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 29, 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 33935
(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 12, 1996.
FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ALICO, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(See Accountants' Review Report)
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
Feb. 29, 1996 Feb. 28, 1995 Feb. 29, 1996 Feb. 28, 1995
_______________________________ _______________________________
Revenue:
Citrus $ 7,133,182 $ 6,802,818 $11,303,342 $10,250,285
Sugarcane 4,022,309 3,860,724 5,408,633 5,022,828
Ranch 195,692 329,568 1,730,263 940,988
Rock products and sand 213,244 213,200 447,636 490,688
Oil lease and land rentals 112,345 116,910 183,493 170,761
Forest products 37,970 25,320 77,420 53,942
Profit on sales of real estate 79,993 16,627 96,901 36,224
Interest and investment income 259,647 274,077 611,279 520,378
Other 65,852 17,367 85,796 46,383
___________ ___________ ___________ ___________
Total revenue 12,120,234 11,656,611 19,944,763 17,532,477
___________ ___________ ___________ ___________
Cost and expenses:
Citrus production, harvesting and
marketing 5,631,314 5,153,275 9,005,962 8,294,764
Sugarcane production and harvesting 3,146,714 2,960,007 4,198,186 3,752,360
Ranch 143,914 191,871 1,672,830 638,812
Real estate expenses 161,650 113,157 258,854 228,431
Interest 173,393 318,034 309,704 536,605
Other, general and administrative 704,327 536,821 1,354,914 1,058,905
____________ ___________ ___________ ___________
Total costs and expenses 9,961,312 9,273,165 16,800,450 14,509,877
____________ ___________ ___________ ___________
Income before income taxes 2,158,922 2,383,446 3,144,313 3,022,600
Provision for income taxes 758,888 843,020 1,096,953 1,061,161
____________ ___________ ___________ ___________
Net income 1,400,034 1,540,426 2,047,360 1,961,439
Retained earnings beginning of period 66,301,277 59,593,333 68,113,690 60,929,277
Dividends paid - - (2,459,739) (1,756,957)
___________ ___________ ___________ ___________
Retained earnings end of period $67,701,311 $61,133,759 $67,701,311 $61,133,759
___________ ___________ ___________ ___________
___________ ___________ ___________ ___________
Weighted average number of shares outstanding 7,027,827 7,027,827 7,027,827 7,027,827
___________ ___________ ___________ ___________
___________ ___________ ___________ ___________
Per share amounts:
Net income $ .20 $ .22 $ .29 $ .28
Dividends $ - $ - $ .35 $ .25
See accompanying notes to condensed consolidated financial statements.
ALICO, INC. AND SUBSIDIARY FORM 10-Q
CONDENSED CONSOLIDATED BALANCE SHEETS
(See Accountants' Review Report)
(Unaudited) (Audited)
February 29, 1996 August 31, 1995
_________________ _______________
ASSETS
Current assets:
Cash and cash investments $ 889,699 $ 1,148,733
Marketable Securities 10,066,017 9,410,936
Accounts and mortgage notes receivable 10,147,041 7,854,254
Inventories 11,188,228 13,057,136
Prepaid expenses 86,046 101,461
Interest receivable 230,012 163,342
____________ ____________
Total current assets 32,607,043 31,735,862
Mortgage notes receivable, non-current 2,229,737 2,229,528
Land held for development and sale 7,702,281 7,322,740
Investments 912,428 925,785
Other 64,427 42,983
Property, buildings and equipment 94,673,318 91,703,367
Less: Accumulated depreciation (26,557,559) (24,953,086)
____________ ____________
Total assets $111,631,675 $109,007,179 ____________ ____________
____________ ____________
____________ ____________
CONDENSED CONSOLIDATED BALANCE SHEETS
(See Accountants' Review Report)
(Continued)
(Unaudited) (Audited)
February 29, 1996 August 31, 1995
LIABILITIES _________________ _______________
Current liabilities:
Accounts payable $ 1,657,138 $ 949,397
Due to profit sharing plan - 217,968
Accrued ad valorem taxes 281,979 1,076,241
Accrued donation (See Note 6) 1,449,592 1,638,038
Accrued expenses 119,364 136,597
Income taxes payable 234,183 254,393
Deferred income taxes 1,704,822 1,383,820
____________ ____________
Total current liabilities 5,447,078 5,656,454
Note payable to bank 19,350,000 16,055,000
Deferred income taxes 11,551,104 11,674,524
Deferred retirement benefits 206,516 214,945
____________ ____________
Total liabilities 36,554,698 33,600,923
____________ ____________
STOCKHOLDERS' EQUITY
Common stock $ 7,027,827 $ 7,027,827
Unrealized gains on marketable securities 347,839 264,739
Retained earnings 67,701,311 68,113,690
____________ ____________
Total stockholders' equity 75,076,977 75,406,256
____________ ____________
Total liabilities and stockholders' equity $111,631,675 $109,007,179
____________ ____________
____________ ____________
See Accompanying notes to condensed consolidated financial statements.
ALICO, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(See Accountants' Review Report)
(Unaudited)
Six Months Ended
Feb. 29, 1996 Feb. 28, 1995
______________________________
Cash flows from operating activities:
Net income $ 2,047,360 $ 1,961,439
Adjustments to reconcile net income to cash
provided from (used for) operating activities:
Depreciation 2,093,538 2,049,189
Accrued donation (188,446) (93,700)
Net decrease in current assets and liabilities (840,910) (737,115)
Deferred income taxes 147,446 (108,041)
Other (584,794) (267,991)
___________ ___________
Net cash provided from operating activities 2,674,194 2,803,781
___________ ___________
Cash flows from (used for) investing activities:
Purchases of property and equipment (3,584,697) (4,409,677)
Proceeds from sales of property and equipment 204,693 104,300
Purchases of marketable securities (3,013,372) (991,022)
Proceeds from sales of marketable securites 2,601,252 609,149
___________ ___________
Net cash used for investing activities (3,792,124) (4,687,250)
___________ ___________
Cash flows from (used for) financing activities:
Notes receivable collections 23,635 40,139
Repayment of bank loan (6,441,000) (6,245,000)
Proceeds from bank loan 9,736,000 9,678,000
Dividends paid (2,459,739) (1,756,957)
___________ ___________
Net cash provided from financing activities 858,896 1,716,182
___________ ___________
Net increase (decrease) in cash
and cash investments $ (259,034) $ (167,287)
___________ ___________
___________ ___________
Supplemental disclosures of cash flow information:
Cash paid for interest, net of amount capitalized $ 300,528 $ 445,318
___________ ___________
___________ ___________
Cash paid for income taxes $ 1,105,000 $ 765,000
___________ ___________
___________ ___________
See accompanying notes to condensed consolidated financial statements.
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, 1995. In the opinion
of Management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments (consisting only of
normal recurring accruals) necessary for a fair presentation of its
consolidated financial position at February 29, 1996 and August 31,
1995 and the consolidated results of operations and cash flows for
the six months ended February 29, 1996 and February 28, 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 $1,087,772 in 1996 and $1,770,146
in 1995. The results of operations for the stated periods are not
necessarily indicative of results to be expected for the full year.
2. Recognition of revenue for real estate sales
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 29, August 31,
1996 1995
___________ ___________
Unharvested fruit crop on trees $ 5,226 $ 6,027
Unharvested sugarcane 414 2,138
Beef cattle 5,194 4,429
Sod 354 463
_______ _______
Total inventories $11,188 $13,057
_______ _______
_______ _______
FORM 10-Q
4. Income taxes:
The provision for income taxes for the quarters ended February 29, 1996 and February 28, 1995
is summarized as follows:
Three Months Ended Six Months Ended
Feb. 29, 1996 Feb. 28, 1995 Feb. 29, 1996 Feb. 28, 1995
_______________________________ _____________________________
Current:
Federal income tax $ 521,295 $ 702,407 $ 870,158 $ 979,517
State income tax 82,118 135,545 140,440 164,411
__________ __________ __________ __________
603,413 837,952 1,010,598 1,143,928
__________ __________ __________ __________
Deferred:
Federal income tax 140,477 11,328 78,025 (71,628)
State income tax 14,998 (6,260) 8,330 (11,139)
__________ __________ __________ __________
155,475 5,068 86,355 (82,767)
__________ __________ __________ __________
Total provision for
income taxes $ 758,888 $ 843,020 $1,096,953 $1,061,161
__________ __________ __________ __________
__________ __________ __________ __________
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 February 29, 1996 and February 28, 1995:
Three Months Ended Six Months Ended
February 29, February 28, February 29, February 28,
1996 1995 1996 1995
_______________________________ _____________________________
Expected income tax $ 734,033 $ 810,372 $1,069,066 $1,027,684
Increase (decrease) resulting
from:
State income taxes, net
of federal benefit 78,369 86,519 114,139 109,720
Nontaxable interest and
dividends (38,004) (50,552) (80,104) (100,158)
Other reconciling items,
net (15,510) (3,319) (6,148) 23,915
__________ __________ __________ __________
Total provision for
income taxes $ 758,888 $ 843,020 $1,096,953 $1,061,161
__________ __________ __________ __________
__________ __________ __________ __________
The Company is currently under examination by the Internal Revenue Service
for the years ended August 31, 1992, 1991 and 1990. The adjustments proposed
to date by the Internal Revenue Service would result in approximately $6.9
million in additional income taxes. When the matter is resolved, any income
taxes due will become currently payable. However, the majority of the proposed
adjustments relate to the timing of recognition of certain income and expense
items already provided for in the Company's deferred tax liability accounts.
A partial settlement was reached with the Internal Revenue Service during
April of 1995. A payment of $385,043 was made consisting of $260,259 taxes
and $124,784 interest. The items conceded related to the timing of recogni-
tion of certain items previously expensed. The effect of this payment was to
increase interest expense by $124,784 and reduce the current deferred tax
liability by $260,259.
5. Indebtedness:
The Company has a financing agreement with a commercial bank that
permits the Company to borrow up to $25 million. The financing
agreement allows the Company to borrow up to $22,000,000 which is
due in January 1998 and up to $3,000,000 which is due on demand.
The total amount of long-term debt under this agreement at February
29, 1996 and August 31, 1995 was $19,350,000 and $16,055,000,
respectively.
Interest cost expensed and capitalized during the six months ended
February 29, 1996 and February 28, 1995 was as follows:
1996 1995
________ ________
Interest expensed $309,704 $536,605
Interest capitalized 344,122 241,181
________ ________
Total interest cost $653,826 $777,786
________ ________
________ ________
6. Commitment:
During October 1992 the Company entered into an agreement to donate land, im-
provements 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, en-
gineering 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.
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
LIQUIDITY AND CAPITAL RESOURCES:
Working capital increased to $27,159,965 at February 29, 1996, up
from $26,079,408 at August 31, 1995. As of February 29, 1996, the
Company had cash and cash investments of $889,699 compared to
$1,148,733 at August 31, 1995. Marketable securities increased from
$9,410,936 to $10,066,017 during the same period. The ratio of
current assets to current liabilities increased from 5.61 to 1 at
August 31, 1995 to 5.99 to 1 at February 29, 1996. Total assets
increased by $2,624,496 from $109,007,179 at August 31, 1995 to
$111,631,675 at February 29, 1996.
The working capital increase ($1,080,557) is primarily the result of
an increase in accounts and mortgage notes receivable ($7,854,254 vs.
$10,147,041 at August 31, 1995 and February 29, 1996, respectively).
An increase in the boxes of citrus harvested compared to the prior
year, coupled with improved prices for citrus products, has caused
an increase in both revenues and the related accounts receivable.
In connection with a financing agreement with a commercial bank (See
Note 5 under Notes to Condensed Consolidated Financial Statements),
the Company has an unused availability of funds of approximately
$5.7 million at February 29, 1996.
RESULTS OF OPERATIONS:
When compared to the second quarter a year ago, net income decreased
$140,392, however, net income for the six months ended February 29,
1996 increased $85,921 over the prior year. Income before income
taxes increased $121,713 during the first six months and decreased
by $224,524 during the second quarter of fiscal 1996, when compared
to the same periods a year ago. This was largely due to earnings
from agricultural activities ($2,429,241 vs. $2,687,957 for the
second quarter, and $3,565,260 vs. $3,528,165 during the first half
of fiscal 1996 and 1995, respectively).
Citrus earnings decreased during the second quarter of fiscal 1996
when compared to the same period last year ($1,501,868 vs. $1,649,543).
The average cost per unit has increased from the prior year ($4.23 per
box in 1996 vs. $4.06 in 1995), the result of increased depreciation
and ad valorem costs related to young groves coming into production,
coupled with an increase in direct production costs due to current
growing conditions. Year to date earnings are slightly higher for this
division ($2,297,380 vs. $1,955,521 during the six months ended February
29, 1996, and February 28, 1995, respectively) due primarily to improved
market prices combined with an increase in the number of boxes and pounds
of solids produced.
FORM 10-Q
ITEM 2. Management's Discussion
RESULTS OF OPERATIONS (Continued):
Sugarcane earnings approximated those of the same period a year ago,
both for the three months ended February 29, 1996 ($875,595 vs.
$900,717 for February 29, 1996 and February 28, 1995, respectively)
and for the six months then ended ($1,210,447 vs. $1,270,468 in 1996
and 1995, respectively). This is expected to continue throughout
the remainder of the fiscal year as total acreage and gross tons
harvested are expected to equal the prior year.
Ranch earnings decreased $85,919 during the second quarter of fiscal
1996, compared to the second quarter of fiscal 1995 ($51,778 vs.
$137,697, respectively). A decrease in market prices for beef is the
primary cause for the decrease in profits for this division, and has
also caused profits to decline when compared to the first six months
of last year ($57,433 vs. $302,176 for the six months ended February
29, 1996, and February 28, 1995, respectively).
Construction activities are expected to commence soon 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.
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 29, 1996.
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 12, 1996 W. Bernard Lester
Date Exeuctive Vice President
and Chief Operating Officer
(Signature)
April 12, 1996 L. Craig Simmons
Date Vice President and
Chief Financial Officer
(Signature)
April 12, 1996 Patrick W. Murphy
Date Controller
(Signature)
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 29, 1996, and the related condensed
consolidated statements of operations and retained earnings for the
three-month and six-month periods ended February 29, 1996 and
February 28, 1995, and the related condensed consolidated statements
of cash flows for the six-month periods ended February 29, 1996 and
February 28, 1995. 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 obtaining an
understanding of the system for the preparation of interim financial
information, 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 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, 1995 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 16, 1995, 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, 1995, 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
April 5, 1996
FORM 10-Q
ALICO, INC.
Computation of Weighted Average Shares Outstanding as of February 29,
1996:
Number of shares outstanding at August 31, 1995 7,027,827
_________
_________
Number of shares outstanding at February 29, 1996 7,027,827
_________
_________
Weighted Average 9/1/95 - 2/29/96 7,027,827
_________
_________
EXHIBIT B