Alico, Inc. History

Address:

640 S. Main Street
LaBelle, Florida 33935
U.S.A.

Telephone: (863) 675-2966
Fax: (863) 675-6928

Public Company
Incorporated: 1960 as Alico Land Development Company
Employees: 143
Sales: $48.3 million (2003)
Stock Exchanges: NASDAQ
Ticker Symbol: ALCO
NAIC: 111998 All Other Miscellaneous Crop Farming

Company Perspectives:

Alico, Inc., is an agribusiness company, primarily engaged in the production of citrus, sugarcane, cattle, sod and forest products. The Company's operations are located in central and southwest Florida.

Key Dates:

1898:: Atlantic Land and Improvement Company is formed as a subsidiary of the Atlantic Coastline Railroad.
1948:: The LaBelle, Florida, office is opened.
1960:: Atlantic Coast Railroad spins off Alico Land Development Company.
1972:: Ben Hill Griffin, Jr., acquires a controlling interest.
1990:: Griffin dies and is succeeded by his son, Ben Hill Griffin III.
2004:: Griffin III resigns, as part of litigation settlement.

Company History:

Alico, Inc., based in LaBelle, Florida, is primarily an agribusiness company involved in the production of citrus fruit, sugarcane, cattle, sod, and forest products, as well as crop insurance through wholly owned subsidiary Agri-Insurance Company, Ltd. In addition, the company rents land for farming, cattle grazing, oil exploration, the mining of materials for the construction industry, and recreational and other uses. Through subsidiary Saddlebag Lake Resorts, Inc., Alico also is involved in retail land sales and development. All told, Alico owns approximately 140,000 acres of Florida land. With more than 11,000 acres in production, it ranks among the top 15 citrus producers in Florida.

Tracing Roots to 1800s Railroad

Alico grew out of the land holdings of The Atlantic Coastline Railroad, which was originally known as the Wilmington & Weldon Railroad. The line was chartered in 1933 to connect the towns of Wilmington and Weldon, North Carolina. When completed in 1840, its length of 161.5 miles made it the longest continuous railroad in the world. During the Civil War, 20 years later, the line was critically important to the Confederacy as the major carrier of supplies from the deep South to the capital in Richmond, Virginia. After the war, the line became The Atlantic Coastline Railroad. Because the company accumulated a great deal of land in connection to its road building, in 1898 it incorporated a subsidiary to manage the holdings, named The Atlantic Land and Improvement Company (the initials of which led to the Alico acronym). It was not until 1948 that the subsidiary opened its LaBelle, Florida, office, located 40 miles east of Fort Meyers. The company, owning more than 250,000 acres, became heavily involved in agribusiness during the 1950s. It began developing citrus groves as well as a cattle ranch, and also began managing its forest holdings. Later in the decade, the company started to lease some of its land for mining and oil exploration. While more and more acres were devoted to citrus growing and the raising of cattle, Atlantic Land sold several thousands of acres to real estate developers to take advantage of the rising demand for new housing following World War II, when the Baby Boom generation and their parents fled the cities in favor of the new suburbs.

In February 1960, The Atlantic Coast Railroad spun off some of the Florida real estate holdings of Atlantic Land and Improvement Company, forming Alico Land Development Company, based in LaBelle, Florida. According to its first annual report, Alico had assets of $2.8 million. Of its $247,000 in revenues, most resulted from the sale of forest products, followed by cattle sales. Citrus was third. Over the course of the 1960s, the business mix would undergo a complete reversal. The company took a number of steps to build up its citrus and cattle operations, investing in infrastructure--building roads and irrigation systems and improving pastures--so that by the close of the decade Alico's fruit sales was the biggest contributor to the balance sheet. Cattle sales came next, followed by oil leases, land rentals, and forest products. According to the 1970 annual report, Alico posted revenues of $2.5 million and net income of $157,000.

Ben Hill Griffin, Jr.--Gaining Control, Fostering Growth: 1960s-80s

It was also early in the 1960s that the man most responsible for the growth of Alico in the 1970s and 1980s would become associated with the company: Ben Hill Griffin, Jr. In 1961 he was named to Alico's board, and over the next dozen years quietly accumulated a controlling interest in the company. According to Florida Trend magazine, Atlantic Coast Line Railroad officials "asked Griffin Jr. to serve on the board of the new company to help it break into citrus, cattle and timber. In 1972, [he] traveled to New York City and bought concentrated control of Alico for $15.9 million in a private, hidden bid."

Griffin was already a successful citrus grower and wealthy man. Born in 1910, he grew up on a farm and then attended the University of Florida, studying economics and agriculture before going to work for his father. As a wedding gift from his father in 1933, Griffin received a ten-acre orange grove. Throughout the Depression of the 1930s, while others were selling, he was buying up their land at bargain prices, just $2 to $3 an acre. In 1938 he picked up 16,000 at once when he acquired his first ranch, the Peace River Ranch. He later added a 55,000-acre spread. During the 1940s he took several key steps that would make his fortune. In 1945 Florida Department of Citrus researchers made a breakthrough in the development of orange juice using the "cutback" process. As a result, an increasing number of citrus growers began to focus on frozen concentrate rather than fresh fruit. Griffin anticipated, as a consequence of this switch, the price of fresh fruit would rise. This was a major assumption in 1948, given that the price of oranges had fallen from $1.50 per box to just 35 cents. Nevertheless, he bought a packing plant in 1948, launching Bill Hill Griffin Inc. Griffin also proved lucky because, that same winter, the California orange crop was devastated by a major freeze, which drove up the price of Florida oranges even higher. These events laid the foundation for Griffin's personal fortune. Moreover, while other growers began selling out to corporate farming interests, he remained independent, and by working hard and keeping his operations lean, he prospered.

As Alico entered the 1970s, it began to sell off noncore acreage and also achieved some diversity by becoming involved in the development of residential real estate. At this point the chairman of the board was W. Thomas Rice, but in 1972 Griffin made his play, gaining a controlling share of Alico through Ben Hill Griffin Inc. His son, Ben Hill Griffin III, was named to the board, and then in 1973 the elder Griffin took over as chairman of the board of directors. That year was also significant because it was the first time that the company declared a dividend. A year later, in 1974, it officially adopted the Alico name. With the autocratic Griffin in charge, Alico entered a new phase in its history.

Alico's total assets topped the $20 million mark by 1980, when the company recorded $15.2 million in sales and net income of $4.2 million. By now, Alico owned 187,000 acres of land, more than 4,300 of which was devoted to citrus fruit, which accounted for more than half of the company's revenues. Under Griffin's leadership, Alico added even more acreage for citrus, buying neighboring land to supplement current holdings. The company reached a significant milestone in the 1987-88 season when it surpassed the two million box mark in citrus production.

During the decade of the 1980s Alico first became involved in sugarcane production, an area in which Florida was fast becoming a major player. In 1989, Alico devoted 845 acres to the planting of its first sugarcane crop. Although very much devoted to agriculture, Alico also was finding even more lucrative uses for its land because of Florida's rapidly increasing population. Some 300,000 people were moving into the state each year, and Alico owned a good deal of land close to such boom areas as Fort Myers and Tampa. Citrus acreage could be sold from $10,000 to $15,000 per acre, but land that could be developed close to a population center could command a price in the $60,000 per acre range. As it entered the 1990s, Alico controlled assets of nearly $70 million, with net sales steadily eclipsing $20 million and net income ranging from $4 million to $10 million.

In March 1990 Griffin died at the age of 79, leaving his estate (Forbes estimated his personal wealth at $300 million) to his five children but appointing his only son as the sole trustee to his business empire. As for Alico, the younger Griffin had taken over the daily running of the business in January 1988 when he succeeded his father as president (although the elder Griffin continued to hold the CEO title and chairmanship). The four sisters had been actively involved in the family's business affairs. They included Sarah Jane Alexander, Lucy Anne Griffin Collier, Francie G. Milligan, and Harriet G. Harris, the mother of Katherine Harris (who as Florida's Secretary of State would gain national prominence for her involvement in the Florida recount controversy in the 2000 Presidential election). The sisters soon became disenchanted with the way their brother ran the businesses, claiming that he acted as if he were sole owner. But Griffin, who had been groomed since childhood to take over, acted in very much the same manner as his father, exerting strong control. He insisted that their father never intended the family businesses to be run by committee. Ultimately the sisters would sue him, maintaining, according to Florida Trend, that he steered "their mother's shares of BHG Inc. into his own hands" and "systematically fired or forced out every member of the plaintiffs' families whom Griffin Jr. had hired." Moreover, he promoted his son, Ben Hill Griffin IV, to a position of prominence.

Family Dispute in the 1990s Affecting the Company's Future

The tensions within the Griffin family increased throughout the 1990s until finally erupting into a very public lawsuit. In the meantime, Alico continued to buy desirable land for its agricultural operations, while unloading surplus acreage and devoting some land for highly profitable real estate development. Even when the company made charitable contributions, it found a way to turn a profit. In 1992 Alico donated land in Lee County to the State of Florida for the founding of a new state university, Florida Gulf Coast University. Alico was not alone in its willingness to provide land. Another two dozen companies were interested, but after a process of elimination conducted by Florida's 14 university system regents was completed, only Alico and corporate giant Westinghouse remained in the running. On the surface, it appeared that Westinghouse had the inside track. The 560-acre site it offered was located close to Florida International Airport and already had connecting roads to I-75 in place. Alico's site was large, encompassing 760 acres, but it was isolated and consisted of forested wetlands. In the words of Florida Trend, "More than Alico's health was at stake for Griffin. He was still trying to fill the huge boots of his father. ... Sensing that the regents were leaning toward Westinghouse, Griffin decided, on the spot, to sweeten Alico's bid by offering an additional $3 million to fund endowed professorships for the new university. Westinghouse executives cried foul as the regents accepted Griffin's offer." Griffin, who had received all the authority he needed in the negotiations from the Alico board, claimed that he "got caught up in the magnanimity," but the donation was in reality a reasonable investment in Alico's future. Florida Trend reported in October 2001, "As Florida Gulf Coast University grows and adjacent cattle lands are bulldozed for development, Alico's 10,000 acres around the university are skyrocketing in value, in some cases, from $5,000 an acre to upward of $90,000."

As Alico closed the 1990s its assets totaled more than $175 million. But now the future of the company would be caught up in the litigation that would consume the Griffin family. The lawsuit went to trial in March 2001, but it never came to a judgment because after three days of testimony the two parties agreed to a settlement, which called for Griffin to receive a 40 percent share of the family's total assets and the four sisters to share the remaining 60 percent. But the Harris family refused to sign on and two months later sued the three other sisters and Griffin to prevent the settlement from being implemented. The matter would linger for another two years. Then, in June 2003, all parties reached final agreement on the matter. It was believed that the split of the estate remained the same, but under the terms of the agreement the controlling interest in Alico was turned over to the sisters through a company named the Four Sisters Family Corporation.

The transfer of Alico stock was completed in February 2004, at which point Griffin resigned as chief executive officer and chairman of the board along with four directors. Five new board members were then named. John R. Alexander became the new chief executive officer and chairman of the board. Providing continuity was President and Chief Operating Officer Bernie Lester, who had been employed by Alico for 17 years. Upon his election, Alexander commented, "We share the philosophy with the past management for the love of the land and our commitment to Florida agriculture. We look forward to working with Bernie Lester and the Alico staff to enhance shareholder value and commit to working diligently for the benefit of the shareholders. We plan to continue the company's involvement in the Central and Southwest Florida regions and its close association with Florida Gulf Coast University." For his part, Griffin wished the new board great success, as Alico took the first steps into a new era in the company's history.

Principal Subsidiaries: Agri-Insurance Company, Ltd.; Saddlebag Lake Resorts, Inc.

Principal Competitors: Cactus Feeders, Inc.; Imperial Sugar Company; Sunkist Growers, Inc.

Alico, Inc. History

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