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, 2000.
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 863/675-2966
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 May 31, 2000.
<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ALICO, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(See Accountants' Review Report)
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
May 31, 2000 May 31, 1999 May 31, 2000 May 31, 1999
____________ _____________ _____________ _____________
<S> <C> <C> <C> <C>
Revenue:
Citrus $10,117,724 $12,953,171 $ 20,990,151 $ 23,074,822
Sugarcane 2,310,378 3,584,534 8,782,558 6,999,338
Ranch 1,668,378 1,851,990 5,237,642 5,559,720
Rock products
and sand 307,176 334,006 989,448 965,996
Oil lease and
land rentals 187,081 274,653 794,093 694,126
Forest products 9,534 16,958 54,950 83,658
Profit on sales of real
estate 2,157 (1,065) 12,994,011 4,292,311
Interest and investment
income 912,231 396,608 3,247,684 832,899
Other 12,571 38,688 23,026 66,626
___________ ___________ ____________ ____________
Total revenue 15,527,230 19,449,543 53,113,563 42,569,496
___________ ___________ ____________ ____________
Cost and expenses:
Citrus production,
harvesting and
marketing 8,818,103 12,221,354 18,420,679 19,802,952
Sugarcane production
and harvesting 1,033,629 2,064,833 6,908,815 4,646,221
Ranch 1,427,821 1,816,363 4,851,294 5,604,206
Real estate
expenses 151,954 158,162 439,772 307,923
Interest 662,924 597,950 2,072,480 1,404,564
Other, general and
administrative 898,722 736,279 2,220,551 2,111,891
___________ ___________ ____________ ____________
Total costs and
expenses 12,993,153 17,594,941 34,913,591 33,877,757
___________ ___________ ____________ ____________
Income before
income taxes 2,534,077 1,854,602 18,199,972 8,691,739
Provision for
income taxes 1,064,258 684,620 6,866,197 3,793,547
___________ ___________ ____________ ____________
Net income 1,469,819 1,169,982 11,333,775 4,898,192
___________ ___________ ____________ ____________
___________ ___________ ____________ ____________
Weighted average number of shares
outstanding 7,027,827 7,027,827 7,027,827 7,027,827
___________ ___________ ____________ ____________
___________ ___________ ____________ ____________
Per share amounts:
Net income $ .21 $ .17 $ 1.61 $ .70
Dividends $ - $ - $ .30 $ .50
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<TABLE>
ALICO, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(See Accountants' Review Report)
May 31, 2000 August 31, 1999
_________________ ________________
ASSETS
<S> <C> <C>
Current assets:
Cash and cash investments $ 1,628,815 $ 740,829
Marketable Securities 15,820,709 15,043,713
Accounts receivable 10,365,374 8,030,863
Notes receivable 3,210,205 73,589
Inventories 16,646,947 20,547,215
Refundable income taxes 0 549,586
Other current assets 99,950 195,904
____________ ____________
Total current assets 47,772,000 45,181,699
Notes receivable, non-current 8,882,864 394,203
Land held for development and sale 7,550,027 9,429,295
Investments 955,779 946,145
Property, buildings and equipment 139,256,881 132,372,839
Less: Accumulated depreciation (34,094,708) (31,402,071)
____________ ____________
Total assets $170,322,843 $156,922,110
____________ ____________
____________ ____________
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEETS
(See Accountants' Review Report)
(Continued)
<S> May 31, 2000 August 31, 1999
LIABILITIES _________________ _______________
<C> <C>
Current liabilities:
Accounts payable $ 1,396,162 $ 2,571,579
Due to profit sharing plan 0 269,177
Accrued ad valorem taxes 1,249,180 1,997,834
Current portion of notes payable 1,322,033 1,322,033
Accrued expenses 661,247 683,848
Income taxes payable 833,381 0
Deferred income taxes 1,876,599 1,893,360
____________ ____________
Total current liabilities 7,338,602 8,737,831
Notes payable 47,661,912 45,630,912
Deferred income taxes 14,726,842 10,780,521
Deferred retirement benefits 443,771 377,487
____________ ____________
Total liabilities 70,171,127 65,526,751
____________ ____________
STOCKHOLDERS' EQUITY
Common stock $ 7,027,827 $ 7,027,827
Accumulated other comprehensive income 542,998 1,029,953
Additional paid in capital 17,885 0
Retained earnings 92,563,006 83,337,579
____________ ____________
Total stockholders' equity 100,151,716 91,395,359
____________ ____________
Total liabilities and
stockholders' equity $170,322,843 $156,922,110
____________ ____________
____________ ____________
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALICO, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(See Accountants' Review Report)
Common Accumulated
Stock Other Additional
Shares Retained Comprehensive Paid-In-
Issued Amount Earnings Income Capital Total
________ ________ ________ _______ _________ ________
<S> <C> <C> <C> <C> <C> <C>
Balances,
August 31, 1998 7,027,827 $7,027,827 $82,770,769 $168,345 - $89,966,941
_______________
Comprehensive income:
Net income for
the year ended
August 31, 1999 - - 4,080,724 - - 4,080,724
Unrealized gains
on securities,
net of taxes - - - 861,608 - 861,608
and reclassification
adjustment (see
disclosure) __________
Total comprehensive
income: 4,942,332
Dividends paid - - (3,513,914) - - (3,513,914)
Stock based
compensation - - - - - -
_________ __________ __________ _______ ________ __________
Balances,
August 31, 1999 7,027,827 $7,027,827 $83,337,579 $1,029,953 - $91,395,359
_______________
Comprehensive income:
Net income for the
nine months ended
May 31, 2000 - - 11,333,775 - - 11,333,775
Unrealized gains
on securities,
net of taxes - - - (486,955) - (486,955)
and reclassification
adjustment(see
disclosure) ___________
Total comprehensive
income: 10,846,820
Dividends paid - - (2,108,348) - - (2,108,348)
Stock based
Compensation - - - - 17,885 17,885
_________ ________ ___________ ________ _______ ____________
Balances,
May 31, 2000 7,027,827 $7,027,827 $92,563,006 $ 542,998 $17,885 $100,151,716
_________ _________ ___________ ________ _______ ____________
_________ _________ ___________ ________ _______ ____________
2000 1999
Disclosure of reclassification amount: ___________ ___________
Unrealized holding gains (losses)
arising during the period $1,608,208 $824,144
Less: reclassification adjustment
for gains (losses) included in net
income 2,095,163 (37,464)
___________ ___________
Net unrealized (losses) gains on securities $ (486,955) $ 861,608
___________ ___________
___________ __________
<FN>
See accompanying notes to condensed consolidated financial statements.
ALICO, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(See Accountants' Review Report)
(Unaudited)
Nine months ended
May 31, 2000 May 31, 1999
<S> _______________________________
Cash flows from operating activities:
<C> <C>
Net income $ 11,333,775 $ 4,898,192
Adjustments to reconcile net income to cash
provided from (used for) operating activities:
Depreciation and amortization 4,234,341 3,891,638
Net decrease in current assets and
liabilities (2,110,939) 125,045
Deferred income taxes 3,923,881 (239,397)
Gain on sales of real estate (12,994,011) (4,268,132)
Other (278,111) 458,695
__________ __________
Net cash provided from
operating activities 4,108,936 4,866,041
__________ __________
Cash flows from (used for) investing activities:
Purchases of property and equipment (8,047,504) (24,169,924)
Proceeds from sales of real estate 4,199,731 4,404,902
Proceeds from sales of property and equipment 310,962 0
Purchases of marketable securities (1,169,509) (3,258,678)
Proceeds from sales of marketable securities 1,562,188 2,160,714
__________ __________
Net cash (used for)
investing activities (3,144,132) (20,862,986)
__________ __________
Cash flows from (used for) financing activities:
Notes receivable collections 530 105,556
Repayment of bank loan (21,183,391) (26,328,667)
Proceeds from bank loan 23,214,391 45,252,000
Dividends paid (2,108,348) (3,513,914)
__________ __________
Net cash (used for)
financing activities (76,818) 15,514,975
__________ __________
Net increase (decrease) in cash and
cash investments $ 887,986 $ (481,970)
__________ __________
__________ __________
Supplemental disclosures of cash flow information:
Cash paid for interest, net of
amount capitalized $ 2,373,057 $ 1,671,478
__________ __________
__________ __________
Cash paid for income taxes, including $ 1,250,229 $ 4,379,835
related interest __________ __________
__________ __________
Non-cash investing and financing activities:
Mortgage notes receivable issued in exchange
for land, less unamortized discount $ 11,625,807 $ 0
___________ __________
___________ __________
Fair value adjustments to securities
available for sale $ (780,196) $ 1,604,590
__________ __________
__________ __________
Income tax effect related to fair
value adjustment $ (293,241) $ 603,808
__________ __________
__________ __________
<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 unaudited 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, 1999. 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 May 31, 2000 and
August 31, 1999 and the consolidated results of operations and cash flows
for the nine months ended May 31, 2000 and 1999.
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 $1,839,642 in 2000 and $159,748 in 1999. The results of
operations for the stated periods are not necessarily indicative of results
to be expected for the full year.
2. Real Estate:
Real Estate sales 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. Notes receivable:
Notes receivable include mortgages and other notes receivable. Mortgage
notes receivable arose from real estate sales. The balances are as follows:
May 31, August 31,
2000 1999
____________ __________
Mortgage notes receivable
on retail land sales $ 258,734 $ 246,660
Mortgage notes receivable
on bulk land sales 12,344,684 0
Less unamortized discount based
on imputed interest rate of 8% (718,877) 0
Other notes receivable 208,528 221,132
___________ __________
Total mortgage notes receivable $ 12,093,069 $ 467,792
Less current portion 3,210,205 73,589
___________ __________
Non-current portion $ 8,882,864 $ 394,203
___________ __________
___________ __________
In September 1999, the Company received a mortgage note in exchange for land
sold. The note totaled $12,344,684 and is due annually in September, bearing
interest at 4%, over the next four years.
<PAGE>
<TABLE>
<CAPTION>
4. Inventories:
A summary of the Company's inventories (in thousands) is shown below:
May 31, August 31,
2000 1999
____________ __________
Unharvested fruit crop on trees $ 6,874,407 $ 9,359,141
Unharvested sugarcane 2,995,809 3,639,356
Beef cattle 6,609,606 7,432,806
Sod 167,125 115,912
____________ __________
Total inventories $16,646,947 $ 20,547,215
5. Income taxes:
The provision for income taxes for the quarters and nine months ended
May 31, 2000 and May 31, 1999 is summarized as follows:
Three Months Ended Nine Months Ended
May 31, 2000 May 31, 1999 May 31, 2000 May 31, 1999
_____________ _____________ ____________ _____________
<C> <C> <C> <C>
Current:
Federal $ 480,493 $ (369,308) $2,310,341 $1,679,631
State 73,115 83,380 333,681 273,428
_____________ ____________ ____________ ____________
553,608 (285,928) 2,644,022 1,953,059
_____________ ____________ _____________ ____________
Deferred:
Federal 449,770 870,431 3,604,566 1,656,439
State 60,880 100,117 617,609 184,049
_____________ ____________ _____________ ____________
510,650 970,548 4,222,175 1,840,488
_____________ ____________ _____________ ____________
Total provision for
income taxes $1,064,258 $ 684,620 $6,866,197 $3,793,547
_____________ ____________ _____________ ____________
_____________ ____________ _____________ ____________
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 nine months ended May 31, 2000 and
May 31, 1999:
Three Months Ended Nine Months Ended
May 31, 2000 May 31, 1999 May 31, 2000 May 31, 1999
_____________ ____________ _____________ _____________
<C> <C> <C> <C>
Expected income tax $ 861,586 $ 630,564 $ 6,187,990 $ 2,955,191
Increase (decrease)
resulting from:
State income taxes, net
of federal benefit 51,516 67,322 590,931 315,510
Nontaxable interest and
dividends (63,031) (22,352) (120,819) (68,588)
Interest and penalties
net of federal and
state benefit 0 0 0 593,878
IRS audit adjustments 188,964 0 188,964 0
Other reconciling items,
net 25,223 9,086 19,131 (2,444)
_____________ _____________ _____________ ____________
Total provision for
income taxes $1,064,258 $ 684,620 $ 6,866,197 $ 3,793,547
_____________ ___________ _____________ ____________
_____________ ___________ _____________ ____________
<PAGE>
The Company is currently under examination by the Internal Revenue
Service for the years ended August 31, 1995 and 1996. When the
examinations are resolved, any income taxes due will become currently
payable. However, the majority of the proposed adjustments relate to,
among other things, the Company's computation of the deferral
determination of the amounts of certain charitable contributions, all
of which have been provided for in the Company's deferred tax liability
account. The Company plans to continue to defend the positions taken
in its income tax returns.
6. Indebtedness:
The Company has financing agreements with commercial banks that permit
the Company to borrow up to $44 million. The financing agreements allow
the company to borrow up to $41 million which is due in 2001 and up to
$3 million which is due on demand. In March 1999, the Company mortgaged
7,680 acres for $19 million in connection with a $22.5 million
acquisition of producing citrus and sugarcane operations. The total
amount of long-term debt under these agreements at May 31, 2000 and
August 31, 1999 was $48,983,945 and $46,952,945, respectively.
Maturities of the indebtedness of the Company over the next five years
are as follows: 2000- $1,322,033; 2001- $32,423,033; 2002- $1,322,033;
2004- $1,322,033; 2005- $1,322,033; thereafter $11,272,780.
Interest cost expensed and capitalized during the nine months ended
May 31, 2000 and May 31, 1999 was as follows:
2000 1999
_________ __________
Interest expensed 2,072,480 $1,404,564
Interest capitalized 361,933 135,130
__________ __________
Total interest cost $2,434,413 $1,539,694
__________ __________
__________ __________
7. Dividends:
On October 5, 1999 the Company declared a year-end dividend of $.30 per
share, which was paid on November 5, 1999.
8. Disclosures about reportable segments: Alico, Inc. has four reportable
segments: citrus, sugarcane, ranching and general corporate. The commodities
produced by these segments are sold to wholesalers and processors who prepare
the products for consumption. The Company's operations are located in Florida.
The accounting policies of the segments are the same as those described
in the summary of significant accounting policies. Alico, Inc. evaluates
performance based on profit or loss from operations before income taxes.
Alico, Inc.'s reportable segments are strategic business units that offer
different products. They are managed separately because each segment
requires different management techniques, knowledge and skills.
<PAGE>
The following table presents information for each of the Company's operating
segments as of and for the nine months ended May 31, 2000:
____________________________________________________________
General Consolidated
Citrus Sugarcane Ranch Corporate* Total
____________________________________________________________
Revenue $ 20,990,151 8,782,558 5,237,642 18,103,212 53,113,563
Costs and
expenses 18,420,679 6,908,815 4,851,294 4,732,803 34,913,591
Depreciation and
amortization 1,809,726 1,580,531 453,128 390,956 4,234,341
Segment profit 2,569,472 1,873,743 386,348 13,370,409 18,199,972
*Consists of rents, investments, real estate activities and other such
items of a general corporate nature.
9. Future Application of Accounting Standards
In June 1998, the Financial Standards Board issued Statements of
Financial Accounting Standards No. 133 (SFAS 133), "Accounting for
Derivative instruments and Hedging Activities". SFAS 133 requires that
an entity recognize all derivatives as either assets or liabilities in
the statement of financial position and measure those instruments at fair
value. Gains and losses resulting from changes in the values of those
derivatives would be accounted for depending on the use of the derivative
and whether it qualifies for hedge accounting. The key criterion for hedge
accounting is that the hedging relationship must be highly effective in
achieving offsetting changes in fair value or cash flows.
In June 1999, the FASB issued SFAS 137 which amended the implementation
date for SFAS 133 to be effective for all fiscal years beginning after
June 15, 2000.
10. Stock Option Plan
On November 3, 1998, the Company adopted the Alico, Inc., Incentive Equity
Plan (The Plan) pursuant to which the Board of Directors of the Company
may grant options, stock appreciation rights, and/or restricted stock to
certain directors and employees. The Plan authorizes grants of shares or
options to purchase up to 650,000 shares of authorized but unissued common
stock. Stock options granted have a maximum term of ten years and have
vesting schedules which are at the discretion of the Board of Directors
options and determined on the effective date of the grant.
Effective April 6, 1999, the Company granted 34,700 with an exercise price
of $14.62 and a fair value of $14.62. Additionally, effective September
9, 1999, the Company granted 14,992 options with an exercise price of
$14.62 and a fair value of $15.813. Options granted have a ten year
contractual life. As of May 31, 2000, there were 49,692 options outstanding
with an weighted average exercise price of $14.62 and a weighted average
remaining contractual life of nine years.
At May 31, 2000, there were no shares exercisable and 600,308 shares
available and for grant under the Plan.
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
LIQUIDITY AND CAPITAL RESOURCES:
Working capital increased to $40,443,398 at May 31, 2000, up from
$36,443,868 at August 31, 1999. As of May 31, 2000, the Company had
cash and cash investments of $1,628,815 compared to $740,829 at August
31, 1999. Marketable securities increased from $15,043,713 to $15,820,709
during the same period. Accounts receivable increased to $10,365,374 at
May 31, 2000 from $8,030,863 at August 31, 1999. At May 31, 2000,
inventories decreased to $16,646,947 at August 31, 1999. The increase in
accounts receivable and decrease in inventories is primarily due to that
fact that the majority of citrus and sugarcane crops have been harvested
at May 31, 2000. The rise in accounts receivable is also effected by the
increase in citrus and sugarcane acreage. The ratio of current assets to
current liabilities increased to 6.51 to 1 at May 31, 2000 from 5.17 to 1
at August 31, 1999. Total assets increased by $13,400,733 to $170,322,843
at May 31, 2000 from $156,922,110 at August 31, 1999.
In connection with financing agreements with commercial banks (See Note 6
under Notes to Condensed Consolidated Financial Statements), the Company
has an unused availability of funds of approximately $12.9 million at
May 31, 2000.
RESULTS OF OPERATIONS:
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. The results of operations for the stated periods are not
necessarily indicative of results to be expected for the full year.
Net income for the three months ending May 31, 2000 increased by $299,837
when compared to the third quarter of fiscal 1999 and $6,435,583 when
compared to the nine-month period then ended. Income before income taxes
increased $679,475 and $9,508,233 for the three and nine months ended
May 31, 2000, respectively, when compared to the same periods a year ago.
Year-to-date earnings from agriculture activities increased during the
third quarter year-to-date and decreased compared to the prior year
($2,816,927 vs. $2,287,145 for the third quarter, and $4,829,563 vs.
5,580,501 during the first three quarters of fiscal 2000 and 1999,
respectively).
During September of 1999, the Company completed a sale of 1,230 acres
of land surrounding the University site in Lee County for $16.5 million.
The contract called for 25 percent of the purchase price to be paid at
closing, with the balance of $12.3 million payable annually over the next
four years. The sale generated a pre-tax gain of approximately $12.9
million.
Interest and investment income increased for the third quarter of fiscal
2000 and the nine months ended May 31, 2000 ($515,623 and $2,414,785,
respectively). The increase was largely due to the realization of gains
from securities sales that generated pre-tax earnings of $1,949,872
during the nine months ended May 31, 2000.
Citrus
______
Citrus earnings increased for the quarter ($1,299,621 during fiscal
2000 vs. $731,817 during fiscal 1999), but is down for nine months
($2,569,472 during fiscal 2000 vs. $3,271,870 during fiscal 1999) ended
May 31, 2000, when compared to the prior year. Lower market prices for
this year's crop is the primary reason for the decrease in year-to-date
earnings for this division.
Sugarcane
_________
Sugarcane earnings were lower for the third quarter ($1,276,749 during
fiscal 2000 vs. $1,519,701 during fiscal 1999) and for the
nine months ended May 31, 2000 ($1,873,743 in 2000 vs. $2,353,117 in
1999), when compared to the same periods a year ago. Although more acres
are being harvested, decreased yields and lower market prices have
combined to generate the decline.
Ranching
________
Ranch earnings were higher for the third quarter when compared to the
prior year ($240,557 vs. $ 35,627 for the three months ended May 31,
2000 and May 31, 1999, respectively), and for the nine months ended
May 31, 2000 ($386,348 vs. <44,486> for the nine months ending May 30,
2000 and May 31, 1999, respectively). Improved market prices for beef
is the primary cause of the rise.
General Corporate
_________________
In July of 1999, the Company entered into and announced a contract to sell
402 acres near the Florida Gulf Coast University for approximately $15.5
million. This agreement has been revised, in accordance with the original
contract, to convey 44.2 acres for approximately $5 million and is still
scheduled to close during fiscal 2001. If the sale is consummated, it is
expected to generate a pre-tax gain of approximately $4.8 million.
Additionally, the Company has agreed to sell 190 acres, also near the
University, for approximately $6.6 million. This sale is also expected to
close during fiscal 2001 and could potentially generate a $5.8 million
pre-tax gain. In May 2000, the Company agreed to sell another 488 acres,
near the University, for $10.6 million. The sale will generate a $9.5
million pre-tax gain and is currently scheduled to close during the
current fiscal year.
In April of 2000, the Company entered into an agreement to sell
approximately 2,500 acres for $34 million. The subject property included
some of the acreage referred to above and the agreement provided for
assignment of the related sales contracts to the prospective purchaser.
However, the prospective buyer opted not to proceed with the acquisition
of this property. Marketing efforts have resumed with the remaining
acreage in this parcel.
In December of 1999, the Company entered into a contract to sell
approximately 2,500 acres of its Lee County property for $50 million.
The property is located east of the University. The date(s) of closing(s)
will become determinable after the developable acreage is determined and
may occur in phases.
In June 2000, the Board of Directors approved the inception of Agri-
Insurance Company, Ltd., a wholly owned subsidiary of Alico, Inc.
The capital was funded by transferring cash and approximately 3,000 acres
of Alico, Inc.'s Lee County property. There are currently sales contracts
for approximately 700 of the acres totaling $18.6 million. The contracts,
while still subject to the buyers' due diligence efforts, have also been
assigned to the subsidiary. In connection with the transaction, management
is of the opinion that the Company will have the opportunity to insure
its' risk of catastrophic crop loss. Additionally, Agri-Insurance Company,
Ltd., will be able to underwrite previously uninsurable risk and have
access to re-insurance markets otherwise inaccessible. The Company will
begin writing coverages before the end of the year 2000. For calendar year
2000, Agri-Insurance is projected to incur little or no tax liability resulting
from it's careful integration into the Alico, Inc. business operations
and underwriting safeguards against initial catastrophic risk exposures.
The Company is continuing its marketing and permit activities for its
land which is adjacent to the Florida Gulf Coast University.
Cautionary Statement
____________________
Readers should note, in particular, that this Form 10-Q contains
forward looking Statements within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that
involve substantial risks and uncertainties. When used in this document,
or in the documents incorporated by reference herein, the words
"anticipate", "believe", "estimate", "may", "intend" and other words of
similar meaning, are likely to address the Company's growth strategy,
financial results and/or product development programs. Actual results,
performance or achievements could differ materially from those
contemplated, expressed or implied by the forward-looking statements
contained herein. The considerations listed herein represent certain
important factors the Company believes could cause such results to differ.
These considerations are not intended to represent a complete list of the
general or specific risks that may effect the Company. It should be
recognized that other risks, including general economic factors and
expansion strategies, may be significant, presently or in the future,
and the risks set forth herein may affect the Company to a greater extent
than indicated.
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
No changes
<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, 2000.
C. Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K.
December 9, 1999.
July 13, 2000.
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 13, 2000 W. Bernard Lester
Date President
Chief Operating Officer
(Signature)
July 13, 2000 L. Craig Simmons
Date Vice President
Chief Financial Officer
(Signature)
July 13, 2000 Deirdre M. Purvis
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 May 31, 2000, and the related condensed consolidated
statements of operations for the three and nine-month periods ended
May 31, 2000 and May 31, 1999, and the condensed consolidated statements
of stockholders' equity for the nine-month period May 31, 2000, and the
condensed consolidated statements of cash flows for the nine-month periods
ended May 31, 2000 and 1999. 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, 1999 and the related consolidated statement of operations,
stockholders' equity and cash flows for the year then ended (not presented
herein); and in our report dated October 13, 1999 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, 1999, is fairly presented, in all material
respects, in relation to the consolidated balance sheet from which it has
been derived.
/s/ KPMG LLP
Orlando, Florida
June 28, 2000
<PAGE>
FORM 10-Q
ALICO, INC.
Computation of Weighted Average Shares Outstanding as of May 31, 2000:
Number of shares outstanding at August 31, 1999 7,027,827
_________
_________
Number of shares outstanding at May 31, 2000 7,027,827
_________
_________
Weighted Average 9/1/99 - 05/31/00 7,027,827
_________
_________
EXHIBIT B
<PAGE>
</TABLE>
