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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, 1999.
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 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 reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
_________
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_____
As of October 18, 1999 there were 7,027,827 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 $56,154,229.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report and Proxy Statement dated
November 15, 1999 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 145,840 acres of land located in Collier, Hendry, Lee and Polk
Counties. (See table on Page 6 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 farming, grazing, recreation and oil
exploration, in some instances, utilize the same acreage.
Agricultural operations have combined to produce from 68 to 91 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 9,707 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 5,432 acres in production during the 1999 fiscal year consisted of
188 acres planted in 1993, 535 acres planted in 1994, 1,129 acres planted
in 1995, 2,130 acres planted in 1996 and 1,450 acres planted in 1997.
The Company continued to expand agriculture activities during the 1999
fiscal year, purchasing additional property (approximately 7,600 acres in
Hendry County, Florida) to be used as citrus, sugarcane, and pasture land.
Leasing of lands for rock mining and oil and mineral exploration, 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 3 to 5 percent of total revenue.
The Company is not in the 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. Gross revenue
from land sales during the past five years has ranged from 1 to 24 percent
of total revenues.
For further discussion of the relative importance of the various segments
of the Company's operations, including financial information regarding
revenues, operating profits (losses) and assets attributable to each major
segment of the Company's business, see Note 11 of Notes to Consolidated
Financial Statements and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this document.
Subsidiary Operations
_____________________
The Company's wholly owned subsidiary, Saddlebag Lake Resorts, Inc. (the
"Subsidiary"), is only active in the subdividing, development and sale of
real estate. The financial results of the operation of this subsidiary are
consolidated with those of the Company. (See Note 1 of Notes to Consolidated
Financial Statements.)
Contributions by the Subsidiary to the net income of the Company, during
the past five years, have ranged from 0 to 1 percent. The Subsidiary has
two subdivisions near Frostproof, Florida which have been developed and are
on the market. Approximately 74% of the lots have been sold.
Citrus
______
Approximately 9,488 acres of citrus were harvested during the 1999 season.
Since 1983 the Company has maintained a marketing 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 August 1st,
preceding the fruit season immediately following. 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, 1999, approximately 89% of the Company's
fruit crop was marketed under this agreement, as compared to 90% in 1997/98.
The Company expects that the majority of the 1999/00 crop will be marketed
under the same terms. In addition, Ben Hill Griffin, Inc. provides
harvesting services to the Company for citrus sold to unrelated processors.
These sales accounted for the remaining 11% of total citrus revenue for the
year.
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 15,000 cows, bulls and replacement heifers. Approximately
54% of the herd are from one to five years old, while the remaining 46% 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 5,432 acres and 5,698 acres of sugarcane in production
during the 1998/99 and 1997/98 fiscal years, respectively. The 1998/99 and
1997/98 crops yielded approximately 216,000 and 204,000 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 pulpwood and sabal
palms. These products are sold to a paper company and various landscaping
companies, respectively. 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 lands 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 profitable 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 7,927 acres in Lee County, Florida to Florida Rock
Industries, Inc. of Jacksonville, 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 imported 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, 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 substantial 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, executive 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 1999 the Company had a total of 146 full-time
employees classified as follows: Citrus 56; Ranch 16; Sugarcane 13;
Facilities Maintenance Support 27; General and Administrative 34. There
are no employees engaged in the development of new products or research.
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 quarters. Other segments of the Company's business
such as its cattle and sod sales, and its timber, mining and leasing
operations, tend to be more successive than seasonal in nature.
Item 2. Properties.
____________________________
At August 31, 1999, the Company owned a total of 145,840 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 9,296 447 -- 3,148 -- -- 4 13,146
Lee 3,731 1,086 -- -- -- -- 1,460 3,599 9,876
Hendry 3,823 46,417 24,794 220 4,025 12,056 16,630 3,629 111,594
Collier 1,902 1,836 1,112 -- 4,041 -- -- 2,333 11,224
______ _______ ______ ___ _____ _____ _____ _____ _______
Totals 9,707 58,635 26,353 220 11,214 12,056 18,090 9,565 145,840
______ _______ ______ ___ _____ _____ ______ _____ _______
______ _______ ______ ___ _____ _____ ______ _____ _______
Of the above lands, the Company utilizes 24,178 acres of improved pasture
plus approximately 67,000 acres of native pasture for cattle production and
7,927 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 subsurface rights to
18,882 acres.
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 agricultural 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.
___________________________________
There are no pending legal proceedings involving the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
_____________________________________________________________________
None.
Executive Officers of the Company
_________________________________
Pursuant to General Instruction G of Form 10-K, the following list is
included as an unnumbered Item in Part I of this report in lieu of being
included in the Proxy Statement for the Annual Meeting of Stockholders to
be held on December 9, 1999.
Election of Executive Officer is held each year at the Annual Meeting of
the Board of Directors following the Annual Meeting of the Stockholders.
Name Title Age
____ _____ ___
Ben Hill Griffin, III Chairman of the Board (since March 1990),
Chief Executive Officer (since January
1988) and Director (since March 1973) 57
W. Bernard Lester President (since December 1997) and Chief
Operating Officer (since January 1988) and
Director (since 1987), prior to July 1, 1986
was Executive Director of Florida Department
of Citrus for over five years 60
L. Craig Simmons Vice President (effective February, 1995),
Treasurer and Chief Financial Officer
(effective September 1, 1992), prior thereto
was Controller (from January 1 to August 31, 1992)
and Assistant Comptroller (from January 1 to
December 31, 1991), prior to September 1990
was Controller of Farm/Citrus Division,
Collier Enterprises, Agribusiness Group 47
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) during the 1999 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 officer, director or beneficial owners of 10% or more of the
Company'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 1999.
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, 1999 and 1998
are presented below:
1999 1998
Bid Price Bid Price
_________ _________
High Low High Low
First Quarter 17 3/4 16 25 1/2 23 7/8
Second Quarter 19 1/2 15 7/8 24 1/2 19 1/2
Third Quarter 16 1/2 13 3/4 23 19 3/4
Fourth Quarter 17 3/4 15 1/8 20 3/4 17 5/8
Approximate Number of Holders of Common Stock
_____________________________________________
As of October 18, 1999 there were approximately 794 holders of record of
Alico, Inc. Common Stock.
Dividend Information
____________________
Only year-end dividends have been paid, and during the last three fiscal
years were as follows:
Amount Paid
Record Date Payment Date Per Share
___________ ____________ ___________
October 25, 1996 November 8, 1996 $.15
October 20, 1997 November 7, 1997 $.60
October 19, 1998 November 6, 1998 $.50
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.
Item 6. Selected Financial Data.
_________________________________________
Years Ended August 3l,
DESCRIPTION 1999 1998 1997 1996 1995
________ ________ ________ ________ ________
(In Thousands, Except Per Share Amounts)
Revenues $ 44,947 $ 44,679 $ 47,433 $ 36,089 $ 39,571
Costs and Expenses 37,886 33,654 29,583 29,269 25,105
Income Taxes 2,980 4,249 6,677 2,381 5,525
Net Income 4,081 6,776 11,173 4,439 8,941
Average Number of
Shares Outstanding 7,028 7,028 7,028 7,028 7,028
Basic Earnings Per Share .58 .96 1.59 .63 1.27
Cash Dividend Paid per Share .50 .60 .15 .35 .25
Current Assets 45,182 42,354 37,887 34,877 31,736
Total Assets 156,922 130,554 117,723 114,504 109,007
Current Liabilities 8,738 5,649 4,988 5,115 5,656
Ratio-Current Assets
to Current Liabilities 5.17:1 7.50:1 7.59:1 6.82:1 5.61:1
Working Capital 36,444 36,705 32,899 29,762 26,080
Long-Term Obligations 56,789 34,938 24,582 32,006 27,945
Total Liabilities 65,527 40,587 29,570 37,121 33,601
Stockholders' Equity 91,395 89,967 88,153 77,383 75,406
Item 7. Management's Discussion and Analysis of Financial
__________________________________________________________________
Condition and Results of Operations.
____________________________________
The following discussion focuses on the results of operations and the
financial condition of Alico.
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 $15.8 million at August
31, 1999 compared with $13.2 million at August 31, 1998. Working capital
decreased slightly, from $36.7 million at August 31, 1998 to $36.4 million
August 31, 1999.
Also, the Company purchased approximately 7,680 acres of citrus, sugarcane
and range lands in Hendry County, Florida, for $22.5 million in March 1999.
Cash outlay for land, equipment, building, and other improvements totaled
$27.9 million, during fiscal 1999, compared to $12.2 million during August
31, 1998 and $5.8 million in 1997, respectively. The most significant
expenditure was the land purchase referred to above. Land excavation for
sugarcane farming development and capital maintenance continued, as did
expenditures for replacement equipment and raising of breeding cattle.
Capital projects for the upcoming year are expected to include development
of additional sugarcane acreage.
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 provided
for revolving credit of up to $44 million of which $15.9 million was
available for the Company's general use at August 31, 1999 (see note 5 of
consolidated financial statements).
Year 2000 Compliance
____________________
The Company recognizes that year 2000 issues could result in system
failures or miscalculations causing disruptions of operations, including,
among others, a temporary inability to process transactions, send invoices
or engage in similar normal business activities.
The Company has been engaged in an evaluation of its year 2000 readiness in
connection with various aspects of its business. Specifically, the Company
has focused on its information technology and non-information technology
systems. In addition, the Company has analyzed its production processes and
products. The Company has also attempted to analyze year 2000 issues
relating to third parties with whom the Company has a business relationship.
The current status of the Company's efforts is as follows:
Internal Systems, Processes and Products
________________________________________
Information Technology Systems:
The Company's accounting software provider and operating system provider
have advised the Company that such software is year 2000 compliant.
Non-Information Technology Systems:
The Company does not believe that non-information technology systems are
material to its business; however, the Company has reviewed and testing
such systems. The Company does not believe that it will incur any
material costs in connection with the review and testing of such systems.
Products:
The Company's products are not date sensitive. Therefore, the Company does
not believe it has any material exposure with regard to its products as a
result of the year 2000 issue.
Year 2000 Issues Relating to Third Parties
__________________________________________
Suppliers:
Certain products purchased by the Company are obtained from a limited group
of suppliers. The Company surveyed such suppliers in 1999 regarding their
year 2000 status. Absent widespread difficulties affecting several major
vendors, the Company does not anticipate that vendors' year 2000 issues
would have a material adverse effect on the Company, because the Company
believes alternative sources of supply are available for all required
components.
The Company is not currently aware of the year 2000 readiness of certain
outside services companies. Any adverse effect caused by the failure of
these providers to be year 2000 compliant is not currently susceptible to
quantification.
Customers:
Because the Company intends to distribute the majority of its agricultural
products through third party distribution and marketing agreements, and
because the customer base is expected to change from year to year, the
Company is unable to predict the identity of most of its major customers in
the year 2000 and thereafter. Accordingly, the Company is unable to make an
inquiry as to whether the customers' computer driven payment or purchasing
processes are year 2000 compliant.
A customer's year 2000 issues could cause a delay in receipt of purchase
orders or in payment. If year 2000 issues are widespread among the Company's
customers, the Company's sales and cash flow could be materially affected.
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", "estimate", "may", "intend"
statements. 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 Company to a greater extent than indicated.
Results of Operations
_____________________
Summary of results (in thousands):
Years Ended August 31,
1999 1998 1997
_______ _______ _______
Operating revenue $39,346 $41,618 $34,543
Gross profit 3,997 9,532 5,886
Profit on sale of real estate 3,847 875 11,271
Interest and investment income 1,302 1,734 1,137
Interest expense 2,085 1,116 444
Provision for income taxes 2,980 4,249 6,677
Effective income tax rate 42.2% 38.5% 37.4%
Net income 4,081 6,776 11,173
Operating Revenue
_________________
Operating revenues for fiscal 1999 decreased, compared to fiscal 1998.
A decline in revenues from agricultural operations was the primary factor
in the decrease.
Operating revenues for fiscal 1998 increased when compared to those of
fiscal 1997. Revenues from agricultural operations were higher than in
the prior year.
Gross Profit
____________
Gross profit from operations decreased 58% during fiscal 1999, when
compared to the prior year. Reduced citrus yields combined with lower
market prices for beef as the primary factors in the decline.
Gross profit from operations during fiscal 1998 increased by 62% over
fiscal 1997. The increase was primarily due to larger harvest volume
for sugarcane, combined with improved market prices for citrus products.
Profit on Sale of Real Estate
____________________________________
Profit from the sale of real estate increased from $875 thousand during
fiscal 1998 to $3.8 million during fiscal 1999. Sales during the current
year included ongoing residential lot sales in Polk County and a $4.2 million
pre-tax gain on the sale of 7,142 acres in Hendry County to the South Florida
Water Management District.
Profit from the sale of real estate was $875 thousand during fiscal 1998,
as compared to $11.27 million during fiscal 1997. Sales during 1998 included
residential lot sales in Polk County, sales in Lee County and additional
proceeds resulting from a final survey of the large fiscal 1997 land sale
in Hendry County. During fiscal 1997 revenues included the sale of approximately
21,700 acres of land in Hendry and Collier Counties, Florida, to the State
of Florida for $11.5 million, the pre-tax gain from which was $11.1 million,
and several smaller sales in Lee, Collier and Polk Counties.
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 1999, 1998 and 1997, increasing investment levels during each year.
The rise in fiscal interest and realized and unrealized investment income
for the years presented resulted from reinvested income and favorable
market conditions during each of the years. As a result of the market
downturn of August 1998, the Company experienced unrealized declines in its
portfolio which have been reflected in stockholders' equity.
Interest Expense
________________
Interest expense increased during fiscal 1999, compared to fiscal 1998,
primarily due to increased borrowings related to the acquisition of 7,680
acres of sugarcane, citrus and range land, and borrowings related to the
development of the 8,444 acres purchased during fiscal 1998. Total interest
cost increased 53%, which included capitalized interest and is discussed in
Note 5.
Interest expense increased during fiscal 1998, compared to fiscal 1997,
primarily due to increased borrowings used to acquire property and interest
associated with settling the 8/31/93 and 8/31/94 income tax audits. Total
interest cost, which includes capitalized interest and is discussed in Note 5
to the Consolidated Financial Statements, increased 38%.
Provision for Income Taxes
__________________________
The effective tax rate increased to 42.2% during fiscal year 1999, up from
38.5% during fiscal year 1998, and 37.4% during fiscal year 1997.
Higher taxable income levels, combined with the impact of decreased tax
exempt investment income and payments related to the settlement of Internal
Revenue Service examinations, raised the effective rate.
Individual Operating Divisions
______________________________
Gross profit for the individual operating divisions, for fiscal 1999, 1998
and 1997, is presented in the following schedule and is discussed in
subsequent sections:
Years Ended August 31,
(in thousands)
1999 1998 1997
_______ _______ _______
CITRUS
Revenues:
Sales $23,518 $26,622 $22,287
Less harvesting & marketing 7,902 8,421 8,210
_______ _______ _______
Net Sales 15,616 18,201 14,077
Cost and Expenses:
Direct production** 10,198 6,908 6,875
Allocated cost* 2,977 2,616 2,352
_______ _______ _______
Total 13,175 9,524 9,227
_______ _______ _______
Gross profit, citrus 2,441 8,677 4,850
_______ _______ _______
SUGARCANE
Revenues:
Sales 7,120 6,123 4,967
Less harvesting & hauling 1,341 1,400 1,120
_______ _______ _______
Net Sales 5,779 4,723 3,847
Costs and expenses:
Direct production 1,886 1,926 1,826
Allocated cost* 1,257 1,189 1,190
_______ _______ _______
Total 3,143 3,115 3,016
_______ _____ _______
Gross profit, sugarcane 2,636 1,608 831
_______ _______ _______
RANCH
Revenues:
Sales 6,271 6,883 4,876
Costs and expenses:
Direct production 4,507 4,715 3,165
Allocated cost* 1,772 1,552 946
_______ _______ _______
Total 6,279 6,267 4,111
_______ _______ _______
Gross profit (loss), ranch (8) 616 765
_______ _______ _______
Total gross profit,
agriculture 5,069 10,901 6,446
_______ _______ _______
OTHER OPERATIONS
Revenues:
Rock products and sand 1,350 1,203 1,258
Oil leases and land rentals 711 505 831
Forest products 136 161 224
Other 240 122 100
_______ _______ _______
Total 2,437 1,991 2,413
Costs and expenses:
Allocated Cost* 767 570 481
General and administrative,
all operations 2,742 2,789 2,492
_______ _______ _______
Total 3,509 3,359 2,973
_______ _______ _______
Gross loss, other
operations (1,072) (1,368) (560)
_______ _______ _______
Total gross profit 3,997 9,533 5,886
_______ _______ _______
INTEREST & DIVIDENDS
Revenue 1,302 1,734 1,137
Expense 2,085 1,116 444
_______ _______ _______
Interest & dividends, net (783) 618 693
_______ _______ _______
REAL ESTATE
Revenue:
Sale of real estate 4,299 1,327 11,753
Expenses:
Cost of sales 92 93 122
Other Costs 360 360 360
_______ _______ _______
Total 452 453 482
_______ _______ _______
Gain on sale of real estate 3,847 874 11,271
_______ _______ _______
Income before income taxes $ 7,061 $11,025 $17,850
_______ _______ _______
_______ _______ _______
* Allocated expense includes ad valorem and payroll taxes, depreciation
and insurance.
** Excludes capitalized maintenance cost of groves less than five years of
age consisting of $434 dollars on 134 acres in 1999, $236 thousand on
620 acres in 1998, and $875 thousand on 1,130 acres in 1997.
Citrus
______
Gross profit was $ 2.4 million in fiscal 1999, $8.7 million in fiscal 1998,
and $4.9 million for fiscal 1997.
Revenue from citrus sales decreased 11.7% during fiscal 1999, compared to
fiscal 1998 ($23.5 million during fiscal 1999 vs. $26.6 million during
fiscal 1998).
Production declined for the year, while the average market price for citrus
increased. However, this improvement did not offset the decrease in yields.
Harvesting and marketing costs decreased from the prior year, due to
fewer number of boxes that were harvested during the year. Direct
production and allocated costs also increased (38%), due to inflation and
increased cultivation costs related to young groves recently placed in
service.
Revenue from citrus sales increased 19% during fiscal 1998, compared to
fiscal 1997 ($26.6 million during fiscal 1998 vs. $22.3 million during fiscal
1997). The increase primarily resulted from higher prices for citrus products.
Production remained steady for the year, while average market prices per box
increased.
Harvesting and marketing costs rose slightly from the prior year, due to
competing demands for labor ($8.4 million in fiscal 1998 vs. $8.2 million in
fiscal 1997). Direct production and allocated costs also increased slightly
(3%), largely due to inflation.
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 - - 117 30 - - - - 147
Hamlin
Oranges 386 170 32 30 891 222 254 1,574 3,559
Red Grapefruit - - 54 - 81 - 48 327 510
White Grapefruit - - - 318 - - - 21 339
Tangelos - - - - - - - 135 135
Navel Oranges - - 15 - - - 54 84 153
Mid Season:
Pineapple
Oranges - 103 - - - - 18 467 588
Queen Oranges - - - - - - - 51 51
Honey
Tangerines - 76 - - 45 - - 94 215
Midsweet
Oranges 133 110 - - - - - - 243
Late:
Valencia
Oranges 1,055 308 654 689 1,053 - 125 1,390 5,274
_____ ___ ___ ___ _____ ___ ___ _____ _____
Totals: 1,574 767 872 1,067 2,070 222 499 4,143 11,214
The final returns from citrus pools are not precisely determinable at year
end. Returns are estimated each year based on the most current information
available, conservatively applied. Differences between the estimates and
the final realization of revenues can be significant. Revenues collected
in excess of prior year and year end estimates were $160 thousand, $2.7
million, and $1.0 million during fiscal 1999, 1998 and 1997, respectively.
Sugarcane
_________
Gross profit for fiscal 1999 was $2.6 million compared to $1.6 million in
fiscal 1998 and $831 thousand in fiscal 1997.
Sales revenues from sugarcane increased 16% during fiscal 1999, compared to
fiscal 1998 ($7.1 million vs. $6.1 million, respectively). During the same
period, direct production and allocated costs remained the same ($3.1
million in fiscal 1998 and 1999). The rise in earnings was primarily due to
improved sugar yield per acre. While the gross tons harvested during fiscal
1999 approximated fiscal 1998, this year's crop yielded a higher sugar content,
generating the rise in earnings for this division.
Sales revenues from sugarcane increased 23% during fiscal 1998, compared to
fiscal 1997 ($6.1 million vs. $4.9 million, respectively). During the same
period, direct production and allocated costs increased by 3% ($3.1 million
in fiscal 1998 vs. $3.0 million in fiscal 1997).
The revenue improvement during the year was largely due to increases in acres
harvested and gross tons yielded per acre. The total gross tons harvested
during fiscal 1998 was 29% higher than the previous year. Poor weather
conditions caused decreased yields during the prior year.
Ranching
________
The gross profit (loss) from ranch operations for fiscal 1999, 1998 and 1997
was $(8) thousand, $616 thousand, and $765 thousand, respectively.
Revenues from cattle sales decreased 9% during fiscal 1999, compared to
fiscal 1998 ($6.3 million in fiscal 1999 vs. $6.9 million in fiscal 1998).
The number of animals sold during the year decreased 13% under the prior year
due to decreased sales of feeder cattle during the year.
Direct and allocated costs remained unchanged from their year ago levels ($6.3
million in fiscal 1999 and 1998).
The Company's cattle marketing activities include retention of calves in
western feedlots, contract and auction sales, and risk management contracts.
Revenues from cattle sales increased 41% during fiscal 1998, compared to
fiscal 1997 ($6.9 million in fiscal 1998 vs. $4.9 million in fiscal 1997).
The number of animals sold during the year increased 17% over the prior year
Due to increased sales of feeder cattle inventories during the year.
Direct and allocated costs increased from their year ago levels ($6.3 million
in fiscal 1998 vs. $4.1 million in fiscal 1997). The costs increased as a
result of the increase in the number of animals sold, and the type of animals
sold. During the prior year, the Company sold a larger number of fully brood
cows, resulting in a lower cost basis and a higher profit margin per unit.
Other Operations
________________
Revenues from oil royalties and land rentals were $711 thousand for fiscal
1999 compared to $505 thousand for fiscal 1998 and $831 thousand for fiscal
1997.
Returns from rock products and sand were $1.3 million for fiscal 1999,
$1.2 for 1998 and 1.3 million during 1997. 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, for landscaping purposes, during
fiscal 1998 were $136 thousand compared to $161 thousand and $224 thousand
for fiscal years 1998 and 1997, respectively.
Direct and allocated expenses charged to the "Other" operations category
included general and administrative and other costs not charged directly to
citrus, ranching, sugarcane divisions. These expenses totaled $3.5
million during fiscal 1999 compared to $3.4 million during fiscal 1998 and
to $3.0 million during fiscal 1997.
General Corporate
_________________
The Company is continuing its marketing and permitting activities for its
land which surrounds the Florida Gulf Coast University site.
The Company announced an option agreement with REJ Group, Inc., of Cleveland,
Ohio, during May 1997. The option agreement permits the acquisition of a
minimum 150 acres and a maximum of 400 acres within the 2,300 acres University
Village. The potential pre-tax gain to Alico, if the option is exercised,
would vary from $8.5 million to $24.5 million, depending on the time at which
the option is exercised, and the total number of acres selected.
In February 1999, the South Florida Water Management District acquired
Approximately 12,728 acres of land in Hendry and Collier Counties, Florida,
from Alico, Inc. for $8.8 million. Upon completion of the sale, the Company
recognized a pre-tax gain of approximately $4.2 million on 7,142 of the acres.
The remaining 5,586 acres were used in a like-kind exchange, as part of a
$22.5 million acquisition of approximately 7,680 acres in Hendry County, Florida
that was completed during March of 1999. The acquisition included producing
citrus and sugarcane operations. The transaction included like-kind exchanges
totaling $6.1 million and debt restructuring that resulted in a $19 million
mortgage. (See Note 5 under Notes to Consolidated Financial Statements.)
In July of 1999, the Company entered into a contract to sell 402 acres near
the University to Thomas B. Garlick, a Trustee of Florida Land Trust 996 for
approximately $15.5 million. The sale is scheduled to close during fiscal
2000. If the sale is consummated, it is expected to generate a pre-tax gain
of approximately $13.5 million. Additionally, the Company has agreed to sell
190 acres, also near the University, for approximately $6.6 million to South
west Florida Equities Corporation. The sale is expected to close during
fiscal 2001 and could potentially generate a $5.8 million pre-tax gain.
During September of 1999, the Company announced a sale to Miromar
Development, Inc. of Montreal, Canada, of 1,230 acres of land surrounding
the University site in Lee County for $16.5 million. The contract called for
25 percent of the purchase price to be paid at closing, with the balance
payable over the next four years. The sale is expected to generate a pre-
tax gain of approximately $14 million.
Item 7(a). Quantitative and Qualitative Disclosure About Market Risk
_________________________________________________________________________
Our exposure to market rate risk for changes in interest rates relates
primarily to our investment portfolio. We do not have derivative financial
instruments in our investment portfolio. We place our investments with high
quality issuers and, by policy, limit the amount of credit exposure to any
one issuer. We are adverse to principal loss and ensure the safety and
preservation of our invested funds by limiting default, market and
reinvestment risk. We classify our 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. We classify our cash equivalents and short-term investments as
variable-rate if the rate of return on such investments varies based on the
change in a predetermined index or set of indices during their term. These
variable-rate investments primarily include money market accounts, mutual funds
and equities held at various securities brokers and investment banks. The table
below presents the amounts (in thousands) and related weighted interest rates
of our investment portfolio at August 31, 1999:
Average
Marketable Interest Estimated
Securities and Rate Cost Fair Value
Short-term Investments (1) _____________ ______________ _____________
Fixed Rate 5.10% $ 2,980 $ 2,887
Variable Rate 5.24% $ 10,778 $ 12,520
(1) See definition in Notes 1 and 2 to our Consolidated Financial
Statements.
The aggregate fair value of our investment in debt instruments (net of mutual
funds of $1,791) as of August 31, 1999, by contractual maturity date, consisted
of the following:
Aggregate Fair
Values
______________
(in thousands)
Due in one year or less $ 365
Due between one and five years 166
Due between five and ten years 194
Due thereafter 371
______________
$ 1,096
______________
______________
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
subsidiary as of August 31, 1999 and 1998, 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, 1999. 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
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 subsidiary at August 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the years in the three-year
period ended August 31, 1999, in conformity with generally accepted
accounting principles. 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 13, 1999
CONSOLIDATED BALANCE SHEETS
August 31,
1999 1998
_____________ ____________
ASSETS
Current assets:
Cash, including time deposits and other
cash investments of $ 335,532 in 1999
and $ 849,905 in 1998 $ 740,829 $ 908,268
Marketable equity securities available
for sale, at estimated fair value in
1999 and in 1998 (note 2) 15,043,713 12,291,767
Accounts receivable ($6,084,064 in 1999 and
$8,332,514 in 1998 due from affiliate)
(note 9) 8,030,863 11,093,835
Mortgages and notes receivable, current
portion 73,589 99,673
Inventories (note 3) 20,547,215 17,625,923
Refundable income taxes 549,586 0
Other current assets 195,904 334,577
____________ ____________
Total current assets 45,181,699 42,354,043
____________ ____________
Other assets:
Land inventories 9,429,295 8,837,957
Mortgages and notes receivable, net of
current portion 394,203 514,796
Investments 946,145 965,230
____________ ____________
Total other assets 10,769,643 10,317,983
____________ ____________
Property, buildings and equipment (note 4) 132,372,839 107,064,751
Less accumulated depreciation (31,402,071) (29,182,416)
____________ ____________
Net property, buildings and equipment 100,970,768 77,882,335
____________ ____________
Total assets $156,922,110 $130,554,361
____________ ____________
____________ ____________
See accompanying notes to consolidated financial statements.
August 31,
1999 1998
____________ ____________
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,571,579 $ 1,464,159
Due to profit sharing plan (note 7) 269,177 296,368
Accrued ad valorem taxes 1,997,834 1,329,136
Current portion of notes payable (note 5) 1,322,033 28,145
Accrued expenses 683,848 538,897
Income taxes payable 0 623,128
Deferred income taxes (note 8) 1,893,360 1,023,886
Deferred revenue 0 345,763
____________ ____________
Total current liabilities 8,737,831 5,649,482
Notes payable (note 5) 45,630,912 23,210,723
Deferred income taxes (note 8) 10,780,521 11,723,895
Deferred retirement benefits (note 7) 377,487 3,320
____________ ____________
Total liabilities 65,526,751 40,587,420
____________ ____________
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
7,027,827 in 1999 and 1998 7,027,827 7,027,827
Accumulated other Comprehensive Income
(note 2) 1,029,953 168,345
Retained earnings 83,337,579 82,770,769
____________ ____________
Total stockholders' equity 91,395,359 89,966,941
____________ ____________
Total liabilities and stockholders'
equity $156,922,110 $130,554,361
____________ ____________
____________ ____________
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended August 31,
1999 1998 1997
___________ ___________ ___________
Revenue:
Citrus (including charges from
affiliate (note 9 ) $23,518,082 $26,621,714 $22,287,006
Sugarcane 7,119,976 6,122,822 4,966,837
Ranch 6,270,988 6,882,149 4,875,826
Forest products 136,372 161,309 224,090
Rock and sand royalties 1,349,856 1,203,160 1,257,665
Oil lease and land rentals 710,731 505,426 831,254
Profit on sales of real estate 4,299,434 1,326,624 11,753,199
Interest and investment income 1,301,991 1,734,023 1,136,928
Other income 239,866 121,509 99,872
___________ ___________ ___________
Total revenue 44,947,296 44,678,736 47,432,677
___________ ___________ ___________
Costs and expenses:
Citrus production, harvesting and
Marketing (including charges from
Affiliate (note 9) 21,077,169 17,945,016 17,436,648
Sugarcane production, harvesting
and hauling 4,483,250 4,514,424 4,136,302
Ranch 6,280,000 6,266,688 4,110,969
Real estate 452,029 451,912 481,870
Interest (note 5) 2,085,065 1,116,688 444,217
Other, general and administrative
expenses 3,508,845 3,359,392 2,972,863
___________ ___________ ___________
Total costs and expenses 37,886,358 33,654,120 29,582,869
___________ ___________ ___________
Income before income taxes 7,060,938 11,024,616 17,849,808
Provision for income taxes (note 8) 2,980,214 4,248,810 6,677,116
___________ ___________ ___________
Net Income 4,080,724 $ 6,775,806 $11,172,692
___________ ___________ ___________
___________ ___________ ___________
Weighted average number of shares
outstanding 7,027,827 7,027,827 7,027,827
___________ ___________ ___________
___________ ___________ ___________
Per share amounts:
Basic earnings $ .58 $ .96 $ 1.59
Dividends .50 $ .60 $ .15
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Common Accumulated
Stock Other
Shares Retained Comprehensive
Issued Amount Earnings Income Total
________ ________ __________ _______ ___________
Balances,
August 31, 1996 7,027,827 $7,027,827 $70,093,141 $261,686 $77,382,654
_______________
Comprehensive income:
Net income for
the year ended
August 31, 1997 - - 11,172,692 - 11,172,692
Unrealized gains
on Securities,
net of taxes - - - 651,373 651,373
and reclassification
adjustment
(see disclosure) _____________
Total Comprehensive income: 11,824,065
Dividends paid - - (1,054,174) - (1,054,174)
_________ __________ ___________ ________ _______________
Balances,
August 31, 1997 7,027,827 $7,027,827 $80,211,659 $913,059 $88,152,545
_______________
Comprehensive income:
Net income for
the year ended
August 31, 1998 - - 6,775,806 - 6,775,806
Unrealized losses
on Securities,
net of taxes - - - (744,714) (744,714)
and reclassification
adjustment
(see disclosure) ____________
Total Comprehensive income: 6,031,092
Dividends paid - - (4,216,696) - (4,216,696)
________ __________ ___________ ________ ____________
Balances,
August 31, 1998 7,027,827 $7,027,827 $82,770,769 $168,345 $89,966,941
_______________
Comprehensive income:
Net income for
the year ended
August 31, 1999 - - 4,080,724 - 4,080,724
Unrealized gains on
Securities, net
of taxes - - - 861,608 861,608
and reclassification
adjustment
(see disclosure) ___________
Total Comprehensive income: 4,942,332
Dividends paid - - (3,513,914) - (3,513,914)
_________ __________ ___________ ________ _____________
Balances,
August 31, 1999 7,027,827 $7,027,827 $83,337,579 $1,029,953 $91,395,359
_________ __________ ___________ ________ _____________
_________ __________ ___________ ________ _____________
Disclosure of reclassification amount: 1999 1998 1997
________ ________ ________
Unrealized holding gains (losses)
arising during the period $824,144 $(86,587) $845,326
Less: reclassification adjustment
for gains (losses) included in net
income (37,464) 658,127 193,953
________ ________ ________
Net unrealized gains (losses) on securities $861,608 $(744,714) $651,373
________ _________ ________
________ _________ ________
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended August 31,
1999 1998 1997
___________ ___________ __________
Increase (Decrease) in Cash and Cash Investments:
Cash flows from operating activities:
Net Income $ 4,080,724 $ 6,775,806 $11,172,692
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation and amortization 5,355,450 4,717,219 4,240,117
Gain on breeding herd sales (316,700) (465,482) (526,266)
Deferred income tax expense, net (631,748) 714,257 (259,533)
Deferred retirement benefits 374,167 (9,939) (63,465)
Net gain on sale of marketable
securities (11,736) (850,446) (414,669)
(Gain) loss on sale of property
and equipment 33,934 (14,678) 424,915
Gain on real estate sales (4,299,434) (1,239,031) (11,957,753)
Increase in land inventories (591,338) (492,841) (567,174)
Cash provided by (used for) changes in:
Accounts receivable 3,062,972 (3,636,898) 1,975,901
Inventories (3,824,055) (1,924,894) (2,845,384)
Refundable income taxes (549,586) - -
Other assets 138,673 (65,114) (31,425)
Accounts payable and accrued
expenses 1,893,878 479,862 (590,994)
Income taxes payable (623,128) (311,767) 744,256
Deferred revenues (345,763) 345,763 -
___________ ___________ ___________
Net cash provided by operating
activities 3,746,310 4,021,817 1,301,218
___________ ___________ ___________
Cash flows from investing activities:
Purchases of property and
equipment (27,883,421) (12,186,976) (5,752,072)
Proceeds from disposals of
property and equipment 457,584 510,432 608,658
Proceeds from sale of real
estate 4,466,917 1,393,170 12,060,060
Purchases of other assets (39,165) (51,446) (100,896)
Proceeds from the sale of
other assets 58,250 41,995 161,643
Purchases of marketable
securities (3,461,686) (5,255,681) (4,694,859)
Proceeds from sales of
marketable securities 2,140,932 3,933,517 4,367,008
Collection of mortgages and
notes receivable 146,677 875,503 909,120
___________ __________ ___________
Net cash provided by
(used for) investing
activities (24,113,912) (10,739,486) 7,558,662
___________ ___________ __________
Years Ended August 31,
1999 1998 1997
___________ ___________ ___________
Cash flows from financing activities:
Proceeds of bank loans 59,952,000 31,573,868 18,749,000
Repayment of loans (36,237,923) (21,191,000) (26,523,000)
Dividends paid (3,513,914) (4,216,696) (1,054,174)
___________ ___________ ___________
Net cash provided by
(used for) financing
activities 20,200,163 6,166,172 (8,828,174)
___________ ___________ ___________
Net increase (decrease) in
cash and cash investments (167,439) (551,497) 31,706
Cash and cash investments:
At beginning of year 908,268 1,459,765 1,428,059
___________ ___________ __________
At end of year $ 740,829 $ 908,268 $ 1,459,765
___________ ___________ ___________
___________ ___________ ___________
Supplemental disclosures of cash flow information:
Cash paid for interest,
net of amount capitalized $ 2,186,855 $ 765,210 $ 396,988
___________ ___________ ___________
___________ ___________ ___________
Cash paid for income taxes, $ 3,142,286 $ 3,800,198 $ 6,183,310
including related interest (note 8)___________ ___________ ___________
___________ ___________ ___________
Non-cash investing activities:
Fair value adjustments to
securities available for sale $ 1,482,456 $(1,194,026) $ 1,044,369
___________ ___________ ___________
___________ ___________ ___________
Income tax effect related
to fair value adjustments $ 557,848 $ (449,312) $ 392,996
___________ ___________ __________
___________ ___________ __________
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended August 31, 1999, 1998 and 1997
(1) Summary of Significant Accounting Policies
__________________________________________
(a) Basis of Consolidated Financial Statement Presentation
______________________________________________________
The accompanying financial statements include the accounts of
Alico, Inc. (the Company) and its wholly owned subsidiary,
Saddlebag Lake Resorts, Inc. (Saddlebag), after elimination of
all significant inter-company balances and transactions.
(b) Revenue Recognition
___________________
Income from sales of citrus under marketing pool agreements is
recognized at the time the crop is harvested. The revenue is
based on the Company's estimates of the amounts to be received as
the sales of pooled products are completed. Fluctuation in the
market prices for citrus fruit has caused the Company to recognize
additional revenue from the prior year's crop totaling $ 159,748,
$2,656,629, and $1,007,211 during fiscal years 1999, 1998 and 1997,
respectively.
(c) Real Estate
___________
Real estate sales are recorded under the accrual method of
accounting. Retail land sales are not recognized until payments
received, including interest, aggregate 10 percent of the
contract sales price for residential real estate or 20 percent
for commercial real estate. Sales are discounted to yield 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 improvements 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 incurred. 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 the
estimate fair value of the portfolio. Net unrealized investment
gains and losses are recorded net of related deferred taxes in a
separate component of 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 determined on the specific identification method.
(e) Inventories
___________
Beef cattle inventories are stated at the lower of cost or
market. The cost of the beef cattle inventory 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 unharvested 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.
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.
(g) 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 temporary 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.
(h) Basic Earnings Per Share
________________________
Earnings per share has been computed by dividing net income by
the weighted average number of common shares outstanding during
the year. The Company has no diluting securities.
(i) Cash Flows
__________
For purposes of the cash flows, cash and cash investments include
cash on hand and amounts due from financial institutions with an
original maturity of less than three months.
(j) Use of Estimates
________________
In preparing the consolidated financial statements, management is
required to make estimates and assumptions that effect the
reported amounts of assets and liabilities. Actual results could
differ significantly from those estimates. Although some
variability is inherent in these estimates, management believes
that the amounts provided are adequate.
(k) Financial Instruments and Accruals
__________________________________
The carrying amounts in the consolidated balance sheets for
accounts 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.
l) Accumulated Other Comprehensive Income
______________________________________
As of September 1, 1998, the company adopted Statement of
Financial Accounting Standards No. 130 (SFAS 130), "Reporting
Comprehensive Income", which was effective for fiscal years
beginning after December 15, 1997. SFAS 130 requires that all
items required to be recognized as components of comprehensive
income be reported in a financial statement with equal prominence
to other financial statements. 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 shall be 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".
(m) Operating Segment
_________________
As of September 1, 1998, Alico adopted Statement of Financial
Accounting Standards No. 131 (SFAS 131). "Disclosures about
Segments of an Enterprise and Related Information", which was
effective for fiscal years beginning after December 31, 1997.
SFAS 131 establishes standards for reporting information about a
Company's operating segments. It also establishes standards for
related disclosures about products and services, geographic areas
and major customers.
Alico, Inc. has four reportable segments: citrus, sugarcane,
ranching and general corporate. The commodities produced by these
segments are sold to wholesalers and processors who prepare the
products for consumption. The Company's operations are all located
in Florida.
(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, 1999 and 1998 (in thousands) were as follows:
1999 1998
_____________________________ _____________________________
Gross Estimated Gross Estimated
Unrealized Fair Unrealized Fair
Cost Gains Losses Value Cost Gains Losses Value
_______ ____ ____ _______ ______ ______ ___ ________
Equity
securities $10,900 $1,825 $107 $12,618 $9,498 $ 444 $307 $ 9,635
Debt
securities 2,493 17 84 2,426 2,623 111 77 2,657
_______ ____ ____ _______ ______ ______ ___ ________
Marketable
securities
available
for sale $13,393 $1,842 $191 $15,044 $12,121 $ 555 $384 $12,292
_______ ____ ____ _______ ______ ______ ___ ________
_______ ____ ____ _______ ______ ______ ___ ________
At August 31, 1999, debt instruments (net of mutual funds of $1,791,343)
are collectible as follows: $ 0 within one year, $166,218 between one
and five years, $194,618 between five and ten years, and $341,258 there
after.
(3) Inventories
___________
A summary of the Company's inventories (in thousands) at August 31,
1999 and 1998 is shown below:
1999 1998
_______ _______
Unharvested fruit crop on trees $ 9,359 $ 7,466
Unharvested sugarcane 3,639 2,358
Beef cattle 7,433 7,535
Sod 116 267
_______ _______
Total inventories $20,547 $17,626
_______ _______
_______ _______
Subject to prevailing market conditions, the Company may hedge a portion
of its beef inventory by entering into cattle futures contracts to reduce
exposure to changes in market prices. Any gains or losses anticipated
under these agreements will be deferred, with the cost of the related
cattle being adjusted when the contracts are settled.
(4) Property, Buildings and Equipment
_________________________________
A summary of the Company's property, buildings and equipment (in
thousands) at August 31, 1999 and 1998 is shown below:
Estimated
1999 1998 Useful Lives
_______ _______ ____________
Breeding herd $12,585 $12,588 5-7 years
Buildings 3,396 3,012 5-40 years
Citrus trees 26,797 20,321 22-40 years
Sugarcane 5,998 3,196 4-15 years
Equipment and other facilities 27,373 24,668 3-40 years
_______ _______
Total depreciable properties 76,149 63,785
Less accumulated depreciation 31,402 29,182
_______ _______
Net depreciable properties 44,747 34,603
Land and land improvements 56,224 43,279
_______ _______
Net property, buildings
and equipment $100,971 $77,882
_______ _______
_______ _______
The Company's citrus trees, fruit crop, unharvested sugarcane and
cattle are partially uninsured.
(5) Indebtedness
____________
The Company has financial agreements with commercial banks that permit
the Company to borrow up to $44 million. The financing agreements allow
the Company to borrow up to $41,000,000 which is due in 2001 and up to
$3,000,000 which is due on demand. In March 1999, the Company mortgaged
7,680 acres for $19 million in connection with a $22.5 million acquisition
of producing citrus and sugarcane operations. The total amount of long-
term debt under these agreements at August 31, 1999 and 1998 was
$45,630,912 and $23,210,723, respectively.
Maturities of the indebtedness of the Company over the next five years are
As follows: 2000- $1,322,033; 2001- $29,442,033; 2002- $1,322,033;
2004- $1,322,033; 2005- $1,322,033.
Interest cost expensed and capitalized (in thousands) during the three
years ended August 31, 1999, 1998 and 1997 was as follows:
1999 1998 1997
______ ______ ______
Interest expense $2,085 $1,117 $ 444
Interest capitalized 158 345 618
______ ______ ______
Total interest cost $2,243 $1,462 $1,062
______ ______ ______
______ ______ ______
(6) Stock Option Plan
_________________
On November 3, 1998, the Company adopted the Alico, Inc., Incentive
Equity Plan (The Plan) pursuant to which the Board of Directors of the
Company may grant options, stock appreciation rights, and/or restricted
stock to certain directors and employees. The Plan authorizes grants of
shares or options to purchase up to 650,000 shares of authorized but
unissued common stock. Stock options granted have a maximum term of ten
years and have vesting schedules which are at the discretion of the Board
of Directors and determined on the effective date of the grant.
Effective April 6, 1999, the Company granted 34,700 options with an
exercise price of $14.62 and a fair value of $14.62. Options granted have
a ten year contractual life. As of August 31, 1999, the 34,700 options
remained outstanding with an weighted average exercise price of $14.62 and
a weighted average remaining contractual life of ten years.
At August 31, 1999, there were no shares exercisable and 615,300 shares
available and for grant under the Plan.
The per share weighted-average fair value of stock options granted was
$41,640 on the date of grant using the Black Scholes option-pricing model
with the following weighted-average assumptions:
Volatility 10.90%
Dividend paid 2.05%
Risk-free interest rate 4.50%
Expected life in years 2
All stock options granted, except as noted in the paragraph below, have
been granted to directors or employees with an exercise price equal to
the fair value of the common 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 and, accordingly, no compensation cost has been
recognized in the consolidated financial statements through August 31,
1999.
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 decreased to the pro forma amounts indicated below:
Net income as reported $4,080,724
Pro forma net income $4,039,084
Basic per share, as reported $ .58
Pro forma basic earning per share $ .58
(7) Employee Benefit Plans
______________________
The Company has a profit sharing plan covering substantially all
employees. The plan was established under Internal Revenue Code Section
401(k). Contributions made to the profit sharing plan were $ 269,177,
$296,368 and $230,545 for the years ended August 31, 1999, 1998 and 1997,
respectively.
Certain officers and employees also have employment contracts for
additional retirement benefits, the cost of which is accruable on a
present value basis over the remaining term of the employment agreements.
The lives of such officers and employees have been insured as a means of
funding such additional benefits. The accrued pension liability for
these additional retirement benefits at August 31, 1999 and 1998 was
$3,320 and $3,320, respectively.
Additionally, the Company implemented a nonqualified defined 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, 1999 and 1998 was $374,167 and
($14,950), respectively.
Pension expenses for the additional retirement benefits were approximately
$213,000, $345,000 and $217,000 for the years ended August 31, 1999, 1998
and 1997, respectively.
(8) Income Taxes
____________
The provision for income taxes (in thousands) for the years ended August
31, 1999, 1998 and 1997 is summarized as follows:
1999 1998 1997
______ ______ ______
Current:
Federal income tax $3,369 $3,012 $5,919
State income tax 305 521 1,000
______ ______ ______
3,674 3,533 6,919
______ ______ ______
Deferred:
Federal income tax (593) 611 (207)
State income tax (101) 105 (35)
______ ______ ______
(694) 716 (242)
______ ______ ______
Total provision for
income taxes $2,980 $4,249 $6,677
______ ______ ______
______ ______ ______
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, 1999, 1998 and
1997:
1999 1998 1997
______ ______ ______
Expected income tax $2,401 $3,748 $6,069
Increase (decrease)
resulting from:
State income taxes, net
of federal benefit 135 400 648
Nontaxable interest
and dividends (102) (92) (120)
Internal Revenue Service
examinations 984 - -
Change in valuation
allowance (539) - -
Other reconciling
items, net 101 193 80
______ ______ ______
Total provision for
income taxes $2,980 $4,249 $6,677
______ ______ ______
______ ______ ______
Some items of revenue and expense included in the statement of operations
may not be currently taxable or deductible 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.
At August 31, 1999 the Company had an unused charitable contribution
carryover totaling $7,282,297. Management estimates that $1,467,000 will
be used to reduce taxable income during the next year. As a result,
the estimated unusable portion of the carryover has been set up as the
valuation amount in the deferred tax asset schedule below. The contri-
bution carryover expires in August 31, 2000.
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):
1999 1998
_______ _______
Deferred Tax Assets:
Contribution carryover $(2,740) $(2,841)
Less valuation allowance 2,188 2,727
_______ _______
Net contribution carryover (522) (114)
Beef cattle inventory - -
Pension (193) (284)
Prepaid sales commissions (739) (604)
Other (2,167) (289)
_______ _______
Total gross deferred
tax assets (3,651) (1,291)
_______ _______
Deferred Tax Liabilities:
Revenue recognized from
citrus and sugarcane 1,612 1,174
Property and equipment
(principally due to
depreciation and soil
and water deductions) 12,117 12,619
Mortgage notes receivable 27 29
Other 1,885 153
Unrealized gains on securities 684 64
_______ _______
Total gross deferred
tax liabilities 16,325 14,039
_______ _______
Net deferred income
tax liabilities $12,674 $12,748
_______ _______
_______ _______
The Company is currently under examination by the Internal Revenue Service
for the years ended August 31, 1995 and 1996. When the examination are
resolved, any income taxes due will become currently payable. However,
the majority of the proposed adjustments relate to, among other things,
the Company's computation of the deferral of citrus revenue, timing of
deductions for certain expenses, and the determination of the amounts of
certain charitable contributions, all of which have been provided for in
the Company's deferred tax liability account. The Company plans to
continue to defend the positions taken in its amended tax returns.
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 that not be sufficient to recognize fully all deferred tax assets.
(9) Related Party Transactions
__________________________
Citrus
______
Citrus revenues of $18,188,136, $24,018,251 and $20,065,303 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, 1999, 1998 and
1997, respectively. Griffin and its subsidiaries is the owner of 49.71
percent of the Company's common stock. Accounts receivable, resulting
from citrus sales, include amounts due from Griffin totaling $ 6,084,064
and $8,332,514 at August 31, 1999 and 1998, respectively. 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 $6,127,603, $7,610,639, and $7,335,825 for the years
ended August 31, 1999, 1998 and 1997, respectively. In addition, Griffin
provided the harvesting services for citrus sold to an unrelated
processor. The aggregate cost of these services was $791,932, $758,370 and
$779,715 for the years ended August 31, 1999, 1998 and 1997, respectively.
The accompanying consolidated balance sheets include accounts payable to
Griffin for citrus production, harvesting and processing costs in the
amount of $880,283 and $423,321 at August 31, 1999 and 1998, 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, sugarcane, sod and citrus operations. Such
purchases totaled $6,019,927, $4,650,867 and $4,451,224 during the years
ended August 31, 1999, 1998 and 1997, respectively.
(10) Future Application of Accounting Standards
__________________________________________
In June 1998, the Financial Standards Board issued Statements of Financial
Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative
Instruments and Hedging Activities". SFAS 133 requires that an entity
recognize all derivatives as either assets or liabilities in the statement
of financial position and measure those instruments at fair value. Gains
and losses resulting from changes in the values of those derivatives
would be accounted for depending on the use of the derivative and whether
it qualifies for hedge accounting. The key criterion for hedge accounting
is that the hedging relationship must be highly effective in achieving
offsetting changes in fair value or cash flows.
In June 1999, the FASB issued SFAS 137 which amended the implementation
date for SFAS 133 to be effective for all fiscal years beginning after
June 15, 2000.
(11) Business Segment Information
____________________________
The Company is primarily engaged in agricultural operations, which are
subject to risk, including market prices, weather conditions and environ-
mental 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 operations (in thousands) for the
years ended August 31, 1999, 1998 and 1997 is summarized as follows:
1999 1998 1997
________ ________ ________
Revenues:
Agriculture:
Citrus $ 23,518 $ 26,622 $ 22,287
Sugarcane 7,120 6,123 4,967
Ranch 6,271 6,882 4,876
________ ________ ________
Total agriculture 36,909 39,627 32,130
Real estate 4,299 1,327 11,753
General corporate 3,739 3,725 3,550
________ ________ ________
Consolidated total $ 44,947 $ 44,679 $ 47,433
________ ________ ________
________ ________ ________
Operating income (loss):
Agriculture:
Citrus $ 3,441 $ 8,677 $ 4,850
Sugarcane 2,636 1,608 831
Ranch (8) 615 765
________ ________ ________
Total agriculture 5,069 10,900 6,446
Real estate 3,847 875 11,271
General corporate 3,739 3,725 3,550
________ ________ ________
Total operating income 12,655 15,500 21,267
Interest expense (2,085) (1,116) (444)
General corporate expenses (3,509) (3,359) (2,973)
________ ________ ________
Income before
income taxes $ 7,061 $ 11,025 $ 17,850
________ ________ ________
________ ________ ________
1999 1998 1997
________ ________ ________
Capital expenditures:
Agriculture:
Citrus $ 9,674 $ 1,071 $ 1,829
Sugarcane 13,995 8,846 1,890
Ranch 2,344 1,864 1,159
Sod 16 7 39
Farm lands 64 177 340
Heavy equipment 1,015 177 91
________ ________ ________
Total agriculture 27,108 12,142 5,348
General corporate 775 45 404
________ ________ ________
Consolidated total $ 27,883 $ 12,187 $ 5,752
________ ________ ________
________ ________ ________
Depreciation, depletion and amortization:
Agriculture:
Citrus $ 2,273 $ 1,944 $ 1,818
Sugarcane 1,460 1,010 909
Ranch 1,174 1,346 1,101
Sod 14 17 17
Farm lands 38 37 19
Heavy equipment 319 293 306
________ ________ ________
Total agriculture 5,278 4,647 4,170
General corporate 77 70 70
________ ________ ________
Consolidated total $ 5,355 $ 4,717 $ 4,240
________ ________ ________
________ ________ ________
Identifiable assets:
Agriculture:
Citrus $ 55,156 $ 48,052 $ 45,361
Sugarcane 45,629 31,889 23,746
Ranch 19,306 17,295 16,355
Sod 323 473 379
Farm lands 1,728 1,702 1,561
Heavy equipment 1,835 1,214 1,246
________ ________ ________
Total agriculture 123,977 100,625 88,648
Real estate 9,897 9,452 9,835
General corporate 23,048 20,477 19,240
________ ________ ________
Consolidated total $156,922 $130,554 $117,723
________ ________ ________
________ ________ ________
Identifiable assets represents 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. General corporate
assets consist principally of cash, temporary investments, mortgage notes
receivable 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, 1999 and August 31, 1998, is as
follows:
Quarters Ended
November 30, Feb. 28, May 31, August 31,
1998 1997 1999 1998 1999 1998 1999 1998
_______ _______ _______ _______ _______ _______ _______ ______
Revenue:
Citrus $ 1,587 $ 3,815 $ 8,535 $ 8,373 $12,953 $ 7,693 $ 443 $6,741
Sugarcane 1,194 1,700 2,221 2,797 3,585 1,530 121 96
Ranch 2,647 3,100 1,060 1,144 1,852 1,898 711 740
Property
sales 628 4,293 6 (1) 449 7 244
Interest 196 296 240 325 397 556 469 557
Other
revenues 552 529 595 432 664 543 627 487
_______ _______ _______ _______ _______ _______ _______ ______
Total
revenue 6,176 10,068 16,944 13,077 19,450 12,669 2,378 8,865
_______ _______ _______ _______ _______ _______ _______ ______
Costs and expenses:
Citrus 1,275 3,443 6,306 6,558 12,221 6,070 1,274 1,874
Sugarcane 876 1,475 1,705 2,240 2,065 824 (163) (25)
Ranch 2,787 2,818 1,001 1,015 1,816 1,686 676 748
Interest 409 170 1,350 208 598 256 681 483
Other 820 692 706 781 895 757 1,541 1,581
______ ______ ______ ______ ______ _____ _____ _____
Total costs
and ex-
penses 6,167 8,598 11,068 10,802 17,595 9,593 4,009 4,661
______ ______ ______ ______ ______ _____ _____ _____
Income be-
fore income
taxes 9 1,470 5,876 2,275 1,855 3,076 (1,631) 4,204
Provision for
income
taxes (18) 523 2,175 825 685 1,174 814 1,727
______ ______ ______ ______ ______ ______ ______ _____
Net income $ 27 $ 947 $3,701 $1,450 $1,170 $1,902 $ (817)$2,477
______ ______ ______ ______ ______ ______ ______ _____
______ ______ ______ ______ ______ ______ ______ _____
Basic earnings
per share $.004 $ .13 $ .53 $ .21 $ .17 $ .27 $ (.12) $ .35
______ ______ ______ ______ ______ ______ ______ _____
______ ______ ______ ______ ______ ______ ______ _____
The weighted average number of shares outstanding totaled 7,027,827 shares
during each of the periods presented above.
Item 9. Changes in & Disagreements with Accountants on
Accounting and Financial Disclosure.
_______________________________________________________________________
None
PART III
________
Item 10. Directors and Executive Officers of the Registrant.
_____________________________________________________________________
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 Proxy Statement dated November 9, 1999.
Item 11. Executive Compensation.
_________________________________________
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
______________________________________________________________________
Item 13. Certain Relationships and Related Transactions.
_________________________________________________________________
Information called for by Items 11, 12 and 13 is incorporated by
reference to Proxy Statement dated November 9, 1999.
PART IV
_______
Item 14. 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, 1999 and 1998
Consolidated Statements of Operations - For the Years Ended
August 31, 1999, 1998 and 1997
Consolidated Statements of Stockholders' Equity - For the
Years Ended August 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows - For the Years Ended
August 31, 1999, 1998 and 1997
(a)2. Financial Statement Schedules:
_____________________________
Selected Quarterly Financial Data - For the Years Ended
August 31, 1999 and 1998 - Included in Part II, Item 8
Schedule I - Marketable Securities and Other Investments -
at August 31, 1999
Schedule V - Property, Plant and Equipment - For the Years
Ended August 31, 1999, 1998 and 1997
Schedule VI - Reserves for Depreciation, Depletion and
Amortization of Property, Plant and Equipment - For the
Years Ended August 31, 1999, 1998 and 1997
Schedule IX - Supplementary Income Statement Information -
For the Years Ended August 31, 1999, 1998 and 1997
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
(9) Voting Trust Agreement - 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
(18) Change in Accounting Principles - Not Applicable
(19) Annual Report to Security Holders - By Reference
(21) Subsidiaries of the Registrant - Not Applicable
(22) Published Report Regarding Matters Submitted to Vote of
Security Holders - Not Applicable
(23) Consents of Experts and Counsel - Not Applicable
(24) Power of Attorney - Not Applicable
(28) Information From Reports Furnished to State Insurance
Regulatory Authorities - Not Applicable
(99) Additional Exhibits - None
(b)3. Reports on Form 8-K:
___________________
Form 8-K dated December 2, 1997 regarding re-election of
Directors and election of Officers.
* Material has been filed with Securities and Exchange Commission and NASDAQ
and may be obtained upon request.
ALICO, INC.
SCHEDULE I
Marketable Securities and Other Investments
August 31, 1999
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 $ 591,512 $ 591,512 $ 608,441 $ 608,441
Mutual Funds $6,885,451 6,885,451 8,175,053 8,175,053
Preferred Stocks 135,500 3,429,589 3,322,448 3,322,448
Common Stocks 51,302 1,665,970 2,171,793 2,171,793
Other
Investments $ 820,389 820,389 765,979 765,979
___________ ___________ ___________
Total: $13,392,911 $15,043,714 $15,043,714
___________ ___________ ___________
___________ ___________ ___________
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, 1999
______________________________
Land $22,867,648 $9,746,174 $ 167,483 $ $ 32,446,339
Roads 957,826 457,434 1,415,260
Agricultural Land
Preparation 9,906 9,906
Forest Improvements 100,026 100,026
Pasture
Improvements 2,988,469 2,988,469
Buildings 2,994,000 384,101 3,378,101
Feeding and Watering
Facilities for
Cattle Herd 30,317 12,863 17,454
Water Control
Facilities 5,337 5,337
Fences 298,011 1,252 32,354 266,909
Cattle Pens 134,955 20,697 155,652
Citrus Groves,
Including Irrigation
Systems 39,023,959 7,160,709 46,184,668
Equipment 7,288,254 1,830,423 958,854 8,159,823
Breeding Herd 12,588,424 1,796,523 1,800,351 12,584,592
Sugarcane-Land Prep-
aration, Etc. 15,822,850 7,338,020 526,325 22,634,545
Sod Land-Prep-
aration, Etc. 184,916 6,525 191,441
Farm Land Prep-
aration 1,769,853 64,464 1,834,317
___________ ___________ __________ _______ ____________
$107,064,751 $28,806,322 $3,498,230 $ $132,372,839
___________ ___________ __________ _______ ____________
___________ ___________ __________ _______ ____________
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, 1998
______________________________
Land $14,368,962 $8,562,616 $ 92,516 $28,586* $22,867,648
Roads 953,181 4,645 957,826
Agricultural Land
Preparation 9,906 9,906
Forest Improvements 100,026 100,026
Pasture
Improvements 2,956,774 31,695 2,988,469
Buildings 2,973,486 122,727 102,213 2,994,000
Feeding and Watering
Facilities for
Cattle Herd 34,167 3,850 30,317
Water Control
Facilities 5,337 5,337
Fences 292,197 32,631 26,817 298,011
Cattle Pens 134,955 134,955
Citrus Groves,
Including Irrigation
Systems 38,422,614 800,602 199,257 39,023,959
Equipment 7,280,577 531,520 523,843 7,288,254
Breeding Herd 12,126,689 1,653,306 1,191,571 12,588,424
Sugarcane-Land Prep-
aration, Etc. 15,277,301 888,486 342,937 15,822,850
Sod-Land Prep-
aration, Etc. 180,938 3,978 184,916
Farm Land Prep-
aration 1,592,330 177,523 1,769,853
___________ __________ __________ _______ ____________
$96,709,440 $12,809,729 $2,483,004 $28,586 $107,064,751
___________ __________ __________ _______ ____________
___________ __________ __________ _______ ____________
* Reclassification from other assets.
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, 1997
__________________________________
Land $14,504,916 $ 334,165 $ 470,119 $ $14,368,962
Roads 745,525 207,656 953,181
Agricultural Land
Preparation 9,906 9,906
Forest Improvements 100,026 100,026
Pasture Improve-
ments 2,801,321 155,453 2,956,774
Buildings 3,037,575 6,007 70,096 2,973,486
Feeding and Watering
Facilities for
Cattle Herd 36,067 1,900 34,167
Water Control
Facilities 871,337 866,000 5,337
Fences 270,133 34,484 12,420 292,197
Cattle Pens 134,955 134,955
Citrus Groves,
Including Irri-
gation Systems 38,634,654 1,532,126 1,744,166 38,422,614
Equipment 6,999,963 563,979 283,365 7,280,577
Breeding Herd 13,184,291 935,625 1,993,227 12,126,689
Sugarcane-Land
Prep.,Etc. 14,304,486 1,603,607 630,792 15,277,301
Sod-Land Prep-
aration,Etc. 141,922 39,016 180,938
Farm Land Prep-
aration 1,252,376 339,954 1,592,330
___________ __________ __________ _________ ___________
$97,029,453 $5,752,072 $6,072,085 $ 0 $96,709,440
___________ __________ __________ _________ ___________
___________ __________ __________ _________ ___________
(/TABLE>
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 Charged To Changes Balance
Beginning Profit & Loss Retire- Add(Deduct) at
Description of Period of Income ments Desccribe Close Of
___________ _________ ____________ __________ _________ ________
For Year Ended August 31, 1999
______________________________
Buildings $ 1,268,644 $ 138,613 $ $ $ 1,407,257
Feeding and Watering
Facilities for
Cattle Herd 21,006 353 12,863 8,496
Water Control
Facilities 0 0 0 0
Fences 122,850 26,587 32,354 117,083
Cattle Pens 71,264 13,951 85,215
Citrus Groves,
Including Irriga-
tion Systems 11,299,211 1,914,089 13,213,300
Equipment 4,881,745 809,596 897,921 4,793,420
Breeding Herd 6,939,132 1,024,231 1,686,470 6,276,893
Roads 71,900 41,485 113,385
Sugarcane Lane Prep-
aration, Etc. 4,425,063 1,344,916 506,186 5,263,793
Sod Land Prepara-
tion, Etc. 7,499 3,915 11,414
Farm Land Preparation 74,102 37,713 111,815
___________ __________ __________ ____ ___________
$29,182,416 $5,355,449 $3,135,794 $ 0 $31,402,071
___________ __________ __________ ____ ___________
___________ __________ __________ ____ ___________
ALICO, INC.
SCHEDULE VI
Reserves for Depreciation, Depletion and Amortization
Property, Plant and Equipment
_____________________________________________________
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
________ __________ __________ __________ ________ ________
Additions Other
Balance Charged To Changes Balance
Beginning Profit & Loss Retire- Add(Deduct) at
Description of Period of Income ments Desccribe Close Of
___________ _________ ____________ __________ _________ ________
For Year Ended August 31, 1998
______________________________
Buildings $ 1,221,902 $ 135,690 $ 88,948 $ $ 1,268,644
Feeding and Watering
Facilities for
Cattle Herd 24,059 797 3,850 21,006
Water Control
Facilities 0 0 0 0
Fences 124,017 25,650 26,817 122,850
Cattle Pens 57,313 13,951 71,264
Citrus Groves,
Including Irriga-
tion Systems 9,894,285 1,604,182 199,256 11,299,211
Equipment 4,646,481 747,006 511,742 4,881,745
Breeding Herd 6,861,549 1,202,626 1,125,043 6,939,132
Roads 32,097 39,803 71,900
Sugarcane-Land Prep-
aration, Etc. 3,860,569 907,431 342,937 4,425,063
Sod-Land Prep-
aration, Etc. 3,957 3,542 7,499
Farm Land Preparation 37,561 36,541 74,102
___________ __________ __________ ____ ___________
$26,763,790 $4,717,219 $2,298,593 $ 0 $29,182,416
___________ __________ __________ ____ ___________
___________ __________ __________ ____ ___________
ALICO, INC.
SCHEDULE VI
Reserves for Depreciation, Depletion and Amortization
Property, Plant and Equipment
_____________________________________________________
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
________ __________ __________ __________ ________ ________
Additions Other
Balance Charged To Changes Balance
Beginning Profit & Loss Retire- Add(Deduct) at
Description of Period of Income ments Desccribe Close Of
___________ _________ ____________ __________ _________ ________
For the Year Ended August 31, 1997
__________________________________
Buildings $ 1,152,448 $ 139,550 $ 70,096 $ $ 1,221,902
Feeding and Watering
Facilities for
Cattle Herd 24,044 1,915 1,900 24,059
Water Control
Facilities 866,000 866,000 0
Fences 112,016 24,421 12,420 124,017
Cattle Pens 43,362 13,951 57,313
Citrus Groves,
Including Irrigation
Systems 10,189,551 1,448,900 1,744,166 9,894,285
Equipment 4,106,878 822,968 283,365 4,646,481
Breeding Herd 7,518,756 939,309 1,596,516 6,861,549
Roads 10,731 21,366 32,097
Sugarcane-Land
Prep.,Etc. 3,683,734 807,626 630,791 3,860,569
Sod-Land Prep-
aration, Etc. 2,054 1,903 3,957
Farm Land
Preparation 19,353 18,208 37,561
___________ __________ __________ _______ ___________
$27,728,927 $4,240,117 $5,205,254 $ 0 $26,763,790
___________ __________ __________ _______ ___________
___________ __________ __________ _______ ___________
ALICO, INC.
SCHEDULE IX
____________
SUPPLEMENTARY INCOME STATEMENT INFORMATION
__________________________________________
_____________________________________________________________________________
COLUMN A COLUMN B
_____________________________________________________________________________
Charged to Costs and Expenses
_____________________________
Years Ended August 31,
______________________
Item 1999 1998 1997
____ ____ ____ ____
1. Maintenance and repairs $1,094,379 $1,025,739 $ 990,253
2. Taxes, other than payroll
and income taxes 2,427,161 1,805,322 1,755,168
EXHIBIT 11
ALICO, INC.
Computation of Weighted Average Shares Outstanding as of August 31, 1999:
Number of shares outstanding at August 31, 1999 7,027,827
_________
_________
Number of shares outstanding at August 31, 1998 7,027,827
_________
_________
Weighted Average 9/1/98 - 8/31/99 7,027,827
_________
_________
EXHIBIT 12
ALICO, INC.
Computation of Ratios:
1999 Current Assets $45,181,699
Current Liabilities 8,737,831
45,181,699 divided by 8,674,831 = 5.17:1
1998 Current Assets $42,354,043
Current Liabilities 5,649,482
42,354,043 divided by 5,649,482 = 7.50:1
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 undersigned, thereunto duly authorized.
ALICO, INC.
(Registrant)
November 16, 1999 Ben Hill Griffin, III
Date Chairman, Chief Executive
Officer and Director
(Signature)
November 16, 1999 W. Bernard Lester
Date President, Chief Operating
Officer and Director
(Signature)
November 16, 1999 L. Craig Simmons
Date Vice President and
Chief Financial Officer
(Signature)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated:
Richard C. Ackert Ben Hill Griffin, IV
Director Director
(Signature) (Signature)
K. E. Hartsaw Thomas E. Oakley
Director Director
(Signature) (Signature)
William L. Barton
Director
(Signature)
Walker E. Blount, Jr.
Director
(Signature)
November 16, 1999
Date