Form 10-K
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended September 30, 2009
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 0-261
ALICO, INC.
(Exact name of registrant as specified in its charter)
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Florida
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59-0906081 |
(State or other jurisdiction of incorporation
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(IRS Employer |
or organization)
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identification number) |
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P.O. Box 338, La Belle, Florida
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33975 |
(Address of principal executive offices)
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(Zip code) |
Registrants
telephone number including area code (863) 675-2966
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
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Name of each exchange |
Title of class:
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on which registered: |
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COMMON CAPITAL STOCK, $1.00 Par value, Non-cumulative
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NASDAQ |
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as define in Rule 405
of the Securities Act.
Yes o No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13
or Section 15(d) of the Act.
Yes o No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that such registrant was required to file such reports), and (2) has
been subject to such filings requirements for the past 90 days.
Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit and post such
files).
Yes þ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 or
Regulation S-K is not contained herein, and will not be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this form 10-K.
Yes o No þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated
filer in Rule 12b-2 of the Exchange Act (Check one):
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Large accelerated filer o
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Accelerated filer þ
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Non-accelerated filer o
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Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act.)
Yes o No þ
The aggregate market value of the voting and nonvoting common equity held by non-affiliates
based on the closing price, as quoted on the NASDAQ as of March 31, 2009 (the last business day
of Alicos most recently completed second fiscal quarter) was
$84,948,192. There were 7,375,817
shares of stock outstanding at December 4, 2009.
Documents Incorporated by Reference:
Portions of the Proxy Statement of Registrant to be dated on or before January 20, 2010 are
incorporated by reference in Part III of this report.
ALICO, INC.
FORM 10-K
For the year ended September 30, 2009
2
PART I
Alico, Inc. (the Company), which was formed February 29, 1960 as a spin-off of the Atlantic Coast
Line Railroad Company, is a land management company operating in Central and Southwest Florida.
Alicos primary asset is 135,466 acres of land located in Collier, Glades, Hendry, Lee and Polk
Counties. (See Item 2 for location and acreage by current primary use.) Alico is involved in a
variety of agribusiness pursuits in addition to land leasing and rentals, rock and sand mining and
real estate sales activities.
Alicos land is managed for multiple uses wherever possible. For example, cattle ranching, forestry
and land leased for grazing, recreation and oil exploration utilize the same acreage in some
instances.
The relative contributions of each operation to the operating revenue, profit and total assets of
Alico during the past three years (all revenues are from external customers within the United
States) are discussed under the caption Reportable Segment Information and in Note 10 to the
Consolidated Financial Statements.
Alicos retail land sales and development business is handled solely through its wholly owned
subsidiary, Alico Land Development, Inc. (formerly known as Saddlebag Lake Resorts, Inc.). However,
Alico has from time to time directly sold properties which, in the judgment of Management and the
Board of Directors, were surplus to Alicos primary operations. Additionally, Alicos wholly owned
subsidiary, Alico-Agri, Ltd., has also engaged in bulk land sales. Alico, through its subsidiary
Alico Land Development, Inc., has recently taken actions to enhance the planning and strategic
positioning of all Company owned land. These actions include seeking entitlement of Alicos land
assets in order to preserve rights should Alico choose to develop property in the future.
On September 28, 2007, the Board of Directors of Alico approved a change in Alicos fiscal year end
from August 31 to September 30. The fiscal year change was effective beginning with Alicos 2008
fiscal year. Alicos 2008 fiscal year began on October 1, 2007 and ended September 30, 2008,
resulting in a one month transition period that began September 1, 2007 and ended September 30,
2007. Accordingly, information is presented for the years ended September 30, 2009 and September
30, 2008, the one month transition period ended September 30, 2007, and for the prior fiscal year
ended August 31, 2007.
Subsidiary Operations
Alico has five wholly owned subsidiaries: Agri-Insurance Company, Ltd. (Agri), Alico-Agri, Ltd.
(Alico-Agri), Alico Plant World, LLC (Plant World), Bowen Brothers Fruit LLC (Bowen), and
Alico Land Development, Inc. (ALDI), formerly known as Saddlebag Lake Resort, Inc.
Agri
Agri is a Bermuda based captive insurer and was created to write crop insurance against
catastrophic losses due to weather and disease. Agri provided crop insurance to Alico and other
Florida based third parties during the years from 2000 to 2005. Due to several hurricanes which
impacted the State of Florida during the fall of 2004 and 2005, Agri sustained losses related to
its underwriting activities which caused Agri to suspend additional insuring activities pending an
updated feasibility study of its insuring activities. Based on the findings of the study, along
with the history of losses, Agri ceased issuing policies. Alico is currently working to dissolve
Agri.
Alico-Agri
Alico-Agri, Ltd. was formed during fiscal year 2003 to manage the real estate holdings of Agri.
Agri transferred all of its property holdings, consisting solely of the Lee County, Florida
properties surrounding Florida Gulf Coast University, and the related contracts to Alico-Agri for a
99% partnership interest. Alico, the managing partner, transferred cash for a 1% interest in the
partnership. Upon the dissolution of Agri, the partnership interest in Alico-Agri will be
transferred to ALDI.
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Plant World
In September 2004, Alico, through Alico-Agri, purchased the assets of La Belle Plant World, Inc. a
wholesale grower and shipper of vegetable transplants to commercial farmers. The purchase price was
$4.9 million for the land, office building, greenhouses and associated equipment. Alico Plant
World, LLC was set up as a wholly owned subsidiary of Alico-Agri, Ltd. Due to ongoing losses
sustained by Plant World, Alico discontinued the transplant operations in June 2008 and is
currently leasing Plant Worlds facilities to an outside nursery operation.
Bowen
Bowen provides harvesting, hauling and marketing services to Alico and other outside citrus growers
in the state of Florida.
ALDI
ALDI has been active in the subdivision, development and sale of real estate since its inception in
1971. ALDI has developed and sold two subdivisions near Frostproof, Florida. Through its ALDI
subsidiary, Alico has recently taken actions to enhance the planning and strategic positioning of
all Company owned land. These actions include seeking entitlement of Alicos land assets in order
to preserve rights should Alico choose to develop property in the future.
The financial results of the operations of these subsidiaries are consolidated with those of Alico.
Intercompany activities and balances are eliminated in consolidation. (See Note 1 to the
Consolidated Financial Statements.)
Segments
Alico engages in a variety of agricultural pursuits as well as other land management activities.
For information concerning the revenues, gross profits and assets attributable to each business
segment please refer to Note 10 of the Consolidated Financial Statements.
Agricultural Operations
The table
below outlines the relative contribution to operating revenue by each
of the Companys segments for the past three fiscal years:
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Fiscal year ended September 30, |
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Fiscal year ended |
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2009 |
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2008 |
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August 31, 2007 |
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Bowen |
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31 |
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39 |
% |
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40 |
% |
Citrus |
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40 |
% |
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35 |
% |
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36 |
% |
Sugarcane |
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9 |
% |
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8 |
% |
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7 |
% |
Cattle |
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9 |
% |
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6 |
% |
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8 |
% |
Vegetables |
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5 |
% |
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5 |
% |
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3 |
% |
Other agriculture |
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1 |
% |
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2 |
% |
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1 |
% |
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Total Agriculture |
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95 |
% |
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95 |
% |
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95 |
% |
Real estate |
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2 |
% |
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3 |
% |
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3 |
% |
Non agriculture |
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3 |
% |
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2 |
% |
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2 |
% |
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Total Operating revenue |
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100 |
% |
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100 |
% |
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100 |
% |
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Bowen Brothers
Bowens operations include harvesting, hauling and marketing citrus for both Alico and other
growers in the state of Florida. Bowens operations also include the purchase and resale of citrus
fruit. Bowen Brothers was purchased in February 2006 to provide Alico with additional citrus
marketing expertise and the ability to harvest its own citrus crop.
Citrus Groves
Alicos Citrus Grove operations consist of cultivating citrus trees in order to produce citrus for
delivery to the fresh and processed citrus markets in the state of Florida. Approximately 10,552
acres of citrus were grown and harvested during the 2008-09 season. During the fiscal year ended
September 30, 2009, Alico sold approximately 39% of its citrus crop to Southern Gardens, a wholly
owned subsidiary of U.S. Sugar Corporation (USSC). The balance of the sales concentration is
attributable to citrus contracts with Florida Orange Marketers, Inc. which represented
approximately 29% of Alicos citrus sales and Cutrale, which represented approximately 29% of the
Alicos citrus sales. While Alico believes that it can replace these arrangements with other
marketing alternatives, it may not be able to do so quickly and the results may not be as favorable
as the current contracts.
4
Sugarcane
Alicos sugarcane operations consist of cultivating raw sugarcane for sale to a sugar processor.
The crop is harvested by a co-op, proportionately owned by sugarcane growers, including Alico.
Alico had 8,307 acres, 9,110 acres and 10,254 acres of sugarcane in production during the fiscal
years ended September 30, 2009, September 30, 2008 and August 31, 2007, respectively. Since the
inception of its sugarcane program in 1988, Alico has sold 100% of its product through a pooling
agreement with USSC, a local Florida sugar mill. Under the terms of the pooling agreement, Alicos
sugarcane is processed and sold along with sugarcane from other growers. The proceeds, less costs
and a profit margin, are distributed on a pro rata basis as the finished product is sold. Due to
the location of the Companys sugarcane fields relative to location of alternative processing
plants, the loss of USSC as a customer would have a negative material impact on the Companys
sugarcane operations.
Cattle
Alicos cattle operations, located in Hendry and Collier Counties, Florida, is engaged primarily in
the production of beef cattle, feeding cattle at western feedlots and the raising of replacement
heifers. The breeding herd consists of approximately 10,189 cows, bulls and replacement heifers.
Approximately 53% of the herd is from one to five years old, while the remaining 47% is at least
six years old. Alico primarily sells to packing and processing plants in the United States. Alico
also sells cattle through local livestock auction markets and to contract cattle buyers in the
United States. These buyers provide ready markets for Alicos cattle. In the opinion of Management,
the loss of any one or a few of these processing plants and/or buyers would not have a material
adverse effect on Alicos cattle operation.
Vegetables
In the fiscal year ended August 31, 2006 Alico began growing corn and beans for delivery to local
packing facilities. Alico has marketing agreements for its vegetable products through local packing
facilities and brokers in the state of Florida for sale to wholesale and retail outlets in the
United States. In the opinion of Management, the loss of any one or a few of these facilities or
brokers would not have a material adverse effect on Alicos vegetable operation.
Other Agricultural Operations
Alico is also engaged in the sale of native sod, and other native plants and trees for landscaping
purposes. The sale of these products is not significant to the overall revenue or profitability
of the Company.
Real Estate
ALDI has been active in the subdivision, development and sale of real estate since its inception in
1971. ALDI has developed and sold two subdivisions near Frostproof, Florida. Through its ALDI
subsidiary, Alico has developed a plan to enhance the planning and strategic positioning of all
Company owned land. These actions include seeking entitlement of Alicos land assets in order to
preserve rights should Alico choose to develop property in the future.
5
Non Agricultural Operations
Land Rentals for Grazing, Agricultural, Oil Exploration and Other Uses
Alico rents land to others on a tenant-at-will basis, for grazing, farming, oil exploration and
recreational uses. Alico will continue to develop additional land to lease for farming as
strategically advantageous and according to demand. There were no significant changes in the method
of rental for these properties during the past fiscal year.
Mining Operations: Rock and Sand
In May 2006, Alico acquired a 526 acre mine site for rock and fill in Glades County, Florida. Rock
and sand reserves are depleted and charged to cost of goods sold proportionately as the property is
mined. Additionally, ALDI is currently seeking a permit for two rock mines in Hendry and Lee
Counties. Operating revenue and profits from mining operations have not been significant to the
Company during the past three fiscal years but may increase as additional properties are permitted
and become operational in the future.
Competition
As indicated, Alico is primarily engaged in a variety of agricultural and nonagricultural
activities, all of which are in highly competitive markets. For instance, citrus is grown in
foreign countries and several states, the most notable of which are: Brazil, Florida, California,
and Texas. Beef cattle are produced throughout the United States and domestic beef sales also
compete with imported beef. Sugarcane products compete with products from sugar beets in the United
States as well as imported sugar and sugar products from foreign countries. Vegetables are produced
throughout the United States, as is sod. Forest and rock products are produced in most parts of the
United States. Leasing of land is also widespread.
Alicos share of each of the United States markets for citrus, sugarcane, cattle, vegetables, sod,
mining and forest products is less than 3%.
Environmental Regulations
Alicos operations are subject to various federal, state and local laws regulating the discharge of
materials into the environment. Management believes Alico is in compliance with all such rules and
such compliance has not had a material effect upon capital expenditures, earnings or Alicos
competitive position.
While compliance with environmental regulations has not had a material economic effect on Alicos
operations, executive officers are required to spend a considerable amount of time monitoring these
matters. In addition, there are ongoing costs incurred in complying with permitting and reporting
requirements.
Employees
At September 30, 2009, Alico and its subsidiaries had a total of 161 full-time employees classified
as follows: Bowen 13; Citrus 82; Sugarcane 12; Ranch 7; Vegetables 12; Real Estate 2; Leasing 3;
Facilities Maintenance Support 12; General and Administrative 18. Management is not aware of any
efforts by employees or outside organizers to create any type of labor union. Management believes
that the employer/employee relationship environment is such that labor organization activities are
unlikely to occur.
6
Seasonal Nature of Business
As with any agribusiness enterprise, Alicos business operations are predominantly seasonal in
nature. The harvest and sale of citrus fruit generally occurs in all quarters, but is more
concentrated during the first, second and third fiscal quarters. Sugarcane is harvested during the
first and second fiscal quarters. Vegetable harvest and sales generally occur in the first, second
and third fiscal quarters. Other segments of Alicos business such as its cattle and sod sales, mining and leasing operations, tend to be recurring rather than seasonal in nature.
Capital resources and raw materials
Management believes that Alico will be able to meet its working capital requirements for the
foreseeable future through internally generated funds and credit availability. Alico has credit
commitments that provide for revolving credit that is available for Alicos general use. Raw
materials needed to propagate the various crops grown by Alico which consist primarily of
fertilizer, herbicides, insecticides, fuel and water are readily available from local sources.
Available Information
Alicos internet address is: http://www.alicoinc.com. As required by SEC rules and
regulations, Alico files reports with the SEC on Form 8-K, Form 10-Q, Form 10-K and the annual
proxy statement. These reports are available to the public to read and copy at the SECs Public
Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information
on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
Alico is an electronic filer with the SEC and these reports are also available through the SEC
internet site (http://www.sec.gov), and through Alicos website as soon as reasonably practicable
after filing with the SEC. Copies of documents filed with the SEC are also available free of charge
upon request.
7
Alicos operations involve varying degrees of risk and each investor should consider the specific
risks and speculative features inherent in and affecting the business of Alico before investing in
Alico. In considering the following risk and speculative factors, an investor should realize that
there is a possibility of losing his or her entire investment.
Alicos financial condition and results of operations could be affected by the risk factors
discussed below. These factors may also cause actual results to differ materially from the results
contemplated by the forward looking statements in Managements Discussion and Analysis.
The list of risks below is not intended to be all inclusive. A complete listing of risks is beyond
the scope of this document. However, in contemplating the financial position and results of
operations of Alico, investors should carefully consider, among other factors, the following risk
factors:
General
Alico has a 51% stockholder and a limited public float which could adversely affect the price of
its stock and restrict the ability of the minority shareholders to have a voice in corporate
governance.
Atlantic Blue Group, Inc. (Atlanticblue) (formerly Atlantic Blue Trust, Inc.) is the owner of
approximately 51% of Alicos common stock. Accordingly, Alicos common stock is thinly traded and
its market price may fluctuate significantly more than stocks with a larger public float.
Additionally by virtue of its ownership percentage, Atlanticblue is able to elect all directors
and, consequently, is deemed to control Alico. While Atlanticblue has issued a governance letter
dated December 3, 2009 reaffirming its commitment to maintaining a majority of independent
directors on Alicos Board of Directors, this commitment may be terminated at any time upon 30 days
prior written notice. Alico does not have cumulative voting. Accordingly, stockholders of Alico
other than Atlanticblue have no effective control over who the management and directors of Alico
are or will be.
Alico manages its properties in an attempt to capture its highest and best use and customarily does
not sell property until it determines that the property is surplus to its agricultural activities
by reason of its potential for industrial, commercial or residential use. Alico has little control
over when this occurs as real estate sales are primarily market driven.
Alicos goal for its land management program is to manage and selectively improve its lands for
their most profitable use. To this end, Alico continually evaluates its properties focusing on soil
capabilities, subsurface composition, topography, transportation, availability of markets for its
crops and the climatic characteristics of each of the tracts. While Alico is primarily engaged in
agricultural activities, when land is determined to be better suited to industrial, commercial or
residential use, Alico has classified the property as surplus to its agricultural activities and
sold it. Alicos land management strategy is thus a long term strategy to acquire, hold and manage
land for its best use, selling surplus land at opportune times and in a manner that would maximize
Alicos profits from such surplus tracts. The timing for when agricultural lands become best suited
for industrial, commercial or residential use depends upon a number of factors which are beyond the
control of Alico such as:
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population migration; |
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national, regional and local economic conditions; |
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conditions in local real estate markets (e.g., supply of land versus demand); |
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competition from other available property; |
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current level of, or potential availability of roads and utilities; |
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availability of governmental entitlements; |
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government regulation and changes in real estate, zoning, land use, environmental or tax laws; |
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interest rates and the availability of financing, and; |
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potential liability under environmental and other laws. |
Alico is not able to predict when its properties will become best suited for non-agricultural use
and has limited ability to influence this process. Additionally, changes from time to time in any
or a combination of these factors could result in delays in sales, Alicos ability to sell tracts
which are determined to be surplus or its ability to realize optimum pricing from such sales.
Alico carries large receivables from seller-financed sales of large tracts of surplus land the
collectability of which is subject to credit risk relating to debtors.
The Companys sale of surplus lands often involves buyer financing provided by the Company. In
addition to the cash deposit paid by a buyer of surplus land, the Company at times takes a mortgage
for the unpaid balance of the purchase price of the land sales contract. The collectability of the
amounts owed is dependent on the creditworthiness of the mortgagors, which often depends upon
their continued financial success. The purchasers of the surplus tracts are often developers, whose
success is in turn directly affected by multiple factors in the national and local real estate
markets, including but not limited to interest rates, demand for housing, competition from other
available land, governmental regulation, permitting, and unanticipated costs of construction.
Depending on the magnitude of its debt to the Company, a mortgagors default on a sales contract or
the bankruptcy of any material purchaser of surplus land could have a materially adverse effect on
the Company. Additionally, if a borrower defaults on a secured property and the Company repossesses
the property, the Company cannot predict, under the current real estate market conditions, if the
repossessed property can be sold in the near term or, if the Company is able to sell the
repossessed property, if such sale will result in a gain equal to the anticipated gain under the
original sales contract for such property. Currently Alico-Agri is foreclosing on a mortgage on a
tract involving 4,528 acres in Lee County, Florida with an outstanding balance of $52.2 million.
This foreclosure is being contested. If Alico-Agri is successful in foreclosing on this tract, it
does not believe that it will be able to obtain a deficiency judgment for the amount owed, which
may be in excess of the value of the foreclosed property at the time of foreclosure.
Alico is subject to environmental liability by virtue of owning significant holdings of real estate
assets.
Alico faces a potential for environmental liability by virtue of its ownership of real property. If
hazardous substances (including herbicides and pesticides used by Alico or by any persons leasing
Alicos lands) are discovered on or emanating from any of Alicos lands and the release of such
substances presents a threat of harm to the public health or the environment, Alico may be held
strictly liable for the cost of remediation of these hazardous substances. In addition,
environmental laws that apply to a given site can vary greatly according to the sites location,
its present and former uses, and other factors such as the presence of wetlands or endangered
species on the site. Although Alico purchases insurance when it is available for environmental
liability, these insurance contracts may not be adequate to cover such costs or damages or may not
continue to be available to Alico at prices and terms that would be satisfactory. It is possible
that in some cases the cost of compliance with these environmental laws could exceed the value of a
particular tract of land or be significant enough that it would have a materially adverse effect on
Alico.
Alico has a large customer that accounts for 24% of revenues.
For the
fiscal year ended September 30, 2009, Alicos largest
customer, U.S. Sugar Corporation (USSC) for whom
Alico grows sugarcane, accounted for approximately
24% of operating revenue. Additionally, Alico sells citrus to Southern Gardens, a wholly owned subsidiary of
USSC. These marketing arrangements involve marketing pools which allow the contracting party to
market Alicos product in conjunction with the product of other entities in the pool and pay Alico
a proportionate share of the resulting revenue from the sale of the entire pooled product. While
Alico believes that it can replace these arrangements with other marketing alternatives, it may not
be able to do so quickly and the results may not be as favorable as the current contracts.
9
Agricultural Risks General
Agricultural operations generate a large portion of Alicos revenues. Agriculture operations are
subject to a wide variety of risks including product pricing due to variations in supply and
demand, weather, disease, input costs and product liability.
Agricultural products are subject to supply and demand pricing which is not predictable.
Because Alicos agricultural products are commodities, Alico is not able to predict with certainty
what price it will receive for its products; however, its costs are relatively fixed. Additionally,
the growth cycle of such products in many instances dictates when such products must be marketed
which may or may not be advantageous in obtaining the best price. Excessive supplies tend to cause
severe price competition and lower prices throughout the industry affected. Conversely, shortages
may cause higher prices. Shortages often result from adverse growing conditions which can reduce
the available product of growers in affected growing areas while not affecting others in
non-affected growing areas. Since multiple variables which can affect pricing are incurred before
pricing and supply are known, Alico cannot accurately predict or control from year to year what its
profits or losses from agricultural operations will be.
Alicos agricultural assets are concentrated and the effects of adverse weather conditions such as
hurricanes can be magnified.
Alicos agricultural operations are concentrated in south Florida counties with more than 80% of
its agricultural lands located in a contiguous parcel in Hendry County. All of these areas are
subject to occasional periods of drought, excess rain, flooding, and freeze. Crops require water in
different quantities at different times during the growth cycle. Accordingly, too much or too
little water at any given point can adversely impact production. While Alico attempts to mitigate
controllable weather risks through water management and crop selection, its ability to do so is
limited. Alicos operations in southern and central Florida are also subject to the risk of
hurricanes. Hurricanes have the potential to destroy crops and impact citrus production through the
loss of fruit and destruction of trees either as a result of high winds or through the spread of
wind blown disease. Alico was impacted by hurricanes during fiscal years 2006, 2005 and 2004 and
sustained losses relating to the storms during all three of those fiscal years. Alico seeks to
minimize hurricane risk by the purchase of insurance contracts, but a portion of Alicos crops
remain uninsured. Because Alicos agricultural properties are located in relative close proximity
to each other, the impact of adverse weather conditions may be magnified in Alicos results of
operations.
Water Use Regulation restricts Alicos access to water for agricultural use.
Alicos agricultural operations are dependent upon the availability of adequate surface and
underground water needed to produce its crops. The availability of water for use in irrigation is
regulated by the State of Florida through water management districts which have jurisdiction over
various geographic regions in which Alicos lands are located. Currently, Alico has permits for the
use of underground and surface water which are adequate for its agricultural needs. Surface water
in Hendry County, where much of Alicos agricultural land is located, comes from Lake Okeechobee
via the Caloosahatchee River and the system of canals used to irrigate such land. Since the Army
Corps of Engineers controls the level of Lake Okeechobee, this organization ultimately determines
the availability of surface water even though the use of water has been permitted by the State of
Florida through the water management district. The Army Corps of Engineers previously decided to
lower the permissible level of Lake Okeechobee in response to concerns about the ability of the
levees surrounding the lake to restrain rising waters which could result from hurricanes. Changes
in permitting for underground or surface water use during times of drought, because of lower lake
levels, may result in shortages of water for agricultural use by Alico and could have a materially
adverse effect on Alicos agricultural operations and financial results.
10
Alicos citrus groves are subject to damage and loss from disease including but not limited to
Citrus Canker and Citrus Greening diseases.
Alicos citrus groves are subject to damage and loss from diseases such as Citrus Canker and Citrus
Greening. Each of these diseases is widespread in Florida and Alico has found instances of Citrus
Canker and/or Citrus Greening in several of its groves. Both diseases are present in areas where
Company groves are located. There is no known cure for Citrus Canker at the present time although
some pesticides inhibit the development of the disease. The disease is spread by contact with
infected trees or by wind blown transmission. Alicos policy is to destroy trees which become
infected with this disease or with Citrus Greening disease. Alico maintains an inspection program
to discover infestations early. Citrus Greening destroys infected trees and is spread by psyllids.
Alico utilizes a pesticide program to control these hosts. At the present time, there is no known
pesticide or other treatment for Citrus Greening once trees are infected. Both of these diseases
pose a significant threat to the Florida Citrus industry and to Alicos citrus groves. Wide spread
dissemination of these diseases in Alicos groves could cause a material adverse effect to Alicos
operating results and citrus grove assets.
Pesticide and herbicide use by Alico or its lessees could create liability for Alico.
Alico and some of the parties to whom Alico leases land for agricultural purposes, use herbicides,
pesticides and other hazardous substances in the operation of their businesses. All pesticides and
herbicides used by Alico have been approved for use by the proper governmental agencies with the
hazards attributable to each substance appropriately labeled and described. Alico maintains
policies requiring its employees to apply such chemicals strictly in accordance with the labeling.
However, Alico does not have any knowledge or control over the chemicals used by third parties who
lease Alicos lands for cultivation. It is possible that some of these herbicides and pesticides
could be harmful to humans if used improperly, or that there may be unknown hazards associated with
such chemicals despite any contrary government or manufacturer labels. Alico might have to pay the
costs or damages associated with the improper application, accidental release or the use or misuse
of such substances.
Changes in immigration laws or enforcement of such laws could impact the ability of Alico to
harvest its crops.
Alico engages third parties to provide personnel for its harvesting operations. The personnel
engaged by such third parties could be from pools composed of immigrant labor. The availability and
number of such workers is subject to decrease if there are changes in the U.S. immigration laws or
by stricter enforcement of such laws. The scarcity of available personnel to harvest Alicos
agricultural products could cause Alicos harvesting costs to increase or could lead to the loss of
product that is not timely harvested which could have a materially adverse effect upon Alico.
11
Changing public perceptions regarding the quality, safety or health risks of Alicos agricultural
products can affect demand and pricing of such products.
The general publics perception regarding the quality, safety or health risks associated with
particular food crops Alico grows and sells could reduce demand and prices for some of Alicos
products. To the extent that consumer preferences evolve away from products Alico produces for
health or other reasons, and Alico is unable to modify its products or to develop products that
satisfy new customer preferences, there could be decreased demand for Alicos products. Even if
market prices are unfavorable, produce items which are ready to be or have been harvested must be
brought to market. Additionally, Alico has significant investments in its citrus groves and cannot
easily shift to alternative products for this land. A decrease in the selling price received for
Alicos products due to the factors described above could have a materially adverse effect on
Alico.
Alico faces significant competition in its agricultural operations.
Alico faces significant competition in its agricultural operations both from domestic and foreign
producers and does not have any branded products. Foreign growers generally have a lower cost of
production, less environmental regulation and in some instances greater resources and market
flexibility than Alico. Because foreign growers have great flexibility as to when they enter the
U.S. market, Alico cannot always predict the impact these competitors will have on its business and
results of operations. The competition Alico faces from foreign suppliers of sugar and orange juice
is mitigated by quota restriction on sugar imports imposed by the U.S. government and by a
governmentally imposed tariff on U.S. orange imports. A change in the governments sugar policy
allowing more imports or a reduction in the U.S. orange juice tariff would adversely impact Alicos
results of operations.
|
|
|
Item 1B. |
|
Unresolved Staff Comments. |
None.
12
At September 30, 2009, Alico owned a total of 135,466 acres of land located in five counties in
Florida. Acreage in each county and the primary classification with respect to the present use of
these properties is shown in the following table:
Alico, Inc. & Subsidiaries
Land Use Summary
September 30, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
Hendry(1) |
|
|
Polk |
|
|
Collier |
|
|
Glades |
|
|
Lee |
|
Citrus: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Producing acres |
|
|
10,552 |
|
|
|
3,018 |
|
|
|
3,405 |
|
|
|
4,129 |
|
|
|
|
|
|
|
|
|
Support and
nonproductive(2) |
|
|
6,333 |
|
|
|
2,347 |
|
|
|
789 |
|
|
|
3,197 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Citrus |
|
|
16,885 |
|
|
|
5,365 |
|
|
|
4,194 |
|
|
|
7,326 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sugarcane: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Producing acres |
|
|
8,307 |
|
|
|
8,307 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Support and
nonproductive(2) |
|
|
7,715 |
|
|
|
7,715 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Sugarcane |
|
|
16,022 |
|
|
|
16,022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ranch: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Improved pasture |
|
|
21,201 |
|
|
|
20,906 |
|
|
|
295 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Semi-improved pasture |
|
|
21,752 |
|
|
|
20,038 |
|
|
|
602 |
|
|
|
1,112 |
|
|
|
|
|
|
|
|
|
Native pasture |
|
|
19,513 |
|
|
|
11,846 |
|
|
|
5,949 |
|
|
|
1,718 |
|
|
|
|
|
|
|
|
|
Support and
nonproductive(2) |
|
|
13,583 |
|
|
|
12,527 |
|
|
|
376 |
|
|
|
680 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Ranch |
|
|
76,049 |
|
|
|
65,317 |
|
|
|
7,222 |
|
|
|
3,510 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Farming: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Productive acres |
|
|
5,521 |
|
|
|
5,521 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Support and
nonproductive(2) |
|
|
17,479 |
|
|
|
17,479 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Farming |
|
|
23,000 |
|
|
|
23,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sod: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Producing acres |
|
|
1,540 |
|
|
|
1,540 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Support and
nonproductive(2) |
|
|
363 |
|
|
|
363 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Sod |
|
|
1,903 |
|
|
|
1,903 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rock and Sand Mining |
|
|
526 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
526 |
|
|
|
|
|
Commercial & Residential |
|
|
1,081 |
|
|
|
54 |
|
|
|
66 |
|
|
|
|
|
|
|
|
|
|
|
961 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
135,466 |
|
|
|
111,661 |
|
|
|
11,482 |
|
|
|
10,836 |
|
|
|
526 |
|
|
|
961 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Approximately 51,527 acres of the Hendry County property are encumbered by a Revolving
Line of Credit, Term Note and mortgage held by Farm Credit of Southwest Florida, in the amount
of $78.9 million. |
|
(2) |
|
Includes buildings, roads, water management systems, fallow lands and wetlands. |
13
Of the above lands, Alico utilizes approximately 21,000 acres of improved pasture plus
approximately 42,000 acres of semi-improved and native pasture for cattle production. Much of the
land is also leased for multi-purpose use such as oil exploration, farming and recreation.
From the inception of Alicos predecessors initial development program in 1948, one of the
Companys goals has been to develop the lands for their 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. Management believes that Alico lands are suitable for agricultural, residential and
commercial uses. In the past, some of the land was considered surplus to the agricultural needs of
Alico and, as indicated under Item 1 of this report, sales of such surplus property were made from
time to time.
Alico utilizes consultants to work with senior management and the Board of Directors to enhance the
planning and strategic positioning of all Company owned land. ALDI also oversees the entitlement of
Alicos land assets in order to preserve these rights should Alico choose to develop the property
in the future.
Management believes that each of the major agricultural programs is adequately supported by
equipment, buildings, fences, irrigation systems, drainage systems and other amenities required for
the operation of the projects.
|
|
|
Item 3. |
|
Legal proceedings. |
In June 2008, the Internal Revenue Service (IRS) issued a final Settlement Agreement regarding
audits of Alico for the tax years 2000 through 2004. Pursuant to the agreement, Alico and the IRS
agreed to final taxes resulting from the audits of $41.1 million, penalties of $4.1 million and
interest of $20.0 million. Alico also paid State income taxes related to the final IRS settlement
of $6.2 million along with $4.3 million of related interest. The Settlement Agreement concluded
that Alico must recognize unreported gains resulting from the transfer of real property to a
foreign subsidiary (Agri). The real estate was originally transferred and reported at its
historical cost basis. Additionally, Alico must recognize Subpart F income related to Agris
earnings. Alico had not previously recognized income related to the transactions referenced above
based on reliance on an IRS determination letter stating that Agri was a captive insurer, exempt
from taxes provided certain procedural requirements were followed. Alico believed that it had
followed such requirements, while the IRS ruled otherwise.
14
On October 29, 2008 Alico was served with a shareholder derivative action complaint filed by Baxter
Troutman against JD Alexander and John R. Alexander which names Alico as a nominal defendant.
Mr. Troutman is the cousin and nephew of the two defendants, respectively, and is a shareholder in
Atlanticblue, a (51%) shareholder of Alico. From February 26, 2004 until January 18, 2008 Mr.
Troutman was a director of Alico. The complaint alleges that JD Alexander and John R. Alexander
committed breaches of fiduciary duty in connection with a proposed merger of Atlanticblue into
Alico which was proposed in 2004 and withdrawn by Atlanticblue in 2005. The suit also alleges,
among other things, that the merger proposal was wrongly requested by defendants JD Alexander and
John R. Alexander and improperly included a proposed special dividend; and that the Alexanders
sought to circumvent the Boards nominating process to ensure that they constituted a substantial
part of Alicos senior management team and these actions were contrary to the position of Alicos
independent directors at the time causing a waste of Alicos funds and the resignations of the
independent directors in 2005. As a result the complaint is seeking damages to be paid to Alico by
the Alexanders in excess of $1,000,000. The complaint concedes that Mr. Troutman has not
previously made demand upon Alico to take action for the alleged wrongdoing as required by Florida
law alleging that he believed such a demand would be futile. A copy of the Complaint may be
obtained from the Clerk of the Circuit Court in Polk County, Florida.
On June 3, 2009 a Special Committee of Alicos Board of Directors comprised entirely of Independent
Directors and which was constituted to investigate the shareholder derivative action filed by Mr.
Troutman, completed its investigation with the assistance of independent legal counsel, and
determined that it would not be in Alicos best interest to pursue such litigation. Alico has
filed a motion to dismiss the litigation based upon the findings of the Special Committee. A copy
of the report was filed with the Court and it and the other pleadings in the case are available
from the Clerk of Circuit Court in Polk County, Florida by reference to the matter of Baxter G.
Troutman, Plaintiff vs. John R. Alexander, John D. Alexander, Defendants and Alico, Inc. Nominal
Defendant, Case No. 08-CA-10178 Circuit Court, 10th Judicial Circuit, Polk County,
Florida.
|
|
|
Item 4. |
|
Submission of Matters to a Vote of Security Holders. |
None.
15
PART II
|
|
|
Item 5. |
|
Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities. |
Common Stock Prices
The common stock of Alico, Inc. is traded on the NASDAQ Stock Market, LLC (NASDAQ) under the
symbol ALCO. The high and low prices as reported by NASDAQ, by fiscal quarter, during the fiscal
years ended September 30, 2009 and 2008 are presented below:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
|
2008 |
|
|
|
Price |
|
|
Price |
|
|
|
High |
|
|
Low |
|
|
High |
|
|
Low |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
$ |
47.85 |
|
|
$ |
22.34 |
|
|
$ |
51.13 |
|
|
$ |
35.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter |
|
$ |
45.02 |
|
|
$ |
20.24 |
|
|
$ |
45.62 |
|
|
$ |
35.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
$ |
30.73 |
|
|
$ |
23.25 |
|
|
$ |
45.48 |
|
|
$ |
33.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter |
|
$ |
33.94 |
|
|
$ |
26.29 |
|
|
$ |
50.32 |
|
|
$ |
33.90 |
|
Approximate Number of Holders of Common Stock
As of October 31, 2009 there were approximately 382 holders of record of Alicos Common Stock as
reported by Alicos transfer agent.
Dividend Information
Dividends declared during the last two fiscal years were as follows:
|
|
|
|
|
|
|
Record Date |
|
Payment Date |
|
Amount Paid Per Share |
|
|
|
|
|
|
|
|
April 30, 2008 |
|
May 16, 2008 |
|
$ |
0.275 |
|
July 31, 2008 |
|
August 15, 2008 |
|
$ |
0.275 |
|
October 31, 2008 |
|
November 14, 2008 |
|
$ |
0.275 |
|
January 30, 2009 |
|
February 15, 2009 |
|
$ |
0.275 |
|
April 30, 2009 |
|
May 15, 2009 |
|
$ |
0.1375 |
|
July 31, 2009 |
|
August 15, 2009 |
|
$ |
0.1375 |
|
October 31, 2009 |
|
November 13, 2009 |
|
$ |
0.1375 |
|
At a Board of Directors meeting held on October 30, 2009 the Directors deferred the consideration
of a quarterly dividend.
Alicos ability to pay dividends in the immediate future is dependent on a variety of factors
including earnings and the financial condition of Alico. For a discussion of these factors, see
Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations.
16
Equity Compensation Arrangements
On November 3, 1998, Alico adopted the Alico, Inc. Incentive Equity Plan (the 1998 plan) pursuant
to which the Board of Directors could grant options, stock appreciation rights and/or restricted
stock to certain directors and employees. The 1998 Plan authorized grants of shares or options to
purchase up to 650,000 shares of authorized but unissued common stock. This plan expired on
November 3, 2008.
On February 20, 2009 Alico adopted the Alico, Inc., Incentive Equity Plan (The 2008 Plan) pursuant
to which the Board of Directors of Alico may grant options, stock appreciation rights, and/or
restricted stock to certain directors and employees. The Plan authorized grants of shares or
options to purchase up to 350,000 shares of authorized but unissued common stock to be funded by
treasury purchases. Details of the plan are more fully described in the Companys proxy statement
filed on January 23, 2009.
On October 27, 2006, the Board awarded 20,000 shares of restricted stock to the Chief Executive
Officer under the 1998 Plan as additional compensation. Under the terms of the agreement, 4,000
shares vested effective August 31, 2006, 4,000 vested effective August 31, 2007 and the remaining
12,000 shares vested upon the CEOs retirement on June 30, 2008. The fair value per share was
$61.96 on the date of the award.
During November 2007, the CEO and COO elected to receive a portion of their annual incentive bonus
in Company stock. The CEO chose to receive 4,000 shares at a value of $177 thousand, while the COO
chose to receive 500 shares at a value of $22 thousand. These shares were issued under the 1998
plan. Compensation expense for these awards was accrued and recognized during the fourth quarter of
Alicos fiscal 2007 year.
A grant of 25,562 restricted shares was made to four senior executives in January 2008 under the
1998 Plan with a fair value of $40.67 per share, in order to replace previous retirement benefits
granted. 7,707 of the shares granted in January 2008 related to previously vested retirement
benefits and vested immediately. In January 2009, a total of 3,571 shares vested and the shares
were issued from treasury stock. The remaining 14,284 shares granted in January 2008 vest 25%
annually in January of each year until fully vested.
On September 30, 2008, Alico, hired a President for its subsidiary ALDI. As a portion of the total
compensation package, the Board awarded 7,500 shares of restricted stock under the 1998 Plan. Under
the terms of the agreement, the shares will vest 20% on September 30, 2010 and continue to vest 20%
per year until they are fully vested. The fair value per share was $47.43 on the date of the award.
No stock options or stock appreciation rights have been granted since February 2004. There were no
outstanding stock options or appreciation rights outstanding at September 30, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities |
|
|
|
Number of |
|
|
Weighted |
|
|
remaining available for |
|
|
|
Securities to be |
|
|
average exercise |
|
|
future issuance under |
|
|
|
issued upon |
|
|
price of |
|
|
equity compensation |
|
|
|
exercise of |
|
|
outstanding |
|
|
plans (excluding |
|
|
|
outstanding options, |
|
|
options, warrants |
|
|
securities reflected in |
|
|
|
warrants and rights |
|
|
and rights |
|
|
Column (a)) |
|
Plan Category |
|
[a] |
|
|
[b] |
|
|
[c] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation
plans approved by
security holders |
|
|
|
|
|
|
|
|
|
|
344,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation
plans not approved
by security holders |
|
|
|
|
|
|
|
|
|
|
|
|
17
Issuer Purchases of Equity Securities
In order to fund restricted stock grants pursuant to its Incentive Equity plans for the purpose of
providing restricted stock to eligible Directors and Senior Management and to align their interests
with those of the Company shareholders, the table below summarizes treasury purchases during the
last two fiscal years (in whole dollars):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased as Part of |
|
|
|
|
|
|
Total Number of |
|
|
Average price |
|
|
Publicly Announced |
|
|
Total Dollar value of |
|
Date |
|
Shares Purchased |
|
|
paid per share |
|
|
Plans or Programs |
|
|
shares purchased |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 2007 |
|
|
12,000 |
|
|
$ |
43.97 |
|
|
|
55,770 |
|
|
$ |
527,699 |
|
March 2008 |
|
|
6,200 |
|
|
$ |
44.24 |
|
|
|
61,970 |
|
|
$ |
274,268 |
|
May 2008 |
|
|
9,768 |
|
|
$ |
40.32 |
|
|
|
71,738 |
|
|
$ |
393,851 |
|
December 2008 |
|
|
15,733 |
|
|
$ |
38.37 |
|
|
|
87,471 |
|
|
$ |
603,611 |
|
January 2009 |
|
|
4,267 |
|
|
$ |
41.67 |
|
|
|
91,738 |
|
|
$ |
177,807 |
|
February 2009 |
|
|
2,500 |
|
|
$ |
28.38 |
|
|
|
94,238 |
|
|
$ |
70,948 |
|
May 2009 |
|
|
3,000 |
|
|
$ |
27.21 |
|
|
|
97,238 |
|
|
$ |
81,643 |
|
The stock repurchases began in November 2005 and will be made on a quarterly basis until November
1, 2013 through open market transactions. The timing and actual number of shares repurchased will
depend on a variety of factors including price, corporate and regulatory requirements and other
market conditions. All purchases will be made subject to restrictions of Rule 10b-18 relating to
volume, price and timing so as to minimize the impact of the purchases upon the market for the
Companys shares.
The Company does not anticipate that any purchases under the 2008 Plan will be made from any
officer, director or control person. There are currently no arrangements with any person for the
purchase of the shares. Alico may purchase an additional 344,500 shares in accordance with the
authorization. Pursuant to approved plans, Alico purchased 3,000, 6,767 and 15,733 shares in the
open market during the third, second and first quarter of fiscal year 2009, respectively, at a
weighted average price of $36.63 per share.
There were no purchases of common stock of Alico made during the three months ended September 30,
2009 by Alico or any affiliated purchaser of Alico as defined in rule 10b-18(a)(3) under the
Exchange Act.
18
Alico Performance
The graph below represents the Companys common stock performance, comparing the value of $100
invested on September 1, 2004 in the Companys common stock, the S&P 500 and a Company-constructed
peer group.
19
Total Return To Shareholders
(Includes reinvestment of dividends)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ANNUAL RETURN PERCENTAGE |
|
|
|
Years Ending |
|
Company Name / Index |
|
Aug. 05 |
|
|
Aug. 06 |
|
|
Aug. 07 |
|
|
Aug. 08 |
|
|
Sep. 09 |
|
Alico, Inc. |
|
|
20.40 |
|
|
|
15.39 |
|
|
|
-11.28 |
|
|
|
-13.32 |
|
|
|
-30.08 |
|
S&P 500 Index |
|
|
12.56 |
|
|
|
8.88 |
|
|
|
15.13 |
|
|
|
-11.14 |
|
|
|
-15.20 |
|
New Peer Group |
|
|
58.83 |
|
|
|
-26.65 |
|
|
|
-21.12 |
|
|
|
-1.34 |
|
|
|
-24.11 |
|
Old Peer Group |
|
|
56.59 |
|
|
|
-27.71 |
|
|
|
-27.92 |
|
|
|
2.34 |
|
|
|
-23.82 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base |
|
|
INDEXED RETURNS |
|
|
|
Period |
|
|
Years Ending |
|
Company Name / Index |
|
Aug. 04 |
|
|
Aug. 05 |
|
|
Aug. 06 |
|
|
Aug. 07 |
|
|
Aug. 08 |
|
|
Sep. 09 |
|
Alico, Inc. |
|
|
100 |
|
|
|
120.40 |
|
|
|
138.93 |
|
|
|
123.26 |
|
|
|
106.85 |
|
|
|
74.71 |
|
S&P 500 Index |
|
|
100 |
|
|
|
112.56 |
|
|
|
122.55 |
|
|
|
141.10 |
|
|
|
125.38 |
|
|
|
106.32 |
|
New Peer Group |
|
|
100 |
|
|
|
158.83 |
|
|
|
116.49 |
|
|
|
91.89 |
|
|
|
90.66 |
|
|
|
68.80 |
|
Old Peer Group |
|
|
100 |
|
|
|
156.59 |
|
|
|
113.19 |
|
|
|
81.59 |
|
|
|
83.50 |
|
|
|
63.61 |
|
|
|
|
|
|
New Peer Group Companies |
|
Old Peer Group Companies |
CONSOLIDATED TOMOKA LAND CO |
|
CONSOLIDATED TOMOKA LAND CO |
ST JOE CO |
|
ST JOE CO |
TEJON RANCH CO |
|
TEJON RANCH CO |
TEXAS PACIFIC LAND TRUST |
|
THOMAS PROPERTIES GROUP |
THOMAS PROPERTIES GROUP |
|
|
|
|
20
|
|
|
Item 6. |
|
Selected Financial Data. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Years Ended |
|
|
One Month Ended |
|
|
Fiscal |
|
|
|
September 30, |
|
|
September 30, |
|
|
Years Ended August 31, |
|
Description |
|
2009 |
|
|
2008 |
|
|
2007 (1) |
|
|
2007 |
|
|
2006 |
|
|
2005 |
|
|
|
(In Thousands, Except Per Share Amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
$ |
89,528 |
|
|
$ |
116,382 |
|
|
$ |
758 |
|
|
$ |
132,005 |
|
|
$ |
74,164 |
|
|
$ |
52,938 |
|
Income (loss) from
continuing operations |
|
|
(3,649 |
) |
|
|
5,603 |
|
|
|
(849 |
) |
|
|
(13,395 |
) |
|
|
8,021 |
|
|
|
6,260 |
|
Income (loss) from
continuing operations per
weighted average common
share |
|
$ |
(0.50 |
) |
|
$ |
0.76 |
|
|
$ |
(0.12 |
) |
|
$ |
(1.82 |
) |
|
$ |
1.09 |
|
|
$ |
0.85 |
|
Average Number of Shares
Outstanding |
|
|
7,368 |
|
|
|
7,367 |
|
|
|
7,358 |
|
|
|
7,369 |
|
|
|
7,368 |
|
|
|
7,331 |
|
Cash Dividend Declared Per
Share |
|
|
0.69 |
|
|
|
1.10 |
|
|
|
0.28 |
|
|
|
1.10 |
|
|
|
1.03 |
|
|
|
1.25 |
|
Total Assets |
|
|
200,235 |
|
|
|
273,932 |
|
|
|
285,349 |
|
|
|
281,206 |
|
|
|
263,579 |
|
|
|
248,306 |
|
Long-Term Obligations |
|
|
80,715 |
|
|
|
140,239 |
|
|
|
143,265 |
|
|
|
143,790 |
|
|
|
103,601 |
|
|
|
85,826 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Beginning with fiscal 2008, Alico changed its year end from August 31 to September 30. The year ended September 30, 2008 was the first full
year on the new fiscal year. Results for September 30, 2007 are for the one month transition period. |
Alico, through its subsidiary Bowen, purchased the assets of Bowen Brothers Fruit Co., Inc. for
$1.9 million in February 2006. The purchase was made to provide Alico with additional citrus
marketing expertise and the ability to harvest its own citrus crop. Operating revenue, income,
assets and long-term obligations from Bowen have been included beginning in fiscal year ended
August 31, 2006. For further information concerning Bowens operations and assets please refer to
Note 10 of the consolidated financial statements.
During the fiscal year ended August 31, 2007 the Company revised its estimate in connection with a
tax disagreement with the IRS which resulted in additional income tax expense of $25.6 million for
that fiscal year. The effect of this transaction was to reduce income from continuing operations.
Additionally, the Company utilized its revolving line of credit for funding to settle the dispute,
causing long-term obligations to increase. For further information regarding the IRS settlement,
please refer to Note 8 of the consolidated financial statements.
During the fiscal year ended September 30, 2009, the Company utilized cash to reduce its
outstanding debt by approximately $50.0 million, causing a reduction in total assets and long-term
obligations. For further information concerning the Companys long-term obligations, please refer
to Note 6 of the consolidated financial statements.
21
|
|
|
Item 7. |
|
Managements Discussion and Analysis of Financial Condition and Results of Operations. |
Cautionary Statement
Some of the statements in this document include statements about future expectations. Statements
that are not historical facts are forward-looking statements for the purpose of the safe harbor
provided by Section 21E of the Exchange Act and Section 27A of the Securities Act. These
forward-looking statements, which include references to one or more potential transactions, and
strategic alternatives under consideration or projections of performance for the upcoming fiscal
year, are predictive in nature or depend upon or refer to future events or conditions. These
statements are subject to known, as well as, unknown risks and uncertainties that may cause actual
results to differ materially from expectations. These risks include, but are not limited to those
discussed in the risk factors section of this annual report whether or not such risks are repeated
in connection with any forward looking statement. There can be no assurance that any anticipated
performance or future transactions will occur or be structured in the manner suggested or that any
such transaction will be completed. Alico undertakes no obligation to update publicly any
forward-looking statements, whether as a result of future events, new information or otherwise.
When used in this document, or in the documents incorporated by reference herein, the words
anticipate, should, believe, estimate, may, intend, expect, and other words of similar meaning, are
likely to address Alicos 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 Alico 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 Alico. 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 Alico to a greater extent than indicated.
The following discussion focuses on the results of operations and the financial condition of Alico.
This section should be read in conjunction with the consolidated financial statements and notes.
On September 28, 2007, the Board of Directors of Alico approved a change in Alicos fiscal year end
from August 31 to September 30. The fiscal year change was effective beginning with Alicos 2008
fiscal year. Alicos 2008 fiscal year began on October 1, 2007 and ended September 30, 2008,
resulting in a one month transition period that began September 1, 2007 and ended September 30,
2007. Accordingly, information is presented for the fiscal years ended September 30, 2009 and 2008,
the one month transition period and for the prior fiscal year ended August 31, 2007.
Alicos agricultural operations are seasonal in nature. While the season for each commodity
differs, generally the season for each commodity is concluded by August 31 of each year and begins
no earlier than October 1. For this reason, results for the fiscal year ended September 30 are
generally comparable to those of the prior fiscal years ended August 31.
22
Liquidity and Capital Resources
Dollar amounts listed in thousands:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
Cash & liquid investments |
|
$ |
22,204 |
|
|
$ |
78,637 |
|
|
$ |
78,110 |
|
Total current assets |
|
|
51,335 |
|
|
|
123,130 |
|
|
|
135,376 |
|
Current liabilities |
|
|
12,644 |
|
|
|
18,200 |
|
|
|
25,138 |
|
Working capital |
|
|
38,691 |
|
|
|
104,930 |
|
|
|
110,238 |
|
Total assets |
|
|
200,235 |
|
|
|
273,932 |
|
|
|
285,349 |
|
Notes payable |
|
$ |
78,928 |
|
|
$ |
137,758 |
|
|
$ |
135,884 |
|
Current ratio |
|
|
4.06 |
|
|
|
6.77 |
|
|
|
5.39 |
|
Management believes that Alico will be able to meet its working capital requirements for the
foreseeable future with internally generated funds and available credit. Alico has credit
commitments under a revolving line of credit that provides for revolving credit of up to $75.0
million. Of the $75.0 million credit commitment, $47.7 million was available for Alicos general
use at September 30, 2009 (see Note 6 to consolidated financial statements).
Cash flows from Operations
Cash flows from operations were $16.4 million, $13.8 million and ($52.9 million) for the fiscal
years ended September 30, 2009, September 30, 2008 and August 31, 2007. Cash flow from operations
was ($1.8 million) for the one month transition period ended September 30, 2007. Cash flow from
operations for the fiscal years ended September 30, 2008 and August 31, 2007 were negatively
impacted by payments of $10.5 million to the State of Florida and $66.2 million to the IRS,
respectively, related to the settlement of an IRS audit, which will cause those years not to be
indicative of expected future cash flows from operations (see note 8 to consolidated financial
statements).
In November 2008, Alicos subsidiary, Alico-Agri received a payment of $2.5 million in escrow in
connection with the restructure of a real estate contract (East) with Ginn- LA Naples, Ltd, LLLP
(Ginn). In April 2009, Ginn defaulted on the East parcel contract. Under the terms of the
contract, a quarterly interest payment of $283 thousand was due on March 30, 2009, but the payment
was not received. Alico-Agri has initiated foreclosure proceedings to reclaim the property.
A settlement agreement with a vendor resulted in a $7.0 million payment to Alico in March 2009.
Under the terms of the agreement, the vendor admits no wrongdoing and stipulates that Alico cannot
divulge the vendors name or the agreements circumstances. Alico recognized the payment as other
income during the second quarter of the fiscal year ended September 30, 2009.
In December 2008, Alico offered an option to former and retired employees to terminate future
benefits under a non-qualified deferred compensation plan in exchange for cash equal to the net
present value of future vested benefits. Payments of $1.4 million were paid to participants who
elected the option in January 2009. Life insurance policies were liquidated to fund the
distributions.
Several noncash adjustments to net income caused significant differences in cash flows from
operations compared with the net loss for the fiscal year ended September 30, 2009. The Company
recorded impairments related to its breeding herd, two parcels of real estate and auction rate
securities totaling approximately $5.4 million during the fourth quarter of the fiscal year ended
September 30, 2009. These impairments caused a decrease in net income, but were non-cash items.
Additionally during the fourth quarter of the fiscal year ended September 30, 2009, the Company
adjusted its deferred tax rate and created an allowance account for its charitable contribution
carry forward. These noncash tax items caused net income to decrease by $836 thousand.
23
Inventoried costs of $18.7 million at September 30, 2009 were significantly lower than
the $27.5 million level at September 30, 2008, the result of decreases in the costs of major inputs
such as fuel and fertilizer from their 2008 levels, as well as aggressive cost reduction measures
undertaken by the Company during fiscal year 2009.
Cash flows from Investing
Cash outlays for land, equipment, buildings, and other improvements totaled $6.7 million, $6.1
million and $9.1 million during the fiscal years ended September 30, 2009, September 30, 2008 and
August 31, 2007, respectively. Alico anticipates its capital needs, primarily for the care of young
citrus trees, real estate entitlement work, sugarcane plantings, and raising cattle for breeding
purposes, at between $4.5 million and $5.5 million for fiscal year 2010.
Alicos balance sheet has carried large amounts of cash and investments over the past several years
in order to comply with liquidity provisions mandated by the Bermuda Monetary Authority for Alicos
wholly owned insurance subsidiary, Agri. Alico is currently working to liquidate the subsidiary
and utilized approximately $50.0 million of liquidated Agri cash
and investment proceeds to reduce its
Revolving Line of Credit (RLOC) in January 2009.
Recent market conditions have depressed Florida real estate markets causing the predictability of
real estate sales including timing and market values to be problematic. Alico through its
subsidiary ALDI continues to market parcels of its real estate holdings which are deemed by the
Board of Directors and Management to be excess to the immediate needs of Alicos core operations.
The sale of any of these parcels could be material to the operations and cash flows of Alico.
Cash flows from Financing
Alico is working to dissolve its Agri subsidiary. Proceeds received from the liquidation of cash
and investments held by Agri enabled Alico to pay $50.0 million on its revolving line of credit in
January 2009.
On March 30, 2009, the Company modified its RLOC with Farm Credit of Southwest Florida. According
to the terms of the modification, the total availability of funds under the RLOC was reduced to
$75.0 million from $125.0 million. Additionally, several covenants were modified as follows: a)
the covenant requiring the Company to maintain stockholder equity of at least $110 million was
eliminated in its entirety b) the minimum current ratio was increased to 2.5 to 1 from 2.0 to 1 and
c) the fixed charge coverage ratio was replaced by a debt coverage ratio requiring the Company to
maintain a debt coverage of not less than 1.10 to 1 on a rolling four quarter basis. The maturity
date of the RLOC was extended from August 1, 2011 to August 1, 2012. The interest rate index was
changed from 3 month LIBOR to 1 month LIBOR, and the interest rate spread increased by 100 basis
points. The Company also pledged an additional 10,147 acres of real estate in Hendry County,
Florida. In addition to the covenants discussed above, the agreements set limitations on the
extension of loans or additional borrowings by Alico or any subsidiary. The covenants also restrict
Alicos activities regarding investments, liens, borrowing and leasing.
In September 2008, Alico converted $50.0 million of the outstanding balance on its RLOC with Farm
Credit of Southwest Florida to a 10 year term loan bearing a fixed interest rate of 6.79% with
equal payments of principal and interest of $1.7 million per quarter until maturity. The term loan
is cross collateralized with Alicos RLOC and contains identical covenants. Alico is currently in
compliance with all the covenants under its loan agreements and expects to continue to work with
its lender to remain so for the foreseeable future.
24
Alicos Board of Directors has authorized the repurchase of up to 350,000 shares of Alicos common
stock through November 1, 2013, for the purpose of funding restricted stock grants under its 2008
Incentive Equity Plan in order to provide restricted stock to eligible Directors and Senior
Managers to align their interests with those of Alicos shareholders. Alico may purchase an
additional 344,500 shares in accordance with the authorization. Previously Alico provided
incentives under its 1998 Plan, and was authorized to purchase up to 650,000 shares prior to the
plans expiration in November 2008. Pursuant to approved plans, Alico purchased 25,500 shares in
the open market at an average price of $36.63 per share during the fiscal year ended September 30,
2009, 27,968 shares at an average price of $42.76 during the fiscal year ended September 30, 2008
and 27,770 shares at a weighted average price of $53.45 per share during the fiscal year ended
August 31, 2007. No treasury purchases were made during the transition month ended September 30,
2007.
Alico paid quarterly dividends of $0.275 per share on November 14, 2008 and February 15, 2009 and
quarterly dividends of $0.1375 per share on May 15, 2009, August 15, 2009 and November 13, 2009. At
its meeting on October 30, 2009, the Board of Directors deferred dividend consideration. The Board
will continue to assess financial condition, compliance with debt covenants, and earnings of Alico
in determining its dividend policy.
Results from Operations
Summary of results (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal |
|
|
|
|
|
Fiscal |
|
|
|
|
One Month |
|
|
Year |
|
|
|
Year Ended |
|
|
Ended |
|
|
Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
August 31, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2007 |
|
|
Operating revenue |
|
$ |
89,528 |
|
|
|
116,382 |
|
|
$ |
758 |
|
|
$ |
132,005 |
|
Gross profit (loss) |
|
|
1,838 |
|
|
|
14,057 |
|
|
|
(69 |
) |
|
|
29,685 |
|
General & administrative expenses |
|
|
9,096 |
|
|
|
11,478 |
|
|
|
815 |
|
|
|
12,727 |
|
Profit (loss) from continuing
operations |
|
|
(7,258 |
) |
|
|
2,579 |
|
|
|
(884 |
) |
|
|
16,958 |
|
Profit on sale of bulk real estate |
|
|
1,646 |
|
|
|
817 |
|
|
|
|
|
|
|
1,257 |
|
Interest and investment income |
|
|
594 |
|
|
|
7,745 |
|
|
|
683 |
|
|
|
7,337 |
|
Interest expense |
|
|
5,430 |
|
|
|
6,565 |
|
|
|
820 |
|
|
|
5,652 |
|
Other income (expense) |
|
|
6,961 |
|
|
|
262 |
|
|
|
(4 |
) |
|
|
225 |
|
Income tax provision |
|
$ |
162 |
|
|
|
(765 |
) |
|
$ |
(176 |
) |
|
$ |
33,520 |
|
Effective income tax rate |
|
|
-4.6 |
% |
|
|
-15.8 |
% |
|
|
17.2 |
% |
|
|
166.6 |
% |
Net income (loss) from continuing
operations |
|
$ |
(3,649 |
) |
|
|
5,603 |
|
|
$ |
(849 |
) |
|
$ |
(13,395 |
) |
Alicos agricultural operations generally combine to produce the majority of operating revenue,
gross profit and income from operations. As a producer of agricultural products, Alicos ability to
control the prices it receives from its products is limited, and prices for agricultural products
can be volatile. Operating results are largely dictated by market conditions. A combination of
factors, discussed more specifically in the paragraphs following, resulted in lower profits for the
Companys agricultural operations in fiscal year 2009 when compared with fiscal year 2008 and 2007.
Furthermore, declining market conditions caused the Company to evaluate several of its assets at
September 30, 2009. Impairments of $5.4 million were identified during the process and charged to
operations.
The Company has conducted detailed analyses of its operations in an effort to become more efficient
and become more profitable in the future. These analyses have resulted in the implementation of
aggressive cost reduction measures, the scaling back of operations and the elimination of several
lines of business. The Board of Directors has taken an active role to assist Management in
identifying areas for further improvement and closely monitoring results. While the prices
received for agricultural products is largely out of the Companys control, the Company believes
that margins will improve as further cost savings are realized.
25
General and Administrative
General and administrative expenses decreased by 21% for the fiscal year ended September 30, 2009
compared with the fiscal year ended September 30, 2008. This savings resulted in the lowest level
of general and administrative expenses since the fiscal year ended August 31, 2004. Further
reductions are expected for fiscal year 2010. Cost savings measures have included reductions in
staffing, outside consultants and employee benefit programs, but have generally occurred over all
categories of general and administrative expenses. The cost reduction initiative was implemented
during the fiscal year ended September 30, 2008 and resulted in savings of 10% when compared with
the fiscal year ended August 31, 2007.
Profit from the Sale of Real Estate
Alicos real estate revenues during the fiscal years ended September 30, 2009, September 30, 2008
and August 31, 2007 have primarily resulted from three contracts with the Ginn Companies related to
the sale of real estate in Lee County, Florida. The Company recognized a total of $3.0 million,
$4.6 million, and $4.6 million of real estate revenue for the fiscal years ended September 30,
2009, September 30, 2008 and August 31, 2007, respectively, of which $1.6 million, $0.8 million and
$1.3 million were classified as non-operating revenues for the
fiscal years ended September 30, 2009, September 30, 2008
and August 31, 2007, respectively.
In October 2008, the three contracts were renegotiated, resulting in the Company retaking
possession of one of the properties resulting in a reduction of revenue during the fiscal year
ended September 30, 2009 compared with the two previous fiscal years. The purchaser failed to
exercise its option on another contract. In April 2009, the buyer defaulted on the third contract.
The Company has initiated foreclosure proceedings to reclaim the property.
Recent market conditions have depressed Florida real estate markets causing the predictability of
real estate sales including timing and market values to be problematic. Alico continues to market
parcels of its real estate holdings which are deemed by Management and the Board of Directors to be
excess to the immediate needs of Alicos core operations. The sale of any of these parcels could be
material to the operations and cash flows of Alico.
Due to decreases in the market prices of Florida real estate, the Company evaluated several of its
properties for impairment at September 30, 2009, September 30, 2008 and August 31, 2007. In
conducting its evaluation, the Company reviewed the estimated non-discounted cash flows from each
of the properties and obtained independent third party appraisals from a qualified real estate
appraiser. Based on this information, the Company determined that a 291 acre lakefront property in
Polk County, Florida, purchased in October 2005 for $9.2 million, was impaired by approximately
$1.9 million at August 31, 2007, an additional $1.5 million at September 30, 2008, and an
additional $2.8 million at September 30, 2009 due to declines in the Florida real estate market.
The impairment losses were included as a charge to real estate operating expenses during the fiscal
years ended September 30, 2009, September 30, 2008 and August 31, 2007. Alicos remaining adjusted
book basis in the property was $3.0 million at September 30, 2009. Additionally the Company
determined that a parcel of land in Hendry County, Florida with a cost basis of $3.6 million was
impaired by $1.5 million at September 30, 2009. Alicos remaining book basis in this parcel was
$2.1 million at September 30, 2009.
Provision for Income taxes
The Companys effective tax rate is impacted by IRS adjustments including penalties and interest,
state income taxes, including penalties and interest, items which may be included in book income
but are not taxable under current statutes, such as earnings from tax exempt bonds, items included
in book expense that are not deductible under current statutes, such as lobbying expenses and non
qualified retirement plans, and the expiration of otherwise allowable deductions that do not meet
recognition thresholds such as expired net operating loss and contribution carry forwards.
During the fiscal year ended August 31, 2002, the Company pledged $5.0 million to Florida Gulf
Coast University. The donation was paid $1.0 million during fiscal year 2002 and $800 thousand
annually over the next five years. This donation is the primary source of contribution carry
forwards.
26
Based on income forecasts for subsequent years, the Company lowered its expected tax rate for
deferred items and established an allowance account for its charitable contribution carry forward
at September 30, 2009. Additionally, the Company recognized income taxes for charitable
contributions that expired during the year. The cumulative impact of these adjustments was to
reduce the tax benefit for the fiscal year ended September 30, 2009 by $1.0 million and reduce the
effective tax rate by 29.6%.
For a more complete discussion of items impacting the effective tax rate, see Note 8 to the consolidated financial statements.
The
Company annually evaluates positions taken on tax returns to
determine if it is more likely than not that the positions taken on
the returns would be upheld under audit. During its annual assessment
at September 30, 2009, one position, related to the timing of deductions was identified as not meeting the more likely than not
threshold. The Company has accrued $314 thousand, representing
interest and penalties related to this timing difference. The accrual
was included as a component of the Companys tax provision for
the fiscal year ended September 30, 2009.
The IRS audited the Companys tax returns for the 2000 2004 tax years. The audit was primarily
related to the Companys Agri subsidiary headquartered in Bermuda. As a result of the audit, the
Company reached a settlement with the IRS which resulted in the payment of additional income taxes
of $66.2 million during the fiscal year ended August 31, 2007 and $10.5 million during the fiscal
year ended September 30, 2008.
Alicos effective tax rate for the fiscal year ended September 30, 2008 was impacted by a benefit
resulting from a final adjustment of the IRS settlement adjustment from previously accrued
estimates of $1.6 million. The effect of this adjustment was to reduce the effective tax rate by
33% for the fiscal year ended September 30, 2008.
For the transition month ended September 30, 2007, the effective tax rate was 17.2% which differed
from the expected combined Federal and State blended rate of 38% primarily due to the expiration of
a charitable contribution carry forward.
Alicos effective tax rate for the year ended August 31, 2007, was impacted by a $26.0 million
adjustment related to the settlement of an IRS dispute. The effect of this adjustment was to
increase the effective tax rate by 130% for the fiscal year ended August 31, 2007.
The IRS is currently auditing Alicos amended tax returns for the fiscal years ended August 31,
2007, 2006, and 2005 and the short period return filed for the transition month ended September 30,
2007. Alico has extended the statute of limitations on the originally filed 2005 and 2006 tax
returns to December 31, 2010 pursuant to a request by IRS exams.
Interest and Investment Income
Interest and investment income is generated principally from mortgages held on real estate sold on
the installment basis, investments in corporate and municipal bonds, mutual funds, and U.S.
Treasury securities. Interest and investment income was lower for the fiscal year ended September
30, 2009 compared with the fiscal years ended September 30, 2008 and August 31, 2007 due to
reductions in earnings from mortgage interest and interest from investments.
Variations in interest income related to seller financed mortgages caused by interest rate
fluctuations and a default on the mortgage was a primary factor in interest income fluctuations
between the fiscal years presented. In April 2009, a purchaser defaulted on a $52 million mortgage
held by Alicos subsidiary Alico-Agri. The interest from the mortgage was recognized as interest
income during fiscal years ended August 31, 2007, September 30, 2008 and in the fiscal year ended
September 30, 2009 up until the time of the default. The Company recognized interest income of
$0.8 million, $4.3 million and $3.1 million during the fiscal years ended September 30, 2009,
September 30, 2008 and August 31, 2007 related to the mortgage. Additional interest received
pursuant to the mortgage in the fiscal year ended September 30, 2008 compared with August 31, 2007
was the primary cause of increased interest income for the fiscal year ended September 30, 2008.
For several years, including the fiscal years ended September 30, 2008 and August 31, 2007, Alicos
balance sheet carried large amounts of cash and investments in order to comply with liquidity
provisions mandated by the Bermuda Monetary Authority for Alicos wholly owned insurance
subsidiary, Agri. Alico is currently working to dissolve Agri. As a result of this effort, Agri
converted a large majority of its investments to cash, and made pre-liquidation distributions to
Alico in December of 2008. The result of this transaction was to lower the investment principal of
the Company, causing a reduction in interest income from investments during the fiscal year ended
September 30, 2009 when compared to the fiscal years ended September 30, 2008 and August 31, 2007.
The Companys interest bearing investments totaled $9.8 million, $28.3 million and $46.2 million at
September 30, 2009, September 30, 2008 and August 31, 2007, respectively. Reduced investment
principal combined with declining interest rates over the past three fiscal years caused investment
income to decline.
27
The Company held auction rate securities with a cost basis of $5.5 million at September 30, 2009.
There is no longer a current active market for these securities. The securities continue to be
highly rated and continue to pay interest. The Companys experience with these securities over the
past two years has included several issues being called at face value. However, because there is
no active market for the securities the Company has retained a valuation consultant to value the
securities based on call dates and provisions, bond ratings, prevailing interest rates and broker
expectations. Based on these valuations, Alico recorded impairments related to auction rate
securities of $816 thousand during the fiscal year ended September 30, 2009 and an impairment of
$120 thousand for the fiscal year ended September 30, 2008. At September 30, 2009 and September
30, 2008, auction rate securities with estimated fair values of $4.5 million and $4.1 million,
respectively, were classified as non-current assets.
Interest Expense
Interest expense declined during the fiscal year ended September 30, 2009 compared with the fiscal
year ended September 30, 2008, primarily due to decreased debt levels. Alicos outstanding debt
was $78.9 million, $137.8 million and $136.9 million at September 30, 2009,
September 30, 2008 and August 31, 2007, respectively. In January 2009, Alico utilized the proceeds
from its Agri subsidiarys pre-liquidation distributions to pay down Alicos RLOC. Interest
expense was higher during the fiscal year ended September 30, 2008 than in the previous fiscal year
due to a higher average debt levels during the year.
Operating Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended |
|
|
One Month Ended |
|
|
Fiscal Year Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
August 31, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2007 |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bowen |
|
$ |
27,998 |
|
|
|
45,499 |
|
|
$ |
143 |
|
|
$ |
52,716 |
|
Citrus groves |
|
|
36,030 |
|
|
|
41,167 |
|
|
|
5 |
|
|
|
47,484 |
|
Sugarcane |
|
|
7,624 |
|
|
|
9,671 |
|
|
|
|
|
|
|
9,432 |
|
Cattle |
|
|
8,201 |
|
|
|
6,793 |
|
|
|
330 |
|
|
|
9,977 |
|
Vegetables |
|
|
4,706 |
|
|
|
5,460 |
|
|
|
|
|
|
|
3,803 |
|
Sod |
|
|
535 |
|
|
|
1,118 |
|
|
|
92 |
|
|
|
2,180 |
|
Native trees and shrubs |
|
|
47 |
|
|
|
125 |
|
|
|
|
|
|
|
249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture operations revenue |
|
|
85,141 |
|
|
|
109,833 |
|
|
|
570 |
|
|
|
125,841 |
|
Real estate activities |
|
|
1,372 |
|
|
|
3,870 |
|
|
|
|
|
|
|
3,329 |
|
Land leasing and rentals |
|
|
2,691 |
|
|
|
2,276 |
|
|
|
141 |
|
|
|
1,495 |
|
Mining royalties |
|
|
324 |
|
|
|
403 |
|
|
|
47 |
|
|
|
1,340 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenue |
|
$ |
89,528 |
|
|
|
116,382 |
|
|
$ |
758 |
|
|
$ |
132,005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues declined by 23% during the fiscal year ended September 30, 2009 when compared
with the fiscal year ended September 30, 2008. The decline was primarily due to lower citrus prices
realized by Alicos Bowen and citrus grove operations.
Operating revenues declined by 12% to $116.4 million in the fiscal year ended September 30, 2008
compared with $132.0 million in the fiscal year ended August 31, 2007. The decrease was primarily
due to lower citrus prices realized by Bowen and Alicos citrus grove operations during fiscal year
2008 compared with the prior fiscal year.
28
Gross Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended |
|
|
One Month Ended |
|
|
Fiscal Year Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
August 31, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2007 |
|
Gross profit (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bowen |
|
$ |
1,338 |
|
|
$ |
1,470 |
|
|
$ |
(79 |
) |
|
$ |
930 |
|
Citrus groves |
|
|
8,731 |
|
|
|
13,530 |
|
|
|
2 |
|
|
|
24,057 |
|
Sugarcane |
|
|
(2,185 |
) |
|
|
421 |
|
|
|
|
|
|
|
599 |
|
Cattle |
|
|
(1,960 |
) |
|
|
(2,127 |
) |
|
|
41 |
|
|
|
255 |
|
Vegetables |
|
|
(1,941 |
) |
|
|
(141 |
) |
|
|
|
|
|
|
496 |
|
Sod |
|
|
(67 |
) |
|
|
(1,535 |
) |
|
|
(116 |
) |
|
|
862 |
|
Native trees and shrubs |
|
|
28 |
|
|
|
125 |
|
|
|
|
|
|
|
249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
(loss) from agricultural
operations |
|
|
3,944 |
|
|
|
11,743 |
|
|
|
(152 |
) |
|
|
27,448 |
|
Real estate activities |
|
|
(3,893 |
) |
|
|
341 |
|
|
|
(59 |
) |
|
|
(79 |
) |
Land leasing and rentals |
|
|
1,574 |
|
|
|
1,668 |
|
|
|
105 |
|
|
|
1,102 |
|
Mining royalties |
|
|
213 |
|
|
|
305 |
|
|
|
37 |
|
|
|
1,214 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit (loss) |
|
|
1,838 |
|
|
|
14,057 |
|
|
|
(69 |
) |
|
|
29,685 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alico measures gross profit from its operations before any allocation of corporate overhead or
interest charges. Gross profit is dependent upon the prices received for each of the Companys
products, less harvesting, marketing and delivery costs and the direct costs of producing the
products. Because Alicos agricultural products are commodities, Alico is not able to predict with
certainty what price it will receive for its products; however, its costs are relatively fixed.
Gross profits were lower for the fiscal year ended September 30, 2009 when compared with the fiscal
year ended September 30, 2008 due primarily to declines in gross profits from agricultural and real
estate activities. Gross profits were lower for the fiscal year ended September 30, 2008 compared
with the fiscal year ended August 31, 2007 primarily due to lower gross profits from agricultural
activities.
Reduced gross profits from citrus fruit, sugarcane production and vegetable crops (discussed in
more detail in the paragraphs following) combined to reduce the overall gross profit from
agricultural operations for the fiscal year ended September 30, 2009 when compared with the fiscal
year ended September 30, 2008. Citrus groves, cattle and sod gross profits were lower during the
fiscal year ended September 30, 2008 when compared with the fiscal year ended August 31, 2007.
Agricultural Operations
Due to a variety of factors, several of Alicos agricultural operations generated losses during the
fiscal years ended September 30, 2009 and September 30, 2008. Because agricultural results depend
on a variety of factors largely beyond the Companys control, predicting future revenues or gross
profits from agricultural operations is highly speculative.
29
Bowen
Bowens operations primarily consist of providing harvesting, hauling and marketing services to
Alico, as well as other citrus growers and processors in the State of Florida. Additionally, Bowen
purchases and resells citrus fruit at a modest margin. Bowens operations generated revenues of
$28.0 million, $45.5 million, and $52.7 million for the fiscal years ended September 30, 2009,
September 30, 2008, and August 31, 2007, respectively. Gross profits were $1.3 million, $1.5
million and $0.9 million respectively, for the fiscal years ended September 30, 2009, September 30,
2008 and August 31, 2007. Citrus prices declined during the fiscal year ended September 30, 2009
compared with price levels during the fiscal year ended September 30, 2008 due to consumer price
resistance and large amounts of citrus juice inventories throughout the industry. Nevertheless,
because Bowen is primarily a service provider, Bowen was able to maintain its gross profit level
compared with the prior year despite the decline in gross revenue. During the fiscal year ended
September 30, 2008, Bowen was able to increase the margin for the services it provides and increase
gross profits in spite of a decline in revenue caused by lower citrus prices.
Citrus Groves
Alicos Citrus Groves division primarily produces citrus for delivery to citrus processors. The
division recorded gross revenues of $36.0 million, $41.2 million, and $47.5 million and gross
profits of $8.7 million, $13.5 million, and $24.1 million, for the fiscal years ended September
30, 2009, September 30, 2008 and August 31, 2007, respectively. Citrus prices realized by the
Citrus Groves division declined 5% during the fiscal year ended September 30, 2009 when compared
with the fiscal year ended September 30, 2008, which caused a corresponding decline in revenue and
gross profit for the Citrus Groves division. Additionally, production from the citrus groves
division declined by 7% during the fiscal year ended September 30, 2009 when compared with the
fiscal year ended September 30, 2008. Citrus prices declined by 27% for the fiscal year ended
September 30, 2008 when compared with the fiscal year ended August 31, 2007. This price decline
caused a corresponding decrease in both revenue and gross profit compared with the prior year.
Alico harvested 3.9 million, 4.2 million, and 3.5 million 90-pound equivalent boxes of citrus in
the fiscal years ended September 30, 2009, September 30, 2008 and August 31, 2007, respectively.
Alico estimates that its fiscal year 2010 crop will produce approximately 3.7 million boxes.
Alicos citrus production trend tends to mirror the trend for the State of Florida. The Florida
Department of Agriculture estimates the 2009-10 Florida Orange crop at
136.0 million boxes, a 16% decrease from the 2008-09 crop of 162.4 million boxes. Market reactions
to the estimate have been toward slightly higher prices for 2009-10 crops than those experienced in
2008-09.
Alico has contracts with several citrus processors with pricing mechanisms based on a minimum price
along with a price increase if market conditions exceed the minimum. If current market conditions
and outlooks hold steady, Alico expects to receive slightly better than the minimum contracted
price for its citrus for the fiscal year ending September 30, 2010 which, along with the projected
decline in production, is expected to cause gross citrus revenue and gross profit to remain
relatively stable compared with the fiscal year ended September 30, 2009.
Sugarcane
Alicos sugarcane operations consist of cultivating sugarcane for sale to a sugar processor.
Sugarcane revenues were $7.6 million, $9.7 million, and $9.4 million during the fiscal years ended
September 30, 2009, September 30, 2008 and August 31 2007, respectively. Sugarcane generated gross
(losses) profits of ($2.2 million), $0.4 million, and $0.6 million during the fiscal years ended
September 30, 2009, September 30, 2008 and August 31, 2007, respectively. During fiscal years 2009,
2008 and 2007, approximately 250,000, 381,000, and 381,000 standard tons of sugarcane were
harvested, respectively.
30
To maintain maximum production, sugarcane crops (grown on sandy soil such as Alicos) must be
rotated every three years. Sugarcane plantings tend to produce less tonnage per acre with each
successive crop. Due to dwindling profit margins, uncertainty surrounding the facility where the
Company delivers its product, and an unfavorable price determinant, Alico chose to reduce its
sugarcane planting activities during the fiscal years ended September 30, 2008 and August 31, 2007.
This decision caused the Company to harvest less sugarcane during the fiscal year ended September
30, 2009. Since that time, the market outlook for sugar has improved, key input costs such as fuel
and fertilizer have declined, more details concerning the future of the facility have become known
and the Company was able to successfully negotiate a more favorable pricing arrangement with its
sole customer.
The Company has undertaken a program to replant its sugarcane fields in order to achieve prior
production levels. However, due to the growing cycle of sugarcane crops, the results from these
efforts will not be realized until fiscal year 2011. Accordingly, the Companys expected sugarcane
tonnage for the fiscal year ending September 30, 2010 is expected to be approximately 100,000 tons.
Because of expected low yields from the older plantings, the Company has written down its
sugarcane inventory related to the crop to be harvested during the year ending September 30, 2010
by $1.3 million, which was included as sugarcane operating expenses at September 30, 2009. During
the last week of January and first week of February 2009, a cold front swept through Florida
causing temperatures to drop into the mid 20s resulting in damage to Alicos sugarcane crop of
approximately $1.1 million.
Cattle
Alicos cattle operation is primarily engaged in the production of beef cattle, feeding cattle at
western feedlots and the raising of replacement heifers. Cattle revenues were $8.2 million, $6.8
million, and $10.0 million and gross (losses) profits from cattle operations were ($2.0 million),
($2.1 million) and $0.3 million for the fiscal years ended September 30, 2009, September 30, 2008
and August 31, 2007, respectively.
The total pounds of beef sold was 9.3 million, 7.9 million and 11.1 million during the fiscal years
ended September 30, 2009, September 30, 2008 and August 31, 2007, respectively. The average price
received per pound sold was $0.89, $0.86 and $0.90, for the fiscal years ended September 30, 2009,
September 30, 2008 and August 31, 2007, respectively.
The cattle industry has typically operated on a ten year cycle as cow-calf producers expand
inventories in response to profits and reduce herd sizes in response to losses. Alicos strategy
was based on reducing herd sizes during the expansion phase of the cycle and building herd size
through opportunistic acquisitions during the contraction phase. Several atypical factors have
combined to alter the U.S. cattle cycle in the past few years including the utilization of former
pastures for corn production due to increased ethanol demand, and drought conditions in the
Southeastern United States. Due to these changes, Alico is reevaluating its cattle
strategy to determine the most profitable course of action in the current environment.
The core business of Alicos cattle operation is the sale of calves through western feedlots to
meat packing facilities, or if advantageous, to third parties directly from the ranch. Due to a
severe drought during fiscal year 2007, the stress effect of prior hurricanes on the cattle herd,
and the aforementioned herd reduction, calf births have declined over the past several years,
totaling 7,402 during the fiscal year ended September 30, 2009, 7,763 during the fiscal year ended
September 30, 2008, and 8,488 during the fiscal year ended August 31, 2007. The reduced number of
births has resulted in an increased unit cost per calf. Additionally, rising corn prices caused by
increased demand for ethanol production have caused feeding costs to increase. These factors have
combined causing overall profit margins to decline over the past two fiscal years.
In an effort to minimize risk related to its feeding efforts, during the fiscal year ended
September 30, 2009 the Company purchased corn used for cattle feed. Subsequent declines in the
price of corn after the purchase caused the Company to realize a loss of $444 thousand. Additionally, during the fourth quarter of the fiscal year ended September 30, 2009, the
Company, through independent experts and willing third party buyers, valued its breeding herd and
determined that it was impaired. The impairment adjustment of $813 thousand was included as a
component of the cattle operating expenses for the year ended September 30, 2009.
31
The Company has undertaken assertive actions to reduce its cost of raising cattle. These actions
have included increased fertility testing of the herd, aggressively culling unproductive animals,
looking at alternative nutritional programs, staff reductions, changing pasture maintenance
practices and utilizing outside expertise. The full results of these efforts will not be realized
for several years due to the gestation period of cattle among other factors. In the meantime, the
Company will continue to explore alternatives in an attempt to
maximize the return on the acreage
utilized for cattle operations. The Company expects the cattle division to recognize a
loss from operations during the fiscal year ending September 30, 2010; however, not to as great of
an extent as in the two prior fiscal years.
Vegetables
The Company farms snap beans and sweet corn on a portion of its property. Revenues from the sale
of vegetables were $4.7 million, $5.5 million and $3.8 million for the fiscal years ended September
30, 2009, September 30, 2008 and August 31, 2007, respectively. Gross profits (losses) from the
vegetable division were ($1.9 million), ($0.1 million) and $0.5 million over the same periods.
The Company produced 396,487, 506,069 and 342,705 combined units from its vegetable operations in
fiscal years ended September 30, 2009, September 30, 2008 and August 31, 2007, respectively.
During the last week of January and first week of February 2009, a cold front swept through Florida
causing temperatures to drop into the mid 20s resulting in damage to Alicos vegetable crops.
Additionally, increased production costs together with a decline in prices caused the Company to
realize losses from its vegetable division during the fiscal year ended September 30, 2009.
Effective June 30, 2008, the Company discontinued its participation in Alico-J&J, LLC a joint
venture vegetable farm. The parties to the joint venture each held a 50% interest in the earnings,
assets and liabilities of the farm. The Company is currently working to dissolve the joint venture
and distribute the remaining assets equitably among the members. Losses attributable to the joint
venture of $0.7 million are included with the results of the vegetable division for the fiscal year
ended September 30, 2008. The Company has accounted for the joint venture under the equity method.
Non Agricultural Operations
Land leasing and rentals
Alico rents land to others on a tenant-at-will basis, for grazing, farming, oil exploration and
recreational uses. Revenues from land rentals were $2.7 million, $2.3 million and $1.5 million
during the fiscal years ended September 30, 2009, September 30, 2008 and August 31, 2007,
respectively, generating gross profits of $1.6 million, $1.7 million, and $1.1 million. Alico plans
to increase its leasing activities as opportunity allows.
Discontinued Operations
Effective
June 30, 2008, the Company ceased operating its Alico Plant World facility. Plant World
generated revenues of $2.6 million and $2.8 million during the fiscal years ended September 30,
2008 and August 31, 2007, respectively. Plant Worlds operations generated losses of $1.6 million
and $0.5 million in the fiscal years ended September 30, 2008, August 31, 2007, respectively. Plant
World generated losses net of taxes of $0.9 million or $0.12 per share for the fiscal year ended
September 30, 2008 and $0.2 million or $0.03 per share for the fiscal year ended August 31, 2007.
The Company is currently leasing the Plant World facilities to a commercial greenhouse operator and
has also sold a portion of the equipment used to operate the greenhouse. The results of Plant
Worlds operations and equipment sales have been reported as discontinued operations.
The Company began dissolution of its Agri subsidiary during the third quarter of fiscal year 2008.
The effect of the dissolutions will be to transfer the assets of Agri to Alico and its
subsidiaries. The expected costs of dissolution are not estimated to be material to the Company.
32
Changes in Officers
John R. Alexander, the Companys Chairman, retired as Chief Executive Officer on June 30, 2008. The
Board of Directors appointed Dan L. Gunter as Chief Executive Officer on July 1, 2008. Mr. Gunter
had previously served as the Companys President and Chief Operating Officer since April 2006. Mr.
Alexander is continuing in his role as Chairman of the Board of Directors. As per the terms of a
restricted stock grant in October 2006, 12,000 previously unvested shares vested upon Mr.
Alexanders retirement. The Company recognized compensation expense of $453 thousand for the fiscal
year ended September 30, 2008 in association with the vesting. Additionally, the Company entered
into a Transition, Severance, Consulting and Non-Compete agreement with Mr. Alexander effective
July 1, 2008, the terms of which are more fully described in the Companys Form 8-K filed on June
30, 2008.
Dan L. Gunter resigned as Chief Executive Officer effective November 17, 2008. Mr. Gunter had been
granted 20,000 shares of restricted stock in April 2006 which were to vest 20% in April 2010, and
20% per year afterwards, until fully vested. The Company had been recognizing compensation expense
related to the grants. Upon Mr. Gunters departure, the grants were forfeited, causing the Company
to recover $424 thousand of previous compensation related to the grants. Mr. Gunter also executed a
Transition, Severance, Consulting and Non-Compete agreement with Alico effective November 21, 2008,
the terms of which are more fully described in the Companys Form 8-K filed on November 21, 2008.
The Board of Directors appointed Steven M. Smith as the President and Principal Executive Officer
on November 17, 2008. Mr. Smith had formerly served as Alicos Senior Vice-President of Agriculture
Operations since November 2006, and as the Companys Citrus Division Vice President from 1996 to
2006. Details concerning Mr. Smiths compensation arrangements are described in the Companys Form
8-K filed on November 21, 2008.
Off Balance Sheet Arrangements
Alico through its wholly owned subsidiary Bowen, enters into purchase contracts for the purchase of
citrus fruit during the normal course of its business. The obligations under these purchase
agreements totaled $12.6 million at September 30, 2009. All of these purchases were covered by
sales agreements at prices exceeding cost. In addition, Bowen had
sales contracts totaling $1.2
million at September 30, 2009, for which a purchaser had not been contracted. Bowen management
currently believes that all committed sales quantities can be purchased below the committed sales
price. All of these contracts will be fulfilled by the end of the fiscal year 2010.
During the second quarter of fiscal year 2007, the Company formed a new company, Alico-J&J Farms,
LLC and entered into a joint venture with J&J Produce to produce vegetables on land owned by Alico,
Inc. Under the terms of the joint venture, Alico served as a guarantor for 50% of five-year
equipment leases to the joint venture. The Companys maximum total remaining unpaid obligations
under these leases was $0.2 million at September 30, 2009. Effective June 30, 2008, the Company
discontinued its participation in Alico-J&J, LLC.
33
Disclosure of Contractual Obligations
The contractual obligations of Alico at September 30, 2009 are set forth in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments due by Period |
|
|
|
|
|
|
|
Less than |
|
|
1 - 3 |
|
|
3 - 5 |
|
|
5 + |
|
Contractual obligations |
|
Total |
|
|
1 year |
|
|
years |
|
|
years |
|
|
years |
|
Long-term debt |
|
$ |
78,928 |
|
|
$ |
5,122 |
|
|
$ |
38,394 |
|
|
$ |
11,612 |
|
|
$ |
23,800 |
|
Expected interest on debt |
|
|
18,968 |
|
|
|
4,041 |
|
|
|
6,879 |
|
|
|
4,008 |
|
|
|
4,040 |
|
Commissions |
|
|
2,616 |
|
|
|
100 |
|
|
|
600 |
|
|
|
1,916 |
|
|
|
|
|
Citrus purchase contracts |
|
|
12,596 |
|
|
|
12,596 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement benefits |
|
|
3,523 |
|
|
|
294 |
|
|
|
561 |
|
|
|
600 |
|
|
|
2,068 |
|
Fixed asset additions |
|
|
198 |
|
|
|
198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting contracts |
|
|
1,094 |
|
|
|
750 |
|
|
|
344 |
|
|
|
|
|
|
|
|
|
Leases operating |
|
|
754 |
|
|
|
263 |
|
|
|
443 |
|
|
|
48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
118,677 |
|
|
$ |
23,364 |
|
|
$ |
47,221 |
|
|
$ |
18,184 |
|
|
$ |
29,908 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Critical Accounting Policies and Estimates
The preparation of Alicos 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.
Net Realizable Value Alico records inventory at the lower of cost or net realizable value.
Management regularly assesses estimated inventory valuations based on current and forecasted usage
of the related commodity, observable prices, estimated completion costs and other relevant factors
that may affect the net realizable value.
Revenue Recognition Revenue from agricultural crops is recognized at the time the crop is
harvested. Based on fruit buyers and processors advances to growers, cash and futures markets
combined with experience in the industry, management reviews the reasonableness of revenue accruals
quarterly. Adjustments are made throughout the year to these estimates as more current relevant
information regarding the specific commodity markets become available.
For sales made through Bowen, Alico evaluates the terms of each major customer contract relative to
a number of criteria that management considers in making its determination with respect to gross
versus net reporting of revenue for transactions with its customers. Managements criteria for
making these judgments place particular emphasis on determining the primary obligor in a
transaction and which party bears general inventory risk. Bowen purchases and resells citrus fruit;
in these transactions, Bowen (i) acts as principal; (ii) takes title to the products; and (iii) has
the risks and rewards of ownership, including the risk of loss for collection, delivery or returns.
For these transactions, Bowen recognizes revenues based on the gross amounts due from customers.
34
In recognizing revenue from land sales, Alico applies specific sales recognition criteria to
determine when land sales revenue can be recorded. For example, a land sale must be consummated
with a sufficient down payment of at least 20% to 25% of the sales price depending upon the type
and timeframe for development of the property sold, and that any receivable from the sale cannot be
subject to future subordination. In addition, the seller cannot retain any material continuing
involvement in the property sold.
Capitalized Costs Alico capitalizes the cost of growing crops 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.
Impairment of Investments Alico values its investments based on unadjusted quoted prices in
active markets for investments identical to those to be reported at fair value. An active market is
a market in which transactions occur for the item to be fair valued with sufficient frequency and
volume to provide pricing information on an ongoing basis.
When quoted prices for the specific investments are not available, Alico uses inputs that are
observable either directly or indirectly. These inputs include: (a) quoted prices for similar
investments in active markets; (b) quoted prices for identical or similar investments in markets
that are not active, such as when there are few transactions for the asset or liability, the prices
are not current, price quotations vary substantially over time or are among market makers (for
example, some brokered markets), or in which little information is released publicly (for example,
a principal-to-principal market); (c) inputs other than quoted prices that are observable for the
investment (for example, interest rates and yield curves observable at commonly quoted intervals,
volatilities, prepayments speeds, loss severities, credit risks, and default rates); and (d) inputs
that are derived principally from or corroborated by observable market data by correlation or other
means.
Unobservable inputs for an investment are used to determine fair value only when observable inputs
are not available. Unobservable inputs are developed based on the best information available in the
circumstances, which include Alicos own data and assumptions that market participants would use in
pricing the security.
Unrealized gains and losses determined to be temporary are recorded as other comprehensive income,
net of related deferred taxes, until realized. Unrealized losses determined to be other than
temporary are recognized in the statement of operations during the period the determination is
made.
Impairment of Long-Lived Assets Alico evaluates property, improvements, buildings, equipment and
other long lived assets for impairment when events or changes in circumstances indicate that the
carrying value of assets contained in Alicos financial statements may not be recoverable. The
impairment calculation compares the carrying value of the asset to the assets estimated future
cash flows (undiscounted and without interest charges). Alico recognizes an impairment loss if the
amount of the assets carrying value exceeds the assets estimated fair value. If an impairment
loss is recognized, the adjusted carrying amount of the asset becomes its cost basis. For a
depreciable long-lived asset, the new cost basis will be depreciated (amortized) over the remaining
useful life of that asset. Restoration of a previously recognized impairment loss is prohibited.
Income Taxes Deferred income taxes are recognized for the income tax effect of temporary
differences between financial statement carrying amounts and the income tax bases of assets and
liabilities. Alico regularly reviews its deferred income tax assets to determine whether future
taxable income will be sufficient to realize the benefits of these assets. A valuation allowance is
provided for deferred income tax assets for which it is deemed, more likely than not, that future
taxable income will not be sufficient to realize the related income tax benefits from these assets.
The amount of the net deferred income tax asset that is considered realizable could, however, be
adjusted if estimates of future taxable income are adjusted.
35
|
|
|
Item 7A. |
|
Quantitative and Qualitative Disclosure About Market Risk |
Alicos exposure to market rate risk and changes in interest rates relate primarily to its
investment portfolio, mortgage notes receivable and Revolving Line of Credit. 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 provides for the safety and preservation of invested
funds by limiting default, market and reinvestment risk. Alico 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. No changes in risk management have occurred during the fiscal year
ended September 30, 2009.
The table below presents the costs and estimated fair value of the investment portfolio at
September 30, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated |
|
|
|
Cost |
|
|
Fair Value |
|
Marketable Securities and Short-term Investments (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Rate |
|
$ |
4,123 |
|
|
$ |
4,125 |
|
Variable Rate |
|
$ |
3,883 |
|
|
$ |
3,883 |
|
|
|
|
(1) |
|
See definition in Notes 1 and 2 in Notes to Consolidated Financial Statements. |
The aggregate fair value of investments in debt instruments (net of mutual funds of $1,108) as of
September 30, 2009, by contractual maturity date, consisted of the following:
|
|
|
|
|
|
|
Aggregate |
|
|
|
Fair |
|
|
|
Values |
|
|
|
|
|
|
Due in one year or less |
|
$ |
3,410 |
|
Due between one and five years |
|
|
|
|
Due between five and ten years |
|
|
|
|
Due thereafter |
|
|
3,490 |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
6,900 |
|
|
|
|
|
Fixed rate investments tend to decline with market rate interest increases. Variable rate
investments are generally affected more by general market expectations and conditions. A 1% change
in interest rates on Alicos portfolio would impact Alicos annual interest revenue by
approximately $38 thousand. Additionally, Alico has debt with interest rates that vary with LIBOR.
A 1% increase in this rate would impact Alicos annual interest expense by approximately $273
thousand based on Alicos outstanding debt under these agreements at September 30, 2009.
36
|
|
|
Item 8. |
|
Financial Statements and Supplementary Data. |
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Alico, Inc.
We have audited the accompanying consolidated balance sheets of Alico, Inc. and Subsidiaries as
of September 30, 2009 and 2008, and the related consolidated statements of operations,
stockholders equity and comprehensive income (loss), and cash flows for the years ended
September 30, 2009 and September 30, 2008 and
August 31, 2007, and for the one month period ended September 30, 2007. These financial statements are the responsibility
of the Companys management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). 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 as of September 30,
2009 and 2008, and the results of their operations and their cash flows for the years ended
September 30, 2009 and September 30, 2008 and August 31, 2007, and for the one month period ended September 30, 2007, in conformity with U.S. generally accepted
accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), Alico, Inc. and Subsidiaries internal control over financial
reporting as of September 30, 2009, based on criteria established in Internal Control
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission, and our report dated December 14, 2009 expressed an unqualified opinion on the
effectiveness of Alico, Inc. and Subsidiaries internal control over financial reporting.
|
|
|
/s/ McGladrey & Pullen, LLP
Orlando, Florida
|
|
|
December 14, 2009 |
|
|
37
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Alico, Inc.
We have audited Alico, Inc. and Subsidiaries internal control over financial reporting as of
September 30, 2009, based on criteria established in Internal Control Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission. Alico, Inc. and
Subsidiaries management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal control over
financial reporting included in the accompanying Managements Annual Report on Internal Control
Over Financial Reporting. Our responsibility is to express an opinion on the companys internal
control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists,
and testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk. Our audit also included performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion.
A companys internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting
principles. A companys internal control over financial reporting includes those policies and
procedures that (a) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company;
(b) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and (c) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the companys assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Alico, Inc. and Subsidiaries maintained, in all material respects, effective
internal control over financial reporting as of September 30, 2009, based on criteria
established in Internal Control Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheets of Alico, Inc. and
Subsidiaries as of September 30, 2009 and 2008, and the related consolidated statements of
operations, stockholders equity and comprehensive income (loss), and cash flows for the years
ended September 30, 2009 and 2008 and August 31, 2007, and for the one month period ended September 30, 2007 and our report dated December 14, 2009 expressed an unqualified
opinion.
|
|
|
/s/ McGladrey & Pullen, LLP
Orlando, Florida
|
|
|
December 14, 2009 |
|
|
38
CONSOLIDATED BALANCE SHEETS
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
|
2009 |
|
|
2008 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
18,794 |
|
|
$ |
54,370 |
|
Investments |
|
|
3,410 |
|
|
|
24,267 |
|
Accounts receivable, net |
|
|
1,929 |
|
|
|
5,394 |
|
Income tax receivable |
|
|
5,994 |
|
|
|
6,388 |
|
Mortgages and notes receivable |
|
|
72 |
|
|
|
2,830 |
|
Inventories |
|
|
18,737 |
|
|
|
27,451 |
|
Deferred tax asset |
|
|
1,431 |
|
|
|
1,507 |
|
Other current assets |
|
|
968 |
|
|
|
923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
51,335 |
|
|
|
123,130 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgages and notes receivable, net of current portion |
|
|
7,221 |
|
|
|
4,774 |
|
Investments, deposits and other assets |
|
|
8,984 |
|
|
|
6,975 |
|
Deferred tax asset |
|
|
7,356 |
|
|
|
6,056 |
|
Cash surrender value of life insurance, designated |
|
|
6,291 |
|
|
|
7,585 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other assets |
|
|
29,852 |
|
|
|
25,390 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, buildings and equipment |
|
|
178,736 |
|
|
|
181,429 |
|
Less accumulated depreciation |
|
|
(59,688 |
) |
|
|
(56,017 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net property, buildings and equipment |
|
|
119,048 |
|
|
|
125,412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
200,235 |
|
|
$ |
273,932 |
|
|
|
|
|
|
|
|
(Continued)
39
CONSOLIDATED BALANCE SHEETS
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
|
2009 |
|
|
2008 |
|
LIABILITIES & STOCKHOLDERS EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,283 |
|
|
$ |
1,847 |
|
Income taxes payable |
|
|
|
|
|
|
281 |
|
Current portion of notes payable |
|
|
5,122 |
|
|
|
5,470 |
|
Accrued expenses |
|
|
2,252 |
|
|
|
3,372 |
|
Dividends payable |
|
|
1,014 |
|
|
|
2,027 |
|
Accrued ad valorem taxes |
|
|
1,967 |
|
|
|
2,270 |
|
Other current liabilities |
|
|
1,006 |
|
|
|
2,933 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
12,644 |
|
|
|
18,200 |
|
|
|
|
|
|
|
|
|
|
Notes payable, net of current portion |
|
|
73,806 |
|
|
|
132,288 |
|
Deferred retirement benefits, net of current portion |
|
|
3,229 |
|
|
|
4,151 |
|
Other
liabilities |
|
|
3,680 |
|
|
|
3,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
93,359 |
|
|
|
158,439 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity: |
|
|
|
|
|
|
|
|
Preferred stock, no par value. Authorized 1,000 shares; issued, none |
|
|
|
|
|
|
|
|
Common
stock, $1 par value. Authorized 15,000 shares; issued 7,377 and
outstanding 7,375 shares in 2009; issued 7,376 and outstanding
7,374 in 2008 |
|
|
7,377 |
|
|
|
7,376 |
|
Additional paid in capital |
|
|
9,480 |
|
|
|
9,474 |
|
Treasury stock, at cost |
|
|
(52 |
) |
|
|
(64 |
) |
Accumulated other comprehensive income (loss) |
|
|
3 |
|
|
|
(92 |
) |
Retained earnings |
|
|
90,068 |
|
|
|
98,799 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity |
|
|
106,876 |
|
|
|
115,493 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity |
|
$ |
200,235 |
|
|
$ |
273,932 |
|
|
|
|
|
|
|
|
See accompanying Notes to Consolidated Financial Statements.
40
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One Month |
|
|
Fiscal Year |
|
|
|
Fiscal Year Ended |
|
|
Ended |
|
|
Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
August 31, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2007 |
|
Operating revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agricultural operations |
|
$ |
85,141 |
|
|
$ |
109,833 |
|
|
$ |
570 |
|
|
$ |
125,841 |
|
Non-agricultural operations |
|
|
3,015 |
|
|
|
2,679 |
|
|
|
188 |
|
|
|
2,835 |
|
Real estate operations |
|
|
1,372 |
|
|
|
3,870 |
|
|
|
|
|
|
|
3,329 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenue |
|
|
89,528 |
|
|
|
116,382 |
|
|
|
758 |
|
|
|
132,005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agricultural operations |
|
|
81,197 |
|
|
|
98,090 |
|
|
|
722 |
|
|
|
98,393 |
|
Non-agricultural operations |
|
|
1,228 |
|
|
|
706 |
|
|
|
46 |
|
|
|
519 |
|
Real estate operations |
|
|
5,265 |
|
|
|
3,529 |
|
|
|
59 |
|
|
|
3,408 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
87,690 |
|
|
|
102,325 |
|
|
|
827 |
|
|
|
102,320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (loss) |
|
|
1,838 |
|
|
|
14,057 |
|
|
|
(69 |
) |
|
|
29,685 |
|
Corporate general and administrative |
|
|
9,096 |
|
|
|
11,478 |
|
|
|
815 |
|
|
|
12,727 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit (loss) from continuing operations |
|
|
(7,258 |
) |
|
|
2,579 |
|
|
|
(884 |
) |
|
|
16,958 |
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on sales of bulk real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
|
1,646 |
|
|
|
817 |
|
|
|
|
|
|
|
1,434 |
|
Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(177 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on sales of bulk real estate, net |
|
|
1,646 |
|
|
|
817 |
|
|
|
|
|
|
|
1,257 |
|
Interest & investment income |
|
|
594 |
|
|
|
7,745 |
|
|
|
683 |
|
|
|
7,337 |
|
Interest expense |
|
|
(5,430 |
) |
|
|
(6,565 |
) |
|
|
(820 |
) |
|
|
(5,652 |
) |
Other |
|
|
6,961 |
|
|
|
262 |
|
|
|
(4 |
) |
|
|
225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expense), net |
|
|
3,771 |
|
|
|
2,259 |
|
|
|
(141 |
) |
|
|
3,167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations before income taxes |
|
|
(3,487 |
) |
|
|
4,838 |
|
|
|
(1,025 |
) |
|
|
20,125 |
|
(Benefit from) provision for income taxes |
|
|
162 |
|
|
|
(765 |
) |
|
|
(176 |
) |
|
|
33,520 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
|
(3,649 |
) |
|
|
5,603 |
|
|
|
(849 |
) |
|
|
(13,395 |
) |
(Loss) income from discontinued operations, net of taxes |
|
|
|
|
|
|
(890 |
) |
|
|
169 |
|
|
|
(295 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(3,649 |
) |
|
$ |
4,713 |
|
|
$ |
(680 |
) |
|
$ |
(13,690 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Continued)
41
CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
(in thousands except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One Month |
|
|
Year |
|
|
Fiscal Year Ended |
|
|
Ended |
|
Ended |
|
|
September 30, |
|
|
September 30, |
|
|
August 31, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2007 |
|
|
Weighted-average number of shares
outstanding |
|
|
7,368 |
|
|
|
7,367 |
|
|
|
7,358 |
|
|
|
7,369 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares
outstanding assuming dilution |
|
|
7,368 |
|
|
|
7,385 |
|
|
|
7,358 |
|
|
|
7,369 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share amounts- income (loss)
from continuing operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.50 |
) |
|
$ |
0.76 |
|
|
$ |
(0.12 |
) |
|
$ |
(1.82 |
) |
Diluted |
|
$ |
(0.50 |
) |
|
$ |
0.76 |
|
|
$ |
(0.12 |
) |
|
$ |
(1.82 |
) |
Per share amounts- net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.50 |
) |
|
$ |
0.64 |
|
|
$ |
(0.09 |
) |
|
$ |
(1.86 |
) |
Diluted |
|
$ |
(0.50 |
) |
|
$ |
0.64 |
|
|
$ |
(0.09 |
) |
|
$ |
(1.86 |
) |
Dividends |
|
$ |
0.69 |
|
|
$ |
1.10 |
|
|
$ |
0.28 |
|
|
$ |
1.10 |
|
See accompanying Notes to Consolidated Financial Statements.
42
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
AND COMPREHENSIVE INCOME (LOSS)
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Additional |
|
|
Treasury |
|
|
Other |
|
|
|
|
|
|
|
|
|
Shares |
|
|
|
|
|
|
Paid in |
|
|
Stock |
|
|
Comprehensive |
|
|
Retained |
|
|
|
|
|
|
Issued |
|
|
Amount |
|
|
Capital |
|
|
at cost |
|
|
Income (loss) |
|
|
Earnings |
|
|
Total |
|
Balances, August 31, 2006 |
|
|
7,376 |
|
|
$ |
7,376 |
|
|
$ |
9,691 |
|
|
$ |
(287 |
) |
|
$ |
(29 |
) |
|
$ |
125,149 |
|
|
$ |
141,900 |
|
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,690 |
) |
|
|
(13,690 |
) |
Unrealized losses on securities,
net of taxes of $39 and
reclassification adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74 |
|
|
|
|
|
|
|
74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,616 |
) |
Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,106 |
) |
|
|
(8,106 |
) |
Treasury Stock Purchased |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,484 |
) |
|
|
|
|
|
|
|
|
|
|
(1,484 |
) |
Stock based compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Directors |
|
|
|
|
|
|
|
|
|
|
37 |
|
|
|
478 |
|
|
|
|
|
|
|
|
|
|
|
515 |
|
Employee: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options exercised |
|
|
|
|
|
|
|
|
|
|
(39 |
) |
|
|
55 |
|
|
|
|
|
|
|
|
|
|
|
16 |
|
Stock based compensation |
|
|
|
|
|
|
|
|
|
|
480 |
|
|
|
192 |
|
|
|
|
|
|
|
|
|
|
|
672 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, August 31, 2007 |
|
|
7,376 |
|
|
$ |
7,376 |
|
|
$ |
10,169 |
|
|
$ |
(1,046 |
) |
|
$ |
45 |
|
|
$ |
103,353 |
|
|
$ |
119,897 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(680 |
) |
|
|
(680 |
) |
Liability-Uncertain Tax Position |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(436 |
) |
|
|
(436 |
) |
Unrealized gain on securities,
net of taxes of $1 and
reclassification adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4 |
|
|
|
|
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,112 |
) |
Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,024 |
) |
|
|
(2,024 |
) |
Stock based compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Directors |
|
|
|
|
|
|
|
|
|
|
(6 |
) |
|
|
155 |
|
|
|
|
|
|
|
|
|
|
|
149 |
|
Employee: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options exercised |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock based compensation |
|
|
|
|
|
|
|
|
|
|
36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, September 30, 2007 |
|
|
7,376 |
|
|
$ |
7,376 |
|
|
$ |
10,199 |
|
|
$ |
(891 |
) |
|
$ |
49 |
|
|
$ |
100,213 |
|
|
$ |
116,946 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Continued)
43
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
AND COMPREHENSIVE INCOME (LOSS) (Continued)
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Additional |
|
|
Treasury |
|
|
Other |
|
|
|
|
|
|
|
|
|
Shares |
|
|
|
|
|
|
Paid in |
|
|
Stock |
|
|
Comprehensive |
|
|
Retained |
|
|
|
|
|
|
Issued |
|
|
Amount |
|
|
Capital |
|
|
at cost |
|
|
Income (loss) |
|
|
Earnings |
|
|
Total |
|
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,713 |
|
|
|
4,713 |
|
Unrealized gain on
securities, net of taxes of
$87 and reclassification
adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(141 |
) |
|
|
|
|
|
|
(141 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,572 |
|
Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,127 |
) |
|
|
(6,127 |
) |
Treasury Stock Purchased |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,196 |
) |
|
|
|
|
|
|
|
|
|
|
(1,196 |
) |
Stock based compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Directors |
|
|
|
|
|
|
|
|
|
|
(114 |
) |
|
|
567 |
|
|
|
|
|
|
|
|
|
|
|
453 |
|
Employee: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options exercised |
|
|
|
|
|
|
|
|
|
|
(80 |
) |
|
|
111 |
|
|
|
|
|
|
|
|
|
|
|
31 |
|
Stock based compensation |
|
|
|
|
|
|
|
|
|
|
(531 |
) |
|
|
1,345 |
|
|
|
|
|
|
|
|
|
|
|
814 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, September 30, 2008 |
|
|
7,376 |
|
|
$ |
7,376 |
|
|
$ |
9,474 |
|
|
$ |
(64 |
) |
|
$ |
(92 |
) |
|
$ |
98,799 |
|
|
$ |
115,493 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,649 |
) |
|
|
(3,649 |
) |
Unrealized losses on
securities, net of taxes of
$0 and reclassification
adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
94 |
|
|
|
|
|
|
|
94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
comprehensive (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,555 |
) |
Stock issued |
|
|
1 |
|
|
|
1 |
|
|
|
55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56 |
|
Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,082 |
) |
|
|
(5,082 |
) |
Treasury Stock Purchased |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(934 |
) |
|
|
|
|
|
|
|
|
|
|
(934 |
) |
Stock based compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Directors |
|
|
|
|
|
|
|
|
|
|
(118 |
) |
|
|
651 |
|
|
|
|
|
|
|
|
|
|
|
533 |
|
Employee: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options exercised |
|
|
|
|
|
|
|
|
|
|
(117 |
) |
|
|
204 |
|
|
|
1 |
|
|
|
|
|
|
|
88 |
|
Stock based compensation |
|
|
|
|
|
|
|
|
|
|
186 |
|
|
|
91 |
|
|
|
|
|
|
|
|
|
|
|
277 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, September 30, 2009 |
|
|
7,377 |
|
|
$ |
7,377 |
|
|
$ |
9,480 |
|
|
$ |
(52 |
) |
|
$ |
3 |
|
|
$ |
90,068 |
|
|
$ |
106,876 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended |
|
|
One Month |
|
|
Fiscal Year |
|
|
|
September 30, |
|
|
Sept. 30, |
|
|
August 31, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2007 |
|
Disclosure of reclassification amount: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding gains (losses) arising during the period |
|
|
2 |
|
|
|
(209 |
) |
|
|
27 |
|
|
|
62 |
|
Less: reclassification adjustment for realized gain (loss) included in net income |
|
|
92 |
|
|
|
(68 |
) |
|
|
23 |
|
|
|
(12 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized (losses) gains on securities |
|
|
94 |
|
|
|
(141 |
) |
|
|
4 |
|
|
|
74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to Consolidated Financial Statements.
44
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal |
|
|
One Month |
|
|
Fiscal Year |
|
|
|
Year Ended |
|
|
Ended |
|
|
Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
August 31, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2007 |
|
|
(Decrease) increase in Cash and Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(3,649 |
) |
|
$ |
4,713 |
|
|
$ |
(680 |
) |
|
$ |
(13,690 |
) |
Adjustments
to reconcile net (loss) income to net cash provided by (used for) operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation & amortization |
|
|
7,544 |
|
|
|
8,317 |
|
|
|
707 |
|
|
|
8,770 |
|
Loss (gain) on breeding herd sales |
|
|
139 |
|
|
|
(38 |
) |
|
|
(36 |
) |
|
|
(529 |
) |
Deferred income tax expense, net |
|
|
(1,288 |
) |
|
|
(1,694 |
) |
|
|
(204 |
) |
|
|
(21,255 |
) |
Deferred retirement benefits |
|
|
458 |
|
|
|
(276 |
) |
|
|
(74 |
) |
|
|
(1,186 |
) |
Loss (gain) on sale of investments |
|
|
98 |
|
|
|
(183 |
) |
|
|
|
|
|
|
(31 |
) |
Investment impairment |
|
|
816 |
|
|
|
120 |
|
|
|
|
|
|
|
|
|
Loss (gain) on sale of property and equipment |
|
|
26 |
|
|
|
668 |
|
|
|
|
|
|
|
(20 |
) |
Property impairments |
|
|
5,139 |
|
|
|
1,599 |
|
|
|
|
|
|
|
2,028 |
|
Loss from non consolidated joint venture |
|
|
|
|
|
|
653 |
|
|
|
|
|
|
|
57 |
|
Gain on real estate sales |
|
|
(1,621 |
) |
|
|
(817 |
) |
|
|
(93 |
) |
|
|
(1,257 |
) |
Stock based compensation |
|
|
865 |
|
|
|
1,267 |
|
|
|
185 |
|
|
|
1,187 |
|
Noncash adjustments to inventory |
|
|
2,955 |
|
|
|
3,600 |
|
|
|
|
|
|
|
169 |
|
Cash provided by (used for) changes in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
3,101 |
|
|
|
8,809 |
|
|
|
890 |
|
|
|
(7,149 |
) |
Inventories |
|
|
5,759 |
|
|
|
(3,819 |
) |
|
|
(2,018 |
) |
|
|
(838 |
) |
Other assets |
|
|
(45 |
) |
|
|
547 |
|
|
|
(321 |
) |
|
|
(163 |
) |
Accounts payable & accrued expenses |
|
|
(3,644 |
) |
|
|
(169 |
) |
|
|
(192 |
) |
|
|
(756 |
) |
Income taxes payable/receivable |
|
|
113 |
|
|
|
(9,525 |
) |
|
|
83 |
|
|
|
2,031 |
|
Other |
|
|
(359 |
) |
|
|
|
|
|
|
|
|
|
|
(20,293 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used for) operating activities |
|
|
16,407 |
|
|
|
13,772 |
|
|
|
(1,753 |
) |
|
|
(52,925 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate deposits and accrued commissions |
|
|
(117 |
) |
|
|
100 |
|
|
|
|
|
|
|
1,622 |
|
Purchases of property and equipment |
|
|
(6,705 |
) |
|
|
(6,130 |
) |
|
|
(293 |
) |
|
|
(9,138 |
) |
(Purchase) sale of other investments |
|
|
(1,560 |
) |
|
|
37 |
|
|
|
|
|
|
|
(878 |
) |
Proceeds from disposals of property and equipment |
|
|
543 |
|
|
|
1,511 |
|
|
|
90 |
|
|
|
1,652 |
|
Purchases of investments |
|
|
(7,457 |
) |
|
|
(46,863 |
) |
|
|
(1,574 |
) |
|
|
(54,882 |
) |
Proceeds from the sales of investments |
|
|
27,142 |
|
|
|
64,949 |
|
|
|
1,309 |
|
|
|
58,823 |
|
Collection of mortgages and notes receivable |
|
|
1,926 |
|
|
|
2,830 |
|
|
|
|
|
|
|
2,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used for) investing activities |
|
$ |
13,772 |
|
|
$ |
16,434 |
|
|
$ |
(468 |
) |
|
$ |
(628 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Continued)
45
CONSOLIDATED
STATEMENTS OF CASH FLOWS (continued)
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal |
|
|
|
|
One Month |
|
|
Fiscal Year |
|
|
|
Year Ended |
|
|
Ended |
|
|
Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
August 31, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2007 |
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from share based exchanges |
|
$ |
104 |
|
|
$ |
31 |
|
|
$ |
|
|
|
$ |
16 |
|
Treasury stock purchases |
|
|
(934 |
) |
|
|
(1,196 |
) |
|
|
|
|
|
|
(1,484 |
) |
Proceeds from notes payable |
|
|
40,879 |
|
|
|
42,040 |
|
|
|
1,101 |
|
|
|
95,959 |
|
Principal payment of notes payable |
|
|
(99,709 |
) |
|
|
(40,166 |
) |
|
|
(2,106 |
) |
|
|
(23,072 |
) |
Dividends paid |
|
|
(6,095 |
) |
|
|
(8,144 |
) |
|
|
|
|
|
|
(8,106 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used for) financing activities |
|
|
(65,755 |
) |
|
|
(7,435 |
) |
|
|
(1,005 |
) |
|
|
63,313 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents |
|
|
(35,576 |
) |
|
|
22,771 |
|
|
|
(3,226 |
) |
|
|
9,760 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At beginning of year |
|
|
54,370 |
|
|
|
31,599 |
|
|
|
34,825 |
|
|
|
25,065 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At end of year |
|
$ |
18,794 |
|
|
$ |
54,370 |
|
|
$ |
31,599 |
|
|
$ |
34,825 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest, net of amount capitalized |
|
$ |
5,963 |
|
|
$ |
8,182 |
|
|
$ |
43 |
|
|
$ |
5,077 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for income taxes, including related interest |
|
$ |
1,216 |
|
|
$ |
10,579 |
|
|
$ |
|
|
|
$ |
72,818 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification of breeding herd to Property & Equipment |
|
$ |
552 |
|
|
$ |
458 |
|
|
$ |
|
|
|
$ |
594 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to Consolidated Financial Statements.
46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of September 30, 2009 and 2008,
and for the years ended September 30, 2009, September 30, 2008 and August 31, 2007
and the one month transition period ended September 30, 2007
(in thousands except for unit data)
(1) Summary of Significant Accounting Policies
Change in Fiscal Year
On September 28, 2007, the Board of Directors of the Company approved a change in the Companys
fiscal year end from August 31 to September 30. The fiscal year change was effective beginning with
the Companys 2008 fiscal year. The Companys 2008 fiscal year began on October 1, 2007 and ended
September 30, 2008, resulting in a one month transition period that began September 1, 2007 and
ended September 30, 2007. These financial statements include the audited results as of September
30, 2009 and 2008 and for the fiscal years ended September 30, 2009, September 30, 2008 and August
31, 2007, as well as audited results for the one month transition period ended September 30, 2007.
(a) Basis of Consolidated Financial Statement Presentation
The consolidated financial statements include the accounts of Alico, Inc. (Alico) and its wholly
owned subsidiaries, Alico Land Development, Inc. (ALDI) (formally known as Saddlebag Lake Resorts,
Inc.), Agri-Insurance Company, Ltd. (Agri), Alico-Agri, Ltd. (Alico-Agri), Alico Plant World, LLC
(Plant World) and Bowen Brothers Fruit, LLC (Bowen) (collectively referred to as the Company),
after elimination of all significant intercompany balances and transactions.
(b) Revenue Recognition
Revenue from agricultural crops is recognized at the time the crop is harvested and delivered to
the customer. Based on buyers and processors advances to growers, cash and futures markets
combined with experience in the industry, management reviews the reasonableness of the revenue
accruals quarterly. Adjustments are made throughout the year to these estimates as more current
relevant information regarding the specific markets become available. Differences between the
estimates and the final realization of revenue can be significant, and can be either positive or
negative. Fluctuation in the market prices for citrus fruit has caused Alico to recognize
additional revenue from the prior years crops totaling $22 thousand, $527 thousand, and $537
thousand, during the fiscal years ended September 30, 2009, September 30, 2008 and August 31 2007,
respectively. No additional revenue was recognized during the transition period ended September 30,
2007. Beyond the citrus revenue adjustments discussed above, no material adjustments were noted to
the reported revenues of Alicos crops for any of the periods covered by this report.
Alico recognizes revenue from cattle sales at the time the cattle are sold. Alico recognizes
revenue from the sale of vegetables and sod at the time of harvest and delivery to the customer.
Bowens operations primarily consist of providing harvesting, hauling and marketing services to
Alico, as well as other citrus growers and processors in the State of Florida. Bowen purchases and
resells citrus fruit; in these transactions, Bowen (i) acts as a principal; (ii) takes title to the
products; and (iii) has the risks and rewards of ownership, including the risk of loss for
collection, delivery or returns. Due to the aforementioned factors, Bowen recognizes revenue based
on the gross amounts due from customers for its marketing activities. Harvesting and hauling
revenues are recognized when the services are performed.
(c) Real Estate
Real estate sales are recorded under the accrual method of accounting. Gains from commercial or
bulk land sales 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 according to the installment sales method.
47
Real estate costs incurred for the acquisition, development and construction of real estate
projects are capitalized. Additionally, costs to market real estate are capitalized if they are
reasonably expected to be recovered from the sale of the project.
Properties are tested for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. Impairment losses are recognized when the carrying amount
of a property exceeds its fair value. Such events or changes in circumstances include significant
decreases in the market price of such properties; significant adverse changes in legal factors, the
business climate or the extent or manner in which the asset is being used; an accumulation of costs
significantly in excess of amounts originally expected for the property; continuing operating cash
flow losses associated with the property or an expectation that it is more likely than not that the
property will be sold or otherwise disposed of significantly before the end of its previously
estimated useful life. Impairment losses are measured as the amount by which the carrying amount of
a property exceeds its fair value.
(d) Investments available for sale
Investments are carried at their fair value. Net unrealized investment gains and losses that are
deemed to be temporary, are recorded net of related deferred taxes in accumulated other
comprehensive income within stockholders equity until realized. Unrealized losses determined to be
other than temporary are recognized in the statement of operations in the period the determination
is made. The cost of all investments is determined on the specific identification method.
Alico values its investments based on unadjusted quoted prices in active markets for securities
identical to those to be reported at fair value. An active market is a market in which transactions
occur for the item to be valued with sufficient frequency and volume to provide pricing information
on an ongoing basis.
When direct quotations are not available, Alico utilizes inputs that are observable either directly
or indirectly. These inputs include: (a) Quoted prices for similar investments in active markets;
(b) Quoted prices for identical or similar investments in markets that are not active, such as when
there are few transactions for the asset or liability, the prices are not current, price quotations
vary substantially over time or are among market makers (for example, some brokered markets), or in
which little information is released publicly (for example, a principal-to-principal market); (c)
Inputs other than quoted prices that are observable for the investment (for example, interest rates
and yield curves observable at commonly quoted intervals, volatilities, prepayments speeds, loss
severities, credit risks, and default rates); and (d) Inputs that are derived principally from or
corroborated by observable market data by correlation or other means.
Unobservable inputs for an investment are used to determine fair value only when observable inputs
are not available. Unobservable inputs are developed based on the best information available in the
circumstances, which include Alicos own data and assumptions that market participants would use in
pricing the investment.
(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 expenses with the related revenue earned. Alico states its inventories at
the lower of cost or net realizable value. The cost for unharvested citrus and sugarcane crops is
based on accumulated production costs incurred during the period from January 1 through the balance
sheet date. The cost of the beef cattle inventory is based on the accumulated cost of developing
such animals for sale.
(f) Mortgages and notes receivable
Mortgages and notes receivable arise from real estate sales. Mortgages and notes receivable are
carried at their estimated net realizable value. In circumstances where the stated interest rate is
below the prevailing market rate, the note is discounted to yield the market rate of interest. The
discount offsets the carrying amount of the mortgages and notes receivable.
48
Under the installment method of accounting, gains from commercial or bulk land sales are not
recognized until payments received for property equal or exceed 20% of the contract sales price for
property to be developed within two years after the sale or 25% of the contract sales price for
property to be developed after two years. Such gains are recorded as deferred revenue and offset
the carrying amount of the mortgages and notes receivable.
(g) Accounts receivable
Accounts receivable are generated from the sale of citrus, sugarcane, sod, cattle, vegetables,
plants and other transactions. Alico provides an allowance for doubtful trade receivables equal to
the estimated uncollectible amounts. That estimate is based on historical collection experience,
current economic and market conditions, and a review of the current status of each customers
account.
(h) Property, Buildings and Equipment
Property, buildings and equipment are stated at cost. 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 depreciated over 25 years.
Development costs for sugarcane are capitalized the same as citrus. However, sugarcane matures in
one year and Alico is able to harvest an average of three crops (one per year) from one planting.
As a result, cultivation and caretaking costs are expensed as the crop is harvested, while the
appropriate development and planting costs are depreciated over three 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.
Alico reviews its long-lived assets and certain identifiable intangibles 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 an
asset is considered to be impaired, the impairment to be recognized is measured by the amount that
the carrying amount of the asset exceeds its fair value. Assets to be disposed of are reported at
the lower of the carrying amount or fair value less costs to sell.
(i) Investments and Deposits not classified as available for sale
Investments primarily include stock owned in agricultural cooperatives, marketable debt securities
for which there is no readily available market, and loan origination fees. Marketable debt
securities are valued as discussed in item 1(d) of the Summary of Significant Accounting Policies.
Investments in stock related to agricultural co-ops and deposits are carried at cost. Alico uses
cooperatives to process and sell sugarcane and citrus. Cooperatives typically require members to
acquire stock ownership as a condition for the use of its services.
(j) Income Taxes
Alico 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. Alico includes
interest and penalties from taxing authorities as a component of income tax expense.
49
(k) Earnings per Share
Outstanding stock options and restricted stock shares represent the only dilutive effects reflected
in the computation of weighted average shares outstanding assuming dilution during the periods
presented. There were no stock options issued that could potentially dilute basic earnings per
share in the future that were not included in the computation of earnings per share, assuming
dilution.
Approximately 21,784 shares of restricted stock were potentially dilutive at
September 30, 2009, however were antidilutive
as a result of the loss for the period.
(l) Cash Flows
For purposes of the cash flows, cash and cash equivalents include cash on hand and investments with
an active market and an original maturity of less than three months.
At various times throughout the year, and at September 30, 2009, some deposits held at financial
institutions were in excess of federally insured limits. However, Alico places its cash deposits
with high quality financial institutions and believes it is not exposed to significant credit risk
with these accounts.
(m) Use of Estimates
In preparing the consolidated financial statements, management is required to make estimates and
assumptions that affect 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 Alicos inventories,
the estimated fair values used for impairment evaluations, the collectability of accounts and notes
receivable and the recognition of citrus and sugarcane revenues are some of the more significant
estimates made by Management.
(n) Fair Value of Financial Instruments and Accruals
The carrying amounts in the consolidated balance sheets for accounts receivable, mortgages and
notes receivable, accounts payable and accrued expenses approximate fair value because of the
immediate or short term maturity of these items. Where stated interest rates are below market,
Alico has discounted mortgage notes receivable to reflect their estimated fair value. Alico carries
its investments available for sale at fair value. The carrying amounts reported for Alicos
long-term debt approximates fair value because they are transactions with commercial lenders at
interest rates that vary with market conditions and fixed rates that approximate market rates for
similar obligations.
(o) Accumulated Other Comprehensive Income (Loss)
Comprehensive income (loss) 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 or loss and other comprehensive income or loss. Items included in other
comprehensive income or losses are classified based on their nature. The total of other
comprehensive income or loss for a period has been transferred to an equity account and displayed
as accumulated other comprehensive income (loss) in the accompanying consolidated balance sheets.
(p) Stock-Based Compensation
Alico measures and recognizes compensation cost at fair value for all share-based payments,
including stock options and restricted share awards. Stock-based compensation costs were included
in general and administrative expenses in the consolidated statements of operations. This expense
includes compensation expense, recognized over the applicable vesting periods, for new share-based
awards and for share-based awards granted prior to, but not yet vested, as of September 30, 2009.
50
(q) Reclassifications
Certain amounts from 2008 and 2007 have been reclassified to conform to the 2009 presentation.
These reclassifications had no impact on working capital, net income, stockholders equity or cash
flows as previously reported.
(r) Major customers
For the
fiscal year ended September 30, 2009, Alicos largest
customer, United States Sugar Corporation (USSC) for whom
Alico grows sugarcane, accounted for 24% of
operating revenue. Since the inception of its sugarcane program in 1988, Alico has sold
100% of its product through a pooling agreement with USSC.
Additionally, Alico sells citrus to Southern Gardens, a wholly owned subsidiary of USSC. These
marketing arrangements involve marketing pools which allow the contracting party to market Alicos
product in conjunction with the product of other entities in the pool and pay Alico a proportionate
share of the resulting revenue from the sale of the entire pooled product. While Alico believes
that it can replace the citrus processing portion of the contract with other customers, it may not
be able to do so quickly and the results may not be as favorable as the current contracts.
Details concerning sales and receivables from USSC and Alicos other major customers are as follows
as of and for the fiscal years ended September 30 (unless otherwise indicated):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
Revenues |
|
|
|
2009 |
|
|
2008 |
|
|
2009 |
|
|
2008 |
|
|
Aug. 31, 2007 |
|
USSC |
|
$ |
1,121 |
|
|
$ |
494 |
|
|
$ |
7,624 |
|
|
$ |
9,671 |
|
|
$ |
9,432 |
|
Southern Gardens |
|
$ |
|
|
|
$ |
2,291 |
|
|
$ |
14,031 |
|
|
$ |
15,041 |
|
|
$ |
19,517 |
|
Cutrale Citrus Juices |
|
$ |
|
|
|
$ |
|
|
|
$ |
15,950 |
|
|
$ |
21,162 |
|
|
$ |
6,345 |
|
Florida Orange Marketers, Inc. |
|
$ |
|
|
|
$ |
|
|
|
$ |
13,490 |
|
|
$ |
13,396 |
|
|
$ |
7,305 |
|
Citrosuco North American, Inc. |
|
$ |
|
|
|
$ |
|
|
|
$ |
9,973 |
|
|
$ |
13,336 |
|
|
$ |
8,297 |
|
There was no revenue from these customers during the September 30, 2007 one month transition
period.
51
(2) Investments, deposits and other assets
The Companys investments, deposits and other assets consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2009 |
|
|
September 30, 2008 |
|
|
|
Current |
|
|
Non-current |
|
|
Total |
|
|
Current |
|
|
Non-current |
|
|
Total |
|
Municipal bonds |
|
$ |
|
|
|
$ |
3,373 |
|
|
$ |
3,373 |
|
|
$ |
20,591 |
|
|
$ |
2,755 |
|
|
$ |
23,346 |
|
Auction rate mutual funds (municipals) |
|
|
|
|
|
|
1,108 |
|
|
|
1,108 |
|
|
|
|
|
|
|
1,325 |
|
|
|
1,325 |
|
U.S. Treasury notes and bonds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,599 |
|
|
|
|
|
|
|
1,599 |
|
Corporate bonds |
|
|
2,003 |
|
|
|
|
|
|
|
2,003 |
|
|
|
140 |
|
|
|
|
|
|
|
140 |
|
Certificates of deposit |
|
|
1,407 |
|
|
|
117 |
|
|
|
1,524 |
|
|
|
1,937 |
|
|
|
|
|
|
|
1,937 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for sale securities |
|
|
3,410 |
|
|
|
4,598 |
|
|
|
8,008 |
|
|
|
24,267 |
|
|
|
4,080 |
|
|
|
28,347 |
|
Cooperative retains receivable, net |
|
|
|
|
|
|
1,286 |
|
|
|
1,286 |
|
|
|
|
|
|
|
1,095 |
|
|
|
1,095 |
|
Stock in agricultural cooperatives |
|
|
|
|
|
|
595 |
|
|
|
595 |
|
|
|
|
|
|
|
804 |
|
|
|
804 |
|
Escrowed funds |
|
|
|
|
|
|
150 |
|
|
|
150 |
|
|
|
|
|
|
|
150 |
|
|
|
150 |
|
Intangibles |
|
|
|
|
|
|
557 |
|
|
|
557 |
|
|
|
|
|
|
|
629 |
|
|
|
629 |
|
Tax certificates |
|
|
|
|
|
|
1,305 |
|
|
|
1,305 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
493 |
|
|
|
493 |
|
|
|
|
|
|
|
217 |
|
|
|
217 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
3,410 |
|
|
$ |
8,984 |
|
|
$ |
12,394 |
|
|
$ |
24,267 |
|
|
$ |
6,975 |
|
|
$ |
31,242 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company reports available for sale securities at estimated fair value. Unrealized
gains and losses occurring solely due to changes in market interest rates are recorded as other
comprehensive income, net of related deferred taxes, until realized. During the year ended
September 30, 2009, the Company recognized losses totaling $816 thousand which were determined to
be other than temporary impairments in fair values. These losses related to the auction rate
municipal bonds and mutual funds held by the Company, for which there is not currently an active
market.
For a discussion of fair value determination methods and disclosures, please refer to
note 17 of the consolidated financial statements.
The cost and estimated fair value of available for sale securities at September 30, 2009 and 2008
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2009 |
|
|
September 30, 2008 |
|
|
|
|
|
|
|
Gross |
|
|
Estimated |
|
|
|
|
|
|
Gross |
|
|
Estimated |
|
|
|
|
|
|
|
Unrealized |
|
|
Fair |
|
|
|
|
|
|
Unrealized |
|
|
Fair |
|
|
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal bonds |
|
$ |
3,373 |
|
|
|
|
|
|
|
|
|
|
$ |
3,373 |
|
|
$ |
23,493 |
|
|
$ |
3 |
|
|
$ |
(150 |
) |
|
$ |
23,346 |
|
Certificates of Deposit |
|
|
1,524 |
|
|
|
|
|
|
|
|
|
|
|
1,524 |
|
|
|
1,937 |
|
|
|
|
|
|
|
|
|
|
|
1,937 |
|
US Treasury Notes & Bonds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,592 |
|
|
|
7 |
|
|
|
|
|
|
|
1,599 |
|
Mutual Funds |
|
|
1,108 |
|
|
|
|
|
|
|
|
|
|
|
1,108 |
|
|
|
1,325 |
|
|
|
|
|
|
|
|
|
|
|
1,325 |
|
Corporate bonds |
|
|
2,001 |
|
|
|
2 |
|
|
|
|
|
|
|
2,003 |
|
|
|
150 |
|
|
|
|
|
|
|
(10 |
) |
|
|
140 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
8,006 |
|
|
$ |
2 |
|
|
$ |
|
|
|
|
8,008 |
|
|
$ |
28,497 |
|
|
$ |
10 |
|
|
$ |
(160 |
) |
|
$ |
28,347 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non current portion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,598 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,080 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
24,267 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52
The aggregate fair value of investments in debt instruments (net of mutual funds of $1,108) as
of September 30, 2009 by contractual maturity date consisted of the following:
|
|
|
|
|
Due within 1 year |
|
$ |
3,410 |
|
Due beyond five years |
|
|
3,490 |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
6,900 |
|
|
|
|
|
Realized gains and losses on the disposition of securities and recognition of impairment were
charged to interest and investment income and were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal |
|
|
One |
|
|
Fiscal |
|
|
|
Year Ended |
|
|
Month Ended |
|
|
Year Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
August 31, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized gains |
|
$ |
16 |
|
|
$ |
45 |
|
|
$ |
|
|
|
$ |
71 |
|
Realized losses |
|
|
(930 |
) |
|
|
(9 |
) |
|
|
|
|
|
|
(40 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net |
|
$ |
(914 |
) |
|
$ |
36 |
|
|
$ |
|
|
|
$ |
31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) Mortgages and Notes Receivable
Mortgage and notes receivable arose from real estate and other property sales. The balances are as
follows:
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
|
2009 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
Mortgage notes receivable on retail land sales |
|
$ |
163 |
|
|
$ |
205 |
|
Mortgage notes receivable on bulk land sales |
|
|
52,204 |
|
|
|
54,108 |
|
Other notes receivable |
|
|
75 |
|
|
|
90 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total mortgages and notes receivable |
|
|
52,442 |
|
|
|
54,403 |
|
Less: Deferred revenue |
|
|
(45,146 |
) |
|
|
(46,793 |
) |
Discount on note to impute market interest |
|
|
(3 |
) |
|
|
(6 |
) |
Current portion |
|
|
(72 |
) |
|
|
(2,830 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current portion |
|
$ |
7,221 |
|
|
$ |
4,774 |
|
|
|
|
|
|
|
|
53
The mortgage note receivable on bulk land sales relates to a parcel in Lee County, Florida referred
to as the East parcel which was sold to the Ginn Companies (Ginn). Gains from commercial or
bulk land sales are not recognized until payments received for property to be developed within two
years after the sale represent a 20% continuing interest in the property or for property to be
developed after two years, a 25% continuing interest in the property according to the installment
sales method. The continuing interest thresholds for gain recognition have not been met for the
East contract and Alico-Agri is recognizing gains proportionate to principal receipts through
deferred gain accounts which serve to discount the mortgage note receivables under the installment
method.
In November 2008, Alico-Agri received a principal payment of $1.8 million on the East contract.
Alico-Agri recognized a profit of $1.5 million as non-operating revenue under the installment
method related to the receipt. Additionally during the quarter ended December 31, 2008, the
Company recognized $1.2 million of operating revenue upon the expiration of an option contract that
had previously been deferred.
Interest was scheduled to accrue on the unpaid balance of the note and be paid in quarterly
installments. In April 2009, the purchaser defaulted on the East parcel contract. Under the terms
of the contract, a quarterly interest payment of $283 thousand was due on March 30, 2009 but the
payment was not received. Alico-Agri has initiated foreclosure proceedings and ceased accruing
interest on the note at March 31, 2009.
When the foreclosure becomes final, the net mortgage note receivable of $7.1 million (consisting of
the note balance of $52.2 million less deferred revenue of $45.1 million), plus accrued interest
through March 31, 2009 of $0.3 million, reduced by the associated commissions payable account of
$2.6 million will be reclassified as basis in the property.
(4) Inventories
A summary of the Companys inventories at September 30, 2009 and 2008 is shown below:
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
Unharvested fruit crop on trees |
|
$ |
13,538 |
|
|
$ |
14,322 |
|
Unharvested sugarcane |
|
|
2,585 |
|
|
|
5,978 |
|
Beef cattle |
|
|
1,363 |
|
|
|
5,065 |
|
Plants and vegetables |
|
|
946 |
|
|
|
1,563 |
|
Sod |
|
|
249 |
|
|
|
449 |
|
Other |
|
|
56 |
|
|
|
74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total inventories |
|
$ |
18,737 |
|
|
$ |
27,451 |
|
|
|
|
|
|
|
|
54
Alico records its inventory at the lower of cost or net realizable value. The following
schedule details the net realizable value adjustments to the Companys inventories during the
periods reported. All adjustments to inventory resulted from changing market conditions for the
respective crops and were realized as operating expenses in the period of adjustment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended |
|
|
One Month Ended |
|
|
Fiscal Year Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
August 31, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2007 |
|
Unharvested sugarcane |
|
$ |
1,286 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Beef cattle |
|
|
1,011 |
|
|
|
2,300 |
|
|
|
|
|
|
|
11 |
|
Plants and vegetables |
|
|
658 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
Unharvested sod |
|
|
|
|
|
|
1,300 |
|
|
|
|
|
|
|
158 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
2,955 |
|
|
$ |
3,600 |
|
|
$ |
|
|
|
$ |
169 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5) Property, Buildings and Equipment
A summary of the Companys property, buildings and equipment at September 30, 2009 and 2008 is
shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated |
|
|
|
2009 |
|
|
2008 |
|
|
Useful Lives |
|
|
Breeding herd |
|
$ |
11,295 |
|
|
$ |
12,686 |
|
|
5-7 years |
|
Buildings |
|
|
9,590 |
|
|
|
9,987 |
|
|
5-40 years |
|
Citrus trees |
|
|
33,392 |
|
|
|
32,440 |
|
|
22-40 years |
|
Sugarcane |
|
|
6,182 |
|
|
|
5,512 |
|
|
4-15 years |
|
Equipment and other facilities |
|
|
38,588 |
|
|
|
38,695 |
|
|
3-40 years |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total depreciable properties |
|
|
99,047 |
|
|
|
99,320 |
|
|
|
|
|
Less accumulated depreciation |
|
|
59,688 |
|
|
|
56,017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net depreciable properties |
|
|
39,359 |
|
|
|
43,303 |
|
|
|
|
|
Land and land improvements |
|
|
79,689 |
|
|
|
82,109 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net property, buildings and equipment |
|
$ |
119,048 |
|
|
$ |
125,412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due to decreases in the market prices of Florida real estate, the Company evaluated several of
its properties for impairment at September 30, 2009 and September 30, 2008. In conducting its
evaluation, the Company reviewed the estimated non-discounted cash flows from each of the
properties and obtained independent third party appraisals from a qualified real estate appraiser.
Additionally, due to losses in its cattle division and increasing costs to raise cattle for
breeding purposes, Alico also evaluated its breeding herd for impairment utilizing market
observations and quotes for similar herds based on ages, condition and pregnancies.
55
The table below summarizes impairments recorded to fixed assets during the past three fiscal years:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Polk County |
|
|
Plant World |
|
|
|
|
|
|
Property |
|
|
Property |
|
|
Breeding herd |
|
Acreage |
|
|
290 |
|
|
|
50 |
|
|
|
N/A |
|
Cost basis less depreciation |
|
$ |
9,200 |
|
|
$ |
3,610 |
|
|
$ |
12,368 |
|
Impairments recognized during fiscal years ended: |
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2009 |
|
|
(2,790 |
) |
|
|
(1,460 |
) |
|
|
(813 |
) |
September 30, 2008 |
|
|
(1,480 |
) |
|
|
|
|
|
|
(260 |
) |
August 31, 2007 |
|
|
(1,900 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remaining adjusted basis at September 30, 2009 |
|
$ |
3,030 |
|
|
$ |
2,150 |
|
|
$ |
11,295 |
|
|
|
|
|
|
|
|
|
|
|
Real estate impairments were included as operating expenses of the real estate segment, while
the impairment to the breeding herd was included in the operating expenses of the cattle segment.
(6) Indebtedness
The Companys indebtedness was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving |
|
|
|
|
|
|
Mortgage |
|
|
|
|
|
|
|
|
|
line of |
|
|
|
|
|
|
note |
|
|
|
|
|
|
|
|
|
credit(RLOC) |
|
|
Term note |
|
|
payable |
|
|
All other |
|
|
Total |
|
September 30, 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal balance
outstanding |
|
$ |
27,340 |
|
|
$ |
45,828 |
|
|
$ |
5,700 |
|
|
$ |
60 |
|
|
$ |
78,928 |
|
Remaining available
credit |
|
$ |
47,660 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
47,660 |
|
Effective interest rate |
|
|
2.63 |
% |
|
|
6.79 |
% |
|
|
6.68 |
% |
|
Various |
|
|
|
|
|
Scheduled maturity date |
|
Aug. 2012 |
|
|
Sept. 2018 |
|
|
Mar. 2014 |
|
|
Various |
|
|
|
|
|
Collateral |
|
Real estate |
|
|
Real estate |
|
|
Real estate |
|
|
Various |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal balance
outstanding |
|
$ |
80,740 |
|
|
$ |
50,000 |
|
|
$ |
6,967 |
|
|
$ |
51 |
|
|
$ |
137,758 |
|
Remaining available
credit |
|
$ |
44,260 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
44,260 |
|
Effective interest rate |
|
|
4.25 |
% |
|
|
6.79 |
% |
|
|
6.68 |
% |
|
Various |
|
|
|
|
|
Scheduled maturity date |
|
Aug. 2011 |
|
|
Sept. 2018 |
|
|
Mar. 2014 |
|
|
Various |
|
|
|
|
|
Collateral |
|
Real estate |
|
|
Real estate |
|
|
Real estate |
|
|
Various |
|
|
|
|
|
Alico, Inc. has a Term Note, a Mortgage and a Revolving Line of Credit (RLOC) with Farm Credit of
Southwest Florida. All three agreements are cross collateralized by 7,680 acres of real estate in
Hendry County used for farm leases, sugarcane and citrus production. The Term Note and RLOC are
additionally collateralized by 43,847 acres of real estate in Hendry County used for farm leases
and cattle ranching.
The Term Note calls for equal payments of principal and interest of $1.7 million per quarter over a
ten year term until maturity. The Mortgage note calls for monthly principal payments of $106
thousand plus accrued interest until maturity.
56
On March 30, 2009 the Company modified its RLOC with Farm Credit of Southwest Florida. According
to the terms of the modification, the total availability of funds pursuant to the RLOC was reduced
from $125 million to $75 million. Additionally, several covenants were modified as follows: a)
the covenant requiring the Company to maintain stockholder equity of at least $110 million was
eliminated in its entirety b) the minimum current ratio was increased to 2.5 to 1 from 2.0 to 1 and
c) the fixed charge coverage ratio was replaced by a debt coverage ratio requiring the Company to
maintain a debt coverage of not less than 1.10 to 1 on a rolling four quarter basis. The maturity
date of the RLOC was extended from August 1, 2011 to August 1, 2012. The interest rate index was
changed from 3 month LIBOR to 1 month LIBOR, and the interest rate spreads increased by 100 basis
points. The Company also pledged an additional 10,147 acres of real estate in Hendry County,
Florida, bringing the total acres pledged to 51,527. In addition to the covenants discussed above,
the agreements set limitations on the extension of loans or additional borrowings by Alico or any
subsidiary. The covenants also restrict Alicos activities regarding investments, liens, borrowing
and leasing. The RLOC provides $75.0 million which may be used for general corporate purposes
including: (i) the normal operating needs of Alico and its operating divisions, (ii) the purchase
of capital assets and (iii) the payment of dividends. The Revolving Line of Credit also allows for
an annual extension at the lenders option.
The Companys Chairman of the Board of Directors, John R. Alexander, was a member of the Board of
Directors of the Companys primary lender, Farm Credit of Southwest Florida from 1992 to April
2009. During his tenure, Mr. Alexander abstained from voting on matters that directly affected the
Company.
Maturities of the Companys debt were as follows at September 30, 2009:
|
|
|
|
|
Due within 1 year |
|
$ |
5,122 |
|
Due between 1 and 2 years |
|
|
5,388 |
|
Due between 2 and 3 years |
|
|
33,006 |
|
Due between 3 and 4 years |
|
|
5,961 |
|
Due between 4 and 5 years |
|
|
5,651 |
|
Due beyond five years |
|
|
23,800 |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
78,928 |
|
|
|
|
|
Interest costs expensed and capitalized were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal |
|
|
One |
|
|
Fiscal |
|
|
|
Year Ended |
|
|
Month Ended |
|
|
Year Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
August 31, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
$ |
5,430 |
|
|
$ |
6,565 |
|
|
$ |
820 |
|
|
$ |
5,652 |
|
Interest capitalized |
|
|
51 |
|
|
|
36 |
|
|
|
5 |
|
|
|
43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest cost |
|
$ |
5,481 |
|
|
$ |
6,601 |
|
|
$ |
825 |
|
|
$ |
5,695 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57
(7) Stock Based Compensation
On February 20, 2009, Alico adopted the 2008 Alico, Inc. Incentive Equity Plan (The 2008 Plan)
pursuant to which the Board of Directors of Alico may grant options, stock appreciation rights,
and/or restricted stock to certain directors and employees. The Plan authorized grants of shares or
options to purchase up to 350,000 shares of authorized but unissued common stock to be funded by
treasury purchases. From November 1998 to November 2008, Alico made grants under similar
terms pursuant to its 1998 Plan.
Alico measures the cost of employee services received in exchange for an award of equity
instruments based on the grant-date fair value of the award using
observable market prices for such instruments. The cost is recognized over the period
during which an employee is required to provide service in exchange for the award (usually the
vesting period). If an equity
award is modified after the grant date, incremental compensation cost will be recognized in an
amount equal to the excess of the fair value of the modified award over the fair value of the
original award immediately before the modification.
Alico grants restricted shares to certain key employees as long term incentives. The restricted
shares vest in equal annual installments. The payment of each installment is subject to continued
employment with Alico. In fiscal years ended September 30, 2009, September 30, 2008 and August 31,
2007, 3,571, 12,000 and 4,000 restricted shares, respectively, vested in accordance with these
grants. No restricted shares vested during the one month transition period ended September 30,
2007. There were no restricted shares vested in accordance with these grants at September 30, 2009.
The table below summarizes Alicos restricted share awards granted to date:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
|
Compensation |
|
|
Compensation |
|
|
Compensation |
|
|
Average |
|
|
|
|
|
|
|
|
|
|
|
Expense |
|
|
Expense |
|
|
Expense |
|
|
Grant date |
|
|
|
|
|
|
|
Fair Market Value |
|
|
Recognized for |
|
|
Recognized for |
|
|
Recognized for |
|
|
Fair value |
|
Grant Date |
|
Shares Granted |
|
|
on Date of Grant |
|
|
FYE 9/30/09 |
|
|
FYE 9/30/08 |
|
|
FYE 8/31/07 |
|
|
Per share |
|
April 2006 |
|
|
20,000 |
|
|
$ |
908 |
|
|
$ |
|
|
|
|
(180 |
) |
|
|
172 |
|
|
|
|
|
July 2006 |
|
|
13,000 |
|
|
|
694 |
|
|
|
|
|
|
|
|
|
|
|
(16 |
) |
|
|
|
|
October 2006 |
|
|
20,000 |
|
|
|
1,239 |
|
|
|
|
|
|
|
453 |
|
|
|
516 |
|
|
|
|
|
January 2008 |
|
|
25,562 |
|
|
|
1,040 |
|
|
|
232 |
|
|
|
541 |
|
|
|
|
|
|
|
|
|
September 2008 |
|
|
7,500 |
|
|
|
331 |
|
|
|
96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
86,062 |
|
|
$ |
4,212 |
|
|
$ |
328 |
|
|
$ |
814 |
|
|
$ |
672 |
|
|
$ |
48.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On October 27, 2006, the Board awarded 20,000 shares of restricted stock to the Chief
Executive Officer as additional compensation. Under the terms of the agreement, 4,000 shares vested
effective August 31, 2006, 4,000 vested effective August 31, 2007 and the remaining 12,000 shares
vested upon the CEOs retirement on June 30, 2008. The fair value per share was $61.96 on the date
of the award.
During November 2007, the CEO and COO elected to receive a portion of their annual incentive bonus
in Company stock. The CEO chose to receive 4,000 shares at a value of $177 thousand, while the COO
chose to receive 500 shares at a value of $22 thousand. Compensation expense for these awards was
accrued and recognized during the fourth quarter of Alicos fiscal year ended August 31, 2007.
A grant of 25,562 restricted shares was made to four senior executives in January 2008 with a fair
value of $40.67 per share, in order to replace previous retirement benefits granted. 7,707 of the
shares granted in January 2008 related to previously vested retirement benefits and vested
immediately. In January 2009, a total of 3,571 shares vested and the shares were issued from
treasury stock. The remaining 14,284 shares granted in January 2008 vest 25% annually in January
of each year until fully vested.
58
On
September 30, 2008, Alicos, subsidiary ALDI, hired a President. As a portion of
the total compensation package, the Board awarded 7,500 shares of restricted stock. Under the terms
of the agreement, the shares will vest 20% on September 30, 2010 and continue to vest 20% per year
until they are fully vested. The fair value per share was $44.13 on the date of the award.
No stock options or stock appreciation rights have been granted since February 2004. There were no
outstanding stock options or appreciation rights outstanding at September 30, 2009.
Alico is recognizing compensation cost equal to the fair market value of the stock at the grant
dates prorated over the vesting period of each award. The fair value of the unvested restricted
stock awards at September 30, 2009 was $640 thousand and will be recognized over a weighted average
period of three years.
(8) Income Taxes
The provision for income taxes for the fiscal years ended September 30, 2009, September 30, 2008
and August 31, 2007 along with the one month transition period ended September 30, 2007 is
summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal |
|
|
One Month |
|
|
Fiscal Year |
|
|
|
Year Ended |
|
|
Ended |
|
|
Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
August 31, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax |
|
$ |
268 |
|
|
$ |
(355 |
) |
|
$ |
16 |
|
|
$ |
46,097 |
|
State income tax |
|
|
439 |
|
|
|
763 |
|
|
|
12 |
|
|
|
8,507 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
707 |
|
|
|
408 |
|
|
|
28 |
|
|
|
54,604 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax |
|
|
(408 |
) |
|
|
(1,245 |
) |
|
|
(194 |
) |
|
|
(18,493 |
) |
State income tax |
|
|
(137 |
) |
|
|
(487 |
) |
|
|
25 |
|
|
|
(2,769 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(545 |
) |
|
|
(1,732 |
) |
|
|
(169 |
) |
|
|
(21,262 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total provision for income taxes |
|
$ |
162 |
|
|
$ |
(1,324 |
) |
|
$ |
(141 |
) |
|
$ |
33,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for continuing operations |
|
|
162 |
|
|
|
(765 |
) |
|
|
(176 |
) |
|
|
33,520 |
|
Provision for discontinued operations |
|
|
|
|
|
|
(559 |
) |
|
|
35 |
|
|
|
(178 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total provision for income taxes |
|
$ |
162 |
|
|
$ |
(1,324 |
) |
|
$ |
(141 |
) |
|
$ |
33,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59
Following
is a reconciliation of the expected income tax expense (benefit) for continuing operations
computed at the U.S. Federal statutory rate of 34% and the actual income tax provision for the
fiscal years ended September 30, 2009, September 30, 2008 and August 31, 2007 and the one month
transition period ended September 30, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal |
|
|
One Month |
|
|
Fiscal Year |
|
|
|
Year Ended |
|
|
Ended |
|
|
Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
August 31, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected
income tax (benefit) expense |
|
$ |
(1,185 |
) |
|
$ |
1,665 |
|
|
$ |
(359 |
) |
|
$ |
7,044 |
|
Increase (decrease) resulting from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State income taxes, net of
federal benefit (expense) |
|
|
(54 |
) |
|
|
317 |
|
|
|
28 |
|
|
|
3,732 |
|
Nontaxable interest and dividends |
|
|
(39 |
) |
|
|
(590 |
) |
|
|
(55 |
) |
|
|
(708 |
) |
Federal impacts from IRS exam
and tax return amendments |
|
|
|
|
|
|
(5,409 |
) |
|
|
|
|
|
|
22,272 |
|
Deferred rate adjustment |
|
|
185 |
|
|
|
|
|
|
|
(10 |
) |
|
|
397 |
|
Tax liability adjustments |
|
|
194 |
|
|
|
334 |
|
|
|
|
|
|
|
|
|
Change in valuation allowance |
|
|
651 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant & equipment
deferreds |
|
|
|
|
|
|
1,651 |
|
|
|
|
|
|
|
|
|
Other permanent items |
|
|
96 |
|
|
|
211 |
|
|
|
|
|
|
|
|
|
Other reconciling items, net |
|
|
314 |
|
|
|
1,056 |
|
|
|
220 |
|
|
|
783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total provision for income taxes |
|
$ |
162 |
|
|
$ |
(765 |
) |
|
$ |
(176 |
) |
|
$ |
33,520 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 years tax return,
and a deferred portion, which is the amount attributable to another years 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 as of September 30, 2009 and 2008 are presented below:
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
Deferred Tax Assets: |
|
|
|
|
|
|
|
|
Contribution carry forward |
|
$ |
873 |
|
|
$ |
1,024 |
|
Deferred retirement benefits |
|
|
1,326 |
|
|
|
1,748 |
|
Inventories |
|
|
698 |
|
|
|
798 |
|
Stock options appreciation |
|
|
154 |
|
|
|
134 |
|
Property and Equipment |
|
|
5,129 |
|
|
|
3,614 |
|
Net operating losses |
|
|
682 |
|
|
|
420 |
|
Other |
|
|
1,064 |
|
|
|
1,378 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross deferred tax assets |
|
|
9,926 |
|
|
|
9,116 |
|
|
|
|
|
|
|
|
|
|
Less: Contribution carry forward valuation allowance |
|
|
(651 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets |
|
$ |
9,275 |
|
|
$ |
9,116 |
|
|
|
|
|
|
|
|
60
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
Deferred Tax Liabilities: |
|
|
|
|
|
|
|
|
Revenue recognized from citrus and sugarcane |
|
$ |
4 |
|
|
$ |
319 |
|
Patronage Dividends |
|
|
484 |
|
|
|
492 |
|
Inventories |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
742 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross deferred tax liabilities |
|
$ |
488 |
|
|
$ |
1,553 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred income tax asset |
|
$ |
8,787 |
|
|
$ |
7,563 |
|
|
|
|
|
|
|
|
Based on Alicos history of taxable earnings and its expectations for the future, with the
exception of the contribution carryforward for which an allowance of $651 thousand was made,
Management has determined that its taxable income will more likely than not be sufficient to fully
recognize all deferred tax assets.
In June 2008, the Internal Revenue Service (IRS) issued a final Settlement Agreement regarding
audits of Alico for the tax years 2000 through 2004. Pursuant to the agreement, the Company and the
IRS agreed to final taxes resulting from the audits of $41.1 million, penalties of $4.1 million and
interest of $20.0 million. The Company had previously paid and accrued taxes of $42.2 million,
penalties of $4.2 million and interest of $19.8 million related to an anticipated settlement in the
fourth quarter of fiscal year 2007. The differences between the final settlement amount (including
taxes, penalties and interest) and the previously estimated settlement resulted in a reduction in
income tax expense for the fiscal year ended September 30, 2008.
The reductions to the previous tax liability estimate resulted from the allowance of expenses by
IRS Appeals that were previously not allowed by IRS Exams. As a result of the settlement, the
Company has filed amended tax returns for tax years 2005 through 2007. The Company paid additional
State income taxes pursuant to the final settlement of $6.2 million along with $4.3 million of
related interest during the fiscal year ended September 30, 2008.
The final Settlement Agreement concluded that Alico must recognize unreported gains resulting from
the transfer of real property to a foreign subsidiary (Agri). The real estate was originally
transferred and reported at its historical cost basis. Additionally, Alico must recognize Subpart F
income related to Agris earnings. Alico had not previously recognized income related to the
transactions referenced above based on reliance on an IRS determination letter stating that Agri
was a captive insurer, exempt from taxes provided certain procedural requirements were followed.
The Company believed that it had followed such requirements, while the IRS ruled otherwise.
As a result of the taxation of real property contributions, the Company increased its basis in
those properties to their taxed values, creating deferred tax assets. The deferred tax assets will
be ultimately realized when the Company sells the parcels and pays the associated taxes resulting
from the sale.
The impact of the IRS tax settlement was a combined federal and state net benefit of $1.6 million
for the fiscal year ended September 30, 2008 and additional tax expense of $25.6 million for the
fiscal year ended August 31, 2007.
The Company applies a more likely than not threshold to the recognition and non-recognition of
tax positions. A change in judgment related to prior years tax positions is recognized in the
quarter of such change.
61
At October 1, 2007, the Company had $441 thousand of potential tax exposure related to uncertain
tax positions, which was recorded as a one time adjustment to retained earnings. All of this amount
would, if recognized, impact the effective tax rate. The Company recognizes interest and penalties
related to uncertain tax positions in income tax expense and records the interest and penalties in
the liability for uncertain tax positions. Interest and penalties accrued as of the date of
adoption were approximately $57 thousand.
The
Company annually evaluates positions taken on tax returns to
determine if it is more likely than not that the positions taken on
the returns would be upheld under audit. During its annual assessment
at September 30, 2009, one position, related to the timing of deductions was identified as not meeting the more likely than not
threshold. The Company has accrued $314 thousand, representing
interest and penalties related to this timing difference. The accrual
was included as a component of the Companys tax provision for
the fiscal year ended September 30, 2009.
The IRS is currently auditing Alicos amended tax returns for the fiscal years ended August 31,
2007, 2006, and 2005 and the short period return filed for the transition month ended September 30,
2007. Alico has extended the statute of limitations on the originally filed 2005 and 2006 tax
returns to December 31, 2010 pursuant to a request by IRS exams. The state income tax returns have
not been audited and are subject to audit for the same tax periods open for federal tax purposes.
(9) Related Party Transactions
Atlanticblue Group, Inc.
Atlanticblue (formerly Atlantic Blue Trust, Inc.) holds approximately 51% of Alicos common stock.
By virtue of their ownership percentage, Atlanticblue is able to elect all the directors and,
consequently, to control Alico. Atlanticblue has issued a letter
dated December 3, 2009
reaffirming its commitment to maintaining a majority of independent directors on Alicos board.
John R. Alexander, a major shareholder in Atlanticblue, served as Alicos Chief Executive Officer
from February 2005 through June 2008.
John R. Alexander continues to serve on the Companys Board of Directors as Chairman. Mr.
Alexanders son, JD Alexander, serves as President and Chief Executive Officer of Atlanticblue and
serves on Alicos Board of Directors as its Vice-Chairman. Robert E. Lee Caswell, Mr. Alexanders
son-in-law also serves on the Alico Board of Directors, as does Robert J. Viguet, Jr., who is also
a Director of Atlanticblue (the Affiliated Directors).
The transactions listed below have all been approved by Alicos Board of Directors and a majority
of the Unaffiliated Directors.
As Directors of Alico, the Affiliated Directors receive compensation for their services and
reimbursement of travel expenses in accordance with the general policies of the Company the same as
Unaffiliated directors. Director compensation policies are disclosed in Alicos annual proxy.
Bowen is currently marketing citrus fruit from Tri County Groves, a wholly owned subsidiary of
Atlanticblue. During the fiscal year ended September 30, 2009, Bowen marketed 236,971 boxes of
fruit at a gross value of $2.0 million. During fiscal year ended September 30, 2008, Bowen
marketed 310,000 boxes of fruit at a gross value of $2.9 million.
The Companys Chairman of the Board of Directors, John R. Alexander, was a member of the Board of
Directors of the Companys primary lender, Farm Credit of Southwest Florida from 1992 to April
2009.
On January 18, 2008 the Companys Board of Directors approved an unaccountable expense allowance of
$5,000 per month to Scenic Highlands Enterprises LLC. The Companys former Chief Executive Officer
and current Chairman of the Board, John R. Alexander, serves as the owner and Chief Executive
Officer of Scenic Highlands Enterprises. Per the Boards Action by Written Consent, payments are to
be used for office space, an administrative assistants salary, and utilities. Alico paid $60
thousand and $30 thousand during the fiscal years ended September 30, 2009 and September 30, 2008,
respectively, pursuant to this agreement. Alico is also providing computer and telephone support
services to Scenic Highlands Enterprises at no charge.
62
Effective June 30, 2008 the Board approved a transition, consulting, severance and non-compete
agreement with John R. Alexander providing for total payments of $600,000 over a three year period.
Alico paid $238 thousand and $62 thousand to Mr. Alexander during the fiscal years ended
September 30, 2009 and September 30, 2008, respectively, pursuant to this agreement.
On August 1, 2008 the Board approved a consulting contract with Atlanticblue which provided for
Atlanticblue to provide real estate consulting services to Alicos subsidiary ALDI in the area of
public and government relations in Polk County. The agreement expired on September 30, 2009.
Atlanticblue received total compensation of $5 thousand during the year ended September 30, 2009
under this agreement. No payments were made to Atlanticblue under this agreement during the fiscal
year ended September 30, 2008.
Former
director Baxter Troutman has filed suit against John R. Alexander and JD Alexander. The Company is
reimbursing Mssrs Alexander for legal fees to defend the suit in accordance with the Boards
indemnification agreement. All reimbursements are being approved by the Special Committee of the
Board comprised of independent directors. Reimbursements pursuant to the litigation were $38
thousand on behalf of John R. Alexander and $121 thousand on behalf of JD Alexander during the year
ended September 30, 2009.
Ben Hill Griffin, Inc.
Citrus revenues of $357 thousand, $2.0 million and $14.7 million were recognized for a portion of
citrus crops sold under a marketing agreement with Ben Hill Griffin, Inc. (Griffin) for the years
ended September 30, 2009, September 30, 2008, and August 31, 2007, respectively. For the one month
transition period ended September 30, 2007, Alico recognized $53 thousand of citrus revenue from
Griffin. Griffin and its subsidiaries are controlled by Ben Hill Griffin, III, the brother-in-law
of John R. Alexander, Alicos Chairman and former Chief Executive Officer. Accounts receivable,
resulting from citrus sales, include amounts due from Griffin of $50 thousand and $153 thousand at
September 30, 2009 and September 30, 2008, respectively. These amounts represent estimated revenues
to be received periodically under pooling agreements as the sale of pooled products is completed.
Harvesting, marketing, and processing costs, for fruit sold through Griffin, totaled $153 thousand,
$623 thousand, and $2.7 million for the fiscal years ended September 30, 2009, September 30, 2008,
and August 31, 2007, respectively. Griffin did not provide any harvesting, marketing or processing
services to Alico during the one month transition period ended September 30, 2007. The accompanying
consolidated balance sheets include accounts payable to Griffin for citrus production, harvesting
and processing costs totaling $21 thousand and $28 thousand at September 30, 2009 and September 30,
2008, respectively.
Alico 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 $1.8 million, $2.3 million, and $2.0 million during the fiscal years ended
September 30, 2009, September 30, 2008, and August 31, 2007, respectively. Such purchases totaled
$22 thousand during the one month transition period ended September 30, 2007.
Other
Mr. Charles Palmer, an independent Board Member, and Mr. Steve Smith, the Companys President and
Principal Executive Officer held recreational leases with the Company during the fiscal year ended
September 30, 2009 at the customary terms and rates the Company extends to third parties.
During the year ended September 30, 2009, Bowen Brothers marketed 2,928 boxes of fruit from
Alexander properties at a total gross value of $19 thousand.
63
(10) Reportable Segment Information
Alico has six reportable segments: Bowen, Citrus Groves, Sugarcane, Cattle, Real Estate and
Leasing. Alicos operations are located in Florida. Alico accounts for intersegment sales and
transfers as if the sales or transfers were to third parties, that is, at current market prices.
Bowens operations include harvesting, hauling and marketing citrus for both Alico and other
outside growers in the state of Florida. Bowens operations also include the purchase and resale of
citrus fruit. Alicos Citrus Grove operations consist of cultivating citrus trees in order to
produce citrus for delivery to the fresh and processed citrus markets in the state of Florida.
Alicos sugarcane operations consist of cultivating sugarcane for sale to a sugar processor.
Alicos cattle operation is engaged primarily in the production of beef cattle, feeding cattle at
western feedlots and the raising of replacement heifers.
The goods and services produced by these segments are sold to wholesalers and processors in the
United States who prepare the products for consumption.
Alicos real estate segment, ALDI is engaged in the planning and strategic positioning of all
Company owned land. These actions include seeking entitlement of Alicos land assets in order to
preserve rights should Alico choose to develop property in the future. The real estate segment is
also responsible for negotiating and renegotiating sales and options contracts. Alicos leasing
segment rents land to others on a tenant-at-will basis for grazing, farming, oil exploration and
recreational uses.
Although the Vegetable segment does not meet the quantitative thresholds to be considered as a
reportable segment, information about this segment may be useful to the reader and has been
included in the schedules following.
The accounting policies of the segments are the same as those described in the summary of
significant accounting policies. Alico evaluates performance based on direct margins from
operations before general and administrative costs, interest expense and income taxes not including
nonrecurring gains and losses. Alicos reportable segments are strategic business units that offer
different products. They are managed separately because each business requires different knowledge,
skills and marketing strategies.
64
Information concerning the various segments of Alico for the fiscal years ended September 30, 2009,
September 30, 2008, and August 31, 2007 and the one month transition period ended September 30,
2007 is summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended |
|
|
One Month Ended |
|
|
Fiscal Year Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
August 31, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2007 |
|
Revenues (from external customers
except as noted) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bowen |
|
$ |
27,998 |
|
|
$ |
45,499 |
|
|
$ |
143 |
|
|
$ |
52,716 |
|
Intersegment fruit sales |
|
|
8,374 |
|
|
|
9,816 |
|
|
|
|
|
|
|
5,383 |
|
Citrus groves |
|
|
36,030 |
|
|
|
41,167 |
|
|
|
5 |
|
|
|
47,484 |
|
Sugarcane |
|
|
7,624 |
|
|
|
9,671 |
|
|
|
|
|
|
|
9,432 |
|
Cattle |
|
|
8,201 |
|
|
|
6,793 |
|
|
|
330 |
|
|
|
9,977 |
|
Real Estate |
|
|
1,372 |
|
|
|
3,870 |
|
|
|
|
|
|
|
3,329 |
|
Land leasing and rentals |
|
|
2,691 |
|
|
|
2,276 |
|
|
|
141 |
|
|
|
1,495 |
|
Vegetables |
|
|
4,706 |
|
|
|
5,460 |
|
|
|
|
|
|
|
3,803 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from segments |
|
|
96,996 |
|
|
|
124,552 |
|
|
|
619 |
|
|
|
133,619 |
|
Other operations |
|
|
906 |
|
|
|
1,646 |
|
|
|
139 |
|
|
|
3,769 |
|
Less: intersegment revenues eliminated |
|
|
(8,374 |
) |
|
|
(9,816 |
) |
|
|
|
|
|
|
(5,383 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenue |
|
$ |
89,528 |
|
|
$ |
116,382 |
|
|
$ |
758 |
|
|
$ |
132,005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bowen |
|
$ |
26,660 |
|
|
$ |
44,029 |
|
|
$ |
222 |
|
|
$ |
51,786 |
|
Intersegment fruit sales |
|
|
8,374 |
|
|
|
9,816 |
|
|
|
|
|
|
|
5,383 |
|
Citrus groves |
|
|
27,299 |
|
|
|
27,637 |
|
|
|
3 |
|
|
|
23,427 |
|
Sugarcane |
|
|
9,809 |
|
|
|
9,250 |
|
|
|
|
|
|
|
8,833 |
|
Cattle |
|
|
10,161 |
|
|
|
8,920 |
|
|
|
289 |
|
|
|
9,722 |
|
Real Estate |
|
|
5,265 |
|
|
|
3,529 |
|
|
|
59 |
|
|
|
3,408 |
|
Land leasing and rentals |
|
|
1,117 |
|
|
|
608 |
|
|
|
36 |
|
|
|
393 |
|
Vegetables |
|
|
6,647 |
|
|
|
5,601 |
|
|
|
|
|
|
|
3,307 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating expenses |
|
|
95,332 |
|
|
|
109,390 |
|
|
|
609 |
|
|
|
106,259 |
|
Other operations |
|
|
732 |
|
|
|
2,751 |
|
|
|
218 |
|
|
|
1,444 |
|
Less: intersegment expenses eliminated |
|
|
(8,374 |
) |
|
|
(9,816 |
) |
|
|
|
|
|
|
(5,383 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
$ |
87,690 |
|
|
$ |
102,325 |
|
|
$ |
827 |
|
|
$ |
102,320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bowen |
|
$ |
1,338 |
|
|
$ |
1,470 |
|
|
$ |
(79 |
) |
|
$ |
930 |
|
Citrus groves |
|
|
8,731 |
|
|
|
13,530 |
|
|
|
2 |
|
|
|
24,057 |
|
Sugarcane |
|
|
(2,185 |
) |
|
|
421 |
|
|
|
|
|
|
|
599 |
|
Cattle |
|
|
(1,960 |
) |
|
|
(2,127 |
) |
|
|
41 |
|
|
|
255 |
|
Real Estate |
|
|
(3,893 |
) |
|
|
341 |
|
|
|
(59 |
) |
|
|
(79 |
) |
Land leasing and rentals |
|
|
1,574 |
|
|
|
1,668 |
|
|
|
105 |
|
|
|
1,102 |
|
Vegetables |
|
|
(1,941 |
) |
|
|
(141 |
) |
|
|
|
|
|
|
496 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (loss) from segments |
|
|
1,664 |
|
|
|
15,162 |
|
|
|
10 |
|
|
|
27,360 |
|
Other |
|
|
174 |
|
|
|
(1,105 |
) |
|
|
(79 |
) |
|
|
2,325 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (loss) |
|
$ |
1,838 |
|
|
$ |
14,057 |
|
|
$ |
(69 |
) |
|
$ |
29,685 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended |
|
|
One Month Ended |
|
|
Fiscal Year Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
August 31, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2007 |
|
Capital expenditures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bowen |
|
$ |
73 |
|
|
$ |
38 |
|
|
$ |
|
|
|
$ |
554 |
|
Citrus Groves |
|
|
1,551 |
|
|
|
1,899 |
|
|
|
9 |
|
|
|
1,231 |
|
Sugarcane |
|
|
2,186 |
|
|
|
63 |
|
|
|
|
|
|
|
1,288 |
|
Cattle |
|
|
1,154 |
|
|
|
1,588 |
|
|
|
60 |
|
|
|
1,893 |
|
Leasing |
|
|
65 |
|
|
|
449 |
|
|
|
|
|
|
|
459 |
|
Vegetables |
|
|
428 |
|
|
|
432 |
|
|
|
92 |
|
|
|
473 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment capital expenditures |
|
|
5,457 |
|
|
|
4,469 |
|
|
|
161 |
|
|
|
5,898 |
|
Other capital expenditures |
|
|
1,248 |
|
|
|
1,661 |
|
|
|
132 |
|
|
|
3,240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consolidated capital expenditures |
|
$ |
6,705 |
|
|
$ |
6,130 |
|
|
$ |
293 |
|
|
$ |
9,138 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bowen |
|
$ |
358 |
|
|
$ |
335 |
|
|
$ |
21 |
|
|
$ |
344 |
|
Citrus Groves |
|
|
2,127 |
|
|
|
2,215 |
|
|
|
188 |
|
|
|
2,381 |
|
Sugarcane |
|
|
1,498 |
|
|
|
1,709 |
|
|
|
171 |
|
|
|
2,083 |
|
Cattle |
|
|
1,643 |
|
|
|
1,810 |
|
|
|
134 |
|
|
|
1,887 |
|
Leasing |
|
|
209 |
|
|
|
90 |
|
|
|
7 |
|
|
|
67 |
|
Vegetables |
|
|
211 |
|
|
|
146 |
|
|
|
12 |
|
|
|
68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment depreciation and
amortization |
|
|
6,046 |
|
|
|
6,305 |
|
|
|
533 |
|
|
|
6,830 |
|
Other depreciation, depletion and amortization |
|
|
1,498 |
|
|
|
2,012 |
|
|
|
174 |
|
|
|
1,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total depreciation, depletion and
amortizations |
|
$ |
7,544 |
|
|
$ |
8,317 |
|
|
$ |
707 |
|
|
$ |
8,770 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bowen |
|
$ |
2,816 |
|
|
$ |
2,581 |
|
|
|
|
|
|
|
|
|
Citrus groves |
|
|
45,491 |
|
|
|
49,201 |
|
|
|
|
|
|
|
|
|
Sugarcane |
|
|
42,832 |
|
|
|
43,525 |
|
|
|
|
|
|
|
|
|
Cattle |
|
|
13,595 |
|
|
|
18,343 |
|
|
|
|
|
|
|
|
|
Leasing |
|
|
4,510 |
|
|
|
2,370 |
|
|
|
|
|
|
|
|
|
Vegetables |
|
|
3,647 |
|
|
|
4,213 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets |
|
|
112,891 |
|
|
|
120,233 |
|
|
|
|
|
|
|
|
|
Other Corporate assets |
|
|
87,344 |
|
|
|
153,699 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
200,235 |
|
|
$ |
273,932 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As discussed in note 5 to the consolidated financial statements, non-cash
impairment adjustments of $4.3 million, $1.5 million and $1.9 million were
included as operating expenses of the real estate segment in fiscal years ended
September 30, 2009, September 30, 2008 and August 31, 2007, respectively.
Non-cash impairment adjustments of $813 thousand and $260 thousand were included
as operating expenses of the cattle segment in fiscal years ended September 30, 2009
and September 30, 2008, respectively. There were no impairment adjustments for the one
month transitional period ended September 30, 2007. Aside from depreciation, the
impairment charges represent the only significant non-cash items.
66
(11) Treasury Stock
The Companys Board of Directors has authorized the repurchase of up to 350,000 shares of the
Companys common stock through November 1, 2013 for the purpose of funding restricted stock grants
under its 2008 Incentive Equity Plan in order to provide restricted stock to eligible Directors and
Senior Managers and align their interests with those of the Companys shareholders. Previously
Alico provided incentives under its 1998 Plan, and was authorized to purchase up to 650,000 shares
prior to the plans expiration in November 2008.
The stock repurchases began in November 2005 and will be made on a quarterly basis until November
1, 2013 through open market transactions, at times and in such amounts as the Companys broker
determines subject to the provisions of SEC Rule 10b-18.
The following table provides information relating to purchases of Alicos common shares by Alico on
the open market pursuant to Plans approved by Alicos shareholders on June 10, 2005 and February
20, 2009 for the fiscal years ended September 30, 2009, September 30, 2008, August 31, 2007 and the
one month transition period ended September 30, 2007 (whole dollars):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
purchased |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as part of |
|
|
|
|
|
|
Total |
|
|
Average |
|
|
publicly |
|
|
Total dollar |
|
|
|
number of |
|
|
price |
|
|
announced |
|
|
value of |
|
|
|
shares |
|
|
paid per |
|
|
plans or |
|
|
shares |
|
Fiscal period ended |
|
purchased |
|
|
share |
|
|
programs |
|
|
purchased |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2009 |
|
|
25,500 |
|
|
$ |
36.63 |
|
|
|
97,238 |
|
|
$ |
934,008 |
|
September 30, 2008 |
|
|
27,968 |
|
|
$ |
42.76 |
|
|
|
71,738 |
|
|
$ |
1,195,818 |
|
September 30, 2007 |
|
|
|
|
|
$ |
|
|
|
|
43,770 |
|
|
$ |
|
|
August 31, 2007 |
|
|
27,770 |
|
|
$ |
53.45 |
|
|
|
43,770 |
|
|
$ |
1,484,291 |
|
(12) Off Balance Sheet Arrangements
Alico through its wholly owned subsidiary Bowen enters into purchase contracts for the purchase of
citrus products during the normal course of its business. Typically, these purchases are covered by
sales contracts. The purchase obligations under these purchase agreements totaled $12.6 million at
September 30, 2009. All of these purchases were covered by sales agreements at prices exceeding
cost. In addition, Bowen had forward sales contracts totaling $1.2 million at September 30, 2009
for which a purchaser had not been contracted. Bowen management currently believes that all
committed sales quantities can be purchased below the committed sales price. All of these contracts
will be fulfilled by the end of the fiscal year ending September 30, 2010.
Effective June 30, 2008, the Company discontinued its participation in Alico-J&J, LLC a joint
venture vegetable farm. The parties to the joint venture each held a 50% interest in the earnings,
assets and liabilities of the farm. The Company is currently working to dissolve the joint venture
and distribute the assets equitably among the members. (Losses) profits attributable to the joint
venture of ($0.7 million) and $57 thousand were included with the results of the vegetable division
for the fiscal years ended September 30, 2008 and August 31, 2007, respectively . The Company has
accounted for the joint venture under the equity method. Under the terms of the joint venture,
Alico served as a guarantor for five-year equipment leases to the joint venture. The Companys
maximum total remaining unpaid obligations under these leases was $0.2 million at September 30,
2009.
67
(13) Discontinued Operations
Effective June 30, 2008, the Company ceased operating its Plant World facility. Plant World
generated revenues of $2.6 million, and $2.8 million for the fiscal years ended September 30, 2008
and August 31, 2007, respectively and $0.4 million for the one month transition period ended
September 30, 2007. Plant World generated losses of $0.9 million and $0.2 million (net of taxes of
$559 thousand and $268 thousand) or $0.12 and $0.03 per share for the fiscal years ended
September 30, 2008 and August 31, 2007, respectively. Plant World generated a profit of $169
thousand (net of income taxes of $35 thousand) or $0.02 per share during the one month transition
period ended September 30, 2007. Total assets of $1.7 million related to discontinued operations
were included in the balance sheet at September 30, 2008. The Company is currently leasing the
Plant World facilities to a commercial greenhouse operator and has also sold a portion of the
equipment used to operate the greenhouse. The results of Plant Worlds operations have been
reported as discontinued operations.
(14) New Accounting Pronouncements
In accordance with recent U.S. GAAP requirements Alico changed its accounting and disclosure
practices for the following items during the fiscal year ended September 30, 2009:
Alico discloses the fair value of financial instruments for interim reporting periods as well as in
annual financial statements. As the adoption of these procedures was only disclosure-related, it
did not have an impact on Alicos financial position or results of operations. The required
disclosures are presented in note 17 to the consolidated financial statements Fair Value
Measurement.
Alico is required to disclose any material subsequent events through the filing date of its
quarterly and annual filings. The adoption of this requirement did not have an impact on Alicos
financial position or results of operations. The required disclosures
are presented in Note 15 to
the consolidated financial statements Subsequent Events.
Beginning in the fiscal year ending September 30, 2010, Alico is required to include restricted
shares in its calculation of basic earnings per share. The adoption of this requirement is not
expected to have an impact on Alicos financial position, results of operations or cash flows, but
will further dilute basic earnings per share. The application of this requirement will necessitate
the recalculation of basic earnings per share and the restatement of such for all prior periods
presented. The restated earnings per share amounts are not expected to be materially different
from those reported prior. Early adoption of this change is not permitted.
(15) Subsequent events
There were no subsequent events to disclose during this period. Transactions were evaluated
through December 14, 2009, the filing date of this report on Form 10-K.
68
(16) Transition Period Financial Information
On September 28, 2007, the Companys fiscal year end was changed from August 31 to September 30.
Accordingly, the Company is presenting information for the one month transition period ended
September 30, 2007. The following table provides certain comparative financial information of the
same period of the prior year.
|
|
|
|
|
|
|
|
|
|
|
One Month Ended |
|
|
|
September 30, |
|
(In thousands, except per share data) |
|
2007 |
|
|
2006 |
|
|
|
|
|
|
(Unaudited) |
|
Statement of operations data: |
|
|
|
|
|
|
|
|
Operating revenue |
|
$ |
758 |
|
|
$ |
1,682 |
|
Operating and general and administrative expenses |
|
|
1,642 |
|
|
|
2,499 |
|
|
|
|
|
|
|
|
Profit
(loss) from continuing operations |
|
|
(884 |
) |
|
|
(817 |
) |
Other earnings (loss) |
|
|
28 |
|
|
|
101 |
|
Income taxes (benefit) |
|
|
(176 |
) |
|
|
(341 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(680 |
) |
|
$ |
(375 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.09 |
) |
|
$ |
(0.05 |
) |
Diluted |
|
$ |
(0.09 |
) |
|
$ |
(0.05 |
) |
(17) Fair Value Measurements
The carrying amounts in the balance sheets for accounts receivable, mortgages and notes receivable,
accounts payable and accrued expenses approximate fair value because of the immediate or short term
maturity of these items. When stated interest rates are below market, Alico discounts mortgage
notes receivable to reflect their estimated fair value. Alico carries its investments and
securities available for sale at fair value. The carrying amounts reported for Alicos long-term
debt approximates fair value because they are transactions with commercial lenders at interest
rates that vary with market conditions and fixed rates that approximate market rates for comparable
loans.
Alico implemented fair value measurements requirements on October 1, 2008. Fair value is defined
as the price that would be received upon the sale of an asset or paid to transfer a liability (i.e.
exit price) in an orderly transaction between market participants at the measurement date. Assets
and liabilities measured at fair value are categorized into one of three different levels depending
on the assumptions (i.e. inputs) used in the valuation. Assets and liabilities are classified in
their entirety based on the lowest level of input significant to the fair value measurement. The
fair value hierarchy is defined as follows:
Level 1 Valuations are based on unadjusted quoted prices in active markets for identical assets or
liabilities.
Level 2 Valuations are based on quoted prices for similar assets or liabilities in active markets,
or quoted prices in markets that are not active for which significant inputs are observable, either
directly or indirectly.
Level 3 Valuations are based on prices or valuation techniques that require inputs that are both
unobservable and significant to the overall fair value measurement. Inputs reflect managements
best estimate of what market participants would use in valuing the asset or liability at the
measurement date.
69
The following table represents the fair values of Alicos financial assets and liabilities as
of September 30, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted prices in |
|
|
|
|
|
|
|
|
|
|
|
|
|
active markets for |
|
|
Significant other |
|
|
Significant |
|
|
|
|
|
|
|
identical assets |
|
|
observable inputs |
|
|
unobservable inputs |
|
Description |
|
Fair Value |
|
|
(level 1) |
|
|
(level 2) |
|
|
(level 3) |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for sale investments |
|
$ |
8,008 |
|
|
$ |
3,527 |
|
|
$ |
3,373 |
|
|
$ |
1,108 |
|
Other investments |
|
|
4,386 |
|
|
|
|
|
|
|
1,305 |
|
|
|
3,081 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
12,394 |
|
|
$ |
3,527 |
|
|
$ |
4,678 |
|
|
$ |
4,189 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is a reconciliation of beginning and ending balances for sercurities using level 3 inputs as defined above
for the year ended September 30, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for sale |
|
|
Other |
|
|
|
|
|
|
investments |
|
|
investments |
|
|
Total |
|
Beginning balance |
|
$ |
1,170 |
|
|
$ |
3,475 |
|
|
$ |
4,645 |
|
Realized and unrealized gains (losses) included in earnings |
|
|
|
|
|
|
(359 |
) |
|
|
(359 |
) |
Realized and unrealized gains (losses) included in other
comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
Purchases, sales, issuances and settlements |
|
|
|
|
|
|
(35 |
) |
|
|
(35 |
) |
Transfers in or out of level 3 |
|
|
(62 |
) |
|
|
|
|
|
|
(62 |
) |
|
|
|
|
|
|
|
|
|
|
Ending balance |
|
$ |
1,108 |
|
|
$ |
3,081 |
|
|
$ |
4,189 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and |
|
|
|
|
|
|
investment income |
|
|
Total |
|
Total gains (losses) included in earnings attributable to the change in
unrealized gains or losses relating to assets held at September 30, 2009 |
|
$ |
(816 |
) |
|
$ |
(816 |
) |
|
|
|
|
|
|
|
Alico
utilized third party service providers to evaluate its investments. Current market interest rates, quality
estimates by rating agencies and valuation estimates by active market
participants were used to develop the fair value estimations.
70
(18) Selected Quarterly Financial Data (unaudited)
Summarized quarterly financial data (in thousands except for per share amounts) for the fiscal
years ended September 30, 2009 and 2008 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended |
|
|
|
December 31, |
|
|
March 31, |
|
|
June 30, |
|
|
September 30, |
|
|
|
2008 |
|
|
2007 |
|
|
2009 |
|
|
2008 |
|
|
2009 |
|
|
2008 |
|
|
2009 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
20,294 |
|
|
$ |
22,652 |
|
|
$ |
33,346 |
|
|
$ |
48,182 |
|
|
$ |
31,181 |
|
|
$ |
42,147 |
|
|
$ |
4,707 |
|
|
$ |
3,401 |
|
Discontinued operations |
|
|
|
|
|
|
902 |
|
|
|
|
|
|
|
1,093 |
|
|
|
|
|
|
|
463 |
|
|
|
|
|
|
|
112 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales |
|
|
20,294 |
|
|
|
23,554 |
|
|
|
33,346 |
|
|
|
49,275 |
|
|
|
31,181 |
|
|
|
42,610 |
|
|
|
4,707 |
|
|
|
3,513 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
|
18,004 |
|
|
|
18,381 |
|
|
|
32,294 |
|
|
|
42,027 |
|
|
|
27,438 |
|
|
|
35,790 |
|
|
|
9,954 |
|
|
|
6,127 |
|
Discontinued operations |
|
|
|
|
|
|
833 |
|
|
|
|
|
|
|
1,264 |
|
|
|
|
|
|
|
1,025 |
|
|
|
|
|
|
|
150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
18,004 |
|
|
|
19,214 |
|
|
|
32,294 |
|
|
|
43,291 |
|
|
|
27,438 |
|
|
|
36,815 |
|
|
|
9,954 |
|
|
|
6,277 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
|
2,290 |
|
|
|
4,271 |
|
|
|
1,052 |
|
|
|
6,155 |
|
|
|
3,743 |
|
|
|
6,357 |
|
|
|
(5,247 |
) |
|
|
(2,726 |
) |
Discontinued operations |
|
|
|
|
|
|
69 |
|
|
|
|
|
|
|
(171 |
) |
|
|
|
|
|
|
(562 |
) |
|
|
|
|
|
|
(38 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross profit |
|
|
2,290 |
|
|
|
4,340 |
|
|
|
1,052 |
|
|
|
5,984 |
|
|
|
3,743 |
|
|
|
5,795 |
|
|
|
(5,247 |
) |
|
|
(2,764 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General &
Administrative expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
|
3,001 |
|
|
|
2,913 |
|
|
|
2,811 |
|
|
|
3,884 |
|
|
|
1,671 |
|
|
|
3,568 |
|
|
|
1,613 |
|
|
|
1,113 |
|
Discontinued operations |
|
|
|
|
|
|
88 |
|
|
|
|
|
|
|
97 |
|
|
|
|
|
|
|
495 |
|
|
|
|
|
|
|
17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total general &
administrative expense |
|
|
3,001 |
|
|
|
3,001 |
|
|
|
2,811 |
|
|
|
3,981 |
|
|
|
1,671 |
|
|
|
4,063 |
|
|
|
1,613 |
|
|
|
1,130 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
|
411 |
|
|
|
2,899 |
|
|
|
5,793 |
|
|
|
628 |
|
|
|
(1,306 |
) |
|
|
(119 |
) |
|
|
(1,127 |
) |
|
|
(1,149 |
) |
Discontinued operations |
|
|
|
|
|
|
50 |
|
|
|
|
|
|
|
17 |
|
|
|
|
|
|
|
(215 |
) |
|
|
|
|
|
|
98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income
(expense |
|
|
411 |
|
|
|
2,949 |
|
|
|
5,793 |
|
|
|
645 |
|
|
|
(1,306 |
) |
|
|
(334 |
) |
|
|
(1,127 |
) |
|
|
(1,051 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
|
(300 |
) |
|
|
4,257 |
|
|
|
4,034 |
|
|
|
2,899 |
|
|
|
766 |
|
|
|
2,670 |
|
|
|
(7,987 |
) |
|
|
(4,988 |
) |
Discontinued operations |
|
|
|
|
|
|
31 |
|
|
|
|
|
|
|
(251 |
) |
|
|
|
|
|
|
(1,272 |
) |
|
|
|
|
|
|
43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income before
income taxes |
|
|
(300 |
) |
|
|
4,288 |
|
|
|
4,034 |
|
|
|
2,648 |
|
|
|
766 |
|
|
|
1,398 |
|
|
|
(7,987 |
) |
|
|
(4,945 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
|
(124 |
) |
|
|
1,486 |
|
|
|
1,977 |
|
|
|
1,015 |
|
|
|
157 |
|
|
|
(3,129 |
) |
|
|
(1,848 |
) |
|
|
(137 |
) |
Discontinued operations |
|
|
|
|
|
|
12 |
|
|
|
|
|
|
|
95 |
|
|
|
|
|
|
|
(456 |
) |
|
|
|
|
|
|
(210 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income tax
expense (benefit) |
|
|
(124 |
) |
|
|
1,498 |
|
|
|
1,977 |
|
|
|
1,110 |
|
|
|
157 |
|
|
|
(3,585 |
) |
|
|
(1,848 |
) |
|
|
(347 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
|
(176 |
) |
|
|
2,771 |
|
|
|
2,057 |
|
|
|
1,884 |
|
|
|
609 |
|
|
|
5,799 |
|
|
|
(6,139 |
) |
|
|
(4,851 |
) |
Discontinued operations |
|
|
|
|
|
|
19 |
|
|
|
|
|
|
|
(346 |
) |
|
|
|
|
|
|
(816 |
) |
|
|
|
|
|
|
253 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net income (loss) |
|
$ |
(176 |
) |
|
$ |
2,790 |
|
|
$ |
2,057 |
|
|
$ |
1,538 |
|
|
$ |
609 |
|
|
$ |
4,983 |
|
|
$ |
(6,139 |
) |
|
$ |
(4,598 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
(0.02 |
) |
|
$ |
0.38 |
|
|
$ |
0.28 |
|
|
$ |
0.21 |
|
|
$ |
0.08 |
|
|
$ |
0.68 |
|
|
$ |
(0.84 |
) |
|
$ |
(0.62 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alico discontinued operations of its Plant World subsidiary in June 2008. Plant Worlds
operations were previously reported as a single line, net of tax in the Companys filings on form
10-Q during June and September 2008, but were included as operating items in prior filings. This
change should be considered when comparing this table to the Companys previous filings.
71
Item 9. Changes in & Disagreements with Accountants on Accounting and Financial Disclosure.
There were no disagreements with accountants on accounting and financial disclosure matters.
Item 9A. Controls and Procedures.
Attached as exhibits to this Form 10-K are certifications of our Principal Executive Officer and
Chief Financial Officer, which are required in accordance with Rule 13a-14 of the Securities
Exchange Act. This Controls and Procedures section includes information concerning the controls
and controls evaluation referred to in the certifications.
Evaluation of Disclosure Controls and Procedures
Alico maintains disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as amended, referenced herein as the Exchange Act. These
disclosure controls and procedures are designed to ensure that information required to be disclosed
by Alico in the reports that it files or submits under the Exchange Act is recorded, processed,
summarized, and reported within the time periods specified in the SECs rules and forms, and that
such information is accumulated and communicated to Companys management, including its Principal
Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure. Alico carried out, under the supervision and with the participation of Alicos
management, including Alicos Principal Executive Officer and Alicos Chief Financial Officer, an
evaluation of the effectiveness of the design and operation of Alicos disclosure controls and
procedures performed pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as amended.
Based on their evaluation, Alicos Principal Executive Officer and its Chief Financial Officer
concluded that, as of September 30, 2009, Alicos disclosure controls and procedures were
effective.
Management assessed the effectiveness of Alicos internal control over financial reporting as of
September 30, 2009. In making the assessment, Management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control -
Integrated Framework. Based on this assessment, the Management of Alico concluded that as of
September 30, 2009, Alicos disclosure controls and procedures were effective.
72
Managements Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial
reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f)
promulgated under the Exchange Act as a process designed by, or under the supervision of, Alicos
Principal Executive and Chief Financial Officers and implemented by Alicos Board of Directors,
management and other personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles and includes those polices and procedures that:
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the
transactions and dispositions of the assets of Alico;
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with accounting principles generally accepted in the United
States of America, and that receipts and expenditures of Alico are being made only in accordance
with authorizations of management and directors of Alico; and
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use or disposition of Alicos assets that could have a material effect on the financial statements.
Based on their evaluations of the internal controls, Alicos Principal Executive Officer and Chief
Financial Officer have concluded that as of September 30, 2009, Alico maintained effective internal
control over financial reporting.
The effectiveness of internal control over financial reporting as of September 30, 2009 has been
audited by McGladrey & Pullen, LLP, an independent registered public accounting firm, as
stated in their report which is on page 38 of this Form 10-K.
Item 9B. Other Information.
None.
73
PART III
Items 10 14 of Part III are incorporated by reference to Alicos proxy expected to be filed
on or before January 20, 2010.
PART IV
|
|
|
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
Reports of Independent Registered Certified Public Accounting Firms
Consolidated Balance Sheets September 30, 2009 and September 30, 2008
Consolidated Statements of Operations For the fiscal years ended September 30, 2009,
September 30, 2008 and August 31, 2007 and for the one month transition period ended
September 30, 2007
Consolidated Statements of Stockholders Equity and Comprehensive Income (loss) For the
fiscal years ended September 30, 2009, September 30, 2008 and August 31, 2007 and for the one
month transition period ended September 30, 2007
Consolidated Statements of Cash Flows For the fiscal years ended September 30, 2009,
September 30, 2008, and August 31, 2007, and the one month transition period ended
September 30, 2007
(b) 2. Financial Statement Schedules:
All 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.
(c) 3. Exhibits:
|
|
|
|
|
|
3(i) |
|
|
Articles of Incorporation: |
|
|
|
|
|
|
3(i)1 |
|
|
Restated Certificate of Incorporation, Dated February 17, 1972 (incorporated by reference to
Alicos Registration Statement on Form S-1 dated February 24, 1972, Registration No. 2-43156). |
|
|
|
|
|
|
3(i)2 |
|
|
Certificate of Amendment to Certificate of Incorporation, Dated January 14, 1974
(incorporated by reference to Alicos Registration Statement on Form S-8, dated December 21, 2005,
Registration No. 333-130575) |
|
|
|
|
|
|
3(i)3 |
|
|
Amendment to Articles of Incorporation, Dated January 14, 1987 (incorporated by reference to
Alicos Registration Statement on Form S-8, dated December 21, 2005, Registration No. 333-130575) |
|
|
|
|
|
|
3(i)4 |
|
|
Amendment to Articles of Incorporation, Dated December 27, 1988 (incorporated by reference to
Alicos Registration Statement on Form S-8, dated December 21, 2005, Registration No. 333-130575) |
|
|
|
|
|
|
3(ii)
|
|
|
Bylaws |
|
|
|
|
|
|
3(ii)(1) |
|
|
By-Laws of Alico, Inc., amended and restated (incorporated by reference to Alicos filing
on Form 8-K dated October 4, 2007) |
|
|
|
|
|
|
3(ii)(2)
|
|
|
By-Laws of Alico, Inc. amended and restated (incorporated by reference to Alicos filing
on Form 8-K dated November 21, 2008) |
|
|
|
|
|
|
3(ii)(3)
|
|
|
By-Laws
of Alico, Inc. amended and restated October 30, 2009. |
74
|
|
|
|
|
|
(10) |
|
|
Material Contracts |
|
|
|
|
|
|
(10.1) |
|
|
Citrus Processing and Marketing Agreement with Ben Hill Griffin, Inc., dated November 2,
1983, a Continuing Contract. (incorporated by reference to Alicos filing on Form 10-K dated
November 28, 2006) |
|
|
|
|
|
|
(10.2) |
|
|
Cash Purchase Orange Agreement with Tropicana (incorporated by reference to the Companys
filing on Form 10-K dated November 14, 2007) |
|
|
|
|
|
|
(10.3) |
|
|
Fruit Purchase Agreement with Southern Gardens Citrus Processing Corporation (incorporated
by reference to the Companys filing on Form 10-K dated November 14, 2007) |
|
|
|
|
|
|
(10.4) |
|
|
Second Amendment to Mortgage Deed (incorporated by reference to Alicos filing on Form 8-K
dated October 25, 2007) |
|
|
|
|
|
|
(10.5) |
|
|
Revolving Line of Credit Agreement (incorporated by reference to Alicos filing on Form 8-K
dated October 17, 2005) |
|
|
|
|
|
|
(10.6) |
|
|
Amendment to Line of Credit Agreement (incorporated by reference to Alicos filing on Form
8-K dated June 1, 2006) |
|
|
|
|
|
|
(10.7) |
|
|
Amendment to Line of Credit Agreement (incorporated by reference to Alicos filing on Form
10-K dated November 14, 2007) |
|
|
|
|
|
|
(10.8) |
|
|
Term note with Farm Credit (incorporated by reference to Alicos filing on Form 8-K dated
September 8, 2008) |
|
|
|
|
|
|
(10.9) |
|
|
Fourth Amendment to Amended and Restated Loan Agreement (incorporated by reference to
Alicos filing on Form 8-K dated September 8, 2008) |
|
|
|
|
|
|
(10.10) |
|
|
Amended and Restated RLOC Note (incorporated by reference to Alicos filing on Form 8-K
dated September 8, 2008) |
|
|
|
|
|
|
(10.11) |
|
|
Transition, Severence, Non-Compete and Consulting Agreement with John R. Alexander
(incorporated by reference to Alicos filing on Form 8-K dated June 30, 2008) |
|
|
|
|
|
|
(10.12) |
|
|
Transition, Severence, Non-Compete and Consulting Agreement with Dan L. Gunter
(incorporated by reference to Alicos filing on Form 8-K dated November 21, 2008) |
|
|
|
|
|
|
(14.1) |
|
|
Code
of Ethics amended February 20, 2009 |
|
|
|
|
|
|
(14.2) |
|
|
Whistleblower
Policy amended February 20, 2009 |
|
|
|
|
|
|
(21) |
|
|
Subsidiaries of the Registrant Alico Land Development Company, Inc. (formerly Saddlebag
Lake Resorts, Inc. (a Florida corporation incorporated in 1971));Agri-Insurance Company, Ltd. (a
company formed under the laws of the country of Bermuda incorporated in 2000), Alico-Agri, Ltd (a
Florida limited partnership formed in 2003), Alico Plant World, LLC (a Florida limited liability
company organized in 2004), Bowen Brothers Fruit, LLC (a Florida limited liability company
organized in 2005))
incorporated by reference to Alicos filing on Form 10-K dated November 28, 2006) |
|
|
|
|
|
|
(31.1) |
|
|
Rule 13a-14(a) certification |
|
|
|
|
|
|
(31.2) |
|
|
Rule 13a-14(a) certification |
|
|
|
|
|
|
(32.1) |
|
|
Section 1350 certification |
|
|
|
|
|
|
(32.2) |
|
|
Section 1350 certification |
75
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) |
|
|
|
|
|
|
|
December 14 , 2009
Date
|
|
/s/ Steven M. Smith
Steven M. Smith
|
|
|
|
|
President & Principal Executive Officer |
|
|
|
|
|
|
|
December 14 , 2009
Date |
|
/s/ Patrick W. Murphy
Patrick W. Murphy
|
|
|
|
|
Senior Vice President and Chief Financial Officer |
|
|
76
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:
|
|
|
/s/ John R. Alexander
|
|
/s/ JD Alexander |
|
|
|
John R. Alexander
|
|
JD Alexander |
Chairman
|
|
Vice-Chairman |
|
|
|
/s/ Robert E Lee Caswell
|
|
/s/ Evelyn DAn |
|
|
|
Robert E. Lee Caswell
|
|
Evelyn DAn |
Director
|
|
Director |
|
|
|
/s/ Charles L. Palmer
|
|
/s/ Ramon A. Rodriguez |
|
|
|
Charles L. Palmer
|
|
Ramon A. Rodriguez |
Director
|
|
Director |
|
|
|
/s/ John Darrell Rood
|
|
/s/ Dean Saunders |
|
|
|
John Darrell Rood
|
|
Dean Saunders |
Director
|
|
Director |
|
|
|
/s/ Robert J. Viguet, Jr.
|
|
/s/ Gordon Walker |
|
|
|
Robert J. Viguet, Jr.
|
|
Gordon Walker |
Director
|
|
Director |
December 14, 2009
77
EXHIBIT INDEX
|
|
|
|
|
Exhibit |
|
|
Number |
|
Description |
|
|
|
|
|
|
3(i) |
|
|
Articles of Incorporation: |
|
|
|
|
|
|
3(i)1 |
|
|
Restated Certificate of Incorporation, Dated
February 17, 1972 (incorporated by reference to
Alicos Registration Statement on Form S-1 dated
February 24, 1972, Registration No. 2-43156). |
|
|
|
|
|
|
3(i)2 |
|
|
Certificate of Amendment to Certificate of
Incorporation, Dated January 14, 1974
(incorporated by reference to Alicos Registration
Statement on Form S-8, dated December 21, 2005,
Registration No. 333-130575) |
|
|
|
|
|
|
3(i)3 |
|
|
Amendment to Articles of Incorporation, Dated
January 14, 1987 (incorporated by reference to
Alicos Registration Statement on Form S-8, dated
December 21, 2005, Registration No. 333-130575) |
|
|
|
|
|
|
3(i)4 |
|
|
Amendment to Articles of Incorporation, Dated
December 27, 1988 (incorporated by reference to
Alicos Registration Statement on Form S-8, dated
December 21, 2005, Registration No. 333-130575) |
|
|
|
|
|
3(ii)
|
|
|
Bylaws |
|
|
|
|
|
3(ii)(1)
|
|
|
By-Laws of Alico, Inc., amended and restated
(incorporated by reference to Alicos filing on
Form 8-K dated October 4, 2007) |
|
|
|
|
|
3(ii)(2)
|
|
|
By-Laws of Alico, Inc. amended and restated
(incorporated by reference to Alicos filing on
Form 8-K dated November 21, 2008) |
|
|
|
|
|
3(ii)(3)
|
|
|
By-Laws of Alico, Inc. amended and restated
October 30, 2009. |
|
|
|
|
|
|
(10) |
|
|
Material Contracts |
|
|
|
|
|
|
(10.1) |
|
|
Citrus Processing and Marketing Agreement with Ben
Hill Griffin, Inc., dated November 2, 1983, a
Continuing Contract. (incorporated by reference to
Alicos filing on Form 10-K dated November 28,
2006) |
|
|
|
|
|
|
(10.2) |
|
|
Cash Purchase Orange Agreement with Tropicana
(incorporated by reference to Alicos filing on
Form 10-K dated November 14, 2007) |
|
|
|
|
|
|
(10.3) |
|
|
Fruit Purchase Agreement with Southern Gardens
Citrus Processing Corporation (incorporated by
reference to Alicos filing on Form 10-K dated
November 14, 2007) |
78
|
|
|
|
|
Exhibit |
|
|
Number |
|
Description |
|
|
|
|
|
|
(10.4 |
) |
|
Second Amendment and restate Renewal
Promissory Note (incorporated by reference to
Alicos filing on Form 8-K dated October 25,
2007) |
|
|
|
|
|
|
(10.5 |
) |
|
Second Amendment to Mortgage Deed
(incorporated by reference to Alicos filing
on Form 8-K dated October 25, 2007) |
|
|
|
|
|
|
(10.6 |
) |
|
Revolving Line of Credit Agreement
(incorporated by reference to Alicos filing
on Form 8-K dated October 17, 2005) |
|
|
|
|
|
|
(10.7 |
) |
|
Amendment to Line of Credit Agreement
(incorporated by reference to Alicos filing
on Form 8-K dated June 1, 2006) |
|
|
|
|
|
|
(10.8 |
) |
|
Amendment to Line of Credit Agreement
(incorporated by reference to Alicos filing
on Form 10-K dated November 14, 2007) |
|
|
|
|
|
|
(10.9 |
) |
|
Term note with Farm Credit (incorporated by
reference to Alicos filing on Form 8-K dated
September 8, 2008) |
|
|
|
|
|
|
(10.10 |
) |
|
Fourth Amendment to Amended and Restated Loan
Agreement (incorporated by reference to
Alicos filing on Form 8-K dated September 8,
2008) |
|
|
|
|
|
|
(10.11 |
) |
|
Amended and Restated RLOC Note (incorporated
by reference to Alicos filing on Form 8-K
dated September 8, 2008) |
|
|
|
|
|
|
(10.12 |
) |
|
Transition, Severence, Non-Compete and
Consulting Agreement with John R. Alexander
(incorporated by reference to Alicos filing
on Form 8-K dated June 30, 2008) |
|
|
|
|
|
|
(10.13 |
) |
|
Transition, Severence, Non-Compete and
Consulting Agreement with Dan L. Gunter
(incorporated by reference to Alicos filing
on Form 8-K dated November 21, 2008) |
|
|
|
|
|
79
|
|
|
|
|
Exhibit |
|
|
Number |
|
Description |
|
|
|
|
|
|
(14.1 |
) |
|
Code
of Ethics amended February 20, 2009 |
|
|
|
|
|
|
(14.2 |
) |
|
Whistleblower Policy amended February 20, 2009 |
|
|
|
|
|
|
(21 |
) |
|
Subsidiaries of the Registrant Alico Land
Development Company, Inc. (formerly Saddlebag
Lake Resorts, Inc. (a Florida corporation
incorporated in 1971));Agri-Insurance Company,
Ltd. (a company formed under the laws of the
country of Bermuda incorporated in 2000),
Alico-Agri, Ltd (a Florida limited partnership
formed in 2003), Alico Plant World, LLC (a
Florida limited liability company organized in
2004), Bowen Brothers Fruit, LLC (a Florida
limited liability company organized in
2005)) (incorporated by reference to Alicos
filing on Form 10-K dated November 28, 2006) |
|
|
|
|
|
|
(31.1 |
) |
|
Rule 13a-14(a) certification |
|
|
|
|
|
|
(31.2 |
) |
|
Rule 13a-14(a) certification |
|
|
(32.1 |
) |
|
Section 1350 certification |
|
|
|
|
|
|
(32.2 |
) |
|
Section 1350 certification |
80