UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q __X__ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For six months ended February 29, 2000. OR _____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________________ to ____________________. Commission file number 0-261. ALICO, INC. (Exact name of registrant as specified in its charter) Florida 59-0906081 (State or other jurisdiction of (I.R.S. Employer incorporation of organization) Identification No.) P. O. Box 338, La Belle, FL 33975 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 863/675-2966 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No There were 7,027,827 shares of common stock, par value $1.00 per share, outstanding at February 29, 2000.
PART I. FINANCIAL INFORMATION Item 1. Financial Statements ALICO, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (See Accountants' Review Report) (Unaudited) (Unaudited) Three Months Ended Six Months Ended Feb. 29, Feb. 28, Feb. 29, Feb. 28, 2000 1999 2000 1999 ___________ ___________ ___________ ____________ Revenue: Citrus $ 9,169,863 $ 8,535,053 $ 10,872,427 $ 10,121,651 Sugarcane 5,021,040 2,221,271 6,472,180 3,414,804 Ranch 582,446 1,060,374 3,569,264 3,707,730 Rock products and sand 333,432 279,816 682,272 631,990 Oil lease and land rentals 193,876 285,024 607,012 419,473 Forest products 12,168 12,452 45,416 66,700 Profit on sales of real estate 132,003 4,293,376 12,991,854 4,293,376 Interest and investment income 1,565,781 240,439 2,335,453 436,291 Other 10,628 16,392 10,455 27,938 _________ _________ __________ _________ Total revenue 17,021,237 16,944,197 37,586,333 23,119,953 __________ __________ __________ __________ Cost and expenses: Citrus production, harvesting and marketing 8,527,121 6,306,360 9,602,576 7,581,598 Sugarcane production and harvesting 4,452,486 1,705,466 5,875,186 2,581,388 Ranch 523,905 1,000,815 3,423,473 3,787,843 Real estate expenses 118,464 18,649 287,818 149,761 Interest 777,157 397,677 1,409,556 806,614 Other, general and administrative 725,944 686,625 1,321,829 1,375,612 _________ _________ _________ _________ Total costs and expenses 15,125,077 10,115,592 21,920,438 16,282,816 __________ __________ __________ __________ Income before income taxes 1,896,160 6,828,605 15,665,895 6,837,137 Provision for income taxes 643,575 3,127,489 5,801,939 3,108,927 _________ _________ __________ __________ Net income 1,252,585 3,701,116 9,863,956 3,728,210 _________ _________ _________ _________ _________ _________ _________ _________ Weighted average number of shares outstanding 7,027,827 7,027,827 7,027,827 7,027,827 _________ _________ _________ _________ _________ _________ _________ _________ Per share amounts: Net income $ .18 $ .53 $ 1.40 $ .53 Dividends $ - $ - $ .30 $ .50 See accompanying notes to condensed consolidated financial statements.
ALICO, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (See Accountants' Review Report) February 29, 2000 August 31, 1999 _________________ ________________ ASSETS [S] [C] [C] Current assets: Cash and cash investments $ 777,094 $ 740,829 Marketable Securities 16,443,333 15,043,713 Accounts receivable 7,994,774 8,030,863 Notes receivable 3,210,205 73,589 Inventories 15,883,100 20,547,215 Refundable income taxes 0 549,586 Other current assets 173,119 195,904 ____________ ____________ Total current assets 44,481,625 45,181,699 Notes receivable, non-current 8,730,703 394,203 Land held for development and sale 7,401,489 9,429,295 Investments 901,606 946,145 Property, buildings and equipment 138,275,776 132,372,839 Less: Accumulated depreciation (32,821,390) (31,402,071) ____________ ____________ Total assets $166,969,809 $156,922,110 ____________ ____________ ____________ ____________ CONDENSED CONSOLIDATED BALANCE SHEETS (See Accountants' Review Report) (Continued) February 29, 2000 August 31, 1999 LIABILITIES _________________ _______________ Current liabilities: Accounts payable $ 1,690,853 $ 2,571,579 Due to profit sharing plan 0 269,177 Accrued ad valorem taxes 503,760 1,997,834 Current portion of notes payable 1,322,033 1,322,033 Accrued expenses 723,497 683,848 Income taxes payable 1,262,134 0 Deferred income taxes 1,510,960 1,893,360 ____________ ____________ Total current liabilities 7,013,237 8,737,831 Notes payable 46,072,579 45,630,912 Deferred income taxes 14,602,398 10,780,521 Deferred retirement benefits 390,337 377,487 ____________ ____________ Total liabilities 68,078,551 65,526,751 ____________ ____________ STOCKHOLDERS' EQUITY Common stock $ 7,027,827 $ 7,027,827 Accumulated other comprehensive income 752,359 1,029,953 Additional paid in capital 17,885 0 Retained earnings 91,093,187 83,337,579 ____________ ____________ Total stockholders' equity 98,891,258 91,395,359 ____________ ____________ Total liabilities and stockholders' equity $166,969,809 $156,922,110 ____________ ____________ ____________ ____________ See Accompanying notes to condensed consolidated financial statements.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Accumulated Common Stock Other Com- Additonal Shares Retained prehensive Paid-In- Issued Amount Earnings Income Capital Total _________ _________ __________ ________ _________ _________ Balances, August 31, 1998 7,027,827 $7,027,827 $82,770,769 $168,345 0 $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 and reclassification adjustment (see disclosure) - - - 861,608 - 861,608 ________ Total Comprehensive income: 4,942,332 Dividends paid - - (3,513,914) - - (3,513,914) Stock based compensation - - - - - - ________ __________ ___________ __________ ______ __________ Balances, August 31, 1999 7,027,827 $7,027,827 $83,337,579 $1,029,953 - $91,395,359 _______________ Comprehensive income: Net income for the six months ended February 29, 2000 - - 9,863,956 - - 9,863,956 Unrealized gains on Securities, net of taxes and reclassification adjustment (see disclosure) - - - (277,594) - (277,594) ___________ Total Comprehensive income: 9,586,362 Dividends paid - - (2,108,348) - - (2,108,348) Stock based compensation - - - - 17,885 17,885 _________ __________ ___________ __________________ ___________ Balances, February 29, 2000 7,027,827 $7,027,827 $91,093,187 $ 752,359 $17,885 $98,891,258 _________ __________ ___________ __________________ ___________ _________ __________ ___________ __________________ ___________ Disclosure of 2000 1999 reclassification amount: ___________ _________ Unrealized holding gains (losses) arising during the period $1,503,219 $824,144 Less: reclassification adjustment for gains (losses) included in net income 1,780,813 (37,464) ___________ __________ Net unrealized (losses) gains on securities $ (277,594) $ 861,608 ___________ __________ ___________ _________ See accompanying notes to consolidated financial statements. ALICO, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (See Accountants' Review Report) Six Months Ended Feb. 29, 2000 Feb. 28, 1999 2000 1999 _______________________________ Cash flows from operating activities: Net income $ 9,863,956 $ 3,728,210 Adjustments to reconcile net income to cash provided from (used for) operating activities: Depreciation and amortization 2,747,779 2,411,785 Net decrease in current assets and liabilities 1,567,053 1,055,830 Deferred income taxes 3,342,358 (968,626) Gain on sales of real estate (12,991,854) (4,268 132) Other (202,236) 389,952 __________ __________ Net cash provided from operating activities 4,327,056 2,349,019 __________ __________ Cash flows from (used for) investing activities: Purchases of property and equipment (6,642,920) (4,998,455) Proceeds from sales of real estate 4,141,731 4,404 902 Proceeds from sales of property and equipment 309,712 0 Purchases of marketable securities (1,024,602) (1,986,946) Proceeds from sales of marketable securities 553,895 1,428,472 __________ __________ Net cash (used for) investing activities (2,662,184) (1,152,027) __________ __________ Cash flows from (used for) financing activities: Notes receivable collections 38,074 84,354 Repayment of bank loan (16,201,724) (16,747,000) Proceeds from bank loan 16,643,391 18,602,000 Dividends paid (2,108,348) (3,513,914) __________ __________ Net cash (used for) financing activities (1,628,607) (1,574,560) __________ __________ Net increase (decrease) in cash and cash investments $ 36,265 $ (377,568) __________ __________ __________ __________ Supplemental disclosures of cash flow information: Cash paid for interest, net of amount capitalized $ 1,560,086 $ 776,717 __________ __________ __________ __________ Cash paid for income taxes, including $ 383,817 $3,403,372 related interest __________ __________ __________ __________ Non-cash investing and financing activities: Mortgage notes receivable issued in exchange for land, less unamortized discount $ 11,511,190 $ 0 ___________ __________ ___________ __________ Fair value adjustments to securities available for sale $ 444,520 $ 856,196 __________ __________ __________ __________ Income tax effect related to fair value adjustment $ 166,926 $ 322,187 __________ __________ __________ __________ See accompanying notes to condensed consolidated financial statements.
ALICO, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (See Accountants' Review Report) 1. Basis of financial statement presentation: The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Saddlebag Lake Resorts, Inc., after elimination of all significant intercompany balances and transactions. The accompanying unaudited condensed consolidated financial statements have been prepared on a basis consistent with the accounting principles and policies reflected in the Company's annual report for the year ended August 31, 2000. In the opinion of Management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recur- ring accruals) necessary for a fair presentation of its consolidated financial position at February 29, 2000 and August 31, 1999 and the consolidated results of operations and cash flows for the six months ended February 29, 2000 and 1999. The basic business of the Company is agriculture which is of a seasonal nature and subject to the influence of natural phenomena and wide price fluctuations. Fluctuation in the market prices for citrus fruit has caused the Company to recognize additional revenue from the prior year's crop totaling $849,829 in 2000 and $758,750 in 1999. The results of operations for the stated periods are not necessarily indicative of results to be expected for the full year. 2. Real Estate: Real Estate sales are recorded under the accrual method of accounting. Under this method, a sale is not recognized until payment is received, including interest, aggregating 10% of the contract sales price for residential properties and 20% for commercial properties. 3. Notes receivable: Notes receivable include mortgages and other notes receivable. Mortgage notes receivable arose from real estate sales. The balances are as follows: February 29, August 31, 2000 1999 ____________ __________ Mortgage notes receivable on retail land sales $ 221,190 $ 246,660 Mortgage notes receivable on bulk land sales 12,344,684 0 Less unamortized discount based on imputed interest rate of 8% (833,494) 0 Other notes receivable 208,528 221,132 ___________ __________ Total mortgage notes receivable $ 11,940,908 $ 467,792 Less current portion 3,210,205 73,589 ___________ __________ Non-current portion $ 8,730,703 $ 394,203 ___________ __________ ___________ __________ In September 1999, the Company received a mortgage note in exchange for land sold. The note totaled $12,344,684 and is due annually in September, bearing interest at 4%, over the next four years.
4. Inventories: A summary of the Company's inventories (in thousands) is shown below: February 29, August 31, 2000 1999 ____________ __________ Unharvested fruit crop on trees $ 8,192 $ 9,359 Unharvested sugarcane 1,652 3,639 Beef cattle 5,898 7,433 Sod 141 116 ____________ __________ Total inventories $ 15,883 $ 20,547 5. Income taxes: The provision for income taxes for the quarters and six months ended February 29, 2000 and February 28, 1999 is summarized as follows: Three Months Ended Six Months Ended Feb. 29, Feb. 28, Feb. 29, Feb. 28, 2000 1999 2000 1999 __________ __________ ___________ ____________ Current: Federal income tax $ 1,137,366 $1,948,486 $ 1,829,848 $ 2,048,936 State income tax 139,780 172,997 260,566 190,048 __________ __________ ___________ ____________ 1,277,146 2,121,483 2,090,414 2,238,987 __________ __________ ___________ ____________ Deferred: Federal income tax (555,221) 908,948 3,154,796 786,008 State income tax (78,350) 97,058 556,729 83,932 ________ _________ _________ _______ (633,571) 1,006,006 3,711,525 869,940 ________ _________ _________ _______ Total provision for income taxes $ 643,575 $3,127,489 $ 5,801,939 $3,108,927 ________ __________ ___________ ___________ ________ __________ ___________ ___________ Following is a reconciliation of the expected income tax expense computed at the U.S. Federal statutory rate of 34% and the actual income tax provision for the quarters and six months ended February 29, 2000 and February 28, 1999: Three Months Ended Six Months Ended Feb. 29, Feb. 28, Feb. 29, Feb. 28, 2000 1999 2000 1999 ________ __________ __________ __________ Expected income tax $644,695 $2,321,726 $5,326,404 $2,324,627 Increase (decrease) resulting from: State income taxes, net of federal benefit 41,236 247,878 539,415 248,188 Nontaxable interest and dividends (31,052) (22,411) (57,788) (46,236) Interest and penalties net of federal and state benefit 0 593,878 0 593,878 Other reconciling items, net (11,304) (13,582) (6,092) (11,530) ________ __________ _________ _________ Total provision for income taxes $643,575 $3,127,489 $5,801,939 $3,108,927 _______ __________ __________ ___________ _______ __________ __________ ___________ The Company is currently under examination by the Internal Revenue Service for the years ended August 31, 1995 and 1996. When the examinations are resolved, any income taxes due will become currently payable. However, the majority of the proposed adjustments relate to, among other things, the Company's computation of the deferral determination of the amounts of certain charitable contributions, all of which have been provided for in the Company's deferred tax liability account. The Company plans to continue to defend the positions taken in its income tax returns. 6. Indebtedness: The Company has financing agreements with commercial banks that permit the Company to borrow up to $44 million. The financing agreements allow the Company to borrow up to $41 million which is due in 2001 and up to $3 million which is due on demand. In March 1999, the Company mortgaged 7,680 acres for $19 million in connection with a $22.5 million acquisition of producing citrus and sugarcane operations. The total amount of long-term debt under these agreements at February 29, 2000 and August 31, 1999 was $47,394,612 and $46,952,945, respectively. Maturities of the indebtness of the Company over the next five years are as follows: 2000- $1,322,033; 2001- $32,582,033; 2002- $1,322,033; 2004- $1,322,033; 2005- $1,322,033; thereafter $9,524,447. Interest cost expensed and capitalized during the six months ended February 29, 2000 and February 29, 1999 was as follows: 2000 1999 ________ ________ Interest expensed 1,409,556 $806,614 Interest capitalized 228,667 74,190 ________ ________ Total interest cost $1,638,223 $880,804 ________ ________ ________ ________ 7. Dividends: On October 5, 1999 the Company declared a year-end dividend of $.30 per share, which was paid on November 5, 1999. 8. Disclosures about reportable segments: Alico, Inc. has four reportable segments: citrus, sugarcane, ranching and general corporate. The commodities produced by these segments are sold to wholesalers and processors who prepare the products for consumption. The Company's operations are located in Florida. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Alico, Inc. evaluates performance based on profit or loss from operations before income taxes. Alico, Inc.'s reportable segments are strategic business units that offer different products. They are managed separately because each segment requires different management techniques, knowledge and skills. The following table presents information for each of the Company's operating segments as of and for the six months ended February 29, 2000: ____________________________________________________________ General Consolidated Citrus Sugarcane Ranch Corporate* Total ____________________________________________________________ Revenue $ 10,872,427 6,472,180 3,569,264 16,672,462 37,586,333 Costs and expenses 9,602,576 5,875,186 3,423,473 3,019,203 21,920,438 Depreciation and amortization 1,214,698 992,681 288,922 251,478 2,747,779 Segment profit 1,269,851 596,994 145,791 13,653,259 15,665,895 *Consists of rents, investments, real estate activities and other such items of a general corporate nature. 9. Future Application of Accounting Standards In June 1998, the Financial Standards Board issued Statements of Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative instruments and Hedging Activities". SFAS 133 requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. Gains and losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. The key criterion for hedge accounting is that the hedging relationship must be highly effective in achieving offsetting changes in fair value or cash flows. In June 1999, the FASB issued SFAS 137 which amended the implementation date for SFAS 133 to be effective for all fiscal years beginning after June 15, 2000. 10. Stock Option Plan On November 3, 1998, the Company adopted the Alico, Inc., Incentive Equity Plan (The Plan) pursuant to which the Board of Directors of the Company may grant options, stock appreciation rights, and/or restricted stock to certain directors and employees. The Plan authorizes grants of shares or options to purchase up to 650,000 shares of authorized but unissued common stock. Stock options granted have a maximum term of ten years and have vesting schedules which are at the discretion of the Board of Directors options and determined on the effective date of the grant. Effective April 6, 1999, the Company granted 34,700 with an exercise price of $14.62 and a fair value of $14.62. Additionally, effective September 9, 1999, the Company granted 14,992 options with an exercise price of $14.62 and a fair value of $15.813. Options granted have a ten year contracual life. As of February 29, 2000, there were 49,692 options outstanding with an weighted average exercise price of $14.62 and a weighted average remaining contractual life of ten years. At February 29, 2000, there were no shares exercisable and 600,308 shares available and for grant under the Plan. ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. LIQUIDITY AND CAPITAL RESOURCES: Working capital increased to $37,468,388 at February 29, 2000, up from $36,443,868 at August 31, 1999. As of February 29, 2000, the Company had cash and cash investments of $777,094 compared to $740,829 at August 31, 1999. Marketable securities increased from $15,043,713 to $16,443,333 during the same period. The ratio of current assets to current liabilities increased to 6.34 to 1 at February 29, 2000 from 5.17 to 1 at August 31, 1999. Total assets increased by $10,047,699 to $166,969,809 at February 29, 2000 from $156,922,110 at August 31, 1999. In connection with financing agreements with commercial banks (See Note 6 under Notes to Condensed Consolidated Financial Statements), the Company has an unused availability of funds of approximately $ 14.8 million at February 29, 2000. RESULTS OF OPERATIONS: The basic business of the Company is agriculture which is of a seasonal nature and subject to the influence of natural phenomena and wide price fluctuations. The results of operations for the stated periods are not necessarily indicative of results to be expected for the full year. Net income for the three months ending February 29, 2000 decreased by $2,448,531 when compared to the second quarter of fiscal 1999, but increased by $6,135,746 when compared to the six-month period then ended. Income before income taxes decreased and increased $4,932,445 and $8,828,758 for the three and six months ended February 28, 2000, respectively, when compared to the same periods a year ago. Year-to-date earnings from agriculture activities decreased from the prior year ($1,269,837 vs. $2,804,057 for the second quarter, and $2,012,636 vs. 3,293,356 during the first half of fiscal 2000 and 1999, respectively). During September of 1999, the Company completed a sale of 1,230 acres of land surrounding the University site in Lee County for $16.5 million. The contract called for 25 percent of the purchase price to be paid at closing, with the balance of $12.3 million payable annually over the next four years. The sale generated a pre-tax gain of approximately $12.9 million. Interest and investment income increased for the second quarter of fiscal 2000 and the six months ended February 29, 2000 ($1,325,342 and $1,899,162, respectively). The increase was largely due to the realization of gain from securities sales that generated a pre-tax earning of $1,522,844 during the six months ended February 29, 2000. Citrus ______ Citrus earnings decreased for both the quarter ($642,742 during fiscal 2000 vs. $2,228,693 during fiscal 1999) and the six months ($1,269,851 during fiscal 2000 vs. $2,540,053 during fiscal 1999) ended February 29, 2000, when compared to the prior year. Lower market prices for this year's crop is the primary reason for the decrease in earnings for this division. Sugarcane _________ Sugarcane earnings were somewhat improved for the second quarter ($568,554 during fiscal 2000 vs. $515,805 during fiscal year 1999) but are lower for the six months ended February 29, 2000 ($596,994 in 2000 vs. $833,416 in 1999), when compared to the same periods a year ago. Although more acres are being harvested, decreased yields and lower market prices have combined to generate the decline. Ranching ________ Ranch earnings were lower for the second quarter when compared to the prior year ($58,541 vs. $ 59,559 for the three months ended February 29, 2000 and February 28, 1999, respectively), but improved for the six months ended February 29, 2000 ($145,791 vs. <80,113> for the six months ending February 29, 2000 and February 28, 1999, respectively). Improved market prices for beef is the primary cause of the rise. General Corporate _________________ In July of 1999, the Company entered into and announced a contract to sell 402 acres near the Florida Gulf Coast University for approximately $15.5 million. This agreement has been revised, in accordance with the original contract, to convey 44.2 acres for approximately $5 million and is still scheduled to close during fiscal 2001. If the sale is consummated, it is expected to generate a pre-tax gain of approximately $4.8 million. Additionally, the Company has agreed to sell 190 acres, also near the University, for approximately $6.6 million. This sale is also expected to close during fiscal 2001 and could potentially generate a $5.8 million pre-tax gain. In April of 2000, the Company entered into an agreement to sell appoximately 2,500 acres for $34 million. The subject property includes the acreage referred to above and the agreement provides for assignment of the related sales contracts to the perspective purchaser. This sale could potentially close during the current fiscal year and, if it does, a pre-tax of approximately $32.1 million will be generated by the transaction. In December of 1999, the Company entered into a contract to sell approximately 2,500 acres of its Lee County property for $50 million. The property is located east of the University. The date(s) of closing(s) will become determinable after the developable acreage is determined and may occur in phases. The Company is continuing its marketing and permit activities for its land which surrounds the Florida Gulf Coast University. Cautionary Statement ____________________ Readers should note, in particular, that this Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that involve substantial risks and uncertainties. When used in this document, or in the documents incorporated by reference herein, the words "anticipate", "believe", "estimate", "may", "intend", and other words of similar meaning, are likely to address the Company's growth strategy, financial results, and/or product development programs. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein. The considerations listed herein represent certain important factors the Company believes could cause such results to differ. These considerations are not intended to represent a complete list of the general or specific risks that may 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. ITEM 3. Quantitative and Qualitative Disclosures about Market Risk No changes FORM 10-Q PART II. OTHER INFORMATION ITEM 6. Exhibits and reports on Form 8-K. (a) Exhibits: A. Accountant's Report. B. Computation of Weighted Average Shares Outstanding at February 29, 2000. C. Exhibit 27 - Financial Data Schedule. (b) Reports on Form 8-K. December 9, 1999. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ALICO, INC. (Registrant) April 14, 2000 W. Bernard Lester Date President Chief Operating Officer (Signature) April 14, 2000 L. Craig Simmons Date Vice President Chief Financial Officer (Signature) April 14, 2000 Deirdre M. Purvis Date Controller (Signature) EXHIBIT A INDEPENDENT ACCOUNTANT'S REVIEW REPORT ______________________________________ The Stockholders and Board of Directors Alico, Inc: We have reviewed the condensed consolidated balance sheet of Alico, Inc. and subsidiary as of February 29, 2000, and the related condensed consolidated statements of operations for the six-month periods ended February 29, 2000 and February 28, 1999. These condensed consolidated financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical review procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Alico, Inc. and subsidiary as of August 31, 1999 and the related consolidated statement of operations, stock- holders' equity and cash flows for the year then ended (not presented herein); and in our report dated October 13, 1999 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of August 31, 1999, is fairly presented, in all material respects, in relation to the consolidated balance sheet from which it has been derived. /s/ KPMG LLP Orlando, Florida March 31, 2000 FORM 10-Q ALICO, INC. Computation of Weighted Average Shares Outstanding as of February 29, 2000: Number of shares outstanding at August 31, 1999 7,027,827 _________ _________ Number of shares outstanding at February 29, 2000 7,027,827 _________ _________ Weighted Average 9/1/99 - 02/29/00 7,027,827 _________ _________ EXHIBIT B