NEWS
Delta and Pine Land Company
P.O. Box 157
Scott, Mississippi 38772
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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 FOURTH QUARTER
AND FISCAL YEAR END 2006 FINANCIAL RESULTS
Reports Record Annual Revenues of $418 million
Announces Fiscal 2007 First Quarter Dividend of $0.17 per share
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SCOTT, MS, OCTOBER 24, 2006 -- 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 fourth quarter and year ended
August 31, 2006.
Fourth Quarter Results
Net sales were $6.2 million in the 2006 fourth quarter, a decrease from
2005 fourth quarter net sales of $25.5 million. After charges of $0.28 per
diluted share related to the write-off of acquired in-process research and
development ("IPR&D") and related transaction expenses from the acquisition of
technology licenses from DuPont, and $0.15 per diluted share from expenses
incurred in connection with the merger agreement with Monsanto, net loss for the
2006 fourth quarter was $0.91 per diluted share, an increase from last year's
fourth quarter net loss of $0.24 per diluted share. In the 2005 fourth quarter,
net loss increased by $0.01 per diluted share, due to expenses related to the
Pharmacia/Monsanto litigation.
Excluding the IPR&D charge and merger costs incurred in the fourth
quarter, fourth quarter 2006 net loss was higher than the prior year period,
primarily due to increased legal and professional fees and costs associated with
D&PL's crop loss and replant programs. These programs were adversely impacted by
drought conditions in Texas that persisted throughout the growing season. During
this period, areas east of Texas were plagued by early season cool weather,
followed by drought conditions for the remainder of the growing season. The
combination of these weather conditions resulted in unprecedented crop loss and
replants for D&PL's farmer customers in the fourth quarter.
Annual Operating Results
The Company recorded net sales of $417.6 million for the 2006 fiscal
year, compared to $366.1 million in the prior year. The 14% increase in sales
was primarily driven by increased domestic revenues, due to higher per-unit
technology fees, a 7% increase in overall unit sales volume, and a shift in
sales to higher-value stacked trait units, partially offset by higher sales
incentive payments and payments under D&PL's crop loss and replant programs. The
increase in domestic revenues was partially offset by a decrease in
international revenues, primarily resulting from acreage reductions, government
regulations, competitive products and exchange rates in certain markets.
After charges of $0.67 per diluted share ($0.46 from IPR&D charges,
$0.15 from merger related costs, and $0.06 from Pharmacia/Monsanto litigation
expenses), net income for fiscal 2006 was $0.54 per diluted share, compared to
net income of $1.08 per diluted share for fiscal 2005. Fiscal 2005 net income
included a reduction of $0.07 per diluted share for expenses related to the
Pharmacia/Monsanto litigation.
An increase in operating expenses for the 2006 fiscal year versus the
2005 fiscal year, excluding the 2006 fiscal year IPR&D charges, was primarily
due to higher legal and professional fees, research and development expenses
related to developing products with new technologies, and greater compensation
and benefits costs.
Tom Jagodinski, President and Chief Executive Officer, said, "Revenues
for the 2006 fiscal year represent the highest recorded in our 91 year history.
Our 2006 results are indicative of the strong performance of our cotton
germplasm throughout the cotton belt. Excluding the nearly $11 million spent on
Monsanto related arbitration and legal costs, our core business earnings grew by
18% in a period where domestic cotton acreage only grew by approximately 7%. We
are pleased that three of our top performing varieties were planted on
approximately 35% of the domestic cotton acreage in 2006, again demonstrating
the value of our long-term research and development efforts. Finally, we are
optimistic about the pending merger with Monsanto and the value it will create
for both our shareholders and our farmer customers."
Stock Repurchase Plan
During fiscal 2006, the Company purchased approximately 808,000 shares
of its common stock at an aggregate purchase price of $19.8 million under the
$50 million stock repurchase program initiated in June, 2005. Pursuant to the
merger agreement executed with Monsanto, D&PL is precluded from repurchasing its
own shares.
Quarterly Dividend
The Company also announced that its Board of Directors has declared a
dividend of $0.17 per share for the first quarter of fiscal 2007. The dividend
will be paid on December 14, 2006 to shareholders of record on November 30,
2006.
2007 Earnings Outlook
The Company also announced that it will provide earnings guidance for
fiscal year 2007 once the harvest is complete and 2007 U.S. cotton planting
estimates have been made.
Conference Call
D&PL will hold a conference call this morning at 9:30 a.m. ET/8:30 a.m.
CT to review this announcement. The call can be accessed by dialing 800-374-0532
(International, 706-634-0148) and access code 9048397. 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 Tuesday, October 24, 2006, through midnight ET/11:00
p.m. CT on Tuesday, October 31, 2006, by dialing 800-642-1687 (International,
706-645-9291) and entering the access code 9048397.
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.
In connection with Monsanto Company's ("Monsanto") proposed acquisition of Delta
and Pine Land Company ("D&PL") pursuant to the terms of an Agreement and Plan of
Merger by and among D&PL, Monsanto, and a wholly-owned subsidiary of Monsanto,
D&PL has filed a preliminary proxy statement with the Securities and Exchange
Commission (the "SEC"). Investors are urged to read the preliminary proxy
statement (including all amendments and supplements to it) because it contains
important information.
Investors may obtain free copies of the preliminary proxy statement when it
becomes available, as well as other filings containing information about D&PL,
without charge, at the SEC's Internet site (www.sec.gov). These documents may
also be obtained for free from D&PL's Investor Relations web site
(www.deltaandpine.com) or by directing a request to D&PL at: Delta and Pine Land
Company, Corporate Offices, P.O. Box 157, Scott, MS 38772.
D&PL and its respective directors and executive officers and other members of
management and employees are potential participants in the solicitation of
proxies from D&PL's stockholders in respect of the proposed transaction.
Information regarding D&PL's directors and executive officers is available in
D&PL's proxy statement for its 2006 annual meeting of stockholders, filed with
the SEC on November 29, 2005. Additional information regarding the interests of
such potential participants in the proposed transaction will be included in the
proxy statement to be filed with the SEC in connection with the proposed
transaction.
This written communication contains forward-looking statements that involve
risks and uncertainties concerning Monsanto's proposed acquisition of D&PL,
D&PL's expected financial performance, as well as D&PL's strategic and
operational plans. Actual events or results may differ materially from those
described in this written communication due to a number of risks and
uncertainties. The potential risks and uncertainties include, among others, the
possibility that the transaction will not close or that the closing may be
delayed; the reaction of customers of Monsanto and D&PL to the transaction;
Monsanto's ability to successfully integrate D&PL's operations and employees;
and general economic conditions. In addition, please refer to the documents that
Monsanto and D&PL file with the SEC on Forms 10-K, 10-Q and 8-K. The filings by
each of Monsanto and D&PL identify and address other important factors that
could cause their respective financial and operational results to differ
materially from those contained in the forward-looking statements set forth in
this written communication. Monsanto and D&PL are under no duty to update any of
the forward-looking statements after the date of this press release to conform
to actual results.
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
(in thousands, except per share amounts)
(Unaudited)
August 31, August 31,
2006 2005
----------------- ------------------
NET SALES AND LICENSING FEES $ 6,212 $ 25,452
COST OF SALES 10,136 20,721
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GROSS (LOSS) PROFIT (3,924) 4,731
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OPERATING EXPENSES:
Research and development 6,548 7,158
Selling 3,073 3,273
General and administrative 10,497 8,173
In-process research and development and related transactional costs 20,543 -
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Total operating expenses 40,661 18,604
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OPERATING LOSS (44,585) (13,873)
INTEREST INCOME, NET 1,303 759
OTHER EXPENSE, NET (7,838) (979)
EQUITY IN NET LOSS OF AFFILIATE (674) (620)
MINORITY INTEREST IN LOSS OF SUBSIDIARIES 244 342
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LOSS BEFORE INCOME TAXES (51,550) (14,371)
INCOME TAX BENEFIT (18,867) (5,801)
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NET LOSS (32,683) (8,570)
DIVIDENDS ON PREFERRED STOCK (160) (160)
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NET LOSS APPLICABLE TO COMMON SHARES $ (32,843) $ (8,730)
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BASIC AND DILUTED LOSS PER SHARE $ (0.91) $ (0.24)
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NUMBER OF SHARES USED IN BASIC AND DILUTED LOSS PER SHARE
CALCULATIONS 36,202 36,133
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DIVIDENDS PER COMMON SHARE $ 0.15 $ 0.15
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DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE TWELVE MONTHS ENDED
(in thousands, except per share amounts)
(Unaudited)
August 31, August 31,
2006 2005
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NET SALES AND LICENSING FEES $ 417,633 $ 366,085
COST OF SALES 275,641 234,064
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GROSS PROFIT 141,992 132,021
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OPERATING EXPENSES:
Research and development 24,965 23,015
Selling 14,182 13,531
General and administrative 33,112 23,760
In-process research and development and related transactional costs 27,585 -
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Total operating expenses 99,844 60,306
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OPERATING INCOME 42,148 71,715
INTEREST INCOME, NET 2,167 2,194
OTHER EXPENSE, NET (11,108) (4,310)
EQUITY IN NET LOSS OF AFFILIATE (3,089) (2,787)
MINORITY INTEREST IN EARNINGS OF SUBSIDIARIES (150) (1,609)
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INCOME BEFORE INCOME TAXES 29,968 65,203
INCOME TAX EXPENSE 9,749 22,646
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NET INCOME 20,219 42,557
DIVIDENDS ON PREFERRED STOCK (640) (544)
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NET INCOME APPLICABLE TO COMMON SHARES $ 19,579 $ 42,013
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BASIC EARNINGS PER SHARE $ 0.55 $ 1.11
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NUMBER OF SHARES USED IN BASIC EARNINGS PER SHARE
CALCULATIONS 35,907 37,958
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DILUTED EARNINGS PER SHARE $ 0.54 $ 1.08
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NUMBER OF SHARES USED IN DILUTED EARNINGS PER SHARE
CALCULATIONS
37,209 39,370
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DIVIDENDS PER COMMON SHARE $ 0.60 $ 0.51
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DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(Unaudited)
August 31, August 31,
2006 2005
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 69,691 $ 93,075
Marketable securities 27,600 -
Receivables, net 270,354 228,800
Inventories 31,600 26,625
Prepaid expenses 2,173 1,874
Deferred income taxes 7,849 6,305
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Total current assets 409,267 356,679
PROPERTY, PLANT AND EQUIPMENT, NET 61,066 60,158
EXCESS OF COST OVER NET ASSETS OF
BUSINESSES ACQUIRED 4,183 4,183
INTANGIBLES, NET 8,276 5,960
OTHER ASSETS 1,079 1,446
DEFERRED INCOME TAXES 22,383 10,758
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TOTAL ASSETS $ 506,254 $ 439,184
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES :
Notes payable and current maturities of long-term debt $ 6,428 $ 10,078
Accounts payable 28,866 18,218
Accrued expenses 275,643 221,824
Income taxes payable 14,179 12,893
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Total current liabilities 325,116 263,013
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LONG-TERM DEBT 1,455 7,271
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MINORITY INTEREST IN SUBSIDIARIES 5,027 4,877
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COMMITMENTS AND CONTINGENCIES
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 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
Common stock, par value $0.10 per share; 100,000,000 shares authorized;
42,053,167 and 40,928,929 shares issued;
36,415,567 and 36,099,823 shares outstanding 4,205 4,093
Capital in excess of par value 112,099 81,640
Retained earnings 197,750 199,742
Accumulated other comprehensive loss (2,489) (4,305)
Treasury stock, at cost; 5,637,600 and 4,829,106 shares (137,016) (117,254)
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TOTAL STOCKHOLDERS' EQUITY 174,656 164,023
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 506,254 $ 439,184
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DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED
(in thousands)
(Unaudited)
August 31, August 31,
2006 2005
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 20,219 $ 42,557
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 9,392 8,661
Loss on sale of assets 63 115
In-process research and development and related charges 27,585 -
Excess tax benefits from stock-based compensation arrangements (3,114) -
Equity in net loss of affiliate 3,089 2,787
Foreign exchange loss (gain) 267 (101)
Accretion of debt discount 453 777
Minority interest in earnings of subsidiaries 150 1,609
Stock-based compensation expense 3,255 508
Change in deferred income taxes (13,162) 2,043
Changes in assets and liabilities:
Receivables (41,497) (43,370)
Inventories (5,050) 4,183
Prepaid expenses (306) 43
Intangibles and other assets (176) (540)
Accounts payable 10,455 (6,068)
Accrued expenses 55,480 31,796
Income taxes 4,505 4,027
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Net cash provided by operating activities 71,608 49,027
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities (41,600) -
Sales of marketable securities 14,000 50,000
Purchases of property and equipment (9,691) (6,669)
Sale of investments and property 97 451
Acquisition of Vikki's Agrotech Limited (2,620) -
In-process research and development and related charges (27,585) -
Investment in affiliate (3,125) (2,980)
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Net cash (used in) provided by investing activities (70,524) 40,802
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CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of short-term debt (55,399) (5,800)
Proceeds from short-term debt 45,474 247
Dividends paid (22,211) (19,623)
Minority interest in dividends paid by subsidiary - (1,318)
Payments to acquire treasury stock (19,762) (85,535)
Proceeds from exercise of stock options 24,041 14,103
Excess tax benefits from stock-based compensation arrangements 3,114 -
------------------ -----------------
Net cash used in financing activities (24,743) (97,926)
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EFFECTS OF FOREIGN CURRENCY EXCHANGE RATES 275 1,585
NET DECREASE IN CASH AND CASH EQUIVALENTS (23,384) (6,512)
CASH AND CASH EQUIVALENTS, beginning of year 93,075 99,587
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CASH AND CASH EQUIVALENTS, end of year $ 69,691 $ 93,075
================== =================
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the twelve months for:
Interest, net of capitalized interest $ 244 $ -
Income taxes paid $ 18,088 $ 13,804
Noncash operating activities:
Deferred taxes resulting from change in minimum pension liability $ (1,030) $ 1,276
Noncash financing activities:
Tax benefit of stock option exercises $ 4,245 $ 2,856