Delta and Pine Land Company
P.O. Box 157
Scott, Mississippi 38772
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Contact: Investors Media
Tom Jagodinski Jonathan Gasthalter/Amy Cohen
Delta and Pine Land Company Citigate Sard Verbinnen
662-742-4518 212-687-8080
DELTA AND PINE LAND COMPANY ANNOUNCES RECORD THIRD QUARTER
AND NINE-MONTH REVENUES AND RESULTS OF OPERATIONS
Increases Fiscal 2005 Earnings Guidance To $1.02-$1.11 Per Share, After Certain
Litigation Expenses of $0.08 to $0.10 Per Share
Increases Quarterly Dividend 25% To $0.15 Per Share
Announces $50 Million Stock Repurchase Plan
-------------------------------------------------
SCOTT, MS, July 6, 2005 -- 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 its third quarter and nine months ended
May 31, 2005.
Third Quarter and Nine-Month Results
After charges of $0.01 per diluted share related to Pharmacia/Monsanto
litigation expenses, net earnings for the 2005 third quarter were $0.91 per
diluted share, an increase from last year's comparable third quarter net
earnings of $0.79 per diluted share. In the prior year third quarter, net
earnings were reduced by $0.05 per diluted share for Pharmacia/Monsanto
litigation expenses.
Revenues were $203.3 million in the current year third quarter, compared to
$185.6 million recorded in the year-ago quarter. The revenue increase was
primarily due to higher sales of premium priced stacked trait varieties and
higher trait prices in the domestic segment. Operating expenses increased,
largely due to higher research expenses, legal fees and Sarbanes-Oxley
compliance costs.
After charges of $0.06 per diluted share related to Pharmacia/Monsanto
litigation expenses, net income for the 2005 nine-month period increased more
than 50% to $1.28 per diluted share, compared to net income of $0.85 per diluted
share for the same period last year. In the 2004 nine-month period, net income
included a reduction of $0.16 per diluted share for Pharmacia/Monsanto
litigation expenses.
Revenues for the 2005 nine-month period increased 18% to $340.6 million,
compared to $288.1 million in the prior year period. The revenue increase was
primarily the result of higher unit sales of premium priced stacked trait picker
varieties, as well as increases in trait fee prices.
International revenues also increased, primarily due to higher unit sales
and prices in Australia and Brazil, coupled with stronger export sales to
Greece, Spain and Mexico. Sales at the Company's two joint ventures in China
declined, principally due to strong competition from local varieties and reduced
cotton plantings. Operating expenses increased, largely as a result of higher
research and development expenses related to developing products with new
technologies, compensation costs, legal fees and Sarbanes-Oxley compliance
costs.
Tom Jagodinski, President and Chief Executive Officer, said, "We are
pleased with grower acceptance of our newer stacked trait cotton varieties and
expect DP555 BG/RR and DP444 BG/RR to be the top two selling varieties planted
in the U.S. this year. We also have substantial seed production of new products
containing Monsanto's second-generation traits, Bollgard II(R) and Roundup
Ready(R) Flex, in anticipation of next year's launch of these varieties.
Further, we are continuing to take steps to enhance value by returning cash to
our shareholders, including the significant dividend increase and additional
share repurchase authorization."
Stock Repurchase Plan
D&PL also announced that its Board of Directors has authorized a new share
repurchase program to buy up to an additional $50 million of the Company's
common stock. The Company anticipates that repurchases will be implemented over
time through a variety of methods, which generally will include open market
purchases. The timing and amount of repurchases under the program will depend on
market conditions, legal restrictions and other factors.
As of June 30, 2005, the Company had purchased approximately 3.1 million
shares of its common stock at an aggregate purchase price of $82.6 million in
the current fiscal year. Current year repurchases totaled approximately 8% of
the Company's issued and outstanding stock as of the beginning of the fiscal
year.
Quarterly Dividend
The Company also announced that its Board of Directors has declared a
dividend of $0.15 per share for the fourth quarter, an increase of 25% over the
third quarter dividend. The dividend will be paid on September 14, 2005 to
shareholders of record on August 31, 2005.
2005 Earnings Outlook
For the fiscal year 2005, D&PL now expects to report sales in the range of
$340 million to $360 million, based on U.S. cotton plantings remaining constant
with 2004 levels. The Company is revising its earlier diluted earnings per share
guidance to reflect an anticipated reduction in legal fees related to its
lawsuit against Pharmacia and Monsanto, which previously were estimated to be
$0.13 to $0.18 per diluted share. The Company now believes the
Pharmacia/Monsanto legal expenses will be between $0.08 and $0.10 per diluted
share. Accordingly, the Company now expects to report earnings per diluted share
in the range of $1.02 to $1.11. The earlier guidance provided related to core
business earnings remains unchanged. These earnings estimates include forecasts
of fourth quarter domestic and international sales, slightly higher technology
fee rebates under crop loss and replant programs than was experienced in 2004,
and other assumptions regarding fourth quarter results. Crop loss and replant
program rebates and other grower and channel marketing programs are finalized in
the fourth quarter.
Conference Call
D&PL will hold a conference call this morning at 11:00 a.m. ET/10:00 a.m.
CT to review this announcement. The call can be accessed by dialing 800-374-0532
(International, 706-634-0148) and access code 7411383. 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
noon ET/11:00 a.m. CT on Wednesday, July 6, 2005 through midnight ET/11:00 p.m.
CT on Wednesday, July 13, 2005 by dialing 800-642-1687 (International,
706-645-9291) and entering the access code 7411383.
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 Web site at
http://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 of 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,
2005 2004
----------------- ------------------
NET SALES AND LICENSING FEES $ 203,320 $ 185,649
COST OF SALES 129,747 121,094
----------------- ------------------
GROSS PROFIT 73,573 64,555
----------------- ------------------
OPERATING EXPENSES:
Research and development 5,781 4,465
Selling 3,706 3,230
General and administrative 6,143 3,767
----------------- ------------------
15,630 11,462
----------------- ------------------
OPERATING INCOME 57,943 53,093
INTEREST INCOME, NET 336 262
OTHER EXPENSE (851) (3,650)
EQUITY IN NET LOSS OF AFFILIATE (781) (1,033)
MINORITY INTEREST IN LOSS OF SUBSIDIARIES 394 25
----------------- ------------------
INCOME BEFORE INCOME TAXES 57,041 48,697
INCOME TAX EXPENSE 20,757 17,268
----------------- ------------------
NET INCOME 36,284 31,429
DIVIDENDS ON PREFERRED STOCK (128) (128)
----------------- ------------------
NET INCOME APPLICABLE TO COMMON SHARES $ 36,156 $ 31,301
================= ==================
BASIC NET EARNINGS PER SHARE $ 0.94 $ 0.82
================= ==================
NUMBER OF SHARES USED IN BASIC EARNINGS
PER SHARE CALCULATIONS 38,416 38,311
================= ==================
DILUTED NET EARNINGS PER SHARE $ 0.91 $ 0.79
================= ==================
NUMBER OF SHARES USED IN DILUTED EARNINGS
PER SHARE CALCULATIONS 39,839 39,799
================= ==================
DIVIDENDS PER COMMON SHARE $ 0.12 $ 0.12
================= ==================
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,
2005 2004
----------------- ------------------
NET SALES AND LICENSING FEES $ 340,633 $ 288,129
COST OF SALES 213,343 185,601
----------------- ------------------
GROSS PROFIT 127,290 102,528
----------------- ------------------
OPERATING EXPENSES:
Research and development 15,857 13,598
Selling 10,258 9,181
General and administrative 15,587 13,041
----------------- ------------------
41,702 35,820
----------------- ------------------
OPERATING INCOME 85,588 66,708
INTEREST INCOME, NET 1,435 961
OTHER EXPENSE (3,331) (9,973)
EQUITY IN NET LOSS OF AFFILIATE (2,167) (2,767)
MINORITY INTEREST IN EARNINGS OF SUBSIDIARIES (1,951) (2,380)
----------------- ------------------
INCOME BEFORE INCOME TAXES 79,574 52,549
INCOME TAX EXPENSE 28,447 18,655
----------------- ------------------
NET INCOME 51,127 33,894
DIVIDENDS ON PREFERRED STOCK (384) (363)
----------------- ------------------
NET INCOME APPLICABLE TO COMMON SHARES $ 50,743 $ 33,531
================= ==================
BASIC NET EARNINGS PER SHARE $ 1.32 $ 0.88
================= ==================
NUMBER OF SHARES USED IN BASIC EARNINGS
PER SHARE CALCULATIONS 38,573 38,183
================= ==================
DILUTED NET EARNINGS PER SHARE $ 1.28 $ 0.85
================= ==================
NUMBER OF SHARES USED IN DILUTED EARNINGS
PER SHARE CALCULATIONS 39,928 39,685
================= ==================
DIVIDENDS PER COMMON SHARE $ 0.36 $ 0.34
================= ==================
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,
2005 2004 2004
------------------ ----------------- -----------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 111,287 $ 149,587 $ 148,651
Receivables, net 258,087 184,759 229,759
Inventories 29,099 30,151 26,780
Prepaid expenses 1,024 1,923 807
Deferred income taxes 5,230 9,055 10,755
------------------ ----------------- -----------------
Total current assets 404,727 375,475 416,752
PROPERTY, PLANT AND EQUIPMENT, NET 61,255 61,988 61,205
EXCESS OF COST OVER NET ASSETS OF
BUSINESSES ACQUIRED 4,183 4,183 4,183
INTANGIBLES, NET 5,797 5,471 5,350
OTHER ASSETS 1,492 1,594 1,660
DEFERRED INCOME TAXES 7,603 8,312 -
------------------ ----------------- -----------------
TOTAL ASSETS $ 485,057 $ 457,023 $ 489,150
================== ================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES :
Notes payable $ 11,491 $ 5,639 $ -
Accounts payable 11,820 23,784 8,885
Accrued expenses 242,960 187,890 209,432
Income taxes payable 19,995 8,912 20,789
------------------ ----------------- -----------------
Total current liabilities 286,266 226,225 239,106
------------------ ----------------- -----------------
LONG-TERM DEBT 11,217 16,486 -
------------------ ----------------- -----------------
DEFERRED INCOME TAXES - - 4,183
------------------ ----------------- -----------------
MINORITY INTEREST IN SUBSIDIARIES 5,219 4,586 4,662
------------------ ----------------- -----------------
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;
40,857,834, 40,162,820 and 40,001,984 shares issued;
36,138,728, 38,495,354 and 38,441,718 shares outstanding 4,086 4,016 4,000
Capital in excess of par value 79,941 64,250 61,700
Retained earnings 213,891 176,808 210,129
Accumulated other comprehensive loss (1,390) (3,736) (5,314)
Treasury stock, at cost; 4,719,106, 1,667,466 and 1,560,266 shares (114,280) (31,719) (29,423)
------------------ ----------------- -----------------
TOTAL STOCKHOLDERS' EQUITY 182,355 209,726 241,199
------------------ ----------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 485,057 $ 457,023 $ 489,150
================== ================= =================
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
(in thousands)
(Unaudited)
May 31, May 31,
2005 2004
----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 51,127 $ 33,894
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 6,461 6,228
(Gain) loss on sale of assets (309) 220
Equity in net loss of affiliate 2,167 2,767
Foreign exchange (gain)loss (95) 125
Accretion of debt discount 583 -
Minority interest in earnings of subsidiaries 1,951 2,380
Compensation expense of restricted stock 67 -
Change in deferred taxes 4,574 (1,168)
Changes in assets and liabilities:
Receivables (72,774) (62,786)
Inventories 1,595 5,612
Prepaid expenses 897 1,294
Intangibles and other assets (382) 41
Accounts payable (12,351) (9,195)
Accrued expenses 54,853 33,063
Income taxes 13,494 13,652
----------------- -----------------
Net cash provided by operating activities 51,858 26,127
----------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (5,129) (3,101)
Sale of investments and property 433 64
Investment in affiliate (2,230) (1,880)
----------------- -----------------
Net cash used in investing activities (6,926) (4,917)
----------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of short-term debt - (277)
Payments of long-term debt - (1,607)
Dividends paid (14,044) (13,375)
Proceeds from short-term debt - 245
Minority interest in dividends paid by subsidiary (1,318) (1,336)
Payments to acquire treasury stock (82,561) (3,452)
Proceeds from exercise of stock options 13,176 4,097
----------------- -----------------
Net cash used in financing activities (84,747) (15,705)
----------------- -----------------
EFFECTS OF FOREIGN CURRENCY EXCHANGE RATES 1,515 (139)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (38,300) 5,366
CASH AND CASH EQUIVALENTS, August 31 149,587 143,285
----------------- -----------------
CASH AND CASH EQUIVALENTS, May 31 $ 111,287 $ 148,651
================= =================
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the nine months for:
Interest, net of capitalized interest $ - $ 10
Income taxes paid $ 9,261 $ 5,590
Noncash financing activities:
Tax benefit of stock option exercises $ 2,518 $ 2,799