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 FIRST QUARTER
FISCAL 2007 OPERATING RESULTS
Provides 2007 Earnings Guidance of $1.10 to $1.20 Per Share,
After Certain Merger Expenses of $0.26 Per Share
Announces Fiscal 2007 Second Quarter Dividend of $0.17 per Share
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SCOTT, MS, December 27, 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, 2006. Due to the seasonal nature of the seed business, the Company
typically incurs losses in its first and fourth fiscal quarters.
After charges of $0.06 per diluted share related to expenses incurred
in connection with the Company's pending merger with Monsanto, net loss for the
2007 first quarter was $0.26 per diluted share. The Company recorded a 2006
first quarter loss of $0.27, after charges of $0.02 per diluted share related to
Pharmacia/Monsanto litigation expenses.
Revenues were $14.3 million in the 2007 first quarter, compared to $9.8
million in the year-ago quarter. The revenue increase was attributable to
international operations, particularly in South America and China, offset by
lower revenues in Australia and South Africa. South America sales volumes
benefited primarily from the introduction of transgenic cotton varieties in
Brazil as well as an increase in Brazilian cotton acreage. The introduction of
hybrids in China contributed to the increased sales volumes at our joint
ventures. Sales volumes in Australia continue to be impacted by lower cotton
acreage, due to drought-imposed water restrictions and competition. The decrease
in South Africa occurred as a result of lower cotton acreage, due to lower
cotton lint prices in relation to other crops, as well as dry weather
conditions. The net loss in the first quarter of 2007 also resulted from
increased operating expenses and costs associated with the Monsanto merger.
Tom Jagodinski, President and Chief Executive Officer, said, "We are
pleased with the launch of transgenic varieties in Brazil and the introduction
of hybrids in China. We are excited about our domestic product offerings for the
2007 growing season, including our top performing varieties as well as our
varieties containing Monsanto's second generation traits. Additionally, we
continue to dedicate resources to the development of the traits we have licensed
from DuPont and Syngenta, which are expected to be launched later this decade
and beyond. With respect to the pending merger with Monsanto, our shareholders
have approved the transaction; we continue to work with Monsanto on completing
the regulatory review process in order to obtain U. S. Department of Justice
clearance to complete the merger."
2007 Earnings Outlook
For the 2007 fiscal year, D&PL expects to report earnings per diluted
share in the range of $1.10 to $1.20, after charges of $0.26 per diluted share
related to expenses incurred in connection with its pending merger with
Monsanto. In accordance with the Company's historical practice, this earnings
guidance is based on the assumption that planted cotton acreage in the U.S. in
2007 will be consistent with that of 2006. The 2007 guidance takes into
consideration additional revenues expected from price increases and lower claims
under crop loss and replant programs, partially offset by higher production
costs per unit. Operating expenses are expected to be lower in 2007, primarily
due to a reduction in legal fees incurred in connection with the various
arbitration proceedings between D&PL and Monsanto, offset by an increase in
compensation-related costs.
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 that U.S. cotton plantings could decrease
compared to 2006. However, because it is too early to determine the extent and
the geographic areas in which planted cotton acreage could be reduced, the
Company's earnings guidance is based on the assumption that 2007 cotton acreage
will be the same as 2006, as well as on assumptions regarding maintaining our
market share and achieving our product/sales mix targets. [For illustrative
purposes, for every 500,000 acre decrease in planted cotton acreage in states
east of Texas, the Company estimates that its earnings per share could be
reduced by $0.12 to $0.14 per diluted share. Presently, industry forecasters
estimate that acreage in 2007 could be down as much as ten percent, due to an
expected increase in corn and soybean acres.] Once Delta and Pine Land has
enough information to make an informed estimate of 2007 acreage, the Company
will revise guidance as appropriate.
Quarterly Dividend
The Company also announced that its Board of Directors has declared a
dividend of $0.17 per share for the second quarter of fiscal 2007. The dividend
will be paid on March 14, 2007 to shareholders of record on February 28, 2007.
Conference Call
D&PL will hold a conference call this morning at 10:00 a.m. EST/ 9:00
a.m. CST to review this announcement. The call can be accessed by dialing
800-374-0532 (International, 706-634-0148) and access code 4640377. 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 11:00 a.m. EST/ 10:00 a.m. CST on Wednesday, December 27, 2006 through
midnight EST/ 11:00 p.m. CST on Wednesday, January 3, 2007 by dialing
800-642-1687 (International, 706-645-9291) and entering the access code 4640377.
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,
2006 2005
----------------- ------------------
NET SALES AND LICENSING FEES $14,255 $9,825
COST OF SALES 8,735 6,663
----------------- ------------------
GROSS PROFIT 5,520 3,162
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OPERATING EXPENSES:
Research and development 6,158 5,641
Selling 3,765 3,406
General and administrative 6,054 6,227
----------------- ------------------
15,977 15,274
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OPERATING LOSS (10,457) (12,112)
INTEREST INCOME, NET 1,570 1,028
OTHER EXPENSE, NET (4,419) (1,203)
EQUITY IN NET LOSS OF AFFILIATE (541) (814)
MINORITY INTEREST IN EARNINGS OF SUBSIDIARIES (1,672) (832)
----------------- ------------------
LOSS BEFORE INCOME TAXES (15,519) (13,933)
INCOME TAX BENEFIT (6,161) (4,488)
----------------- ------------------
NET LOSS (9,358) (9,445)
DIVIDENDS ON PREFERRED STOCK (181) (160)
----------------- ------------------
NET LOSS APPLICABLE TO COMMON SHARES $(9,539) $(9,605)
================= ==================
BASIC AND DILUTED NET LOSS PER SHARE $(0.26) $(0.27)
================= ==================
NUMBER OF SHARES USED IN BASIC AND DILUTED NET LOSS PER SHARE CALCULATIONS 36,451 36,074
================= ==================
DIVIDENDS PER COMMON SHARE $ 0.17 $ 0.15
================= ==================
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,
2006 2006 2005
------------------- ------------------ ------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 65,453 $ 69,691 $ 61,148
Marketable securities - 27,600 -
Receivables, net 13,319 270,354 13,596
Inventories 64,092 31,600 66,222
Prepaid expenses 1,432 2,173 1,503
Deferred income taxes 7,902 7,849 6,372
------------------- ------------------ -------------------
Total current assets 152,198 409,267 148,841
PROPERTY, PLANT AND EQUIPMENT, NET 60,544 61,066 60,409
EXCESS OF COST OVER NET ASSETS OF
BUSINESSES ACQUIRED 4,183 4,183 4,183
INTANGIBLES, net 8,309 8,276 5,999
OTHER ASSETS 1,094 1,079 1,562
DEFFERED INCOME TAXES 21,801 22,383 10,366
------------------- ------------------ -------------------
TOTAL ASSETS $ 248,129 $ 506,254 $ 231,360
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES :
Notes payable $ 3,320 $ 6,428 $ 8,300
Accounts payable 21,409 28,866 25,767
Accrued expenses 50,350 275,643 39,135
Income taxes payable 4,953 14,179 3,898
------------------- ------------------ -------------------
Total current liabilities 80,032 325,116 77,100
LONG-TERM DEBT - 1,455 3,363
MINORITY INTEREST IN SUBSIDIARIES 6,233 5,027 5,709
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, 501,989, 501,989 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;
42,110,900, 42,053,167 and 40,944,440 shares issued;
36,473,176, 36,415,567 and 35,900,334 shares outstanding 4,211 4,205 4,094
Capital in excess of par value 114,380 112,099 82,694
Retained earnings 182,010 197,750 184,748
Accumulated other comprehensive loss (1,823) (2,489) (4,060)
Treasury stock, at cost; 5,637,724, 5,637,600 and 5,044,106 shares (137,021) (137,016) (122,395)
------------------- ------------------ -------------------
TOTAL STOCKHOLDERS' EQUITY 161,864 174,656 145,188
------------------- ------------------ -------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 248,129 $ 506,254 $ 231,360
=================== ================== ===================
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
(in thousands)
(Unaudited)
November 30, November 30,
2006 2005
------------------ -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (9,358) $ (9,445)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 2,455 2,155
(Gain) loss on sale of assets (20) 28
Excess tax benefits from stock-based compensation arrangements (367) -
Equity in net loss of affiliate 541 814
Foreign exchange gain (24) (183)
Accretion of debt discount 36 113
Minority interest in earnings of subsidiaries 1,672 832
Stock-based compensation expense 677 812
Change in deferred income taxes 536 320
Changes in assets and liabilities:
Receivables 257,004 215,141
Inventories (31,998) (39,469)
Prepaid expenses 742 373
Intangibles and other assets (123) (242)
Accounts payable (7,510) 7,410
Accrued expenses (225,237) (182,843)
Income taxes (9,222) (8,990)
------------------ -----------------
Net cash used in operating activities (20,196) (13,174)
------------------ -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales of marketable securities 27,600 -
Purchases of property and equipment (1,625) (2,350)
Sale of investments and property 45 23
Investment in affiliate (600) (700)
------------------ -----------------
Net cash provided by investing activities 25,420 (3,027)
------------------ -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of short-term debt (4,604) (5,800)
Dividends paid (6,849) (5,549)
Payments to acquire treasury stock - (5,141)
Cash settlement of employee stock awards (5) -
Proceeds from exercise of stock options 1,611 231
Excess tax benefits from stock-based compensation arrangements 367 -
------------------ -----------------
Net cash used in financing activities (9,480) (16,259)
------------------ -----------------
EFFECTS OF FOREIGN CURRENCY EXCHANGE RATES 18 533
NET DECREASE IN CASH AND CASH EQUIVALENTS (4,238) (31,927)
CASH AND CASH EQUIVALENTS, August 31 69,691 93,075
------------------ -----------------
CASH AND CASH EQUIVALENTS, November 30 $ 65,453 $ 61,148
================== =================
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the three months for:
Income taxes $ 2,322 $ 3,437