UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q __X__ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For nine months ended May 31, 2000. OR _____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________________ to ____________________. Commission file number 0-261. ALICO, INC. (Exact name of registrant as specified in its charter) Florida 59-0906081 (State or other jurisdiction of (I.R.S. Employer incorporation of organization) Identification No.) P. O. Box 338, La Belle, FL 33975 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 863/675-2966 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No There were 7,027,827 shares of common stock, par value $1.00 per share, outstanding at May 31, 2000.
PART I. FINANCIAL INFORMATION Item 1. Financial Statements ALICO, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (See Accountants' Review Report) (Unaudited) (Unaudited) Three Months Ended Nine Months Ended May 31, 2000 May 31, 1999 May 31, 2000 May 31, 1999 ____________ _____________ _____________ _____________ Revenue: Citrus $10,117,724 $12,953,171 $ 20,990,151 $ 23,074,822 Sugarcane 2,310,378 3,584,534 8,782,558 6,999,338 Ranch 1,668,378 1,851,990 5,237,642 5,559,720 Rock products and sand 307,176 334,006 989,448 965,996 Oil lease and land rentals 187,081 274,653 794,093 694,126 Forest products 9,534 16,958 54,950 83,658 Profit on sales of real estate 2,157 (1,065) 12,994,011 4,292,311 Interest and investment income 912,231 396,608 3,247,684 832,899 Other 12,571 38,688 23,026 66,626 ___________ ___________ ____________ ____________ Total revenue 15,527,230 19,449,543 53,113,563 42,569,496 ___________ ___________ ____________ ____________ Cost and expenses: Citrus production, harvesting and marketing 8,818,103 12,221,354 18,420,679 19,802,952 Sugarcane production and harvesting 1,033,629 2,064,833 6,908,815 4,646,221 Ranch 1,427,821 1,816,363 4,851,294 5,604,206 Real estate expenses 151,954 158,162 439,772 307,923 Interest 662,924 597,950 2,072,480 1,404,564 Other, general and administrative 898,722 736,279 2,220,551 2,111,891 ___________ ___________ ____________ ____________ Total costs and expenses 12,993,153 17,594,941 34,913,591 33,877,757 ___________ ___________ ____________ ____________ Income before income taxes 2,534,077 1,854,602 18,199,972 8,691,739 Provision for income taxes 1,064,258 684,620 6,866,197 3,793,547 ___________ ___________ ____________ ____________ Net income 1,469,819 1,169,982 11,333,775 4,898,192 ___________ ___________ ____________ ____________ ___________ ___________ ____________ ____________ Weighted average number of shares outstanding 7,027,827 7,027,827 7,027,827 7,027,827 ___________ ___________ ____________ ____________ ___________ ___________ ____________ ____________ Per share amounts: Net income $ .21 $ .17 $ 1.61 $ .70 Dividends $ - $ - $ .30 $ .50 See accompanying notes to condensed consolidated financial statements.
ALICO, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (See Accountants' Review Report) May 31, 2000 August 31, 1999 _________________ ________________ ASSETS Current assets: Cash and cash investments $ 1,628,815 $ 740,829 Marketable Securities 15,820,709 15,043,713 Accounts receivable 10,365,374 8,030,863 Notes receivable 3,210,205 73,589 Inventories 16,646,947 20,547,215 Refundable income taxes 0 549,586 Other current assets 99,950 195,904 ____________ ____________ Total current assets 47,772,000 45,181,699 Notes receivable, non-current 8,882,864 394,203 Land held for development and sale 7,550,027 9,429,295 Investments 955,779 946,145 Property, buildings and equipment 139,256,881 132,372,839 Less: Accumulated depreciation (34,094,708) (31,402,071) ____________ ____________ Total assets $170,322,843 $156,922,110 ____________ ____________ ____________ ____________ CONDENSED CONSOLIDATED BALANCE SHEETS (See Accountants' Review Report) (Continued) May 31, 2000 August 31, 1999 LIABILITIES _________________ _______________ Current liabilities: Accounts payable $ 1,396,162 $ 2,571,579 Due to profit sharing plan 0 269,177 Accrued ad valorem taxes 1,249,180 1,997,834 Current portion of notes payable 1,322,033 1,322,033 Accrued expenses 661,247 683,848 Income taxes payable 833,381 0 Deferred income taxes 1,876,599 1,893,360 ____________ ____________ Total current liabilities 7,338,602 8,737,831 Notes payable 47,661,912 45,630,912 Deferred income taxes 14,726,842 10,780,521 Deferred retirement benefits 443,771 377,487 ____________ ____________ Total liabilities 70,171,127 65,526,751 ____________ ____________ STOCKHOLDERS' EQUITY Common stock $ 7,027,827 $ 7,027,827 Accumulated other comprehensive income 542,998 1,029,953 Additional paid in capital 17,885 0 Retained earnings 92,563,006 83,337,579 ____________ ____________ Total stockholders' equity 100,151,716 91,395,359 ____________ ____________ Total liabilities and stockholders' equity $170,322,843 $156,922,110 ____________ ____________ ____________ ____________ See accompanying notes to condensed consolidated financial statements.
ALICO, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (See Accountants' Review Report) Common Accumulated Stock Other Additional Shares Retained Comprehensive Paid-In- Issued Amount Earnings Income Capital Total ________ ________ ________ _______ _________ ________ Balances, August 31, 1998 7,027,827 $7,027,827 $82,770,769 $168,345 - $89,966,941 _______________ Comprehensive income: Net income for the year ended August 31, 1999 - - 4,080,724 - - 4,080,724 Unrealized gains on securities, net of taxes - - - 861,608 - 861,608 and reclassification adjustment (see disclosure) __________ Total comprehensive income: 4,942,332 Dividends paid - - (3,513,914) - - (3,513,914) Stock based compensation - - - - - - _________ __________ __________ _______ ________ __________ Balances, August 31, 1999 7,027,827 $7,027,827 $83,337,579 $1,029,953 - $91,395,359 _______________ Comprehensive income: Net income for the nine months ended May 31, 2000 - - 11,333,775 - - 11,333,775 Unrealized gains on securities, net of taxes - - - (486,955) - (486,955) and reclassification adjustment(see disclosure) ___________ Total comprehensive income: 10,846,820 Dividends paid - - (2,108,348) - - (2,108,348) Stock based Compensation - - - - 17,885 17,885 _________ ________ ___________ ________ _______ ____________ Balances, May 31, 2000 7,027,827 $7,027,827 $92,563,006 $ 542,998 $17,885 $100,151,716 _________ _________ ___________ ________ _______ ____________ _________ _________ ___________ ________ _______ ____________ 2000 1999 Disclosure of reclassification amount: ___________ ___________ Unrealized holding gains (losses) arising during the period $1,608,208 $824,144 Less: reclassification adjustment for gains (losses) included in net income 2,095,163 (37,464) ___________ ___________ Net unrealized (losses) gains on securities $ (486,955) $ 861,608 ___________ ___________ ___________ __________ See accompanying notes to condensed consolidated financial statements. ALICO, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (See Accountants' Review Report) (Unaudited) Nine months ended May 31, 2000 May 31, 1999 _______________________________ Cash flows from operating activities: Net income $ 11,333,775 $ 4,898,192 Adjustments to reconcile net income to cash provided from (used for) operating activities: Depreciation and amortization 4,234,341 3,891,638 Net decrease in current assets and liabilities (2,110,939) 125,045 Deferred income taxes 3,923,881 (239,397) Gain on sales of real estate (12,994,011) (4,268,132) Other (278,111) 458,695 __________ __________ Net cash provided from operating activities 4,108,936 4,866,041 __________ __________ Cash flows from (used for) investing activities: Purchases of property and equipment (8,047,504) (24,169,924) Proceeds from sales of real estate 4,199,731 4,404,902 Proceeds from sales of property and equipment 310,962 0 Purchases of marketable securities (1,169,509) (3,258,678) Proceeds from sales of marketable securities 1,562,188 2,160,714 __________ __________ Net cash (used for) investing activities (3,144,132) (20,862,986) __________ __________ Cash flows from (used for) financing activities: Notes receivable collections 530 105,556 Repayment of bank loan (21,183,391) (26,328,667) Proceeds from bank loan 23,214,391 45,252,000 Dividends paid (2,108,348) (3,513,914) __________ __________ Net cash (used for) financing activities (76,818) 15,514,975 __________ __________ Net increase (decrease) in cash and cash investments $ 887,986 $ (481,970) __________ __________ __________ __________ Supplemental disclosures of cash flow information: Cash paid for interest, net of amount capitalized $ 2,373,057 $ 1,671,478 __________ __________ __________ __________ Cash paid for income taxes, including $ 1,250,229 $ 4,379,835 related interest __________ __________ __________ __________ Non-cash investing and financing activities: Mortgage notes receivable issued in exchange for land, less unamortized discount $ 11,625,807 $ 0 ___________ __________ ___________ __________ Fair value adjustments to securities available for sale $ (780,196) $ 1,604,590 __________ __________ __________ __________ Income tax effect related to fair value adjustment $ (293,241) $ 603,808 __________ __________ __________ __________ See accompanying notes to condensed consolidated financial statements.
ALICO, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (See Accountants' Review Report) 1. Basis of financial statement presentation: The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Saddlebag Lake Resorts, Inc., after elimination of all significant intercompany balances and transactions. The accompanying unaudited condensed consolidated financial statements have been prepared on a basis consistent with the accounting principles and policies reflected in the Company's annual report for the year ended August 31, 1999. In the opinion of Management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of its consolidated financial position at May 31, 2000 and August 31, 1999 and the consolidated results of operations and cash flows for the nine months ended May 31, 2000 and 1999. The basic business of the Company is agriculture which is of a seasonal nature and subject to the influence of natural phenomena and wide price fluctuations. Fluctuation in the market prices for citrus fruit has caused the Company to recognize additional revenue from the prior year's crop totaling $1,839,642 in 2000 and $159,748 in 1999. The results of operations for the stated periods are not necessarily indicative of results to be expected for the full year. 2. Real Estate: Real Estate sales are recorded under the accrual method of accounting. Under this method, a sale is not recognized until payment is received, including interest, aggregating 10% of the contract sales price for residential properties and 20% for commercial properties. 3. Notes receivable: Notes receivable include mortgages and other notes receivable. Mortgage notes receivable arose from real estate sales. The balances are as follows: May 31, August 31, 2000 1999 ____________ __________ Mortgage notes receivable on retail land sales $ 258,734 $ 246,660 Mortgage notes receivable on bulk land sales 12,344,684 0 Less unamortized discount based on imputed interest rate of 8% (718,877) 0 Other notes receivable 208,528 221,132 ___________ __________ Total mortgage notes receivable $ 12,093,069 $ 467,792 Less current portion 3,210,205 73,589 ___________ __________ Non-current portion $ 8,882,864 $ 394,203 ___________ __________ ___________ __________ In September 1999, the Company received a mortgage note in exchange for land sold. The note totaled $12,344,684 and is due annually in September, bearing interest at 4%, over the next four years.
4. Inventories: A summary of the Company's inventories (in thousands) is shown below: May 31, August 31, 2000 1999 ____________ __________ Unharvested fruit crop on trees $ 6,874,407 $ 9,359,141 Unharvested sugarcane 2,995,809 3,639,356 Beef cattle 6,609,606 7,432,806 Sod 167,125 115,912 ____________ __________ Total inventories $16,646,947 $ 20,547,215 5. Income taxes: The provision for income taxes for the quarters and nine months ended May 31, 2000 and May 31, 1999 is summarized as follows: Three Months Ended Nine Months Ended May 31, 2000 May 31, 1999 May 31, 2000 May 31, 1999 _____________ _____________ ____________ _____________ Current: Federal $ 480,493 $ (369,308) $2,310,341 $1,679,631 State 73,115 83,380 333,681 273,428 _____________ ____________ ____________ ____________ 553,608 (285,928) 2,644,022 1,953,059 _____________ ____________ _____________ ____________ Deferred: Federal 449,770 870,431 3,604,566 1,656,439 State 60,880 100,117 617,609 184,049 _____________ ____________ _____________ ____________ 510,650 970,548 4,222,175 1,840,488 _____________ ____________ _____________ ____________ Total provision for income taxes $1,064,258 $ 684,620 $6,866,197 $3,793,547 _____________ ____________ _____________ ____________ _____________ ____________ _____________ ____________ Following is a reconciliation of the expected income tax expense computed at the U.S. Federal statutory rate of 34% and the actual income tax provision for the quarters and nine months ended May 31, 2000 and May 31, 1999: Three Months Ended Nine Months Ended May 31, 2000 May 31, 1999 May 31, 2000 May 31, 1999 _____________ ____________ _____________ _____________ Expected income tax $ 861,586 $ 630,564 $ 6,187,990 $ 2,955,191 Increase (decrease) resulting from: State income taxes, net of federal benefit 51,516 67,322 590,931 315,510 Nontaxable interest and dividends (63,031) (22,352) (120,819) (68,588) Interest and penalties net of federal and state benefit 0 0 0 593,878 IRS audit adjustments 188,964 0 188,964 0 Other reconciling items, net 25,223 9,086 19,131 (2,444) _____________ _____________ _____________ ____________ Total provision for income taxes $1,064,258 $ 684,620 $ 6,866,197 $ 3,793,547 _____________ ___________ _____________ ____________ _____________ ___________ _____________ ____________ The Company is currently under examination by the Internal Revenue Service for the years ended August 31, 1995 and 1996. When the examinations are resolved, any income taxes due will become currently payable. However, the majority of the proposed adjustments relate to, among other things, the Company's computation of the deferral determination of the amounts of certain charitable contributions, all of which have been provided for in the Company's deferred tax liability account. The Company plans to continue to defend the positions taken in its income tax returns. 6. Indebtedness: The Company has financing agreements with commercial banks that permit the Company to borrow up to $44 million. The financing agreements allow the company to borrow up to $41 million which is due in 2001 and up to $3 million which is due on demand. In March 1999, the Company mortgaged 7,680 acres for $19 million in connection with a $22.5 million acquisition of producing citrus and sugarcane operations. The total amount of long-term debt under these agreements at May 31, 2000 and August 31, 1999 was $48,983,945 and $46,952,945, respectively. Maturities of the indebtedness of the Company over the next five years are as follows: 2000- $1,322,033; 2001- $32,423,033; 2002- $1,322,033; 2004- $1,322,033; 2005- $1,322,033; thereafter $11,272,780. Interest cost expensed and capitalized during the nine months ended May 31, 2000 and May 31, 1999 was as follows: 2000 1999 _________ __________ Interest expensed 2,072,480 $1,404,564 Interest capitalized 361,933 135,130 __________ __________ Total interest cost $2,434,413 $1,539,694 __________ __________ __________ __________ 7. Dividends: On October 5, 1999 the Company declared a year-end dividend of $.30 per share, which was paid on November 5, 1999. 8. Disclosures about reportable segments: Alico, Inc. has four reportable segments: citrus, sugarcane, ranching and general corporate. The commodities produced by these segments are sold to wholesalers and processors who prepare the products for consumption. The Company's operations are located in Florida. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Alico, Inc. evaluates performance based on profit or loss from operations before income taxes. Alico, Inc.'s reportable segments are strategic business units that offer different products. They are managed separately because each segment requires different management techniques, knowledge and skills. The following table presents information for each of the Company's operating segments as of and for the nine months ended May 31, 2000: ____________________________________________________________ General Consolidated Citrus Sugarcane Ranch Corporate* Total ____________________________________________________________ Revenue $ 20,990,151 8,782,558 5,237,642 18,103,212 53,113,563 Costs and expenses 18,420,679 6,908,815 4,851,294 4,732,803 34,913,591 Depreciation and amortization 1,809,726 1,580,531 453,128 390,956 4,234,341 Segment profit 2,569,472 1,873,743 386,348 13,370,409 18,199,972 *Consists of rents, investments, real estate activities and other such items of a general corporate nature. 9. Future Application of Accounting Standards In June 1998, the Financial Standards Board issued Statements of Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative instruments and Hedging Activities". SFAS 133 requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. Gains and losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. The key criterion for hedge accounting is that the hedging relationship must be highly effective in achieving offsetting changes in fair value or cash flows. In June 1999, the FASB issued SFAS 137 which amended the implementation date for SFAS 133 to be effective for all fiscal years beginning after June 15, 2000. 10. Stock Option Plan On November 3, 1998, the Company adopted the Alico, Inc., Incentive Equity Plan (The Plan) pursuant to which the Board of Directors of the Company may grant options, stock appreciation rights, and/or restricted stock to certain directors and employees. The Plan authorizes grants of shares or options to purchase up to 650,000 shares of authorized but unissued common stock. Stock options granted have a maximum term of ten years and have vesting schedules which are at the discretion of the Board of Directors options and determined on the effective date of the grant. Effective April 6, 1999, the Company granted 34,700 with an exercise price of $14.62 and a fair value of $14.62. Additionally, effective September 9, 1999, the Company granted 14,992 options with an exercise price of $14.62 and a fair value of $15.813. Options granted have a ten year contractual life. As of May 31, 2000, there were 49,692 options outstanding with an weighted average exercise price of $14.62 and a weighted average remaining contractual life of nine years. At May 31, 2000, there were no shares exercisable and 600,308 shares available and for grant under the Plan. ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. LIQUIDITY AND CAPITAL RESOURCES: Working capital increased to $40,443,398 at May 31, 2000, up from $36,443,868 at August 31, 1999. As of May 31, 2000, the Company had cash and cash investments of $1,628,815 compared to $740,829 at August 31, 1999. Marketable securities increased from $15,043,713 to $15,820,709 during the same period. Accounts receivable increased to $10,365,374 at May 31, 2000 from $8,030,863 at August 31, 1999. At May 31, 2000, inventories decreased to $16,646,947 at August 31, 1999. The increase in accounts receivable and decrease in inventories is primarily due to that fact that the majority of citrus and sugarcane crops have been harvested at May 31, 2000. The rise in accounts receivable is also effected by the increase in citrus and sugarcane acreage. The ratio of current assets to current liabilities increased to 6.51 to 1 at May 31, 2000 from 5.17 to 1 at August 31, 1999. Total assets increased by $13,400,733 to $170,322,843 at May 31, 2000 from $156,922,110 at August 31, 1999. In connection with financing agreements with commercial banks (See Note 6 under Notes to Condensed Consolidated Financial Statements), the Company has an unused availability of funds of approximately $12.9 million at May 31, 2000. RESULTS OF OPERATIONS: The basic business of the Company is agriculture which is of a seasonal nature and subject to the influence of natural phenomena and wide price fluctuations. The results of operations for the stated periods are not necessarily indicative of results to be expected for the full year. Net income for the three months ending May 31, 2000 increased by $299,837 when compared to the third quarter of fiscal 1999 and $6,435,583 when compared to the nine-month period then ended. Income before income taxes increased $679,475 and $9,508,233 for the three and nine months ended May 31, 2000, respectively, when compared to the same periods a year ago. Year-to-date earnings from agriculture activities increased during the third quarter year-to-date and decreased compared to the prior year ($2,816,927 vs. $2,287,145 for the third quarter, and $4,829,563 vs. 5,580,501 during the first three quarters of fiscal 2000 and 1999, respectively). During September of 1999, the Company completed a sale of 1,230 acres of land surrounding the University site in Lee County for $16.5 million. The contract called for 25 percent of the purchase price to be paid at closing, with the balance of $12.3 million payable annually over the next four years. The sale generated a pre-tax gain of approximately $12.9 million. Interest and investment income increased for the third quarter of fiscal 2000 and the nine months ended May 31, 2000 ($515,623 and $2,414,785, respectively). The increase was largely due to the realization of gains from securities sales that generated pre-tax earnings of $1,949,872 during the nine months ended May 31, 2000. Citrus ______ Citrus earnings increased for the quarter ($1,299,621 during fiscal 2000 vs. $731,817 during fiscal 1999), but is down for nine months ($2,569,472 during fiscal 2000 vs. $3,271,870 during fiscal 1999) ended May 31, 2000, when compared to the prior year. Lower market prices for this year's crop is the primary reason for the decrease in year-to-date earnings for this division. Sugarcane _________ Sugarcane earnings were lower for the third quarter ($1,276,749 during fiscal 2000 vs. $1,519,701 during fiscal 1999) and for the nine months ended May 31, 2000 ($1,873,743 in 2000 vs. $2,353,117 in 1999), when compared to the same periods a year ago. Although more acres are being harvested, decreased yields and lower market prices have combined to generate the decline. Ranching ________ Ranch earnings were higher for the third quarter when compared to the prior year ($240,557 vs. $ 35,627 for the three months ended May 31, 2000 and May 31, 1999, respectively), and for the nine months ended May 31, 2000 ($386,348 vs. <44,486> for the nine months ending May 30, 2000 and May 31, 1999, respectively). Improved market prices for beef is the primary cause of the rise. General Corporate _________________ In July of 1999, the Company entered into and announced a contract to sell 402 acres near the Florida Gulf Coast University for approximately $15.5 million. This agreement has been revised, in accordance with the original contract, to convey 44.2 acres for approximately $5 million and is still scheduled to close during fiscal 2001. If the sale is consummated, it is expected to generate a pre-tax gain of approximately $4.8 million. Additionally, the Company has agreed to sell 190 acres, also near the University, for approximately $6.6 million. This sale is also expected to close during fiscal 2001 and could potentially generate a $5.8 million pre-tax gain. In May 2000, the Company agreed to sell another 488 acres, near the University, for $10.6 million. The sale will generate a $9.5 million pre-tax gain and is currently scheduled to close during the current fiscal year. In April of 2000, the Company entered into an agreement to sell approximately 2,500 acres for $34 million. The subject property included some of the acreage referred to above and the agreement provided for assignment of the related sales contracts to the prospective purchaser. However, the prospective buyer opted not to proceed with the acquisition of this property. Marketing efforts have resumed with the remaining acreage in this parcel. In December of 1999, the Company entered into a contract to sell approximately 2,500 acres of its Lee County property for $50 million. The property is located east of the University. The date(s) of closing(s) will become determinable after the developable acreage is determined and may occur in phases. In June 2000, the Board of Directors approved the inception of Agri- Insurance Company, Ltd., a wholly owned subsidiary of Alico, Inc. The capital was funded by transferring cash and approximately 3,000 acres of Alico, Inc.'s Lee County property. There are currently sales contracts for approximately 700 of the acres totaling $18.6 million. The contracts, while still subject to the buyers' due diligence efforts, have also been assigned to the subsidiary. In connection with the transaction, management is of the opinion that the Company will have the opportunity to insure its' risk of catastrophic crop loss. Additionally, Agri-Insurance Company, Ltd., will be able to underwrite previously uninsurable risk and have access to re-insurance markets otherwise inaccessible. The Company will begin writing coverages before the end of the year 2000. For calendar year 2000, Agri-Insurance is projected to incur little or no tax liability resulting from it's careful integration into the Alico, Inc. business operations and underwriting safeguards against initial catastrophic risk exposures. The Company is continuing its marketing and permit activities for its land which is adjacent to the Florida Gulf Coast University. Cautionary Statement ____________________ Readers should note, in particular, that this Form 10-Q contains forward looking Statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that involve substantial risks and uncertainties. When used in this document, or in the documents incorporated by reference herein, the words "anticipate", "believe", "estimate", "may", "intend" and other words of similar meaning, are likely to address the Company's growth strategy, financial results and/or product development programs. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein. The considerations listed herein represent certain important factors the Company believes could cause such results to differ. These considerations are not intended to represent a complete list of the general or specific risks that may effect the Company. It should be recognized that other risks, including general economic factors and expansion strategies, may be significant, presently or in the future, and the risks set forth herein may affect the Company to a greater extent than indicated. ITEM 3. Quantitative and Qualitative Disclosures about Market Risk No changes FORM 10-Q PART II. OTHER INFORMATION ITEM 6. Exhibits and reports on Form 8-K. (a) Exhibits: A. Accountant's Report. B. Computation of Weighted Average Shares Outstanding at May 31, 2000. C. Exhibit 27 - Financial Data Schedule. (b) Reports on Form 8-K. December 9, 1999. July 13, 2000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ALICO, INC. (Registrant) July 13, 2000 W. Bernard Lester Date President Chief Operating Officer (Signature) July 13, 2000 L. Craig Simmons Date Vice President Chief Financial Officer (Signature) July 13, 2000 Deirdre M. Purvis Date Controller (Signature) EXHIBIT A INDEPENDENT ACCOUNTANT'S REVIEW REPORT ______________________________________ The Stockholders and Board of Directors Alico, Inc: We have reviewed the condensed consolidated balance sheet of Alico, Inc. and subsidiary as of May 31, 2000, and the related condensed consolidated statements of operations for the three and nine-month periods ended May 31, 2000 and May 31, 1999, and the condensed consolidated statements of stockholders' equity for the nine-month period May 31, 2000, and the condensed consolidated statements of cash flows for the nine-month periods ended May 31, 2000 and 1999. These condensed consolidated financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical review procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Alico, Inc. and subsidiary as of August 31, 1999 and the related consolidated statement of operations, stockholders' equity and cash flows for the year then ended (not presented herein); and in our report dated October 13, 1999 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of August 31, 1999, is fairly presented, in all material respects, in relation to the consolidated balance sheet from which it has been derived. /s/ KPMG LLP Orlando, Florida June 28, 2000 FORM 10-Q ALICO, INC. Computation of Weighted Average Shares Outstanding as of May 31, 2000: Number of shares outstanding at August 31, 1999 7,027,827 _________ _________ Number of shares outstanding at May 31, 2000 7,027,827 _________ _________ Weighted Average 9/1/99 - 05/31/00 7,027,827 _________ _________ EXHIBIT B