Item 1. Business. __________________________
Alico, Inc. (the "Company"), was formed February 29, 1960 as a spinoff of the Atlantic Coast Line Railroad Company and is generally recognized as an agribusiness company operating in Central and Southwest Florida. The Company's primary asset is 141,764 acres of land located in Collier, Hendry, Lee and Polk Counties. (See table on Page 7 for location and acreage by current primary use.) The Company is involved in various operations and activities including citrus fruit production, cattle ranching, sugarcane and sod production, and forestry. The Company also leases land for farming, cattle grazing, recreation, and oil exploration.
The Company's land is managed for multiple use wherever possible. Cattle ranching, forestry and land leased for farming, grazing, recreation and oil exploration, in some instances, utilize the same acreage.
Agricultural operations have combined to produce from 67 to 82 percent of total annual revenues during the past five years. Citrus groves generate the most gross operating revenue. Sugarcane ranks second in operating revenue production. While the cattle ranching operation utilizes the largest acreage, it ranks third in the production of operating revenue. Approximately 8,748 acres of the Company's property are classified as timberlands, however, the area in which these lands are located is not highly rated for timber production. These lands are also utilized as native range, in the ranching operation, and leased out for recreation and oil exploration.
Diversification of the Company's agricultural base was initiated with the development of a Sugarcane Division at the end of the 1988 fiscal year. The 11,840 acres in production during the 2003 fiscal year consisted of 2,477 acres planted in 1998, 4,052 acres planted in 1999, 2,550 acres planted in 2000 and 2,761 acres planted in 2001.
Leasing of lands for rock mining and oil and mineral exploration, rental of land for grazing, farming, recreation and other uses, while not classified as agricultural operations, are important components of the Company's land utilization and operation. Gross revenue from these activities during the past five years has ranged from 4 to 5 percent of total revenue.
The Company is not in the retail land sales and development business, except through its wholly owned subsidiary, Saddlebag Lake Resorts, Inc. However, it does from time to time sell properties which, in the judgment of management, are surplus to the Company's primary operations. Additionally, the Company's wholly owned subsidiary, Alico-Agri, Ltd., engages in bulk land sales in connection with the generation of underwriting capital. Revenues from sales of real estate during the past five years has ranged from 10 to 26 percent of total revenues.
For further discussion of the relative importance of the various segments of the Company's operations, including financial information regarding revenues, operating profits (losses) and assets attributable to each major segment of the Company's business, see Note 15 of Notes to Consolidated Financial Statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this document.
Subsidiary Operations _____________________
The Company has three wholly owned subsidiaries; Saddlebag Lake Resorts, Inc. ("Saddlebag") Agri-Insurance Company, Ltd. ("Agri") and Alico-Agri, Ltd. ("A/A").
Saddlebag has been active in the subdividing, development and sale of real estate since its inception in 1971. Saddlebag has two subdivisions near Frostproof, Florida which have been developed and are on the market. While one of the subdivisions has been sold out, approximately 69% of the lots in the second development have been sold.
Agri, formed during fiscal 2000, was created to write crop insurance against catastrophic losses due to weather and disease. During fiscal 2002, Agri supplied reinsurance to an independent underwriter who insured catastrophic business interruption coverage for Ben Hill Griffin, Inc. The total coverage under the policy was $3.5 million and the premium charged was $138 thousand. The coverage term was from December 2002 to December 2003. The Company expects to renew the policy and appropriately adjust premium rates. Additionally, Agri directly underwrote catastrophic business interruption coverage for its parent company, Alico, Inc., insuring all but two of Alico's citrus groves. The coverage term was from August 2002 to August 2003. Total coverage under the policy was $12.7 million and the premium charged was $803 thousand. Alico, Inc., renewed the policy in August 2003, extending the coverage term to August 2004. The coverage under the renewal was $13.6 million and the premium charge was $858 thousand.
Agri underwrote catastrophic business coverage for Alico's remaining two groves under a policy covering the term from January 2003 to January 2004. Total coverage under the policy is $2.0 million, and the premium charged was $119 thousand.
Alico-Agri, Ltd. was formed during fiscal 2003 to manage the real estate holdings of Agri. The partnership allows Alico to provide management and administrative services so that Agri can focus on insurance issues. Agri transferred all of its property holdings and the related contracts to A/A for a 99% partnership interest. Alico, the managing partner, transferred cash for a 1% interest in the partnership.
The financial results of the operation of these subsidiaries are consolidated with those of the Company. (See Note 1 of Notes to Consolidated Financial Statements.)
Citrus ______
Approximately 9,715 acres of citrus were harvested during the 2002/03 season. Since 1983 the Company has maintained a marketing contract covering the majority of the Company's citrus crop with Ben Hill Griffin, Inc., a Florida corporation and major shareholder. The agreement provides for modifications to meet changing market conditions and provides that either party may terminate the contract by giving notice prior to the first day of August preceding each fruit season. Under the terms of the contract, the Company's fruit is packed and/or processed and sold along with fruit from other growers, including Ben Hill Griffin, Inc. The proceeds are distributed on a pro rata basis as the finished product is sold.
During the year ended August 31, 2003, approximately 75% of the Company's fruit crop was marketed under this agreement, as compared to 77% for each of the years ended August 31, 2002 and August 31, 2001. In addition, Ben Hill Griffin, Inc. provides harvesting services to the Company for citrus sold to unrelated processors. These sales accounted for the remaining 25% of total citrus revenue for the year.
Sugarcane _________
The Company had 11,840 acres, 11,680 acres, and 11,722 acres of sugarcane in production during the 2003, 2002, and 2001 fiscal years, respectively. The 2003, 2002, and 2001 fiscal year crops yielded approximately 413,000, 376,000, and 417,000 gross tons, respectively.
Ranch ______
The Company has a cattle operation located in Hendry and Collier Counties, Florida which is engaged primarily in the production of beef cattle and the raising of replacement heifers. The breeding herd consists of approximately 13,428 cows, bulls and replacement heifers. Approximately 42% of the herd are from one to five years old, while the remaining 58% are six and older. The Company primarily sells to packing and processing plants. The Company also sells cattle through local livestock auction markets and to contract cattle buyers. These buyers provide ready markets for the Company's cattle. The loss of any one or a few of these plants and/or buyers would not, in management's view, have a material adverse effect on the Company's cattle operation. Subject to prevailing market conditions, the Company may hedge its beef inventory by entering into cattle futures contracts to reduce exposure to changes in market prices.
Forest Products _______________
Approximately 6% of the Company's properties are classified as timberlands. The principal forest products sold by the Company are sabal palms and other horticultural commodities. These products are sold to various landscaping companies. The Company does not incur any of the harvesting expenses.
Part of the land, from which the timber was removed, is being converted to semi-improved pasture and other uses.
Mining Operations: Rock and Sand _________________________________
The Company leases approximately 5,714 acres in Lee County, Florida to CSR America, Inc. of West Palm Beach, Florida for mining and production of rock, aggregate, sand, baserock and other road building and construction materials.
Royalties which the company receives for these products are based on a percentage of the F.O.B. plant sales price.
Land Rental for Grazing, Agricultural and Other Uses ____________________________________________________
The Company rents land to others for grazing, farming and recreational uses, on a tenant-at-will basis, for an annual fee. The income is not significant when compared to overall gross income, however, it does help to offset the expense of carrying these properties until they are put to a more profitable use. The Company has developed additional land to lease for farming.
There were no significant changes in the method of rental for these purposes during the past fiscal year.
Leases for Oil and Mineral Exploration ______________________________________
The Company has leased subsurface rights to a portion of its properties for the purpose of oil and mineral exploration. Currently, there are two leases in effect.
Twenty-four wells have been drilled during the years that the Company has been leasing subsurface rights to oil companies. The drilling has resulted in twenty-one dry holes, one marginal producer, which has been abandoned, and two average producers, still producing.
Competition ___________
As indicated, the Company is primarily engaged in a limited number of agricultural activities, all of which are highly competitive. For instance, citrus is grown in several states, the most notable of which are: Florida, California, Arizona and Texas. In addition, citrus and sugarcane products are imported from some foreign countries. Beef cattle are produced throughout the United States and domestic beef sales must also compete with sales of imported beef. Additionally, forest and rock products are produced in most parts of the United States. Leasing of land for oil exploration is also widespread.
All of the Company's sales are to United States purchasers. The Company's share of the market for citrus, sugarcane, cattle and forest products in the United States is insignificant.
Environmental Regulations _________________________
The Company's operation is subject to various federal, state and local laws regulating the discharge of materials into the environment. The Company is in compliance with all such rules and such compliance has not had a material effect upon capital expenditures, earnings or the competitive position of the Company.
While compliance with environmental regulations has not had a material economic effect on the Company's operations, executive officers are required to spend a considerable amount of time keeping current on these matters. In addition, there are ongoing costs incurred in complying with the permitting and reporting requirements.
Employees _________
At the end of August 2003, the Company had a total of 143 full-time employees classified as follows: Citrus 75; Ranch 15; Sugarcane 12; Facilities Maintenance Support 26; General and Administrative 15. There are no employees engaged in the development of new products or research. Management is not aware of any efforts by employees or outside organizers to create any type of labor union arrangement. Management believes that the employer/employee relationship environment is such that labor organization activities are unlikely to occur.
Seasonal Nature of Business ___________________________
As with any agribusiness enterprise, the Company's business operations are predominantly seasonal in nature. The harvest and sale of citrus fruit generally occurs from October to June. Sugarcane is harvested during the first, second and third quarters. Other segments of the Company's business such as its cattle and sod sales, and its timber, mining and leasing operations, tend to be more successive than seasonal in nature.
Available information ______________________
The Company's internet address is: http://www.alicoinc.com. The Company files reports with the Securities Exchange Commission ("SEC") as required by SEC rules and regulations on Form 10-Q, Form 10-K and the annual proxy statement. These reports are available to the public to read and copy at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
The Company is an electronic filer with the SEC and these reports are available through the SEC internet site (http:/www.sec.gov), and through the Company's website as soon as reasonably practicable after filing with the SEC. Copies of SEC filed documents are also available free of charge upon request.
Item 2.
Item 2. Properties. ____________________________
At August 31, 2003, the Company owned a total of 141,764 acres of land located in four counties in Florida. Acreage in each county and the primary classification with respect to present use of these properties is shown in the following table:
ACREAGE BY CURRENT PRIMARY USE ______________________________
Timber Native Improved Citrus Sugar- Agri- County Land Pasture Pasture Sod Land cane culture Other Total ___________________________________________________________________________
Polk 251 8,559 359 -- 3,253 -- -- 1 12,423
Lee 2,792 1,086 -- -- -- -- 1,460 625 5,963
Hendry 3,823 48,735 21,573 580 3,765 14,358 15,953 3,435 112,222
Collier 1,882 1,700 1,112 -- 4,129 -- -- 2,333 11,156 ______ _______ ______ ___ _____ _____ _____ _____ _______
Totals 8,748 60,080 23,044 580 11,147 14,358 17,413 6,394 141,764 ______ _______ ______ ___ _____ _____ ______ _____ _______ ______ _______ ______ ___ _____ _____ ______ _____ _______
Of the above lands, the Company utilizes approximately 20,977 acres of improved pasture plus approximately 49,000 acres of native pasture for cattle production and approximately 5,714 acres are leased for rock mining operations. Much of the land is also leased for multi-purpose use such as cattle grazing, oil exploration, agriculture and recreation.
In addition to the land shown in the above table, the Company owns full subsurface rights to 1,064 acres and fractional subsurface rights to 18,707 acres located throughout the Counties referred to above.
From the inception of the Company's initial development program in 1948, the goal has been to develop the lands for the most profitable use. Prior to implementation of the development program, detailed studies were made of the properties focusing on soil capabilities, topography, transportation, availability of markets and the climatic characteristics of each of the tracts. Based on these and later studies, the use of each tract was determined. It is the opinion of Management that the lands are suitable for agricultural, residential and commercial uses. However, since the Company is primarily engaged in agricultural activities, some of the lands are considered surplus to its needs for this purpose and, as indicated under Item 1 of this report, sales of real property are made from time to time.
Management believes that each of the major programs is adequately supported by agricultural equipment, buildings, fences, irrigation systems and other amenities required for the operation of the projects.
Item 3.
Item 3. Legal Proceedings. ___________________________________
Ben Hill Griffin III, Chairman of the Board, was a party to a lawsuit filed against him in Polk County, Florida Circuit Court by the families of his four sisters, most of the members of whom are beneficiaries of a trust, entitled the Ben Hill Griffin, Jr. Revocable Inter Vivos Trust #1 (the "Trust"). The plaintiffs in the lawsuit (The Four Sisters Protectorate, et al. v. Ben Hill Griffin, III, Trustee, Case No. GC-G-0054, Section 81) sought to impose judicial sanctions on Mr. Griffin III, including his removal as Trustee of the Trust based on allegations of over-compensation and receipt of an illegal bonus.
The Company has been informed by Mr. Griffin III, that he has executed a "Settlement Agreement" with the families of his four sisters, The Four Sisters Protectorate, and that the enforceability of the settlement agreement was affirmed by both the Circuit court, Case number GC-G-0054, and the second District Court of Appeals for the State of Florida, Case numbers 2D01-5407 and 2D03-0499. A second litigation challenging the enforceability of the settlement Agreement, Case number 4:01CU432-RH, was dismissed with prejudice by the United States District Court for the Northern District of Florida, Tallahassee Division.
The Settlement Agreement had been entered into subject to certain conditions, including Internal Revenue Service approval of the proposed transaction as a tax free split-off for federal income tax purposes and judicial termination of the Trust. Mr. Griffin, III has informed the Company that (a) the issues related to the mechanism and terms of the proposed distribution of certain of the assets of the Trust to the families of the four sisters, including the Alico stock beneficially owned by the Trust, have been worked out between the representatives of the four sisters and Ben Hill Griffin, III and are set forth in a definitive separation agreement, and (b) the parties have received a favorable IRS Revenue Ruling related to the original "Settlement Agreement".
On June 11, 2003, BHG Investments, a wholly owned subsidiary of Ben Hill Griffin, Inc. (BHG) and the record owner of 3,493,777 shares of the Company (the "Alico Shares") was merged into Alico Holding, LLC (the "Merger"), another entity wholly owned by BHG. Also on June 11, 2003, Mr. Griffin, III, individually and as trustee of the Trust, BHG, and BHG Investments (prior to consummation of the Merger) and certain beneficiaries of the Trust entered into a supplemental settlement agreement (the "Griffin Agreement"), which set forth certain actions to be performed by Mr. Griffin, III, as Trustee, to facilitate the performance of a separate supplement agreement that had been executed on June 5, 2003, by and among other of the Trust's beneficiaries and members of their respective families (the "2003 Mediated Settlement Agreement"). The purpose of both the Griffin Agreement and the 2003 Mediated Settlement Agreement, each resulting from further mediation, was to finally settle all disputes among the parties to the Mediation Settlement Agreement, thereby facilitating final performance of the Settlement Agreement.
On August 6, 2003, an Order Approving Supplemental Mediation Settlement Agreements was entered by the Tenth Judicial Circuit Court in and for Polk County, Florida, Case No. GC-G-0054, approving the Griffin Agreement and the 2003 Mediated Settlement Agreements as being in the best interests of all persons having any interest in the Trust and authorizing Mr. Griffin III, as trustee, to perform all of the actions required of him under each agreement. Those actions, following receipt of a favorable private letter ruling from the Internal Revenue Service that takes into account the changes to the Griffin Agreement and the "2003 Mediated Settlement Agreement", will result in the transfer and assignment of the Alico Shares to a Florida corporation formed for the purpose of transferring and assigning of substantially all shares of that corporation's issued and outstanding voting stock to Atlantic Blue Trust, Inc. (ABT), an entity to be formed as a subsidiary of BHG Investments. BHG Investments will then distribute the stock of ABT up to BHG the parent company of BHG Investments, which will then transfer such Stock to The Four Sisters Protectorate and the Protectorate Family Trusts, trusts for the benefit of Mr. Griffin, III's four sisters and their lineal descendants, so as to cause control of Alico to shift from Mr. Griffin, III to such trusts.
The Company is not a party to any of this litigation.
The Company is also involved in certain other claims and legal actions arising in the ordinary course of its business. The ultimate disposition of all such matters is not expected to have a material adverse effect on the Company's financial position, results of operations or liquidity.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders. _____________________________________________________________________ None.
PART II _______
Item 5.
Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters. _____________________________________________________________________
Common Stock Prices ___________________
The common stock of Alico, Inc. is traded over-the-counter on the NASDAQ National Market System under the symbol ALCO. The high and low prices, by fiscal quarter, during the years ended August 31, 2003 and 2002 are presented below: 2003 2002 Bid Price Bid Price _________ _________
High Low High Low
First Quarter 28.80 22.25 30.21 24.90
Second Quarter 28.04 21.15 32.17 28.50
Third Quarter 27.30 21.00 29.70 28.20
Fourth Quarter 28.70 22.72 29.54 28.01
Approximate Number of Holders of Common Stock _____________________________________________
As of October 17, 2003, there were approximately 553 holders of record of the Company's Common Stock.
The closing price for the Company's stock was $32.80 on November 13,2003.
Dividend Information ____________________
Only year-end dividends have been paid and during the last three fiscal years the dividends were as follows: Amount Paid Record Date Payment Date Per Share ___________ ____________ ___________
October 13, 2000 October 27, 2000 $1.00 October 12, 2001 October 26, 2001 $1.00 October 11, 2002 October 25, 2002 $0.35
The Company's Board of directors, at its meeting on October 7, 2003, declared a dividend of $.60 per share payable on October 31, 2003 to shareholders of record on October 17, 2003. Dividends are paid at the discretion of the Company's Board of Directors. The Company foresees no change in its ability to pay annual dividends in the immediate future; nevertheless, there is no assurance that dividends will be paid in the future since they are dependent upon earnings, the financial condition of the Company, and other factors.
Equity Compensation Plan Information ____________________________________ Number of securities remaining available Number of securities for future issuance to be issued Weighted-average under equity upon exercise of exercise price of compensation plans outstanding options, outstanding options, (excluding securities Plan category warrants and rights warrants and rights reflected in column(a) _____________ ___________________ ___________________ _____________________ (a) (b) (c)
Equity compensation plans approved by security holders 149,401 $15.34 412,356
Equity compensation plans not approved by security holders - - - ________ ________ _________
Total 149,401 $15.34 412,356 ________ ________ _________ ________ ________ _________
Item 6.
Item 6. Selected Financial Data. _________________________________________
Years Ended August 3l, DESCRIPTION 2003 2002 2001 2000 1999 ________ ________ ________ ________ ________ (In Thousands, Except Per Share Amounts)
Total Revenues $ 66,532 $ 63,545 $ 69,710 $ 62,540 $ 44,947 Costs and Expenses 47,448 53,752 49,598 41,965 37,886 Income Taxes 6,425 2,258 4,046 6,464 2,980 Net Income 12,659 7,535 16,066 14,111 4,081 Average Number of Shares Outstanding 7,106 7,070 7,033 7,028 7,028 Net Income Per Share 1.78 1.07 2.29 2.01 .58 Cash Dividend Paid per Share 0.35 1.00 1.00 .30 .50 Current Assets 90,204 66,267 61,345 56,578 45,182 Total Assets 212,748 191,910 179,134 176,876 156,922 Current Liabilities 10,722 9,543 7,691 12,346 8,738 Ratio-Current Assets to Current Liabilities 8.41:1 6.94:1 7.98:1 4.58:1 5.17:1 Working Capital 79,482 56,724 53,654 44,232 36,444 Long-Term Obligations 75,844 69,149 58,818 60,985 56,789 Total Liabilities 86,566 78,692 66,508 73,331 65,527 Stockholders' Equity 126,182 113,218 112,625 103,545 91,395
Item 7.
Item 7. Management's Discussion and Analysis of Financial __________________________________________________________________
Condition and Results of Operations. ____________________________________
Cautionary Statement ____________________
Readers should note, in particular, that this document contains forward- looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that involve substantial risks and uncertainties. When used in this document, or in the documents incorporated by reference herein, the words "anticipate", "believe", "estimate", "may", "intend", "expect" 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 affect the Company. It should be recognized that other risks, including general economic factors and expansion strategies, may be significant, presently or in the future, and the risks set forth herein may affect the Company to a greater extent than indicated.
The following discussion focuses on the results of operations and the financial condition of the Company.
This section should be read in conjunction with the consolidated financial statements and notes.
Liquidity and Capital Resources _______________________________
The Company had cash and marketable securities of $55.2 million at August 31, 2003, compared with $31.6 million at August 31, 2002. Working capital was $79.5 million and $56.7 million at August 31, 2003 and August 31, 2002 respectively.
Cash outlay for land, equipment, buildings, and other improvements totaled $7.3 million during fiscal 2003, compared to $9.3 million during fiscal 2002 and $8.5 million during fiscal 2001, respectively. Land preparation for citrus re-development and capital maintenance continued, as did expenditures for replacement equipment and raising of breeding cattle.
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 $10.2 million was available for the Company's general use at August 31, 2003 (see Note 6 of Notes to consolidated financial statements).
Results of Operations _____________________
Summary of results (in thousands): Years Ended August 31, 2003 2002 2001 _______ _______ _______
Operating revenue $48,285 $49,185 $51,533 Gross profit 11,022 9,678 11,921 General & administrative expenses 6,319 10,806 5,471 Income (loss) from operations 4,703 (1,128) 6,450 Profit on sale of real estate 14,994 11,641 11,354 Interest and investment income 1,201 1,471 2,124 Interest expense 2,081 2,421 3,029 Other income 267 230 3,213 Provision for income taxes 6,425 2,258 4,046 Effective income tax rate 33.7% 23.1% 20.1% Net income 12,659 7,535 16,066
Operating Revenue _________________
Operating revenues for fiscal 2003 decreased compared to fiscal 2002. A decrease in revenues from agricultural activities was the most significant factor in the decline.
Operating revenues for fiscal 2002 decreased when compared to those of fiscal 2001. A decrease in revenues from agricultural activities was the most significant factor in the decline.
Income (loss) from Operations _____________________________
Earnings from operations increased significantly during fiscal 2003 when compared to the prior year ( $ 4,703 in fiscal 2003 vs. $(1,128) in fiscal 2002). The improvement in earnings was largely impacted by the Company's fiscal 2002 commitment to donate $5.0 million to Florida Gulf Coast University (the University) in December 2001, for a new athletic complex, scholarships and athletic programs. In accordance with the Company's agreement with the University, $1.0 million was paid in fiscal 2002, $800 thousand was paid in fiscal 2003, and $800 thousand will be paid each year over the next four years. The entire donation was accrued and included in general and administrative expenses during fiscal 2002. The remaining increase in gross profits from operations was due to an increase in earnings from agricultural activities.
Income from operations decreased 117% during fiscal 2002 when compared to fiscal 2001, primarily due to increased general and administrative expenses resulting from the accrued University donation.
Interest and Investment Income ______________________________
Interest and investment income is generated principally from investments in marketable equity securities, corporate and municipal bonds, mutual funds, U.S. Treasury securities and mortgages held on real estate sold on the installment basis. Realized investment earnings were reinvested throughout fiscal 2003, 2002 and 2001, increasing investment levels during each year. The decrease in fiscal 2003, 2002 and 2001, interest and realized and unrealized investment income resulted from unfavorable conditions in the financial markets.
Interest Expense ________________
Interest expense declined during fiscal 2003 when compared to fiscal 2002, as interest rates on borrowings have declined.
Interest expense decreased during fiscal 2002, compared to fiscal 2001. This was due to a decline in interest rates on borrowings.
Individual Operating Divisions ______________________________
Gross profits for the individual operating divisions, for fiscal 2003, 2002 and 2001, are presented in the following schedule and are discussed in subsequent sections:
Years Ended August 31, (in thousands) 2003 2002 2001 _______ _______ _______
CITRUS Revenues: Sales $24,107 $25,105 $27,570 Less harvesting & marketing 8,910 9,364 10,046 _______ _______ _______ Net sales 15,197 15,741 17,524
Cost and expenses: Direct production** 7,671 8,594 8,932 Allocated cost* 3,525 3,463 3,472 _______ _______ _______
Total 11,196 12,057 12,404 _______ _______ _______
Gross profit, citrus 4,001 3,684 5,120 _______ _______ _______
SUGARCANE Revenues: Sales 13,373 11,789 12,450 Less harvesting & hauling 2,915 2,239 2,516 _______ _______ _______ Net sales 10,458 9,550 9,934
Costs and expenses: Direct production 3,844 3,965 4,094 Allocated cost* 3,429 3,253 3,018 _______ _______ _______
Total 7,273 7,218 7,112 _______ _____ _______
Gross profit, sugarcane 3,185 2,332 2,822 _______ _______ _______
Years Ended August 31, (in thousands) 2003 2002 2001 _______ _______ _______ RANCH Revenues: Sales 7,175 9,102 8,788 Costs and expenses: Direct production 4,937 6,087 5,287 Allocated cost* 1,853 2,428 2,107 _______ _______ _______
Total 6,790 8,515 7,394 _______ _______ _______
Gross profit, ranch 385 587 1,394 _______ _______ _______ Total gross profit, agriculture 7,571 6,603 9,336 _______ _______ _______ OTHER OPERATIONS Revenues: Rock products and sand 2,154 1,999 1,726 Oil leases and land rentals 973 721 770 Forest products 292 355 91 Recovery of citrus eradication costs in excess of basis - - 2,968 Other 267 230 245 _______ _______ _______ Total 3,686 3,305 5,800
Costs and expenses: Allocated cost* 882 735 604 General and administrative, all operations 5,437 10,071 4,867 _______ _______ _______
Total 6,319 10,806 5,471 _______ _______ _______
Gross (loss) income, other operations (2,633) (7,501) 329 _______ _______ _______
Total gross profit (loss) 4,938 (898) 9,665 _______ _______ _______
INTEREST & DIVIDENDS Revenue 1,201 1,471 2,124 Expense 2,081 2,421 3,029 _______ _______ _______
Interest & dividends, net (880) (950) (905) _______ _______ _______
Years Ended August 31, (in thousands) 2003 2002 2001 _______ _______ _______ REAL ESTATE Revenue: Sale of real estate 16,990 12,773 12,978 Expenses: Cost of sales 1,925 1,076 1,393 Other Costs 39 56 233 _______ _______ _______
Total 1,964 1,132 1,626 _______ _______ _______
Gain on sale of real estate 15,026 11,641 11,352 _______ _______ _______
Income before income taxes $19,084 $ 9,793 $20,112 _______ _______ _______ _______ _______ _______
* Allocated cost includes ad valorem and payroll taxes, depreciation and insurance.
** Excludes capitalized maintenance cost of groves less than five years of age consisting of $2.3 million on 1,617 acres in 2003, $2.5 million on 1,326 acres in 2002, and $200 thousand on 570 acres in 2001.
Citrus ______
Gross profit was $4.0 million in fiscal 2003, $3.7 million in fiscal 2002, and $5.1 million for fiscal 2001.
Revenue from citrus sales decreased 4% during fiscal 2003, compared to fiscal 2002 ($24.1 million during fiscal 2003 vs. $25.1 million during fiscal 2002).
Pounds of fruit solids per box decreased during fiscal 2003, compared to fiscal 2002, and was the primary cause of the decline.
Harvesting and marketing costs decreased when compared to fiscal 2002 due to procedural efficiencies that resulted in a decrease in the per box rate during the year. Direct production and allocated costs decreased 7% due to a decrease in the costs of cultivation and irrigation impacted by improved weather conditions.
Revenue from citrus sales decreased 9% during fiscal 2002, compared to fiscal 2001 ($25.1 million during fiscal 2002 vs. $27.6 million during fiscal 2001).
Production decreased during fiscal 2002, compared to fiscal 2001 and was the primary cause of the decline. Harvesting and marketing costs decreased in fiscal 2002 compared to fiscal 2001, corresponding to a decrease in boxes harvested. Direct production and allocated costs decreased 3% due to a decline in the number of producing acres.
The final returns from citrus pools are not precisely determinable at year end. Returns are estimated each year based on the most current information available. Differences between the estimates and the final realization of revenues can be significant. Revenues collected in excess of prior year and year end estimates were $198 thousand, $568 thousand, and $617 thousand during fiscal 2003, 2002 and 2001, respectively.
ACREAGE BY VARIETY AND AGE
VARIETY 1-4 5-6 7-8 9-10 11-12 13-14 15-16 17+ Acres ___ ___ ___ ____ _____ _____ _____ ____ _____ Early: Parson Brown Oranges - - - - 118 - 30 - 148 Hamlin Oranges 314 - 22 - 63 - 159 2,934 3,492 Red Grapefruit - - - - - - 73 335 408 Tangelos - - - - - - - 38 38 Navel Oranges - - - - - - - 138 138 Mid Season: Pineapple Oranges - - - 102 - - - 518 620 Honey Tangerines - - - 76 - - - 143 219 Midsweet Oranges 46 71 - 164 - - - - 281 Late: Valencia Oranges 1,259 206 237 585 366 959 271 1,920 5,803 _____ ___ ___ ___ _____ ___ ___ _____ _____
Totals: 1,619 277 259 927 547 959 533 6,026 11,147
Sugarcane _________
Gross profit for fiscal 2003 was $3.2 million, compared to $2.3 million in fiscal 2002 and $2.8 million in fiscal 2001.
Sales revenue from sugarcane increased 13% during fiscal 2003, compared to fiscal 2002 ($13.4 million vs. $11.8 million, respectively). The increase was the result of an improvement in the yield per acre brought about by favorable weather conditions during the growing season. Direct production costs decreased 3% during fiscal 2003, compared to fiscal 2002. This was offset by a 5% rise in allocated costs during 2003, compared to 2002 levels, due to increases in insurance costs and ad valorem taxes.
Sales revenues from sugarcane decreased 5% during fiscal 2002, compared to fiscal 2001 ($11.8 million vs. $12.5 million, respectively). The decrease in revenue and related costs was the result of lower yields resulting from a drought.
Ranching ________
The gross profit from ranch operations for fiscal 2003, 2002 and 2001 was $385 thousand, $587 thousand, and $1.4 million, respectively.
Revenues from cattle sales decreased 21% during fiscal 2003, compared to fiscal 2002 ($7.2 million in fiscal 2003 vs. $9.1 million in fiscal 2002). Direct and allocated production costs decreased by 20% during fiscal 2003, as compared to fiscal 2002 ($6.8 million in fiscal 2003 vs. $8.5 million in fiscal 2002). The decline in revenue and total production costs primarily resulted from a corresponding decrease in the total number of cattle sold during fiscal 2003 when compared to fiscal 2002.
Revenues from cattle sales increased 3% during fiscal 2002, compared to fiscal 2001 ($9.1 million in fiscal 2002 vs. $8.8 million in fiscal 2001) due to increased sales of feeder cattle during the year.
Direct and allocated costs increased 15% when compared to the prior year ($8.5 million during fiscal 2002 and $7.4 million during fiscal 2001) due to the increase in the number of animals sold from feedlots.
The Company's cattle marketing activities include retention of calves in western feedlots, contract and auction sales, and risk management contracts.
Other Operations ________________
Returns from rock products and sand were $2.2 million for fiscal 2003, $2.0 million for 2002 and $1.7 million during 2001. Rock and sand supplies are sufficient to meet current demand, and no major price changes have occurred over the past 3 years.
Revenues from oil royalties and land rentals were $973 thousand in fiscal 2003 as compared to $721 thousand in fiscal 2002 and $770 thousand for fiscal 2001. The fiscal 2003 improvement is primarily due to an increase in the amount of land leased for farming.
Profits from the sale of sabal palms and other horticultural items, for landscaping purposes, during fiscal 2003 were $292 thousand compared to $355 thousand and $91 thousand for fiscal years 2002 and 2001, respectively.
Direct and allocated expenses charged to the "Other" operations category included general and administrative and other costs not charged directly to the citrus, ranching or sugarcane divisions. These expenses totaled $6.3 million during fiscal 2003, compared to $10.8 million during fiscal 2002 and to $5.5 million during fiscal 2001. In December 2001, the Company agreed to donate $5.0 million to the Florida Gulf Coast University for a new athletic complex, scholarships and athletic programs. As per the agreement with the
University, $1.0 million was paid in fiscal 2002, $800 thousand was paid in fiscal 2003 and $800 thousand will be paid each year over the next four years. The net present value of the total donation was accrued and included in general and administrative expenses in fiscal 2002 and was the primary cause for the increase in general and administrative expenses that year.
Profit on Sale of Real Estate ____________________________________
Profit from retail land sales, made through Saddlebag, were $32 thousand in fiscal 2003, vs. breaking even during fiscal 2002. Profit from bulk land sales, increased from $11.6 million in fiscal 2002 to $15.0 million in fiscal 2003.
Real estate profits increased from $11.4 million in fiscal 2001 to $11.6 million during fiscal 2002.
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.
During January 2002, the Company acquired 40 acres of Lee County, Florida 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. During the third quarter of fiscal 2003, Agri announced a contract to sell the 40 acres. The contract price is $13.1 million and the closing may occur by December 10, 2004.
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.
During the third quarter of fiscal 2003, the Company entered into a limited partnership with its wholly owned subsidiary, Agri-Insurance Company, Ltd. The partnership was created 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.
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.
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. Through Agri, the Company has been able to underwrite previously uninsurable risk related to catastrophic crop and other losses. The coverages currently underwritten by Agri will indemnify insured's 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 was transferred during fiscal 2001. Agri underwrote a limited amount of coverage for Ben Hill Griffin, Inc. during fiscal 2003, 2002 and 2001 and in August 2002 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. Agri is a recently created entity. 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.
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 have been identified that affect the more significant judgments and estimates used in the preparation of the consolidated financial statements.
The Company 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 prior years' crop totaling $198 thousand, $568 thousand, and $617 thousand during fiscal 2003, 2002, and 2001, respectively.
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.
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. As Agri has converted certain of the assets contributed by Alico to cash, book and tax differences have arisen resulting from differing viewpoints related to the tax treatment of insurance companies for federal and state tax purposes. Due to the historic nature of the primary assets contributed as capital to Agri and the timing of the sales of certain of those assets by Agri, management has decided to record a contingent liability, providing for potential differences in the tax treatment of sales of Agri's assets. Management's decision has been influenced by perceived changes in the regulatory environment.
Off-Balance Sheet Arrangements ______________________________
The Company is not involved in any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on the Company's financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Item 7(a). Quantitative and Qualitative Disclosure About Market Risk _________________________________________________________________________
Alico's exposure to market rate risk for changes in interest rates relates primarily to its investment portfolio. There are no derivative financial instruments in the investment portfolio. Investments are placed with high quality issuers and, by policy, limit the amount of credit exposure to any one issuer. Alico is adverse to principal loss and ensures the safety and preservation of invested funds by limiting default, market and reinvestment risk. The Company classifies cash equivalents and short-term investments as fixed-rate if the rate of return on such instruments remains fixed over their term. These fixed-rate investments include fixed-rate U.S. government securities, municipal bonds, time deposits and certificates of deposit. Cash equivalents and short-term investments are classified as variable-rate if the rate of return on such investments varies based on the change in a predetermined index or set of indices during their term. These variable-rate investments primarily include money market accounts, mutual funds and equities held at various securities brokers and investment banks. The table below presents the amounts (in thousands) and related weighted interest/dividend yield rates of the investment portfolio at August 31, 2003:
Average Interest Estimated Marketable Securities and Rate/Dividend Yield Cost Fair Value Short-term Investments (1) ________________ _____________ ___________
Fixed Rate 5.38% $ 14,423 $ 14,259 Variable Rate 2.93% $ 23,013 $ 24,561
(1) See definition in Notes 1 and 2 to our Notes to Consolidated Financial Statements.
The aggregate fair value of investments in debt instruments (net of mutual funds of $8,435) as of August 31, 2003, by contractual maturity date, consisted of the following: Aggregate Fair Values ______________ (in thousands)
Due in one year or less $ 8,115 Due between one and five years 4,454 Due between five and ten years 1,335 Due thereafter 355 ______________
$14,259 ______________ ______________
The Company has debt which has interest rates that vary with the LIBOR and prime rate. A 1% change in these rates would impact the Company's annual interest expense by approximately $438 thousand based on the Company's outstanding debt under these agreements as of August 31, 2003.
Item 8.
Item 8. Financial Statements and Supplementary Data. _____________________________________________________________
Independent Auditors' Report ____________________________
The Stockholders and Board of Directors Alico, Inc.:
We have audited the consolidated balance sheets of Alico, Inc. and subsidiaries as of August 31, 2003 and 2002, and the related consolidated statements of operations, stockholders' equity and comprehensive income (loss), and cash flows for each of the years in the three-year period ended August 31, 2003. In connection with our audits of the consolidated financial statements, we also have audited the related consolidated financial statement schedules as listed in Item 15(a)(2) herein. These consolidated financial statements and financial statements schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and schedules based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Alico, Inc. and subsidiaries at August 31, 2003 and 2002, and the results of their operations and their cash flows for each of the years in the three-year period ended August 31, 2003 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related consolidated financial statement schedules, when considered in relation to the consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
KPMG LLP (Signature)
Orlando, Florida October 10, 2003
CONSOLIDATED BALANCE SHEETS (in thousands) August 31, 2003 2002 _____________ ____________
ASSETS
Current assets: Cash, including time deposits and other cash investments of $16,303 in 2003 and $10,028 in 2002 $ 16,352 $ 10,140 Marketable securities available for sale, at estimated fair value in 2003 and in 2002 (Note 2) 38,820 21,417 Accounts receivable ($6,470 in 2003 and $6,457 in 2002 due from affiliate) (Note 12) 9,680 9,461 Mortgages and notes receivable, current portion (Note 3) 2,534 2,451 Inventories (Note 4) 21,845 21,672 Income tax refund receivable 229 271 Other current assets 744 855 ____________ ____________
Total current assets 90,204 66,267 ____________ ____________ Other assets: Land inventories 16,587 16,787 Mortgages and notes receivable, net of current portion (Note 3) 234 2,693 Investments 886 908 ____________ ____________
Total other assets 17,707 20,388 ____________ ____________
Property, buildings and equipment (Note 5) 144,578 142,355 Less accumulated depreciation (39,741) (37,100) ____________ ____________
Net property, buildings and equipment 104,837 105,255 ____________ ____________
Total assets $ 212,748 $ 191,910 ____________ ____________ ____________ ____________
See accompanying Notes to Consolidated Financial Statements.
August 31, 2003 2002 ____________ ____________
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable $ 2,110 $ 1,438 Due to profit sharing plan (Note 10) 350 285 Accrued ad valorem taxes 1,519 1,524 Current portion of notes payable (Note 6) 3,321 3,318 Accrued expenses 988 1,169 Deferred income taxes (Note 11) 1,680 1,038 Donation payable 754 771 ____________ ____________
Total current liabilities 10,722 9,543
Deferred revenue 91 113 Notes payable (Note 6) 54,127 52,658 Deferred income taxes (Note 11) 9,668 9,728 Deferred retirement benefits (Note 10) 120 119 Other non-current liability (Note 8) 9,609 3,641 Donation payable 2,229 2,890 ____________ ____________
Total liabilities 86,566 78,692 ____________ ____________
Stockholders' equity: Preferred stock, no par value. Authorized 1,000,000 shares; issued, none - - Common stock, $1 par value. Authorized 15,000,000 shares; issued and outstanding 7,116,070 in 2003 and 7,080,344 in 2002 7,116 7,080 Additional paid in capital 3,074 1,716 Accumulated other comprehensive income (loss) 961 (432) Retained earnings 115,031 104,854 ____________ ____________
Total stockholders' equity 126,182 113,218 ____________ ____________
Total liabilities and stockholders' equity $ 212,748 $ 191,910 ____________ ____________ ____________ ____________
See accompanying Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands except per share data) Years Ended August 31, 2003 2002 2001
___________ ___________ ___________
Revenue: Citrus (including revenues from affiliate (Note 12) $ 24,107 $25,105 $27,570 Sugarcane 13,373 11,789 12,450 Ranch 7,175 9,102 8,788 Forest products 292 355 91 Rock and sand royalties 2,154 1,999 1,726 Oil lease and land rentals 973 721 770 Retail land sales 211 114 138 ___________ __________ ___________
Operating revenue 48,285 49,185 51,533 ___________ __________ ___________
Costs of sales: Citrus production, harvesting and marketing (including charges from affiliate (Note 12)) 20,106 21,421 22,450 Sugarcane production, harvesting and hauling 10,188 9,457 9,628 Ranch 6,790 8,515 7,394 Retail land sales 179 114 140 __________ ___________ ___________
Total costs of sales 37,263 39,507 39,612 __________ ___________ ___________
Gross profit 11,022 9,678 11,921
General and administrative expenses 6,319 10,806 5,471 __________ ___________ ___________
Income (loss) from operations 4,703 (1,128) 6,450
Other income (expenses):
Profit on sales of real estate: Sales 16,779 12,659 12,840 Cost of sales 1,785 1,018 1,486 ___________ ___________ ___________
Profit on sales of real estate, net 14,994 11,641 11,354 Interest and investment income 1,201 1,471 2,124 Recovery of citrus eradication costs in excess of basis (Note 14) - - 2,968 Interest expense (Note 6) (2,081) (2,421) (3,029) Other 267 230 245 ___________ ___________ ___________
Total other income, net 14,381 10,921 13,662 ___________ ___________ ___________
Income before income taxes 19,084 9,793 20,112 Provision for income taxes (Note 11) 6,425 2,258 4,046 ___________ ___________ ___________
Net Income 12,659 $ 7,535 $ 16,066 ___________ ___________ ___________ ___________ ___________ ___________
Weighted-average number of shares outstanding 7,106 7,070 7,033 ___________ ___________ ___________ ___________ ___________ ___________
Weighted-average number of shares outstanding assuming dilution 7,256 7,188 7,057 ___________ ___________ ___________ ___________ ___________ ___________
Per share amounts: Basic $ 1.78 $ 1.07 $ 2.29 Diluted $ 1.74 $ 1.05 $ 2.28 Dividends $ 0.35 $ 1.00 $ 1.00
See accompanying Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME(LOSS) (in thousands) Accumulated Common Stock Additional Other Shares Paid in Comprehensive Retained Issued Amount Capital Income Earnings Total _______ __________ ___________ _______ ________ ________ Balances, August 31, 2000 7,028 $ 7,028 $ 18 $ 1,159 $95,340 $ 103,545 _________ Comprehensive income: Net income for the year ended August 31, 2001 - - - - 16,066 16,066 Unrealized gains on securities, net of taxes of $(174) - - (288) - (288) of and reclass- ification adjustment __________ Total comprehensive income: 	 15,778 Dividends paid - - - - (7,028) (7,028) Stock options Exercised 17 17 227 - 244 Stock based compensation - - 86 - - 86 _________ _________ ___________ ________ _____ ___________
Balances, August 31, 2001 7,045 $ 7,045 $ 331 $ 871 $ 104,378 $ 112,625 _________ Comprehensive income: Net income for the year ended August 31, 2002- - - - 7,535 7,535 Unrealized gains on securities net of taxes of $(622) - - (1,303) - (1,303) and reclass- ification adjustment ___________ Total comprehensive income: 	 	 6,232 Dividends paid - - - - (7,059) (7,059) Stock options exercised 35 35 494 - - 529 Stock based compensation - - 891 - - 891 _________ _________ __________ _______ _______ ___________
Balances, August 31, 2002	 7,080 $ 7,080 $ 1,716 $ (432) $104,854 $ 113,218 _________
Comprehensive income: Net income for the year ended August 31, 2003 - - - 12,659 12,659 Unrealized gains (losses) on securities, net of taxes of $552 - - 1,393 - 1,393 of and reclass- ification adjustment ___________ Total comprehensive income:	 14,052 Dividends paid - - - - (2,482) (2,482) Stock options exercised 36 36 519 - - 555 Stock based compensation - - 839 - - 839 _________ _________ _________ _______ _________ ___________ Balances, August 31, 2003 7,116 $ 7,116 $ 3,074 $ 961 $115,031 $ 126,182 _________ __________ ___________ ________ ________ ___________ _________ __________ ___________ ________ ________ ___________
Disclosure of reclassification amount: 2003 2002 2001 ________ __________ ________ Unrealized holding gains (losses) arising during the period 	 $ 2,651 $ (1,774) $ (207) Less: reclassification adjustment for gains (losses) included in net income 				 1,258 (471) 81 ________ __________ _________
Net unrealized gains (losses) on securities $ 1,393 $ (1,303)$ (288) _________ _________ _________ _________ _________ _________
See accompanying Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Years Ended August 31, 2003 2002 2001 ___________ ___________ __________ Increase (Decrease) in Cash and Cash Investments: Cash flows from operating activities: Net income $ 12,659 $ 7,535 $ 16,066 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 6,723 6,982 6,946 (Gain) loss on breeding herd sales (16) (84) (77) Deferred income tax expense, net 582 1,263 1,179 Deferred retirement benefits 1 (31) (102) Net (gain) loss on sale of marketable securities (691) 381 (160) (Gain) Loss on sale of property and equipment 606 (150) 1,642 Gain on real estate sales (15,026) (11,758) (11,586) Stock options granted below fair market value 839 891 86 Cash provided by (used for) changes in: Accounts receivable (218) 692 1,847 Inventories (173) 1,059 (1,702) Other assets 111 57 (600) Accounts payable and accrued expenses 5,840 2,944 (112) Income taxes payable 42 (294) (4,147) Deferred revenues (23) 48 53 ___________ ___________ ___________ Net cash provided by operating activities 11,256 9,535 9,333 ___________ ___________ ___________ Cash flows from investing activities: Increase in land inventories (684) (9,785) (925) Purchases of property and equipment (7,325) (9,270) (8,502) Proceeds from disposals of property and equipment 431 1,257 959 Proceeds from sale of real estate 15,911 12,789 2,880 Purchases of investments - (126) (212) Purchases of marketable securities (20,257) (8,047) (3,013) Proceeds from sales of marketable securities 4,958 3,673 2,039 Issuances of mortgages and notes receivable - (79) (381) Collection of mortgages and notes receivable 2,377 2,528 2,630 ___________ __________ ___________ Net cash used for investing activities (4,589) (7,060) (4,525) ___________ ___________ ___________
Years Ended August 31, 2003 2002 2001 ___________ ___________ ___________
Cash flows from financing activities: Proceeds from exercising stock options 555 529 244 Proceeds from bank loans 33,169 43,597 43,194 Repayment of bank loans (31,697) (35,627) (36,789) Dividends paid (2,482) (7,059) (7,028) ___________ ___________ ___________ Net cash provided by (used for) financing activities (455) 1,440 (379) ___________ ___________ ___________ Net increase (decrease) in cash and cash investments 6,212 3,915 4,429
Cash and cash investments: At beginning of year 10,140 6,225 1,796 ___________ ___________ __________
At end of year $ 16,352 $ 10,140 $ 6,225 ___________ ___________ ___________ ___________ ___________ ___________ Supplemental disclosures of cash flow information:
Cash paid for interest, net of amount capitalized $ 1,767 $ 2,124 $ 3,102 ___________ ___________ ___________ ___________ ___________ ___________
Cash paid for income taxes, $ 1,060 $ 943 $ 3,116 including related interest (Note 11)__________ ___________ ___________ ___________ ___________ ___________ Noncash investing activities:
Fair value adjustments to securities available for sale $ 1,945 $ (1,925) $ (462) 						 ___________ ___________ ___________ 						 ___________ ___________ ___________
Income tax effect related to fair value adjustments $ 552 $ (622) $ (174) 						 ___________ ___________ ___________ 						 ___________ ___________ ___________
Reclassification of breeding herd to Property & Equipment $ 700 $ 515 $ 370 						 ___________ ___________ ___________ 						 ___________ ___________ ___________
See accompanying Notes to Consolidated Financial Statements.
			 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended August 31, 2003, 2002 and 2001
(1) Summary of Significant Accounting Policies __________________________________________
(a) Basis of Consolidated Financial Statement Presentation ______________________________________________________
The consolidated financial statements include the accounts of Alico, Inc. (the Company) and its wholly owned subsidiaries, Saddlebag Lake Resorts, Inc. (Saddlebag), Agri-Insurance Company, Ltd. (Agri), and Alico-Agri, Ltd. after elimination of all significant intercompany balances and transactions.
(b) Revenue Recognition ___________________
Income from the sale of citrus is recognized at the time the crop is harvested. Based on fruit buyers' and processors' advances to growers, stated cash and futures markets, 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 $198 thousand, $568 thousand, and $617 thousand during fiscal years 2003, 2002 and 2001, respectively.
Income from sugarcane under a pooled agreement is recognized at the time the crop is harvested. Based on the processor's advance payment, management reviews the reasonableness of the sugarcane revenue accrual. Adjustments are made as additional relevant information regarding the sugar market becomes available. Market price increases to the sugar pool have caused the Company to recognize additional revenue from the prior year's crop totaling $356 thousand, $318 thousand and $49 thousand during the fiscal year's 2003, 2002, and 2001, respectively.
The Company recognizes revenue from cattle sales at the time the cattle are sold at auction.
(c) Real Estate ___________
Real estate sales are recorded under the accrual method of accounting. Residential retail land sales made through Saddlebag are not recognized until the buyer's initial investment or cumulative payments of principal and interest equal or exceed 10 percent of the contract sales price. Commercial or bulk land sales, made mostly through Alico-Agri, Ltd. are not recognized until payments received for property to be developed within two years after the sale equal 20%, or property to be developed after two years equal 25%, of the contract sales price. At August 31, 2000,
the Company did not recognize gross profit totaling $9,540,000 related to commercial real estate which was sold subject to a mortgage note receivable (note 3). The terms of the sale called for 10% of the contract price of $10,600,000 to be paid at closing. The $1,060,000 less the land basis and closing costs was recognized as a gain on the sale of real estate totaling $287,880 during the year ended August 31, 2000.
During the year ended August 31, 2001, the purchaser made the first of four equal annual installments, required in the mortgage, totaling $2,385,000, plus interest. The deferred profit on the sale was then recognized as 32.5 percent of the contract price was received and the buyer's continuing investment became adequate to demonstrate its commitment to pay for the property.
Profits from commercial real estate sales are discounted to reflect the market rate of interest where the stated rate is less than the market rate. The recorded valuation discounts are realized as the balances due are collected. In the event of early liquidation, interest is recognized on the simple interest method.
Tangible assets that are purchased during the period to aid in the sale of the project as well as costs for services performed to obtain regulatory approval of the sales are capitalized as land and land improvements to the extent they are estimated to be recoverable from the sale of the property. Land and land improvement costs are allocated to individual parcels on a per lot basis using the relative sales value method.
The Company has entered into an agreement with a real estate consultant to assist in obtaining the necessary regulatory approvals for the development and marketing of a tract of raw land. The marketing costs under this agreement are being expensed as incurred. The costs incurred to obtain the necessary regulatory approvals are capitalized into land costs when paid. These costs will be expensed as cost of sales when the underlying real estate is sold.
(d) Marketable Securities Available for Sale ________________________________________
Marketable securities available for sale are carried at their estimated fair value. Net unrealized investment gains and losses are recorded net of related deferred taxes in accumulated other comprehensive income within stockholders' equity until realized.
Fair value for debt and equity investments is based on quoted market prices at the reporting date for those or similar investments. The cost of all marketable securities available for sale are determined on the specific identification method.
(e) Inventories ___________
The costs of growing crops 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.
Beef cattle inventories are stated at the lower of cost or market. The cost of the beef cattle inventory is based on the accumulated cost of developing such animals for sale.
Unharvested crops are stated at the lower of cost or market. The cost for unharvested crops is based on accumulated production costs incurred during the eight month period from January 1 through August 31.
(f) Property, Buildings and Equipment _________________________________
Property, buildings and equipment are stated at cost. Properties acquired from the Company's predecessor corporation in exchange for common stock issued in 1960, at the inception of the Company, are stated on the basis of cost to the predecessor corporation. Property acquired as part of a land exchange trust is valued at the carrying value of the property transferred to the trust.
All costs related to the development of citrus groves, through planting, are capitalized. Such costs include land clearing, excavation and construction of ditches, dikes, roads, and reservoirs, etc. After the planting, caretaking costs or pre-productive maintenance costs are capitalized for four years. After four years, a grove is considered to have reached maturity and the accumulated costs, except for land excavation become the depreciable basis of a grove and are written off over 25 years.
Development costs for sugarcane are capitalized the same as citrus. However, sugarcane matures in one year and the Company is able to harvest an average of 3 crops (1 per year) from one planting. As a result, cultivation/caretaking costs are expensed as the crop is harvested, while the appropriate development and planting costs are depreciated over 3 years.
The breeding herd consists of purchased animals and animals raised on the ranch. Purchased animals are stated at cost. The cost of animals raised on the ranch is based on the accumulated cost of developing such animals for productive use.
Depreciation for financial reporting purposes is computed on straight-line or accelerated methods over the estimated useful lives of the various classes of depreciable assets.
The Company accounts for long-lived assets in accordance with the provisions of SFAS No. 144, "Accounting for the Impairment or disposal of Long-Lived Assets". This Statement requires 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 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.
(g) Land Inventories
Land inventories are carried at cost and consist of property located in Lee County, Florida and owned by Alico-Agri, Ltd., and residential lots in Polk County, Florida and owned by Saddlebag. The Lee County property is held for sale as commercial real estate.
(h) Other Investments
Other investments are carried at cost which primarily includes stock owned in agricultural cooperatives. The Company uses cooperatives to process and sell sugarcane and citrus. Cooperatives typically require members to acquire ownership as a term of use of its services.
(i) Income Taxes ____________
The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
(j) Net Earnings Per Share ________________________
Outstanding stock options issued by the Company represent the only dilutive effect reflected in the computation of weighted average shares outstanding assuming dilution. Options do not impact the numerator of the earnings per share computation.
There were no stock options that could potentially dilute basic earnings per share in the future that were not included in the computation of earnings per share assuming dilution.
(k) Cash Flows __________
For purposes of the cash flows, cash and cash investments include cash on hand and amounts due from financial institutions with an original maturity of less than three months.
(l) Use of Estimates ________________
In preparing the consolidated financial statements, management is required to make estimates and assumptions that effect the reported amounts of assets and liabilities. Actual results could differ significantly from those estimates. Although some variability is inherent in these estimates, management believes that the amounts provided are adequate. The valuation of the Company's inventories and the recognition of citrus and sugarcane revenues are two of the more significant estimates made by Management.
(m) Financial Instruments and Accruals __________________________________
The carrying amounts in the consolidated balance sheets for accounts receivable, mortgage and notes receivable, accounts payable and accrued expenses approximate fair value, because of the immediate or short term maturity of these items. The carrying amounts reported for the Company's long-term debts approximate fair value because they are arms length transactions with commercial lenders at market interest rates.
(n) Derivative and Hedging Instruments __________________________________
The Company engages in cattle futures trading activities for the purpose of economically hedging against price fluctuations. The Company records gains and losses related to economic hedges in costs of goods sold. At August 31, 2003 and 2002, the Company had no open positions.
(o) Accumulated Other Comprehensive Income ______________________________________
Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It includes both net income and other comprehensive income. Items included in other comprehensive income are classified based on their nature. The total of other comprehensive income for a period has been transferred to an equity account and displayed as "accumulated other comprehensive income".
(p) Stock-Based Compensation ________________________
The Company applies Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) for stock options and other stock-based awards while disclosing pro forma net income and net income per share as if the fair value method had been applied in accordance with Statement of Financial Accounting Standards No. 123,"Accounting for Stock-based Compensation" (SFAS 123)and amended by Statement of Financial Accounting Standards No. 148 "Accounting for Stock-Based Compensation - Transition and Disclosure".
(q) Reportable Segments _________________
The Company has three reportable segments: citrus, sugarcane, and ranch. The citrus segment produces fruit for both the fresh fruit and processed juice markets. The sugarcane segment produces sugarcane for processing. The ranch segment raises beef cattle to be sold in the wholesale market.
The Company's reportable segments are strategic business units that offer different products. They are managed separately because each business requires different operating strategies.
(r) Reclassifications _________________
Certain amounts from 2002 and 2001 have been reclassified to conform to the 2003 presentation.
(2) Marketable Securities Available for Sale ________________________________________
The Company has classified 100% of its investments in marketable securities as available for sale and, as such, the securities are carried at estimated fair value. Any unrealized gains and losses, net of related deferred taxes, are recorded as a net amount in a separate component of stockholders' equity until realized.
The cost and estimated fair values of marketable securities available for sale at August 31, 2003 and 2002 (in thousands) were as follows:
2003 2002 _____________________________ _____________________________
Gross Estimated Gross Estimated Equity Unrealized Fair Unrealized Fair securities: Cost Gains Losses Value Cost Gains Losses Value _______ ____ ____ _______ ______ ______ ___ ________
Preferred stocks $ 2,504 $ 85 $ (65) $ 2,524 $ 3,160 $ 65 $(79)$ 3,146 Common stocks 1,893 221 (306) 1,808 1,734 135 (242) 1,627 Mutual funds* 10,181 1,801 - 11,982 9,908 479 (147) 10,240 _____________________________ ______________________________ Total equity securities 14,578 2,107 (371) 16,314 14,802 679 (468) 15,013 _____________________________ ______________________________
Debt securities:
Municipal bonds 515 28 - 543 559 36 - 595 Mutual funds 8,435 421 (609) 8,247 5,418 232 (882) 4,768 Fixed maturity funds 11,146 - (31) 11,115 282 15 (1) 296 Corporate bonds 2,762 22 (183) 2,601 882 14 (151) 745 _____________________________ ______________________________
Total debt securities 22,858 471 (823) 22,506 7,141 297 (1,034) 6,404 _____________________________ ______________________________
Marketable securities available for sale 37,436 2,578 (1,194) 38,820 21,943 976 (1,502) 21,417 _____________________________ ______________________________ _____________________________ ______________________________
* Includes shares held by regulated investment companies as well as a limited partnership hedge fund primarily investing in marketable equity securities.
At August 31, 2003, debt instruments (net of mutual funds of $8,435) are collectible as follows: $8,115 within one year, $4,454 between one and five years, $1,335 between five and ten years, and $519 there after.
(3) Mortgage and Notes Receivable ____________________________
Mortgage and notes receivable arose from real estate sales. The balances (in thousands) are as follows:
August 31, 2003 August 31, 2002 _______________ _______________
Mortgage notes receivable on retail land sales $ 235 $ 193 Mortgage notes receivable on bulk land sales 2,420 4,926 Other notes receivable 113 25 ________________ _______________
Total mortgage and notes receivable $ 2,768 $ 5,144 Less current portion 2,534 2,451 ________________ _______________
Non-current portion $ 234 $ 2,693 ________________ _______________ ________________ _______________
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 LIBOR, over four years.
(4) Inventories ___________
A summary of the Company's inventories (in thousands) at August 31, 2003 and 2002 is shown below:
2003 2002 _______ _______
Unharvested fruit crop on trees $ 8,135 $ 8,599 Unharvested sugarcane 5,159 5,274 Beef cattle 7,892 7,507 Sod 659 292 _______ _______
Total inventories $21,845 $21,672 _______ _______ _______ _______
(5) Property, Buildings and Equipment _________________________________
A summary of the Company's property, buildings and equipment (in thousands) at August 31, 2003 and 2002 is shown below:
Estimated 2003 2002 Useful Lives _______ _______ ____________
Breeding herd $12,711 $12,618 5-7 years Buildings 3,875 3,945 5-40 years Citrus trees 31,109 28,555 22-40 years Sugarcane 8,350 8,360 4-15 years Equipment and other facilities 29,526 29,996 3-40 years _______ _______
Total depreciable properties 85,571 83,474 Less accumulated depreciation 39,741 37,100 _______ _______
Net depreciable properties 45,830 46,374 Land and land improvements 59,007 58,881 _______ _______ Net property, buildings and equipment $104,837 $105,255 _______ _______ _______ _______
The Company's unharvested sugarcane and cattle are partially uninsured.
(6) Indebtedness ____________
The Company has financial agreements with commercial banks that permit the Company to borrow up to $54.0 million. The financing agreements allow the Company to borrow up to $41.0 million which is 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 $10.0 million to be paid in equal principal installments over five years with interest to be paid quarterly. The outstanding debt under these agreements was $43.8 million and $41.0 million at August 31, 2003 and 2002, respectively.
In March 1999, the Company mortgaged 7,680 acres for $19.0 million in connection with a $22.5 million acquisition of producing citrus and sugarcane operations. The outstanding debt under the mortgage was $13.4 million and $14.7 million as of August 31, 2003 and 2002, respectively. The total long-term portion of the Company's indebtedness at August 31, 2003 and 2002 was $54.1 million and $52.7 million, respectively.
Maturities of the indebtedness of the Company over the next five years (in thousands) are as follows: 2004- $3,321; 2005- $36,264; 2006- $3,312; 2007- $3,315; 2008- $1,318 and $9,918 thereafter.
Interest cost expensed and capitalized (in thousands) during the three years ended August 31, 2003, 2002 and 2001 was as follows:
2003 2002 2001 ______ ______ ______
Interest expense $2,081 $2,421 $3,029 Interest capitalized 267 322 175 ______ ______ ______
Total interest cost $2,348 $2,743 $3,204 ______ ______ ______ 				 ______ ______ ______
(7) Commitments and Contingencies _____________________________
The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company's consolidated financial position, results of operation or liquidity.
(8) 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. As Agri has converted certain of the assets contributed by Alico to cash, book and tax differences have arisen resulting from differing viewpoints related to the tax treatment of insurance companies for federal and state tax purposes. Due to the historic nature of the primary assets contributed as capital to Agri and the timing of the sales of certain of those assets by Agri, management has decided to record a contingent liability, providing for potential differences in the tax treatment of sales of Agri's assets. Management's decision has been influenced by perceived changes in the regulatory environment.
(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 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 Shares average remaining Under exercise contractual Option price Life (in years) ______ _________ _______________
Balance outstanding, August 31, 2001 84,080 $14.62 7
Granted 69,598 $15.68 _______________
Exercised 35,831 $14.76 ______ _________ _______________ 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 ______ _________ _______________ ______ _________ _______________
On August 31, 2003 and 2002, there were 412,356 and 479,636 shares available for grant, respectively.
The fair value of stock options granted was $845 thousand in 2003 and $819 thousand in 2002 on the date of the grant using the Black Scholes option-pricing model with the following weighted average assumptions: 2003 2002 ____ ____
Volatility 8.39% 8.39% Dividend paid 2.23% 6.38% Risk-free interest rate 4.75% 4.75% Expected life in years 1 1
All stock options granted, except as noted in the paragraph below, have been granted to directors or employees with an exercise price equal to the fair value of the common stock at the date of the grant, and a vesting period of one year.
The Company applies APB Opinion No. 25 for issuances to directors and employees in accounting for its Plan. No compensation cost was recognized in the consolidated financial statements through August 31, 2001, as options were issued at or above fair value. On September 9, 1999, the Company granted 14,992 stock options with an exercise price of $14.62 and a fair value of $15.813. The Company recorded $18 thousand of unearned compensation at the date of the grant. On September 12, 2000, the Company granted an additional 51,074 stock options with an exercise price of $14.62 and a fair value of $16.313. The Company recorded $86 thousand of unearned compensation at the date of the grant.
On September 11, 2001, the Company granted an additional 69,598 stock options with an exercise price of $15.68 and a fair value of $28.48. The Company recorded $891 thousand of unearned compensation at the date of the grant. On September 10, 2002, the Company granted an additional 67,280 stock options with an exercise price of $15.68 and a fair value of $28.15. The Company recorded $839 thousand of unearned compensation at the date of the grant.
Had the Company determined compensation cost based on the fair value at the grant date for its stock options under SFAS No. 123, the Company's net income would have changed to the pro forma amounts indicated below (in thousands):
2003 2002 ____ ____
Net income as reported $ 12,659 $ 7,535
Pro forma net income $ 12,653 $ 7,607
Basic earnings per share, as reported $ 1.78 $ 1.07
Pro forma basic earnings per share $ 1.78 $ 1.08
(10) Employee Benefit Plans ______________________
The Company has a profit sharing plan covering substantially all employees. The plan was established under Internal Revenue Code Section 401(k). Contributions made to the profit sharing plan (in thousands) were $350, $285 and $444 for the years ended August 31, 2003, 2002 and 2001, respectively.
Additionally, the Company has a nonqualified defined benefit retirement plan covering the officers and other key management personnel of the Company. Details concerning this plan are as follows:
August 31, 2003 2002 _____ ______
Beginning benefit obligation 3,785 		2,446 Service cost			 			 626		 714 Interest cost						 234 		 185 Benefits paid						 (132)		 (79) Actuarial losses					 - 		 517 Other							 2 		 2 			 ______ 		______
Ending benefit obligation				 4,515		3,785 								 ______		______
Changes in plan assets
Beginning plan assets					 3,666		2,299 Return on plan assets				 109		 834 Employer contributions				 39		 545 Plan participant contributions			 115		 67 Benefits paid						 (132) 		 (79) 								 ______		______
Ending plan assets					 3,797		3,666 								 ______		______
Net pension liability		 	 		 718		 119 Less: current payable				 (598)		 - 								 ______		______
Long term portion						 120		 119 								 ______		______
Components of net pension cost
Service cost, net of participant contributions 511		 301 Interest cost						 234		 185 Expected return on plan assets			 -		 - Prior service cost amortization			 2		 2 								 ______		______
Net pension cost for defined benefit plan		 747		 488 								 ______		______
The net benefit obligation was computed using a discount rate of 6.25%.
(11) Income Taxes ____________ The provision for income taxes (in thousands) for the years ended August 31, 2003, 2002 and 2001 is summarized as follows:
2003 2002 2001 ______ ______ ______
Current: Federal income tax $5,872 $3,713 $2,428 State income tax 628 396 439 ______ ______ ______
6,500 4,109 2,867 ______ ______ ______ Deferred: Federal income tax (68) (1,673) 1,058 State income tax (7) (178) 121 ______ ______ ______
(75) (1,851) 1,179 ______ ______ ______ Total provision for income taxes $6,425 $2,258 $4,046 ______ ______ ______ ______ ______ ______
Following is a reconciliation of the expected income tax expense computed at the U.S. Federal statutory rate of 34% and the actual income tax provision (in thousands) for the years ended August 31, 2003, 2002 and 2001:
2003 2002 2001 ______ ______ ______
Expected income tax $6,489 $3,330 $6,838 Increase (decrease) resulting from: State income taxes, net of federal benefit 410 144 328 Nontaxable interest and dividends (97) (102) (113) Internal Revenue Service examinations 14 11 479 Income from Agri- Insurance Company, Ltd. (752) (1,156) (3,829) Other reconciling items, net 361 31 343 ______ ______ ______ Total provision for income taxes $6,425 $2,258 $4,046 ______ ______ ______ ______ ______ ______
Some items of revenue and expense included in the statement of operations may not be currently taxable or deductible on the income tax returns. Therefore, income tax assets and liabilities are divided into a current portion, which is the amount attributable to the current year's tax return, and a deferred portion, which is the amount attributable to another year's tax return. The revenue and expense items not currently taxable or deductible are called temporary differences.
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below (in thousands):
2003 2002 _______ _______
Deferred Tax Assets: Contribution carry forward (1,632) (1,698) Pension (183) (168) Prepaid sales commissions (802) (789) Land inventories (488) (480) Deferred retirement benefits (749) (502) Other (1,256) (1,380) _______ _______ Total gross deferred tax assets (5,110) (5,017) _______ _______
Deferred Tax Liabilities: Revenue recognized from citrus and sugarcane 607 458 Property and equipment (principally due to depreciation and soil and water deductions) 12,981 12,645 Mortgage notes receivable 11 10 Inventories 1,205 886 Deferred real estate gains 1,625 1,600 Other 29 184 _______ _______ Total gross deferred tax liabilities 16,458 15,783 _______ _______ Net deferred income tax liabilities $11,348 $10,766 _______ _______ _______ _______
Based on the Company's history of taxable earnings and its expectations for the future, management has determined that its taxable income will more likely than not be sufficient to fully recognize all deferred tax assets.
Agri Insurance Company, Ltd. (Agri), a wholly owned insurance company subsidiary of Alico, is treated as a U.S. taxpayer, pursuant to an election under Internal Revenue Code Section 953 (d), for all purposes except for consolidating an operating loss by virtue of the dual consolidated loss rules. (Dual consolidated losses prevent operating losses (not capital losses) from occurring in insurance companies domiciled outside of the United States from offsetting operating income irrespective of the fact that the insurance company is a member of the consolidated return group.)
Agri was established to provide agricultural insurance that falls outside of the Federal Crop Insurance Program, for catastrophic perils. Agri was domiciled in Bermuda because it offers easy access to reinsurance markets.
Agri issued its initial policy in August 2000 to a third party. Agri's ability to underwrite insurance risks has been limited to its operational liquidity, by the Registrar of Companies in Bermuda. Agri will be able to underwrite additional insurance as its liquidity is increased from additional asset sales and as payments are received on prior sales. For Federal income tax purposes, only premiums received by Agri from policies of insurance issued to parties other than its parent, Alico, are considered insurance premiums. The preceding limiting factors resulted in Agri not incurring a tax liability on underwriting profits or investment income. Agri's tax status resulted in it filing its Federal tax return on a stand alone basis for the calendar year periods ending December 31, 2002, 2001 and 2000.
The Internal Revenue Service has notified the Company of its intent to examine the Company tax returns for the years ended August 31, 2001 and 2002. Any adjustments resulting from the examination will be currently due and payable. No adjustments have been proposed to date.
(12) Related Party Transactions __________________________
Citrus ______
Citrus revenues of $17.7 million, $19.1 million and $19.9 million were recognized for a portion of citrus crops sold under a marketing agreement with Ben Hill Griffin, Inc. (Griffin) for the years ended August 31, 2003, 2002 and 2001, respectively. Griffin and its subsidiaries is the owner of approximately 49.52 percent of the Company's common stock. Accounts receivable, resulting from citrus sales, include amounts due from Griffin totaling $6.5 million at both August 31, 2003 and 2002. These amounts represent estimated revenues to be received periodically under pooling agreements as sale of pooled products is completed.
Harvesting, marketing, and processing costs, related to the citrus sales noted above, totaled $6.6 million, $7.1 million, and $7.6 million for the years ended August 31, 2003, 2002 and 2001, respectively. In addition, Griffin provided the harvesting services for citrus sold to unrelated processors. The aggregate cost of these services was $2.1 million, $2.0 million and $2.2 million for the years ended August 31, 2003, 2002 and 2001, respectively. The accompanying consolidated balance sheets include accounts payable to Griffin for citrus production, harvesting and processing costs in the amount of $435 thousand and $594 thousand at August 31, 2003 and 2002, respectively.
Other Transactions __________________
The Company purchased fertilizer and other miscellaneous supplies, services, and operating equipment from Griffin, on a competitive bid basis, for use in its cattle, sugarcane, sod and citrus operations. Such purchases totaled $6.4 million, $6.2 million and $6.0 million during the years ended August 31, 2003, 2002 and 2001, respectively.
Griffin purchased catastrophic business interruption coverage from Agri during fiscal 2003, 2002 and 2001. The total coverage under the policy was $3.5 million, $3.2 million and $3.2 million for the fiscal years 2003, 2002 and 2001, respectively. The policy renews annually in December for a one year term. The premiums charged under this policy were $138 thousand, $128 thousand and $114 thousand for 2003, 2002 and 2001, respectively.
(13) Future Application of Accounting Standards __________________________________________ In May 2003 the FASB issued SFAS 150 "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). The remaining provisions of this Statement are consistent with the Board's proposal to revise that definition to encompass certain obligations that a reporting entity can or must settle by issuing its own equity shares, depending on the nature of the relationship established between the holder and the issuer. This Statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatorily redeemable financial instruments of nonpublic entities. It is to be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of the Statement and still existing at the beginning of the interim period of adoption. Restatement is not permitted. The adoption of this Statement is not expected to have a significant impact on the financial position or results of operations of the Company.
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 enter- prise obtains an interest after that date, and for variable interest entities created before that date, the provisions are effective July 1, 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.
(14) Recovery of Citrus Canker Eradication Costs in Excess of Basis ______________________________________________________________
The Company incurred losses during the year ended August 31, 2001 related to citrus canker eradication. The eradication program called for the removal of 507 acres of citrus trees from a grove in Hendry County, Florida. While the trees were insured under the Federal Crop Insurance Program, additional relief funding was available and secured by the Company from both Federal and State government sources. A summary of the recovery sources, related basis of the trees removed and the crop inventory losses are summarized (in thousands) as follows:
2003 2002 2001 ______ ______ ______
Recovery Sources Federal $ - $ - $2,830 State - - 157 Insurance - - 219 ______ ______ ______
Total Recovery - - 3,206
Loss Basis Net Book Value of Trees - - 238 Fruit Inventory - - - ______ ______ ______
Total Basis - - 238 ______ ______ ______
Excess of Recovery over Basis $ - $ - $ 2,968 ______ ______ ______ ______ ______ ______
15) Reportable Segment Information ____________________________
The Company is primarily engaged in agricultural operations, which are subject to risk, including market prices, weather conditions and environmental concerns. The Company is also engaged in retail land sales and, from time to time, sells real estate considered surplus to its operating needs. Information about the Company's reportable segments (in thousands) for the years ended August 31, 2003, 2002 and 2001 is summarized as follows:
2003 2002 2001 ________ ________ ________
Revenues Agriculture: Citrus $ 24,107 $ 25,105 $ 27,570 Sugarcane 13,373 11,789 12,450 Ranch 7,175 9,102 8,788 ________ ________ ________ Total revenues from external customers for reportable segments 44,655 45,996 48,808 Other revenues from external customers 3,630 3,189 2,725 ________ ________ ________
Total operating revenue $ 48,285 $ 49,185 $ 51,533 ________ ________ ________ ________ ________ ________
Costs of sales: Citrus $ 20,106 $ 21,421 $ 22,450 Sugarcane 10,188 9,457 9,628 Ranch 6,790 8,515 7,394 ________ ________ ________
Total costs of sales for reportable segments 37,084 39,393 39,472
Other costs of sales 179 114 140 ________ ________ ________
Total consolidated costs of sales $ 37,263 $ 39,507 $ 39,612 ________ ________ ________ ________ ________ ________
2003 2002 2001 ________ ________ ________
Gross profit: Agriculture: Citrus $ 4,001 $ 3,684 $ 5,120 Sugarcane 3,185 2,332 2,822 Ranch 385 587 1,394 ________ ________ ________ Total profit for reportable segments 7,571 6,603 9,336
Other gross profit 3,451 3,075 2,585 ________ ________ ________
Consolidated gross profit 11,022 9,678 11,921 ________ ________ ________ Unallocated amounts: Profit on sale of bulk real estate 14,994 11,641 11,354 Other corporate expense (6,932) (11,526) (3,163) ________ ________ ________
Income before income taxes $ 19,084 $ 9,793 $ 20,112 ________ ________ ________ ________ ________ ________ Capital expenditures: Agriculture: Citrus $ 3,216 $ 4,704 $ 3,310 Sugarcane 1,451 1,293 2,632 Ranch 2,245 3,240 2,157 ________ ________ ________
Total agriculture capital expenditures for reportable segments 6,912 9,237 8,099 Other capital expenditures 1,113 548 773 Cattle transferred from inventory held for sale into breeding stock (700) (515) (370) ________ ________ ________
Total consolidated capital expenditures $ 7,325 $ 9,270 $ 8,502 ________ ________ ________ ________ ________ ________
Depreciation, depletion and amortization: Agriculture: Citrus $ 2,354 $ 2,394 $ 2,405 Sugarcane 2,414 2,527 2,587 Ranch 1,474 1,573 1,456 ________ ________ ________
Total depreciation, depletion and amortization for reportable segments 6,242 6,494 6,448 Other depreciation, depletion, and amortization 481 488 498 ________ ________ ________
Total consolidated depreciation, depletion and amortization $ 6,723 $ 6,982 $ 6,946 ________ ________ ________ ________ ________ ________ Assets: Agriculture: Citrus $ 54,549 $ 53,876 $ 53,266 Sugarcane 52,283 52,015 51,678 Ranch 22,430 21,920 22,205 ________ ________ ________ Total assets for reportable segments 129,262 127,811 127,149 Other assets 83,486 64,099 51,985 ________ ________ ________
Total consolidated assets $212,748 $191,910 $179,134 ________ ________ ________ ________ ________ ________
Identifiable assets represent assets on hand at year-end which are allocable to a particular segment either by their direct use or by allocation when used jointly by two or more segments. Other assets consist principally of cash, temporary investments, mortgage notes receivable, bulk land inventories, and property and equipment used in general corporate business.
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data (in thousands except for per share amounts) for the years ended August 31, 2003 and August 31, 2002, is as follows: Quarters Ended November 30, Feb. 28, May 31, August 31, 2002 2001 2003 2002 2003 2002 2003 2002 _______ _______ _______ _______ _______ _______ _______ ______ Revenue: Citrus $ 1,621 $ 1,506 $ 9,774 $ 7,689 $ 9,247 $ 9,889 $ 3,465 $6,021 Sugarcane 2,748 2,255 5,212 6,978 4,977 1,883 436 673 Ranch 2,118 3,590 1,146 2,013 3,086 2,536 825 963 Property sales 535 2,819 134 8,547 178 252 16,143 1,155 Interest 276 497 245 336 229 403 451 235 Other revenues 957 879 942 569 703 983 1,084 874 _______ _______ _______ _______ _______ _______ _______ ______ Total revenue 8,255 11,546 17,453 26,132 18,420 15,946 22,404 9,921 _______ _______ _______ _______ _______ _______ _______ ______ Costs and expenses: Citrus 1,580 1,485 9,405 7,348 7,385 7,605 1,736 4,983 Sugarcane 2,224 1,855 4,062 5,497 3,476 1,864 426 241 Ranch 2,214 3,010 1,025 1,857 2,658 2,434 893 1,214 Interest 541 514 483 531 518 682 539 694 Other 1,347 1,401 1,398 5,888 1,436 1,341 4,102 3,308 ______ ______ ______ ______ ______ _____ _____ _____ Total costs and expenses 7,906 8,265 16,373 21,121 15,473 13,926 7,696 10,440 		______ ______ ______ ______ ______ _____ _____ _____ Income (loss) be- fore income taxes 349 3,281 1,080 5,011 2,947 2,020 14,708 (519) Provision for income taxes 91 277 290 295 882 1,589 5,162 97 ______ ______ ______ ______ ______ ______ ______ _____ Net income (loss) $ 258 $3,004 $ 790 $4,716 $2,065 $ 431 $ 9,546 (616) ______ ______ ______ ______ ______ ______ ______ _____ ______ ______ ______ ______ ______ ______ ______ _____ Basic earnings (loss) per share $ .04 $ .43 $ .11 $ .66 $ .29 $ .06 $ 1.34 $(.08) ______ ______ ______ ______ ______ ______ ______ _____ ______ ______ ______ ______ ______ ______ ______ _____ Weighted average Shares out- standing 7,097 7,056 7,108 7,065 7,110 7,073 7,111 7,070 ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______
Item 9.
Item 9. Changes in & Disagreements with Accountants on Accounting and Financial Disclosure. _______________________________________________________________________
None
Item 9 (a) 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.
PART III ________
Item 10.
Item 10. Directors and Executive Officers of the Registrant. _____________________________________________________________________
Executive Officers of the Company _________________________________
Information with respect to Directors and Executive Officers may be found under the captions "Nomination for Election as Directors" and "Executive Officers" of the Company's Proxy Statement for the Annual Meeting of Shareholders to be held December 4, 2003 (the "Proxy Statement"). Such information is incorporated herein by reference.
Section 16 (a) - Beneficial Ownership Reporting Compliance ______________________________________________________
Based solely upon a review of Forms 3, 4 and 5 and amendments thereto furnished to the Company pursuant to Rule 16a-3(e) during the 2003 fiscal year and certain written representations, if any, made to the Company, no officer, director or beneficial owners of 10% or more of the Company's common stock has failed to file on a timely basis any reports required by Section 16(a) of the Exchange Act to be filed during fiscal 2003, with the following two exceptions. William L. Barton filed one late Form 4
related to the sale of shares in the Company and Amy Gravina filed one late Form 3 related to the initial acquisition of shares in the Company by a family member.
For information with respect to the executive officers of the registrant, see "Executive Officers of the Registrant" at the end of Part I of this report.
The information called for regarding directors is incorporated by reference to the Company's Proxy Statement dated November 10, 2003.
Code of Ethics ______________
The Company adopted a code of Business Conduct and Ethics during fiscal 2003. This Code of Ethics applies to all directors, officers and employees and includes a "Whistleblower Policy" with procedures for the submission of complaints or concerns regarding financial statement disclosures and other matters. A copy of the Code of Ethics is attached as an Exhibit to this annual Report on Form 10-K, and is also posted on the Company's website. Any person will be provided with a copy of such Code of Ethics without charge upon written request to the Company's address, attention: Denise Plair, Corporate Secretary.
Item 11.
Item 11. Executive Compensation. _________________________________________
The information in the Proxy Statement set forth under the captions "Executive Compensation" and "Directors' Compensation, Committees of the Board of Directors and certain meetings" is incorporated herein by reference.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management. ______________________________________________________________________
Information called for by Items 12 is incorporated by reference to the Company's Proxy Statement dated November 10, 2003.
Item 13.
Item 13. Certain Relationships and Related Transactions. _________________________________________________________________
Information called for by Items 13 is incorporated by reference to the Company's Proxy Statement dated November 10, 2003.
Item 14.
Item 14. Principal Accountant's Fees and Services. _________________________________________________________________
Information called for by Items 14 is incorporated by reference to the Company's Proxy Statement dated November 10, 2003.
PART IV _______
Item 15.
Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K. ____________________________________________________
(a)1. Financial Statements: ____________________
Included in Part II, Item 8 of this Report
Report of Independent Auditors'
Consolidated Balance Sheets - August 31, 2003 and 2002
Consolidated Statements of Operations - For the Years Ended August 31, 2003, 2002 and 2001
Consolidated Statements of Stockholders' Equity and Comprehensive Income (loss) - For the Years Ended August 31, 2003, 2002 and 2001
Consolidated Statements of Cash Flows - For the Years Ended August 31, 2003, 2002 and 2001
(a)2. Financial Statement Schedules: _____________________________
Selected Quarterly Financial Data - For the Years Ended August 31, 2003 and 2002 - Included in Part II, Item 8
Schedule I - Marketable Securities and Other Investments - at August 31, 2003
Schedule V - Property, Plant and Equipment - For the Years Ended August 31, 2003, 2002 and 2001
Schedule VI - Reserves for Depreciation, Depletion and Amortization of Property, Plant and Equipment - For the Years Ended August 31, 2003, 2002 and 2001
Schedule IX - Supplementary Income Statement Information - For the Years Ended August 31, 2003, 2002 and 2001
All other schedules not listed above are not submitted because they are not applicable or not required or because the required information is included in the financial statements or notes thereto.
(a)3. Exhibits: ________
(3) Articles of Incorporation: *
Schedule I - Restated Certificate of Incorporation, Dated February 17, 1972 Schedule II - Certificate of Amendment to Certificate of Incorporation, Dated January 14, 1974 Schedule III - Amendment to Articles of Incorporation, Dated January 14, 1987 Schedule IV - Amendment to Articles of Incorporation, Dated December 27, 1988 Schedule V - By-Laws of Alico, Inc., Amended to September 13, 1994
(4) Instruments Defining the Rights of Security Holders, Including Indentures - Not Applicable
(10) Material Contracts - Citrus Processing and Marketing Agreement with Ben Hill Griffin, Inc., dated November 2, 1983, a Continuing Contract. *
(11) Statement - Computation of Weighted Average Shares Outstanding and Per Share Earnings.
(12) Statement - Computation of Ratios
	 (14) Code of ethics
(19) Annual Report to Security Holders - By Reference
(21) Subsidiaries of the Registrant - Sadddlebag Lake Resorts, Inc. (incorporated in 1971) and Agri-Insurance Company, Ltd. (incorporated in 2000).
(22) Published Report Regarding Matters Submitted to Vote of Security Holders - Not Applicable
(99) Additional Exhibits - None
(b) Reports on Form 8-K: ___________________
Form 8-K dated August 12, 2003 regarding settlement agreement proceedings.
Form 8-K dated July 15, 2003 regarding land sale.
Form 8-K dated June 12, 2003 regarding land sale.
Form 8-K dated April 8, 2003 regarding settlement agreement enforceability.
Form 8-K dated March 26, 2003 regarding land sale.
Form 8-K dated March 12, 2003 regarding land sale.
Form 8-K dated February 24, 2003 regarding settlement agreement enforceability.
Form 8-K dated December 10, 2002 regarding land sale.
Form 8-K dated December 6, 2002 regarding re-election of directors, Officers, and additional comments by the chairman.
Form 8-K dated September 17, 2002 regarding land sale.
Form 8-K dated September 16, 2002 announcing new director.
*Material has been filed with Securities and Exchange Commission and NASDAQ and may be obtained upon request.
	ALICO, INC.
SCHEDULE I
Marketable Securities and Other Investments (in thousands)
August 31, 2003
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E ________ ________ ________ ________ ________
Amount of Which Each Portfolio of Equity Secu- Number of Market rity Issues and Shares or Value of Each Other Se- Name of Issuer Units-Principal Cost of Each Issue curity Issue and Title of Amounts of Bonds Each at Balance Carried in the Each Issue and Notes Issue Sheet Date Balance Sheet ______________ _______________ ___________ ____________ ___________
Municipal Bonds 500 $ 515 $ 543 $ 543
Corporate Bonds 2,557 2,762 2,601 2,601
Mutual-Debt 8,435 8,435 8,247 8,247
Preferred Stocks 99 2,504 2,524 2,524
Common Stocks 67 1,893 1,808 1,808
Mutual Equity 10,181 10,181 11,982 11,982
Fixed maturity Funds 11,146 11,146 11,115 11,115 ___________ ___________ ___________
Total: $ 37,436 $ 38,820 $ 38,820 ___________ ___________ ___________ ___________ ___________ ___________
See accompanying independent auditors report
ALICO, INC. SCHEDULE V (In Thousands)
PROPERTY, PLANT AND EQUIPMENT
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F ________ _________ _________ ________ ________ ________
Other Changes Balance Retire- Debit and/or Balance Beginning Additions ments Credit- at Close Description of Period at Cost or Sales Describe of Period ___________ _________ _________ _________ ___________ __________
For Year Ended August 31, 2003 ______________________________
Land $ 31,542 $ 126 $ 374 $ $ 31,294 Roads 2,247 33 2,280 Agricultural Land Preparation 10 10 Forest Improvements 100 100 Pasture Improvements 3,174 154 3,328 Buildings 3,927 168 238 3,857 Feeding and Watering Facilities for Cattle Herd 23 23 Water Control Facilities 5 5 Fences 303 9 39 273 Cattle Pens 167 10 29 148 Interest-Ranch 34 4 38 Irrigation System- Ranch 676 676 Citrus Groves, Including Irrigation Systems 47,881 2,709 374 50,216 Equipment 9,358 761 470 9,649 Breeding Herd 12,618 1,859 1,766 12,711 Sugarcane-Land Prep- aration, Etc. 26,853 1,256 1,812 26,297 Sod Land-Prep- aration, Etc. 1,583 193 1,776 Farm Land Prep- aration, Etc. 1,854 43 1,897 ___________ ___________ __________ _______ ____________ $ 142,355 $ 7,325 $ 5,102 $ $ 144,578 ___________ ___________ __________ _______ ____________ ___________ ___________ __________ _______ ____________
See accompanying independent auditors report
ALICO, INC. SCHEDULE V (In thousands)
PROPERTY, PLANT AND EQUIPMENT
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F ________ _________ _________ ________ ________ ________
Other Changes Balance Retire- Debit and/or Balance Beginning Additions ments Credit- at Close Description of Period at Cost or Sales Describe of Period ___________ _________ _________ _________ ___________ __________
For Year Ended August 31, 2002 ______________________________
Land $ 31,624 $ 51 $ 133 $ $ 31,542 Roads 2,189 58 2,247 Agricultural Land Preparation 10 10 Forest Improvements 100 100 Pasture Improvements 3,039 135 3,174 Buildings 3,789 138 3,927 Feeding and Watering Facilities for Cattle Herd 18 7 2 23 Water Control Facilities 5 5 Fences 286 18 1 303 Cattle Pens 176 9 167 Interest-Ranch 17 17 34 Irrigation System- Ranch 330 346 676 Citrus Groves, Including Irrigation Systems 45,112 4,065 1,296 47,881 Equipment 9,447 1,316 1,405 9,358 Breeding Herd 12,465 1,723 1,570 12,618 Sugarcane-Land Prep- aration, Etc. 27,039 1,180 1,366 26,853 Sod-Land Prep- aration, Etc. 858 725 1,583
Farm Land Prep- aration 1,848 6 1,854 ___________ __________ __________ _______ ____________ $ 138,352 $ 9,785 $ 5,782 $ $ 142,355 ___________ __________ __________ _______ ____________ ___________ __________ __________ _______ ____________
See accompanying independent auditors report
ALICO, INC. SCHEDULE V (In thousands)
PROPERTY, PLANT AND EQUIPMENT
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F ________ _________ _________ ________ ________ ________
Other Changes Balance Retire- Debit and/or Balance Beginning Additions ments Credit- at Close Description of Period at Cost or Sales Describe of Period ___________ _________ _________ _________ ___________ __________
For the Year Ended August 31, 2001 __________________________________
Land $ 32,396 $ 42 $ 814 $ $ 31,624 Roads 2,157 32 2,189 Agricultural Land Preparation 10 10 Forest Improvements 100 100 Pasture Improve- ments 3,012 51 24 3,039 Buildings 3,554 235 3,789 Feeding and Watering Facilities for Cattle Herd 23 5 18 Water Control Facilities 5 5 Fences 277 10 1 286 Cattle Pens 187 11 176 Interest-Ranch 0 17 17 Irrigation System- Ranch 0 330 330 Citrus Groves, Including Irri- gation Systems 44,327 2,818 2,033 45,112 Equipment 8,956 1,101 610 9,447 Breeding Herd 13,714 1,531 2,780 12,465 Sugarcane-Land Prep.,Etc. 25,991 2,112 1,064 27,039 Sod-Land Prep- aration,Etc. 271 587 858 Farm Land Prep- aration 1,842 6 1,848 ___________ __________ __________ _________ ___________
$ 136,822 $ 8,872 $ 7,342 $ $ 138,352 ___________ __________ __________ _________ ___________ ___________ __________ __________ _________ ___________ * Reclassification from other assets. See accompanying independent auditors report
ALICO, INC. SCHEDULE VI (In thousands)
Reserves for Depreciation, Depletion and Amortization of Property, Plant and Equipment _____________________________________________________
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F ________ __________ __________ __________ ________ ________
Additions Other Balance Balance Charged To Changes at Beginning Profit & Loss Retire- Add(Deduct) Close Of Description of Period of Income ments Desccribe Period ___________ _________ ____________ __________ _________ ________
For Year Ended August 31, 2003 ______________________________
Buildings $ 1,833 $ 181 $ 238 $ $ 1,776 Feeding and Watering Facilities for Cattle Herd 3 2 5 Fences 186 30 32 184 Cattle Pens 106 12 29 89 Interest-Ranch 3 3 6 Irrigation System- Ranch 28 34 62 Citrus Groves, Including Irriga- tion Systems 15,765 1,867 374 17,258 Equipment 5,352 1,071 470 5,953 Breeding Herd 4,760 1,242 1,127 4,875 Roads 411 127 538 Sugarcane Lane Prep- aration, Etc. 8,376 2,058 1,812 8,622 Sod Land Prepara- tion, Etc. 49 57 106 Farm Land Preparation 228 39 267 ___________ __________ __________ ____ ___________ $ 37,100 $ 6,723 $ 4,082 $ 0 $ 39,741 ___________ __________ __________ ____ ___________ ___________ __________ __________ ____ ___________
See accompanying independent auditors report
ALICO, INC. SCHEDULE VI (In thousands)
Reserves for Depreciation, Depletion and Amortization of Property, Plant and Equipment _____________________________________________________
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F ________ __________ __________ __________ ________ ________
Additions Other Balance Balance Charged To Changes at Beginning Profit & Loss Retire- Add(Deduct) Close Of Description of Period of Income ments Desccribe Period ___________ _________ ____________ __________ _________ ________
For Year Ended August 31, 2002 ______________________________
Buildings $ 1,663 $ 170 $ $ $ 1,833 Feeding and Watering Facilities for Cattle Herd 5 1 3 3 Fences 158 29 1 186 Cattle Pens 102 13 9 106 Interest- Ranch 1 2 3 Irrigation System- Ranch 4 24 28 Citrus Groves, Including Irriga- tion Systems 14,835 1,922 992 15,765 Equipment 5,622 1,081 1,351 5,352 Breeding Herd 4,467 1,332 1,039 4,760 Roads 288 123 411 Sugarcane-Land Prep- aration, Etc. 7,520 2,221 1,365 8,376 Sod-Land Prepara- tion, Etc. 24 25 49 Farm Land Preparation 189 39 228 ___________ __________ __________ ____ ___________
$ 34,878 $ 6,982 $ 4,760 $ 0 $ 37,100 ___________ __________ __________ ____ ___________ ___________ __________ __________ ____ ___________
See accompanying independent auditors report
ALICO, INC. SCHEDULE VI (In thousands)
Reserves for Depreciation, Depletion and Amortization of Property, Plant and Equipment _____________________________________________________
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F ________ __________ __________ __________ ________ ________
Additions Other Balance Balance Charged To Changes at Beginning Profit & Loss Retire- Add(Deduct) Close of Description of Period of Income ments Desccribe Period ___________ _________ ____________ __________ _________ ________
For the Year Ended August 31, 2001 __________________________________
Buildings $ 1,503 $ 160 $ $ $ 1,663 Feeding and Watering Facilities for Cattle Herd 9 1 5 5 Fences 130 28 0 158 Cattle Pens 99 14 11 102 Citrus Groves, Interest-Ranch 0 1 1 Irrigation System- Ranch 0 4 4 Including Irrigation Systems 13,714 1,949 828 14,835 Equipment 5,089 1,037 504 5,622 Breeding Herd 5,133 1,275 1,941 4,467 Roads 172 116 288 Sugarcane-Land Prep.,Etc. 5,951 2,314 745 7,520 Sod-Land Prep- aration, Etc. 16 8 24 Farm Land Preparation 150 39 189 ___________ __________ __________ _______ ___________
$ 31,966 $ 6,946 $ 4,034 $ 0 $ 34,878 ___________ __________ __________ _______ ___________ ___________ __________ __________ _______ ___________
See accompanying independent auditors report
ALICO, INC.
SCHEDULE IX ____________
SUPPLEMENTARY INCOME STATEMENT INFORMATION __________________________________________
_____________________________________________________________________________
COLUMN A COLUMN B _____________________________________________________________________________
Charged to Costs and Expenses _____________________________
(In thousands)
Years Ended August 31, ______________________
Item 2003 2002 2001 ____ ____ ____ ____
1. Maintenance and repairs $ 1,156 $ 862 $ 1,476
2. Taxes, other than payroll and income taxes 2,081 2,054 1,617
								 EXHIBIT 11 ALICO, INC. Computation of weighted average shares outstanding at August 31, 2003:
	 Outstanding Date	 Shares 	 Days	 Total (days X shares) 09/01/02 7,080,344 	 2 14,160,688 09/03/02 7,083,592 	 1 7,083,592 09/04/02 7,089,392 	 1 7,089,392 09/05/02 7,089,562 	 1	 7,089,562 09/06/02 7,090,492 	 3	 21,271,476 09/09/02 7,093,092 	 46	 326,282,232 10/25/02 7,095,092 	 4	 28,380,368 10/29/02 7,100,406 	 2	 14,200,812 10/31/02 7,101,706 	 4	 28,406,824 11/04/02 7,102,106 	 1	 7,102,106 11/05/02 7,104,906 	 48	 341,035,488 12/23/02 7,108,345 	 43	 305,658,835 02/04/03 7,109,595 	 168	 1,194,411,960 07/22/03 7,110,095 	 7	 49,770,665 07/29/03 7,111,295 	 22	 156,448,490 08/20/03 7,111,495 	 1	 7,111,495 08/21/03 7,114,295 1 7,114,295 08/22/03 7,115,320 	 3	 21,345,960 08/25/03 7,116,070 7	 49,812,490 	 ___ ______________
365	 2,593,776,730
Total Weight 2,593,776,730 divided by 365 days = 7,106,238 __________ __________
Computation of Basic Earnings per Share:
Net income $12,659 divided by total weighted average shares 7,106 (in thousands)= $1.78 _________ _________ Computation of fully diluted Earnings per Share:
Weighted average shares 7,106 Dilutive options outstanding 150 ______
Total shares, assuming exercise 7,256 ______ ______
Net income $12,659 divided by total weighted average shares (assuming dilution) 7,256 (in thousands) = $1.74 _____ _____
EXHIBIT 12
ALICO, INC.
Computation of Ratios:
2003 Current Assets $90,204 Current Liabilities 10,722
90,204 divided by 10,722 = 8.41:1
2002 Current Assets $66,267 Current Liabilities 9,543
66,267 divided by 9,543 = 6.94:1
EXHIBIT 14 ALICO, INC. CODE OF ETHICS AND WHISTLEBLOWER POLICY
ALICO, INC.
CODE OF BUSINESS CONDUCT AND ETHICS
Preamble
Our Company has always insisted that our employees, officers and directors maintain the highest level of integrity in their dealings with each other and with the public on behalf of the Company. This Code of Ethics (this "Code") is intended to document some of the specific principles of conduct and ethics which will be followed by our directors, officers and employees in the performance of their responsibilities with respect to the Company's business.
Its purpose is to:
Promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
Promote full, fair, accurate, timely and understandable disclosure to the public including our periodic reports required to be filed with the Securities Exchange Commission;
Promote compliance with applicable governmental rules and regulations;
Provide guidance to directors, officers and employees to help them recognize and deal with ethical issues;
Provide a mechanism to report unethical conduct;
Help foster a culture of honesty and accountability.
Our directors have committed that they will comply at all times with the principles set forth in this Code and they expect each of our Officers and employees to do likewise. A violation is grounds for disciplinary action up to and including discharge and possible legal prosecution.
Article I.	Ethical Conduct
Each director, officer and employee of the Company will at all times deal fairly with our customers, suppliers, partners, stockholders and employees, and will conduct business activities and operations in an ethical manner and in compliance with all applicable laws, rules, regulations, Company policies and the standards set forth in this Code.
Each director, officer and employee must:
Avoid all conflicts of interest between his or her personal and professional relationships; provided, however, that if the best interests of the Company dictate that the Company engage in a business situation which places or appears to place a director, officer or employee in a conflict of interest situation such conflict or potential conflict must be immediately and fully disclosed to the Company's Board of Directors prior to any commitment by the Company with respect thereto and the conflict should be dealt with in accordance with our Board's procedures for handling disclosed potential conflicts as set forth in Article III below;
provide, or cause to be provided, full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Company;
comply, and take reasonable actions to encourage others within the Company to comply, with applicable governmental laws, rules and regulations;
promptly report violations of this Code as required and specified in the Reporting Procedures developed by our Audit Committee a copy of which is attached hereto as Exhibit A.; and
promote accountability for adherence to this Code.
Our Company records must at all times be prepared accurately and maintained properly, in accordance with our records management policies and all applicable laws, rules and regulations. No false, artificial or deceptive entries may be made in the Company's records for any reason. The simple rule of thumb is that the Company's books must accurately reflect the transactions they record. In addition, it is important to remember that the Company records belong to the Company. Therefore, the Company records should not be removed from the Company property except for a legitimate business reason, and any documents so removed should be returned to the Company's property as soon as practical. Accounting procedures and controls are prescribed by Company policies. Within these policies, the senior officers of our Company have the primary responsibility for establishing and monitoring adequate systems of internal accounting and controls in accordance with sound accounting principles, and all employees must adhere to these controls. The Company's auditors will be asked from time to time to monitor and report upon these internal controls. Our employees are required to cooperate completely and forthrightly with the Company's internal and independent auditors. No employee, officer or director may engage in, allow or conceal any financial or bookkeeping irregularity.
Article II.	Compliance with Laws, Rules and Regulations
Our employees must comply, at all times and in all material respects, with all applicable laws, rules and regulations.
Our directors, officers and employees who are in possession of material, non- public information must refrain from (i) buying or selling securities, either personally or on behalf of others on the basis of such information, (ii) using such information for personal gain or (iii) disclosing such information
to anyone outside the Company who does not require such information for business purposes in the performance of their services to the Company and agrees to abide by our non use and non selective disclosure policies. Material, non-public information is factual information that a reasonable investor would want to know before making an investment decision to buy or sell our securities which has not been disclosed to the public.
Article III.	Disclosure of Conflicts of Interest and Board Procedures for Resolution of the same.
Directors, officers and employees have a primary business responsibility to the Company and must take all reasonable actions necessary to avoid conflicts of interest or the appearance of conflicts of interest. A conflict of interest occurs when an individual's private interest is detrimental to the interests of the Company as a whole. Examples of situations involving a conflict of interest include but are not limited to:
(i) conducting business with a firm owned, partially owned or controlled by a director, officer, or employee or a relative of such person;
(ii) owning a financial interest in Alico's vendors, customers, or competitors (ownership of less than 1% of the stock of a publicly traded company that competes or does business with our Company is permissible);
(iii) performing work, with or without compensation, for a competitor, governmental or regulatory entity, customer or supplier of our Company, or doing any work for a third party that may adversely affect your performance or judgment on the job or diminish your ability to devote the necessary time and attention to your duties;
(iv) using Company property, materials, supplies funds or other resources for personal purposes. These situations and others like them, where loyalties to our Company could be compromised, must be avoided. If you believe that you are involved in a potential conflict of interest, you must discuss it with your supervisor and report it to our chief legal officer.
The chief legal officer shall file a report with our Board of Directors of any reported conflicts or potential conflicts which shall include a statement as to the resolution if any of such conflict. Conflicts which are unresolved or which otherwise need to be considered by our Board should be placed upon the agenda for the next Board meeting. If the potential conflict involves a member of our Board of Directors, such member shall abstain from participating in the resolution of such conflict by the Board or any special committee to which the Board may refer such matter. Disclosed conflicts of interest or potential conflicts of interest will not be considered to violate our conflicts policy if and only if our Board less any member who may have a conflict of interest with regard to the matter under consideration or a special independent
committee of our board to whom review of such conflict has been referred, has determined that the activity which gives rise to the disclosed conflict of interest or potential conflict of interest is none-the-less in the best interest of the Company and is fair to the Company and its stockholders.
Article IV.	Corporate Opportunities
No director, officer or employee shall:
(i) take for himself or herself personally any opportunity of which he or she becomes aware through the use of Company property, information or position when such opportunity could be of benefit or interest to the Company;
(ii) make it possible for others to take any opportunity of which he or she becomes aware through the use of Company property, information or position when such opportunity could be of benefit or interest to the Company, unless the Company has expressly decided not to attempt to take such opportunity;
(iii) use Company property, information or position for personal gain; or
(iv) compete with the Company in any way.
Article V.	Confidentiality
Directors, officers and employees must maintain inviolable confidentiality of all information entrusted to them by the Company, unless disclosure is authorized by the Company or legally required. Confidential information includes all information relating to the Company that may be of use to the Company's competitors that is not otherwise public information or information that has been entrusted to the Company by its customers, vendors or others that have a relationship with the Company. Directors, officers and employees shall comply with all confidentiality policies adopted by the Company from time to time, and with confidentiality provisions contained in agreements to which they or the Company is a party.
Article VI.	Company Assets
Directors, officers and employees shall take reasonable steps to protect the Company's assets and ensure their efficient use, and directors, officers and employees shall use the Company's assets only for the Company's legitimate business purposes.
Article VII.	Reporting Violations
The Audit Committee of our Board of Directors has established many options for any director, officer and employee seeking compliance advice or reporting misconduct or violations of this Code of Ethics. You can contact your supervisor; our chief legal officer; the chairman of our Audit Committee, Richard C. Ackert (telephone 239-896-1783); our outside legal counsel, David C. Shobe, Esq., Fowler White Boggs Banker P.A., 501 East Kennedy Blvd., Suite 1700, Tampa, Florida 33602; or you can place a report to our specially designated Compliance Reporting Post Office Box 339, LaBelle, Florida, on an
identified or anonymous basis or call our Compliance Hotline at 877-778-5463 which is staffed by independent third parties. The procedures for handling compliance reports and questions as adopted by the Audit Committee from time to time are attached to this Code as Exhibit A.
Anyone who seeks advice, raises a concern or reports misconduct or a violation of this Code is following the requirements of this Code and the desires of our Board of Directors. We encourage such action. Call our Compliance Hotline if you have reason to believe there is a problem. Retaliation against anyone who makes a good faith report of misconduct is illegal and will not be tolerated. We will take appropriate disciplinary action, including severance from the Company, against any individuals engaging in improper retaliatory conduct.
Article VIII.	Amendment to, or Waiver of, this Code
Any amendment to, or waiver of, any provision of this Code with regard to any director, officer or employee must be approved by the Board. In the event that members of the Board will be personally affected by a waiver of this Code, such waiver shall be approved by a committee consisting entirely of members of the Board who will not be personally affected by such waiver.
No amendment to, or waiver of, this Code will be effective until the waiver has been reported to the person responsible for the preparation and filing of the Company's current reports on Form 8-K, in sufficient detail to enable such person to accurately disclose such amendment or waiver in the current report on Form 8-K if necessary. The Company shall promptly disclose on Form 8-K, by means of filing such form with the SEC, any amendment to, or waiver of, this Code that applies to the Company's directors or executive officers.
THE INFORMATION PROVIDED AND PROCEDURES SET FORTH IN THIS PUBLICATION DO NOT CONFER CONTRACTUAL RIGHTS OF ANY KIND UPON ANY EMPLOYEE OR THIRD PARTY OR CREATE CONTRACTUAL OBLIGATIONS OF ANY KIND FOR ALICO, INC.
Exhibit A
Whistleblower Policy
Procedures for the Submission of Complaints or Concerns Regarding Financial Statement or other Disclosures, Accounting, Internal Accounting or Disclosure Controls, Auditing Matters or Violations of the Alico, Inc., Code of Business Ethics and Conduct
Section 301 of the Sarbanes-Oxley Act requires the Audit Committee of the Board of Directors of Alico, Inc. (the "Company") to establish procedures for: (a) the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters; and
(b) the submission by employees of the Company and others, on a confidential and anonymous basis, of good faith concerns regarding questionable accounting or auditing matters.
In accordance with Section 301, the Audit Committee has adopted the following procedures:
1. The Company shall promptly forward to the Audit Committee any complaints that it has received regarding financial statement disclosures, accounting, internal accounting or disclosure controls or auditing matters, disclosure violations or violations of our Code of Business Conduct and Ethics.
2. Any employee of the Company may submit, on a confidential, anonymous basis if the employee so desires, any good faith concerns regarding financial statement or other disclosure, accounting, internal accounting or disclosure controls, auditing matters or violations of the Company's Code of Business Conduct and Ethics. All such concerns shall be set forth in writing and forwarded in a sealed envelope to the chairman of the Audit Committee, in care of the Company's Chief Legal Officer, L. Craig Simmons, in an envelope labeled with a legend such as: "To be opened by the Audit Committee only. Being submitted pursuant to the "whistleblower policy" adopted by the Audit Committee." If an employee would like to discuss any matter with the Audit Committee, the employee should indicate this in the submission and include a telephone number at which he or she might be contacted if the Audit Committee deems it appropriate. Any such envelopes received by the Company's Chief Legal Officer shall be forwarded promptly and unopened to the chairman of the Audit Committee. If the employee would prefer an alternative method of contact, the employee may contact our "Employee Whistleblower Hotline" using the contact information set forth below or may mail a complaint as indicated above to our Employer Whistleblower post office box using the address listed below.
3. Following the receipt of any complaints submitted hereunder, the Audit Committee will investigate each matter so reported and take corrective and disciplinary actions, if appropriate, which may include, alone or in combination, a warning or letter of reprimand, demotion, loss of merit increase, bonus or stock options, suspension without pay or termination of employment.
4. The Audit Committee may enlist committee members, employees of the Company and/or outside legal, accounting or other advisors, as appropriate, to conduct any investigation of complaints regarding financial statement disclosures, disclosure concerns or violations, accounting, internal accounting controls, auditing matters or violations of the Company's Code of Business Conduct and Ethics. In conducting any investigation, the Audit Committee shall use reasonable efforts to protect the confidentiality and anonymity of the complainant.
5. The Company does not permit retaliation of any kind against employees for complaints submitted hereunder that are made in good faith. Additionally, no employee shall be adversely affected because the employee refuses to carry out a directive which, in fact, constitutes corporate fraud, or is a violation of state or federal law or the Company's Code of Business Conduct and Ethics.
6. The Audit Committee shall retain as a part of the records of the Audit Committee any such complaints or concerns for a period of no less than seven (7) years.
7. Problems or concerns related to financial statement or other disclosures, accounting, internal or disclosure controls, auditing matters or questions, disclosure violations or violations of the Company's Code of Business Conduct and Ethics which an employee wishes to discuss or report on a non-confidential or non-anonymous basis should be reported immediately to the company's Chief Legal Officer using the contact information specified below or if the employee is uncomfortable reporting to such person, the Company's outside legal counsel using the contact information specified below.
The Chief Legal Officer or outside counsel, as the case may be, shall keep a written record of all such reports or inquiries and make monthly reports of the same to the Chairman of the Audit Committee in any month in which an inquiry or complaint is received by them. If the contact is in the nature of an alleged violation of the Company's Code of Conduct and Ethics or an impropriety with regard to the Company's financial statements or other disclosures, accounting, internal or disclosure controls, or auditing matters, the allegation shall immediately be relayed by the Chief Legal Officer or the Company's outside legal counsel to the Chairman of the Audit Committee, who shall immediately notify the complainant that the complaint has been received and begin the procedures outlined above.
Contact Information
Chief Legal Officer L Craig Simmons Alico, Inc. P O Box 338 LaBelle, FL 33975 Phone 863-675-2966
Audit Committee Chairman Richard C. Ackert South Trust Bank, N.A. P O Box 2425 Fort Myers, FL 33902 Phone 239-896-1779
Outside Legal Counsel David C. Shobe, Esq. Fowler White Boggs Banker P.A. 501 East Kennedy Blvd. Suite 1700 Tampa, FL 33602 Phone 813-222-1123
Whistleblower Hotline 877-778-5463
Whistleblower Post Office Box P O Box 339 LaBelle, FL 33975
Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ALICO, INC. (Registrant)
November 13, 2003 Ben Hill Griffin, III Date Chairman, Chief Executive Officer and Director
/s/ Ben Hill Griffin, III
November 13, 2003 W. Bernard Lester Date President, Chief Operating Officer and Director
/s/ W. Bernard Lester
November 13, 2003 L. Craig Simmons Date Vice President and Chief Financial Officer
/s/ L. Craig Simmons
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated:
Richard C. Ackert Amy Gravina Director Director
/s/ Richard C. Ackert /s/ Amy Gravina
K. E. Hartsaw 					 Thomas E. Oakley Director					 Director
/s/ K. E. Hartsaw /s/ Thomas E. Oakley
William L. Barton Monterey Campbell, III Director Director
/s/ William L. Barton /s/ Monterey Campbell, III
Walker E. Blount, Jr. Director
/s/ Walker E. Blount, Jr.
November 13, 2003 Date
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacities and on the date indicated:
I, Ben Hill Griffin, III, certify that:
1. I have reviewed this annual report on Form 10-K of Alico, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report; and
c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors:
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: November 13, 2003
/s/ Ben Hill Griffin, III _____________________________________ Ben Hill Griffin, III 						Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacities and on the date indicated:
I, L. Craig Simmons, certify that:
1. I have reviewed this annual report on Form 10-K of Alico, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (As defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report; and
c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors:
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: November 13, 2003
/s/ L. Craig Simmons _____________________________________ L. Craig Simmons 						Vice President and Chief Financial Officer