Related Party Transactions
|9 Months Ended|
Jun. 30, 2012
|Related Party Transactions [Abstract]|
|Related Party Transactions||
Note 10. Related Party Transactions
Atlantic Blue Group, Inc.
Atlanticblue owns approximately 51% of Alico's common stock. By virtue of its ownership percentage, Atlanticblue is able to elect all of the directors and, consequently, control Alico. Directors which also serve on Atlanticblue's board are referred to as "affiliated directors". Atlanticblue issued a letter dated December 3, 2009, reaffirming its commitment to maintain a majority of independent directors (which may include affiliated directors) on Alico's board. A director is considered independent if the Board makes an affirmative determination that (i) the director has no relationship which would interfere with the exercise of independent judgment in carrying out the responsibilities as a director and (ii) the director has no prohibited relationships with the registered company or its Executive Officers during the preceding thirty-six months from the determination.
John R. Alexander, a major shareholder in Atlanticblue, serves as Chairman of the Company's Board of Directors. Mr. Alexander's son, JD Alexander, resigned March 31, 2012, as The President and Chief Executive Officer of Atlanticblue and did not stand for re-election as a Director during the June 2012 Atlanticblue shareholders meeting. John R. Alexander was elected to the Atlanticblue Board of Directors in June 2012. In February 2010, JD Alexander was appointed Alico's President and Chief Executive Officer, and he serves on Alico's Board of Directors. Robert E. Lee Caswell, John R. Alexander's son-in-law, serves as a Director on the Board of Alico. Robert J. Viguet, Jr., an Alico Inc. Director, did not stand for re-election as a Director of Atlanticblue at the June 2012 shareholders meeting.
Effective July 1, 2008, the Company's Board of Directors approved an unaccountable expense allowance of $5,000 per month to Scenic Highlands Enterprises LLC. The Company's former Chief Executive Officer and current Chairman of the Board, John R. Alexander, is the owner and Chief Executive Officer of Scenic Highlands Enterprises, LLC. Per the Board's Action by Written Consent, payments are to be used for office space, an administrative assistant's salary and utilities. The agreement ended June 30, 2011. Alico paid Scenic Highlands Enterprises, LLC $15,000 and $45,000 for the three and nine months ended June 30, 2011, in accordance with this agreement.
Effective July 1, 2008, the Board approved a transition, consulting, severance and non-compete agreement with John R. Alexander providing for total payments of $600,000 over a three year period. The payments ended June 30, 2011. Mr. Alexander was paid approximately $38,000 and $113,000 in accordance with this agreement during the three and nine months ended June 30, 2011.
In connection with the derivative shareholder suit filed against John R. Alexander and JD Alexander, the Company is reimbursing Messrs. Alexander for legal fees to defend themselves against the suit in accordance with the Board's indemnification agreement. All reimbursements are approved by the Special Litigation Committee of the Board comprised of four independent directors. Reimbursements for litigation were $39,000 and $118,000 on behalf of John R. Alexander and $39,000 and $221,000 on behalf of JD Alexander for the three and nine months ended June 30, 2012, respectively. Reimbursements for litigation were $0 and $68,000 on behalf of John R. Alexander and $0 and $48,000 on behalf of JD Alexander for the three and nine months ended June 30, 2011, respectively. See Note 9. Commitments and Contingencies.
During the three and nine months ended June 30, 2012, Bowen marketed 602 boxes and 1,946 boxes of fruit for Alexander Properties, Inc. at $12,000 and $31,000, respectively. During the three and nine months ended June 30, 2011, Bowen marketed 742 boxes and 2,196 boxes of fruit from Alexander Properties for approximately $13,000 and $30,000, respectively. Alexander Properties, Inc. is a company owned by John R. Alexander and JD Alexander.
Bowen is currently marketing citrus fruit from Tri County Groves, LLC, a wholly owned subsidiary of Atlanticblue. During the three and nine months ended June 30, 2012, Bowen marketed 47,209 and 237,626 boxes of fruit, for approximately $639,000 and $2,900,000 respectively. During the three and nine months ended June 30, 2011, Bowen marketed 75,116 and 222,856 boxes of fruit, for approximately $713,000 and $2,053,000, respectively.
Ben Hill Griffin, Inc.
Sales and Purchases
Citrus revenues of $148,000 and $521,000 were recognized for a portion of citrus crops sold under a marketing agreement with Griffin Inc. for the three and nine months ended June 30, 2012, respectively. For the three and nine months ended June 30, 2011, citrus revenues from sales to Griffin Inc. under the marketing agreement were $271,000 and $1,100,000, respectively. Griffin Inc. and its subsidiaries are controlled by Ben Hill Griffin, III, the brother-in-law of John R. Alexander, Alico's Chairman. Accounts receivable in the Condensed Consolidated Balance Sheets include amounts due from Griffin Inc. of $80,000 and $152,000 at June 30, 2012 and September 30, 2011, 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 for fruit sold through Griffin Inc. totaled $83,000 and $135,000 for the three and nine months ended June 30, 2012, respectively, and $60,000 and $228,000 for the three and nine months ended June 30, 2011, respectively.
Alico purchases fertilizer and other miscellaneous supplies, and services, and operating equipment from Griffin Inc., on a competitive bid basis, for use in its cattle, sugarcane, sod and citrus operations. Such purchases totaled $63,000 and $880,000 for the three and nine months ended June 30, 2012 and $1,478,000 and $2,255,000 for the three and nine months ended June 30, 2011, respectively. The accompanying Condensed Consolidated Balance Sheets include accounts payable to Griffin Inc. for fertilizer and other crop supplies totaling approximately $46,000 and $41,000 at June 30, 2012 and September 30, 2011, respectively.
During June 2012, we closed on the sales contracts for two parcels of land in Polk County, FL to Ben Hill Griffin III and Griffin Inc. The sale of the Polk County parcels totaled approximately $10,122,000. We received cash of approximately $9,768,000, of which approximately $8,747,000 was being held in an escrow account while the Company considered a potential like kind exchange transaction.
The first parcel of land totaled 3,630 acres. The sales price was approximately $9,077,000 or $2,500 per acre. The sales contract closed on June 14, 2012, with the deed and possession delivered to Ben Hill Griffin III. We received approximately $8,747,000 which was being held in escrow while the Company considered a potential like kind exchange transaction and was classified as restricted cash on the Condensed Consolidated Balance Sheet. The cash was remitted to the Company on July 31, 2012 as no like kind exchanges were identified.
The second parcel of land totaled 380 acres for which we received approximately $1,021,000 in cash. The sales price was $1,045,000 or $2,750 per acre. The sales contract closed on June 20, 2012, with deed and possession delivered to Griffin Inc.
The transactions were approved by the Audit Committee, which consists solely of independent directors, in accordance with the Company's policies. See Note 4. Property, Buildings and Equipment, Net.
The entire disclosure for related party transactions, including the nature of the relationship(s), a description of the transactions, the amount of the transactions, the effects of any change in the method of establishing the terms of the transaction from the previous period, stated interest rate, expiration date, terms and manner of settlement per the agreement with the related party, and amounts due to or from related parties. If the entity and one or more other entities are under common ownership or management control and this control affects the operating results or financial position, disclosure includes the nature of the control relationship even if there are no transactions between the entities. Disclosure may also include the aggregate amount of current and deferred tax expense for each statement of earnings presented where the entity is a member of a group that files a consolidated tax return, the amount of any tax related balances due to or from affiliates as of the date of each statement of financial position presented, the principal provisions of the method by which the consolidated amount of current and deferred tax expense is allocated to the members of the group and the nature and effect of any changes in that method. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.
Reference 1: http://www.xbrl.org/2003/role/presentationRef