SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



	þ	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

		For the Quarterly Period Ended March 31, ~~2018~~2019

		or

Commission File Number: 0-261

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. þYes ¨ 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). þYes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	¨	Accelerated filer	þ
Non-accelerated filer	¨	Smaller Reporting Company	¨
Emerging Growth Company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	ALCO	NASDAQ Global Market

There were ~~8,227,224~~7,470,031 shares of common stock outstanding at May 3, ~~2018.~~2019.

For the three and six months ended March 31, ~~2018~~2019 and ~~2017~~2018

Part 1 - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial ~~Statements (Unaudited).~~Statements.

Index to Condensed Consolidated Financial Statements



ALICO, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts)


	March 31,			September 30,
	2019			2018
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	606		$	25,260
Accounts receivable, net	13,997			2,544
Inventories	36,111			41,033
Assets held for sale	1,403			1,391
Prepaid expenses and other current assets	946			833
Total current assets	53,063			71,061

Restricted cash	7,004			7,000
Property and equipment, net	342,930			340,403
Goodwill	2,246			2,246
Deferred financing costs, net of accumulated amortization	44			136
Other non-current assets	2,802			2,576
Total assets	$	408,089		$	423,422

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	7,372		$	3,764
Accrued liabilities	5,988			9,226
Long-term debt, current portion	5,313			5,275
Income taxes payable	1,468			2,320
Other current liabilities	437			913
Total current liabilities	20,578			21,498

Long-term debt:
Principal amount, net of current portion	163,599			169,074
Less: deferred financing costs, net	(1,465		)	(1,563		)
Long-term debt less current portion and deferred financing costs, net	162,134			167,511
Lines of credit	24,962			2,685
Deferred income tax liabilities	28,930			25,153
Deferred gain on sale	—			24,928
Deferred retirement obligations	3,938			4,052
Other liabilities	346			—
Total liabilities	240,888			245,827
Commitments and Contingencies (Note 12)
Stockholders' equity:
Preferred stock, no par value, 1,000,000 shares authorized; none issued	—			—
Common stock, $1.00 par value, 15,000,000 shares authorized; 8,416,145 and 8,416,145 shares issued and 7,462,803 and 8,199,957 shares outstanding at March 31, 2019 and September 30, 2018, respectively	8,416			8,416
Additional paid in capital	19,733			20,126
Treasury stock, at cost, 953,342 and 216,188 shares held at March 31, 2019 and September 30, 2018, respectively	(32,496		)	(7,536		)
Retained earnings	166,193			151,111
Total Alico stockholders' equity	161,846			172,117
Noncontrolling interest	5,355			5,478
Total stockholders' equity	167,201			177,595
Total liabilities and stockholders' equity	$	408,089		$	423,422

ALICO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)

March 31, September 30,
2018 2017
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 12,022
$ 3,395
Accounts receivable, net 16,515
4,286
Inventories 27,010
36,204
Assets held for sale 706
20,983
Prepaid expenses and other current assets 2,287
1,621
Total current assets 58,540
66,489

Property and equipment, net 348,017
349,337
Goodwill 2,246
2,246
Deferred financing costs, net of accumulated amortization 138
262
Other non-current assets 1,001
848
Total assets $ 409,942
$ 419,182

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,449
$ 3,192
Accrued liabilities 4,991
6,781
Long-term debt, current portion 5,225
4,550
Other current liabilities 438
1,460
Total current liabilities 15,103
15,983

Long-term debt:
Principal amount, net of current portion 174,536
181,926
Less: deferred financing costs, net (1,664 ) (1,767 )
Long-term debt less current portion and deferred financing costs, net 172,872
180,159
Deferred income tax liabilities 22,802
27,108
Deferred gain on sale 26,829
26,440
Deferred retirement obligations 4,097
4,123
Total liabilities 241,703
253,813
Commitments and Contingencies (Note 11)

Stockholders' equity:
Preferred stock, no par value, 1,000,000 shares authorized; none issued —
—
Common stock, $1.00 par value, 15,000,000 shares authorized; 8,416,145 and 8,416,145 shares issued and 8,248,449 and 8,238,830 shares outstanding at March 31, 2018 and September 30, 2017, respectively 8,416
8,416
Additional paid in capital 19,050
18,694
Treasury stock, at cost, 167,696 and 177,315 shares held at March 31, 2018 and September 30, 2017, respectively (6,208 ) (6,502 )
Retained earnings 142,277
140,033
Total Alico stockholders' equity 163,535
160,641
Noncontrolling interest 4,704
4,728
Total stockholders' equity 168,239
165,369
Total liabilities and stockholders' equity $ 409,942
$ 419,182

See accompanying notes to the condensed consolidated financial statements.

ALICO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share amounts)

Three Months Ended March 31, Six Months Ended March 31,
2018 2017 2018 2017
Operating revenues:
Alico Citrus $ 34,709
$ 55,667
$ 51,788
$ 72,544
Conservation and Environmental Resources 493
337
856
638
Other Operations 398
196
489
463
Total operating revenues 35,600
56,200
53,133
73,645
Operating expenses:

Alico Citrus 26,110
40,923
42,405
55,008
Conservation and Environmental Resources 1,593
761
2,190
1,275
Other Operations 64
—
123
93
Total operating expenses 27,767
41,684
44,718
56,376
Gross profit 7,833
14,516
8,415
17,269
General and administrative expenses 3,073
3,399
6,959
7,187
Income from operations 4,760
11,117
1,456
10,082
Other (expense) income:

Interest expense (2,239 ) (2,374 ) (4,494 ) (4,701 )
Gain on sale of real estate, property and equipment 99
1,396
1,835
1,832
Other income (expense), net —
66
144
(24 )
Total other expense, net (2,140 ) (912 ) (2,515 ) (2,893 )
Income (loss) before income taxes 2,620
10,205
(1,059 ) 7,189
Provision (benefit) for income taxes 8,150
4,321
(4,267 ) 3,048
Net (loss) income (5,530 ) 5,884
3,208
4,141
Net loss (income) attributable to noncontrolling interests 16
(51 ) 24
(43 )
Net (loss) income attributable to Alico, Inc. common stockholders $ (5,514 ) $ 5,833
$ 3,232
$ 4,098
Per share information attributable to Alico, Inc. common stockholders:
Earnings (loss) per common share:

Basic $ (0.67 ) $ 0.70
$ 0.39
$ 0.49
Diluted $ (0.67 ) $ 0.70
$ 0.39
$ 0.49
Weighted-average number of common shares outstanding:

Basic 8,256
8,327
8,251
8,326
Diluted 8,256
8,327
8,310
8,326

Cash dividends declared per common share $ 0.06
$ 0.06
$ 0.12
$ 0.12



ALICO, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per share amounts)

	Three Months Ended March 31,						Six Months Ended March 31,
	2019			2018			2019			2018
Operating revenues:
Alico Citrus	$	47,823		$	34,709		$	61,720		$	51,788
Water Resources and Other Operations	698			891			1,580			1,345
Total operating revenues	48,521			35,600			63,300			53,133
Operating expenses:
Alico Citrus	31,582			26,110			42,456			42,405
Water Resources and Other Operations	625			1,657			1,348			2,313
Total operating expenses	32,207			27,767			43,804			44,718
Gross profit:	16,314			7,833			19,496			8,415
General and administrative expenses	4,654			3,073			8,104			6,959
Income from operations	11,660			4,760			11,392			1,456
Other (expense) income:
Interest expense	(1,963		)	(2,239		)	(3,880		)	(4,494		)
Gain on sale of real estate, property and equipment and assets held for sale	1			99			23			1,835
Change in fair value of derivatives	(33		)	—			(989		)	—
Other income, net	23			—			10			144
Total other expenses, net	(1,972		)	(2,140		)	(4,836		)	(2,515		)
Income (loss) before income taxes	9,688			2,620			6,556			(1,059		)
Income tax provision (benefit)	2,228			8,150			1,599			(4,267		)
Net income (loss)	7,460			(5,530		)	4,957			3,208
Net loss attributable to noncontrolling interests	87			16			123			24
Net income (loss) attributable to Alico, Inc. common stockholders	$	7,547		$	(5,514	)	$	5,080		$	3,232
Per share information attributable to Alico, Inc. common stockholders:
Earnings (loss) per common share:
Basic	$	1.01		$	(0.67	)	$	0.68		$	0.39
Diluted	$	1.01		$	(0.67	)	$	0.68		$	0.39
Weighted-average number of common shares outstanding:
Basic	7,463			8,256			7,471			8,251
Diluted	7,469			8,256			7,506			8,310

Cash dividends declared per common share	$	0.06		$	0.06		$	0.12		$	0.12

See accompanying notes to the condensed consolidated financial statements.

ALICO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)

Six Months Ended March 31,
2018 2017
Net cash used in operating activities:

Net income $ 3,208
$ 4,141
Adjustments to reconcile net income to net cash used in operating activities:

Deferred gain on sale of sugarcane land (282 ) (265 )
Depreciation, depletion and amortization 6,922
7,796
Deferred income tax provision (benefit) (4,306 ) 3,048
Gain on sale of real estate, property and equipment (1,835 ) (1,619 )
Non-cash interest expense on deferred gain on sugarcane land 688
707
Stock-based compensation expense 856
835
Other (300 ) 153
Changes in operating assets and liabilities:

Accounts receivable (12,229 ) (17,909 )
Inventories 9,194
3,434
Prepaid expenses and other assets (620 ) (1,627 )
Accounts payable and accrued expenses (533 ) (2,701 )
Other liabilities (1,014 ) 1,258
Net cash used in operating activities (251 ) (2,749 )

Cash flows from investing activities:

Purchases of property and equipment (7,438 ) (5,040 )
Proceeds from sale of property and equipment 24,612
2,651
Notes receivable (379 ) —
Other —
156
Net cash provided by (used in) investing activities 16,795
(2,233 )

Cash flows from financing activities:

Repayments on revolving lines of credit (21,424 ) (47,082 )
Borrowings on revolving lines of credit 21,424
53,499
Principal payments on term loans (6,715 ) (5,381 )
Treasury stock purchases (206 ) (641 )
Dividends paid (988 ) (997 )
Capital lease obligation payments (8 ) —
Net cash used in financing activities (7,917 ) (602 )

Net increase (decrease) in cash and cash equivalents 8,627
(5,584 )
Cash and cash equivalents at beginning of the period 3,395
6,625

Cash and cash equivalents at end of the period $ 12,022
$ 1,041



ALICO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in thousands)

For the three months ended March 31, 2019

				Additional												Non-
	Common stock			Paid In			Treasury			Retained			Total Alico,			controlling			Total
	Shares	Amount		Capital			Stock			Earnings			Inc. Equity			Interest			Equity

Balance at December 31, 2018	8,416	$	8,416	$	20,384		$	(32,817	)	$	159,094		$	155,077		$	5,442		$	160,519
Net Income (loss)	—	—		—			—			7,547			7,547			(87		)	7,460
Dividends ($0.06/share)	—	—		—			—			(448		)	(448		)	—			(448		)
Treasury stock purchases	—	—		—			—			—			—			—			—
Stock-based compensation:
Directors	—	—		(83		)	321			—			238			—			238
Executives	—	—		255			—			—			255			—			255
Executive forfeiture	—	—		(823		)	—			—			(823		)	—			(823		)

Balance at March 31, 2019	8,416	$	8,416	$	19,733		$	(32,496	)	$	166,193		$	161,846		$	5,355		$	167,201


For the six months ended March 31, 2019

				Additional												Non-
	Common stock			Paid In			Treasury			Retained			Total Alico,			controlling			Total
	Shares	Amount		Capital			Stock			Earnings			Inc. Equity			Interest			Equity

Balance at September 30, 2018	8,416	$	8,416	$	20,126		$	(7,536	)	$	151,111		$	172,117		$	5,478		$	177,595
Net Income (loss)	—	—		—			—			5,080			5,080			(123		)	4,957
Dividends ($0.12/share)	—	—		—			—			(895		)	(895		)	—			(895		)
Treasury stock purchases	—	—		—			(25,576		)	—			(25,576		)	—			(25,576		)
ASC 610-20 adoption	—	—		—			—			10,897			10,897			—			10,897
Stock-based compensation:
Directors	—	—		(140		)	616			—			476			—			476
Executives	—	—		570			—			—			570			—			570
Executive forfeiture	—	—		(823		)	—			—			(823		)	—			(823		)

Balance at March 31, 2019	8,416	$	8,416	$	19,733		$	(32,496	)	$	166,193		$	161,846		$	5,355		$	167,201




For the three months ended March 31, 2018

				Additional												Non-
	Common stock			Paid In			Treasury			Retained			Total Alico,			controlling			Total
	Shares	Amount		Capital			Stock			Earnings			Inc. Equity			Interest			Equity

Balance at December 31, 2017	8,416	8,416		18,890			(6,275		)	148,285			169,316			4,720			174,036
Net loss	—	—		—			—			(5,514		)	(5,514		)	(16		)	(5,530		)
Dividends ($0.06/share)	—	—		—			—			(494		)	(494		)	—			(494		)
Treasury stock purchases	—	—		—			(206		)	—			(206		)	—			(206		)
Stock-based compensation:
Directors	—	—		(82		)	273			—			191			—			191
Executives	—	—		242			—			—			242			—			242

Balance at March 31, 2018	8,416	8,416		19,050			(6,208		)	142,277			163,535			4,704			168,239


For the six months ended March 31, 2018

				Additional												Non-
	Common stock			Paid In			Treasury			Retained			Total Alico,			controlling			Total
	Shares	Amount		Capital			Stock			Earnings			Inc. Equity			Interest			Equity

Balance at September 30, 2017	8,416	$	8,416	$	18,694		$	(6,502	)	$	140,033		$	160,641		$	4,728		$	165,369
Net Income (loss)	—	—		—			—			3,232			3,232			(24		)	3,208
Dividends ($0.12/share)	—	—		—			—			(988		)	(988		)	—			(988		)
Treasury stock purchases	—	—		—			(206		)	—			(206		)	—			(206		)
Stock-based compensation:
Directors	—	—		(118		)	500			—			382			—			382
Executives	—	—		474			—			—			474			—			474

Balance at March 31, 2018	8,416	$	8,416	$	19,050		$	(6,208	)	$	142,277		$	163,535		$	4,704		$	168,239

See accompanying notes to the condensed consolidated financial statements.



ALICO, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)



	Six Months Ended March 31,
	2019			2018
Net cash provided by (used in) operating activities:
Net income	$	4,957		$	3,208
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Deferred gain on sale of sugarcane land	—			(282		)
Depreciation, depletion and amortization	6,951			6,922
Deferred income tax provision (benefit)	73			(4,306		)
Gain on sale of real estate, property and equipment and assets held for sale	(23		)	(1,835		)
Change in fair value of derivatives	989			—
Non-cash interest expense on deferred gain on sugarcane land	—			688
Stock-based compensation expense	223			856
Other	(51		)	(300		)
Changes in operating assets and liabilities:
Accounts receivable	(11,453		)	(12,229		)
Inventories	4,922			9,194
Prepaid expenses and other assets	92			(620		)
Accounts payable and accrued expenses	370			(533		)
Income tax payable	(852		)	—
Other liabilities	(130		)	(1,014		)
Net cash provided by (used in) operating activities	6,068			(251		)

Cash flows from investing activities:
Purchases of property and equipment	(9,524		)	(7,438		)
Net proceeds from sale of property and equipment and assets held for sale	202			24,612
Deposits on purchase of citrus trees	(515		)	—
Notes receivable	50			(379		)
Net cash (used in) provided by investing activities	(9,787		)	16,795

Cash flows from financing activities:
Repayments on revolving lines of credit	(41,360		)	(21,424		)
Borrowings on revolving lines of credit	63,637			21,424
Principal payments on term loans	(5,437		)	(6,715		)
Treasury stock purchases	(25,576		)	(206		)
Payment on termination of Global Ag agreement	(11,300		)	—
Dividends paid	(895		)	(988		)
Capital lease obligation payments	—			(8		)
Net cash used in financing activities	(20,931		)	(7,917		)

Net (decrease) increase in cash and cash equivalents and restricted cash	(24,650		)	8,627
Cash and cash equivalents and restricted cash at beginning of the period	32,260			3,395

Cash and cash equivalents and restricted cash at end of the period	$	7,610		$	12,022

See accompanying notes to the condensed consolidated financial statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Basis of Presentation

Description of Business

Alico, Inc. ~~(“Alico”)~~, together with its subsidiaries (collectively, “Alico”, the “Company", "we", "us" or "our”), is a Florida agribusiness and land management company owning approximately ~~121,000~~117,000 acres of land throughout Florida, including approximately 90,000 acres of mineral rights. The Company manages its land based upon its primary usage, and reviews its performance based upon two primary ~~classifications -~~classifications: (i) Alico Citrus ~~(formerly Orange Co.)~~ and ~~Conservation~~(ii) Water Resources and ~~Environmental Resources.~~Other Operations. Financial results are presented based upon its ~~three~~two business segments (Alico Citrus ~~Conservation~~ and ~~Environmental~~Water Resources and Other Operations).

Basis of Presentation

The Company has prepared the accompanying financial statements on a condensed consolidated basis. These accompanying unaudited condensed consolidated interim financial statements, which are referred to herein as the “Financial Statements", have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to Article 10-01 of Regulation S-X of the U.S. Securities and Exchange Commission ("SEC") for interim financial information. These Financial Statements do not include all of the disclosures required for complete annual financial statements and, accordingly, certain information, footnotes and disclosures normally included in annual financial statements, prepared in accordance with U.S. GAAP, have been condensed or omitted in accordance with SEC rules and regulations. Accordingly, the Financial Statements should be read in conjunction with the Company's audited Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017,~~2018, as filed with the SEC on December ~~11, 2017.~~6, 2018.

The Financial Statements presented in this Form 10-Q are unaudited. However, in the opinion of management, such Financial Statements include all adjustments, consisting solely of normal recurring adjustments, necessary to present fairly the financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP applicable to interim periods.

Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the current fiscal year ending September 30, ~~2018.~~2019. All intercompany transactions and account balances between the consolidated businesses have been eliminated.

Operating segments are defined in the criteria established under the Financial Accounting Standards Board - Accounting Standards Codification (“FASB ASC”) Topic 280 as components of public entities that engage in business activities from which they may earn revenues and incur expenses for which separate financial information is available and which is evaluated regularly by the Company’s chief operating decision maker (“CODM”) in deciding how to assess performance and allocate resources. The Company’s CODM assesses performance and allocates resources based on ~~three~~two operating segments: (i) Alico Citrus ~~(formerly Orange Co.), Conservation~~ and ~~Environmental~~(ii) Water Resources and Other Operations.

Principles of Consolidation

The Financial Statements include the accounts of Alico ~~Inc.~~ and the accounts of all the subsidiaries in which a controlling interest is held by the Company. Under U.S. GAAP, consolidation is generally required for investments of more than 50% of the outstanding voting stock of an investee, except when control is not held by the majority owner. The Company’s subsidiaries include: Alico Land Development, Inc., Alico-Agri, Ltd., Alico Plant World, LLC, Alico Fruit Company, LLC, Alico Citrus Nursery, LLC, Alico Chemical Sales, LLC, 734 Citrus Holdings LLC and subsidiaries, Alico Fresh Fruit LLC, Alico Skink Mitigation, LLC and Citree Holdings 1, LLC. The Company considers the criteria established under FASB ASC Topic 810, “Consolidations” in its consolidation process. All significant intercompany balances and transactions have been eliminated in consolidation.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities as of the date of the accompanying Financial Statements, the disclosure of contingent assets and liabilities in the Financial Statements and the accompanying Notes, and the reported amounts of revenues and expenses and cash flows during the periods presented. Actual results could differ from those estimates based upon future events. The Company evaluates estimates on an ongoing basis. The estimates are based on current and expected economic

conditions, historical experience, the experience and judgment of the Company’s management and various other specific

assumptions that the Company believes to be reasonable. The Company evaluates its assumptions and estimates on an ongoing basis and may employ outside experts to assist in the Company’s evaluations.

Restricted cash is comprised of cash received from the sale of certain assets for which the use of funds is restricted. For certain sale transactions, the Company sells property, which serves as collateral for specific debt obligations. As a result, the sale proceeds can only be used to purchase like-kind citrus groves, which are acceptable to the debt holder. If the restricted cash is not used for such purchases within a twelve-month period, it will be used to pay down principal on Company debt. Based on the contractual uses of restricted cash, these amounts have been classified as non-current.

Revenues are derived from the sale of processed fruit, fresh fruit, other citrus revenue, leasing revenue and other water and resource revenues. The majority of the revenue is generated from the sale of citrus fruit to processing facilities and fresh fruit purchases. The Company recognizes revenue at the amount it expects to be entitled to when control of the products or services is transferred to its customers, which occurs upon delivery of and acceptance of the fruit by the customer and the Company has a right to payment.

The Company has identified one performance obligation as the delivery of fruit to the processing facility (or harvesting of the citrus in the case of fresh fruit) of the customer for each separate variety of fruit identified in the contract. The Company initially recognizes revenue in an amount which is estimated based on contractual and market prices, if such market price falls within the range (known as “floor” and “ceiling” prices) identified in the specific contracts. Additionally, the Company also has a contractual agreement whereby revenue is determined based on applying a cost-plus structure methodology. As such, since these contracts contain elements of variable consideration, the Company recognizes this variable consideration by using the expected value method. Adjustments are made throughout the year to these estimates as more current relevant industry information becomes available. Differences between the estimates and the final realization of revenues at the close of the harvesting season can result in either an increase or decrease to reported revenues. During the periods presented, no material adjustments were made to the reported citrus

Receivables under these contracts are primarily paid at the floor amount and are collected within seven days after the harvest week. Any adjustments to pricing as a result of changes in market prices, which fall within the range of the floor and ceiling price identified in the specific contract, are collected thirty to sixty days after final market pricing is published. As of March 31, 2019 and September 30, 2018, the Company had total receivables relating to sales of citrus of $13,696,000 and $2,471,000, respectively, recorded in Accounts Receivable, net, in the Condensed Consolidated Balance Sheets.

Disaggregated Revenue

Revenues disaggregated by significant products and services for the three and six months ended March 31, 2019 and 2018 are as follows:



(in thousands)
	Three Months Ended March 31, 2018				Six Months Ended March 31, 2019
	2019		2018		2019		2018
Alico Citrus
Early and Mid-Season	$	27,929	$	8,839	$	39,574	$	24,256
Valencias	18,746		24,598		18,746		24,598
Fresh Fruit	671		418		2,577		1,506
Other	477		854		823		1,428
Total	$	47,823	$	34,709	$	61,720	$	51,788

Water Resources and Other Operations
Land and other leasing	$	658	$	840	$	1,392	$	1,087
Other	40		51		188		258
Total	$	698	$	891	$	1,580	$	1,345

Total Revenues	$	48,521	$	35,600	$	63,300	$	53,133

Certain prior year amounts have been reclassified in the accompanying Financial Statements for consistent presentation to the current period. These reclassifications had no impact on net income, equity or cash flows ~~or working capital.~~as previously reported.

Noncontrolling Interest in Consolidated Subsidiary

The Financial Statements include all assets and liabilities of the less-than-100%-owned subsidiary the Company controls, Citree Holdings I, LLC (“Citree”). Accordingly, the Company has recorded a noncontrolling interest in the equity of such entity. Citree had a net loss of approximately ~~$33,000~~$177,000 and ~~had net income of approximately $104,000~~$33,000 for the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, respectively, and had a net loss of approximately ~~$49,000~~$251,000 and ~~had net income of approximately $88,000~~$49,000 for the six months ended March 31, ~~2018~~2019 and ~~2017,~~2018, respectively, of which 51% is attributable to the Company.

Recent Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842).” This guidance will require entities that enter into leases as a lessee to recognize right-of-use assets and lease liabilities for those leases classified as operating leases under previous GAAP. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. The Company is currently evaluating the impact this guidance will have on our Financial Statements, and it will become effective for Alico October 1, 2019.

In January 2017, the FASB issued ASU 2017-04, “Intangibles-Goodwill and Other” (Topic 350), which simplifies the accounting for goodwill impairment. The updated guidance eliminates Step 2 of the impairment test, which requires entities to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value, determined in Step 1. This guidance will become effective for us in the fiscal years beginning after December 15, 2019, including interim periods within those reporting periods. We will adopt this guidance using a prospective approach. Earlier adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently evaluating the impact on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurements" ("ASU 2018-13"), which aims to improve the overall usefulness of disclosures to financial statement users and reduce unnecessary costs to companies when preparing fair value measurement

disclosures. ASU 2018-13 is effective for annual and interim periods in the fiscal years beginning after December 15, 2019. Early adoption is permitted. Retrospective adoption is required, except for certain disclosures, which will be required to be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. The Company does not expect the adoption of ASU 2018-13 will have a material impact on its consolidated financial statements and will adopt the standard effective October 1, 2020.

In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses.” ASU 2018-19 clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Leases (Topic 842). The standard is effective on October 1, 2020, with early adoption permitted. The Company does not expect the adoption of ASU 2018-19 to have a material impact on the unaudited Condensed Consolidated Financial Statements of the Company. Information regarding the adoption of Leases (Topic 842) is described above.

The Company has reviewed other recently issued accounting standards which have not yet been adopted in order to determine their potential effect, if any, on the results of operations or financial condition. Based on the review of these other recently issued standards, the Company does not currently believe that any of those accounting pronouncements will have a significant effect on its current or future financial position, results of operations, cash flows or disclosures.

Recently Adopted Accounting Pronouncements

In May 2014, the FASB issued ~~Accounting Standard Update ("ASU")~~ASU 2014-09, ~~“Revenue~~Revenue from Contracts with Customers,~~” as~~ and has subsequently issued several supplemental and/or clarifying ASU’s (collectively, “ASC 606”), which prescribes a comprehensive new ~~ASC topic (Topic 606).~~revenue recognition standard that supersedes previously existing revenue recognition guidance. The new model provides a five-step analysis in determining when and how revenue is recognized. The core principle of ~~this ASU~~the new guidance is that ~~an entity~~a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ~~ASU further provides guidance for any entity that either enters into contracts with customers~~standard also requires new, expanded disclosures regarding revenue recognition. The standard allows initial application to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards (for example, lease contracts). The FASB subsequently issued ASU 2015-14 to defer the effective date of ASU 2014-09 until annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with earlier adoption permitted. The FASB also recently issued ASU 2016-10, "Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing," and 2016-12, "Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients," that clarify or amend the original Topic 606. ASU 2014-09 can be ~~adopted using one of two retrospective transition methods: 1)~~performed retrospectively to each ~~prior reporting~~ period presented or 2) as a ~~cumulative-effect~~modified retrospective adjustment as of the date of adoption. ~~While~~ASC 606, also provides for certain practical expedients, including the option to expense as incurred the incremental costs of obtaining a contract, if the contract period is for one year or less, and policy elections regarding shipping and handling that provides the option to account for shipping and handling costs as contract fulfillment costs. The Company ~~has~~adopted ASC 606 effective October 1, 2018, the first day of our 2019 fiscal year, using the modified retrospective method. The implementation of ASC 606 did not ~~yet completed their evaluation, it has reviewed ASU 2014-09 and does not expect this new guidance~~require an adjustment to ~~have a material impact on its consolidated financial statements. To~~ the ~~extent there is an impact, the Company will apply as a cumulative-effect adjustment~~opening balance of retained earnings as of October 1, 2018 (see Note 1. “Revenue Recognition”).

In February 2017, the ~~date~~FASB issued ASU 2017-05, Other Income - Gains and Losses from the Derecognition of ~~adoption.~~Nonfinancial Assets (ASC 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. This standard clarifies the scope and application of ASC 610-20 on the sale, transfer, and derecognition of nonfinancial assets and in substance nonfinancial assets to non-customers, including partial sales. It also provides guidance on how gains and losses on transfers of nonfinancial assets and in substance nonfinancial assets to non-customers are recognized. The standard also clarifies the derecognition of businesses is under the scope of ASC 810. The standard must be adopted concurrently with ASC 606, however an entity will not have to apply the same transition method as ASC 606. The Company adopted ASC 610-20 (“ASC 610-20”) effective October 1, 2018, the first day of our 2019 fiscal year, using the modified retrospective method. The implementation of ASC 610-20 resulted in an adjustment to increase the opening balance of retained earnings by $14,601,000 as of October 1, 2018 (see Note 7. “Deferred Gain on Sale”).

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 Alico's fiscal year produce the majority of the Company's annual revenue. Working capital requirements are typically greater in the first and fourth quarters of the fiscal year, coinciding with harvesting cycles. Due to Hurricane Irma, in the first six months of fiscal 2018 Alico produced a greater percentage of boxes harvested, as compared to the estimated totals for the full harvest season, than in past years. As a result, the working capital requirements may vary from the typical trends historically experienced in the current year. Because of the seasonality of the business, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.

Inventories consist of the following at March 31, ~~2018~~2019 and September 30, ~~2017:~~2018:

During the fiscal year ended September 30, 2018, the Company received insurance proceeds relating to Hurricane Irma of approximately $477,000 for property and casualty damage claims and approximately $8,952,000 for crop claims. The Company has additional property and casualty claims outstanding and is awaiting determination of additional proceeds to be received, if any. Insurance proceeds are recorded in the period they are both probable and reasonably estimable.

In addition to the commercial insurance claims which have been submitted, the Company may be eligible for Hurricane Irma federal relief programs distributed by the Farm Service Agency under the 2017 Wildfires and Hurricane Indemnity Program (2017 WHIP), as well as block grants that will be administered through the State of Florida. The specifics of these programs are still being finalized, and at this time the Company cannot determine the amount of federal relief funds, if any, which will be received, or when these funds will be disbursed.

The Company records its inventory at the lower of cost or net realizable value. For the three and six months ended March 31, ~~2018~~2019 and ~~2017~~March 31, 2018, the Company did not record any adjustments to reduce inventory to net realizable value.

~~On January 25, 2018, the Company sold its breeding herd to a third party and as a result the value of the Beef Cattle inventory was expensed.~~

In September 2017, the State of Florida's citrus business, including the Company's unharvested citrus crop, was significantly impacted by Hurricane Irma. For the year ended September 30, 2017, the Company recorded a casualty loss on its inventory. In calculating this casualty loss, the Company made certain estimates. As of March 31, 2018, there were no revisions to these estimates which required any further inventory losses to be recorded. The Company continues to work closely with its insurers and adjusters to determine the amount of insurance recoveries the Company may be entitled to.

Note 3. Assets Held for Sale

In accordance with its strategy to dispose of non-core and under-performing assets, the following assets have been classified as assets held for sale as of March 31, ~~2018~~2019 and September 30, ~~2017:~~2018:

(in thousands) Carrying Value
March 31, September 30,
2018 2017
Office Building $ —
$ 3,214
Nursery - Gainesville —
6,500
Chancey Bay —
4,179
Gal Hog 70
70
Breeding Herd —
5,858
Trailers 636
1,162
Total Assets Held For Sale $ 706
$ 20,983



(in thousands)	Carrying Value
	March 31,		September 30,
	2019		2018
Trailers	$	421	$	456
Frostproof Parcels	—		176
Parcels on East Ranch	759		759
Twin Mills	223		—
Total Assets Held For Sale	$	1,403	$	1,391

On March 1, 2019, the Company sold certain trailers for approximately $35,000.

On October 30, 2018, the Company sold certain parcels at Frostproof for approximately $188,000 and realized a gain of approximately $12,000.

On May 2, 2018, the Company sold its Gal Hog property for approximately $7,300,000 and recognized a gain of approximately $6,709,000.

On March 30, 2018, the Company sold property located on its Winterhaven location for approximately $251,000 and recognized a loss of approximately $20,000. This asset was classified as an asset held for sale during the first quarter of fiscal year 2018.

On February 12, 2018, the Company sold its property at Chancey Bay for approximately $4,200,000 and realized a loss of approximately $44,000. As part of the transaction, the Company agreed to pay the purchaser rent of $200,000 in exchange for Alico retaining the rights of harvesting and selling of the fruit in the 2017/2018 harvest season.

On February 9, 2018, the Company sold its nursery located in Gainesville for approximately $6,500,000 and realized a gain of approximately $150,000.

On January 25, 2018, the Company sold its breeding herd to a third party for approximately $7,800,000. As part of this transaction, the purchaser is also leasing grazing and other rights on the Alico Ranch from the Company at a rate of $100,000 per month.

On January 19, 2018, the Company sold certain trailers to a third party for $500,000. The Company received $125,000 and the remaining portion is to be paid in accordance with a promissory note, which bears interest at 5%, over three years.

On October 30, 2017, the Company sold its corporate office building in Fort Myers, Florida for $5,300,000 and realized a gain of approximately $1,800,000. The sales agreement provides that the Company will lease back a portion of the office space for five years.

The Company has used a portion of the proceeds to pay down debt (see Note 5. "Long-Term Debt and Lines of Credit") and plans to use the remaining cash proceeds from the sale of these assets towards future working capital requirements.

~~The Company continues to negotiate with interested parties for the remaining assets held for sale. Assets held for sale consists solely of property and equipment.~~

~~The Company recorded an impairment loss of approximately $4,131,000 during fiscal year 2017 on these assets classified as assets held for sale at September 30, 2017.~~

Note 4. Property and Equipment, Net

Property and equipment, net consists of the following at March 31, ~~2018~~2019 and September 30, ~~2017:~~2018:

During the six months ended March 31, 2019, the Company purchased 188 net tree acreage of citrus blocks for approximately $1,848,000. These purchases were made from grove owners from within the Company’s existing grove locations. In April 2019, the Bank agreed to accept these purchases as substitute collateral and release approximately $1,800,000 from restricted cash.

On ~~March 15,~~September 29, 2018, the Company sold ~~certain parcels comprised of citrus trees and land located on~~ its ~~Ranch One grove~~property at Island Pond for ~~approximately $586,000 and recognized a loss of approximately $80,000.~~$7,900,000. As ~~part~~Island Pond was collateralized under one of the ~~transaction,~~Company’s loan documents, $7,000,000 of the ~~revenues generated from these parcels during the 2017/2018 harvest season were allocated to the purchaser.~~proceeds is restricted in use.

Note 5. Long-Term Debt and Lines of Credit

~~Credit Facilities~~The following table summarizes long-term debt and related deferred financing costs net of accumulated amortization at March 31, 2019 and September 30, 2018:



(in thousands)	March 31, 2019				September 30, 2018
	Principal		Deferred Financing Costs, Net		Principal		Deferred Financing Costs, Net

Long-term debt, net of current portion:
Met Fixed-Rate Term Loans	$	92,814	$	780	$	95,938	$	836
Met Variable-Rate Term Loans	45,281		359		46,719		385
Met Citree Term Loan	4,850		42		4,925		44
Pru Loans A & B	16,837		232		17,417		241
Pru Loan E	4,565		13		4,675		17
Pru Loan F	4,565		39		4,675		40
	168,912		1,465		174,349		1,563
Less current portion	5,313		—		5,275		—
Long-term debt	$	163,599	$	1,465	$	169,074	$	1,563

The following table summarizes lines of credit and related deferred financing costs net of accumulated amortization at March 31, 2019 and September 30, 2018:



	March 31, 2019				September 30, 2018
	Principal		Deferred Financing Costs, Net		Principal		Deferred Financing Costs, Net
	(in thousands)

Lines of Credit:
RLOC	$	—	$	33	$	—	$	58
WCLC	24,962		11		2,685		78
Lines of Credit	$	24,962	$	44	$	2,685	$	136

Future maturities of long-term debt and lines of credit as of March 31, 2019 are as follows:



(in thousands)

Due within one year	$	5,313
Due between one and two years	10,975
Due between two and three years	35,937
Due between three and four years	14,660
Due between four and five years	10,755
Due beyond five years	116,234

Total future maturities	$	193,874

Interest costs expensed and capitalized were as follows:



(in thousands)
	Three Months Ended March 31,				Six Months Ended March 31,
	2019		2018		2019		2018
Interest expense	$	1,963	$	2,239	$	3,880	$	4,494
Interest capitalized	229		147		445		281
Total	$	2,192	$	2,386	$	4,325	$	4,775

The Company's credit facilities ~~initially consisted~~consist of $125,000,000 in fixed interest rate term loans (“Met Fixed-Rate Term Loans”), $57,500,000 in variable interest rate term loans (“Met 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 real property. The security for the term loans and RLOC consists of approximately 38,200 gross acres of citrus groves and 5,762 gross acres of ranch land. The WCLC is collateralized by the Company’s current assets and certain other personal property owned by the Company.

The term loans, collectively, are subject to quarterly principal payments of $2,281,250, and mature November 1, 2029. The Met Fixed-Rate Term Loans bear interest at 4.15% per annum, and the Met Variable-Rate Term Loans bear interest at a rate equal to 90 day LIBOR plus 150 basis points (the “LIBOR spread”). The LIBOR spread ~~was adjusted~~is subject to adjustment by the lender onbeginning May 1, 2017 and is subject to further adjustment ~~by the lender on May 1, 2019 and~~ every two years thereafter until maturity. Interest on the term loans is payable quarterly.

The interest rates on the Met Variable-Rate Term Loans were ~~3.42%~~4.39% per annum and ~~2.96%~~3.99% per annum as of March 31, ~~2018~~2019 and September 30, ~~2017,~~2018, respectively.

The Company may prepay up to $8,750,000 of the Met Fixed-Rate Term Loan principal annually without penalty, and any such prepayments may be applied to reduce subsequent mandatory principal payments. The maximum annual prepayment was made for calendar year 2015. During the first and second quarter of the fiscal year 2018, the Company elected not to make its principal payment and utilized a portion of its 2015 prepayment to satisfy its principal payment requirements for such quarters. At March 31, ~~2018,~~2019, the Company had $5,625,000 remaining available from its 2015 prepayment to reduce future mandatory principal payments should the Company elect to do so. The Met Variable-Rate Term Loans may be prepaid without penalty.

The RLOC bears interest at a floating rate equal to 90 day LIBOR plus ~~150~~165 basis points, payable quarterly. The LIBOR spread was adjusted by the lender on May 1, 2017 and is subject to further adjustment 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 of credit. The RLOC is available for funding general corporate needs. The variable interest rate was ~~3.42%~~4.39% and ~~2.96%~~3.99% per annum as of March 31, ~~2018~~2019 and September 30, ~~2017,~~2018, respectively. Availability under the RLOC was $25,000,000 as of March 31, ~~2018.~~2019.

The WCLC is a revolving credit facility and is available for funding working capital and general corporate requirements. The interest rate on the WCLC is based on the one month LIBOR, plus a spread, which is adjusted quarterly, based on the Company's

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 variable interest rate was ~~3.41%~~4.24% per annum and ~~2.99%~~3.85% per annum as of March 31, ~~2018~~2019 and September 30, ~~2017,~~2018, respectively. The WCLC agreement was amended on September 30, ~~2017,~~2018, and the primary terms of the amendment were an extension of the maturity to November 1, ~~2019.~~2021. There were no changes to the commitment amount or interest rate. Availability under the WCLC was approximately ~~$59,700,000~~$44,578,000 and $57,015,000 as of March 31, ~~2018~~2019 and September 30, ~~2017,~~2018, respectively.

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 Alico's debt service coverage ratio for the preceding quarter and can vary from a minimum of 20 basis points to a maximum of 30 basis points. Commitment fees to date have been charged at 20 basis points.

The outstanding balance on the WCLC was $0$24,962,000 at March 31, ~~2018.~~2019. The WCLC agreement provides for Rabo to issue up to $20,000,000 in letters of credit on the Company’s behalf. As of March 31, ~~2018,~~2019, there was approximately ~~$10,300,000~~$460,000 in outstanding letters of credit, which correspondingly reduced the Company's availability under the line of credit.

In 2014, the Company capitalized approximately $2,834,000 of debt financing costs related to the refinancing. These costs, together with approximately $339,000 of costs related to the retired debt, are being amortized to interest expense over the applicable terms of the loans. Additionally, approximately $123,000 of financing costs were incurred for the fiscal year ended September 30, 2018 in connection with letters of credit. These costs are also being amortized to interest expense over the applicable terms of the obligations. The unamortized balance of deferred financing costs related to the financing above was approximately $1,183,000 and approximately $1,357,000 at March 31, 2019 and September 30, 2018, respectively.

These credit facilities noted above are subject to various covenants including the following financial covenants: (i) minimum debt service coverage ratio of 1.10 to 1.00, (ii) tangible net worth of at least $160,000,000 increased annually by 10% of consolidated net income for the preceding ~~year,~~years, or approximately ~~$162,300,000~~$163,581,000 for the year ended September 30, ~~2017,~~2018, (iii) minimum current ratio of 1.50 to 1.00, (iv) debt to total assets ratio not greater than .625 to 1.00, and, solely in the case of the WCLC, (v) a limit on capital expenditures of $30,000,000 per fiscal year. As of March 31, ~~2018,~~2019, the Company was in compliance with all of the financial covenants.

The credit facilities also include a Met Life term loan collateralized by real estate owned by Citree (“Met Citree Loan”). This is a $5,000,000 credit facility that bears interest at a fixed rate of 5.28% per annum. An initial advance of $500,000 was made at closing on March 4, 2014. The loan agreement was amended to provide for an interim advance of $2,000,000 on September 17, 2015, and the interest rate was adjusted to 5.30% per annum at the time of the interim advance. The final $2,500,000 advance was funded on April 27, 2016 and the interest rate was adjusted to 5.28%. Principal payments on this term loan commenced on February 1, 2018 and are payable quarterly thereafter. The loan matures in February 2029.

Silver Nip Citrus Debt

There are two fixed-rate term loans, with an original combined balance of $27,550,000, bearing interest at 5.35% per annum (“Pru Loans A & B”). Principal of $290,000 is payable quarterly, together with accrued interest. On February 15, 2015, 734 Citrus Holdings, LLC d/b/a Silver Nip Citrus (“Silver Nip Citrus”) made a prepayment of $750,000. In addition, the Company made prepayments of approximately $4,453,000 in the second fiscal quarter of 2018 with the sale of certain properties, which were collateralized under these loans. The Company may prepay up to $5,000,000 of principal without penalty. As such, the Company exceeded the allowed $5,000,000 prepayment by approximately $203,000 and was required to make a premium payment of approximately $22,000. The loans are collateralized by real estate in Collier, Hardee, Highlands ~~Martin, Osceola~~ and Polk Counties, Florida and mature inon June 1, 2029 and June 1, 2033.

Silver Nip Citrus entered into two additional fixed-rate term loans with Prudential to finance the acquisition of a 1,500 acre citrus grove on September 4, 2014. Each loan was in the original amount of $5,500,000. Principal of $55,000 per loan is payable quarterly, together with accrued interest. One loan bears interest at 3.85% per annum (“Pru Loan E”), while the other bears interest at 3.45% per annum (“Pru Loan ~~F��~~F”). The interest rate on Pru Loan E is subject to adjustment on September 1, 2019 and every year thereafter until maturity. Both loans are collateralized by real estate in Charlotte County, Florida. Pru Note E matures September 1, 2021, and Pru Note F matures September 1, 2039.

The Silver Nip Citrus credit agreements were amended on December 1, 2016. The primary terms of the amendments were (1) the Company provided a limited $8,000,000 guaranty of the Silver Nip Citrus debt, (2) the limited personal guarantees provided by George Brokaw, Remy Trafelet and Clayton Wilson prior to the Company’s merger with Silver Nip Citrus, and also totaling $8,000,000, were released and (3) the consolidated current ratio covenant requirement was reduced from 1.50 to 1.00 to 1.00 to ~~1:00.~~1.00. Silver Nip Citrus was in compliance with the current ratio covenant as of March 31, ~~2018,~~2019, the most recent measurement date.

~~Other Modifications of Rabo and Prudential Credit Agreements~~

In February 2015, Rabo agreed, subject to certain conditions, that the Company may loan Silver Nip Citrus up to $7,000,000 on a revolving basis for cash management purposes. These advances would be funded from either cash on hand or draws on the Company’s WCLC. Silver Nip Citrus has provided a $7,000,000 limited guaranty and 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.~~

~~The following table summarizes long-term debt and related deferred financing costs net of accumulated amortization at March 31, 2018 and September 30, 2017:~~

March 31, 2018 September 30, 2017
Principal Deferred Financing Costs, Net Principal Deferred Financing Costs, Net
(in thousands)

Long-term debt, net of current portion:
Met Fixed-Rate Term Loans $ 99,062
$ 895
$ 99,062
$ 954
Met Variable-Rate Term Loans 48,157
411
49,594
439
Met Citree Term Loan 4,975
47
5,000
49
Pru Loans A & B 17,997
249
23,030
258
Pru Loan E 4,785
21
4,895
25
Pru Loan F 4,785
41
4,895
42
179,761
1,664
186,476
1,767
Less current portion 5,225
—
4,550
—
Long-term debt $ 174,536
$ 1,664
$ 181,926
$ 1,767

~~The following table summarizes lines of credit and related deferred financing costs net of accumulated amortization at March 31, 2018 and September 30, 2017:~~

March 31, 2018 September 30, 2017
Principal Deferred Financing Costs, Net Principal Deferred Financing Costs, Net
(in thousands)

Lines of Credit:
RLOC $ —
$ 84
$ —
$ 109
WCLC —
54
—
153
Lines of Credit $ —
$ 138
$ —
$ 262

~~Future maturities of long-term debt and lines of credit as of March 31, 2018 are as follows:~~

(in thousands)

Due within one year $ 5,225
Due between one and two years 10,938
Due between two and three years 10,975
Due between three and four years 14,880
Due between four and five years 10,755
Due beyond five years 126,988

Total future maturities $ 179,761

~~Interest costs expensed and capitalized were as follows:~~

(in thousands)
Three Months Ended March 31, Six Months Ended March 31,
2018 2017 2018 2017
Interest expense $ 2,239
$ 2,374
$ 4,494
$ 4,701
Interest capitalized 147
64
281
127
Total $ 2,386
$ 2,438
$ 4,775
$ 4,828

Note 6. Accrued Liabilities

Accrued ~~Liabilities~~liabilities consist of the following at March 31, ~~2018~~2019 and September 30, ~~2017:~~2018:

Note 7. Deferred Gain on Sale

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”) for approximately $97,900,000 in cash.

The sales price was subject to post-closing adjustments over a ten year period. The Company realized a gain of approximately $42,753,000 on the sale. Initially, $29,140,000 of the gain was deferred due to the Company’s continuing involvement in the property pursuant to a post-closing agreement and the potential price adjustments. The deferral represented the Company’s estimate of the maximum exposure to loss as a result of the continuing involvement. A net gain of approximately $13,613,000 was recognized at the time of the sale.

On October 1, 2018, the Company adopted ASC 610-20 and reevaluated the original post closing agreement under the guidance of ASC 610-20. As such, the Company recorded a derivative asset and derivative liabilities, which resulted in an increase to retained earnings of $14,601,000. This adjustment consisted of recording a derivative asset in the amount of $3,553,000 relating to potential payments due Alico from Global Ag Properties USA, LLC (“Global Ag”) and derivative liabilities of $13,864,000 relating to potential payments due Global Ag from Alico. In the first quarter ended December 31, 2018, the Company recorded a loss of $956,000, which reflects the change in fair value of the derivative asset and derivative liabilities. In the three months ended March 31, 2019, the Company recorded an additional loss of $33,000.

On December 7, 2018, the Company and Global Ag entered into a Termination of Post Closing Agreement (the “2018 Post Closing Agreement”), pursuant to which the parties thereto agreed to certain terms and conditions under which a Post Closing Agreement, dated as of November 21, 2014 (the “2014 Post Closing Agreement”), may be terminated prior to the expiration of its stated term and with the payment of certain termination payments. The 2014 Post Closing Agreement was entered into in connection with the November 21, 2014 closing (the “Land Disposition”) of the sale by Alico to Global Ag of certain land used for sugarcane production and land leasing in Hendry County, Florida, (the “Land”).

The 2014 Post Closing Agreement contained obligations, including possible payments by Alico and by Global Ag to each other over a ten year period following the closing of the Land Disposition, with the payments each year being based on the difference, if any, between certain computed amounts. Since the time of the closing of the Land Disposition and up through March 11, 2019, the computations have resulted in payments being made each year by Alico to Global Ag., which have aggregated approximately $6,518,000.

The 2018 Post Closing Agreement provided for (i) the termination of the 2014 Post Closing Agreement following the satisfaction of certain terms and conditions set forth in the termination agreement and (ii) the deposit by wire transfer into escrow of an aggregate of $11,300,000 following notification by Global Ag to Alico of the closing date of a sale of the Land by Global Ag to a third party. The conditions to the termination of the 2014 Post Closing Agreement and the payment of funds to Global Ag included (a) Global Ag’s assignment to the third party buyer, and such third party buyer’s assumption, of certain specified water management

obligations, irrigation and drainage easement obligations, access easements obligations and obligations under a certain option to purchase certain railroad property owned by Alico, (b) delivery to the escrow agent of all instruments and consideration required to consummate the closing by Global Ag of the sale of the Land to the third party buyer, and (c) delivery to the escrow agent of copies of a water management project cooperation agreement running in favor of Alico and signed by Global Ag and the third party buyer.

On March 11, 2019, the 2018 Post Closing Agreement was completed. As such, all the conditions of the termination of the 2014 Post Closing Agreement, mentioned above, were met with the sale of the sugarcane land to a third party. As a result, the Company does not have any future liabilities or commitment to Global Ag in connection with the 2014 Post Closing Agreement.

Note 7.8. Income Taxes

On December 22, 2017, the U.S. Tax Cuts and Jobs Act (the “Act”) was signed into law. The Act contains significant changes to corporate taxes, including a permanent reduction of the U.S. corporate tax rate from 35% to 21% effective January 1, 2018. The Company’s statutory rate for the fiscal year ended September 30, 2018 ~~will be~~was 24.5%, based on a fiscal year blended rate calculation. The 21% U.S. corporate tax rate will apply to the fiscal years ending September 30, 2019 and each year thereafter.

~~Additionally, the~~The Act ~~requires~~required a one-time remeasurement of certain tax related assets and liabilities. During the first quarter ended December 31, 2017, the Company made certain estimates related to the impact of the Act including the remeasurement of deferred taxes at the new expected tax rate and a revised effective tax rate for the year ended September 30, 2018. The amounts recorded in the six months ended March 31, 2018 for the remeasurement of deferred taxes principally relate to the reduction in the U.S. corporate income tax rate. During the second quarter ended March 31, 2018, the Company made certain updates to the estimates used during the first quarter, which resulted in a change to the remeasurement. For the six months ended March 31, 2018, the Company has recorded a tax benefit of approximately $10,100,000 to account for these deferred tax impacts.

AsThe impact of adopting ASC 610 -20 has been modified in the quarter ended March 31, ~~2018,~~2019 to reflect the ~~Company has a capital loss carryforward~~deferred income tax impact of ~~approximately $24,600,000, which will expire on September 30, 2018. Management believes that it is more likely than not that the full benefit of~~ this adoption. The deferred tax asset ~~will not be realized. In recognition of this risk, the Company has provided for a valuation allowance of approximately $6,000,000 on~~related to the deferred ~~tax asset.~~gain on sale has been decreased by $3,704,000 with a corresponding decrease to retained earnings, offsetting the October 1, 2018 increase to retained earnings for the ASC 610-20 implementation (see Note 7. “Deferred Gain on Sale”).

Note 8.9. Earnings ~~(Loss)~~ Per Common Share

Basic earnings per share for Alico's common stock is calculated by dividing net income attributable to Alico ~~Inc.~~ common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted earnings per common share is similarly calculated, except that the calculation includes the dilutive effect of the assumed issuance of common shares issuable under equity-based compensation plans in accordance with the treasury stock method, except where the inclusion of such common shares would have an anti-dilutive impact.

For the three and six months ended March 31, ~~2018~~2019 and ~~2017,~~2018, basic and diluted earnings per common share were as follows:



(in thousands except per share amounts)
	Three Months Ended March 31,					Six Months Ended March 31,
	2019		2018			2019		2018

Net income (loss) attributable to Alico, Inc. common stockholders	$	7,547	$	(5,514	)	$	5,080	$	3,232

Weighted average number of common shares outstanding - basic	7,463		8,256			7,471		8,251
Dilutive effect of equity-based awards	6		—			35		59
Weighted average number of common shares outstanding - diluted	7,469		8,256			7,506		8,310

Net income (loss) per common shares attributable to Alico, Inc. common stockholders:
Basic	$	1.01	$	(0.67	)	$	0.68	$	0.39
Diluted	$	1.01	$	(0.67	)	$	0.68	$	0.39

(in thousands except per share amounts)
Three Months Ended March 31, Six Months Ended March 31,
2018 2017 2018 2017

Net income (loss) attributable to Alico, Inc. common stockholders $ (5,514 ) $ 5,833
$ 3,232
$ 4,098

Weighted average number of common shares outstanding - basic 8,256
8,327
8,251
8,326
Dilutive effect of equity-based awards —
—
59
—
Weighted average number of common shares outstanding - diluted 8,256
8,327
8,310
8,326

Net income (loss) per common shares attributable to Alico, Inc. common stockholders:
Basic $ (0.67 ) $ 0.70
$ 0.39
$ 0.49
Diluted $ (0.67 ) $ 0.70
$ 0.39
$ 0.49

~~The computation of diluted earnings per common share for~~For the six months ended March 31, ~~2018 includes the impact of certain~~2019, equity ~~awards because they are dilutive. Such~~ awards are comprised of ~~750,000~~227,500 stock options granted to Executive Officers, after taking into effect the forfeitures of 832,500 stock options (see Note ~~12. "Related Party Transactions"~~11. "Stockholders Equity") ~~during the three months ended December 31, 2016. These options were anti-dilutive for~~. For the three months ended March 31, 2018 ~~and for~~there were anti-dilutive equity awards that were excluded from the ~~six months ended March 31, 2017.~~calculation of diluted earnings per common share.

Note 9.10. Segment Information

Total revenues represent sales to unaffiliated customers, as reported in the Condensed Consolidated Statements of Operations. 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 (gross profit) from operations before general and administrative expenses, interest expense, other income (expense) and income taxes, not including nonrecurring gains and losses.

Information by operating segment is as follows:

Note ~~10.~~11. Stockholders' Equity

The Company recognizes stock-based compensation expense for (i) Board of Directors (the “Board of Directors” or the “Board”) fees (paid in treasury stock), and (ii) other awards under the Stock Incentive Plan of 2015 (paid in restricted stock and stock options) (the “2015 Plan”). Stock-based compensation expense is recognized in general and administrative expenses in the Condensed Consolidated Statements of Operations.

Stock Compensation - Board of Directors

The Board of Directors can either elect to receive stock compensation or cash for their fees for services provided. Stock-based compensation expense relating to the Board of Director fees was approximately ~~$191,000~~$238,000 and ~~$383,000~~$476,000 for the three and six months ended March 31, ~~2018,~~2019, and approximately ~~$163,000~~$192,000 and ~~$418,000~~$382,000 for the three and six months ended March 31, ~~2017,~~2018, respectively.

In fiscal year 2015, the Company awarded 12,500 restricted shares of the Company’s common stock (“Restricted Stock”) to two senior executives under the 2015 Plan at a weighted average fair value of $49.49 per common share, vesting over three to five years.

In November 2017, a senior executive was awarded 5,000 restricted shares of the Company’s common stock (“Restricted Stock”) under the 2015 Plan at a weighted average fair value of $31.95 per common share, vesting over approximately three years.

Stock compensation expense related to the Restricted Stock totaled approximately $26,000 and $52,000 for the three and six months ended March 31, 2019, and $37,000 and $63,000 for the three and six months ended March 31, 2018, ~~respectively, and approximately $27,000 and $211,000 for the three and six months ended March 31, 2017,~~ respectively. There was approximately ~~$246,000~~$120,000 and ~~$202,000~~$172,000 of total unrecognized stock compensation costs related to unvested stock compensation for the Restricted Stock grants at March 31, ~~2018~~2019 and ~~2017,~~September 30, 2018, respectively.

OnStock option grants of 10,000 options to Mr. Kiernan (the “2019 Option Grants”) were granted on October 25, 2018. The option exercise price for these options was set at $33.34, the closing price on October 25, 2018. The 2019 Option Grants will vest as follows: (i) 3,333 of the options will vest if the price of the Company’s common stock during a consecutive 20-trading day period

exceeds $40.00; (ii) 3,333 of the options will vest if the price of the Company’s common stock during a consecutive 20-trading day period exceeds $45.00; (iii) 3,334 of the options will vest if the price of the Company’s common stock during a consecutive 20-trading day period exceeds $50.00. If the applicable stock price hurdles have not been achieved by (A) the date that is 18 months following the Executive’s termination of employment, if the Executive’s employment is terminated due to death or disability, (B) the date that is 12 months following the Executive’s termination of employment, if the Executive’s employment is terminated by the Company without cause, by the Executive with good reason, or due to the Executive’s retirement, or (C) the date of the termination of the Executive’s employment for any other reason, then any unvested options will be forfeited. In addition, if the applicable stock price hurdles have not been achieved by December 31, ~~2016,~~2021 then any unvested options will be forfeited. The 2019 Option Grants will also become vested to the extent that the applicable stock price hurdles are satisfied in connection with a change in control of the Company. As of March 31, 2019, the Company’s stock was trading at $27.21 per share, and during the six months ended March 31, 2019, the stock did not trade above $40.00 per share; accordingly, none of the stock options are vested at March 31, 2019.

Stock option grants of 210,000 options to Mr. Trafelet and 90,000 options to Mr. Kiernan (collectively, the “2018 Option Grants”) were granted on September 7, 2018. The option exercise price for these options was set at $33.60, the closing price on September 7, 2018. The 2018 Option Grants will vest as follows: (i) 25% of the options will vest if the price of the Company’s common stock during a consecutive 20-trading day period exceeds $35.00; (ii) 25% of the options will vest if the price of the Company’s common stock during a consecutive 20-trading day period exceeds $40.00; (iii) 25% of the options will vest if the price of the Company’s common stock during a consecutive 20-trading day period exceeds $45.00; and (iv) 25% of the options will vest if the price of the Company’s common stock during a consecutive 20-trading day period exceeds $50.00. If the applicable stock price hurdles have not been achieved by (A) the date that is 18 months following the Executive’s termination of employment, if the Executive’s employment is terminated due to death or disability, (B) the date that is 12 months following the Executive’s termination of employment, if the Executive’s employment is terminated by the Company ~~entered into new~~without cause, by the Executive with good reason, or due to the Executive’s retirement, or (C) the date of the termination of the Executive’s employment ~~agreements (collectively,~~for any other reason, then any unvested options will be forfeited. In addition, if the ~~“Employment Agreements”)~~applicable stock price hurdles have not been achieved by December 31, 2021 then any unvested options will be forfeited. The 2018 Option Grants will also become vested to the extent that the applicable stock

price hurdles are satisfied in connection with ~~each~~a change in control of ~~Remy W. Trafelet, Henry R. Slack,~~the Company. As of March 31, 2019, the Company’s stock was trading at $27.21 per share, and ~~George R. Brokaw (collectively,~~during the ~~“Executives”).~~six months ended March 31, 2019, the stock did not trade above $35.00 per share; accordingly, none of the stock options are vested at March 31, 2019. As set forth below, more than a majority of the 2018 Option Grants issued to Mr. Trafelet ~~serves as~~were forfeited and the ~~President and Chief Executive Officer~~vesting conditions of the ~~Company, Mr. Slack serves~~remainder were modified, all pursuant to the Settlement Agreement, as ~~the Executive Chairman of the Company, and Mr. Brokaw serves as the Executive Vice Chairman of the Company, and each of them continues to serve on the Company’s Board of Directors.~~defined below.

A stock option grant of 300,000 options in the case of Mr. Trafelet and 225,000 options in the case of each of Messrs. Slack and Brokaw (collectively, the ~~“Option~~“2016 Option Grants”) were granted on December 31, 2016. The option price was set at $27.15, the closing price on December 31, 2016. The 2016 Option Grants will vest as follows: (i) 25% of the options will vest if the price of the Company’s common stock during a consecutive 20-trading day period exceeds $60.00; (ii) 25% of the options will vest if such price exceeds $75.00; (iii) 25% of the options will vest if such price exceeds $90.00; and (iv) 25% of the options will vest if such price exceeds $105.00. If the applicable stock price hurdles have not been achieved by (A) the second anniversary of the Executive’s termination of employment, if the Executive’s employment is terminated due to death or disability, (B) the date that is 18 months following the Executive’s termination of employment, if the Executive’s employment is terminated by the Company without cause, by the Executive with good reason, or due to the Executive’s retirement, or (C) the date of the termination of the Executive’s employment for any other reason, then any unvested options will be forfeited. In addition, if the applicable stock price hurdles have not been achieved by the fifth anniversary of the grant date (or the fourth anniversary of the grant date, in the case of the tranche described in clause (i) above), then any unvested options will be forfeited. The 2016 Option Grants will also become vested to the extent that the applicable stock price hurdles are satisfied in connection with a change in control of the Company. As of March 31, 2019, the Company’s stock was trading at $27.21 per share, and during the six months ended March 31, 2019, the stock did not trade above $60.00 per share; accordingly, none of the stock options are vested at March 31, 2019. As set forth below, all of the 2016 Option Grants issued to Mr. Trafelet were forfeited pursuant to the Settlement Agreement, as defined below.

Additionally, 187,500 shares of the 2016 Option Grants made to each of Messrs. Slack and Brokaw were forfeited on September 5, 2018 and no replacement options were granted. As such, the remaining unrecognized expense associated with these options of approximately $783,000 was accelerated and recorded for the fiscal year ended September 30, 2018.

Pursuant to a Settlement Agreement (described in Note 13. “Related Party Transactions”), which was unanimously approved by the Alico Board of Directors, Mr. Trafelet agreed to voluntarily resign from his roles as president and chief executive officer and a director of the Company. Under the Settlement Agreement, Mr. Trafelet forfeited (i) all the 2016 Option Grants granted to him and (ii) all of the 2018 Option Grants granted to him in September 2018, other than 26,250 stock options that will vest if the minimum price of Alico's common stock over 20 consecutive trading days exceeds $35.00 per share and 26,250 stock options that will vest if the minimum price of Alico's common stock over 20 consecutive trading days exceeds $40.00 per share (“2019 Modified Option Grant”), in each case, by the first anniversary of the date of the Settlement Agreement (collectively, the "Retained Options"). Any Retained Options that vest in accordance with their terms will expire on the date that is six months following the date on which the Retained Option vests, and any Retained Options that do not vest by the first anniversary of the Settlement Agreement will be forfeited as of such first anniversary. As a result of the forfeited stock options, the Company reversed $823,000 of previously recorded stock compensation expense during the quarter ended March 31, 2019, which is recorded as a reduction of General and Administrative expense.

Stock compensation expense related to the options totaled approximately $229,000 and $518,000 for the three and six months ended March 31, 2019, prior to taking into effect the forfeited stock options during the quarter ended March 31, 2019, and $205,000 and $411,000 for the three and six months ended March 31, 2018, ~~respectively,~~respectively. After taking into effect these forfeitures, the Company recorded a credit to stock compensation expense of $594,000 and ~~approximately $205,000~~$305,000 for the three and six months ended March 31, ~~2017.~~2019, respectively. At March 31, ~~2018~~2019 and ~~2017,~~September 30, 2018 there was approximately ~~$1,619,000~~$658,000 and ~~$2,441,000~~$2,842,000 of total unrecognized stock compensation costs related to unvested share-based compensation for the option grants, respectively. The total unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately ~~2.08~~1.72 years.

The fair value of the 2019, 2018 and 2016 Option Grants was estimated on the date of grant using a Monte Carlo valuation model that uses the assumptions noted in the following table. The expected term of options granted is derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding; the range given below results from different time-frames for the various market conditions being met.

2019 Modified Option Grant



Expected Volatility	~~32.19~~25.0	%
Expected Term (in years)	1.50
Risk Free Rate	2.52	%

The weighted-average grant-date fair value of the 2019 Modified Option Grant was $1.40.



Expected Volatility	30.0	%
Expected Term (in years)	4.09
Risk Free Rate	2.95	%

The weighted-average grant-date fair value of the 2019 Option Grants was $7.10.



Expected Volatility	30.0	%
Expected Term (in years)	3.32
Risk Free Rate	2.80	%

The weighted-average grant-date fair value of the 2018 Option Grants was $7.40.



Expected Volatility	32.2	%
Expected Term (in years)	2.6 - 4.0
Risk Free Rate	~~24.5~~2.45	%

The weighted-average grant-date fair value of the 2016 Option Grants was $3.53.

There were no additional stock options granted ~~exercised~~ or ~~forfeited~~exercised for the ~~three and six months~~fiscal quarter ended March 31, ~~2018.~~2019. As of March 31, 2019, there remained 1,005,000 common shares available for issuance under the 2015 Plan.

Stock Repurchase Authorizations

In the fiscal year 2017, the Board of Directors authorized the repurchase of up to $7,000,000 of the Company’s common stock in two separate authorizations (the "2017 Authorization"). In March 2017, the Board of Directors authorized the repurchase of up to $5,000,000 of the Company’s common stock beginning March 9, 2017 and continuing through March 9, 2019. In May 2017, the Board of Directors authorized the repurchase of up to an additional $2,000,000 of the Company’s common stock beginning May 24, 2017 and continuing through May 24, 2019. The stock repurchases made under this repurchase 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.

On October 3, 2018, the Company completed a tender offer of 752,234 shares at a price of $34.00 per share aggregating $25,575,956. 734 Investors, Alico's largest stockholder since 2013, participated in the tender offer and sold a small percentage of its holdings.

For the three and six months ended March 31, ~~2018,~~2019, the Company ~~purchased 7,525~~did not purchase any shares ~~at a cost of $205,639~~ under the 2017 Authorization, and has ~~$3,730,544~~$1,676,443 remaining available to repurchase ~~the Company’s~~ stock ~~in accordance with~~under the 2017 ~~Authorization.~~

In fiscal year 2016, the Board of Directors authorized the repurchase of up to 50,000 shares of the Company’s outstanding common stock beginning February 18, 2016 and continuing through February 17, 2017 (the "2016 Authorization"). No shares were repurchased under the 2016 Authorization.

The following table illustrates the Company’s treasury stock activity for the six months ended March 31, ~~2018:~~2019:

Capital Contribution

On April 16, 2018, all operating partners of Citree received a funding notice relating to an additional Cash Capital Contribution (“Contribution”) requirement of approximately $2,041,000 as a result of Hurricane Irma, which reduced the amount of crop available for sale in the 2017-2018 harvest season and the Company’s adoption of a more extensive caretaking plan focused on limiting the impact of citrus greening. The Company’s portion of the Contribution was approximately $1,041,000 and was funded on April 27, 2018. The remaining portion of the Contribution of $1,000,000 was funded by the noncontrolling parties.

Note ~~11.~~12. Commitments and Contingencies

The Company had outstanding standby letters of credit in the total amount of approximately $460,000 and $10,300,000 at March 31, ~~2018~~2019 and September 30, ~~2017,~~2018, respectively, to secure its various contractual obligations. Upon the completion of the 2018 Post Closing Agreement (and corresponding termination of the 2014 Post-Closing Agreement) during the quarter ended March 31, 2019, the Company terminated its $9,800,000 standby letter of credit associated with this transaction (see Note 7. “Deferred Gain on Sale”).

On November 16, 2018, 734 Agriculture, RCF 2014 Legacy LLC, Delta Offshore Master II, LTD. and Mr. Remy W. Trafelet (the “Trafelet Parties”), the Company's President and Chief Executive Officer and a member of the Board of Directors, filed a lawsuit against Messrs. George R. Brokaw, Henry R. Slack, W. Andrew Krusen and Greg Eisner, members of the Board of Directors, in the Circuit Court (the “Circuit Court”) for Hillsborough County, Florida (the “Florida Litigation”). The Trafelet Parties sought, among other things, a declaration that (1) a purported stockholder action by written consent, delivered to the Company in the name of 734 Investors and the plaintiffs in the Florida Litigation on November 11, 2018 (the “Purported Consent”) was valid and binding, (2) the resolutions passed at a meeting of the Board of Directors on November 12, 2018, to, among other things, constitute an ad hoc committee of the Board of Directors to consider, evaluate and make any and all determinations, and to take any and all actions, on behalf of the Board of Directors, in connection with the Purported Consent were null and void and (3) the four defendants in the Florida Litigation were properly removed from the Board of Directors by the Purported Consent. On November 27, 2018, the Circuit Court denied without prejudice plaintiffs’ motion for a temporary restraining order and an affirmative injunction restoring Mr. Trafelet from administrative leave to active status in his capacity as President and CEO of the Company.

On November 28, 2018, the parties in the Florida Litigation stipulated to an order which provided, pending the resolution of the Delaware Litigation (as defined below), that (1) the record date for the Purported Consent was stayed indefinitely, and (2) Mr. Trafelet and the Company’s Board of Directors should not take any action out of routine day-to-day operations conducted in the ordinary course of business, including any action to change the corporate governance of Alico or removing any corporate officers or directors from positions held as of November 27, 2018.

On December 6, 2018, the Trafelet Parties filed an amended complaint in the Florida Litigation which added the Company and Benjamin D. Fishman, a member of the Board of Directors, as defendants. On December 21, 2018, the Trafelet Parties filed a renewed motion for a preliminary injunction restoring Mr. Trafelet from administrative leave to active status in his capacity as President and CEO of the Company. On January 14, 2019, the defendants in the Florida Litigation filed an opposition to plaintiffs’ renewed motion for a preliminary injunction. On January 18, 2019, the defendants in the Florida Litigation filed a motion to dismiss the plaintiffs’ amended complaint.

On February 11, 2019, the parties to the Florida Litigation entered into a settlement agreement (the “Alico Settlement Agreement”) wherein the parties agreed to promptly dismiss all claims in the Florida Litigation. Pursuant to the Alico Settlement Agreement, Mr. Trafelet agreed to voluntarily resign as president and chief executive officer and a member of the Board of Directors, effective upon the execution of the Alico Settlement Agreement.

As contemplated by the Alico Settlement Agreement, on February 11, 2019, the Company entered into a consulting agreement (the “Consulting Agreement”) with Mr. Trafelet and 3584 Inc., an entity controlled by Mr. Trafelet (the “Consultant”). Pursuant to the Consulting Agreement, Mr. Trafelet will make himself available to provide consulting services to the Company through the Consultant for up to 24 months. In exchange for the consulting services, the Consultant will receive an annual consulting fee of $400,000. If the Company terminates the consulting period (other than in certain specified circumstances), the Company will

continue to pay the consulting fees described in the immediately preceding sentence through the balance of the 24-month term. As such, the Company recorded the $800,000 as expense in the quarter ended March 31, 2019.

Also on February 11, 2019, as contemplated by the Alico Settlement Agreement, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with Mr. Trafelet, relating to the shares of the Company’s common stock directly held by the Trafelet Parties as of February 11, 2019 (the “Registrable Securities”). The Registration Rights Agreement requires the Company to, among other things and subject to the terms and conditions thereof, use reasonable best efforts to file with the U.S. Securities and Exchange Commission a registration statement on Form S-3 within 90 days of the date thereof, covering the resale of the Registrable Securities.

On November 20, 2018, members of 734 Investors filed a lawsuit against 734 Agriculture and Mr. Trafelet, the Company's President and Chief Executive Officer and a member of the Board of Directors in the Delaware Court of Chancery (the "Delaware Court"), captioned Arlon Valencia Holdings v. Trafelet, C.A. No. 2018-0842-JTL (the “Members’ Delaware Litigation”). The plaintiffs sought, among other things, a declaration that (1) 734 Agriculture was validly replaced as the managing member of 734 Investors pursuant to the Amended and Restated Limited Liability Company Operating Agreement of 734 Investors (the “LLC Agreement”) and the 734 Consent (described above), and (2) the Purported Consent was invalid under the LLC Agreement.

Also on November 20, 2018, 734 Agriculture filed a lawsuit contesting the 734 Consent in the Delaware Court, captioned 734 Agriculture v. Arlon Valencia Holdings, LLC, C.A. No. 2018-0844-JTL (the “734 Delaware Litigation”). On November 27, 2018, the Delaware Court entered a stipulated order consolidating the Members’ Delaware Litigation and the 734 Delaware Litigation into a single lawsuit, captioned In re 734 Investors, LLC Litigation, Consol. C.A. No. 2018-0844-JTL (the consolidated suit, the “Delaware Litigation”).

On December 5, 2018, the Delaware Court entered a stipulated status quo order which provided, among other things, that 734 Agriculture was to serve as the managing member of 734 Investors during the pendency of the Delaware Litigation. The status quo order also provided that 734 Agriculture would not be permitted to take any actions outside of the ordinary course of business of 734 Investors without the consent of two-thirds of the membership interests of 734 Investors, including exercising any voting rights with respect to any shares of the Company’s common stock beneficially owned by 734 Investors.

On February 11, 2019, Mr. Trafelet, 734 Agriculture, 734 Investors, and certain members of 734 Investors entered into a settlement agreement (the “734 Investors Settlement Agreement”) wherein the parties agreed to promptly dismiss all claims in the Delaware Litigation. Pursuant to the 734 Investors Settlement Agreement, 734 Agriculture resigned as Managing Member of 734 Investors and Arlon Valencia Holdings, LLC was confirmed as Managing Member of 734 Investors.

From time to time, Alico may be involved in litigation relating to claims arising out of its operations in the normal course of business. There are no other current legal proceedings to which the Company is a party or of which any of its property is subject that it believes will have a material adverse effect on its financial position, results of operations or cash flows.

Purchase Commitments

The Company enters into contracts for the purchase of citrus trees during the normal course of its business. As of March 31, 2019, the Company had approximately $3,170,000 relating to outstanding commitments for these purchases, which will be paid upon delivery.

Note ~~12.~~13. Related Party Transactions



¨	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period
	from____________________	to_________________________



Florida		59-0906081
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

10070 Daniels Interstate Court,
Suite 100, Fort Myers, FL		33913
(Address of principal executive offices)		(Zip Code)



Part I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements	1
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	1725
Item 3. Quantitative and Qualitative Disclosures About Market Risk	2737
Item 4. Controls and Procedures	2737
Part II - OTHER INFORMATION
Item 1. Legal Proceedings	2838
Item 1A. Risk Factors	2840
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	2840
Item 3. Defaults Upon Senior Securities	2840
Item 4. Mine Safety Disclosures	2840
Item 5. Other Information	2840
Item 6. Exhibits	2941
Signatures	3042



	Page
Condensed Consolidated Balance Sheets as of March 31, ~~2018~~2019 (Unaudited) and September 30, ~~2017~~2018	1
Condensed Consolidated Statements of Operations for the three and six months ended March 31, ~~2018~~2019 and ~~2017~~2018 (Unaudited)	2
Condensed Consolidated Statements of Changes in Equity for the three and six months ended March 31, 2019 and 2018 (Unaudited)	3
Condensed Consolidated Statements of Cash Flows for the six months ended March 31, ~~2018~~2019 and ~~2017~~2018 (Unaudited)	35
Notes to Condensed Consolidated Financial Statements (Unaudited)	46


(in thousands)	March 31,			September 30,			March 31,			September 30,
	2018			2017			2019			2018
Citrus trees	$	263,987		$	258,949		$	272,100		$	264,714
Equipment and other facilities	55,019			54,592			54,985			53,544
Buildings and improvements	8,162			8,835			8,213			8,052
Total depreciable properties	327,168			322,376			335,298			326,310
Less: accumulated depreciation and depletion	(88,496		)	(82,443		)	(98,609		)	(91,858		)
Net depreciable properties	238,672			239,933			236,689			234,452
Land and land improvements	109,345			109,404			106,241			105,951
Net property and equipment	$	348,017		$	349,337		$	342,930		$	340,403



	March 31, 2018				September 30, 2017
	Principal		Deferred Financing Costs, Net		Principal		Deferred Financing Costs, Net
	(in thousands)

Long-term debt, net of current portion:
Met Fixed-Rate Term Loans	$	99,062	$	895	$	99,062	$	954
Met Variable-Rate Term Loans	48,157		411		49,594		439
Met Citree Term Loan	4,975		47		5,000		49
Pru Loans A & B	17,997		249		23,030		258
Pru Loan E	4,785		21		4,895		25
Pru Loan F	4,785		41		4,895		42
	179,761		1,664		186,476		1,767
Less current portion	5,225		—		4,550		—
Long-term debt	$	174,536	$	1,664	$	181,926	$	1,767


(in thousands, except share amounts)
	Shares		Cost			Shares		Cost
Balance as of September 30, 2017	177,315		$	6,502
Balance as of September 30, 2018						216,188		$	7,536
Purchased	7,525		206			752,234		25,576
Issued to employees and directors	(17,144	)	(500		)	(15,080	)	(616		)

Balance as of March 31, 2018	167,696		$	6,208
Balance as of March 31, 2019						953,342		$	32,496



(in thousands)	Three Months Ended											Six Months Ended
	March 31,						Change					March 31,						Change
	2018			2017			$			%		2018			2017			$			%
Operating revenues:
Alico Citrus	$	34,709		$	55,667		$	(20,958	)	(37.6	)%	$	51,788		$	72,544		$	(20,756	)	(28.6	)%
Conservation and Environmental Resources	493			337			156			46.3	%	856			638			218			34.2	%
Other Operations	398			196			202			103.1	%	489			463			26			5.6	%
Total operating revenues	35,600			56,200			(20,600		)	(36.7	)%	53,133			73,645			(20,512		)	(27.9	)%

Gross profit (loss):
Alico Citrus	8,599			14,744			(6,145		)	(41.7	)%	9,383			17,536			(8,153		)	(46.5	)%
Conservation and Environmental Resources	(1,100		)	(424		)	(676		)	159.4	%	(1,334		)	(637		)	(697		)	109.4	%
Other Operations	334			196			138			70.4	%	366			370			(4		)	(1.1	)%
Total gross profit	7,833			14,516			(6,683		)	(46.0	)%	8,415			17,269			(8,854		)	(51.3	)%

General and administrative expenses	3,073			3,399			(326		)	(9.6	)%	6,959			7,187			(228		)	(3.2	)%
Income from operations	4,760			11,117			(6,357		)	(57.2	)%	1,456			10,082			(8,626		)	(85.6	)%
Total other expense, net	(2,140		)	(912		)	(1,228		)	134.6	%	(2,515		)	(2,893		)	378			(13.1	)%
Income (loss) before income taxes	2,620			10,205			(7,585		)	(74.3	)%	(1,059		)	7,189			(8,248		)	NM
Provision (benefit) for income taxes	8,150			4,321			3,829			88.6	%	(4,267		)	3,048			(7,315		)	NM
Net (loss) income	(5,530		)	5,884			(11,414		)	NM		3,208			4,141			(933		)	(22.5	)%
Net loss (income) attributable to noncontrolling interests	16			(51		)	67			NM		24			(43		)	67			NM
Net (loss) income attributable to Alico, Inc. common stockholders	$	(5,514	)	$	5,833		$	(11,347	)	(194.5	)%	$	3,232		$	4,098		$	(866	)	(21.1	)%


(in thousands, except per pound solids per box data)
(in thousands, except per box and per pound solids data)																					(in thousands, except per box and per pound solids data)

	Three Months Ended March 31,										Six Months Ended March 31,										Three Months Ended											Six Months Ended
	Three Months Ended March 31,					Change									Change					March 31,					Change						March 31,					Change
	2018		2017			Unit			%		Six Months Ended March 31,	2018		2017			$			%		2019		2018			Unit			%			2019		2018			Unit			%
Operating Revenues:
Early and Mid-Season	$	8,839	$	32,026		$	(23,187	)	(72.4	)%	$	24,256	$	45,695		$	(21,439	)	(46.9	)%	$	27,929	$	8,839		$	19,090		216.0	%		$	39,574	$	24,256		$	15,318		63.2	%
Valencias	24,598		20,317			4,281			21.1	%	24,598		20,317			4,281			21.1	%	18,746		24,598			(5,852		)	(23.8	)%		18,746		24,598			(5,852		)	(23.8	)%
Fresh Fruit	418		1,758			(1,340		)	(76.2	)%	1,506		4,379			(2,873		)	(65.6	)%	671		418			253			60.5	%		2,577		1,506			1,071			71.1	%
Purchase and Resale of Fruit	464		930			(466		)	(50.1	)%	499		1,029			(530		)	(51.5	)%	221		464			(243		)	(52.4	)%		246		499			(253		)	(50.7	)%
Other	390		636			(246		)	(38.7	)%	929		1,124			(195		)	(17.3	)%	256		390			(134		)	(34.4	)%		577		929			(352		)	(37.9	)%
Total	$	34,709	$	55,667		$	(20,958	)	(37.6	)%	$	51,788	$	72,544		$	(20,756	)	(28.6	)%	$	47,823	$	34,709		$	13,114		37.8	%		$	61,720	$	51,788		$	9,932		19.2	%
Boxes Harvested:
Early and Mid-Season	597		2,186			(1,589		)	(72.7	)%	1,811		3,215			(1,404		)	(43.7	)%	2,120		597			1,523			NM			3,114		1,811			1,303			71.9	%
Valencias	1,470		1,225			245			20.0	%	1,470		1,225			245			20.0	%	1,298		1,470			(172		)	(11.7	)%		1,298		1,470			(172		)	(11.7	)%
Total Processed	2,067		3,411			(1,344		)	(39.4	)%	3,281		4,440			(1,159		)	(26.1	)%	3,418		2,067			1,351			65.4	%		4,412		3,281			1,131			34.5	%
Fresh Fruit	24		115			(91		)	(79.1	)%	97		244			(147		)	(60.2	)%	33		24			9			37.5	%		136		97			39			40.2	%
Total	2,091		3,526			(1,435		)	(40.7	)%	3,378		4,684			(1,306		)	(27.9	)%	3,451		2,091			1,360			65.0	%		4,548		3,378			1,170			34.6	%
Pound Solids Produced:
Early and Mid-Season	3,125		12,510			(9,385		)	(75.0	)%	9,194		17,950			(8,756		)	(48.8	)%	11,735		3,125			8,610			NM			16,873		9,194			7,679			83.5	%
Valencias	8,651		7,467			1,184			15.9	%	8,651		7,467			1,184			15.9	%	7,831		8,651			(820		)	(9.5	)%		7,831		8,651			(820		)	(9.5	)%
Total	11,776		19,977			(8,201		)	(41.1	)%	17,845		25,417			(7,572		)	(29.8	)%	19,566		11,776			7,790			66.2	%		24,704		17,845			6,859			38.4	%
Pound Solids per Box:
Early and Mid-Season	5.23		5.72			(0.49		)	(8.6	)%	5.08		5.58			(0.50		)	(9.0	)%	5.54		5.23			0.31			5.9	%		5.42		5.08			0.34			6.7	%
Valencias	5.89		6.09			(0.20		)	(3.3	)%	5.89		6.09			(0.20		)	(3.3	)%	6.04		5.89			0.15			2.5	%		6.04		5.89			0.15			2.5	%
Price per Pound Solids:
Early and Mid-Season	$	2.83	$	2.56		$	0.27		10.5	%	$	2.64	$	2.55		$	0.09		3.5	%	$	2.38	$	2.83		$	(0.45	)	(15.9	)%		$	2.35	$	2.64		$	(0.29	)	(11.0	)%
Valencias	$	2.84	$	2.72		$	0.12		4.4	%	$	2.84	$	2.72		$	0.12		4.4	%	$	2.39	$	2.84		$	(0.45	)	(15.8	)%		$	2.39	$	2.84		$	(0.45	)	(15.8	)%
Price per Box:
Fresh Fruit	$	17.42	$	15.30		$	2.12		13.9	%	$	15.53	$	17.95		$	(2.42	)	(13.5	)%	$	20.17	$	17.42		$	2.75		15.8	%		$	18.95	$	15.53		$	3.42		22.0	%
Operating Expenses:
Cost of Sales	$	19,696	$	29,906		$	(10,210	)	(34.1	)%	$	31,941	$	38,536		$	(6,595	)	(17.1	)%	$	21,886	$	19,696		$	2,190		11.1	%		$	29,794	$	31,941		$	(2,147	)	(6.7	)%
Fresh Fruit Packaging	—		(40		)	40			NM		—		1,142			(1,142		)	NM
Harvesting and Hauling	5,711		9,754			(4,043		)	(41.4	)%	9,208		13,501			(4,293		)	(31.8	)%	9,404		5,711			3,693			64.7	%		12,148		9,208			2,940			31.9	%
Purchase and Resale of Fruit	328		862			(534		)	(61.9	)%	369		959			(590		)	(61.5	)%	147		328			(181		)	(55.2	)%		168		369			(201		)	(54.5	)%
Other	375		441			(66		)	(15.0	)%	887		870			17			2.0	%	145		375			(230		)	(61.3	)%		346		887			(541		)	(61.0	)%
Total	$	26,110	$	40,923		$	(14,813	)	(36.2	)%	$	42,405	$	55,008		$	(12,603	)	(22.9	)%	$	31,582	$	26,110		$	5,472		21.0	%		$	42,456	$	42,405		$	51		0.1	%



(in thousands, except per pound data)
	Three Months Ended March 31,									Six Months Ended March 31,
	Three Months Ended March 31,				Change					Six Months Ended March 31,				Change
	2018		2017		$			%		2018		2017		$			%
Revenue From:
Sale of Calves	$	—	$	—	$	—		NM		$	57	$	20	$	37		NM
Sale of Culls	—		24		(24		)	NM		—		24		(24		)	NM
Land Leasing	465		225		240			106.7	%	712		455		257			56.5	%
Other	28		88		(60		)	(68.2	)%	87		139		(52		)	(37.4	)%
Total	$	493	$	337	$	156		46.3	%	$	856	$	638	$	218		34.2	%
Pounds Sold:
Calves	—		—		—			NM		49		16		33			NM
Culls	—		45		(45		)	NM		—		45		(45		)	NM
Price Per Pound:
Calves	$	—	$	—	$	—		NM		$	1.17	$	1.25	$	(0.08	)	(6.4	)%
Culls	$	—	$	0.53	$	(0.53	)	NM		$	—	$	0.53	$	(0.53	)	NM
Operating Expenses:
Cost of Calves Sold	$	946	$	—	$	946		NM		$	1,015	$	24	$	991		NM
Cost of Culls Sold	—		29		(29		)	NM		—		29		(29		)	NM
Land Leasing Expenses	275		57		218			NM		408		89		319			NM
Water Conservation	372		675		(303		)	(44.9	)%	767		1,133		(366		)	(32.3	)%
Total	$	1,593	$	761	$	832		109.3	%	$	2,190	$	1,275	$	915		71.8	%



Exhibit Number		Exhibit Index
~~3.1~~		~~Restated Certificate of Incorporation, Dated February 17, 1972 (incorporated by reference to Exhibit 3.1 of the Company's Annual Report on Form 10-K filed with the Commission on December 11, 2017)~~
~~3.2~~		Certificate of Amendment to Certificate of Incorporation, Dated January 14, 1974 (incorporated by reference to Alico’s Registration Statement on Form S-8, dated December 21, 2005, Registration No. 333-130575)
~~3.3~~		~~Amendment to Articles of Incorporation, Dated January 14, 1987 (incorporated by reference to Alico’s Registration Statement on Form S-8, dated December 21, 2005, Registration No. 333-130575)~~
~~3.4~~		~~Amendment to Articles of Incorporation, Dated December 27, 1988 (incorporated by reference to Alico’s Registration Statement on Form S-8, dated December 21, 2005, Registration No. 333-130575)~~
~~3.5~~		~~By-Laws of Alico, Inc., amended and restated (Incorporated by reference to Exhibit 3.1 of the Company’s current report on Form 8-K, filed with the Commission on January 25, 2013)~~
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Rule 13a-14(a) certification
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Rule 13a-14(a) certification
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350
101
101.INS	**	XBRL Instance Document
101.SCH	**	XBRL Taxonomy Extension Schema Document
101.CAL	**	XBRL Taxonomy Calculation Linkbase Document
101.DEF	**	XBRL Taxonomy Definition Linkbase Document
101.LAB		XBRL Taxonomy Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document



**	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.



	ALICO, INC. (Registrant)

May 7, ~~2018~~2019	By:	/s/ ~~Remy W. Trafelet~~ Henry R. Slack
		~~Remy W. Trafelet~~Henry R. Slack
		~~President~~Executive Chairman and ~~Chief~~Director
		(Principal Executive ~~Officer~~Officer)

May 7, ~~2018~~2019	By:	/s/ John E. Kiernan
		John E. Kiernan
		Executive Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)