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, 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 January 15, 1998.
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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,
1997 1996
_______________________________
<S> <C> <C>
Revenue:
Citrus $ 3,814,858 $ 2,093,471
Sugarcane 1,699,690 1,077,707
Ranch 3,099,678 838,407
Rock products and sand 312,082 345,945
Oil lease and land rentals 159,896 140,338
Forest products 44,491 26,928
Profit on sales of real estate 627,660 23,719
Interest and investment income 295,532 243,596
Other 14,599 21,640
___________ ___________
Total revenue 10,068,486 4,811,751
___________ ___________
Cost and expenses:
Citrus production, harvesting and
marketing 3,443,008 1,789,031
Sugarcane production and harvesting 1,475,296 828,138
Ranch 2,818,387 565,571
Real estate expenses 103,625 113,372
Interest 169,995 248,943
Other, general and administrative 588,048 702,535
____________ ___________
Total costs and expenses 8,598,359 4,247,590
____________ ___________
Income before income taxes 1,470,127 564,161
Provision for income taxes 522,789 182,129
____________ ___________
Net income 947,338 382,032
Retained earnings beginning of period 80,211,659 70,093,141
Dividends paid (4,216,696) (1,054,174)
___________ ___________
Retained earnings end of period 76,942,301 69,420,999
___________ ___________
Weighted average number of shares outstanding 7,027,827 7,027,827
___________ ___________
___________ ___________
Per share amounts:
Net income $ .13 $ .05
Dividends $ .60 $ .15
<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, 1997 August 31, 1997
ASSETS
<S> <C> <C>
Current assets:
Cash and cash investments $ 1,281,865 $ 1,459,765
Marketable Securities 12,117,580 11,412,915
Accounts and mortgage notes receivable 8,399,730 8,358,049
Inventories 15,148,090 16,387,128
Other current assets 593,697 269,463
____________ ____________
Total current assets 37,540,962 37,887,320
Mortgage notes receivable, non-current 542,440 588,860
Land held for development and sale 8,452,124 8,345,116
Investments 938,247 955,779
Property, buildings and equipment 98,200,126 96,709,440
Less: Accumulated depreciation (27,570,024) (26,763,790)
____________ ____________
Total assets $118,103,875 $117,722,725
____________ ____________
____________ ____________
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEETS
(See Accountants' Review Report)
(Continued)
(Unaudited) (Audited)
<S> November 30, 1997 August 31, 1997
LIABILITIES _________________ _______________
<C> <C>
Current liabilities:
Accounts payable $ 946,393 $ 1,158,012
Due to profit sharing plan - 230,545
Accrued ad valorem taxes 1,083,539 1,253,053
Accrued road commitment (See Note 6) 123,139 212,075
Accrued expenses 170,697 329,772
Income taxes payable 935,302 934,895
Deferred income taxes 543,110 869,763
____________ ____________
Total current liabilities 3,802,180 4,988,115
Notes payable to banks 17,356,000 12,856,000
Deferred income taxes 11,927,423 11,712,806
Deferred retirement benefits 1,682 13,259
____________ ____________
Total liabilities 33,087,285 29,570,180
____________ ____________
STOCKHOLDERS' EQUITY
Common stock $ 7,027,827 $ 7,027,827
Unrealized gains on marketable securities 1,046,462 913,059
Retained earnings 76,942,301 80,211,659
____________ ____________
Total stockholders' equity 85,016,590 88,152,545
____________ ____________
Total liabilities and
stockholders' equity $118,103,875 117,722,725
____________ ____________
____________ ____________
<FN>
See Accompanying notes to condensed consolidated financial statements.
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ALICO, INC. AND SUBSIDIARY FORM 10-Q
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(See Accountants' Review Report)
(Unaudited)
Three Months Ended November 30,
1997 1996
<S> _______________________________
Cash flows from operating activities:
<C> <C>
Net income $ 947,338 $ 382,032
Adjustments to reconcile net income to cash
provided from (used for) operating activities:
Depreciation 1,140,337 1,068,727
Accrued road commitment (88,936) (879)
Net decrease in current assets and
liabilities 140,986 (2,338,635)
Deferred income taxes (192,523) (38,498)
Other (945,573) (383,944)
__________ __________
Net cash provided from (used for)
operating activities 1,001,629 (1,311,197)
__________ __________
Cash flows from (used for) investing activities:
Purchases of property and equipment (1,833,714) (1,896,769)
Proceeds from sales of property and equipment 789,258 230,069
Purchases of marketable securities (994,553) (1,371,101)
Proceeds from sales of marketable securites 567,965 1,097,382
__________ __________
Net cash used for
investing activities (1,471,044) (1,940,419)
__________ __________
Cash flows used for financing activities:
Notes receivable collections 8,211 60,262
Repayment of bank loan (5,435,000) (1,950,000)
Proceeds from bank loan 9,935,000 5,870,000
Dividends paid (4,216,696) (1,054,174)
__________ __________
Net cash provided from
financing activities 291,515 2,926,088
__________ __________
Net increase (decrease) in
cash and cash investments $ (177,900) $ (325,528)
__________ __________
__________ __________
Supplemental disclosures of cash flow information:
Cash paid for interest, net of
amount capitalized $ 144,670 $ 225,056
__________ __________
__________ __________
Cash paid for income taxes $ 798,000 $ 137,500
__________ __________
__________ __________
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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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, 1997.
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, 1997 and August 31, 1997 and the consolidated results
of operations and cash flows for the three months ended November 30, 1997 and
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 $663,413 in
1997 and $370,130 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:
November 30, August 31,
1997 1997
____________ __________
Unharvested fruit crop on trees $ 7,211 $ 6,909
Unharvested sugarcane 1,925 2,322
Beef cattle 5,786 6,993
Sod 226 163
_______ _______
Total inventories $15,148 $16,387
_______ _______
_______ _______
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4. Income taxes:
The provision for income taxes for the quarters ended November 30, 1997 and 1996
is summarized as follows:
Three Months Ended November 30,
1997 1996
_______________________________
<S> <C> <C>
Current:
Federal income tax $ 542,685 $ 186,901
State income tax 94,523 33,727
__________ __________
637,208 220,628
__________ __________
Deferred:
Federal income tax (103,382) (34,785)
State income tax (11,037) (3,714)
__________ __________
(114,419) (38,499)
__________ __________
Total provision for
income taxes $ 522,789 $ 182,129
__________ __________
__________ __________
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, 1997 and 1996:
Three Months Ended November 30,
1997 1996
_______________________________
<S> <C> <C>
Expected income tax $ 499,843 $ 191,815
Increase (decrease) resulting
from:
State income taxes, net
of federal benefit 53,366 20,479
Nontaxable interest and
dividends (25,514) (22,939)
Other reconciling items,
net (4,906) (7,226)
__________ __________
Total provision for
income taxes $ 522,789 $ 182,129
__________ __________
__________ __________
<PAGE>
The Company is currently under examination by the Internal Revenue Service for
the years ended August 31, 1991, 1992, 1993 and 1994. When the examinations are
resolved, any income taxes due will become currently payable. However, the
majority of the proposed adjustments relate to the timing of certain income and
expense items already provided for in the Company's deferred tax liability
accounts.
Previously the Company had been under audit for the year ended August 31, 1990.
A final settlement was reached in August of 1997. Payments totaling
approximately $1.4 million resulted in a refund due of approximately $80
thousand. The items settled related to the timing of recognition of certain
items previously expensed. The aforementioned payments increased interest
expense by $124,784 and $263,000 during the fiscal years ended August 31, 1995
and 1996, respectively.
The adjustments proposed to date for the years ended August 31, 1991 and 1992
would potentially result in $3.3 million of additional income tax payments.
Management anticipates a settlement regarding these years to occur within the
next twelve months. No adjustments have yet been proposed for the years ended
August 31, 1993 and 1994.
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 1999 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, 1997 and August 31, 1997 was $17,356,000 and $12,856,000,
respectively.
Interest cost expensed and capitalized during the three months
ended November 30, 1997 and November 30, 1996 was as follows:
1997 1996
________ ________
Interest expensed $169,995 $248,943
Interest capitalized 84,803 139,699
________ ________
Total interest cost $254,798 $388,642
________ ________
________ ________
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.
<PAGE>
7. Dividends:
On October 7, 1997 the Company declared a year-end dividend of $.15 per share
and a special dividend of $.45 per share, which were paid on November 7, 1997.
8. 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 $33,738,782 at November 30, 1997, up from
$32,899,205 at August 31, 1997. As of November 30, 1997, the Company had cash
and cash investments of $1,281,865 compared to $1,459,765 at August 31, 1997.
Marketable securities increased from $11,412,915 to $12,117,580 during the same
period. The ratio of current assets to current liabilities increased from 7.60
to 1 at August 31, 1997 to 9.87 to 1 at November 30, 1997. Total assets
increased by $381,150 from $117,722,725 at August 31, 1997 to $118,103,875 at
November 30, 1997.
The working capital increase ($839,577) resulted from an increase in cash
provided by operations.
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 $12.6 million at November 30, 1997.
RESULTS OF OPERATIONS:
Income before income taxes and net income increased $905,966 and $565,306,
respectively, during the first quarter of fiscal 1998, when compared to the
same period a year ago. The increases were largely due to an increase in
earnings from real estate activities ($524,035 for the three months ended
November 30, 1997 vs. a loss of ($89,653) for the three months ended November 30,
1996). Additionally, agricultural earnings for the period were slightly higher
when compared to the first quarter of fiscal 1997 ($877,535 for the three months
ended November 30, 1997 vs. $826,845 for the three months ended November 30,
1996).
Citrus earnings increased during the first quarter of fiscal 1998, when compared
to the same period last year ($371,850 vs. $304,440). This was due to the
recognition of additional revenues from the prior year's crop of $663,413 (see
Note 1 to the Condensed Consolidated Financial Statements). Lower market prices
for citrus products have been experienced during the first quarter of fiscal
year 1998. If this trend continues, it may result in lower earnings for this
division.
Sugarcane earnings during the first quarter of fiscal 1998 approximated the same
period a year ago, ($224,394 vs. $249,569 during the first quarter of fiscal
1998 and 1997, respectively). Total gross tons harvested during fiscal 1998 are
expected to increase over those harvested in fiscal 1997, provided growing
conditions are not negatively impacted by weather or other uncontrollable
events. However, the increase in tonnage for the first quarter was offset by a
decrease in sugar content, when compared to the same period a year ago.
<PAGE>
FORM 10-Q
ITEM 2. Management's Discussion
RESULTS OF OPERATIONS (Continued):
Earnings from ranching activities approximated those of a year ago ($281,291
during the first quarter of fiscal 1998, compared to $272,836 during the first
quarter of fiscal 1997). Although more animals have been sold in the current
period, prior year sales included a greater number of fully depreciated cows,
which typically generate a higher profit margin per head sold.
The Company is continuing its marketing and permit activities for its land which
surrounds the Florida Gulf Coast University.
During November of 1997, 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 1998. 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.
Additionally, the Company announced an option agreement with REJ Group, Inc.
The option agreement permits the acquisition of a minimum 150 acres and a
maximum of 400 acres within the 2,300 acre university village. The potential
pretax gain to Alico, if the option is exercised, would vary from $8.5 million
to $24.5 million, depending on the time at which the option is exercised, and
the total number of acres selected.
<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, 1997.
C. Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K.
December 2, 1997.
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 15, 1998 W. Bernard Lester
Date President
Chief Operating Officer
(Signature)
January 15, 1998 L. Craig Simmons
Date Vice President
Chief Financial Officer
(Signature)
January 15, 1998 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, 1997, and the related condensed consolidated
statements of operations and retained earnings for the three-month periods ended
November 30, 1997 and 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 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, 1997 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 10, 1997 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,
1997, 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
January 6, 1998
<PAGE>
FORM 10-Q
ALICO, INC.
Computation of Weighted Average Shares Outstanding as of November 30, 1997:
Number of shares outstanding at August 31, 1997 7,027,827
_________
_________
Number of shares outstanding at November 30, 1997 7,027,827
_________
_________
Weighted Average 9/1/97 - 11/30/97 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, 1997 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-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> NOV-30-1997
<CASH> 1281865
<SECURITIES> 12117580
<RECEIVABLES> 8399730
<ALLOWANCES> 0
<INVENTORY> 15148090
<CURRENT-ASSETS> 37540962
<PP&E> 98200126
<DEPRECIATION> 27570024
<TOTAL-ASSETS> 118103875
<CURRENT-LIABILITIES> 3802180
<BONDS> 0
0
0
<COMMON> 7027827
<OTHER-SE> 77988763
<TOTAL-LIABILITY-AND-EQUITY> 118103875
<SALES> 9772954
<TOTAL-REVENUES> 10068486
<CGS> 7736691
<TOTAL-COSTS> 7736691
<OTHER-EXPENSES> 691673
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 169995
<INCOME-PRETAX> 1470127
<INCOME-TAX> 522789
<INCOME-CONTINUING> 947338
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 947338
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
</TABLE>
