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 six months ended February 28, 2002.
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 7,073,466 shares of common stock, par value $1.00 per share,
outstanding at April 15, 2002.
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 Six Months Ended
Feb. 28, 2002 Feb. 28, 2001 Feb. 28, 2002 Feb. 28, 2001
_____________ _____________ _____________ ______________
Revenue:
Citrus $ 7,688,526 $10,421,372 $ 9,194,524 $ 11,516,991
Sugarcane 6,978,177 6,303,311 9,233,440 9,241,521
Ranch 2,012,991 951,472 5,602,551 5,751,244
Rock products
and sand 403,757 412,213 858,554 833,858
Oil lease and
land rentals 169,565 167,860 338,990 372,600
Forest products 37,096 576 141,580 28,283
Retail land sales - 47,500 39,450 62,500
___________ __________ ___________ ___________
Total revenue 17,290,112 18,304,304 25,409,089 27,806,997
___________ ___________ ____________ ____________
Cost of sales:
Citrus production,
harvesting and
marketing 7,348,174 9,424,949 8,833,231 10,260,103
Sugarcane production
and harvesting 5,497,042 5,056,250 7,351,884 7,292,628
Ranch 1,857,346 918,405 4,867,789 5,233,684
Retail land sales 12,884 50,939 46,566 74,044
___________ __________ ___________ ___________
Total cost of sales 14,715,446 15,450,543 21,099,470 22,860,459
___________ __________ ___________ ___________
Gross Profit 2,574,666 2,853,761 4,309,619 4,946,538
General and administration
expenses 5,874,340 1,165,033 7,240,980 2,046,407
___________ __________ ___________ ___________
Income (loss)
from operations (3,299,674) 1,688,728 (2,931,361) 2,900,131
Other income (expenses):
Profit on sales of real
estate 8,547,447 944,895 11,326,787 1,049,916
Interest and
investment income 336,087 229,659 833,566 731,581
Interest expense (531,376) (979,890) (1,045,619) (1,708,700)
Other (41,801) 51,251 107,925 141,856
___________ ___________ ____________ ____________
Total other income, net 8,310,357 245,915 11,222,659 214,653
___________ ___________ ____________ ____________
Income before income taxes 5,010,683 1,934,643 8,291,298 3,114,784
Provision for income taxes 294,336 643,777 571,299 1,019,174
___________ ___________ ____________ ____________
Net income $ 4,716,347 $ 1,290,866 $ 7,719,999 $ 2,095,610
___________ ___________ ____________ ____________
___________ ___________ ____________ ____________
Weighted average number of shares
outstanding 7,060,928 7,027,827 7,060,928 7,027,827
___________ ___________ ____________ ____________
___________ ___________ ____________ ____________
Per share amounts:
Basic $ .67 $ .18 $ 1.09 $ .30
Fully diluted $ .66 $ .18 $ 1.08 $ .30
Dividends $ - $ - $ 1.00 $ 1.00
See accompanying Notes to Condensed Consolidated Financial Statements.
ALICO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(See Accountants' Review Report)
February 28, 2002 August 31, 2001
___(Unaudited)_____________________
ASSETS
Current assets:
Cash and cash investments $ 8,928,099 $ 6,225,088
Marketable securities 19,707,554 18,726,723
Accounts receivable 8,289,452 10,153,205
Mortgage and notes receivable 2,491,682 2,482,454
Income taxes refundable 290,881 -
Inventories 19,450,674 23,246,609
Other current assets 782,773 510,760
____________ ____________
Total current assets 59,941,115 61,344,839
Notes receivable, non-current 5,126,135 5,112,309
Land held for development and sale 16,345,903 7,931,544
Investments 1,288,659 1,170,898
Property, buildings and equipment 142,392,239 138,352,300
Less: Accumulated depreciation (37,450,205) (34,878,310)
____________ ____________
Total assets $187,643,846 $179,033,580
____________ ____________
____________ ____________
ALICO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(See Accountants' Review Report)
(Continued)
February 28, 2002 August 31, 2001
LIABILITIES ___(Unaudited)_______________________
Current liabilities:
Accounts payable $ 1,911,758 $ 1,810,094
Due to profit sharing plan - 443,942
Accrued ad valorem taxes 237,545 1,383,111
Current portion of notes payable 3,301,146 1,301,146
Accrued expenses 1,434,991 1,394,940
Income taxes payable - 22,670
Deferred revenue 211,607 52,987
Deferred income taxes 2,044,357 1,234,697
____________ ____________
Total current liabilities 9,141,404 7,643,587
Notes payable 50,167,793 46,704,954
Deferred income taxes 11,199,387 11,909,252
Accrued donation 2,917,819 -
Deferred retirement benefits 325,879 150,429
____________ ____________
Total liabilities 73,752,282 66,408,222
____________ ____________
STOCKHOLDERS' EQUITY
Common stock 7,069,757 7,044,513
Additional paid in capital 1,125,994 331,617
Accumulated other comprehensive income 656,702 871,077
Retained earnings 105,039,111 104,378,151
____________ ____________
Total stockholders' equity 113,891,564 112,625,358
____________ ____________
Total liabilities and
stockholders' equity $187,643,846 $179,033,580
____________ ____________
____________ ____________
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, 2000 7,027,827 $7,027,827 $95,339,847 $1,159,445 $ 17,885 $103,545,004
_______________
Comprehensive income:
Net income for the year
ended August 31, 2001 - - 16,066,131 - - 16,066,131
Unrealized gains on
securities, net of taxes
and reclassification adjustment - - - (288,368) - (288,368)
___________
Total comprehensive income 15,777,763
Dividends paid - - (7,027,827) - - (7,027,827)
Stock options exercised 16,686 16,686 - - 227,264 243,950
Stock based compensation - - - - 86,468 86,468
_________ __________ ___________ ________ ___________
Balances,
August 31, 2001 7,044,513 $7,044,513 $104,378,151 $ 871,077 $331,617 $112,625,358
_______________
Comprehensive income:
Net income for the six months
ended February 28, 2002 - - 7,719,999 - - 7,719,999
Unrealized gains on
securities, net of taxes
and reclassification adjustment - - - (214,375) - (214,375)
___________
Total comprehensive income 7,505,624
Dividends paid - - (7,059,039) - - (7,059,039)
Stock options exercised 25,244 25,244 - - 348,949 374,193
Stock based compensation - - - - 445,428 445,428
_________ __________ ___________ ________ ___________
Balances,
February 28, 2002 (Unaudited) 7,069,757 $7,069,757 $105,039,111 $ 656,702 $1,125,994 $113,891,564
_________ __________ ___________ ________ ___________
_________ __________ ___________ ________ ___________
February 28, August 31,
2002 2001
Disclosure of reclassification amount: _(Unaudited) ___________
Unrealized holding gains (losses)
arising during the period $ 134,187 $ (206,715)
Less: reclassification adjustment
for gains (losses) included in net
income 348,562 81,653
_________ __________
Net unrealized gains (losses) on securities $(214,375) $ (288,368)
_________ __________
_________ __________
See accompanying Notes to Condensed Consolidated Financial Statements.
ALICO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - See Accountants' Review Report)
Six Months Ended February 28,
2002 2001
_______________________________
Cash flows from operating activities:
Net income $ 7,719,999 $2,095,610
Adjustments to reconcile net income to cash
provided from (used for) operating activities:
Depreciation and amortization 3,544,473 3,470,493
Contribution expense accrued 3,581,800 -
Net decrease in current assets and
liabilities 5,140,394 1,528,714
Deferred income taxes 216,124 (628,525)
Gain on sales of real estate (11,326,787) (1,049,916)
Other 1,190,617 (318,693)
__________ __________
Cash provided from
operating activities 10,066,620 5,097,683
__________ __________
Cash flows from (used for) investing activities:
Notes receivable issuances (24,800) (312,300)
Notes receivable collections 1,746 57,894
Purchases of real estate (9,946,814) -
Purchases of property and equipment (5,062,659) (4,719,030)
Proceeds from sales of real estate 12,802,198 704,220
Proceeds from sales of property and equipment 367,896 880,351
Purchases of marketable securities (3,540,773) (1,558,796)
Proceeds from sales of marketable securities 2,553,615 1,090,519
__________ __________
Cash used for
investing activities (2,849,591) (3,857,142)
__________ __________
Cash flows from (used for) financing activities:
Repayment of bank loan (35,690,325) (24,038,916)
Proceeds from bank loan 38,235,346 30,518,827
Dividends paid (7,059,039) (7,027,827)
__________ __________
Cash used for
financing activities (4,514,018) (547,916)
__________ __________
Increase in cash and
cash investments 2,703,011 692,625
__________ __________
Cash at beginning of period 6,225,088 1,796,428
__________ _________
Cash at end of period $ 8,928,099 $ 2,489,053
__________ __________
__________ __________
Supplemental disclosures of cash flow information:
Cash paid for interest, net of
amount capitalized $1,202,643 $1,857,944
__________ __________
__________ __________
Cash paid for income taxes $ 925,600 $4,291,269
__________ __________
__________ __________
Non-cash investing and financing activities:
Fair value adjustments to securities
available for sale $ (330,704) $ (59,557)
__________ __________
__________ __________
Income tax effect related to fair
value adjustment $ 116,329 $ 22,411
__________ __________
__________ __________
Reclassification of breeding herd
to property & equipment $ 515,398 $ 370,192
__________ __________
__________ __________
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, 2001.
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 February 28, 2002 and August 31, 2001 and the consolidated results
of operations and cash flows for the three and six months ended February 28,
2002 and February 28, 2001.
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. Certain items from 2001 have been
reclassified to conform to 2002 presentation.
The Company accounts for long-lived assets in accordance with the provisions
of SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets for
Long-Lived Assets to be Disposed of". This Statement requires the long-
lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying
amount of an asset to future net cash flows expected to be generated
by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets.
Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell.
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
February 28, 2002 and August 31, 2001 are as follows:
February 28, August 31,
2002 2001
____________ __________
Mortgage notes receivable
on retail land sales $ 239,784 $ 241,852
Mortgage notes receivable
on bulk land sales 7,143,033 7,052,911
Other notes receivable 235,000 300,000
____________ __________
Total mortgage notes receivable $ 7,617,817 $ 7,594,763
Less current portion 2,491,682 2,482,454
____________ __________
Non-current portion $ 5,126,135 $5,112,309
____________ __________
____________ __________
In July 2000, the Company received a mortgage note in exchange for land sold.
The note totaled $9,540,000 and principal payments of $2,385,000 are due
annually on July 14, bearing interest at the LIBOR, over four years.
4. Inventories:
A summary of the Company's inventories (in thousands) is shown below:
February 28, August 31,
2002 2001
____________ ___________
Unharvested fruit crop on trees $ 9,363,003 $ 9,626,006
Unharvested sugarcane 2,641,746 5,386,633
Beef cattle 7,237,247 8,075,729
Sod 208,678 158,241
____________ ___________
Total inventories $ 19,450,674 $23,246,609
____________ ___________
____________ ___________
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. At February 28, 2002, the
Company had no open positions.
5. Income taxes:
The provision for income taxes for the quarters and six months ended February
28, 2002 and February 28, 2001 is summarized as follows:
Three Months Ended Six Months Ended
Feb. 28, 2002 Feb. 28, 2001 Feb. 28, 2002 Feb. 28, 2001
_____________ _____________ _____________ ______________
Current:
Federal income tax $ (389,139) $ 842,581 $ 308,250 $1,395,355
State income tax (72,454) 163,895 46,925 252,344
_____________ _____________ _____________ ______________
(461,593) 1,006,476 355,175 1,647,699
_____________ _____________ _____________ ______________
Deferred:
Federal income tax 621,989 (308,573) 153,867 (535,546)
State income tax 133,940 (54,126) 62,257 (92,979)
_____________ _____________ _____________ ______________
755,929 (362,699) 216,124 (628,525)
_____________ _____________ _____________ ______________
Total provision for
income taxes $ 294,336 $ 643,777 $ 571,299 $1,019,174
_____________ _____________ _____________ ______________
_____________ _____________ _____________ ______________
6. Indebtedness:
The Company has financing agreements with commercial banks that permit the
Company to borrow up to $54 million. Financing agreements allowing the
Company to borrow up to $41 million are due in 2003 and up to $3 million
are due on demand. In December 2001, the Company entered into an
additional financing agreement to borrow $10 million to be paid in equal
principal installments over five years with interest to be paid quarterly.
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
February 28, 2002 and August 31, 2001 was $50,167,793 and $46,704,954,
respectively.
Maturities of the indebtedness of the Company over the next five years are as
follows: 2002- $3,301,146; 2003- $31,168,559; 2004- $3,306,142;
2005- $3,308,905; 2006- $3,311,862; thereafter $9,072,325.
Interest cost expensed and capitalized during the six months ended
February 28, 2002 and February 28, 2001 was as follows:
2002 2001
________ ________
Interest expensed $1,045,619 $1,708,700
Interest capitalized 129,366 109,909
________ ________
Total interest cost $1,174,985 $1,818,609
________ ________
________ ________
7. Dividends:
On October 2, 2001 the Company declared a year-end dividend of $1.00 per
share, which was paid on October 26, 2001.
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 six months ended February 28, 2002:
____________________________________________________________
General Consolidated
Citrus Sugarcane Ranch Corporate* Total
____________________________________________________________
Revenue $ 9,194,524 9,233,440 5,602,551 13,646,852 37,677,367
Costs and
expenses 8,833,231 7,351,884 4,867,789 8,333,165 29,386,069
Depreciation and
amortization 1,202,541 1,340,356 755,403 246,173 3,544,473
Segment profit 361,293 1,881,556 734,762 5,313,687 8,291,298
Segment assets 56,168,167 53,447,255 21,697,849 56,330,575 187,643,846
The following table presents information for each of the Company's operating
segments as of and for the six months ended February 28, 2001:
____________________________________________________________
General Consolidated
Citrus Sugarcane Ranch Corporate* Total
____________________________________________________________
Revenue $ 11,516,991 9,241,521 5,751,244 3,220,594 29,730,350
Costs and
expenses 10,260,103 7,292,628 5,233,684 3,829,151 26,615,566
Depreciation and
amortization 1,243,000 1,256,219 718,639 252,635 3,470,493
Segment profit 1,256,888 1,948,893 517,560 (608,557) 3,114,784
Segment assets 54,845,676 51,831,962 20,407,345 45,370,653 172,455,636
*Consists of amounts related to forest products sales, rock and sand
royalties, oil lease and land rentals, investments, real estate activities
and other such items of a general corporate nature.
9. 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. The
strike price cannot be less than 55% of the market price.
Weighted
Weighted average
average remaining
exercise contractual
Shares price life (in years)
_______ _________ _______________
Balance outstanding,
August 31, 1999 34,700 $ 14.62 10
_______________
Granted 15,042 14.62 _______________
_______ _________
Balance outstanding,
August 31, 2000 49,742 14.62 9.3
_______________
Granted 51,074 14.62 _______________
Exercised 16,686 14.62
_______ __________
Balance outstanding,
August 31, 2001 84,130 14.62 9.3
_______________
Granted 69,598 15.68 _______________
Exercised 25,244 14.82
_______ __________
Balance outstanding,
February 28, 2002 128,484 $ 15.15 9.15
_______ _________ _______________
_______ _________ _______________
On February 28, 2002, there were 128,484 shares exercisable and 479,586
shares available for grant.
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
LIQUIDITY AND CAPITAL RESOURCES:
Working capital decreased to $50,799,711 at February 28, 2002, down from
$53,701,252 at August 31, 2001. As of February 28, 2002, the Company had cash
and cash investments of $8,928,099 compared to $6,225,088 at August 31, 2001.
Marketable securities increased from $18,726,723 to $19,707,554 during the same
period. The ratio of current assets to current liabilities decreased to 6.56
to 1 at February 28, 2002 from 8.03 to 1 at August 31, 2001. The decrease in
working capital ($50,799,711 vs. $53,701,252 as of February 28, 2002 and
August 31, 2001, respectively) was largely due to the $2,000,000 increase in
the current portion of notes payable during the same period. Total assets
increased to $187,643,846 at February 28, 2002, compared to $179,033,580
at August 31, 2001.
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 $16.1 million at
February 28, 2002.
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 six months ending February 28, 2002 increased by $5,624,389
when compared to the same period a year ago. ($7,719,999 vs. $2,095,610 for the
six months ended February 28, 2002 and February 28, 2001, respectively). Net
income increased during the three months ended February 28, 2002, compared to
the same period a year ago ($4,716,347 vs. $1,290,866).
Income before income taxes increased $5,176,514 for the six months ended
February 28, 2002, when compared to the same period a year ago. This was
primarily due to the increase in earnings from real estate activities
($11,366,237 for the six months ended February 28, 2002 compared to $1,112,416
for the six months ended February 28, 2001).
Earnings from agricultural activities decreased from the prior year
($1,977,132 vs. $2,276,551 for the second quarter, and $2,977,611 vs.
$3,723,341 during the first six months of fiscal 2002 and 2001, respectively).
Citrus
______
Citrus earnings decreased for the second quarter ($340,352 during fiscal
2002 vs. $996,423 during fiscal 2001) and during the six months ended
February 28, 2002, when compared to the prior year ($361,293
during the first half of fiscal 2002 vs. $1,256,888 during the same
period in fiscal 2001). This is in part the result of the recognition of
revenue from the fiscal 2000 fresh fruit crop which was greater than the
comparable amount realized in the first quarter of the current year
($185,697 in the second quarter of fiscal 2002, compared to $280,758 in
the second quarter of fiscal 2001, see Note 1 to the Notes to Condensed
Consolidated Financial Statements). Additionally, producing acreage
And boxes produced per acre decreased when compared to the prior year,
resulting in higher unit costs for both the boxes harvested and the
related pounds of solids.
Sugarcane
_________
Sugarcane earnings increased for the second quarter ($1,481,135 for
fiscal 2002 vs. $1,247,061 for fiscal 2001) but decreased for the six
months ended February 28, 2002 ($1,881,556 vs. $1,948,893 for the six
months ended February 28, 2001). The number of producing acres are
down slightly when compared to the prior year. This factor, combined
with the effects of drought conditions early in the growing cycle,
has combined to decrease the yield from this years crop.
Ranching
________
Ranch earnings increased for both the second quarter ($155,645 vs.
$33,067 for the three months ended February 28, 2002 and
February 28, 2001, respectively) and for the six months ($734,762
vs. $517,560 for the six months ended February 28, 2002 and
February 28, 2001, respectively). Reduced operating expenses for beef
are the primary reason for the improvement. Market prices for the second
quarter were approximately the same as a year ago, while the number of
cattle sold has decreased. Total revenue decreased slightly as a result
of the decrease in sales quantity.
General Corporate
_________________
The Company is continuing its marketing and permitting activities for its
land which surrounds the Florida Gulf Coast University site. At February 28,
2002, there were sales contracts in place for more than 5,400 acres of
the Lee County, Florida property totaling $146 million. The agreements are
at various stages of the due diligence periods with closing dates over the
next ten years.
The Company announced the formation of Agri-Insurance Company, Ltd. (Agri)
a wholly owned subsidiary, during July of 2000. The insurance company was
initially capitalized by transferring cash and approximately 3,000 acres of
the Lee County property (along with the sales contracts totaling $8 million).
Through Agri, the Company expects to be able to underwrite previously
uninsurable risk related to catastrophic crop and other losses.
Additionally, the insurance company will have access to reinsurance
markets, otherwise inaccessible. However, the current Federal Crop
Insurance Program does not provide business interruption coverage. The
coverages contemplated by Agri would indemnify the insured for the loss
of the revenue stream resulting from a catastrophic event that would cause
a grove to be replanted. The insurance market is bifurcated into
insurers and reinsurers. Reinsurers provide wholesale insurance coverage
to the industry. Same specialized reinsurers will only deal with
insurance companies. As a result, the only way to access the wholesale
insurance market is through the formation of a captive insurance company.
Reinsurers provide greater insurance coverage flexibility than can be
found in the primary insurance market.
To expedite the creation of the capital liquidity necessary to
underwrite the Company's exposure to catastrophic losses through land
sales, another 5,600 acres was transferred during fiscal 2001. Agri
underwrote a limited amount of coverage during fiscal 2001. As Agri
gains underwriting experience and increases its liquidity, it will be
able to increase its insurance program.
During November 2001, Agri began to close on a 2,500 acre, $30 million sale,
of which 40 acres were transferred in November and 1,744 acres were
transferred by the end of December. However, upon mutual consent 323
acres, representing $9.6 million was released from the contract and
retained by Agri for sale at a future date. The remaining 393 acres
are scheduled to be transferred by the end of calendar year 2002.
The profit from this transaction is included in statement of operations
under gain on sales of real estate.
Also in December 2001, the Company agreed to donate $5 million to
Florida Gulf Coast University for a new athletic complex, scholarships
and athletic programs. The agreement calls for $1 million to be donated
during the current fiscal year and $800 thousand to be donated each year
over the next five years. The donation has been accrued and is
included in general and administrative expenses in the statement of
operations.
During January 2002, the Company acquired 40 acres of Lee County property
for $9.5 million. The property is located near one of the interstate highway
access ramps to Florida Gulf Coast University and the Southwest Florida
International Airport.
Critical Accounting Policies and Estimates
__________________________________________
The preparation of our financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and judgments that affect our
reported amounts of assets and liabilities, revenues and expenses, and related
disclosures of contingent assets and liabilities. On an on-going basis, we
evaluate our estimates and assumptions based upon historical experience and
various other factors and circumstances. Management believes that our estimates
and assumptions are reasonable in the circumstances; however, actual results
may vary from these estimates and assumption under different future
circumstances. We have identified the following critical accounting policies
that affect the more significant judgments and estimates used in the
preparation of our consolidated financial statements.
Alico records inventory at the lower of cost or market. Management regularly
assesses estimated inventory valuations based on current and forecasted
usage of the related commodity and any other relevant factors that affect
the net realizable value.
Based on fruit buyers' and processors' advances to growers, stated cash and
futures markets combined experience in the industry, management reviews the
reasonableness of citrus revenue accrual. Adjustments are made throughout
the year to these estimates as relevant information regarding the citrus
market becomes available. Fluctuation in the market prices for citrus fruit
has caused the Company to recognize additional revenue from the prior year's
crop totaling $185,697 during fiscal 2002 and $280,758 in 2001.
In accordance with Statement of Position 85-3 "Accounting by Agricultural
Producers and Agricultural Cooperatives", the cost of growing crops (citrus
and sugarcane) are capitalized into inventory until the time of harvest. Once
a given crop is harvested, the related inventoried costs are recognized as
a cost of sale to provide an appropriate matching of costs incurred with the
related revenue earned.
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
February 28, 2002.
(b) Reports on Form 8-K.
October 2, 2001
October 9, 2001
December 5, 2001
December 7, 2001
December 7, 2001
December 12, 2001
December 13, 2001
January 7, 2002
January 7, 2002
January 31, 2002
February 25, 2002
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)
April 15, 2002 W. Bernard Lester
Date President
Chief Operating Officer
(Signature)
April 15, 2002 L. Craig Simmons
Date Vice President
Chief Financial Officer
(Signature)
April 15, 2002 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 February 28, 2002, and the related condensed
consolidated statements of operations for the three-month and six-month
periods ended February 28, 2002 and February 28, 2001, the condensed
consolidated statements of stockholders' equity for the six-month period
February 28, 2002, and the condensed consolidated statements of cash
flows for the six-month periods ended February 28, 2002 and February 28, 2001.
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 auditing standards generally
accepted in the United States of America, 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 accounting principles generally
accepted in the United States of America.
We have previously audited, in accordance with auditing standards
generally accepted in the United States of America, the consolidated
balance sheet of Alico, Inc. and subsidiaries as of August 31, 2001 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, 2001 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, 2001, 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
April 5, 2002
FORM 10-Q
ALICO, INC.
Computation of Weighted Average Shares Outstanding as of February 28, 2002:
Number of shares outstanding at August 31, 2001 7,044,513
_________
_________
Number of shares outstanding at February 28, 2002 7,069,757
_________
_________
Weighted Average 9/1/01 - 02/28/02 7,060,928
_________
_________
EXHIBIT B