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 THIRD QUARTER AND
NINE-MONTH OPERATING RESULTS
Increased Cotton Acreage and Market Share Drives Record Quarterly Revenues of
$287 Million
Generates Third Quarter EPS of $1.28, after a $0.12 per share IPR&D Charge
Second Highest Quarterly Net Income Reported
-------------------------------------------------
SCOTT, MS, July 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 the third quarter and
nine-month period ended May 31, 2006.
Third Quarter Results
Net income for the 2006 third quarter was $1.28 per diluted share,
compared to last year's third quarter net income of $0.91 per diluted share.
Third quarter earnings were reduced by charges of $0.02 per diluted share
related to Pharmacia/Monsanto litigation expenses and $0.12 per diluted share
related to the write-off of acquired in-process research and development
("IPR&D") and related transaction costs from the previously announced
acquisition of Syngenta's global cotton seed assets. The net income reported by
the Company for the third quarter represents the second highest net income ever
reported for a single quarter, behind only the second quarter of 2000, which
included pre-tax income of $71 million from an unusual item. In the prior year
third quarter, Pharmacia/Monsanto litigation expenses were $0.01 per diluted
share. The recently announced strategic licensing agreements for cotton, soybean
and other technologies with a DuPont subsidiary, Pioneer Hi-Bred International,
Inc. will be accounted for in the fourth quarter.
Revenues of $286.6 million reported for the 2006 third quarter,
compared to $203.3 million for prior year quarter, are the highest ever for the
Company in a single quarter. Revenues were impacted by: (1) a significant
increase in units sold, due to an increase in cotton acreage and an increase in
market share in our key markets in the states east of Texas; (2) higher
technology fees per unit; (3) a shift in our sales mix to more premium-priced,
stacked-trait varieties; and (4) premium seed treatment revenues, partially
offset by higher sales allowances. International revenues were slightly higher
than the prior-year quarter, due to a shift in sales into the third quarter in
2006 in both Mexico and Spain, and higher unit sales in Turkey. Earnings were
also impacted in the third 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
share-based compensation costs.
Nine-Month Results
After charges of $0.05 per diluted share related to Pharmacia/Monsanto
litigation expenses and $0.12 related to the aforementioned IPR&D write-off, net
income for the 2006 nine-month period was $1.43 per diluted share, compared to
net income of $1.28 per diluted share for the same period last year. Net income
in the 2005 nine-month period included a reduction of $0.06 per diluted share
for Pharmacia/Monsanto litigation expenses.
Record revenues for the 2006 nine-month period were $411.4 million,
compared to $340.6 million in the prior year. Revenues were impacted by an
increase in cotton acreage and the aforementioned market share factors.
International sales were lower for the nine month period due to acreage
reductions, government regulations and exchange rates in certain markets.
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 share-based
compensation costs.
Tom Jagodinski, President and Chief Executive Officer, said, "Our
quarter and year-to-date results were strong, resulting largely from the
continued penetration and performance of our cotton germplasm and sales of
premium seed treatments. We are continuing to execute our strategy of
in-licensing new technologies from multiple partners to offer farmers more
technology choices. We are pleased to have completed the acquisition of
Syngenta's cotton seed assets in the quarter, as well as our recent strategic
licensing agreement with DuPont. Further, preliminary indications demonstrate an
increase in cotton acreage and we have expanded our market share in the high
value markets east of Texas."
Share Repurchase Program
From September 1, 2005 through June 30, 2006, D&PL repurchased 808,494
shares at an aggregate purchase price of approximately $19.7 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.
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
1-800-374-0532 (International, 706-634-0148) and access code 1683562. 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 Thursday, July 6, 2006 through midnight EDT/
11:00 p.m. CDT on Thursday, July 13, 2006 by dialing 800-642-1687
(International, 706-645-9291) and entering the access code 1683562.
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,
2006 2005
----------------- ------------------
NET SALES AND LICENSING FEES $ 286,618 $ 203,320
COST OF SALES 184,696 129,747
----------------- ------------------
GROSS PROFIT 101,922 73,573
----------------- ------------------
OPERATING EXPENSES:
Research and development 6,631 5,781
Selling 3,793 3,706
General and administrative 9,163 6,143
In-process research and development and related transactional costs 7,042 -
----------------- ------------------
Total operating expenses 26,629 15,630
----------------- ------------------
OPERATING INCOME 75,293 57,943
INTEREST (EXPENSE) INCOME, NET (341) 336
OTHER EXPENSE, NET (1,336) (851)
EQUITY IN NET LOSS OF AFFILIATE (821) (781)
MINORITY INTEREST IN LOSS OF SUBSIDIARIES 307 394
----------------- ------------------
INCOME BEFORE INCOME TAXES 73,102 57,041
INCOME TAX EXPENSE 25,424 20,757
----------------- ------------------
NET INCOME 47,678 36,284
DIVIDENDS ON PREFERRED STOCK (160) (128)
----------------- ------------------
NET INCOME APPLICABLE TO COMMON SHARES $ 47,518 $ 36,156
================= ==================
BASIC EARNINGS PER SHARE $ 1.33 $ 0.94
================= ==================
NUMBER OF SHARES USED IN BASIC EARNINGS PER SHARE
CALCULATIONS 35,734 38,416
================= ==================
DILUTED EARNINGS PER SHARE $ 1.28 $ 0.91
================= ==================
NUMBER OF SHARES USED IN DILUTED EARNINGS PER SHARE
CALCULATIONS 37,123 39,839
================= ==================
DIVIDENDS PER COMMON SHARE $ 0.15 $ 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,
2006 2005
----------------- ------------------
NET SALES AND LICENSING FEES $ 411,422 $ 340,633
COST OF SALES 265,505 213,343
----------------- ------------------
GROSS PROFIT 145,917 127,290
----------------- ------------------
OPERATING EXPENSES:
Research and development 18,416 15,857
Selling 11,110 10,258
General and administrative 22,616 15,587
In-process research and development and related transactional costs 7,042 -
----------------- ------------------
Total operating expenses 59,184 41,702
----------------- ------------------
OPERATING INCOME 86,733 85,588
INTEREST INCOME, NET 864 1,435
OTHER EXPENSE, NET (3,270) (3,331)
EQUITY IN NET LOSS OF AFFILIATE (2,415) (2,167)
MINORITY INTEREST IN EARNINGS OF SUBSIDIARIES (394) (1,951)
----------------- ------------------
INCOME BEFORE INCOME TAXES 81,518 79,574
INCOME TAX EXPENSE 28,616 28,447
----------------- ------------------
NET INCOME 52,902 51,127
DIVIDENDS ON PREFERRED STOCK (480) (384)
----------------- ------------------
NET INCOME APPLICABLE TO COMMON SHARES $ 52,422 $ 50,743
================= ==================
BASIC EARNINGS PER SHARE $ 1.46 $ 1.32
================= ==================
NUMBER OF SHARES USED IN BASIC EARNINGS PER SHARE
CALCULATIONS 35,832 38,573
================= ==================
DILUTED EARNINGS PER SHARE $ 1.43 $ 1.28
================= ==================
NUMBER OF SHARES USED IN DILUTED EARNINGS PER SHARE
CALCULATIONS
37,093 39,928
================= ==================
DIVIDENDS PER COMMON SHARE $ 0.45 $ 0.36
================= ==================
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,
2006 2005 2005
------------------ ----------------- -----------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 141,018 $ 93,075 $ 111,287
Receivables, net 315,254 228,800 258,087
Inventories 32,784 26,625 29,099
Prepaid expenses 816 1,874 1,024
Deferred income taxes 10,792 6,305 5,230
------------------ ----------------- -----------------
Total current assets 500,664 356,679 404,727
PROPERTY, PLANT AND EQUIPMENT, NET 59,778 60,158 61,255
EXCESS OF COST OVER NET ASSETS OF
BUSINESSES ACQUIRED 4,183 4,183 4,183
INTANGIBLES, NET 8,170 5,960 5,797
OTHER ASSETS 1,268 1,446 1,492
DEFERRED INCOME TAXES 10,574 10,758 7,603
------------------ ----------------- -----------------
TOTAL ASSETS $ 584,637 $ 439,184 $ 485,057
================== ================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES :
Notes payable and current maturities of long-term debt $ 8,064 $ 10,078 $ 11,491
Accounts payable 9,194 18,218 11,820
Accrued expenses 329,114 221,824 242,960
Income taxes payable 31,168 12,893 19,995
------------------ ----------------- -----------------
Total current liabilities 377,540 263,013 286,266
------------------ ----------------- -----------------
LONG-TERM DEBT 3,578 7,271 11,217
------------------ ----------------- -----------------
MINORITY INTEREST IN SUBSIDIARIES 5,271 4,877 5,219
------------------ ----------------- -----------------
COMMITMENTS AND CONTINGENCIES (Note 10 )
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, and 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;
41,521,498, 40,928,929 and 40,857,834 shares issued;
35,970,798, 36,099,823 and 36,138,728 shares outstanding 4,152 4,093 4,086
Capital in excess of par value 97,041 81,640 79,941
Retained earnings 236,055 199,742 213,891
Accumulated other comprehensive loss (4,520) (4,305) (1,390)
Treasury stock, at cost; 5,550,700, 4,829,106 and 4,719,106 shares (134,587) (117,254) (114,280)
------------------ ----------------- -----------------
TOTAL STOCKHOLDERS' EQUITY 198,248 164,023 182,355
------------------ ----------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 584,637 $ 439,184 $ 485,057
================== ================= =================
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
(in thousands)
(Unaudited)
May 31, May 31,
2006 2005
------------------ -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 52,902 $ 51,127
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 7,027 6,461
Loss (gain) on sale of assets 54 (309)
In-process research and development and related charges 7,042 -
Excess tax benefits from stock-based compensation arrangements (1,285) -
Equity in net loss of affiliate 2,415 2,167
Foreign exchange loss (gain) 374 (95)
Accretion of debt discount 340 583
Minority interest in earnings of subsidiaries 394 1,951
Stock-based compensation expense 2,493 67
Change in deferred income taxes (4,301) 4,574
Changes in assets and liabilities:
Receivables (86,467) (72,774)
Inventories (5,978) 1,595
Prepaid expenses 1,020 897
Intangibles and other assets 50 (382)
Accounts payable (9,424) (12,351)
Accrued expenses 107,056 54,853
Income taxes payable 18,248 13,494
------------------ -----------------
Net cash provided by operating activities 91,960 51,858
------------------ -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (6,246) (5,129)
Sale of investments and property 72 433
Acquisition of business and in-process research and development (9,662) -
Investment in affiliate (2,325) (2,230)
------------------ -----------------
Net cash used in investing activities (18,161) (6,926)
------------------ -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of short-term debt (51,049) -
Dividends paid (16,589) (14,044)
Proceeds from short-term debt 45,000 -
Minority interest in dividends paid by subsidiary - (1,318)
Payments to acquire treasury stock (17,333) (82,561)
Proceeds from exercise of stock options 12,968 13,176
Excess tax benefits from stock-based compensation arrangements 1,285 -
------------------ -----------------
Net cash used in financing activities (25,718) (84,747)
------------------ -----------------
EFFECTS OF FOREIGN CURRENCY EXCHANGE RATES (138) 1,515
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 47,943 (38,300)
CASH AND CASH EQUIVALENTS, August 31 93,075 149,587
------------------ -----------------
CASH AND CASH EQUIVALENTS, May 31 $ 141,018 $ 111,287
================== =================
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the nine months for:
Interest, net of capitalized interest $ 238 $ -
Income taxes paid $ 12,381 $ 9,261
Noncash financing activities:
Tax benefit of equity awards $ 2,067 $ 2,518