in
cash and cash investments $ (325,528) $ 448,648
__________ __________
__________ __________
Supplemental disclosures of cash flow information:
Cash paid for interest, net of
amount capitalized $ 225,056 $ 118,075
__________ __________
__________ __________
Cash paid for income taxes $ 137,500 $ 285,000
__________ __________
__________ __________
<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 recur-
ring accruals) necessary for a fair presentation of its consolidated financial
position at November 30, 1996 and August 31, 1996 and the consolidated results
of operations and cash flows for the three months ended November 30, 1996 and
1995.
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 $370,130 in
1996 and $482,211 in 1995. 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:
November 30, August 31,
1996 1996
____________ __________
Unharvested fruit crop on trees $ 7,837 $ 7,064
Unharvested sugarcane 2,317 2,231
Beef cattle 5,479 3,937
Sod 62 53
_______ _______
Total inventories $15,695 $13,285
_______ _______
_______ _______
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4. Income taxes:
The provision for income taxes for the quarters ended November 30, 1996 and 1995
is summarized as follows:
Three Months Ended November 30,
1996 1995
_______________________________
<S> <C> <C>
Current:
Federal income tax $ 186,901 $ 348,863
State income tax 33,727 58,322
__________ __________
220,628 407,185
__________ __________
Deferred:
Federal income tax (34,785) (62,452)
State income tax (3,714) (6,668)
__________ __________
(38,499) (69,120)
__________ __________
Total provision for
income taxes $ 182,129 $ 338,065
__________ __________
__________ __________
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 November 30, 1996 and 1995:
Three Months Ended November 30,
1996 1995
_______________________________
<S> <C> <C>
Expected income tax $ 191,815 $ 335,033
Increase (decrease) resulting
from:
State income taxes, net
of federal benefit 20,479 35,770
Nontaxable interest and
dividends (22,939) (42,100)
Other reconciling items,
net (7,226) 9,362
__________ __________
Total provision for
income taxes $ 182,129 $ 338,065
__________ __________
__________ __________
<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 potentially 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 ex-
pense 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 lia-
bility 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 this agree-
ment at November 30, 1996 and August 31, 1996 was $22,000,000 and $20,630,000,
respectively.
Interest cost expensed and capitalized during the three months
ended November 30, 1996 and November 30, 1995 was as follows:
1996 1995
________ ________
Interest expensed $248,943 $136,311
Interest capitalized 139,699 175,990
________ ________
Total interest cost $388,642 $312,301
________ ________
________ ________
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, 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 $31,079,674 at November 30, 1996, up from
$29,761,766 at August 31, 1996. As of November 30, 1996, the Company had cash
and cash investments of $1,102,531 compared to $1,428,059 at August 31, 1996.
Marketable securities increased from $9,626,025 to $10,347,222 during the same
period. The ratio of current assets to current liabilities decreased from 6.82
to 1 at August 31, 1996 to 6.51 to 1 at November 30, 1996. Total assets in-
creased by $2,552,796 from $114,503,573 at August 31, 1996 to $117,056,369 at
November 30, 1996.
The working capital increase ($1,317,908) is primarily the result of an increase
in inventories ($13,284,527 vs. $15,694,511 at August 31, 1996 and November 30,
1996, respectively). Additional costs incurred to produce citrus crops, and
placement of cattle into western feedlots have caused both citrus and beef in-
ventories to increase.
In connection with a financing agreement with commercial banks (See Note 5 under
Notes to Condensed Consolidated Financail Statements), the Company has an unused
availability of funds of approximately $5.4 million at November 30, 1996.
RESULTS OF OPERATIONS:
Net income for fiscal 1997 decreased by $265,294 when compared to the first
quarter of fiscal 1996. Income before income taxes decreased $421,230 during
the first quarter of fiscal 1997, when compared to the same period a year ago.
The decrease was primarily due to a decline in earnings from agricultural
activities ($826,845 vs. $1,136,019 during the first three months of fiscal
1997 and 1996, respectively).
Citrus earnings decreased during the first quarter of fiscal 1997, when compared
to the same period last year ($304,440 vs. $795,512). While the number of boxes
harvested to date are below the first quarter of fiscal 1996 levels, this is a
matter of timing and the difference will reverse as the year progresses. Market
prices, however, are below the same period a year ago, a trend which is expected
to continue through the end of the fiscal year.
Sugarcane earnings also decreased during the first quarter of fiscal 1997, com-
pared to the same period a year ago, ($249,569 vs. $334,852 during fiscal 1997
and 1996, respectively). Fewer tons were harvested in the first quarter of
fiscal 1997, compared to the first quarter a year ago, due to adverse growing
conditions which reduced yields for the current year's crop. Yields for the
year are expected to remain below the prior year.
<PAGE>
FORM 10-Q
ITEM 2. Management's Discussion
RESULTS OF OPERATIONS (Continued):
Earnings from ranching activities improved during the first quarter of fiscal
1997, compared to the first quarter a year ago ($272,836 during the first
quarter of fiscal 1997, compared to $5,655 during the first quarter of fiscal
1996). 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.
Actual construction is underway for 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 December of 1996, the Company sold approximately 21,700 acres of land,
in Hendry County, Florida, to the State of Florida for $11.5 million. This
sale is expected to generate a pretax gain in excess of $11 million.
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 August of 1997. The contact 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
November 30, 1996.
C. Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K.
December 3, 1996.
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)
January 13, 1997 W. Bernard Lester
Date Exeuctive Vice President
and Chief Operating Officer
(Signature)
January 13, 1997 L. Craig Simmons
Date Vice President and
Chief Financial Officer
(Signature)
January 13, 1997 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 of November 30, 1996, and the related condensed consolidated
statements of operations and retained earnings for the three-month periods ended
November 30, 1996 and 1995, and the related condensed consolidated statements of
cash flows for the three-month periods ended November 30, 1996 and 1995, 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 informa-
tion, 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 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, stock-
holders' 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
January 3, 1997
<PAGE>
FORM 10-Q
ALICO, INC.
Computation of Weighted Average Shares Outstanding as of November 30, 1996:
Number of shares outstanding at August 31, 1996 7,027,827
_________
_________
Number of shares outstanding at November 30, 1996 7,027,827
_________
_________
Weighted Average 9/1/96 - 11/30/96 7,027,827
_________
_________
EXHIBIT B
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET OF ALICO, INC. AND SUBSIDIARY AS OF NOVEMBER 30, 1996 AND THE
RELATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS AND CASH FLOWS FOR
THE THREE MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> SEP-01-1996
<PERIOD-END> NOV-30-1996
<CASH> 1102531
<SECURITIES> 10347222
<RECEIVABLES> 8997248
<ALLOWANCES> 0
<INVENTORY> 15694511
<CURRENT-ASSETS> 36720999
<PP&E> 98134865
<DEPRECIATION> 28292946
<TOTAL-ASSETS> 117056369
<CURRENT-LIABILITIES> 5641325
<BONDS> 0
0
0
<COMMON> 7027827
<OTHER-SE> 69955296
<TOTAL-LIABILITY-AND-EQUITY> 117056369
<SALES> 4568155
<TOTAL-REVENUES> 4811751
<CGS> 3182740
<TOTAL-COSTS> 3182740
<OTHER-EXPENSES> 815907
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 248943
<INCOME-PRETAX> 564161
<INCOME-TAX> 182129
<INCOME-CONTINUING> 382032
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 382032
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
