NEWS
Delta and Pine Land Company
P.O. Box 157
Scott, Mississippi 38772
__________________________________________________________________________
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 FIRST QUARTER
FISCAL 2006 OPERATING RESULTS
Acquires Indian Seed Company
Provides 2006 Earnings Guidance of $1.10 to $1.20 Per Share,
After Certain Litigation Expenses of $0.10 Per Share
-------------------------------------------------
SCOTT, MS, January 6, 2006 -- Delta and Pine Land Company (NYSE:DLP)
("D&PL" or the "Company"), a leading commercial breeder, producer and marketer
of cotton planting seed, today announced results for its first quarter ended
November 30, 2005. Due to the seasonal nature of the seed business, the Company
typically incurs losses in its first and fourth fiscal quarters.
After charges of $0.02 per diluted share related to Pharmacia/Monsanto
litigation expenses and $0.01 per diluted share related to recording the
cumulative effect of a change in accounting for stock options upon initial
adoption of Statement of Financial Accounting Standards No. 123 (Revised 2004),
Share-based Payment ("SFAS 123R"), net loss for the 2006 first quarter was $0.27
per diluted share, an increase from last year's first quarter net loss of $0.12
per diluted share. In the prior year first quarter, Pharmacia/Monsanto
litigation expenses were $0.03 per diluted share and there was no cumulative
effect of a change in accounting principle.
Revenues were $9.8 million in the 2006 first quarter, compared to $17.5
million recorded in the year-ago quarter. The revenue decrease was attributable
to international operations, particularly in South America and Australia. Sales
volumes in South America were lower, primarily due to a reduction in the cotton
acreage planted in Brazil. Sales volumes in Australia were impacted by increased
competition. Results were also impacted in the first quarter of 2006 by
increased spending on research and development activities related to new
technologies from Monsanto, Syngenta and DuPont, higher professional services
fees related to litigation (other than the Pharmacia/Monsanto lawsuit), and
stock-based compensation costs.
Indian Acquisition
D&PL also announced that it has acquired Vikki's Agrotech Pvt. Ltd., an
Indian cottonseed company. Vikki's has licenses to Monsanto's Bollgard(R) and
Bollgard II(R) technologies for India as well as rights to commercialize Bt
genes from another party. Subject to regulatory approvals being received,
Vikki's may commercialize Bollgard(R) hybrids in India in 2006. The Company
continues to consider other acquisition opportunities in the Indian market. D&PL
has also established a research program in Northern India to develop products
for the Punjab region of both India and Pakistan.
Tom Jagodinski, President and Chief Executive Officer, said, "We are
very pleased with the acquisition of Vikki's, which further expands our
international presence, providing D&PL with a platform in the Indian cottonseed
market. This transaction further builds on our expansion efforts in India and
will enable the Company to launch additional research initiatives in India."
Mr. Jagodinski continued, "In addition, we continue to introgress the
second generation Monsanto insect resistant and herbicide tolerance traits into
our most elite material. We expect to launch as many as eight new varieties
containing these technologies in 2006 and expect to have enough seed to plant
approximately 1,500,000 acres with seed containing these new traits. Moreover,
we continue to dedicate resources to the development of the traits we have
licensed from Syngenta and DuPont, which are expected to be launched later this
decade.
Share Repurchase Program
From September 1, 2005 through December 31, 2005, D&PL repurchased
320,000 shares at an aggregate purchase price of approximately $7.6 million
under the June 30, 2005, share repurchase program. The Company expects to
repurchase shares under this plan over time and through a variety of methods,
which generally will include open market purchases. The timing and amount of
repurchases under this program will depend on market conditions, legal
restrictions and other factors.
2006 Earnings Outlook
For the fiscal year 2006, D&PL expects to report earnings per diluted
share in the range of $1.10 to $1.20, after charges of $0.10 per diluted share
related to its lawsuit against Pharmacia and Monsanto. The Company reported
earnings of $1.08 per diluted share in fiscal 2005, after a reduction of $0.07
per diluted share related to Pharmacia/Monsanto litigation expenses. The 2006
guidance takes into consideration additional revenues expected to be derived
from higher technology fees from Monsanto's new traits and seed mix changes,
partially offset by additional costs related to product development and the
launch of new technologies from Monsanto, costs related to the development of
Dupont and Syngenta technologies, expenses related to share-based compensation
and sales and marketing expenses.
Earnings are significantly affected by planted cotton acreage in the
U.S. Based on current market conditions (primarily commodity prices and the cost
of inputs), the Company expects cotton plantings in the U.S. to remain constant
with or to increase slightly over 2005 plantings of 14.2 million acres,
especially in areas east of Texas. The Company's earnings guidance is based on
cotton acreage that is flat with 2005 as well as assumptions regarding the
maintenance of our market share and product/sales mix targets being met.
Conference Call
D&PL will hold a conference call this morning at 11:00 a.m. EST/ 10:00
a.m. CST to review this announcement. The call can be accessed by dialing
800-374-0532 (International, 706-634-0148) and access code 3792188. 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 EST/ 11:00 a.m. CST on Friday, January 6, 2006 through midnight EST/
11:00 p.m. CST on Friday, January 13, 2006 by dialing 800-642-1687
(International, 706-645-9291) and entering the access code 3792188.
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)
November 30, November 30,
2005 2004
----------------- ------------------
NET SALES AND LICENSING FEES $ 9,825 $ 17,454
COST OF SALES 6,663 8,421
----------------- ------------------
GROSS PROFIT 3,162 9,033
----------------- ------------------
OPERATING EXPENSES:
Research and development 5,605 4,430
Selling 3,398 3,066
General and administrative 6,119 4,539
----------------- ------------------
15,122 12,035
----------------- ------------------
OPERATING LOSS (11,960) (3,002)
INTEREST INCOME, NET 1,028 458
OTHER EXPENSE, NET (1,203) (1,507)
EQUITY IN NET LOSS OF AFFILIATE (814) (738)
MINORITY INTEREST IN EARNINGS OF SUBSIDIARIES (832) (2,336)
----------------- ------------------
LOSS BEFORE INCOME TAXES (13,781) (7,125)
INCOME TAX BENEFIT (4,488) (2,808)
----------------- ------------------
LOSS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE (9,293) (4,317)
CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET OF TAX (358) -
----------------- ------------------
NET LOSS (9,651) (4,317)
DIVIDENDS ON PREFERRED STOCK (160) (128)
----------------- ------------------
NET LOSS APPLICABLE TO COMMON SHARES $ (9,811) $ (4,445)
================= ==================
BASIC AND DILUTED NET LOSS PER SHARE, BEFORE
CUMULATIVE EFFECT OF ACCOUNTING CHANGE $ (0.26) $ (0.12)
================= ==================
CUMULATIVE EFFECT OF ACCOUNTING CHANGE $ (0.01) $ -
================= ==================
BASIC AND DILUTED NET LOSS PER SHARE $ (0.27) $ (0.12)
================= ==================
NUMBER OF SHARES USED IN BASIC AND DILUTED NET
LOSS PER SHARE CALCULATIONS 36,074 38,544
================= ==================
DIVIDENDS PER COMMON SHARE $ 0.15 $ 0.12
================= ==================
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(Unaudited)
November 30, August 31, November 30,
2005 2005 2004
------------------ ----------------- -----------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 61,148 $ 93,075 $ 121,222
Receivables, net 13,596 228,800 15,332
Inventories 66,222 26,625 62,039
Prepaid expenses 1,503 1,874 1,547
Deferred income taxes 6,372 6,305 6,598
------------------ ----------------- -----------------
Total current assets 148,841 356,679 206,738
PROPERTY, PLANT AND EQUIPMENT, NET 60,409 60,158 62,299
EXCESS OF COST OVER NET ASSETS OF
BUSINESSES ACQUIRED 4,183 4,183 4,183
INTANGIBLES, net 5,999 5,960 5,489
OTHER ASSETS 1,562 1,446 1,608
DEFFERED INCOME TAXES 10,563 10,758 7,600
------------------ ----------------- -----------------
TOTAL ASSETS $ 231,557 $ 439,184 $ 287,917
================== ================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES :
Notes payable $ 8,300 $ 10,078 $ 11,318
Accounts payable 25,767 18,218 22,955
Accrued expenses 39,135 221,824 29,735
Income taxes payable 3,898 12,893 2,377
------------------ ----------------- -----------------
Total current liabilities 77,100 263,013 66,385
------------------ ----------------- -----------------
LONG-TERM DEBT 3,363 7,271 11,001
------------------ ----------------- -----------------
MINORITY INTEREST IN SUBSIDIARIES 5,709 4,877 6,563
------------------ ----------------- -----------------
DEFERRED COMPENSATION 403 - -
------------------ ----------------- -----------------
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; 501,989, 456,989, 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;
40,944,440, 40,928,929 and 40,247,696 shares issued;
35,900,334, 36,099,823 and 38,580,230 shares outstanding 4,094 4,093 4,025
Capital in excess of par value 82,694 81,640 66,127
Retained earnings 184,542 199,742 167,734
Accumulated other comprehensive loss (4,060) (4,305) (2,306)
Treasury stock, at cost; 5,044,106, 4,829,106 and 1,667,466 shares (122,395) (117,254) (31,719)
------------------ ----------------- -----------------
TOTAL STOCKHOLDERS' EQUITY 144,982 164,023 203,968
------------------ ----------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 231,557 $ 439,184 $ 287,917
================== ================= =================
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
(in thousands)
(Unaudited)
November 30, November 30,
2005 2004
------------------ -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (9,651) $ (4,317)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 2,155 2,226
Loss (gain) on sale of assets 28 (10)
Equity in net loss of affiliate 814 738
Foreign exchange gain (183) (106)
Accretion of debt discount 113 194
Minority interest in earnings of subsidiaries 832 2,336
Stock-based compensation expense 660 -
Change in deferred income taxes 123 3,209
Cumulative effect of accounting change 555 -
Changes in assets and liabilities:
Receivables 215,141 169,892
Inventories (39,469) (31,778)
Prepaid expenses 373 371
Intangibles and other assets (242) (254)
Accounts payable 7,410 (1,194)
Accrued expenses (182,843) (158,203)
Income taxes (8,990) (6,397)
------------------ -----------------
Net cash used in operating activities (13,174) (23,293)
------------------ -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (2,350) (1,781)
Sale of investments and property 23 12
Investment in affiliate (700) (800)
------------------ -----------------
Net cash used in investing activities (3,027) (2,569)
------------------ -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of short-term debt (5,800) -
Dividends paid (5,549) (4,757)
Minority interest in dividends paid by subsidiary - (359)
Payments to acquire treasury stock (5,141) -
Proceeds from exercise of stock options 231 1,675
------------------ -----------------
Net cash used in financing activities (16,259) (3,441)
------------------ -----------------
EFFECTS OF FOREIGN CURRENCY EXCHANGE RATES 533 938
NET DECREASE IN CASH AND CASH EQUIVALENTS (31,927) (28,365)
CASH AND CASH EQUIVALENTS, August 31 93,075 149,587
------------------ -----------------
CASH AND CASH EQUIVALENTS, November 30 $ 61,148 $ 121,222
================== =================
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the three months for:
Interest, net of capitalized interest $ - $ -
Income taxes paid/(refunded) $ $3,437 $ (128)
Non-cash financing activities:
Tax benefit of stock option exercises $ 12 $ 211