Back to GetFilings.com
Alico, Inc.
P. O. Box 338
La Belle, FL 33975
November 15, 2002
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
Pursuant to the requirements of the Securities Exchange
Act of 1934, we are transmitting herewith the attached
Form 10-K for the year ending August 31, 2002.
Sincerely,
ALICO, INC.
L. Craig Simmons
L. Craig Simmons
Vice President and
Chief Financial Officer
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
__X__ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended August 31, 2002.
OR
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
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 or organization) Identification No.)
P. O. Box 338, La Belle, Florida 33975
______________________________________ __________
(Address of principal executive offices) (Zip Code)
(863)675-2966
Registrant's telephone number, including area code_____________
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of each exchange on
Title of each class which registered
___________________ ________________________
None None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON CAPITAL STOCK, $1.00 Par value, Non-cumulative
_____________________________________________________
(Title of Class)
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 such registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes __X__ No_____
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained,to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
eference in Part III of this Form 10-K or any amendment to this
Form 10-K. _____
As of October 11, 2002 there were 7,093,092 shares of stock
outstanding and the aggregate market value (based upon the
average bid and asked price, as quoted on NASDAQ) of the common
stock held by non-affiliates was approximately $101,184,156.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement dated November 8,
2002 are incorporated by reference in Parts II and III,
respectively.
PART I
______
Item 1. Business.
__________________________
Alico, Inc. (the "Company") is generally recognized as an
agribusiness company operating in Central and Southwest
Florida. The Company's primary asset is 140,526 acres of land
located in Collier, Hendry, Lee and Polk Counties. (See table
on Page 7 for location and acreage by current primary use.)
The Company is involved in various operations and activities
including citrus fruit production, cattle ranching, sugarcane
and sod production, and forestry. The Company also leases land
for farming, cattle grazing, recreation, and oil exploration.
The Company's land is managed for multiple use wherever
possible. Cattle ranching, forestry and land leased for farm-
ing, grazing,recreation and oil exploration, in some instances,
utilize the same acreage.
Agricultural operations have combined to produce from 69 to 89
percent of annual revenues during the past five years. Citrus
groves generate the most gross revenue. Sugarcane ranks second
in revenue production. While the cattle ranching operation
utilizes the largest acreage, it ranks third in the production
of revenue. Approximately 9,197 acres of the Company's
property are classified as timberlands, however, the area in
which these lands are located is not highly rated for timber
production. These lands are also utilized as native range, in
the ranching operation, and leased out for recreation and oil
exploration.
Diversification of the Company's agricultural base was
initiated with the development of a Sugarcane Division at the
end of the 1988 fiscal year. The 11,680 acres in production
during the 2002 fiscal year consisted of 1,520 acres planted
in 1997, 3,326 acres planted in 1998, 4,152 acres planted in
1999 and 2,682 acres planted in 2000.
Leasing of lands for rock mining and oil and mineral explor-
ation, rental of land for grazing, farming, recreation and
other uses, while not classified as agricultural operations,
are important components of the Company's land utilization and
operation. Gross revenue from these activities during the
past five years has ranged from 4 to 5 percent of total
revenue.
The Company is not in the retail land sales and development
business, except through its wholly owned subsidiary,
Saddlebag Lake Resorts, Inc.. However,it does from time to
time sell properties which, in the judgment of management,
are surplus to the Company's primary operations. Additionally,
the Company's wholly owned subsidiary, Agri-Insurance Company,
Ltd., engages in bulk land sales in connection with the gene-
ration of underwriting capital. Gains from sales of real
estate during the past five years has ranged from 3 to 23 per-
cent of total revenues.
For further discussion of the relative importance of the
various segments of the Company's operations, including finan-
cial information regarding revenues, operating profits (losses)
and assets attributable to each major segment of the Company's
business, see Note 15 of Notes to Consolidated Financial State-
ments and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this
document.
Subsidiary Operations
_____________________
The Company has two wholly owned subsidiaries; Saddlebag Lake
Resorts, Inc. ("Saddlebag") and Agri-Insurance Company, Ltd.
("Agri"). Saddlebag has been active in the subdividing, deve-
lopment and sale of real estate since its inception in 1971.
Saddlebag has two subdivisions near Frostproof, Florida which
have been developed and are on the market. While one of the
subdivisions has been sold out, approximately 62% of the lots
in the second development have been sold.
Agri, formed during fiscal 2000, was created to write crop
insurance against catastrophic losses due to weather and
disease. During fiscal 2002, Agri supplied reinsurance to an
independent underwriter who insured catastrophic business
interruption coverage for Ben Hill Griffin, Inc.. The total
coverage under the policy was $3.2 million and the premium
charged was $128 thousand. The coverage term was from Decem-
ber 2001 to December 2002. The Company expects to renew the
policy and appropriately adjust premium rates. Additionally,
Agri directly underwrote catastrophic business interruption
coverage for its parent company, Alico, Inc., insuring all
of Alico's citrus groves. The coverage term was from August
31, 2002 to August 2003. Total coverage under the policy was
$12.7 million and the premium charged was $803 thousand.
The financial results of the operation of these subsidiaries
are consolidated with those of the Company. (See Note 1 of
Notes to Consolidated Financial Statements.)
Citrus
______
Approximately 9,756 acres of citrus were harvested during the
2001/02 season. Since 1983 the Company has maintained a mar-
keting contract covering the majority of the Company's citrus
crop with Ben Hill Griffin, Inc., a Florida corporation and
major shareholder. The agreement provides for modifications
to meet changing market conditions and provides that either
party may terminate the contract by giving notice prior to the
first day of August preceding each fruit season. Under the
terms of the contract, the Company's fruit is packed and/or
processed and sold along with fruit from other growers,
including Ben Hill Griffin, Inc. The proceeds are distributed
on a pro rata basis as the finished product is sold. During the
year ended August 31, 2002, approximately 77% of the Company's
fruit crop was marketed under this agreement, the same percen-
tage as in the year ended August 31, 2001. In addition, Ben
Hill Griffin, Inc. provides harvesting services to the Company
for citrus sold to unrelated processors. These sales accounted
for the remaining 23% of total citrus revenue for the year.
For the year ended August 31, 2000, approximately 76% of the
Company's fruit crop was marketed under this agreement.
Ranch
______
The Company has a cattle operation located in Hendry and
Collier Counties, Florida which is engaged primarily in the
production of beef cattle and the raising of replacement
heifers. The breeding herd consists of approximately 13,755
cows, bulls and replacement heifers. Approximately 47% of the
herd are from one to five years old, while the remaining 53%
are six and older. The Company primarily sells to packing and
processing plants. The Company also sells cattle through
local livestock auction markets and to contract cattle buyers.
These buyers provide ready markets for the Company's cattle.
The loss of any one or a few of these plants and/or buyers
would not, in management's view, have a material adverse effect
on the Company's cattle operation. Subject to prevailing
market conditions, the Company may hedge its beef inventory by
entering into cattle futures contracts to reduce exposure to
changes in market prices.
Sugarcane
_________
The Company had 11,680 acres, 11,722 acres, and 9,588 acres of
sugarcane in production during the 2001/02,2000/01, and 1999/00
fiscal years, respectively. The 2001/02, 2000/01, and 1999/00
crops yielded approximately 376,000, 417,000, and 321,000 gross
tons, respectively.
Forest Products
_______________
Approximately 7% of the Company's properties are classified as
timberlands. The principal forest products sold by the Company
are sabal palms and other horticultural commodities. These
products are sold to various landscaping companies. The
Company does not incur any of the harvesting expenses.
Part of the lands, from which the timber was removed, is being
converted to semi-improved pasture and other uses.
Land Rental for Grazing, Agricultural and Other Uses
____________________________________________________
The Company rents land to others for grazing, farming and
recreational uses, on a tenant-at-will basis, for an annual
fee. The income is not significant when compared to overall
gross income, however, it does help to offset the expense of
carrying these properties until they are put to a more profit-
able use. The Company has developed additional land to lease
for farming.
There were no significant changes in the method of rental for
these purposes during the past fiscal year.
Leases for Oil and Mineral Exploration
______________________________________
The Company has leased subsurface rights to a portion of its
properties for the purpose of oil and mineral exploration.
Currently, there are two leases in effect.
Twenty-four wells have been drilled during the years that the
Company has been leasing subsurface rights to oil companies.
The drilling has resulted in twenty-one dry holes, one marginal
producer, which has been abandoned,and two average producers,
still producing.
Mining Operations: Rock and Sand
_________________________________
The Company leases 6,143 acres in Lee County, Florida to CSR
America,Inc. of West Palm Beach, Florida for mining and
production of rock, aggregate, sand, baserock and other road
building and construction materials.
Royalties which the company receives for these products are
based on a percentage of the F.O.B. plant sales price.
Competition
___________
As indicated, the Company is primarily engaged in a limited
number of agricultural activities, all of which are highly
competitive. For instance, citrus is grown in several states,
the most notable of which are: Florida, California, Arizona
and Texas. In addition, citrus and sugarcane products are im-
ported from some foreign countries. Beef cattle are produced
throughout the United States and domestic beef sales must also
compete with sales of imported beef. Additionally, forest and
rock products are produced in most parts of the United States.
Leasing of land for oil exploration is also widespread.
The Company's share of the market for citrus, sugarcane, cattle
and forest products in the United States is insignificant.
Environmental Regulations
_________________________
The Company's operation is subject to various federal, state
and local laws regulating the discharge of materials into the
environment. The Company is in compliance with all such rules
and such compliance has not had a material effect upon capital
expenditures, earnings or the competitive position of the
Company.
While compliance with environmental regulations has not had a
material economic effect on the Company's operations, execu-
tive officers are required to spend a considerable amount of
time keeping current on these matters. In addition, there are
ongoing costs incurred in complying with the permitting and
reporting requirements.
Employees
_________
At the end of August 2002, the Company had a total of 152 full-
time employees classified as follows: Citrus 73; Ranch 19;
Sugarcane 16; Facilities Maintenance Support 27; General and
Administrative 17. There are no employees engaged in the deve-
lopment of new products or research. Management is not aware
of any efforts by employees or outside organizers to create any
type of labor union arrangement. Management believes that the
employer/employee relationship environment is such that labor
organization activities are unlikely to occur.
Seasonal Nature of Business
___________________________
As with any agribusiness enterprise, the Company's business
operations are predominantly seasonal in nature. The harvest
and sale of citrus fruit generally occurs from October to June.
Sugarcane is harvested during the first, second and third quar-
ters. Other segments of the Company's business such as its
cattle and sod sales, and its timber, mining and leasing oper-
ations, tend to be more successive than seasonal in nature.
Item 2. Properties.
____________________________
At August 31, 2002, the Company owned a total of 140,526 acres
of land located in four counties in Florida. Acreage in each
county and the primary classification with respect to present
use of these properties is shown in the following table:
ACREAGE BY CURRENT PRIMARY USE
______________________________
Timber Native Improved Citrus Sugar- Agri-
County Land Pasture Pasture Sod Land cane culture Other Total
___________________________________________________________________________
Polk 251 9,268 359 -- 3,253 -- -- 1 13,132
Lee 3,221 1,086 -- -- -- -- 1,460 625 6,392
Hendry 3,823 43,138 24,774 580 3,765 14,358 15,953 3,435 109,826
Collier 1,902 1,700 1,112 -- 4,129 -- -- 2,333 11,176
______ _______ ______ ___ _____ _____ _____ _____ _______
Totals 9,197 55,192 26,245 580 11,147 14,358 17,413 6,394 140,526
______ _______ ______ ___ _____ _____ ______ _____ _______
______ _______ ______ ___ _____ _____ ______ _____ _______
Of the above lands, the Company utilizes 24,178 acres of imp-
roved pasture plus approximately 46,000 acres of native pasture
for cattle production and 6,143 acres are leased for rock
mining operations. Much of the land is also leased for multi-
purpose use such as cattle grazing, oil exploration,
agriculture and recreation.
In addition to the land shown in the above table, the Company
owns full subsurface rights to 1,064 acres and fractional sub-
surface rights to 18,707 acres located throughout the Counties
referred to above.
From the inception of the Company's initial development program
in 1948, the goal has been to develop the lands for the most
profitable use. Prior to implementation of the development
program, detailed studies were made of the properties focusing
on soil capabilities, topography, transportation, availability
of markets and the climatic characteristics of each of the
tracts. Based on these and later studies, the use of each
tract was determined. It is the opinion of Management that the
lands are suitable for agricultural, residential and commercial
uses. However, since the Company is primarily engaged in agri-
cultural activities, some of the lands are considered surplus
to its needs for this purpose and, as indicated under Item 1 of
this report, sales of real property are made from time to time.
Management believes that each of the major programs is
adequately supported by agricultural equipment, buildings,
fences, irrigation systems and other amenities required for the
operation of the projects.
Item 3. Legal Proceedings.
___________________________________
The Company has been informed by Ben Hill Griffin III, Chairman
of the Board, that he is party to a lawsuit filed against him
in Polk County, Florida Circuit Court by the families of his
four sisters, most of the members of whom are beneficiaries of
a trust, entitled the Ben Hill Griffin, Jr. Revocable Inter
Vivos Trust #1 (the "Trust"). The plaintiffs in the lawsuit
(The Four Sisters Protectorate, et al. v. Ben Hill Griffin,
III, Trustee, Case No. GC-G-0054, Section 81) sought to impose
judicial sanctions on Mr. Griffin III, including his removal
as Trustee of the Trust based on allegations of over-compen-
sation and receipt of an illegal bonus. On March 29, 2001,
after court-ordered mediation pending completion of which the
trial was adjourned, Mr. Griffin III and a representative of
the Four Sisters Protectorate, joined by their respective
counsel, executed a "Settlement Agreement" which set forth
the basic elements of a settlement of the lawsuit, contingent
upon several events, including Internal Revenue Service
approval of the proposed transaction as a tax free split-off
for federal income tax purposes, and the Court's judicial
termination of the Trust. The terms contained in the Settle-
ment Agreement were not intended, nor were they sufficient,
to resolve all specific items necessary to consummate a
settlement of the lawsuit. The Settlement Agreement provided
that the shares of Alico, Inc., stock then owned by Ben Hill
Griffin Investments Inc. would be utilized in the tax free
split-off, along with other assets, as a means of allocating
to the Four Sisters Protectorate assets approximating the
value of their interests in Ben Hill Griffin Investments
Inc., a holding company wholly owned by the Trust, Ben Hill
Griffin III, The Four Sisters Protectorate and its members.
Mr. Griffin III has indicated that following execution of the
Settlement Agreement the parties disagreed as to its validity
or enforceability on various grounds. On May 14, 2001, the
Harris Family filed a motion in the Circuit Court of the 10th
Judicial Circuit in and for Polk County, Florida (Case No.
GC-G-0054) seeking to have the Settlement Agreement set aside
as invalid and unenforceable. On November 2, 2001 the Court
entered a written order that the Settlement Agreement is en-
forceable. The Harris family has filed an Appeal in response
to the order. Mr. Griffin, III has informed the Company that
the issues related to the mechanism and terms of the proposed
distribution of certain of the assets of the Trust to the
families of the four sisters, including the Alico stock bene-
ficially owned by the Trust, have been worked out between the
representatives of the four sisters and Ben Hill Griffin III,
and are set forth in a definitive separation agreement. The
Company further understands that consummation of the settle-
ment continues to be subject to certain conditions which are
still pending, specifically, the Harris family litigation.
The Company has been informed by Mr. Griffin III that the
arties have received a favorable IRS Revenue Ruling. Neither
the Company nor Mr. Griffin III or his attorneys know when the
settlement will be implemented, but believe related litigation
proceedings could take 6 months to a year to be resolved.
Mr. Griffin III has also informed the Company that immediately
before the hearing on the enforcement of the State court
action, lawyers for the Harris family provided Mr. Griffin
III's attorneys with copies of a federal court action naming
among others as defendants, Mr. Griffin III, individually and
as Trustee of the Ben Hill Griffin, Jr., revocable Inter Vivos
Trust #1, and BHG Inc. According to Mr. Griffin III's attor-
neys, this litigation was filed in the federal district court
for the Northern District of Florida (Case No: 4:olcv 432-5PM).
The complaint, among other things,seeks to set aside the
settlement agreement based on alleged violations of the secur-
ities laws, fraud, and negligence. This suit was filed on
October 2, 2001. Mr. Griffin III's attorneys have indicated
that they believe this suit is without merit, if not frivolous,
and have stated that Mr. Griffin III will defend it vigorously.
Since the Company opted out of the Florida Business Corporation
Act's provisions on Affiliated Transactions and Control Share
Acquisitions (currently FBCA s. 607.0901 and s. 607.0902) under
the predecessor statutes to such sections, transactions contem-
plated by the Settlement Agreement may not be subject to share-
holder approval or review by the Company's Board of Directors.
The Company is not a party to any of this litigation.
Item 4. Submission of Matters to a Vote of Security Holders.
____________________________________________________________
None.
PART II
_______
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters.
____________________________________________________________
Common Stock Prices
___________________
The common stock of Alico, Inc. is traded over-the-counter on
the NASDAQ National Market System under the symbol ALCO. The
high and low sales prices, by fiscal quarter, during the years
ended August 31, 2002 and 2001 are presented below:
2002 2001
Bid Price Bid Price
_________ _________
High Low High Low
First Quarter 30.21 24.90 16.81 15.31
Second Quarter 32.17 28.50 17.75 15.63
Third Quarter 29.70 28.20 28.63 15.75
Fourth Quarter 29.54 28.01 32.06 26.63
Approximate Number of Holders of Common Stock
_____________________________________________
As of October 11, 2002, there were approximately 619 holders
of record of the Company's Common Stock.
Dividend Information
____________________
Only year-end dividends have been paid and during the last
three fiscal years the dividends were as follows:
Amount
Paid
Record Date Payment Date Per
Share
_________ ____________ ___________
October 18, 1999 November 5, 1999 $ .30
October 13, 2000 October 27, 2000 $ 1.00
October 12, 2001 October 26, 2001 $ 1.00
Dividends are paid at the discretion of the Company's Board of
Directors. The Company foresees no change in its ability to
pay annual dividends in the immediate future; nevertheless,
there is no assurance that dividends will be paid in the future
since they are dependent upon earnings, the financial condition
of the Company, and other factors.
Equity Compensation Plan Information
____________________________________
Number of
securities
Number of remaining
securities available for
to be future issuance
issued upon Weighted under equity
exercise of Average compensation
outstanding exercise plans
options, price of (excluding
warrants outstanding securities
and options, reflected in
rights warrants column (a)
Plan category and rights
_____________ ________ ________ ________
(a) (b) (c)
Equity compensation
plans approved by
security holders 117,847 $15.20 479,636
Equity compensation
plans not approved
by security holders - - -
________ ________ _________
Total 117,847 $15.20 479,636
________ ________ _________
________ ________ _________
Item 6. Selected Financial Data.
_________________________________________
Years Ended August 3l,
DESCRIPTION 2002 2001 2000 1999 1998
________ ________ ________ ________ ________
(In Thousands, Except Per Share Amounts)
Revenues $ 62,530 $ 68,318 $ 62,540 $ 44,947 $ 44,679
Costs & Expenses 52,737 48,205 41,965 37,886 33,654
Income Taxes 2,258 4,046 6,464 2,980 4,249
Net Income 7,535 16,066 14,111 4,081 6,776
Average Number of
Shares Outstanding 7,070 7,033 7,028 7,028 7,028
Net Income
Per Share 1.07 2.29 2.01 .58 .96
Cash Dividend Paid
per Share 1.00 1.00 .30 .50 .60
Current Assets 66,267 61,345 56,578 45,182 42,354
Total Assets 191,909 179,134 176,876 156,922 130,554
Current
Liabilities 9,543 7,691 12,346 8,738 5,649
Ratio-Current Assets
to Current
Liabilities 6.94:1 7.98:1 4.58:1 5.17:1 7.50:1
Working Capital 56,724 53,654 44,232 36,444 36,705
Long-Term
Obligations 69,149 58,818 60,985 56,789 34,938
Total Liabilities 78,692 66,508 73,331 65,527 40,587
Stockholders'
Equity 113,217 112,625 103,545 91,395 89,967
Item 7. Management's Discussion and Analysis of Financial
______________________________________________________________
Condition and Results of Operations.
____________________________________
Cautionary Statement
____________________
Readers should note, in particular, that this document 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", "esti-
mate", "may","intend", "expect" 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 affect 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 Com-
pany to a greater extent than indicated.
The following discussion focuses on the results of operations
and the financial condition of the Company.
This section should be read in conjunction with the
consolidated financial statements and notes.
Liquidity and Capital Resources
_______________________________
The Company had cash and marketable securities of $31.6 million
at August 31, 2002, compared with $25.0 million at August 31,
2001. Working capital was $56.7 million and $53.7 million at
August 31, 2002 and August 31, 2001 respectively.
Cash outlay for land, equipment, buildings, and other improve-
ments totaled $9.3 million during fiscal 2002, compared to
$8.5 million during fiscal 2001 and $10.0 million during fiscal
2000, respectively. Land preparation for citrus development and
capital maintenance continued, as did expenditures for replace-
ment equipment and raising of breeding cattle. Additional sod
acreage also was developed.
Management believes that the Company will be able to meet its
working capital requirements for the foreseeable future with
internally generated funds. In addition, the Company has
credit commitments which provide for revolving credit of up to
$54.0 million, of which $13.0 million was available for the
Company's general use at August 31, 2002 (see Note 6 of Notes
to consolidated financial statements).
Results of Operations
_____________________
Summary of results (in thousands):
Years Ended August 31,
2002 2001 2000
_______ _______ _______
Operating revenue $49,185 $51,533 $45,207
Gross profit 9,679 11,921 11,364
General &
administrative
expenses 10,806 5,471 4,416
Income (loss)
from operations (1,127) 6,450 6,949
Profit on sale of
real estate 11,641 11,354 13,281
Interest and
investment income 1,471 2,124 3,093
Interest expense 2,421 3,029 3,020
Other income 229 3,213 272
Provision for income taxes 2,258 4,046 6,464
Effective income tax rate 23.1% 20.1% 31.4%
Net income 7,535 16,066 14,111
Operating Revenue
_________________
Operating revenues for fiscal 2002 decreased compared to fiscal
2001. A decrease in revenues from agricultural activities was
the most significant factor in the decline.
Operating revenues for fiscal 2001 increased when compared to
those of fiscal 2000. An increase in revenues from agricul-
tural activities was the most significant factor in the rise.
Income (loss) from Operations
_____________________________
Earnings from operations decreased significantly during fiscal
2002 when compared to the prior year ( $(1,127) in fiscal 2002
vs. $6,450 in fiscal 2001). The decrease was largely impacted
by the Company's commitment to donate $5.0 million to Florida
Gulf Coast University (the University) in December 2001, for a
new athletic complex, scholarships and athletic programs. In
accordance with the Company's agreement with the University,
$1.0 million was donated in fiscal 2002, and $800 thousand
will be donated each year over the next five years. The
entire donation has been accrued and is included in general
and administrative expenses in the current year. The remain-
ing decline in gross profits from operations was due to a
decline in earnings from agricultural activities.
Income from operations decreased 7% during fiscal 2001 due to
increased general and administrative expenses.
Profit on Sale of Real Estate
____________________________________
Profit from retail land sales, made through Saddlebag, were
at breakeven for fiscal 2002 and 2001. Profit from bulk land
sales, increased from $11.4 million in fiscal 2001 to $11.6
million in fiscal 2002.
Real estate profits decreased from $13.3 million in fiscal
2000 to $11.4 million during fiscal 2001.
Interest and Investment Income
______________________________
Interest and investment income is generated principally from
investments in marketable equity securities, corporate and
municipal bonds, mutual funds, U.S. Treasury securities and
mortgages held on real estate sold on the installment basis.
Realized investment earnings were reinvested throughout fiscal
2002, 2001 and 2000, increasing investment levels during each
year. The decrease in fiscal 2002 and 2001 interest and
realized and unrealized investment income resulted from unfa-
vorable financial conditions. The rise in fiscal 2000
interest and realized and unrealized investment income
resulted from favorable market conditions during the year.
Interest Expense
________________
Interest expense declined during fiscal 2002 when compared to
fiscal 2001, as interest rates on borrowings have declined.
Interest expense increased during fiscal 2001 and 2000,
compared to each respective prior year. This was primarily due
to increased borrowings related to the acquisition of 7,680
acres of sugarcane, citrus and ranch during fiscal 1999. Total
interest cost decreased slightly in 2001 while increasing 54%
during fiscal 2000.
Individual Operating Divisions
______________________________
Gross profit for the individual operating divisions, for fiscal
2002, 2001 and 2000, is presented in the following schedule and
is discussed in subsequent sections:
Years Ended August 31,
(in thousands)
2002 2001 2000
_______ _______ _______
CITRUS
Revenues:
Sales $25,105 $27,570 $28,172
Less harvesting
& marketing 9,364 10,046 9,737
_______ _______ _______
Net sales 15,741 17,524 18,435
Cost and expenses:
Direct production** 8,594 8,932 8,655
Allocated cost* 3,463 3,472 3,040
_______ _______ _______
Total 12,057 12,404 11,695
_______ _______ _______
Gross profit, citrus 3,684 5,120 6,740
_______ _______ _______
SUGARCANE
Revenues:
Sales 11,300 11,939 8,501
Less harvesting
& hauling 2,239 2,516 1,997
_______ _______ _______
Net sales 9,061 9,423 6,504
Costs and expenses:
Direct production 3,731 3,810 2,787
Allocated cost* 3,220 2,992 2,178
_______ _______ _______
Total 6,951 6,802 4,965
_______ ______ _______
Gross profit, sugarcane 2,110 2,621 1,539
_______ _______ _______
Years Ended August 31,
(in thousands)
2002 2001 2000
_______ _______ _______
RANCH
Revenues:
Sales 9,591 9,299 6,062
Costs and expenses:
Direct production 6,321 5,571 3,844
Allocated cost* 2,461 2,133 1,479
_______ _______ _______
Total 8,782 7,704 5,323
_______ _______ _______
Gross profit, ranch 809 1,595 739
_______ _______ _______
Total gross profit,
agriculture 6,603 9,336 9,018
_______ _______ _______
OTHER OPERATIONS
Revenues:
Rock products & sand 1,999 1,726 1,320
Oil leases &
land rentals 721 770 923
Forest products 355 91 84
Recovery of citrus
eradication costs
in excess of basis - 2,968 235
Other 229 245 37
_______ _______ _______
Total 3,304 5,800 2,599
Costs and expenses:
Allocated cost* 735 604 658
General &
administrative,
all operations 10,070 4,867 3,757
_______ _______ _______
Total 10,805 5,471 4,415
_______ _______ _______
Gross (loss)
income, other
operations (7,501) 329 (1,816)
_______ _______ _______
Years Ended August 31,
(in thousands)
2002 2001 2000
_______ _______ _______
Total gross
profit (loss) (898) 9,665 7,202
_______ _______ _______
INTEREST & DIVIDENDS
Revenue 1,471 2,124 3,094
Expense 2,421 3,029 3,020
_______ _______ _______
Interest & dividends,
net (950) (905) 74
_______ _______ _______
REAL ESTATE
Revenue:
Sale of real estate 11,758 12,442 14,112
Expenses:
Cost of sales 61 857 126
Other Costs 56 233 687
_______ _______ _______
Total 117 1,090 813
_______ _______ _______
Gain on sale of
real estate 11,641 11,352 13,299
_______ _______ _______
Income before
income taxes $ 9,793 $20,112 $20,575
_______ _______ _______
_______ _______ _______
* Allocated cost includes ad valorem and payroll taxes,
depreciation and insurance.
** Excludes capitalized maintenance cost of groves less than
five years of age consisting of $2.5 million on 1,326 acres
in 2002, $200 thousand on 570 acres in 2001, and $309
thousand on 411 acres in 2000.
Citrus
______
Gross profit was $3.7 million in fiscal 2002, $5.1 million in
fiscal 2001, and $6.7 million for fiscal 2000.
Revenue from citrus sales decreased 9% during fiscal 2002,
compared to fiscal 2001 ($25.1 million during fiscal 2002 vs.
$27.6 million during fiscal 2001).
Production decreased during fiscal 2002, compared to fiscal
2001, and was the primary cause of the decline.
Harvesting and marketing costs decreased when compared to fis-
cal 2001due to the decrease in boxes harvested during the year.
Direct production and allocated costs decreased 3% due to a de-
cline in the number of producing acres.
Revenue from citrus sales decreased 2% during fiscal 2001,
compared to fiscal 2000 ($27.6 million during fiscal 2001 vs.
$28.2 million during fiscal 2000).
Production improved during fiscal 2001, however, the average
market price decreased compared to fiscal 2000.
Harvesting and marketing costs increased in fiscal 2001 com-
pared to fiscal 2000, corresponding with an increase in boxes
harvested. Direct production and allocated costs increased 6%
resulting from inflation and increased cultivation costs
related to replanted trees.
The final returns from citrus pools are not precisely deter-
minable at year end. Returns are estimated each year based on
the most current information available. Differences between
the estimates and the final realization of revenues can be sig-
nificant. Revenues collected in excess of prior year and year
end estimates were $568 thousand, $617 thousand, and
$1.8 million during fiscal 2002, 2001 and 2000, respectively.
ACREAGE BY VARIETY AND AGE
VARIETY 1-4 5-6 7-8 9-10 11-12 13-14 15-16 17+ Acres
___ ___ ___ ____ _____ _____ _____ ____ _____
Early:
Parson Brown
Oranges - - - - 118 30 - - 148
Hamlin
Oranges 225 - 22 63 - 159 872 2,152 3,493
Red Grapefruit - - - - - 73 - 335 408
Tangelos - - - - - - - 38 38
Navel Oranges - - - - - - - 138 138
Mid Season:
Pineapple
Oranges - - - 102 - - - 518 620
Honey
Tangerines - - 76 - - - - 143 219
Midsweet
Oranges 46 71 54 110 - - - - 281
Late:
Valencia
Oranges 1,161 206 513 310 253 1,071 784 1,504 5,802
_____ ___ ___ ___ _____ ___ ___ _____ _____
Totals: 1,432 277 665 585 371 1,333 1,656 4,828 11,147
Sugarcane
_________
Gross profit for fiscal 2002 was $2.1 million, compared to
$2.6 million in fiscal 2001 and $1.5 million in fiscal 2000.
Sales revenues from sugarcane decreased 5% during fiscal 2002,
compared to fiscal 2001 ($11.3 million vs. $11.9 million, re-
spectively). The decline inrevenue was the result of a de-
creased yield per acre resulting from drought conditions during
the growing season. Direct production costs decreased 2%
during fiscal 2002, compared to fiscal 2001. However, allo-
cated costs increased 8% during 2002 over 2001 levels due to
an increase in ad valorem taxes.
Sales revenues from sugarcane increased 40% during fiscal 2001,
compared to fiscal 2000 ($11.9 million vs. $8.5 million,
respectively). The rise in revenue and related costs was the
result of the increase in the number of producing acres.
Ranching
________
The gross profit from ranch operations for fiscal 2002, 2001
and 2000 was $809 thousand, $1.6 million, and $739 thousand,
respectively.
Revenues from cattle sales increased 3% during fiscal 2002,
compared to fiscal 2001 ($9.6 million in fiscal 2002 vs. $9.3
million in fiscal 2001). The proportion of animals sold from
feedlots increased in the current year resulting in higher
sales weights per head and higher revenues. The increase in
revenues was offset, however, by a 14% rise in direct and
allocated costs when compared to the prior year ($8.8 million
during fiscal 2002 and $7.7 million during fiscal 2001).
Revenues from cattle sales increased 54% during fiscal 2001,
compared to fiscal 2000 ($9.3 million in fiscal 2001 vs. $6.1
million in fiscal 2000). The number of animals sold during
the year increased 52% over the prior year due to increased
sales of feeder cattle during the year and market prices for
beef improved.
Direct and allocated costs increased 45% when compared to the
prior year ($7.7 million during fiscal 2001 and $5.3 million
during fiscal 2000) corresponding to the increase in the
number of animals sold.
The Company's cattle marketing activities include retention of
calves in western feedlots, contract and auction sales, and
risk management contracts.
Other Operations
________________
Revenues from oil royalties and land rentals were $721
thousand in fiscal 2002 as compared to $770 thousand for fis-
cal 2001 and $923 thousand for fiscal 2000.
Returns from rock products and sand were $2.0 million for fis-
cal 2002,$1.7 million for 2001 and $1.3 million during 2000.
Rock and sand supplies are sufficient to meet current demand,
and no major price changes have occurred over the past 3 years.
Profits from the sale of sabal palms and other horticultural
items, for landscaping purposes, during fiscal 2002 were $355
thousand compared to $91 thousand and $84 thousand for fiscal
years 2001 and 2000, respectively.
Direct and allocated expenses charged to the "Other" opera-
tions category included general and administrative and other
costs not charged directly to the citrus, ranching, sugarcane
divisions. These expenses totaled $10.8 million during fiscal
2002, compared to $5.5 million during fiscal 2001 and to $4.4
million during fiscal 2000.
In December 2001, the Company agreed to donate $5.0 million to
the Florida Gulf Coast University for a new athletic complex,
scholarships and athletic programs. As per the agreement with
the University, $1.0 million was donated in fiscal 2002, and
$800 thousand will be donated each year over the next five
years. The net present value of the total donation was ac-
crued and included in general and administrative expenses in
fiscal 2002 and was the primary cause for the increase in
general and administrative expenses for the year.
General Corporate
_________________
The Company is continuing its marketing and permitting activi-
ties for its land which surrounds the Florida Gulf Coast Uni-
versity site. There are sales contracts in place for more
than 5,400 acres of the Lee County, Florida property totaling
$146.0 million. The agreements are at various stages in the
due diligence process with closing dates over the next ten
years.
The Company announced the formation of Agri-Insurance Company,
Ltd. (Agri) a wholly owned subsidiary, during July of 2000.
The insurance company was initially capitalized by transfer-
ring cash and approximately 3,000 acres of the Lee County
property. Through Agri, the Company has been able to under-
write previously uninsurable risk related to catastrophic crop
and other losses. Additionally, the insurance company will
have access to reinsurance markets, otherwise inaccessible.
The Federal Crop Insurance Program provides coverage for cer-
tain perils such as freeze damage, windstorm damage, disease,
etc. However, the current Federal Crop Insurance Program does
not provide business interruption coverage. The coverages cur-
rently underwritten by Agri will indemnify the insured for the
loss of the revenue stream resulting from a catastrophic event
that would cause a grove to be replanted. The insurance market
is bifurcated into direct insurers and reinsurers. Reinsurers
provide wholesale insurance coverage to direct insurers. Some
specialized reinsurers will only deal with insurance companies.
As a result, the only way to access the wholesale insurance
market is through the formation of a captive insurance company.
Reinsurers provide greater insurance coverage flexibility than
can be found in the primary insurance market.
Agri is a recently created entity. It would be difficult, if
not impossible, to speculate about the impact that Agri could
have on the Company's financial position, results of
operations and liquidity in future periods. Since the cover-
ages that will be written, as liquidity is generated, will be
primarily for the benefit of Alico, the financial substance of
this venture is to insure risk that is inherent in the
Company's existing operations. To expedite the creation of
the capital liquidity necessary to underwrite the Company's
exposure to catastrophic losses, another 5,600 acres was trans-
ferred during fiscal 2001. Agri underwrote a limited amount
of coverage for Ben Hill Griffin, Inc. during fiscal 2002 and
2001 and in August 31, 2002 began insuring all of the Alico,
Inc., citrus groves. As Agri gains underwriting experience
and increases its liquidity, it will be able to increase its
insurance program.
During September of 1999, the Company announced a sale of
1,270 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
payable over the next four years. In July of 2000, Agri sold
another 488 acres to the same buyer, also near the University,
for $10.6 million. In connection with the sale, the purchaser
agreed to pay off the $12.3 million mortgage related to the
September 1999 sale and pay 10% of the contract price for
their second purchase at closing, with the balance payable
over the next four years. The first sale generated a pre-tax
gain of $13.4 million. The gain related to the second sale
was recognized during fiscal 2000, to the extent that 10% of
the purchase price has been collected net of closing costs
($959 thousand). The remainder of the gain and related mort-
gage were recognized during the 2001 fiscal year upon receipt
of the first annual mortgage payment which, combined with the
initial payment in fiscal 2000, exceeded 20% of the contract
price.
During November 2001, Agri began to close on a 2,500 acre,
$30.0 million sale, of which 40 acres were transferred in
November 2001 and 1,744 acres were transferred by the end of
December 2001. However, upon mutual consent, 323 acres,
representing $9.6 million were released from the contract and
retained by Agri for sale at a future date. The remaining 393
acres are expected to be transferred by the end of fiscal 2003.
The profits from portions of this transaction that have closed
are included in the statement of operations under gain on
sales of real estate.
Also in December 2001, the Company agreed to donate $5.0 mil-
lion to Florida Gulf Coast University for a new athletic com-
plex, scholarships and athletic programs. The agreement
called for $1.0 million to be donated in the current fiscal
year, and $800 thousand to be donated each year over the next
five years. The entire donation has been accrued and is in-
cluded in general and administrative expenses in the statement
of operations.
During January 2002, the Company acquired 40 acres of Lee
County, Florida property for $9.5 million. The property is
located near one of the interstate highway access ramps to
Florida Gulf Coast University and the Southwest Florida
International Airport.
Critical Accounting Policies and Estimates
__________________________________________
The preparation of the Company's financial statements and rela-
ted disclosures in conformity with accounting principles
generally accepted in the United States of America requires
management to make estimates and judgments that affect the re-
ported amounts of assets and liabilities, revenues and ex-
penses, and related disclosures of contingent assets and
liabilities. On an on-going basis, management evaluates the
estimates and assumptions based upon historical experience and
various other factors and circumstances. Management believes
that the estimates and assumptions are reasonable in the
circumstances; however, actual results may vary from these
estimates and assumptions under different future circumstances.
The following critical accounting policies have been identi-
fied that affect the more significant judgments and estimates
used in the preparation of the consolidated financial
statements.
The Company records inventory at the lower of cost or market.
Management regularly assesses estimated inventory valuations
based on current and forecasted usage of the related commodity
and any other relevant factors that affect the net realizable
value.
Based on fruit buyers' and processors' advances to growers,
stated cash and futures markets combined experience in the
industry, management reviews the reasonableness of the citrus
revenue accrual. Adjustments are made throughout the year to
these estimates as relevant information regarding the citrus
market becomes available. Fluctuation in the market prices
for citrus fruit has caused the Company to recognize additional
revenue from prior years' crop totaling $568 thousand, $617
thousand, and $1.8 million, during fiscal 2002, 2001 and 2000,
respectively.
In accordance with Statement of Position 85-3 "Accounting by
Agricultural Producers and Agricultural Cooperatives", the
cost of growing crops (citrus and sugarcane) are capitalized
into inventory until the time of harvest. Once a given crop
is harvested, the related inventoried costs are recognized as
a cost of sale to provide an appropriate matching of costs
incurred with the related revenue earned.
Alico formed a wholly owned insurance subsidiary, Agri
Insurance Company, Ltd. (Bermuda) ("Agri") in June of 2000.
Agri was formed in response to the lack of insurance avail-
ability, both in the traditional commercial insurance markets
and governmental sponsored insurance programs, suitable to pro-
vide coverages for the increasing number and potential
severity of agricultural related events. Such events include
citrus canker, crop diseases, livestock related maladies and
weather. Alico's goal included not only prefunding its poten-
tial exposures related to the aforementioned events, but also
to attempt to attract new underwriting capital if it is suc-
cessful in profitably underwriting its own potential risks as
well as similar risks of its historic business partners.
Alico primarily utilized its inventory of land and additional
contributed capital to bolster the underwriting capacity of
Agri. As Agri has converted certain of the assets contributed
by Alico to cash, book and tax differences have arisen result-
ing from differing viewpoints related to the tax treatment of
insurance companies for other federal and state tax purposes.
Due to the historic nature of the primary assets contributed
as capital to Agri and the timing of the sales of certain of
those assets by Agri, management has decided to record a
contingent liability, providing for potential differences in
the tax treatment of sales of Agri's assets in its initial
year of operation. Management's decision has been influenced
by perceived changes in the regulatory environment.
Item 7(a). Quantitative and Qualitative Disclosure About
Market Risk
______________________________________________________________
Alico's exposure to market rate risk for changes in interest
rates relates primarily to its investment portfolio. There
are no derivative financial instruments in the investment port-
folio. Investments are placed with high quality issuers and,
by policy, limit the amount of credit exposure to any one
issuer. Alico is adverse to principal loss and ensures the
safety and preservation of invested funds by limiting default,
market and reinvestment risk. The Company classifies cash
equivalents and short-term investments as fixed-rate if the
rate of return on such instruments remains fixed over their
term. These fixed-rate investments include fixed-rate U.S.
government securities, municipal bonds, time deposits and
certificates of deposit. Cash equivalents and short-term in-
vestments are classified as variable-rate if the rate of
return on such investments varies based on the change in a pre-
determined index or set of indices during their term. These
variable-rate investments primarily include money market ac-
counts, mutual funds and equities held at various securities
brokers and investment banks. The table below presents the
amounts (in thousands) and related weighted interest/dividend
yield rates of the investment portfolio at August 31, 2002:
Average Interest Estimated
Marketable Securities and Rate/Dividend Yield Cost Fair Value
Short-term Investments (1) ________________ _____________ ___________
Fixed Rate 3.35% $ 7,141 $ 6,404
Variable Rate 2.29% $ 14,802 $ 15,013
(1) See definition in Notes 1 and 2 to our Notes to Consolidated
Financial Statements.
The aggregate fair value of investments in debt instruments
(net of mutual funds of $4,768) as of August 31, 2002, by
contractual maturity date, consisted of the following:
Aggregate Fair
Values
______________
(in thousands)
Due in one year or less $ 118
Due between one and five years 234
Due between five and ten years 433
Due thereafter 851
______________
$ 1,636
______________
______________
Item 8. Financial Statements and Supplementary Data.
_____________________________________________________________
Independent Auditors' Report
____________________________
The Stockholders and Board of Directors
Alico, Inc.:
We have audited the consolidated balance sheets of Alico, Inc.
and subsidiaries as of August 31, 2002 and 2001, and the
related consolidated statements of operations, stockholders'
equity, and cash flows for each of the years in the three-year
period ended August 31, 2002. In connection with our audits
of the consolidated financial statements, we also have
audited the related consolidated financial statement schedules
as listed in Item 14(a)(2) herein. These consolidated
financial statements and financial statements schedules are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated
financial statements and schedules based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the
financial position of Alico,Inc. and subsidiaries at August 31,
2002 and 2001, and the results of their operations and their
cash flows for each of the years in the three-year period
ended August 31, 2002 in conformity with accounting principles
generally accepted in the United States of America. Also in
our opinion, the related consolidated financial statement
schedules, when considered in relation to the consolidated
financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.
KPMG LLP
(Signature)
Orlando, Florida
October 12, 2002
CONSOLIDATED BALANCE SHEETS
August 31,
2002 2001
_____________ ____________
ASSETS
Current assets:
Cash, including time deposits and other
cash investments of $10,028,199 in 2002
and $478,260 in 2001 $ 10,139,659 $ 6,225,088
Marketable securities available for
sale, at estimated fair value in
2002 and in 2001 (Note 2) 21,417,046 18,726,723
Accounts receivable ($6,456,783 in 2002 and
$6,901,275 in 2001 due from affiliate)
(Note 12) 9,460,834 10,153,205
Mortgages and notes receivable, current
portion (Note 3) 2,451,340 2,482,454
Inventories (Note 4) 21,671,964 23,246,609
Income tax refund receivable 271,036 -
Other current assets 855,447 510,760
____________ ____________
Total current assets 66,267,326 61,344,839
____________ ____________
Other assets:
Land inventories 16,786,717 8,031,544
Mortgages and notes receivable, net of
current portion (Note 3) 2,693,186 5,112,309
Investments 908,049 1,170,898
____________ ____________
Total other assets 20,387,952 14,314,751
____________ ____________
Property, buildings and equipment (Note 5) 142,354,775 138,352,300
Less accumulated depreciation (37,100,353) (34,878,310)
____________ ____________
Net property, buildings and equipment 105,254,422 103,473,990
____________ ____________
Total assets $191,909,700 $179,133,580
____________ ____________
____________ ____________
See accompanying Notes to Consolidated Financial Statements.
August 31,
2002 2001
____________ ____________
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,437,756 $ 1,810,094
Due to profit sharing plan (Note 10) 284,649 443,942
Accrued ad valorem taxes 1,523,980 1,383,111
Current portion of notes payable (Note 6) 3,318,524 1,301,146
Accrued expenses 1,168,652 1,494,940
Income taxes payable - 22,670
Deferred income taxes (Note 11) 1,038,727 1,234,697
Donation payable 770,721 -
____________ ____________
Total current liabilities 9,543,009 7,690,600
Deferred revenue 113,532 52,987
Notes payable (Note 6) 52,657,508 46,704,954
Deferred income taxes (Note 11) 9,727,889 11,909,252
Deferred retirement benefits (Note 10) 119,247 150,429
Other non-current liability (Note 8) 3,640,593 -
Donation payable 2,890,423 -
____________ ____________
Total liabilities 78,692,201 66,508,222
____________ ____________
Stockholders' equity:
Preferred stock, no par value. Authorized
1,000,000 shares; issued, none - -
Common stock, $1 par value. Authorized
15,000,000 shares; issued and outstanding
7,080,344 in 2002 and 7,044,513 in 2001 7,080,344 7,044,513
Additional paid in capital 1,715,616 331,617
Accumulated other comprehensive income (432,577) 871,077
Retained earnings 104,854,116 104,378,151
____________ ____________
Total stockholders' equity 113,217,499 112,625,358
____________ ____________
Total liabilities and stockholders'
equity $191,909,700 $179,133,580
____________ ____________
____________ ____________
See accompanying Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended August 31,
2002 2001 2000
___________ ___________ ___________
Revenue:
Citrus (including revenues from
affiliate (Note 12) $25,105,126 $27,569,705 $28,172,057
Sugarcane 11,300,199 11,939,228 8,501,549
Ranch 9,591,237 9,299,477 6,062,224
Forest products 354,699 90,861 84,104
Rock and sand royalties 1,998,863 1,725,997 1,319,525
Oil lease and land rentals 721,239 770,170 923,535
Retail land sales 114,000 137,950 144,250
___________ __________ ___________
Total revenue 49,185,363 51,533,388 45,207,244
___________ __________ ___________
Costs of sales:
Citrus production, harvesting and
marketing (including charges from
affiliate (Note 12)) 21,420,816 22,450,086 21,431,441
Sugarcane production, harvesting
and hauling 9,189,734 9,317,739 6,962,366
Ranch 8,781,819 7,704,467 5,323,002
Retail land sales 114,398 140,102 126,012
__________ ___________ ___________
Total costs of sales 39,506,767 39,612,394 33,842,821
__________ ___________ ___________
Gross profit 9,678,596 11,920,994 11,364,423
General and administrative
expenses 10,806,157 5,471,128 4,415,614
__________ ___________ ___________
Income (loss) from operations (1,127,561) 6,449,866 6,948,809
Other income (expenses):
Profit on sales of real estate:
Sales 12,658,954 12,840,652 27,575,329
Cost of sales 1,017,635 1,486,282 4,754,645
___________ ___________ ___________
Gross profit 11,641,319 11,354,370 22,820,684
Gross profit not yet
recognized - - 9,540,000
___________ ___________ ___________
Profit on sales of
real estate, net 11,641,319 11,354,370 13,280,684
Interest and investment income 1,471,056 2,123,595 3,093,203
Recovery of citrus eradication costs
in excess of basis (Note 14) - 2,967,950 234,920
Interest expense (Note 6) (2,420,893) (3,028,631) (3,019,819)
Other 229,276 245,165 37,177
___________ ___________ ___________
Total other income, net 10,920,758 13,662,449 13,626,165
___________ ___________ ___________
Income before income taxes 9,793,197 20,112,315 20,574,974
Provision for income taxes (Note 11) 2,258,192 4,046,184 6,464,358
___________ ___________ ___________
Net Income $ 7,535,005 $16,066,131 $14,110,616
___________ ___________ ___________
___________ ___________ ___________
Weighted-average number of shares
outstanding 7,070,024 7,032,929 7,027,827
___________ ___________ ___________
___________ ___________ ___________
Weighted-average number of shares
outstanding assuming dilution 7,198,191 7,057,395 7,031,861
___________ ___________ ___________
___________ ___________ ___________
Per share amounts:
Basic $ 1.07 $ 2.29 $ 2.01
Diluted $ 1.05 $ 2.28 $ 2.01
Dividends $ 1.00 $ 1.00 $ .30
See accompanying Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Accumulated
Common Stock Other Additional
Shares Retained Comprehensive Paid in
Issued Amount Earnings Income Capital Total
________ __________ ___________ _______ ________ ________
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 year
ended
August 31, 2000 - - 14,110,616 - - 14,110,616
Unrealized gains
on securities,
net of taxes - - - 129,492 - 129,492
and reclass-
ification adjustment __________
Total comprehensive
income: 14,240,108
Dividends paid - - (2,108,348) - - (2,108,348)
Stock based
compensation - - - - 17,885 17,885
_________ _________ ___________ ________ _____ ___________
Balances,
August 31,
2000 7,027,827 $7,027,827 $95,339,847 $1,159,445 $17,885 $103,545,004
_________
Comprehensive
income:
Net income
for the year
ended
August 31, 2001 - - 16,066,131 - - 16,066,131
Unrealized gains
on securities,
net of taxes - - - (288,368) - (288,368)
and reclass-
ification adjustment ___________
Total comprehensive
income: 15,777,763
Dividends paid - - (7,027,827) - - (7,027,827)
Stock options
exercised 16,686 16,686 - - 227,264 243,950
Stock based
compensation - - - - 86,468 86,468
_________ _________ __________ _______ _______ ___________
Balances,
August 31,
2001 7,044,513 $7,044,513 $104,378,151 $871,077 $331,617 $112,625,358
_________
Comprehensive
income:
Net income
for the year
ended
August 31, 2002 - - 7,535,005 - - 7,535,005
Unrealized losses
on securities,
net of taxes - - - (1,303,654) - (1,303,654)
and reclass-
ification adjustment ___________
Total comprehensive income: 6,231,351
Dividends paid - - (7,059,040) - - (7,059,040)
Stock options
exercised 35,831 35,831 - - 493,197 529,028
Stock based
compensation - - - - 890,802 890,802
_________ _________ _________ _______ _________ ___________
Balances,
August 31,
2002 7,080,344 $7,080,344 $104,854,116 $(432,577) $1,715,616 $113,217,499
_________ __________ ___________ ________ ________ ___________
_________ __________ ___________ ________ ________ ___________
Disclosure of reclassification amount: 2002 2001 2000
________ __________ ________
Unrealized holding gains (losses)
arising during the period $(1,774,892) $ (206,715) $2,176,940
Less: reclassification adjustment
for gains (losses) included in net
income (471,238) 81,653 2,047,448
________ __________ _________
Net unrealized gains
(losses) on securities $(1,303,654) $ (288,368) $ 129,492
_________ _________ _________
_________ _________ _________
See accompanying Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended August 31,
2002 2001 2000
___________ ___________ __________
Increase (Decrease) in Cash and Cash Investments:
Cash flows from operating activities:
Net income $ 7,535,005 $16,066,131 $14,110,616
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation and amortization 6,982,221 6,946,005 5,118,854
(Gain) loss on breeding herd sales (84,279) (76,993) 99,766
Deferred income tax expense, net 1,263,260 1,178,810 (613,097)
Deferred retirement benefits (31,182) (102,380) (124,678)
Net (gain) loss on sale of marketable
securities 380,579 (159,830) (1,868,010)
(Gain) Loss on sale of property
and equipment (149,970) 1,641,938 1,232,535
Gain on real estate sales (11,758,419) (11,585,627) (13,967,688)
Stock options granted below fair
market value 890,802 86,468 17,885
Cash provided by (used for) changes in:
Accounts receivable 692,371 1,846,507 (3,930,668)
Inventories 1,059,247 (1,701,762) (2,214,387)
Other assets 57,255 (600,335) (201,767)
Accounts payable and accrued
expenses 2,944,094 (112,219) 161,824
Income taxes payable (293,706) (4,146,847) 4,719,103
Deferred revenues 47,845 52,987 -
___________ ___________ ___________
Net cash provided by operating
activities 9,535,123 9,332,853 2,540,288
___________ ___________ ___________
Cash flows from investing activities:
Increase in land inventories (9,785,254) (924,851) (713,832)
Purchases of property and
equipment (9,269,856) (8,502,483) (9,995,159)
Proceeds from disposals of
property and equipment 1,256,850 959,324 522,091
Proceeds from sale of real
estate 12,788,500 2,880,279 17,089,222
Purchases of investments (126,393) (211,646) (69,937)
Proceeds from the sale of
other assets - - 56,829
Purchases of marketable
securities (8,047,072) (3,013,303) (2,902,598)
Proceeds from sales of
marketable securities 3,672,516 2,039,159 1,967,397
Issuances of mortgages and
notes receivable (79,256) (381,425) (85,080)
Collection of mortgages and
notes receivable 2,529,493 2,630,275 105,926
___________ __________ ___________
Net cash provided by
(used for) investing
activities (7,060,472) (4,524,671) 5,974,859
___________ ___________ ___________
Years Ended August 31,
2002 2001 2000
___________ ___________ ___________
Cash flows from financing activities:
Proceeds from exercising
stock options 529,028 243,950 -
Proceeds from bank loans 43,597,058 43,193,828 33,086,000
Repayment of bank loans (35,627,126) (36,789,473) (38,437,200)
Dividends paid (7,059,040) (7,027,827) (2,108,348)
___________ ___________ ___________
Net cash provided by
(used for) financing
activities 1,439,920 (379,522) (7,459,548)
___________ ___________ ___________
Net increase (decrease) in
cash and cash investments 3,914,571 4,428,660 1,055,599
Cash and cash investments:
At beginning of year 6,225,088 1,796,428 740,829
___________ ___________ __________
At end of year $10,139,659 $ 6,225,088 $ 1,796,428
___________ ___________ ___________
___________ ___________ ___________
Supplemental disclosures of cash flow information:
Cash paid for interest,
net of amount capitalized $ 2,123,822 $ 3,101,692 $ 2,863,215
___________ ___________ ___________
___________ ___________ ___________
Cash paid for income taxes, $ 942,811 $ 3,115,896 $ 2,472,505
including related interest (Note 11)___________ ___________ ___________
___________ ___________ ___________
Noncash investing activities:
Fair value adjustments to
securities available for sale $(1,925,167) $ (462,350) $ 208,175
___________ ___________ ___________
___________ ___________ ___________
Income tax effect related
to fair value adjustments $ (621,513) $ (173,982) $ 78,336
___________ ___________ ___________
___________ ___________ ___________
Reclassification of breeding
herd to Property & Equipment $ 515,398 $ 370,192 $ 989,896
___________ ___________ ___________
___________ ___________ ___________
See accompanying Notes to Consolidated Financial Statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended August 31, 2002, 2001 and 2000
(1) Summary of Significant Accounting Policies
__________________________________________
(a) Basis of Consolidated Financial Statement Presentation
______________________________________________________
The consolidated financial statements include the
accounts of Alico, Inc. (the Company) and its wholly
owned subsidiaries,Saddlebag Lake Resorts, Inc.
(Saddlebag), and Agri Insurance Company, Ltd. (Agri),
after elimination of all significant intercompany
balances and transactions.
(b) Revenue Recognition
___________________
Income from sales of citrus under marketing pool
agreements is recognized at the time the crop is
harvested. Based on fruit buyers' and processors'
advances to growers, stated cash and futures markets,
management reviews the reasonableness of the citrus
revenue accrual. Adjustments are made throughout
the year to these estimates as relevant information
regarding the citrus market becomes available.
Fluctuation in the market prices for citrus fruit
has caused the Company to recognize additional
revenue from the prior year's crop totaling $568
thousand, $617 thousand, and $1.8 million during
fiscal years 2002, 2001 and 2000, respectively.
Revenue from sugarcane is recognized when the har-
vested product is taken for processing. The earnings
process is complete at that time and the resulting
revenue is determinable for the sugarcane crop as of
year-end, therefore, no estimations are necessary.
The Company recognizes revenue from cattle sales at
the time the cattle are sold at auction.
(c) Real Estate
___________
Real estate sales are recorded under the accrual
method of accounting. Residential retail land sales
made through Saddlebag are not recognized until the
buyer's initial investment or cumulative payments of
principal and interest equal or exceed 10 percent of
the contract sales price Commercial or bulk land
sales,made mostly through Agri, are not recognized
until payments received for property to be developed
within two years after the sale equal 20%, or
property to be developed after two years equal 25%,
of the contract sales price. At August 31, 2000,
the Company did not recognize gross profit totaling
$9.5 million related to commercial real estate which
was sold subject to a mortgage note receivable
(note 3). The terms of the sale called for 10% of
the contract price of $10.6 million to be paid at
closing. The $1.1 million less the land basis and
closing costs was recognized as a gain on the sale
of real estate totaling $288 thousand during
August 31, 2000.
During the year ended August 31, 2001, the purchaser
made the first of four equal annual installments,
required in the mortgage, totaling $2.4 million,
plus interest. The deferred profit on the sale was
then recognized as 32.5 percent of the contract
price was received and the buyer's continuing invest-
ment became adequate to demonstrate its commitment
to pay for the property.
Profits from commercial real estate sales are
discounted to reflect the market rate of interest
where the stated rate is less than the market rate.
The recorded valuation discounts are realized as the
balances due are collected. In the event of early
liquidation, interest is recognized on the simple
interest method.
Tangible assets that are purchased during the period
to aid in the sale of the project as well as costs
for services performed to obtain regulatory approval
of the sales are capitalized as land and land im-
provements to the extent they are estimated to be
recoverable from the sale of the property. Land and
land improvement costs are allocated to individual
parcels on a per lot basis using the relative sales
value method.
The Company has entered into an agreement with a
real estate consultant to assist in obtaining the
necessary regulatory approvals for the development
and marketing of a tract of raw land. The marketing
costs under this agreement are being expensed as in-
curred. The costs incurred to obtain the necessary
regulatory approvals are capitalized into land costs
when paid. These costs will be expensed as cost of
sales when the underlying real estate is sold.
(d) Marketable Securities Available for Sale
________________________________________
Marketable securities available for sale are carried
at their estimated fair value. Net unrealized
investment gains and losses are recorded net of
related deferred taxes in accumulated other
comprehensive income within stockholders' equity
until realized.
Fair value for debt and equity investments is based
on quoted market prices at the reporting date for
those or similar investments. The cost of all
marketable securities available for sale are deter-
mined on the specific identification method.
(e) Inventories
___________
The costs of growing citrus and sugarcane are
capitalized into inventory until the time of harvest.
Once a given crop is harvested, the related inven-
toried costs are recognized as a cost of sale to pro-
vide an appropriate matching of costs incurred with
the related revenue earned.
Beef cattle inventories are stated at the lower of
cost or market. The cost of the beef cattle inven-
tory is based on the accumulated cost of developing
such animals for sale. Unharvested crops are stated
at the lower of cost or market. The cost for unhar-
vested crops is based on accumulated production
costs incurred during the eight month period from
January 1 through August 31.
(f) Property, Buildings and Equipment
_________________________________
Property, buildings and equipment are stated at cost.
Properties acquired from the Company's predecessor
corporation in exchange for common stock issued in
1960, at the inception of the Company, are stated on
the basis of cost to the predecessor corporation.
Property acquired as part of a land exchange trust
is valued at the carrying value of the property
transferred to the trust.
All costs related to the development of citrus
groves, through planting, are capitalized. Such
costs include land clearing, excavation and construc-
tion of ditches, dikes, roads, and reservoirs, etc.
After the planting, caretaking costs or preproductive
maintenance costs are capitalized for four years.
After four years, a grove is considered to have
reached maturity and the accumulated costs, except
for land excavation become the depreciable basis of
a grove and are written off over 25 years.
Development costs for sugarcane are capitalized the
same as citrus. However, sugarcane matures in one
year and the Company is able to harvest an average
of 3 crops (1 per year) from one planting. As a re-
sult, cultivation/caretaking costs are expensed as
the crop is harvested, while the appropriate deve-
lopment and planting costs are depreciated over 3
years.
The breeding herd consists of purchased animals and
animals raised on the ranch. Purchased animals are
stated at cost. The cost of animals raised on the
ranch is based on the accumulated cost of developing
such animals for productive use.
Depreciation for financial reporting purposes is
computed on straight-line and accelerated methods
over the estimated useful lives of the various
classes of depreciable assets.
The Company accounts for long-lived assets in accor-
dance with the provisions of SFAS No. 121, "Accoun-
ting for the Impairment of Long-Lived Assets for
Long-Lived Assets to be Disposed of". This Statement
requires the long-lived assets and certain identifi-
able intangibles be reviewed for impairment whenever
events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of
an asset to future net cash flows expected to be
generated by the asset. If such are considered to
be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount
of the assets exceeds the fair value of the assets.
Assets to be disposed of are reported at the lower
of the carrying amount or fair value less costs to
sell.
(g) Land Inventories
Land inventories are carried at cost and consists of
property located in Lee County, Florida and owned by
Agri-Insurance Co., Ltd. The property is held for
sale as commercial real estate.
(h) Other Investments
Other investments are carried at cost which primarily
includes stock owned in cooperatives. The Company
uses cooperatives to process and sell sugarcane and
cattle. Cooperatives typically require members to ac-
quire ownership as a term of use of its services.
(i) Income Taxes
____________
The Company accounts for income taxes under the asset
and liability method. Under this method, deferred
tax assets and liabilities are recognized for the
future tax consequences attributable to differences
between the financial statement carrying amounts of
existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply
to taxable income in the years in which those tem-
porary differences are expected to be recovered or
settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized
in income in the period that includes the enactment
date.
(j) Net Earnings Per Share
________________________
Outstanding stock options issued by the Company
represent the only dilutive effect reflected in the
computation of diluted weighted average shares
outstanding assuming dilution. Options do not
impact the numerator of the earnings per
share computation.
There were no stock options that could potentially
dilute basic earnings per share in the future that
were not included in the computation of earnings per
share assuming dilution.
(k) Cash Flows
__________
For purposes of the cash flows, cash and cash invest-
ments include cash on hand and amounts due from
financial institutions with an original maturity of
less than three months.
(l) Use of Estimates
________________
In preparing the consolidated financial statements,
management is required to make estimates and assump-
tions that effect the reported amounts of assets and
liabilities. Actual results could differ signifi-
cantly from those estimates. Although some
variability is inherent in these estimates, manage-
ment believes that the amounts provided are adequate.
(m) Financial Instruments and Accruals
__________________________________
The carrying amounts in the consolidated balance
sheets for accounts receivable, mortgage and notes
receivable, accounts payable and accrued expenses
approximate fair value, because of the immediate or
short term maturity of these items. The carrying
amounts reported for the Company's long-term debts
approximate fair value.
(n) Derivative and Hedging Instruments
__________________________________
In June 1998, the Financial Accounting Standards
Board ("FASB") issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities",
which establishes accounting and reporting standards
for derivative instruments, including certain deriva-
tive instruments embedded in other contracts (collec-
tively referred to as derivatives), and for hedging
activities. SFAS No. 133 was amended by SFAS No. 138
in June 2000, in part, to allow "normal purchases and
normal sales" transactions to be excluded from SFAS
133. At September 1, 2000, the Company had no open
derivatives. Accordingly, the Company's adoption of
the provisions of SFAS No. 133, as amended, on
September 1, 2000, did not result in a transition
adjustment.
The Company engages in cattle futures trading acti-
vities for the purpose of economically hedging
against price fluctuations. The Company records gains
and losses related to economic hedges in costs of
goods sold. At August 31, 2002 and 2001, the
Company had no open positions.
(o) Accumulated Other Comprehensive Income
______________________________________
Comprehensive income is defined as the change in
equity of a business enterprise during a period from
transactions and other events and circumstances from
non-owner sources. It includes both net income and
other comprehensive income. Items included in other
comprehensive income are classified based on their
nature. The total of other comprehensive income for a
period has been transferred to an equity account and
displayed as "accumulated other comprehensive income".
(p) Stock-Based Compensation
________________________
The Company applies Accounting Principles Board
Opinion No. 25,"Accounting for Stock Issued to
Employees" (APB 25) for stock options and other stock-
based awards while disclosing pro forma net income
and net income per share as if the fair value method
had been applied in accordance with Statement of
Financial Accounting Standards No. 123,"Accounting
for Stock-based Compensation" (SFAS 123).
(q) Reportable Segments
_________________
The Company has three reportable segments: citrus,
sugarcane, and ranch. The citrus segment produces
fruit for both the fresh fruit and processed juice mar-
kets. The sugarcane segment produces sugarcane for
processing. The ranch segment raises beef cattle to
be sold in the wholesale market.
The Company's reportable segments are strategic busi-
ness units that offer different products. They are
managed separately because each business requires
different operating strategies.
(r) Reclassifications
_________________
Certain amounts from 2001 have been reclassified to
conform to the 2002 presentation.
(2) Marketable Securities Available for Sale
________________________________________
The Company has classified 100% of its investments in
marketable securities as available for sale and, as
such, the securities are carried at estimated fair
value. Any unrealized gains and losses, net of
related deferred taxes, are recorded as a net amount
in a separate component of stockholders' equity until
realized.
The cost and estimated fair values of marketable
securities available for sale at August 31, 2002 and
2001 (in thousands) were as follows:
2002 2001
_____________________________ _____________________________
Gross Estimated Gross Estimated
Equity Unrealized Fair Unrealized Fair
securities: Cost Gains Losses Value Cost Gains Losses Value
_______ ____ ____ _______ ______ ______ ___ ________
Preferred
stocks $ 3,160 $ 65( $ 79) $ 3,146 $ 3,565 $ 27 $ - $ 3,592
Common stocks 1,734 135( 242) 1,627 2,152 261 - 2,413
Mutual funds 9,908 479( 147) 10,240 8,515 1,076 - 9,591
_____________________________ ______________________________
Total equity
securities 14,802 679( 468) 15,013 14,232 1,364 - 15,596
_____________________________ ______________________________
Debt securities:
Mutual bonds 559 36 - 595 750 37 - 787
Mutual funds 5,418 232 ( 882) 4,768 1,986 45 - 2,031
Fixed maturity
funds 282 15 ( 1) 296 - - - -
Corporate bonds 882 14 ( 151) 745 362 - (49) 313
_____________________________ ______________________________
Total debt
securities 7,141 297 (1,034) 6,404 3,098 82 (49) 3,131
_____________________________ ______________________________
Marketable
securities
available
for sale 21,943 976 (1,502) 21,417 17,330 1,446 (49) 18,727
_____________________________ ______________________________
_____________________________ ______________________________
At August 31, 2002, debt instruments (net of mutual funds
of $4,768) are collectible as follows: $118 within one
year, $234 between one and five years, $433 between five
and ten years, and $851 there after.
(3) Mortgage and Notes Receivable
____________________________
Mortgage and notes receivable arose from real estate
sales. The balances (in thousands) are as follows:
August 31, 2002 August 31, 2001
_______________ _______________
Mortgage notes receivable
on retail land sales $ 193 $ 242
Mortgage notes receivable
on bulk land sales 4,926 7,262
Other notes receivable 25 90
________________ _______________
Total mortgage and notes
receivable $ 5,144 $ 7,594
Less current portion 2,451 2,482
________________ _______________
Non-current portion $ 2,693 $ 5,112
________________ _______________
________________ _______________
In July 2000, the Company received a mortgage note in
exchange for land sold. The note totaled $9.5 million and
principal payments of $2.4 million are due annually on
July 14, bearing interest at LIBOR, over four years.
(4) Inventories
___________
A summary of the Company's inventories (in thousands) at
August 31, 2002 and 2001 is shown below:
2002 2001
_______ _______
Unharvested fruit crop on trees $ 8,599 $ 9,626
Unharvested sugarcane 5,274 5,387
Beef cattle 7,507 8,076
Sod 292 158
_______ _______
Total inventories $21,672 $23,247
_______ _______
_______ _______
(5) Property, Buildings and Equipment
_________________________________
A summary of the Company's property, buildings and equip-
ment (in thousands) at August 31, 2002 and 2001 is shown
below:
Estimated
2002 2001
Useful Lives
_______ _______ ____________
Breeding herd $12,618 $12,465 5-7 years
Buildings 3,945 3,806 5-40 years
Citrus trees 28,555 25,328 22-40 years
Sugarcane 8,360 8,378 4-15 years
Equipment and
other facilities 29,996 29,993 3-40 years
_______ _______
Total depreciable properties 83,474 79,970
Less accumulated depreciation 37,100 34,878
_______ _______
Net depreciable properties 46,374 45,092
Land & land improvements 58,880 58,382
_______ _______
Net property, buildings
and equipment $105,254 $103,474
_______ _______
_______ _______
The Company's citrus trees, fruit crop, unharvested
sugarcane and cattle are partially uninsured.
(6) Indebtedness
____________
The Company has financial agreements with commercial banks
that permit the Company to borrow up to $54 million. The
financing agreements allow the Company to borrow up to
$41 million which is due in 2004 and up to $3 million
which is due on demand. In December 2001, the Company
entered into an additional financing agreement to borrow
$10 million to be paid in equal principal installments
over five years with interest to be paid quarterly. The
outstanding debt under these agreements was $41.0 million
and $31.8 million at August 31, 2002 and 2001,
respectively. 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 at August 31, 2002 and
2001 was $52.7 million and $46.7 million, respectively.
Maturities of the indebtedness of the Company over the
next five years (in thousands) are as follows: 2003-
$3,319; 2004- $34,321; 2005- $3,319; 2006- $3,312; 2007-
$3,315 and $8,390 thereafter.
Interest cost expensed and capitalized (in thousands)
during the three years ended August 31, 2002, 2001 and
2000 was as follows:
2002 2001 2000
______ ______ ______
Interest expense $2,421 $3,029 $3,020
Interest capitalized 322 175 431
______ ______ ______
Total interest cost $2,743 $3,204 $3,451
______ ______ ______
______ ______ ______
(7) Commitments and Contingencies
_____________________________
The Company is involved in various claims and legal
actions arising in the ordinary course of business. In
the opinion of management,the ultimate disposition of
these matters will not have a material adverse effect on
the Company's consolidated financial position, results of
operation or liquidity.
(8) Other non-current liability
___________________________
Alico formed a wholly owned insurance subsidiary, Agri
Insurance Company, Ltd. (Bermuda) ("Agri") in June of
2000. Agri was formed in response to the lack of insur-
ance availability, both in the traditional commercial in-
surance markets and governmental sponsored insurance pro-
grams, suitable to provide coverages for the increasing
number and potential severity of agricultural related
events. Such events include citrus canker, crop diseases,
livestock related maladies and weather. Alico's goal in-
cluded not only prefunding its potential exposures related
to the aforementioned events, but also to attempt to at-
tract new underwriting capital if it is successful in
profitably underwriting its own potential risks as well as
similar risks of its historic business partners. Alico
primarily utilized its inventory of land and additional
contributed capital to bolster the underwriting capacity
of Agri. As Agri has converted certain of the assets
contributed by Alico to cash, book and tax differences
have arisen resulting from differing viewpoints related
to the tax treatment of insurance companies for
federal and state tax purposes. Due to the historic
nature of the primary assets contributed as capital to
Agri and the timing of the sales of certain of those as-
sets by Agri,management has decided to record a contin-
gent liability, providing for potential differences in the
tax treatment of sales of Agri's assets in its initial
year of operation. Management's decision has been
influenced by perceived changes in the regulatory
environment.
(9) 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 have
vesting schedules which are at the discretion of the
Board of Directors and determined on the effective date
of the grant.
Weighted
Weighted average
average remaining
exercise contractual
Shares price Life (in years)
______ _________ _______________
Balance outstanding,
August 31, 2000 49,692 $14.62 8
Granted 51,074 $14.62 _______________
Exercised 16,686 $14.62
______ _________ _______________
Balance outstanding,
August 31, 2001 84,080 14.62 9
_______________
Granted 69,598 15.68 _______________
Exercised 35,831 14.76
______ _________
Balance outstanding,
August 31, 2002 117,847 $15.20 8
______ _________ _______________
______ _________ _______________
On August 31, 2002 and 2001, there were 479,636 and
549,234 shares available for grant, respectively.
The fair value of stock options granted was $819 thousand
in 2002 and $79 thousand in 2001 on the date of the grant
using the Black Scholes option-pricing model with the fol-
lowing weighted average assumptions:
2002 2001
____ ____
Volatility 8.39% 10.19%
Dividend paid 6.38% 6.84%
Risk-free interest rate 4.75% 5.75%
Expected life in years 1 1
All stock options granted, except as noted in the para-
graph below, have been granted to directors or employees
with an exercise price equal to the fair value of the com-
mon stock at the date of the grant. The Company applies
APB Opinion No. 25 for issuances to directors and
employees in accounting for its Plan. No compensation cost
was recognized in the consolidated financial statements
through August 31, 2000, as options were issued at or
above fair value.
On September 9, 1999, the Company granted 14,992 stock
options with an exercise price of $14.62 and a fair value
of $15.813. The Company recorded $18 thousand of unearned
compensation at the date of the grant. On September 12,
2000, the Company granted an additional 51,074 stock
options with an exercise price of $14.62 and a fair value
of $16.313. The Company recorded $86 thousand of unearned
compensation at the date of the grant.
On September 11, 2001, the Company granted an additional
69,598 stock options with an exercise price of $15.68 and
a fair value of $28.48. The Company recorded $891
thousand of unearned compensation at the date of the
grant.
Had the Company determined compensation cost based on the
fair value at the grant date for its stock options under
SFAS No. 123, the Company's net income would have changed
to the pro forma amounts indicated below:
2002 2001
____ ____
Net income as reported $ 7,535,005 $16,066,131
Pro forma net income $ 7,606,899 $16,073,741
Basic earnings per share,
as reported $ 1.07 $ 2.29
Pro forma basic
earnings per share $ 1.08 $ 2.29
(10) Employee Benefit Plans
______________________
The Company has a profit sharing plan covering substan-
tially all employees. The plan was established under In-
ternal Revenue Code Section 401(k). Contributions made
to the profit sharing plan (in thousands) were $285, $444
and $430 for the years ended August 31, 2002, 2001 and
2000, respectively.
Additionally, the Company implemented a nonqualified de-
fined benefit retirement plan covering the officers and
other key management personnel of the Company. The plan
is being funded by the purchase of insurance contracts.
The accrued pension liability for the nonqualified
defined benefit retirement plan at August 31, 2002 and
2001 was $119,247 and $150,429, respectively.
Pension expenses (in thousands) for the additional retire-
ment benefits were $488, $395 and $128 for the years ended
August 31, 2002, 2001 and 2000, respectively.
(11) Income Taxes
____________
The provision for income taxes (in thousands) for the
years ended August 31, 2002, 2001 and 2000 is summarized
as follows:
2002 2001 2000
______ ______ ______
Current:
Federal income tax $3,713 $2,428 $6,218
State income tax 396 439 860
______ ______ ______
4,109 2,867 7,078
______ ______ ______
Deferred:
Federal income tax (1,673) 1,058 (528)
State income tax (178) 121 ( 86)
______ ______ ______
(1,851) 1,179 (614)
______ ______ ______
Total provision for
income taxes $2,258 $4,046 $6,464
______ ______ ______
______ ______ ______
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 (in thousands) for the
years ended August 31, 2002, 2001 and 2000:
2002 2001 2000
______ ______ ______
Expected income tax $3,330 $6,838 $6,995
Increase (decrease)
resulting from:
State income taxes, net
of federal benefit 144 328 516
Nontaxable interest
and dividends (102) (113) (127)
Internal Revenue Service
examinations 11 479 (352)
Utilization of
charitable
contribution
carryforward - - (136)
Income from Agri-
Insurance
Company, Ltd. (1,156) (3,829) -
Other reconciling
items, net 31 343 (432)
______ ______ ______
Total provision for
income taxes $2,258 $4,046 $6,464
______ ______ ______
______ ______ ______
Some items of revenue and expense included in the state-
ment of operations may not be currently taxable or de-
ductible on the income tax returns. Therefore, income tax
assets and liabilities are divided into a current portion,
which is the amount attributable to the current year's
tax return,and a deferred portion, which is the amount
attributable to another year's tax return. The revenue
and expense items not currently taxable or deductible are
called temporary differences.
The tax effects of temporary differences that give rise
to significant portions of the deferred tax assets and
deferred tax liabilities are presented below (in thousands):
2002 2001
_______ _______
Deferred Tax Assets:
Contribution carry forward (1,698) -
Pension (168) (168)
Prepaid sales commissions (789) (776)
Inventory-beef - (376)
Land inventories (480) (435)
Deferred retirement benefits (502) (303)
Other (1,380) (943)
_______ _______
Total gross deferred
tax assets (5,017) (3,001)
_______ _______
Deferred Tax Liabilities:
Revenue recognized from
citrus and sugarcane 458 861
Property and equipment
(principally due to
depreciation and soil
and water deductions) 12,645 12,390
Mortgage notes receivable 10 117
Inventories 886 468
Deferred real estate gains 1,600 1,600
Unrealized gains on securities - 526
Other 185 183
_______ _______
Total gross deferred
tax liabilities 15,784 16,145
_______ _______
Net deferred income
tax liabilities $10,767 $13,144
_______ _______
_______ _______
Based on the Company's history of taxable earnings and its
expectations for the future, management has determined
that its taxable income will more likely than not be suf-
ficient to fully recognize all deferred tax assets.
Agri Insurance Company, Ltd. (Agri), a wholly owned
insurance company subsidiary of Alico, is treated as a
U.S. taxpayer,pursuant to an election under Internal
Revenue Code Section 953(d), for all purposes except for
consolidating an operating loss by virtue of the dual con-
solidated loss rules. (Dual consolidated losses prevent
operating losses (not capital losses) from occurring in
insurance companies domiciled outside of the United States
from offsetting operating income irrespective of the fact
that the insurance company is a member of the consolidated
return group.)
Agri was established to provide agricultural insurance
that falls outside of the Federal Crop Insurance Program,
for catastrophic perils. Agri was domiciled in Bermuda
because it offers easy access to reinsurance markets.
Agri issued its initial policy in August 2000 to a third
party. Agri's ability to underwrite insurance risks has
been limited to its operational liquidity, by the Regis-
trar of Companies in Bermuda. Agri will be able to under-
write additional insurance as its liquidity is increased
from additional asset sales and as payments are received
on prior sales. For Federal income tax purposes, only
premiums received by Agri from policies of insurance is-
sued to parties other than its parent, Alico Inc., are
considered insurance premiums. The preceding limiting
factors resulted in Agri not incurring a tax liability on
underwriting profits or investment income. Agri's tax
status resulted in it filing its Federal tax return on a
stand alone basis for the calendar year periods ending
December 31, 2001 and 2000.
(12) Related Party Transactions
__________________________
Citrus
______
Citrus revenues of $19.1 million, $19.9 million and $20.0
million were recognized for a portion of citrus crops sold
under a marketing agreement with Ben Hill Griffin, Inc.
(Griffin) for the years ended August 31, 2002, 2001 and
2000, respectively. Griffin and its subsidiaries is the
owner of approximately 49.85 percent of the Company's com-
mon stock. Accounts receivable, resulting from citrus
sales, include amounts due from Griffin totaling $6.5 mil-
lion and $6.9 million at August 31, 2002 and 2001, res-
pectively. These amounts represent estimated revenues to
be received periodically under pooling agreements as the
sale of pooled products is completed.
Harvesting, marketing, and processing costs, related to
the citrus sales noted above, totaled $7.1 million, $7.6
million, and $7.5 million for the years ended August 31,
2002, 2001 and 2000, respectively. In addition, Griffin
provided the harvesting services for citrus sold to
unrelated processors. The aggregate cost of these services
was $2.0 million, $2.2 million and $2.0 million for the
years ended August 31, 2002, 2001 and 2000, respectively.
The accompanying consolidated balance sheets include ac-
counts payable to Griffin for citrus production, harvest-
ing and processing costs in the amount of $594 thousand
and $414 thousand at August 31, 2002 and 2001,
respectively.
Other Transactions
__________________
The Company purchased fertilizer and other miscellaneous
supplies, services, and operating equipment from Griffin,
on a competitive bid basis, for use in its cattle, sugar-
cane, sod and citrus operations. Such purchases totaled
$6.2 million, $6.0 million and $5.5 million during the
years ended August 31, 2002, 2001 and 2000, respectively.
(13) Future Application of Accounting Standards
__________________________________________
In June 2001, the Financial Accounting Standard Board
(FASB) issued Financial Accounting Standards (SFAS) No.
141, "Business Combinations". This statement addresses
financial accounting and reporting for business combina-
tions and supersedes Accounting Principal Board (APB)
Option No. 16, "Business Combinations", and FASB Statement
No. 38, "Accounting for Preacquisition Contingencies of
Purchased Enterprises". All business combinations in the
scope of this Statement are to be accounted for using one
method, the purchase method. The provisions of this
Statement apply to all business combinations initiated af-
ter June 30, 2001. The Statement also applies to all
business combinations accounted for using the purchase
method which the date of acquisition is July 1, 2001, or
later. Adoption of this Statement is not expected to have
a significant impact on the financial position or results
of operations of the Company.
In June 2001, the FASB issued SFAS No. 142, "Goodwill and
Other Intangible Assets". This Statement addresses finan-
cial accounting and reporting for acquired goodwill and
other intangible assets and supersedes APB Opinion No. 17,
"Intangible Assets". It addresses how intangible assets
that are acquired individually or with a group of other
assets (but not those acquired in a business combination)
should be accounted for in financial statements upon their
acquisition. This Statement also addresses how goodwill
and other intangible assets should be accounted for after
they have been initially recognized in the financial
statements. Adoption of this Statement is not expected
to have a significant impact on the financial position or
results of operations of the Company.
In June 2001, the FASB issued SFAS No. 143 "Accounting for
Asset Retirement Obligations." This statement addresses
financial accounting and reporting for obligations asso-
ciated with the retirement of tangible long-lived assets
and the associated asset retirement costs. It applies to
legal obligations associated with the retirement of long-
lived assets that result from the acquisition, construc-
tion, development and (or) the normal operation of a long-
lived asset, except for certain obligations of lessees.
This Statement is effective for financial statements with
fiscal years beginning after June 15, 2002. Adoption of
this Statement is not expected to have a significant im-
pact on the financial position or results of operations of
the Company.
In August 2001, the FASB issued SFAS No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets."
This Statement addresses financial accounting and report-
ing for the impairment or disposal of long-lived assets.
This Statement supercedes both FASB Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets to Be
Disposed Of" and the accounting and reporting provisions
of Accounting Principles Board Opinion No. 30, "Reporting
the Results of Operations-Reporting the Effects of Dis-
posal of a Segment of a Business, and Extraordinary, Un-
usual and Infrequently Occurring Events and Transactions
of a Segment of a Business." This Statement is effective
for financial statements with fiscal years beginning af-
ter December 15, 2001. Adoption of this Statement is not
expected to have a significant impact on the financial
position or results of operations of the Company.
(14) Recovery of Citrus Canker Eradication Costs
in Excess of Basis
______________________________________________________________
The Company incurred losses during the years ended August
31, 2001 and 2000, related to citrus canker eradication.
The eradication program called for the removal of 507
acres of citrus trees from a grove in Hendry County, Flo-
rida. While the trees were insured under the Federal Crop
Insurance Program, additional relief funding was available
and secured by the Company from both Federal and State
government sources. A summary of the recovery sources,
related basis of the trees removed and the crop inventory
losses are summarized (in thousands) as follows:
2002 2001 2000
______ ______ ______
Recovery Sources
Federal $ - $ 2,830 $1,423
State - 157 -
Insurance - 219 383
______ ______ ______
Total Recovery - 3,206 1,806
Loss Basis
Net Book Value of Trees - 238 1,222
Fruit Inventory - - 349
______ ______ ______
Total Basis - 238 1,571
______ ______ ______
Excess of Recovery over Basis $ - $ 2,968 $ 235
______ ______ ______
______ ______ ______
15) Reportable Segment Information
____________________________
The Company is primarily engaged in agricultural opera-
tions, which are subject to risk, including market prices,
weather conditions and environmental concerns. The Company
is also engaged in retail land sales and, from time to time,
sells real estate considered surplus to its operating needs.
Information about the Company's reportable segments (in
thousands) for the years ended August 31, 2002, 2001 and
2000 is summarized as follows:
2002 2001 2000
________ ________ ________
Revenues
Agriculture:
Citrus $ 25,105 $ 27,570 $ 28,172
Sugarcane 11,300 11,939 8,501
Ranch 9,591 9,299 6,062
________ ________ ________
Total revenues from
external customers
for reportable segments 45,996 48,808 42,735
Other revenues from
external customers 3,189 2,725 2,472
________ ________ ________
Total consolidated revenues $ 49,185 $ 51,533 $ 45,207
________ ________ ________
________ ________ ________
Costs of sales:
Citrus $ 21,421 $ 22,450 $ 21,431
Sugarcane 9,190 9,318 6,962
Ranch 8,782 7,704 5,323
________ ________ ________
Total costs of sales
for reportable segments 39,393 39,472 33,716
Other costs of sales 114 140 127
________ ________ ________
Total consolidated
costs of sales $ 39,507 $ 39,612 $ 33,843
________ ________ ________
________ ________ ________
2002 2001 2000
________ ________ ________
Gross profit:
Agriculture:
Citrus $ 3,684 $ 5,120 $ 6,741
Sugarcane 2,110 2,621 1,539
Ranch 809 1,595 739
________ ________ ________
Total profit for
reportable segments 6,603 9,336 9,019
Other gross profit 3,075 2,585 2,345
________ ________ ________
Consolidated gross profit 9,678 11,921 11,364
________ ________ ________
Unallocated amounts:
Profit on sale of bulk
real estate 11,641 11,354 13,281
Other corporate expense (11,526) (3,163) (4,070)
________ ________ ________
Income before income taxes $ 9,793 $ 20,112 $ 20,575
________ ________ ________
________ ________ ________
Capital expenditures:
Agriculture:
Citrus $ 4,704 $ 3,310 $ 1,331
Sugarcane 1,293 2,632 5,861
Ranch 3,240 2,157 2,940
________ ________ ________
Total agriculture capital
expenditures for
reportable segments 9,237 8,099 10,132
Other capital expenditures 548 773 853
Cattle transferred from
inventory held for sale
into breeding stock (515) (370) (990)
________ ________ ________
Total consolidated
capital expenditures $ 9,270 $ 8,502 $ 9,995
________ ________ ________
________ ________ ________
Depreciation, depletion and amortization:
Agriculture:
Citrus $ 2,394 $ 2,405 $ 2,417
Sugarcane 2,527 2,587 2,235
Ranch 1,573 1,456 (66)
________ ________ ________
Total depreciation,
depletion and amortization
for reportable segments 6,494 6,448 4,586
Other depreciation, depletion,
and amortization 488 498 533
________ ________ ________
Total consolidated depreciation,
depletion and
amortization $ 6,982 $ 6,946 $ 5,119
________ ________ ________
________ ________ ________
Assets:
Agriculture:
Citrus $ 53,876 $ 53,266 $ 56,173
Sugarcane 50,083 51,678 50,784
Ranch 23,852 22,205 21,765
________ ________ ________
Total assets for
reportable segments 127,811 127,149 128,722
Other assets 64,098 51,985 48,154
________ ________ ________
Total consolidated assets $191,909 $179,134 $176,876
________ ________ ________
________ ________ ________
Identifiable assets represent assets on hand at year-end
which are allocable to a particular segment either by
their direct use or by allocation when used jointly by
two or more segments. Other assets consist principally
of cash, temporary investments, mortgage notes receivable,
bulk land inventories, and property and equipment used
in general corporate business.
SELECTED QUARTERLY FINANCIAL DATA
(UNAUDITED)
Summarized quarterly financial data (in thousands except for
per share amounts) for the years ended August 31, 2002 and
August 31, 2001, is as follows:
Quarters Ended
November 30, Feb. 28, May 31, August 31,
2001 2000 2002 2001 2002 2001 2002 2001
_______ _______ _______ _______ _______ _______ _______ ______
Revenue:
Citrus $ 1,506 $ 1,096 $ 7,689 $10,421 $ 9,889 $12,658 $ 6,021 $3,395
Sugarcane 2,255 2,938 6,978 6,303 1,883 2,698 184 -
Ranch 3,590 4,800 2,013 951 2,536 2,156 1,452 1,392
Property
sales 2,822 195 8,544 1,025 252 515 140 9,850
Interest 497 502 336 230 403 215 235 1,177
Other
revenues 879 744 569 633 983 803 874 3,620
_______ _______ _______ _______ _______ _______ _______ ______
Total
revenue 11,549 10,275 26,129 19,563 15,946 19,045 8,906 19,434
_______ _______ _______ _______ _______ _______ _______ ______
Costs and expenses:
Citrus 1,485 835 7,348 9,425 7,605 9,396 4,983 2,794
Sugarcane 1,855 2,236 5,497 5,056 1,864 2,031 (26) (5)
Ranch 3,010 4,315 1,857 918 2,434 1,446 1,481 1,025
Interest 514 729 531 980 682 647 694 673
Other 1,404 980 5,885 1,249 1,341 1,128 2,292 2,347
______ ______ ______ ______ ______ _____ _____ _____
Total costs
and ex-
penses 8,268 9,095 21,118 17,628 13,926 14,648 9,424 6,834
______ ______ ______ ______ ______ _____ _____ _____
Income be-
fore income
taxes 3,281 1,180 5,011 1,935 2,020 4,397 (518)12,600
Provision for
income
taxes 277 375 295 644 1,589 1,425 98 1,602
______ ______ ______ ______ ______ ______ ______ _____
Net income $3,004 $ 805 $4,716 $1,291 $ 431 $2,972 $ (616)10,998
______ ______ ______ ______ ______ ______ ______ _____
______ ______ ______ ______ ______ ______ ______ _____
Basic earnings
per share $ .43 $ .11 $ .66 $ .18 $ .06 $ .42 $ (.08) $1.58
______ ______ ______ ______ ______ ______ ______ _____
______ ______ ______ ______ ______ ______ ______ _____
Weighted average
Shares out-
standing 7,056 7,028 7,061 7,028 7,065 7,032 7,070 7,033
______ ______ ______ ______ ______ ______ ______ ______
______ ______ ______ ______ ______ ______ ______ ______
Item 9. Changes in & Disagreements with Accountants on
Accounting and Financial Disclosure.
______________________________________________________________
None
PART III
________
Item 10. Directors and Executive Officers of the Registrant.
______________________________________________________________
Executive Officers of the Company
_________________________________
Information with respect to Directors and Executive Officers
may be found under the captions "Nomination for Election as
Directors" and "Executive Offices" of the Company's Proxy
Statement for the Annual Meeting of Shareholders to be held
December 5, 2002 (the "Proxy Statement"). Such information is
incorporated herein by reference.
Section 16 - Beneficial Ownership Reporting Compliance
______________________________________________________
Based solely upon a review of Forms 3 and 4 and amendments
thereto furnished to the Company pursuant to Rule 16a-3(e) dur-
ing the 2002 fiscal year and Forms 5 and amendments thereto
furnished to the Company during fiscal year 1992 and certain
written representations, if any, made to the Company, no offi-
cer, director or beneficial owners of 10% or more of the Com-
pany's common stock has failed to file on a timely basis any
reports required by Section 16(a) of the Exchange Act to be
filed during fiscal 2002. For information with respect to the
executive officers of the registrant, see "Executive Officers
of the Registrant" at the end of Part I of this report.
The information called for regarding directors is incorporated
by reference to the Company's Proxy Statement dated November 8,
2002.
Item 11. Executive Compensation.
_________________________________________
The information in the Proxy Statement set forth under the cap-
tions "Executive Compensation" and "Directors' Compensation,
Committees of the Board of Directors and certain meetings" is
incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners
and Management.
______________________________________________________________
Information called for by Items 12 is incorporated by reference
to the Company's Proxy Statement dated November 8, 2002.
Item 13. Certain Relationships and Related Transactions.
______________________________________________________________
Information called for by Items 13 is incorporated by reference
to the Company's Proxy Statement dated November 8, 2002.
Item 14. Controls and Procedures
______________________________________________________________
Evaluation of disclosure controls and procedures
The Company maintans controls and procedures designed to ensure
that information required to be disclosed in the reports that
the Company files or submits under the Securities Exchange Act
of 1934 is recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the Secu-
rities and Exchange Commission. Based upon their evaluation
of those controls and procedures performed within 90 days of
the filing date of this report, the Chief executive and Chief
financial officers of the Company concluded that the Company's
disclosure controls and procedures were adequate.
Changes in internal controls
The Company made no significant changes in its internal con-
trols or in other factors that could significantly affect these
controls subsequent to the date of the evaluation of those con-
trols by the Chief Executive and Chief Financial officers.
PART IV
_______
Item 15. Exhibits, Financial Statement Schedules and
Reports on Form 8-K.
______________________________________________________________
(a)1. Financial Statements:
____________________
Included in Part II, Item 8 of this Report
Report of Independent Auditors'
Consolidated Balance Sheets - August 31, 2002 and 2001
Consolidated Statements of Operations - For the Years
Ended August 31, 2002, 2001 and 2000
Consolidated Statements of Stockholders' Equity - For
the Years Ended August 31, 2002, 2001 and 2000
Consolidated Statements of Cash Flows - For the Years
Ended August 31, 2002, 2001 and 2000
(a)2. Financial Statement Schedules:
_____________________________
Selected Quarterly Financial Data - For the Years
Ended August 31, 2002 and 2001 - Included in Part II,
Item 8
Schedule I - Marketable Securities and Other
Investments - at August 31, 2002
Schedule V - Property, Plant and Equipment - For the
Years Ended August 31, 2002, 2001 and 2000
Schedule VI - Reserves for Depreciation, Depletion and
Amortization of Property, Plant and Equipment - For
the Years Ended August 31, 2002, 2001 and 2000
Schedule IX - Supplementary Income Statement
Information - For the Years Ended August 31, 2002,
2001 and 2000
All other schedules not listed above are not submitted because
they are not applicable or not required or because the
required information is included in the financial statements
or notes thereto.
(a)3. Exhibits:
________
(3) Articles of Incorporation: *
Schedule I - Restated Certificate of
Incorporation, Dated February 17, 1972
Schedule II - Certificate of Amendment to
Certificate of Incorporation, Dated
January 14, 1974
Schedule III - Amendment to Articles of
Incorporation, Dated January 14, 1987
Schedule IV - Amendment to Articles of
Incorporation, Dated December 27, 1988
Schedule V - By-Laws of Alico, Inc.,
Amended to September 13, 1994
(4) Instruments Defining the Rights of Security
Holders, Including Indentures - Not Applicable
(10) Material Contracts - Citrus Processing and
Marketing Agreement with Ben Hill Griffin, Inc.,
dated November 2, 1983, a Continuing Contract. *
(11) Statement - Computation of Per Share Earnings
(12) Statement - Computation of Ratios
(19) Annual Report to Security Holders - By Reference
(21) Subsidiaries of the Registrant - Sadddlebag Lake
Resorts, Inc. (incorporated in 1971) and
Agri-Insurance Company, Ltd.(incorporated in 2000).
(22) Published Report Regarding Matters Submitted to
Vote of Security Holders - Not Applicable
(99) Additional Exhibits - None
(b) Reports on Form 8-K:
___________________
Form 8-K dated September 17, 2002 regarding disposition
of land.
Form 8-K dated September 16, 2002 announcing new
Director.
Form 8-K dated February 25, 2002 regarding Chairman
adopting a written sales plan.
Form 8-K dated February 25, 2002 regarding amendment of
sales plan.
Form 8-K dated January 7, 2002 announcing of 13D/A
filing by majority shareholder group.
Form 8-K dated January 7, 2002 regarding purchase of
land.
Form 8-K dated January 31, 2002 regarding land
disposition revision.
Form 8-K dated December 12, 2001 announcing donation to
Florida Gulf Coast University.
Form 8-K dated December 7, 2001 announcing purchase of
land.
Form 8-K dated December 7, 2001 revising announcements
of land purchase.
Form 8-K dated December 6, 2001 regarding re-election of
Directors and election of officers.
Form 8-K dated December 4, 2001 regarding land
disposition.
Form 8-K dated November 20, 2001 regarding land
disposition.
Form 8-K dated October 26, 2001 regarding land
disposition.
Form 8-K dated October 9, 2001 regarding a settlement
agreement and litigation in State Court,
Polk County, Florida.
Form 8-K dated October 2, 2001 announcing 13D/A filing
by Majority shareholder group.
Material has been filed with the Securities and Exchange
Commission and NASDAQ and may be obtained upon request.
ALICO, INC.
SCHEDULE I
Marketable Securities and Other Investments
August 31, 2002
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
________ ________ ________ ________ ________
Amount of Which
Each Portfolio
of Equity Secu-
Number of Market rity Issues and
Shares or Value of Each Other Se-
Name of Issuer Units-Principal Cost of Each Issue curity Issue
and Title of Amounts of Bonds Each at Balance Carried in the
Each Issue and Notes Issue Sheet Date Balance Sheet
______________ _______________ ___________ ____________ ___________
Municipal Bonds 558,829 $ 558,829 $ 595,254 $ 595,254
Corporate Bonds 882,176 882,176 745,850 745,850
Mutual-Debt 5,417,604 5,417,604 4,766,982 4,766,982
Preferred Stocks 125,500 3,159,887 3,146,153 3,146,153
Common Stocks 57,695 1,733,592 1,626,919 1,626,919
Mutual Equity 9,908,936 9,908,936 10,239,657 10,239,657
Other
Investments 281,561 281,561 296,231 296,231
___________ ___________ ___________
Total: $21,942,585 $21,417,046 $21,417,046
___________ ___________ ___________
___________ ___________ ___________
ALICO, INC.
SCHEDULE V
PROPERTY, PLANT AND EQUIPMENT
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
________ _________ _________ ________ ________ ________
Other Changes
Balance Retire- Debit and/or Balance
Beginning Additions ments Credit- at Close
Description of Period at Cost or Sales Describe of Period
___________ _________ _________ _________ ___________ __________
For Year Ended August 31, 2002
______________________________
Land $31,623,725 $ 51,201 $ 133,242 $ $ 31,541,684
Roads 2,188,493 58,138 2,246,631
Agricultural Land
Preparation 9,906 9,906
Forest Improvements 100,026 100,026
Pasture
Improvements 3,038,915 135,064 3,173,979
Buildings 3,788,616 138,770 3,927,386
Feeding and Watering
Facilities for
Cattle Herd 18,039 7,316 2,738 22,617
Water Control
Facilities 5,338 5,338
Fences 286,273 17,461 1,037 302,697
Cattle Pens 176,073 9,329 166,744
Interest-Ranch 16,963 17,105 34,068
Irrigation System-
Ranch 329,801 346,334 676,135
Citrus Groves,
Including Irrigation
Systems 45,112,548 4,064,545 1,295,996 47,881,097
Equipment 9,446,885 1,316,095 1,405,396 9,357,584
Breeding Herd 12,464,867 1,723,202 1,570,420 12,617,649
Sugarcane-Land Prep-
aration, Etc. 27,039,605 1,177,767 1,364,621 26,852,751
Sod Land-Prep-
aration, Etc. 857,910 725,806 1,583,716
Farm Land Prep-
aration, Etc. 1,848,317 6,450 1,854,767
___________ ___________ __________ _______ ____________
$138,352,300 $ 9,785,254 $5,782,779 $ $142,354,775
___________ ___________ __________ _______ ____________
___________ ___________ __________ _______ ____________
ALICO, INC.
SCHEDULE V
PROPERTY, PLANT AND EQUIPMENT
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
________ _________ _________ ________ ________ ________
Other Changes
Balance Retire- Debit and/or Balance
Beginning Additions ments Credit- at Close
Description of Period at Cost or Sales Describe of Period
___________ _________ _________ _________ ___________ __________
For Year Ended August 31, 2001
______________________________
Land $32,395,754 $ 42,266 $ 814,295 $ $31,623,725
Roads 2,156,452 32,041 2,188,493
Agricultural Land
Preparation 9,906 9,906
Forest Improvements 100,026 100,026
Pasture
Improvements 3,012,907 50,446 24,438 3,038,915
Buildings 3,553,390 235,226 3,788,616
Feeding and Watering
Facilities for
Cattle Herd 22,995 4,956 18,039
Water Control
Facilities 5,338 5,338
Fences 277,102 10,669 1,498 286,273
Cattle Pens 186,809 10,736 176,073
Interest-Ranch 0 16,963 16,963
Irrigation System-
Ranch 0 329,801 329,801
Citrus Groves,
Including Irrigation
Systems 44,327,540 2,817,916 2,032,908 45,112,548
Equipment 8,956,294 1,100,457 609,866 9,446,885
Breeding Herd 13,713,389 1,531,307 2,779,829 12,464,867
Sugarcane-Land Prep-
aration, Etc. 25,991,443 2,112,392 1,064,230 27,039,605
Sod-Land Prep-
aration, Etc. 270,719 587,191 857,910
Farm Land Prep-
aration 1,842,317 6,000 1,848,317
___________ __________ __________ _______ ____________
$136,822,381 $ 8,872,675 $7,342,756 $ $138,352,300
___________ __________ __________ _______ ____________
___________ __________ __________ _______ ____________
ALICO, INC.
SCHEDULE V
PROPERTY, PLANT AND EQUIPMENT
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
________ _________ _________ ________ ________ ________
Other Changes
Balance Retire- Debit and/or Balance
Beginning Additions ments Credit- at Close
Description of Period at Cost or Sales Describe of Period
___________ _________ _________ _________ ___________ __________
For the Year Ended August 31, 2000
__________________________________
Land $32,446,339 $ 15,821 $ 66,406 $ $32,395,754
Roads 1,415,260 741,192 2,156,452
Agricultural Land
Preparation 9,906 9,906
Forest Improvements 100,026 100,026
Pasture Improve-
ments 2,988,469 24,438 3,012,907
Buildings 3,378,101 293,695 118,406 3,553,390
Feeding and Watering
Facilities for
Cattle Herd 17,454 5,541 22,995
Water Control
Facilities 5,338 5,338
Fences 266,909 24,402 14,209 277,102
Cattle Pens 155,652 31,157 186,809
Citrus Groves,
Including Irri-
gation Systems 46,184,668 849,070 2,706,198 44,327,540
Equipment 8,159,823 1,555,882 759,411 8,956,294
Breeding Herd 12,584,592 2,619,785 1,490,988 13,713,389
Sugarcane-Land
Prep.,Etc. 22,634,544 4,736,794 1,379,895 25,991,443
Sod-Land Prep-
aration,Etc. 191,441 79,278 270,719
Farm Land Prep-
aration 1,834,317 8,000 1,842,317
___________ __________ __________ _________ ___________
$132,372,839 $10,985,055 $6,535,513 $ $136,822,381
___________ __________ __________ _________ ___________
___________ __________ __________ _________ ___________
* Reclassification from other assets.
ALICO, INC.
SCHEDULE VI
Reserves for Depreciation, Depletion and
Amortization of Property, Plant and Equipment
_____________________________________________________
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
________ __________ __________ __________ ________ ________
Additions Other Balance
Balance Charged To Changes at
Beginning Profit & Loss Retire- Add(Deduct) Close of
Description of Period of Income ments Desccribe Period
___________ _________ ____________ __________ _________ ________
For Year Ended August 31, 2002
______________________________
Buildings $ 1,662,509 $ 170,298 $ $ $ 1,832,807
Feeding and Watering
Facilities for
Cattle Herd 4,845 1,344 2,738 3,451
Fences 157,483 29,323 1,037 185,769
Cattle Pens 102,801 13,155 9,329 106,627
Interest-Ranch 283 2,124 2,407
Irrigation System-
Ranch 3,997 24,028 28,025
Citrus Groves,
Including Irriga-
tion Systems 14,836,199 1,922,057 992,449 15,765,807
Equipment 5,621,992 1,080,638 1,350,503 5,352,127
Breeding Herd 4,467,256 1,332,142 1,039,502 4,759,896
Roads 288,519 122,624 411,143
Sugarcane Lane Prep-
aration, Etc. 7,519,249 2,220,866 1,364,620 8,375,495
Sod Land Prepara-
tion, Etc. 24,553 24,799 49,352
Farm Land Preparation 188,624 38,823 227,447
___________ __________ __________ ____ ___________
$34,878,310 $6,982,221 $4,760,178 $ 0 $37,100,353
___________ __________ __________ ____ ___________
___________ __________ __________ ____ ___________
ALICO, INC.
SCHEDULE VI
Reserves for Depreciation, Depletion and
Amortization of Property, Plant and Equipment
_____________________________________________________
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
________ __________ __________ __________ ________ ________
Additions Other Balance
Balance Charged To Changes at
Beginning Profit & Loss Retire- Add(Deduct) Close of
Description of Period of Income ments Desccribe Period
___________ _________ ____________ __________ _________ ________
For Year Ended August 31, 2001
______________________________
Buildings $ 1,502,400 $ 160,109 $ $ $ 1,662,509
Feeding and Watering
Facilities for
Cattle Herd 9,067 734 4,956 4,845
Fences 129,521 28,165 203 157,483
Cattle Pens 99,012 14,525 10,736 102,801
Interest- Ranch 0 283 283
Irrigation System-
Ranch 0 3,997 3,997
Citrus Groves,
Including Irriga-
tion Systems 13,715,634 1,949,064 828,499 14,836,199
Equipment 5,088,513 1,037,208 503,729 5,621,992
Breeding Herd 5,132,625 1,275,138 1,940,507 4,467,256
Roads 173,052 115,467 288,519
Sugarcane-Land Prep-
aration, Etc. 5,950,645 2,314,161 745,557 7,519,249
Sod-Land Prepara-
tion, Etc. 16,066 8,487 24,553
Farm Land Preparation 149,957 38,667 188,624
___________ __________ __________ ____ ___________
$31,966,492 $6,946,005 $4,034,187 $ 0 $34,878,310
___________ __________ __________ ____ ___________
___________ __________ __________ ____ ___________
ALICO, INC.
SCHEDULE VI
Reserves for Depreciation, Depletion and
Amortization of Property, Plant and Equipment
_____________________________________________________
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
________ __________ __________ __________ ________ ________
Additions Other Balance
Balance Charged To Changes at
Beginning Profit & Loss Retire- Add(Deduct) Close of
Description of Period of Income ments Desccribe Period
___________ _________ ____________ __________ _________ ________
For the Year Ended August 31, 2000
__________________________________
Buildings $ 1,407,257 $ 153,267 $ 58,124 $ $ 1,502,400
Feeding and Watering
Facilities for
Cattle Herd 8,496 571 9,067
Fences 117,083 26,647 14,209 129,521
Cattle Pens 85,215 13,797 99,012
Citrus Groves,
Including Irrigation
Systems 13,213,300 1,986,634 1,484,300 13,715,634
Equipment 4,793,420 989,713 694,620 5,088,513
Breeding Herd 6,276,893 (220,982) 923,286 5,132,625
Roads 113,385 59,667 173,052
Sugarcane-Land
Prep.,Etc. 5,263,793 2,066,746 1,379,894 5,950,645
Sod-Land Prep-
aration, Etc. 11,414 4,652 16,066
Farm Land
Preparation 111,815 38,142 149,957
___________ __________ __________ _______ ___________
$31,402,071 $5,118,854 $4,554,433 $ 0 $31,966,492
___________ __________ __________ _______ ___________
___________ __________ __________ _______ ___________
ALICO, INC.
SCHEDULE IX
____________
SUPPLEMENTARY INCOME STATEMENT INFORMATION
__________________________________________
______________________________________________________________
COLUMN A COLUMN B
______________________________________________________________
Charged to Costs and Expenses
_____________________________
Years Ended August 31,
______________________
Item 2002 2001 2000
____ ____ ____ ____
1. Maintenance
and repairs $ 861,587 $1,475,565 $1,294,131
2. Taxes, other
than payroll
and income taxes 2,053,763 1,616,942 2,130,749
EXHIBIT 11
ALICO, INC.
Computation of Weighted Average Shares Outstanding as of
August 31, 2002:
Number of shares outstanding at August 31, 2002: 7,080,344
_________
_________
Number of shares outstanding at August 31, 2001: 7,044,513
_________
_________
Weighted Average 9/1/01 - 8/31/02: 7,070,024
_________
_________
EXHIBIT 12
ALICO, INC.
Computation of Ratios:
2002 Current Assets $66,267,326
Current Liabilities 9,543,009
66,267,326 divided by 9,543,009 = 6.94:1
2001 Current Assets $61,344,839
Current Liabilities 7,690,600
61,344,839 divided by 7,690,600 = 7.98:1
Pursuant to the requirements of Section 13 of the Securities
Exchange Act of 1934, as amended, the registrant has duly
caused this report to be signed on its behalf by the under-
signed, thereunto duly authorized.
ALICO, INC.
(Registrant)
November 12, 2002 /s/ Ben Hill Griffin, III
_________________ _________________________
Ben Hill Griffin, III
Date Chairman, Chief Executive
Officer and Director
November 12, 2002 /s/ W. Bernard Lester
_________________ _________________________
W. Bernard Lester
Date President, Chief Operating
Officer and Director
November 12, 2002 /s/ L. Craig Simmons
_________________ _________________________
L. Craig Simmons
Date Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following per-
sons on behalf of the registrant and in the capacities and on
the date indicated:
/s/ Richard C. Ackert /s/ Ben Hill Griffin, IV
_____________________ _________________________
Richard C. Ackert Ben Hill Griffin, IV
Director Director
/s/ K. E. Hartsaw /s/ Thomas E. Oakley
_____________________ _________________________
K. E. Hartsaw Thomas E. Oakley
Director Director
/s/ William L. Barton /s/ Monterey Campbell, III
_____________________ _________________________
William L. Barton Monterey Campbell, III
Director Director
/s/ Walker E. Blount, Jr. /s/ Amy Gravina
_____________________ _________________________
Walker E. Blount, Jr. Amy Gravina
Director Director
November 12, 2002
_________________
Date
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following per-
sons on behalf of the registrant and in the capacities and on
the date indicated:
I, Ben Hill Griffin, III, certify that:
1. I have reviewed this annual report on Form 10-K of Alico,
Inc.;
2. Based on my knowledge, this annual report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
annual report;
3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are respon-
sible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report on September 10, 2002;
and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the regist-
rant's auditors and the audit committee of registrant's board
of directors:
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the regist-
rant's internal controls;
and
6. The registrant's other certifying officers and I have
indicated in this annual report whether there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.
Date: November 12, 2003
__________________
/s/ Ben Hill Griffin, III
_______________________
Ben Hill Griffin, III
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following per-
sons on behalf of the registrant and in the capacities and on
the date indicated:
I, L. Craig Simmons, certify that:
1. I have reviewed this annual report on Form 10-K of Alico,
Inc.;
2. Based on my knowledge, this annual report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
annual report;
3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are respon-
sible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report on September 10, 2002;
and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the regist-
rant's auditors and the audit committee of registrant's board
of directors:
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the regist-
rant's internal controls;
and
6. The registrant's other certifying officers and I have
indicated in this annual report whether there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.
Date: November 12, 2003
__________________
/s/ L. Craig Simmons
_______________________
L. Craig Simmons
Chief Financial Officer
and Vice President