UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q/A
__X__ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For quarterly period ended November 30, 2003.
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 7,159,104 shares of common stock, par value $1.00 per share,
outstanding at January 13, 2004.
Explanatory note:This Amendment on Form 10-Q/A amends the Quarterly Report on Form 10-Q
for the quarter ended November 30, 2003 which was previously filed with
the Securities and Exchange Commission (the "SEC") on January 13, 2004.
The footnotes to the financial statments and disclosures set forth in
Management's Discussion and Analysis are amended herein.
This Amendment amends the footnotes to the financial statements and
Management's discussion and analysis portions of the Quarterly Report as
specified above and does not reflect events occurring after the original
filing date of the Quarterly Report on January 13, 2004.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ALICO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited - See Accountants' Review Report)
Three Months Ended November 30,
2003 2002
_______________________________
Revenue:
Citrus $ 1,354 $ 1,621
Sugarcane 2,591 2,748
Ranch 3,344 2,118
Rock products and sand 765 517
Oil lease and land rentals 289 246
Forest products 82 50
Retail land sales 14 84
___________ ___________
Total operating revenue 8,439 7,384
___________ ___________
Cost of sales
Citrus production, harvesting and
marketing 2,254 1,580
Sugarcane production and harvesting 2,107 2,224
Ranch 2,620 2,214
Retail land sales 16 69
____________ ___________
Total costs of sales 6,997 6,087
____________ ___________
Gross Profit 1,442 1,297
General and administration expenses 1,409 1,278
____________ ___________
Income from operations 33 19
Other income (expenses):
(loss) profit on sales of real estate - 451
Interest and investment income 450 276
Interest expense (488) (541)
Other 79 144
____________ ___________
Total other income, net 41 330
____________ ___________
Income before income taxes 74 349
Provision for income taxes 25 91
____________ ___________
Net income 49 258
____________ ___________
____________ ___________
Weighted average number of shares outstanding 7,140 7,097
____________ ___________
____________ ___________
Per share amounts:
Basic $ .01 $ .04
Fully diluted $ .01 $ .04
Dividends $ .60 $ .35
See accompanying Notes to Condensed Consolidated Financial Statements.
ALICO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(See Accountants' Review Report)
November 30, 2003 August 31, 2003
(unaudited)
_________________ _______________
ASSETS
Current assets:
Cash and cash investments $ 7,244 $ 16,352
Marketable securities 44,720 38,820
Accounts receivable 5,933 9,680
Mortgage and notes receivable 2,514 2,534
Inventories 21,160 21,845
Other current assets 1,084 973
____________ ____________
Total current assets 82,655 90,204
Notes receivable, non-current 221 234
Land held for development and sale 16,714 16,587
Investments 856 886
Property, buildings and equipment 147,034 144,578
Less: Accumulated depreciation (41,022) (39,741)
____________ ____________
Total assets $ 206,458 $ 212,748
____________ ____________
____________ ____________
ALICO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(See Accountants' Review Report)
(Continued)
November 30, 2003 August 31, 2003
(unaudited)
LIABILITIES _________________ ________________
Current liabilities:
Accounts payable $ 908 $ 2,110
Accrued ad valorem taxes - 1,519
Current portion of notes payable 3,321 3,321
Accrued expenses 978 988
Deferred income taxes 1,638 1,680
Due to profit sharing - 350
Other current liabilities 863 754
____________ ____________
Total current liabilities 7,708 10,722
Deferred revenue 10 91
Notes payable 53,276 54,127
Deferred income taxes 9,574 9,668
Deferred retirement benefits 511 120
Other non-current liability 9,609 9,609
Donation payable 2,228 2,229
____________ ____________
Total liabilities 82,916 86,566
____________ ____________
STOCKHOLDERS' EQUITY
Common stock $ 7,152 $ 7,116
Additional paid in capital 3,810 3,074
Accumulated other comprehensive income 1,784 961
Retained earnings 110,796 115,031
____________ ____________
Total stockholders' equity 123,542 126,182
____________ ____________
Total liabilities and
stockholders' equity $ 206,458 $ 212,748
____________ ____________
____________ ____________
See accompanying Notes to Condensed Consolidated Financial Statements.
ALICO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited - See Accountants' Review Report)
Three Months Ended November 30,
2003 2002
____________ _____________
Cash flows from operating activities:
Net cash provided from
operating activities $ 2,448 $ 2,367
__________ __________
Cash flows used for investing activities:
Purchases of property and equipment (2,343) (2,270)
Proceeds from sales of real estate - 541
Proceeds from sales of property and equipment 143 157
Purchases of marketable securities (5,690) (814)
Proceeds from sales of marketable securities 999 2,195
Other (95) 4
__________ __________
Net cash used for
investing activities (6,986) (187)
__________ __________
Cash flows used for financing activities:
Repayment of bank loan (8,561) (6,684)
Proceeds from bank loan 7,710 9,127
Proceeds from exercising stock options 566 383
Dividends paid (4,285) (2,482)
__________ __________
Net cash (used for) provided from
financing activities (4,570) 344
__________ __________
Net (decrease)increase in cash
and cash investments $ (9,108) $ 2,524
Cash and cash investments
At the beginning of year 16,352 10,140
__________ __________
At end of period 7,244 12,664
__________ __________
__________ __________
See accompanying Notes to Condensed Consolidated Financial Statements.
ALICO, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(See Accountants' Review Report)
(in thousands except for per share data)
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),Agri-Insurance Company, Ltd. (Agri), and
Alico-Agri, LLC 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, 2003.
In the opinion of Management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments necessary for a fair presentation
of its consolidated financial position at November 30, 2003 and the
consolidated results of operations and cash flows for the three months ended
November 30, 2003 and 2002.
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 $174 in
2003 and $193 in 2002. Due to current market conditions for citrus, the
Company recorded a valuation allowance of ($722) for its unharvested
fruit crop on trees at November 30, 2003.
The results of operations for the stated periods are not necessarily
indicative of results to be expected for the full year. Certain items from
2002 have been reclassified to conform to the 2003 presentation.
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, 2003 and August 31, 2003 are as follows:
November 30, August 31,
2003 2003
(Unaudited)
____________ __________
Mortgage notes receivable
on retail land sales $ 235 $ 235
Mortgage notes receivable
on bulk land sales 2,410 2,420
Other notes receivable 90 113
____________ __________
Total mortgage notes receivable $ 2,735 $ 2,768
Less current portion 2,514 2,534
____________ __________
Non-current portion $ 221 $ 234
____________ __________
____________ __________
4. Inventories:
A summary of the Company's inventories is shown below:
November 30, August 31,
2003 2003
(Unaudited)
____________ ___________
Unharvested fruit crop on trees $ 8,692 $ 8,135
Unharvested sugarcane 4,829 5,159
Beef cattle 6,943 7,892
Sod 696 659
____________ ___________
Total inventories $ 21,160 $ 21,845
____________ ___________
____________ ___________
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 November 30, 2003, the Company
had no open positions.
5. Income taxes:
The provision for income taxes for the quarters ended November 30, 2003
and 2002 is summarized as follows:
Three Months Ended November 30,
2003 2002
(Unaudited) (Unaudited)
_______________________________
Current:
Federal income tax $ 281 $ 55
State income tax 30 9
__________ __________
311 64
__________ __________
Deferred:
Federal income tax (258) 23
State income tax (28) 4
__________ __________
(286) 27
__________ __________
Total provision for
income taxes $ 25 $ 91
__________ __________
__________ __________
The Internal Revenue Service has begun its examination of
the Company tax returns for the years ended August 31, 2000, 2001 and 2002,
and Agri tax returns for calendar years 2000, 2001 and 2002. Any adjustments
resulting from the examination will be currently due and payable. No
adjustments have been proposed to date.
6. Indebtedness:
The Company has financing agreements with commercial banks that permit the
Company to borrow up to $54.0 million. Financing agreements allowing the
Company to borrow up to $41.0 million are due in 2005, and up to $3.0 million
which is 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. The outstanding debt under these agreements was $43.3 million
and $41.0 million at November 30 and August 31, 2003 respectively.
In March 1999, the Company mortgaged 7,680 acres for $19 million in
connection with a $22.5 million acquisition of producing citrus and
sugarcane operations. The total long-term portion of debt at November 30,
2003 and August 31, 2003 was $53.3 million and $54.1 million respectively.
Maturities of the indebtedness of the Company over the next five years are as
follows : 2004- $3,321; 2005- $36,260; 2006- $3,312;
2007- $3,315; 2008- $1,318; and $9,071 thereafter.
Interest cost expensed and capitalized during the three months ended
November 30, 2003 and 2002 was as follows:
2003 2002
________ ________
Interest expensed $ 488 $ 541
Interest capitalized 66 60
________ ________
Total interest cost $ 554 $ 601
________ ________
________ ________
7. Other non-current liability:
Alico formed a wholly owned insurance subsidiary, Agri Insurance
Company, Ltd. (Bermuda) ("Agri") in June of 2000. Agri was formed in
response to the lack of insurance availability, both in the traditional
commercial insurance markets and governmental sponsored insurance
programs, suitable to provide coverages for the increasing number and
potential severity of agricultural related events. Such events include
citrus canker, crop diseases, livestock related maladies and weather.
Alico's goal included not only prefunding its potential exposures
related to the aforementioned events, but also to attempt to attract
new underwriting capital if it is successful in profitably
underwriting its own potential risks as well as similar risks of its
historic business partners. Alico primarily utilized its inventory of
land and additional contributed capital to bolster the underwriting
capacity of Agri.
Alico capitalized Agri by contributing real estate located in Lee County
Florida. The real estate was transferred at its historical cost basis.
Agri received a determination letter from the Internal Revenue Service (IRS)
stating that Agri was exempt from taxation provided that net premium levels,
consisting only of premiums with third parties, were below an annual stated
level ($350 thousand). Third party premiums have remained below the stated
annual level. As the Lee county real estate was sold, substantial gains were
generated in Agri, creating permanent book/tax differences.
Since receiving the favorable IRS determination letter, certain transactions,
entered into by other taxpayers under the same IRS Code Section came under
scrutiny and criticism by the news media. In reaction, Management has
recorded a contingent liability of $9.6 million for income taxes in the event
of an IRS challenge. Management’s decision has been influenced by perceived
changes in the regulatory environment. The Company believes that it can
successfully defend any such challenge, however, because it is probable that
a challenge will be made and possible that it may be successful, Management
has provided for the contingency.
The Internal Revenue Service has begun its examination of the Company tax
returns for the years ended August 31, 2000, 2001 and 2002, and Agri tax
returns for calendar years 2000, 2001 and 2002. Any adjustments resulting
from the examination will be currently due and payable. No adjustments have
been proposed to date.
8. Dividends:
On October 7, 2003 the Company declared a dividend of $.60 per share, which
was paid on October 31, 2003.
9. Disclosures about reportable segments:
Alico, Inc. has three reportable segments: citrus, sugarcane, and ranching.
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, 2003:
____________________________________________________________
Consolidated
Citrus Sugarcane Ranch Other* Total
____________________________________________________________
Revenue $ 1,354 2,591 3,344 1,630 8,919
Costs and
expenses 2,254 2,107 2,620 1,864 8,845
Depreciation and
amortization 603 535 356 81 1,575
Segment profit (loss) (900) 484 724 (234) 74
Segment assets 52,972 50,164 23,630 79,692 206,458
The following table presents information for each of the Company's
operating segments as of and for the three months ended November 30, 2002:
____________________________________________________________
Consolidated
Citrus Sugarcane Ranch Other* Total
____________________________________________________________
Revenue $ 1,621 2,748 2,118 1,768 8,255
Costs and
expenses 1,580 2,224 2,214 1,888 7,906
Depreciation and
amortization 593 592 364 136 1,685
Segment profit 41 524 (96) (120) 349
Segment assets 53,388 50,461 24,169 64,494 192,512
*Consists of rents, investments, real estate activities and other such
items of a general corporate nature.
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 strike price and 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.
On November 30, 2003, there were 113,883 shares exercisable and 347,225
shares available for grant.
Weighted
Weighted average
average remaining
exercise contractual
Options price Life (in years)
_______ _________ _______________
Balance outstanding,
August 31, 2002 117,847 15.20 7
_______________
Granted 67,280 15.68 _______________
Exercised 35,726 15.53
_______ _________
Balance outstanding,
August 31, 2003 149,401 15.34 9
_______________
Granted 65,081 15.34 _______________
Exercised 35,518 15.57
_______ _________
Balance outstanding,
November 30, 2003 178,964 15.38
_______ _________
_______ _________
Had the Company determined compensation cost based on the fair value at the
grant date for its stock options under SFAS 123, the Company's net income
would have changed to the proforma amounts indicated below (in thousands):
Three months ended November 30,
2003 2002
_______ _______
Net income as reported $ 49 $ 258
Proforma net income $ 63 $ 256
Basic earnings per share reported $ .01 $ .04
Proforma basic earnings per share $ .01 $ .04
11. Future Application of Accounting Standards
In January 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 46, "Consolidation of Variable Interest Entities."
Interpretation No. 46 requires unconsolidated variable interest entities to be
consolidated by their primary beneficiaries if the entities do not effectively
disperse the risks and rewards of ownership among their owners and other
parties involved. The provisions of interpretation No. 46 are applicable
immediately to all variable interest entities created after January 31, 2003
and variable interest entities in which an enterprise obtains an interest
after that date, and for variable interest entities created before that date,
the provisions are effective for reporting periods beginning after
December 31, 2003. The adoption of Interpretation No. 46 is not expected to
have a material effect on the financial condition, results of operations, or
liquidity of the Company.
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
LIQUIDITY AND CAPITAL RESOURCES:
Working capital decreased to $74.9 million at November 30, 2003, down from
$79.5 million at August 31, 2003. As of November 30, 2003, the Company had
cash and cash investments of $7.2 million compared to $16.4 million at
August 31, 2003. Marketable securities increased to $44.7 million from $38.8
million during the same period. The ratio of current assets to current
liabilities increased to 10.72 to 1 at November 30, 2003 up from 8.41 to 1 at
August 31, 2003. Total assets decreased by $6.2 million to $206.5 million at
November 30, 2003, compared to $212.7 million at August 31, 2003.
Management expects several real estate transactions to close in
fiscal 2004. Additionally, Management expects continued profitability from
its agricultural operations in fiscal 2004. The outlook is for
gross profits from citrus operations to decline due to a large
crop forecast for the industry as a whole and substantial carryover
inventories for the industry. Management also expects gross profits from
sugarcane to decline as the Company's current crop is expected
to be smaller in fiscal 2004 than in fiscal 2003.
Management believes that the Company will be able to meet its working capital
requirements for the foreseeable future with internally generated funds. In
addition, the Company has credit commitments which provide for revolving
credit of up to $54.0 million, of which $10.7 million was available for the
Company's general use at November 30, 2003 (see Note 6 to condensed
consolidated financial statements).
RESULTS OF OPERATIONS:
The basic business of the Company is agriculture, which is of a seasonal
nature and is 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, 2003 decreased by
$209 thousand when compared to the first quarter of the prior year. This was
primarily due to a decrease in profit from bulk real estate sales for the
quarter ended November 30, 2003 when compared to the quarter ended November
30, 2002. No bulk real estate sales occurred in the first quarter of fiscal
2004, while a profit of $451 thousand was earned from bulk real estate sales
during the first quarter of fiscal 2003.
Income from operations increased to $33 thousand for the first quarter of
fiscal 2004 from $19 thousand for the first quarter of fiscal 2003. The
increase was primarily due to an increase in income from rock and sand
product sales. Income from agricultural operations decreased when compared
to the first quarter of fiscal 2003 ($308 thousand vs. $469 thousand for the
first three months of fiscal 2004 and 2003, respectively). For a detailed discussion
of agricultural operating results please see below.
Citrus
______
The Citrus division recorded a loss of $900 thousand for the first quarter
of fiscal 2004, compared to $41 thousand profit during the first quarter of
fiscal 2003. Recognition of revenue from the prior year's crop totaled $174
thousand in fiscal 2003 vs. $193 thousand in the first quarter of fiscal 2003
(see Note 1 to Condensed Consolidated Financial Statements). The current
year Florida orange crop has been forecasted to be the largest on record.
Accordingly, citrus prices have declined
($4.28 vs. $4.91 average price per box at November 30, 2003 and 2002, respectively). In light of this, the Company
recorded a valuation allowance of $722 thousand for its unharvested fruit
crop on trees at November 30, 2003.
Sugarcane
_________
Sugarcane earnings were $484 thousand for the first quarter of fiscal 2004,
compared to $524 thousand during the first quarter of fiscal 2003. Less acres
were harvested during the first quarter of fiscal 2004 than the first quarter
of fiscal 2003 (2,904 vs. 3,263 acres harvested for the first quarter of fiscal2004 and 2003, respectively), and was the primary reason for the decline.
Ranching
________
Ranch earnings increased during the first quarter of 2004 when compared
to the same period a year ago ($724 thousand vs. ($96 thousand) for the three
months ended November 30, 2003 and 2002, respectively). The number of cattle
sold increased by 28% during the first quarter of fiscal 2004 compared to the
same period in 2003 (3,395 vs. 2,658 for the first quarter of fiscal 2004 and
2003, respectively). More animals of the age and size required by meat packers
were available for sale in fiscal 2004 than in 2003 because of the timing of
placements into western feedlots.Additionally, cattle prices increased 34% when
compared to the same period a year ago ($.91 vs. $.68 per pound in fiscal 2004 and
2003, respectively).
During December 2003, a cow in Washington State tested positive for bovine
spongiform encephalopathy (BSE a/k/a "mad cow disease"). This has caused some
foreign countries to ban beef imports from the United States. Although there
have been price declines since the BSE discovery, the incident appears to be
isolated and beef prices are still currently at prior year levels. The
Company has no reason to believe its beef herd is subject to any risk from
this disease.
General Corporate
_________________
The Company is continuing its marketing and permitting activities for its
land which surrounds Florida Gulf Coast University in Lee County, Florida.
There are sales contracts in place for all this property, totaling $171.8
million. The agreements are at various stages in the due diligence process
with closing dates expected over the next three years.
The Company formed 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. Through Agri, the Company has been able to under-
write previously uninsurable risk related to catastrophic crop and other
losses. The coverages currently underwritten by Agri will indemnify insureds
for the loss of the revenue stream resulting from a catastrophic event that
would cause a grove to be replanted. To expedite the creation of the capital
liquidity necessary to underwrite the Company's exposure to catastrophic
losses, another 5,600 acres were transferred during fiscal 2001. Agri under-
wrote a limited amount of coverage for Ben Hill Griffin, Inc. during fiscal
years 2001 - 2004, and in August 2002, Agri began insuring the Alico, Inc.,
citrus groves. As Agri gains underwriting experience and increases its
liquidity, it will be able to increase its insurance programs. Due to
Agri's limited operating history, it would be difficult, if not impossible, to
speculate about the impact that Agri could have on the Company's financial
position, results of operations and liquidity in future periods. Since the
coverages that have been written, as liquidity has been generated, are
primarily for the benefit of Alico, the financial substance of this venture
is to insure risk that is inherent in the Company's existing operations.
During the third quarter of fiscal 2003, the Company entered into a
limited partnership with Agri to manage Agri's real estate holdings.
Agri transferred all of the Lee County property and associated
sales contracts to the limited partnership, Alico-Agri, Ltd (Alico-Agri)
in return for a 99% partnership interest. Alico, Inc. transferred $1.2
million cash for a 1% interest. The creation of the partnership allows
Agri to concentrate solely on insurance matters while utilizing Alico's
knowledge of real estate management. The partnership will pay Alico a
management fee for real estate management and administrative services.
During the second quarter of fiscal 2003, Agri contracted to sell an
additional 53 acres in Lee County, Florida to the Ginn Company. The contract
price is $10.6 million. Agri also announced an addition to the original Ginn
Company contract, adding 555 acres for a price of $13.3 million. This
amendment brought the total acreage of the contract to 5,060.
In the fourth quarter of fiscal 2003, the Company, through Alico-Agri,
completed the sale of 313 acres in Lee County, Florida to Airport Interstate
Associates, LLC. The sales price was $9.7 million and resulted in a gain of
$8.7 million. Additionally, Alico-Agri completed the sale of 40 acres in Lee
County, Florida to University Club Apartments/Gulf Coast, LLC. The sales
price of the property was $5.5 million and generated a gain of $4.7 million.
During the fourth quarter of fiscal 2003, the Company sold 358 acres in
Hendry County, Florida for $669 thousand. The sale generated a gain of
$335 thousand. Additionally, the Company sold 266 acres in Polk County,
Florida for $617 thousand, generating a gain of $612 thousand.
During the second quarter of fiscal 2004, the Company, through Alico-Agri,
completed the sale of 244 acres in Lee County, Florida. The sales price
was $30.9 million and will result in a gain of $18.2 million, of which
$2.1 million will be recorded in the second quarter of fiscal 2004, while
the remainder is expected to be recognized by August 31, 2004.
Off Balance Sheet arrangements
______________________________
The Company has no off balance sheet arrangements that have, or are
reasonably likely to have any material impact on the Company's current or
future financial condition, revenues, or results of operations.
Disclosure of Contractual Obligations
_____________________________________
Contractual obligations of the Company are outlined below:
November 30, 2003
(in thousands)
Less than 1-3 3-5 5+
Contractual obligations Total 1 year years years years
Long-term debt $56,597 $3,321 $39,572 $4,633 $9,071
Leases (Operating & capital) - - - - -
Purchase obligations (donation) 3,012 784 1,458 770 -
Other long-term liabilities 19,704 - 9,931 180 9,593
August 31, 2003
(in thousands)
Less than 1-3 3-5 5+
Contractual obligations Total 1 year years years years
Long-term debt $57,448 $3,321 $39,576 $4,633 $9,918
Leases (Operating & capital) - - - - -
Purchase obligations (donation) 2,983 754 1,459 770 -
Other long-term liabilities 19,488 - 9,820 180 9,488
Critical Accounting Policies and Estimates
__________________________________________
The preparation of the Company's 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 the reported amounts of assets and liabilities, revenues and expenses,
and related disclosures of contingent assets and liabilities. On an on-going
basis, management evaluates the estimates and assumptions based upon
historical experience and various other factors and circumstances. Management
believes that the estimates and assumptions are reasonable in the
circumstances; however, actual results may vary from these estimates and
assumptions under different future circumstances. The following critical
accounting policies that affect the more significant judgments and estimates
used in the preparation of our consolidated financial statements are discussed
below.
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 the 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 $174 thousand during fiscal 2004 and $193 thousand in fiscal
2003.
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
cost of sales to provide an appropriate matching of costs incurred with the
related revenue earned. The inventoried cost of each crop is then compared
with the estimated net realizable value (NRV) of the crop and any costs in
excess of the NRV are immediately recognized as cost of sales.
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
ITEM 4. Controls and Procedures
Evaluation of disclosure controls and procedures
The Company maintains controls and procedures designed to ensure that
information required to be disclosed in the reports that the Company files
or submits under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the rules and
forms of the Securities and Exchange Commission. Based upon their evaluation
of those controls and procedures performed within 90 days of the filing date
of this report, the Chief Executive and Chief Financial officers of the
Company concluded that the Company's disclosure controls and procedures were
adequate.
Changes in internal controls
The Company made no significant changes in its internal controls or in other
factors that could significantly affect these controls subsequent to the date
of the evaluation of those controls by the Chief Executive and Chief Financial
officers.
FORM 10-Q
PART II. OTHER INFORMATION
ITEMS 1-5 have been omitted as there are no items to report during this
interim period.
ITEM 6. Exhibits and reports on Form 8-K.
(a) Exhibits:
Exhibit 11. Computation of Weighted Average Shares Outstanding at
November 30, 2003.
Exhibit 31.1 Rule 13a-14(a) certification.
Exhibit 31.2 Rule 13a-14(a) certification.
Exhibit 32.1 Section 1350 certification.
Exhibit 32.2 Section 1350 certification.
Exhibit 99. Accountant's Review Report.
(b) Reports on Form 8-K.
January 8, 2004 announcing real estate sale by Alico-Agri
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 3, 2005 W. Bernard Lester
Date President
Chief Executive Officer
(Signature)
January 3, 2005 L. Craig Simmons
Date Vice President
Chief Financial Officer
(Signature)
January 3, 2005 Patrick W. Murphy
Date Controller
(Signature)