Scott, Mississippi
July 9, 2004
Delta and Pine Land
Company ("D&PL"), a leading commercial breeder, producer and
marketer of cotton planting seed, today announced financial
results for the third fiscal quarter and nine months ended May
31, 2004. Third
Quarter and Nine-Month Results
Net income for the third
quarter was $0.79 per diluted share compared to last year's
third quarter net income of $0.72 per diluted share. Net income
reflects a reduction of $0.05 per diluted share related to
Monsanto/Pharmacia litigation expenses incurred during the third
quarter, compared to a reduction of $0.04 per diluted share
incurred in last year's third quarter. Prior year third quarter
net income was further impacted by expenses related to a
workforce reduction and a facility closing that reduced earnings
per diluted share by $0.01.
Net sales and licensing fees
for the 2004 third quarter were $185.1 million compared to
$168.9 million in the prior year quarter. The revenue increase
was primarily due to an anticipated shift of domestic cottonseed
sales into the third quarter from the second quarter. Soybean
seed revenues also significantly increased in the current year
quarter as compared to last year due to improved product
offerings and an increase in soybean plantings. International
sales were higher, primarily from export sales to Mexico and
Colombia, and from a shift in sales to Greece from the second
quarter to the third quarter. Operating expenses were
essentially flat with last year while costs related to
Monsanto/Pharmacia litigation increased. The costs associated
with our investment in DeltaMax Cotton LLC, the Company's
50%-owned joint venture that is developing new traits for
cotton, also increased.
Net income for the 2004
nine-month period was $0.85 per diluted share compared to net
income of $0.94 per diluted share for the same period last year.
Net income reflects a reduction of $0.16 per diluted share
related to Monsanto/Pharmacia litigation expenses incurred
during the nine-month period ended May 31, 2004, compared to a
reduction of $0.14 per diluted share recorded in the same period
in 2003. Prior year net income was also affected by expenses
related to two U.S. facility closings and workforce reductions
at two foreign locations that reduced earnings per diluted share
by $0.02.
Net sales for the 2004
nine-month period were $287.2 million as compared to $282.1
million in the prior year period. This was due primarily to
increased international revenues from in-country sales in
Australia, Brazil and South Africa, and from export sales to
Mexico and Colombia. Soybean seed sales were also significantly
higher during the current year nine-month period. Operating
expenses increased during the current year period due to higher
research and development and selling expenses as well as an
increase in professional fees.
Tom Jagodinski, President and
Chief Executive Officer, said, "Although cotton acreage for 2004
was less than originally expected due to increased plantings of
soybeans caused by higher soybean commodity prices, we are
pleased that many of our newer products were widely adopted by
our farmer customers. We believe that we have the best product
pipeline we have had in a number of years, and we expect to
launch additional superior varieties in the years to come. We
also remained focused on new trait development and we are
incorporating those new traits into our most elite varieties.
Our partner in the DeltaMax joint venture, Verdia, Inc., was
recently acquired by DuPont, which brings potential for
additional investment capital, strategic focus and critical mass
to our trait development activities."
Stock Repurchase Plan
As of June 30, 2004, the
Company has purchased 218,000 shares of its common stock at an
aggregate purchase price of $5.0 million in the current fiscal
year. The Company will continue to purchase its shares from time
to time depending on market conditions and other factors.
2004 Earnings Outlook
Due to the reduction in U.S.
cotton acreage versus the Company's original estimates of 14.5
million acres, the Company now expects to report earnings per
diluted share in the range of $0.67 to $0.75 for the fiscal year
ending August 31, 2004. This revised earnings estimate includes
a reduction of $0.19 to $0.21 per diluted share from expenses
related to the Monsanto/Pharmacia litigation. This new guidance
is based on estimated overall U.S. cotton plantings of
approximately 13.2 to 13.5 million acres and includes a
reduction in acres planted in D&PL's key picker markets
(primarily east of Texas) as compared to 2003 cotton plantings.
The Company expects cotton acres in the High Plains of Texas to
have increased over last year. In addition, this earnings
estimate reflects lower technology fee rebates under crop loss
and replant programs than was experienced in 2003. Crop loss and
replant program rebates are generally finalized in the fourth
quarter.
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 website at
http://www.deltaandpine.com/ .
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,
2004 2003
NET SALES AND LICENSING FEES $ 185,119 $ 168,936
COST OF SALES 120,564 111,095
GROSS PROFIT 64,555 57,841
OPERATING EXPENSES:
Research and development 4,465 4,152
Selling 3,230 3,014
General and administrative 3,767 3,732
Special charges -- 462
11,462 11,360
OPERATING INCOME 53,093 46,481
INTEREST INCOME, NET 262 160
OTHER EXPENSE (3,650) (2,480)
EQUITY IN NET LOSS OF AFFILIATE (1,033) (551)
MINORITY INTEREST IN LOSS OF SUBSIDIARIES 25 522
INCOME BEFORE INCOME TAXES 48,697 44,132
INCOME TAX EXPENSE 17,268 15,667
NET INCOME 31,429 28,465
DIVIDENDS ON PREFERRED STOCK (128) (64)
NET INCOME APPLICABLE TO COMMON SHARES $ 31,301 $ 28,401
BASIC NET EARNINGS PER SHARE $ 0.82 $ 0.75
NUMBER OF SHARES USED IN BASIC EARNINGS
PER SHARE CALCULATIONS 38,311 38,049
DILUTED NET EARNINGS PER SHARE $ 0.79 $ 0.72
NUMBER OF SHARES USED IN DILUTED EARNINGS
PER SHARE CALCULATIONS 39,799 39,598
DIVIDENDS PER COMMON SHARE $ 0.12 $ 0.06
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,
2004 2003
NET SALES AND LICENSING FEES $ 287,240 $ 282,072
COST OF SALES 184,712 181,078
GROSS PROFIT 102,528 100,994
OPERATING EXPENSES:
Research and development 13,598 12,036
Selling 9,181 8,235
General and administrative 13,041 12,095
Special charges -- 962
35,820 33,328
OPERATING INCOME 66,708 67,666
INTEREST INCOME, NET 961 742
OTHER EXPENSE (9,973) (8,498)
EQUITY IN NET LOSS OF AFFILIATE (2,767) (1,492)
MINORITY INTEREST IN EARNINGS OF
SUBSIDIARIES (2,380) (796)
INCOME BEFORE INCOME TAXES 52,549 57,622
INCOME TAX EXPENSE 18,655 20,456
NET INCOME 33,894 37,166
DIVIDENDS ON PREFERRED STOCK (363) (181)
NET INCOME APPLICABLE TO COMMON SHARES $ 33,531 $ 36,985
BASIC NET EARNINGS PER SHARE $ 0.88 $ 0.97
NUMBER OF SHARES USED IN BASIC EARNINGS
PER SHARE CALCULATIONS $ 38,183 $ 38,115
DILUTED NET EARNINGS PER SHARE $ 0.85 $ 0.94
NUMBER OF SHARES USED IN DILUTED EARNINGS
PER SHARE CALCULATIONS 39,685 39,554
DIVIDENDS PER COMMON SHARE $ 0.34 $ 0.17
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,
2004 2003 2003
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 148,651 $ 143,285 $ 116,385
Receivables, net 229,759 166,952 243,440
Inventories 30,469 32,231 34,204
Prepaid expenses 807 2,116 634
Deferred income taxes 10,755 10,677 11,225
Total current assets 420,441 355,261 405,888
PROPERTY, PLANT AND EQUIPMENT, NET 61,205 64,441 61,427
EXCESS OF COST OVER NET ASSETS OF
BUSINESSES ACQUIRED 4,183 4,183 4,183
INTANGIBLES, net 5,350 5,470 5,489
INVESTMENT IN AFFILIATE -- 328 753
OTHER ASSETS 1,660 1,869 1,946
TOTAL ASSETS $ 492,839 $ 431,552 $ 479,686
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ -- $ 40 $ 24
Accounts payable 12,574 17,966 9,119
Accrued expenses 209,432 176,150 208,209
Income taxes payable 20,789 9,894 22,988
Total current liabilities 242,795 204,050 240,340
LONG-TERM DEBT -- 1,557 2,145
DEFERRED INCOME TAXES 4,183 5,220 3,129
MINORITY INTEREST IN SUBSIDIARIES 4,662 3,618 3,310
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;
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, 107 107 107
issued and outstanding
Common stock, par value $0.10 per
share; 100,000,000 shares authorized;
40,001,984, 39,525,116 and
39,474,723 shares issued;
38,441,718, 38,107,850 and
38,094,557 shares outstanding 4,000 3,953 3,947
Capital in excess of par value 61,700 54,850 53,974
Retained earnings 210,129 189,610 202,888
Accumulated other comprehensive loss (5,314) (5,442) (5,043)
Treasury stock, at cost; 1,560,266,
1,417,266 and 1,380,166 shares (29,423) (25,971) (25,111)
TOTAL STOCKHOLDERS' EQUITY 241,199 217,107 230,762
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 492,839 $ 431,552 $ 479,686
Delta and Pine Land Company and Subsidiaries
Consolidated Statements of Cash Flows
For the Nine Months Ended
(In Thousands)
(Unaudited)
May 31, May 31,
2004 2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 33,894 $37,166
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 6,228 5,739
Loss (gain) on sale of assets 220 (28)
Equity in net loss of affiliate 2,767 1,492
Foreign exchange loss (gain) 125 (2)
Minority interest in earnings of
subsidiaries 2,380 796
Change in deferred taxes (1,168) --
Changes in assets and liabilities:
Receivables (62,786) (97,364)
Inventories 1,923 5,567
Prepaid expenses 1,294 1,539
Intangibles and other assets 41 126
Accounts payable (5,506) (7,420)
Accrued expenses 33,063 64,236
Income taxes 13,652 11,127
Net cash provided by operating activities 26,127 22,974
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (3,101) (3,302)
Sale of investments and property 64 76
Investment in affiliate (1,880) (1,550)
Net cash used in investing activities (4,917) (4,776)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of short-term debt (277) (2,095)
Payments of long-term debt (1,607) --
Dividends paid (13,375) (6,659)
Proceeds from short-term debt 245 437
Minority interest in dividends paid (1,336) --
by subsidiary
Payments to acquire treasury stock (3,452) (5,275)
Proceeds from exercise of stock options 4,097 1,784
Net cash used in financing activities (15,705) (11,808)
EFFECTS OF FOREIGN CURRENCY EXCHANGE RATES (139) 904
NET INCREASE IN CASH AND CASH EQUIVALENTS 5,366 7,294
CASH AND CASH EQUIVALENTS, August 31 143,285 109,091
CASH AND CASH EQUIVALENTS, May 31 $ 148,651 $ 116,385
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the nine months for:
Interest, net of capitalized interest $ 10 $ 50
Income taxes $ 5,600 $ 9,200
Noncash financing activities: $ 2,800 $ 600
Tax benefit of stock option exercises
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