NEWS
Delta and Pine Land Company
P.O. Box 157
Scott, Mississippi 38772
__________________________________________________________________________
Contact: Investors Media
Tom Jagodinski Jonathan Gasthalter/Cassandra Bujarski
Delta and Pine Land Company Citigate Sard Verbinnen
662-742-4518 212-687-8080
DELTA AND PINE LAND COMPANY ANNOUNCES SECOND QUARTER AND
SIX-MONTH OPERATING RESULTS
Raises 2006 Earnings Guidance to $1.15 to $1.25 Per Share,
After Expected Litigation Expenses of $0.10 Per Share
USDA Planting Intentions Report Indicates an Increase in Cotton Acreage of 3%
Repurchases $15 million of Common Shares Through March 31, 2006
-------------------------------------------------
SCOTT, MS, April 4, 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 the second quarter and
six-month period ended February 28, 2006.
Second Quarter Results
Net income for the 2006 second quarter was $0.40 per diluted share,
compared to last year's second quarter net income of $0.48 per diluted share.
Second quarter earnings include charges of $0.01 per diluted share related to
Pharmacia/Monsanto litigation expenses and a benefit of $0.01 per diluted share
related to the reversal of the cumulative effect of a change in accounting that
was recorded in the first quarter related to stock-based compensation expense.
In the prior year second quarter, Pharmacia/Monsanto litigation expenses were
$0.02 per diluted share.
Revenues were $115.0 million in the 2006 second quarter, compared to
$119.9 million recorded in the year-ago quarter. The revenue decrease was
primarily attributable to a shift in domestic shipments from the second quarter
to the third quarter, offset by increased prices of both seed and technology.
Additionally, sales were impacted by higher sales allowances and lower
international sales units. Consistent with the U.S., sales volumes in Mexico and
Greece were lower primarily due to a shift in product shipments from the second
quarter to the third quarter. Earnings were also impacted in the second quarter
of 2006 by increased spending on research and development activities related to
new technologies, higher professional fees related to litigation (other than the
Pharmacia/Monsanto lawsuit), and stock-based compensation costs.
Six Month Results
After charges of $0.03 per diluted share related to Pharmacia/Monsanto
litigation expenses, net income for the 2006 six-month period was $0.14 per
diluted share, compared to net income of $0.37 per diluted share for the same
period last year. Net income included a reduction of $0.05 per diluted share for
Pharmacia/Monsanto litigation expenses in the 2005 six-month period.
Revenues for the 2006 six-month period were $124.8 million, compared to
$137.3 million in the prior year. Revenues were impacted by a shift in domestic
product shipments from the second quarter to the third quarter, offset by
increased prices of both seed and technology, higher sales allowances and lower
international sales. Sales volumes in South America were impacted by a reduction
in the cotton acreage planted in Brazil, which occurred in the first quarter.
Sales volumes in Mexico and Greece were lower versus the prior year period,
primarily due to a shift in sales from the second quarter to the third quarter.
Earnings were also impacted by increased spending on research and development
activities related to new technologies, higher professional fees related to
litigation (other than the Pharmacia/Monsanto lawsuit), and stock-based
compensation costs.
Tom Jagodinski, President and Chief Executive Officer, said, "While our
second quarter and six-month results are lower than the prior year periods, we
continue to be confident in our business outlook. Our business is strong, and,
based on an expected increase in cotton acreage, we are raising our 2006
guidance. We believe we have an adequate supply of seed for our key products to
meet expected demand. Further, we continue to rapidly develop new elite
varieties with new technologies from Monsanto, Syngenta and DuPont and are
pleased with the progress to date."
Share Repurchase Program
From September 1, 2005 through March 31, 2006, D&PL repurchased 650,000
shares at an aggregate purchase price of approximately $15 million under the
June 30, 2005, share repurchase program. The Company expects to continue
repurchasing 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.
Increased 2006 Earnings Guidance
For the fiscal year 2006, D&PL is raising its earnings guidance to
$1.15 to $1.25 per diluted share, after charges of $0.10 per diluted share
related to its lawsuit against Pharmacia and Monsanto and has issued third
quarter guidance of $1.28 to $1.38 per diluted share. Previously, D&PL expected
to report 2006 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 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, expenses related to stock-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 now expects cotton plantings in the U.S. to increase
over 2005 plantings of 14.2 million acres by 3%, based on various industry
estimates. The Company's updated earnings guidance is based on increased cotton
acreage as well as assumptions regarding the maintenance of our market share and
product/sales mix targets being met. The USDA issued its Planting Intentions
report on March 31, 2006 and has estimated 2006 cotton acreage of 14.6 million
acres, a 3% increase, or 439,000 acres, over the prior year.
Conference Call
D&PL will hold a conference call this morning at 11:00 a.m. EDT/10:00
a.m. CDT to review this announcement. The call can be accessed by dialing
800-374-0532 (International, 706-634-0148) and access code 7109872. 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 EDT/ 11:00 a.m. CDT on Tuesday, April 4, 2006 through midnight EDT/
11:00 p.m. CDT on Tuesday, April 11, 2006 by dialing 800-642-1687
(International, 706-645-9291) and entering the access code 7109872.
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)
February 28, February 28,
2006 2005
----------------- ------------------
NET SALES AND LICENSING FEES $ 114,977 $ 119,859
COST OF SALES 74,145 75,175
----------------- ------------------
GROSS PROFIT 40,832 44,684
----------------- ------------------
OPERATING EXPENSES:
Research and development 6,182 5,646
Selling 3,917 3,486
General and administrative 7,333 4,905
----------------- ------------------
17,432 14,037
----------------- ------------------
OPERATING INCOME 23,400 30,647
INTEREST INCOME, NET 177 641
OTHER EXPENSE, NET (730) (973)
EQUITY IN NET LOSS OF AFFILIATE (780) (648)
MINORITY INTEREST IN LOSS (EARNINGS) OF SUBSIDIARIES 131 (9)
----------------- ------------------
INCOME BEFORE INCOME TAXES 22,198 29,658
INCOME TAX EXPENSE (7,680) (10,498)
----------------- ------------------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 14,518 19,160
CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET OF TAX 358 -
----------------- ------------------
NET INCOME 14,876 19,160
DIVIDENDS ON PREFERRED STOCK (160) (128)
----------------- ------------------
NET INCOME APPLICABLE TO COMMON SHARES $ $
14,716 19,032
================= ==================
BASIC EARNINGS PER SHARE, BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE $ 0.41 $ 0.49
================= ==================
CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET OF TAX $ 0.01 $ -
================= ==================
BASIC EARNINGS PER SHARE $ 0.42 $ 0.49
================= ==================
NUMBER OF SHARES USED IN BASIC EARNINGS
PER SHARE CALCULATIONS 35,688 38,763
================= ==================
DILUTED EARNINGS PER SHARE, BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE $ 0.39 $ 0.48
================= ==================
CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET OF TAX $ 0.01 $ -
================= ==================
DILUTED EARNINGS PER SHARE $ 0.40 $ 0.48
================= ==================
NUMBER OF SHARES USED IN DILUTED EARNINGS
PER SHARE CALCULATIONS
36,914 40,276
================= ==================
DIVIDENDS PER COMMON SHARE $ 0.15 $ 0.12
================= ==================
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED
(in thousands, except per share amounts)
(Unaudited)
February 28, February 28,
2006 2005
----------------- ------------------
NET SALES AND LICENSING FEES $ 124,803 $ 137,313
COST OF SALES 80,809 83,596
----------------- ------------------
GROSS PROFIT 43,994 53,717
----------------- ------------------
OPERATING EXPENSES:
Research and development 11,786 10,076
Selling 7,316 6,552
General and administrative 13,452 9,444
----------------- ------------------
32,554 26,072
----------------- ------------------
OPERATING INCOME 11,440 27,645
INTEREST INCOME, NET 1,205 1,099
OTHER EXPENSE, NET (1,933) (2,480)
EQUITY IN NET LOSS OF AFFILIATE (1,594) (1,386)
MINORITY INTEREST IN EARNINGS OF SUBSIDIARIES (701) (2,345)
----------------- ------------------
INCOME BEFORE INCOME TAXES 8,417 22,533
INCOME TAX EXPENSE (3,192) (7,690)
----------------- ------------------
NET INCOME 5,225 14,843
DIVIDENDS ON PREFERRED STOCK (320) (256)
----------------- ------------------
NET INCOME APPLICABLE TO COMMON SHARES $ 4,905 $ 14,587
================= ==================
BASIC EARNINGS PER SHARE $ 0.14 $ 0.38
================= ==================
NUMBER OF SHARES USED IN BASIC EARNINGS
PER SHARE CALCULATIONS 35,882 38,653
================= ==================
DILUTED EARNINGS PER SHARE $ 0.14 $ 0.37
================= ==================
NUMBER OF SHARES USED IN DILUTED EARNINGS
PER SHARE CALCULATIONS 37,145 40,124
================= ==================
DIVIDENDS PER COMMON SHARE $ 0.30 $ 0.24
================= ==================
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(Unaudited)
February 28, August 31, February 28,
2006 2005 2005
------------------- ----------------- -----------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 13,420 $ 93,075 $ 110,632
Receivables, net 138,193 228,800 139,330
Inventories 69,389 26,625 56,861
Prepaid expenses 1,657 1,874 2,038
Deferred income taxes 6,047 6,305 6,725
------------------- ----------------- -----------------
Total current assets 228,706 356,679 315,586
PROPERTY, PLANT AND EQUIPMENT, NET 61,507 60,158 62,005
EXCESS OF COST OVER NET ASSETS OF
BUSINESSES ACQUIRED 4,183 4,183 4,183
INTANGIBLES, net 8,459 5,960 5,757
OTHER ASSETS 1,214 1,446 1,545
DEFERRED INCOME TAXES 11,238 10,758 9,685
------------------- ----------------- -----------------
TOTAL ASSETS $ 315,307 $ 439,184 $ 398,761
=================== ================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES :
Notes payable and current maturities of long-term debt $ 8,448 $ 10,078 $ 11,405
Accounts payable 21,776 18,218 19,466
Accrued expenses 120,814 221,824 108,508
Income taxes payable 8,872 12,893 10,712
------------------- ----------------- -----------------
Total current liabilities 159,910 263,013 150,091
------------------- ----------------- -----------------
LONG-TERM DEBT 3,471 7,271 11,109
------------------- ----------------- -----------------
MINORITY INTEREST IN SUBSIDIARIES 5,577 4,877 6,572
------------------- ----------------- -----------------
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;
40,965,695, 40,928,929 and 40,788,040 shares issued;
35,495,589, 36,099,823 and 39,120,574 shares outstanding 4,097 4,093 4,079
Capital in excess of par value 83,989 81,640 78,340
Retained earnings 193,933 199,742 182,071
Accumulated other comprehensive loss (3,440) (4,305) (1,889)
Treasury stock, at cost; 5,470,106, 4,829,106 and 1,667,466 shares (132,337) (117,254) (31,719)
------------------- ----------------- -----------------
TOTAL STOCKHOLDERS' EQUITY 146,349 164,023 230,989
------------------- ----------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 315,307 $ 439,184 $ 398,761
=================== ================= =================
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
(in thousands)
(Unaudited)
February 28, February 28,
2006 2005
------------------ -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 5,225 $ 14,843
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization 4,358 4,265
Loss (gain) on sale of assets 59 (323)
Equity in net loss of affiliate 1,594 1,386
Foreign exchange loss (gain) 33 (219)
Accretion of debt discount 227 389
Minority interest in earnings of subsidiaries 701 2,345
Stock-based compensation expense 1,641 -
Change in deferred income taxes (229) 974
Changes in assets and liabilities:
Receivables 90,695 45,851
Inventories (42,340) (26,260)
Prepaid expenses 226 (118)
Intangibles and other assets (52) (370)
Accounts payable 3,374 (4,591)
Accrued expenses (101,331) (79,431)
Income taxes (4,070) 3,987
------------------ -----------------
Net cash used in operating activities (39,889) (37,272)
------------------ -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (5,336) (3,561)
Sale of investments and property 23 388
Acquisition of Vikki's Agrotech Pvt. Ltd. (2,620) -
Investment in affiliate (1,525) (1,550)
------------------ -----------------
Net cash used in investing activities (9,458) (4,723)
------------------ -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of short-term debt (5,925) -
Dividends paid (11,034) (9,580)
Proceeds from short-term debt 266
Minority interest in dividends paid by subsidiary - (359)
Payments to acquire treasury stock (15,083) -
Proceeds from exercise of stock options 712 11,855
------------------ -----------------
Net cash (used in) provided by financing activities (31,064) 1,916
------------------ -----------------
EFFECTS OF FOREIGN CURRENCY EXCHANGE RATES 756 1,124
NET DECREASE IN CASH AND CASH EQUIVALENTS (79,655) (38,955)
CASH AND CASH EQUIVALENTS, August 31 93,075 149,587
------------------ -----------------
CASH AND CASH EQUIVALENTS, February 28 $ 13,420 $ 110,632
================== =================
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the six months for:
Interest, net of capitalized interest $ - $ -
Income taxes paid $ 6,859 $ 1,645
Non-cash financing activities:
Tax benefit of stock option exercises $ 708 $ 2,298