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 three months ended November 30, 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 January 12, 2001.
PART I. FINANCIAL INFORMATION Item 1. Financial Statements ALICO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited - See Accountants' Review Report) Three Months Ended November 30, 2000 1999 _______________________________ Revenue: Citrus $ 1,095,619 $ 1,702,564 Sugarcane 2,938,210 1,451,140 Ranch 4,799,772 2,986,818 Rock products and sand 421,645 348,840 Oil lease and land rentals 204,740 413,136 Forest products 27,707 33,248 Profit on sales of real estate 195,264 12,859,851 Interest and investment income 501,922 769,672 Other 90,605 0 ___________ ___________ Total revenue 10,275,484 20,565,269 ___________ ___________ Cost and expenses: Citrus production, harvesting and marketing 835,154 1,075,455 Sugarcane production and harvesting 2,236,378 1,422,700 Ranch 4,315,279 2,899,568 Real estate expenses 98,348 380,564 Interest 728,810 632,399 Other, general and administrative 881,374 384,848 ____________ ___________ Total costs and expenses 9,095,343 6,795,534 ____________ ___________ Income before income taxes 1,180,141 13,769,735 Provision for income taxes 375,397 5,158,364 ____________ ___________ Net income 804,744 8,611,371 ____________ ___________ ____________ ___________ Weighted average number of shares outstanding 7,027,827 7,027,827 ____________ ___________ ____________ ___________ Per share amounts: Basic and diluted $ .11 $ 1.23 Dividends $ 1.00 $ .30 See accompanying Notes to Condensed Consolidated Financial Statements.
ALICO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (See Accountants' Review Report) November 30, 2000 August 31, 2000 (Unaudited) _________________ _______________ ASSETS Current assets: Cash and cash investments $ 2,057,446 $ 1,796,428 Marketable Securities 17,523,548 18,055,099 Accounts receivable 10,076,584 11,954,721 Mortgage and notes receivable 2,514,851 2,509,034 Inventories 21,229,161 21,915,039 Other current assets 800,814 348,062 ____________ ____________ Total current assets 54,202,404 56,578,383 Notes receivable, non-current 7,322,222 7,334,579 Land held for development and sale 7,452,436 7,147,937 Investments 1,156,447 959,252 Property, buildings and equipment 138,664,934 136,822,381 Less: Accumulated depreciation (32,938,708) (31,966,492) ____________ ____________ Total assets $175,859,735 $176,876,040 ____________ ____________ ____________ ____________ ALICO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (See Accountants' Review Report) (Continued) November 30, 2000 August 31, 2000 (Unaudited) _________________ _______________ Current liabilities: Accounts payable $ 1,061,341 $ 2,429,242 Due to profit sharing plan 0 429,784 Accrued ad valorem taxes 17,577 1,780,807 Current portion of notes payable 1,298,890 1,298,890 Accrued expenses 997,329 988,011 Income taxes payable 232,937 4,169,517 Deferred income taxes 1,105,521 1,250,026 ____________ ____________ Total current liabilities 4,713,595 12,346,277 Deferred revenue 9,540,000 9,540,000 Notes payable 53,639,433 40,302,855 Deferred income taxes 10,767,775 10,889,095 Deferred retirement benefits 277,017 252,809 ____________ ____________ Total liabilities 78,937,820 73,331,036 ____________ ____________ STOCKHOLDERS' EQUITY Common stock $ 7,027,827 $ 7,027,827 Additional paid in capital 104,354 17,885 Accumulated other comprehensive income 672,970 1,159,445 Retained earnings 89,116,764 95,339,847 ____________ ____________ Total stockholders' equity 96,921,915 103,545,004 ____________ ____________ Total liabilities and stockholders' equity $175,859,735 $176,876,040 ____________ ____________ ____________ ____________ See accompanying Notes to Condensed Consolidated Financial Statements.
ALICO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (See Accountants' Review Report) Accumulated Common Stock Other Additional Shares Retained Comprehensive Paid in Issued Amount Earnings Income Capital Total _________ __________ _________ _______ __________ ________ Balances, August 31, 1999 7,027,827 $7,027,827 $83,337,579 $1,029,953 $91,395,359 _______________ Comprehensive income: Net income for the year ended August 31, 2000 - - 14,110,616 - - 14,110,616 Unrealized gains on securities, net of taxes and - - - 129,492 - 129,492 reclassification adjustment __________ Total comprehensive income: 14,240,108 Dividends paid - - (2,108,348) - - (2,108,348) Stock based compensation - - - - $17,885 17,885 _________ __________ ___________ ________ ________ ___________ Balances, August 31, 2000 7,027,827 $7,027,827 $95,339,847 $1,159,445 $17,885 $103,545,004 _______________ Comprehensive income: Net income for the three months ended November 30, 2000 - - 804,744 - - 804,744 Unrealized gains on securities, net of taxes - - - (486,475) - (486,475) and reclassification adjustment _________ Total comprehensive income: 318,269 Dividends paid - - (7,027,827) - - (7,027,827) Stock based compensation - - - - $86,469 86,469 _________ __________ ___________ ________ ________ ___________ Balances, November 30, 2000 (Unaudited) 7,027,827 $7,027,827 $89,116,764 $672,970 $104,354 $96,921,915 _________ __________ ___________ ________ ________ __________ _________ __________ ___________ ________ ________ __________ November 30, August 31, 2000 2000 (Unaudited) Disclosure of reclassification amount: ____________ ___________ Unrealized holding gains (losses) arising during the period $(444,707) $2,176,940 Less: reclassification adjustment for gains (losses) included in net income 41,768 2,047,448 _________ ________ Net unrealized gains (losses) on securities $(486,475) $ 129,492 _________ __________ _________ __________ See accompanying Notes to Condensed Consolidated Financial Statements. ALICO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited - See Accountants' Review Report) Three Months Ended November 30, 2000 1999 _______________________________ Cash flows from operating activities: Net income $ 804,744 $8,611,371 Adjustments to reconcile net income to cash provided from (used for) operating activities: Depreciation and amortization 1,750,647 1,458,920 Net decrease in current assets and liabilities (6,180,210) (2,133,048) Deferred income taxes 27,682 4,312,542 Gain on sales of real estate (96,916) (12,859,851) Other (383,640) (217,659) __________ __________ Net cash provided from (used for) operating activities (4,077,693) (827,725) __________ __________ Cash flows from (used for) investing activities: Purchases of property and equipment (2,462,959) (3,850,238) Proceeds from sales of real estate 210,595 3,971,175 Proceeds from sales of property and equipment 409,800 230,457 Purchases of marketable securities (1,209,992) (443,737) Proceeds from sales of marketable securities 1,075,976 173,164 __________ __________ Net cash provide from (used for) investing activities (1,976,580) 80,821 __________ __________ Cash flows from (used for) financing activities: Notes receivable collections 6,540 (430) Repayment of bank loan (13,277,249) (9,001,667) Proceeds from bank loan 26,613,827 11,825,000 Dividends paid (7,027,827) (2,108,348) __________ __________ Net cash provided from financing activities 6,315,291 714,555 __________ __________ Net decrease in cash and cash investments $ 261,018 $ (32,349) __________ __________ __________ __________ Supplemental disclosures of cash flow information: Cash paid for interest, net of amount capitalized $ 749,395 $ 501,111 __________ __________ __________ __________ Cash paid for income taxes $4,284,296 $ 103,817 __________ __________ __________ __________ Non-cash investing and financing activities: Mortgage and notes receivable issued in exchange for land, less unamortized discount $ -0- $11,396,574 ___________ __________ ___________ __________ Fair value adjustments to securities available for sale $ 779,982 $ 85,588 __________ __________ __________ __________ Income tax effect related to fair value adjustment $ 293,507 $ 32,554 __________ __________ __________ __________ See accompanying Notes to Condensed Consolidated Financial Statements.
ALICO, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (See Accountants' Review Report) 1. Basis of financial statement presentation: The accompanying condensed consolidated financial statements include the accounts of Alico, Inc. and its wholly owned subsidiaries, Saddlebag Lake Resorts, Inc. (Saddlebag) and Agri-Insurance Company, Ltd. (Agri), after elimination of all significant intercompany balances and transactions. The accompanying unaudited condensed consolidated financial statements have been prepared on a basis consistent with the accounting principles and policies reflected in the Company's annual report for the year ended August 31, 2000. In the opinion of Management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recur- ring accruals) necessary for a fair presentation of its consolidated financial position at November 30, 2000 and August 31, 2000 and the consolidated results of operations and cash flows for the three months ended November 30, 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 $280,758 in 2000 and $1,839,642 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. Mortgage and notes receivable: Mortgage and notes receivable arose from real estate sales. The balances at November 30, 2000 and August 31, 2000 are as follows: November 30, August 31, 2000 2000 ____________ __________ Mortgage notes receivable on retail land sales $ 201,877 $ 238,417 Mortgage notes receivable on bulk land sales 9,540,000 9,540,000 Other notes receivable 95,196 65,196 ____________ __________ Total mortgage notes receivable $ 9,837,073 $9,843,613 Less current portion 2,514,851 2,509,034 ____________ __________ Non-current portion $ 7,322,222 $7,334,579 ____________ __________ ____________ __________ In July 2000, the Company received a mortgage note in exchange for land sold. The note totaled $9,540,000 and principal payments of $2,385,000 are due annually on July 14, bearing interest at the LIBOR, over the next four years.
4. Inventories: A summary of the Company's inventories (in thousands) is shown below: November 30, August 31, 2000 2000 ____________ ___________ Unharvested fruit crop on trees $ 11,253,072 $ 9,160,234 Unharvested sugarcane 4,797,383 5,095,514 Beef cattle 4,960,370 7,469,897 Sod 218,336 189,394 ____________ ___________ Total inventories $ 21,229,161 $21,915,039 ____________ ___________ ____________ ___________ 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 were deferred, with the cost of the related cattle being adjusted when the contracts are settled. Effective September 1, 2000, gains and losses under these agreements are recognized as incurred in accordance with SFAS 133, as further discussed in Note 9. 5. Income taxes: The provision for income taxes for the quarters ended November 30, 2000 and 1999 is summarized as follows: Three Months Ended November 30, 2000 1999 _______________________________ Current: Federal income tax $ 552,774 $ 692,482 State income tax 88,449 120,786 __________ __________ 641,223 813,268 __________ __________ Deferred: Federal income tax (226 973) 3,710,017 State income tax (38,853) 635,079 __________ __________ (265,826) 4,345,096 __________ __________ Total provision for income taxes $ 375,397 $5,158,364 __________ __________ __________ __________ 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 ended November 30, 2000 and 1999: Three Months Ended November 30, 2000 1999 _______________________________ Expected income tax $ 401,248 $4,681,709 Increase (decrease) resulting from: State income taxes, net of federal benefit 32,173 498,179 Nontaxable interest and dividends (32,420) (26,736) Other reconciling items, net (25,604) 5,212 __________ __________ Total provision for income taxes $ 375,397 $5,158,364 __________ __________ __________ __________ 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 2002 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 November 30, 2000 and August 31, 2000 was $53,639,433 and $40,302,855, respectively. Maturities of the indebtedness of the Company over the next five years are as follows: 2001- $1,298,890; 2002- $38,301,146; 2003- $1,303,559; 2004- $1,306,142; 2005- $1,308,905; thereafter $11,419,681. Interest cost expensed and capitalized during the three months ended November 30, 2000 and 1999 was as follows: 2000 1999 ________ ________ Interest expensed $728,810 $632,399 Interest capitalized 53,930 95,473 ________ ________ Total interest cost $782,740 $727,872 ________ ________ ________ ________ 7. Dividends: On October 3, 2000 the Company declared a year-end dividend of $1.00 per share, which was paid on October 27, 2000. 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 three months ended November 30, 2000: ____________________________________________________________ General Consolidated Citrus Sugarcane Ranch Corporate* Total ____________________________________________________________ Revenue $ 1,095,619 2,938,210 4,799,772 1,441,883 10,275,484 Costs and expenses 835,154 2,236,378 4,315,279 1,708,532 9,095,343 Depreciation and amortization 610,453 652,679 356,917 130,598 1,750,647 Segment profit 260,465 701,832 484,493 (266,649) 1,180,141 Segment assets 54,259,074 52,036,655 20,930,064 48,633,942 175,859,735 The following table presents information for each of the Company's operating segments as of and for the three months ended November 30, 1999: ____________________________________________________________ General Consolidated Citrus Sugarcane Ranch Corporate* Total ____________________________________________________________ Revenue $ 1,702,564 1,451,140 2,986,818 14,424,747 20,565,269 Costs and expenses 1,075,455 1,422,700 2,899,568 1,397,811 6,795,534 Depreciation and amortization 603,876 492,292 240,062 122,690 1,458,920 Segment profit 627,109 28,440 87,250 13,026,936 13,769,735 Segment assets 39,387,876 42,368,444 13,474,271 72,284,841 167,515,432 *Consists of rents, investments, real estate activities and other such items of a general corporate nature. 9. Adoption of Accounting Standard As of September 1, 2000, the Company adopted Statements of Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative instruments and Hedging Activities" as amended by SFAS 137 and 138. 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. Upon adoption, the Company's management decided not to designate any of its derivative instruments as hedge transactions and, accordingly, the changes in fair value of derivatives are recorded each period in current operations. At September 1, 2000, the fair value of these derivatives was equal to a gain of $41,620. This adjustment was recorded against operations as of September 1, 2000, as a cumulative adjustment of a change in accounting principle, net of income taxes of $15,662, or $25,958 after-tax. 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 vesting schedules which are at the discretion of the Board of Directors and determined on the effective date of the grant. Weighted Weighted average average remaining exercise contractual Shares price Life (in years) _______ _________ _______________ Balance outstanding, August 31, 1998 - - - Granted 34,700 $14.62 _______________ _______ _________ _______________ Balance outstanding, August 31, 1999 34,700 14.62 11 _______________ Granted 14,992 14.62 _______________ _______ _________ Balance outstanding, August 31, 2000 49,692 14.62 10 _______________ Granted 51,074 14.62 _______________ _______ _________ Balance outstanding, November 30, 2000 100,766 14.62 _______ _________ _______ _________ On November 30, 2000, there were 49,692 shares exercisable and 549,234 shares available for grant. ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. LIQUIDITY AND CAPITAL RESOURCES: Working capital increased to $49,488,809 at November 30, 2000, up from $44,232,006 at August 31, 2000. As of November 30, 2000, the Company had cash and cash investments of $2,057,446 compared to $1,796,428 at August 31, 2000. Marketable securities decreased from $18,055,099 to $17,523,548 during the same period. The ratio of current assets to current liabilities increased to 11.5 to 1 at November 30, 2000 from 4.58 to 1 at August 31, 2000. Total assets decreased by $1,016,305 to $175,859,735 at November 30, 2000 from $176,876,040 at August 31, 2000. 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 $6.3 million at November 30, 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 November 30, 2000 decreased by $7,806,627 when compared to the first quarter of fiscal 2000. Income before income taxes decreased $12,589,594 for the three months ended November 30, 2000, when compared to the same period a year ago. This was primarily due to the decrease in earnings from real estate activities ($96,916 for the three months ended November 30, 2000 compared to $12,479,287 for the three months ended November 30, 1999). Earnings from agricultural activities increased during the first quarter of fiscal 2001 ($1,446,790 vs. $742,799 during the first three months of fiscal 2001 and 2000, respectively). Citrus ______ Citrus earnings decreased for the quarter ended November 30, 2000, when compared to the prior year ($260,465 during the first quarter of fiscal 2001 vs. $627,109 during the same period in fiscal 2000). This is largely the result of the recognition of revenue from the fiscal 1999 fresh fruit crop which was greater than the comparable amount realized in the first quarter of the current year ($280,758 in the first quarter of fiscal 2001, compared to $758,750 in the first quarter of fiscal 2000, see Note 1 to the Notes to Condensed Consolidated Financial Statements). Sugarcane _________ Sugarcane earnings increased during the first quarter of 2001 ($701,832 during fiscal 2001 vs. $28,440 during fiscal 2000) when compared to the prior year. Producing acres have increased and, as a result, more acres are being harvested. Improved yields and market prices have also contributed to the rise. Ranching ________ Ranch earnings also increased when compared to a year ago ($484,493 vs. $87,250 for the three months ended November 30, 2000 and November 30, 1999, respectively). Increased market prices for beef are the primary cause of the improvement. 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 the formation of Agri-Insurance Company, Ltd. (Agri) a wholly owned subsidiary, during July of 2000. The insurance company has been capitalized by transferring cash and approximately 6,000 acres of the Lee County property along with the sales contracts, referred to below. Through Agri, the Company expects to be able to underwrite previously uninsurable risk related to catastrophic crop and other losses. Additionally, the insurance company will have access to reinsurance markets, otherwise inaccessible. While Agri underwrote a small policy during August of 2000, it is expected to begin writing more significant coverages before the end of fiscal 2001. In December of 1999, the Company entered into a contract to sell approximately 2,500 acres for $50 million to Naples/Dallas Venture, Inc. The agreement calls for closings to occur on 250 acres per year for 10 years. The first closing is expected during fiscal 2001. 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. In August of 2000, Agri sold another 488 acres to Miromar, also near the University, for $10.6 million. In connection with the sale, Miromar agreed to pay off the $12.3 million mortgage related to the September 1999 sale and pay 10% of the contract price for their second purchase at closing. The balance is payable over the next four years. The first sale generated a pre-tax gain of $13.4 million. The gain related to the second sale has only been recognized to the extent that 10% of the purchase price has been collected net of closing costs ($959 thousand). The remainder of the gain and related mortgage will be recognized upon receipt of 20% of the contract price. This is expected to occur during August of 2001. In July of 1999, the Company entered into a contract to sell up to 402 acres near the University to Thomas B. Garlick, a Trustee of Florida Land Trust 996 for approximately $15.5 million. The contract was subsequently renegotiated, as provided for in the original agreement, and calls for the sale of 44 acres for $5 million. 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 November 30, 2000. C. Exhibit 27 - Financial Data Schedule. (b) Reports on Form 8-K. November 3, 2000 December 7, 2000 December 14, 2000 December 18, 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) January 12, 2001 W. Bernard Lester Date President Chief Operating Officer (Signature) January 12, 2001 L. Craig Simmons Date Vice President Chief Financial Officer (Signature) January 12, 2001 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 subsidiaries as of November 30, 2000, and the related condensed consolidated statements of operations for the three month periods ended November 30, 2000 and 1999, the condensed consolidated statements of stockholders' equity for the three month period November 30, 2000, and the condensed consolidated statements of cash flows for the three month periods ended November 30, 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 subsidiaries as of August 31, 2000 and the related consolidated statements of operations, stockholders' equity and cash flows for the year then ended (not presented herein); and in our report dated October 12, 2000 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, 2000, is fairly presented, in all material respects, in relation to the consolidated balance sheet from which it has been derived. s/s KPMG LLP Orlando, Florida January 4, 2001 FORM 10-Q ALICO, INC. Computation of Weighted Average Shares Outstanding as of November 30, 2000: Number of shares outstanding at August 31, 2000 7,027,827 _________ _________ Number of shares outstanding at November 30, 2000 7,027,827 _________ _________ Weighted Average 9/1/00 - 11/30/00 7,027,827 _________ _________ EXHIBIT B