NEWS
Delta and Pine Land Company
P.O. Box 157
Scott, Mississippi 38772
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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 for Quarter
o Earnings Guidance Updated Due to Lower than Expected U.S. Cotton Plantings
SCOTT, MS, July 9, 2004 -- 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, 2004.
Third Quarter and Nine-Month Results
Net income for the third quarter was $0.79 per diluted share compared to
last year's third quarter net income of $0.72 per diluted share. Net income
reflects a reduction of $0.05 per diluted share related to Monsanto/Pharmacia
litigation expenses incurred during the third quarter, compared to a reduction
of $0.04 per diluted share incurred in last year's third quarter. Prior year
third quarter net income was further impacted by expenses related to a workforce
reduction and a facility closing that reduced earnings per diluted share by
$0.01.
Net sales and licensing fees for the 2004 third quarter were $185.1
million compared to $168.9 million in the prior year quarter. The revenue
increase was primarily due to an anticipated shift of domestic cottonseed sales
into the third quarter from the second quarter. Soybean seed revenues also
significantly increased in the current year quarter as compared to last year due
to improved product offerings and an increase in soybean plantings.
International sales were higher, primarily from export sales to Mexico and
Colombia, and from a shift in sales to Greece from the second quarter to the
third quarter. Operating expenses were essentially flat with last year while
costs related to Monsanto/Pharmacia litigation increased. The costs associated
with our investment in DeltaMax Cotton LLC, the Company's 50%-owned joint
venture that is developing new traits for cotton, also increased.
Net income for the 2004 nine-month period was $0.85 per diluted share
compared to net income of $0.94 per diluted share for the same period last year.
Net income reflects a reduction of $0.16 per diluted share related to
Monsanto/Pharmacia litigation expenses incurred during the nine-month period
ended May 31, 2004, compared to a reduction of $0.14 per diluted share recorded
in the same period in 2003. Prior year net income was also affected by expenses
related to two U.S. facility closings and workforce reductions at two foreign
locations that reduced earnings per diluted share by $0.02.
Net sales for the 2004 nine-month period were $287.2 million as compared
to $282.1 million in the prior year period. This was due primarily to increased
international revenues from in-country sales in Australia, Brazil and South
Africa, and from export sales to Mexico and Colombia. Soybean seed sales were
also significantly higher during the current year nine-month period. Operating
expenses increased during the current year period due to higher research and
development and selling expenses as well as an increase in professional fees.
Tom Jagodinski, President and Chief Executive Officer, said, "Although
cotton acreage for 2004 was less than originally expected due to increased
plantings of soybeans caused by higher soybean commodity prices, we are pleased
that many of our newer products were widely adopted by our farmer customers. We
believe that we have the best product pipeline we have had in a number of years,
and we expect to launch additional superior varieties in the years to come. We
also remained focused on new trait development and we are incorporating those
new traits into our most elite varieties. Our partner in the DeltaMax joint
venture, Verdia, Inc., was recently acquired by DuPont, which brings potential
for additional investment capital, strategic focus and critical mass to our
trait development activities."
Stock Repurchase Plan
As of June 30, 2004, the Company has purchased 218,000 shares of its
common stock at an aggregate purchase price of $5.0 million in the current
fiscal year. The Company will continue to purchase its shares from time to time
depending on market conditions and other factors.
2004 Earnings Outlook
Due to the reduction in U.S. cotton acreage versus the Company's original
estimates of 14.5 million acres, the Company now expects to report earnings per
diluted share in the range of $0.67 to $0.75 for the fiscal year ending August
31, 2004. This revised earnings estimate includes a reduction of $0.19 to $0.21
per diluted share from expenses related to the Monsanto/Pharmacia litigation.
This new guidance is based on estimated overall U.S. cotton plantings of
approximately 13.2 to 13.5 million acres and includes a reduction in acres
planted in D&PL's key picker markets (primarily east of Texas) as compared to
2003 cotton plantings. The Company expects cotton acres in the High Plains of
Texas to have increased over last year. In addition, this earnings estimate
reflects lower technology fee rebates under crop loss and replant programs than
was experienced in 2003. Crop loss and replant program rebates are generally
finalized in the fourth quarter.
Conference Call
D&PL will hold a conference call with the investment community to review
this announcement on Friday, July 9, 2004, at 11:00 a.m. ET/10:00 a.m. CT. The
call can be accessed by dialing 888-270-8028 (International, 706-679-0236) and
access code 8596320. 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 for replay from 1:00 p.m. ET/12:00 p.m. CT on Friday,
July 9, 2004, through midnight, Friday, July 16, 2004, by dialing 800-642-1687
(International, 706-645-9291) and entering reservation number: 8596320.
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,
2004 2003
----------------- ------------------
NET SALES AND LICENSING FEES $ 185,119 $ 168,936
COST OF SALES 120,564 111,095
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GROSS PROFIT 64,555 57,841
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OPERATING EXPENSES:
Research and development 4,465 4,152
Selling 3,230 3,014
General and administrative 3,767 3,732
Special charges - 462
----------------- ------------------
11,462 11,360
----------------- ------------------
OPERATING INCOME 53,093 46,481
INTEREST INCOME, NET 262 160
OTHER EXPENSE (3,650) (2,480)
EQUITY IN NET LOSS OF AFFILIATE (1,033) (551)
MINORITY INTEREST IN LOSS
OF SUBSIDIARIES 25 522
----------------- ------------------
INCOME BEFORE INCOME TAXES 48,697 44,132
INCOME TAX EXPENSE 17,268 15,667
----------------- ------------------
NET INCOME 31,429 28,465
DIVIDENDS ON PREFERRED STOCK (128) (64)
----------------- ------------------
NET INCOME APPLICABLE TO COMMON SHARES $ 31,301 $ 28,401
================= ==================
BASIC NET EARNINGS PER SHARE $ 0.82 $ 0.75
================= ==================
NUMBER OF SHARES USED IN BASIC
EARNINGS PER SHARE CALCULATIONS 38,311 38,049
================= ==================
DILUTED NET EARNINGS PER SHARE $ 0.79 $ 0.72
================= ==================
NUMBER OF SHARES USED IN DILUTED
EARNINGS PER SHARE CALCULATIONS 39,799 39,598
================= ==================
DIVIDENDS PER COMMON SHARE $ 0.12 $ 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,
2004 2003
----------------- ------------------
NET SALES AND LICENSING FEES $ 287,240 $ 282,072
COST OF SALES 184,712 181,078
----------------- ------------------
GROSS PROFIT 102,528 100,994
----------------- ------------------
OPERATING EXPENSES:
Research and development 13,598 12,036
Selling 9,181 8,235
General and administrative 13,041 12,095
Special charges - 962
----------------- ------------------
35,820 33,328
----------------- ------------------
OPERATING INCOME 66,708 67,666
INTEREST INCOME, NET 961 742
OTHER EXPENSE (9,973) (8,498)
EQUITY IN NET LOSS OF AFFILIATE (2,767) (1,492)
MINORITY INTEREST IN EARNINGS OF
SUBSIDIARIES (2,380) (796)
----------------- ------------------
INCOME BEFORE INCOME TAXES 52,549 57,622
INCOME TAX EXPENSE 18,655 20,456
----------------- ------------------
NET INCOME 33,894 37,166
DIVIDENDS ON PREFERRED STOCK (363) (181)
----------------- ------------------
NET INCOME APPLICABLE TO COMMON SHARES $ 33,531 $ 36,985
================= ==================
BASIC NET EARNINGS PER SHARE $ 0.88 $ 0.97
================= ==================
NUMBER OF SHARES USED IN BASIC
EARNINGS PER SHARE CALCULATIONS 38,183 38,115
================= ==================
DILUTED NET EARNINGS PER SHARE $ 0.85 $ 0.94
================= ==================
NUMBER OF SHARES USED IN DILUTED
EARNINGS PER SHARE CALCULATIONS 39,685 39,554
================= ==================
DIVIDENDS PER COMMON SHARE $ 0.34 $ 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,
2004 2003 2003
------------------ ----------------- -----------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 148,651 $ 143,285 $ 116,385
Receivables, net 229,759 166,952 243,440
Inventories 30,469 32,231 34,204
Prepaid expenses 807 2,116 634
Deferred income taxes 10,755 10,677 11,225
------------------ ----------------- -----------------
Total current assets 420,441 355,261 405,888
PROPERTY, PLANT AND EQUIPMENT, NET 61,205 64,441 61,427
EXCESS OF COST OVER NET ASSETS OF
BUSINESSES ACQUIRED 4,183 4,183 4,183
INTANGIBLES, net 5,350 5,470 5,489
INVESTMENT IN AFFILIATE - 328 753
OTHER ASSETS 1,660 1,869 1,946
------------------ ----------------- -----------------
TOTAL ASSETS $ 492,839 $ 431,552 $ 479,686
================== ================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES :
Notes payable $ - $ 40 $ 24
Accounts payable 12,574 17,966 9,119
Accrued expenses 209,432 176,150 208,209
Income taxes payable 20,789 9,894 22,988
------------------ ----------------- -----------------
Total current liabilities 242,795 204,050 240,340
------------------ ----------------- -----------------
LONG-TERM DEBT - 1,557 2,145
------------------ ----------------- -----------------
DEFERRED INCOME TAXES 4,183 5,220 3,129
------------------ ----------------- -----------------
MINORITY INTEREST IN SUBSIDIARIES 4,662 3,618 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.l0 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;
40,001,984, 39,525,116 and 39,474,723 shares issued;
38,441,718, 38,107,850 and 38,094,557 shares outstanding 4,000 3,953 3,947
Capital in excess of par value 61,700 54,850 53,974
Retained earnings 210,129 189,610 202,888
Accumulated other comprehensive loss (5,314) (5,442) (5,043)
Treasury stock, at cost; 1,560,266, 1,417,266 and 1,380,166 shares (29,423) (25,971) (25,111)
------------------ ----------------- -----------------
TOTAL STOCKHOLDERS' EQUITY 241,199 217,107 230,762
------------------ ----------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 492,839 $ 431,552 $ 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,
2004 2003
------------------ -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 33,894 $ 37,166
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 6,228 5,739
Loss (gain) on sale of assets 220 (28)
Equity in net loss of affiliate 2,767 1,492
Foreign exchange loss (gain) 125 (2)
Minority interest in earnings of subsidiaries 2,380 796
Change in deferred taxes (1,168) -
Changes in assets and liabilities:
Receivables (62,786) (97,364)
Inventories 1,923 5,567
Prepaid expenses 1,294 1,539
Intangibles and other assets 41 126
Accounts payable (5,506) (7,420)
Accrued expenses 33,063 64,236
Income taxes 13,652 11,127
------------------ -----------------
Net cash provided by operating activities 26,127 22,974
------------------ -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (3,101) (3,302)
Sale of investments and property 64 76
Investment in affiliate (1,880) (1,550)
------------------ -----------------
Net cash used in investing activities (4,917) (4,776)
------------------ -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of short-term debt (277) (2,095)
Payments of long-term debt (1,607) -
Dividends paid (13,375) (6,659)
Proceeds from short-term debt 245 437
Minority interest in dividends paid by subsidiary (1,336) -
Payments to acquire treasury stock (3,452) (5,275)
Proceeds from exercise of stock options 4,097 1,784
------------------ -----------------
Net cash used in financing activities (15,705) (11,808)
------------------ -----------------
EFFECTS OF FOREIGN CURRENCY EXCHANGE RATES (139) 904
NET INCREASE IN CASH AND CASH EQUIVALENTS 5,366 7,294
CASH AND CASH EQUIVALENTS, August 31 143,285 109,091
------------------ -----------------
CASH AND CASH EQUIVALENTS, May 31 $ 148,651 $ 116,385
================== =================
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the nine months for:
Interest, net of capitalized interest $ 10 $ 50
Income taxes $ 5,600 $ 9,200
Noncash financing activities:
Tax benefit of stock option exercises $ 2,800 $ 600