Business Context and Reporting Period
Company: ALICO, INC. (Alico), a land management company.
Filing Type: Form 8-K (Current Report)
Date of Report: July 25, 2012
Event: Sale of land assets by wholly-owned subsidiary Alico-Agri, Ltd.
Key Financial Metrics
- Sales Price: $10.0 million for approximately 5,200 acres in Lee County, Florida.
- Impairment Loss: Approximately $1.9 million expected to impact the quarter ended June 30, 2012.
- Cash Flow Impact: Expected increase of $7.3 million for the fiscal year ending September 30, 2012, and $2.5 million for the fiscal year ending September 30, 2013.
- Tax Basis: Approximately $65.0 million.
- Tax Loss Generated: Approximately $55.0 million.
- Loss Carryforwards: Approximately $45.0 million available for potential use over the next five years.
Material Changes and Transaction Details
The Company entered an agreement with Private Equity Group, LLC ("PEG") to sell three parcels of land. The transaction is structured in two tranches with closings scheduled for July 25, 2012, and October 3, 2012. Proceeds from both tranches have been delivered or deposited in a non-refundable escrow account. The sale generates a significant book loss due to the high income tax basis relative to the sales price.
Outlook and Management Commentary
Management indicates the tax loss will offset gains from recently completed Polk County, Florida land transactions. The remaining loss carryforwards are intended to support the Company's strategy of marketing under-productive assets. The filing does not provide specific forward-looking revenue guidance beyond the cash flow impacts of this specific transaction.
Investor Verification Checklist
- Confirm the closing dates for the two tranches (July 25, 2012, and October 3, 2012).
- Verify the recognition of the $1.9 million impairment loss in the Q2 2012 financial statements.
- Assess the utilization timeline for the $45.0 million in tax loss carryforwards.
- Review the status of funds in the non-refundable escrow account.