NEWS
Delta and Pine Land Company
P.O. Box 157
Scott, Mississippi 38772
- --------------------------------------------------------------------------------
Contact: Investors Media
Tom Jagodinski Stephanie Pillersdorf/Keil Decker
Delta and Pine Land Company Citigate Sard Verbinnen
(662) 742-4518 (212) 687-8080
DELTA AND PINE LAND COMPANY REPORTS
THIRD QUARTER AND NINE-MONTH FINANCIAL RESULTS
o Reports Increased Sales and Net Income
o Full Year Earnings Guidance Updated in Light of Heavy Rains and
Storms in the Cotton Belt
SCOTT, MS, July 7, 2003 -- Delta and Pine Land Company (NYSE:DLP)
("D&PL"), a leading commercial breeder, producer and marketer of cotton planting
seed, today announced financial results for the third fiscal quarter and nine
months ended May 31, 2003.
Third Quarter and Nine-Month Results
Third quarter net income was $0.77 per diluted share, an increase of 18%
over last year's third quarter net income of $0.65, before legal expenses
related to the D&PL versus Monsanto/Pharmacia litigation of $0.04 in 2003 ($0.02
in 2002), and before special charges in 2003 primarily related to a workforce
reduction in Australia of $0.01 per diluted share. Diluted earnings per share
after such expenses and special charges was $0.72 per share for the third
quarter compared to $0.63 per share in the prior year. Net sales for the fiscal
2003 third quarter increased 25% to $169.0 million from $135.4 million in the
year ago quarter, primarily the result of a shift in shipments into the third
quarter from the second quarter. Sales and net income were also favorably
affected by increased demand for stacked gene cottonseed products, which carry
higher technology fees. Operating expenses were essentially flat with last year.
Net income for the nine-month period was $1.10 per diluted share compared
to $1.00 in the prior year, before legal expenses related to the D&PL versus
Monsanto/Pharmacia litigation of $0.14 in 2003 ($0.04 in 2002), and special
charges related to two U.S. location shut downs and workforce reductions at two
foreign locations of $0.02 per diluted share. Diluted earnings per share after
such expenses and special charges was $0.94 for the nine-month period compared
to $0.96 in the prior year. Net sales for the current nine-month period
increased to $282.1 million from $255.5 million in the comparable prior period.
This increase was primarily the result of higher sales of stacked gene products
and higher soybean sales in the U.S. market. Lower international sales and poor
weather in the U.S. and Australia also negatively affected our 2003 results. The
USDA is now estimating that planted cotton acreage in 2003 will be lower overall
than in 2002 and a major commodity broker has lowered its earlier estimates of
acres to be planted in 2003. Operating expenses increased due to higher
insurance, pension and payroll related costs.
Tom Jagodinski, President and CEO said, "Although we reported higher sales
and net income in the third quarter and year-to-date versus 2002, inclement
weather, primarily heavy rains in the South and the Texas High Plains, reduced
the number of acres planted to levels below our earlier estimates as well as
forecasts made by the USDA. Because of the poor weather, several hundred
thousand acres were not planted with cotton and, in many cases, technology fees
will not be collected on some planted acres if the crop was subsequently
destroyed or abandoned. In spite of the effects of the weather this year, we are
encouraged by increased market share for our high-value picker products in
markets east of Texas, the strong demand for higher margin stacked gene products
and higher soybean sales. We remain optimistic about new products containing
third party traits we are currently working on, as well as the prospects for our
DeltaMax Cotton joint venture."
The following table reconciles net income before unusual items to net
income at May 31.
Diluted EPS: Three Months Nine Months
------------ ------------
Net income before legal 2002 2003 2002 2003
expenses related to D&PL
versus Monsanto/Pharmacia
litigation and special charges
(a non-GAAP measure) $0.65 $0.77 $1.00 $1.10
Monsanto litigation expenses (0.02) (0.04) (0.04) (0.14)
Special charges - (0.01) - (0.02)
-------- --------- --------- --------
Net income (a GAAP measure) $0.63 $0.72 $0.96 $0.94
======== ========= ========= ========
2003 Earnings Outlook
Due to the reduction in planted acreage in D&PL's key picker markets
(primarily east of Texas) and inclement weather across the Cotton Belt, the
Company now expects to report earnings per diluted share before Monsanto legal
expenses and special charges (a non-GAAP measure) in the range of $0.93 to
$0.98. Legal expenses associated with the Monsanto litigation are expected to
range from $0.17 to $0.19 per diluted share. Special charges are expected to
approximate $0.02 per share. Diluted earnings per share after Monsanto legal
expenses and special charges (a GAAP measure) are expected to range from $0.72
to $0.79 per share.
Conference Call
D&PL will hold a conference call with the investment community to review
this announcement on Tuesday, July 8, 2003, at 11 a.m. ET/10 a.m. CT. The call
can be accessed by dialing 888-270-8028 (International, 706-679-0236), pass
code: 1452504. Live audio of the conference call will also be accessible at
www.vcall.com. The call will be available on the website for 90 days, and will
also be available by replay from 3 p.m. ET/2 p.m. CT on Tuesday, July 8th
through 3 p.m. ET/2 p.m. CT on Tuesday, July 15th by dialing 800-642-1687
(International, 706-645-9291) and entering the pass code: 1452504.
About Delta and Pine Land Company
Delta and Pine Land Company is a leading commercial breeder, producer and
marketer of cotton planting seed. Headquartered in Scott, Mississippi, with
multiple offices in eight states and facilities in several foreign countries,
D&PL also breeds, produces and markets soybean planting seed in the U.S. For
more information, please refer to the Company's website at www.deltaandpine.com.
# # #
Certain matters discussed in this release are "forward-looking statements,"
including statements about the Company's future plans, goals and other events
which have not yet occurred. These statements are intended to qualify for the
safe harbors from liability provided by the Private Securities Litigation Reform
Act of 1995. They can generally be identified because the context of such
statements will include words such as "believes," "anticipates," "expects" or
words of similar import. It is the nature of agricultural seed businesses that
supply, demand and their timing are affected by many variables, including
commodity prices, weather and government policy. Due to the seasonal nature of
the seed business, the Company typically incurs losses in its first and fourth
quarters. Additional risks and uncertainties with respect to the Company's
business and forward looking statements are set forth in the Company's latest
filings with the Securities and Exchange Commission.
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
(in thousands, except per share amounts)
(Unaudited)
May 31, May 31,
2002 2003
---------------- ----------------
NET SALES AND LICENSING FEES $ 135,386 $ 168,936
COST OF SALES 86,336 110,547
---------------- ----------------
GROSS PROFIT 49,050 58,389
---------------- ----------------
OPERATING EXPENSES:
Research and development 4,796 4,700
Selling 2,700 3,014
General and administrative 3,837 3,882
---------------- ----------------
11,333 11,596
SPECIAL CHARGES (462)
---------------- ----------------
OPERATING INCOME 37,717 46,331
---------------- ----------------
INTEREST (EXPENSE) INCOME, net (62) 160
OTHER EXPENSE, net (390) (2,330)
EQUITY IN NET LOSS OF AFFILIATE - (551)
MINORITY INTEREST IN LOSS OF SUBSIDIARIES 1,594 522
---------------- ----------------
INCOME BEFORE INCOME TAXES 38,859 44,132
INCOME TAX PROVISION 13,794 15,667
---------------- ----------------
NET INCOME 25,065 28,465
DIVIDENDS ON PREFERRED STOCK (53) (64)
---------------- ----------------
NET INCOME APPLICABLE TO COMMON SHARES $ 25,012 $ 28,401
================ ================
NET INCOME APPLICABLE TO COMMON SHARES
BEFORE SPECIAL CHARGES $ 25,012 $ 28,699
================ ================
BASIC EARNINGS PER SHARE:
NET INCOME BEFORE SPECIAL CHARGES $ 0.65 $ 0.76
SPECIAL CHARGES, net of tax - (0.01)
---------------- ----------------
NET INCOME $ 0.65 $ 0.75
================ ================
DILUTED EARNINGS PER SHARE:
NET INCOME BEFORE SPECIAL CHARGES $ 0.63 $ 0.73
SPECIAL CHARGES, net of tax - (0.01)
---------------- ----------------
NET INCOME $ 0.63 $ 0.72
================ ================
NUMBER OF SHARES USED IN BASIC EARNINGS
PER SHARE CALCULATIONS 38,343 38,049
================ ================
NUMBER OF SHARES USED IN DILUTED EARNINGS
PER SHARE CALCULATIONS 39,769 39,598
================ ================
DIVIDENDS PER COMMON SHARE $ 0.05 $ 0.06
================ ================
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED
(in thousands, except per share amounts)
(Unaudited)
May 31, May 31,
2002 2003
---------------- ----------------
NET SALES AND LICENSING FEES $ 255,506 $ 282,072
COST OF SALES 163,530 179,762
---------------- ----------------
GROSS PROFIT 91,976 102,310
---------------- ----------------
OPERATING EXPENSES:
Research and development 13,438 13,352
Selling 8,168 8,235
General and administrative 10,463 11,779
---------------- ----------------
32,069 33,366
SPECIAL CHARGES - (962)
---------------- ----------------
OPERATING INCOME 59,907 67,982
---------------- ----------------
INTEREST INCOME, net 1,096 742
OTHER EXPENSE, net (3,605) (8,814)
EQUITY IN NET LOSS OF AFFILIATE - (1,492)
MINORITY INTEREST IN LOSS/(EARNINGS)
OF SUBSIDIARIES 2,066 (796)
---------------- ----------------
INCOME BEFORE INCOME TAXES 59,464 57,622
INCOME TAX PROVISION 21,110 20,456
---------------- ----------------
NET INCOME 38,354 37,166
DIVIDENDS ON PREFERRED STOCK (159) (181)
---------------- ----------------
NET INCOME APPLICABLE TO COMMON SHARES $ 38,195 $ 36,985
================ ================
NET INCOME APPLICABLE TO COMMON SHARES
BEFORE SPECIAL CHARGES $ 38,195 $ 37,605
================ ================
BASIC EARNINGS PER SHARE:
NET INCOME BEFORE SPECIAL CHARGES $ 0.99 $ 0.99
SPECIAL CHARGES, net of tax - (0.02)
---------------- ----------------
NET INCOME $ 0.99 $ 0.97
================ ================
DILUTED EARNINGS PER SHARE:
NET INCOME BEFORE SPECIAL CHARGES $ 0.96 $ 0.96
SPECIAL CHARGES, net of tax - (0.02)
---------------- ----------------
NET INCOME $ 0.96 $ 0.94
================ ================
NUMBER OF SHARES USED IN BASIC EARNINGS
PER SHARE CALCULATIONS 38,394 38,116
================ ================
NUMBER OF SHARES USED IN DILUTED EARNINGS
PER SHARE CALCULATIONS 39,832 39,554
================ ================
DIVIDENDS PER COMMON SHARE $ 0.15 $ 0.17
================ ================
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(Unaudited)
May 31, August 31, May 31,
2002 2002 2003
----------------- ---------------- ----------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 87,577 $ 109,091 $ 116,385
Receivables, net 214,936 145,876 243,440
Inventories 43,060 40,021 34,204
Prepaid expenses 622 2,266 634
Deferred income taxes 8,674 11,214 11,225
----------------- ---------------- ----------------
Total current assets 354,869 308,468 405,888
PROPERTY, PLANT and EQUIPMENT, net 62,924 63,401 61,427
EXCESS OF COST OVER NET ASSETS OF
BUSINESS ACQUIRED, net 4,182 4,187 4,183
INTANGIBLES, net 4,125 4,032 5,489
INVESTMENT IN AFFILIATE - 695 753
OTHER ASSETS 2,338 2,359 1,946
----------------- ---------------- ----------------
Total non-current assets 73,569 74,674 73,798
----------------- ---------------- ----------------
$ 428,438 $ 383,142 $ 479,686
================= ================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 146 $ 1,763 $ 24
Accounts payable 11,641 16,447 9,119
Accrued expenses 171,792 143,533 208,209
Income taxes payable 18,122 12,381 22,988
----------------- ---------------- ----------------
Total current liabilities 201,701 174,124 240,340
----------------- ---------------- ----------------
LONG-TERM DEBT, less current maturities 1,319 1,176 2,145
----------------- ---------------- ----------------
DEFERRED INCOME TAXES 4,706 3,121 3,129
----------------- ---------------- ----------------
MINORITY INTEREST IN SUBSIDIARIES 4,177 2,514 3,310
----------------- ---------------- ----------------
STOCKHOLDERS' EQUITY:
Preferred stock, par value $0.10 per share; 2,000,000 shares authorized:
Series A Junior Participating Preferred, par value $0.10 per share;
456,989 shares authorized; no shares issued or outstanding - - -
Series M Convertible Non-Voting Preferred, par value $0.10 per
share; 1,066,667 shares authorized, issued and outstanding 107 107 107
Common stock, par value $0.10 per share; 100,000,000 shares authorized;
39,278,071, 39,311,571 and 39,474,723 issued;
38,332,405, 38,204,405 and 38,094,557 shares outstanding 3,928 3,931 3,947
Capital in excess of par value 51,146 51,563 53,974
Retained earnings 182,359 172,381 202,888
Accumulated other comprehensive loss (4,196) (5,939) (5,043)
Treasury stock at cost, 945,666, 1,107,166 and 1,380,166 shares (16,809) (19,836) (25,111)
----------------- ---------------- ----------------
Total stockholders' equity 216,535 202,207 230,762
----------------- ---------------- ----------------
$ 428,438 $ 383,142 $ 479,686
================= ================ ================
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
(in thousands)
(Unaudited)
May 31, May 31,
2002 2003
---------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 38,354 $ 37,166
Adjustments to reconcile net income to
net cash (used in) provided by operating activities:
Depreciation and amortization 5,062 5,739
Loss/(gain) on sale of property and equipment 187 (28)
Equity in net loss of affiliate - 1,492
Minority interest in net (loss)/income of subsidiaries (2,066) 796
Changes in current assets and liabilities:
Receivables (40,091) (97,364)
Inventories (7,060) 5,567
Prepaid expenses 1,417 1,539
Intangibles and other assets (11) 126
Accounts payable (2,937) (7,420)
Accrued expenses (3,269) 64,236
Income taxes payable 2,469 11,127
---------------- ----------------
Net cash (used in) provided by operating activities (7,945) 22,976
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (5,082) (3,302)
Sale of investments and property 43 76
Purchase of minority interest in subsidiary (4,838) -
Investment in affiliate 1,000 (1,550)
---------------- ----------------
Net cash used in investing activities (8,877) (4,776)
---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of short-term debt (2,268) (2,095)
Payments of long-term debt (73) -
Dividends paid (5,918) (6,659)
Proceeds from long-term debt 672 -
Proceeds from short-term debt 693 437
Payments to acquire treasury stock (6,933) (5,275)
Minority interest in dividends by subsidiaries (447) -
Proceeds from exercise of stock options 2,251 1,784
---------------- ----------------
Net cash used in financing activities (12,023) (11,808)
---------------- ----------------
EFFECTS OF FOREIGN CURRENCY EXCHANGE RATES ON CASH 2,419 902
NET (DECREASE)INCREASE IN CASH AND CASH EQUIVALENTS (26,426) 7,294
CASH AND CASH EQUIVALENTS, as of August 31 114,003 109,091
---------------- ----------------
CASH AND CASH EQUIVALENTS, as of May 31 $ 87,577 $ 116,385
================ ================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the nine months for:
Interest, net of capitalized interest $ 700 $ 50
Income taxes $ 18,000 $ 9,200
Noncash financing activities:
Tax benefit of stock option exercises $ 500 $ 600