Alico, Inc. Annual Report 2008

FY2008 Annual Report · Alico, Inc.

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A L I C O I N C O R P O R A T E D

49 TH ANNUA L R EPO RT FOR T HE YEAR ENDED SEP T EMBER 3 0, 2 008

640 South Main Street, LaBelle, Florida 33935 • Post Office Box 338, LaBelle, Florida 33975
Office (863) 675-2966 • Fax (863) 675-6928

ALICO, INC.

To Our Shareholders:

January 14, 2009

The current economic climate is as difficult as we have seen since the Great Depression. We have
witnessed the bankruptcies of several investment banks with long impressive histories, the failure of
a number of commercial banks and major financial institutions, an upheaval and serious decline in
real estate markets, a substantial loss of corporate and individual net worth, and unprecedented
government intervention in private business.

During fiscal 2008, Alico faced many significant events, including the retirement of one Chief
Executive, the resignation of another, the final settlement of an IRS dispute, a restructuring of
company operations and the Ginn real estate transactions, as well as lower prices for our products
and rising prices for most of our inputs. In spite of these events we are pleased to report that Alico
was able to maintain profitability.

Net income was $4.7 million, or $0.64 per share for the fiscal year ended September 30, 2008,
compared with a net loss of $13.7 million, or ($1.86) per share during the fiscal year ended August
31, 2007. Results from both years were impacted by the final settlement of the IRS proceedings.
Operating revenue was $116.0 million for the fiscal year ended September 30, 2008, compared with
$132.0 million for the fiscal year ended August 31, 2007. Pre-tax income from continuing operations
was $4.8 million for the fiscal year ended September 30, 2008, compared with $20.1 million for the
fiscal year ended August 31, 2007.

Due to the ongoing crisis in the business and financial marketplace, Alico has refocused on its core
businesses in agriculture and related lines. Our fundamental strategy is to tighten our belts by
reducing expenses and managing Alico so that we will be ready for the opportunities that will
inevitably arise once this economic crisis is resolved. We are looking closely at each of our
operations in an effort to enhance profits. At the same time, we are looking for new opportunities in
non-agricultural operations, such as land leasing and mining activities. Additionally, Alico, through
its Alico Land Development subsidiary, is seeking entitlements for properties which are excess to the
company’s agricultural operations and expected to become marketable over the next several years.

At Alico, we are committed to do our part to work hard and create shareholder value. We believe
Alico has extraordinarily attractive long-term prospects. In spite of the downturn in the economy,
people will continue to consume orange juice, vegetables and beef. Our company is therefore well
positioned to grow its businesses, as it focuses on unlocking the value inherent in its vast land
holdings.

We recognize that the continued support of our Shareholders, Directors, and employees is essential
to our success. Thank you for your confidence.

Sincerely,

John R. Alexander
Chairman

Steven M. Smith
President and Principal Executive Officer

Contents

Form 10-K

Board of Directors .

Financial Information
at a Glance .

. 1

Annual Meeting

10:00 a.m., February 20, 2009
at Alico Arena
Florida Gulf Coast University
10501 FGCU Boulevard South
Fort Myers, FL 33965

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K

�

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2008
OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-261

ALICO, INC.

(Exact name of registrant as specified in its charter)

Florida
(State or other jurisdiction of incorporation
or organization)

P.O. Box 338, La Belle, Florida
(Address of principal executive offices)

59-0906081
(IRS Employer
identification number)

33975
(Zip code)

Registrant’s telephone number including area code (863) 675-2966
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of class:
COMMON CAPITAL STOCK, $1.00 Par value, Non-cumulative

Name of each exchange
on which registered:
NASDAQ

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None

Yes o No �

Indicate by check mark if the registrant is a well-known seasoned issuer, as define in Rule 405 of the Securities
Act.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of
the Act.

Yes o No �

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that such
registrant was required to file such reports), and (2) has been subject to such filings requirements for the past
90 days.

Yes � No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 or Regulation S-K is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this form 10-K.
Yes o No �
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated
filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer o Accelerated filer � Non-accelerated filer o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)
Yes o No �

Smaller Reporting Company o

The aggregate market value of the voting and nonvoting common equity held by non-affiliates based on the closing
price, as quoted on the NASDAQ as of March 31, 2008 (the last business day of Alico’s most recently completed
second fiscal quarter) was $159,530,550. There were 7,377,106 shares of stock outstanding at December 12, 2008.

Documents Incorporated by Reference:
Portions of the Proxy Statement of Registrant to be dated on or before January 20, 2009 are incorporated by
reference in Part III of this report.

TABLE OF CONTENTS

ALICO, INC.
FORM 10-K
For the year ended September 30, 2008

Part I

Item 1. Business

Item 1A. Risk factors

Item 1B. Unresolved staff comments

Item 2. Properties

Item 3. Legal Proceedings

Item 4. Submission of Matters to a Vote of Security Holders

Part II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity

Securities

Item 6. Selected Financial Data

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosure About Market Risk

Item 8. Financial Statements and Supplementary Data

Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other information

Part III

Item 10. Directors, Executive Officers and Corporate Governance

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13. Certain Relationships and Related Transactions, and Director Independence

Item 14. Principal Accountants’ Fees and Services

Part IV

Item 15. Exhibits and Financial Statement Schedules

Signatures

Exhibit 10.6
Exhibit 14.1
Exhibit 14.2
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

Item 1. Business.

PART I

Alico, Inc. (the “Company”), which was formed February 29, 1960 as a spin-off of the Atlantic Coast Line Railroad
Company, is a land management company operating in Central and Southwest Florida. Alico’s primary asset is
135,466 acres of land located in Collier, Glades, Hendry, Lee and Polk Counties. (See Item 2 for location and
acreage by current primary use.) Alico is involved in a variety of agribusiness pursuits in addition to land leasing and
rentals, rock and sand mining and real estate sales activities.

Alico’s land is managed for multiple uses wherever possible. For example, cattle ranching, forestry and land leased
for grazing, recreation and oil exploration utilize the same acreage in some instances.

The relative contribution of each operation to the operating revenue, profit and total assets of Alico during the past
three years (all revenues are from external customers within the United States) are discussed under the caption
“segments” and in Note 10 to the Consolidated Financial Statements.

Alico’s retail land sales and development business is handled solely through its wholly owned subsidiary, Alico
Land Development, Inc. (formerly known as Saddlebag Lake Resorts, Inc.) However, Alico has from time to time
directly sold properties which, in the judgment of Management and the Board of Directors, were surplus to Alico’s
primary operations. Additionally, Alico’s wholly owned subsidiary, Alico-Agri, Ltd., has also engaged in bulk land
sales. Alico through its subsidiary Alico Land Development, Inc., has recently taken actions to enhance the planning
and strategic positioning of all Company owned land. These actions include seeking entitlement of Alico’s land
assets in order to preserve rights should Alico choose to develop property in the future.

On September 28, 2007, the Board of Directors of Alico approved a change in Alico’s fiscal year end from
August 31 to September 30. The fiscal year change is effective beginning with Alico’s 2008 fiscal year. Alico’s 2008
fiscal year began on October 1, 2007 and ended September 30, 2008, resulting in a one month transition period that
began September 1, 2007 and ended September 30, 2007. Accordingly, information is presented for the year ended
September 30, 2008, the one month transition period ended September 30, 2007, and for prior fiscal years ended
August 31.

Subsidiary Operations

Alico has five wholly owned subsidiaries: Agri-Insurance Company, Ltd. (“Agri”), Alico-Agri, Ltd. (“Alico-
Agri”), Alico Plant World, LLC (“Plant World”), Bowen Brothers Fruit LLC (“Bowen”), and Alico Land
Development, Inc (formerly known as Saddlebag Lake Resort, Inc.).

Agri

Agri is a Bermuda based captive insurer and was created to write crop insurance against catastrophic losses due to
weather and disease. Agri provided crop insurance to Alico and other Florida based third parties during the years
from 2000 to 2005. Due to several hurricanes which impacted the State of Florida during the fall of 2004 and
2005, Agri sustained losses related to its underwriting activities which caused Agri to suspend additional insuring
activities until an updated feasibility study of its insuring activities could be completed. Based on the findings
of the study, along with the history of losses, Agri ceased issuing policies. Alico is currently working to dissolve
Agri.

Alico-Agri

Alico-Agri, Ltd. was formed during fiscal year 2003 to manage the real estate holdings of Agri. Agri transferred
all of its property holdings, consisting solely of the Lee County, Florida properties surrounding Florida Gulf
Coast University, and the related contracts to Alico-Agri for a 99% partnership interest. Alico, the managing
partner, transferred cash for a 1% interest in the partnership. Upon the dissolution of Agri, the partnership interest
in Alico-Agri will be transferred to Alico Land Development, Inc.

Plant World

In September 2004, Alico, through Alico-Agri, purchased the assets of La Belle Plant World, Inc. a wholesale
grower and shipper of vegetable transplants to commercial farmers. The purchase price was $4.9 million for the
land, office building, greenhouses and associated equipment. Alico Plant World, LLC was set up as a wholly
owned subsidiary of Alico-Agri, Ltd. Due to ongoing losses sustained by Alico Plant World, Alico discontinued
the transplant operations in June 2008 and leased Plant World’s facilities to an outside nursery operation.

Bowen

Alico, through its newly formed subsidiary Bowen, purchased the assets of Bowen Brothers Fruit Co., Inc. for
$1.9 million in February 2006. The purchase was made to provide Alico with additional marketing expertise and
the ability to harvest its own fruit crop. Bowen provides harvesting, hauling and marketing services to Alico and
other outside citrus growers in the state of Florida.

Alico Land Development

Alico Land Development, Inc. (formerly known as Saddlebag Lake Resorts, Inc.) has been active in the
subdivision, development and sale of real estate since its inception in 1971. Alico Land Development has
developed and sold two subdivisions near Frostproof, Florida. Through its Alico Land Development subsidiary,
Alico has recently taken actions to enhance the planning and strategic positioning of all Company owned land.
These actions include seeking entitlement of Alico’s land assets in order to preserve rights should Alico choose to
develop property in the future.

The financial results of the operations of these subsidiaries are consolidated with those of Alico. Intercompany
activities and balances are eliminated in consolidation. (See Note 1 to the Consolidated Financial Statements.)

Segments

Alico engages in a variety of agricultural pursuits as well as other land management activities. For further information
concerning segments please refer to Note 10 to the Consolidated Financial Statements.

Revenues

Agriculture:
Bowen
Citrus groves
Sugarcane
Cattle
Vegetables
Sod
Native trees and shrubs

Agriculture operations revenue
Real estate activities
Land leasing and rentals
Mining royalties

Year ended

Sept. 30,
2008

One month
Sept. 30,
2007 (1)

Fiscal years ended

Aug. 31,
2007

Aug. 31,
2006

45,499
41,167
9,671
6,793
5,460
1,118
125

109,833
3,870
2,276
403

143 $
5
—
330
—
92
—

570
—
141
47

52,716
47,484
9,432
9,977
3,803
2,180
249

125,841
3,329
1,495
1,340

30,869
22,188
8,926
5,700
2,389
1,528
142

71,742
113
1,369
940

Total operating revenue

$ 116,382

758

132,005

74,164

Year ended
Sept. 30,
2008

One month
Sept. 30,
2007 (1)

Fiscal years ended

Aug. 31,
2007

Aug. 31,
2006

Gross profit (loss):
Agriculture:
Bowen
Citrus groves
Sugarcane
Cattle
Vegetables
Sod
Native trees and shrubs

Gross profit from agricultural

operations

Real estate activities
Land leasing and rentals
Mining royalties
Net casualty (recovery)

Subtotal

Profits from the sale of bulk real estate
Net interest and investment income
Corporate general and administrative

and other

Income from operations before income

taxes

Provision for income taxes

Net income (loss) from continuing

operations

1,470
13,530
421
(2,127)
(141)
(1,535)
125

11,743
341
1,668
305
—

14,057
817
1,180

(11,216)

(79) $
2
—
41
—
(116)
—

(152)
(59)
105
37
—

(69)
—
(137)

(819)

930
24,057
599
255
496
862
249

27,448
(79)
1,102
1,214
—

29,685
1,257
1,685

(268)
7,614
360
786
985
688
142

10,307
52
917
940
4,036

16,252
4,369
5,092

(12,502)

(10,533)

4,838
(765)

(1,025)
176

20,125
33,520

15,180
7,159

5,603

(849)

(13,395)

8,021

(1) Alico changed its fiscal year end from August 31 to September 30. The year ended September 30, 2008 was the first full

year on the new fiscal year. Results for September 30, 2007 are for the one month transition period.

Total Assets:

Agriculture:
Bowen
Citrus groves
Sugarcane
Cattle
Vegetables
Sod

Subtotal Agriculture
Other Corporate assets

Sept. 30,
2008

Sept. 30,
2007

2,581
49,201
43,525
18,343
4,213
3,906

121,769
152,163

2,891
53,339
45,128
20,837
3,238
5,400

130,833
154,516

Total assets

273,932

285,349

Agricultural Operations

Bowen Brothers

Bowen’s operations include harvesting, hauling and marketing citrus for both Alico and other growers in the
state of Florida. Bowen’s operations also include the purchase and resale of citrus fruit. Bowen Brothers was
purchased in February 2006 to provide Alico with additional citrus marketing expertise and the ability to harvest
its own citrus crop. During fiscal years ended September 30, 2008, August 31, 2007 and August 31, 2006, Bowen
harvested approximately 4.2 million, 2.3 million and 900 thousand boxes of Alico’s fruit, respectively. Bowen
harvested 2.2 million, 2.0 million and 2.7 million boxes of fruit for other growers during fiscal years ended
September 30, 2008, August 31, 2007 and August 31, 2006, respectively.

Citrus Groves

Alico’s Citrus Grove operations consist of cultivating citrus trees in order to produce citrus for delivery to the
fresh and processed citrus markets in the state of Florida. Approximately 10,582 acres of citrus were grown and
harvested during the 2007-08 season. During the fiscal year ended September 30, 2008, Alico sold approximately
37% of its citrus crop to Southern Gardens, a wholly owned subsidiary of U.S. Sugar Corporation (USSC).
The balance of the sales concentration is attributable to citrus contracts with Florida Orange Marketers, which
represented approximately 30% of Alico’s citrus sales and Cutrale, which represented approximately 29% of the
Alico’s citrus sales. While Alico believes that it can replace these arrangements with other marketing alternatives,
it may not be able to do so quickly and the results may not be as favorable as the current contracts.

Sugarcane

Alico’s sugarcane operations consist of cultivating raw sugarcane for sale to a sugar processor. The crop is
harvested by a co-op, proportionately owned by sugarcane growers, including Alico. Alico had 9,110 acres,
10,254 acres and 10,138 acres of sugarcane in production during the fiscal years ended September 30, 2008,
August 31, 2007 and August 31, 2006, respectively. Since the inception of its sugarcane program in 1988, Alico
has sold 100% of its product through a pooling agreement with USSC, a local Florida sugar mill. Under the terms
of the pooling agreement, Alico’s sugarcane is processed and sold along with sugarcane from other growers. The
proceeds, less costs and a profit margin, are distributed on a pro rata basis as the finished product is sold.

Florida Governor Charlie Crist has announced that the South Florida Water Management District (SFWMD) is
negotiating a purchase of the land holdings of USSC. USSC and its subsidiary Southern Gardens, is Alico’s
largest customer accounting for approximately 21% of fiscal year 2008 operating revenue. Under the most recent
terms of the proposal, USSC will retain ownership and continue operation of its sugar mill, sugar refinery and
citrus plant. USSC would lease back the property sold to SFWMD for a period of seven crop cycles.

At the present time, Alico is unable to assess the impact of this potential transaction on its operations. As the
potential sale progresses and more details become known, Alico will continue to assess its options and strategies
going forward.

Cattle

Alico’s cattle operations, located in Hendry and Collier Counties, Florida, is engaged primarily in the production
of beef cattle, feeding cattle at western feedlots and the raising of replacement heifers. The breeding herd consists
of approximately 10,014 cows, bulls and replacement heifers. Approximately 69% of the herd is from one to five
years old, while the remaining 31% is at least six years old. Alico primarily sells to packing and processing plants
in the United States. Alico also sells cattle through local livestock auction markets and to contract cattle buyers in
the United States. These buyers provide ready markets for Alico’s cattle. In the opinion of Management, the loss
of any one or a few of these processing plants and/or buyers would not have a material adverse effect on Alico’s
cattle operation.

Vegetables

In the fiscal year ended August 31, 2006 Alico began growing vegetables. During the fiscal year ended
September 30, 2008, Alico harvested 356,591 crates of corn from 944 acres and 149,478 bushels of beans from
909 acres. In the fiscal year ended August 31, 2007, Alico harvested 218,063 crates of corn from 809 acres and
124,642 bushels of beans from 878 acres. During fiscal year 2006, Alico harvested 119,000 crates of corn from
500 acres, and 77,000 bushels of beans from 500 acres.

Alico has marketing agreements for its vegetable products through local packing facilities and brokers in the state
of Florida for sale to wholesale and retail outlets in the United States. In the opinion of Management, the loss
of any one or a few of these facilities or brokers would not have a material adverse effect on Alico’s vegetable
operation.

In December of 2006, Alico entered into a joint venture with J&J Produce, Inc. of Loxahatchee, Florida, to farm
cucumbers, squash and zucchini on Alico’s property. Effective June 30, 2008, Alico discontinued its participation
in the joint venture vegetable farm. The parties to the joint venture each held a 50% interest in the earnings, assets
and liabilities of the farm. Alico is currently working to dissolve the joint venture and distribute the remaining
assets equitably among the members.

Sod

Real Estate

Alico Land Development, Inc. (formerly known as Saddlebag Lake Resorts, Inc.) has been active in the
subdivision, development and sale of real estate since its inception in 1971. Alico Land Development Inc. has
developed and sold two subdivisions near Frostproof, Florida. Through its Alico Land Development subsidiary,
Alico has developed a plan to enhance the planning and strategic positioning of all Company owned land. These
actions include seeking entitlement of Alico’s land assets in order to preserve rights should Alico choose to
develop property in the future.

Non Agricultural Operations

Mining Operations: Rock and Sand

In May 2006, Alico paid $10.6 million to purchase a 526 acre riverfront mine site for rock and fill in Glades
County, Florida. Alico allocated approximately 54% of the purchase price to the rock and sand reserves, with the
remaining 46% of the purchase price allocated as residual land value based on the present value of the expected
rock royalties over 20 years and the expected residual value of the property after that time. Rock and sand
reserves are depleted and charged to cost of goods sold proportionately as the property is mined.

Additionally, Alico Land Development Inc. is currently seeking a permit for two rock mines in Hendry and Lee
Counties.

Land Rentals for Grazing, Agricultural, Oil Exploration and Other Uses

Alico rents land to others on a tenant-at-will basis, for grazing, farming, oil exploration and recreational uses.
Alico will continue to develop additional land to lease for farming as strategically advantageous. There were no
significant changes in the method of rental for these properties during the past fiscal year.

Competition

As indicated, Alico is primarily engaged in a variety of agricultural and nonagricultural activities, all of which
are in highly competitive markets. For instance, citrus is grown in foreign countries and several states, the most
notable of which are: Brazil, Florida, California, and Texas. Beef cattle are produced throughout the United States
and domestic beef sales also compete with imported beef. Sugarcane products compete with products from sugar
beets in the United States as well as imported sugar and sugar products from foreign countries. Sod is produced
throughout the United States, as are vegetables. Forest and rock products are produced in most parts of the United
States. Leasing of land is also widespread.

Alico’s share of each of the United States markets for citrus, sugarcane, cattle, sod, vegetables, mining and forest
products is less than 3%.

Environmental Regulations

Alico’s operations are subject to various federal, state and local laws regulating the discharge of materials into the
environment. Management believes Alico is in compliance with all such rules and such compliance has not had a
material effect upon capital expenditures, earnings or Alico’s competitive position.
While compliance with environmental regulations has not had a material economic effect on Alico’s operations,
executive officers are required to spend a considerable amount of time monitoring these matters. In addition,
there are ongoing costs incurred in complying with permitting and reporting requirements.

Employees

At September 30, 2008, Alico and its subsidiaries had a total of 203 full-time employees classified as follows:
Bowen 14; Citrus 85; Sugarcane 12; Ranch 15; Vegetables 14; Sod 6; Real Estate 2; Leasing 1; Facilities
Maintenance Support 32; General and Administrative 22. Management is not aware of any efforts by employees
or outside organizers to create any type of labor union. Management believes that the employer/employee
relationship environment is such that labor organization activities are unlikely to occur.

Seasonal Nature of Business

As with any agribusiness enterprise, Alico’s business operations are predominantly seasonal in nature. The
harvest and sale of citrus fruit generally occurs in all quarters, but is more concentrated during the first, second
and third fiscal quarters. Sugarcane is harvested during the first and second fiscal quarters. Vegetable harvest and
sales generally occur in the first, second and third fiscal quarters. Other segments of Alico’s business such as its
cattle and sod sales, timber, mining and leasing operations, tend to be recurring rather than seasonal in nature.

Capital resources and raw materials

Management believes that Alico will be able to meet its working capital requirements for the foreseeable future
with internally generated funds. Additionally, Alico has credit commitments that provide for revolving credit that
is available for Alico’s general use. Raw materials needed to propagate the various crops grown by Alico which
consist primarily of fertilizer, herbicides, fuel and water are readily available from local sources.

Available Information

Alico’s internet address is: http://www.alicoinc.com. As required by SEC rules and regulations, Alico files reports
with the SEC on Form 8-K, Form 10-Q, Form 10-K and the annual proxy statement. These reports are available
to the public to read and copy at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.

Alico is an electronic filer with the SEC and these reports are also available through the SEC internet site (http://
www.sec.gov), and through Alico’s website as soon as reasonably practicable after filing with the SEC. Copies of
documents filed with the SEC are also available free of charge upon request.

Item 1A. Risk Factors.

Alico’s operations involve varying degrees of risk and each investor should consider the specific risks and
speculative features inherent in and affecting the business of Alico before investing in Alico. In considering the
following risk and speculative factors, an investor should realize that there is a possibility of losing his or her
entire investment.

Alico’s financial condition and results of operations could be affected by the risk factors discussed below. These
factors may also cause actual results to differ materially from the results contemplated by the forward looking
statements in Management’s Discussion and Analysis.

The list of risks below is not intended to be all inclusive. A complete listing of risks is beyond the scope of this
document. However, in contemplating the financial position and results of operations of Alico, investors should
carefully consider, among other factors, the following risk factors:

General

Alico has a 51% stockholder and a limited public float which could adversely affect the price of its stock
and restrict the ability of the minority shareholders to have a voice in corporate governance.

Atlantic Blue Group, Inc. (AtlanticBlue) (formerly Atlantic Blue Trust, Inc.) is the owner of approximately 51%
of Alico’s common stock. Accordingly, Alico’s common stock is thinly traded and its market price may fluctuate
significantly more than stocks with a larger public float. Additionally by virtue of its ownership percentage,
AtlanticBlue is able to elect all directors and, consequently, is deemed to control Alico. While AtlanticBlue
has issued a governance letter dated September 29, 2006 reaffirming its commitment to maintaining a majority
of independent directors on Alico’s Board of Directors, this commitment may be terminated at any time upon
30 days prior written notice. Alico does not have cumulative voting. Accordingly, stockholders of Alico other than
AtlanticBlue have no effective control over who the management and directors of Alico are or will be.

Alico manages its properties in an attempt to capture its highest and best use and customarily does not
sell property until it determines that the property is surplus to its agricultural activities by reason of its
potential for industrial, commercial or residential use. Alico has little control over when this occurs as real
estate sales are primarily market driven.

Alico’s goal for its land management program is to manage and selectively improve its lands for their most
profitable use. To this end, Alico continually evaluates its properties focusing on soil capabilities, subsurface
composition, topography, transportation, availability of markets for its crops and the climatic characteristics of
each of the tracts. While Alico is primarily engaged in agricultural activities, when land is determined to be better
suited to industrial, commercial or residential use, Alico has classified the property as surplus to its agricultural
activities and sold it. Alico’s land management strategy is thus a long term strategy to acquire, hold and manage
land for its best use, selling surplus land at opportune times and in a manner that would maximize Alico’s profits
from such surplus tracts. The timing for when agricultural lands become best suited for industrial, commercial or
residential use depends upon a number of factors which are beyond the control of Alico such as:

population migration;

national, regional and local economic conditions;

•

conditions in local real estate markets (e.g., supply of land versus demand);

competition from other available property;

current level of, or potential availability of roads and utilities;

availability of governmental entitlements;

government regulation and changes in real estate, zoning, land use, environmental or tax laws;

interest rates and the availability of financing, and;

potential liability under environmental and other laws.

Alico is not able to predict when its properties will become best suited for non-agricultural use and has limited
ability to influence this process. Additionally, changes from time to time in any or a combination of these factors
could result in delays in sales, Alico’s ability to sell tracts which are determined to be surplus or its ability to
realize optimum pricing from such sales.

Alico carries large receivables from seller-financed sales of large tracts of surplus land the collectibility of
which is subject to credit risk relating to debtors.

The Company’s sale of surplus lands often involves buyer financing provided by the Company. In addition to the
cash deposit paid by a buyer of surplus land, the Company at times takes a mortgage for the unpaid balance of
the purchase price of the land sales contract. The collectability of the amounts owed and the likelihood that the
Company will achieve the profitability promised by any sales contract is dependent on the creditworthiness of
the mortgagors, which often depends upon their continued financial success. The purchasers of the surplus tracts
are often developers, whose success is in turn directly affected by multiple factors in the national and local real
estate markets, including but not limited to interest rates, demand for housing, competition from other available
land, governmental regulation, permitting, and unanticipated costs of construction. Depending on the magnitude
of its debt to the Company, a mortgagor’s default on a sales contract or the bankruptcy of any material purchaser
of surplus land could have a materially adverse effect on the Company. Additionally, if a borrower defaults on a
secured property and the Company repossesses the property, the Company cannot predict, under the current real
estate market conditions, if the repossessed property can be sold in the near term or, if the Company is able to
sell the repossessed property, if such sale will result in a gain equal to the anticipated gain under the original sales
contract for such property.

Alico is subject to environmental liability by virtue of owning significant holdings of real estate assets.

Alico faces a potential for environmental liability by virtue of its ownership of real property. If hazardous
substances (including herbicides and pesticides used by Alico or by any persons leasing Alico’s lands) are
discovered on or emanating from any of Alico’s lands and the release of such substances presents a threat of
harm to the public health or the environment, Alico may be held strictly liable for the cost of remediation of these
hazardous substances. In addition, environmental laws that apply to a given site can vary greatly according to
the site’s location, its present and former uses, and other factors such as the presence of wetlands or endangered
species on the site. Although Alico purchases insurance when it is available for environmental liability, these
insurance contracts may not be adequate to cover such costs or damages or may not continue to be available to
Alico at prices and terms that would be satisfactory. It is possible that in some cases the cost of compliance with
these environmental laws could exceed the value of a particular tract of land or be significant enough that it
would have a materially adverse effect on Alico.

Alico has a large customer that accounts for 21% of revenues.

For the fiscal year ended September 30, 2008, Alico’s largest customer accounted for approximately 21% of
operating revenue. Alico’s largest customer is U.S. Sugar Corporation (USSC), for whom Alico grows sugarcane.
Additionally, Alico sells citrus to Southern Gardens, a wholly owned subsidiary of USSC. These marketing
arrangements involve marketing pools which allow the contracting party to market Alico’s product in conjunction
with the product of other entities in the pool and pay Alico a proportionate share of the resulting revenue from the
sale of the entire pooled product. While Alico believes that it can replace these arrangements with other marketing
alternatives, it may not be able to do so quickly and the results may not be as favorable as the current contracts.

Agricultural Risks — General

Agricultural operations generate a large portion of Alico’s revenues. Agriculture operations are subject to a wide
variety of risks including product pricing due to variations in supply and demand, weather, disease, input costs
and product liability.

Agricultural products are subject to supply and demand pricing which is not predictable.

Because Alico’s agricultural products are commodities, Alico is not able to predict with certainty what price
it will receive for its products; however, its costs are relatively fixed. Additionally, the growth cycle of
such products in many instances dictates when such products must be marketed which may or may not be
advantageous in obtaining the best price. Excessive supplies tend to cause severe price competition and lower
prices throughout the industry affected. Conversely, shortages may cause higher prices. Shortages often result
from adverse growing conditions which can reduce the available product of growers in affected growing areas
while not affecting others in non-affected growing areas. Since multiple variables which can affect pricing are
incurred before pricing and supply are known, Alico cannot accurately predict or control from year to year what
its profits or losses from agricultural operations will be.

Alico’s agricultural assets are concentrated and the effects of adverse weather conditions such as
hurricanes can be magnified.

Alico’s agricultural operations are concentrated in south Florida counties with more than 80% of its agricultural
lands located in a contiguous parcel in Hendry County. All of these areas are subject to occasional periods of
drought, excess rain, flooding, and freeze. Crops require water in different quantities at different times during
the growth cycle. Accordingly, too much or too little water at any given point can adversely impact production.
While Alico attempts to mitigate controllable weather risks through water management and crop selection,
its ability to do so is limited. Alico’s operations in southern and central Florida are also subject to the risk of
hurricanes. Hurricanes have the potential to destroy crops and impact citrus production through the loss of fruit
and destruction of trees either as a result of high winds or through the spread of wind blown disease. Alico was
impacted by hurricanes during fiscal years 2006, 2005 and 2004 and sustained losses relating to the storms during
all three fiscal years. Alico seeks to minimize hurricane risk by the purchase of insurance contracts, but a portion
of Alico’s crops remain uninsured. Because Alico’s agricultural properties are located in relative close proximity
to each other, the impact of adverse weather conditions may be magnified in Alico’s results of operations.

Water Use Regulation restricts Alico’s access to water for agricultural use.

Alico’s agricultural operations are dependent upon the availability of adequate surface and underground water
needed to produce its crops. The availability of water for use in irrigation is regulated by the State of Florida
through water management districts which have jurisdiction over various geographic regions in which Alico’s
lands are located. Currently, Alico has permits for the use of underground and surface water which are adequate
for its agricultural needs. Surface water in Hendry County, where much of Alico’s agricultural land is located,
comes from Lake Okeechobee via the Caloosahatchee River and the system of canals used to irrigate such
land. Since the Army Corps of Engineers controls the level of Lake Okeechobee, this organization ultimately
determines the availability of surface water even though the use of water has been permitted by the State of
Florida through the water management district. Recently the Army Corps of Engineers decided to lower the
permissible level of Lake Okeechobee in response to concerns about the ability of the levees surrounding the lake
to restrain rising waters which could result from hurricanes. Changes in permitting for underground or surface
water use during times of drought, because of lower lake levels, may result in shortages of water for agricultural
use by Alico and could have a materially adverse effect on Alico’s agricultural operations and financial results.

Alico’s citrus groves are subject to damage and loss from disease including but not limited to Citrus
Canker and Citrus Greening diseases.

Alico’s citrus groves are subject to damage and loss from diseases such as Citrus Canker and Citrus Greening.
Each of these diseases are widespread in Florida and Alico has found instances of Citrus Canker and/or Citrus
Greening in several of its groves. Both diseases are present in areas where Company groves are located. There
is no known cure for Citrus Canker at the present time although some pesticides inhibit the development of
the disease. The disease is spread by contact with infected trees or by wind blown transmission. Alico’s policy
is to destroy trees which become infected with this disease or with Citrus Greening disease. Alico maintains
an inspection program to discover infestations early. Citrus Greening destroys infected trees and is spread by
psyllids. Alico utilizes a pesticide program to control these hosts. There is no known pesticide or other treatment
for Citrus Greening once trees are infected at the present time. Both of these diseases pose a significant threat to
the Florida Citrus industry and to Alico’s citrus groves. Wide spread dissemination of these diseases in Alico’s
groves could cause a material adverse effect to Alico’s operating results and citrus grove assets.

Pesticide and herbicide use by Alico or its lessees could create liability for Alico.

Alico and some of the parties to whom Alico leases land for agricultural purposes, use herbicides, pesticides
and other hazardous substances in the operation of their businesses. All pesticides and herbicides used by Alico
have been approved for use by the proper governmental agencies with the hazards attributable to each substance
appropriately labeled and described. Alico maintains policies requiring its employees to apply such chemicals
strictly in accordance with the labeling. However, Alico does not have any knowledge or control over the
chemicals used by third parties who lease Alico’s lands for cultivation. It is possible that some of these herbicides
and pesticides could be harmful to humans if used improperly, or that there may be unknown hazards associated
with such chemicals despite any contrary government or manufacturer labels. Alico might have to pay the costs or
damages associated with the improper application, accidental release or the use or misuse of such substances.

Changes in immigration laws or enforcement of such laws could impact the ability of Alico to harvest its
crops.

Alico engages third parties to provide personnel for its harvesting operations. The personnel engaged by such
companies could be from pools composed of immigrant labor. The availability and number of such workers is
subject to decrease if there are changes in the U.S. immigration laws or by stricter enforcement of such laws.
The scarcity of available personnel to harvest Alico’s agricultural products could cause Alico’s harvesting costs
to increase or could lead to the loss of product that is not timely harvested which could have a materially adverse
effect upon Alico.

Changing public perceptions regarding the quality, safety or health risks of Alico’s agricultural products
can affect demand and pricing of such products.

The general public’s perception regarding the quality, safety or health risks associated with particular food
crops Alico grows and sells could reduce demand and prices for some of Alico’s products. To the extent that
consumer preferences evolve away from products Alico produces for health or other reasons, and Alico is unable
to modify its products or to develop products that satisfy new customer preferences, there could be decreased
demand for Alico’s products. Even if market prices are unfavorable, produce items which are ready to be or have
been harvested must be brought to market. Additionally, Alico has significant investments in its citrus groves
and cannot easily shift to alternative products for this land. A decrease in the selling price received for Alico’s
products due to the factors described above could have a materially adverse effect on Alico.

Alico faces significant competition in its agricultural operations.

Alico faces significant competition in its agricultural operations both from domestic and foreign producers
and does not have any branded products. Foreign growers generally have a lower cost of production, less
environmental regulation and in some instances greater resources and market flexibility than Alico. Because
foreign growers have great flexibility as to when they enter the U.S. market, Alico cannot always predict the
impact these competitors will have on its business and results of operations. The competition Alico faces from
foreign suppliers of sugar and orange juice is mitigated by quota restriction on sugar imports imposed by the U.S.
government and by a governmentally imposed tariff on U.S. orange imports. A change in the government’s sugar
policy allowing more imports or a reduction in the U.S. orange juice tariff would adversely impact Alico and
negatively impact Alico’s results of operations.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

At September 30, 2008, Alico owned a total of 135,466 acres of land located in five counties in Florida. Acreage in
each county and the primary classification with respect to the present use of these properties is shown in the following
table:

Alico, Inc. & Subsidiaries
Land Use Summary
September 30, 2008

Total

Hendry

Polk

Collier

Glades

Lee

Citrus:

Producing acres
Support and nonproductive*

10,582
6,303

3,048
2,317

3,405
789

4,129
3,197

Total Citrus

16,885

5,365

4,194

7,326

Sugarcane:

Producing acres
Support and nonproductive*

9,110
6,912

Total Sugarcane

16,022

—
—

—

—
—

—

Ranch:

Improved pasture
Semi-improved pasture
Native pasture
Support and nonproductive*

21,201
21,752
19,513
13,583

20,906
20,038
11,846
12,527

295
602
5,949
376

—
1,112
1,718
680

Total Ranch

76,049

65,317

7,222

3,510

Farming:

Productive acres
Support and nonproductive*

5,521
17,479

Total farming

23,000

Sod:

Producing acres
Support and nonproductive*

1,540
363

Total sod

1,903

Rock and Sand Mining
Commercial & Residential

526
1,081

—
54

—
—

—

—
—

—

—
66

—
—

—

—
—

—

—
—

Total

135,466

111,661

11,482

10,836

—
—

—

—
—

—

—
—
—
—

—

—
—

—

—
—

—

—
—

—

—
—

—

—
—
—
—

—

—
—

—

—
—

—

526
—

526

—
961

961

Includes buildings, roads, water management systems, fallow lands and wetlands.

Of the above lands, Alico utilizes approximately 21,000 acres of improved pasture plus approximately 42,000 acres of
semi-improved and native pasture for cattle production. Much of the land is also leased for multi-purpose use such as oil
exploration, farming and recreation.

From the inception of Alico’s predecessor’s initial development program in 1948, the goal has been to develop
the lands for their most profitable use. Prior to implementation of the development program, detailed studies
were made of the properties focusing on soil capabilities, topography, transportation, availability of markets
and the climatic characteristics of each of the tracts. Based on these and later studies, the use of each tract was
determined. Management believes that Alico lands are suitable for agricultural, residential and commercial uses.
In the past some of the land was considered surplus to the agricultural needs of Alico and, as indicated under Item
1 of this report, sales of such surplus property were made from time to time.

Alico utilizes consultants to work with senior management and the Board of Directors to enhance the planning
and strategic positioning of all Company owned land. Alico Land Development Inc. also oversees the entitlement
of Alico’s land assets in order to preserve these rights should Alico choose to develop the property in the future.

Management believes that each of the major agricultural programs is adequately supported by equipment,
buildings, fences, irrigation systems, drainage systems and other amenities required for the operation of the
projects.

Item 3. Legal proceedings.

In June 2008, the Internal Revenue Service (IRS) issued a final Settlement Agreement regarding audits of Alico
for the tax years 2000 through 2004. Pursuant to the agreement, Alico and the IRS agreed to final taxes resulting
from the audits of $41.1 million, penalties of $4.1 million and interest of $20.0 million. Alico also paid State
income taxes related to the final IRS settlement of $6.2 million along with $4.3 million of related interest. The
Settlement Agreement concluded that Alico must recognize unreported gains resulting from the transfer of real
property to a foreign subsidiary (Agri). The real estate was originally transferred and reported at its historical cost
basis. Additionally, Alico must recognize Subpart F income related to Agri’s earnings. Alico had not previously
recognized income related to the transactions referenced above based on reliance on an IRS determination
letter stating that Agri was a captive insurer, exempt from taxes provided certain procedural requirements were
followed. Alico believed that it had followed such requirements, while the IRS ruled otherwise.

On October 29, 2008 Alico was served with a shareholder derivative action complaint filed by Baxter Troutman
against J. D. Alexander and John R. Alexander which names Alico as a nominal defendant. Mr. Troutman is
the cousin and nephew of the two defendants, respectively, and is a shareholder in Atlantic Blue, Inc., a (51%)
shareholder of Alico. From February 26, 2004 until January 18, 2008 Mr. Troutman was a director of Alico. The
complaint alleges that J.D. Alexander and John R. Alexander committed breaches of fiduciary duty in connection
with a proposed merger of Atlantic Blue into Alico which was proposed in 2004 and withdrawn by Atlantic
Blue in 2005. The suit also alleges, among other things, that the merger proposal was wrongly requested by
defendants J. D. Alexander and John R. Alexander and improperly included a proposed special dividend; and that
the Alexanders’ sought to circumvent the Board’s nominating process to ensure that they constituted a substantial
part of Alico’s senior management team and these actions were contrary to the position of Alico’s independent
directors at the time causing a waste of Alico’s funds and the resignations of the independent directors in 2005.
As a result the complaint is seeking damages to be paid to Alico by the Alexanders’ in excess of $1,000,000. The
complaint concedes that Mr. Troutman has not previously made demand upon Alico to take action for the alleged
wrongdoing as required by Florida law alleging that he believed such a demand would be futile. A copy of the
Complaint may be obtained from the Clerk of the Circuit Court in Polk County, Florida.

Alico’s Board of Director’s has established a Special Committee consisting entirely of directors independent of
Atlantic Blue in order to investigate Mr. Troutman’s complaint. For further information regarding this case please
refer to Alico’s 8-K filing dated October 30, 2008.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities.

Common Stock Prices

The common stock of Alico, Inc. is traded on the NASDAQ Stock Market, LLC (“NASDAQ”) under the symbol
ALCO. The high and low prices as reported by NASDAQ, by fiscal quarter, during the fiscal years ended
September 30, 2008 and 2007 are presented below:

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

2008
Price

2007
Price

High

Low

High

Low

51.13

45.62

45.48

50.32

35.35

35.44

33.14

33.90

62.92

60.45

62.24

65.00

48.50

46.25

54.97

43.29

Approximate Number of Holders of Common Stock

As of October 31, 2008 there were approximately 396 holders of record of Alico’s Common Stock as reported by
Alico’s transfer agent.

Dividend Information

Dividends declared during the last two fiscal years were as follows:

Payment Date

Amount Paid Per Share

January 15, 2007

April 16, 2007
July 16, 2007

October 15, 2007
January 15, 2008

May 16, 2008
August 15, 2008

$
$
$
$
$
$
$

0.275
0.275
0.275
0.275
0.275
0.275
0.275

Record Date

December 29, 2006
March 30, 2007
June 29, 2007
September 28, 2007
December 29, 2007
April 30, 2008
July 31, 2008

On November 15, 2008, Alico paid a dividend of $0.275 per share to shareholders of record as of October 31,
2008. At a Board of Directors meeting held on October 31, 2008 the Directors declared a quarterly dividend of
$0.275 per share payable to stockholders of record as of January 30, 2009, with payment expected on or about
February 15, 2009.

Alico’s ability to pay dividends in the immediate future is dependent on a variety of factors including earnings
and the financial condition of Alico. For a discussion of these factors, see Item 7, Management’s Discussion and
Analysis of Financial Condition and Results of Operations.

Equity Compensation Arrangements

On November 3, 1998, Alico adopted the Alico, Inc., Incentive Equity Plan (The 1998 Plan) pursuant to which
the Board of Directors of Alico may grant options, stock appreciation rights, and/or restricted stock to certain
directors and employees. The Plan authorized grants of shares or options to purchase up to 650,000 shares of
authorized but unissued common stock. This plan expired on November 3, 2008 and was replaced with a new
plan by Alico’s Board of Directors subject to shareholder approval. Provisions of the 2008 plan are similar to the
1998 Plan, and authorize grants of up to 350,000 shares of common stock to be funded by treasury purchases.
Details of the plan are more fully described in the Company’s proxy statement expected to be filed on or before
January 20, 2009.

On April 17, 2006 Alico hired a President and Chief Operating Officer. As a portion of the total compensation
package, the Board awarded 20,000 shares of restricted stock. Under the terms of the agreement, the shares were
to vest 25% on April 17, 2010 and continue to vest 25% per year until fully vested. The fair value per share was
$45.25 on the date of the award. The grant was forfeited due to the resignation of the individual in November,
2008. Since none of the shares granted on April 17, 2006 had vested, the previously recognized compensation
cost of $424 thousand was reversed during the fourth quarter of fiscal year 2008.
On October 27, 2006, the Board awarded 20,000 shares of restricted stock to the Chief Executive Officer as
additional compensation. Under the terms of the agreement, 4,000 shares vested effective August 31, 2006, 4,000
vested effective August 31, 2007 and the remaining 12,000 shares vested upon the CEO’s retirement on June 30,
2008. The fair value per share was $61.96 on the date of the award.

During November 2007, the CEO and COO elected to receive a portion of their annual incentive bonus in
Company stock. The CEO chose to receive 4,000 shares at a value of $177 thousand, while the COO chose to
receive 500 shares at a value of $22 thousand. These shares do not contain any restrictions, but were issued under
Alico’s Incentive Equity Plan. Compensation expense for these awards was accrued and recognized during the
fourth quarter of Alico’s fiscal 2007 year.

A grant of 25,562 restricted shares was made to four senior executives in January 2008 with a fair value of $40.67
per share, in order to replace previous retirement benefits granted. 7,707 of the shares granted in January 2008
related to previously vested retirement benefits and vested immediately. The remaining 17,855 shares granted in
January 2008 vest 20% annually in January of each year until fully vested.

On September 30, 2008, Alico, through its subsidiary Alico Land Development, Inc., hired a Vice-President
of Real Estate Operations. As a portion of the total compensation package, the Board awarded 7,500 shares of
restricted stock. Under the terms of the agreement, the shares will vest 20% on September 30, 2009 and continue
to vest 20% per year until they are fully vested. The fair value per share was $47.43 on the date of the award.

The following schedule summarizes the outstanding option grants under the program. No stock options or stock
appreciation rights have been granted since February 2004.

Equity Compensation Plan Information

Number of securities
remaining available
for future issuance

Plan category

Equity compensation plans approved by

security holders

Equity compensation plans not approved by

security holders

Number of securities
to be issued upon
exercise of

Weighted average
exercise price of
outstanding options,
warrants and rights warrants and rights

outstanding options,

(a)

(b)

under equity
compensation plans
(excluding securities
reflected in
column (a))
(c)

6,158 $

16.84

231,600

—

Total

6,158 $

16.84

231,600

Issuer Purchases of Equity Securities

Date

January 2007
March 2007
May 2007
August 2007
November 2007
March 2008
May 2008

Total Number of Average price Publicly Announced Total Dollar value of
paid per share Plans or Programs(1)
Shares Purchased

shares purchased

Total Shares
Purchased as Part of

9,927 $
843 $
10,000 $
7,000 $
12,000 $
6,200 $
9,768 $

48.72
47.69
59.67
51.98
43.97
44.24
40.32

25,927 $
26,770 $
36,770 $
43,770 $
55,770 $
61,970 $
71,738 $

483,597
40,199
596,654
363,841
527,699
274,268
393,851

The Company’s Board of Directors has authorized the repurchase of up to 131,000 shares of the Company’s
common stock through August 31, 2010, for the purpose of funding restricted stock grants under its 1998 Incentive
Equity Plan in order to provide restricted stock to eligible Directors and Senior Managers and align their interests
with those of the Company’s shareholders.

The stock repurchases began in November 2005 and will be made on a quarterly basis until August 31, 2010
through open market transactions. The timing and actual number of shares repurchased will depend on a variety
of factors including price, corporate and regulatory requirements and other market conditions. All purchases will
be made subject to restrictions of Rule 10b-18 relating to volume, price and timing so as to minimize the impact
of the purchases upon the market for the Company’s shares. The Company does not anticipate that any purchases
under the Plan will be made from any officer, director or control person. There are currently no arrangements
with any person for the purchase of the shares. Alico may purchase an additional 59,262 shares. Pursuant to
these plans, Alico purchased 9,768, 6,200 and 12,000 shares in the open market during the third, second and first
quarter of fiscal year 2008, respectively, at an average price of $42.76 per share.

There were no purchases of common stock of Alico made during the three months ended September 30, 2008 by
Alico or any “affiliated purchaser” of Alico as defined in rule 10b-18(a)(3) under the Exchange Act.

Alico Performance

The graph below represents the Company’s common stock performance, comparing the value of $100 invested on
September 1, 2005 in the Company’s common stock, the S&P 500 and a Company-constructed peer group.

ANNUAL RETURN PERCENTAGE

Company Name / Index
ALICO, INC.
S&P 500 INDEX
NEW PEER GROUP
OLD PEER GROUP

Aug 04

Aug 05

58.48
11.46
39.85
31.36

20.40
12.56
56.59
60.44

Years Ending
Aug 06

15.39
8.88
-27.71
-24.86

Aug 07

Aug 08

-11.28
15.13
-27.92
-15.21

-13.32
-11.14
2.34
-1.80

INDEXED RETURNS

Company Name / Index
ALICO, INC.
S&P 500 INDEX
NEW PEER GROUP
OLD PEER GROUP

Base
Period
Aug 03
100
100
100
100

Aug 04
158.48
111.46
139.85
131.36

Aug 05
190.82
125.45
218.99
210.75

Years Ending
Aug 06
220.18
136.59
158.30
158.35

Aug 07
195.35
157.27
114.10
134.27

Aug 08
169.33
139.75
116.77
131.85

New Peer Group
CONSOLIDATED TOMOKA LAND CO
ST JOE CO
TEJON RANCH CO
THOMAS PROPERTIES GROUP

Item 6. Selected Financial Data.

Old Peer Group Companies

ALEXANDER & BALDWIN INC
CONSOLIDATED TOMOKA LAND CO
ST JOE CO
TEJON RANCH CO

Description

2008

2007 (1)

2007

2006

2005

2004

September 30,

Years Ended August 31,

(In Thousands, Except Per Share Amounts)

Operating revenue
Income (loss) from

$ 116,382

758 $ 132,005

74,164

52,938

52,057

continuing operations

5,603

(849)

(13,395)

8,021

6,260

17,813

Income (loss) from

continuing operations
per weighted average
common share
Average Number of

Shares Outstanding
Cash Dividend Declared

Per Share
Total Assets
Long-Term Obligations

0.76

(0.12)

(1.82)

1.09

0.85

2.47

7,367

7,358

7,369

7,368

7,331

7,219

1.10

273,932
140,239

0.28
285,349
143,265

1.10
281,206
143,790

1.03
263,579
103,601

1.25
248,306
85,826

0.60
238,242
82,908

(1) Beginning with fiscal 2008, Alico changed its year end from August 31 to September 30. The year ended

September 30, 2008 was the first full year on the new fiscal year. Results for September 30, 2007 are for the
one month transition period.

Alico, through its subsidiary Bowen, purchased the assets of Bowen Brothers Fruit Co., Inc. for $1.9 million
in February 2006. The purchase was made to provide Alico with additional citrus marketing expertise and the
ability to harvest its own citrus crop. Results from Bowen have been included beginning in fiscal year ended
August 31, 2006. For further information concerning Bowen’s operations and assets please refer to Note 10 of
the consolidated financial statements.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Cautionary Statement

Some of the statements in this document include statements about future expectations. Statements that are not
historical facts are “forward-looking statements” for the purpose of the safe harbor provided by Section 21E
of the Exchange Act and Section 27A of the Securities Act. These forward-looking statements, which include
references to one or more potential transactions, and strategic alternatives under consideration or projections of
performance for the upcoming fiscal year, are predictive in nature or depend upon or refer to future events or
conditions. These statements are subject to known, as well as, unknown risks and uncertainties that may cause
actual results to differ materially from expectations. These risks include, but are not limited to those discussed
in the risk factors section of this annual report whether or not such risks are repeated in connection with any
forward looking statement. There can be no assurance that any anticipated performance or future transactions will
occur or be structured in the manner suggested or that any such transaction will be completed. Alico undertakes
no obligation to update publicly any forward-looking statements, whether as a result of future events, new
information or otherwise.

When used in this document, or in the documents incorporated by reference herein, the words anticipate, should,
believe, estimate, may, intend, expect, and other words of similar meaning, are likely to address Alico’s growth
strategy, financial results and/or product development programs. Actual results, performance or achievements
could differ materially from those contemplated, expressed or implied by the forward-looking statements
contained herein. The considerations listed herein represent certain important factors Alico believes could cause
such results to differ. These considerations are not intended to represent a complete list of the general or specific
risks that may affect Alico. It should be recognized that other risks, including general economic factors and
expansion strategies, may be significant, presently or in the future, and the risks set forth herein may affect Alico
to a greater extent than indicated.

The following discussion focuses on the results of operations and the financial condition of Alico. This section
should be read in conjunction with the Consolidated Financial Statements and Notes.

On September 28, 2007, the Board of Directors of Alico approved a change in Alico’s fiscal year end from
August 31 to September 30. The fiscal year change is effective beginning with Alico’s 2008 fiscal year. Alico’s
2008 fiscal year began on October 1, 2007 and ended September 30, 2008, resulting in a one month transition
period that began September 1, 2007 and ended September 30, 2007. Accordingly, information is presented
for the fiscal year ended September 30, 2008, the one month transition period and for prior fiscal years ended
August 31.

Alico’s agricultural operations are seasonal in nature. While the season for each commodity differs, generally
the season for each commodity is concluded by August 31 of each year and begins no earlier than October 1. For
this reason, results for the fiscal year ended September 30 are comparable to those of the prior fiscal years ended
August 31.

Liquidity and Capital Resources

Dollar amounts listed in thousands:

Cash & liquid investments
Total current assets
Current liabilities
Working capital
Total assets
Notes payable
Current ratio

9/30/08

9/30/07

8/31/07

78,637
123,130
18,200
104,930
273,932
137,758
6.77

78,110
135,376
25,138
110,238
285,349
135,884
5.39

81,067
127,494
17,519
109,975
281,206
136,889
7.28

Management believes that Alico will be able to meet its working capital requirements for the foreseeable future
with internally generated funds. In addition, Alico has credit commitments under a revolving line of credit that
provides for revolving credit of up to $125.0 million. Of the $125.0 million credit commitment, $44.3 million was
available for Alico’s general use at September 30, 2008 (see Note 6 to Consolidated Financial Statements).

Cash flows from Operations

Cash flows from operations were $13.8 million, ($52.9 million) and $9.5 million for the fiscal years ended
September 30, 2008, August 31, 2007 and August 31, 2006. Cash flow from operations was ($1.8 million) for
the one month transition period ended September 30, 2007. Cash flow from operations for the fiscal years ended
September 30, 2008 and August 31, 2007 were negatively impacted by payments of $10.5 million to the State of
Florida and $66.2 million to the IRS, respectively, related to the settlement of an IRS audit, which will cause those
years not to be indicative of expected future cash flows from operations (see Note 8 to Consolidated Financial
Statements).

In November 2008, Alico’s subsidiary, Alico-Agri, Ltd., received a payment of $2.5 million in escrow in
connection with the restructure of a real estate contract (“East”) with Ginn- LA Naples, Ltd, LLLP (“Ginn”).

The East contract was originally entered into in July 2005 and relates to the sale of approximately 4,538 acres in
Lee County Florida. Under the terms of the restructure, principal payments were extended as follows (thousands):

Due before restructure Due after restructure
1,787
1,000
1,000
4,000
8,000
12,000
26,321

3,980
12,000
12,000
26,128
-0-
-0-
-0-

Due Date
9/28/08
9/28/09
9/28/10
9/28/11
9/28/12
9/28/13
9/28/14

Interest will continue to accrue on the unpaid balance of the note and be paid in quarterly installments. The note
will bear interest at rates published by HSH and associates for the London Interbank Offered Rate (LIBOR) plus
150 basis points from September 29, 2008 to September 28, 2009, HSH LIBOR plus 200 basis points from
September 29, 2009 to September 28, 2010 and HSH LIBOR plus 250 basis points thereafter until the note is
paid in full. Ginn will forfeit release credits it has accumulated on the property in the event of default, foreclosure
or bankruptcy.

Ginn did not exercise its option on a second contract (“West”). In connection with this action, Ginn has provided
a deed in lieu of foreclosure on a third contract (“Crockett”) and gave up any rights it may have had to the West
property. Alico took possession of the West and Crockett parcels free of any claims by Ginn.

The West and Crockett parcels consist of approximately 980 acres in Lee County, Florida located just south
of the Southwest Florida Regional Airport and north of Florida Gulf Coast University, and just east of an I-75
interchange.
Alico collected cash payments of $4.2 million during the fiscal year ended September 30, 2008 related to the
West and Crockett parcels. Alico, through its subsidiary Alico Land Development Inc. is actively seeking to
entitle and sell these properties.

Overall, gross profits during fiscal year 2009 are expected to be lower than those of fiscal year 2008 due to
an expected decrease in returns from agricultural operations. Market prices Alico receives for citrus products,
typically Alico’s largest source of gross profit, are expected to decline due to increased Florida citrus production
and carryover inventories at citrus processing plants.

Alico experienced increases in the cost of fertilizer, herbicides, insecticides and fuel during the fiscal year ended
September 30, 2008. A large portion of these costs related to the production of fiscal year 2009 crops and were
inventoried. These costs will be charged against fiscal year 2009 revenues as crops are harvested. While several
input costs, including fuel, have recently declined from higher levels, significant reductions will not be realized
through gross profit until the fiscal year 2010 crops are harvested, assuming the lower costs continue.

Cash flows from Investing

Cash outlays for land, equipment, buildings, and other improvements totaled $6.1 million, $9.1 million and
$33.2 million during the fiscal years ended September 30, 2008, August 31, 2007, and August 31, 2006,
respectively. Alico anticipates its capital needs, primarily for the care of young citrus trees, real estate entitlement
work, sugarcane plantings, and raising cattle for breeding purposes, at between $7.0 million and $9.0 million for
fiscal year 2009.

Alico’s balance sheet has carried large amounts of cash and investments over the past several years in order
to comply with liquidity provisions mandated by the Bermuda Monetary Authority for Alico’s wholly owned
insurance subsidiary, Agri-Insurance Co., Ltd. Due to several hurricanes which impacted the State of Florida
during the fall of 2004 and 2005, Agri sustained losses related to its underwriting activities which caused Agri
to suspend additional insuring activities until an updated feasibility study of its insuring activities could be
completed. Based on the findings of the study, along with the history of losses, Agri ceased issuing policies. Alico
is currently working to dissolve Agri. Upon Agri’s dissolution, Alico expects to reduce its outstanding debt by
utilizing a portion of its cash and marketable securities.

Recent market conditions have depressed Florida real estate markets causing the predictability of real estate sales
including timing and market values to be problematic. Alico through its subsidiary Alico Land Development
Inc. continues to market parcels of its real estate holdings which are deemed by Management and the Board of
Directors to be excess to the immediate needs of Alico’s core operations. The sale of any of these parcels could be
material to the operations and cash flows of Alico.

Cash flows from Financing

Alico’s Board of Directors has authorized the repurchase of up to 131,000 shares of Alico’s common stock
through August 31, 2010, for the purpose of funding restricted stock grants under its 1998 Incentive Equity Plan
in order to provide restricted stock to eligible Directors and Senior Managers to align their interests with those of
Alico’s shareholders.

All purchases will be made subject to restrictions of Rule 10b-18 relating to volume, price and timing so as to
minimize the impact of the purchases upon the market for Alico’s shares. The stock repurchases will be made on
a quarterly basis until August 31, 2010 through open market transactions. The timing and actual number of shares
repurchased will depend on a variety of factors including price, corporate and regulatory requirements and other
market conditions. Alico does not anticipate that any purchases under the Plan will be made from any officer,
director or control person. There are currently no arrangements with any person for the purchase of the Shares.
Alico will use internally generated funds and available working capital to make the purchases. In accordance with
the approved plans, Alico may purchase an additional 59,262 shares. Alico purchased 27,968 shares in the open
market at an average price of $42.76 during the fiscal year ended September 30, 2008 and 27,770 shares at an
average price of $53.45 per share during the fiscal year ended August 31, 2007. No treasury purchases were made
during the transition month ended September 30, 2007.

On September 3, 2008 Alico converted $50.0 million of the outstanding balance on its $175.0 million Revolving
Line of Credit with Farm Credit of Southwest Florida to a 10 year term loan bearing a fixed interest rate of 6.79%
with equal payments of principal and interest of $1.7 million per quarter until maturity. The Board’s decision to
fix the interest rate on a portion of its borrowings was part of its risk management program. The new term loan is
cross collateralized with Alico’s Revolving line of Credit and contains identical covenants. Alico is currently in
compliance with all the covenants under its loan agreements and expects to remain so for the foreseeable future.

Alico paid quarterly dividends of $0.275 per share on October 15, 2007, January 15, 2008, May 16, 2008,
August 15, 2008 and November 15, 2008. At its meeting on October 31, 2008, the Board of Directors declared
a quarterly dividend of $0.275 per share payable to stockholders of record as of January 30, 2009 with payment
expected on or around February 15, 2009. The Board will continue to assess financial condition, compliance with
debt covenants, and earnings of Alico in determining its dividend policy.

Results from Operations

Summary of results (in thousands):

Year Ended
September 30,
2008

Month Ended
September 30,
2007

Year Ended
August 31,

2007

2006

Operating revenue
Gross profit (loss)
General & administrative expenses
Profit (loss) from continuing operations
Profit on sale of real estate
Interest and investment income
Interest expense
Other income (expense)
Income tax provision
Effective income tax rate
Net income (loss) from continuing
operations

116,382
14,057
11,478
2,579
817
7,745
6,565
262
(765)
(15.8)%

758
(69)
815
(884)
—
683
820
(4)
(176)
17.2%

132,005
29,685
12,727
16,958
1,257
7,337
5,652
225
33,520
166.6%

74,164
16,252
10,901
5,351
4,369
8,944
3,852
368
7,159
47.2%

8,021

5,603

(849)

(13,395)

Alico’s agricultural operations generally combine to produce the majority of operating revenue, gross profit and
income from operations. As a producer of agricultural products, Alico’s ability to control the prices it receives
from its products is limited, and prices for agricultural products can be volatile. Operating results are largely
dictated by market conditions. During the fiscal year ended August 31, 2007, Alico benefited from unusually
high pricing for its citrus crops. Accordingly, results, including operating revenue, gross profit, profit from
continuing operations and income before income taxes were higher in the fiscal year ended August 31, 2007
than those of the following and prior fiscal years.

General and Administrative

General and administrative expenses decreased by 10% for the fiscal year ended September 30, 2008 compared
with the fiscal year ended August 31, 2007. The Company is aggressively seeking to further reduce general and
administration expenses in fiscal year 2009 including reductions in staffing, legal fees, outside consultants and
donations.

General and administrative were higher for the fiscal year ended August 31, 2007 compared with the fiscal
year ended August 31, 2006 due to increased staff, Sarbanes Oxley compliance, fees incurred related to the IRS
audits and depreciation.

Profit from the Sale of Real Estate

Alico through its subsidiary Alico Land Development Inc. hired a real estate professional to manage the
planning and strategic positioning of all Company owned land. These actions include seeking entitlement of
Alico’s land assets in order to preserve rights should Alico choose to develop property in the future. Alico Land
Development Inc. is also responsible for negotiating and renegotiating sales and options contracts. Proceeds
from the contracts negotiated or renegotiated under the direction of the real estate department are classified as
operating items, while proceeds from sales that originated prior to the establishment of the department and are
not deemed to be substantially modified according to U.S. GAAP, are classified as non-operating.

Alico’s real estate revenues during the fiscal years ended September 30, 2008 and August 31, 2007 have primarily
resulted from three contracts with the Ginn Companies for real estate in Lee County Florida. The Company
recognized a total of $4.6 million of real estate revenue related to these contracts, for each of the fiscal years
ended September 30, 2008 and August 31, 2007, of which $0.8 million and $1.3 million were classified as non-
operating revenues for September 30, 2008 and August 31, 2007, respectively.

In October 2008, the three contracts were renegotiated, resulting in the Company retaking possession of
two of the properties. This is expected to result in a reduction of revenue from the two previous contracts of
approximately $2.6 million in fiscal year 2009.

Due to decreases in the market prices of Florida real estate, the Company evaluated several of its properties for
impairment at September 30, 2008 and August 31, 2007. In conducting its evaluation, the Company reviewed
the estimated non-discounted cash flows from each of the properties and obtained independent third party
appraisals from a qualified real estate appraiser. Based on this information, the Company determined that a 291
acre lakefront property in Polk County, Florida, purchased in October 2005 for $9.2 million, was impaired by
approximately $1.9 million at August 31, 2007 and by an additional $1.5 million at September 30, 2008 due to
declines in the Florida real estate market. The impairment losses were included as a charge to real estate operating
expenses during the fiscal years ended September 30, 2008 and August 31, 2007. Alico’s remaining adjusted book
basis in the property was $5.8 million at September 30, 2008.

Recent market conditions have depressed Florida real estate markets causing the predictability of real estate sales
including timing and market values to be problematic. Alico continues to market parcels of its real estate holdings
which are deemed by Management and the Board of Directors to be excess to the immediate needs of Alico’s core
operations. The sale of any of these parcels could be material to the operations and cash flows of Alico.

In the first quarter of fiscal year 2006, Alico sold approximately 280 acres of citrus grove located south of
LaBelle, Florida in Hendry County for $5.6 million cash for a net gain of $4.4 million. Alico has retained
operating rights to the grove until residential development begins.

Provision for Income taxes

The Company’s effective tax rate is affected by IRS adjustments including penalties and interest, state income
taxes, including penalties and interest, items which may be included in book income but are not taxable under
current statutes, such as earnings from tax exempt bonds, items included in book expense that are not deductible
under current statutes, such as lobbying expenses and non qualified retirement plans and the expiration of
otherwise allowable deductions that do not meet recognition thresholds such as expired net operating loss and
contribution carry forwards.

The Company expects its effective tax rate to more closely match the blended Federal and State rates for the
fiscal year ending September 30, 2009, due to the final settlement of the 2000-2004 IRS audits.

Alico’s effective tax rate, excluding the IRS settlement adjustment benefit of $1.6 million was 30.5% for the
fiscal year ended September 30, 2008 and differed from the expected combined Federal and State blended rate
of 38% due to interest earnings on tax exempt securities. For the transition month ended September 30, 2007, the
effective tax rate was 17.2% which differed from the expected combined Federal and State blended rate of 38%
primarily due to the expiration of a charitable contribution carry forward.

Alico’s effective tax rate, excluding the IRS settlement adjustment of $26 million, was 39.3% for the year ended
August 31, 2007, which differed from the expected combined Federal and State blended rate of 38.5% due to
the expiration of charitable contribution carry forwards and an adjustment to the expected rate at which Alico
expected to realize its deferred tax items. The effective tax rate, excluding the IRS settlement adjustment of
$2.2 million, was 30.5% for the fiscal year ended August 31, 2006, which differed from the expected combined
Federal and State blended rate of 38.5% due to the impact of earnings from tax exempt bonds.

Interest and Investment Income

Interest and investment income is generated principally from mortgages held on real estate sold on the installment
basis, investments in corporate and municipal bonds, mutual funds, and U.S. Treasury securities.

Due to the recent volatility in the financial markets, Alico has continued to focus on short term, highly rated
and highly liquid investments. During the fiscal year ended September 30, 2008, the average return on these
investments declined considerably due to lower interest rates. The preservation of capital is a primary objective
of the Company’s investment strategy; however, during the fiscal year ended September 30, 2008, the Company
was unable to liquidate several auction rate securities, having a total face value of $5.9 million. Several of
these securities were called subsequent to the balance sheet date. The remaining securities are highly rated and
continue to pay interest, but absent an observable market for the securities, Alico analyzed each security based
on call dates and provisions, bond ratings, prevailing interest rates, and broker expectations. As a result of these
evaluations, Alico determined that one $3.0 million bond was impaired. An adjustment of $120 thousand was
recognized for the fiscal year ended September 30, 2008 as a temporary impairment at September 30, 2008 and
charged to other comprehensive income based on the present value of the expected cash flows. The impaired
security was classified as a non-current investment at September 30, 2008. In addition $1.2 million of the
remaining auction rate securities were classified as non-current assets at September 30, 2008 at face value, based
on the conclusions reached by the Company’s evaluation.

Interest income for the fiscal year ended August 31, 2007 was $7.3 million compared with $8.9 million in the
fiscal year ended August 31, 2006. In accordance with guidelines established by Alico’s Board of Directors, Alico
restructured its investment portfolio during the first quarter of fiscal year 2006, focusing on high quality fixed
income securities with original maturities of less than 12 months. These sales resulted in a net realized gain of
$3.3 million in fiscal year 2006.

Interest Expense

Interest expense has continued to increase during the past three fiscal years, primarily due to higher debt levels.
Alico’s outstanding debt was $137.8 million, $136.9 million and $64.0 million for the fiscal years ended
September 30, 2008, August 31, 2007 and August 31, 2006. Alico utilized funds available under its revolving
line of credit to pay $76.8 million of taxes, penalties and interest to the IRS and the State of Florida related to tax
audits of the tax years 2000 — 2004. Alico has three debt agreements with Farm Credit of Southwest Florida, a
$125.0 million revolving line of credit, whose interest rate is based on the London Interbank Offered Rate (LIBOR,
4.25% effective rate at September 30, 2008), a $50.0 million term loan payable over 10 years at a fixed annual
interest rate of 6.79%, and a mortgage note with ratio of an interest 6.68% annually. The outstanding balances
for the revolving credit line, term loan and mortgage note were $80.7 million, $50.0 million and $7.0 million,
respectively at September 30, 2008.

Upon the dissolution of Agri, Alico expects to reduce its outstanding debt by utilizing a portion of its cash and
marketable securities. This transaction is expected to result in lower interest expense to the Company during the
fiscal year ending September 30, 2009 by both reducing the total debt outstanding and the variable interest rate,
which is based on LIBOR plus a varying percentage dependent upon the debt ratio of the Company.

Operating Revenue

Revenues

Agriculture:
Bowen
Citrus groves
Sugarcane
Cattle
Vegetables
Sod
Native trees and shrubs

Agriculture operations revenue
Real estate activities
Land leasing and rentals
Mining royalties

Year ended

One month

Fiscal years ended

Sept. 30,
2008

Sept. 30,
2007 (1)

Aug. 31,
2007

Aug. 31,
2006

45,499 $
41,167
9,671
6,793
5,460
1,118
125

109,833
3,870
2,276
403

143 $
5
—
330
—
92
—

570
—
141
47

52,716
47,484
9,432
9,977
3,803
2,180
249

125,841
3,329
1,495
1,340

30,869
22,188
8,926
5,700
2,389
1,528
142

71,742
113
1,369
940

Total operating revenue

116,382 $

758 $

132,005

74,164

(1) Alico changed its fiscal year end from August 31 to September 30. The year ended September 30, 2008 was
the first full year on the new fiscal year. Results for September 30, 2007 are for the one month transition
period.

Operating revenues declined by 12% during the fiscal year ended September 30, 2008 when compared with
the fiscal year ended August 31, 2007. The decline was primarily due to lower citrus prices realized industry
wide, as well as by Alico’s Bowen and citrus grove operations.

Operating revenues are expected to decline from 2008 levels for the fiscal year ending September 30, 2009,
based on preliminary price estimates for Alico’s various agricultural products.

Operating revenues increased by 77.9% to $132.0 million in the fiscal year ended August 31, 2007 compared with
$74.2 million in the fiscal year ended August 31, 2006. The increase was primarily due to higher citrus prices
realized by Bowen and Alico’s citrus grove operations during fiscal year 2007 and also realized throughout the
citrus industry.

Gross Profit

Gross profit (loss):
Agriculture:
Bowen
Citrus groves
Sugarcane
Cattle
Vegetables
Sod
Native trees and shrubs

Gross profit from agricultural

operations

Real estate activities
Land leasing and rentals
Mining royalties
Net casualty (recovery)

Gross Profit (loss)

Year ended

One month

Fiscal years ended

Sept. 30,
2008

Sept. 30,
2007 (1)

Aug. 31,
2007

Aug. 31,
2006

1,470 $
13,530
421
(2,127)
(141)
(1,535)
125

11,743
341
1,668
305
—

14,057

(79) $
2
—
41
—
(116)
—

(152)
(59)
105
37
—

(69)

930
24,057
599
255
496
862
249

27,448
(79)
1,102
1,214
—

29,685

(268)
7,614
360
786
985
688
142

10,307
52
917
940
4,036

16,252

(1) Alico changed its fiscal year end from August 31 to September 30. The year ended September 30, 2008 was the
first full year on the new fiscal year. Results for September 30, 2007 are for the one month transition period.

Alico measures gross profit from its operations before any allocation of corporate overhead or interest charges.
Gross profit is dependent upon the prices received for each of the Company’s products, less harvesting,
marketing and delivery costs and the direct costs of producing the products. Because Alico’s agricultural
products are commodities, Alico is not able to predict with certainty what price it will receive for its products;
however, its costs are relatively fixed. During the fiscal year ended September 30, 2008, lower prices and
rising production and delivery costs lowered margins on several of Alico’s agricultural operations. As a result,
gross profits declined by 53% when compared with the fiscal year ended August 31, 2007.

Gross profit from agricultural operations is expected to decline below 2008 levels for the fiscal year ending
September 30, 2009, based on preliminary price and cost estimates for Alico’s various agricultural products.

Gross profit for the fiscal year ended August 31, 2007 increased by 83% when compared with gross profit
for the fiscal year ended August 31, 2006, due to increased gross profits from agricultural operations. This
increase was primarily due to higher citrus prices and volume.

Agricultural Operations

Agricultural operations generate a large portion of Alico’s revenues. Agricultural operations are subject to a
wide variety of risks including weather and disease. Additionally, it is not unusual for agricultural commodities
to experience wide variations in prices from year to year or from season to season. Due to a variety of factors,
several of Alico’s agricultural operations generated losses during the fiscal year ended September 30, 2008.
Based on initial estimates and market conditions, the Company expects overall revenue and gross profits from its
agricultural operations to be lower during the fiscal year ending September 30, 2009 when compared to the fiscal
year ended September 30, 2008.

Bowen

Bowen’s operations primarily consist of providing harvesting, hauling and marketing services to citrus growers and
processors in the State of Florida. Additionally, Bowen purchases and resells citrus products at a modest margin.
Bowen’s operations generated revenues of $45.5 million, $52.7 million and $30.9 million for the fiscal years ended
September 30, 2008, August 31, 2007 and August 31, 2006, respectively. Gross profits (losses) were $1.5 million,
$0.9 million and ($0.3 million) during the fiscal years ended September 30, 2008, August 31, 2007 and August 31,
2006. Citrus prices declined 27% during the fiscal year ended September 30, 2008 when compared with the fiscal
year ended August 31, 2007, which caused a corresponding decline in Bowen’s revenues. Despite this decline,
Bowen was able to increase the margin charged for its services, and therefore increase its gross profits.

Citrus Groves

Alico’s Citrus Groves division primarily produces citrus for delivery to citrus processors. The division recorded
gross revenues of $41.2 million, $47.5 million, and $22.2 million and gross profits of $13.5 million, $24.1 million
and $7.6 million, for the fiscal years ended September 30, 2008, August 31, 2007, and August 31, 2006,
respectively. Citrus prices declined 27% during the fiscal year ended September 30, 2008 when compared with
the fiscal year ended August 31, 2007, which caused a corresponding decline in revenue and gross profit for the
Citrus Groves division. Additionally, rising input costs (such as fuel and fertilizer), needed to produce and deliver
citrus products, further eroded margins.

Hurricanes, citrus diseases and increased real estate development in the central and southern portions of Florida,
where the majority of citrus in the state is produced, combined to reduce the supply of citrus during the fiscal
years ended August 31, 2007 and August 31, 2006, resulting in per unit price increases for citrus products across
the industry during those years. As real estate development has slowed and groves across the state have recovered
from the damages caused by the hurricanes, production has slowly increased causing downward pressure on citrus
prices.

Alico harvested 4.2 million, 3.5 million, and 3.3 million 90 pound equivalent boxes of citrus in the fiscal years
ended September 30, 2008, August 31, 2007, and August 31, 2006, respectively. Alico estimates that its fiscal
year 2009 crop will produce approximately 4.0 million boxes.

Alico has contracts with several citrus processors with pricing mechanisms based on a minimum price along with
a price increase if market conditions exceed the minimum. Due to current market conditions and outlooks, Alico
expects to receive the minimum contracted price for its citrus for the fiscal year ending September 30, 2009,
which, along with the projected decline in production, is expected to cause a decline in gross citrus revenue, and a
corresponding decline in gross profit.

Sugarcane

Alico’s sugarcane operations consist of cultivating sugarcane for sale to a sugar processor. Sugarcane revenues
were $9.7 million, $9.4 million, and $8.9 million during the fiscal years ended September 30, 2008, August 31
2007, and August 31, 2006, respectively. Sugarcane generated gross profits of $0.4 million, $0.6 million,
and $0.4 million during the fiscal years ended September 30, 2008, August 31, 2007, and August 31, 2006,
respectively. During fiscal years 2008, 2007 and 2006, approximately 381,000, 381,000, and 342,000 standard
tons of sugarcane were harvested.

Florida Governor Charlie Crist has announced that the South Florida Water Management District (SFWMD) is
negotiating a purchase of the land holdings of United States Sugar Corporation (USSC). USSC and its subsidiary
Southern Gardens, is Alico’s largest customer accounting for approximately 21% of fiscal year 2008 operating
revenue. Under the terms of the most recent proposal, USSC will retain ownership and continue operation of its
sugar mill, sugar refinery and citrus plant. USSC would lease back the property sold to SFWMD for a period
of seven crop cycles. At the present time, Alico is unable to assess the impact of this potential transaction on its
operations. As the potential sale progresses and more details become known, Alico will continue to assess the
impact, its options and strategies going forward.

Cattle

Alico’s cattle operation is primarily engaged in the production of beef cattle, feeding cattle at western feedlots
and the raising of replacement heifers. Cattle revenues were $6.8 million, $10.0 million, and $5.7 million and
gross profits (losses) from cattle operations were ($2.1 million), $0.3 million and $0.8 million for the fiscal years
ended September 30, 2008, August 31, 2007, and August 31, 2006, respectively.

During fiscal year 2007, Alico implemented a program designed to improve conception rates and reduce the
supplemental feed costs of its cattle herd. The initiatives included improving Alico’s cattle pastures through
fencing, grass plantings and reworking pastures where native weed growth had reduced the forage available for
the cattle. These projects have been ongoing. It was believed that those projects would allow the cattle herd to be
sustained to a greater degree by grazing and would reduce the amount of supplements such as corn silage needed
and thereby overall feeding costs. Furthermore, the overall number of cattle on the property was reduced to allow
for more grazing area per animal. In the fiscal year ended September 30, 2008, Alico reduced its breeding herd
by 1,430 animals and in the fiscal year ended August 31, 2007, Alico reduced its breeding herd by approximately
2,000 animals that were identified as poor producers.

The cattle industry has typically operated on a ten year cycle as cow-calf producers expand inventories in
response to profits and reduce herd sizes in response to losses. Alico’s strategy was based on reducing herd sizes
during the expansion phase of the cycle and building herd size through opportunistic acquisitions during the
contraction phase. Several atypical factors have combined to alter the cattle cycle in the past few years including
the utilization of former pastures for corn production due to increased ethanol demand, and drought conditions
in the Southeastern United States. Due to these changes, Alico is currently reevaluating its cattle strategy to
determine the most profitable course of action in the current environment.

The core business of Alico’s cattle operation is the sale of calves through western feedlots to meat packing
facilities, or if advantageous, to third parties directly from the ranch. Due to a severe drought during fiscal year
2007, the stress effect of prior hurricanes on the cattle herd, and the aforementioned herd reduction, calf births
have declined over the past several years, totaling 7,763 during the fiscal year ended September 30, 2008,
8,488 during the fiscal year ended August 31, 2007 and 9,029 during the fiscal year ended August 31, 2006.
The reduced number of births has resulted in increased unit costs to calves. Additionally, rising corn prices
caused by increased demand for ethanol production have caused feeding costs to increase. These factors have
combined causing overall profit margins to decline over the affected fiscal years. During the fiscal year ended
September 30, 2008, Alico wrote down its cattle inventories by $2.3 million to their net realizable value.

Vegetables

In the fiscal year ended August 31, 2006, in an effort to diversify its agricultural operations, Alico began growing
vegetables. During the fiscal year ended September 30 2008, Alico harvested 356,591 crates of corn from 944
acres and 149,478 bushels of beans from 909 acres. In fiscal year 2007, Alico harvested 218,063 crates of corn
from 809 acres and 124,642 bushels of beans from 878 acres. During fiscal year 2006, Alico harvested 119,000
crates from 500 acres of sweet corn and 77,000 bushels of green beans from 500 acres.

Revenues from the sale of vegetables were $5.5 million, $3.8 million and $2.4 million for the fiscal years ended
September 30, 2008, August 31, 2007 and August 31, 2006, respectively. Gross profits (losses) from the vegetable
division were ($0.1 million), $0.5 million and $1.0 million over the same periods. Although the Company
harvested more vegetables in the current year, adverse weather conditions combined with less favorable prices
and rising production costs have caused vegetable performance to decline over the past two fiscal years, when
compared with the prior years.

Sod

Alico is also engaged in the cultivation and sale of sod for landscaping purposes. Alico harvested approximately
44.8 million, 64.4 million, and 28.5 million square feet of sod in the fiscal years ended September 30, 2008,
August 31, 2007 and August 31, 2006, respectively. Alico produces two varieties of sod, Floratam and Bahia.
Floratam is a lush grass that is well suited for manicured lawns. Floratam has fallen into recent disfavor due to its
lack of drought tolerance, and increasing restrictions on lawn watering in south and central Florida. Prior to fiscal
year 2008, Alico had been expanding its cultivation of Floratam sod. Continued slowdowns in the housing market
have caused the demand for Floratam sod to decline substantially. As a result, the Company has abandoned its
Floratam inventories, taking write offs of $1.3 million during the fiscal year ended September 30, 2008. Alico has
no immediate plans to resume its cultivation of Floratam sod.

Bahia is a native grass to Florida and is tolerant of both wet and dry conditions. It is commonly used for roadsides
and medians, as well as pasture forage and lawns. Demand for Bahia sod, although somewhat decreased,
remained strong during the fiscal year ended September 30, 2008, accounting for 95% of the total sod volume
sold during the fiscal year ended September 30, 2008. While the demand for Bahia sod also declined in the fiscal
year ended September 30, 2008, the decline was not as dramatic as the decline in demand for Floratam.

Sod revenues were $1.1 million, $2.2 million and $1.5 million for the fiscal years ended September 30,
2008, August 31, 2007 and August 31, 2006, respectively. Gross profits (losses) from the sod division were
($1.5 million), $0.9 million and $0.7 million over the same periods. The lack of demand for Floratam, as
discussed above, caused sod revenue and gross profit to decline for the fiscal year ended September 30, 2008,
when compared with the fiscal year ended August 31, 2007. Due to increasing sales of Bahia, revenue and
gross profits were higher for the fiscal year ended August 31, 2007 when compared with the fiscal year ended
August 31, 2006.

Non Agricultural Operations

Land leasing and rentals

Alico rents land to others on a tenant-at-will basis, for grazing, farming, oil exploration and recreational uses.
Revenues from land rentals were $2.3 million, $1.5 million and $1.4 million during the fiscal years ended
September 30, 2008, August 31, 2007, and August 31, 2006, respectively, generating gross profits of $1.7 million,
$1.1 million, and $0.9 million. Alico plans to increase its leasing activities as opportunity allows.

Mining royalties

Gross revenues from mining royalties were $0.4 million, $1.3 million and $0.9 million for fiscal years ended
September 30, 2008, August 31, 2007, and August 31, 2006, respectively. Gross profit from the sale of rock
products and sand were $0.3 million, $1.2 million and $0.9 million during the fiscal years ended September 30,
2008, August 31, 2007, and August 31, 2006, respectively.

During fiscal years ended August 31, 2007 and August 31, 2006, the Company continued to receive royalties
from a rock mine located in Lee County, Florida. Mining operations ceased at the site during the fiscal year ended
August 31, 2007, which caused both revenue and profit from mining operations to decrease during the fiscal year
ended September 30, 2008. The rock royalties realized during the fiscal year ended September 30, 2008 were
from a 526 acre mine site in Glades County, Florida. As construction in southwest Florida has slowed, so has the
demand for mining products. Nevertheless, the Company believes that the proximity of its mining operations
and the lack of alternative sites within the industry due to regulatory constraints, indicate that the longer term
prospects for mining are favorable. To this end, Alico through its subsidiary Alico Land Development, Inc. is
currently seeking permits for rock mines on two additional sites.

Discontinued Operations

Effective June 30, 2008, the Company ceased operating its Alico Plant World facility. Alico Plant World
generated revenues of $2.6 million, $2.8 million and $3.3 million during the fiscal years ended September 30,
2008, August 31, 2007 and August 31, 2006, respectively. Plant World’s operations generated losses of
$1.6 million, $0.5 million and $2.0 million in the fiscal years ended September 30, 2008, August 31, 2007 and
August 31, 2006, respectively. Alico Plant World generated losses net of taxes of $0.9 million or $0.12 per
share for the fiscal year ended September 30, 2008, $0.2 million or $0.03 per share for the fiscal year ended
August 31, 2007 and $1.3 million or $0.18 per share during the fiscal year ended August 31, 2006. The Company
is currently leasing the Plant World facilities to a commercial greenhouse operator and has also sold a portion of
the equipment used to operate the greenhouse. The results of Alico Plant World’s operations and equipment sales
have been reported as discontinued operations.

The Company began dissolution of its Agri-Insurance subsidiary during the third quarter of fiscal year 2008. The
effect of the dissolutions will be to transfer the assets of Agri Insurance to Alico, Inc. and its subsidiaries. The
expected costs of dissolution are not estimated to be material to the Company.

Changes in Officers

John R. Alexander, the Company’s Chairman, retired as Chief Executive Officer on June 30, 2008. The Board of
Directors appointed Dan L. Gunter as Chief Executive Officer on July 1, 2008. Mr. Gunter had previously served as
the Company’s President and Chief Operating Officer since April 2006. Mr. Alexander will continue in his role as
Chairman of the Board of Directors. As per the terms of a restricted stock grant in October 2006, 12,000 previously
unvested shares vested upon Mr. Alexander’s retirement. The Company recognized compensation expense of $453
thousand for the fiscal year ended September 30, 2008 in association with the vesting. Additionally, the Company
entered into a Transition, Severance, Consulting and Non-Compete agreement with Mr. Alexander effective July 1,
2008, the terms of which are more fully described in the Company’s Form 8-K filed on June 30, 2008.

Dan L. Gunter resigned as Chief Executive Officer effective November 17, 2008. Mr. Gunter had been granted
20,000 shares of restricted stock in April 2006 which were to vest 20% in April 2010, and 20% per year
afterwards, until fully vested. The Company had been recognizing compensation expense related to the grants.
Upon Mr. Gunter’s departure, the grants were forfeited, causing the Company to recover $424 thousand of
previous compensation related to the grants. Mr. Gunter also executed a Transition, Severance, Consulting and
Non-Compete agreement with Alico effective November 21, 2008, the terms of which are more fully described in
the Company’s Form 8-K filed on November 21, 2008.

The Board of Directors appointed Steven M. Smith as the President and Principal Executive Officer on
November 17, 2008. Mr. Smith had formerly served as Alico’s Senior Vice-President of Agriculture Operations
since November 2006, and as the Company’s Citrus Division Vice President from 1996 to 2006. Details
concerning Mr. Smith’s compensation arrangements are described in the Company’s Form 8-K filed on
November 21, 2008.

Off Balance Sheet Arrangements

Alico through its wholly owned subsidiary Bowen, enters into purchase contracts for the purchase of citrus fruit
during the normal course of its business. The obligations under these purchase agreements totaled $10.9 million at
September 30, 2008. All of these purchases were covered by sales agreements at prices exceeding cost. In addition,
Bowen had sales contracts totaling $1.8 million at September 30, 2008, for which a purchaser had not been
contracted. Bowen management currently believes that all committed sales quantities can be purchased below the
committed sales price. All of these contracts will be fulfilled by the end of the fiscal year 2010.

During the second quarter of fiscal year 2007, the Company formed a new company, Alico-J&J Farms, LLC and
entered into a joint venture with J&J Produce to produce vegetables on land owned by Alico, Inc. Under the terms
of the joint venture, Alico served as a guarantor for 50% of five-year equipment leases to the joint venture. The
Company’s maximum total remaining unpaid obligations under these leases was $0.5 million at September 30,
2008. The Company expects the lease obligations to be transferred solely to J&J Farms. Effective June 30, 2008,
the Company discontinued its participation in Alico-J&J, LLC.

Disclosure of Contractual Obligations

The contractual obligations of Alico at September 30, 2008 are set forth in the table below:

Contractual obligations
Long-term debt
Expected interest on debt
Commissions
Citrus purchase contracts
Retirement benefits
Equipment additions
Consulting contracts
Leases — operating

Total
137,758 $
29,394
2,705
10,901
4,532
99
1,043
457

Less than
1 year

Payments due by Period
1 - 3
years

3 - 5
years

5,470 $
7,109
139
8,855
381
99
638
207

91,222 $
12,578
250
2,046
792
—
405
250

11,614 $
4,794
1,000
—
779
—
—
—

5 +
years

29,452
4,913
1,316
—
2,580
—
—
—

Total

186,889 $

22,898 $

107,543 $

18,187 $

38,261

Critical Accounting Policies and Estimates

The preparation of Alico’s financial statements and related disclosures in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates and judgments that
affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent
assets and liabilities. On an on-going basis, management evaluates the estimates and assumptions based upon
historical experience and various other factors and circumstances. Management believes that the estimates and
assumptions are reasonable in the circumstances; however, actual results may vary from these estimates and
assumptions under different future circumstances. The following critical accounting policies have been identified
that affect the more significant judgments and estimates used in the preparation of the consolidated financial
statements.

Net Realizable Value - Alico records inventory at the lower of cost or net realizable value. Management regularly
assesses estimated inventory valuations based on current and forecasted usage of the related commodity,
observable prices, estimated completion costs and other relevant factors that may affect the net realizable value.

Revenue Recognition - Revenue from agricultural crops is recognized at the time the crop is harvested. Based
on fruit buyers’ and processors’ advances to growers, cash and futures markets combined with experience in
the industry, management reviews the reasonableness of revenue accruals quarterly. Adjustments are made
throughout the year to these estimates as more current relevant information regarding the specific commodity
markets become available.

For sales made through Bowen, Alico applies the provisions of Emerging Issues Task Force (“EITF”) Issue
No. 99-19, “Reporting Revenue Gross as a Principal versus Net as an Agent.” Alico’s application of EITF 99-19
includes evaluation of the terms of each major customer contract relative to a number of criteria that management
considers in making its determination with respect to gross versus net reporting of revenue for transactions with
its customers. Management’s criteria for making these judgments place particular emphasis on determining the
primary obligor in a transaction and which party bears general inventory risk. Bowen purchases and resells citrus
fruit; in these transactions, Bowen (i) acts as principal; (ii) takes title to the products; and (iii) has the risks and
rewards of ownership, including the risk of loss for collection, delivery or returns. For these transactions, Bowen
recognizes revenues based on the gross amounts due from customers.

In recognizing revenue from land sales, Alico follows the provisions in Financial Accounting Standards Board, or
FASB, Statement of Financial Accounting Standards, or SFAS, No. 66, “Accounting for Sales of Real Estate,” to
record these sales. SFAS No. 66 provides specific sales recognition criteria to determine when land sales revenue
can be recorded. For example, SFAS No. 66 requires a land sale must be consummated with a sufficient down
payment of at least 20% to 25% of the sales price depending upon the type and timeframe for development of
the property sold, and that any receivable from the sale cannot be subject to future subordination. In addition, the
seller cannot retain any material continuing involvement in the property sold.

Capitalized Costs - In accordance with Statement of Position 85-3 “Accounting by Agricultural Producers and
Agricultural Cooperatives”, the cost of growing crops are capitalized into inventory until the time of harvest.
Once a given crop is harvested, the related inventoried costs are recognized as a cost of sale to provide an
appropriate matching of costs incurred with the related revenue earned.

Impairment of Marketable Securities - Alico values its marketable securities based on unadjusted quoted prices
in active markets for securities identical to those to be reported at fair value. An active market is a market in
which transactions occur for the item to be fair valued with sufficient frequency and volume to provide pricing
information on an ongoing basis.

When Quoted prices for the specific securities are not available, Alico uses inputs that are observable either
directly or indirectly. These inputs include: (a) Quoted prices for similar securities in active markets; (b) Quoted
prices for identical or similar securities in markets that are not active, such as when there are few transactions
for the asset or liability, the prices are not current, price quotations vary substantially over time or are among
market makers (for example, some brokered markets), or in which little information is released publicly (for
example, a principal-to-principal market); (c) Inputs other than quoted prices that are observable for the security
(for example, interest rates and yield curves observable at commonly quoted intervals, volatilities, prepayments
speeds, loss severities, credit risks, and default rates); and (d) Inputs that are derived principally from or
corroborated by observable market data by correlation or other means.

Unobservable inputs for a security are used to determine fair value only when observable inputs are not available.
Unobservable inputs are developed based on the best information available in the circumstances, which include
Alico’s own data and assumptions that market participants would use in pricing the security.

Unrealized gains and losses determined to be temporary are recorded as other comprehensive income, net of
related deferred taxes, until realized. Unrealized losses determined to be other than temporary are recognized in
the period the determination is made.

Impairment of Long-Lived Assets - Alico evaluates property, improvements, buildings, equipment and other
long lived assets for impairment when events or changes in circumstances indicate that the carrying value of
assets contained in Alico’s financial statements may not be recoverable. The impairment calculation compares the
carrying value of the asset to the asset’s estimated future cash flows (undiscounted and without interest charges).
Alico recognizes an impairment loss if the amount of the asset’s carrying value exceeds the asset’s estimated fair
value. If an impairment loss is recognized, the adjusted carrying amount of the asset becomes its cost basis. For a
depreciable long-lived asset, the new cost basis will be depreciated (amortized) over the remaining useful life of
that asset. Restoration of a previously recognized impairment loss is prohibited.

Defined Benefit Retirement Plans - Alico maintains a non-qualified defined benefit deferred compensation plan,
for key employees. Although the general assets of Alico are used to fund the plan, Alico has purchased life insurance
policies on the covered employees to help fund the plan liabilities. The investments held by these life insurance
policies are valued using market quotations. Pension benefit obligations and the related effects on operations are
calculated using actuarial models. Two critical assumptions — discount rate and expected return on assets — are
important elements of plan expense and asset/liability measurement. Alico evaluates these assumptions annually.
Other assumptions involving demographic factors such as retirement age, mortality and turnover are evaluated
annually and are updated to reflect Alico’s experience. Actual results in any given year will often differ from actuarial
assumptions because of economic and other factors. The discount rate enables Alico to state expected future cash
flows at a present value on the measurement date. In determining the discount rate, Alico utilizes the yield on high-
quality, fixed-income investments currently available with maturities corresponding to the anticipated timing of the
benefit payments and rates published by the Pension Benefit Guaranty Corporation (PBGC). At September 30, 2008,
the discount rate used to compute Alico’s defined benefit deferred compensation plan was 5.775%.

Income Taxes - Deferred income taxes are recognized for the income tax effect of temporary differences between
financial statement carrying amounts and the income tax bases of assets and liabilities. Alico regularly reviews its
deferred income tax assets to determine whether future taxable income will be sufficient to realize the benefits of
these assets. A valuation allowance is provided for deferred income tax assets for which it is deemed, more likely
than not, that future taxable income will not be sufficient to realize the related income tax benefits from these
assets. The amount of the net deferred income tax asset that is considered realizable could, however, be adjusted if
estimates of future taxable income are adjusted.

Item 7A. Quantitative and Qualitative Disclosure About Market Risk

Alico’s exposure to market rate risk and changes in interest rates relate primarily to its investment portfolio,
mortgage notes receivable and Revolving Line of Credit. Investments are placed with high quality issuers and, by
policy, limit the amount of credit exposure to any one issuer. Alico is adverse to principal loss and provides for
the safety and preservation of invested funds by limiting default, market and reinvestment risk. Alico classifies
cash equivalents and short-term investments as fixed-rate if the rate of return on such instruments remains fixed
over their term. These fixed-rate investments include fixed-rate U.S. government securities, municipal bonds, time
deposits and certificates of deposit. Cash equivalents and short-term investments are classified as variable-rate if
the rate of return on such investments varies based on the change in a predetermined index or set of indices during
their term. These variable-rate investments primarily include money market accounts, mutual funds and equities
held at various securities brokers and investment banks.

The table below presents the costs and estimated fair value of the investment portfolio at September 30, 2008:

Marketable Securities and Short-term Investments (1)

Fixed Rate
Variable Rate

(1) See definition in Notes 1 and 2 in Notes to Consolidated Financial Statements.

Cost

Estimated
Fair Value

$
$

18,922
9,575

$
$

18,902
9,445

The aggregate fair value of investments in debt instruments (net of mutual funds of $1,325) as of September 30,
2008, by contractual maturity date, consisted of the following:

Due in one year or less
Due between one and five years
Due between five and ten years
Due thereafter

Total

Aggregate
Fair
Values

15,227
4,815
1,000
5,980

27,022

Fixed rate securities tend to decline with market rate interest increases. Variable rate securities are generally
affected more by general market expectations and conditions. A 1% change in interest rates on Alico’s portfolio
would impact Alico’s annual interest revenue by approximately $636 thousand. Additionally, Alico has debt with
interest rates that vary with LIBOR. A 1% increase in this rate would impact Alico’s annual interest expense by
approximately $807 thousand based on Alico’s outstanding debt under these agreements at September 30, 2008.

A 1% change in the LIBOR would impact Alico’s interest revenue from its mortgage notes receivable by
approximately $541 thousand.

Item 8. Financial Statements and Supplementary Data.

Report of Independent Registered Certified Public Accounting Firm

To the Board of Directors and Stockholders

Alico, Inc.

We have audited the accompanying consolidated balance sheets of Alico, Inc. and Subsidiaries as of
September 30, 2008 and 2007, and the related consolidated statements of operations, stockholders’ equity and
comprehensive income (loss), and cash flows for the years ended September 30, 2008 and August 31, 2007, and
for the one month transitional period ended September 30, 2007. These financial statements are the responsibility
of Alico’s management. Our responsibility is to express an opinion on these financial statements based on our
audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management as well as evaluating the overall
financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position of Alico, Inc. and Subsidiaries as of September 30, 2008 and 2007, and the results of their
operations and their cash flows for the years ended September 30, 2008 and August 31, 2007, and for the one
month transitional period ended September 30, 2007, in conformity with U.S. generally accepted accounting
principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the effectiveness of Alico, Inc. and Subsidiaries’ internal control over financial reporting as
of September 30, 2008, based on criteria established in Internal Control — Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated December 15,
2008 expressed an unqualified opinion on the effectiveness of Alico, Inc. and Subsidiaries’ internal control over
financial reporting.

/s/ McGladrey & Pullen, LLP

Orlando, Florida
December 15, 2008

REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Alico, Inc.

We have audited Alico, Inc. and Subsidiaries internal control over financial reporting as of September 30,
2008, based on criteria established in Internal Control — Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Alico, Inc. and Subsidiaries’ management is responsible
for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting included in the accompanying Management’s Annual Report on Internal
Control Over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control
over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk. Our audit also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles. A company’s internal control over financial
reporting includes those policies and procedures that (a) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (b) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and directors of the company; and (c)
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

In our opinion, Alico, Inc. and Subsidiaries maintained, in all material respects, effective internal control over
financial reporting as of September 30, 2008, based on criteria established in Internal Control — Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated balance sheets of Alico, Inc. and Subsidiaries as of September 30, 2008 and
2007 and the related consolidated statements of operations, stockholders’ equity and comprehensive income
(loss), and cash flows for the years ended September 30, 2008 and August 31, 2007 and for the one month
transitional period ended September 30, 2007 and our report dated December 15, 2008 expressed an unqualified
opinion.

/s/ McGladrey & Pullen, LLP

Orlando, Florida
December 15, 2008

Report of Independent Registered Certified Public Accounting Firm

To the Stockholders and Board of Directors of
Alico, Inc. and Subsidiaries

We have audited the accompanying consolidated statements of operations, stockholders’ equity and
comprehensive income (loss), and cash flows for the year ended August 31, 2006 of Alico, Inc. and Subsidiaries.
These financial statements are the responsibility of Alico’s management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
results of operations of Alico, Inc. and Subsidiaries, and their cash flows for the year ended August 31, 2006, in
conformity with U.S. generally accepted accounting principles.

/s/ Tedder, James, Worden & Associates, P.A.
Orlando, Florida
November 17, 2006

This page left intentionally blank.

CONSOLIDATED BALANCE SHEETS

(in thousands)

ASSETS

Current assets:

Cash and cash equivalents
Marketable securities available for sale
Accounts receivable, net
Federal income tax receivable
Mortgages and notes receivable
Inventories
Deferred tax asset
Other current assets

Total current assets

Other assets:

Mortgages and notes receivable, net of current portion
Investments, marketable securities available for sale and deposits
Deferred tax asset
Cash surrender value of life insurance, designated

Total other assets

Property, buildings and equipment
Less accumulated depreciation

Net property, buildings and equipment

Total assets

(Continued)

September 30,

2008

2007

54,370
24,267
5,394
6,388
2,830
27,451
1,507
923

31,599
46,511
15,126
5,696
3,832
27,232
2,661
2,719

123,130

135,376

4,774
6,975
6,056
7,585

6,688
3,875
3,208
7,656

25,390

21,427

181,429
(56,017)

178,968
(50,422)

125,412

128,546

273,932

285,349

CONSOLIDATED BALANCE SHEETS

(in thousands)

LIABILITIES & STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable
State income taxes payable
Current portion of notes payable
Accrued expenses
Dividends payable
Accrued ad valorem taxes
Other current liabilities

Total current liabilities

Notes payable, net of current portion
Deferred retirement benefits, net of current portion
Commissions and deposits payable

Total liabilities

Stockholders’ equity:

Preferred stock, no par value. Authorized 1,000 shares; issued, none
Common stock, $1 par value. Authorized 15,000 shares; issued 7,376 shares;

outstanding 7,374 in 2008 and 7,357 in 2007

Additional paid in capital
Treasury stock, at cost
Accumulated other comprehensive (loss) income
Retained earnings

September 30,

2008

2007

1,847
281
5,470
3,372
2,027
2,270
2,933

18,200

132,288
4,151
3,800

1,943
9,114
1,350
4,425
4,048
2,105
2,153

25,138

134,534
4,466
4,265

158,439

168,403

—

7,376
9,474
(64)
(92)
98,799

—

7,376
10,199
(891)
49
100,213

Total stockholders’ equity

115,493

116,946

Total liabilities and stockholders’ equity

273,932

285,349

See accompanying Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share data)

Year Ended
Sept. 30, 2008

One Month

Ended
Sept. 30, 2007

Year Ended
Aug. 31, 2007

Year Ended
Aug. 31, 2006

Operating revenue

Agricultural operations
Non-agricultural operations
Real estate operations

Total operating revenue

Operating expenses

Agricultural operations
Non-agricultural operations
Real estate operations
Net casualty (recovery)

Total operating expenses

Gross profit (loss)
Corporate general and administrative

Profit (loss) from continuing operations

Other income (expenses):

Profit on sales of bulk real estate:

Sales
Cost of sales

Profit on sales of bulk real estate, net
Interest & investment income
Interest expense
Other

Total other income, (expense) net

Income (loss) from continuing

operations before income taxes
(Benefit from) Provisions for income

taxes

Income (loss) from continuing

operations

(Loss) income from discontinued

operations, net of taxes

109,833 $
2,679
3,870

116,382

98,090
706
3,529
—

102,325

14,057
11,478

2,579

817
—

817
7,745
(6,565)
262

2,259

570
188
—

758

722
46
59
—

827

(69)
815

(884)

—
—

—
683
(820)
(4)

(141)

125,841
2,835
3,329

132,005

98,393
519
3,408
—

102,320

29,685
12,727

16,958

1,434
(177)

1,257
7,337
(5,652)
225

3,167

71,742
2,309
113

74,164

61,435
452
61
(4,036)

57,912

16,252
10,901

5,351

5,761
(1,392)

4,369
8,944
(3,852)
368

9,829

4,838

(1,025)

20,125

15,180

(765)

(176)

33,520

7,159

5,603

(890)

(849)

169

(13,395)

(295)

Net (loss) income

4,713 $

(680)

(13,690) $

Weighted-average number of shares

outstanding

Weighted-average number of shares
outstanding assuming dilution

Per share amounts- income (loss) from

continuing operations:
Basic
Diluted

Per share amounts- net income (loss)

Basic
Diluted
Dividends

$
$

$
$
$

7,367

7,385

0.76 $
0.76 $

0.64 $
0.64 $
1.10 $

7,358

(0.12)
(0.12)

$
$

(0.09)
(0.09)
0.28

$
$
$

7,369

(1.82) $
(1.82) $

(1.86) $
(1.86) $
$
1.10

See accompanying Notes to Consolidated Financial Statements.

8,021

(1,230)

6,791

7,368

7,379

1.09
1.09

0.92
0.92
1.03

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME (LOSS)
(in thousands)

Common Stock Additional Treasury
Shares
Issued Amount Capital

Paid in Stock Comprehensive Retained
at cost Income (loss) Earnings

Accumulated
Other

Total

Restated Balances, August 31, 2005
Comprehensive income:
Net income

Unrealized losses on securities, net of taxes of $408 and

reclassification adjustment

Total comprehensive income:
Dividends
Treasury Stock Purchased
Stock based compensation
- Directors
Employee:
Stock options exercised
Stock based compensation

Balances, August 31, 2006

Comprehensive income:
Net loss

Unrealized losses on securities, net of taxes of $39 and

reclassification adjustment

Total comprehensive income:
Dividends
Treasury Stock Purchased
Stock based compensation
- Directors
Employee:
Stock options exercised
Stock based compensation

Balances, August 31, 2007

Comprehensive income:
Net loss
Liability- Uncertain Tax Positions

Unrealized gain on securities, net of taxes of $1 and

reclassification adjustment

Total comprehensive loss:
Dividends
Treasury Stock Purchased
Stock based compensation
- Directors
Employee:
Stock options exercised
Stock based compensation

Balances, September 30, 2007

Comprehensive income:
Net income

7,369

9,183

2,195

125,914 144,661

—

6,791

—

(2,224)

—

(2,224)

—
—

—
(763)

—

476

7
—

127
329

—
—

—

—
—

(7,556)
—

—

—
—

4,567
(7,556)
(763)

528

134
329

7,376 $ 7,376 $

9,691 $

(287) $

(29) $ 125,149 $ 141,900

—

(13,690)

—

—
—

—
(1,484)

—

478

—
—

(39)
480

55
192

—
—

—

—
—

—

(8,106)
—

(13,616)
(8,106)
(1,484)

—

—
—

515

16
672

7,376 $ 7,376 $

10,169 $

(1,046) $

45 $ 103,353 $ 119,897

—
—

—

—
—

(680)
(436)

—

(2,024)

(1,112)
(2,024)

—

(6)

155

—
—

—
36

—
—

—

—
—

—

149

—
—

—
36

7,376 $ 7,376 $

10,199 $

(891) $

49 $ 100,213 $ 116,946

—

4,713

Unrealized losses on securities, net of taxes of $87 and

reclassification adjustment

—

(141)

—

Total comprehensive income:
Dividends
Treasury Stock Purchased
Stock based compensation
- Directors
Employee:
Stock options exercised
Stock based compensation

Balances, September 30, 2008

Disclosure of reclassification amount:

Unrealized holding (losses) gains arising during the period
Less: reclassification adjustment for realized gain

(loss) included in net income
Net unrealized (losses) gains on securities

—
—

—
(1,196)

—

(114)

567

—
—

(80)
(531)

111
1,345

—
—

—

—
—

(6,127)

—
—

7,376 $ 7,376 $

9,474 $

(64) $

(92) $

98,799 $ 115,493

Fiscal Year
2008

One Month Sept. 30,
2007

Fiscal Year

2007

2006

(209)

(68)

(141)

(12)

See accompanying Notes to Consolidated Financial Statements.

(141)

4,572

(6,127)
(1,196)

453

31
814

(29)

2,195

(2,224)

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Increase (Decrease) in Cash and Cash equivalents:
Cash flows from operating activities:

Net income (loss)
Adjustments to reconcile net income (loss) to cash

(used for) provided by operating activities:

Depreciation & amortization
Gain on breeding herd sales
Deferred income tax expense, net
Deferred retirement benefits
Net gain on sale of marketable securities
Loss on sale of property and equipment
Fixed asset impairments
Loss from non consolidated joint venture
Gain on real estate sales
Stock based compensation
Imputed interest on mortgage note receivable
Cash provided by (used for) changes in:

Accounts receivable
Inventories
Other assets
Accounts payable & accrued expenses
Income taxes payable/receivable
Other non-current liability

Year Ended
Sept. 30,
2008

One Month
Ended
Sept. 30,
2007

Year Ended
August 31,

2007

2006

4,713 $

(680) $

(13,690)

6,791

8,317
(38)
(1,694)
(276)
(63)
668
1,599
653
(817)
1,267
—

8,809
(219)
547
(169)
(9,525)
—

707
(36)
(204)
(74)
—
—
—
—
(93)
185
—

890
(2,018)
(321)
(192)
83
—

8,770
(529)
(21,255)
(1,186)
(31)
(20)
2,028
57
(1,257)
1,187
—

(7,149)
(669)
(163)
(756)
2,031
(20,293)

8,590
(162)
883
245
(3,254)
861
—
—
(4,369)
857
(2,891)

2,323
(4,159)
(1,585)
719
1,304
3,339

Net cash provided by (used for) operating activities

13,772

(1,753)

(52,925)

9,492

Cash flows from investing activities:

Increase in land inventories
Real Estate deposits and accrued commissions
Purchases of property and equipment
Sale (purchase) of other investments
Proceeds from disposals of property and equipment
Proceeds from sale of real estate
Purchases of marketable securities and investments
Proceeds from sales of marketable securities
Collection of mortgages and notes receivable

—
100
(6,130)
37
1,511
—
(46,863)
64,949
2,830

—
—
(293)
—
90
—
(1,574)
1,309
—

—
1,622
(9,138)
(878)
1,652
—
(54,882)
58,823
2,173

(793)
6,811
(33,172)
—
1,092
5,555
(92,583)
109,992
632

Net cash provided by (used for) investing activities

16,434 $

(468) $

(628)

(2,466)

(continued)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

One Month

Year Ended

Sept. 30,
2008

Ended
Sept. 30,
2007

Year Ended
August 31,

2007

2006

Cash flows from financing activities:

Proceeds from exercise of stock options
Treasury stock purchases
Proceeds from notes payable
Principal payment of notes payable
Dividends paid

31 $

(1,196)
42,040
(40,166)
(8,144)

— $
—
1,101
(2,106)
—

16
(1,484)
95,959
(23,072)
(8,106)

134
(763)
65,814
(53,160)
(7,370)

Net cash provided by (used for)

financing activities

Net increase (decrease) in cash and

cash equivalents

Cash and cash equivalents:
At beginning of year

(7,435)

(1,005)

63,313

4,655

22,771

(3,226)

9,760

11,681

31,599

34,825

25,065

13,384

At end of year

54,370 $

31,599 $

34,825

25,065

Supplemental disclosures of cash flow

information:

Cash paid for interest, net of amount

capitalized

8,182 $

43 $

5,077

Cash paid for income taxes, including

related interest

10,579 $

— $

72,818

3,576

1,803

Non-cash investing activities:

Reclassification of breeding herd to

Property & Equipment

458 $

— $

594

516

See accompanying Notes to Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2008 and 2007,
and for the years ended September 30, 2008, August 31, 2007 and 2006
and the one month transition period ended September 30, 2007
(in thousands except for unit data)

(1) Summary of Significant Accounting Policies

Change in Fiscal Year
On September 28, 2007, the Board of Directors of the Company approved a change in the Company’s fiscal year
end from August 31 to September 30. The fiscal year change is effective beginning with the Company’s 2008
fiscal year. The Company’s 2008 fiscal year began on October 1, 2007 and ended September 30, 2008, resulting
in a one month transition period that began September 1, 2007 and ended September 30, 2007. This Form 10-K
includes the audited results as of September 30, 2008 and 2007 and for the fiscal years ended September 30,
2008, August 31, 2007 and August 31, 2006, as well as audited results for the one month transition period ended
September 30, 2007.

(a) Basis of Consolidated Financial Statement Presentation

The consolidated financial statements include the accounts of Alico, Inc. (Alico) and its wholly owned
subsidiaries, Alico Land Development Company (formally known as Saddlebag Lake Resorts, Inc.), Agri-
Insurance Company, Ltd. (Agri), Alico-Agri, Ltd., Alico Plant World, LLC and Bowen Brothers Fruit, LLC
(Bowen) (collectively referred to as the “Company”), after elimination of all significant intercompany balances
and transactions.

(b) Revenue Recognition

Revenue from agricultural crops is recognized at the time the crop is harvested and delivered to the customer.
Based on buyers’ and processors’ advances to growers, cash and futures markets combined with experience in
the industry, management reviews the reasonableness of the revenue accruals quarterly. Adjustments are made
throughout the year to these estimates as more current relevant information regarding the specific markets
become available. Differences between the estimates and the final realization of revenue can be significant, and
can be either positive or negative. Fluctuation in the market prices for citrus fruit has caused Alico to recognize
additional revenue from the prior years’ crops totaling $527 thousand, $537 thousand, and $838 thousand, during
the fiscal years ended September 30, 2008, August 31 2007 and August 31, 2006, respectively. No additional
revenue was recognized during the transition period ended September 30, 2007. Beyond the citrus revenue
adjustments discussed above, no material adjustments were noted to the reported revenues of Alico’s crops for
any of the periods covered by this report.

Alico recognizes revenue from cattle sales at the time the cattle are sold. Alico recognizes revenue from the sale
of vegetables and sod at the time of harvest and delivery to the customer.

For sales made through Bowen, Alico applies the provisions of Emerging Issues Task Force (“EITF”) Issue
No. 99-19, “Reporting Revenue Gross as a Principal versus Net as an Agent”. Alico’s application of EITF 99-19
includes evaluation of the terms of each major customer contract relative to a number of criteria that management
considers in making its determination with respect to gross versus net reporting of revenue for transactions with
its customers. Management’s criteria for making these judgments place particular emphasis on determining the
primary obligor in a transaction and which party bears general inventory risk. Bowen purchases and resells citrus
fruit; in these transactions, Bowen (i) acts as a principal; (ii) takes title to the products; and (iii) has the risks and
rewards of ownership, including the risk of loss for collection, delivery or returns. Due to the aforementioned
factors, Bowen recognizes revenue based on the gross amounts due from customers.

Real estate sales are recorded under the accrual method of accounting. Gains from commercial or bulk land sales
are not recognized until payments received for property to be developed within two years after the sale equal 20%,
or property to be developed after two years equal 25% of the contract sales price according to the installment sales
method.

Real estate costs incurred for the acquisition, development and construction of real estate projects are capitalized.
Additionally, costs to market real estate are capitalized if they are reasonably expected to be recovered from the
sale of the project.

Properties are tested for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. Impairment losses are recognized when the carrying amount of a property
exceeds its fair value. Such events or changes in circumstances include significant decreases in the market price
of such properties; significant adverse changes in legal factors, the business climate or the extent or manner in
which the asset is being used; an accumulation of costs significantly in excess of amounts originally expected for
the property; continuing operating cash flow losses associated with the property or an expectation that it is more
likely than not that the property will be sold or otherwise disposed of significantly before the end of its previously
estimated useful life. Impairment losses are measured as the amount by which the carrying amount of a property
exceeds its fair value.

(d) Marketable Securities Available for Sale

Marketable securities available for sale are carried at their fair value. Net unrealized investment gains and losses
are recorded net of related deferred taxes in accumulated other comprehensive income within stockholders’
equity until realized. Unrealized losses determined to be other than temporary are recognized in the statement
of operations in the period the determination is made. The cost of all marketable securities available for sale is
determined on the specific identification method.

Alico values its marketable securities based on unadjusted quoted prices in active markets for securities identical
to those to be reported at fair value. An active market is a market in which transactions occur for the item to be
valued with sufficient frequency and volume to provide pricing information on an ongoing basis.

When direct quotations are not available, Alico utilizes inputs that are observable either directly or indirectly.
These inputs include: (a) Quoted prices for similar securities in active markets; (b) Quoted prices for identical or
similar securities in markets that are not active, such as when there are few transactions for the asset or liability,
the prices are not current, price quotations vary substantially over time or are among market makers (for example,
some brokered markets), or in which little information is released publicly (for example, a principal-to-principal
market); (c) Inputs other than quoted prices that are observable for the security (for example, interest rates and
yield curves observable at commonly quoted intervals, volatilities, prepayments speeds, loss severities, credit
risks, and default rates); and (d) Inputs that are derived principally from or corroborated by observable market
data by correlation or other means.

(e) Inventories

The costs of growing crops are capitalized into inventory until the time of harvest. Once a given crop is harvested,
the related inventoried costs are recognized as a cost of sale to provide an appropriate matching of expenses with
the related revenue earned.

Alico states its inventories at the lower of cost or net realizable value. The cost for unharvested citrus and
sugarcane crops is based on accumulated production costs incurred during the period from January 1 through
the balance sheet date. The cost of the beef cattle inventory is based on the accumulated cost of developing such
animals for sale.

(f) Mortgages and notes receivable

Mortgages and notes receivable arise from real estate sales. Mortgages and notes receivable are carried at their
estimated net realizable value. In circumstances where the stated interest rate is below the prevailing market
rate, the note is discounted to yield the market rate of interest. The discount offsets the carrying amount of the
mortgages and notes receivable.

Under the installment method of accounting, gains from commercial or bulk land sales are not recognized until
payments received for property equal or exceed 20% of the contract sales price for property to be developed
within two years after the sale or 25% of the contract sales price for property to be developed after two years.
Such gains are recorded as deferred revenue and offset the carrying amount of the mortgages and notes
receivable.

(g) Accounts receivable

Accounts receivable are generated from the sale of citrus, sugarcane, sod, cattle, vegetables, plants and other
transactions. Alico provides an allowance for doubtful trade receivables equal to the estimated uncollectible
amounts. That estimate is based on historical collection experience, current economic and market conditions, and
a review of the current status of each customer’s account.

(h) Property, Buildings and Equipment

Property, buildings and equipment are stated at cost. All costs related to the development of citrus groves, through
planting, are capitalized. Such costs include land clearing, excavation and construction of ditches, dikes, roads,
and reservoirs, etc. After the planting, caretaking costs or pre-productive maintenance costs are capitalized for
four years. After four years, a grove is considered to have reached maturity and the accumulated costs, except for
land excavation, become the depreciable basis of a grove and are depreciated over 25 years.

Development costs for sugarcane are capitalized the same as citrus. However, sugarcane matures in one year and
Alico is able to harvest an average of 3 crops (1 per year) from one planting. As a result, cultivation/caretaking
costs are expensed as the crop is harvested, while the appropriate development and planting costs are depreciated
over 3 years.

The breeding herd consists of purchased animals and animals raised on the ranch. Purchased animals are stated
at cost. The cost of animals raised on the ranch is based on the accumulated cost of developing such animals for
productive use.

Depreciation for financial reporting purposes is computed on straight-line or accelerated methods over the
estimated useful lives of the various classes of depreciable assets. See Note 5 to the consolidated financial
statements.

Alico accounts for long-lived assets in accordance with the provisions of (Statement of Financial Accountant
Standards) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. This Statement requires
long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be
held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to
be generated by the asset. If such are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed
of are reported at the lower of the carrying amount or fair value less costs to sell.

(i) Investments and Deposits

Investments primarily include stock owned in agricultural cooperatives, marketable debt securities for which a
ready market is not available, and loan origination fees. Marketable debt securities are valued as discussed in item
1(d) of the Summary of Significant Accounting Policies. Investments in stock related to agricultural coops and
deposits are carried at cost except for loan origination fees that are being amortized over the life of the loan. Alico
uses cooperatives to process and sell sugarcane and citrus. Cooperatives typically require members to acquire
stock ownership as a condition for the use of its services.

During fiscal year 2006, Alico entered into and later amended a Credit Facility with a commercial bank for a
$175.0 million line of credit which matures on August 1, 2011. During 2008, Alico converted $50.0 million of the
outstanding balance on its $175.0 million line of credit to a 10 year term loan. Loan origination and other related
fees included as investments and deposits were $376 thousand, and $535 thousand at September 30, 2008, and
September 30, 2007, respectively and are being amortized over the life of the Credit Facility. The amortization
expense was $189 thousand, $189 thousand and $124 thousand for fiscal years ended September 30, 2008,
August 31, 2007 and August 31, 2006, respectively. The amortization expense was $16 thousand for the one
month transition period ended September 30, 2007.

(j) Income Taxes

Alico accounts for income taxes under the asset and liability method. Under this method, deferred tax assets
and liabilities are recognized for the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the enactment date. Alico includes interest
and penalties from taxing authorities as a component of income tax expense.

(k) Net Earnings per Share

Outstanding stock options and restricted stock shares represent the only dilutive effects reflected in the
computation of weighted average shares outstanding assuming dilution. There were no stock options issued
that could potentially dilute basic earnings per share in the future that were not included in the computation of
earnings per share, assuming dilution.

(l) Cash Flows

For purposes of the cash flows, cash and cash equivalents include cash on hand and investments with an active
market and an original maturity of less than three months.
At various times throughout the year, and at September 30, 2008, some deposits held at financial institutions
were in excess of federally insured limits. However, Alico places its cash deposits with high quality financial
institutions and believes it is not exposed to significant credit risk with these accounts.

(m) Use of Estimates

In preparing the consolidated financial statements, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities. Actual results could differ significantly from those
estimates. Although some variability is inherent in these estimates, management believes that the amounts
provided are adequate. The valuation of Alico’s inventories, the estimated market values used for impairment
evaluations, the collectibility of accounts and notes receivable and the recognition of citrus and sugarcane
revenues are some of the more significant estimates made by Management.

(n) Fair Value of Financial Instruments and Accruals

The carrying amounts in the consolidated balance sheets for accounts receivable, mortgages and notes receivable,
accounts payable and accrued expenses approximate fair value because of the immediate or short term maturity of
these items. Where stated interest rates are below market, Alico has discounted mortgage notes receivable to reflect
their estimated fair market value. Alico carries its marketable securities available for sale at fair value. The carrying
amounts reported for Alico’s long-term debt approximates fair value because they are transactions with commercial
lenders at interest rates that vary with market conditions and fixed rates that approximate market.

(o) Accumulated Other Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from
transactions and other events and circumstances from non-owner sources. It includes both net income and other
comprehensive income or loss. Items included in other comprehensive income or losses are classified based on
their nature. The total of other comprehensive income or loss for a period has been transferred to an equity account
and displayed as “accumulated other comprehensive income (loss)”.

(p) Stock-Based Compensation

Alico measures and recognizes compensation cost at fair value for all share-based payments, including stock
options and restricted share awards. Stock-based compensation recognized for the fiscal years ended September 30,
2008, August 31, 2007 and August 31, 2006 was approximately $429 thousand, $672 thousand and $329 thousand,
and was included in general and administrative expenses in the consolidated statements of operations. Stock based
compensation recognized during the one month transition period ended September 30, 2007 was $37 thousand.
This expense includes compensation expense, recognized over the applicable vesting periods, for new share-based
awards and for share-based awards granted prior to, but not yet vested, as of September 30, 2008. For further
information concerning stock based compensation, please see Note 7 to the consolidated financial statements.

(q) Reclassifications

Certain amounts from 2007 and 2006 have been reclassified to conform to the 2008 presentation. These
reclassifications had no impact on working capital net income, stockholders’ equity or cash flows as
previously reported.

(r) Major customers

For the fiscal year ended September 30, 2008, Alico’s largest customer accounted for 21% of operating revenue.
Alico’s largest customer is United States Sugar Corporation (USSC), for whom Alico grows raw sugarcane. Since
the inception of its sugarcane program in 1988, Alico has sold 100% of its product through a pooling agreement
with USSC, a local Florida sugar mill. Additionally, Alico sells citrus to Southern Gardens, a wholly owned
subsidiary of USSC. These marketing arrangements involve marketing pools which allow the contracting party to
market Alico’s product in conjunction with the product of other entities in the pool and pay Alico a proportionate
share of the resulting revenue from the sale of the entire pooled product. While Alico believes that it can replace the
citrus processing portion of the contract with other customers, it may not be able to do so quickly and the results
may not be as favorable as the current contracts.

Florida Governor Charlie Crist has announced that the South Florida Water Management District (SFWMD) is
negotiating a purchase of the land holdings of USSC. Under the terms of the most recent proposal, USSC will
retain ownership and continue operation of its sugar mill, sugar refinery and citrus plant. USSC would lease back
the property sold to SFWMD for a period of seven crop cycles. Based on current information, Alico is unable to
assess the impact of this potential transaction on its operations. As the potential sale progresses and more details
become known, Alico will continue to assess its options and strategies going forward.

Details concerning the sales and receivables from USSC and Alico’s other major customers are as follows as of
and for the fiscal years ended:

Accounts receivable

Revenues

Sept 30, 2008
2,373
$
USSC
2,373
Southern Garndens
$
Cutrale Citrus Juices $
—
Florida Orange
Marketers
Citrosuco North
American, Inc.

—

Sept 30, 2007 Sept 30, 2008 Aug 31, 2007 Aug 31, 2006
8,926
2,133
1,748

9,432 $
19,517 $
6,345 $

9,671 $
15,041 $
21,162 $

1,497 $
4,288 $
— $

— $

13,396 $

7,305 $

— $

13,336 $

8,297 $

1,394

1,451

$
$
$

There was no revenue from these customers during the September, 2007 one month transition period.

(2) Marketable Securities Available for Sale

Alico has classified 100% of its investments in marketable securities as available for sale and, as such, the
securities are carried at fair value. Unrealized gains and losses determined to be temporary are recorded as other
comprehensive income, net of related deferred taxes, until realized. Unrealized losses determined to be other than
temporary are recognized in the period the determination is made.

The cost and estimated fair values of marketable securities available for sale at September 30, 2008 and 2007
were as follows:

2008

2007

Gross
Unrealized
Gains

Estimated
Fair
Losses Value

Cost

Gross
Unrealized
Gains

Losses

Fair
Value

Estimated

Debt securities

Municipal bonds
Mutual funds

Fixed maturity funds
Corporate bonds

$ 23,493 $
1,325

3,529
150

3 $
—

7
—

(150) $
—

23,346 $
1,325

29,213 $
2,000

—
(10)

3,536
140

12,569
2,670

23 $
—

49
—

(2) $
—

29,234
2,000

(2)
(9)

12,616
2,661

Total

$ 28,497 $

10 $

(160) $

28,347 $

46,452 $

72 $

(13) $

46,511

Marketable securities available for sale

24,267

46,511

Investment-non current, included in

investments and deposits

4,080

—

The aggregate fair value of investments in debt securities (net of mutual funds of $1,325) as of September 30,
2008 by contractual maturity date, consisted of the following:

Due in one year or less
Due between one and five years
Due between five and ten years
Due thereafter

Total

Aggregate
Fair Value

15,227
4,815
1,000
5,980

27,022

Realized gains and losses on the disposition of securities were as follows:

Year Ended Month Ended

Sept. 30,
2008

Sept. 30,
2007

Year Ended
August 31,

2007

2006

Realized gains
Realized losses

Net

45 $
(9)

36 $

— $
—

71
(40)

— $

4,962
(1,708)

3,254

In evaluating whether a security was other than temporarily impaired, Alico considered the severity and length
of time impaired for each security in a loss position. Other qualitative data was also considered including recent
developments specific to the organization issuing the security and the overall environment of the financial markets.
The following table shows the gross unrealized losses and fair value of Alico’s investments with unrealized losses
that are not deemed to be other than temporarily impaired, aggregated by investment category and length of time that
individual securities have been in a continuous unrealized loss position, at September 30, 2008:

Less than 12 months

12 months or greater

Fair
Value

Unrealized

Losses

Fair
Value

Unrealized

Losses

Fair
Value

Total
Unrealized
Losses

Municipal bonds
Corporate bonds

$
$

14,961
—

Total

14,961

150 $
—

—
140

150 $

140

— $
10

14,961 $
140

150
10

10 $

15,101 $

160

Due to the recent volatility in the financial markets, Alico has continued to focus on short term, highly rated and
highly liquid investments. During the fiscal year ended September 30, 2008, the average return on these investments
declined considerably due to lower interest rates. The preservation of capital is a primary objective of the Company’s
investment strategy; however, during the fiscal year ended September 30, 2008, the Company was unable to liquidate
several auction rate securities, having a total face value of $5.9 million. Several of these securities were called
subsequent to the balance sheet date. The remaining securities are highly rated and continue to pay interest, but
absent an observable market for the security, Alico analyzed each security based on call dates and provisions, bond
ratings, prevailing interest rates, and broker expectations. As a result of these evaluations, Alico determined that one
$3.0 million municipal bond was impaired. An unrealized loss of $120 thousand was recognized for the fiscal year
ended September 30, 2008 as a temporary impairment at September 30, 2008 and charged to other comprehensive
income. The impaired security was classified as a non-current investment at September 30, 2008. In addition
$1.2 million of the remaining auction rate securities were classified as non-current assets at September 30, 2008 at
face value, based on the conclusions reached by the Company’s evaluation.

Debt instruments and funds. The unrealized losses on municipal bonds, fixed maturity funds and corporate
bonds were primarily due to changes in interest rates. At September 30, 2008 Alico held loss positions in 25
government backed bonds and 1 corporate bond position. Because the decline in market values of these securities
is attributable to changes in interest rates and not credit quality and because Alico has the ability and intent to
hold these investments until a recovery of fair value, which may be maturity, Alico does not believe any of the
unrealized losses represent other than temporary impairment based on evaluations of available evidence as of
September 30, 2008.

(3) Mortgages and Notes Receivable

Mortgage and notes receivable arose from real estate and other property sales. The balances are as follows:

Mortgage notes receivable on retail land sales
Mortgage notes receivable on bulk land sales
Other notes receivable

Total mortgages and notes receivable
Less: Deferred revenue

Discount on note to impute market interest
Current portion

September 30,

2008

2007

205
54,108
90

54,403
(46,793)
(6)
(2,830)

299
65,963
—

66,262
(53,253)
(2,489)
(3,832)

Non-current portion

4,774

6,688

Maturities of the mortgages and notes receivable are as follows:

Due within 1 year
Due between 1 and 2 years
Due between 2 and 3 years
Due between 3 and 4 years
Due between 4 and 5 years
Due beyond five years

Total mortgages and notes receivable
Less: Deferred Revenue

Discount on note to impute market interest

2,830
1,083
4,073
8,039
12,037
26,341

54,403
(46,793)
(6)

Net mortgages and notes receivable

7,604

The mortgage notes receivable on bulk land sales relate to two parcels in Lee County, Florida referred to as the
“East” and “Crockett” parcels sold to the Ginn Companies. In July 2005, Alico’s subsidiary, Alico-Agri entered
into a sales contract for the East property, consisting of approximately 4,538 acres for $62.9 million. At the
time of the sale, Alico-Agri received a down payment of $6.2 million and a mortgage note of $56.6 million in
exchange for the East property. The Crockett sale was for approximately 80 acres for $12.0 million, and closed in
December, 2006. Alico-Agri received a down payment of $600 thousand and a mortgage note of $11.4 million in
exchange for the Crockett property.

Alico-Agri records real estate sales following the provisions in Financial Accounting Standards Board, or
FASB, Statement of Financial Accounting Standards No. 66, “Accounting for Sales of Real Estate,” Under these
guidelines, gains from commercial or bulk land sales are not recognized until payments received for property to
be developed within two years after the sale represent a 20% continuing interest in the property or for property to
be developed after two years, a 25% continuing interest in the property according to the installment sales method.
The continuing interest thresholds for gain recognition were not met for either the East or Crockett contract during
the years presented and Alico-Agri is recognizing gains proportionate to principal receipts through deferred gain
accounts which serve to discount the mortgage note receivables under the installment method.

Alico-Agri received principal payments of $0.4 million during the fiscal year ended September 30, 2008, and
$2.1 million on the East mortgage during the fiscal year ended August 31, 2007. Alico-Agri further restructured
the East agreement in November 2008. Ginn has subsequently issued Alico-Agri a deed in lieu of foreclosure
on the Crockett contract. In light of the aforementioned events, Alico-Agri wrote off the mortgage, associated
discount and deferred gain related to the Crockett sale as of the end of the fiscal year ended September 30, 2008
and reestablished a basis of $1.0 million in the property.

Profits from commercial real estate sales are discounted to reflect the market rate of interest when the stated
rate of the mortgage note is less than the market rate. The recorded imputed interest discounts are realized as the
balances due are collected. In the event of early liquidation, interest is recognized on the simple interest method.
At September 30, 2007, both the East and Crockett mortgages were discounted to reflect current market interest
rates.

In October 2008, Alico-Agri received a payment of $2.5 million in escrow in connection with the restructure
of the East contract. In connection with the East restructure, principal payments were extended as follows
(thousands):

Due Date
9/28/08
9/28/09
9/28/10
9/28/11
9/28/12
9/28/13
9/28/14

Due before restructure Due after restructure
1,787
1,000
1,000
4,000
8,000
12,000
26,321

3,980
12,000
12,000
26,128
-0-
-0-
-0-

Interest will continue to accrue on the unpaid balance of the note and be paid in quarterly installments. The note
will bear interest at HSH LIBOR plus 150 basis points from September 29, 2008 to September 28, 2009, HSH
LIBOR plus 200 basis points from September 29, 2009 to September 28, 2010 and HSH LIBOR plus 250 basis
points thereafter until the note is paid in full. Ginn will forfeit release credits it has accumulated on the property in
the event of default, foreclosure or bankruptcy.

(4) Inventories

A summary of the Company’s inventories at September 30, 2008 and 2007 is shown below:

Unharvested fruit crop on trees
Unharvested sugarcane
Beef cattle
Plants and vegetables
Sod
Other

2008

2007

14,322
5,978
5,065
1,563
449
74

12,982
5,410
5,757
1,484
1,476
123

Total inventories

27,451

27,232

Alico records its inventory at the lower of cost or net realizable value. During the fiscal year ended September 30,
2008, Alico wrote down cattle inventory by $2.3 million and sod by $1.3 million. During the fiscal year ended
August 31, 2007, Alico wrote down its cattle inventory by $11 thousand and sod by $158 thousand. During the
fiscal year ended August 31, 2006, Alico wrote down cattle inventory by $35 thousand. There were no writedowns
to Sod inventory during the fiscal year ended August 31, 2006.

Hurricane Wilma, a category three hurricane, swept through southwest Florida during the first quarter of fiscal
year 2006. The hurricane caused extensive damage to Alico’s crops and infrastructure in Collier and Hendry
Counties. As a result of the hurricane, Alico recognized casualty losses related to inventoried costs of $3.7 million
for the fiscal year ended August 31, 2006.

(5) Property, Buildings and Equipment

A summary of the Company’s property, buildings and equipment at September 30, 2008 and 2007 is shown
below:

Breeding herd
Buildings
Citrus trees
Sugarcane
Equipment and other facilities

Total depreciable properties
Less accumulated depreciation

Net depreciable properties
Land and land improvements

2008

2007

Estimated
Useful Lives

5-7 years
5-40 years
22-40 years
4-15 years
3-40 years

12,686
9,987
32,440
5,512
38,695

99,320
56,017

43,303
82,109

13,444
9,971
31,466
5,508
39,880

100,269
50,422

49,847
78,699

Net property, buildings and equipment

125,412

128,546

Due to decreases in the market prices of Florida real estate, the Company evaluated several of its properties for
impairment at September 30, 2008 and August 31, 2007. In conducting its evaluation, the Company reviewed the
estimated non- discounted cash flows from each of the properties and obtained independent third party appraisals
from a qualified real estate appraiser. Based on this information, the Company determined that a 291 acre property
in Polk County, Florida, purchased in October 2005 for $9.2 million, was impaired by approximately $1.9 million
at August 31, 2007 and by an additional $1.5 million at September 30, 2008 due to declines in the Florida real
estate market. The impairment losses were included as a charge to real estate operating expenses during the fiscal
years ended September 30, 2008 and August 31, 2007. Alico’s remaining adjusted book basis in the property was
$5.8 million at September 30, 2008.

Due to losses in its cattle division and increasing costs to raise cattle for breeding purposes, Alico also evaluated
its breeding herd for impairment. Based on available market data and industry practices, Alico determined that its
breeding herd was impaired by $260 thousand at September 30, 2008. The impairment charge was taken against
the breeding herd and included as a component of cattle cost of sales at September 30, 2008.

(6) Indebtedness

The Company’s indebtedness was as follows:

September 30, 2008
Principal balance
outstanding

Remaining available

credit

Effective interest rate
Scheduled maturity date
Collateral

September 30, 2007
Principal balance
outstanding

Remaining available

credit

Effective interest rate
Scheduled maturity date
Collateral

Revolving

line of
credit

Mortgage

note
payable

Term note

All other

Total

80,740

50,000

6,967

137,758

44,260

4.25%

Aug 2011
Real estate

—
6.79%

—
6.68%

Sep 2018
Real estate

Mar 2014
Real estate

—
Various
Various
Various

44,260

127,519

47,481

Aug 2011
Real estate

—

—
—
—
—

8,234

131

135,884

—
6.68%

Mar 2014
Real estate

—
Various
Various
Various

47,481

Alico, Inc. has a Term Note, a Mortgage and a Revolving Line of Credit with Farm Credit of Southwest Florida.
All three agreements are cross collateralized by 7,680 acres of real estate in Hendry County used for farm leases,
sugarcane and citrus production. The Term Note and Revolving Line of Credit are additionally collateralized by
33,700 acres of real estate in Hendry County used for farm leases and cattle ranching.

The Term Note calls for equal payments of principal and interest of $1.7 million per quarter over a ten year term
until maturity. The Mortgage note calls for monthly principal payments of $106 thousand plus accrued interest
until maturity.

The Term Note and Revolving Line of Credit contain numerous restrictive covenants including those requiring Alico
to maintain a net worth of $110 million, a debt ratio of no greater than 60%, a minimum current ratio of 2:1 and a
fixed charge coverage ratio of 1.5:1, and sets limitations on the extension of loans or additional borrowings by Alico
or any subsidiary. The covenants also restrict Alico’s activities regarding investments, liens, borrowing and leasing.

The Revolving Line of Credit provides $125.0 million which may be used for general corporate purposes including:
(i) the normal operating needs of Alico and its operating divisions, (ii) the purchase of capital assets and (iii) the
payment of dividends. The Revolving Line of Credit also allows for an annual extension at the lender’s option.

Under the Revolving Line of Credit, revolving borrowings require quarterly interest payments at LIBOR plus a
variable rate between 0.8% and 1.5% depending on Alico’s debt ratio.

An event of default occurs under the Revolving Line of Credit if Alico fails to make the payments required of it
or otherwise fails to fulfill the provisions and covenants applicable to it. In the event of default, the Revolving
Line of Credit shall bear an increased interest rate of 2% in addition to the then-current rate specified in the
Revolving Line of Credit; the lender may alternatively at its option, terminate its revolving credit commitment
and require immediate payment of the entire unpaid principal amount of the Revolving Line of Credit, accrued
interest and declare all other obligations immediately due and payable. In the opinion of Management, Alico was
in compliance with all of the covenants and provisions of its debt agreements at September 30, 2008.

Alico’s Chairman of the Board of Directors, John R. Alexander, is also member of the Board of Directors of
Alico’s primary lender, Farm Credit of Southwest Florida. Mr. Alexander abstains from voting on matters that
directly affect Alico.

Maturities of the Company’s debt were as follows at September 30, 2008:

Due within 1 year
Due between 1 and 2 years
Due between 2 and 3 years
Due between 3 and 4 years
Due between 4 and 5 years
Due beyond five years

Total

5,470

5,108

86,114

5,653

5,961

29,452

137,758

Interest costs expensed and capitalized were as follows:

Year Ended Month Ended

Sept. 30,
2008

Sept. 30,
2007

Year Ended
August 31,

2007

2006

Interest expense
Interest capitalized

6,565 $

820 $

5,652

3,852

Total interest cost

6,601 $

825 $

5,695

3,929

(7) Stock Based Compensation

On November 3, 1998, Alico adopted the Alico, Inc. Incentive Equity Plan (The Plan) pursuant to which the
Board of Directors of Alico may grant options, stock appreciation rights, and/or restricted stock to certain
directors and employees. The Plan authorized grants of shares or options to purchase up to 650,000 shares of
authorized but unissued common stock. Stock options granted have a strike price and vesting schedules that
are at the discretion of the Board of Directors and are determined on the effective date of the grant. The strike
price cannot be less than 55% of the market price. No stock options were granted during the fiscal years ended
September 30, 2008, August 31, 2007 or August 31, 2006 or during the one month transition period ended
September 30, 2007. The 1998 plan expired on November 3, 2008.

Alico measures the cost of employee services received in exchange for an award of equity instruments based
on the grant-date fair value of the award. The cost is recognized over the period during which an employee is
required to provide service in exchange for the award (usually the vesting period). The grant date fair value of
employee share options and similar instruments are estimated using option-pricing models adjusted for the unique
characteristics of those instruments (unless observable market prices for the same or similar instruments are
available). If an equity award is modified after the grant date, incremental compensation cost will be recognized
in an amount equal to the excess of the fair value of the modified award over the fair value of the original award
immediately before the modification.

A summary of option activity under the Plan is as follows:

Shares Under
Option

Weighted average
exercise price

remaining contractual
life (in years)

Weighted average

Aggregate
Intrinsic
Value

Options outstanding, August 31,

2005
Granted
Exercised

Options outstanding, August 31,

2006
Granted
Exercised

Options outstanding, August 31,

2007
Granted
Exercised

Options outstanding, September 30,

2007
Granted
Exercised

Options outstanding September 30,

2008

16,371 $
—
7,213

9,158 $
—
1,000

8,158 $
—
—

8,158 $
—
2,000

17.29
—
17.08

18.05

18.55

17.66

15.68

17.66

15.68

6,158

16.87

6 $

188,188

At September 30, 2008, and September 30, 2007, there were 6,158, and 8,158 stock options, respectively,
fully vested and exercisable and 231,600 and 273,815 shares, respectively, available for grant. The 6,158
options outstanding as of September 30, 2008 had a fair value of $188 thousand. There was no unrecognized
compensation expense related to outstanding stock option grants at September 30, 2008.

In the fiscal year ended September 30, 2008, 2,000 options were exercised having a total fair value of $59
thousand. In the fiscal year ended August 31, 2007, 1,000 options were exercised having a total fair value of $33
thousand. In the fiscal year ended August 31, 2006, 7,213 options were exercised having a total fair value of $259
thousand. No options were exercised during the one month transition period ended September 30, 2007.

In the fiscal year ended August 31, 2006, Alico began granting restricted shares to certain key employees as long
term incentives. The restricted shares vest in equal annual installments. The payment of each installment is subject
to continued employment with Alico. In fiscal years ended September 30, 2008, August 31, 2007 and August 31,
2006, 12,000, 4,000 and 4,000 restricted shares, respectively, vested in accordance with these grants. No restricted
shares vested during the one month transition period ended September 30, 2007. There were no restricted shares
vested in accordance with these grants at September 30, 2008.
The table below summarizes Alico’s restricted share awards granted to date:

Fair Market Value Recognized for Recognized for

Compensation
Expense

Weighted
Compensation Average
Grant date
Recognized for Fair value
FYE 9/30/08 month of Sept. 07 FYE 8/31/07 Per share

Compensation
Expense

Expense

Shares Granted on Date of Grant

20,000 $
13,000
20,000
25,562
7,500

908 $
694
1,239
1,040
331

(180)
—
453
541
—

14
—
22
—
—

172
(16)
516
—
—

Grant Date
April 2006
July 2006
October 2006
January 2008
September 2008

Total

86,062 $

4,212 $

814 $

36 $

672 $

48.94

The shares granted in April 2006 were forfeited in fiscal year 2008. The shares granted in July 2006 were forfeited
in fiscal 2007. Four thousand of the shares granted in October 2006 related to past service and were immediately
vested and an additional 4,000 shares vested September 30, 2007, the remaining shares under the October 2006
grant vested June 30, 2008 upon the retirement of the CEO.

A grant of 25,562 restricted shares was made to four senior executives in January 2008 with a fair value of $40.67
per share, in order to replace previous retirement benefits offered. 7,707 of the shares granted in January 2008
related to previously vested retirement benefits and vested immediately. The remaining 17,855 shares granted in
January 2008 vest 20% annually in January of each year until fully vested. The shares granted in September 2008
vest 20% in September 2009 and 20% annually thereafter until fully vested. Please refer to the table above for a
description of amounts expensed related to these transactions.

Following the guidelines established in FAS 123R, Alico is recognizing compensation cost equal to the fair
market value of the stock at the grant dates prorated over the vesting period of each award. The fair value of the
unvested restricted stock awards at September 30, 2008 was $1.2 million and will be recognized over a weighted
average period of 6 years.

During November 2007, the CEO and COO elected to receive a portion of their annual incentive bonus in
Company stock. The CEO chose to receive 4,000 shares at a value of $177 thousand, while the COO chose to
receive 500 shares at a value of $22 thousand. These shares do not contain any restrictions, but were issued under
the Company’s Incentive Equity Plan. Compensation expense for these awards was accrued and recognized
during the fourth quarter of the Company’s fiscal year ended August 31, 2007.

(8) Income Taxes

The provision for income taxes for the fiscal years ended September 30, 2008, August 31, 2007, and August 31,
2006 along with the one month transition period ended September 30, 2007 is summarized as follows:

Year Ended
Sept. 30, 2008

One Month Ended
Sept. 30, 2007

Year Ended
August 31,

2007

2006

Current:

Federal income tax
State income tax

Deferred:

Federal income tax
State income tax

(355) $
763
408

(1,245)
(487)
(1,732)

16 $
12
28

46,097
8,507
54,604

(194)
25
(169)

(18,493)
(2,769)
(21,262)

2,640
282
2,922

3,258
356
3,614

Total provision for income taxes

(1,324) $

(141) $

33,342

6,536

Provision for continuing operations
Provision for discontinued operations

Total provision for income taxes

(765)
(559)

(1,324)

(176)
35

(141)

33,520

(178)

33,342

7,159
(623)

6,536

Following is a reconciliation of the expected income tax expense for continuing operations computed at the U.S.
Federal statutory rate of 35% and the actual income tax provision for the fiscal years ended September 30, 2008,
August 31, 2007, August 31, 2006 and the one month transition period ended September 30, 2007:

Expected income tax
Increase (decrease) resulting from:

State income taxes, net of federal

benefit

Nontaxable interest and dividends
Federal impacts from IRS exam and

tax return amendments
Deferred rate adjustment
Tax liability adjustments

Property, plant & equipment deferreds
Other permanent items
Other reconciling items, net

Year Ended
Sept. 30, 2008

One Month Ended
Sept. 30, 2007

Year Ended
August 31,

2007

2006

1,665 $

(359) $

7,044

5,313

317
(590)

(5,409)
—
334

1,651
211
1,056

28
(55)

—
(10)
—

—
—
220

3,732
(708)

22,272
397
—

—
—
783

407
(352)

2,204
—
—

—
—
(413)

Total provision for income taxes

(765) $

(176) $

33,520

7,159

Some items of revenue and expense included in the statement of operations may not be currently taxable or deductible
on the income tax returns. Therefore, income tax assets and liabilities are divided into a current portion, which is the
amount attributable to the current year’s tax return, and a deferred portion, which is the amount attributable to another
year’s tax return. The revenue and expense items not currently taxable or deductible are called temporary differences.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and
deferred tax liabilities as of September 30, 2008 and 2007 are presented below:

Deferred Tax Assets:

Contribution carry forward
Deferred retirement benefits
Federal benefit of state tax reserve
Inventories
Stock options appreciation
Property and Equipment
Net operating losses
Interest on taxes accrued for State amended returns
Other

Total gross deferred tax assets

Deferred Tax Liabilities:

Revenue recognized from citrus and sugarcane
Patronage Dividends
Inventories
Other

Total gross deferred tax liabilities

Net deferred income tax asset

2008

2007

1,024
1,748
—
798
134
3,614
420
—
1,378

917
2,027
2,229
—
243
2,095
—
1,437
1,220

9,116

10,168

319
492
—
742

1,553

7,563

1,525
324
452
1,998

4,299

5,869

Based on Alico’s history of taxable earnings and its expectations for the future, Management has determined that
its taxable income will more likely than not be sufficient to fully recognize all deferred tax assets.

In June 2008, the Internal Revenue Service (IRS) issued a final Settlement Agreement regarding audits of Alico
for the tax years 2000 through 2004. Pursuant to the agreement, the Company and the IRS agreed to final taxes
resulting from the audits of $41.1 million, penalties of $4.1 million and interest of $20.0 million. The Company
had previously paid and accrued taxes of $42.2 million, penalties of $4.2 million and interest of $19.8 million
related to an anticipated settlement in the fourth quarter of fiscal year 2007. The Company has established a
receivable account of $1.0 million for the overpayments. The differences between the final settlement amount
(including taxes, penalties and interest) and the previously estimated settlement have resulted in a reduction in
income tax expense for the fiscal year ended September 30, 2008.

The reductions to the previous tax liability estimate resulted from the allowance of expenses by IRS Appeals that
were previously not allowed by IRS Exams. As a result of the settlement, the Company has filed amended tax returns
for tax years 2005 through 2007. The Company paid additional State income taxes pursuant to the final settlement of
$6.2 million along with $4.3 million of related interest during the fiscal year ended September 30, 2008.

The final Settlement Agreement concluded that Alico must recognize unreported gains resulting from the
transfer of real property to a foreign subsidiary (Agri). The real estate was originally transferred and reported at
its historical cost basis. Additionally, Alico must recognize Subpart F income related to Agri’s earnings. Alico
had not previously recognized income related to the transactions referenced above based on reliance on an
IRS determination letter stating that Agri was a captive insurer, exempt from taxes provided certain procedural
requirements were followed. The Company believed that it had followed such requirements, while the IRS ruled
otherwise.

As a result of the taxation of real property contributions, the Company is allowed to increase its basis in those
properties to their taxed values, creating deferred tax assets. The deferred tax assets will be ultimately realized
when the Company sells the parcels and pays the associated taxes resulting from the sale.

The impact of the IRS tax settlement was a combined federal and state net benefit of $1.6 million for the fiscal
year ended September 30, 2008, additional tax expense of $25.6 million for the fiscal year ended August 31, 2007
and additional tax expense of $2.2 million for the fiscal year ended August 31, 2006.

The Company adopted the provisions of Financial Accounting Standards Board (“FASB”) Interpretation No. 48,
“Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109” (“Interpretation
No. 48”), on October 1, 2007. Among other things, FIN 48 requires application of a “more likely than not”
threshold to the recognition and non-recognition of tax positions. It further requires that a change in judgment
related to prior years’ tax positions be recognized in the quarter of such change.

At October 1, 2007, the Company had $441 thousand of potential tax exposure related to uncertain tax positions,
which was recorded as a one time adjustment to retained earnings. All of this amount would, if recognized,
impact the effective tax rate. The Company recognizes interest and penalties related to uncertain tax positions in
income tax expense and records the interest and penalties in the liability for uncertain tax positions. Interest and
penalties accrued as of the date of adoption were approximately $57 thousand. The amended tax returns filed for
fiscal years ended 2005 — 2007 reversed the previous uncertain tax positions taken and effectively eliminated the
uncertain tax position liability.

The statute of limitations for the Company’s 2000 — 2004 tax returns has been extended to December 31, 2008.
Additionally, the tax years ended August 31, 2005, August 31, 2006, August 31, 2007 and September 30, 2007
remain open to examination by the major taxing jurisdictions to which the Company is subject. The state income
tax returns have not been audited and are subject to audit for the same tax periods open for federal tax purposes.

The IRS has notified Alico that it will be auditing the amended tax returns for the fiscal years ended August 31,
2007, 2006 and 2005. Alico has extended the statute of limitations on the originally filed 2005 tax return to
June 30, 2010 per a request by IRS exams. The audits are expected to commence in January 2009.

(9) Related Party Transactions

Ben Hill Griffin, Inc.

Citrus revenues of $2.0 million, $14.7 million and $17.2 million were recognized for a portion of citrus crops
sold under a marketing agreement with Ben Hill Griffin, Inc. (Griffin) for the years ended September 30, 2008,
August 31, 2007, and August 31, 2006, respectively. For the one month transition period ended September 30,
2007, Alico recognized $53 thousand of citrus revenue from Griffin. Griffin and its subsidiaries are controlled
by Ben Hill Griffin, III, the brother-in-law of John R. Alexander, Alico’s Chairman and former Chief Executive
Officer, and was the owner of approximately 49.85 percent of Alico’s common stock until February 26, 2004.
Accounts receivable, resulting from citrus sales, include amounts due from Griffin totaling $153 thousand and
$3.7 million at September 30, 2008 and September 30, 2007, respectively. These amounts represent estimated
revenues to be received periodically under pooling agreements as sale of pooled products is completed.

Harvesting, marketing, and processing costs, for fruit sold through Griffin, totaled $623 thousand, $2.7 million,
and $5.5 million for the fiscal years ended September 30, 2008, August 31, 2007, and August 31, 2006,
respectively. Griffin did not provide any harvesting, marketing or processing services to Alico during the one
month transition period ended September 30, 2007. The accompanying consolidated balance sheets include
accounts payable to Griffin for citrus production, harvesting and processing costs totaling $28 thousand and $24
thousand at September 30, 2008 and September 30, 2007, respectively.

Alico purchased fertilizer and other miscellaneous supplies, services, and operating equipment from Griffin,
on a competitive bid basis, for use in its cattle, sugarcane, sod and citrus operations. Such purchases totaled
$2.3 million, $2.0 million, and $3.3 million during the fiscal years ended September 30, 2008, August 31, 2007
and August 31, 2006, respectively. Such purchases totaled $22 thousand during the one month transition period
ended September 30, 2007.

AtlanticBlue Group, Inc.

During the fiscal year ended August 31, 2006, AtlanticBlue (formerly Atlantic Blue Trust, Inc.) increased its
holdings to approximately 51% of Alico’s common stock. By virtue of their ownership percentage, AtlanticBlue
is able to elect all the directors and, consequently, to control Alico. AtlanticBlue has issued a letter dated
September 29, 2006 reaffirming its commitment to maintaining a majority of independent directors on Alico’s
board. John R. Alexander, a major shareholder in AtlanticBlue, served as Alico’s Chief Executive Officer from
February 2005 through June 2008.

John R. Alexander continues to serve on the Company’s Board of Directors as Chairman. Mr. Alexander’s son,
JD Alexander, serves as President and Chief Executive Officer of AtlanticBlue and serves on Alico’s Board of
Directors. Robert E. Lee Caswell, Mr. Alexander’s son-in-law also serves on the Alico Board of Directors, as does
Robert J. Viguet, Jr., who is also a Director of AtlanticBlue (the “Affiliated Directors”).

The transactions listed below have all been approved by Alico’s Board of Directors and a majority of the
Unaffiliated Directors.

As Directors of Alico, the Affiliated Directors receive compensation for their services and reimbursement of travel
expenses in accordance with the general policies of the Company the same as Unaffiliated directors. Director
compensation policies are disclosed in Alico’s annual proxy.

Bowen Brothers is currently marketing citrus fruit from Tri County Groves, a wholly owned subsidiary of
AtlanticBlue. During the fiscal year ended September 30, 2008, Bowen marketed 310,000 boxes of fruit at a
gross value of $2.9 million.

John R. Alexander serves on the Board of Farm Credit of Southwest Florida, ACA, the Company’s primary
lender.

On January 18, 2008 the Company’s Board of Directors approved an unaccountable expense allowance of
$5,000 per month to Scenic Highlands Enterprises LLC. The Company’s former Chief Executive Officer and
current Chairman of the Board, John R. Alexander, serves as the owner and Chief Executive Officer of Scenic
Highlands Enterprises. Per the Board’s Action by Written Consent, payments are to be used for office space, an
administrative assistant’s salary, and utilities. Alico paid $30 thousand during the fiscal year ended September 30,
2008 pursuant to this agreement. Alico is also providing computer and telephone support services to Scenic
Highlands Enterprises at no charge.

Effective June 30, 2008 the Board approved a transition, consulting, severance and non-compete agreement with
John R. Alexander providing for total payments of $600,000 over a three year period. Alico paid $62 thousand to
Mr. Alexander during the fiscal year ended September 30, 2008 pursuant to this agreement.

On August 1, 2008 the Board approved a consulting contract with AtlanticBlue which provides for Lisa Jensen,
Chief Operating Officer of AtlanticBlue, to provide real estate consulting services to Alico’s subsidiary Alico
Land Development in the area of public and government relations in Polk County. The agreement expires
March 31, 2009, unless otherwise extended by the parties in writing. AtlanticBlue will receive a fee of $250 per
hour for their services under the agreement, but in no event will total compensation exceed $150 thousand under
the agreement. The agreement also allows for the reimbursement of reasonable and necessary expenses provided
that AtlanticBlue provides sufficient documentation of such. No payments were made to AtlanticBlue under this
agreement during the fiscal year ended September 30, 2008.

Other

Alico, Inc. received notification and legal advice from Kristin Gunter, a partner in McFarlane, Ferguson and
McMullen, P.A., and wife of Dan Gunter, former President and Chief Executive Officer of Alico, regarding the
Company’s eligibility and application for federal Byrd amendment funds. These funds are “dumping” penalties
collected on citrus products. Ms. Gunter was uniquely qualified to provide legal guidance on this matter and
assisted a number of different companies with their applications. Ms. Gunter received a fee for her legal services
of $10,000.

Mr. Charles Palmer, a Board Member, and Mr. Steve Smith, the Company’s Principal Executive Officer held
recreational leases with the Company during the fiscal year ended September 30, 2008 at the customary terms and
rates the Company extends to third parties.

(10) Reportable Segment Information

Alico has six reportable segments: Bowen, Citrus Groves, Sugarcane, Cattle, Real Estate and Leasing. Alico’s
operations are located in Florida. Alico accounts for intersegment sales and transfers as if the sales or transfers
were to third parties, that is, at current market prices.

Bowen’s operations include harvesting, hauling and marketing citrus for both Alico and other outside growers in
the state of Florida. Bowen’s operations also include the purchase and resale of citrus fruit. Alico’s Citrus Grove
operations consist of cultivating citrus trees in order to produce citrus for delivery to the fresh and processed
citrus markets in the state of Florida. Alico’s sugarcane operations consist of cultivating sugarcane for sale to a
sugar processor. Alico’s cattle operation is engaged primarily in the production of beef cattle, feeding cattle at
western feedlots and the raising of replacement heifers.

The goods and services produced by these segments are sold to wholesalers and processors in the United States
who prepare the products for consumption.

Alico’s real estate segment, Alico Land Development, Inc. is engaged in the planning and strategic positioning
of all Company owned land. These actions include seeking entitlement of Alico’s land assets in order to preserve
rights should Alico choose to develop property in the future. The real estate segment is also responsible for
negotiating and renegotiating sales and options contracts. Alico’s leasing segment rents land to others on a tenant-
at-will basis, for grazing, farming, oil exploration and recreational uses.

Although the Vegetable and Sod segments do not meet the quantitative thresholds to be considered as reportable
segments, information about these segments may be useful and has been included in the schedules below. For a
description of the business activities of the Vegetable and Sod segments please refer to Item 1 of this report.

The accounting policies of the segments are the same as those described in the summary of significant accounting
policies. Alico evaluates performance based on direct margins from operations before general and administrative
costs, interest expense and income taxes not including nonrecurring gains and losses. Alico’s reportable segments
are strategic business units that offer different products. They are managed separately because each business
requires different knowledge, skills and marketing strategies.

Information concerning the various segments of Alico for the fiscal years ended September 30, 2008, August 31,
2007 and August 31, 2006 and the one month transition period ended September 30, 2007 is summarized as follows:

Year ended One month

Sept. 30,
2008

Sept. 30,
2007 (1)

Fiscal year ended
August 31,

2007

2006

Revenues (from external customers except as noted)
$

Bowen
Intersegment fruit sales through Bowen
Citrus groves
Sugarcane
Cattle
Real Estate
Land leasing and rentals
Vegetables
Sod

Revenue from segments
Other operations
Less: intersegment revenues eliminated

45,499 $
9,816
41,167
9,671
6,793
3,870
2,276
5,460
1,118

125,670
528
(9,816)

143 $
—
5
—
330
—
141
—
92

711
47
—

52,716
5,383
47,484
9,432
9,977
3,329
1,495
3,803
2,180

135,799
1,589
(5,383)

30,869
1,723
22,188
8,926
5,700
113
1,369
2,389
1,528

74,805
1,082
(1,723)

Total operating revenue

116,382 $

758 $

132,005

74,164

Operating expenses
Bowen
Intersegment fruit sold through Bowen
Citrus groves
Sugarcane
Cattle
Real Estate
Land leasing and rentals
Vegetables
Sod

Segment operating expenses
Other operations
Less: intersegment expenses eliminated
Net casualty loss (recovery)

44,029 $
9,816
27,637
9,250
8,920
3,529
608
5,601
2,653

112,043
98
(9,816)
—

222 $
—
3
—
289
59
36
—
208

817
10
—
—

51,786
5,383
23,427
8,833
9,722
3,408
393
3,307
1,318

107,577
126
(5,383)
—

31,137
1,723
14,574
8,566
4,914
61
452
1,404
840

63,671
—
(1,723)
(4,036)

Total operating expenses

102,325 $

827 $

102,320

57,912

Gross profit (loss):
Bowen
Citrus groves
Sugarcane
Cattle
Real Estate
Land leasing and rentals
Vegetables
Sod

Gross profit (loss) from segments
Other

1,470 $
13,530
421
(2,127)
341
1,668
(141)
(1,535)

13,627
430

(79) $
2
—
41
(59)
105
—
(116)

(106)
37

930
24,057
599
255
(79)
1,102
496
862

28,222
1,463

(268)
7,614
360
786
52
917
985
688

11,134
5,118

Gross profit (loss)

14,057 $

(69) $

29,685

16,252

(1) Alico changed its fiscal year end from August 31 to September 30. The year ended September 30, 2008 was the first full

year on the new fiscal year. Results for September 30, 2007 are for the one month transition period.

Year ended

One month

Sept. 30,
2008

Sept. 30,
2007 (1)

Fiscal year ended
August 31,

2007

2006

Capital expenditures:
Bowen
Citrus Groves
Sugarcane
Cattle
Leasing
Vegetables
Sod

Segment capital expenditures
Other capital expenditures

38 $

1,899
63
1,588
449
432
116

4,585
1,545

— $
9
—
60
—
92
27

188
105

554
1,231
1,288
1,893
459
473
908

6,806
2,332

Total consolidated capital expenditures

6,130 $

293 $

9,138

Depreciation, depletion and amortization:
Bowen
Citrus Groves
Sugarcane
Cattle
Leasing
Vegetables
Sod

Total segment depreciation and amortization
Other depreciation, depletion and

amortization

335 $

2,215
1,709
1,810
90
146
281

6,586

1,731

21 $
188
171
134
7
12
18

551

156

344
2,381
2,083
1,887
67
68
220

7,050

1,720

1,536
9,929
3,065
3,490
—
325
1,103

19,448
13,724

33,172

913
2,540
1,918
1,817
25
17
143

7,373

1,217

Total depreciation, depletion and

amortizations

Total Assets:
Bowen
Citrus groves
Sugarcane
Cattle
Leasing
Vegetables
Sod

Segment assets
Other Corporate assets

8,317 $

707 $

8,770

8,590

2,581 $
49,201
43,525
18,343
2,370
4,213
3,906

124,139
149,793

2,891
53,339
45,128
20,837
2,012
3,238
5,400

132,845
152,504

Total assets

273,932 $

285,349

(1) Alico changed its fiscal year end from August 31 to September 30. The year ended September 30, 2008 was the first
full year on the new fiscal year. Capital expenditures and depreciation for September 30, 2007 are for the one month
transition period.

(11) Casualty (Recoveries) Losses

Hurricane Wilma caused extensive damage to Alico’s crops and infrastructure in Collier and Hendry Counties
during the fiscal year ended August 31, 2006. Also, canker was confirmed in several groves in 2006 and 2005.
During the fiscal year ended August 31, 2006, Alico recorded damages to crop inventories of $3.7 million, and
property and equipment damages of $1.4 million. Alico received insurance payments related to these damages of
$8.7 million and recognized a net casualty recovery of $3.6 million in the fiscal year ended August 31, 2006.

(12) Treasury Stock

The Company’s Board of Directors has authorized the repurchase of up to 131,000 shares of the Company’s
common stock through August 31, 2010, for the purpose of funding restricted stock grants under its 1998
Incentive Equity Plan in order to provide restricted stock to eligible Directors and Senior Managers and align their
interests with those of the Company’s shareholders.

The stock repurchases began in November 2005 and will be made on a quarterly basis until August 31, 2010
through open market transactions, at times and in such amounts as the Company’s broker determines subject to
the provisions of SEC Rule 10b-18.

The following table provides information relating to purchases of Alico’s common shares by Alico on the
open market pursuant to the Director Compensation Plan approved by Alico’s shareholders on June 10, 2005
for the fiscal years ended September 30, 2008 and August 31, 2007 and the one month transition period ended
September 30, 2007:

Total
number of
shares
purchased

Average
price
paid per
share

Total
shares
purchased
as part of
publicly

announced

plans or
programs

Total dollar
value of
shares
purchased

27,968 $
— $
27,770 $
16,000 $

42.76
—
53.45
47.70

71,738 $
43,770 $
43,770 $
16,000 $

1,195,818
—
1,484,291
763,247

Fiscal period ended

September 30, 2008
September 30, 2007
August 31, 2007
August 31, 2006

(13) Off Balance Sheet Arrangements

Alico through its wholly owned subsidiary Bowen enters into purchase contracts for the purchase of citrus
products during the normal course of its business. Typically, these purchases are covered by sales contracts. The
purchase obligations under these purchase agreements totaled $10.9 million at September 30, 2008. All of these
purchases were covered by sales agreements at prices exceeding cost. In addition, Bowen had forward sales
contracts totaling $1.8 million at September 30, 2008 for which a purchaser had not been contracted. Bowen
management currently believes that all committed sales quantities can be purchased below the committed sales
price. All of these contracts will be fulfilled by the end of the fiscal year ending September 30, 2009.

Effective June 30, 2008, the Company discontinued its participation in Alico-J&J, LLC a joint venture vegetable
farm. The parties to the joint venture each held a 50% interest in the earnings, assets and liabilities of the farm.
The Company is currently working to dissolve the joint venture and distribute the assets equitably among the
members. (Losses) profits attributable to the joint venture of ($0.7 million) and $57 thousand have been included
with the results of the vegetable division for the fiscal years ended September 30, 2008 and August 31, 2007,
respectively . The Company has accounted for the joint venture under the equity method. Under the terms of the
joint venture, Alico served as a guarantor for five-year equipment leases to the joint venture. The Company’s
maximum total remaining unpaid obligations under these leases was $0.5 million at September 30, 2008. The
Company expects that the lease obligations will be transferred solely to J&J Farms.

(14) Discontinued Operations

Effective June 30, 2008, the Company ceased operating its Alico Plant World facility. Alico Plant World generated
revenues of $2.6 million, $2.8 million and $3.3 million for the fiscal years ended September 30, 2008, August 31,
2007 and August 31, 2006, respectively and $0.4 million for the one month transition period ended September 30,
2007. Alico Plant World generated losses of $0.9 million, $0.2 million and $1.3 million (net of taxes of $559
thousand, $268 thousand, and $623 thousand) or $0.12, $0.03 and $0.18 per share for the fiscal years ended
September 30, 2008, August 31, 2007 and August 31, 2006, respectively. Alico Plant World generated a profit of
$169 thousand (net of income taxes of $35 thousand) or $0.02 per share during the one month transition period
ended September 30, 2007. Total assets of $1.7 million and $1.6 million related to discontinued operations were
included in the balance sheet at September 30, 2008 and September 30, 2007, respectively. The Company is
currently leasing the Alico Plant World facilities to a commercial greenhouse operator and has also sold a portion
of the equipment used to operate the greenhouse. The results of Alico Plant World’s operations have been reported
as discontinued operations.

(15) Revision of Prior Period Amounts

During the fourth quarter of the fiscal year ended September 30, 2008, the Company discovered an error related to prior year
defined benefit pension accruals of $653 thousand. During the second quarter, the Company discovered an error in its accrual of
Cooperative retains related to prior periods totaling $916 thousand. Neither error had an impact on the previously reported cash
flows from operating, financing or investing activities, and both were considered immaterial to the Company’s previously reported
results of operations for the fiscal years ended August 31, 2007 and August 31, 2006. The cumulative effect of the adjustment on
beginning retained earnings for the year ended August 31, 2006 was $475 thousand. However, since the cumulative combined
impact of these errors would be material to the results of operations for the fiscal year ended September 30, 2008, the Company
applied the guidance of Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements (“SAB 108”). This guidance requires that the prior period financial statements
be corrected, even though the revision was immaterial to the prior period financial statements. Correcting prior year financial
statements for immaterial items does not require previously filed reports to be amended. Such corrections are made each time the
registrant subsequently reports the prior year financial statements Based on SAB 108, the prior period income statement amounts
have been corrected to include the following adjustments (in thousands):

Corporate general and
administrative

Profit (loss) from continuing

operations
Interest expense
Total other income (expense) net

Income (loss) from continuing

operations before income taxes
Provision (benefit) for income taxes
Income (loss) from continuing

operations
Net income (loss)

Earnings per share data:
Basic earnings (loss) per share
from continuing operations

Diluted earnings (loss) per share
from continuing operations

Basic earnings (loss) per share

Diluted earnings (loss) per share

Fiscal year ended

August 31, 2007

August 31, 2006

Previously

reported Adjustment

Revised

reported Adjustment Revised

12,887 $

(160) $

12,727 $

11,212 $

(311) $ 10,901

16,798
5,742
3,077

19,875
33,424

160
(90)
90

250
96

16,958
5,652
3,167

5,040
4,066
9,615

311
(214)
214

5,351
3,852
9,829

20,125
33,520

14,655
6,956

525
203

15,180
7,159

(13,549)
(13,844) $

154
154 $

(13,395)
(13,690) $

7,699
6,469 $

322
322 $

8,021
6,791

(1.84) $

0.02 $

(1.82) $

1.05 $

0.04 $

1.09

(1.84) $

0.02 $

(1.82) $

1.05 $

0.04 $

1.09

(1.88) $

0.02 $

(1.86) $

0.88 $

0.04 $

(1.88)

0.02

(1.86) $

0.88 $

0.04 $

0.92

Balance sheets were corrected as follows (in thousands):

September 30, 2007

Accounts receivable
Current assets
Investments and deposits
Deferred income taxes
Total other assets
Total Assets
Deferred retirement benefits
Total liabilities
Retained earnings
Total Equity

Previously
reported

Adjustment

Revised

14,848
135,098
3,237
3,805
21,386
285,030
5,098
169,035
99,262
115,995

278
278
638
(597)
41
319
(632)
(632)
951
951

15,126
135,376
3,875
3,208
21,427
285,349
4,466
168,403
100,213
116,946
78

The statement of cash flows has been corrected to include the following adjustments (in thousands):

August 31, 2007

August 31, 2006

Fiscal year ended

Net income (loss)

Deferred income taxes
Deferred retirement

benefits

Accounts receivable

Previously
reported

Adjustment
154

(13,844)

Previously

Revised
(13,690)

reported Adjustment
322

6,469

Revised
6,791

(21,351)

(21,255)

680

203

883

(1,026)
(7,059)

(160)
(90)

(1,186)
(7,149)

556
2,537

(311)
(214)

245
2,323

The statement of stockholder equity was revised as follows (in thousands):

Retained earnings
Beginning balance, originally stated
Original net income
Dividends

Ending balance, originally stated
Cumulative adjustment

Restated beginning balance
Restated net income
FIN 48
Dividends

Ending balance, restated

(16) New Accounting Pronouncements

9/30/07

8/31/07

8/31/06

8/31/05

102,402
(680)
(2,024)

99,698
—

103,353
(680)
(436)
(2,024)

100,213

124,352
(13,844)
(8,106)

102,402
—

125,149
(13,690)
—
(8,106)

103,353

125,439
6,469
(7,556)

124,352
—

125,914
6,791
—
(7,556)

125,149

128,560
6,090
(9,211)

125,439
475

125,914
—
—
—

125,914

In June 2008, the FASB issued staff position (FSP) EITF 3-6-1, “Determining Whether Instruments Granted in
Share-Based Payment Transactions Are Participating Securities”. This statement is effective for fiscal year 2009.
This FASB Staff Position (FSP) addresses whether instruments granted in share-based payment transactions are
participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing
earnings per share (EPS) under the two-class method described in paragraphs 60 and 61 of FASB Statement
No. 128, Earnings per Share. Under FSP 3-6-1, the FASB clarified that instruments granted in share-based
payment transactions can be participating securities prior to the requisite service having been rendered. The
Company does not expect the adoption of EITF 3-6-1 to have a material impact on its financial statements.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. SFAS No. 157 defines fair
value, establishes a framework for measuring fair value in generally accepted accounting principles and expands
disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that
require or permit fair value measurements. Alico is required to adopt SFAS No. 157 effective at the beginning
of fiscal year 2009. The Company does not expect the adoption of SFAS 157 to have a material impact on its
financial statements.

(17) Subsequent events

At a Board of Directors meeting held on October 31, 2008, the Board declared a quarterly dividend of $0.275 per share
payable to stockholders of record as of January 30, 2009, with payment expected on or about February 15, 2009.

In November 2008, Alico finalized the renegotiation of a sales contract and mortgage related to a parcel of
land in Lee County, Florida that closed in July 2005. The East contract was originally entered into in July 2005
and relates to the sale of approximately 4,538 acres in Lee County Florida. Under the terms of the restructure,
principal payments were extended as follows (thousands):

Due Date
9/28/8
9/28/9
9/28/10
9/28/11
9/28/12
9/28/13
9/28/14

Due before restructure Due after restructure
1,787
1,000
1,000
4,000
8,000
12,000
26,321

3,980
12,000
12,000
26,128
-0-
-0-
-0-

Interest will continue to accrue on the unpaid balance of the note and be paid in quarterly installments. The
note will bear interest at HSH LIBOR plus 150 basis points from October 1, 2008 to September 28, 2009, HSH
LIBOR plus 200 basis points from October 1, 2009 to September 28, 2010 and HSH LIBOR plus 250 basis points
thereafter until the note is paid in full. Ginn will forfeit release credits it has accumulated on the property in the
event of default, foreclosure or bankruptcy.

Ginn did not exercise its option on a second contract (“West”). In connection with this action, Ginn has agreed to
provide a deed in lieu of foreclosure on a third contract (“Crockett”) and give up any rights it may have had to the
West property. Alico will thus take possession of the West and Crockett parcels free of any claims by Ginn.

(18) Transition Period Financial Information:

On September 28, 2007, the Company’s fiscal year end was changed from August 31 to September 30.
Accordingly, the Company is presenting information for the one month transition period ended September 30,
2007. The following table provides certain comparative financial information of the same period of the prior year.

(In thousands, except per share data)

Statement of operations data:

Operating revenue
Operating and general and administrative expenses

Earnings (loss) from operations
Other earnings (loss)
Income taxes (benefit)

Net earnings (loss)

Earnings (loss) per share:

Basic
Diluted

Balance sheet data:
Current assets
Total assets
Current liabilities
Other liabilities
Stockholders’ equity

One Month Ended

September 30,
2007
(Audited)

September 30,
2006
(Unaudited)

$
$

758
1,642

(884)
28
(176)

(680)

(0.09)
(0.09)

September 30,
2007
(Audited)

135,376
285,349
25,138
143,265
116,946

$
$

1,682
2,499

(817)
101
(341)

(375)

(0.05)
(0.05)

September 30,
2006
(Unaudited)

110,183
262,587
16,950
104,014
141,573

(19) Selected Quarterly Financial Data (unaudited)

Summarized quarterly financial data (in thousands except for per share amounts) for the fiscal years ended
September 30, 2008 and 2007 were as follows:

One month
Ended
Sep 30,
2007

December 31,

March 31,

June 30,

September 30,

2007

2006

2008

2007

2008

2007

2008

2007

Quarters Ended

Net sales

Continuing operations
$
Discontinued operations

758 $ 22,652
902
419

$ 25,779 $ 48,182
1,093
749

$ 55,466 $ 42,147 $

992

463

46,149 $
617

3,401
112

Total net sales

Cost of sales

1,177 23,554

26,528 49,275

56,458 42,610

46,766

3,513

Continuing operations

827 18,381

20,082 42,027

42,696 35,790

33,491

6,127

Discontinued operations

190

833

491

1,264

1,093

1,025

859

150

Total cost of sales

Gross profits

1,017 19,214

20,573 43,291

43,789 36,815

34,350

6,277

3,953
627

4,580

5,645

322

5,967

Continuing operations

(69)

4,271

5,697

6,155

12,770

6,357

12,658

(2,726)

(1,692)

Discontinued operations

229

258

(171)

(101)

(562)

(242)

(38)

Total gross profit

160

4,340

5,955

5,984

12,669

5,795

12,416

(2,764)

305

(1,387)

General & Administrative

expense
Continuing operations

815

2,913

2,985

3,884

3,172

3,568

3,509

1,113

3,041

Discontinued operations

182

233

495

266

(90)

Total general &

administrative expense

850

3,001

3,167

3,981

3,405

4,063

3,775

1,130

2,951

Other income (expense)

Continuing operations

(141)

2,899

1,702

628

436

(119)

1,061

(1,149)

(362)

Discontinued operations

(5)

(215)

Total other income (expense

(131)

2,949

1,731

645

431

(334)

1,121

(1,051)

(341)

154

Restatements (see note 15)

Income before income taxes
Continuing operations

(1,025)

4,257

4,414

2,899

10,034

2,670

10,210

(4,988)

(5,095)

Discontinued operations

204

105

(251)

(339)

(1,272)

(448)

416

Total income before income

taxes

Income tax

(expense) benefit
Continuing operations

(821)

4,288

4,519

2,648

9,695

1,398

9,762

(4,945)

(4,679)

(176)

1,486

1,899

1,015

4,321

(3,129)

29,025

(137)

(1,626)

Discontinued operations

(129)

(456)

(242)

(210)

158

Total income tax expense

(benefit)

Net income (loss)

(141)

1,498

1,939

1,110

4,192

(3,585)

28,783

(347)

(1,468)

Continuing operations

(849)

2,771

2,515

1,884

5,713

5,799

(18,815)

(4,851)

(3,469)

Discontinued operations

169

(346)

(210)

(816)

(206)

253

258

Total net income (loss)

(680) $

2,790

2,580 $

1,538

5,503 $

4,983 $ (19,021) $ (4,598)

$ (3,057)

Basic earnings per share

(0.09) $

0.38

0.35 $

0.21

0.75 $

0.68 $

(2.58) $

(0.62)

(0.41)

Alico discontinued operations of its Plant World subsidiary in June 2008. Plant World’s operations were
previously reported as a single line, net of tax in the Company’s filings on form 10-Q during June and September,
but were included as operating items in prior filings. This change should be considered when comparing this table
to the Company’s previous filings.

Item 9. Changes in & Disagreements with Accountants on Accounting and Financial Disclosure.

There were no disagreements with accountants on accounting and financial disclosure matters.

Item 9A. Controls and Procedures.

Attached as exhibits to this Form 10-K are certifications of our Principal Executive Officer and Chief Financial
Officer, which are required in accordance with Rule 13a-14 of the Securities Exchange Act. This “Controls
and Procedures” section includes information concerning the controls and controls evaluation referred to in the
certifications.

Evaluation of Disclosure Controls and Procedures

Alico maintains disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended, referenced herein as the Exchange Act. These disclosure controls
and procedures are designed to ensure that information required to be disclosed by Alico in the reports that
it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time
periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to
Company’s management, including its Principal Executive Officer and Chief Financial Officer, as appropriate,
to allow timely decisions regarding required disclosure. Alico carried out, under the supervision and with the
participation of Alico’s management, including Alico’s Principal Executive Officer and Alico’s Chief Financial
Officer, an evaluation of the effectiveness of the design and operation of Alico’s disclosure controls and
procedures performed pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as amended. Based
on their evaluation, Alico’s Principal Executive Officer and its Chief Financial Officer concluded that, as of
September 30, 2008, Alico’s disclosure controls and procedures were effective.

Management assessed the effectiveness of Alico’s internal control over financial reporting as of September 30,
2008. In making the assessment, Management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework. Based on this
assessment, the Management of Alico, Inc. concluded that as of September 30, 2008, Alico’s disclosure controls
and procedures were effective.

Management’s Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting.
Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the
Exchange Act as a process designed by, or under the supervision of, Alico’s principal executive and principal
financial officers and implemented by Alico’s Board of Directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles and includes those polices and
procedures that:

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and
dispositions of the assets of Alico;

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with Generally Accepted Accounting Principles, and that receipts and expenditures of
Alico are being made only in accordance with authorizations of management and directors of Alico; and

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of Alico’s assets that could have a material effect on the financial statements.

Based on their evaluations of the internal controls, Alico’s Principal Executive Officer and Chief Financial Officer
have concluded that as of September 30, 2008, Alico maintained effective internal control over financial reporting.

The effectiveness of internal control over financial reporting as of September 30, 2008 has been audited by
McGladrey & Pullen, LLP, an independent registered certified public accounting firm, as stated in their report
which is on page 43 of this Form 10-K.

Item 9B. Other Information.

None.

PART III

Items 10 — 14 of Part III are incorporated by reference to Alico’s proxy expected to be filed on or before
January 20, 2009.

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K.

PART IV

(a) 1. Financial Statements:

Included in Part II, Item 8 of this Report

Reports of Independent Registered Certified Public Accounting Firms

Consolidated Balance Sheets — September 30, 2008 and September 30, 2007

Consolidated Statements of Operations — For the Years Ended September 30, 2008, August 31, 2007 and
August 31, 2006 and
for the one month transition period ended September 30, 2007

Consolidated Statements of Stockholders’ Equity and Comprehensive Income (loss) — For the Years Ended
September 30, 2008,
August 31, 2007 and August 31, 2006 and for the one month transition period ended September 30, 2007

Consolidated Statements of Cash Flows — For the Years Ended September 30, 2008, and August 31, 2007,
August 31, 2006 and the one month transition period ended September 30, 2007

(b) 2. Financial Statement Schedules:

All schedules not listed above are not submitted because they are not applicable or not required or because the
required information is included in the financial statements or notes thereto.

3(i) Articles of Incorporation:

3(i)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(i)2 Certificate of Amendment to Certificate of Incorporation, Dated January 14, 1974 (incorporated by reference
to Alico’s Registration Statement on Form S-8, dated December 21, 2005, Registration No. 333-130575)

3(i)3 Amendment to Articles of Incorporation, Dated January 14, 1987 (incorporated by reference to Alico’s
Registration Statement on Form S-8, dated December 21, 2005, Registration No. 333-130575)

3(i)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(ii) Bylaws

3(ii)(1) By-Laws of Alico, Inc., amended and restated (incorporated by reference to Alico’s filing on Form 8-K
dated October 4, 2007)

3(ii) (2) By-Laws of Alico, Inc. amended and restated (incorporated by reference to Alico’s filing on Form 8-K
dated November 21, 2008)

(10) Material Contracts

(10.1) Citrus Processing and Marketing Agreement with Ben Hill Griffin, Inc., dated November 2, 1983, a
Continuing Contract. (incorporated by reference to Alico’s filing on Form 10-K dated November 28, 2006)

(10.2) Cash Purchase Orange Agreement with Tropicana (incorporated by reference to the Company’s filing on
Form 10-K dated November 14, 2007)

(10.3) Fruit Purchase Agreement with Southern Gardens Citrus Processing Corporation (incorporated by reference
to the Company’s filing on Form 10-K dated November 14, 2007)

(10.4) Real Estate Sale Agreement with Ginn Development Corporation (incorporated by reference to Alico’s
filing on Form 10Q/A dated January 6, 2005)

(10.5) First Amendment to Real Estate Sales Agreement with Ginn Development Corporation (incorporated by
reference to Alico’s filing on Form 8-K dated December 27, 2006)

(10.6) Amended Real Estate Sales Agreement with Ginn Development Corporation dated November 11, 2008

(10.7) Second Amendment and restate Renewal Promissory Note (incorporated by reference to Alico’s filing on
Form 8-K dated October 25, 2007)

(10.8) Second Amendment to Mortgage Deed (incorporated by reference to Alico’s filing on Form 8-K dated
October 25, 2007)

(10.9) Revolving Line of Credit Agreement (incorporated by reference to Alico’s filing on Form 8-K dated
October 17, 2005)

(10.10) Amendment to Line of Credit Agreement (incorporated by reference to Alico’s filing on Form 8-K dated
June 1, 2006)

(10.11) Amendment to Line of Credit Agreement (incorporated by reference to Alico’s filing on Form 10-K dated
November 14, 2007)

(10.12) Term note with Farm Credit (incorporated by reference to Alico’s filing on Form 8-K dated September 8,
2008)

(10.13) Fourth Amendment to Amended and Restated Loan Agreement (incorporated by reference to Alico’s filing
on Form 8-K dated September 8, 2008)

(10.14) Amended and Restated RLOC Note (incorporated by reference to Alico’s filing on Form 8-K dated
September 8, 2008)

(10.15) Transition, Severence, Non-Compete and Consulting Agreement with John R. Alexander (incorporated by
reference to Alico’s filing on Form 8-K dated June 30, 2008)

(10.16) Transition, Severence, Non-Compete and Consulting Agreement with Dan L. Gunter (incorporated by
reference to Alico’s filing on Form 8-K dated November 21, 2008)

(14.1) Code of Ethics amended October 31, 2008

(14.2) Whistleblower Policy amended October 31, 2008

(21) Subsidiaries of the Registrant — Alico Land Development Company, Inc. (formerly Saddlebag Lake Resorts,
Inc. (a Florida corporation incorporated in 1971));Agri-Insurance Company, Ltd. (a company formed under the
laws of the country of Bermuda incorporated in 2000), Alico-Agri, Ltd (a Florida limited partnership formed in
2003), Alico Plant World, LLC (a Florida limited liability company organized in 2004), Bowen Brothers Fruit,
LLC (a Florida limited liability company organized in 2005)) (incorporated by reference to Alico’s filing on Form
10-K dated November 28, 2006)

(31.1) Rule 13a-14(a) certification

(31.2) Rule 13a-14(a) certification

(32.1) Section 1350 certifications

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, as amended, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ALICO, INC.
(Registrant)

December 15 , 2008
Date

/s/ Steven M. Smith
Steven M. Smith
President & Principal Executive Officer

/s/ Patrick W. Murphy
Patrick W. Murphy
Senior Vice President and Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the date indicated:

/s/ JD Alexander

JD Alexander
Director

/s/ Evelyn D’An

Evelyn D’An
Director

/s/ Gregory T. Mutz

Gregory T. Mutz
Director

/s/ Robert J. Viguet, Jr.

Robert J. Viguet, Jr.
Director

/s/ John R. Alexander
John R. Alexander
Chairman

/s/ Robert E. Lee Caswell
Robert E. Lee Caswell
Director

/s/ Phillip S. Dingle
Phillip S. Dingle
Director

/s/ Charles L. Palmer
Charles L. Palmer
Director

/s/ Gordon Walker
Gordon Walker
Director

December 15, 2008
Date

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Board of Directors

John R. Alexander

Chairman of the Board, Alico, Inc.
Chief Executive Officer, Scenic
Highland Enterprises, LLC.

Evelyn D’An *

CPA and President
D’An Financial Services, Inc.

Charles L. Palmer *

President and
Chief Executive Officer
North American Company, LLLP

JD Alexander
Chief Executive Officer, Atlanticblue, Florida
State Senator, 17th District, Policy and
Steering Committee on Ways and Means,
Chair; Ethics and Elections, Chair

Phillip S. Dingle *

Managing Partner and Founder
Health Edge
Investment Partners, LLC

Robert J. Viguet, Jr. *

Partner
Thompson & Knight, LLP

Robert E. Lee Caswell

Gregory T. Mutz *

Operations Manager
PC Associates, LLC

Chairman of the Board
AMLI Residential Properties Trust

Gordon Walker, PhD *

Chairman Department of
Strategy & Entrepreneurship
Southern Methodist University

*Independent Directors

Committees

Audit Committee
Phillip S. Dingle, Chairman
Evelyn D’An, Financial Expert
Gregory T. Mutz
Dr. Gordon Walker
Compensation Committee
Charles L. Palmer, Chairman
Gregory T. Mutz
Robert J. Viguet, Jr.
Dr. Gordon Walker
Strategy And Business Development
Committee
Dr. Gordon Walker, Chairman
JD Alexander
Phillip S. Dingle
Gregor T. Mutz
Charles L. Palmer
Robert J. Viguet, Jr.
Nominating and Governance
Committee
Dr. Gordon Walker, Chairman
Evelyn D’An
Gregory T. Mutz
Charlies L. Palmer
Robert J. Viguet, Jr.

Company Contact
Information
Physicial Address
640 South Main Street
LaBelle, Florida 33935

Mailing Address
Post Office Box 338
LaBelle, Florida 33975

Phone
(863) 675-2966

Fax
(863) 675-6928

Transfer Agent
Jennifer Attubato
Transfer Agent
Computershare
250 Royal Street
Canton, MA 02021
T (781) 575-3451
F (781) 575-2152
www.computershare.com

Officers
Steven M. Smith
Principal Executive Officer and President
Patrick W. Murphy
Chief Financial Officer and Senior Vice-President
Don Schrotenboer
President, Alico
Land Development Co., Inc.
Michael R. Talaga
Senior Vice President,
Human Resources and Information Technology
A. Denise Plair
Corporate Secretary

Financial Information at a Glance

$140

$120
$140

$100
$120

$80
$100

$60
$80

$40
$60

$20
$40

$0
$20

($20)
$0

($40)
($20)

($40)

14
12

12
10

10
8

8
6

6
4

4
2

2
0

Current Ratio

Debt/equity ratio
Current Ratio

Debt/equity ratio

2004

2005

2006

2007

2008

2004

2005
Operating
Revenues
Operating
Revenues

2007

2006
Operating
Income
Operating
Income

2008

Net
Income
Net
Income

2004

2005

2006

2007

2008

$3.00

$3.00
$2.00

$2.00
$1.00

$1.00
$0.00

$0.00
($1.00)

($1.00)
($2.00)

($2.00)
($3.00)

($3.00)

$300

$300
$250

$250
$200

$200
$150

$150
$100

$100
$50

$50
$0

2004

2005

2006

2007

2005

2006
Earning per share

2007
Dividends

Earning per share

Dividends

2008

2004

2005

2006

2007

2008

2005

Total Assets

2006

2007
Stockholder Equity

2008

Total Assets

Stockholder Equity

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