Alico, Inc. P. O. Box 338 La Belle, FL 33975 November 13, 2001 Securities and Exchange Commission Washington, D.C. 20549 Gentlemen: Pursuant to the requirements of the Securities Exchange Act of 1934, we are transmitting herewith the attached Form 10-K for the year ending August 31, 2001. Sincerely, ALICO, INC. L. Craig Simmons L. Craig Simmons Vice President and Chief Financial Officer UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-K __X__ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended August 31, 2001. OR _____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from ________________ to_______________. Commission file number 0-261. ALICO, INC. ______________________________________________________ (Exact name of registrant as specified in its charter) Florida 59-0906081 _______________________________ ____________________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P. O. Box 338, La Belle, Florida 33975 ________________________________________ __________ (Address of principal executive offices) (Zip Code) (863)675-2966 Registrant's telephone number, including area code______________ SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Name of each exchange on Title of each class which registered ___________________ ________________________ None None SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON CAPITAL STOCK, $1.00 Par value, Non-cumulative _____________________________________________________ (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that such registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes __X__ No_____ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. _____ As of October 12, 2001 there were 7,059,039 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 $88,722,551. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's Proxy Statement dated November 16, 2001 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 142,551 acres of land located in Collier, Hendry, Lee and Polk Counties. (See table on Page 7 for location and acreage by current primary use.) The Company is involved in various operations and activities including citrus fruit production, cattle ranching, sugarcane and sod production, and forestry. The Company also leases land for farming, cattle grazing, recreation, and oil exploration. The Company's land is managed for multiple use wherever possible. Cattle ranching, forestry and land leased for 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 9,197 acres of the Company's property are classified as timberlands, however, the area in which these lands are located is not highly rated for timber production. These lands are also utilized as native range, in the ranching operation, and leased out for recreation and oil exploration. Diversification of the Company's agricultural base was initiated with the development of a Sugarcane Division at the end of the 1988 fiscal year. The 11,722 acres in production during the 2001 fiscal year consisted of 903 acres planted in 1995, 2,649 acres planted in 1996, 2,430 acres planted in 1997, 3,377 acres planted in 1998, 2,363 acres planted in 1999. 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 2 to 3 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 14 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 has two wholly owned subsidiaries; Saddlebag Lake Resorts, Inc. ("Saddlebag") and Agri-Insurance Company, Ltd. ("Agri"). Saddlebag has been active in the subdividing, development and sale of real estate since its inception in 1971. Saddlebag has two subdivisions near Frostproof, Florida which have been developed and are on the market. Approximately 61% of the lots have been sold. Agri, formed during fiscal 2000, was created to write crop insurance against catastrophic losses due to weather and disease. The subsidiary wrote minor policies during 2000. During fiscal 2001, Agri supplied reinsurance to an independent underwriter who insured catastrophic business interruption coverage for Ben Hill Griffin, Inc. The total coverage under the policy was $3,143,537 and the premium charged was $126,860. The coverage term was from December 19, 2000 to December 19, 2001. There was a claim incurred during the year totaling $212,000. The Company expects to renew the policy and appropriately adjust premium rates. The financial results of the operation of these subsidiaries are consolidated with those of the Company. (See Note 1 of Notes to Consolidated Financial Statements.) Citrus ______ Approximately 10,371 acres of citrus were harvested during the 2000 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, 2001, approximately 77% of the Company's fruit crop was marketed under this agreement, as compared to 76% in 1999/00. In addition, Ben Hill Griffin, Inc. provides harvesting services to the Company for citrus sold to unrelated processors. These sales accounted for the remaining 23% of total citrus revenue for the year. In fiscal year 1999, approximately 89% of the Company's fruit crop was marketed under this agreement. Ranch ______ The Company has a cattle operation located in Hendry and Collier counties, Florida which is engaged primarily in the production of beef cattle and the raising of replacement heifers. The breeding herd consists of approximately 14,000 cows, bulls and replacement heifers. Approximately 44% of the herd are from one to five years old, while the remaining 56% are six and older. The Company primarily sells to packing and processing plants. The Company also sells cattle through local livestock auction markets and to contract cattle buyers. These buyers provide ready markets for the Company's cattle. The loss of any one or a few of these plants and/or buyers would not, in management's view, have a material adverse effect on the Company's cattle operation. Subject to prevailing market conditions, the Company may hedge its beef inventory by entering into cattle futures contracts to reduce exposure to changes in market prices. Sugarcane _________ The Company had 11,722 acres, 9,588 acres, and 5,432 acres of sugarcane in production during the 2000/01,1999/00, and 1998/99 fiscal years, respectively. The 2000/01, 1999/00, and 1998/99 crops yielded approximately 417,000, 321,000, and 216,000 gross tons, respectively. Forest Products _______________ Approximately 6% 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 land to others for grazing, farming and recreational uses, on a tenant-at-will basis, for an annual fee. The income is not significant when compared to overall gross income, however, it does help to offset the expense of carrying these properties until they are put to a more 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 CSR America, Inc. of West Palm Beach, Florida for mining and production of rock, aggregate, sand, baserock and other road building and construction materials. Royalties which the company receives for these products are based on a percentage of the F.O.B. plant sales price. Competition ___________ As indicated, the Company is primarily engaged in a limited number of agricultural activities, all of which are highly competitive. For instance, citrus is grown in several states, the most notable of which are: Florida, California, Arizona and Texas. In addition, citrus and sugarcane products are 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, sugarcane, cattle and forest products in the United States is insignificant. Environmental Regulations _________________________ The Company's operation is subject to various federal, state and local laws regulating the discharge of materials into the environment. The Company is in 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 2001, the Company had a total of 150 full-time employees classified as follows: Citrus 71; Ranch 22; Sugarcane 15; Facilities Maintenance Support 28; General and Administrative 14. There are no employees engaged in the development of new products or research. Management is not aware of any efforts by employees or outside organizers to create any type of labor union arrangement. Management believes that the employer/employee relationship environment is such that labor organization activities are unlikely to occur. Seasonal Nature of Business ___________________________ As with any agribusiness enterprise, the Company's business operations are predominantly seasonal in nature. The harvest and sale of citrus fruit generally occurs from October to June. Sugarcane is harvested during the first, second and third 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, 2001, the Company owned a total of 142,551 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 9,270 447 -- 3,251 -- -- 1 13,220 Lee 3,221 1,086 -- -- -- -- 1,460 2,369 8,136 Hendry 3,823 45,741 24,774 280 3,763 12,056 15,953 3,629 110,019 Collier 1,902 1,700 1,112 -- 4,129 -- -- 2,333 11,176 ______ _______ ______ ___ _____ _____ _____ _____ _______ Totals 9,197 57,797 26,333 280 11,143 12,056 17,413 8,332 142,551 ______ _______ ______ ___ _____ _____ ______ _____ _______ ______ _______ ______ ___ _____ _____ ______ _____ _______
Of the above lands, the Company utilizes 24,178 acres of improved pasture plus approximately 50,000 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 18,707 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. ___________________________________ The Company has been informed by Ben Hill Griffin III that he is party to a lawsuit filed against him in Polk County, Florida Circuit Court by the families of his four sisters, most of the members of whom are beneficiaries of a trust, entitled the Ben Hill Griffin, Jr. Revocable Intervisos Trust #1 (the "Trust"). The plaintiffs in the lawsuit (The Four Sisters Protectorate, et al. v. Ben Hill Griffin, III, Trustee, Case No. GC-G-0054, Section 81) sought to impose judicial sanctions on Mr. Griffin III, including his removal as Trustee of the Trust based on allegations of over-compensation and receipt of an illegal bonus. On March 29, 2001, after court-ordered mediation pending completion of which the trial was adjourned, Mr. Griffin III and a representative of the Four Sisters Protectorate, joined by their respective counsel, executed a "Settlement Agreement" which set forth the basic elements of a settlement of the lawsuit, contingent upon several events, including Internal Revenue Service approval of the proposed transaction as a tax free split-off for federal income tax purposes, and the Court's judicial termination of the Trust. The terms contained in the Settlement Agreement were not intended, nor were they sufficient, to resolve all specific items necessary to consummate a settlement of the lawsuit. The Settlement Agreement provided that the shares of Alico stock then owned by Ben Hill Griffin Investments would be utilized in the tax free split-off, along with other assets, as a means of allocating to the Four Sisters Protectorate assets approximating the value of their interests in Ben Hill Griffin Investments, a holding company wholly owned by the Trust, Ben Hill Griffin III, and the families represented in the Four Sisters Protectorate. Mr. Griffin III has indicated that almost immediately following execution of the Settlement Agreement the parties disagreed as to its validity or enforceability on various grounds. On May 14, 2001, the Harris Family filed a motion in the Circuit Court of the 10th Judicial Circuit in and for Polka County, Florida (Case No. GC-G-0054) seeking to have the Settlement Agreement set aside as invalid and unenforceable. On November 2, 2001 the Court entered a written order that the Settlement Agreement is enforceable. Mr. Griffin III's attorneys indicate that a large number of issues related to the mechanism and terms of the proposed distribution of certain of the assets of the Trust to the families of the four sisters, including the Alico stock beneficially owned by the Trust, remain to be worked out between the representatives of the four sisters and Ben Hill Griffin III and are currently being negotiated. According to them these terms are expected to be set forth in a definitive separation agreement, which is still being negotiated by the parties to the litigation but is expected to be finalized shortly. The Company further understands that consummation of the settlement will be subject to various conditions which are still being discussed, but will include the requirement that the parties receive a favorable IRS Revenue Ruling. Mr. Griffin III's attorneys indicate that no ruling request has yet been submitted. Neither the Company nor Mr. Griffin III know when or if the settlement will be implemented but believe the IRS ruling process alone could take 6 months from the date a ruling request is submitted. Mr. Griffin III has also informed the Company that immediately before the hearing on the enforcement of the State court action, lawyers for the Harris family provided Mr. Griffin III's attorneys with copies of a federal court action naming among others as defendants, Mr. Griffin III, individually and as Trustee of the Ben Hill Griffin Jr. Revocable Intervisos Trust #1, and BHG Inc. According to Mr. Griffin III's attorneys, this Litigation was filed in the federal district court for the Northern District of Florida (Case No: 4:olcv 432-5PM). The complaint, among other things, seeks to set aside the settlement agreement based on alleged violations of the securities laws, fraud, and negligence. Although this suit was filed on October 2, 2001, Mr. Griffin III's attorneys indicate that, as of this date, neither Mr. Griffin III nor BHG Inc. has been served in this action. Mr. Griffin III's attorneys have indicated that they believe this suit is without merit, if not frivolous, and have stated that if Mr. Griffin III is ever served, he will defend it vigorously. Since the Company opted out of the Florida Business Corporation Act's provisions on Affiliated Transactions and Control Share Acquisitions (currently FBCA s. 607.0901 and s. 607.0902) under the predecessor statutes to such sections, transactions contemplated by the Settlement Agreement may not be subject to shareholder approval or review by the Company's Board of Directors. The Company is not a party to any of this litigation. Item 4. Submission of Matters to a Vote of Security Holders. _____________________________________________________________________ None. PART II _______ Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters. _____________________________________________________________________ Common Stock Prices ___________________ The common stock of Alico, Inc. is traded over-the-counter on the NASDAQ National Market System under the symbol ALCO. The high and low sales prices, by fiscal quarter, during the years ended August 31, 2001 and 2000 are presented below:
2001 2000 Bid Price Bid Price _________ _________ High Low High Low First Quarter 16 13/16 15 5/16 16 5/16 14 1/2 Second Quarter 17 3/4 15 5/8 18 1/8 15 1/4 Third Quarter 28 5/8 15 3/4 17 1/4 15 1/16 Fourth Quarter 32 1/16 26 5/8 18 14 13/16
Approximate Number of Holders of Common Stock _____________________________________________ As of October 12, 2001, there were approximately 680 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 19, 1998 November 6, 1998 $ .50 October 18, 1999 November 5, 1999 $ .30 October 13, 2000 October 27, 2000 $1.00 Dividends are paid at the discretion of the Company's Board of Directors. The Company foresees no change in its ability to pay annual dividends in the immediate future; nevertheless, there is no assurance that dividends will be paid in the future since they are dependent upon earnings, the financial condition of the Company, and other factors. Item 6. Selected Financial Data. _________________________________________
Years Ended August 3l, DESCRIPTION 2001 2000(a) 1999 1998 1997 ________ ________ ________ ________ ________ (In Thousands, Except Per Share Amounts) Revenues $ 68,318 $ 62,540 $ 44,947 $ 44,679 $ 47,433 Costs and Expenses 48,205 41,965 37,886 33,654 29,583 Income Taxes 4,046 6,464 2,980 4,249 6,677 Net Income 16,066 14,111 4,081 6,776 11,173 Average Number of Shares Outstanding 7,033 7,028 7,028 7,028 7,028 Net Income Per Share 2.29 2.01 .58 .96 1.59 Cash Dividend Paid per Share 1.00 .30 .50 .60 .15 Current Assets 61,345 56,578 45,182 42,354 37,887 Total Assets 179,134 176,876 156,922 130,554 117,723 Current Liabilities 7,691 12,346 8,738 5,649 4,988 Ratio-Current Assets to Current Liabilities 7.98:1 4.58:1 5.17:1 7.50:1 7.59:1 Working Capital 53,654 44,232 36,444 36,705 32,899 Long-Term Obligations 58,818 60,985 56,789 34,938 24,582 Total Liabilities 66,508 73,331 65,527 40,587 29,570 Stockholders' Equity 112,625 103,545 91,395 89,967 88,153 (a) Certain amounts from 2000 have been reclassified to conform to the 2001 presentation.
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 $25.0 million at August 31, 2001 compared with $19.9 million at August 31, 2000. Working capital increased from $44.2 million at August 31, 2000 to $53.7 million at August 31, 2001. Cash outlay for land, equipment, building, and other improvements totaled $8.9 million during fiscal 2001, compared to $10.0 million during August 31, 2000 and $27.9 million in 1999, respectively. Land preparation for sugarcane 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 sod 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 provide for revolving credit of up to $44 million of which $12.2 million was available for the Company's general use at August 31, 2001 (see Note 6 of Notes to consolidated financial statements). 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" 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. Results of Operations _____________________ Summary of results (in thousands):
Years Ended August 31, 2001 2000 1999 _______ _______ _______ Operating revenue $54,609 $45,335 $39,346 Gross profit 9,665 7,202 3,997 Profit on sale of real estate 11,352 13,299 3,847 Interest and investment income 2,124 3,094 1,302 Interest expense 3,029 3,020 2,085 Provision for income taxes 4,046 6,464 2,980 Effective income tax rate 20.1% 31.4% 42.2% Net income 16,066 14,111 4,081
Operating Revenue _________________ Operating revenues for fiscal 2001 increased compared to fiscal 2000. An increase in revenues from agricultural activities was the most significant factor in the rise. Operating revenues for fiscal 2000 increased when compared to those of fiscal 1999. An increase in revenues from agricultural activities was the most significant factor in the rise. Gross Profit ____________ Gross profit from operations increased 35% during fiscal 2001. Increased sugarcane production and cattle sales are, combined with improved market prices, the primary factors in the rise. Gross profit from operations increased 80% during fiscal 2000. Improved market prices for both citrus and beef combined with increased citrus production as the primary factors in the rise. Profit on Sale of Real Estate ____________________________________ Profit from the sale of real estate decreased from $13.3 million in fiscal 2000 to $11.4 million in fiscal 2001. The Company recognized a $9.5 million gain on the sale of 488 acres, sold during fiscal 2000, upon receipt of the first annual mortgage payment which, combined with the initial payment in fiscal 2000, exceeded 20% of the contract price. Real estate profits increased from $3.8 million to $13.3 million during fiscal 2000. The most significant factor in the increase was the sale of 1,270 acres in Lee County, Florida for $16.5 million. The sale generated a $13.4 million pre-tax gain. 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 2001, 2000 and 1999, increasing investment levels during each year. The decrease in fiscal 2001 interest and realized and unrealized investment income resulted from unfavorable market conditions. The rise in fiscal 2000 and 1999 interest and realized and unrealized investment income for the years presented resulted from reinvested investment income and favorable market conditions during each of the years. Interest Expense ________________ Interest expense increased during fiscal 2001, 2000 and 1999, compared to each respective prior year. This was primarily due to increased borrowings related to the acquisition of 7,680 acres of sugarcane, citrus and ranch during fiscal 1999. Total interest cost increased slightly in 2001 and increased 54% and 53% during 2000 and 1999, respectively. Individual Operating Divisions ______________________________ Gross profit for the individual operating divisions, for fiscal 2001, 2000 and 1999, is presented in the following schedule and is discussed in subsequent sections:
Years Ended August 31, (in thousands) 2001 2000 1999 _______ _______ _______ CITRUS Revenues: Sales $27,570 $28,172 $23,518 Less harvesting & marketing 10,046 9,737 7,902 _______ _______ _______ Net Sales 17,524 18,435 15,616 Cost and Expenses: Direct production** 8,932 8,665 10,198 Allocated cost* 3,472 3,040 2,977 _______ _______ _______ Total 12,404 11,695 13,175 _______ _______ _______ Gross profit, citrus 5,120 6,740 2,441 _______ _______ _______ SUGARCANE Revenues: Sales 11,939 8,501 7,120 Less harvesting & hauling 2,516 1,997 1,341 _______ _______ _______ Net Sales 9,423 6,504 5,779 Costs and expenses: Direct production 3,810 2,787 1,886 Allocated cost* 2,992 2,178 1,257 _______ _______ _______ Total 6,802 4,965 3,143 _______ _____ _______ Gross profit, sugarcane 2,621 1,539 2,636 _______ _______ _______ RANCH Revenues: Sales 9,299 6,062 6,271 Costs and expenses: Direct production 5,571 3,844 4,507 Allocated cost* 2,133 1,479 1,772 _______ _______ _______ Total 7,704 5,323 6,279 _______ _______ _______ Gross profit (loss), ranch 1,595 739 (8) _______ _______ _______ Total gross profit, agriculture 9,336 9,018 5,069 _______ _______ _______ OTHER OPERATIONS Revenues: Rock products and sand 1,726 1,320 1,350 Oil leases and land rentals 770 923 711 Forest products 91 84 136 Other 3,213 272 240 _______ _______ _______ Total 5,800 2,599 2,437 Costs and expenses: Allocated Cost* 604 658 767 General and administrative, all operations 4,867 3,757 2,742 _______ _______ _______ Total 5,471 4,415 3,509 _______ _______ _______ Gross loss, other operations 329 (1,816) (1,072) _______ _______ _______ Total gross profit 9,665 7,202 3,997 _______ _______ _______ INTEREST & DIVIDENDS Revenue 2,124 3,094 1,302 Expense 3,029 3,020 2,085 _______ _______ _______ Interest & dividends, net (905) 74 (783) _______ _______ _______ REAL ESTATE Revenue: Sale of real estate 12,442 14,112 4,299 Expenses: Cost of sales 857 126 92 Other Costs 233 687 360 _______ _______ _______ Total 1,090 813 452 _______ _______ _______ Gain on sale of real estate 11,352 13,299 3,847 _______ _______ _______ Income before income taxes $20,112 $20,575 $ 7,061 _______ _______ _______ _______ _______ _______
* 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 $200 thousand on 570 acres in 2001 $309 thousand on 411 acres in 2000, and $434 thousand on 134 acres in 1999. Citrus ______ Gross profit was $ 5.1 million in fiscal 2001, $6.7 million in fiscal 2000, and $2.4 million for fiscal 1999. Revenue from citrus sales decreased 2% during fiscal 2001, compared to fiscal 2000 ($27.6 million during fiscal 2001 vs. $28.2 million during fiscal 2000). Production increased during fiscal 2001, however, the average market price decreased, compared to fiscal 2000. Harvesting and marketing costs increased over the prior year due to the increase in boxes harvested during the year. Direct production and allocated costs increased 8% due to inflation and increased cultivation costs related to replanting trees. Revenue from citrus sales increased 20% during fiscal 2000, compared to fiscal 1999 ($28.2 million during fiscal 2000 vs. $23.5 million during fiscal 1999). Production and the average market price improved during fiscal 2000, compared to fiscal 1999. Harvesting and marketing costs increased over the prior year, corresponding with an increase in yields. Direct production and allocated costs decreased 13% resulting from more favorable growing conditions, requiring less caretaking expenses. 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. 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 $617 thousand, $1.8 million, and $160 thousand during fiscal 2001, 2000 and 1999, respectively.
ACREAGE BY VARIETY AND AGE VARIETY 1-4 5-6 7-8 9-10 11-12 13-14 15-16 17+ Acres ___ ___ ___ ____ _____ _____ _____ ____ _____ Early: Parson Brown Oranges - - - 117 - 30 - - 147 Hamlin Oranges 158 22 - 63 - 159 915 2,152 3,469 Red Grapefruit - - - - - 73 - 335 408 White Grapefruit - - - - - - - - - Tangelos - - - - - - - 38 38 Navel Oranges - - - - - - - 138 138 Mid Season: Pineapple Oranges - - 102 - - - - 518 620 Queen Oranges - - - - - - - - - Honey Tangerines - - 76 - - - - 143 219 Midsweet Oranges 117 - 164 - - - - - 281 Late: Valencia Oranges 540 238 585 366 958 291 493 1,504 4,975 _____ ___ ___ ___ _____ ___ ___ _____ _____ Totals: 815 260 927 546 958 553 1,408 4,828 10,295
Sugarcane _________ Gross profit for fiscal 2001 was $2.6 million compared to $1.5 million in fiscal 2000, and $2.6 million in fiscal 1999. Sales revenues from sugarcane increased 40% during fiscal 2001, compared to fiscal 2000 ($11.9 million vs. $8.5 million, respectively). Direct production costs increased 37% during fiscal 2001, compared to fiscal 2000, respectively.) The rise in revenue and related costs was the result of the increase in the number of producing acres and improved market prices for sugar. Sales revenues from sugarcane increased 20% during fiscal 2000, compared to fiscal 1999 ($8.5 million vs. $7.1 million, respectively). The rise in revenue and related costs was the result of the increase in the number of producing acres. However, a decline in the market price for sugar and sugar yield per acre offset the increased production, creating a 42% decrease in division earnings. Ranching ________ The gross profit (loss) from ranch operations for fiscal 2001, 2000 and 1999 was $1.6 million, $739 thousand, and ($8) thousand, respectively. Revenues from cattle sales increased 54% during fiscal 2001, compared to fiscal 2000 ($9.3 million in fiscal 2001 vs. $6.1 million in fiscal 2000). The number of animals sold during fiscal 2001 increased 52% over the prior year due to increased in the number of feeder cattle sold during the current year. The rise in revenue was also affected by improved market prices for beef. Direct and allocated costs increased 45% when compared to the prior year ($7.5 million during fiscal 2001 and $5.1 million during fiscal 2000) corresponding to the decrease in the number of animals sold. Revenues from cattle sales decreased 3% during fiscal 2000, compared to fiscal 1999 ($6.1 million in fiscal 2000 vs. $6.3 million in fiscal 1999). The number of animals sold during the year decreased 13% under the prior year due to decreased sales of feeder cattle during the year. However, a significant improvement in market prices for beef is the primary cause of the increase in earnings for the division. Direct and allocated costs decreased 16% when compared to the prior year ($5.3 million during fiscal 2000 and $6.3 million during fiscal 1999) corresponding to the decrease in the number of animals sold. The Company's cattle marketing activities include retention of calves in western feedlots, contract and auction sales, and risk management contracts. Other Operations ________________ Revenues from oil royalties and land rentals were $770 thousand as compared to $923 thousand for fiscal 2000 and $711 thousand for fiscal 1999. Returns from rock products and sand were $1.7 million for fiscal 2001, $1.3 million for 2000 and $1.3 million during 1999. 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 2001 were $91 thousand compared to $84 thousand and $136 thousand for fiscal years 2000 and 1999, respectively. Direct and allocated expenses charged to the "Other" operations category included general and administrative and other costs not charged directly to the citrus, ranching, sugarcane divisions. These expenses totaled $5.5 million during fiscal 2001 compared to $4.4 million during fiscal 2000 and to $3.5 million during fiscal 1999. General Corporate _________________ The Company is continuing its marketing and permitting activities for its land which surrounds the Florida Gulf Coast University site. There are sales contracts in place for more than 7,400 acres of the Lee County, Florida property totaling $167 million. The agreements are at various stages of the due diligence periods with closing dates over the next ten years. The Company announced the formation of Agri-Insurance Company, Ltd. (Agri) a wholly owned subsidiary, during July of 2000. The insurance company was initially capitalized by transferring cash and approximately 3,000 acres of the Lee County property (along with sales contracts totaling $8 million). Through Agri, the Company expects to be able to underwrite previously uninsurable risk related to catastrophic crop and other losses. Additionally, the insurance company will have access to reinsurance markets, otherwise inaccessible. To expedite the creation of the capital liquidity necessary to underwrite the Company's exposure to catastrophic losses, another 5,600 acres was transferred during fiscal 2001. Agri underwrote a limited amount of coverage during fiscal 2001, and is expected to begin writing more significant coverages before the end of December 2001. During September of 1999, the Company announced a sale of 1,270 acres of land surrounding the University site in Lee County for $16.5 million. The contract called for 25 percent of the purchase price to be paid at closing, with the balance payable over the next four years. In August of 2000, Agri sold another 488 acres to the same buyer, also near the University, for $10.6 million. In connection with the sale, the purchaser agreed to pay off the $12.3 million mortgage related to the September 1999 sale and pay 10% of the contract price for their second purchase at closing, with the balance payable over the next four years. The first sale generated a pre-tax gain of $13.4 million. The gain related to the second sale was recognized during fiscal 2000, to the extent that 10% of the purchase price has been collected net of closing costs ($959 thousand). The remainder of the gain and related mortgage were recognized during the current fiscal year upon receipt of the first annual mortgage payment which, combined with the initial payment in fiscal 2000, exceeded 20% of the contract price. 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, 2001:
Average Interest Estimated Marketable Securities and Rate Cost Fair Value Short-term Investments (1) ________________ _____________ ___________ Fixed Rate 5.92% $ 3,098 $ 3,131 Variable Rate 2.45% $ 14,232 $ 15,596 (1) See definition in Notes 1 and 2 to our Notes to Consolidated Financial Statements.
The aggregate fair value of our investment in debt instruments (net of mutual funds of $1,426) as of August 31, 2001, by contractual maturity date, consisted of the following: Aggregate Fair Values ______________ (in thousands) Due in one year or less $ 68 Due between one and five years 100 Due between five and ten years 242 Due thereafter 1,262 ______________ $ 1,672 ______________ Item 8. Financial Statements and Supplementary Data. _____________________________________________________________ Independent Auditors' Report ____________________________ The Stockholders and Board of Directors Alico, Inc.: We have audited the consolidated balance sheets of Alico, Inc. and subsidiaries as of August 31, 2001 and 2000, 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, 2001. In connection with our audits of the consolidated financial statements, we also have audited the related consolidated financial statement schedules as listed in Item 14(a)(2) herein. These consolidated financial statements and financial statements schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Alico, Inc. and subsidiaries at August 31, 2001 and 2000, and the results of their operations and their cash flows for each of the years in the three-year period ended August 31, 2001 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related consolidated financial statement schedules, when considered in relation to the consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. KPMG LLP (Signature) Orlando, Florida October 12, 2001
CONSOLIDATED BALANCE SHEETS August 31, 2001 2000 _____________ ____________ ASSETS Current assets: Cash, including time deposits and other cash investments of $478,260 in 2001 and $179,311 in 2000 $ 6,225,088 $ 1,796,428 Marketable securities available for sale, at estimated fair value in 2001 and in 2000 (Note 2) 18,726,723 18,055,099 Accounts receivable ($6,901,275 in 2001 and $7,717,325 in 2000 due from affiliate) (Note 10) 10,153,205 11,954,721 Mortgages and notes receivable, current portion (Note 3) 2,482,454 2,509,034 Inventories (Note 4) 23,246,609 21,915,039 Other current assets 510,760 348,062 ____________ ____________ Total current assets 61,344,839 56,578,383 ____________ ____________ Other assets: Land inventories 8,031,544 7,147,937 Mortgages and notes receivable, net of current portion (Note 3) 5,112,309 7,334,579 Investments 1,170,898 959,252 ____________ ____________ Total other assets 14,314,751 15,441,768 ____________ ____________ Property, buildings and equipment (Note 5) 138,352,300 136,822,381 Less accumulated depreciation (34,878,310) (31,966,492) ____________ ____________ Net property, buildings and equipment 103,473,990 104,855,889 ____________ ____________ Total assets $179,133,580 $176,876,040 ____________ ____________ ____________ ____________ See accompanying Notes to Consolidated Financial Statements.
August 31, 2001 2000 ____________ ____________ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,810,094 $ 2,429,242 Due to profit sharing plan (Note 8) 443,942 429,784 Accrued ad valorem taxes 1,383,111 1,780,807 Current portion of notes payable (Note 6) 1,301,146 1,298,890 Accrued expenses 1,494,940 988,011 Income taxes payable 22,670 4,169,517 Deferred income taxes (Note 9) 1,234,697 1,250,026 ____________ ____________ Total current liabilities 7,690,600 12,346,277 Deferred revenue 52,987 9,540,000 Notes payable (Note 6) 46,704,954 40,302,855 Deferred income taxes (Note 9) 11,909,252 10,889,095 Deferred retirement benefits (Note 8) 150,429 252,809 ____________ ____________ Total liabilities 66,508,222 73,331,036 ____________ ____________ 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 7,044,513 in 2001 and 7,027,827 in 2000 7,044,513 7,027,827 Additional paid in capital 331,617 17,885 Accumulated other comprehensive income 871,077 1,159,445 Retained earnings 104,378,151 95,339,847 ____________ ____________ Total stockholders' equity 112,625,358 103,545,004 ____________ ____________ Total liabilities and stockholders' equity $179,133,580 $176,876,040 ____________ ____________ ____________ ____________ See accompanying Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF OPERATIONS Years Ended August 31, 2001 2000 1999 ___________ ___________ ___________ Revenue: Citrus (including revenues from affiliate (Note 10) $27,569,705 $28,172,057 $23,518,082 Sugarcane 11,939,228 8,501,549 7,119,976 Ranch 9,299,477 6,062,224 6,270,988 Forest products 90,861 84,104 136,372 Rock and sand royalties 1,725,997 1,319,525 1,349,856 Oil lease and land rentals 770,170 923,535 710,731 Profit on sales of real estate 11,585,627 14,111,938 4,299,434 Interest and investment income 2,123,595 3,093,203 1,301,991 Recovery of citrus eradication costs in excess of basis (Note 13) 2,967,950 234,920 - Other income 245,165 37,177 239,866 ___________ ___________ ___________ Total revenue 68,317,775 62,540,232 44,947,296 ___________ ___________ ___________ Costs and expenses: Citrus production, harvesting and marketing (including charges from affiliate (Note 10)) 22,450,086 21,431,441 21,077,169 Sugarcane production, harvesting and hauling 9,317,739 6,962,366 4,483,250 Ranch 7,704,467 5,323,002 6,280,000 Real estate 233,409 813,016 452,029 Interest (Note 6) 3,028,631 3,019,819 2,085,065 Other, general and administrative expenses 5,471,128 4,415,614 3,508,845 ___________ ___________ ___________ Total costs and expenses 48,205,460 41,965,258 37,886,358 ___________ ___________ ___________ Income before income taxes 20,112,315 20,574,974 7,060,938 Provision for income taxes (Note 9) 4,046,184 6,464,358 2,980,214 ___________ ___________ ___________ Net Income 16,066,131 $14,110,616 $ 4,080,724 ___________ ___________ ___________ ___________ ___________ ___________ Weighted-average number of shares outstanding 7,032,929 7,027,827 7,027,827 ___________ ___________ ___________ ___________ ___________ ___________ Per share amounts: Basic and diluted earnings $ 2.29 $ 2.01 $ .58 Dividends $ 1.00 $ .30 $ .50 See accompanying Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Accumulated Common Stock Other Additional Shares Retained Comprehensive Paid in Issued Amount Earnings Income Capital Total ________ __________ ___________ _______ ________ ________ Balances, August 31, 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 reclass- ification adjustment __________ 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 _________ Comprehensive income: Net income for the year ended August 31, 2000 - - 14,110,616 - - 14,110,616 Unrealized gains on securities, net of taxes - - - 129,492 - 129,492 and reclass- ification adjustment ___________ Total comprehensive income: 14,240,108 Dividends paid - - (2,108,348) - - (2,108,348) Stock based compensation - - - - 17,885 17,885 _________ _________ __________ _______ _______ ___________ Balances, August 31, 2000 7,027,827 $7,027,827 $95,339,847 $1,159,445 $ 17,885 $103,545,004 _________ Comprehensive income: Net income for the year ended August 31, 2001 - - 16,066,131 - - 16,066,131 Unrealized losses on securities, net of taxes - - - (288,368) - (288,368) and reclass- ification adjustment ___________ Total comprehensive income: 15,777,763 Dividends paid - - (7,027,827) - - (7,027,827) Stock options exercised 16,686 16,686 - - 227,264 243,950 Stock based compensation - - - - 86,468 86,468 _________ _________ _________ _______ _________ ___________ Balances, August 31, 2001 7,044,513 $7,044,513$104,378,151 $871,077 $331,617 $112,625,358 _________ __________ ___________ ________ ________ ___________ _________ __________ ___________ ________ ________ ___________ Disclosure of reclassification amount: 2001 2000 1999 ________ __________ ________ Unrealized holding gains (losses) arising during the period $ (206,715) $2,176,940 $824,144 Less: reclassification adjustment for gains (losses) included in net income 81,653 2,047,448 (37,464) ________ __________ _________ Net unrealized gains (losses) on securities $ (288,368) $ 129,492 $ 861,608 _________ _________ _________ _________ _________ _________ See accompanying Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended August 31, 2001 2000 1999 ___________ ___________ __________ Increase (Decrease) in Cash and Cash Investments: Cash flows from operating activities: Net income $16,066,131 $14,110,616 $ 4,080,724 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 6,946,005 5,118,854 5,355,450 (Gain) loss on breeding herd sales (76,993) 99,766 (316,700) Deferred income tax expense, net 1,178,810 (613,097) (631,748) Deferred retirement benefits (102,380) (124,678) 374,167 Net gain on sale of marketable securities (159,830) (1,868,010) (11,736) Loss on sale of property and equipment 1,641,938 1,232,535 33,934 Gain on real estate sales (11,585,627) (13,967,688) (4,299,434) Stock options granted below fair market value 86,468 17,885 - Cash provided by (used for) changes in: Accounts receivable 1,846,507 (3,930,668) 3,062,972 Inventories (1,701,762) (2,214,387) (3,824,055) Income taxes refundable - - (549,586) Other assets (600,335) (201,767) 138,673 Accounts payable and accrued expenses (112,219) 161,824 1,893,878 Income taxes payable (4,146,847) 4,719,103 (623,128) Deferred revenues 52,987 - (345,763) ___________ ___________ ___________ Net cash provided by operating activities 9,332,853 2,540,288 4,337,648 ___________ ___________ ___________ Cash flows from investing activities: Increase in land inventories (924,851) (713,832) (591,338) Purchases of property and equipment (8,502,483) (9,995,159) (27,883,421) Proceeds from disposals of property and equipment 959,324 522,091 457,584 Proceeds from sale of real estate 2,880,279 17,089,222 4,466,917 Purchases of investments (211,646) (69,937) (39,165) Proceeds from the sale of other assets - 56,829 58,250 Purchases of marketable securities (3,013,303) (2,902,598) (3,461,686) Proceeds from sales of marketable securities 2,039,159 1,967,397 2,140,932 Collection of mortgages and notes receivable 2,248,850 20,846 146,677 ___________ __________ ___________ Net cash provided by (used for) investing activities (4,524,671) 5,974,859 (24,705,250) ___________ ___________ ___________ Years Ended August 31, 2001 2000 1999 ___________ ___________ ___________ Cash flows from financing activities: Proceeds from exercising stock options 243,950 - - Proceeds from bank loans 43,193,828 33,086,000 59,952,000 Repayment of bank (36,789,473) (38,437,200) (36,237,923) Dividends paid (7,027,827) (2,108,348) (3,513,914) ___________ ___________ ___________ Net cash provided by (used for) financing activities (379,522) (7,459,548) 20,200,163 ___________ ___________ ___________ Net increase (decrease) in cash and cash investments 4,428,660 1,055,599 (167,439) Cash and cash investments: At beginning of year 1,796,428 740,829 908,268 ___________ ___________ __________ At end of year $ 6,225,088 $ 1,796,428 $ 740,829 ___________ ___________ ___________ ___________ ___________ ___________ Supplemental disclosures of cash flow information: Cash paid for interest, net of amount capitalized $ 3,101,692 $ 2,863,215 $ 2,186,855 ___________ ___________ ___________ ___________ ___________ ___________ Cash paid for income taxes, $ 7,014,227 $ 2,472,505 $ 3,142,286 including related interest (Note 9)___________ ___________ ___________ ___________ ___________ ___________ Noncash investing activities: Fair value adjustments to securities available for sale $ (462,350) $ 208,175 $ 1,482,456 ___________ ___________ ___________ ___________ ___________ ___________ Income tax effect related to fair value adjustments $ (173,982) $ 78,336 $ 557,848 ___________ ___________ ___________ ___________ ___________ ___________ Reclassification of breeding herd to Property & Equipment $ 370,192 $ 989,896 $ 902,763 ___________ ___________ ___________ ___________ ___________ ___________ See accompanying Notes to Consolidated Financial Statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended August 31, 2001, 2000 and 1999 (1) Summary of Significant Accounting Policies __________________________________________ (a) Basis of Consolidated Financial Statement Presentation ______________________________________________________ The consolidated financial statements include the accounts of Alico, Inc. (the Company) and its wholly owned subsidiaries, Saddlebag Lake Resorts, Inc. (Saddlebag), and Agri-Insurance Company, Ltd. (Agri), after elimination of all significant intercompany balances and transactions. (b) Revenue Recognition ___________________ Income from sales of citrus under marketing pool agreements is recognized at the time the crop is harvested. 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 $617,086, $1,839,642, and $159,748 during fiscal years 2001, 2000 and 1999, 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. At August 31, 2000, the Company had deferred revenue of $9,540,000 related to commercial real estate which was sold subject to a mortgage note receivable (note 3). 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 dilutive 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, mortgage and notes receivable, accounts payable and accrued expenses approximate fair value, because of the immediate or short term maturity of these items. The carrying amounts reported for the Company's long-term debts approximate fair value. (l) Derivative and Hedging Instruments __________________________________ In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives), and for hedging activities. SFAS No. 133 was amended by SFAS No. 138 in June 2000, in part, to allow "normal purchases and normal sales" transactions to be excluded from SFAS 133. At September 1, 2000, the Company had no open derivatives. Accordingly, the Company's adoption of the provisions of SFAS No. 133, as amended, on September 1, 2000, did not result in a transition adjustment. The Company engages in cattle futures trading activities for the purpose of economically hedging against price fluctuations. The Company records gains and losses related to economic hedges in costs of goods sold. At August 31, 2001, the Company had no open positions. (m) Accumulated Other Comprehensive Income ______________________________________ Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It includes both net income and other comprehensive income. Items included in other comprehensive income are classified based on their nature. The total of other comprehensive income for a period has been transferred to an equity account and displayed as "accumulated other comprehensive income". (n) Stock-Based Compensation ________________________ The Company applies Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) for stock options and other stock-based awards while disclosing pro forma net income and net income per share as if the fair value method had been applied in accordance with Statement of Financial Accounting Standards No. 123,"Accounting for Stock-based Compensation" (SFAS 123). (o) Operating Segment _________________ Alico, Inc. has four reportable segments: citrus, sugarcane, ranch 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. (p) Reclassifications _________________ Certain amounts from 2000 have been reclassified to conform to the 2001 presentation. (2) Marketable Securities Available for Sale ________________________________________ The Company has classified 100% of its investments in marketable securities as available for sale and, as such, the securities are carried at estimated fair value. Any unrealized gains and losses, net of related deferred taxes, are recorded as a net amount in a separate component of stockholders' equity until realized. The cost and estimated fair values of marketable securities available for sale at August 31, 2001 and 2000 (in thousands) were as follows:
2001 2000 _____________________________ _____________________________ Gross Estimated Gross Estimated Unrealized Fair Unrealized Fair Cost Gains Losses Value Cost Gains Losses Value _______ ____ ____ _______ ______ ______ ___ ________ Equity securities $14,232 $1,364 $ (-) $15,596 $13,107 $2,260 $(284) $15,083 Debt securities 3,098 82 (49) 3,131 3,089 16 (133) 2,972 _______ ____ _____ _______ ______ ______ ___ _______ Marketable securities available for sale $17,330 $1,446 $ (49)$18,727 $16,196 $2,276 $ (417) $18,055 _______ _____ _____ _______ ______ ______ ____ _______ _______ _____ _____ _______ ______ ______ ____ _______
At August 31, 2001, debt instruments (net of mutual funds of $1,426,046) are collectible as follows:$67,968 within one year, $100,250 between one and five years, $241,850 between five and ten years, and $1,261,609 there after. (3) Mortgage and Notes Receivable ____________________________ Mortgage and notes receivable arose from real estate sales. The balances (in thousands) are as follows:
August 31, 2001 August 31, 2000 _______________ _______________ Mortgage notes receivable on retail land sales $ 242 $ 239 Mortgage notes receivable on bulk land sales 7,262 9,540 Other notes receivable 90 65 ________________ _______________ Total mortgage and notes receivable $ 7,594 $ 9,844 Less current portion 2,482 2,509 ________________ _______________ Non-current portion $ 5,112 $ 7,335 ________________ _______________ ________________ _______________
In July 2000, the Company received a mortgage note in exchange for land sold. The note totaled $9,540,000 and principal payments of $2,385,000 are due annually on July 14, bearing interest at the LIBOR, over four years. (4) Inventories ___________ A summary of the Company's inventories (in thousands) at August 31, 2001 and 2000 is shown below:
2001 2000 _______ _______ Unharvested fruit crop on trees $ 9,626 $ 9,160 Unharvested sugarcane 5,387 5,096 Beef cattle 8,076 7,470 Sod 158 189 _______ _______ Total inventories $23,247 $21,915 _______ _______ _______ _______
(5) Property, Buildings and Equipment _________________________________ A summary of the Company's property, buildings and equipment (in thousands) at August 31, 2001 and 2000 is shown below:
Estimated 2001 2000 Useful Lives _______ _______ ____________ Breeding herd $12,465 $13,713 5-7 years Buildings 3,806 3,571 5-40 years Citrus trees 25,328 25,839 22-40 years Sugarcane 8,378 7,651 4-15 years Equipment and other facilities 29,993 27,670 3-40 years _______ _______ Total depreciable properties 79,970 78,444 Less accumulated depreciation 34,878 31,966 _______ _______ Net depreciable properties 45,092 46,478 Land and land improvements 58,382 58,378 _______ _______ Net property, buildings and equipment $103,474 $104,856 _______ _______ _______ _______
The Company's citrus trees, fruit crop, unharvested sugarcane and cattle are partially uninsured. (6) Indebtedness ____________ The Company has financial agreements with commercial banks that permit the Company to borrow up to $44 million. The financing agreements allow the Company to borrow up to $41 million which is due in 2003 and up to $3 million which is due on demand. The outstanding debt under these agreements was $31.8 million and $24.1 million at August 31, 2001 and 2000, respectively. In March 1999, the Company mortgaged 7,680 acres for $19 million in connection with a $22.5 million acquisition of producing citrus and sugarcane operations. The total amount of long- term debt under these agreements at August 31, 2001 and 2000 was $46,704,954 and $40,302,855, respectively. Maturities of the indebtedness of the Company over the next five years are as follows: 2002- $1,301,146; 2003- $18,072,386; 2004- $1,306,142; 2005- $1,308,905; 2006- $1,311,862. Interest cost expensed and capitalized (in thousands) during the three years ended August 31, 2001, 2000 and 1999 was as follows:
2001 2000 1999 ______ ______ ______ Interest expense $3,029 $3,020 $2,085 Interest capitalized 175 431 158 ______ ______ ______ Total interest cost $3,204 $3,451 $2,243 ______ ______ ______ ______ ______ ______
(7) Stock Option Plan __________ On November 3, 1998, the Company adopted the Alico, Inc., Incentive Equity Plan ("The Plan") pursuant to which the Board of Directors of the Company may grant options, stock appreciation rights, and/or restricted stock to certain directors and employees. The Plan authorizes grants of shares or options to purchase up to 650,000 shares of authorized but unissued common stock. Stock options have vesting schedules which are at the discretion of the Board of Directors and determined on the effective date of the grant.
Weighted Weighted average average remaining exercise contractual Shares price Life (in years) ______ _________ _______________ Balance outstanding, August 31, 1999 34,700 $14.42 8 Granted 14,992 $14.62 _______________ ______ _________ _______________ Balance outstanding, August 31, 2000 46,692 14.62 9 _______________ Granted 51,074 14.62 _______________ Exercised 16,686 14.62 ______ _________ Balance outstanding, August 31, 2001 84,080 $14.62 10 ______ _________ _______________ ______ _________ _______________
On August 31, 2001 and 2000, there were 549,234 and 600,308 shares available for grant, respectively. The fair value of stock options granted was $78,858 in 2001 and $15,667 in 2000 on the date of the grant using the Black Scholes option-pricing model with the following weighted average assumptions:
2001 2000 ____ ____ Volatility 10.19% 7.26% Dividend paid 6.84% 6.84% Risk-free interest rate 5.75% 5.75% Expected life in years 1 1
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. No compensation cost has been recognized in the consolidated financial statements through August 31, 1999, as options were issued at or above fair value. On September 9, 1999, the Company granted 14,992 stock options with an exercise price of $14.62 and a fair value of $15.813. The Company recorded $17,885 of unearned compensation at the date of the grant. On September 12, 2000, the Company granted an additional 51,074 stock options with an exercise price of $14.62 and a fair value of $16.313. The Company recorded $86,468 of unearned compen- sation at the date of the grant. Had the Company determined compensation cost based on the fair value at the grant date for its stock options under SFAS No. 123, the Company's net income would have changed to the pro forma amounts indicated below:
2001 2000 ____ ____ Net income as reported $16,066,131 $14,110,616 Pro forma net income $16,073,741 $14,112,834 Basic earning per share, as reported $ 2.29 $ 2.01 Pro forma basic earning per share $ 2.29 $ 2.01
(8) 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 $443,942, $429,784 and $269,177 for the years ended August 31, 2001, 2000 and 1999, 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, 2001 and 2000 was $147,108 and $249,488, respectively. Pension expenses for the additional retirement benefits were approximately $395,000, $128,000 and $213,000 for the years ended August 31, 2001, 2000 and 1999, respectively. (9) Income Taxes ____________ The provision for income taxes (in thousands) for the years ended August 31, 2001, 2000 and 1999 is summarized as follows:
2001 2000 1999 ______ ______ ______ Current: Federal income tax $2,428 $6,218 $3,311 State income tax 439 860 300 ______ ______ ______ 2,867 7,078 3,611 ______ ______ ______ Deferred: Federal income tax 1,058 (528) (539) State income tax 121 (86) ( 92) ______ ______ ______ 1,179 (614) (631) ______ ______ ______ Total provision for income taxes $4,046 $6,464 $2,980 ______ ______ ______ ______ ______ ______
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, 2001, 2000 and 1999:
2001 2000 1999 ______ ______ ______ Expected income tax $6,838 $6,995 $2,401 Increase (decrease) resulting from: State income taxes, net of federal benefit 328 516 135 Nontaxable interest and dividends (113) (127) (102) Internal Revenue Service examinations 479 (352) 984 Change in valuation allowance - - (539) Utilization of charitable contribution carryforward - (136) - Income from Agri- Insurance Company, Ltd. (3,829) - - Other reconciling items, net 343 (432) 101 ______ ______ ______ Total provision for income taxes $4,046 $6,464 $2,980 ______ ______ ______ ______ ______ ______
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. 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):
2001 2000 _______ _______ Deferred Tax Assets: Pension (168) (171) Prepaid sales commissions (776) (875) Inventory-beef (376) (416) Land inventories (435) (300) Other (1,246) (1,649) _______ _______ Total gross deferred tax assets (3,001) (3,411) _______ _______ Deferred Tax Liabilities: Revenue recognized from citrus and sugarcane 861 654 Property and equipment (principally due to depreciation and soil and water deductions) 12,390 12,814 Mortgage notes receivable 117 27 A/R citrus 671 546 Other 1,580 809 Unrealized gains on securities 526 700 _______ _______ Total gross deferred tax liabilities 16,145 15,550 _______ _______ Net deferred income tax liabilities $13,144 $12,139 _______ _______ _______ _______
Based on the Company's history of taxable earnings and its expectations for the future, management has determined that its taxable income will more likely than not be sufficient to fully recognize all deferred tax assets. Agri Insurance Company, Ltd. (Agri), a wholly owned insurance company subsidiary of Alico, is treated as a U.S. taxpayer, pursuant to an election under Internal Revenue Code Section 953 (d), for all purposes except for consolidating an operating loss by virtue of the dual consolidated loss rules. (Dual consolidated losses prevent operating losses (not capital losses) from occurring in insurance companies domiciled outside of the United States from offsetting operating income irrespective of the fact that the insurance company is a member of the consolidated return group.) Agri was established to provide agricultural insurance that falls outside of the Federal Crop Insurance Program, for catastrophic perils. Agri was domiciled in Bermuda because it offers easy access to reinsurance markets. Agri issued its initial policy in August 2000 to a third party. Agri's ability to underwrite insurance risks has been limited to its operational liquidity, by the Registrar of Companies in Bermuda. Agri will be able to underwrite additional insurance as its liquidity is increased from additional asset sales and as payments are received on prior sales. For Federal income tax purposes, only premiums received by Agri from policies of insurance issued to parties other than its parent, Alico, are considered insurance premiums. The preceding limiting factors resulted in Agri not incurring a tax liability on underwriting profits or investment income. Agri's tax status resulted in it filing its Federal tax return on a stand alone basis on a calendar year period ending December 31, 2000. It should be noted that during the fiscal year ending August 31, 2001, Agri incurred an underwriting loss of approximately $212,000. (10) Related Party Transactions __________________________ Citrus ______ Citrus revenues of $19,908,087, $20,032,730 and $18,188,136 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, 2001, 2000 and 1999, respectively. Griffin and its subsidiaries is the owner of approximately 50.78 percent of the Company's common stock. Accounts receivable, resulting from citrus sales, include amounts due from Griffin totaling $6,901,275 and $7,717,325 at August 31, 2001 and 2000, 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 $7,614,788, $7,531,491, and $6,127,603 for the years ended August 31, 2001, 2000 and 1999, respectively. In addition, Griffin provided the harvesting services for citrus sold to unrelated processors. The aggregate cost of these services was $2,185,899, $1,987,660 and $791,932 for the years ended August 31, 2001, 2000 and 1999, respectively. The accompanying consolidated balance sheets include accounts payable to Griffin for citrus production, harvesting and processing costs in the amount of $414,126 and $616,430 at August 31, 2001 and 2000, 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 $6,029,491, $5,518,087 and $6,019,927 during the years ended August 31, 2001, 2000 and 1999, respectively. (11) Future Application of Accounting Standards __________________________________________ In June 2001, the Financial Accounting Standard Board (FASB) issued Financial Accounting Standards (SFAS) No. 141, "Business Combinations". This statement addresses financial accounting and reporting for business combinations and supersedes Accounting Principal Board (APB) Option No. 16, "Business Combinations", and FASB Statement No. 38, "Accounting for Preacquisition Contingencies of Purchased Enterprises". All business combinations in the scope of this Statement are to be accounted for using one method, the purchase method. The provisions of this Statement apply to all business combinations initiated after June 30, 2001. The Statement also applies to all business combinations accounted for using the purchase method which the date of acquisition is July 1, 2001, or later. Adoption of this Statement is not expected to have a significant impact on the financial position or results of operations of the Company. In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets". This Statement addresses financial accounting and reporting for acquired goodwill and other intangible assets and supersedes APB Opinion No. 17, "Intangible Assets". It addresses how intangible assets that are acquired individually or with a group of other assets (but not those acquired in a business combination) should be accounted for in financial statements upon their acquisition. This Statement also addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements. Adoption of this Statement is not expected to have a significant impact on the financial position or results of operations of the Company. In June 2001, the FASB issued SFAS No. 143 "Accounting for Asset Retirement Obligations." This statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. It applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and (or) the normal operation of a long-lived asset, except for certain obligations of lessees. This Statement is effective for financial statements with fiscal years beginning after June 15, 2002. Adoption of this Statement is not expected to have a significant impact on the financial position or results of operations of the Company. In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." This Statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. This Statement supercedes both FASB Statement No. 121, "Accounting for the Impairment of Long- Lived Assets to Be Disposed Of" and the accounting and reporting Provisions of Accounting Principles Board Opinion No. 30, "Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions of a Segment of a Business." This Statement is effective for financial statements with fiscal years beginning after December 15, 2001. Adoption of this Statement is not expected to have a significant impact on the financial position or results of operations of the Company. (12) Commitments and Contingencies _____________________________ The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company's consolidated financial position, results of operation or liquidity. 13) Recovery of Citrus Canker Eradication Costs in Excess of Basis ______________________________________________________________ The Company incurred losses during the years ended August 31, 2001 and 2000, related to citrus canker eradication. The eradication program called for the removal of 507 acres of citrus trees from a grove in Hendry County, Florida. While the trees were insured under the Federal Crop Insurance Program, additional relief funding was available and secured by the Company from both Federal and State government sources. A summary of the recovery sources, related basis of the trees removed and the crop inventory losses are summarized (in thousands) as follows:
2001 2000 ______ ______ Recovery Sources Federal $ 2,830 $ 1,423 State 157 - Insurance 219 383 ______ ______ Total Recovery 3,206 1,806 Loss Basis Net Book Value of Trees 238 1,222 Fruit Inventory - 349 ______ ______ Total Basis 238 1,571 ______ ______ Excess of Recovery over Basis $ 2,968 $ 235 ______ ______ ______ ______
14) Business Segment Information ____________________________ The Company is primarily engaged in agricultural operations, which are subject to risk, including market prices, weather conditions and environmental concerns. The Company is also engaged in retail land sales and, from time to time, sells real estate considered surplus to its operating needs. Information about the Company's operations (in thousands) for the years ended August 31, 2001, 2000 and 1999 is summarized as follows:
2001 2000 1999 ________ ________ ________ Revenues: Agriculture: Citrus $ 27,570 $ 28,172 $ 23,518 Sugarcane 11,939 8,501 7,120 Ranch 9,299 6,062 6,271 ________ ________ ________ Total agriculture 48,808 42,735 36,909 Real estate 11,586 14,112 4,299 General corporate 7,924 5,693 3,739 ________ ________ ________ Consolidated totals $ 68,318 $ 62,540 $ 44,947 ________ ________ ________ ________ ________ ________ 2001 2000 1999 ________ ________ ________ Operating income (loss): Agriculture: Citrus $ 5,120 $ 6,740 $ 2,441 Sugarcane 2,621 1,539 2,636 Ranch 1,595 739 (8) ________ ________ ________ Total agriculture 9,336 9,018 5,069 Real estate 11,352 13,299 3,847 General corporate 7,924 5,693 3,739 ________ ________ ________ Total operating income 28,612 28,010 12,655 Interest expense (3,029) (3,020) (2,085) General corporate expenses (5,471) (4,415) (3,509) ________ ________ ________ Income before income taxes $ 20,112 $ 20,575 $ 7,061 ________ ________ ________ ________ ________ ________ Capital expenditures: Agriculture: Citrus $ 3,310 $ 1,331 $ 9,674 Sugarcane 2,632 5,861 13,995 Ranch 2,157 1,950 2,344 Sod 606 80 16 Farm lands 6 8 64 Heavy equipment 71 708 1,015 ________ ________ ________ Total agriculture 8,782 9,938 27,108 General corporate 91 57 775 ________ ________ ________ Consolidated totals $ 8,873 $ 9,995 $ 27,883 ________ ________ ________ ________ ________ ________ Depreciation, depletion and amortization: Agriculture: Citrus $ 2,405 $ 2,417 $ 2,273 Sugarcane 2,587 2,235 1,460 Ranch 1,456 (66) 1,174 Sod 18 11 14 Farm lands 39 39 38 Heavy equipment 353 396 319 ________ ________ ________ Total agriculture 6,858 5,032 5,278 General corporate 88 87 77 ________ ________ ________ Consolidated totals $ 6,946 $ 5,119 $ 5,355 ________ ________ ________ ________ ________ ________ Identifiable assets: Agriculture: Citrus $ 53,266 $ 56,173 $ 55,156 Sugarcane 51,678 50,784 45,629 Ranch 22,205 21,765 19,306 Sod 1,030 474 323 Farm lands 1,664 1,697 1,728 Heavy equipment 1,656 1,989 1,835 ________ ________ ________ Total agriculture 131,499 132,882 123,977 Real estate 15,626 16,992 9,897 General corporate 32,099 27,002 23,048 ________ ________ ________ Consolidated totals $179,134 $176,876 $156,922 ________ ________ ________ ________ ________ ________
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, 2001 and August 31, 2000, is as follows:
Quarters Ended November 30, Feb. 28, May 31, August 31, 2000 1999 2001 2000 2001 2000 2001 2000 _______ _______ _______ _______ _______ _______ _______ ______ S> Revenue: Citrus $ 1,096 $ 1,703 $10,421 $ 9,170 $12,658 $10,118 $ 3,395 $7,182 Sugarcane 2,938 1,451 6,303 5,021 2,698 2,310 0 (281) Ranch 4,800 2,987 951 582 2,156 1,668 1,392 825 Property sales 195 12,860 1,025 132 515 2 9,850 1,118 Interest 502 770 230 1,566 215 912 1,177 (154) Other revenues 744 794 633 550 803 517 3,620 737 _______ _______ _______ _______ _______ _______ _______ ______ Total revenue 10,275 20,565 19,563 17,021 19,045 15,527 19,434 9,427 _______ _______ _______ _______ _______ _______ _______ ______ Costs and expenses: Citrus 835 1,075 9,425 8,527 9,396 8,818 2,794 3,011 Sugarcane 2,236 1,423 5,056 4,452 2,031 1,034 (5) 54 Ranch 4,315 2,900 918 524 1,446 1,428 1,025 472 Interest 729 632 980 777 647 663 673 947 Other 980 765 1,249 845 1,128 1,050 2,347 2,568 ______ ______ ______ ______ ______ _____ _____ _____ Total costs and ex- penses 9,095 6,795 17,628 15,125 14,648 12,993 6,834 7,052 ______ ______ ______ ______ ______ _____ _____ _____ Income be- fore income taxes 1,180 13,770 1,935 1,896 4,397 2,534 12,600 2,375 Provision for income taxes 375 5,158 644 644 1,425 1,064 1,602 (402) ______ ______ ______ ______ ______ ______ ______ _____ Net income $ 805 $8,612 $1,291 $1,252 $2,972 $1,470 $10,998 $2,777 ______ ______ ______ ______ ______ ______ ______ _____ ______ ______ ______ ______ ______ ______ ______ _____ Basic earnings per share $ .11 $1.23 $ .18 $ .18 $ .42 $ .21 $ 1.58 $ .39 ______ ______ ______ ______ ______ ______ ______ _____ ______ ______ ______ ______ ______ ______ ______ _____ The weighted average number of shares outstanding totaled 7,027,827 shares during the first and second quarters, 7,031,585 in the third quarter, and 7,032,929 in the fourth quarter.
Item 9. Changes in & Disagreements with Accountants on Accounting and Financial Disclosure. _______________________________________________________________________ None PART III ________ Item 10. Directors and Executive Officers of the Registrant. _____________________________________________________________________ Executive Officers of the Company _________________________________ Election of Executive Officers 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) 59 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 62 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 49 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 2001 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 2001. For information with respect to the executive officers of the registrant, see "Executive Officers of the Registrant" at the end of Part I of this report. The information called for regarding directors is incorporated by reference to the Company's Proxy Statement dated November 16, 2001. Item 11. Executive Compensation. _________________________________________ Information called for by Items 11 is incorporated by reference to the Company's Proxy Statement dated November 16, 2001. As disclosed in the Proxy Statement, on September 12, 2000, the Company granted options for 51,074 shares of the Company's common stock to its employees pursuant to the Company's Incentive Equity Plan, 23,302 of which were awarded to the Company's two most highest compensated employees. The options had an exercise price of $14.62 and fair market value of $16.313 at the time of the grant. Item 12. Security Ownership of Certain Beneficial Owners and Management. ______________________________________________________________________ Information called for by Items 12 is incorporated by reference to the Company's Proxy Statement dated November 16, 2001. Item 13. Certain Relationships and Related Transactions. _________________________________________________________________ Information called for by Items 13 is incorporated by reference to the Company's Proxy Statement dated November 16, 2001. 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, 2001 and 2000 Consolidated Statements of Operations - For the Years Ended August 31, 2001, 2000 and 1999 Consolidated Statements of Stockholders' Equity - For the Years Ended August 31, 2001, 2000 and 1999 Consolidated Statements of Cash Flows - For the Years Ended August 31, 2001, 2000 and 1999 (a)2. Financial Statement Schedules: _____________________________ Selected Quarterly Financial Data - For the Years Ended August 31, 2001 and 2000 - Included in Part II, Item 8 Schedule I - Marketable Securities and Other Investments - at August 31, 2001 Schedule V - Property, Plant and Equipment - For the Years Ended August 31, 2001, 2000 and 1999 Schedule VI - Reserves for Depreciation, Depletion and Amortization of Property, Plant and Equipment - For the Years Ended August 31, 2001, 2000 and 1999 Schedule IX - Supplementary Income Statement Information - For the Years Ended August 31, 2001, 2000 and 1999 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 - Sadddlebag Lake Resorts, Inc. (incorporated in 1971) and Agri-Insurance Company, Ltd. (incorporated in 2000). (22) Published Report Regarding Matters Submitted to Vote of Security Holders - Not Applicable (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 15, 2000 regarding re-election of Directors and election of Officers. Form 8-K dated November 3, 2000 regarding disposition of land. Form 8-K dated December 14, 2000 regarding disposition of land. Form 8-K dated December 19, 2000 regarding disposition of land. Form 8-K dated December 21, 2000 regarding disposition of land. Form 8-K dated March 7, 2001 regarding election of new Director. Form 8-K dated March 23, 2001 regarding disposition of land. Form 8-K dated May 18, 2000 regarding disposition of land. Form 8-K dated June 12, 2001 regarding Chairman and CEO taking leave of absence. Form 8-K dated August 3, 2001 regarding Chairman and CEO returning from leave of absence. Form 8-K dated October 9, 2001 regarding a settlement agreement and litigation in State Court, Polk County, Florida. Form 8-K dated October 29, 2001 regarding disposition of land. 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, 2001 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 750,083 $ 750,083 $ 787,201 $ 787,201 Mutual Funds 9,934,236 9,934,236 11,044,493 11,044,493 Preferred Stocks 141,500 3,564,585 3,592,295 3,592,295 Common Stocks 57,986 2,151,892 2,412,188 2,412,188 Other Investments 929,298 929,298 890,546 890,546 ___________ ___________ ___________ Total: $17,330,094 $18,726,723 $18,726,723 ___________ ___________ ___________ ___________ ___________ ___________
ALICO, INC. SCHEDULE V PROPERTY, PLANT AND EQUIPMENT COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F ________ _________ _________ ________ ________ ________ Other Changes Balance Retire- Debit and/or Balance Beginning Additions ments Credit- at Close Description of Period at Cost or Sales Describe of Period ___________ _________ _________ _________ ___________ __________ For Year Ended August 31, 2001 ______________________________ Land $32,395,754 $ 42,266 $ 814,295 $ $ 31,623,725 Roads 2,156,452 32,041 2,188,493 Agricultural Land Preparation 9,906 9,906 Forest Improvements 100,026 100,026 Pasture Improvements 3,012,907 50,446 24,438 3,038,915 Buildings 3,553,390 235,226 3,788,616 Feeding and Watering Facilities for Cattle Herd 22,995 4,956 18,039 Water Control Facilities 5,337 5,337 Fences 277,102 10,669 1,498 286,273 Cattle Pens 186,809 10,736 176,073 Interest-Ranch 0 16,963 16,963 Irrigation System- Ranch 0 329,801 329,801 Citrus Groves, Including Irrigation Systems 44,327,540 2,817,916 2,032,908 45,112,548 Equipment 8,956,294 1,100,457 609,866 9,446,885 Breeding Herd 13,713,389 1,531,307 2,779,829 12,464,867 Sugarcane-Land Prep- aration, Etc. 25,991,444 2,112,392 1,064,230 27,039,605 Sod Land-Prep- aration, Etc. 270,719 587,191 857,910 Farm Land Prep- aration, Etc. 1,842,317 6,000 1,848,317 ___________ ___________ __________ _______ ____________ $136,822,381 $ 8,872,675 $7,342,756 $ $138,352,300 ___________ ___________ __________ _______ ____________ ___________ ___________ __________ _______ ____________
ALICO, INC. SCHEDULE V PROPERTY, PLANT AND EQUIPMENT COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F ________ _________ _________ ________ ________ ________ Other Changes Balance Retire- Debit and/or Balance Beginning Additions ments Credit- at Close Description of Period at Cost or Sales Describe of Period ___________ _________ _________ _________ ___________ __________ For Year Ended August 31, 2000 ______________________________ Land $32,446,339 $ 15,821 $ 66,406 $ $32,395,754 Roads 1,415,260 741,192 2,156,452 Agricultural Land Preparation 9,906 9,906 Forest Improvements 100,026 100,026 Pasture Improvements 2,988,469 24,438 3,012,907 Buildings 3,378,101 293,695 118,406 3,553,390 Feeding and Watering Facilities for Cattle Herd 17,454 5,541 22,995 Water Control Facilities 5,337 5,337 Fences 266,909 24,402 14,209 277,102 Cattle Pens 155,652 31,157 186,809 Citrus Groves, Including Irrigation Systems 46,184,668 849,070 2,706,198 44,327,540 Equipment 8,159,823 1,555,882 759,411 8,956,294 Breeding Herd 12,584,592 2,619,785 1,490,988 13,713,389 Sugarcane-Land Prep- aration, Etc. 22,634,545 4,736,794 1,379,895 25,991,444 Sod-Land Prep- aration, Etc. 191,441 79,278 270,719 Farm Land Prep- aration 1,834,317 8,000 1,842,317 ___________ __________ __________ _______ ____________ $132,372,839 $10,985,055 $6,535,513 $ $136,822,381 ___________ __________ __________ _______ ____________ ___________ __________ __________ _______ ____________
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, 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 Improve- ments 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 Irri- gation 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 1,796,519 1,800,351 12,584,592 Sugarcane-Land Prep.,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 $28,806,318 $3,498,230 $ $132,372,839 ___________ __________ __________ _________ ___________ ___________ __________ __________ _________ ___________ * Reclassification from other assets.
ALICO, INC. SCHEDULE VI Reserves for Depreciation, Depletion and Amortization of Property, Plant and Equipment _____________________________________________________ COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F ________ __________ __________ __________ ________ ________ Additions Other Balance 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, 2001 ______________________________ Buildings $ 1,502,400 $ 160,109 $ $ $ 1,662,509 Feeding and Watering Facilities for Cattle Herd 9,067 734 4,956 4,845 Water Control Facilities 0 0 0 0 Fences 129,521 28,165 203 157,483 Cattle Pens 99,012 14,525 10,736 102,801 Interest-Ranch 0 283 283 Irrigation System- Ranch 0 3,997 3,997 Citrus Groves, Including Irriga- tion Systems 13,715,634 1,949,064 828,499 14,836,199 Equipment 5,088,513 1,037,208 503,729 5,621,992 Breeding Herd 5,132,625 1,275,138 1,940,507 4,467,256 Roads 173,052 115,467 288,519 Sugarcane Lane Prep- aration, Etc. 5,950,645 2,314,161 745,557 7,519,249 Sod Land Prepara- tion, Etc. 16,066 8,487 24,553 Farm Land Preparation 149,957 38,667 188,624 ___________ __________ __________ ____ ___________ $31,966,492 $6,946,005 $4,034,187 $ 0 $34,878,310 ___________ __________ __________ ____ ___________ ___________ __________ __________ ____ ___________
ALICO, INC. SCHEDULE VI Reserves for Depreciation, Depletion and Amortization 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, 2000 ______________________________ Buildings $ 1,407,257 $ 153,267 $ 58,124 $ $ 1,502,400 Feeding and Watering Facilities for Cattle Herd 8,496 571 9,067 Water Control Facilities 0 0 0 0 Fences 117,083 26,647 14,209 129,521 Cattle Pens 85,215 13,797 99,012 Citrus Groves, Including Irriga- tion Systems 13,213,300 1,986,634 1,484,300 13,715,634 Equipment 4,793,420 989,713 694,620 5,088,513 Breeding Herd 6,276,893 (220,982) 923,286 5,132,625 Roads 113,385 59,667 173,052 Sugarcane-Land Prep- aration, Etc. 5,263,793 2,066,746 1,379,894 5,950,645 Sod-Land Prepara- tion, Etc. 11,414 4,652 16,066 Farm Land Preparation 111,815 38,142 149,957 ___________ __________ __________ ____ ___________ $31,402,071 $5,118,854 $4,554,433 $ 0 $31,966,492 ___________ __________ __________ ____ ___________ ___________ __________ __________ ____ ___________
ALICO, INC. SCHEDULE 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, 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 Irrigation 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-Land Prep.,Etc. 4,425,063 1,344,917 506,187 5,263,793 Sod-Land Prep- aration, Etc. 7,499 3,915 11,414 Farm Land Preparation 74,102 37,713 111,815 ___________ __________ __________ _______ ___________ $29,182,416 $5,355,450 $3,135,795 $ 0 $31,402,071 ___________ __________ __________ _______ ___________ ___________ __________ __________ _______ ___________
ALICO, INC. SCHEDULE IX ____________ SUPPLEMENTARY INCOME STATEMENT INFORMATION __________________________________________ _____________________________________________________________________________ COLUMN A COLUMN B _____________________________________________________________________________ Charged to Costs and Expenses _____________________________ Years Ended August 31, ______________________ Item 2001 2000 1999 ____ ____ ____ ____ 1. Maintenance and repairs $1,475,565 $1,294,131 $1,094,379 2. Taxes, other than payroll and income taxes 1,616,942 2,130,749 2,427,161
EXHIBIT 11 ALICO, INC. Computation of Weighted Average Shares Outstanding as of August 31, 2001: Number of shares outstanding at August 31, 2001 7,044,513 _________ _________ Number of shares outstanding at August 31, 2000 7,027,827 _________ _________ Weighted Average 9/1/99 - 8/31/01 7,032,929 _________ _________ EXHIBIT 12 ALICO, INC. Computation of Ratios: 2001 Current Assets $61,344,839 Current Liabilities 7,690,600 61,344,839 divided by 7,690,600 = 7.98:1 2000 Current Assets $56,578,383 Current Liabilities 12,346,277 56,578,383 divided by 12,346,277 = 4.58:1 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 13, 2001 Ben Hill Griffin, III Date Chairman, Chief Executive Officer and Director (Signature) November 13, 2001 W. Bernard Lester Date President, Chief Operating Officer and Director (Signature) November 13, 2001 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 Monterey Campbell, III Director Director (Signature) (Signature) Walker E. Blount, Jr. Director (Signature) November 13, 2001 Date 1 43