Scott, Mississippi
January 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 its first quarter ended
November 30, 2005. Due to the seasonal nature of the seed
business, the Company typically incurs losses in its first and
fourth fiscal quarters.
After charges of $0.02 per diluted share related to
Pharmacia/Monsanto litigation expenses and $0.01 per diluted
share related to recording the cumulative effect of a change in
accounting for stock options upon initial adoption of Statement
of Financial Accounting Standards No. 123 (Revised 2004),
Share-based Payment ("SFAS 123R"), net loss for the 2006 first
quarter was $0.27 per diluted share, an increase from last
year's first quarter net loss of $0.12 per diluted share. In the
prior year first quarter, Pharmacia/Monsanto litigation expenses
were $0.03 per diluted share and there was no cumulative effect
of a change in accounting principle.
Revenues were $9.8 million in
the 2006 first quarter, compared to $17.5 million recorded in
the year-ago quarter. The revenue decrease was attributable to
international operations, particularly in South America and
Australia. Sales volumes in South America were lower, primarily
due to a reduction in the cotton acreage planted in Brazil.
Sales volumes in Australia were impacted by increased
competition. Results were also impacted in the first quarter of
2006 by increased spending on research and development
activities related to new technologies from Monsanto, Syngenta
and DuPont, higher professional services fees related to
litigation (other than the Pharmacia/Monsanto lawsuit), and
stock-based compensation costs.
Indian Acquisition
D&PL also announced that it has
acquired Vikki's Agrotech Pvt. Ltd., an Indian cottonseed
company. Vikki's has licenses to Monsanto's Bollgard® and
Bollgard II® technologies for India as well as rights to
commercialize Bt genes from another party. Subject to regulatory
approvals being received, Vikki's may commercialize Bollgard®
hybrids in India in 2006. The Company continues to consider
other acquisition opportunities in the Indian market. D&PL has
also established a research program in Northern India to develop
products for the Punjab region of both India and Pakistan.
Tom Jagodinski, President and
Chief Executive Officer, said, "We are very pleased with the
acquisition of Vikki's, which further expands our international
presence, providing D&PL with a platform in the Indian
cottonseed market. This transaction further builds on our
expansion efforts in India and will enable the Company to launch
additional research initiatives in India."
Mr. Jagodinski continued, "In
addition, we continue to introgress the second generation
Monsanto insect resistant and herbicide tolerance traits into
our most elite material. We expect to launch as many as eight
new varieties containing these technologies in 2006 and expect
to have enough seed to plant approximately 1,500,000 acres with
seed containing these new traits. Moreover, we continue to
dedicate resources to the development of the traits we have
licensed from Syngenta and DuPont, which are expected to be
launched later this decade.
Share Repurchase Program
From September 1, 2005 through
December 31, 2005, D&PL repurchased 320,000 shares at an
aggregate purchase price of approximately $7.6 million under the
June 30, 2005, share repurchase program. The Company expects to
repurchase 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.
2006 Earnings Outlook
For the fiscal year 2006, D&PL
expects to report 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 Company
reported earnings of $1.08 per diluted share in fiscal 2005,
after a reduction of $0.07 per diluted share related to
Pharmacia/Monsanto litigation expenses. 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 from
Monsanto, costs related to the development of Dupont and
Syngenta technologies, expenses related to share- 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 expects cotton plantings in the U.S. to
remain constant with or to increase slightly over 2005 plantings
of 14.2 million acres, especially in areas east of Texas. The
Company's earnings guidance is based on cotton acreage that is
flat with 2005 as well as assumptions regarding the maintenance
of our market share and product/sales mix targets being met.
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.
xxx
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,
2005 2004
------------ ------------
NET SALES AND LICENSING FEES $9,825 $17,454
COST OF SALES 6,663 8,421
------------ ------------
GROSS PROFIT 3,162 9,033
------------ -----------
OPERATING EXPENSES:
Research and development 5,605 4,430
Selling 3,398 3,066
General and administrative 6,119 4,539
------------ -----------
15,122 12,035
------------ -----------
OPERATING LOSS (11,960) (3,002)
INTEREST INCOME, NET 1,028 458
OTHER EXPENSE, NET (1,203) (1,507)
EQUITY IN NET LOSS OF AFFILIATE (814) (738)
MINORITY INTEREST IN EARNINGS OF SUBSIDIARIES (832) (2,336)
------------ -----------
LOSS BEFORE INCOME TAXES (13,781) (7,125)
INCOME TAX BENEFIT (4,488) (2,808)
------------ -----------
LOSS BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE (9,293) (4,317)
CUMULATIVE EFFECT OF ACCOUNTING
CHANGE, NET OF TAX (358) --
------------ -----------
NET LOSS (9,651) (4,317)
DIVIDENDS ON PREFERRED STOCK (160) (128)
------------ -----------
NET LOSS APPLICABLE TO COMMON SHARES $(9,811) $(4,445)
============ ===========
BASIC AND DILUTED NET LOSS
PER SHARE, BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE $(0.26) $(0.12)
============ ===========
CUMULATIVE EFFECT OF ACCOUNTING CHANGE $(0.01) $--
============ ===========
BASIC AND DILUTED NET LOSS PER SHARE $(0.27) $(0.12)
============ ===========
NUMBER OF SHARES USED IN BASIC
AND DILUTED NET LOSS PER SHARE
CALCULATIONS 36,074 38,544
============ ===========
DIVIDENDS PER COMMON SHARE $0.15 $0.12
============ ===========
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,
2005 2005 2004
ASSETS ----------- ---------- ------------
CURRENT ASSETS:
Cash and cash equivalents $61,148 $93,075 $121,222
Receivables, net 13,596 228,800 15,332
Inventories 66,222 26,625 62,039
Prepaid expenses 1,503 1,874 1,547
Deferred income taxes 6,372 6,305 6,598
----------- ---------- -----------
Total current assets 148,841 356,679 206,738
PROPERTY, PLANT AND
EQUIPMENT, NET 60,409 60,158 62,299
EXCESS OF COST OVER NET
ASSETS OF BUSINESSES
ACQUIRED 4,183 4,183 4,183
INTANGIBLES, net 5,999 5,960 5,489
OTHER ASSETS 1,562 1,446 1,608
DEFERRED INCOME TAXES 10,563 10,758 7,600
----------- ---------- -----------
TOTAL ASSETS $231,557 $439,184 $287,917
=========== ========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $8,300 $10,078 $11,318
Accounts payable 25,767 18,218 22,955
Accrued expenses 39,135 221,824 29,735
Income taxes payable 3,898 12,893 2,377
----------- ---------- -----------
Total current liabilities 77,100 263,013 66,385
----------- ---------- -----------
LONG-TERM DEBT 3,363 7,271 11,001
MINORITY INTEREST IN ----------- ---------- -----------
SUBSIDIARIES 5,709 4,877 6,563
----------- ---------- -----------
DEFERRED COMPENSATION 403 -- --
----------- ---------- -----------
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; 40,944,440,
40,928,929 and 40,247,696 shares
issued; 35,900,334, 36,099,823
and 38,580,230 shares
outstanding 4,094 4,093 4,025
Capital in excess of par value 82,694 81,640 66,127
Retained earnings 184,542 199,742 167,734
Accumulated other
comprehensive loss (4,060) (4,305) (2,306)
Treasury stock, at cost;
5,044,106, 4,829,106 and
1,667,466 shares (122,395) (117,254) (31,719)
----------- ----------- ----------
TOTAL STOCKHOLDERS' EQUITY 144,982 164,023 203,968
TOTAL LIABILITIES AND ----------- ----------- ----------
STOCKHOLDERS' EQUITY $231,557 $439,184 $287,917
=========== =========== ==========
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
(in thousands)
(Unaudited)
November November
30, 2005 30, 2004
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(9,651) $(4,317)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization 2,155 2,226
Loss (gain) on sale of assets 28 (10)
Equity in net loss of affiliate 814 738
Foreign exchange gain (183) (106)
Accretion of debt discount 113 194
Minority interest in earnings of subsidiaries 832 2,336
Stock-based compensation expense 660 --
Change in deferred income taxes 123 3,209
Cumulative effect of accounting change 555 --
Changes in assets and liabilities:
Receivables 215,141 169,892
Inventories (39,469) (31,778)
Prepaid expenses 373 371
Intangibles and other assets (242) (254)
Accounts payable 7,410 (1,194)
Accrued expenses (182,843) (158,203)
Income taxes (8,990) (6,397)
--------- ---------
Net cash used in operating activities (13,174) (23,293)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (2,350) (1,781)
Sale of investments and property 23 12
Investment in affiliate (700) (800)
--------- ---------
Net cash used in investing activities (3,027) (2,569)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of short-term debt (5,800) --
Dividends paid (5,549) (4,757)
Minority interest in dividends paid
by subsidiary -- (359)
Payments to acquire treasury stock (5,141) --
Proceeds from exercise of stock options 231 1,675
--------- ---------
Net cash used in financing activities (16,259) (3,441)
--------- ---------
EFFECTS OF FOREIGN CURRENCY EXCHANGE RATES 533 938
NET DECREASE IN CASH AND CASH EQUIVALENTS (31,927) (28,365)
CASH AND CASH EQUIVALENTS, August 31 93,075 149,587
--------- ---------
CASH AND CASH EQUIVALENTS, November 30 $61,148 $121,222
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the three months for:
Interest, net of capitalized interest $-- $--
Income taxes paid/(refunded) $3,437 $(128)
Non-cash financing activities:
Tax benefit of stock option exercises $12 $211
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