UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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For the quarterly period ended March 31, 2015 |
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or |
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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For the transition period from _____________ to _____________ |
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Commission File Number: 0-261
Alico,
Inc.
(Exact name of registrant as specified in its charter) |
Florida |
59-0906081 |
(State or other jurisdiction of |
(I.R.S. Employer |
incorporation or organization) |
Identification No.) |
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10070 Daniels Interstate Court, Fort Myers, FL |
33913 |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone
number, including area code: 239-226-2000
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. R Yes £
No
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). R Yes
£ No
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions
of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act. (Check one):
Large accelerated file £ |
Accelerated filer R |
Non-accelerated filer £ |
Smaller reporting company £ |
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(Do not check if a smaller reporting company) |
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act).
£
Yes R No
There were 8,277,513 shares of common stock,
par value $1.00 per share, outstanding as of May 7, 2015.
ALICO, INC.
INDEX TO FORM 10-Q
PART I – FINANCIAL INFORMATION |
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Item 1. |
Condensed Combined Consolidated Financial Statements (Unaudited) |
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Condensed Combined Consolidated Statements of Comprehensive Income for the three and six months
ended March 31, 2015 and 2014 |
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Condensed Combined Consolidated Balance Sheets as of March 31, 2015 and September 30, 2014 |
4 |
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Condensed Combined Consolidated Statements of Cash Flows for the six months ended March 31, 2015
and 2014 |
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Notes to Condensed Combined Consolidated Financial Statements |
6 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
21 |
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Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
33 |
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Item 4. |
Control and Procedures |
33 |
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Part
II – OTHER INFORMATION
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Item 1. |
Legal Proceedings |
34 |
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Item 1A. |
Risk Factors |
34 |
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Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
34 |
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Item 3. |
Defaults Upon Senior Securities |
34 |
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Item 4. |
Mine Safety Disclosures |
34 |
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Item 5. |
Other Information |
34 |
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Item 6. |
Exhibits |
35 |
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
ALICO, INC. AND SUBSIDIARIES |
CONDENSED COMBINED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) |
(in thousands, except per share amounts) |
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Three Months Ended March 31, | |
Six Months Ended March 31, |
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2015 | |
2014 | |
2015 | |
2014 |
Operating revenues: | |
| | | |
| | | |
| | | |
| | |
Citrus Groves | |
$ | 50,371 | | |
$ | 22,590 | | |
$ | 63,289 | | |
$ | 28,223 | |
Agricultural Supply Chain Management | |
| 3,296 | | |
| 6,135 | | |
| 4,479 | | |
| 8,241 | |
Improved Farmland | |
| 982 | | |
| 10,750 | | |
| 2,074 | | |
| 17,282 | |
Ranch and Conservation | |
| 309 | | |
| 910 | | |
| 1,145 | | |
| 1,441 | |
Other Operations | |
| 164 | | |
| 257 | | |
| 313 | | |
| 444 | |
Total operating revenue | |
| 55,122 | | |
| 40,642 | | |
| 71,300 | | |
| 55,631 | |
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Operating expenses: | |
| | | |
| | | |
| | | |
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Citrus Groves | |
| 40,349 | | |
| 14,699 | | |
| 50,476 | | |
| 18,243 | |
Agricultural Supply Chain Management | |
| 2,740 | | |
| 5,844 | | |
| 4,111 | | |
| 8,169 | |
Improved Farmland | |
| 1,286 | | |
| 8,865 | | |
| 2,077 | | |
| 14,395 | |
Ranch and Conservation | |
| 623 | | |
| 1,171 | | |
| 1,368 | | |
| 1,547 | |
Other Operations | |
| 45 | | |
| 90 | | |
| 93 | | |
| 507 | |
Total operating expenses | |
| 45,043 | | |
| 30,669 | | |
| 58,125 | | |
| 42,861 | |
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Gross profit | |
| 10,079 | | |
| 9,973 | | |
| 13,175 | | |
| 12,770 | |
Corporate general and administrative | |
| 3,381 | | |
| 1,834 | | |
| 9,294 | | |
| 5,622 | |
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Income from operations | |
| 6,698 | | |
| 8,139 | | |
| 3,881 | | |
| 7,148 | |
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Other income (expense), net: | |
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Interest and investment income, net | |
| - | | |
| (9 | ) | |
| 2 | | |
| 27 | |
Interest expense | |
| (2,285 | ) | |
| (396 | ) | |
| (3,588 | ) | |
| (665 | ) |
Loss on extinguishment of debt | |
| (17 | ) | |
| - | | |
| (964 | ) | |
| - | |
Gain (loss) on sale of real estate | |
| (116 | ) | |
| (1 | ) | |
| 16,424 | | |
| (1 | ) |
Asset impairment | |
| (541 | ) | |
| - | | |
| (541 | ) | |
| - | |
Other income (loss), net | |
| 5 | | |
| (44 | ) | |
| 24 | | |
| (72 | ) |
Total other income (expense), net | |
| (2,954 | ) | |
| (450 | ) | |
| 11,357 | | |
| (711 | ) |
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Income before income taxes | |
| 3,744 | | |
| 7,689 | | |
| 15,238 | | |
| 6,437 | |
Income taxes | |
| 950 | | |
| 2,992 | | |
| 4,713 | | |
| 2,445 | |
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Net income attributable to common shareholders | |
| 2,794 | | |
| 4,697 | | |
| 10,525 | | |
| 3,992 | |
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Comprehensive income, net of tax effect | |
| - | | |
| - | | |
| - | | |
| - | |
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Comprehensive income attributable to common shareholders | |
$ | 2,794 | | |
$ | 4,697 | | |
$ | 10,525 | | |
$ | 3,992 | |
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Weighted-average number of shares outstanding: | |
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Basic | |
| 8,272 | | |
| 7,345 | | |
| 7,815 | | |
| 7,313 | |
Diluted | |
| 8,272 | | |
| 7,349 | | |
| 7,815 | | |
| 7,349 | |
Earnings per common share: | |
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Basic | |
$ | 0.34 | | |
$ | 0.64 | | |
$ | 1.35 | | |
$ | 0.55 | |
Diluted | |
$ | 0.34 | | |
$ | 0.64 | | |
$ | 1.35 | | |
$ | 0.54 | |
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Cash dividends declared per common share | |
$ | 0.06 | | |
$ | - | | |
$ | 0.12 | | |
$ | 0.12 | |
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See accompanying notes to condensed combined consolidated financial statements (unaudited) |
ALICO, INC. AND SUBSIDIARIES |
CONDENSED COMBINED CONSOLIDATED BALANCE SHEETS (UNAUDITED) |
(dollars in thousands, except share and per share amounts) |
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March 31, 2015 | |
September 30, 2014 |
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(unaudited) | |
(unaudited) |
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ASSETS | |
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Current assets: | |
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Cash and cash equivalents | |
$ | 2,775 | | |
$ | 31,020 | |
Investments | |
| 264 | | |
| 263 | |
Accounts receivable, net | |
| 21,206 | | |
| 8,724 | |
Inventories | |
| 58,539 | | |
| 25,469 | |
Deferred tax asset | |
| 71 | | |
| - | |
Assets held for sale | |
| 1,509 | | |
| 59,513 | |
Other current assets | |
| 1,511 | | |
| 721 | |
Total current assets | |
| 85,875 | | |
| 125,710 | |
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Investment in Magnolia Fund | |
| 998 | | |
| 1,435 | |
Investments, deposits and other non-current assets | |
| 6,269 | | |
| 2,905 | |
Goodwill | |
| 1,146 | | |
| - | |
Cash surrender value of life insurance | |
| 688 | | |
| 695 | |
Property, buildings and equipment, net | |
| 383,446 | | |
| 126,833 | |
Total assets | |
$ | 478,422 | | |
$ | 257,578 | |
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LIABILITIES & STOCKHOLDERS’ EQUITY | |
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Current liabilities: | |
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Accounts payable | |
$ | 4,966 | | |
$ | 2,052 | |
Long-term debt, current portion | |
| 4,511 | | |
| 3,196 | |
Accrued expenses | |
| 8,685 | | |
| 1,934 | |
Income taxes payable | |
| 4,085 | | |
| 4,572 | |
Dividend payable | |
| 442 | | |
| 442 | |
Accrued ad valorem taxes | |
| 930 | | |
| 1,850 | |
Capital lease obligation | |
| 258 | | |
| 259 | |
Other current liabilities | |
| 751 | | |
| 6,365 | |
Total current liabilities | |
| 24,628 | | |
| 20,670 | |
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Long-term debt, net of current portion | |
| 205,500 | | |
| 58,444 | |
Line of credit | |
| 21,975 | | |
| 3,160 | |
Other liability, noncurrent | |
| 3,633 | | |
| - | |
Deferred gain on sale | |
| 29,140 | | |
| - | |
Capital lease obligation, noncurrent | |
| 839 | | |
| 839 | |
Deferred income taxes, net of current portion | |
| 11,966 | | |
| 5,738 | |
Deferred retirement benefits, net of current portion | |
| 3,883 | | |
| 6,877 | |
Total liabilities | |
| 301,564 | | |
| 95,728 | |
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Commitments and contingencies | |
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Stockholders’ equity: | |
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Preferred stock, no par value. Authorized 1,000,000 shares; issued and outstanding, none | |
| - | | |
| - | |
Common stock, $1 par value; 15,000,000 shares authorized; 8,300,363 shares issued and 8,284,173 and 7,361,340 shares outstanding at March 31, 2015 and September 30, 2014, respectively | |
| 8,300 | | |
| 7,377 | |
Additional paid in capital | |
| 21,173 | | |
| 3,742 | |
Treasury stock at cost 16,190 and 15,766 shares held at March 31, 2015 and September 30, 2014, respectively | |
| (771 | ) | |
| (650 | ) |
Member's equity | |
| - | | |
| 15,768 | |
Retained earnings | |
| 143,222 | | |
| 135,613 | |
Total Alico stockholders’ equity | |
| 171,924 | | |
| 161,850 | |
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Noncontrolling interest | |
| 4,934 | | |
| - | |
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Total liabilities and stockholders’ equity | |
$ | 478,422 | | |
$ | 257,578 | |
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See accompanying notes to condensed combined consolidated financial statements (unaudited). |
ALICO, INC. AND SUBSIDIARIES |
CONDENSED COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) |
(in thousands) |
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Six Months Ended |
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March 31, |
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2015 | |
2014 |
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Net cash (used in) provided by operating activities | |
$ | (6,261 | ) | |
$ | 4,626 | |
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Cash flows from investing activities: | |
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Purchases of property and equipment | |
| (23,239 | ) | |
| (8,758 | ) |
Acquisition of citrus business, net of cash acquired | |
| (264,586 | ) | |
| - | |
Proceeds from disposals of property and equipment | |
| 103,445 | | |
| 700 | |
Return on investment in Magnolia | |
| 474 | | |
| 2,555 | |
Collections of mortgages and notes receivable | |
| (2 | ) | |
| - | |
Net cash used in investing activities | |
| (183,908 | ) | |
| (5,503 | ) |
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Cash flows from financing activities: | |
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Principal payments on term loan | |
| (11,629 | ) | |
| (1,001 | ) |
Payoff of term loan | |
| (34,000 | ) | |
| - | |
Borrowings on revolving line of credit | |
| 63,671 | | |
| 300 | |
Repayments on revolving line of credit | |
| (44,856 | ) | |
| - | |
Proceeds from term loans | |
| 193,500 | | |
| - | |
Payment of loan origination fees | |
| (3,364 | ) | |
| - | |
Treasury stock purchases | |
| (512 | ) | |
| (4,713 | ) |
Capital lease payments | |
| (2 | ) | |
| - | |
Dividends paid | |
| (884 | ) | |
| (2,005 | ) |
Net cash provided by (used in) financing activities | |
| 161,924 | | |
| (7,419 | ) |
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Net decrease in cash and cash equivalents | |
| (28,245 | ) | |
| (8,296 | ) |
Cash and cash equivalents at beginning of period | |
| 31,020 | | |
| 27,252 | |
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Cash and cash equivalents at end of period | |
$ | 2,775 | | |
$ | 18,956 | |
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Supplemental cash flow information: | |
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Cash paid for interest, net of amount capitalized | |
$ | 1,213 | | |
$ | 580 | |
Cash paid for income taxes | |
$ | 5,200 | | |
$ | 925 | |
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See accompanying notes to condensed combined consolidated financial statements (unaudited). |
ALICO, INC. AND SUBSIDIARIES
NOTES TO CONDENSED COMBINED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)
Note 1. Description of Business and Basis of Presentation
Description of Business and Basis of Presentation
Alico Inc. (“Alico”), and
its subsidiaries (collectively, the “Company”), are an agribusiness and land management company. The Company
owns approximately 121,000 acres of land in twelve Florida counties (Alachua, Charlotte, Collier, Desoto, Glades, Hardee,
Hendry, Highlands, Lee, Martin, Osceola and Polk) and includes approximately 90,000 acres of mineral rights. In addition
to principal lines of business in citrus groves, improved farmland, leasing, cattle ranching and conservation, and related
support operations, we also receive royalties from rock mining and oil production.
Common Control Acquisition between the Company
and 734 Citrus Holdings, LLC
Effective February 28, 2015, the Company completed
the merger (“Merger”) with 734 Citrus Holdings, LLC (“Silver Nip Citrus”) pursuant to an Agreement and
Plan of Merger (the “Merger Agreement”) with 734 Sub, LLC, a wholly owned subsidiary of the Company (“Merger
Sub”), Silver Nip Citrus and, solely with respect to certain sections thereof, the equity holders of Silver Nip Citrus. The
ownership of Silver Nip Citrus was held by 734 Agriculture, 74.89%, Mr. Clay Wilson, Chief Executive Officer of the Company, 5% and
an entity controlled by Mr. Clay Wilson owned, 20.11%.
On November 19, 2013, 734 Agriculture and its
affiliates, including 734 Investors, acquired approximately 51% of the Company’s common stock. 734 Agriculture is the sole
managing member of 734 Investors. By virtue of their ownership percentage, 734 Agriculture is able to elect all of the Directors
and, consequently, control Alico.
734 Agriculture has control over both Silver
Nip Citrus and the Company, and therefore the Merger was treated as a common control acquisition.
At closing of the Merger, Merger Sub merged
with and into Silver Nip Citrus, with Silver Nip Citrus surviving the Merger as a wholly owned subsidiary of the Company. Pursuant
to the Merger Agreement, at closing, the Company issued 923,257 shares (the “Stock Issuance”) of the Company’s
common stock, par value $1.00 per share (the “Common Stock”), to the holders of membership interests in Silver Nip
Citrus. Silver Nip Citrus’ outstanding net indebtedness at the closing of the
Merger was approximately $40,278,000 and other liabilities totaled $6,952,000. The Company acquired assets at net book value of
$65,739,000 and total net assets of $18,509,000. The shares issued were recorded at the carrying amount of the net assets transferred.
The holders of membership interests in Silver Nip Citrus will also receive additional Company shares based on the value of the
proceeds received by the Company from the sale of citrus fruit harvested on Silver Nip Citrus’ real property following the
conclusion of the 2014-2015 citrus harvest season.
The Company expensed $811,000 in professional
and legal fees in connection with the Merger in the six months ended March 31, 2015.
Basis of Presentation
Because the Company and Silver Nip Citrus were
under common control, we are required under generally accepted accounting principles in the United States (“GAAP”)
to account for this Common Control Acquisition in a manner similar to the pooling of interest method of accounting. Under this
method of accounting, our balance sheet reflects Silver Nip Citrus’ historical carryover basis in the assets and liabilities
instead of reflecting the fair market value of the assets and liabilities. We have also retrospectively recast our financial statements
to combine the operating results of the Company and Silver Nip Citrus from the date common control began, November 19, 2013.
The accompanying (a) condensed combined
consolidated balance sheet as of September 30, 2014, which has been derived from financial statements, and (b) unaudited
condensed combined consolidated interim financial statements (the “Financial Statements”) of the Company have been
prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The
Financial Statements include all adjustments, consisting of normal and recurring adjustments, which in the opinion of management
were necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented.
The results of the interim period are not necessarily indicative of the results for any other interim periods or the entire fiscal
year.
Due to the fact Silver Nip Citrus’ fiscal
year end is June 30, the Company’s condensed combined consolidated financial condition as of March 31, 2015 includes the
financial condition of Silver Nip Citrus as of December 31, 2014, and the Company’s condensed combined consolidated results
of operations for the six months ended March 31, 2015 includes the Silver Nip Citrus results of operations for the six months ended
December 31, 2014. The Company’s combined consolidated financial condition as of March 31, 2014 reflects the financial condition
of Silver Nip Citrus as of December 31, 2013, and the Company’s condensed combined consolidated results of operations for
the six months ended March 31, 2014 includes Silver Nip Citrus’ results of operations from November 19, 2013 (the initial
date of common control) through December 31, 2013.
The Financial Statements
have been presented according to the rules and regulations of the Securities and Exchange Commission (“SEC”), instructions
to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information, footnotes and disclosures normally included in annual financial
statements, prepared in accordance with GAAP, have been condensed or omitted in accordance with those rules and regulations. The
Company believes that the disclosures made are adequate to make the information not misleading. The Financial Statements should
be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual
Report on Form 10-K for the year ended September 30, 2014.
Principles of Consolidation
The Financial Statements include the accounts
of Alico, Inc. and its subsidiaries. The Company’s subsidiaries include: Alico Land Development, Inc., Alico-Agri, Ltd.,
Alico Plant World, LLC, Alico Fruit Company, LLC (formerly Bowen Brothers Fruit Company, LLC”), Alico Citrus Nursery, LLC,
734 Citrus LLC and Citree Holdings 1, LLC. All significant intercompany accounts and transactions have been eliminated in consolidation.
Noncontrolling Interests in Consolidated
Affiliate
The condensed combined consolidated financial
statements include all assets and liabilities of the less-than-100%-owned affiliate the Company controls, Citree Holdings I, LLC
(“Citree”). Accordingly, the Company has recorded noncontrolling interests in the equity of such entity. Citree did
not have any income or loss for the quarter ended March 31, 2015, and therefore there is no allocation of income or loss to the
noncontrolling interest holders based upon the portion of the subsidiary they own.
Business Combinations
The Company accounts for its business acquisitions
under the acquisition method of accounting as indicated in ASC No. 805, Business Combinations, which requires the acquiring entity
in a business combination to recognize the fair value of all assets acquired, liabilities assumed and any noncontrolling interest
in the acquiree, and establishes the acquisition date as the fair value measurement point. Accordingly, the Company recognizes
assets acquired and liabilities assumed in business combinations, including contingent assets and liabilities and noncontrolling
interest in the acquiree, based on fair value estimates as of the date of acquisition. In accordance with ASC No. 805, the Company
recognizes and measures goodwill, if any, as of the acquisition date, as the excess of the fair value of the consideration paid
over the fair value of the identified net assets acquired.
When we acquire a business from an entity under
common control, whereby the companies are ultimately controlled by the same party or parties both before and after the transaction,
it is treated similar to the pooling of interest method of accounting, whereby the assets and liabilities are recorded at the transferring
entity’s historical cost instead of reflecting the fair market value of assets and liabilities.
Reclassifications
Certain reclassifications have been made to
the prior years’ consolidated financial statements to conform to the fiscal year 2015 presentation. These reclassifications
had no impact on working capital, net income, stockholders’ equity or cash flows as previously reported.
Use of Estimates
The preparation of financial statements in
conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make
estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent
assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates based upon future events. The Company periodically evaluates the estimates.
The estimates are based on current and expected economic conditions, historical experience and various other specific assumptions
that the Company believes to be reasonable.
Seasonality
The Company is primarily engaged in the production
of fruit for sale to citrus markets, which is of a seasonal nature and subject to the influence of natural phenomena and wide price
fluctuations. Historically, the second and third quarters of our fiscal year generally produce the majority of our annual revenue,
and our working capital requirements are typically greater in the first and fourth quarters of our fiscal year. The results of
the reported period herein are not necessarily indicative of the results for any other interim periods or the entire fiscal year.
Note 2. Inventories
A summary of the Company’s inventories
consisted of the following at March 31, 2015 and September 30, 2014:
(in thousands) | |
March 31, | |
September 30, |
| |
2015 | |
2014 |
| |
| | | |
| | |
Unharvested fruit crop on the trees | |
$ | 52,139 | | |
$ | 23,502 | |
Beef cattle | |
| 2,538 | | |
| 1,022 | |
Nursery | |
| 1,876 | | |
| 516 | |
Other | |
| 1,986 | | |
| 429 | |
| |
| | | |
| | |
Total Inventories | |
$ | 58,539 | | |
$ | 25,469 | |
Note 3. Property, Buildings and Equipment,
Net
Property, buildings and equipment consisted
of the following at March 31, 2015 and September 30, 2014:
(in thousands) | |
March 31, | |
September 30, |
| |
2015 | |
2014 |
| |
| | | |
| | |
Breeding herd | |
$ | 10,897 | | |
$ | 11,558 | |
Buildings | |
| 21,010 | | |
| 16,052 | |
Citrus trees | |
| 242,278 | | |
| 66,886 | |
Equipment and other facilities | |
| 58,412 | | |
| 55,696 | |
| |
| | | |
| | |
Total depreciable properties | |
| 332,597 | | |
| 150,192 | |
Less accumulated depreciation and depletion | |
| (72,158 | ) | |
| (63,031 | ) |
| |
| | | |
| | |
Net depreciable properties | |
| 260,439 | | |
| 87,161 | |
Land and land improvements | |
| 123,007 | | |
| 39,672 | |
| |
| | | |
| | |
Net property, buildings and equipment | |
$ | 383,446 | | |
$ | 126,833 | |
Land Purchase
Silver Nip Citrus purchased approximately 1,500
acres of citrus groves that included land, trees and fruit inventory as well as irrigation and other equipment on September 4,
2014. The purchase price was approximately $17,600,000 which was funded through cash plus additional financing of $11,000,000 in
term debt (see “Note 7. Long -Term Debt” in the Notes to the Condensed Combined Consolidated Financial Statements (Unaudited)).
Land Sale
Certain Silver Nip Citrus land with a cost
of $2,832,159 was classified as held for sale as of September 30, 2014. It was sold during the six month period ended March 31,
2015 resulting in a gain on sale of assets of $2,926,553.
Asset Impairment
The Company recorded an impairment loss of
approximately $541,000 during the quarter ended March 31, 2015 on property classified as Assets Held for Sale. The Company entered
into a sales contract on February 17, 2015, which triggered the impairment of the property based on the negotiated sales price.
The property was closed on April 3, 2015 and the Company received approximately $1,509,000 in net sales proceeds.
Note 4. Orange-Co Acquisition
On December 2, 2014, the Company completed
the acquisition of certain citrus and related assets of Orange-Co, LP (“Orange-Co”) pursuant to an Asset Purchase Agreement,
which we refer to as the Orange-Co Purchase Agreement, dated as of December 1, 2014 and 51% of the ownership interests of Citree
Holdings 1, LLC. The assets Alico purchased include approximately 20,263 acres of citrus groves in DeSoto and Charlotte Counties,
Florida, which comprise one of the largest contiguous citrus grove properties in the state of Florida. The total purchase price
was approximately $276,673,300, net of $2,060,000 in cash acquired, including: (1) $147,500,000 in initial cash consideration funded
from the proceeds of the sugarcane disposition (see “Note 5. Assets held for sale” in the Notes to the Condensed Combined
Consolidated Financial Statements (Unaudited)) and new term debt; (2) up to $7,500,000 in additional cash consideration to be released
from escrow in equal parts, subject to certain limitations, on December 1, 2015 and June 1, 2016; (3) the refinancing of Orange-Co’s
outstanding debt including approximately $91,371,000 in term debt and a working capital facility of approximately $27,775,000 and
(4) the assumption of certain other liabilities totaling $4,587,000. On December 1, 2014, Alico deposited an irrevocable standby
letter of credit issued by Rabo Agrifinance, Inc., or Rabo, in the aggregate amount of $7,500,000 into an escrow account to fund
the additional cash consideration.
The Company acquired Orange-Co to transform
our citrus business and meaningfully enhance the Company’s position in the citrus industry. The Company has included the
financial results of Orange-Co in the consolidated financial statements from the date of acquisition in the Citrus Groves operating
segment. These results include approximately $37,625,000 in revenue and $7,786,000 in gross profit.
This acquisition was accounted for
under the acquisition method of accounting. Accordingly, the Company recognized amounts for identifiable assets acquired
and liabilities assumed at their estimated acquisition date fair values, while transaction and integration costs associated
with the acquisition were expensed as incurred. The excess of the purchase price over the fair value of assets acquired,
net of liabilities assumed, and noncontrolling interests is recognized as goodwill. All goodwill recognized will be
deductible for income tax purposes. The initial accounting for the business combination is not complete and adjustments to
provisional amounts, or recognition of additional assets acquired or liabilities assumed, may occur as more detailed analyses
are completed and additional information is obtained about the facts and circumstances that existed as of the acquisition
date.
The Company expensed $3,037,000 in professional
and legal fees in connection with the Orange-Co acquisition, in the six months ended March 31, 2015.
The following table summarizes the consideration
paid for the acquired assets and the preliminary acquisition accounting for the fair values of the assets recognized and liabilities
assumed in the Condensed Combined Consolidated Balance Sheets at the acquisition date. These balances are subject to change when
final asset valuations are obtained and the potential for liabilities has been evaluated.
Asset acquisition | |
| | |
| |
| | |
(in thousands) | |
Amount |
| |
|
Assets | |
| | |
Accounts receivable | |
$ | 888 | |
Other current assets | |
| 845 | |
Inventories | |
| 35,562 | |
Property, Buildings and Equipment: | |
| | |
Equipment and other facilities | |
| 13,432 | |
Land | |
| 63,337 | |
Citrus trees | |
| 164,053 | |
Goodwill | |
| 1,146 | |
Other assets | |
| 2,344 | |
| |
| | |
Total assets, net of cash acquired | |
$ | 281,607 | |
| |
| | |
Liabilities | |
| | |
Accounts payable and accrued liabilities | |
$ | 4,087 | |
Term loan | |
| 500 | |
Payable to seller | |
| 7,500 | |
| |
| | |
Total liabilities assumed | |
$ | 12,087 | |
| |
| | |
Assets acquired less liabilities assumed | |
$ | 269,520 | |
| |
| | |
Less: fair value attributable to noncontrolling interest | |
| (4,933 | ) |
| |
| | |
Total purchase consideration | |
$ | 264,587 | |
The fair value of the consideration paid for
the acquisition of the net assets was as follows:
Cash proceeds from sugarcane disposition | |
$ | 97,126 | |
Working capital line of credit | |
| 27,775 | |
Term loans | |
| 139,686 | |
| |
| | |
Total purchase consideration | |
$ | 264,587 | |
The unaudited pro-forma information below for
the three and six months ended March 31, 2015 and 2014 gives effect to this acquisition as if the acquisitions had occurred on
October 1, 2013. The pro-forma financial information is not necessarily indicative of the results of operations if the acquisition
had been effective as of this date.
| |
Three Months Ended March 31, | |
Six Months Ended March 31, |
(in thousands except per share amount) | |
2015 | |
2014 | |
2015 | |
2014 |
| |
| |
| |
| |
|
Revenues | |
$ | 55,122 | | |
$ | 66,326 | | |
$ | 71,828 | | |
$ | 89,856 | |
Income from operations | |
$ | 6,698 | | |
$ | 17,073 | | |
$ | 3,865 | | |
$ | 17,641 | |
Net income attributable to common shareholder | |
$ | 2,794 | | |
$ | 9,902 | | |
$ | 10,065 | | |
$ | 9,435 | |
Basic earnings per common share | |
$ | 0.34 | | |
$ | 1.35 | | |
$ | 1.29 | | |
$ | 1.29 | |
Diluted earnings per common share | |
$ | 0.34 | | |
$ | 1.35 | | |
$ | 1.29 | | |
$ | 1.28 | |
Note 5. Assets Held for Sale
Sugarcane land
On November 21,
2014, the Company completed the sale of approximately 36,000 acres of land used for sugarcane production and land leasing in Hendry
County, Florida to Global Ag Properties, LLC (“Global Ag Properties”) for $97,913,921 in cash. We had previously
leased approximately 30,600 of these acres to United States Sugar Corporation (the “USSC Lease”). The USSC Lease was
assigned to Global Ag Properties in conjunction with the land sale.
Net proceeds from the
sugarcane land sale of $97,126,000 were deposited with a Qualified Intermediary in anticipation of the Orange-Co asset acquisition
in a tax deferred like kind exchange pursuant to Internal Revenue Code Section §1031 (see “Note 4. Orange-Co Acquisition”
in the Notes to the Condensed Combined Consolidated Financial Statements (Unaudited)).
The sales price is subject
to post-closing adjustments over a ten (10)-year period. The Company realized a gain of $42,753,000 on the sale. However, $29,140,000
of the gain has been deferred due to the Company’s continuing involvement in the property pursuant to a post-closing agreement
and the potential price adjustments. The deferral represents the Company’s estimate of the maximum exposure to loss as a
result of the continuing involvement. A net gain of $13,613,000 was recognized in the financial statements as of and for the six
months ended March 31, 2015.
As a result of the disposition
of our sugarcane land, we are no longer involved in sugarcane operations, and, as of November 21, 2014, the Improved Farmland segment
was no longer material to our business, however, the sugarcane operation has not been classified as a discontinued operation due
to the post-closing adjustments, amongst other involvement, as described above.
Our sugarcane land was classified as assets
held for sale as of September 30, 2014.
Asset held for sale | |
|
| |
|
(in thousands) | |
March 31, |
| |
2015 |
| |
|
Land and land improvements | |
$ | 2,050 | |
Impairment | |
| (541 | ) |
| |
| | |
Assets held for sale | |
$ | 1,509 | |
Note 6. Income Taxes
The Company’s effective tax rates were
31.0% and 38% for the six months ended March 31, 2015 and 2014, respectively.
The Company applies a “more likely than
not” threshold to the recognition and nonrecognition of tax positions. A change in judgment related to prior years’
tax positions is recognized in the quarter of such change. The Company had no reserve for uncertain tax positions at March 31,
2015 and September 30, 2014. The Company recognizes interest and/or penalties related to income tax matters in income tax expense
and in income taxes payable.
The Internal Revenue Service (“IRS”)
is currently auditing Alico’s tax return for the fiscal year ended September 30, 2013.
Note 7. Long-Term Debt
Outstanding debt under the Company’s
various loan agreements is presented in the table below:
(in thousands) | |
| |
|
| |
March 31, | |
September 30, |
| |
2015 | |
2014 |
| |
| | | |
| | |
Long-term debt, net of current portion: | |
| | | |
| | |
Metropolitan Life Insurance Company and New England Life Insurance Company fixed rate term loans in the original principal amount of $125 million: the loans bear interest at the rate of 4.15%. The loans are collateralized by real estate and mature in November 2029. | |
$ | 114,688 | | |
$ | - | |
| |
| | | |
| | |
Metropolitan Life Insurance Company and New England Life Insurance Company variable rate term loans in the original principal amounts of $57.5 million: the variable interest rate was 1.75% at March 31, 2015. The loans are collateralized by real estate and mature in November 2029. | |
| 56,781 | | |
| - | |
| |
| | | |
| | |
Metropolitan Life Insurance Company term loan: the loan bears interest at the initial rate of 5.49%. A final advance of $4.5 million is scheduled for December 1, 2015 subject to certain performance conditions. The interest rate is subject to adjustment on the date of the final advance. The loan is secured by real estate and matures in February 2029. | |
| 500 | | |
| - | |
| |
| | | |
| | |
Rabo Agrifinance, Inc. variable rate term loan: the variable interest rate on this loan was 2.40% at September 30, 2014. The loan was secured by real estate and had a maturity date of October 2020. The loan was refinanced on December 3, 2014. | |
| - | | |
| 34,000 | |
| |
| | | |
| | |
Prudential Mortgage Capital Company, LLC fixed rate term loans: the loans bear interest at the rate of 5.35%. The loans are collateralized by real estate and mature in June 2033. | |
| 26,970 | | |
| 27,550 | |
| |
| | | |
| | |
Prudential Mortgage Capital Company, LLC fixed rate term loan: the loan bears interest at the rate of 3.85%. The loan is collateralized by real estate and matures in September 2021. | |
| 5,500 | | |
| - | |
| |
| | | |
| | |
Prudential Mortgage Capital Company, LLC fixed rate term loan: the loan bears interest at the rate of 3.45%. The loan is collateralized by real estate and matures in September 2039. | |
| 5,500 | | |
| - | |
| |
| | | |
| | |
Note payable to a financing company secured by equipment and maturing in December 2016 | |
| 72 | | |
| 90 | |
| |
| | | |
| | |
| |
| 210,011 | | |
| 61,640 | |
Less current portion | |
| 4,511 | | |
| 3,196 | |
| |
| | | |
| | |
Long-term debt | |
$ | 205,500 | | |
$ | 58,444 | |
(in thousands) | |
| |
|
| |
March 31, | |
September 30, |
| |
2015 | |
2014 |
| |
| | | |
| | |
Lines of Credit: | |
| | | |
| | |
Metropolitan Life Insurance Company and New England Life Insurance Company revolving line of credit: this $25 million line bears interest at a variable rate which was 1.75% at March 31, 2015. The line is secured by real estate and matures in November 2019. | |
$ | - | | |
$ | - | |
| |
| | | |
| | |
Rabo Agrifinance, Inc. working capital line of credit: this $70 million line bears interest at a variable rate which was 1.92% at March 31, 2015. The line is secured by personal property and matures in November 2016. Availability under the line was $36.3 million at March 31, 2015. | |
| 16,239 | | |
| - | |
| |
| | | |
| | |
Rabo Agrifinance, Inc. revolving line of credit: this $60 million line bore interest at a variable rate which was 2.10% at September 30, 2014. The entire $60 million balance was available at September 30, 2014. The line was secured by real estate and had a maturity date of October 2020. The loan was refinanced on December 3, 2014. | |
| - | | |
| - | |
| |
| | | |
| | |
Prudential Mortgage Capital Company, LLC revolving line of credit: this $6 million line bears interest at a variable rate which was 3.00% at December 31, 2014 and 2.98% at June 30, 2014, respectively. The line is secured by real estate and matures in June 2018. Availability under the line was $264,000 at December 31, 2014 and $2,840,000 at June 30, 2014. | |
| 5,736 | | |
| 3,160 | |
| |
| | | |
| | |
| |
| | | |
| | |
Lines of Credit | |
$ | 21,975 | | |
$ | 3,160 | |
Refinancing on December 3, 2014
The Company refinanced its outstanding debt
on December 3, 2014 in connection with the Orange-Co acquisition (see “Note 4. Orange-Co Acquisition” in the Notes
to the Condensed Combined Consolidated Financial Statements (Unaudited)). The debt facilities include $114,688,000 in fixed rate
term loans, $56,781,000 in variable rate term loans and a $25,000,000 revolving line of credit (“RLOC”) with Metropolitan
Life Insurance Company and New England Life Insurance Company (collectively “Met”) and a $70,000,000 working capital
line of credit (“WCLC”) with Rabo Agrifinance, Inc. (“Rabo”).
The term loans and RLOC are secured by approximately
38,700 gross acres of citrus groves and 14,000 gross acres of farmland. The WCLC is secured by current assets and certain other
personal property owned by the Company.
The term loans are subject to quarterly principal
payments of $2,281,250 and mature November 1, 2029. The fixed rate term loans bear interest at 4.15%, and the variable rate term
loans bear interest at a rate equal to 90 day LIBOR plus 150 basis points (the “LIBOR spread”). The LIBOR spread is
subject to adjustment by the lender on May 1, 2017 and every two years thereafter. Interest on the term loans is payable quarterly.
The Company may prepay up to $8,750,000 of
the fixed rate term loan principal annually without penalty, and any such prepayments shall be applied to reduce subsequent mandatory
principal payments. The maximum annual prepayment has been made for the current fiscal year. The variable rate term loans may be
prepaid without penalty.
The RLOC bears interest at a floating rate
equal to 90 day LIBOR plus 150 basis points payable quarterly. The LIBOR spread is subject to adjustment by the lender on May 1,
2017 and every two years thereafter. Outstanding principal, if any, is due at maturity on November 1, 2019. The RLOC is subject
to an annual commitment fee of 25 basis points on the unused portion of the line. The RLOC is available for funding general corporate
needs.
The WCLC is a revolving credit facility and
is available for funding working capital and general corporate needs. The interest rate on the WCLC is based on the one month LIBOR
plus a spread. The spread is adjusted quarterly based on our debt service coverage ratio for the preceding quarter and can vary
from 175 to 250 basis points. The rate is currently at LIBOR plus 175 basis points. The WCLC facility matures November 1, 2016.
The WCLC is subject to a quarterly commitment
fee on the daily unused availability under the line computed as the commitment amount less the aggregate of the outstanding loans
and outstanding letters of credit. The commitment fee is adjusted quarterly based on our debt service coverage ratio for the preceding
quarter and can vary from 20 to 30 basis points.
The WCLC agreement provides for Rabo to issue
up to $20,000,000 in letters of credit on our behalf. At March 31, 2015, there was $17,498,500 in outstanding letters of credit
which correspondingly reduced our availability under the line of credit.
The Company capitalized approximately $2,834,000
of debt issuance costs and recognized a loss on extinguishment of debt of approximately $585,000.
The facilities above are subject to various
covenants including the following financial covenants (1) minimum debt service coverage ratio of 1.10 to 1.00, (2) tangible net
worth of at least $160,000,000 increased annually by 10% of consolidated net income for the preceding year, (3) minimum current
ratio of 1.50 to 1.00 (4) debt to total assets ratio not greater than .625 to 1.00, and, solely in the case of the WCLC, (5) a
limit on capital expenditures of $30,000,000 per fiscal year. The Company is in compliance with all covenants at March 31, 2015.
Debt Prior to Refinancing
Prior to the December 3, 2014 refinancing,
the Company had a $34,000,000 term loan and a $60,000,000 revolving line of credit (“Old RLOC”) with Rabo.
The term loan required quarterly payments of
interest at a floating rate of one month LIBOR plus 225 basis points and quarterly principal payments of $500,000. The term loan
was refinanced in connection with the Orange-Co acquisition.
The Old RLOC had an interest rate based on
one month LIBOR plus a spread. The spread was determined based upon our debt service coverage ratio for the preceding fiscal year
and could vary from 195 to 295 basis points. The rate was LIBOR plus 195 basis points at the date of the refinancing and September
30, 2014. Interest on the Old RLOC was payable quarterly. The Old RLOC was subject to an unused commitment fee of 20 basis points
on the annual average unused availability. There was no balance outstanding at the time of the refinancing or September 30, 2014.
Loan origination fees incurred as a result
of entry into the Rabo credit facility loan agreement, including appraisal fees, document stamps, legal fees and lender fees of
approximately $1,202,000 were capitalized in fiscal year 2010 and were being amortized over the term of the loan agreement. The
unamortized balance of the loan origination fees at the time of December 3, 2014 refinancing was approximately $697,000 of which
approximately $396,000 was expensed as a loss on extinguishment of debt and approximately $301,000 will be amortized over the applicable
terms of the new loans.
At September 30, 2014, the Company was
in compliance with the financial debt covenants and terms of the Rabo loan agreement.
Silver Nip Citrus Debt
Silver Nip Citrus has five loans payable to
Prudential Mortgage Capital Company, LLC (“Prudential”) as described below.
There are two fixed rate term loans with total
outstanding balances of $26,970,000 and $27,550,000 at December 31, 2014 and June 30, 2014, respectively. Principal of $290,000
is payable quarterly. Interest accrues at 5.35% and is also payable quarterly. The Company may prepay up to $5,000,000 of principal
without penalty. The loan is secured by real estate in Collier, Hardee, Hendry, Highlands, Martin, Osceola and Polk Counties, Florida.
In connection with the purchase of 1,500 acres
of citrus grove on September 4, 2014 (see “Note 3. Property, Buildings and Equipment, Net” in the Notes to the Condensed
Combined Consolidated Financial Statements (Unaudited)), Silver Nip Citrus has a fixed rate term loan with Prudential with an outstanding
balance of $5,500,000 at December 31, 2014 that bears interest at the rate of 3.85%. Principal in the amount of $55,000 is payable
quarterly together with accrued interest. The loan is secured by real estate in Charlotte County, Florida.
Silver Nip Citrus also has a fixed rate term
loan with Prudential with an outstanding balance of $5,500,000 at December 31, 2014 that bears interest at the rate of 3.45%. The
rate is subject to adjustment on September 1, 2019 and every five years thereafter until maturity. Principal of $55,000 is payable
quarterly together with accrued interest. The loan is secured by real estate in Charlotte County, Florida.
Silver Nip Citrus has a $6,000,000 revolving
line of credit with Prudential. Outstanding balances were $5,736,000 and $3,160,000 at December 31, 2014 and June 30, 2014, respectively.
The interest rate on the line is based the three month LIBOR rate plus 275 basis points. Interest is payable semi-annually with
outstanding principal due at maturity.
The Silver Nip Citrus facilities are subject
to a financial covenant requiring a current ratio of at least 2.00 to 1.00 measured at the end of each fiscal year. The Company
was in compliance with all covenants related to the Silver Nip debt at June 30, 2014.
The Silver Nip Citrus facilities are personally
guaranteed by George Brokaw, Remy Trafelet and Clayton Wilson.
Debt Maturities
Maturities of the Company’s debt were
as follows at March 31, 2015:
(in thousands) | |
| | |
| |
| | |
Due within one year | |
$ | 4,511 | |
Due between one and two years | |
| 24,504 | |
Due between two and three years | |
| 10,750 | |
Due between three and four years | |
| 16,586 | |
Due between four and five years | |
| 10,938 | |
Due beyond five years | |
| 164,697 | |
| |
| | |
Total | |
$ | 231,986 | |
Interest costs expensed and capitalized to
property, buildings and equipment were as follows:
(in thousands) | |
Three Months Ended March 31, | |
Six Months Ended March 31, |
| |
2015 | |
2014 | |
2015 | |
2014 |
| |
| |
| |
| |
|
Interest expense | |
$ | 2,285 | | |
$ | 396 | | |
$ | 3,588 | | |
$ | 665 | |
Interest capitalized | |
| 159 | | |
| 40 | | |
| 212 | | |
| 69 | |
| |
| | | |
| | | |
| | | |
| | |
Total | |
$ | 2,444 | | |
$ | 436 | | |
$ | 3,800 | | |
$ | 734 | |
Note 8. Disclosures about reportable segments
The Company manages its land based upon its
primary usage and reviews its performance based upon three primary classifications – Citrus Groves, Improved Farmland and
Ranch and Conservation. In addition, it operates an Agricultural Supply Chain Management business that is not tied directly
to its land holdings and Other Operations that include a citrus nursery and leasing mines and oil extraction rights to third parties.
The Company presents its financial results and the related discussions based upon these five segments (Citrus Groves, Improved
Farmland, Ranch and Conservation, Agricultural Supply Chain Management and Other Operations). A description of the Company’s
business segments is as follows:
| · | Citrus Groves include activities related to planting, owning, cultivating and/or managing citrus
groves in order to produce fruit for sale to fresh and processed citrus markets. |
| · | Agricultural Supply Chain Management and Support includes activities related to the purchase and
resale of fruit, as well as, to value-added services which include contracting for the harvesting, marketing and hauling of citrus. |
| · | Improved Farmland includes activities related to owning and/or leasing improved farmland. Improved
farmland is acreage that has been converted, or is permitted to be converted, from native pasture and which has various improvements
including irrigation, drainage and roads. |
| · | Ranch and Conservation includes activities related to cattle grazing, sod, native plant and animal
sales, leasing, management and/or conservation of unimproved native pasture land. |
| · | Other Operations include activities related to rock mining royalties, oil exploration, a citrus
nursery and other insignificant lines of business. |
Intersegment sales and transfers are accounted
by the Company as if the sales or transfers were to third parties at current market prices. Goods and services produced by these
segments are sold to wholesalers and processors in the United States who prepare the products for consumption. The Company evaluates
the segments performance based on direct margins from operations before general and administrative costs, interest expense and
income taxes not including nonrecurring gains and losses.
The accounting policies of the segments are
the same as those described in Note 1, Description of Business and Basis of Presentation. Total revenues represent sales to unaffiliated
customers, as reported in the Company’s Condensed Combined Consolidated Statement of Comprehensive Income. All intercompany
transactions have been eliminated.
Information by business segment is as follows:
(in thousands) | |
Three Months Ended March 31, | |
Six Months Ended March 31, |
| |
2015 | |
2014 | |
2015 | |
2014 |
| |
| |
| |
| |
|
Revenues: | |
| | | |
| | | |
| | | |
| | |
Citrus Groves | |
$ | 50,371 | | |
$ | 22,590 | | |
$ | 63,289 | | |
$ | 28,223 | |
Agricultural Supply Chain Management | |
| 3,296 | | |
| 6,135 | | |
| 4,479 | | |
| 8,241 | |
Improved Farmland | |
| 982 | | |
| 10,750 | | |
| 2,074 | | |
| 17,282 | |
Ranch and Conservation | |
| 309 | | |
| 910 | | |
| 1,145 | | |
| 1,441 | |
Other Operations | |
| 164 | | |
| 257 | | |
| 313 | | |
| 444 | |
Intersegment Revenues | |
| 4,115 | | |
| 4,000 | | |
| 5,386 | | |
| 6,245 | |
Eliminations | |
| (4,115 | ) | |
| (4,000 | ) | |
| (5,386 | ) | |
| (6,245 | ) |
| |
| | | |
| | | |
| | | |
| | |
Total revenue | |
| 55,122 | | |
| 40,642 | | |
| 71,300 | | |
| 55,631 | |
| |
| | | |
| | | |
| | | |
| | |
Operating expenses: | |
| | | |
| | | |
| | | |
| | |
Citrus Groves | |
| 40,349 | | |
| 14,699 | | |
| 50,476 | | |
| 18,243 | |
Agricultural Supply Chain Management | |
| 2,740 | | |
| 5,844 | | |
| 4,111 | | |
| 8,169 | |
Improved Farmland | |
| 1,286 | | |
| 8,865 | | |
| 2,077 | | |
| 14,395 | |
Ranch and Conservation | |
| 623 | | |
| 1,171 | | |
| 1,368 | | |
| 1,547 | |
Other Operations | |
| 45 | | |
| 90 | | |
| 93 | | |
| 507 | |
| |
| | | |
| | | |
| | | |
| | |
Total operating expenses | |
| 45,043 | | |
| 30,669 | | |
| 58,125 | | |
| 42,861 | |
| |
| | | |
| | | |
| | | |
| | |
Gross profit: | |
| | | |
| | | |
| | | |
| | |
Citrus Groves | |
| 10,022 | | |
| 7,891 | | |
| 12,813 | | |
| 9,980 | |
Agricultural Supply Chain Management | |
| 556 | | |
| 291 | | |
| 368 | | |
| 72 | |
Improved Farmland | |
| (304 | ) | |
| 1,885 | | |
| (3 | ) | |
| 2,887 | |
Ranch and Conservation | |
| (314 | ) | |
| (261 | ) | |
| (223 | ) | |
| (106 | ) |
Other Operations | |
| 119 | | |
| 167 | | |
| 220 | | |
| (63 | ) |
| |
| | | |
| | | |
| | | |
| | |
Total gross profit | |
$ | 10,079 | | |
$ | 9,973 | | |
$ | 13,175 | | |
$ | 12,770 | |
| |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Capital expenditures: | |
| | | |
| | | |
| | | |
| | |
Citrus Groves | |
$ | 17,661 | | |
$ | 2,083 | | |
$ | 19,230 | | |
$ | 4,026 | |
Agricultural Supply Chain Management | |
| 119 | | |
| 38 | | |
| 329 | | |
| 71 | |
Improved Farmland | |
| - | | |
| 212 | | |
| - | | |
| 3,685 | |
Ranch and Conservation | |
| 14 | | |
| 33 | | |
| 190 | | |
| 776 | |
Other Operations | |
| 3,396 | | |
| 196 | | |
| 3,411 | | |
| 200 | |
Other Capital Expenditures | |
| - | | |
| (343 | ) | |
| 79 | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
Total capital expenditures | |
$ | 21,190 | | |
$ | 2,219 | | |
$ | 23,239 | | |
$ | 8,758 | |
| |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Depreciation, depletion and amortization: | |
| | | |
| | | |
| | | |
| | |
Citrus Groves | |
$ | 3,584 | | |
$ | 525 | | |
$ | 4,840 | | |
$ | 1,054 | |
Agricultural Supply Chain Management | |
| 93 | | |
| 53 | | |
| 145 | | |
| 82 | |
Improved Farmland | |
| - | | |
| 1,285 | | |
| - | | |
| 2,622 | |
Ranch and Conservation | |
| 242 | | |
| 329 | | |
| 485 | | |
| 662 | |
Other Operations | |
| 270 | | |
| 21 | | |
| 398 | | |
| 109 | |
Other Depreciation, Depletion and Amortization | |
| 36 | | |
| 214 | | |
| 200 | | |
| 400 | |
| |
| | | |
| | | |
| | | |
| | |
Total depreciation, depletion and amortization | |
$ | 4,225 | | |
$ | 2,427 | | |
$ | 6,068 | | |
$ | 4,929 | |
(in thousands) | |
March 31, 2015 | |
September 30, 2014 |
| |
| |
|
Assets: | |
| | | |
| | |
Citrus Groves | |
$ | 422,070 | | |
$ | 121,399 | |
Agricultural Supply Chain Management | |
| 3,097 | | |
| 2,498 | |
Improved Farmland | |
| 119 | | |
| 57,726 | |
Ranch and Conservation | |
| 13,384 | | |
| 13,920 | |
Other Operations | |
| 31,292 | | |
| 26,356 | |
Other Corporate Assets | |
| 8,460 | | |
| 35,679 | |
| |
| | | |
| | |
Total assets | |
$ | 478,422 | | |
$ | 257,578 | |
Note 9. Stockholders’ Equity
Effective January 27, 2015, the Company’s
Board of Directors adopted the Stock Incentive Plan of 2015 (the “2015 Plan”) which provides for up to an additional
1,250,000 shares available for issuance to provide a long-term incentive plan for officers, employees, directors and/or consultants
to directly link incentives to shareholders value. The 2015 Plan was approved by shareholders on February 25, 2015.
The adoption of the 2015 Plan superseded the
2013 Incentive Equity Plan (“2013 Plan”), which had been in place since April 2013.
There are no awards outstanding under the 2015
Plan or the 2013 Plan at March 31, 2015 or September 30, 2014.
In March 2015, the Board of Directors
authorized the repurchase of up to 20,000 shares of the Company’s common stock beginning March 25, 2015 and continuing
through March 25, 2016. The stock repurchases were made through open market transactions at times and in such amounts as the
Company’s broker determined subject to the provisions of SEC Rule 10b-18. All repurchases were made on or subsequent to
March 25, 2015. The following table illustrates the Company’s treasury stock purchases and issuances for the six months
ended March 31, 2015:
(in thousands, except share amounts) | |
Shares | |
Cost |
| |
| |
|
Balance at September 30, 2014 | |
| 15,766 | | |
$ | 650 | |
Purchased | |
| 9,907 | | |
| 512 | |
Issued to Directors and Named Executive Officers | |
| (9,483 | ) | |
| (391 | ) |
| |
| | | |
| | |
Balance at March 31, 2015 | |
| 16,190 | | |
$ | 771 | |
Stock-based compensation expense recognized
in the Condensed Combined Consolidated Statements of Comprehensive Income in general and administrative expenses was $254,000 and
$509,000 for the three and six months ended March 31, 2015, respectively, and $204,000 and $705,000 for the three and six months
ended March 31, 2014, respectively. Stock-based compensation is recorded for Board of Directors fees paid in treasury stock and
the Long Term Incentive Compensation Plan restricted common stock awards.
Note 10. Commitments and Contingencies
On March 11, 2015, a putative shareholder class
action lawsuit was filed by Shiva Y. Stein in the Circuit Court of the Twentieth Judicial District in and for Lee County, Florida,
against Alico, Inc. (“Alico”), its current and certain former directors, 734 Citrus Holdings, LLC d/b/a Silver Nip
Citrus (“Silver Nip”), 734 Investors, LLC (“734 Investors”), 734 Agriculture, LLC (“734 Agriculture”)
and 734 Sub, LLC (“734 Sub”) in connection with the acquisition of Silver Nip by Alico (the “Acquisition”).
The complaint alleges that Alico’s directors at the time of the Acquisition, 734 Investors and 734 Agriculture breached fiduciary
duties to Alico stockholders in connection with the Acquisition and that Silver Nip and 734 Sub aided and abetted such breaches.
The lawsuit seeks, among other things, monetary and equitable relief, costs, fees (including attorneys’ fees) and expenses.
We believe that this lawsuit is without merit and intend to contest it vigorously.
From time to time, we may be involved in litigation
relating to claims arising out of our operations in the normal course of business. There are no current legal proceedings to which
we are a party to or which any of our property is subject to that we believe will have a material adverse effect on our business,
financial condition or results of operations.
Note 11. Related Party Transactions
Change in Control Transaction
On November 19, 2013, 734 Agriculture, LLC
(“734 Agriculture”) and its affiliates, including 734 Investors, LLC (“734 Investors”), completed the previously
announced purchase from Alico Holding, LLC, a company wholly owned by Atlantic Blue Group, Inc. (“Atlanticblue”), of
3,725,457 shares of our common stock (the “Share Purchase”).
The common stock acquired by 734 Agriculture
and its affiliates, including 734 Investors, represented approximately 51% of the Company’s outstanding voting securities.
On November 15, 2013, 734 Investors amended and restated its LLC operating agreement (the “LLC Agreement”) to admit
new members and to designate 734 Agriculture as the managing member, with authority to administer the affairs of 734 Investors,
including the voting and disposition of shares of common stock, subject to certain restrictions set forth therein. As a result,
upon the consummation of the Share Purchase, 734 Agriculture and its affiliates, including 734 Investors, acquired the voting power
to control the election of the Company’s Directors and any other matter requiring the affirmative vote or consent of the
Company’s shareholders. Messrs. Remy W. Trafelet and George R. Brokaw are the two controlling persons of 734 Agriculture.
Appointment of Mr. Wilson as the Company’s
Chief Executive Officer
Upon the Closing of the Share Purchase, Mr.
JD Alexander ceased to be the Company’s CEO pursuant to his previously disclosed resignation. On November 22, 2013, the Board
appointed Mr. Wilson to serve as the CEO, effective immediately.
Silver Nip Merger Agreement
Effective February 28, 2015, the Company completed
the merger (“Merger”) with 734 Citrus Holdings, LLC (“Silver Nip Citrus”) pursuant to an Agreement and
Plan of Merger (the “Merger Agreement”) with 734 Sub, LLC, a wholly owned subsidiary of the Company (“Merger
Sub”), Silver Nip Citrus and, solely with respect to certain sections thereof, the equity holders of Silver Nip Citrus. The
ownership of Silver Nip Citrus was held by 734 Agriculture, 74.89%, Mr. Clay Wilson, Chief Executive Officer of the Company, 5% and
an entity controlled by Mr. Clay Wilson owned, 20.11%.
On November 19, 2013, 734 Agriculture and its
affiliates, including 734 Investors, acquired approximately 51% of the Company’s common stock. 734 Agriculture is the sole
managing member of 734 Investors. By virtue of their ownership percentage, 734 Agriculture is able to elect all of the Directors
and, consequently, control Alico.
734 Agriculture has control over both Silver
Nip Citrus and the Company and therefore the Merger was treated as a common control acquisition.
At closing of the Merger, Merger Sub merged
with and into Silver Nip Citrus, with Silver Nip Citrus surviving the Merger as a wholly owned subsidiary of the Company. Pursuant
to the Merger Agreement, at closing, the Company issued 923,257 shares (the “Stock Issuance”) of the Company’s
common stock, par value $1.00 per share (the “Common Stock”), to the holders of membership interests in Silver Nip
Citrus. Silver Nip Citrus’ outstanding net indebtedness at the closing of the
Merger was approximately $40,278,000 and other liabilities totaled $6,952,000. The Company acquired assets at net book value of
$65,739,000 and total net assets of $18,509,000. The shares issued were recorded at the carrying amount of the net assets transferred.
The holders of membership interest in Silver Nip Citrus will also receive additional Company shares based on the value of the proceeds
received by the Company from the sale of citrus fruit harvested on Silver Nip Citrus’ real property following the conclusion
of the 2014-2015 citrus harvest season.
The Company expensed $811,000 in professional
and legal fees in connection with the Merger in the six months ended March 31, 2015.
JD Alexander
On November 6, 2013, JD Alexander tendered
his resignation as Chief Executive Officer and as an employee of the Company, subject to and effective immediately after the Closing
of the Share Purchase transaction on November 19, 2013. Mr. Alexander’s resignation includes a waiver of any rights to any
payments under his Change-in-Control Agreement with the Company. On November 6, 2013, the Company and Mr. Alexander also entered
into a Consulting and Non-Competition Agreement under which (i) Mr. Alexander will provide consulting services to the Company
during the two-year period after the Closing, (ii) Mr. Alexander agreed to be bound by certain non-competition covenants relating
to the Company’s citrus operations and non-solicitation and non-interference covenants for a period of two years after the
Closing, and (iii) the Company will pay Mr. Alexander for such services and covenants $2,000,000 in twenty-four monthly installments.
Mr. Alexander also agreed, in a separate side letter with the Company, not to sell or transfer the shares that were awarded pursuant
to his Restricted Stock Award Agreement (other than to a family trust) for a period of two years after the Closing. Mr. Alexander
also executed a general release in favor of the Company.
Ken Smith
On March 20, 2015, Ken Smith tendered his resignation
as Chief Operating Officer and as an employee of the Company. Mr. Smith’s resignation includes a waiver of any rights to
any payments under his Change-in-Control Agreement with the Company. On March 20, 2015, the Company and Mr. Smith also entered
into a Consulting and Non-Competition Agreement under which (i) Mr. Smith will provide consulting services to the Company
during the three-year period after the resignation date, (ii) Mr. Smith agreed to be bound by certain non-competition covenants
relating to the Company’s citrus operations and non-solicitation and non-interference covenants for a period of two years
after the resignation date, and (iii) the Company will pay Mr. Smith up to $1,225,000 for such services and covenants.
Note 12. Subsequent Events
Modification of Credit Agreements
The Silver Nip Citrus line of credit with Prudential was paid in
full and terminated on April 28, 2015. Rabo has agreed, subject to certain conditions, that the Company may loan Silver Nip Citrus
up to $7,000,000 on a revolving basis. These advances would be funded from either cash on hand or draws on the Company’s
$70,000,000 Rabo working capital line of credit.
Silver Nip has provided a $7,000,000 limited guaranty and a security
agreement granting Rabo a security interest in crops, accounts receivable, inventory and certain other assets.
This modification required the amendment of various Prudential and
Rabo loan documents and mortgages.
ITEM 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
The following discussion and analysis should
be read in conjunction with the unaudited condensed combined consolidated financial statements and related notes included elsewhere
in this Form 10-Q. Additional context can also be found in our Form 10-K for the fiscal year ended September 30, 2014, as filed
with the Securities and Exchange Commission (“SEC”) on December 12, 2014.
Cautionary Statement Regarding Forward-Looking Information
We provide forward-looking information in
this Quarterly Report, particularly in this Management’s Discussion and Analysis, pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements in this Quarterly Report that
are not historical facts are forward-looking statements. Forward-looking statements include, but are not limited to, statements
that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities
or other future events or conditions. These statements are based on our current expectations, estimates and projections about our
business based, in part, on assumptions made by our management. Factors which may cause future outcomes to differ materially from
those foreseen in forward-looking statements include, but are not limited to: changes in laws, regulation and rules; weather conditions
that affect production, transportation, storage, demand, import and export of fresh product and their by-products, increased pressure
from disease, insects and other pests; disruption of water supplies or changes in water allocations; pricing and supply of raw
materials and products; market responses to industry volume pressures; pricing and supply of energy; changes in interest rates;
availability of financing for land development activities and other growth opportunities; onetime events; acquisitions and divestitures;
seasonality; labor disruptions; inability to pay debt obligations; inability to engage in certain transactions due to restrictive
covenants in debt instruments; government restrictions on land use; changes in agricultural land values; changes in dividends;
and market and pricing risks due to concentrated ownership of stock. These assumptions are not guarantees of future performance
and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ
materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those risks
factors described in our Annual Report on Form 10-K for the year ended September 30, 2014 and our Quarterly Reports on Form 10-Q.
Overview
We manage our land based upon its primary usage
and review its performance based upon three primary classifications – Citrus Groves, Improved Farmland and Ranch and Conservation.
In addition, we operate an Agricultural Supply Chain Management business that is not tied directly to our land holdings and Other
Operations that include leases for mining and oil extraction rights to third parties. We present our financial results and
the related discussions based upon these five segments (Citrus Groves, Improved Farmland, Ranch and Conservation, Agricultural
Supply Chain Management and Other Operations).
In connection with our pursuit of growth opportunities
consistent with our mission, we intend to regularly evaluate potential acquisitions and divestitures and other business opportunities,
some of which are material in nature. If appropriate opportunities present themselves, we may engage in selected acquisitions,
divestitures and other business growth initiatives or undertakings. To the extent we engage in such opportunities it could,
among other things, change our revenue mix, require us to obtain additional debt or equity financing and have a material impact
on our business and financial condition.
Segments
We own approximately 121,000 acres of land
in twelve Florida counties (Alachua, Charlotte, Collier, DeSoto, Glades, Hardee, Hendry, Highlands, Lee, Martin Osceola and Polk),
and includes approximately 90,000 acres of mineral rights, and operate five segments.
| · | Citrus Groves include activities related to planting, owning, cultivating and/or managing citrus
groves in order to produce fruit for sale to fresh and processed citrus markets. |
| · | Agricultural Supply Chain Management and Support includes activities related to the purchase and
resale of fruit, as well as, to value-added services which include contracting for the harvesting, marketing and hauling of citrus. |
| · | Improved Farmland includes activities related to owning and/or leasing improved farmland. Improved
Farmland is acreage that has been converted, or is permitted to be converted, from native pasture and which may have various improvements
including irrigation, drainage and roads. |
| · | Ranch and Conservation includes activities related to cattle grazing, sod, native plant and animal
sales, leasing, management and/or conservation of unimproved native pasture land. |
| · | Other Operations include activities related to a citrus nursery, rock mining royalties, oil exploration
and other insignificant lines of business. |
Critical Accounting Policies and Estimates
The discussion and analysis of our financial
condition and results of operations are based upon our unaudited condensed combined consolidated financial statements which have
been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
The preparation of these financial statements requires us 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. We base these estimates on
historical experience, available current market information and on various other assumptions that management believes are reasonable
under the circumstances. Additionally we evaluate the results of these estimates on an on-going basis. Management’s estimates
form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under different assumptions or conditions.
The Company accounts for its business acquisitions
under the acquisition method of accounting as indicated in ASC No. 805, Business Combinations, which requires the acquiring entity
in a business combination to recognize the fair value of all assets acquired, liabilities assumed and any noncontrolling interest
in the acquiree, and establishes the acquisition date as the fair value measurement point. Accordingly, the Company recognizes
assets acquired and liabilities assumed in business combinations, including contingent assets and liabilities and noncontrolling
interest in the acquiree, based on fair value estimates as of the date of acquisition. In accordance with ASC No. 805, the Company
recognizes and measures goodwill, if any, as of the acquisition date, as the excess of the fair value of the consideration paid
over the fair value of the identified net assets acquired.
When we acquire a business from an entity under
common control, whereby the companies are ultimately controlled by the same party or parties both before and after the transaction,
it is treated similar to the pooling of interest method of accounting, whereby the assets and liabilities are recorded at the transferring
entity’s historical cost instead of reflecting the fair market value of assets and liabilities.
There have been no significant changes during
this reporting period to the policies and disclosures set forth in Part II, Item 7 in our Annual Report on Form 10-K for the
fiscal year ended September 30, 2014.
Recent Events
Orange-Co Acquisition
On December 2, 2014, we completed the acquisition
of certain citrus and related assets of Orange-Co, LP (“Orange-Co”) pursuant to an Asset Purchase Agreement, which
we refer to as the Orange-Co Purchase Agreement, dated as of December 1, 2014. The assets we purchased include approximately 20,263
acres of citrus groves in DeSoto and Charlotte Counties, Florida, which comprise one of the largest contiguous citrus grove properties
in the state of Florida. The purchase price was approximately $276,673,000, net of cash acquired, including: (1) $147,500,000 in
initial cash consideration funded from the proceeds of the sugarcane disposition and new term debt; (2) up to $7,500,000 in additional
cash consideration to be released from escrow in equal parts, subject to certain limitations, on December 1, 2015 and June 1, 2016;
(3) the refinancing of Orange-Co’s outstanding debt including approximately $91,371,000 in term debt and a working capital
facility of approximately $27,775,000 and (4) the assumption of certain other liabilities totaling $4,587,000. On December 1, 2014,
we deposited an irrevocable standby letter of credit issued by Rabo Agrifinance, Inc., or Rabo, in the aggregate amount of $7,500,000
into an escrow account to fund the additional cash consideration.
Sugarcane Land Disposition
On November 21,
2014, the Company completed the sale of approximately 36,000 acres of land used for sugarcane production and land leasing in Hendry
County, Florida to Global Ag Properties, LLC (“Global Ag Properties”) for $97,913,921 in cash. We had previously
leased approximately 30,600 of these acres to United States Sugar Corporation (the “USSC Lease”). The USSC Lease was
assigned to Global Ag Properties in conjunction with the land sale.
Net proceeds from the
sugarcane land sale of $97,126,000 were deposited with a Qualified Intermediary in anticipation of the Orange-Co asset acquisition
in a tax deferred like kind exchange pursuant to Internal Revenue Code Section §1031 (see “Note 4. Orange-Co Acquisition”
in the Notes to the Condensed Combined Consolidated Financial Statements (Unaudited)).
The sales price is subject
to post-closing adjustments over a ten (10)-year period. The Company realized a gain of $42,753,000 on the sale. However, $29,140,000
of the gain has been deferred due to the Company’s continuing involvement in the property pursuant to a post-closing agreement
and the potential price adjustments. The deferral represents the Company’s estimate of the maximum exposure to loss as a
result of the continuing involvement. A net gain of $13,613,000 was recognized in the financial statements as of and for the six
months ended March 31, 2015.
As a result of the disposition of our sugarcane
land, we are no longer involved in sugarcane, and, as of November 21, 2014, the Improved Farmland segment was no longer material
to our business.
Our sugarcane land was classified as assets
held for sale as of September 30, 2014. The sugarcane operation has not been classified as a discontinued operation due to the
Company’s continuing involvement pursuant to the post-closing agreement described above.
Water Storage Contract Approval
In December 2012, the
South Florida Water Management District (“SFWMD”) issued a solicitation request for projects to be considered for the
Northern Everglades Payment for Environmental Services Program. In March 2013, the Company submitted its response proposing a dispersed
water management project on a portion of its ranch land.
On December 11, 2014,
the SFWMD approved a contract with the Company. The contract term is eleven years and allows up to one year for implementation
(design, permitting, construction and construction completion certification) and ten years of operation whereby the Company will
provide water retention services. Payment for these services includes an amount not to exceed $4,000,000 of reimbursement for implementation.
In addition, it provides for an annual fixed payment of $12,000,000 for operations and maintenance costs as long as the project
is in compliance with the contract and subject to annual SFWMD Governing Board (“Board”) approval of funding. The contract
specifies that the Board has to approve the payments annually, and there can be no assurance that it will approve the annual fixed
payments.
Silver Nip Merger Agreement
Effective February 28, 2015, the Company completed
the merger (“Merger”) with 734 Citrus Holdings, LLC (“Silver Nip Citrus”) pursuant to an Agreement and
Plan of Merger (the “Merger Agreement”) with 734 Sub, LLC, a wholly owned subsidiary of the Company (“Merger
Sub”), Silver Nip Citrus and, solely with respect to certain sections thereof, the equity holders of Silver Nip Citrus. The
ownership of Silver Nip Citrus was held by 734 Agriculture, 74.89%, Mr. Clay Wilson, Chief Executive Officer of the Company, 5% and
an entity controlled by Mr. Clay Wilson owned, 20.11%.
On November 19, 2013, 734 Agriculture and its
affiliates, including 734 Investors, acquired approximately 51% of the Company’s common stock. 734 Agriculture is the sole
managing member of 734 Investors. By virtue of their ownership percentage, 734 Agriculture is able to elect all of the Directors
and, consequently, control Alico.
734 Agriculture has control over both Silver
Nip Citrus and the Company and therefore the Merger was treated as a common control acquisition.
At closing of the Merger, Merger Sub merged
with and into Silver Nip Citrus, with Silver Nip Citrus surviving the Merger as a wholly owned subsidiary of the Company. Pursuant
to the Merger Agreement, at closing, the Company issued 923,257 shares (the “Stock Issuance”) of the Company’s
common stock, par value $1.00 per share (the “Common Stock”), to the holders of membership interests in Silver Nip
Citrus. Silver Nip Citrus’ outstanding net indebtedness at the closing of the
Merger was approximately $40,278,000 and other liabilities totaled $6,952,000. The Company acquired assets at net book value of
$65,739,000 and total net assets of $18,509,000. The shares issued were recorded at the carrying amount of the net assets transferred.
The holders of membership interest in Silver Nip Citrus will also receive additional Company shares based on the value of the proceeds
received by the Company from the sale of citrus fruit harvested on Silver Nip Citrus’ real property following the conclusion
of the 2014-2015 citrus harvest season.
The Company expensed $811,000 in professional
and legal fees in connection with the Merger in the six months ended March 31, 2015.
Because the Company and Silver Nip Citrus were
under common control, we are required under generally accepted accounting principles in the United States (“GAAP”)
to account for this Common Control Acquisition in a manner similar to the pooling of interest method of accounting. Under this
method of accounting, our balance sheet reflects Silver Nip Citrus’ historical carryover basis in the assets and liabilities
instead of reflecting the fair market value of the assets and liabilities. We have also retrospectively recast our financial statements to combine the
operating results of the Company and Silver Nip Citrus from the date common control began, November 19, 2013.
Due to the fact Silver Nip Citrus’ fiscal
year end is June 30, the Company’s condensed combined consolidated financial condition as of March 31, 2015 includes the
financial condition of Silver Nip Citrus as of December 31, 2014, and the Company’s condensed combined consolidated results
of operations for the six months ended March 31, 2015 includes the Silver Nip Citrus results of operations for the six months ended
December 31, 2014. The Company’s combined consolidated financial condition as of March 31, 2014 reflects the financial condition
of Silver Nip Citrus as of December 31, 2013, and the Company’s condensed combined consolidated results of operations for
the six months ended March 31, 2014 includes Silver Nip Citrus’ results of operations from November 19, 2013 (the initial
date of common control) through December 31, 2013.
Results of Operations
The following table sets forth a comparison
of results of operations for the three and six months ended March 31, 2015 and 2014:
(in thousands) |
Three Months Ended | |
| |
| |
Six Months Ended | |
| |
|
|
March
31, | |
Change | |
March
31, | |
Change |
|
2015 | |
2014 | |
$ | |
% | |
2015 | |
2014 | |
$ | |
% |
|
| |
| |
| |
| |
| |
| |
| |
|
Operating revenues: |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Citrus Groves |
$ | 50,371 | | |
$ | 22,590 | | |
$ | 27,781 | | |
| 123.0 | % | |
$ | 63,289 | | |
$ | 28,223 | | |
$ | 35,066 | | |
| 124.3 | % |
Agricultural Supply Chain Management |
| 3,296 | | |
| 6,135 | | |
| (2,839 | ) | |
| (46.3 | )% | |
| 4,479 | | |
| 8,241 | | |
| (3,762 | ) | |
| (45.6 | )% |
Improved Farmland |
| 982 | | |
| 10,750 | | |
| (9,768 | ) | |
| (90.9 | )% | |
| 2,074 | | |
| 17,282 | | |
| (15,208 | ) | |
| (88.0 | )% |
Ranch and Conservation |
| 309 | | |
| 910 | | |
| (601 | ) | |
| (66.1 | )% | |
| 1,145 | | |
| 1,441 | | |
| (296 | ) | |
| (20.5 | )% |
Other
Operations |
| 164 | | |
| 257 | | |
| (93 | ) | |
| (36.2 | )% | |
| 313 | | |
| 444 | | |
| (131 | ) | |
| (29.5 | )% |
Total
operating revenues |
| 55,122 | | |
| 40,642 | | |
| 14,480 | | |
| 35.7 | % | |
| 71,300 | | |
| 55,631 | | |
| 15,669 | | |
| 28.2 | % |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Gross Profit: |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Citrus Groves |
| 10,022 | | |
| 7,891 | | |
| 2,131 | | |
| 27.0 | % | |
| 12,813 | | |
| 9,980 | | |
| 2,833 | | |
| 28.4 | % |
Agricultural Supply Chain Management |
| 556 | | |
| 291 | | |
| 265 | | |
| 91.1 | % | |
| 368 | | |
| 72 | | |
| 296 | | |
| NM | |
Improved Farmland |
| (304 | ) | |
| 1,885 | | |
| (2,189 | ) | |
| (116.2 | )% | |
| (3 | ) | |
| 2,887 | | |
| (2,890 | ) | |
| (100.1 | )% |
Ranch and Conservation |
| (314 | ) | |
| (261 | ) | |
| (53 | ) | |
| 20.3 | % | |
| (223 | ) | |
| (106 | ) | |
| (117 | ) | |
| 110.4 | % |
Other
Operations |
| 119 | | |
| 167 | | |
| (48 | ) | |
| (28.8 | )% | |
| 220 | | |
| (63 | ) | |
| 283 | | |
| NM | |
Total
gross profit |
| 10,079 | | |
| 9,973 | | |
| 106 | | |
| 1.1 | % | |
| 13,175 | | |
| 12,770 | | |
| 405 | | |
| 3.2 | % |
Corporate, general and |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
administrative
expenses |
| 3,381 | | |
| 1,834 | | |
| 1,547 | | |
| 84.4 | % | |
| 9,294 | | |
| 5,622 | | |
| 3,672 | | |
| 65.4 | % |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Income from operations |
| 6,698 | | |
| 8,139 | | |
| (1,441 | ) | |
| (17.7 | )% | |
| 3,881 | | |
| 7,148 | | |
| (3,267 | ) | |
| (45.7 | )% |
Other income (expense),
net |
| (2,954 | ) | |
| (450 | ) | |
| (2,504 | ) | |
| NM | | |
| 11,357 | | |
| (711 | ) | |
| 12,068 | | |
| NM | |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Income before income taxes |
| 3,744 | | |
| 7,689 | | |
| (3,945 | ) | |
| (51.3 | )% | |
| 15,238 | | |
| 6,437 | | |
| 8,801 | | |
| 136.8 | % |
Income taxes |
| 950 | | |
| 2,992 | | |
| (2,042 | ) | |
| (68.3 | )% | |
| 4,713 | | |
| 2,445 | | |
| 2,268 | | |
| 92.8 | % |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net income |
$ | 2,794 | | |
$ | 4,697 | | |
$ | (1,903 | ) | |
| (40.6 | )% | |
$ | 10,525 | | |
$ | 3,992 | | |
$ | 6,533 | | |
| 163.7 | % |
A discussion of our segment results of operations follows.
Citrus Groves
The table below presents key operating measures
for the three and six months ended March 31, 2015 and 2014:
(in thousands,
except per box and per pound solid data) |
|
| |
| |
| |
| |
| |
|
|
Three Months Ended | |
| |
| |
Six Months Ended | |
| |
|
|
March
31, | |
Change | |
March
31, | |
Change |
|
2015 | |
2014 | |
$ | |
% | |
2015 | |
2014 | |
$ | |
% |
|
| |
| |
| |
| |
| |
| |
| |
|
Revenue From: |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Early and
Mid Season |
$ | 36,052 | | |
$ | 17,927 | | |
$ | 18,125 | | |
| 101.1 | % | |
$ | 47,927 | | |
$ | 22,366 | | |
$ | 25,561 | | |
| 114.3 | % |
Valencias |
| 12,037 | | |
| 3,438 | | |
| 8,599 | | |
| 250.2 | % | |
| 12,037 | | |
| 3,438 | | |
| 8,599 | | |
| 250.1 | % |
Fresh Fruit |
| 1,621 | | |
| 1,205 | | |
| 416 | | |
| 34.6 | % | |
| 2,541 | | |
| 1,859 | | |
| 692 | | |
| 36.7 | % |
Other |
| 661 | | |
| 20 | | |
| 641 | | |
| NM | | |
| 784 | | |
| 560 | | |
| 224 | | |
| 40.0 | % |
Total |
$ | 50,371 | | |
$ | 22,590 | | |
$ | 27,781 | | |
| 123.0 | % | |
$ | 63,289 | | |
$ | 28,223 | | |
$ | 35,066 | | |
| 124.3 | % |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Boxes Harvested: |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Early and Mid Season |
| 3,117 | | |
| 1,381 | | |
| 1,736 | | |
| 125.7 | % | |
| 4,251 | | |
| 1,828 | | |
| 2,423 | | |
| 132.6 | % |
Valencias |
| 887 | | |
| 245 | | |
| 642 | | |
| 262.1 | % | |
| 888 | | |
| 245 | | |
| 643 | | |
| 262.5 | % |
Total
Processed |
| 4,004 | | |
| 1,626 | | |
| 2,378 | | |
| 146.3 | % | |
| 5,139 | | |
| 2,073 | | |
| 3,066 | | |
| 147.9 | % |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Fresh
Fruit |
| 117 | | |
| 110 | | |
| 7 | | |
| 6.4 | % | |
| 179 | | |
| 160 | | |
| 19 | | |
| 11.9 | % |
Total |
| 4,121 | | |
| 1,736 | | |
| 2,385 | | |
| 137.4 | % | |
| 5,318 | | |
| 2,233 | | |
| 3,085 | | |
| 138.2 | % |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Pound Solids Produced: |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Early and Mid Season |
| 18,694 | | |
| 8,644 | | |
| 10,050 | | |
| 116.3 | % | |
| 24,941 | | |
| 11,255 | | |
| 13,686 | | |
| 121.6 | % |
Valencias |
| 5,610 | | |
| 1,528 | | |
| 4,082 | | |
| NM | | |
| 5,610 | | |
| 1,528 | | |
| 4,082 | | |
| NM | |
Fresh
Fruit |
| 85 | | |
| 37 | | |
| 48 | | |
| 129.8 | % | |
| 84 | | |
| 37 | | |
| 47 | | |
| 127.1 | % |
Total |
| 24,389 | | |
| 10,209 | | |
| 14,180 | | |
| 138.9 | % | |
| 30,635 | | |
| 12,820 | | |
| 17,815 | | |
| 139.0 | % |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Pound Solids per Box: |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Early and Mid Season |
| 6.00 | | |
| 6.26 | | |
| (0.26 | ) | |
| (4.3 | )% | |
| 5.87 | | |
| 6.16 | | |
| (0.29 | ) | |
| (4.7 | )% |
Valencias |
| 6.32 | | |
| 6.24 | | |
| 0.08 | | |
| 1.3 | % | |
| 6.32 | | |
| 6.24 | | |
| 0.08 | | |
| 1.3 | % |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Price per Pound Solid: |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Early and Mid Season |
$ | 1.93 | | |
$ | 2.07 | | |
$ | (0.15 | ) | |
| (7.2 | )% | |
$ | 1.92 | | |
$ | 1.99 | | |
$ | (0.07 | ) | |
| (3.6 | )% |
Valencias |
$ | 2.15 | | |
$ | 2.25 | | |
$ | (0.10 | ) | |
| (4.5 | )% | |
$ | 2.15 | | |
$ | 2.25 | | |
$ | (0.10 | ) | |
| (4.5 | )% |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Price per Box: |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Fresh Fruit |
$ | 13.85 | | |
$ | 10.95 | | |
$ | 2.90 | | |
| 26.5 | % | |
$ | 14.20 | | |
$ | 11.62 | | |
$ | 2.58 | | |
| 22.2 | % |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Operating Expenses: |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Cost of Sales |
$ | 29,786 | | |
$ | 10,401 | | |
$ | 19,385 | | |
| 186.4 | % | |
$ | 36,810 | | |
$ | 12,601 | | |
$ | 24,209 | | |
| 192.2 | % |
Harvesting and Hauling |
| 9,501 | | |
| 4,207 | | |
| 5,294 | | |
| 125.9 | % | |
| 12,067 | | |
| 5,425 | | |
| 6,642 | | |
| 122.5 | % |
Other |
| 1,062 | | |
| 91 | | |
| 971 | | |
| NM | | |
| 1,599 | | |
| 217 | | |
| 1,382 | | |
| NM | |
Total |
$ | 40,349 | | |
$ | 14,699 | | |
$ | 25,650 | | |
| 174.5 | % | |
$ | 50,476 | | |
$ | 18,243 | | |
$ | 32,233 | | |
| 176.7 | % |
We sell our Early and Mid-Season and Valencia
oranges to processors that convert the majority of the citrus crop into orange juice. They generally buy their citrus on a pound
solids basis, which is the measure of the soluble solids (sugars and acids) contained in one box of fruit. Fresh Fruit is generally
sold to packing houses that purchase their citrus on a per box basis. Our Operating Expenses consist primarily of Cost of Sales
and Harvesting and Hauling. Cost of Sales represents the cost of maintaining our citrus groves for
the preceding calendar year and does not
vary in relation to production. Harvesting and Hauling represents the cost of bringing citrus product to processors and varies
based upon the number of boxes produced.
The increases for the three and six months
ended March 31, 2015 as compared to the three and six months ended March 31, 2014 in revenues, boxes harvested, pound solids produced
and gross profit relate primarily to the acquisition of Orange-Co in December 2014. Orange-Co related revenues and gross profit
increased by approximately $30,625,000 and $6,092,000 for the three months ended March 31, 2015, respectively, and by approximately
by $37,625,000 and $7,786,000 for the six months ended March 31, 2015, respectively. Orange-Co related boxes harvested and pound
solids produced increased by approximately 2,416,000 and 14,989,000 for the three months ended March 31, 2015 respectively, and
by approximately 3,082,000 and 18,640,000 for the six months ended March 31, 2015, respectively, as a result of the acquisition.
We included the financial results of Orange-Co in the consolidated financial statements from the date of acquisition.
The USDA, in its April 9, 2015 Citrus Forecast,
indicated that it currently expects the Florida orange crop to decline by 2,700,000 boxes or approximately 2.6% versus the prior
year. We currently expect our 2014/2015 crop to outpace the current statewide estimate on a boxes harvested basis, with a 3% -
5% increase over the prior year.
Agricultural Supply Chain Management
The table below presents key operating measures
for the three and six months ended March 31, 2015 and 2014:
(in thousands, except per box and per pound solid data) |
|
| |
| |
| |
| |
| |
|
|
Three Months Ended | |
| |
| |
Six Months Ended | |
| |
|
|
March
31, | |
Change | |
March
31, | |
Change |
|
2015 | |
2014 | |
$ | |
% | |
2015 | |
2014 | |
$ | |
% |
|
| |
| |
| |
| |
| |
| |
| |
|
Purchase and Resale of
Fruit: |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Revenue |
$ | 2,725 | | |
$ | 5,205 | | |
$ | (2,480 | ) | |
| (47.7 | )% | |
$ | 3,644 | | |
$ | 6,733 | | |
$ | (3,089 | ) | |
| (45.9 | )% |
Boxes Sold |
| 243 | | |
| 444 | | |
| (201 | ) | |
| (45.3 | )% | |
| 330 | | |
| 601 | | |
| (271 | ) | |
| (45.1 | )% |
Pound Solids Sold |
| 1,440 | | |
| 2,725 | | |
| (1,285 | ) | |
| (47.2 | )% | |
| 1,921 | | |
| 3,624 | | |
| (1,703 | ) | |
| (47.0 | )% |
Pound Solids per Box |
| 5.93 | | |
| 6.14 | | |
| (0.21 | ) | |
| (3.5 | )% | |
| 5.82 | | |
| 6.03 | | |
| (0.21 | ) | |
| (3.5 | )% |
Price per Pound Solids |
$ | 1.89 | | |
$ | 1.91 | | |
$ | (0.02 | ) | |
| (1.1 | )% | |
$ | 1.90 | | |
$ | 1.86 | | |
$ | 0.04 | | |
| 2.2 | % |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Value Added Services: |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Revenue |
$ | 482 | | |
$ | 915 | | |
$ | (433 | ) | |
| (47.4 | )% | |
$ | 657 | | |
$ | 1,217 | | |
$ | (560 | ) | |
| (46.1 | )% |
Value Added Boxes |
| 241 | | |
| 464 | | |
| (223 | ) | |
| (48.1 | )% | |
| 328 | | |
| 579 | | |
| (251 | ) | |
| (43.4 | )% |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Other Revenue |
$ | 89 | | |
$ | 15 | | |
| 74 | | |
| NM | | |
$ | 178 | | |
$ | 291 | | |
| (113 | ) | |
| (38.9 | )% |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
NM - Not Meaningful |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
The overall decline for the three and six months
ended March 31, 2015 as compared to the three and six months ended March 31, 2014 in Purchase and Resale of Fruit revenue, boxes
sold and pound solids sold, as well as the declines in Value Added Services revenue and boxes, are all being driven by a management
decision to reduce the number of external boxes handled by Alico Fruit Company to focus on our internal operations. This decision
was made in in the second quarter of fiscal year 2014.
The decline in Alico Fruit Company gross profit
relates primarily to the changes in revenue outlined above.
Improved Farmland
The table below presents key operating measures
for the three and six months ended March 31, 2015 and 2014:
(in thousands, except per net standard ton and per acre data) |
| |
| |
| |
| |
| |
| |
| |
| |
|
| |
Three Months Ended | |
| |
| |
Six Months Ended | |
| |
|
| |
March 31, | |
Change | |
March 31, | |
Change |
| |
2015 | |
2014 | |
$ | |
% | |
2015 | |
2014 | |
$ | |
% |
| |
| |
| |
| |
| |
| |
| |
| |
|
Revenue From: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Sale of Sugarcane | |
$ | - | | |
$ | 9,996 | | |
$ | (9,996 | ) | |
| (100.0 | )% | |
$ | - | | |
$ | 16,018 | | |
$ | (16,018 | ) | |
| (100.0 | )% |
Molasses Bonus | |
| - | | |
| 457 | | |
| (457 | ) | |
| (100.0 | )% | |
| - | | |
| 761 | | |
| (761 | ) | |
| (100.0 | )% |
Land Leasing | |
| 982 | | |
| 298 | | |
| 684 | | |
| NM | | |
| 2,074 | | |
| 503 | | |
| 1,571 | | |
| NM | |
Other | |
| - | | |
| (1 | ) | |
| 1 | | |
| (100.0 | )% | |
| - | | |
| - | | |
| - | | |
| NM | |
Total | |
$ | 982 | | |
$ | 10,750 | | |
$ | (9,768 | ) | |
| (90.9 | )% | |
$ | 2,074 | | |
$ | 17,282 | | |
$ | (15,208 | ) | |
| (88.0 | )% |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Operating Expenses: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Cost of Sales | |
$ | - | | |
$ | 6,757 | | |
$ | (6,757 | ) | |
| (100.0 | )% | |
$ | - | | |
$ | 10,908 | | |
$ | (10,908 | ) | |
| (100.0 | )% |
Harvesting and Hauling | |
| - | | |
| 2,053 | | |
| (2,053 | ) | |
| (100.0 | )% | |
| - | | |
| 3,331 | | |
| (3,331 | ) | |
| (100.0 | )% |
Land Leasing Expenses | |
| - | | |
| 55 | | |
| (55 | ) | |
| (100.0 | )% | |
| - | | |
| 156 | | |
| (156 | ) | |
| (100.0 | )% |
Guaranteed Payment | |
| 1,080 | | |
| - | | |
| 1,080 | | |
| NM | | |
| 1,560 | | |
| - | | |
| 1,560 | | |
| NM | |
Other | |
| 206 | | |
| - | | |
| 206 | | |
| NM | | |
| 517 | | |
| - | | |
| 517 | | |
| NM | |
Total | |
$ | 1,286 | | |
$ | 8,865 | | |
$ | (7,579 | ) | |
| (85.5 | )% | |
$ | 2,077 | | |
$ | 14,395 | | |
$ | (12,318 | ) | |
| (85.6 | )% |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
NM - Not Meaningful | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
On May 19, 2014, the Company entered
into a triple net agricultural lease with its sole sugarcane customer, United States Sugar Corporation, of approximately 30,600
gross acres of land in Hendry County, Florida used for sugarcane farming which includes 19,181 acres planted or plantable to sugar.
As a result of the Lease, the Company is no longer directly engaged in sugarcane farming.
On August 8, 2014, we entered into a Purchase
and Sale Agreement, (the “Purchase Agreement”) with Terra Land Company (“Terra”) to sell approximately
30,959 gross acres of land located in Hendry County, Florida used for sugarcane production for a base purchase price of $91,436,000.
The base purchase price was subject to a valuation adjustment in the event that either the net farmable acres or net support acres
of the land were more or less than the amounts in the Purchase Agreement by one percent (1%) or greater.
On November 21, 2014, via various amendments
to the Purchase Agreement, we completed the sale to Global Ag Properties USA LLC of approximately 36,000 gross acres of land located
in Henry County, Florida used for sugarcane production for a purchase price of $97,900,000 pursuant to the Purchase and Sale Agreement
dated August 8, 2014. Global is a wholly-owned subsidiary of Terra. We have also assigned our interest in the USSC Lease to Global
in conjunction with the sale. The parties have made customary representations, warranties, covenants and agreements in the Purchase
Agreement.
As a result of the disposition of our sugarcane
land, we are no longer involved in sugarcane and the Improved Farmland segment was no longer material to our business.
Ranch and Conservation
The table below presents key operating measures
for the three and six months ended March 31, 2015 and 2014:
(in thousands, except per pound data) | |
| |
| |
| |
| |
| |
| |
| |
|
| |
| |
| |
| |
| |
| |
| |
| |
|
|
Three Months Ended | |
| |
| |
Six Months Ended | |
| |
|
|
March
31, | |
Change | |
March
31, | |
Change |
|
2015 | |
2014 | |
$ | |
% | |
2015 | |
2014 | |
$ | |
% |
|
| |
| |
| |
| |
| |
| |
| |
|
Revenue From: |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Sale of Calves |
$ | 25 | | |
$ | 25 | | |
$ | - | | |
| 0.0 | % | |
$ | 109 | | |
$ | 261 | | |
$ | (152 | ) | |
| (58.2 | )% |
Sale of Culls |
| 21 | | |
| 691 | | |
| (670 | ) | |
| (97.0 | )% | |
| 511 | | |
| 692 | | |
| (181 | ) | |
| (26.2 | )% |
Land Leasing |
| 223 | | |
| 242 | | |
| (19 | ) | |
| (7.9 | )% | |
| 447 | | |
| 487 | | |
| (40 | ) | |
| (8.3 | )% |
Other |
| 40 | | |
| (48 | ) | |
| 88 | | |
| (183.4 | )% | |
| 78 | | |
| 1 | | |
| 77 | | |
| NM | |
Total |
$ | 309 | | |
$ | 910 | | |
$ | (601 | ) | |
| (66.1 | )% | |
$ | 1,145 | | |
$ | 1,441 | | |
$ | (296 | ) | |
| (20.5 | )% |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Pounds Sold: |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Calves |
| 12 | | |
| 17 | | |
| (5 | ) | |
| (28.5 | )% | |
| 50 | | |
| 158 | | |
| (108 | ) | |
| (68.4 | )% |
Culls |
| 76 | | |
| 793 | | |
| (717 | ) | |
| (90.5 | )% | |
| 446 | | |
| 794 | | |
| (348 | ) | |
| (43.9 | )% |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Price Per Pound: |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Calves |
$ | 2.08 | | |
$ | 1.47 | | |
$ | 0.61 | | |
| 41.5 | % | |
$ | 2.18 | | |
$ | 1.65 | | |
$ | 0.53 | | |
| 32.2 | % |
Culls |
$ | 0.28 | | |
$ | 0.87 | | |
$ | (0.59 | ) | |
| (67.9 | )% | |
$ | 1.15 | | |
$ | 0.87 | | |
$ | 0.28 | | |
| 32.2 | % |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Operating Expenses: |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Cost of Calves Sold |
$ | 1 | | |
$ | (66 | ) | |
$ | 67 | | |
| (101.6 | )% | |
$ | 3 | | |
$ | 220 | | |
$ | (217 | ) | |
| (98.7 | )% |
Cost of Culls Sold |
| 21 | | |
| 354 | | |
| (333 | ) | |
| (94.1 | )% | |
| 220 | | |
| 355 | | |
| (135 | ) | |
| NM | |
Land Leasing Expenses |
| 58 | | |
| 71 | | |
| (13 | ) | |
| (18.3 | )% | |
| 113 | | |
| 128 | | |
| (15 | ) | |
| (11.8 | )% |
Other |
| 543 | | |
| 812 | | |
| (269 | ) | |
| (33.2 | )% | |
| 1,032 | | |
| 844 | | |
| 188 | | |
| 22.3 | % |
Total |
$ | 623 | | |
$ | 1,171 | | |
$ | (548 | ) | |
| (46.8 | )% | |
$ | 1,368 | | |
$ | 1,547 | | |
$ | (179 | ) | |
| (11.6 | )% |
Ranch
Calves are generally sold to market in the
fourth quarter of each fiscal year. Results in each of the first, second and third quarters of the fiscal years are immaterial
and generally nonrecurring in nature, and comparison of results is not meaningful.
Conservation
Water Storage Contract Approval
In December 2012, the South Florida Water Management
District (“SFWMD”) issued a solicitation request for projects to be considered for the Northern Everglades Payment
for Environmental Services Program. In March 2013, we submitted a response proposing a dispersed water management project on portions
of our ranch land.
In December 2014, the SFWMD approved a contract,
based on the submitted response, with the Company. The contract term is eleven years and allows up to one year for implementation
(design, permitting, construction and construction completion certification) and ten years of operation whereby the Company will
provide water retention services. Payment for these services includes an amount not to exceed $4,000,000 of reimbursement for implementation.
In addition it provides for an annual fixed payment of $12,000,000 for operations and maintenance costs as long as the project
is in compliance with the contract and subject to annual SFWMD Governing Board (“Board”) approval of funding. The contract
specifies that the Board has to approve the payments annually, and there can be no assurance that it will approve the annual fixed
payments. Operating expenses were approximately $530,000 and $549,000 for the three months ended March 31, 2015 and 2014 respectively.
The operating expenses were approximately $1,018,000 and $814,900 for the six months ended March 31, 2015 and 2014 respectively.
Other Operations
The results of the Other Operations segment
for the six months ended March 31, 2015 are in-line with the same period of the prior year.
General and Administrative
The increase in general and administrative
expenses for the three months and six months ended March 31, 2015 versus the same period of the prior year relates primarily to
professional and legal fees associated with the acquisitions and dispositions described above in “Recent Events,” which
totaled approximately $753,000 and $4,353,000 for the three and six months ended March 31, 2015, respectively. The charges included
$2,500,000 in legal fees, $1,350,000 in other real estate closing costs and $500,000 related to a consulting and non-competition
agreement with the former CEO for the six months ended March 31, 2015.
The general and administrative expenses for
the three and six months ended March 31, 2014 included costs incurred related to the change in control from November 2013 which
totaled $260,000 and $2,005,000 for the three and six months ended March 31, 2014, respectively. The charges included $195,000
for the acceleration of the vesting of the Long-Term Incentive Plan awards, $849,000 for the cost of Director and Officer insurance
for the departing Directors and $333,000 related to a consulting and non-competition agreement with the former CEO for the six
months ended March 31, 2014.
Other Income (Expense), net
Other income (expense), net for the six months
ended March 31, 2015 is approximately $12,100,000 greater than the same period of the prior year due to an approximate $1,000,000
loss on extinguishment of debt (see “Note 7. Long-Term Debt” in the Notes to the Condensed Combined Consolidated Financial
Statements (Unaudited)), an increase of approximately $2,923,000 in interest expense due primarily to the term debt from the Orange-Co
acquisition and a partial recognition of the gain on sale for the sugarcane land sale in November of $13,600,000 (see “Note
5. Assets Held For Sale” in the Notes to the Condensed Combined Consolidated Financial Statements (Unaudited)).
Income Tax Expense
Income tax expense was approximately
$950,000 and $2,992,000 for the three months ended March 31, 2015 and 2014, respectively. The Company’s effective tax
rates were 25.4% and 39.0% for the three months ended March 31, 2015 and 2014, respectively. Income tax expense was
approximately $4,713,000 and $2,445,000 for the six months ended March 31, 2015 and 2014, respectively. The Company’s
effective tax rates for the six months ended March 31, 2015 and 2014 were 31.0% and 38.0%, respectively. During the quarter
ended March 31, 2015, the Company revised effective tax rates to reflect the impact of claiming certain deductions on amended federal and state income tax returns filed for the fiscal years ended September 30, 2011
through September 30, 2013. Other changes to the effective tax rates relate primarily to the nondeductible nature of
projected political contributions and limitations on certain deductions related to the vesting of the long-term
incentive grants for fiscal year 2014.
The IRS is currently auditing the Company’s
tax return for the year ended September 30, 2013.
Seasonality
Historically, the second and third quarters
of our fiscal year produce the majority of our annual revenue, and our working capital requirements are typically greater in the
first and fourth quarters of our fiscal year coinciding with our harvesting cycles. Because of the seasonality of our business,
results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.
Liquidity and Capital Resources
A comparative balance sheet summary is presented in the following
table:
| |
March 31 | |
September 30, | |
|
(in thousands) | |
2015 | |
2014 | |
Change |
| |
| |
| |
|
| |
| |
| |
|
Cash and cash equivalents | |
$ | 2,775 | | |
$ | 31,020 | | |
$ | (28,245 | ) |
Investments | |
$ | 264 | | |
$ | 263 | | |
$ | 1 | |
Total current assets | |
$ | 85,875 | | |
$ | 125,710 | | |
$ | (39,835 | ) |
Total current liabilities | |
$ | 24,628 | | |
$ | 20,670 | | |
$ | 3,958 | |
Working capital | |
$ | 61,247 | | |
$ | 105,040 | | |
$ | (43,793 | ) |
Total assets | |
$ | 478,422 | | |
$ | 257,578 | | |
$ | 220,844 | |
Term loans and line of credit | |
$ | 231,986 | | |
$ | 64,800 | | |
$ | 167,186 | |
Current ratio | |
| 3.49 to 1 | | |
| 6.08 to 1 | | |
| | |
We believe that our current cash
position, revolving credit facilities and the cash we expect to generate from operating activities will provide us with
sufficient liquidity to satisfy our working capital requirements and capital expenditures for at least the next 12 months. We
have $76,000,000 in working capital lines of credit of which $36,500,000 is available for our general use
at March 31, 2015 and a $25,000,000 revolving line of credit all of which is available for our general
use at March 31, 2015 (see “Note 7. Long-Term Debt” in the Notes to the Condensed Combined Consolidated Financial
Statements (Unaudited)). If the Company pursues significant growth opportunities in the future, it could have a material
adverse impact on our cash balances, and we may need to finance such activities by drawing down monies under our lines of
credit and if necessary, obtaining additional debt or equity financing.
The decrease in cash and cash equivalents was
primarily due to the following factors:
| · | Cash used in operations of $6,261,000, |
| · | Capital expenditures of $23,239,000, |
| · | Acquisition of Orange-Co of $264,586,000 offset by $149,000,000 in
new term debt, |
| · | Payment on revolving credit line of $44,856,000 and, |
| · | Principal payments on long-term debt of $11,629,000 |
Net Cash (Used In) Provided By Operating
Activities
The following table details the items contributing
to Net Cash (Used In) Provided by Operating Activities for the six months ended March 31, 2015 and 2014:
(in thousands) | |
Six Months Ended March 31, | |
|
| |
2015 | |
2014 | |
Change |
| |
| |
| |
|
Net Income | |
$ | 10,525 | | |
$ | 3,992 | | |
$ | 6,533 | |
Depreciation and Amortization | |
| 6,068 | | |
| 4,929 | | |
| 1,139 | |
Net (gain) loss on Sale of Property and Equipment | |
| (16,425 | ) | |
| (370 | ) | |
| (16,055 | ) |
Other Non-Cash Expenses | |
| 3,788 | | |
| 522 | | |
| 3,266 | |
Change in Working Capital | |
| (10,217 | ) | |
| (4,447 | ) | |
| (5,770 | ) |
| |
| | | |
| | | |
| | |
Cash (used in) provided by operations | |
$ | (6,261 | ) | |
$ | 4,626 | | |
$ | (10,887 | ) |
The factors contributing to the increase in
net income for the six months ended March 31, 2015, versus the same period of the prior year are discussed in “Results of
Operations.” The gain on sale of property and equipment is substantially due to the recognition of approximately $13,613,000
associated with the Sugarcane land sale as discussed in Recent Events.
Due to the seasonal nature of our business,
working capital requirements are typically greater in the first and fourth quarters of our fiscal year coinciding with our harvest
cycles. Cash flows from operating activities typically improve in our second and third fiscal quarters as we harvest our crops.
Net Cash Used In Investing Activities
The following table details the items contributing
to Net Cash Used in Investing Activities for the six months ended March 31, 2015 and 2014:
(in thousands) | |
Six Months Ended March 31, | |
|
| |
2015 | |
2014 | |
Change |
| |
| |
| |
|
Purchases of property and equipment: | |
| | | |
| | | |
| | |
Citrus grove acquisition | |
$ | (17,624 | ) | |
$ | - | | |
$ | (17,624 | ) |
Sugarcane planting | |
| | | |
| (2,748 | ) | |
| 2,748 | |
Improvements to farmland | |
| - | | |
| (33 | ) | |
| 33 | |
Citrus nursery | |
| (2,406 | ) | |
| (3,349 | ) | |
| 943 | |
Citrus tree development | |
| (300 | ) | |
| (478 | ) | |
| 178 | |
Breeding herd purchases | |
| (164 | ) | |
| (776 | ) | |
| 612 | |
Rolling stock, equipment and other | |
| (1,770 | ) | |
| (1,374 | ) | |
| (396 | ) |
Other | |
| (975 | ) | |
| - | | |
| (975 | ) |
| |
| | | |
| | | |
| | |
Total | |
| (23,239 | ) | |
| (8,758 | ) | |
| (14,481 | ) |
| |
| | | |
| | | |
| | |
Acquisition of Citrus business | |
$ | (264,586 | ) | |
$ | - | | |
$ | (264,586 | ) |
Disposal of property and equipment | |
| 103,445 | | |
| 700 | | |
| 102,745 | |
Return on investment in Magnolia | |
| 474 | | |
| 2,555 | | |
| (2,081 | ) |
Other | |
| (2 | ) | |
| - | | |
| (2 | ) |
| |
| | | |
| | | |
| | |
Cash used in investing activities | |
$ | (183,908 | ) | |
$ | (5,503 | ) | |
$ | (178,405 | ) |
Purchases of property and equipment include
Silver Nip Citrus’s purchase of a citrus grove of approximately 1,475 acres in Charlotte County, Florida. Otherwise, purchases
of property and equipment decreased primarily to the disposition of our sugarcane land. We are no longer involved in sugarcane
and therefore no sugarcane plantings or improvements to farmland took place in the six months ended March 31, 2015.
Additionally, we acquired Orange-Co for approximately
$264,586,000 in December 2014 (see “Note 4. Orange-Co Acquisition” in the Notes to the Condensed Combined Consolidated
Financial Statements (Unaudited)) and utilized proceeds from the disposition of our sugarcane land of $97,126,000 via a tax deferred
like kind exchange pursuant to Internal Revenue Code Section §1031 (see “Note 5. Assets Held For Sale”
in the Notes to the Condensed Combined Consolidated Financial Statements (Unaudited)).
Net Cash Provided By (Used In) Financing
Activities
The following table details the items contributing
to Net Cash Provided By (Used In) Financing Activities for the six months ended March 31, 2015 and 2014:
(in thousands) | |
Six Months Ended March 31, | |
|
| |
2015 | |
2014 | |
Change |
| |
| |
| |
|
Principal payments on term loan | |
$ | (11,629 | ) | |
$ | (1,001 | ) | |
$ | (10,628 | ) |
Payoff of term loan | |
| (34,000 | ) | |
| - | | |
| (34,000 | ) |
Borrowings on revolving line of credit | |
| 63,671 | | |
| 300 | | |
| 63,371 | |
Repayments on revolving line of credit | |
| (44,856 | ) | |
| - | | |
| (44,856 | ) |
Proceeds from term loans | |
| 193,500 | | |
| - | | |
| 193,500 | |
Payment of loan origination fees | |
| (3,364 | ) | |
| - | | |
| (3,364 | ) |
Treasury stock purchases | |
| (512 | ) | |
| (4,713 | ) | |
| 4,201 | |
Dividends paid | |
| (884 | ) | |
| (2,005 | ) | |
| 1,121 | |
Proceeds from capital leases | |
| (2 | ) | |
| - | | |
| (2 | ) |
| |
| | | |
| | | |
| | |
Cash provided by (used in) financing activities | |
$ | 161,924 | | |
$ | (7,419 | ) | |
$ | 169,343 | |
The Company restructured its outstanding debt
on December 3, 2014 in connection with the Orange-Co acquisition (see “Note 5. Long-Term Debt” in the Notes to the
Condensed Combined Consolidated Financial Statements (Unaudited)). The restructured debt facilities include $125,000,000 in fixed
rate term loans, $57,500,000 in variable rate term loans and a $25,000,000 revolving line of credit (“RLOC”) with Metropolitan
Life Insurance Company and New England Life Insurance Company (collectively “Met”) and a $70,000,000 working capital
line of credit (“WCLC”) with Rabo Agrifinance, Inc. (“Rabo”).
The previous term loan required quarterly principal
payments of $500,000. The balance of the term loan was $34,000,000 at the time it was refinanced in connection with the Orange-Co
acquisition.
Purchase Commitments
Alico, through its wholly owned subsidiary
Alico Fruit, enters into contracts for the purchase of citrus fruit during the normal course of its business. The remaining obligations
under these purchase agreements totaled approximately $6,758,000 at March 31, 2015 for delivery in fiscal years 2015 through 2016.
All of these obligations are covered by sales agreements. Alico’s management currently believes that all committed purchase
volume will be sold at cost or higher.
Contractual Obligations and Off Balance
Sheet Arrangements
There have been no material changes during
this reporting period to the disclosures set forth in Part II, Item 7 in our Form 10-K for the fiscal year ended September 30,
2014.
ITEM 3. Quantitative and Qualitative
Disclosures about Market Risk
There have been no material changes during
this reporting period in the disclosures set forth in Part II, Item 7A in our Form 10-K for the fiscal year ended September 30,
2014.
ITEM 4. Controls and Procedures
(a) Evaluation of disclosure controls and
procedures
As of the end of the period covered by this
report, an evaluation, as required by Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934 as amended (“Exchange
Act”), was carried out under the supervision and with the participation of our management, including the Chief Executive
Officer and the Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. Based on that evaluation,
the Chief Executive Officer and Chief Financial Officer have concluded that the design and operation of our disclosure controls
and procedures are effective to ensure that all information required to be disclosed in the reports that we file or submit under
the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and
forms, and to provide reasonable assurance that information required to be disclosed by us in such reports is accumulated and communicated
to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions
regarding required disclosure.
(b) Changes in internal control over financial
reporting
There have been no changes in our internal
control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15(f)
or Rule 15d-15(f) under the Exchange Act that occurred during our last fiscal quarter that have materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings.
Since the March 2, 2015 announcement of the acquisition of Silver Nip, two putative shareholder class action lawsuits have
been filed against Alico and its directors, among other parties, in the Circuit Court of the Twentieth Judicial District in
and for Lee County, Florida. The specific cases are Shiva Y. Stein v. Alico Inc. et al No. 15-CA-000645 filed on March 11,
2015 (the "Stein Complaint") and Ruth S. Dimon Trust v. George R. Brokaw et al., No. 15-CA-001162 filed on May 6, 2015 (the
"Dimon Complaint"). The Stein Complaint alleges that Alico’s directors at the time of the Acquisition, 734 Investors
and 734 Agriculture breached fiduciary duties to Alico stockholders in connection with the acquisition and that Silver Nip
and 734 Sub aided and abetted such breaches. It seeks, among other things, monetary and equitable relief, costs, fees (including
attorneys’ fees) and expenses. The Dimon Complaint alleges claims for breach of fiduciary duty, gross mismanagement,
waste of corporate assets and tortious interference with contract against Alico’s directors, unjust enrichment against
three of the directors and aiding and abetting breach of fiduciary duty against Silver Nip, 734 investors and 734 Agriculture.
It seeks, among other things, rescission of the acquisition, an injunction prohibiting certain payments to Silver Nip shareholders,
unspecified damages, disgorgement of profits, costs, fees (including attorneys’ fees) and expenses. We believe that
these lawsuits are without merit and intend to contest them vigorously.
From time to time, we may be involved in litigation
relating to claims arising out of our operations in the normal course of business. There are no current legal proceedings to which
we are a party to or which any of our property is subject to that we believe will have a material adverse effect on our business,
financial condition or results of operations.
ITEM 1A. Risk Factors.
There have been no material changes in the
risk factors set forth in Part 1, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year
ended September 30, 2014.
ITEM 2. Unregistered Sales of Equity
Securities and Use of Proceeds.
There were no sales of unregistered equity
securities during the period.
In March 2015, the Board of Directors authorized
the repurchase of up to 20,000 shares of the Company’s common stock beginning March 25, 2015 and continuing through March
25, 2016. The stock repurchases were made through open market transactions at times and in such amounts as the Company’s
broker determined subject to the provisions of SEC Rule 10b-18. The Company also adopted a Rule 10b5-1 share repurchase plan under
the Securities Exchange Act of 1934 (the “Plan”) in connection with its share repurchase authorization. The Plan allows
the Company to repurchase its shares at times when it otherwise might be prevented from doing so under insider trading laws or
because of self-imposed trading blackout periods.
Through March 31, 2015, the Company had purchased
9,907 shares and had available to purchase an additional 10,093 in accordance with the authorization. The following table describes
our purchases of our common through March 31, 2015.
| |
Total Number of
Shares Purchased | |
Average Price Paid Per Share | |
Total Number of Shares Purchased As Part of Publicly Announced
Plans or Programs | |
Maximum Number of Shares that May Yet
Be Purchased Under
the Plans or Programs |
| |
| |
| |
| |
|
Month of January 2015 | | |
| - | | |
$ | - | | |
| - | | |
| - | |
Month of February 2015 | | |
| - | | |
$ | - | | |
| - | | |
| - | |
Month of March 2015 | | |
| 9,907 | | |
$ | 51.64 | | |
| 9,907 | | |
| 10,093 | |
ITEM 3.
Defaults Upon Senior Securities.
None.
ITEM 4. Mine Safety Disclosure.
None.
ITEM 5. Other Information.
None.
ITEM 6. Exhibits
Exhibit No. |
|
Description of Exhibit |
|
|
|
|
|
|
|
2.1 |
* |
Asset Purchase Agreement, dates as of December 1, 2014, by and among Alico, Inc., Orange-Co, L.P. and solely with respect to certain sections thereof, Orange-Co, LLC and Tamiami Citrus, LLC. (Incorporated by reference to Exhibit 2.1 of Alico’s filing on Form 8-K dated December 5, 2014). |
|
Previously filed |
|
|
|
|
|
2.2 |
* |
Agreement and Plan of Merger, dated as of December 2, 2014, by and among Alico, Inc., 734 Sub, LLC, 734 Citrus Holdings, LLC, and, solely with respect to certain sections thereof, 734 Agriculture, LLC, Rio Verde Ventures, LLC and Clayton G. Wilson. (Incorporated by reference to Exhibit 2.2 of Alico’s filing on Form 8-K dated December 5, 2014). |
|
Previously filed |
|
|
|
|
|
10.1 |
* |
First Amended and Restated Credit Agreement, dated December 1, 2014, by and among Alico, Inc., Alico Land Development, Inc., Alico-Agri, Ltd., Alico Plant World, L.L.C., Alico Fruit Company, LLC, Metropolitan Life Insurance Company, and New England Life Insurance Company. (Incorporated by reference to Exhibit 10.1 of Alico’s filing on Form 8-K dated December 5, 2014). |
|
Previously filed |
|
|
|
|
|
10.2 |
* |
Credit Agreement, by and between Alico, Inc., Alico-Agri, Ltd., Alico Plant World, L.L.C., Alico Fruit Company, LLC, Alico Land Development, Inc., and Alico Citrus Nursery, LLC, as Borrowers and Rabo Agrifinance, Inc., as Lender. (Incorporated by reference to Exhibit 10.2 of Alico’s filing on Form 8-K dated December 5, 2014). |
|
Previously filed |
|
|
|
|
|
31.1 |
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
Filed herewith |
|
|
|
|
31.2 |
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
Filed herewith |
|
|
|
|
32.1 |
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350. |
|
Furnished herewith |
|
|
|
|
32.2 |
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section
1350.
|
|
Furnished herewith |
|
|
|
|
101.INS |
** |
XBRL Instance Document |
|
Filed herewith |
|
|
|
|
|
101.SCH |
** |
XBRL Taxonomy Extension Schema Document |
|
Filed herewith |
|
|
|
|
|
101.CAL |
** |
XBRL Taxonomy Calculation Linkbase Document |
|
Filed herewith |
|
|
|
|
|
101.DEF |
** |
XBRL Taxonomy Definition Linkbase Document |
|
Filed herewith |
|
|
|
|
|
101.LAB |
** |
XBRL Taxonomy Label Linkbase Document |
|
Filed herewith |
|
|
|
|
|
101.PRE |
** |
XBRL Taxonomy Extension Presentation Linkbase Document |
|
Filed herewith |
* |
Certain schedules and exhibits have been omitted from this filing pursuant to Item 601 (b)(2) of Regulation S-K, the Company will furnish supplemental copies of any such schedules or exhibits to the Securities and Exchange Commission upon request. |
|
|
** |
In accordance with Rule 406T of Regulation S-T, these XBRL (eXtensible Business Reporting Language) documents are furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under these sections. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
|
|
|
|
ALICO, INC. |
|
|
|
|
(Registrant) |
|
|
|
|
|
|
|
|
|
|
|
Date: May 11, 2015 |
|
|
By: |
/s/Clayton G. Wilson |
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Clayton G. Wilson |
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Chief Executive Officer |
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Date: May 11, 2015 |
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By: |
/s/W. Mark Humphrey |
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W. Mark Humphrey |
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Chief Financial Officer and Senior Vice President |
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Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY
ACT OF 2002.
I, Clayton G. Wilson certify that;
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Alico, Inc. (Alico), |
| 2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material
fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, and is not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of Alico as of, and for, the periods presented
in this report; |
| 4. | Alico’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for Alico and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to Alico, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, 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; |
| c) | Evaluated the effectiveness of Alico’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and |
| d) | Disclosed in this report any change in Alico’s internal control over financial reporting that occurred during Alico’s
most recent fiscal quarter ended March 31, 2015, that has materially affected, or is reasonably likely to materially affect, Alico’s
internal control over financial reporting; and |
| 5. | Alico’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to Alico’s auditors and audit committee of Alico’s Board of Directors: |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting. |
Dated: May 11, 2015
/s/ Clayton G. Wilson |
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Clayton G. Wilson |
Chief Executive Officer |
Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY
ACT OF 2002.
I, W. Mark Humphrey that;
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Alico, Inc. (Alico), |
| 2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material
fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, and is not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of Alico as of, and for, the periods presented
in this report; |
| 4. | Alico’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for Alico and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to Alico, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, 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; |
| c) | Evaluated the effectiveness of Alico’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and |
| d) | Disclosed in this report any change in Alico’s internal control over financial reporting that occurred during Alico’s
most recent fiscal quarter ended March 31, 2015, that has materially affected, or is reasonably likely to materially affect, Alico’s
internal control over financial reporting; and |
| 5. | Alico’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to Alico’s auditors and audit committee of Alico’s Board of Directors: |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting. |
Dated: May 11, 2015
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/s/ W. Mark Humphrey |
W. Mark Humphrey |
Chief Financial Officer and Senior Vice President |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report
of Alico, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2015, as filed with the Securities and Exchange
Commission on May 11, 2015, (the “Form 10-Q”), I, Clayton G. Wilson, Chief Executive Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Form 10-Q fully complies with the requirements
of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2) The information contained in the Form 10-Q fairly
presents, in all material respects, the financial condition and results of operations of the Company.
Dated: May 11, 2015
|
/s/ Clayton G. Wilson |
Clayton G. Wilson |
Chief Executive Officer |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report
of Alico, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2015, as filed with the Securities and Exchange
Commission on May 11, 2015, (the “Form 10-Q”), I, W. Mark Humphrey, Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Form 10-Q fully complies with the requirements
of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2) The information contained in the Form 10-Q fairly
presents, in all material respects, the financial condition and results of operations of the Company.
Dated: May 11, 2015
|
/s/ W. Mark Humphrey |
W. Mark Humphrey |
Chief Financial Officer and Senior Vice President |
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