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, 1998.
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 13, 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) (Unaudited)
Three Months Ended Six Months Ended
Feb. 28, 1998 Feb. 28, 1997 Feb. 28, 1998 Feb. 28, 1997
_____________ _____________ _____________ _____________
<S> <C> <C> <C> <C>
Revenue:
Citrus $ 8,372,605 $ 9,825,628 $12,187,463 $11,919,099
Sugarcane 2,796,753 3,517,719 4,496,443 4,595,426
Ranch 1,143,736 1,661,053 4,243,414 2,499,460
Rock products and sand 263,586 265,317 575,668 611,262
Oil lease and land rentals 104,113 146,898 264,009 287,236
Forest products 37,622 45,066 82,113 71,994
Profit on sales of real estate 5,712 11,383,964 633,372 11,407,683
Interest and investment income 324,505 351,232 620,037 594,828
Other 28,076 37,228 42,675 58,868
___________ ___________ ___________ ___________
Total revenue 13,076,708 27,234,105 23,145,194 32,045,856
___________ ___________ ___________ ___________
Cost and expenses:
Citrus production, harvesting and
marketing 6,557,629 8,596,388 10,000,637 10,385,419
Sugarcane production and harvesting 2,240,340 3,263,134 3,715,636 4,091,272
Ranch 1,014,643 1,343,907 3,833,030 1,909,478
Real estate expenses 110,794 116,373 214,419 229,745
Interest 208,335 60,332 378,330 309,275
Other, general and administrative 670,050 626,462 1,258,098 1,328,997
___________ ___________ ___________ ___________
Total costs and expenses 10,801,791 14,006,596 19,400,150 18,254,186
___________ ___________ ___________ ___________
Income before income taxes 2,274,917 13,227,509 3,745,044 13,791,670
Provision for income taxes 824,679 4,970,392 1,347,468 5,152,521
___________ ___________ ___________ ___________
Net income 1,450,238 8,257,117 2,397,576 8,639,149
Retained earnings beginning of period 76,942,301 69,420,999 80,211,659 70,093,141
Dividends paid - - (4,216,696) (1,054,174)
___________ ___________ ___________ ___________
Retained earnings end of period $78,392,539 $77,678,116 $78,392,539 $77,678,116
___________ ___________ ___________ ___________
___________ ___________ ___________ ___________
Weighted average number of shares
outstanding 7,027,827 7,027,827 7,027,827 7,027,827
___________ ___________ ___________ ___________
___________ ___________ ___________ ___________
Per share amounts:
Net income $ .21 $ 1.17 $ .34 $ 1.23
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)
February 28, 1998 August 31, 1997
ASSETS
<S> <C> <C>
Current assets:
Cash and cash investments $ 895,279 $ 1,459,765
Marketable Securities 12,902,859 11,412,915
Accounts and mortgage notes receivable 9,197,389 8,358,049
Inventories 13,981,919 16,387,128
Other current assets 173,466 269,463
____________ ____________
Total current assets 37,150,912 37,887,320
Mortgage notes receivable, non-current 530,065 588,860
Land held for development and sale 8,561,175 8,345,116
Investments 942,580 955,779
Property, buildings and equipment 98,571,971 96,709,440
Less: Accumulated depreciation (28,024,184) (26,763,790)
____________ ____________
Total assets $117,732,519 $117,722,725
____________ ____________
____________ ____________
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEETS
(See Accountants' Review Report)
(Continued)
(Unaudited) (Audited)
<S> February 28, 1998 August 31, 1997
LIABILITIES _________________ _______________
<C> <C>
Current liabilities:
Accounts payable $ 1,438,632 $ 1,158,012
Due to profit sharing plan - 230,545
Accrued ad valorem taxes 438,674 1,253,053
Accrued expenses 329,487 541,847
Income taxes payable 915,733 934,895
Deferred income taxes 197,229 869,763
____________ ____________
Total current liabilities 3,319,755 4,988,115
Notes payable to banks 15,256,000 12,856,000
Deferred income taxes 12,430,783 11,712,806
Deferred retirement benefits 34,291 13,259
____________ ____________
Total liabilities 31,040,829 29,570,180
____________ ____________
STOCKHOLDERS' EQUITY
Common stock $ 7,027,827 $ 7,027,827
Unrealized gains on marketable securities 1,271,324 913,059
Retained earnings 78,392,539 80,211,659
____________ ____________
Total stockholders' equity 86,691,690 88,152,545
____________ ____________
Total liabilities and
stockholders' equity $117,732,519 117,722,725
____________ ____________
____________ ____________
<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)
Feb. 28, 1998 Feb. 28, 1997
_____________ _____________
<S>
Cash flows from operating activities:
<C> <C>
Net income $ 2,397,576 $ 8,639,149
Adjustments to reconcile net income to cash
provided from (used for) operating activities:
Depreciation 2,272,562 2,122,293
Net decrease in current assets and
liabilities 211,026 5,072,271
Deferred income taxes (170,710) (466,550)
Gain on sale of real estate (616,268) (11,407,683)
Other (603,317) 289,868
___________ ___________
Net cash provided from (used for)
operating activities 3,490,869 4,249,348
___________ ___________
Cash flows from (used for) investing activities:
Purchases of property and equipment (2,411,878) (3,575,782)
Proceeds from sales of real estate 650,000 10,952,060
Proceeds from sales of other property
and equipment 250,852 379,415
Purchases of marketable securities (2,537,697) (2,548,667)
Proceeds from sales of marketable securites 1,788,792 2,469,760
___________ ___________
Net cash provided by (used for)
investing activities (2,259,931) 7,676,786
___________ ___________
Cash flows from (used for) financing activities:
Notes receivable collections 21,272 96,523
Repayment of bank loan (11,225,000) (18,513,000)
Proceeds from bank loan 13,625,000 7,314,000
Dividends paid (4,216,696) (1,054,174)
___________ ___________
Net cash provided from (used for)
financing activities (1,795,424) (12,156,651)
___________ ___________
Net increase (decrease) in
cash and cash investments $ (564,486) $ (230,517)
___________ ___________
___________ ___________
Supplemental disclosures of cash flow information:
Cash paid for interest, net of
amount capitalized $ 362,251 $ 372,364
___________ ___________
___________ ___________
Cash paid for income taxes $ 1,612,600 $ 597,500
___________ ___________
___________ ___________
<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, 1997.
In the opinion of Management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments necessary for a fair presentation
of its consolidated financial position at February 28, 1998 and August 31, 1997
and the consolidated results of operations and cash flows for the six months
ended February 28, 1998 and 1997.
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 $2,536,337 in
1998 and $1,007,211 in 1997. 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,
1998 1997
____________ __________
Unharvested fruit crop on trees $ 6,153 $ 6,909
Unharvested sugarcane 1,054 2,322
Beef cattle 6,517 6,993
Sod 258 163
_______ _______
Total inventories $13,982 $16,387
_______ _______
_______ _______
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<CAPTION>
4. Income taxes:
The provision for income taxes for the quarters and six months ended February
28, 1998 and 1997 is summarized as follows:
Three Months Ended Six Months Ended
Feb. 28, 1998 Feb. 28, 1997 Feb. 28, 1998 Feb. 28, 1997
_____________ _____________ _____________ _____________
<S> <C> <C> <C> <C>
Current:
Federal income tax $678,251 $4,611,748 $1,220,936 $4,798,649
State income tax 72,413 786,695 166,936 820,422
________ __________ __________ __________
750,664 5,398,443 1,387,872 5,619,071
________ __________ __________ __________
Deferred:
Federal income tax 66,876 (386,761) (36,506) (421,546)
State income tax 7,139 (41,290) (3,898) (45,004)
________ __________ __________ __________
74,015 (428,051) (40,404) (466,550)
________ __________ __________ __________
Total provision for
income taxes $824,679 $4,970,392 $1,347,468 $5,152,521
________ __________ __________ __________
________ __________ __________ __________
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, 1998
and 1997:
Three Months Ended Six Months Ended
Feb. 28, 1998 Feb. 28, 1997 Feb. 28, 1998 Feb. 28, 1997
_____________ _____________ _____________ _____________
<S> <C> <C> <C> <C>
Expected income tax $773,472 $4,497,353 $1,273,315 $4,689,168
Increase (decrease) resulting
from:
State income taxes, net
of federal benefit 82,579 480,159 135,945 500,638
Nontaxable interest and
dividends (25,459) (29,490) (50,973) (52,429)
Other reconciling items,
net (5,913) 22,370 (10,819) 15,144
________ __________ __________ __________
Total provision for
income taxes $824,679 $4,970,392 $1,347,468 $5,152,521
________ __________ ________ __________
________ __________ ________ __________
<PAGE>
The Company is currently under examination by the Internal Revenue Service for
the years ended August 31, 1991, 1992, 1993 and 1994. 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.
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. 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 February 28, 1998 and August 31, 1997 was $15,256,000 and $12,856,000,
respectively.
Interest cost expensed and capitalized during the six months ended February 28,
1998 and February 28, 1997 was as follows:
1998 1997
________ ________
Interest expensed $378,330 $309,275
Interest capitalized 172,516 291,932
________ ________
Total interest cost $550,846 $601,207
________ ________
________ ________
6. 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 $33,831,157 at February 28, 1998, up from
$32,899,205 at August 31, 1997. As of February 28, 1998, the Company had cash
and cash investments of $895,279 compared to $1,459,765 at August 31, 1997.
Marketable securities increased from $11,412,915 to $12,902,859 during the same
period. The ratio of current assets to current liabilities increased to 11.19
to 1 at February 28, 1998 from 7.60 to 1 at August 31, 1997. Total assets
increased by $9,794 to $117,732,519 at February 28, 1998 from $117,722,725 at
August 31, 1997.
The working capital increase of $931,952 is primarily resulting from an increase
in cash provided by operations. With this cash, the Company paid several large
current liabilities accrued at August 31, 1997, including ad valorem taxes of
$1,083,000, and amounts due to the profit sharing plan of $230,000.
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 $14.7 million at February 28, 1998.
RESULTS OF OPERATIONS:
Net income for the three months ending February 28, 1998 decreased by $6,806,879
when compared to the second quarter of fiscal 1997, and $6,241,573 when compared
to the six-month period then ended. Income before income taxes decreased
$10,952,592 and $10,046,626 for the three and six months ended February 28,
1998, 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 in fiscal year 1997. The pretax gain
from the sale totaled $11,334,156.
Earnings from agriculture activities increased from the prior year ($2,500,482
vs. $1,800,971 for the second quarter, and $3,378,017 vs. $2,627,816 during the
first half of fiscal 1998 and 1997, respectively).
Citrus earnings increased both for the quarter ($1,814,976 during fiscal 1998
vs. $1,229,240 during fiscal 1997) and for the six months ($2,186,826 during
fiscal 1998 vs. $1,533,680 during fiscal 1997) ended February 28, 1998 when
compared to the prior year. Better than anticipated market prices for the prior
year's crop (see Note 1 under Notes to Condensed Consolidated Financial
Statements) is the reason for the improved profitability of this division.
Sugarcane earnings were higher for both the quarter ($556,413 during fiscal 1998
vs. $254,585 during fiscal 1997) and for the six months ended February 28, 1998
($780,807 in 1998 vs. $504,154 in 1997) when compared to the prior year.
Improved yields per acre resulted in an increase in gross tons harvested from
the prior year.
<PAGE>
ITEM 2. Management's Discussion
RESULTS OF OPERATIONS (Continued)
Ranch earnings were slightly lower for both the quarter and six months ended
February 28, 1998 when compared to the prior year ($129,093 vs. $317,146 for the
three months ended February 28, 1998 and February 28, 1997, respectively), and
($410,384 vs. $589,982 for the six months ending February 28, 1998 and February
28, 1997, respectively). Fewer fully depreciated animals were sold in the
current year, causing the decrease.
The Company is continuing its marketing and permit activities for its land which
surrounds the Florida Gulf Coast University.
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 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
February 28, 1998.
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 13, 1998 W. Bernard Lester
Date President
Chief Operating Officer
(Signature)
April 13, 1998 L. Craig Simmons
Date Vice President
Chief Financial Officer
(Signature)
April 13, 1998 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, 1998, and the related condensed consolidated
statements of operations and retained earnings for the three and six month
periods ended February 28, 1998 and 1997, and the related condensed consolidated
statements of cash flows for the six month periods ended February 28, 1998 and
1997. 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,
stockholders' 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
March 26, 1998
<PAGE>
FORM 10-Q
ALICO, INC.
Computation of Weighted Average Shares Outstanding as of February 28, 1998:
Number of shares outstanding at August 31, 1997 7,027,827
_________
_________
Number of shares outstanding at February 28, 1998 7,027,827
_________
_________
Weighted Average 09/01/97 - 02/28/98 7,027,827
_________
_________
EXHIBIT B
<PAGE>
</TABLE>
<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, 1998 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-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<CASH> 895279
<SECURITIES> 12902859
<RECEIVABLES> 9197389
<ALLOWANCES> 0
<INVENTORY> 13981919
<CURRENT-ASSETS> 37150912
<PP&E> 98571971
<DEPRECIATION> 28024184
<TOTAL-ASSETS> 117732519
<CURRENT-LIABILITIES> 3319755
<BONDS> 0
0
0
<COMMON> 7027827
<OTHER-SE> 79663863
<TOTAL-LIABILITY-AND-EQUITY> 117732519
<SALES> 22525157
<TOTAL-REVENUES> 23145194
<CGS> 17334884
<TOTAL-COSTS> 17334884
<OTHER-EXPENSES> 1472517
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 378330
<INCOME-PRETAX> 3745044
<INCOME-TAX> 1347468
<INCOME-CONTINUING> 2397576
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2397576
<EPS-PRIMARY> .34
<EPS-DILUTED> .34
</TABLE>
