UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-K __X__ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended August 31, 1999. OR _____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from ________________ to_______________. Commission file number 0-261. ALICO, INC. ______________________________________________________ (Exact name of registrant as specified in its charter) Florida 59-0906081 _______________________________ ____________________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P. O. Box 338, La Belle, Florida 33975 ________________________________________ __________ (Address of principal executive offices) (Zip Code) (863)675-2966 Registrant's telephone number, including area code______________ SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Name of each exchange on Title of each class which registered ___________________ ________________________ None None SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON CAPITAL STOCK, $1.00 Par value, Non-cumulative _____________________________________________________ (Title of Class) Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. _________ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that such registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes __X__ No_____ As of October 18, 1999 there were 7,027,827 shares of stock outstanding and the aggregate market value (based upon the average bid and asked price, as quoted on NASDAQ) of the common stock held by non-affiliates was approximately $56,154,229. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's Annual Report and Proxy Statement dated November 15, 1999 are incorporated by reference in Parts II and III, respectively. PART I ______ Item 1. Business. __________________________ Alico, Inc. (the "Company") is generally recognized as an agribusiness company operating in Central and Southwest Florida. The Company's primary asset is 145,840 acres of land located in Collier, Hendry, Lee and Polk Counties. (See table on Page 6 for location and acreage by current primary use.) The Company is involved in various operations and activities including citrus fruit production, cattle ranching, sugarcane and sod production, and forestry. The Company also leases land for farming, cattle grazing, recreation, and oil exploration. The Company's land is managed for multiple use wherever possible. Cattle ranching, forestry and land leased for farming, grazing, recreation and oil exploration, in some instances, utilize the same acreage. Agricultural operations have combined to produce from 68 to 91 percent of annual revenues during the past five years. Citrus groves generate the most gross revenue. Sugarcane ranks second in revenue production. While the cattle ranching operation utilizes the largest acreage, it ranks third in the production of revenue. Approximately 9,707 acres of the Company's property are classified as timberlands, however, the area in which these lands are located is not highly rated for timber production. These lands are also utilized as native range, in the ranching operation, and leased out for recreation and oil exploration. Diversification of the Company's agricultural base was initiated with the development of a Sugarcane Division at the end of the 1988 fiscal year. The 5,432 acres in production during the 1999 fiscal year consisted of 188 acres planted in 1993, 535 acres planted in 1994, 1,129 acres planted in 1995, 2,130 acres planted in 1996 and 1,450 acres planted in 1997. The Company continued to expand agriculture activities during the 1999 fiscal year, purchasing additional property (approximately 7,600 acres in Hendry County, Florida) to be used as citrus, sugarcane, and pasture land. Leasing of lands for rock mining and oil and mineral exploration, rental of land for grazing, farming, recreation and other uses, while not classified as agricultural operations, are important components of the Company's land utilization and operation. Gross revenue from these activities during the past five years has ranged from 3 to 5 percent of total revenue. The Company is not in the land sales and development business, except through its wholly owned subsidiary, Saddlebag Lake Resorts, Inc.; however, it does from time to time sell properties which, in the judgment of management, are surplus to the Company's primary operations. Gross revenue from land sales during the past five years has ranged from 1 to 24 percent of total revenues. For further discussion of the relative importance of the various segments of the Company's operations, including financial information regarding revenues, operating profits (losses) and assets attributable to each major segment of the Company's business, see Note 11 of Notes to Consolidated Financial Statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this document. Subsidiary Operations _____________________ The Company's wholly owned subsidiary, Saddlebag Lake Resorts, Inc. (the "Subsidiary"), is only active in the subdividing, development and sale of real estate. The financial results of the operation of this subsidiary are consolidated with those of the Company. (See Note 1 of Notes to Consolidated Financial Statements.) Contributions by the Subsidiary to the net income of the Company, during the past five years, have ranged from 0 to 1 percent. The Subsidiary has two subdivisions near Frostproof, Florida which have been developed and are on the market. Approximately 74% of the lots have been sold. Citrus ______ Approximately 9,488 acres of citrus were harvested during the 1999 season. Since 1983 the Company has maintained a marketing contract covering the majority of the Company's citrus crop with Ben Hill Griffin, Inc., a Florida corporation and major shareholder. The agreement provides for modifications to meet changing market conditions and provides that either party may terminate the contract by giving notice prior to August 1st, preceding the fruit season immediately following. Under the terms of the contract the Company's fruit is packed and/or processed and sold along with fruit from other growers, including Ben Hill Griffin, Inc. The proceeds are distributed on a pro rata basis as the finished product is sold. During the year ended August 31, 1999, approximately 89% of the Company's fruit crop was marketed under this agreement, as compared to 90% in 1997/98. The Company expects that the majority of the 1999/00 crop will be marketed under the same terms. In addition, Ben Hill Griffin, Inc. provides harvesting services to the Company for citrus sold to unrelated processors. These sales accounted for the remaining 11% of total citrus revenue for the year. Ranch _____ The Company has a cattle operation located in Hendry and Collier Counties, Florida which is engaged primarily in the production of beef cattle and the raising of replacement heifers. The breeding herd consists of approximately 15,000 cows, bulls and replacement heifers. Approximately 54% of the herd are from one to five years old, while the remaining 46% are six and older. The Company primarily sells to packing and processing plants. The Company also sells cattle through local livestock auction markets and to contract cattle buyers. These buyers provide ready markets for the Company's cattle. The loss of any one or a few of these plants and/or buyers would not, in management's view, have a material adverse effect on the Company's cattle operation. Subject to prevailing market conditions, the Company may hedge its beef inventory by entering into cattle futures contracts to reduce exposure to changes in market prices. Sugarcane _________ The Company had 5,432 acres and 5,698 acres of sugarcane in production during the 1998/99 and 1997/98 fiscal years, respectively. The 1998/99 and 1997/98 crops yielded approximately 216,000 and 204,000 gross tons, respectively. Forest Products _______________ Approximately 7% of the Company's properties are classified as timberlands. The principal forest products sold by the Company are pulpwood and sabal palms. These products are sold to a paper company and various landscaping companies, respectively. The Company does not incur any of the harvesting expenses. Part of the lands, from which the timber was removed, is being converted to semi-improved pasture and other uses. Land Rental for Grazing, Agricultural and Other Uses ____________________________________________________ The Company rents lands to others for grazing, farming and recreational uses, on a tenant-at-will basis, for an annual fee. The income is not significant when compared to overall gross income, however, it does help to offset the expense of carrying these properties until they are put to a more profitable use. The Company has developed additional land to lease for farming. There were no significant changes in the method of rental for these purposes during the past fiscal year. Leases for Oil and Mineral Exploration ______________________________________ The Company has leased subsurface rights to a portion of its properties for the purpose of oil and mineral exploration. Currently, there are two leases in effect. Twenty-four wells have been drilled during the years that the Company has been leasing subsurface rights to oil companies. The drilling has resulted in twenty-one dry holes, one marginal producer, which has been abandoned, and two average producers, still producing. Mining Operations: Rock and Sand _________________________________ The Company leases 7,927 acres in Lee County, Florida to Florida Rock Industries, Inc. of Jacksonville, Florida for mining and production of rock, aggregate, sand, baserock and other road building and construction materials. Royalties which the company receives for these products are based on a percentage of the F.O.B. plant sales price. Competition ___________ As indicated, the Company is primarily engaged in a limited number of agricultural activities, all of which are highly competitive. For instance, citrus is grown in several states, the most notable of which are: Florida, California, Arizona and Texas. In addition, citrus and sugarcane products are imported from some foreign countries. Beef cattle are produced throughout the United States and domestic beef sales must also compete with sales of imported beef. Additionally, forest and rock products are produced in most parts of the United States. Leasing of land for oil exploration is also widespread. The Company's share of the market for citrus, cattle and forest products in the United States is insignificant. Environmental Regulations _________________________ The Company's operation is subject to various federal, state and local laws regulating the discharge of materials into the environment. The Company is in substantial compliance with all such rules and such compliance has not had a material effect upon capital expenditures, earnings or the competitive position of the Company. While compliance with environmental regulations has not had a material economic effect on the Company's operations, executive officers are required to spend a considerable amount of time keeping current on these matters. In addition, there are ongoing costs incurred in complying with the permitting and reporting requirements. Employees _________ At the end of August 1999 the Company had a total of 146 full-time employees classified as follows: Citrus 56; Ranch 16; Sugarcane 13; Facilities Maintenance Support 27; General and Administrative 34. There are no employees engaged in the development of new products or research. Seasonal Nature of Business ___________________________ As with any agribusiness enterprise, the Company's business operations are predominantly seasonal in nature. The harvest and sale of citrus fruit generally occurs from October to June. Sugarcane is harvested during the first, second and third quarters. Other segments of the Company's business such as its cattle and sod sales, and its timber, mining and leasing operations, tend to be more successive than seasonal in nature. Item 2. Properties. ____________________________ At August 31, 1999, the Company owned a total of 145,840 acres of land located in four counties in Florida. Acreage in each county and the primary classification with respect to present use of these properties is shown in the following table:
ACREAGE BY CURRENT PRIMARY USE ______________________________ Timber Native Improved Citrus Sugar- Agri- County Land Pasture Pasture Sod Land cane culture Other Total ___________________________________________________________________________ Polk 251 9,296 447 -- 3,148 -- -- 4 13,146 Lee 3,731 1,086 -- -- -- -- 1,460 3,599 9,876 Hendry 3,823 46,417 24,794 220 4,025 12,056 16,630 3,629 111,594 Collier 1,902 1,836 1,112 -- 4,041 -- -- 2,333 11,224 ______ _______ ______ ___ _____ _____ _____ _____ _______ Totals 9,707 58,635 26,353 220 11,214 12,056 18,090 9,565 145,840 ______ _______ ______ ___ _____ _____ ______ _____ _______ ______ _______ ______ ___ _____ _____ ______ _____ _______
Of the above lands, the Company utilizes 24,178 acres of improved pasture plus approximately 67,000 acres of native pasture for cattle production and 7,927 acres are leased for rock mining operations. Much of the land is also leased for multi-purpose use such as cattle grazing, oil exploration, agriculture and recreation. In addition to the land shown in the above table, the Company owns full subsurface rights to 1,064 acres and fractional subsurface rights to 18,882 acres. From the inception of the Company's initial development program in 1948, the goal has been to develop the lands for the most profitable use. Prior to implementation of the development program, detailed studies were made of the properties focusing on soil capabilities, topography, transportation, availability of markets and the climatic characteristics of each of the tracts. Based on these and later studies, the use of each tract was determined. It is the opinion of Management that the lands are suitable for agricultural, residential and commercial uses. However, since the Company is primarily engaged in agricultural activities, some of the lands are considered surplus to its needs for this purpose and, as indicated under Item 1 of this report, sales of real property are made from time to time. Management believes that each of the major programs is adequately supported by agricultural equipment, buildings, fences, irrigation systems and other amenities required for the operation of the projects. Item 3. Legal Proceedings. ___________________________________ There are no pending legal proceedings involving the Company. Item 4. Submission of Matters to a Vote of Security Holders. _____________________________________________________________________ None. Executive Officers of the Company _________________________________ Pursuant to General Instruction G of Form 10-K, the following list is included as an unnumbered Item in Part I of this report in lieu of being included in the Proxy Statement for the Annual Meeting of Stockholders to be held on December 9, 1999. Election of Executive Officer is held each year at the Annual Meeting of the Board of Directors following the Annual Meeting of the Stockholders. Name Title Age ____ _____ ___ Ben Hill Griffin, III Chairman of the Board (since March 1990), Chief Executive Officer (since January 1988) and Director (since March 1973) 57 W. Bernard Lester President (since December 1997) and Chief Operating Officer (since January 1988) and Director (since 1987), prior to July 1, 1986 was Executive Director of Florida Department of Citrus for over five years 60 L. Craig Simmons Vice President (effective February, 1995), Treasurer and Chief Financial Officer (effective September 1, 1992), prior thereto was Controller (from January 1 to August 31, 1992) and Assistant Comptroller (from January 1 to December 31, 1991), prior to September 1990 was Controller of Farm/Citrus Division, Collier Enterprises, Agribusiness Group 47 Section 16 - Beneficial Ownership Reporting Compliance ______________________________________________________ Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to the Company pursuant to Rule 16a-3(e) during the 1999 fiscal year and Forms 5 and amendments thereto furnished to the Company during fiscal year 1992 and certain written representations, if any, made to the Company, no officer, director or beneficial owners of 10% or more of the Company's common stock has failed to file on a timely basis any reports required by Section 16(a) of the Exchange Act to be filed during fiscal 1999. PART II _______ Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters. _____________________________________________________________________ Common Stock Prices ___________________ The common stock of Alico, Inc. is traded over-the-counter on the NASDAQ National Market System under the symbol ALCO. The high and low sales prices, by fiscal quarter, during the years ended August 31, 1999 and 1998 are presented below:
1999 1998 Bid Price Bid Price _________ _________ High Low High Low First Quarter 17 3/4 16 25 1/2 23 7/8 Second Quarter 19 1/2 15 7/8 24 1/2 19 1/2 Third Quarter 16 1/2 13 3/4 23 19 3/4 Fourth Quarter 17 3/4 15 1/8 20 3/4 17 5/8
Approximate Number of Holders of Common Stock _____________________________________________ As of October 18, 1999 there were approximately 794 holders of record of Alico, Inc. Common Stock. Dividend Information ____________________ Only year-end dividends have been paid, and during the last three fiscal years were as follows: Amount Paid Record Date Payment Date Per Share ___________ ____________ ___________ October 25, 1996 November 8, 1996 $.15 October 20, 1997 November 7, 1997 $.60 October 19, 1998 November 6, 1998 $.50 Dividends are paid at the discretion of the Company's Board of Directors. The Company foresees no change in its ability to pay annual dividends in the immediate future; nevertheless, there is no assurance that dividends will be paid in the future since they are dependent upon earnings, the financial condition of the Company, and other factors. Item 6. Selected Financial Data. _________________________________________
Years Ended August 3l, DESCRIPTION 1999 1998 1997 1996 1995 ________ ________ ________ ________ ________ (In Thousands, Except Per Share Amounts) Revenues $ 44,947 $ 44,679 $ 47,433 $ 36,089 $ 39,571 Costs and Expenses 37,886 33,654 29,583 29,269 25,105 Income Taxes 2,980 4,249 6,677 2,381 5,525 Net Income 4,081 6,776 11,173 4,439 8,941 Average Number of Shares Outstanding 7,028 7,028 7,028 7,028 7,028 Basic Earnings Per Share .58 .96 1.59 .63 1.27 Cash Dividend Paid per Share .50 .60 .15 .35 .25 Current Assets 45,182 42,354 37,887 34,877 31,736 Total Assets 156,922 130,554 117,723 114,504 109,007 Current Liabilities 8,738 5,649 4,988 5,115 5,656 Ratio-Current Assets to Current Liabilities 5.17:1 7.50:1 7.59:1 6.82:1 5.61:1 Working Capital 36,444 36,705 32,899 29,762 26,080 Long-Term Obligations 56,789 34,938 24,582 32,006 27,945 Total Liabilities 65,527 40,587 29,570 37,121 33,601 Stockholders' Equity 91,395 89,967 88,153 77,383 75,406
Item 7. Management's Discussion and Analysis of Financial __________________________________________________________________ Condition and Results of Operations. ____________________________________ The following discussion focuses on the results of operations and the financial condition of Alico. This section should be read in conjunction with the consolidated financial statements and notes. Liquidity and Capital Resources _______________________________ The Company had cash and marketable securities of $15.8 million at August 31, 1999 compared with $13.2 million at August 31, 1998. Working capital decreased slightly, from $36.7 million at August 31, 1998 to $36.4 million August 31, 1999. Also, the Company purchased approximately 7,680 acres of citrus, sugarcane and range lands in Hendry County, Florida, for $22.5 million in March 1999. Cash outlay for land, equipment, building, and other improvements totaled $27.9 million, during fiscal 1999, compared to $12.2 million during August 31, 1998 and $5.8 million in 1997, respectively. The most significant expenditure was the land purchase referred to above. Land excavation for sugarcane farming development and capital maintenance continued, as did expenditures for replacement equipment and raising of breeding cattle. Capital projects for the upcoming year are expected to include development of additional sugarcane acreage. Management believes that the Company will be able to meet its working capital requirements, for the foreseeable future, with internally generated funds. In addition, the Company has credit commitments which provided for revolving credit of up to $44 million of which $15.9 million was available for the Company's general use at August 31, 1999 (see note 5 of consolidated financial statements). Year 2000 Compliance ____________________ The Company recognizes that year 2000 issues could result in system failures or miscalculations causing disruptions of operations, including, among others, a temporary inability to process transactions, send invoices or engage in similar normal business activities. The Company has been engaged in an evaluation of its year 2000 readiness in connection with various aspects of its business. Specifically, the Company has focused on its information technology and non-information technology systems. In addition, the Company has analyzed its production processes and products. The Company has also attempted to analyze year 2000 issues relating to third parties with whom the Company has a business relationship. The current status of the Company's efforts is as follows: Internal Systems, Processes and Products ________________________________________ Information Technology Systems: The Company's accounting software provider and operating system provider have advised the Company that such software is year 2000 compliant. Non-Information Technology Systems: The Company does not believe that non-information technology systems are material to its business; however, the Company has reviewed and testing such systems. The Company does not believe that it will incur any material costs in connection with the review and testing of such systems. Products: The Company's products are not date sensitive. Therefore, the Company does not believe it has any material exposure with regard to its products as a result of the year 2000 issue. Year 2000 Issues Relating to Third Parties __________________________________________ Suppliers: Certain products purchased by the Company are obtained from a limited group of suppliers. The Company surveyed such suppliers in 1999 regarding their year 2000 status. Absent widespread difficulties affecting several major vendors, the Company does not anticipate that vendors' year 2000 issues would have a material adverse effect on the Company, because the Company believes alternative sources of supply are available for all required components. The Company is not currently aware of the year 2000 readiness of certain outside services companies. Any adverse effect caused by the failure of these providers to be year 2000 compliant is not currently susceptible to quantification. Customers: Because the Company intends to distribute the majority of its agricultural products through third party distribution and marketing agreements, and because the customer base is expected to change from year to year, the Company is unable to predict the identity of most of its major customers in the year 2000 and thereafter. Accordingly, the Company is unable to make an inquiry as to whether the customers' computer driven payment or purchasing processes are year 2000 compliant. A customer's year 2000 issues could cause a delay in receipt of purchase orders or in payment. If year 2000 issues are widespread among the Company's customers, the Company's sales and cash flow could be materially affected. Cautionary Statement ____________________ Readers should note, in particular, that this document contains forward-looking Statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that involve substantial risks and uncertainties. When used in this document, or in the documents incorporated by reference herein, the words "anticipate", "believe", "estimate", "may", "intend" statements. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein. The considerations listed herein represent certain important factors the Company believes could cause such results to differ. These considerations are not intended to represent a complete list of the general or specific risks that may affect the Company. It should be recognized that other risks, including general economic factors and expansion strategies, may be significant, presently or in the future, and the risks set forth herein may affect the Company to a greater extent than indicated. Results of Operations _____________________ Summary of results (in thousands):
Years Ended August 31, 1999 1998 1997 _______ _______ _______ Operating revenue $39,346 $41,618 $34,543 Gross profit 3,997 9,532 5,886 Profit on sale of real estate 3,847 875 11,271 Interest and investment income 1,302 1,734 1,137 Interest expense 2,085 1,116 444 Provision for income taxes 2,980 4,249 6,677 Effective income tax rate 42.2% 38.5% 37.4% Net income 4,081 6,776 11,173
Operating Revenue _________________ Operating revenues for fiscal 1999 decreased, compared to fiscal 1998. A decline in revenues from agricultural operations was the primary factor in the decrease. Operating revenues for fiscal 1998 increased when compared to those of fiscal 1997. Revenues from agricultural operations were higher than in the prior year. Gross Profit ____________ Gross profit from operations decreased 58% during fiscal 1999, when compared to the prior year. Reduced citrus yields combined with lower market prices for beef as the primary factors in the decline. Gross profit from operations during fiscal 1998 increased by 62% over fiscal 1997. The increase was primarily due to larger harvest volume for sugarcane, combined with improved market prices for citrus products. Profit on Sale of Real Estate ____________________________________ Profit from the sale of real estate increased from $875 thousand during fiscal 1998 to $3.8 million during fiscal 1999. Sales during the current year included ongoing residential lot sales in Polk County and a $4.2 million pre-tax gain on the sale of 7,142 acres in Hendry County to the South Florida Water Management District. Profit from the sale of real estate was $875 thousand during fiscal 1998, as compared to $11.27 million during fiscal 1997. Sales during 1998 included residential lot sales in Polk County, sales in Lee County and additional proceeds resulting from a final survey of the large fiscal 1997 land sale in Hendry County. During fiscal 1997 revenues included the sale of approximately 21,700 acres of land in Hendry and Collier Counties, Florida, to the State of Florida for $11.5 million, the pre-tax gain from which was $11.1 million, and several smaller sales in Lee, Collier and Polk Counties. Interest and Investment Income ______________________________ Interest and investment income is generated principally from investments in marketable equity securities, corporate and municipal bonds, mutual funds, U.S. Treasury securities and mortgages held on real estate sold on the installment basis. Realized investment earnings were reinvested throughout fiscal 1999, 1998 and 1997, increasing investment levels during each year. The rise in fiscal interest and realized and unrealized investment income for the years presented resulted from reinvested income and favorable market conditions during each of the years. As a result of the market downturn of August 1998, the Company experienced unrealized declines in its portfolio which have been reflected in stockholders' equity. Interest Expense ________________ Interest expense increased during fiscal 1999, compared to fiscal 1998, primarily due to increased borrowings related to the acquisition of 7,680 acres of sugarcane, citrus and range land, and borrowings related to the development of the 8,444 acres purchased during fiscal 1998. Total interest cost increased 53%, which included capitalized interest and is discussed in Note 5. Interest expense increased during fiscal 1998, compared to fiscal 1997, primarily due to increased borrowings used to acquire property and interest associated with settling the 8/31/93 and 8/31/94 income tax audits. Total interest cost, which includes capitalized interest and is discussed in Note 5 to the Consolidated Financial Statements, increased 38%. Provision for Income Taxes __________________________ The effective tax rate increased to 42.2% during fiscal year 1999, up from 38.5% during fiscal year 1998, and 37.4% during fiscal year 1997. Higher taxable income levels, combined with the impact of decreased tax exempt investment income and payments related to the settlement of Internal Revenue Service examinations, raised the effective rate. Individual Operating Divisions ______________________________ Gross profit for the individual operating divisions, for fiscal 1999, 1998 and 1997, is presented in the following schedule and is discussed in subsequent sections:
Years Ended August 31, (in thousands) 1999 1998 1997 _______ _______ _______ CITRUS Revenues: Sales $23,518 $26,622 $22,287 Less harvesting & marketing 7,902 8,421 8,210 _______ _______ _______ Net Sales 15,616 18,201 14,077 Cost and Expenses: Direct production** 10,198 6,908 6,875 Allocated cost* 2,977 2,616 2,352 _______ _______ _______ Total 13,175 9,524 9,227 _______ _______ _______ Gross profit, citrus 2,441 8,677 4,850 _______ _______ _______ SUGARCANE Revenues: Sales 7,120 6,123 4,967 Less harvesting & hauling 1,341 1,400 1,120 _______ _______ _______ Net Sales 5,779 4,723 3,847 Costs and expenses: Direct production 1,886 1,926 1,826 Allocated cost* 1,257 1,189 1,190 _______ _______ _______ Total 3,143 3,115 3,016 _______ _____ _______ Gross profit, sugarcane 2,636 1,608 831 _______ _______ _______ RANCH Revenues: Sales 6,271 6,883 4,876 Costs and expenses: Direct production 4,507 4,715 3,165 Allocated cost* 1,772 1,552 946 _______ _______ _______ Total 6,279 6,267 4,111 _______ _______ _______ Gross profit (loss), ranch (8) 616 765 _______ _______ _______ Total gross profit, agriculture 5,069 10,901 6,446 _______ _______ _______ OTHER OPERATIONS Revenues: Rock products and sand 1,350 1,203 1,258 Oil leases and land rentals 711 505 831 Forest products 136 161 224 Other 240 122 100 _______ _______ _______ Total 2,437 1,991 2,413 Costs and expenses: Allocated Cost* 767 570 481 General and administrative, all operations 2,742 2,789 2,492 _______ _______ _______ Total 3,509 3,359 2,973 _______ _______ _______ Gross loss, other operations (1,072) (1,368) (560) _______ _______ _______ Total gross profit 3,997 9,533 5,886 _______ _______ _______ INTEREST & DIVIDENDS Revenue 1,302 1,734 1,137 Expense 2,085 1,116 444 _______ _______ _______ Interest & dividends, net (783) 618 693 _______ _______ _______ REAL ESTATE Revenue: Sale of real estate 4,299 1,327 11,753 Expenses: Cost of sales 92 93 122 Other Costs 360 360 360 _______ _______ _______ Total 452 453 482 _______ _______ _______ Gain on sale of real estate 3,847 874 11,271 _______ _______ _______ Income before income taxes $ 7,061 $11,025 $17,850 _______ _______ _______ _______ _______ _______
* Allocated expense includes ad valorem and payroll taxes, depreciation and insurance. ** Excludes capitalized maintenance cost of groves less than five years of age consisting of $434 dollars on 134 acres in 1999, $236 thousand on 620 acres in 1998, and $875 thousand on 1,130 acres in 1997. Citrus ______ Gross profit was $ 2.4 million in fiscal 1999, $8.7 million in fiscal 1998, and $4.9 million for fiscal 1997. Revenue from citrus sales decreased 11.7% during fiscal 1999, compared to fiscal 1998 ($23.5 million during fiscal 1999 vs. $26.6 million during fiscal 1998). Production declined for the year, while the average market price for citrus increased. However, this improvement did not offset the decrease in yields. Harvesting and marketing costs decreased from the prior year, due to fewer number of boxes that were harvested during the year. Direct production and allocated costs also increased (38%), due to inflation and increased cultivation costs related to young groves recently placed in service. Revenue from citrus sales increased 19% during fiscal 1998, compared to fiscal 1997 ($26.6 million during fiscal 1998 vs. $22.3 million during fiscal 1997). The increase primarily resulted from higher prices for citrus products. Production remained steady for the year, while average market prices per box increased. Harvesting and marketing costs rose slightly from the prior year, due to competing demands for labor ($8.4 million in fiscal 1998 vs. $8.2 million in fiscal 1997). Direct production and allocated costs also increased slightly (3%), largely due to inflation.
ACREAGE BY VARIETY AND AGE VARIETY 1-4 5-6 7-8 9-10 11-12 13-14 15-16 17+ Acres ___ ___ ___ ____ _____ _____ _____ ____ _____ Early: Parson Brown Oranges - - 117 30 - - - - 147 Hamlin Oranges 386 170 32 30 891 222 254 1,574 3,559 Red Grapefruit - - 54 - 81 - 48 327 510 White Grapefruit - - - 318 - - - 21 339 Tangelos - - - - - - - 135 135 Navel Oranges - - 15 - - - 54 84 153 Mid Season: Pineapple Oranges - 103 - - - - 18 467 588 Queen Oranges - - - - - - - 51 51 Honey Tangerines - 76 - - 45 - - 94 215 Midsweet Oranges 133 110 - - - - - - 243 Late: Valencia Oranges 1,055 308 654 689 1,053 - 125 1,390 5,274 _____ ___ ___ ___ _____ ___ ___ _____ _____ Totals: 1,574 767 872 1,067 2,070 222 499 4,143 11,214
The final returns from citrus pools are not precisely determinable at year end. Returns are estimated each year based on the most current information available, conservatively applied. Differences between the estimates and the final realization of revenues can be significant. Revenues collected in excess of prior year and year end estimates were $160 thousand, $2.7 million, and $1.0 million during fiscal 1999, 1998 and 1997, respectively. Sugarcane _________ Gross profit for fiscal 1999 was $2.6 million compared to $1.6 million in fiscal 1998 and $831 thousand in fiscal 1997. Sales revenues from sugarcane increased 16% during fiscal 1999, compared to fiscal 1998 ($7.1 million vs. $6.1 million, respectively). During the same period, direct production and allocated costs remained the same ($3.1 million in fiscal 1998 and 1999). The rise in earnings was primarily due to improved sugar yield per acre. While the gross tons harvested during fiscal 1999 approximated fiscal 1998, this year's crop yielded a higher sugar content, generating the rise in earnings for this division. Sales revenues from sugarcane increased 23% during fiscal 1998, compared to fiscal 1997 ($6.1 million vs. $4.9 million, respectively). During the same period, direct production and allocated costs increased by 3% ($3.1 million in fiscal 1998 vs. $3.0 million in fiscal 1997). The revenue improvement during the year was largely due to increases in acres harvested and gross tons yielded per acre. The total gross tons harvested during fiscal 1998 was 29% higher than the previous year. Poor weather conditions caused decreased yields during the prior year. Ranching ________ The gross profit (loss) from ranch operations for fiscal 1999, 1998 and 1997 was $(8) thousand, $616 thousand, and $765 thousand, respectively. Revenues from cattle sales decreased 9% during fiscal 1999, compared to fiscal 1998 ($6.3 million in fiscal 1999 vs. $6.9 million in fiscal 1998). The number of animals sold during the year decreased 13% under the prior year due to decreased sales of feeder cattle during the year. Direct and allocated costs remained unchanged from their year ago levels ($6.3 million in fiscal 1999 and 1998). The Company's cattle marketing activities include retention of calves in western feedlots, contract and auction sales, and risk management contracts. Revenues from cattle sales increased 41% during fiscal 1998, compared to fiscal 1997 ($6.9 million in fiscal 1998 vs. $4.9 million in fiscal 1997). The number of animals sold during the year increased 17% over the prior year Due to increased sales of feeder cattle inventories during the year. Direct and allocated costs increased from their year ago levels ($6.3 million in fiscal 1998 vs. $4.1 million in fiscal 1997). The costs increased as a result of the increase in the number of animals sold, and the type of animals sold. During the prior year, the Company sold a larger number of fully brood cows, resulting in a lower cost basis and a higher profit margin per unit. Other Operations ________________ Revenues from oil royalties and land rentals were $711 thousand for fiscal 1999 compared to $505 thousand for fiscal 1998 and $831 thousand for fiscal 1997. Returns from rock products and sand were $1.3 million for fiscal 1999, $1.2 for 1998 and 1.3 million during 1997. Rock and sand supplies are sufficient to meet current demand, and no major price changes have occurred over the past 3 years. Profits from the sale of sabal palms, for landscaping purposes, during fiscal 1998 were $136 thousand compared to $161 thousand and $224 thousand for fiscal years 1998 and 1997, respectively. Direct and allocated expenses charged to the "Other" operations category included general and administrative and other costs not charged directly to citrus, ranching, sugarcane divisions. These expenses totaled $3.5 million during fiscal 1999 compared to $3.4 million during fiscal 1998 and to $3.0 million during fiscal 1997. General Corporate _________________ The Company is continuing its marketing and permitting activities for its land which surrounds the Florida Gulf Coast University site. The Company announced an option agreement with REJ Group, Inc., of Cleveland, Ohio, during May 1997. The option agreement permits the acquisition of a minimum 150 acres and a maximum of 400 acres within the 2,300 acres University Village. The potential pre-tax gain to Alico, if the option is exercised, would vary from $8.5 million to $24.5 million, depending on the time at which the option is exercised, and the total number of acres selected. In February 1999, the South Florida Water Management District acquired Approximately 12,728 acres of land in Hendry and Collier Counties, Florida, from Alico, Inc. for $8.8 million. Upon completion of the sale, the Company recognized a pre-tax gain of approximately $4.2 million on 7,142 of the acres. The remaining 5,586 acres were used in a like-kind exchange, as part of a $22.5 million acquisition of approximately 7,680 acres in Hendry County, Florida that was completed during March of 1999. The acquisition included producing citrus and sugarcane operations. The transaction included like-kind exchanges totaling $6.1 million and debt restructuring that resulted in a $19 million mortgage. (See Note 5 under Notes to Consolidated Financial Statements.) In July of 1999, the Company entered into a contract to sell 402 acres near the University to Thomas B. Garlick, a Trustee of Florida Land Trust 996 for approximately $15.5 million. The sale is scheduled to close during fiscal 2000. If the sale is consummated, it is expected to generate a pre-tax gain of approximately $13.5 million. Additionally, the Company has agreed to sell 190 acres, also near the University, for approximately $6.6 million to South west Florida Equities Corporation. The sale is expected to close during fiscal 2001 and could potentially generate a $5.8 million pre-tax gain. During September of 1999, the Company announced a sale to Miromar Development, Inc. of Montreal, Canada, of 1,230 acres of land surrounding the University site in Lee County for $16.5 million. The contract called for 25 percent of the purchase price to be paid at closing, with the balance payable over the next four years. The sale is expected to generate a pre- tax gain of approximately $14 million. Item 7(a). Quantitative and Qualitative Disclosure About Market Risk _________________________________________________________________________ Our exposure to market rate risk for changes in interest rates relates primarily to our investment portfolio. We do not have derivative financial instruments in our investment portfolio. We place our investments with high quality issuers and, by policy, limit the amount of credit exposure to any one issuer. We are adverse to principal loss and ensure the safety and preservation of our invested funds by limiting default, market and reinvestment risk. We classify our cash equivalents and short-term investments as fixed-rate if the rate of return on such instruments remains fixed over their term. These fixed-rate investments include fixed-rate U.S. government securities, municipal bonds, time deposits and certificates of deposit. We classify our cash equivalents and short-term investments as variable-rate if the rate of return on such investments varies based on the change in a predetermined index or set of indices during their term. These variable-rate investments primarily include money market accounts, mutual funds and equities held at various securities brokers and investment banks. The table below presents the amounts (in thousands) and related weighted interest rates of our investment portfolio at August 31, 1999: Average Marketable Interest Estimated Securities and Rate Cost Fair Value Short-term Investments (1) _____________ ______________ _____________ Fixed Rate 5.10% $ 2,980 $ 2,887 Variable Rate 5.24% $ 10,778 $ 12,520 (1) See definition in Notes 1 and 2 to our Consolidated Financial Statements. The aggregate fair value of our investment in debt instruments (net of mutual funds of $1,791) as of August 31, 1999, by contractual maturity date, consisted of the following: Aggregate Fair Values ______________ (in thousands) Due in one year or less $ 365 Due between one and five years 166 Due between five and ten years 194 Due thereafter 371 ______________ $ 1,096 ______________ ______________ Item 8. Financial Statements and Supplementary Data. _____________________________________________________________ Independent Auditors' Report ____________________________ The Stockholders and Board of Directors Alico, Inc.: We have audited the consolidated balance sheets of Alico, Inc. and subsidiary as of August 31, 1999 and 1998, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the years in the three-year period ended August 31, 1999. In connection with our audits of the consolidated financial statements, we also have audited the related consolidated financial statement schedules as listed in Item 14(a)(2) herein. These consolidated financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Alico, Inc. and subsidiary at August 31, 1999 and 1998, and the results of their operations and their cash flows for each of the years in the three-year period ended August 31, 1999, in conformity with generally accepted accounting principles. Also in our opinion, the related consolidated financial statement schedules, when considered in relation to the consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. KPMG LLP (Signature) Orlando, Florida October 13, 1999
CONSOLIDATED BALANCE SHEETS August 31, 1999 1998 _____________ ____________ ASSETS Current assets: Cash, including time deposits and other cash investments of $ 335,532 in 1999 and $ 849,905 in 1998 $ 740,829 $ 908,268 Marketable equity securities available for sale, at estimated fair value in 1999 and in 1998 (note 2) 15,043,713 12,291,767 Accounts receivable ($6,084,064 in 1999 and $8,332,514 in 1998 due from affiliate) (note 9) 8,030,863 11,093,835 Mortgages and notes receivable, current portion 73,589 99,673 Inventories (note 3) 20,547,215 17,625,923 Refundable income taxes 549,586 0 Other current assets 195,904 334,577 ____________ ____________ Total current assets 45,181,699 42,354,043 ____________ ____________ Other assets: Land inventories 9,429,295 8,837,957 Mortgages and notes receivable, net of current portion 394,203 514,796 Investments 946,145 965,230 ____________ ____________ Total other assets 10,769,643 10,317,983 ____________ ____________ Property, buildings and equipment (note 4) 132,372,839 107,064,751 Less accumulated depreciation (31,402,071) (29,182,416) ____________ ____________ Net property, buildings and equipment 100,970,768 77,882,335 ____________ ____________ Total assets $156,922,110 $130,554,361 ____________ ____________ ____________ ____________ See accompanying notes to consolidated financial statements. August 31, 1999 1998 ____________ ____________ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,571,579 $ 1,464,159 Due to profit sharing plan (note 7) 269,177 296,368 Accrued ad valorem taxes 1,997,834 1,329,136 Current portion of notes payable (note 5) 1,322,033 28,145 Accrued expenses 683,848 538,897 Income taxes payable 0 623,128 Deferred income taxes (note 8) 1,893,360 1,023,886 Deferred revenue 0 345,763 ____________ ____________ Total current liabilities 8,737,831 5,649,482 Notes payable (note 5) 45,630,912 23,210,723 Deferred income taxes (note 8) 10,780,521 11,723,895 Deferred retirement benefits (note 7) 377,487 3,320 ____________ ____________ Total liabilities 65,526,751 40,587,420 ____________ ____________ Stockholders' equity: Preferred stock, no par value. Authorized 1,000,000 shares; issued, none - - Common stock, $1 par value. Authorized 15,000,000 shares; issued and outstanding 7,027,827 in 1999 and 1998 7,027,827 7,027,827 Accumulated other Comprehensive Income (note 2) 1,029,953 168,345 Retained earnings 83,337,579 82,770,769 ____________ ____________ Total stockholders' equity 91,395,359 89,966,941 ____________ ____________ Total liabilities and stockholders' equity $156,922,110 $130,554,361 ____________ ____________ ____________ ____________ See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS Years Ended August 31, 1999 1998 1997 ___________ ___________ ___________ Revenue: Citrus (including charges from affiliate (note 9 ) $23,518,082 $26,621,714 $22,287,006 Sugarcane 7,119,976 6,122,822 4,966,837 Ranch 6,270,988 6,882,149 4,875,826 Forest products 136,372 161,309 224,090 Rock and sand royalties 1,349,856 1,203,160 1,257,665 Oil lease and land rentals 710,731 505,426 831,254 Profit on sales of real estate 4,299,434 1,326,624 11,753,199 Interest and investment income 1,301,991 1,734,023 1,136,928 Other income 239,866 121,509 99,872 ___________ ___________ ___________ Total revenue 44,947,296 44,678,736 47,432,677 ___________ ___________ ___________ Costs and expenses: Citrus production, harvesting and Marketing (including charges from Affiliate (note 9) 21,077,169 17,945,016 17,436,648 Sugarcane production, harvesting and hauling 4,483,250 4,514,424 4,136,302 Ranch 6,280,000 6,266,688 4,110,969 Real estate 452,029 451,912 481,870 Interest (note 5) 2,085,065 1,116,688 444,217 Other, general and administrative expenses 3,508,845 3,359,392 2,972,863 ___________ ___________ ___________ Total costs and expenses 37,886,358 33,654,120 29,582,869 ___________ ___________ ___________ Income before income taxes 7,060,938 11,024,616 17,849,808 Provision for income taxes (note 8) 2,980,214 4,248,810 6,677,116 ___________ ___________ ___________ Net Income 4,080,724 $ 6,775,806 $11,172,692 ___________ ___________ ___________ ___________ ___________ ___________ Weighted average number of shares outstanding 7,027,827 7,027,827 7,027,827 ___________ ___________ ___________ ___________ ___________ ___________ Per share amounts: Basic earnings $ .58 $ .96 $ 1.59 Dividends .50 $ .60 $ .15 See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Common Accumulated Stock Other Shares Retained Comprehensive Issued Amount Earnings Income Total ________ ________ __________ _______ ___________ Balances, August 31, 1996 7,027,827 $7,027,827 $70,093,141 $261,686 $77,382,654 _______________ Comprehensive income: Net income for the year ended August 31, 1997 - - 11,172,692 - 11,172,692 Unrealized gains on Securities, net of taxes - - - 651,373 651,373 and reclassification adjustment (see disclosure) _____________ Total Comprehensive income: 11,824,065 Dividends paid - - (1,054,174) - (1,054,174) _________ __________ ___________ ________ _______________ Balances, August 31, 1997 7,027,827 $7,027,827 $80,211,659 $913,059 $88,152,545 _______________ Comprehensive income: Net income for the year ended August 31, 1998 - - 6,775,806 - 6,775,806 Unrealized losses on Securities, net of taxes - - - (744,714) (744,714) and reclassification adjustment (see disclosure) ____________ Total Comprehensive income: 6,031,092 Dividends paid - - (4,216,696) - (4,216,696) ________ __________ ___________ ________ ____________ Balances, August 31, 1998 7,027,827 $7,027,827 $82,770,769 $168,345 $89,966,941 _______________ Comprehensive income: Net income for the year ended August 31, 1999 - - 4,080,724 - 4,080,724 Unrealized gains on Securities, net of taxes - - - 861,608 861,608 and reclassification adjustment (see disclosure) ___________ Total Comprehensive income: 4,942,332 Dividends paid - - (3,513,914) - (3,513,914) _________ __________ ___________ ________ _____________ Balances, August 31, 1999 7,027,827 $7,027,827 $83,337,579 $1,029,953 $91,395,359 _________ __________ ___________ ________ _____________ _________ __________ ___________ ________ _____________ Disclosure of reclassification amount: 1999 1998 1997 ________ ________ ________ Unrealized holding gains (losses) arising during the period $824,144 $(86,587) $845,326 Less: reclassification adjustment for gains (losses) included in net income (37,464) 658,127 193,953 ________ ________ ________ Net unrealized gains (losses) on securities $861,608 $(744,714) $651,373 ________ _________ ________ ________ _________ ________ See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended August 31, 1999 1998 1997 ___________ ___________ __________ Increase (Decrease) in Cash and Cash Investments: Cash flows from operating activities: Net Income $ 4,080,724 $ 6,775,806 $11,172,692 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 5,355,450 4,717,219 4,240,117 Gain on breeding herd sales (316,700) (465,482) (526,266) Deferred income tax expense, net (631,748) 714,257 (259,533) Deferred retirement benefits 374,167 (9,939) (63,465) Net gain on sale of marketable securities (11,736) (850,446) (414,669) (Gain) loss on sale of property and equipment 33,934 (14,678) 424,915 Gain on real estate sales (4,299,434) (1,239,031) (11,957,753) Increase in land inventories (591,338) (492,841) (567,174) Cash provided by (used for) changes in: Accounts receivable 3,062,972 (3,636,898) 1,975,901 Inventories (3,824,055) (1,924,894) (2,845,384) Refundable income taxes (549,586) - - Other assets 138,673 (65,114) (31,425) Accounts payable and accrued expenses 1,893,878 479,862 (590,994) Income taxes payable (623,128) (311,767) 744,256 Deferred revenues (345,763) 345,763 - ___________ ___________ ___________ Net cash provided by operating activities 3,746,310 4,021,817 1,301,218 ___________ ___________ ___________ Cash flows from investing activities: Purchases of property and equipment (27,883,421) (12,186,976) (5,752,072) Proceeds from disposals of property and equipment 457,584 510,432 608,658 Proceeds from sale of real estate 4,466,917 1,393,170 12,060,060 Purchases of other assets (39,165) (51,446) (100,896) Proceeds from the sale of other assets 58,250 41,995 161,643 Purchases of marketable securities (3,461,686) (5,255,681) (4,694,859) Proceeds from sales of marketable securities 2,140,932 3,933,517 4,367,008 Collection of mortgages and notes receivable 146,677 875,503 909,120 ___________ __________ ___________ Net cash provided by (used for) investing activities (24,113,912) (10,739,486) 7,558,662 ___________ ___________ __________ Years Ended August 31, 1999 1998 1997 ___________ ___________ ___________ Cash flows from financing activities: Proceeds of bank loans 59,952,000 31,573,868 18,749,000 Repayment of loans (36,237,923) (21,191,000) (26,523,000) Dividends paid (3,513,914) (4,216,696) (1,054,174) ___________ ___________ ___________ Net cash provided by (used for) financing activities 20,200,163 6,166,172 (8,828,174) ___________ ___________ ___________ Net increase (decrease) in cash and cash investments (167,439) (551,497) 31,706 Cash and cash investments: At beginning of year 908,268 1,459,765 1,428,059 ___________ ___________ __________ At end of year $ 740,829 $ 908,268 $ 1,459,765 ___________ ___________ ___________ ___________ ___________ ___________ Supplemental disclosures of cash flow information: Cash paid for interest, net of amount capitalized $ 2,186,855 $ 765,210 $ 396,988 ___________ ___________ ___________ ___________ ___________ ___________ Cash paid for income taxes, $ 3,142,286 $ 3,800,198 $ 6,183,310 including related interest (note 8)___________ ___________ ___________ ___________ ___________ ___________ Non-cash investing activities: Fair value adjustments to securities available for sale $ 1,482,456 $(1,194,026) $ 1,044,369 ___________ ___________ ___________ ___________ ___________ ___________ Income tax effect related to fair value adjustments $ 557,848 $ (449,312) $ 392,996 ___________ ___________ __________ ___________ ___________ __________ See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended August 31, 1999, 1998 and 1997 (1) Summary of Significant Accounting Policies __________________________________________ (a) Basis of Consolidated Financial Statement Presentation ______________________________________________________ The accompanying financial statements include the accounts of Alico, Inc. (the Company) and its wholly owned subsidiary, Saddlebag Lake Resorts, Inc. (Saddlebag), after elimination of all significant inter-company balances and transactions. (b) Revenue Recognition ___________________ Income from sales of citrus under marketing pool agreements is recognized at the time the crop is harvested. The revenue is based on the Company's estimates of the amounts to be received as the sales of pooled products are completed. Fluctuation in the market prices for citrus fruit has caused the Company to recognize additional revenue from the prior year's crop totaling $ 159,748, $2,656,629, and $1,007,211 during fiscal years 1999, 1998 and 1997, respectively. (c) Real Estate ___________ Real estate sales are recorded under the accrual method of accounting. Retail land sales are not recognized until payments received, including interest, aggregate 10 percent of the contract sales price for residential real estate or 20 percent for commercial real estate. Sales are discounted to yield the market rate of interest where the stated rate is less than the market rate. The recorded valuation discounts are realized as the balances due are collected. In the event of early liquidation, interest is recognized on the simple interest method. Tangible assets that are purchased during the period to aid in the sale of the project as well as costs for services performed to obtain regulatory approval of the sales are capitalized as land and land improvements to the extent they are estimated to be recoverable from the sale of the property. Land and land improvement costs are allocated to individual parcels on a per lot basis using the relative sales value method. The Company has entered into an agreement with a real estate consultant to assist in obtaining the necessary regulatory approvals for the development and marketing of a tract of raw land. The marketing costs under this agreement are being expensed as incurred. The costs incurred to obtain the necessary regulatory approvals are capitalized into land costs when paid. These costs will be expensed as cost of sales when the underlying real estate is sold. (d) Marketable Securities Available for Sale ________________________________________ Marketable securities available for sale are carried at the estimate fair value of the portfolio. Net unrealized investment gains and losses are recorded net of related deferred taxes in a separate component of stockholders' equity until realized. Fair value for debt and equity investments is based on quoted market prices at the reporting date for those or similar investments. The cost of all marketable securities available for sale are determined on the specific identification method. (e) Inventories ___________ Beef cattle inventories are stated at the lower of cost or market. The cost of the beef cattle inventory is based on the accumulated cost of developing such animals for sale. Unharvested crops are stated at the lower of cost or market. The cost for unharvested crops is based on accumulated production costs incurred during the eight month period from January 1 through August 31. (f) Property, Buildings and Equipment _________________________________ Property, buildings and equipment are stated at cost. Properties acquired from the Company's predecessor corporation in exchange for common stock issued in 1960, at the inception of the Company, are stated on the basis of cost to the predecessor corporation. Property acquired as part of a land exchange trust is valued at the carrying value of the property transferred to the trust. The breeding herd consists of purchased animals and animals raised on the ranch. Purchased animals are stated at cost. The cost of animals raised on the ranch is based on the accumulated cost of developing such animals for productive use. Depreciation for financial reporting purposes is computed on straight-line and accelerated methods over the estimated useful lives of the various classes of depreciable assets. (g) Income Taxes ____________ The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. (h) Basic Earnings Per Share ________________________ Earnings per share has been computed by dividing net income by the weighted average number of common shares outstanding during the year. The Company has no diluting securities. (i) Cash Flows __________ For purposes of the cash flows, cash and cash investments include cash on hand and amounts due from financial institutions with an original maturity of less than three months. (j) Use of Estimates ________________ In preparing the consolidated financial statements, management is required to make estimates and assumptions that effect the reported amounts of assets and liabilities. Actual results could differ significantly from those estimates. Although some variability is inherent in these estimates, management believes that the amounts provided are adequate. (k) Financial Instruments and Accruals __________________________________ The carrying amounts in the consolidated balance sheets for accounts receivable, accounts payable and accrued expenses approximate fair value, because of the immediate or short term maturity of these items. The carrying amounts reported for the Company's long-term debts approximate fair value. l) Accumulated Other Comprehensive Income ______________________________________ As of September 1, 1998, the company adopted Statement of Financial Accounting Standards No. 130 (SFAS 130), "Reporting Comprehensive Income", which was effective for fiscal years beginning after December 15, 1997. SFAS 130 requires that all items required to be recognized as components of comprehensive income be reported in a financial statement with equal prominence to other financial statements. Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It includes both net income and other comprehensive income. Items included in other comprehensive income shall be classified based on their nature. The total of other comprehensive income for a period has been transferred to an equity account and displayed as "accumulated other comprehensive income". (m) Operating Segment _________________ As of September 1, 1998, Alico adopted Statement of Financial Accounting Standards No. 131 (SFAS 131). "Disclosures about Segments of an Enterprise and Related Information", which was effective for fiscal years beginning after December 31, 1997. SFAS 131 establishes standards for reporting information about a Company's operating segments. It also establishes standards for related disclosures about products and services, geographic areas and major customers. Alico, Inc. has four reportable segments: citrus, sugarcane, ranching and general corporate. The commodities produced by these segments are sold to wholesalers and processors who prepare the products for consumption. The Company's operations are all located in Florida. (2) Marketable Securities Available for Sale ________________________________________ The Company has classified 100% of its investments in marketable securities as available-for-sale and, as such, the securities are carried at estimated fair value. Any unrealized gains and losses, net of related deferred taxes, are recorded as a net amount in a separate component of stockholders' equity until realized. The cost and estimated fair values of marketable securities available for sale at August 31, 1999 and 1998 (in thousands) were as follows:
1999 1998 _____________________________ _____________________________ Gross Estimated Gross Estimated Unrealized Fair Unrealized Fair Cost Gains Losses Value Cost Gains Losses Value _______ ____ ____ _______ ______ ______ ___ ________ Equity securities $10,900 $1,825 $107 $12,618 $9,498 $ 444 $307 $ 9,635 Debt securities 2,493 17 84 2,426 2,623 111 77 2,657 _______ ____ ____ _______ ______ ______ ___ ________ Marketable securities available for sale $13,393 $1,842 $191 $15,044 $12,121 $ 555 $384 $12,292 _______ ____ ____ _______ ______ ______ ___ ________ _______ ____ ____ _______ ______ ______ ___ ________ At August 31, 1999, debt instruments (net of mutual funds of $1,791,343) are collectible as follows: $ 0 within one year, $166,218 between one and five years, $194,618 between five and ten years, and $341,258 there after.
(3) Inventories ___________ A summary of the Company's inventories (in thousands) at August 31, 1999 and 1998 is shown below:
1999 1998 _______ _______ Unharvested fruit crop on trees $ 9,359 $ 7,466 Unharvested sugarcane 3,639 2,358 Beef cattle 7,433 7,535 Sod 116 267 _______ _______ Total inventories $20,547 $17,626 _______ _______ _______ _______
Subject to prevailing market conditions, the Company may hedge a portion of its beef inventory by entering into cattle futures contracts to reduce exposure to changes in market prices. Any gains or losses anticipated under these agreements will be deferred, with the cost of the related cattle being adjusted when the contracts are settled. (4) Property, Buildings and Equipment _________________________________ A summary of the Company's property, buildings and equipment (in thousands) at August 31, 1999 and 1998 is shown below:
Estimated 1999 1998 Useful Lives _______ _______ ____________ Breeding herd $12,585 $12,588 5-7 years Buildings 3,396 3,012 5-40 years Citrus trees 26,797 20,321 22-40 years Sugarcane 5,998 3,196 4-15 years Equipment and other facilities 27,373 24,668 3-40 years _______ _______ Total depreciable properties 76,149 63,785 Less accumulated depreciation 31,402 29,182 _______ _______ Net depreciable properties 44,747 34,603 Land and land improvements 56,224 43,279 _______ _______ Net property, buildings and equipment $100,971 $77,882 _______ _______ _______ _______
The Company's citrus trees, fruit crop, unharvested sugarcane and cattle are partially uninsured. (5) Indebtedness ____________ The Company has financial agreements with commercial banks that permit the Company to borrow up to $44 million. The financing agreements allow the Company to borrow up to $41,000,000 which is due in 2001 and up to $3,000,000 which is due on demand. In March 1999, the Company mortgaged 7,680 acres for $19 million in connection with a $22.5 million acquisition of producing citrus and sugarcane operations. The total amount of long- term debt under these agreements at August 31, 1999 and 1998 was $45,630,912 and $23,210,723, respectively. Maturities of the indebtedness of the Company over the next five years are As follows: 2000- $1,322,033; 2001- $29,442,033; 2002- $1,322,033; 2004- $1,322,033; 2005- $1,322,033. Interest cost expensed and capitalized (in thousands) during the three years ended August 31, 1999, 1998 and 1997 was as follows:
1999 1998 1997 ______ ______ ______ Interest expense $2,085 $1,117 $ 444 Interest capitalized 158 345 618 ______ ______ ______ Total interest cost $2,243 $1,462 $1,062 ______ ______ ______ ______ ______ ______
(6) Stock Option Plan _________________ On November 3, 1998, the Company adopted the Alico, Inc., Incentive Equity Plan (The Plan) pursuant to which the Board of Directors of the Company may grant options, stock appreciation rights, and/or restricted stock to certain directors and employees. The Plan authorizes grants of shares or options to purchase up to 650,000 shares of authorized but unissued common stock. Stock options granted have a maximum term of ten years and have vesting schedules which are at the discretion of the Board of Directors and determined on the effective date of the grant. Effective April 6, 1999, the Company granted 34,700 options with an exercise price of $14.62 and a fair value of $14.62. Options granted have a ten year contractual life. As of August 31, 1999, the 34,700 options remained outstanding with an weighted average exercise price of $14.62 and a weighted average remaining contractual life of ten years. At August 31, 1999, there were no shares exercisable and 615,300 shares available and for grant under the Plan. The per share weighted-average fair value of stock options granted was $41,640 on the date of grant using the Black Scholes option-pricing model with the following weighted-average assumptions: Volatility 10.90% Dividend paid 2.05% Risk-free interest rate 4.50% Expected life in years 2 All stock options granted, except as noted in the paragraph below, have been granted to directors or employees with an exercise price equal to the fair value of the common stock at the date of the grant. The Company applies APB Opinion No. 25 for issuances to directors and employees in accounting for its Plan and, accordingly, no compensation cost has been recognized in the consolidated financial statements through August 31, 1999. Had the Company determined compensation cost based on the fair value at the grant date for its stock options under SFAS No. 123 the Company's net income would have decreased to the pro forma amounts indicated below: Net income as reported $4,080,724 Pro forma net income $4,039,084 Basic per share, as reported $ .58 Pro forma basic earning per share $ .58 (7) Employee Benefit Plans ______________________ The Company has a profit sharing plan covering substantially all employees. The plan was established under Internal Revenue Code Section 401(k). Contributions made to the profit sharing plan were $ 269,177, $296,368 and $230,545 for the years ended August 31, 1999, 1998 and 1997, respectively. Certain officers and employees also have employment contracts for additional retirement benefits, the cost of which is accruable on a present value basis over the remaining term of the employment agreements. The lives of such officers and employees have been insured as a means of funding such additional benefits. The accrued pension liability for these additional retirement benefits at August 31, 1999 and 1998 was $3,320 and $3,320, respectively. Additionally, the Company implemented a nonqualified defined benefit retirement plan covering the officers and other key management personnel of the Company. The plan is being funded by the purchase of insurance contracts. The accrued pension liability for the nonqualified defined benefit retirement plan at August 31, 1999 and 1998 was $374,167 and ($14,950), respectively. Pension expenses for the additional retirement benefits were approximately $213,000, $345,000 and $217,000 for the years ended August 31, 1999, 1998 and 1997, respectively. (8) Income Taxes ____________ The provision for income taxes (in thousands) for the years ended August 31, 1999, 1998 and 1997 is summarized as follows:
1999 1998 1997 ______ ______ ______ Current: Federal income tax $3,369 $3,012 $5,919 State income tax 305 521 1,000 ______ ______ ______ 3,674 3,533 6,919 ______ ______ ______ Deferred: Federal income tax (593) 611 (207) State income tax (101) 105 (35) ______ ______ ______ (694) 716 (242) ______ ______ ______ Total provision for income taxes $2,980 $4,249 $6,677 ______ ______ ______ ______ ______ ______
Following is a reconciliation of the expected income tax expense computed at the U.S. Federal statutory rate of 34% and the actual income tax provision (in thousands) for the years ended August 31, 1999, 1998 and 1997:
1999 1998 1997 ______ ______ ______ Expected income tax $2,401 $3,748 $6,069 Increase (decrease) resulting from: State income taxes, net of federal benefit 135 400 648 Nontaxable interest and dividends (102) (92) (120) Internal Revenue Service examinations 984 - - Change in valuation allowance (539) - - Other reconciling items, net 101 193 80 ______ ______ ______ Total provision for income taxes $2,980 $4,249 $6,677 ______ ______ ______ ______ ______ ______
Some items of revenue and expense included in the statement of operations may not be currently taxable or deductible on the income tax returns. Therefore, income tax assets and liabilities are divided into a current portion, which is the amount attributable to the current year's tax return, and a deferred portion, which is the amount attributable to another year's tax return. The revenue and expense items not currently taxable or deductible are called temporary differences. At August 31, 1999 the Company had an unused charitable contribution carryover totaling $7,282,297. Management estimates that $1,467,000 will be used to reduce taxable income during the next year. As a result, the estimated unusable portion of the carryover has been set up as the valuation amount in the deferred tax asset schedule below. The contri- bution carryover expires in August 31, 2000. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below (in thousands):
1999 1998 _______ _______ Deferred Tax Assets: Contribution carryover $(2,740) $(2,841) Less valuation allowance 2,188 2,727 _______ _______ Net contribution carryover (522) (114) Beef cattle inventory - - Pension (193) (284) Prepaid sales commissions (739) (604) Other (2,167) (289) _______ _______ Total gross deferred tax assets (3,651) (1,291) _______ _______ Deferred Tax Liabilities: Revenue recognized from citrus and sugarcane 1,612 1,174 Property and equipment (principally due to depreciation and soil and water deductions) 12,117 12,619 Mortgage notes receivable 27 29 Other 1,885 153 Unrealized gains on securities 684 64 _______ _______ Total gross deferred tax liabilities 16,325 14,039 _______ _______ Net deferred income tax liabilities $12,674 $12,748 _______ _______ _______ _______
The Company is currently under examination by the Internal Revenue Service for the years ended August 31, 1995 and 1996. When the examination are resolved, any income taxes due will become currently payable. However, the majority of the proposed adjustments relate to, among other things, the Company's computation of the deferral of citrus revenue, timing of deductions for certain expenses, and the determination of the amounts of certain charitable contributions, all of which have been provided for in the Company's deferred tax liability account. The Company plans to continue to defend the positions taken in its amended tax returns. Based on the Company's history of taxable earnings and its expectations for The future, management has determined that its taxable income will more likely that not be sufficient to recognize fully all deferred tax assets. (9) Related Party Transactions __________________________ Citrus ______ Citrus revenues of $18,188,136, $24,018,251 and $20,065,303 were recognized for a portion of citrus crops sold under a marketing agreement with Ben Hill Griffin, Inc. (Griffin) for the years ended August 31, 1999, 1998 and 1997, respectively. Griffin and its subsidiaries is the owner of 49.71 percent of the Company's common stock. Accounts receivable, resulting from citrus sales, include amounts due from Griffin totaling $ 6,084,064 and $8,332,514 at August 31, 1999 and 1998, respectively. These amounts represent estimated revenues to be received periodically under pooling agreements as the sale of pooled products is completed. Harvesting, marketing, and processing costs, related to the citrus sales noted above, totaled $6,127,603, $7,610,639, and $7,335,825 for the years ended August 31, 1999, 1998 and 1997, respectively. In addition, Griffin provided the harvesting services for citrus sold to an unrelated processor. The aggregate cost of these services was $791,932, $758,370 and $779,715 for the years ended August 31, 1999, 1998 and 1997, respectively. The accompanying consolidated balance sheets include accounts payable to Griffin for citrus production, harvesting and processing costs in the amount of $880,283 and $423,321 at August 31, 1999 and 1998, respectively. Other Transactions __________________ The Company purchased fertilizer and other miscellaneous supplies, services, and operating equipment from Griffin, on a competitive bid basis, for use in its cattle, sugarcane, sod and citrus operations. Such purchases totaled $6,019,927, $4,650,867 and $4,451,224 during the years ended August 31, 1999, 1998 and 1997, respectively. (10) Future Application of Accounting Standards __________________________________________ In June 1998, the Financial Standards Board issued Statements of Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative Instruments and Hedging Activities". SFAS 133 requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. Gains and losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. The key criterion for hedge accounting is that the hedging relationship must be highly effective in achieving offsetting changes in fair value or cash flows. In June 1999, the FASB issued SFAS 137 which amended the implementation date for SFAS 133 to be effective for all fiscal years beginning after June 15, 2000. (11) Business Segment Information ____________________________ The Company is primarily engaged in agricultural operations, which are subject to risk, including market prices, weather conditions and environ- mental concerns. The Company is also engaged in retail land sales and, from time to time, sells real estate considered surplus to its operating needs. Information about the Company's operations (in thousands) for the years ended August 31, 1999, 1998 and 1997 is summarized as follows:
1999 1998 1997 ________ ________ ________ Revenues: Agriculture: Citrus $ 23,518 $ 26,622 $ 22,287 Sugarcane 7,120 6,123 4,967 Ranch 6,271 6,882 4,876 ________ ________ ________ Total agriculture 36,909 39,627 32,130 Real estate 4,299 1,327 11,753 General corporate 3,739 3,725 3,550 ________ ________ ________ Consolidated total $ 44,947 $ 44,679 $ 47,433 ________ ________ ________ ________ ________ ________ Operating income (loss): Agriculture: Citrus $ 3,441 $ 8,677 $ 4,850 Sugarcane 2,636 1,608 831 Ranch (8) 615 765 ________ ________ ________ Total agriculture 5,069 10,900 6,446 Real estate 3,847 875 11,271 General corporate 3,739 3,725 3,550 ________ ________ ________ Total operating income 12,655 15,500 21,267 Interest expense (2,085) (1,116) (444) General corporate expenses (3,509) (3,359) (2,973) ________ ________ ________ Income before income taxes $ 7,061 $ 11,025 $ 17,850 ________ ________ ________ ________ ________ ________ 1999 1998 1997 ________ ________ ________ Capital expenditures: Agriculture: Citrus $ 9,674 $ 1,071 $ 1,829 Sugarcane 13,995 8,846 1,890 Ranch 2,344 1,864 1,159 Sod 16 7 39 Farm lands 64 177 340 Heavy equipment 1,015 177 91 ________ ________ ________ Total agriculture 27,108 12,142 5,348 General corporate 775 45 404 ________ ________ ________ Consolidated total $ 27,883 $ 12,187 $ 5,752 ________ ________ ________ ________ ________ ________ Depreciation, depletion and amortization: Agriculture: Citrus $ 2,273 $ 1,944 $ 1,818 Sugarcane 1,460 1,010 909 Ranch 1,174 1,346 1,101 Sod 14 17 17 Farm lands 38 37 19 Heavy equipment 319 293 306 ________ ________ ________ Total agriculture 5,278 4,647 4,170 General corporate 77 70 70 ________ ________ ________ Consolidated total $ 5,355 $ 4,717 $ 4,240 ________ ________ ________ ________ ________ ________ Identifiable assets: Agriculture: Citrus $ 55,156 $ 48,052 $ 45,361 Sugarcane 45,629 31,889 23,746 Ranch 19,306 17,295 16,355 Sod 323 473 379 Farm lands 1,728 1,702 1,561 Heavy equipment 1,835 1,214 1,246 ________ ________ ________ Total agriculture 123,977 100,625 88,648 Real estate 9,897 9,452 9,835 General corporate 23,048 20,477 19,240 ________ ________ ________ Consolidated total $156,922 $130,554 $117,723 ________ ________ ________ ________ ________ ________
Identifiable assets represents assets on hand at year-end which are allocable to a particular segment either by their direct use or by allocation when used jointly by two or more segments. General corporate assets consist principally of cash, temporary investments, mortgage notes receivable and property and equipment used in general corporate business. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) Summarized quarterly financial data (in thousands except for per share amounts) for the years ended August 31, 1999 and August 31, 1998, is as follows:
Quarters Ended November 30, Feb. 28, May 31, August 31, 1998 1997 1999 1998 1999 1998 1999 1998 _______ _______ _______ _______ _______ _______ _______ ______ Revenue: Citrus $ 1,587 $ 3,815 $ 8,535 $ 8,373 $12,953 $ 7,693 $ 443 $6,741 Sugarcane 1,194 1,700 2,221 2,797 3,585 1,530 121 96 Ranch 2,647 3,100 1,060 1,144 1,852 1,898 711 740 Property sales 628 4,293 6 (1) 449 7 244 Interest 196 296 240 325 397 556 469 557 Other revenues 552 529 595 432 664 543 627 487 _______ _______ _______ _______ _______ _______ _______ ______ Total revenue 6,176 10,068 16,944 13,077 19,450 12,669 2,378 8,865 _______ _______ _______ _______ _______ _______ _______ ______ Costs and expenses: Citrus 1,275 3,443 6,306 6,558 12,221 6,070 1,274 1,874 Sugarcane 876 1,475 1,705 2,240 2,065 824 (163) (25) Ranch 2,787 2,818 1,001 1,015 1,816 1,686 676 748 Interest 409 170 1,350 208 598 256 681 483 Other 820 692 706 781 895 757 1,541 1,581 ______ ______ ______ ______ ______ _____ _____ _____ Total costs and ex- penses 6,167 8,598 11,068 10,802 17,595 9,593 4,009 4,661 ______ ______ ______ ______ ______ _____ _____ _____ Income be- fore income taxes 9 1,470 5,876 2,275 1,855 3,076 (1,631) 4,204 Provision for income taxes (18) 523 2,175 825 685 1,174 814 1,727 ______ ______ ______ ______ ______ ______ ______ _____ Net income $ 27 $ 947 $3,701 $1,450 $1,170 $1,902 $ (817)$2,477 ______ ______ ______ ______ ______ ______ ______ _____ ______ ______ ______ ______ ______ ______ ______ _____ Basic earnings per share $.004 $ .13 $ .53 $ .21 $ .17 $ .27 $ (.12) $ .35 ______ ______ ______ ______ ______ ______ ______ _____ ______ ______ ______ ______ ______ ______ ______ _____ The weighted average number of shares outstanding totaled 7,027,827 shares during each of the periods presented above.
Item 9. Changes in & Disagreements with Accountants on Accounting and Financial Disclosure. _______________________________________________________________________ None PART III ________ Item 10. Directors and Executive Officers of the Registrant. _____________________________________________________________________ For information with respect to the executive officers of the registrant, see "Executive Officers of the Registrant" at the end of Part I of this report. The information called for regarding directors is incorporated by reference to Proxy Statement dated November 9, 1999. Item 11. Executive Compensation. _________________________________________ Item 12. Security Ownership of Certain Beneficial Owners and Management. ______________________________________________________________________ Item 13. Certain Relationships and Related Transactions. _________________________________________________________________ Information called for by Items 11, 12 and 13 is incorporated by reference to Proxy Statement dated November 9, 1999. PART IV _______ Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. ____________________________________________________ (a)1. Financial Statements: ____________________ Included in Part II, Item 8 of this Report Report of Independent Auditors' Consolidated Balance Sheets - August 31, 1999 and 1998 Consolidated Statements of Operations - For the Years Ended August 31, 1999, 1998 and 1997 Consolidated Statements of Stockholders' Equity - For the Years Ended August 31, 1999, 1998 and 1997 Consolidated Statements of Cash Flows - For the Years Ended August 31, 1999, 1998 and 1997 (a)2. Financial Statement Schedules: _____________________________ Selected Quarterly Financial Data - For the Years Ended August 31, 1999 and 1998 - Included in Part II, Item 8 Schedule I - Marketable Securities and Other Investments - at August 31, 1999 Schedule V - Property, Plant and Equipment - For the Years Ended August 31, 1999, 1998 and 1997 Schedule VI - Reserves for Depreciation, Depletion and Amortization of Property, Plant and Equipment - For the Years Ended August 31, 1999, 1998 and 1997 Schedule IX - Supplementary Income Statement Information - For the Years Ended August 31, 1999, 1998 and 1997 All other schedules not listed above are not submitted because they are not applicable or not required or because the required information is included in the financial statements or notes thereto. (a)3. Exhibits: ________ (3) Articles of Incorporation: * Schedule I - Restated Certificate of Incorporation, Dated February 17, 1972 Schedule II - Certificate of Amendment to Certificate of Incorporation, Dated January 14, 1974 Schedule III - Amendment to Articles of Incorporation, Dated January 14, 1987 Schedule IV - Amendment to Articles of Incorporation, Dated December 27, 1988 Schedule V - By-Laws of Alico, Inc., Amended to September 13, 1994 (4) Instruments Defining the Rights of Security Holders, Including Indentures - Not Applicable (9) Voting Trust Agreement - Not Applicable (10) Material Contracts - Citrus Processing and Marketing Agreement with Ben Hill Griffin, Inc., dated November 2, 1983, a Continuing Contract. * (11) Statement - Computation of Per Share Earnings (12) Statement - Computation of Ratios (18) Change in Accounting Principles - Not Applicable (19) Annual Report to Security Holders - By Reference (21) Subsidiaries of the Registrant - Not Applicable (22) Published Report Regarding Matters Submitted to Vote of Security Holders - Not Applicable (23) Consents of Experts and Counsel - Not Applicable (24) Power of Attorney - Not Applicable (28) Information From Reports Furnished to State Insurance Regulatory Authorities - Not Applicable (99) Additional Exhibits - None (b)3. Reports on Form 8-K: ___________________ Form 8-K dated December 2, 1997 regarding re-election of Directors and election of Officers. * Material has been filed with Securities and Exchange Commission and NASDAQ and may be obtained upon request.
ALICO, INC. SCHEDULE I Marketable Securities and Other Investments August 31, 1999 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E ________ ________ ________ ________ ________ Amount of Which Each Portfolio of Equity Secu- Number of Market rity Issues and Shares or Value of Each Other Se- Name of Issuer Units-Principal Cost of Each Issue curity Issue and Title of Amounts of Bonds Each at Balance Carried in the Each Issue and Notes Issue Sheet Date Balance Sheet ______________ _______________ ___________ ____________ ___________ Municipal Bonds $ 591,512 $ 591,512 $ 608,441 $ 608,441 Mutual Funds $6,885,451 6,885,451 8,175,053 8,175,053 Preferred Stocks 135,500 3,429,589 3,322,448 3,322,448 Common Stocks 51,302 1,665,970 2,171,793 2,171,793 Other Investments $ 820,389 820,389 765,979 765,979 ___________ ___________ ___________ Total: $13,392,911 $15,043,714 $15,043,714 ___________ ___________ ___________ ___________ ___________ ___________
ALICO, INC. SCHEDULE V PROPERTY, PLANT AND EQUIPMENT COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F ________ _________ _________ ________ ________ ________ Other Changes Balance Retire- Debit and/or Balance Beginning Additions ments Credit- at Close Description of Period at Cost or Sales Describe of Period ___________ _________ _________ _________ ___________ __________ For Year Ended August 31, 1999 ______________________________ Land $22,867,648 $9,746,174 $ 167,483 $ $ 32,446,339 Roads 957,826 457,434 1,415,260 Agricultural Land Preparation 9,906 9,906 Forest Improvements 100,026 100,026 Pasture Improvements 2,988,469 2,988,469 Buildings 2,994,000 384,101 3,378,101 Feeding and Watering Facilities for Cattle Herd 30,317 12,863 17,454 Water Control Facilities 5,337 5,337 Fences 298,011 1,252 32,354 266,909 Cattle Pens 134,955 20,697 155,652 Citrus Groves, Including Irrigation Systems 39,023,959 7,160,709 46,184,668 Equipment 7,288,254 1,830,423 958,854 8,159,823 Breeding Herd 12,588,424 1,796,523 1,800,351 12,584,592 Sugarcane-Land Prep- aration, Etc. 15,822,850 7,338,020 526,325 22,634,545 Sod Land-Prep- aration, Etc. 184,916 6,525 191,441 Farm Land Prep- aration 1,769,853 64,464 1,834,317 ___________ ___________ __________ _______ ____________ $107,064,751 $28,806,322 $3,498,230 $ $132,372,839 ___________ ___________ __________ _______ ____________ ___________ ___________ __________ _______ ____________
ALICO, INC. SCHEDULE V PROPERTY, PLANT AND EQUIPMENT COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F ________ _________ _________ ________ ________ ________ Other Changes Balance Retire- Debit and/or Balance Beginning Additions ments Credit- at Close Description of Period at Cost or Sales Describe of Period ___________ _________ _________ _________ ___________ __________ For Year Ended August 31, 1998 ______________________________ Land $14,368,962 $8,562,616 $ 92,516 $28,586* $22,867,648 Roads 953,181 4,645 957,826 Agricultural Land Preparation 9,906 9,906 Forest Improvements 100,026 100,026 Pasture Improvements 2,956,774 31,695 2,988,469 Buildings 2,973,486 122,727 102,213 2,994,000 Feeding and Watering Facilities for Cattle Herd 34,167 3,850 30,317 Water Control Facilities 5,337 5,337 Fences 292,197 32,631 26,817 298,011 Cattle Pens 134,955 134,955 Citrus Groves, Including Irrigation Systems 38,422,614 800,602 199,257 39,023,959 Equipment 7,280,577 531,520 523,843 7,288,254 Breeding Herd 12,126,689 1,653,306 1,191,571 12,588,424 Sugarcane-Land Prep- aration, Etc. 15,277,301 888,486 342,937 15,822,850 Sod-Land Prep- aration, Etc. 180,938 3,978 184,916 Farm Land Prep- aration 1,592,330 177,523 1,769,853 ___________ __________ __________ _______ ____________ $96,709,440 $12,809,729 $2,483,004 $28,586 $107,064,751 ___________ __________ __________ _______ ____________ ___________ __________ __________ _______ ____________ * Reclassification from other assets.
ALICO, INC. SCHEDULE V PROPERTY, PLANT AND EQUIPMENT COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F ________ _________ _________ ________ ________ ________ Other Changes Balance Retire- Debit and/or Balance Beginning Additions ments Credit- at Close Description of Period at Cost or Sales Describe of Period ___________ _________ _________ _________ ___________ __________ For the Year Ended August 31, 1997 __________________________________ Land $14,504,916 $ 334,165 $ 470,119 $ $14,368,962 Roads 745,525 207,656 953,181 Agricultural Land Preparation 9,906 9,906 Forest Improvements 100,026 100,026 Pasture Improve- ments 2,801,321 155,453 2,956,774 Buildings 3,037,575 6,007 70,096 2,973,486 Feeding and Watering Facilities for Cattle Herd 36,067 1,900 34,167 Water Control Facilities 871,337 866,000 5,337 Fences 270,133 34,484 12,420 292,197 Cattle Pens 134,955 134,955 Citrus Groves, Including Irri- gation Systems 38,634,654 1,532,126 1,744,166 38,422,614 Equipment 6,999,963 563,979 283,365 7,280,577 Breeding Herd 13,184,291 935,625 1,993,227 12,126,689 Sugarcane-Land Prep.,Etc. 14,304,486 1,603,607 630,792 15,277,301 Sod-Land Prep- aration,Etc. 141,922 39,016 180,938 Farm Land Prep- aration 1,252,376 339,954 1,592,330 ___________ __________ __________ _________ ___________ $97,029,453 $5,752,072 $6,072,085 $ 0 $96,709,440 ___________ __________ __________ _________ ___________ ___________ __________ __________ _________ ___________ (/TABLE>
ALICO, INC. SCHEDULE VI Reserves for Depreciation, Depletion and Amortization of Property, Plant and Equipment _____________________________________________________ COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F ________ __________ __________ __________ ________ ________ Additions Other Balance Charged To Changes Balance Beginning Profit & Loss Retire- Add(Deduct) at Description of Period of Income ments Desccribe Close Of ___________ _________ ____________ __________ _________ ________ For Year Ended August 31, 1999 ______________________________ Buildings $ 1,268,644 $ 138,613 $ $ $ 1,407,257 Feeding and Watering Facilities for Cattle Herd 21,006 353 12,863 8,496 Water Control Facilities 0 0 0 0 Fences 122,850 26,587 32,354 117,083 Cattle Pens 71,264 13,951 85,215 Citrus Groves, Including Irriga- tion Systems 11,299,211 1,914,089 13,213,300 Equipment 4,881,745 809,596 897,921 4,793,420 Breeding Herd 6,939,132 1,024,231 1,686,470 6,276,893 Roads 71,900 41,485 113,385 Sugarcane Lane Prep- aration, Etc. 4,425,063 1,344,916 506,186 5,263,793 Sod Land Prepara- tion, Etc. 7,499 3,915 11,414 Farm Land Preparation 74,102 37,713 111,815 ___________ __________ __________ ____ ___________ $29,182,416 $5,355,449 $3,135,794 $ 0 $31,402,071 ___________ __________ __________ ____ ___________ ___________ __________ __________ ____ ___________
ALICO, INC. SCHEDULE VI Reserves for Depreciation, Depletion and Amortization Property, Plant and Equipment _____________________________________________________ COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F ________ __________ __________ __________ ________ ________ Additions Other Balance Charged To Changes Balance Beginning Profit & Loss Retire- Add(Deduct) at Description of Period of Income ments Desccribe Close Of ___________ _________ ____________ __________ _________ ________ For Year Ended August 31, 1998 ______________________________ Buildings $ 1,221,902 $ 135,690 $ 88,948 $ $ 1,268,644 Feeding and Watering Facilities for Cattle Herd 24,059 797 3,850 21,006 Water Control Facilities 0 0 0 0 Fences 124,017 25,650 26,817 122,850 Cattle Pens 57,313 13,951 71,264 Citrus Groves, Including Irriga- tion Systems 9,894,285 1,604,182 199,256 11,299,211 Equipment 4,646,481 747,006 511,742 4,881,745 Breeding Herd 6,861,549 1,202,626 1,125,043 6,939,132 Roads 32,097 39,803 71,900 Sugarcane-Land Prep- aration, Etc. 3,860,569 907,431 342,937 4,425,063 Sod-Land Prep- aration, Etc. 3,957 3,542 7,499 Farm Land Preparation 37,561 36,541 74,102 ___________ __________ __________ ____ ___________ $26,763,790 $4,717,219 $2,298,593 $ 0 $29,182,416 ___________ __________ __________ ____ ___________ ___________ __________ __________ ____ ___________
ALICO, INC. SCHEDULE VI Reserves for Depreciation, Depletion and Amortization Property, Plant and Equipment _____________________________________________________ COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F ________ __________ __________ __________ ________ ________ Additions Other Balance Charged To Changes Balance Beginning Profit & Loss Retire- Add(Deduct) at Description of Period of Income ments Desccribe Close Of ___________ _________ ____________ __________ _________ ________ For the Year Ended August 31, 1997 __________________________________ Buildings $ 1,152,448 $ 139,550 $ 70,096 $ $ 1,221,902 Feeding and Watering Facilities for Cattle Herd 24,044 1,915 1,900 24,059 Water Control Facilities 866,000 866,000 0 Fences 112,016 24,421 12,420 124,017 Cattle Pens 43,362 13,951 57,313 Citrus Groves, Including Irrigation Systems 10,189,551 1,448,900 1,744,166 9,894,285 Equipment 4,106,878 822,968 283,365 4,646,481 Breeding Herd 7,518,756 939,309 1,596,516 6,861,549 Roads 10,731 21,366 32,097 Sugarcane-Land Prep.,Etc. 3,683,734 807,626 630,791 3,860,569 Sod-Land Prep- aration, Etc. 2,054 1,903 3,957 Farm Land Preparation 19,353 18,208 37,561 ___________ __________ __________ _______ ___________ $27,728,927 $4,240,117 $5,205,254 $ 0 $26,763,790 ___________ __________ __________ _______ ___________ ___________ __________ __________ _______ ___________
ALICO, INC. SCHEDULE IX ____________ SUPPLEMENTARY INCOME STATEMENT INFORMATION __________________________________________ _____________________________________________________________________________ COLUMN A COLUMN B _____________________________________________________________________________ Charged to Costs and Expenses _____________________________ Years Ended August 31, ______________________ Item 1999 1998 1997 ____ ____ ____ ____ 1. Maintenance and repairs $1,094,379 $1,025,739 $ 990,253 2. Taxes, other than payroll and income taxes 2,427,161 1,805,322 1,755,168
EXHIBIT 11 ALICO, INC. Computation of Weighted Average Shares Outstanding as of August 31, 1999: Number of shares outstanding at August 31, 1999 7,027,827 _________ _________ Number of shares outstanding at August 31, 1998 7,027,827 _________ _________ Weighted Average 9/1/98 - 8/31/99 7,027,827 _________ _________ EXHIBIT 12 ALICO, INC. Computation of Ratios: 1999 Current Assets $45,181,699 Current Liabilities 8,737,831 45,181,699 divided by 8,674,831 = 5.17:1 1998 Current Assets $42,354,043 Current Liabilities 5,649,482 42,354,043 divided by 5,649,482 = 7.50:1 Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ALICO, INC. (Registrant) November 16, 1999 Ben Hill Griffin, III Date Chairman, Chief Executive Officer and Director (Signature) November 16, 1999 W. Bernard Lester Date President, Chief Operating Officer and Director (Signature) November 16, 1999 L. Craig Simmons Date Vice President and Chief Financial Officer (Signature) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated: Richard C. Ackert Ben Hill Griffin, IV Director Director (Signature) (Signature) K. E. Hartsaw Thomas E. Oakley Director Director (Signature) (Signature) William L. Barton Director (Signature) Walker E. Blount, Jr. Director (Signature) November 16, 1999 Date