Scott, Mississippi
April 4, 2006
-
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
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.
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.
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, 2006 |
|
February 28, 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, 2006 |
|
February 28, 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, 2006 |
|
August 31, 2005 |
|
February 28, 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, 2006 |
|
February 28, 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 |
|
