þ | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
For the quarterly period ended | ||
or |
¨ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
For the transition period from | ||
from | to |
Alico, Inc.
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 | |
(Address of principal executive offices) | 33913 (Zip Code) |
Large accelerated | ¨ | Accelerated filer | þ |
Non-accelerated filer | ¨ | Smaller | |
Reporting Company |
☐Act.) Yes ☑
ALICO, INC.
FORM 10-Q
TABLE OF CONTENTS
Page | |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
(UNAUDITED)
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Operating revenues: | ||||||||||||||||
Citrus Groves | $ | 65,795 | $ | 27,167 | $ | 129,084 | $ | 55,390 | ||||||||
Agricultural Supply Chain Management | 2,105 | 4,083 | 6,584 | 12,324 | ||||||||||||
Improved Farmland | 418 | 2,159 | 2,492 | 19,441 | ||||||||||||
Ranch and Conservation | 296 | 408 | 1,441 | 1,849 | ||||||||||||
Other Operations | 195 | 58 | 508 | 502 | ||||||||||||
Total operating revenue | 68,809 | 33,875 | 140,109 | 89,506 | ||||||||||||
Operating expenses: | ||||||||||||||||
Citrus Groves | 45,551 | 18,317 | 96,027 | 36,560 | ||||||||||||
Agricultural Supply Chain Management | 1,467 | 3,916 | 5,578 | 12,085 | ||||||||||||
Improved Farmland | 659 | 6,591 | 2,736 | 20,986 | ||||||||||||
Ranch and Conservation | 624 | 684 | 1,992 | 2,231 | ||||||||||||
Other Operations | 693 | (226 | ) | 786 | 281 | |||||||||||
Total operating expenses | 48,994 | 29,282 | 107,119 | 72,143 | ||||||||||||
Gross profit | 19,815 | 4,593 | 32,990 | 17,363 | ||||||||||||
Corporate, general and administrative | 3,638 | 2,339 | 12,932 | 7,961 | ||||||||||||
Income from operations | 16,177 | 2,254 | 20,058 | 9,402 | ||||||||||||
Other income (expense), net: | ||||||||||||||||
Interest and investment income, net | 42 | 88 | 44 | 115 | ||||||||||||
Interest expense | (2,127 | ) | (657 | ) | (5,715 | ) | (1,322 | ) | ||||||||
Loss on extinguishment of debt | - | - | (964 | ) | - | |||||||||||
Gain (loss) on sale of real estate | (27 | ) | 4 | 16,397 | 3 | |||||||||||
Asset impairment | - | - | (541 | ) | - | |||||||||||
Other income (loss), net | (71 | ) | 133 | (47 | ) | 61 | ||||||||||
Total other income (expense), net | (2,183 | ) | (432 | ) | 9,174 | (1,143 | ) | |||||||||
Income before income taxes | 13,994 | 1,822 | 29,232 | 8,259 | ||||||||||||
Income taxes | 6,227 | 791 | 10,940 | 3,236 | ||||||||||||
Net income | 7,767 | 1,031 | 18,292 | 5,023 | ||||||||||||
Net income (loss) attributable to noncontrolling interests | - | - | - | - | ||||||||||||
Net income attributable to Alico, Inc. common stockholders | 7,767 | 1,031 | 18,292 | 5,023 | ||||||||||||
Other comprehensive income (loss), net of tax | - | - | - | - | ||||||||||||
Comprehensive income | 7,767 | 1,031 | 18,292 | 5,023 | ||||||||||||
Comprehensive income (loss) attributable to noncontrolling interest | - | - | - | - | ||||||||||||
Comprehensive income attributable to Alico, Inc. common stockholders | $ | 7,767 | $ | 1,031 | $ | 18,292 | $ | 5,023 | ||||||||
Earnings per common share: | ||||||||||||||||
Basic | $ | 0.94 | $ | 0.14 | $ | 2.30 | $ | 0.69 | ||||||||
Diluted | $ | 0.94 | $ | 0.14 | $ | 2.29 | $ | 0.68 | ||||||||
Weighted-average number of common shares outstanding: | ||||||||||||||||
Basic | 8,278 | 7,356 | 7,969 | 7,327 | ||||||||||||
Diluted | 8,284 | 7,356 | 7,971 | 7,351 | ||||||||||||
Cash dividends declared per common share | $ | 0.06 | $ | 0.06 | $ | 0.18 | $ | 0.18 | ||||||||
Three Months Ended December 31, | |||||||
2015 | 2014 | ||||||
Operating revenues: | |||||||
Orange Co. | $ | 19,295 | $ | 16,993 | |||
Conservation and Environmental Resources | 1,007 | 836 | |||||
Other Operations | 302 | 1,241 | |||||
Total operating revenues | 20,604 | 19,070 | |||||
Operating expenses: | |||||||
Orange Co. | 17,608 | 14,214 | |||||
Conservation and Environmental Resources | 1,560 | 745 | |||||
Other Operations | 70 | 839 | |||||
Total operating expenses | 19,238 | 15,798 | |||||
Gross profit | 1,366 | 3,272 | |||||
General and administrative expenses | 3,925 | 5,484 | |||||
Loss from operations | (2,559 | ) | (2,212 | ) | |||
Other (expense) income: | |||||||
Interest expense | (2,503 | ) | (1,378 | ) | |||
Gain on sale of real estate | 142 | 13,497 | |||||
Loss on extinguishment of debt | — | (947 | ) | ||||
Other (expense) income, net | (174 | ) | 9 | ||||
Total other (expense) income, net | (2,535 | ) | 11,181 | ||||
(Loss) income before income taxes | (5,094 | ) | 8,969 | ||||
(Benefit) provision for income taxes | (2,075 | ) | 3,763 | ||||
Net (loss) income | (3,019 | ) | 5,206 | ||||
Net loss attributable to noncontrolling interests | 8 | — | |||||
Net (loss) income attributable to Alico, Inc. common stockholders | $ | (3,011 | ) | $ | 5,206 | ||
Comprehensive income (loss) attributable to noncontrolling interests | — | — | |||||
Comprehensive income (loss) attributable to Alico, Inc. common stockholders | $ | (3,011 | ) | $ | 5,206 | ||
Per share information attributable to Alico, Inc. common stockholders: | |||||||
Earnings per common share: | |||||||
Basic | $ | (0.36 | ) | $ | 0.71 | ||
Diluted | $ | (0.36 | ) | $ | 0.71 | ||
Weighted-average number of common shares outstanding: | |||||||
Basic | 8,303 | 7,367 | |||||
Diluted | 8,303 | 7,367 | |||||
Cash dividends declared per common share | $ | 0.06 | $ | 0.06 |
to the condensed combined consolidated financial statements
.(UNAUDITED)
June 30, 2015 | September 30, 2014 | |||||||
(unaudited) | (unaudited) | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 9,739 | $ | 31,020 | ||||
Short-term investments | - | 263 | ||||||
Accounts receivable, net | 15,103 | 8,724 | ||||||
Inventories, net | 46,255 | 25,469 | ||||||
Income tax receivable | 2,074 | - | ||||||
Assets held for sale | - | 59,513 | ||||||
Other current assets | 5,504 | 721 | ||||||
Total current assets | 78,675 | 125,710 | ||||||
Property, buildings and equipment, net | 383,100 | 126,833 | ||||||
Goodwill | 2,246 | - | ||||||
Investment in Magnolia Fund | 825 | 1,435 | ||||||
Cash surrender value of life insurance | 705 | 695 | ||||||
Investments, deposits and other assets | 4,671 | 2,905 | ||||||
Total assets | $ | 470,222 | $ | 257,578 | ||||
LIABILITIES & EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 3,352 | $ | 2,052 | ||||
Long-term debt, current portion | 4,511 | 3,196 | ||||||
Accrued expenses | 7,941 | 1,934 | ||||||
Income taxes payable | - | 4,572 | ||||||
Deferred tax liability, current portion | 725 | 3,135 | ||||||
Dividends payable | 497 | 442 | ||||||
Accrued ad valorem taxes | 1,757 | 1,850 | ||||||
Capital lease obligation, current portion | 258 | 259 | ||||||
Other current liabilities | 1,002 | 3,229 | ||||||
Total current liabilities | 20,043 | 20,669 | ||||||
Long-term debt, net of current portion | 202,069 | 58,444 | ||||||
Lines of credit | 3,348 | 3,160 | ||||||
Deferred gain on sale of assets, net of current portion | 29,139 | - | ||||||
Capital lease obligation, net of current portion | 839 | 839 | ||||||
Deferred tax liability, net of current portion | 23,595 | 8,760 | ||||||
Deferred retirement benefits | 3,895 | 3,855 | ||||||
Other liabilities | 3,867 | - | ||||||
Total liabilities | 286,795 | 95,727 | ||||||
Commitments and contingencies (Note 11) | ||||||||
Equity: | ||||||||
Preferred stock, no par value, 1,000,000 shares authorized; none issued | - | - | ||||||
Common stock, $1 par value; 15,000,000 shares authorized, 8,300,363 and 7,377,106 shares issued and 8,277,513 and 7,361,340 shares outstanding as of June 30, 2015 and September 30, 2014, respectively | 8,300 | 7,377 | ||||||
Additional paid-in-capital | 21,360 | 3,742 | ||||||
Treasury stock at cost, 22,850 and 15,766 shares held as of June 30, 2015 and September 30, 2014, respectively | (1,147 | ) | (650 | ) | ||||
Members' equity | - | 16,414 | ||||||
Retained earnings | 150,076 | 134,968 | ||||||
Total Alico, Inc. equity | 178,589 | 161,851 | ||||||
Noncontrolling interest | 4,838 | - | ||||||
Total liabilities and equity | $ | 470,222 | $ | 257,578 | ||||
December 31, | September 30, | ||||||
2015 | 2015 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 3,276 | $ | 5,474 | |||
Accounts receivable, net | 12,074 | 3,137 | |||||
Inventories | 61,017 | 58,273 | |||||
Income tax receivable | 4,163 | 2,088 | |||||
Prepaid expenses and other current assets | 1,530 | 1,791 | |||||
Total current assets | 82,060 | 70,763 | |||||
Property and equipment, net | 380,107 | 381,099 | |||||
Goodwill | 2,246 | 2,246 | |||||
Deferred financing costs, net of accumulated amortization | 2,788 | 2,978 | |||||
Other non current assets | 1,781 | 3,002 | |||||
Total assets | $ | 468,982 | $ | 460,088 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 3,520 | $ | 4,407 | |||
Accrued liabilities | 8,334 | 13,815 | |||||
Long-term debt, current portion | 4,511 | 4,511 | |||||
Line of credit, current portion | 132 | — | |||||
Deferred tax liability, current portion | 151 | 151 | |||||
Obligations under capital leases, current portion | 277 | 277 | |||||
Other current liabilities | 659 | 974 | |||||
Total current liabilities | 17,584 | 24,135 | |||||
Long-term debt | 198,270 | 200,970 | |||||
Lines of credit | 25,000 | — | |||||
Deferred tax liability | 24,087 | 24,134 | |||||
Deferred gain on sale | 29,112 | 29,122 | |||||
Deferred retirement obligations | 4,152 | 4,134 | |||||
Obligations under capital leases | 588 | 588 | |||||
Total liabilities | 298,793 | 283,083 | |||||
Commitments and Contingencies (Note 10) | |||||||
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 8,277,147 and 8,325,580 shares outstanding at December 31, 2015 and September 30, 2015, respectively | 8,416 | 8,416 | |||||
Additional paid in capital | 19,736 | 21,289 | |||||
Treasury stock, at cost, 138,998 and 90,565 shares held at December 31, 2015 and September 30, 2015, respectively | (5,755 | ) | (3,962 | ) | |||
Retained earnings | 142,993 | 146,455 | |||||
Total Alico stockholders' equity | 165,390 | 172,198 | |||||
Noncontrolling interest | 4,799 | 4,807 | |||||
Total stockholders' equity | 170,189 | 177,005 | |||||
Total liabilities and stockholders' equity | $ | 468,982 | $ | 460,088 |
to the condensed combined consolidated financial statements.
(UNAUDITED)
Nine Months Ended | ||||||||
June 30, | ||||||||
2015 | 2014 | |||||||
(unaudited) | ||||||||
Net cash provided by operating activities | $ | 25,895 | $ | 14,770 | ||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (9,674 | ) | (11,255 | ) | ||||
Acquisition of citrus businesses, net of cash acquired | (283,211 | ) | - | |||||
Proceeds from sale of sugarcane operations | 97,151 | - | ||||||
Proceeds for the sale of assets | 9,045 | 928 | ||||||
Return on investment in Magnolia Fund | 652 | 3,185 | ||||||
Other | (1 | ) | 27 | |||||
Net cash used in investing activities | (186,038 | ) | (7,115 | ) | ||||
Cash flows from financing activities: | ||||||||
Principal payments on term loans | (15,061 | ) | (3,041 | ) | ||||
Repayment of term loan | (34,000 | ) | - | |||||
Borrowings on revolving lines of credit | 81,135 | - | ||||||
Repayments on revolving lines of credit | (80,947 | ) | - | |||||
Proceeds from term loans | 193,500 | - | ||||||
Financing costs | (3,353 | ) | - | |||||
Treasury stock purchases | (1,029 | ) | (4,844 | ) | ||||
Dividends paid | (1,381 | ) | (2,744 | ) | ||||
Principal payments on capital lease obligation | (2 | ) | - | |||||
Net cash provided by (used in) financing activities | 138,862 | (10,629 | ) | |||||
Net decrease in cash and cash equivalents | (21,281 | ) | (2,974 | ) | ||||
Cash and cash equivalents at beginning of period | 31,020 | 27,252 | ||||||
Cash and cash equivalents at end of period | $ | 9,739 | $ | 24,278 | ||||
Supplemental cash flow information: | ||||||||
Cash paid for interest, net of amount capitalized | $ | 4,892 | $ | 1,193 | ||||
Cash paid for income taxes | $ | 5,200 | $ | 925 | ||||
Three Months Ended December 31, | |||||||
2015 | 2014 | ||||||
Net cash used in operating activities: | $ | (14,781 | ) | $ | (16,446 | ) | |
Cash flows from investing activities: | |||||||
Acquisition of citrus businesses, net of cash acquired | — | (265,063 | ) | ||||
Proceeds on sale of sugarcane land | — | 97,151 | |||||
Purchases of property and equipment | (2,988 | ) | (1,808 | ) | |||
Other | 140 | 361 | |||||
Net cash used in investing activities | (2,848 | ) | (169,359 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from term loans | — | 182,555 | |||||
Repayments on revolving line of credit | — | (22,309 | ) | ||||
Borrowings on revolving line of credit | 24,986 | 36,319 | |||||
Repayment of term loan | — | (34,000 | ) | ||||
Principal payments on term loans | (2,699 | ) | (290 | ) | |||
Contingent consideration paid | (3,750 | ) | — | ||||
Treasury stock purchases | (2,602 | ) | — | ||||
Financing costs | — | (2,834 | ) | ||||
Dividends paid | (504 | ) | (442 | ) | |||
Distributions to members | — | (458 | ) | ||||
Net cash provided by financing activities | 15,431 | 158,541 | |||||
Net decrease in cash and cash equivalents | (2,198 | ) | (27,264 | ) | |||
Cash and cash equivalents at beginning of year | 5,474 | 31,130 | |||||
Cash and cash equivalents at end of year | $ | 3,276 | $ | 3,866 | |||
Supplemental disclosure of cash flow information: | |||||||
Cash paid for interest, net of amount capitalized | $ | 2,003 | $ | 351 | |||
Cash paid for income taxes | $ | — | $ | 4,600 |
3 |
Description of Business
Common Control Acquisitioncash flows for the periods presented in conformity with U.S. GAAP applicable to interim periods.
combined businesses have been eliminated.
On November 19, 2013, 734 Agriculture and its affiliates, including 734 Investors, acquired approximately 51% of the Company’s common stock. 734 Agriculture is the sole managing member of 734 Investors. By virtue of their ownership percentage, 734 Agriculture is able to elect all of the Directors and, consequently, control Alico.
734 Agriculture had control over both Silver Nip Citrus and the Company, and therefore the Merger was treated as a common control acquisition.
At closing of the Merger, Merger Sub merged with and into Silver Nip Citrus, with Silver Nip Citrus and its affiliates surviving the Merger as wholly owned subsidiaries of the Company. Pursuant to the Merger Agreement, at closing, the Company issued 923,257 shares of the Company’s common stock, par value $1.00 per share, to the holders of membership interests in Silver Nip Citrus. Silver Nip Citrus’ outstanding net indebtedness at the closing of the Merger was approximately $40,278,000 and other liabilities totaled $6,952,000. The Company acquired assets with a book value of $65,739,000 and total net assets of $18,470,000. The shares of common stock issued were recorded at the carrying amount of the net assets transferred. The holders of membership interests in Silver Nip Citrus will also receive additional Company shares based on the value of the proceeds received by the Company from the sale of citrus fruit harvested on Silver Nip Citrus’ real property following the conclusion of the 2014-2015 citrus harvest season.
For the nine months ended June 30, 2015, the Company incurred approximately $894,000 in professional and legal costs in connection with the Merger. These costs are included in corporate, general and administrative expenses in the Condensed Combined Consolidated Statements of Operations and Comprehensive Income for the nine months ended June 30, 2015.
Basis of Presentation
The Company has prepared the accompanying financial statements on a consolidated and combined basis. These accompanying unaudited condensed combined 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. The Company believes that the disclosures made are adequate to make the information not misleading. 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, 2014, filed with the SEC on December 12, 2014.
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, 2015. All intercompany transactions and account balances between the consolidated and combined businesses have been eliminated.
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 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 the 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.
As the Company and Silver Nip Citrus were under common control at the time of the Merger, we are required under U.S. GAAP to account for this common control acquisition in a manner similar to the pooling of interest method of accounting. Under this method of accounting, our Condensed Combined Consolidated Balance Sheets as of June 30,December 31, 2015 and September 30, 20142015 reflect Silver Nip Citrus’ historical carryover basis in the assets and liabilities instead of reflecting the fair market value of the assets and liabilities. We have also retrospectively recast our financial statements to combine the operating results of the Company and Silver Nip Citrus from the date common control began, November 19, 2013.
Since
have been revised to be consistent with the current operating segment structure.
December 31, 2015 and 2014, of which 51% is attributable to the Company.
New Accounting Pronouncements
Presentation of Debt Issuance Costs for Term Debt
In April 2015, the FASB issued Accounting Standard Update 2015-03,“Simplifying the Presentation of Debt Issuance Costs” ("ASU 2015-03"). Upon adoption, ASU 2015-03 will require debt issuance costs associated with outstanding term debt to be presented in the balance sheet as a direct reduction in the carrying value of the associated debt liability, consistent with the current presentation of a debt discount. For fees paid to lenders to secure revolving lines of credit, such fees will continue to be presented as a deferred charge (asset) on the balance sheet. Under current guidance prior to ASU 2015-03, all debt issuance costs, for both term debt and revolving lines of credit, are presented in the balance sheet as a deferred charge (asset). ASU 2015-03 is limited to the presentation of debt issuance costs and will not affect the recognition and measurement of debt issuance costs. Upon adoption, ASU 2015-03 must be applied on a retrospective basis and is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted. Since ASU 2015-03 involves balance sheet presentation only, its adoption will not have any impact on the Company's results of operations, financial condition, or cash flows. The Company is evaluating a decision to early adopt ASU 2015-03 prior to its mandatory effective date.
Simplified Measurement Date for Defined Benefit Plan Assets and Obligations
In April 2015, the FASB issued Accounting Standard Update 2015-04, “Practical Expedient for the Measurement Date of an Employer's Defined Benefit Obligation and Plan Assets” ("ASU 2015-04"). Upon adoption, ASU 2015-04 will allow employers with fiscal year ends that do not coincide with a calendar month end to make an accounting policy election to measure defined benefit plan assets and obligations as of the end of the month closest to their fiscal year ends (i.e., on an alternative measurement date). An employer that makes this election must consistently apply the practical expedient from year to year and to all of its defined benefit plans. ASU 2015-04 will be effective for interim and fiscal periods beginning after December 15, 2015; prospective application is required and early adoption is permitted. The Company's fiscal year end is September 30 and the Company has a defined retirement plan. The Company is currently evaluating the policy election that will be allowed upon the adoption of ASU 2015-04.
Revenue Recognition
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2014-09,“Revenue from Contracts with Customers” (Topic 606), which clarifies the principles for recognizing revenue. The guidance is applicable to all contracts with customers regardless of industry-specific or transaction-specific fact patterns. Further, the guidance requires improved disclosures as well as additional disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. The standard is effective for the Company beginning in the first quarter of fiscal 2018, including interim periods within that first fiscal year, and early adoption is now permitted for 2017. Upon becoming effective, the Company will apply the amendments in the updated standard either retrospectively to each prior reporting period presented, or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application. The Company is currently evaluating the impact of adopting this standard on its consolidated financial position, results of operations, and cash flows.
Reclassifications
June 30, | September 30, | ||||||
2015 | 2014 | ||||||
Unharvested fruit crop on the trees | $ | 38,832 | $ | 23,502 | |||
Beef cattle | 3,469 | 1,022 | |||||
Nursery | 1,822 | 516 | |||||
Other | 2,132 | 429 | |||||
Total inventories | $ | 46,255 | $ | 25,469 |
the following at December 31, 2015 and September 30, 2015:
(in thousands) | December 31, | September 30, | |||||
2015 | 2015 | ||||||
Unharvested fruit crop on the trees | $ | 54,433 | $ | 52,497 | |||
Beef cattle | 1,780 | 1,612 | |||||
Citrus tree nursery | 2,511 | 2,854 | |||||
Other | 2,293 | 1,310 | |||||
Total inventories | $ | 61,017 | $ | 58,273 |
June 30, | September 30, | |||||||
2015 | 2014 | |||||||
Breeding herd | $ | 11,158 | $ | 11,558 | ||||
Buildings | 21,377 | 16,282 | ||||||
Citrus trees | 243,878 | 69,952 | ||||||
Equipment and other facilities | 59,464 | 55,799 | ||||||
Total depreciable assets | 335,877 | 153,591 | ||||||
Less: accumulated depreciation and depletion | (75,324 | ) | (66,321 | ) | ||||
Net depreciable assets | 260,553 | 87,270 | ||||||
Land and land improvements | 122,547 | 39,563 | ||||||
Total property, buildings and equipment, net | $ | 383,100 | $ | 126,833 |
Land Sale
Certain Silver Nip Citrus land with a cost of $2,832,159 was classified as held for sale as ofthe following at December 31, 2015 and September 30, 2014. It was sold during the nine months ended June 30, 2015 resulting in a gain on sale of assets of $2,926,553.
Asset Impairment
The Company recorded an impairment loss of approximately $541,000 during the nine months ended June 30, 2015 on property classified as assets held for sale as of September 30, 2014. The Company entered into a sales contract on February 17, 2015, which triggered the impairment of the property based on the negotiated sales price. The property was sold on April 3, 2015 and the Company received approximately $1,509,000 in net sales proceeds.
(in thousands) | December 31, | September 30, | |||||
2015 | 2015 | ||||||
Citrus trees | $ | 248,408 | $ | 247,488 | |||
Equipment and other facilities | 57,439 | 56,200 | |||||
Buildings and improvements | 21,262 | 21,259 | |||||
Breeding herd | 12,464 | 11,924 | |||||
Total depreciable properties | 339,573 | 336,871 | |||||
Less accumulated depreciation and depletion | (73,959 | ) | (70,200 | ) | |||
Net depreciable properties | 265,614 | 266,671 | |||||
Land and land improvements | 114,493 | 114,428 | |||||
Net property and equipment | $ | 380,107 | $ | 381,099 |
The Company acquired On December 1, 2015, we paid $3,750,000 of additional consideration on the Orange-Co to transform our citrus businessacquisition as contemplated by the Orange-Co Purchase Agreement. Our $7,500,000 irrevocable letter of credit securing the payment of the additional consideration expired and meaningfully enhance the Company’s positionwas replaced with a new letter of credit in the citrus industry. The Company has includedamount of $3,750,000 securing the financial results of Orange-Co in the Financial Statements from the date of acquisition. These results include approximately $72,233,000 in revenue and $18,060,000 in gross profit.
final payment due on June 1, 2016 subject to certain limitations.
$1,000,000 during the fiscal year ended September 30, 2015.
Income.
The fair value of the consideration paid for the acquisition of the net assets, as adjusted, was as follows:
Asset acquisition | ||||
(in thousands) | ||||
Amount | ||||
Assets: | ||||
Accounts receivable, net | $ | 888 | ||
Other current assets | 845 | |||
Inventories, net | 35,562 | |||
Property, Buildings and Equipment | 240,949 | |||
Goodwill | 2,246 | |||
Other assets | 2,140 | |||
Total assets, net of cash acquired | $ | 282,630 | ||
Liabilities: | ||||
Accounts payable and accrued liabilities | $ | 4,205 | ||
Debt | 500 | |||
Payable to seller | 7,500 | |||
Total liabilities assumed | $ | 12,205 | ||
Assets acquired less liabilities assumed | $ | 270,425 | ||
Less: fair value attributable to noncontrolling interest | (4,838 | ) | ||
Total purchase consideration | $ | 265,587 | ||
Cash proceeds from sugarcane disposition | $ | 97,126 | ||
Working capital line of credit | 27,857 | |||
Term loans | 140,604 | |||
Total purchase consideration | $ | 265,587 |
The unaudited pro-forma information below for the three and nine months ended June 30, 2015 and 2014 gives effect to this acquisition as if the acquisitions had occurred on October 1, 2013. The pro-forma financial information is not necessarily indicative of the results of operations if the acquisition had been effective as of this date.
(in thousands except per share amounts) | Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Revenues | $ | 68,809 | $ | 73,519 | $ | 131,857 | $ | 163,375 | ||||||||
Income from operations | $ | 16,177 | $ | 20,479 | $ | 18,438 | $ | 38,119 | ||||||||
Net income attributable to Alico, Inc. common stockholders | $ | 7,767 | $ | 11,843 | $ | 15,104 | $ | 20,932 | ||||||||
Basic earnings per common share | $ | 0.94 | $ | 1.61 | $ | 1.90 | $ | 2.86 | ||||||||
Diluted earnings per common share | $ | 0.94 | $ | 1.61 | $ | 1.89 | $ | 2.85 |
Acquisition of Citrus Grove
On September 4, 2014, Silver Nip Citrus and TRB Groves, LLC entered into a Purchase and Sale Agreement pursuant to which Silver Nip Citrus purchased all of the assets on a 1,500 acre citrus grove in Charlotte County, FL for a purchase price of approximately $17,624,000. The purchase price was funded from Silver Nip Citrus’ cash and cash equivalents and $11,000,000 in term loans (see “Note 7” to the accompanying Condensed Combined Consolidated Financial Statements). We acquired the citrus acres to increase the size of our citrus groves which we believe strengthens our market position.
The total cost of the acquisition was allocated to the assets acquired based on their estimated respective fair values in accordance with ASC 805, Business Combinations and was accounted for using the acquisition method of accounting.
The results of operations have been included in our combined consolidated statements of operations since September 4, 2014, the date of closing. Pro-forma operating results, as if the Company had completed the acquisition at the beginning of the periods presented, are not significant to the Company’s consolidated financial statements and are not presented.
Assets acquired in the acquisition are as follows:
(in thousands) | ||
Amount | ||
Assets: | ||
Inventories, net | $ | 1,329 |
Property, Buildings and Equipment | ||
Equipment and other facilities | 2,742 | |
Land | 5,921 | |
Citrus Trees | 7,632 | |
Total assets, net of cash acquired | $ | 17,624 |
values:
Asset acquisition | |||
(in thousands) | |||
Amount | |||
Assets: | |||
Accounts receivable | $ | 888 | |
Other current assets | 845 | ||
Inventories | 35,562 | ||
Property and equipment | |||
Citrus Trees | 164,123 | ||
Land | 63,395 | ||
Equipment and other facilities | 13,431 | ||
Goodwill | 2,246 | ||
Other assets | 2,140 | ||
Total assets, net of cash acquired | $ | 282,630 | |
Liabilities: | |||
Accounts payable and accrued liabilities | $ | 4,205 | |
Debt | 500 | ||
Contingent consideration | 7,500 | ||
Total liabilities assumed | $ | 12,205 | |
Assets acquired less liabilities assumed | $ | 270,425 | |
Less: fair value attributable to noncontrolling interest | (4,838 | ) | |
Total purchase consideration | $ | 265,587 | |
Cash proceeds from sugarcane disposition | $ | 97,126 | |
Working capital line of credit | 27,857 | ||
Term loans | 140,604 | ||
Total purchase consideration | $ | 265,587 |
1031.
December 31, 2014.
The Company’s results of operations for the three and nine months ended June 30, 2015 include the Silver Nip Citrus results of operations for the three and nine months ended March 31, 2015. The Company’s results of operations for the three and nine months ended June 30, 2014 include the Silver Nip Citrus results of operations frombegan, November 19, 2013 (the initial date of common control) through March 31, 2014.
2013.
(in thousands except for per share amounts) | Three Months Ended June 30, 2015 | Three Months Ended June 30, 2014 | ||||||||||||||||||||||
Silver Nip | Silver Nip | |||||||||||||||||||||||
Alico | Citrus | Total | Alico | Citrus | Total | |||||||||||||||||||
Operating revenues | $ | 61,007 | $ | 7,802 | $ | 68,809 | $ | 28,675 | $ | 5,200 | $ | 33,875 | ||||||||||||
Gross profit | $ | 18,090 | $ | 1,725 | $ | 19,815 | $ | 3,739 | $ | 854 | $ | 4,593 | ||||||||||||
Net income | $ | 6,727 | $ | 1,040 | $ | 7,767 | $ | 1,119 | $ | (88 | ) | $ | 1,031 | |||||||||||
Comprehensive income | $ | 6,727 | $ | 1,040 | $ | 7,767 | $ | 1,119 | $ | (88 | ) | $ | 1,031 | |||||||||||
Earnings per common share: | ||||||||||||||||||||||||
Basic | $ | 0.81 | $ | 0.13 | $ | 0.94 | $ | 0.15 | $ | (0.01 | ) | $ | 0.14 | |||||||||||
Diluted | $ | 0.81 | $ | 0.13 | $ | 0.94 | $ | 0.15 | $ | (0.01 | ) | $ | 0.14 |
(in thousands except for per share amounts) | Nine Months Ended June 30, 2015 | Nine Months Ended June 30, 2014 | ||||||||||||||||||||||
Silver Nip | Silver Nip | |||||||||||||||||||||||
Alico | Citrus | Total | Alico | Citrus | Total | |||||||||||||||||||
Operating revenues | $ | 129,375 | $ | 10,734 | $ | 140,109 | $ | 81,139 | $ | 8,367 | $ | 89,506 | ||||||||||||
Gross profit | $ | 31,185 | $ | 1,805 | $ | 32,990 | $ | 15,593 | $ | 1,770 | $ | 17,363 | ||||||||||||
Net income | $ | 15,866 | $ | 2,426 | $ | 18,292 | $ | 4,485 | $ | 538 | $ | 5,023 | ||||||||||||
Comprehensive income | $ | 15,866 | $ | 2,426 | $ | 18,292 | $ | 4,485 | $ | 538 | $ | 5,023 | ||||||||||||
Earnings per common share: | ||||||||||||||||||||||||
Basic | $ | 1.99 | $ | 0.30 | $ | 2.30 | $ | 0.61 | $ | 0.07 | $ | 0.69 | ||||||||||||
Diluted | $ | 1.99 | $ | 0.30 | $ | 2.29 | $ | 0.61 | $ | 0.07 | $ | 0.68 |
follows:
(in thousands except per share amounts) | |||||||||||
Three Months Ended December 31, 2014 | |||||||||||
Silver Nip | |||||||||||
Alico | Citrus | Total | |||||||||
Operating revenue | $ | 16,158 | $ | 2,912 | $ | 19,070 | |||||
Gross profit | $ | 3,144 | $ | 128 | $ | 3,272 | |||||
Loss from operations | $ | (2,286 | ) | $ | 74 | $ | (2,212 | ) | |||
Net income | $ | 5,775 | $ | (569 | ) | $ | 5,206 | ||||
Earnings per common share: | |||||||||||
Basic | $ | 0.78 | $ | (0.08 | ) | $ | 0.71 | ||||
Diluted | $ | 0.78 | $ | (0.08 | ) | $ | 0.71 |
Income tax expense was approximately $6,227,000 and $791,000 for the three months ended June 30, 2015 and 2014, respectively. The Company’s effective income tax rates were 44.5% and 43.4% for the three months ended June 30, 2015 and 2014, respectively. Income tax expense was approximately $10,940,000 and $3,236,000 for the nine months ended June 30, 2015 and 2014, respectively. The Company’s effective income tax rates for the nine months ended June 30, 2015 and 2014 were 37.4% and 39.2%, respectively.
During the three months ended June 30, 2015, the Company revised its effective tax rates to reflect the impact of claiming certain deductions on amended federal and state income tax returns filed in prior fiscal years. Other changes to the effective tax rates relate primarily to the nondeductible nature of projected political contributions and lobbying expenses. In addition, there were limitations on certain deductions related to the vesting of the long-term incentive grants for fiscal year 2014, and non-deductible transaction costs related to the Silver Nip Citrus merger for fiscal year 2015.
The Company applies a “more likely than not” threshold to the recognition and nonrecognition of tax positions. A change in judgment related to prior years’ tax positions is recognized in the quarter of such change. The Company had no reserve for uncertain tax positions as of June 30, 2015 and September 30, 2014. The Company recognizes interest and/or penalties related to income tax matters in income tax expense and in income taxes payable.
The Internal Revenue Service (“IRS”) is currently auditing Alico’s tax returns for the fiscal years ended September 30, 2013, 2012 and 2011.
Note 7. Long-Term Debt and Lines of Credit
December 31, | September 30, | ||||||
2015 | 2015 | ||||||
(in thousands) | |||||||
Long-term debt, net of current portion: | |||||||
Metropolitan Life Insurance Company and New England Life Insurance Company fixed rate term loans in the original principal amount of $125,000,000: the loans bear interest at the rate of 4.15% per annum as of December 31, 2015. The loans are collateralized by real estate and mature in November 2029. | $ | 110,000 | $ | 111,563 | |||
Metropolitan Life Insurance Company and New England Life Insurance Company variable rate term loans in the original principal amounts of $57,500,000: the variable interest rate was approximately 1.82% per annum as of December 31, 2015. The loans are collateralized by real estate and mature in November 2029. | 54,625 | 55,344 | |||||
Metropolitan Life Insurance Company term loan: the loan bears interest at the rate of 5.30% per annum as of December 31, 2015. A final advance of $2,500,000 is scheduled for March 1, 2016 subject to certain performance conditions. The interest rate is subject to adjustment on the date of the final advance. The loan is collateralized by real estate and matures in February 2029. | 2,500 | 2,500 | |||||
Prudential Mortgage Capital Company, LLC fixed rate term loans: the loans bear interest at the rate of 5.35% per annum as of December 31, 2015. The loans are collateralized by real estate and mature in June 2033. | 25,060 | 25,350 | |||||
Prudential Mortgage Capital Company, LLC fixed rate term loan: the loan bears interest at the rate of 3.85% per annum as of December 31, 2015. The loan is collateralized by real estate and matures in September 2021. | 5,280 | 5,335 | |||||
Prudential Mortgage Capital Company, LLC fixed rate term loan: the loan bears interest at the rate of 3.45% per annum as of December 31, 2015. The loan is collateralized by real estate and matures in September 2039. | 5,280 | 5,335 | |||||
Note payable to a financing company collateralized by equipment and maturing in December 2016. | 36 | 54 | |||||
202,781 | 205,481 | ||||||
Less current portion | 4,511 | 4,511 | |||||
Long-term debt | $ | 198,270 | $ | 200,970 |
December 31, | September 30, | ||||||
2015 | 2015 | ||||||
(in thousands) | |||||||
Lines of Credit: | |||||||
Metropolitan Life Insurance Company and New England Life Insurance Company revolving line of credit: this $25,000,000 line bears interest at a variable rate which was 1.82% per annum as of December 31, 2015. The line is collateralized by real estate and matures in November 2019. | $ | — | $ | — | |||
Rabo Agrifinance, Inc. working capital line of credit: this $70,000,000 line bears interest at a variable rate which was 1.99% per annum as of December 31, 2015. The line is collateralized by current assets and certain personal property and matures in November 2016. Availability under the line was approximately $30,884,000 as of December 31, 2015. | 25,132 | — | |||||
Lines of Credit | $ | 25,132 | $ | — |
(in thousands) | |||
Due within one year | $ | 4,643 | |
Due between one and two years | 8,225 | ||
Due between two and three years | 10,825 | ||
Due between three and four years | 35,925 | ||
Due between four and five years | 10,975 | ||
Due beyond five years | 157,320 | ||
Total future maturities | $ | 227,913 |
The variable interest rate was 1.82% per annum as of December 31, 2015. The RLOC was available as of December 3, 2014 but has remained undrawn as of December 31, 2015.
Availability under the line of credit was approximately $30,884,000 as of December 31, 2015.
The outstanding balance on the WCLC was approximately $25,132,000 as of December 31, 2015. On January
The new credit facilities noted above are subject to various covenants including the following financial covenants: (1)(i) minimum debt service coverage ratio of 1.10 to 1.00, (2)(ii) tangible net worth of at least $160,000,000 increased annually by 10% of consolidated net income for the preceding year, (3)or approximately $161,576,000 for the year ending September 30, 2016, (iii) minimum current ratio of 1.50 to 1.00, (4)(iv) debt to total assets ratio not greater than .625 to 1.00, and, solely in the case of the WCLC, (5)(v) a limit on capital expenditures of $30,000,000 per fiscal year. TheAs of December 31, 2015, the Company was in compliance with all covenants as of June 30, 2015.
Debt Prior to Refinancing
Prior to the December 3, 2014 refinancing, the Company hadfinancial covenants.
The term loan required quarterly payments offacility that initially bore interest at a floating rate5.49% per annum. An initial advance of one month LIBOR plus 225 basis points$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 quarterly principal payments of $500,000. The term loan was refinanced in connection with the Orange-Co acquisition.
The Old RLOC had an interest rate based on one month LIBOR plus a spread. The spread was determined based upon our debt service coverage ratio for the preceding fiscal year and could vary from 195adjusted to 295 basis points. The rate was LIBOR plus 195 basis points at the date of the refinancing and September 30, 2014. Interest on the Old RLOC was payable quarterly. The Old RLOC was subject to an unused commitment fee of 20 basis points on the annual average unused availability. There was no balance outstanding5.30% per annum at the time of the refinancing or September 30, 2014.
Debt financing costs incurred as a result of entry intointerim advance. The amendment extended the Rabo credit facility loan agreement, including appraisal fees, document stamps, legal costs and lender fees of approximately $1,202,000 were capitalized in fiscal year ended September 30, 2010 and were being amortized to interest expense over the termdate of the loan.final $2,500,000 advance from December 1, 2015 to March 1, 2016. The interest rate is subject to further adjustment at the time of the final advance. The loan matures in February 2029. The unamortized balance of the deferred financing costs related to this loan was approximately $56,131 at the time of December 3, 2014 refinancing were approximately $697,000 of which approximately $375,000 was written off and expensed as a loss on extinguishment of debt and approximately $301,000 will be amortized over the applicable terms of the new loans.
At September 30, 2014, the Company was in compliance with the financial debt covenants and terms of the Rabo loan agreement.
31, 2015.
In connection
Silver Nip Citrus also has a fixed rate termOne loan with Prudential with an outstanding balance of $5,445,000 at March 31, 2015 that bears interest at 3.85% per annum while the rate ofother bears interest at 3.45% per annum. The note with an interest rate of 3.85% per annum is subject to adjustment on September 1, 2019 and every five yearsyear thereafter until maturity. Principal of $55,000 is payable quarterly together with accrued interest. The loan is securedBoth loans are collateralized by real estate in Charlotte County, Florida.
2015.
2015, the most recent measurement date.
WCLC, for cash management purposes. common share for the three months ended December 31, 2015 excludes the impact of the equity awards because they are anti-dilutive. Such awards are comprised of 12,500 shares awarded to the Chief Executive Officer and Chief Financial Officer during the fiscal year ended September 30, 2015. The former Citrus Groves and Agricultural Supply Chain Management segments have been combined in Orange Co. and, as a result of the disposition of our sugarcane land in fiscal year 2015, we are no longer involved in sugarcane and the Improved Statements of Operations and Comprehensive Income for the three months ended December 31, 2014. three months ended December 31, 2015 and 2014, respectively. expensed approximately $50,000 under the Consulting and Non-Competition Agreement for the three months ended December 31, 2015. Effective September 1, 2015, Mr. Humphrey was appointed to serve as Senior Vice President and Chief Accounting Officer and will continue to receive monthly payments under The Consulting Agreement through the first anniversary of his resignation date. 10, 2015. Silver Nip Citrus was changed to September 30 to reflect that of the Company. Accordingly, the Company’s financial condition as of December 31, 2015 and September 30, 2015 now includes the financial condition of Silver Nip Citrus as of December 31, 2015 and September 30, 2015, and the Company’s results of operations for the three months ended December 31, 2015 and 2014 now includes the Silver Nip Citrus’ results of operations for the three months ended December 31, 2015 and 2014. The impact of this change was not material to the Condensed Combined Consolidated Financial Statements with an approximate $480,000 decrease in total assets and an approximate net loss of $594,000 for the transition period related to this change included in Stockholders' Equity at September 30, 2015. the Company. The Members will receive additional Company common shares based on any additional proceeds received by the Company subsequent to December 2015 related to the 2014-2015 harvest season. a third party. 2016. acquisition in place for a full quarter in fiscal 2016. 2011 have been finalized and our returns were accepted as filed. Note 4. Acquisitions and Dispositions to the Condensed Combined Consolidated Financial Statements. final payment due on June 1, 2016 subject to certain limitations. Risk. Certification of Chief Financial Officer pursuant to 18 U.S.C. Section The Silver Nip Citrus line of credit with Prudential was paid in full and terminated on April 28, 2015. has agreed, subject to certain conditions, that the Company may loan Silver Nip Citrus up to $7,000,000 on a revolving basis. These advances would be funded from either cash on hand or draws on the Company’s WCLC.Outstanding debt obligations under the Company’s various loan agreements is presented in the tables below:(in thousands) June 30, September 30, 2015 2014 Long-term debt, net of current portion: Metropolitan Life Insurance Company and New England Life Insurance Company fixed rate term loans in the original principal amount of $125 million: the loans bear interest at the rate of 4.15% per annum as of June 30, 2015. The loans are collateralized by real estate and mature in November 2029. $ 113,125 $ - Metropolitan Life Insurance Company and New England Life Insurance Company variable rate term loans in the original principal amounts of $57.5 million: the variable interest rate was 1.78% per annum as of June 30, 2015. The loans are collateralized by real estate and mature in November 2029. 56,063 - Metropolitan Life Insurance Company term loan: the loan bears interest at the initial rate of 5.49% per annum as of June 30, 2015. A final advance of $4.5 million is scheduled for December 1, 2015 subject to certain performance conditions. The interest rate is subject to adjustment on the date of the final advance. The loan is secured by real estate and matures in February 2029. 500 - Rabo Agrifinance, Inc. variable rate term loan: the variable interest rate on this loan was 2.40% per annum as of September 30, 2014. The loan was secured by real estate and had a maturity date of October 2020. The loan was refinanced on December 3, 2014. - 34,000 Prudential Mortgage Capital Company, LLC fixed rate term loans: the loans bear interest at the rate of 5.35% per annum as of June 30, 2015. The loans are collateralized by real estate and mature in June 2033. 25,930 27,550 Prudential Mortgage Capital Company, LLC fixed rate term loan: the loan bears interest at the rate of 3.85% per annum as of June 30, 2015. The loan is collateralized by real estate and matures in September 2021. 5,445 - Prudential Mortgage Capital Company, LLC fixed rate term loan: the loan bears interest at the rate of 3.45% per annum as of June 30, 2015. The loan is collateralized by real estate and matures in September 2039. 5,445 - Note payable to a financing company secured by equipment and maturing in December 2016. 72 90 206,580 61,640 Less: current portion 4,511 3,196 Long-term debt $ 202,069 $ 58,444 (in thousands) June 30, September 30, 2015 2014 Lines of Credit: Metropolitan Life Insurance Company and New England Life Insurance Company revolving line of credit: this $25 million line bears interest at a variable rate which was 1.78% per annum as of June 30, 2015. The line is secured by real estate and matures in November 2019. $ - $ - Rabo Agrifinance, Inc. working capital line of credit: this $70 million line bears interest at a variable rate which was 1.93% per annum as of June 30, 2015. The line is secured by personal property and matures in November 2016. Availability under the line was $52.5 million as of June 30, 2015. - - Prudential Mortgage Capital Company, LLC revolving line of credit: this $6 million line bears interest at a variable rate which was 3.01% per annum as of March 31, 2015 and 2.98% per annum as of June 30, 2014, respectively. The line is secured by real estate and matures in June 2018. Availability under the line was $2.6 million as of March 31, 2015 and $2.8 million as of June 30, 2014. 3,348 3,160 Lines of Credit $ 3,348 $ 3,160 Debt MaturitiesMaturities of the Company’s outstanding debt as of June 30, 2015 were as follows:(in thousands) Due within one year $ 4,511 Due between one and two years 8,261 Due between two and three years 14,123 Due between three and four years 10,875 Due between four and five years 10,950 Due beyond five years 161,208 Total $ 209,928 16(in thousands) Three Months Ended June 30, Nine Months Ended June 30, 2015 2014 2015 2014 Interest expense $ 2,127 $ 657 $ 5,715 $ 1,322 Interest capitalized 71 40 283 118 Total $ 2,198 $ 697 $ 5,998 $ 1,440 (in thousands) Three months ended December 31, 2015 2015 2014 Interest expense $ 2,503 $ 1,378 Interest capitalized 43 53 Total $ 2,546 $ 1,431 8.7. Earnings Per Common Shareoutstanding.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.and nine months ended June 30,December 31, 2015 and 2014, basic and diluted earnings per common share were as followsfollows:(in thousands except per share amounts) Three months ended December 31, 2015 2014 Net (loss) income attributable to Alico, Inc. common stockholders $ (3,011 ) $ 5,206 Weighted average number of common shares outstanding - basic 8,303 7,367 Dilutive effect of equity awards — — Weighted average number of common shares outstanding - diluted 8,303 7,367 Net (loss) income per common shares attributable to Alico, Inc. common stockholders: Basic $ (0.36 ) $ 0.71 Diluted $ (0.36 ) $ 0.71 (in thousands, except per share amounts): Three Months Ended June 30, Nine Months Ended June 30, 2015 2014 2015 2014 Net income attributable to Alico, Inc. common stockholders $ 7,767 $ 1,031 $ 18,292 $ 5,023 Weighted average number of common shares outstanding - basic 8,278 7,356 7,969 7,327 Dilutive effect of equity awards 6 - 2 24 Weighted average number of common shares outstanding - diluted 8,284 7,356 7,971 7,351 Net income per common shares attributable to Alico, Inc.
common stockholders: Basic $ 0.94 $ 0.14 $ 2.30 $ 0.69 Diluted $ 0.94 $ 0.14 $ 2.29 $ 0.68 For the three and nine months ended June 30, 2015, there were no anti-dilutive equity awards that were excluded from the calculationshare.9. 8. Segment Informationisare evaluated regularly by the Company’s chief operating decision makers (“CODMs”)CODMs in deciding how to assess performance and allocate resources. TheFor the fiscal year ended September 30, 2015, the Company’s CODMs assessassessed performance and allocateallocated resources based on five operating segments: Citrus Groves, Improved Farmland, Ranch and Conservation, Agricultural Supply Chain Management and Other Operations.threetwo primary classifications – Citrus Groves, Improved Farmland- Orange Co. and RanchConservation and Conservation.Environmental Resources. In addition, it operates an Agricultural Supply Chain Management business that is not tied directly to its land holdings and Other Operations that include a citrus nursery and leasing mines and oil extraction rights to third parties, as well as leasing improved farmland to third parties. corporate, general and administrative expenses, interest expense, other income (expense) and income taxes, not including nonrecurring gains and losses. All intercompany transactions between the segments have been eliminated.follows(in thousands): Three Months Ended June 30, Nine Months Ended June 30, 2015 2014 2015 2014 Operating revenues: Citrus Groves $ 65,795 $ 27,167 $ 129,084 $ 55,390 Agricultural Supply Chain Management 2,105 4,083 6,584 12,324 Improved Farmland 418 2,159 2,492 19,441 Ranch and Conservation 296 408 1,441 1,849 Other Operations 195 58 508 502 Intersegment Revenues 5,058 4,173 10,444 9,299 Eliminations (5,058 ) (4,173 ) (10,444 ) (9,299 ) Total revenues $ 68,809 $ 33,875 $ 140,109 $ 89,506 Operating expenses: Citrus Groves $ 45,551 $ 18,317 $ 96,027 $ 36,560 Agricultural Supply Chain Management 1,467 3,916 5,578 12,085 Improved Farmland 659 6,591 2,736 20,986 Ranch and Conservation 624 684 1,992 2,231 Other Operations 693 (226 ) 786 281 Total operating expenses $ 48,994 $ 29,282 $ 107,119 $ 72,143 Gross profit (loss): Citrus Groves $ 20,244 $ 8,850 $ 33,057 $ 18,830 Agricultural Supply Chain Management 638 167 1,006 239 Improved Farmland (241 ) (4,432 ) (244 ) (1,545 ) Ranch and Conservation (328 ) (276 ) (551 ) (382 ) Other Operations (498 ) 284 (278 ) 221 Total gross profit (loss) $ 19,815 $ 4,593 $ 32,990 $ 17,363 Capital expenditures: Citrus Groves $ 4,413 $ 2,354 $ 5,018 $ 6,380 Agricultural Supply Chain Management 17 - 346 71 Improved Farmland - 44 - 3,729 Ranch and Conservation 369 103 559 879 Other Operations 47 (172 ) 3,458 28 Other Capital Expenditures 214 168 293 168 Total capital expenditures $ 5,060 $ 2,497 $ 9,674 $ 11,255 Depreciation, depletion and amortization: Citrus Groves $ 3,037 $ 1,132 $ 7,877 $ 2,196 Agricultural Supply Chain Management 109 41 254 123 Improved Farmland - 572 - 3,194 Ranch and Conservation 291 335 776 997 Other Operations 347 477 745 586 Other Depreciation, Depletion and Amortization 67 (252 ) 267 148 Total depreciation, depletion and amortization $ 3,851 $ 2,305 $ 9,919 $ 7,244
follows:18(in thousands) June 30,
2015 September 30, 2014 Assets: Citrus Groves $ 407,107 $ 121,399 Agricultural Supply Chain Management 2,717 2,498 Improved Farmland 1,556 57,726 Ranch and Conservation 14,480 13,920 Other Operations 33,836 26,356 Other Corporate Assets 10,526 35,679 Total assets $ 470,222 $ 257,578 (in thousands) Three Months Ended December 31, 2015 2014 Revenues: Orange Co. $ 19,295 $ 16,993 Conservation and Environmental Resources 1,007 836 Other Operations 302 1,241 Total revenues 20,604 19,070 Operating expenses: Orange Co. 17,608 14,214 Conservation and Environmental Resources 1,560 745 Other Operations 70 839 Total operating expenses 19,238 15,798 Gross profit: Orange Co. 1,687 2,779 Conservation and Environmental Resources (553 ) 91 Other Operations 232 402 Total gross profit $ 1,366 $ 3,272 Depreciation, depletion and amortization: Orange Co. $ 3,357 $ 1,946 Conservation and Environmental Resources 232 243 Other Operations 106 128 Other Depreciation, Depletion and Amortization 313 667 Total depreciation, depletion and amortization $ 4,008 $ 2,984 (in thousands) December 31, September 30, 2015 2015 Assets: Orange Co. $ 421,505 $ 392,329 Conservation and Environmental Resources 13,776 13,779 Other Operations 21,189 31,468 Other Corporate Assets 12,512 22,512 Total Assets $ 468,982 $ 460,088 10. Stockholders’9. Stockholders' EquityEffective January 27, 2015, the Company’s Board of Directors adopted the Stock Incentive Plan of 2015 (the “2015 Plan”) which provides for up to an additional 1,250,000 shares available for issuance to provide a long-term incentive plan for officers, employees, directors and/or consultants to directly link incentives to stockholder value. The 2015 Plan was approved by stockholders on February 25, 2015.The adoption of the 2015 Plan superseded the 2013 Incentive Equity Plan (“2013 Plan”), which had been in place since April 2013. In the three months ended June 30, 2015, the Company awarded 12,500 restricted shares of the company’s common stock (“Restricted Stock”) to two senior executives, under the 2015 Plan. Total stock compensation expense for the restricted stock was approximately $17,000 for the three months ended June 30, 2015.also recognizes stockstock-based compensation expense for (i) Board of Directors fees (paid in treasury stock) and (ii) the Long TermStock Incentive Compensation Plan of 2015 (via restricted stock). Stock-based compensation expense for the Board of Director fees and Long Term Incentive Compensation PlanNamed Executive Officers was $176,200approximately $245,000 and $585,000$254,000 for the three and nine months ended June 30,December 31, 2015 respectively, and $204,000 and $909,000 for the three and nine months ended June 30, 2014, respectively. Stock compensation expense is recognized in corporate, general and administrative expenses in the Condensed Combined Consolidated Statements of Operations and Comprehensive Income.Marchfiscal year 2015, the Board of Directors authorized the repurchase of up to 20,000170,000 shares of the Company’s common stock beginning March 25, 2015 and continuing through March 25,December 31, 2016. The stock repurchases were made through open market transactions at times and in such amounts as the Company’s broker determined subject to the provisions of SEC Rule 10b-18. All repurchases were made by April 30, 2015. The following table illustrates the Company’s treasury stock purchases and issuances for the ninethree months ended June 30,December 31, 2015:(in thousands, except share amounts) Shares Cost Balance as of September 30, 2014 15,766 $ 650 Purchased 20,000 1,029 Issued to Directors and Named Executive Officers (12,916 ) (532 ) Balance as of June 30, 2015 22,850 $ 1,147 19(in thousands, except share amounts) Shares Cost Balance as of September 30, 2015 90,565 $ 3,962 Purchased 64,136 2,602 Issued to Directors (15,703 ) (809 ) Balance as of December 31, 2015 138,998 $ 5,755 11.10. Commitments and Contingenciesshareholderstockholder class action lawsuit captioned Shiva Y. Stein v. Alico, Inc., et al., No. 15-CA-000645 (the “Stein lawsuit”), was filed in the Circuit Court of the Twentieth Judicial District in and for Lee County, Florida, against Alico, Inc. (“Alico”), its current and certain former directors, 734 Citrus Holdings, LLC d/b/a Silver Nip Citrus, (“Silver Nip”), 734 Investors, LLC (“734 Investors”), 734 Agriculture, LLC (“734 Agriculture”) and 734 Sub, LLC (“734 Sub”) in connection with the acquisition of Silver Nip by Alico (the “Acquisition”). The complaint alleges that Alico’s directors at the time of the Acquisition, 734 Investors and 734 Agriculture breached fiduciary duties to Alico stockholders in connection with the Acquisition and that Silver Nip and 734 Sub aided and abetted such breaches. The lawsuit seeks, among other things, monetary and equitable relief, costs, fees (including attorneys’ fees) and expenses.shareholders,Citrus members, unspecified damages, disgorgement of profits, costs, fees (including attorneys’ fees) and expenses.conditionposition or results of operations.12.11. Related Party TransactionsChange in Control TransactionOn November 19, 2013, 734 Agriculture, LLC (“734 Agriculture”) and its affiliates, including 734 Investors, LLC (“734 Investors”), completed the previously announced purchase from Alico Holding, LLC, a company wholly owned by Atlantic Blue Group, Inc. (“Atlanticblue”), of 3,725,457 shares of our common stock (the “Share Purchase”).The common stock acquired by 734 Agriculture and its affiliates, including 734 Investors, represented approximately 51% of the Company’s outstanding voting securities. On November 15, 2013, 734 Investors amended and restated its LLC operating agreement to admit new members and to designate 734 Agriculture as the managing member, with authority to administer the affairs of 734 Investors, including the voting and disposition of shares of common stock, subject to certain restrictions set forth therein. As a result, upon the consummation of the Share Purchase, 734 Agriculture and its affiliates, including 734 Investors, acquired the voting power to control the election of the Company’s Directors and any other matter requiring the affirmative vote or consent of the Company’s shareholders. Messrs. Remy W. Trafelet and George R. Brokaw are the two controlling persons of 734 Agriculture.Appointment of Mr. Wilson as the Company’s Chief Executive OfficerUpon the Closing of the Share Purchase, Mr. JD Alexander ceased to be the Company’s CEO pursuant to his previously disclosed resignation. On November 22, 2013, the Board appointed Mr. Wilson to serve as the CEO, effective immediately.According to the terms The closing price of the Merger Agreement,Company's common stock on February 27, 2015 was $45.67.the membership interests (the "Members") in Silver Nip Citrus will receiveearned an additional Company148,705 shares of the Company’s common stock pursuant to the Merger Agreement. The additional purchase consideration was based on the value of the proceeds received to date by the Company from the sale of citrus fruit harvested on Silver Nip Citrus’ real property duringCitrus’s citrus groves following the conclusion of the 2014-2015 citrus harvest season. Additional consideration dueThe Members will receive additional Company common shares based on sales through May 31,any additional proceeds received by the Company subsequent to December 2015 is approximately 115,783 shares. The computation of additional consideration for the June 2015 harvest proceeds (the final proceeds of the harvest season) is pending receipt of final pricing information from processors, (see “Note 1”related to the accompanying2014-2015 harvest season.Financial Statements).includesincluded a waiver of any rights to any payments under his Change-in-Control Agreement with the Company. On November 6, 2013, the Company and Mr. Alexander also entered into a Consulting and Non-Competition Agreement under which (i) Mr. Alexander will provide consulting services to the Company during the two-year period after the Closing, (ii) Mr. Alexander agreed to be bound by certain non-competition covenants relating to the Company’s citrus operations and non-solicitation and non-interference covenants for a period of two years after the Closing, and (iii) the Company will paypaid Mr. Alexander for such services and covenants $2,000,000 in twenty-four monthly installments. Mr. Alexander also agreed, in a separate side letter withThe Company expensed approximately $167,000 and $250,000 under the Company, not to sell or transferConsulting and Non-Competition Agreement for the shares that were awarded pursuant to his Restricted Stock Award Agreement (other than to a family trust) for a period of two years after the Closing. Mr. Alexander also executed a general release in favor of the Company.includesincluded a waiver of any rights to any payments under his Change-in-Control Agreement with the Company. On March 20, 2015, the Company and Mr. Smith also entered into a Consulting and Non-Competition Agreement under which (i) Mr. Smith will provide consulting services to the Company during the three-year period after the resignation date, (ii) Mr. Smith agreed to be bound by certain non-competition covenants relating to the Company’s citrus operations and non-solicitation and non-interference covenants for a period of two years after the resignation date, and (iii) the Company will pay Mr. Smith up to $1,225,000 for such services and covenants. The Company’s business operations previously managed by Mr. Smith willare now be does not expect to appoint an interim or ongoing Chief Operating Officersubject to his execution, delivery, and non-revocation of a general release of claims in favor of the Company, to the following benefits: (a) $100,000 in cash in a lump sum and (b) a consulting fee of $350,000 payable monthly during the period commencing on his resignation date and ending on the first anniversary of his resignation date, subject to his continuing to provide services todate. The Company expensed approximately $88,000 under the Company.Separation and Consulting Agreement for the three months ended December 31, 2015. On June 1, 2015, the Company appointed John E. Kiernan to serve as Senior Vice President and Chief Financial Officer. approved, but not yet executed, a shared services agreement with Trafelet Brokaw & Co., LLC (“TBCO”) whereby the Company will reimburse TBCO for use of office space and various administrative and support services. The annual cost of the office and services is approximately $400,000. The agreement will expire in June 2016. The Company expensed approximately $98,560 under the Shared Services Agreement for the three months ended December 31, 2015.
Note 12. Accrued Liabilities21
Accrued Liabilities consist of the following at December 31, 2015 and 2014:ITEM 2.ALICO, INC. AND SUBSIDIARIES(in thousands) December 31, September 30, 2015 2015 Ad valorem taxes $ 163 $ 2,640 Accrued interest 1,247 1,155 Accrued employee wages and benefits 1,522 427 Inventory received but not invoiced 456 581 Accrued dividends 497 501 Current portion of deferred retirement obligations 342 342 Additional purchase price consideration 3,750 7,500 Other accrued liabilities 357 669 Total accrued liabilities $ 8,334 $ 13,815 MANAGEMENT’S DISCUSSION AND ANALYSISOF FINANCIAL CONDITION AND RESULTS OF OPERATIONSnotesNotes thereto. Additional context can also be found in our Annual Report on Form 10-K for the fiscal year ended September 30, 2014,2015, as filed with the Securities and Exchange Commission (“SEC”) on December 12, 2014.one timeonetime events; acquisitions and divestitures including our ability to achieve the anticipated results of the Orange-Co acquisition and Silver Nip Citrus merger; seasonality; labor disruptions; inability to pay debt obligations; inability to engage in certain transactions due to restrictive covenants in debt instruments; government restrictions on land use; changes in agricultural land values; changes in dividends; and market and pricing risks due to concentrated ownership of stock. These assumptions are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those risks factorsRisks Factors described in our Annual Report on Form 10-K for the year ended September 30, 20142015 and our Quarterly Reports on Form 10-Q.managegenerate operating revenues primarily from the sale of our land based upon its primary usagecitrus products and review its performance based upon three primary classifications – Citrus Groves, Improved Farmland, and Ranch and Conservation. In addition,cattle ranching operations. Effective October 1, 2015, we operate an Agricultural Supply Chain Management business that is not tied directly to our land holdings and Other Operations that include leases for mining and oil extraction rights to third parties. We present our financial results and the related discussions based upon these fiveas three business segments (Citrusand substantially all of our operating revenues are generated in the United States. During the three months ended December 31, 2015, we generated operating revenues of $20,604,000, loss from operations of $2,559,000, net loss of $3,011,000 and cash used in operations of $14,781,000.Operations). In connection withOperations.pursuitfiscal year 2016, we operate three business segments related to our various land holdings, as follows:growth opportunities consistent with our mission, we intendfruit, as well as, to regularly evaluate potential acquisitionsvalue-added services which include contracting for the harvesting, marketing and divestitureshauling of citrus.opportunities, someand also includes activities related to owning and/or leasing improved farmland. Improved farmland is acreage that has been converted, or is permitted to be converted, from native pasture and which may have various improvements including irrigation, drainage and roads.whichthe disposition of our sugarcane land in fiscal year 2015, we are no longer involved in sugarcane and the Improved Farmland segment is no longer material in nature. If appropriate opportunities present themselves, we may engage in selected acquisitions, divestitures and other business growth initiatives or undertakings. To the extent we engage in such opportunities it could, among other things, change our revenue mix, require us to obtain additional debt or equity financing and have a material impact on our business and has been combined in Other Operations. cash flows.Business SegmentsWe own approximately 121,000 acresfor the fiscal years ended June 30, 2015 and 2014 were included in the financial condition and results of land in twelve Florida counties (Alachua, Charlotte, Collier, DeSoto, Glades, Hardee, Hendry, Highlands, Lee, Martin Osceolaoperations of the Company as of and Polk),for the fiscal years ended September 30, 2015 and approximately 90,000 acres of mineral rights, and operate five business segments.·Citrus Groves include activities related to planting, owning, cultivating and/or managing citrus groves in order to produce fruit2014, respectively. Effective October 1, 2015, the fiscal year end for sale to fresh and processed citrus markets.·Agricultural Supply Chain Management and Support includes activities related to the purchase and resale of fruit, as well as, to value-added services which include contracting for the harvesting, marketing and hauling of citrus.22·Improved Farmland includes activities related to owning and/or leasing improved farmland. Improved Farmland is acreage that has been converted, or is permitted to be converted, from native pasture and which may have various improvements including irrigation, drainage and roads.·Ranch and Conservation includes activities related to cattle grazing, sod, native plant and animal sales, leasing, management and/or conservation of unimproved native pasture land.·Other Operations include activities related to a citrus nursery, rock mining royalties, oil exploration and other insignificant lines of business.Recent EventsMerger Agreement(“Merger”(the “Merger”) with 734 Citrus Holdings, LLC (“Silver Nip Citrus”) pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) with 734 Sub, LLC, a wholly owned subsidiary of the Company (“Merger Sub”), Silver Nip Citrus and, solely with respect to certain sections thereof, the equity holders of Silver Nip Citrus. The ownership of Silver Nip Citrus was held by 734 Agriculture, 74.89%, Mr. Clay Wilson, Chief Executive Officer of the Company, 5% and an entity controlled by Mr. Clay Wilson owned, 20.11%.Alico. wholly ownedwholly-owned subsidiaries of the Company. Pursuant to the Merger Agreement, at closing, the Company issued 923,257 shares of the Company’s common stock, par value $1.00 per share, to the holders of membership interests in Silver Nip Citrus. Silver Nip Citrus’ outstanding net indebtedness at the closing of the Merger was approximately $40,278,000 and other liabilities totaled $6,952,000. The Company acquired assets with a book value of approximately $65,739,000 and total net assets of $18,470,000. The common shares issued were recorded at the carrying amount of the net assets transferred. Thewill also receiveearned an additional Company148,705 shares of the Company’s common stock pursuant to the Merger Agreement. The additional purchase consideration was based on the value of the proceeds received to date by the Company from the sale of citrus fruit harvested on Silver Nip Citrus’ real propertyCitrus’s citrus groves following the conclusion of the 2014-2015 citrus harvest season.(“Board”(the “Board”) approval of funding. The contract specifies that the Board has to approve the payments annually and there can be no assurance that it will approve the annual fixed payments.itSFWMD has amended the Contract with the Company to extend the duration for funding beyond the 2016 legislative session. This provided the District with options available to continue with the project.23DistrictSFWMD receiving funds for the project from the Florida Legislature and the DistrictSFWMD Governing Board budget appropriation.DistrictSFWMD budget process allows for amending the budget at any Governing Board meeting, which could allow for some funding later in the fiscal year.year 2016. However, if no funds are provided in 2016 and accommodation is not reached to delay work on the project until funds are available, the District would be within its rights under the contract to terminate.Orange-Co AcquisitionOn December 2, 2014, the Company completed the acquisition of certain citrus and related assets of Orange-Co, LP (“Orange-Co”) pursuant to an Asset Purchase Agreement, which we refer to as the Orange-Co Purchase Agreement, dated as of December 1, 2014 and 51% of the ownership interests of Citree Holdings 1, LLC. The assets the Company purchased include approximately 20,263 acres of citrus groves in DeSoto and Charlotte Counties, Florida, which comprise one of the largest contiguous citrus grove propertiesstate of Florida. Total assets acquired were approximately $277,792,000, net of $2,060,000 in cash acquired and $4,838,000 in fair value attributableaccompanying Financial Statements for consistent presentation to noncontrolling interest, including: (1) $147,500,000 in initial cash consideration funded from the proceeds of the sugarcane disposition and new term debt; (2) up to $7,500,000 in additional cash consideration to be released from escrow in equal parts, subject to certain limitations,current period business segments. These reclassifications had no impact on December 1, 2015 and June 1, 2016; (3) the refinancing of Orange-Co’s outstanding debt including approximately $92,290,000 in term debt and a working capital, facilitynet income, or equity of approximately $27,857,000;cash flows as previously reported.(4) the assumption of certain other liabilities totaling $4,705,000. On December 1, 2014, Alico deposited an irrevocable standby letter of credit issued by Rabo Agrifinance, Inc. (“Rabo”) in the aggregate amount of $7,500,000 into an escrow account to fund the additional cash consideration.Sugarcane Land DispositionOn November 21, 2014, the Company completed the sale of approximately 36,000 acres of land used for sugarcane production and land leasing in Hendry County, Florida to Global Ag Properties, LLC (“Global Ag Properties”) for $97,913,921 in cash. We had previously leased approximately 30,600 of these acres to United States Sugar Corporation (the “USSC Lease”). The USSC Lease was assigned to Global Ag Propertiesshould be read in conjunction with the land sale.Net proceeds from the sugarcane land sale of $97,126,000 were deposited with a Qualified Intermediary in anticipation of the Orange-Co asset acquisition in a tax deferred like-kind exchange pursuant to Internal Revenue Code Section §1031 (see “Note 4” to the accompanying Condensed Combined Consolidated Financial Statements).The sales price is subject to post-closing adjustments over a ten (10)-year period. The Company realized a gain of $42,753,000 on the sale. 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 represents the Company’s estimate of the maximum exposure to loss as a result of the continuing involvement. A net gain of $13,613,000 was recognized in the Condensed Combined Consolidated Statements of Operations and Comprehensive Income for the nine months ended June 30, 2015.On May 1, 2015, the Company made a payment of $1,347,000 to Global Ag Properties pursuant to the sales contract. The USSC Lease is tied to the market price of sugar, and this payment is required annually, in advance, to supplement the rent paid by USSC in the event that the sugar prices are below certain thresholds. This advance payment is included in other current assets at June 30, 2015.As a result of the disposition of our sugarcane land, we are no longer involved in sugarcane, and, as of November 21, 2014, the Improved Farmland segment was no longer material to our business.Our sugarcane land was classified as assets held for sale as of September 30, 2014. The sugarcane operation has not been classified as a discontinued operation due to the Company’s continuing involvement pursuant to the post-closing agreement described above.24Results of OperationsThe following table sets forth a comparison of results of operations for the three and nine months ended June 30,December 31, 2015 and 2014:(in thousands) Three Months Ended Nine Months Ended June 30, Change June 30, Change 2015 2014 $ % 2015 2014 $ % Operating revenues: Citrus Groves $ 65,795 $ 27,167 $ 38,628 142.2 % $ 129,084 $ 55,390 $ 73,694 133.0 % Agricultural Supply Chain Management 2,105 4,083 (1,978 ) (48.4 )% 6,584 12,324 (5,740 ) (46.6 )% Improved Farmland 418 2,160 (1,742 ) (80.6 )% 2,492 19,441 (16,949 ) (87.2 )% Ranch and Conservation 296 408 (112 ) (27.5 )% 1,441 1,849 (408 ) (22.1 )% Other Operations 195 57 138 242.1 % 508 502 6 1.2 % Total operating revenues 68,809 33,875 34,934 103.1 % 140,109 89,506 50,603 56.5 % Gross Profit: Citrus Groves 20,244 8,850 11,394 128.7 % 33,057 18,830 14,227 75.6 % Agricultural Supply Chain Management 638 167 471 282.0 % 1,006 239 767 320.9 % Improved Farmland (241 ) (4,432 ) 4,191 (94.6 )% (244 ) (1,545 ) 1,301 (84.2 )% Ranch and Conservation (328 ) (276 ) (52 ) 18.8 % (551 ) (382 ) (169 ) 44.2 % Other Operations (498 ) 284 (782 ) (275.4 )% (278 ) 221 (499 ) (225.8 )% Total gross profit 19,815 4,593 15,222 331.4 % 32,990 17,363 15,627 90.0 % Corporate, general and administrative expenses 3,638 2,339 1,299 55.5 % 12,932 7,961 4,971 62.4 % Income from operations 16,177 2,254 13,923 617.7 % 20,058 9,402 10,656 113.3 % Other income (expense), net (2,183 ) (432 ) (1,751 ) 405.3 % 9,174 (1,143 ) 10,317 (902.6 )% Income before income taxes 13,994 1,822 12,172 668.1 % 29,232 8,259 20,973 253.9 % Income taxes 6,227 791 5,436 687.2 % 10,940 3,236 7,704 238.1 % Net income $ 7,767 $ 1,031 $ 6,736 653.3 % $ 18,292 $ 5,023 $ 13,269 264.2 % A(in thousands) Three Months Ended December 31, Change 2015 2014 $ % Operating revenues: Orange Co. $ 19,295 $ 16,993 $ 2,302 13.5 % Conservation and Environmental Resources 1,007 836 171 20.5 % Other Operations 302 1,241 (939 ) (75.7 )% Total operating revenues 20,604 19,070 1,534 8.0 % Gross profit: Orange Co. 1,687 2,779 (1,092 ) (39.3 )% Conservation and Environmental Resources (553 ) 91 (644 ) NM Other Operations 232 402 (170 ) (42.3 )% Total gross profit 1,366 3,272 (1,906 ) (58.3 )% General and administrative expenses 3,925 5,484 (1,559 ) (28.4 )% Loss from operations (2,559 ) (2,212 ) (347 ) 15.7 % Total other (expense) income, net (2,535 ) 11,181 (13,716 ) (122.7 )% (Loss) income before income taxes (5,094 ) 8,969 (14,063 ) (156.8 )% (Benefit) provision for income taxes (2,075 ) 3,763 (5,838 ) (155.1 )% Net (loss) income (3,019 ) 5,206 (8,225 ) (158.0 )% Net loss attributable to noncontrolling interests 8 — 8 NM Net (loss) income attributable to Alico, Inc. common stockholders $ (3,011 ) $ 5,206 $ (8,217 ) (157.8 )% segment results of operations follows.
business segments:25
Orange Co.Citrus Grovesand nine months ended June 30,December 31, 2015 and 2014:(in thousands, except per box and per pound solids data) Three Months Ended Nine Months Ended June 30, Change June 30, Change 2015 2014 $ % 2015 2014 $ % Operating Revenues: Early and Mid Season $ 3,999 $ 2,907 $ 1,092 37.6 % $ 51,926 $ 25,273 $ 26,653 105.5 % Valencias 54,693 23,692 31,001 130.9 % 66,730 27,130 39,600 146.0 % Fresh Fruit 3,400 485 2,915 601.0 % 5,941 2,344 3,597 153.5 % Other 3,703 83 3,620 NM 4,487 643 3,844 597.8 % Total $ 65,795 $ 27,167 $ 38,628 142.2 % $ 129,084 $ 55,390 $ 73,694 133.0 % Boxes Harvested: Early and Mid Season 191 175 16 9.1 % 4,442 2,002 2,440 121.9 % Valencias 4,056 1,485 2,571 173.1 % 4,944 1,730 3,214 185.8 % Total Processed 4,247 1,660 2,587 155.8 % 9,386 3,732 5,654 151.5 % Fresh Fruit 280 53 227 428.3 % 459 213 246 115.5 % Total 4,527 1,713 2,814 164.3 % 9,845 3,945 5,900 149.6 % Pound Solids Produced: Early and Mid Season 1,198 1,066 132 12.4 % 26,139 12,321 13,818 112.1 % Valencias 26,418 10,008 16,410 164.0 % 32,112 11,536 20,576 178.4 % Total 27,616 11,074 16,542 149.4 % 58,251 23,857 34,394 144.2 % Pound Solids per Box: Early and Mid Season 6.27 6.09 0.18 3.0 % 5.88 6.15 (0.27 ) (4.4 )% Valencias 6.51 6.74 (0.23 ) (3.4 )% 6.50 6.67 (0.17 ) (2.5 )% Price per Pound Solids: Early and Mid Season $ 3.34 $ 2.73 $ 0.61 22.3 % $ 1.99 $ 2.05 $ (0.06 ) (2.9 )% Valencias $ 2.07 $ 2.37 $ (0.30 ) (12.7 )% $ 2.08 $ 2.35 $ (0.27 ) (11.5 )% Price per Box: Fresh Fruit $ 12.14 $ 9.15 $ 2.99 32.7 % $ 12.94 $ 11.00 $ 1.94 17.6 % Operating Expenses: Cost of Sales $ 33,762 $ 13,169 $ 20,593 156.4 % $ 70,572 $ 25,770 $ 44,802 173.9 % Harvesting and Hauling 9,424 4,794 4,630 96.6 % 21,491 10,790 10,701 99.2 % Other 2,365 354 2,011 568.1 % 3,964 - 3,964 NM Total $ 45,551 $ 18,317 $ 27,234 148.7 % $ 96,027 $ 36,560 $ 59,467 162.7 % NM - Not Meaningful (in thousands, except per box and per pound solids data) Three Months Ended December 31, Change 2015 2014 $ % Operating Revenues: Early and Mid-Season $ 13,930 $ 14,377 $ (447 ) (3.1 )% Fresh Fruit 2,460 1,283 1,177 91.7 % Purchase and Resale of Fruit 1,327 920 407 44.2 % Other 1,578 413 1,165 282.1 % Total $ 19,295 $ 16,993 $ 2,302 13.5 % Boxes Harvested: Early and Mid-Season 1,311 1,363 (52 ) (3.8 )% Total Processed 1,311 1,363 (52 ) (3.8 )% Fresh Fruit 196 86 110 127.9 % Total 1,507 1,449 58 4.0 % Pound Solids Produced: Early and Mid-Season 6,931 7,500 (569 ) (7.6 )% Total 6,931 7,500 (569 ) (7.6 )% Pound Solids per Box: Early and Mid-Season 5.29 5.50 (0.21 ) (3.8 )% Price per Pound Solids: Early and Mid-Season $ 2.01 $ 1.92 $ 0.09 4.7 % Price per Box: Fresh Fruit $ 12.55 $ 14.88 $ (2.33 ) (15.7 )% Operating Expenses: Cost of Sales $ 10,907 $ 9,008 $ 1,899 21.1 % Harvesting and Hauling 3,755 3,742 13 0.3 % Purchase and Resale of Fruit 1,257 907 350 38.6 % Other 1,689 557 1,132 203.2 % Total $ 17,608 $ 14,214 $ 3,394 23.9 % hauling.hauling costs. Cost of sales represents the cost of maintaining our citrus groves for the preceding calendar year and does not vary in relation to production. Harvesting and hauling representscosts represent the costcosts of bringing citrus product to processors and varies based upon the number of boxes produced.
Other expenses include the period costs of third-party grove caretaking and the contracting for harvesting and hauling activities.26and gross profit for the three and nine months ended June 30,December 31, 2015, as compared to the three and nine months ended June 30,December 31, 2014, was primarily due to the acquisitionharvesting of Orange-Coan additional 110,000 boxes of fresh fruit and an increase of 66,000 boxes in December 2014. Orange-Co related revenuesthe resale of third party fruit. Additionally, the early and gross profit were approximately $34,608,000 and $10,274,000 for the three months ended June 30, 2015, respectively, and $72,233,000 and $18,060,000 for the nine months ended June 30, 2015, respectively. For the three and nine months ended June 30, 2015, Orange-Co revenues represented 53% and 56% of total citrus grove revenues.Orange-Co relatedmid-season revenue decreased $447,000 due to fewer boxes harvested and fewer pound solids produced totaled approximately 2,225,000per box, offset by a $0.09 price per pound solid increase. The increase in other revenues relates to increased contract harvest and 14,683,000haul for the three months ended June 30, 2015, respectively and approximately 5,307,000 and 33,323,000 for the nine months ended June 30, 2015, respectively. We included the financial results of Orange-Co in the accompanying Condensed Combined Consolidated Financial Statements from the date of acquisition.July 10, 2015January 12, 2016 Citrus Crop Forecast for the 2015/2016 harvest season, indicated that the 2014/2015 Florida orange crop declined by 8,000,000will decrease from 96,800,000 boxes or approximately 7.6% compared tofor the prior year. As indicated below, our 2014/2015 crop significantly outpaced the statewide performance on ayear to 69,000,000 boxes harvested basis with an increase of approximately 5% over the prior year.Pro-Forma Results for Citrus GrovesThe unaudited pro forma financial information below for the nine months ended June 30,2015/2016 crop year, a decrease of 28.7%. We have revised our 2016 production estimate and now expect our 2016 crop to be approximately 85% of our 2015 and 2014 gives effectproduction. These declines are believed to the acquisition of Orange-Co as if the acquisition had occurred on October 1, 2014 and includes production from Silver Nip Citrus through June 30, 2015. The pro forma financial information is not necessarily indicative of the results of operations if the acquisitions had been effective as of this date.(in thousands, except for pound solids per box) Nine Months Ended June 30, Citrus Boxes Harvested 2015 2014 Change % Change Early & Mid-Season 4,442 4,631 (189 ) (4.1 )% Valencias 5,569 5,031 538 10,7 % Fresh Fruit 460 308 152 49.4 % 10,471 9,970 501 5.0 % Pound Solids Produced Early & Mid-Season 26,139 28,508 (2,369 ) (8.3 )% Valencias 36,044 33,754 2,290 6.8 % 62,183 62,262 (79 ) (0.1 )% Pound Solids Per Box Early & Mid-Season 5.88 6.16 (0.28 ) (4.5 )% Valencias 6.47 6.71 (0.24 ) (3.6 )% Combined 6.21 6.44 (0.23 ) (3.6 )% Citrus box and pound solids production fluctuates eachbe mainly driven by growing season and these fluctuations in production which may behave been attributable to various factors, including changes in weather impacting bloom, horticultural practices and the effects of diseases and pests, including Citrus Greening.
The industry and the Company are both experiencing premature fruit drop and smaller sized fruit. We continue to expect and have seen in our first quarter results that the forecasted 28.7% decrease in the size of the statewide crop will cause the price per pound solids for fiscal year 2016 to be above the price for fiscal year 2015. 27Agricultural Supply Chain Managementand nine months ended June 30,December 31, 2015 and 2014:(in thousands, except per box and per pound solids data) Three Months Ended Nine Months Ended June 30, Change June 30, Change 2015 2014 $ % 2015 2014 $ % Purchase and Resale of Fruit: Revenues $ 1,524 $ 3,398 $ (1,874 ) (55.2 )% $ 5,168 $ 10,095 $ (4,927 ) (48.8 )% Boxes Sold 112 235 (123 ) (52.3 )% 442 836 (394 ) (47.1 )% Pound Solids Sold 742 1,571 (829 ) (52.8 )% 2,663 5,195 (2,532 ) (48.7 )% Pound Solids per Box 6.63 6.69 (0.06 ) (0.9 )% 6.02 6.21 (0.19 ) (3.1 )% Price per Pound Solids $ 2.05 $ 2.16 $ (0.11 ) (5.1 )% $ 1.94 $ 1.94 $ - - Value Added Services: Revenue $ 581 $ 670 $ (89 ) (13.3 )% $ 1,238 $ 1,891 $ (653 ) (34.5 )% Value Added Boxes 209 71 138 194.4 % 537 652 (115 ) (17.6 )% Other Revenue $ - $ 15 (15 ) (100.0 )% $ 178 $ 338 (160 ) (47.3 )% (in thousands, except per pound data) Three Months Ended December 31, Change 2015 2014 $ % Revenue From: Sale of Calves $ 782 $ 83 $ 699 NM Sale of Culls — 490 (490 ) (100.0 )% Land Leasing 221 224 (3 ) (1.3 )% Other 4 39 (35 ) (89.7 )% Total $ 1,007 $ 836 $ 171 20.5 % Pounds Sold: Calves 483 38 445 NM Culls — 370 (370 ) (100.0 )% Price Per Pound: Calves $ 1.62 $ 2.18 $ (0.56 ) (25.7 )% Culls $ — $ 1.33 $ (1.33 ) (100.0 )% Operating Expenses: Cost of Calves Sold $ 602 $ 3 $ 599 NM Cost of Culls Sold — 199 (199 ) (100.0 )% Land Leasing Expenses 44 56 (12 ) (21.4 )% Water Conservation 914 487 427 87.7 % Total $ 1,560 $ 745 $ 815 109.4 % overall declineincrease in revenues from the sale of calves for the three and nine months ended June 30,December 31, 2015 as compared to the three and nine months ended June 30,December 31, 2014 is due to the increase in Purchase and Resale of Fruit revenue, boxespounds sold, and pound solids sold, as well as the declines in Value Added Services revenues and other revenues, are all being drivenpartially offset by a management decision to reduce the number of external boxes handled by Alico Fruit Company to focus on our internal operations. This decision was madedecrease in price per pound. The increase in pounds sold in the secondcurrent quarter was due to timing of fiscal year 2014.The declinecalf sales as we held an additional 1,000 calves in Alico Fruit Company gross profit relates primarily to the changes in revenue outlined above.28Improved FarmlandThe table below presents key operating measures for the three and nine months ended Juneinventory at September 30, 2015, and 2014:(in thousands) Three Months Ended Nine Months Ended June 30, Change June 30, Change 2015 2014 $ % 2015 2014 $ % Operating Revenues: Sale of Sugarcane $ - $ 1,410 $ (1,410 ) (100.0 )% $ - $ 17,428 $ (17,428 ) (100.0 )% Molasses Bonus - 56 (56 ) (100.0 )% - 817 (817 ) (100.0 )% Land Leasing 418 693 (275 ) (39.7 )% 2,492 1,196 1,296 108.4 % Total $ 418 $ 2,159 $ (1,741 ) (80.6 )% $ 2,492 $ 19,441 $ (16,949 ) (87.2 )% Operating Expenses: Cost of Sales $ - $ 2,973 $ (2,973 ) (100.0 )% $ - $ 13,881 $ (13,881 ) (100.0 )% Harvesting and Hauling - 428 (428 ) (100.0 )% - 3,759 (3,759 ) (100.0 )% Land Leasing Expenses 60 3,190 (3,130 ) (98.1 )% 577 3,346 (2,769 ) (82.8 )% Guaranteed Payment 599 - 599 NM 2,159 - 2,159 NM Total $ 659 $ 6,591 $ (5,932 ) (90.0 )% $ 2,736 $ 20,986 $ (18,250 ) (87.0 )% NM - Not Meaningful On May 19, 2014, the Company entered into a triple net agricultural lease with its sole sugarcane customer, United States Sugar Corporation (“USSC”), of approximately 30,600 gross acres of land in Hendry County, Florida used for sugarcane farming which includes 19,181 acres planted or plantable to sugar. As a result of the lease, the Company is no longer directly engaged in sugarcane farming.On August 8, 2014, we entered into a Purchase and Sale Agreement, (the “Purchase Agreement”) with Terra Land Company (“Terra”) to sell approximately 30,959 gross acres of land located in Hendry County, Florida used for sugarcane production for a base purchase price of $91,436,000. The base purchase price was subject to a valuation adjustment in the event that either the net farmable acres or net support acres of the land were more or less than the amounts in the Purchase Agreement by one percent (1%) or greater.On November 21, 2014, via various amendments to the Purchase Agreement, we completed the sale to Global Ag Properties of approximately 36,000 gross acres of land located in Henry County, Florida used for sugarcane production for a purchase price of approximately $97,900,000 pursuant to the Purchase and Sale Agreement dated August 8, 2014. Global Ag Properties is a wholly-owned subsidiary of Terra. We have also assigned our interest in the USSC Lease to Global Ag Properties in conjunction with the sale. The parties have made customary representations, warranties, covenants and agreements in the Purchase AgreementAs a result of the disposition of our sugarcane land, we are no longer involved in sugarcane and the Improved Farmland segment is no longer material to our business.29Ranch and ConservationThe table below presents key operating measures for the three and nine months ended June 30, 2015 and 2014: Three Months Ended Nine Months Ended June 30, Change June 30, Change 2015 2014 $ % 2015 2014 $ % Operating Revenues: Sale of Calves $ 62 47 $ 15 31.9 % $ 171 $ 308 $ (137 ) (44.5 )% Sale of Culls - - - NM 511 692 (181 ) (26.2 )% Land Leasing 197 311 (114 ) (36.7 )% 644 798 (154 ) (19.3 )% Other 37 50 (13 ) (26.0 )% 115 51 64 125.5 % Total $ 296 $ 408 $ (112 ) (27.5 )% $ 1,441 $ 1,849 $ (408 ) (22.1 )% Pounds Sold: Calves 29 30 (1 ) (3.3 )% 79 188 (109 ) (58.0 )% Culls - - - NM 446 794 (348 ) (43.8 )% Price Per Pound: Calves $ 2.14 $ 1.57 $ 0.57 36.3 % $ 2.16 $ 1.64 $ 0.52 31.7 % Culls $ - $ - $ - NM $ 1.15 $ 0.87 $ 0.28 32.2 % Operating Expenses: Cost of Calves Sold $ 3 $ 64 $ (61 ) (95.3 )% $ 6 $ 284 $ (278 ) (97.9 )% Cost of Culls Sold - 100 (100 ) (100.0 )% 220 455 (235 ) (51.6 )% Land Leasing Expenses 50 - 50 NM 176 157 19 12.1 % Other 571 520 51 9.8 % 1,590 1,335 255 19.1 % Total $ 624 $ 684 $ (60 ) (8.8 )% $ 1,992 $ 2,231 $ (239 ) (10.7 )% NM - Not Meaningful RanchCalves are generallyhistorically been sold to market in the fourth quarter of eachthe fiscal year. ResultsWe sold 786 calves in each ofthe three months ended December 31, 2015. There were no culls sold in the three months ended December 31, 2015. The increase in gross profit for the three months ended December 31, 2015 as compared to the three months ended December 31, 2014 relates primarily to the increase in pounds sold, offset by no cull pounds sold in the first second and third quartersfiscal quarter of the fiscal years are immaterial and comparison of results is not meaningful.$558,000$914,000 and $480,000$487,000 for the three months ended June 30,December 31, 2015 and 2014, respectively, and were approximately $1,590,000 and $1,364,000 for the nine months ended June 30, 2015 and 2014, respectively.resultsdecrease in Other Operations revenues is a result of the sale of our sugarcane operations and the corresponding reduction in land lease revenues from our former lease with United States Sugar Corporation. Operating expenses for Other Operations segment for the three and nine months ended June 30, 2015 are in-line with the same perioddecreased by approximately $800,000 as a result of the prior year.Corporate, sale of our sugarcane operations.increasedecrease in corporate, general and administrative expenses for the three and nine months ended June 30,December 31, 2015 as compared to the three months ended December 31, 2014 relates primarily to professional and legal costs associated with the acquisitions, dispositions and mergers described above in “Recent Events,”during the first fiscal quarter of 2015 which totaled approximately $1,120,000$3,600,000. Additionally, in the three months ended December 31, 2015, we incurred approximately $1,400,000 in costs that were not incurred in the prior year same quarter. The costs included approximately $400,000 in legal costs related to shareholder litigation, $400,000 in write-off of an unsuccessful acquisition, $304,000 related to consulting and $5,473,000non-competition agreements, and bonuses awarded to certain executives for fiscal 2015 performance that were approved in the current quarter.and nine months ended June 30, 2015, respectively. The costs included $3,424,000 in legal costs, $1,036,000 in other real estate closing costs and $800,000 related to a consulting and non-competition agreement with the former CEO for the nine months ended June 30, 2015.Corporate, general and administrative expenses for the three and nine months ended June 30, 2014 included costs incurred related to the change in control in November 2013, which totaled $261,000 and $2,266,000 for the three and nine months ended June 30, 2014, respectively. The costs included $195,000 for the acceleration of the vesting of the Long-Term Incentive Plan awards, $849,000 for the cost of Director and Officer insurance for the departing Directors and $583,000 related to a consulting and non-competition agreement with the former CEO for the nine months ended June 30, 2014.Other Income (Expense), netOther income (expense), net for the nine months ended June 30,December 31, 2015 is approximately $10,000,000 greater$13,716,000 less than the same period of the prior year due to an approximate $16,000,000a gain of approximately $13,613,000 on sale of real estatethe sugarcane land in the first quarter of fiscal 2015, offset by an increase of approximately $6,000,000$1,125,000 in interest expense, due primarily to the term loan debt from the Orange-Co acquisition.$6,227,000 and $791,000$3,763,000 for the three months ended June 30,December 31, 2015 and 2014, respectively. The Company’s effective income tax rates were 44.5%40.7% and 43.4%41.9% for the three months ended June 30,December 31, 2015 and 2014, respectively. Income tax expense was approximately $10,940,000 and $3,236,000 for the nine months ended June 30, 2015 and 2014, respectively. Company’s effective income tax rates for the nine months ended June 30, 2015 and 2014 were 37.4% and 39.2%, respectively.During the three months ended June 30, 2015, the Company revised effective tax rates to reflect the impact of claiming certain deductions on amended federal and state income tax returns filed for the fiscal years ended September 30, 2011 through September 30, 2013. Other changes to the effective tax rates relate primarily to the nondeductible nature of projected political contributions and lobbying expenses. In addition, there were limitations on certain deductions related to the vesting of the long-term incentive grants for fiscal year 2014, and non-deductible transaction costs related to the Silver Nip Citrus merger for fiscal year 2015The IRSInternal Revenue Service ("IRS") is currently auditing the Company’s tax returnsreturn for the fiscal year ended September 30, 2013. Audits for fiscal years ended September 30, 2013, 2012 and 2011.31AlicoEBITDAEarnings before interest, tax, depreciation and amortization ("EBITDA") among other measures, to evaluate the performance of its business. Due to significant depreciable assets associated with the nature of our operations and, to a lesser extent, interest costs associated with our capital structure, management believes that Adjusted EBITDA, Adjusted Earnings per Diluted Common Share, Adjusted Free Cash Flow and Adjusted Free Cash Flow per Diluted Common Share are important measures to evaluate our results of operations between periods on a more comparable basis and to help investors analyze underlying trends in our business, evaluate the performance of our business both on an absolute basis and relative to our peers and the broader market, provides useful information to both management and investors by excluding certain items that may not be indicative of our core operating results and operational strength of our business and helps investors evaluate our ability to service our debt. Tax impacts are computed based on the effective rate for the ninethree months ended June 30,December 31, 2015. Such measurements are not prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”)GAAP and should not be construed as an alternative to reported results determined in accordance with U.S. GAAP. The non-U.S. GAAP information provided is unique to Alicothe Company and may not be consistent with methodologies used by other companies. Adjusted Free Cash Flow is defined as cash provided by (used in) operations less capital expenditures adjusted for non-recurring transactions. The Company uses Adjusted Free Cash Flow and Adjusted Free Cash Flow per Diluted Common Share to evaluate its business and this measure is considered an important indicator of the Company's liquidity, including its ability to reduce net debt, make strategic investments and pay dividends to common stockholders. An analysis of Adjusted Free Cash Flow and Adjusted Free Cash Flow per Common Share is provided below. Net income which management considers being the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP,attributable to common stockholders is reconciled to Adjusted EBITDA and Adjusted Earnings per Diluted Common Share, as follows:Adjusted EBITDA (in thousands) Three Months Ended June 30, Nine Months Ended June 30, 2015 2014 2015 2014 Net income $ 7,767 $ 1,031 $ 18,292 $ 5,023 Interest expense 2,127 657 5,715 1,322 Income tax provision 6,227 791 10,940 3,236 Depreciation and amortization 3,851 2,305 9,919 7,244 EBITDA 19,972 4,784 44,866 16,825 Asset impairment - - 541 - Loss on extinguishment of debt - - 964 - Transaction costs 407 261 4,760 2,266 Write-off of certain inventory and plant cane costs - 2,309 - 2,309 Acquired citrus inventory fair value adjustments 3,023 - 7,225 - Payments on consulting agreements 704 - 704 - Loss (gain) on sale of assets 27 (4 ) (16,397 ) (3 ) Adjusted EBITDA $ 24,133 $ 7,350 $ 42,663 $ 21,397 32Adjusted Earnings Per Diluted Common Share (in thousands) Net income $ 7,767 $ 1,031 $ 18,292 $ 5,023 Asset impairment - - 541 - Loss on extinguishment of debt - - 964 - Transaction costs 407 261 4,760 2,266 Write-off of certain inventory and plant cane costs - 2,309 - 2,309 Acquired citrus inventory fair value adjustments 3,023 - 7,225 - Payments on consulting agreements 704 - 704 - Loss (gain) on sale of assets 27 (4 ) (16,397 ) (3 ) Tax impact (1,594 ) (1,030 ) 824 (1,792 ) Adjusted net income $ 10,334 $ 2,567 $ 16,913 $ 7,803 Dilutive common shares 8,284 7,356 7,971 7,351 Adjusted Earnings Per Diluted Common Share $ 1.25 $ 0.35 $ 2.12 $ 1.06 Adjusted Free Cash Flow (in thousands) Cash provided by operations $ 32,156 $ 10,144 $ 25,895 $ 14,770 Adjustments for non-recurring items: Transaction costs 407 261 4,760 2,266 Payments on consulting agreements 704 - 704 - Capital expenditures (4,059 ) (2,497 ) (9,674 ) (11,255 ) Adjusted Free Cash Flow $ 29,208 $ 7,908 $ 21,685 $ 5,781 Dilutive common shares 8,284 7,356 7,971 7,351 Adjusted Free Cash Flow Per Diluted Common Share $ 3.53 $ 1.08 $ 2.72 $ 0.79 33
Adjusted EBITDA(in thousands) Three Months Ended December 31, 2015 2014 Net (loss) income attributable to common stockholders $ (3,011 ) $ 5,206 Interest expense 2,503 1,378 (Benefit) provision for income taxes (2,075 ) 3,763 Depreciation and amortization 4,008 2,984 EBITDA 1,425 13,331 Transaction costs 397 3,579 Loss on extinguishment of debt — 947 Payments on consulting agreements 304 — Litigation expenses related to shareholder lawsuit 400 — Gains on sale of real estate (142 ) (13,497 ) Adjusted EBITDA $ 2,384 $ 4,360 (in thousands) Three Months Ended December 31, 2015 2014 Net (loss) income attributable to common stockholders $ (3,011 ) $ 5,206 Loss on extinguishment of debt — 947 Transaction costs 397 3,579 Litigation expenses related to shareholder lawsuit 400 — Payments on consulting agreements 304 — Gains on sale of real estate (142 ) (13,497 ) Tax impact (391 ) 3,764 Adjusted net loss $ (2,443 ) $ (1 ) Diluted common shares 8,303 7,367 Adjusted Earnings per Diluted Common Share $ (0.29 ) $ — (in thousands) Three Months Ended December 31, 2015 2014 Net cash used in operating activities $ (14,781 ) $ (16,446 ) Adjustments for non-recurring items: Transaction costs 397 3,579 Payments on consulting agreements 304 — Litigation expenses related to shareholder lawsuit 400 — Capital expenditures (2,988 ) (1,808 ) Adjusted Free Cash Flow $ (16,668 ) $ (14,675 ) Diluted common shares 8,303 7,367 Adjusted Free Cash Flow per Diluted Common Share $ (2.01 ) $ (1.99 ) (in thousands) June 30, September 30, 2015 2014 Change Cash and cash equivalents $ 9,739 $ 31,020 $ (21,281 ) Investments $ - $ 263 $ (263 ) Total current assets $ 78,675 $ 125,710 $ (47,035 ) Total current liabilities $ 20,043 $ 20,669 $ (626 ) Working capital $ 58,632 $ 105,041 $ (46,409 ) Total assets $ 470,222 $ 257,578 $ 212,644 Term loans and lines of credit $ 209,928 $ 64,800 $ 145,128 Current ratio 3.93 6.08 (2.15 ) Our operations have historically generated positive net cash flow from operating activities. Sources of cash primarily include cash flow from operations, amounts available under our revolving and working capital credit facilities and access to capital markets. Our access to additional borrowings under the Revolving Credit Facility is subject to the satisfaction of customary borrowing conditions, including the absence of any event or circumstance having a material adverse effect on our business. As a public company, we may have access to other sources of capital such as the public bond markets. However, our access to, and the availability of, financing on acceptable terms in the future will be affected by many factors, including (i) our financial condition, prospects and credit rating, (ii) the liquidity of the overall capital markets and (iii) the state of the economy. There can be no assurance that we will continue to have access to the capital markets on acceptable terms or at all.The principal uses of cash that affect our liquidity position include the following: operational expenditures including employee costs, the cost of maintaining our citrus groves, harvesting and hauling of our citrus products, capital expenditures, income tax payments, acquisitions, dividends, and debt service costs including interest and principal payments on our term loans and credit facilities. In addition to the acquisitions and dispositions disclosed elsewhere, we have evaluated and expect to continue to evaluate possible acquisitions and dispositions of certain businesses. Such transactions may be material and may involve cash, the issuance of other securities or the assumption of indebtedness.(in thousands) December 31, September 30, 2015 2015 Change Cash and cash equivalents $ 3,276 $ 5,474 (2,198 ) Total current assets $ 82,060 $ 70,763 11,297 Total current liabilities $ 17,584 $ 24,135 (6,551 ) Working capital $ 64,476 $ 46,628 17,848 Total assets $ 468,982 $ 460,088 8,894 Term loans and line of credit $ 227,913 $ 205,481 22,432 Current ratio 4.67 to 1 2.93 to 1 operating activities,operations and availability under our revolvinglines of credit facilities will provide us with sufficient liquidity to service the principal and interest payments on our indebtedness, satisfy our working capital requirements and capital expenditures for at least the next 12twelve months and over the long term. We have $76,000,000 ina $70,000,000 working capital linesline of credit, of which $55,153,500approximately $30,884,000 is available for our general use as of June 30,December 31, 2015 and a $25,000,000 revolving line of credit all of which is available for our general use as of June 30,December 31, 2015 (see “Note 7”Note 6 “Long-Term Debt and Lines of Credit" to the accompanying Condensed Combined Consolidated Financial Statements). If the Company pursues significant growth opportunities in the future, it could have a material adverse impact on our cash balances and we may need to finance such activities by drawing down monies under our lines of credit and if necessary,or obtaining additional debt or equity financing.Our level of debt There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. Any inability to obtain additional financing could have important consequences on our business, including, but not limited to, increasing our vulnerability to general adverse economic and industry conditions, limiting the availability of our cash flow to fund future investments, capital expenditures, working capital, business activities and other general corporate requirements and limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate. These events would adversely impact our results of operations, cash flows and financial position.
ability to pursue different growth opportunities.34Cash FlowsThe decrease in cash and cash equivalents was primarily due to the following factors:·Capital expenditures of $9,674,000;·Acquisition of Citrus groves (Orange-Co and TRB) of $283,211,000 offset by $145,000,000 in refinanced debt;·Payment on revolving credit lines of $80,947,000; and·Principal payments on long-term debt of $15,061,000.Provided ByUsed In Operating ActivitiesProvided byUsed in Operating Activities for the ninethree months ended June 30,December 31, 2015 and 2014:(in thousands) Nine Months Ended June 30, 2015 2014 Change Net income $ 18,292 $ 5,023 $ 13,269 Depreciation and amortization 9,919 7,244 2,675 (Gain) loss on sale of assets (17,087 ) 638 (17,725 ) Other non-cash expenses 16,285 1,562 14,723 Change in working capital (1,514 ) 303 (1,817 ) Cash provided by operating activities $ 25,895 $ 14,770 $ 11,125 Three Months Ended (in thousands) December 31, 2015 2014 Change Net (Loss) Income $ (3,011 ) $ 5,206 $ (8,217 ) Depreciation and Amortization 4,008 2,984 1,024 Net (gain) loss on Sale of Property and Equipment 128 (13,701 ) 13,829 Other non-cash expenses 613 187 426 Change in working capital (16,519 ) (11,122 ) (5,397 ) Cash used in operating activities $ (14,781 ) $ (16,446 ) $ 1,665 increasedecrease in net income for the ninethree months ended June 30,December 31, 2015, versus the same period of the prior year are discussed in “Results“Condensed Combined Consolidated Statements of Operations.Comprehensive Income.” The gain on sale of assetsproperty and equipment in the three months ended December 31, 2014 is substantially due to the recognition of approximately $13,613,000 associated with the Sugarcanesugarcane land sale as discussed inRecent Events.year coinciding with our harvest cycles.year. Cash flows from operating activities typically improve in our second and third fiscal quarters as we harvest our citrus crops.35ninethree months ended June 30,December 31, 2015 and 2014:(in thousands) Nine Months Ended June 30, 2015 2014 Change Capital expenditures Sugarcane planting $ - $ (2,792 ) $ 2,792 Improvements to farmland (2,406 ) (937 ) (1,469 ) Citrus nursery (2,944 ) (4,783 ) 1,839 Citrus tree development (493 ) (733 ) 240 Breeding herd purchases (509 ) (752 ) 243 Rolling stock, equipment and other (2,347 ) (1,258 ) (1,089 ) Other (975 ) - (975 ) Total $ (9,674 ) $ (11,255 ) $ (1,581 ) - - Acquisition of Citrus business $ (283,211 ) $ - $ (283,211 ) Proceeds from sale of assets 106,196 928 105,268 Return on investment in Magnolia Fund 652 3,185 (2,533 ) Other (1 ) 27 (28 ) Cash used in investing activities $ (186,038 ) $ (7,115 ) $ (178,923 ) Capital expenditures decreased Three Months Ended (in thousands) December 31, 2015 2014 Change Capital expenditures: Citrus nursery $ (41 ) $ (1,248 ) $ 1,207 Citrus tree development (1,529 ) (117 ) (1,412 ) Breeding herd purchases (620 ) (164 ) (456 ) Rolling stock, equipment and other (659 ) (279 ) (380 ) Other (139 ) — (139 ) Total $ (2,988 ) $ (1,808 ) $ (1,180 ) Acquisition of Citrus business $ — $ (265,063 ) $ 265,063 Proceeds from sale of assets — 97,151 (97,151 ) Other 140 361 (221 ) Cash used in investing activities $ (2,848 ) $ (169,359 ) $ 166,511 dispositionacquisition of our sugarcane land. We are no longer involved in sugarcane and therefore no sugarcane plantings or improvements to farmland took place in the nine months ended June 30, 2015.Additionally, we acquired Orange-Co for approximately $265,587,000$265,063,000 in December 2014 (see “Note 4” to the accompanying Condensed Combined Consolidated Financial Statements) and utilizedutilizing proceeds from the disposition of our sugarcane land of $97,151,000 fromapproximately $97,126,000 via a tax deferred like-kindlike kind exchange pursuant to Internal Revenue Code Section §10311031 (see “Note 4”Note 4. “Acquisitions and Dispositions" to the accompanying Condensed Combined Consolidated Financial Statements ). In addition, Silver Nip acquired a citrus grove of approximately 1,500 acres in Charlotte County, Florida for $17,624,000.
Statements).36(Used In) Financing Activities Three Months Ended (in thousands) December 31, 2015 2014 Change Proceeds from term loans $ — $ 182,555 $ (182,555 ) Repayments on revolving line of credit $ — $ (22,309 ) $ 22,309 Borrowings on revolving line of credit 24,986 36,319 (11,333 ) Repayment of term loan — (34,000 ) 34,000 Principal payments on term loans (2,699 ) (290 ) (2,409 ) Contingent consideration paid (3,750 ) — (3,750 ) Treasury stock purchases $ (2,602 ) $ — $ (2,602 ) Financing costs — (2,834 ) 2,834 Dividends paid $ (504 ) $ (442 ) $ (62 ) Distributions to members — (458 ) 458 Cash provided by financing activities 15,431 158,541 (143,110 ) following table details the items contributing to Net Cash Provided By (Used In) Financing Activitiesdecrease in net cash provided by financing activities for the ninethree months ended June 30,December 31, 2015, and 2014:(in thousands) Nine Months Ended June 30, 2015 2014 Change Principal payments on term loan $ (15,061 ) $ (3,041 ) $ (12,020 ) Repayment of term loan (34,000 ) - (34,000 ) Borrowings on revolving line of credit 81,135 - 81,135 Repayments on revolving line of credit (80,947 ) - (80,947 ) Proceeds from term loans 193,500 - 193,500 Financing costs (3,353 ) - (3,353 ) Treasury stock purchases (1,029 ) (4,844 ) 3,815 Dividends paid (1,381 ) (2,744 ) 1,363 Principal payments on capital lease obligation (2 ) - (2 ) Cash provided by (used in) financing activities $ 138,862 $ (10,629 ) $ 149,491 The Companyas compared to the three months ended December 31, 2014, was primarily due to (i) net proceeds from the Company’s restructured its outstandinglong-term debt on December 3, 2014, in connection with the Orange-Co acquisition (see “Note 7”Note 6. “Long-term Debt and Lines of Credit” to the accompanying Condensed Combined Consolidated Financial Statements). The restructured debtcredit facilities include $113,125,000included $125,000,000 in fixed rate term loans, $56,063,000 in variableinterest rate term loans and a $25,000,000 revolving$57,500,000 in variable interest rate term loans. The proceeds of the new credit facilities were partially offset by the repayment of an existing $33,500,000 variable interest rate term loan.credit (“RLOC”)credit. The outstanding balance on the WCLC was approximately $25,132,000 as of December 31, 2015. On January 19, 2016, $25,000,000 was transferred from the WCLC to the RLOC and has been classified as non-current at December 31, 2015 in accordance with Metropolitan Life Insurance Company and New England Life Insurance Company (collectively “Met”) andFASB ASC 470-10, "Debt." The remaining $132,000 balance on the WCLC has been classified as a $70,000,000 working capital linecurrent liability at December 31, 2015.(“WCLC”) with Rabo.The previous term loan required quarterly principal payments of $500,000. The balancesecuring the payment of the term loanadditional consideration expired and was $34,000,000 atreplaced with a new letter of credit in the time it was refinanced in connection withamount of $3,750,000 securing the Orange-Co acquisition.Alico,totaledwere approximately $4,047,855$3,709,495 as of June 30,December 31, 2015 for delivery in fiscal year 2016. These contractualAll of these obligations are covered by sales agreements. Alico’sThe Company’s management currently believes that all committed purchase volume will be sold at cost or higher.reportReport on Form 10-K for the fiscal year ended September 30, 2014.2015.37ITEMRisk2014,2015, filed with the SEC on December 12, 2014.10, 2015.ITEMProcedures(a) Procedures.(a) Evaluation of Disclosure Controls and Procedures. As as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, an evaluation, as required by Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934 as amended (“Exchange Act”), was carried out under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the design and operation of our disclosure controls and procedures are effective to ensure that all information required to be disclosedwere effective.(b) Changes in Internal Control over Financial Reporting. reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to provide reasonable assurance that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.(b) Changes in internal control over financial reportingThere have beenfirst quarter ended December 31, 2015, there were no changes in our internal controlcontrols over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15(f) or Rule 15d-15(f) under the Exchange Act that occurred during our last fiscal quarter that have materially affected or isare reasonably likely to materially affect, our internal control over financial reporting.38ITEMshareholderstockholder class action lawsuit captioned Shiva Y. Stein v. Alico, Inc., et al., No. 15-CA-000645 (the “Stein lawsuit”), was filed in the Circuit Court of the Twentieth Judicial District in and for Lee County, Florida, against Alico, Inc. (“Alico”), its current and certain former directors, 734 Citrus Holdings, LLC d/b/a Silver Nip Citrus, (“Silver Nip”), 734 Investors, LLC (“734 Investors”), 734 Agriculture, LLC (“734 Agriculture”) and 734 Sub, LLC (“734 Sub”) in connection with the acquisition of Silver Nip by Alico (the “Acquisition”). The complaint alleges that Alico’s directors at the time of the Acquisition, 734 Investors and 734 Agriculture breached fiduciary duties to Alico stockholders in connection with the Acquisition and that Silver Nip and 734 Sub aided and abetted such breaches. The lawsuit seeks, among other things, monetary and equitable relief, costs, fees (including attorneys’ fees) and expenses.shareholders,Citrus members, unspecified damages, disgorgement of profits, costs, fees (including attorneys’ fees) and expenses.conditionposition or results of operations.ITEM2014,2015, as filed with the SEC on December 12, 2014.10, 2015.ITEMMarchfiscal year 2015, the Board of Directors authorized the repurchase of up to 20,000170,000 shares of the Company’s common stock beginning March 25,26, 2015 and continuing through March 25, 2016.December 31, 2016 (the "2015 Authorization"). The stock repurchases were made through open market transactions at times and in such amounts as the Company’s broker determined subject to the provisions of SEC Rule 10b-18. The Company also adopted a Rule 10b5-1 share repurchase plan under the Securities Exchange Act of 1934 (the “Plan”) in connection with its share repurchase authorization. The Plan allows the Company to repurchase its shares at times when it otherwise might be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods.ninethree months ended June 30,December 31, 2015, the Company had purchased 64,136 shares all 20,000in accordance with the 2015 Authorization and had available to purchase an additional 14,310 shares in accordance with the authorization.2015 Authorization. The following table describes our purchases of our common stock during the three months ended through June 30,December 31, 2015. Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs Month of March 2015 9,907 $ 51.64 9,907 10,093 Month of April 2015 10,093 $ 49.27 10,093 - Total Total Number of Shares Maximum Number of Number of Average Purchased As Part of Shares that May Yet Be Shares Price Paid Publicly Announced Purchased Under the Purchased Per Share Plans Or Programs Plans or Programs Month of October 2015 10,685 $ 41.40 — 67,761 Month of November 2015 24,613 $ 41.38 24,613 43,148 Month of December 2015 28,838 $ 39.59 28,838 14,310 ITEMITEMApplicableApplicable.ITEMNone.39
None.ITEMExhibitsExhibits. No. Description of Index 2.1 *** Asset Purchase Agreement, datesdated as of December 1, 2014, by and among Alico, Inc., Orange-Co, L.P.LP, and, solely with respect to certain sections thereof, Orange-Co, LLC and Tamiami Citrus, LLC. (Incorporated by reference to Exhibit 2.1 of Alico’s filing on Form 8-K dated December 5, 2014).Previously filed2.2 *** Agreement and Plan of Merger, dated as of December 2, 2014, by and among Alico, Inc., 734 Sub, LLC, 734 Citrus Holdings, LLC, and, solely with respect to certain sections thereof, 734 Agriculture, LLC, Rio Verde Ventures, LLC and Clayton G. Wilson. (Incorporated by reference to Exhibit 2.2 of Alico’s filing on Form 8-K dated December 5, 2014) .Previously filed3.1 Restated Certificate of Incorporation, Dated February 17, 1972 (incorporated by reference to Alico’s Registration Statement on Form S-1 dated February 24, 1972, Registration No. 2-43156) 3.2 10.1*First Amended and Restated Credit Agreement,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 1, 2014,21, 2005, Registration No. 333-130575)3.3 Amendment to Articles of Incorporation, Dated January 14, 1987 (incorporated by and amongreference 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., Alico Land Development, Inc., Alico-Agri, Ltd., Alico Plant World, L.L.C., Alico Fruit Company, LLC, Metropolitan Life Insurance Company,amended and New England Life Insurance Company.restated (Incorporated by reference to Exhibit 10.13.1 of Alico’s filingthe Company’s current report on Form 8-K, dated December 5, 2014).Previously filed10.2*Credit Agreement, by and between Alico, Inc., Alico-Agri, Ltd., Alico Plant World, L.L.C., Alico Fruit Company, LLC, Alico Land Development, Inc., and Alico Citrus Nursery, LLC, as Borrowers and Rabo Agrifinance, Inc., as Lender. (Incorporated by reference to Exhibit 10.2 of Alico’s filing with the Commission on Form 8-K dated December 5, 2014).Previously filed10.3Separation and Consulting Agreement dated March 30, 2015, by and between Alico, Inc. and Ken Smith.Filed herewith10.4Employment Agreement, dated as of April 20, 2015, by and between Alico, Inc. and Clayton G. Wilson. (Incorporated by reference to Exhibit 10.1 of Alico’s filing on Form 8-K dated April 21, 2015).Previously filed10.5Employment Agreement, dated as of June 1, 2015, by and between Alico, Inc. and John E. Kiernan. (Incorporated by reference to Exhibit 10.1 of Alico’s filing on Form 8-K dated June 1, 2015).Previously filed10.6Separation and Consulting Agreement dated as of June 1, 2015, by and between Alico, Inc. and W. Mark Humphrey.Filed herewithJanuary 25, 2013) 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.Filed herewith2002 Rule 13a-14(a) certification 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.Filed herewith2002 Rule 13a-14(a) certification 32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.Furnished herewith1350 32.2 1350.Furnished herewith1350101.0 101.INS ** XBRL Instance Document Filed herewith101.SCH ** XBRL Taxonomy Extension Schema Document Filed herewith101.CAL ** XBRL Taxonomy Calculation Linkbase Document Filed herewith101.DEF ** XBRL Taxonomy Definition Linkbase Document Filed herewith101.LAB **XBRL Taxonomy Label Linkbase Document Filed herewith101.PRE **XBRL Taxonomy Extension Presentation Linkbase Document Filed herewith*Certain schedules and exhibits have been omitted from this filing pursuant to Item 601 (b)(2) of Regulation S-K, the Company will furnish supplemental copies of any such schedules or exhibits to the Securities and Exchange Commission upon request.** In accordance with Rule 406T of Regulation S-T, these XBRL (eXtensible Business Reporting Language) documents are furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under these sections. *** Certain schedules and exhibits have been omitted from this filing pursuant to Item 601(b) (2) of Regulation S-K. The Company will furnish supplemental copies of any such schedules or exhibits to the SEC upon request. SIGNATURESALICO, INC. ALICO, INC. (Registrant) February 8, 2016 By: /s/ Clayton G. Wilson Date: August 5, 2015By: /s/ Clayton G. WilsonClayton G. Wilson President and Chief Executive Officer February 8, 2016 By: /s/ John E. Kiernan Date: August 5, 2015By:/s/ John E. KiernanJohn E. Kiernan Senior Vice President and Chief Financial Officer 41