DLP Delta & Pine

Increased Cotton Acreage and Market Share Drives Record Quarterly Revenues of $287 Million SCOTT, Miss., July 6 /PRNewswire-FirstCall/ -- 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 third quarter and nine-month period ended May 31, 2006. Third Quarter Results Net income for the 2006 third quarter was $1.28 per diluted share, compared to last year's third quarter net income of $0.91 per diluted share. Third quarter earnings were reduced by charges of $0.02 per diluted share related to Pharmacia/Monsanto litigation expenses and $0.12 per diluted share related to the write-off of acquired in-process research and development ("IPR&D") and related transaction costs from the previously announced acquisition of Syngenta's global cotton seed assets. The net income reported by the Company for the third quarter represents the second highest net income ever reported for a single quarter, behind only the second quarter of 2000, which included pre-tax income of $71 million from an unusual item. In the prior year third quarter, Pharmacia/Monsanto litigation expenses were $0.01 per diluted share. The recently announced strategic licensing agreements for cotton, soybean and other technologies with a DuPont subsidiary, Pioneer Hi-Bred International, Inc. will be accounted for in the fourth quarter. Revenues of $286.6 million reported for the 2006 third quarter, compared to $203.3 million for prior year quarter, are the highest ever for the Company in a single quarter. Revenues were impacted by: (1) a significant increase in units sold, due to an increase in cotton acreage and an increase in market share in our key markets in the states east of Texas; (2) higher technology fees per unit; (3) a shift in our sales mix to more premium-priced, stacked- trait varieties; and (4) premium seed treatment revenues, partially offset by higher sales allowances. International revenues were slightly higher than the prior-year quarter, due to a shift in sales into the third quarter in 2006 in both Mexico and Spain, and higher unit sales in Turkey. Earnings were also impacted in the third 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 share- based compensation costs. Nine-Month Results After charges of $0.05 per diluted share related to Pharmacia/Monsanto litigation expenses and $0.12 related to the aforementioned IPR&D write-off, net income for the 2006 nine-month period was $1.43 per diluted share, compared to net income of $1.28 per diluted share for the same period last year. Net income in the 2005 nine-month period included a reduction of $0.06 per diluted share for Pharmacia/Monsanto litigation expenses. Record revenues for the 2006 nine-month period were $411.4 million, compared to $340.6 million in the prior year. Revenues were impacted by an increase in cotton acreage and the aforementioned market share factors. International sales were lower for the nine month period due to acreage reductions, government regulations and exchange rates in certain markets. 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 share-based compensation costs. Tom Jagodinski, President and Chief Executive Officer, said, "Our quarter and year-to-date results were strong, resulting largely from the continued penetration and performance of our cotton germplasm and sales of premium seed treatments. We are continuing to execute our strategy of in-licensing new technologies from multiple partners to offer farmers more technology choices. We are pleased to have completed the acquisition of Syngenta's cotton seed assets in the quarter, as well as our recent strategic licensing agreement with DuPont. Further, preliminary indications demonstrate an increase in cotton acreage and we have expanded our market share in the high value markets east of Texas." Share Repurchase Program From September 1, 2005 through June 30, 2006, D&PL repurchased 808,494 shares at an aggregate purchase price of approximately $19.7 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. Conference Call D&PL will hold a conference call this morning at 11:00 a.m. EDT/10:00 a.m. CDT to review this announcement. The call can be accessed by dialing 1-800-374-0532 (International, 706-634-0148) and access code 1683562. Live audio of the conference call will also be accessible at http://www.vcall.com/. The call will be available on the website for 90 days, and will also be available by replay from noon EDT/ 11:00 a.m. CDT on Thursday, July 6, 2006 through midnight EDT/ 11:00 p.m. CDT on Thursday, July 13, 2006 by dialing 800-642-1687 (International, 706-645-9291) and entering the access code 1683562. 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) May 31, May 31, 2006 2005 NET SALES AND LICENSING FEES $286,618 $203,320 COST OF SALES 184,696 129,747 GROSS PROFIT 101,922 73,573 OPERATING EXPENSES: Research and development 6,631 5,781 Selling 3,793 3,706 General and administrative 9,163 6,143 In-process research and development and related transactional costs 7,042 - Total operating expenses 26,629 15,630 OPERATING INCOME 75,293 57,943 INTEREST (EXPENSE) INCOME, NET (341) 336 OTHER EXPENSE, NET (1,336) (851) EQUITY IN NET LOSS OF AFFILIATE (821) (781) MINORITY INTEREST IN LOSS OF SUBSIDIARIES 307 394 INCOME BEFORE INCOME TAXES 73,102 57,041 INCOME TAX EXPENSE 25,424 20,757 NET INCOME 47,678 36,284 DIVIDENDS ON PREFERRED STOCK (160) (128) NET INCOME APPLICABLE TO COMMON SHARES $47,518 $36,156 BASIC EARNINGS PER SHARE $1.33 $0.94 NUMBER OF SHARES USED IN BASIC EARNINGS PER SHARE CALCULATIONS 35,734 38,416 DILUTED EARNINGS PER SHARE $1.28 $0.91 NUMBER OF SHARES USED IN DILUTED EARNINGS PER SHARE CALCULATIONS 37,123 39,839 DIVIDENDS PER COMMON SHARE $0.15 $0.12 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, 2006 2005 NET SALES AND LICENSING FEES $411,422 $340,633 COST OF SALES 265,505 213,343 GROSS PROFIT 145,917 127,290 OPERATING EXPENSES: Research and development 18,416 15,857 Selling 11,110 10,258 General and administrative 22,616 15,587 In-process research and development and related transactional costs 7,042 - Total operating expenses 59,184 41,702 OPERATING INCOME 86,733 85,588 INTEREST INCOME, NET 864 1,435 OTHER EXPENSE, NET (3,270) (3,331) EQUITY IN NET LOSS OF AFFILIATE (2,415) (2,167) MINORITY INTEREST IN EARNINGS OF SUBSIDIARIES (394) (1,951) INCOME BEFORE INCOME TAXES 81,518 79,574 INCOME TAX EXPENSE 28,616 28,447 NET INCOME 52,902 51,127 DIVIDENDS ON PREFERRED STOCK (480) (384) NET INCOME APPLICABLE TO COMMON SHARES $52,422 $50,743 BASIC EARNINGS PER SHARE $1.46 $1.32 NUMBER OF SHARES USED IN BASIC EARNINGS PER SHARE CALCULATIONS 35,832 38,573 DILUTED EARNINGS PER SHARE $1.43 $1.28 NUMBER OF SHARES USED IN DILUTED EARNINGS PER SHARE CALCULATIONS 37,093 39,928 DIVIDENDS PER COMMON SHARE $0.45 $0.36 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, 2006 2005 2005 ASSETS CURRENT ASSETS: Cash and cash equivalents $141,018 $93,075 $111,287 Receivables, net 315,254 228,800 258,087 Inventories 32,784 26,625 29,099 Prepaid expenses 816 1,874 1,024 Deferred income taxes 10,792 6,305 5,230 Total current assets 500,664 356,679 404,727 PROPERTY, PLANT AND EQUIPMENT, NET 59,778 60,158 61,255 EXCESS OF COST OVER NET ASSETS OF BUSINESSES ACQUIRED 4,183 4,183 4,183 INTANGIBLES, NET 8,170 5,960 5,797 OTHER ASSETS 1,268 1,446 1,492 DEFERRED INCOME TAXES 10,574 10,758 7,603 TOTAL ASSETS $584,637 $439,184 $485,057 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable and current maturities of long-term debt $8,064 $10,078 $11,491 Accounts payable 9,194 18,218 11,820 Accrued expenses 329,114 221,824 242,960 Income taxes payable 31,168 12,893 19,995 Total current liabilities 377,540 263,013 286,266 LONG-TERM DEBT 3,578 7,271 11,217 MINORITY INTEREST IN SUBSIDIARIES 5,271 4,877 5,219 COMMITMENTS AND CONTINGENCIES (Note 10) 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, 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 107 107 107 Common stock, par value $0.10 per share; 100,000,000 shares authorized; 41,521,498, 40,928,929 and 40,857,834 shares issued; 35,970,798, 36,099,823 and 36,138,728 shares outstanding 4,152 4,093 4,086 Capital in excess of par value 97,041 81,640 79,941 Retained earnings 236,055 199,742 213,891 Accumulated other comprehensive loss (4,520) (4,305) (1,390) Treasury stock, at cost; 5,550,700, 4,829,106 and 4,719,106 shares (134,587) (117,254) (114,280) TOTAL STOCKHOLDERS' EQUITY 198,248 164,023 182,355 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $584,637 $439,184 $485,057 DELTA AND PINE LAND COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED (in thousands) (Unaudited) May 31, May 31, 2006 2005 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $52,902 $51,127 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 7,027 6,461 Loss (gain) on sale of assets 54 (309) In-process research and development and related charges 7,042 - Excess tax benefits from stock-based compensation arrangements (1,285) - Equity in net loss of affiliate 2,415 2,167 Foreign exchange loss (gain) 374 (95) Accretion of debt discount 340 583 Minority interest in earnings of subsidiaries 394 1,951 Stock-based compensation expense 2,493 67 Change in deferred income taxes (4,301) 4,574 Changes in assets and liabilities: Receivables (86,467) (72,774) Inventories (5,978) 1,595 Prepaid expenses 1,020 897 Intangibles and other assets 50 (382) Accounts payable (9,424) (12,351) Accrued expenses 107,056 54,853 Income taxes payable 18,248 13,494 Net cash provided by operating activities 91,960 51,858 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (6,246) (5,129) Sale of investments and property 72 433 Acquisition of business and in-process research and development (9,662) - Investment in affiliate (2,325) (2,230) Net cash used in investing activities (18,161) (6,926) CASH FLOWS FROM FINANCING ACTIVITIES: Payments of short-term debt (51,049) - Dividends paid (16,589) (14,044) Proceeds from short-term debt 45,000 - Minority interest in dividends paid by subsidiary - (1,318) Payments to acquire treasury stock (17,333) (82,561) Proceeds from exercise of stock options 12,968 13,176 Excess tax benefits from stock-based compensation arrangements 1,285 - Net cash used in financing activities (25,718) (84,747) EFFECTS OF FOREIGN CURRENCY EXCHANGE RATES (138) 1,515 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 47,943 (38,300) CASH AND CASH EQUIVALENTS, August 31 93,075 149,587 CASH AND CASH EQUIVALENTS, May 31 $141,018 $111,287 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the nine months for: Interest, net of capitalized interest $238 $- Income taxes paid $12,381 $9,261 Noncash financing activities: Tax benefit of equity awards $2,067 $2,518 DATASOURCE: Delta and Pine Land Company CONTACT: Investors, Tom Jagodinski of Delta and Pine Land Company, +1-662-742-4518; or Media, Jonathan Gasthalter or Cassandra Bujarski of Citigate Sard Verbinnen, +1-212-687-8080 Web site: http://www.deltaandpine.com/

Copyright