DLP Delta & Pine

SCOTT, Miss., April 9 /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 second quarter and six-month period ended February 28, 2007. Second Quarter Results Net loss for the 2007 second quarter was $0.06 per diluted share, compared to last year's second quarter net income of $0.40 per diluted share. The second quarter net loss includes charges of $0.02 per diluted share related to the proposed merger with Monsanto. The prior year second quarter included $0.01 per diluted share in Pharmacia/Monsanto litigation expenses. Revenues were $45.0 million in the 2007 second quarter, compared to $115.0 million recorded in the year-ago quarter. The revenue decrease was largely attributable to lower domestic sales volumes, offset by increased revenues from the International division, primarily in Brazil, which continues to benefit from the introduction of transgenic cotton varieties and higher acreage, as it did in the first quarter. Domestic sales volumes were lower as a result of customer indecision related to planting intentions, as higher corn prices have increased the number of anticipated acres planted to corn. The loss for the quarter was mitigated by lower operating expenses, compared to the prior year quarter, primarily due to reduced legal fees associated with various arbitration proceedings with Monsanto that were either dismissed or stayed pending the proposed merger. Six Month Results After charges of $0.08 per diluted share related to the proposed merger with Monsanto, net loss for the 2007 six-month period was $0.35 per diluted share, compared to net income of $0.14 per diluted share for the same period last year. Net income in 2006 included a reduction of $0.03 per diluted share for Pharmacia/Monsanto litigation expenses for the six-month period. Revenues for the 2007 six-month period were $57.9 million, compared to $124.8 million in the prior year. As previously indicated, the revenue decrease was primarily attributable to lower domestic sales volumes, partially offset by higher international sales in South America. 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 loss for the six-month period was partially mitigated by lower operating expenses, compared to the prior year period, largely due to reduced legal fees associated with various arbitration proceedings with Monsanto that were either dismissed or stayed pending the proposed merger. Subsequent to the issuance of the Company's 2007 first quarter consolidated financial statements, the Company recorded a correction to such previously-issued financial statements relating to a misstatement of a marketing accrual. The correction of approximately $1.3 million ($800,000 after taxes) was not material to the Company's consolidated financial position or results of operations for the previous quarter ended November 30, 2006. This correction does not impact the year-to-date results. Revised 2007 Earnings Guidance For the fiscal year 2007, assuming that cotton acreage planted declines 21% as now forecasted by the U.S. Department of Agriculture ("USDA") in its March 31 Planting Intentions Report and the Company maintains its market share and product sales mix, D&PL expects earnings per diluted share of $0.53 to $0.63, after charges of $0.26 per diluted share related to its proposed merger with Monsanto. The previously issued fiscal 2007 guidance had anticipated that planted cotton acreage would be consistent with the prior year. D&PL provides guidance based on an estimate of U.S. cotton acreage issued by the USDA. For illustrative purposes, for every 500,000 acre decrease in planted cotton acreage in states east of Texas, the Company estimates that its earnings could be reduced by as much as $0.12 to $0.14 per diluted share. Tom Jagodinski, President and Chief Executive Officer, said: "While the short-term forecast calls for U.S. cotton acreage to decline as a result of the increase in acreage planted to other crops, mainly corn, we believe that farmers will rely more than ever on our leading products for superior yield, consistency and reliability. Our farmer customers are in a period of uncertainty regarding commodity prices, the upcoming U.S. Farm bill, and international trade negotiations. Despite the fluctuating environment, we will continue to invest, as we have for over 95 years, in the necessary research and development of future varieties and technologies to bring increased value to our farmer customers. With respect to the pending merger with Monsanto 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." 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 800-374- 0532 (International, 706-634-0148) and access code 2466319. 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 Monday, April 9, 2007 through midnight EDT/ 11:00 p.m. CDT on Monday, April 16, 2007 by dialing 800-642-1687 (International, 706-645-9291) and entering the access code 2466319. 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) February 28, February 28, 2007 2006 NET SALES AND LICENSING FEES $45,009 $114,977 COST OF SALES 31,327 74,145 GROSS PROFIT 13,682 40,832 OPERATING EXPENSES: Research and development 6,206 6,145 Selling 3,426 3,910 General and administrative 5,724 7,225 Total operating expenses 15,356 17,280 OPERATING (LOSS) INCOME (1,674) 23,552 INTEREST INCOME, NET 462 177 OTHER EXPENSE, NET (2,399) (730) EQUITY IN NET LOSS OF AFFILIATE (417) (780) MINORITY INTEREST IN (EARNINGS) LOSS OF SUBSIDIARIES (390) 131 (LOSS) INCOME BEFORE INCOME TAXES (4,418) 22,350 INCOME TAX BENEFIT (EXPENSE) 2,348 (7,680) NET (LOSS) INCOME (2,070) 14,670 DIVIDENDS ON PREFERRED STOCK (182) (160) NET (LOSS) INCOME APPLICABLE TO COMMON SHARES $(2,252) $14,510 BASIC (LOSS) EARNINGS PER SHARE $(0.06) $0.41 NUMBER OF SHARES USED IN BASIC (LOSS) EARNINGS PER SHARE CALCULATIONS 36,604 35,688 DILUTED (LOSS) EARNINGS PER SHARE $(0.06) $0.40 NUMBER OF SHARES USED IN DILUTED (LOSS) EARNINGS PER SHARE CALCULATIONS 36,604 36,914 DIVIDENDS PER COMMON SHARE $0.17 $0.15 The accompanying notes are an integral part of these financial statements. 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, February 28, 2007 2006 NET SALES AND LICENSING FEES $57,893 $124,803 COST OF SALES 40,062 80,809 GROSS PROFIT 17,831 43,994 OPERATING EXPENSES: Research and development 12,364 11,786 Selling 7,191 7,316 General and administrative 11,778 13,452 Total operating expenses 31,333 32,554 OPERATING (LOSS) INCOME (13,502) 11,440 INTEREST INCOME, NET 2,032 1,205 OTHER EXPENSE, NET (6,818) (1,933) EQUITY IN NET LOSS OF AFFILIATE (958) (1,594) MINORITY INTEREST IN EARNINGS OF SUBSIDIARIES (2,062) (701) (LOSS) INCOME BEFORE INCOME TAXES (21,308) 8,417 INCOME TAX BENEFIT (EXPENSE) 9,053 (3,192) NET (LOSS) INCOME (12,255) 5,225 DIVIDENDS ON PREFERRED STOCK (363) (320) NET (LOSS) INCOME APPLICABLE TO COMMON SHARES $(12,618) $4,905 BASIC (LOSS) EARNINGS PER SHARE $(0.35) $0.14 NUMBER OF SHARES USED IN BASIC (LOSS) EARNINGS PER SHARE CALCULATIONS 36,527 35,882 DILUTED (LOSS) EARNINGS PER SHARE $(0.35) $0.14 NUMBER OF SHARES USED IN DILUTED (LOSS) EARNINGS PER SHARE CALCULATIONS 36,527 37,145 DIVIDENDS PER COMMON SHARE $0.34 $0.30 The accompanying notes are an integral part of these financial statements. DELTA AND PINE LAND COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) (Unaudited) February August February 28, 31, 28, 2007 2006 2006 ASSETS CURRENT ASSETS: Cash and cash equivalents $21,453 $69,691 $13,420 Marketable securities - 27,600 - Receivables, net 62,406 270,354 138,193 Income taxes receivable 6,078 - - Inventories 73,183 31,600 69,389 Prepaid expenses 1,126 2,173 1,657 Deferred income taxes 9,495 7,849 6,047 Total current assets 173,741 409,267 228,706 PROPERTY, PLANT AND EQUIPMENT, NET 60,585 61,066 61,507 EXCESS OF COST OVER NET ASSETS OF BUSINESSES ACQUIRED 4,183 4,183 4,183 INTANGIBLES, NET 8,368 8,276 8,459 DEFERRED INCOME TAXES 21,527 22,383 11,238 OTHER ASSETS 1,029 1,079 1,214 TOTAL ASSETS $269,433 $506,254 $315,307 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable and current maturities of long-term debt $3,256 $6,428 $8,448 Accounts payable 20,244 28,866 21,776 Accrued expenses 71,557 275,643 120,814 Income taxes payable - 14,179 8,872 Total current liabilities 95,057 325,116 159,910 LONG-TERM DEBT - 1,455 3,471 MINORITY INTEREST IN SUBSIDIARIES 6,622 5,027 5,577 COMMITMENTS AND CONTINGENCIES 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 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; 42,615,436, 42,053,167 and 40,965,695 shares issued; 36,977,072, 36,415,567 and 35,495,589 shares outstanding 4,262 4,205 4,097 Capital in excess of par value 129,166 112,099 83,989 Retained earnings 172,647 197,750 193,933 Accumulated other comprehensive loss (1,381) (2,489) (3,440) Treasury stock, at cost; 5,638,364, 5,637,600 and 5,470,106 shares (137,047) (137,016) (132,337) TOTAL STOCKHOLDERS' EQUITY 167,754 174,656 146,349 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $269,433 $506,254 $315,307 The accompanying notes are an integral part of these financial statements. DELTA AND PINE LAND COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED (in thousands) (Unaudited) February 28, February 28, 2007 2006 CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $(12,255) $5,225 Adjustments to reconcile net (loss) income to net cash used in operating activities: Depreciation and amortization 4,832 4,358 (Gain) loss on sale of assets (87) 59 Excess tax benefits from stock- based compensation arrangements (3,682) - Equity in net loss of affiliate 958 1,594 Foreign exchange loss 9 33 Accretion of debt discount 72 227 Minority interest in earnings of subsidiaries 2,062 701 Stock-based compensation expense 1,271 1,641 Change in deferred income taxes (782) (229) Changes in assets and liabilities: Receivables 209,454 90,695 Inventories (42,560) (42,340) Prepaid expenses 1,048 226 Intangibles and other assets (298) (52) Accounts payable (8,801) 3,374 Accrued expenses (203,945) (101,331) Income taxes payable (20,241) (4,070) Net cash used in operating activities (72,945) (39,889) CASH FLOWS FROM INVESTING ACTIVITIES: Sales of marketable securities 27,600 - Purchases of property and equipment (3,721) (5,336) Sales of investments and property 162 23 Acquisition of business - (2,620) Investment in affiliate (1,140) (1,525) Net cash provided by (used in) investing activities 22,901 (9,458) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from short-term debt - 266 Payments of short-term debt (4,707) (5,925) Dividends paid (12,849) (11,034) Payments to acquire treasury stock - (15,083) Minority interest in dividends paid by subsidiaries (467) - Cash settlement of employee stock awards (31) - Proceeds from exercise of stock options 15,854 712 Excess tax benefits from stock-based compensation arrangements 3,682 - Net cash provided by (used in) financing activities 1,482 (31,064) EFFECTS OF FOREIGN CURRENCY EXCHANGE RATES 324 756 NET DECREASE IN CASH AND CASH EQUIVALENTS (48,238) (79,655) CASH AND CASH EQUIVALENTS, August 31 69,691 93,075 CASH AND CASH EQUIVALENTS, November 30 $21,453 $13,420 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the six months for: Income taxes $8,272 $6,859 Noncash financing activities: Tax benefit of stock option exercises $3,567 $54 The accompanying notes are an integral part of these financial statements. Contact: Investors Tom Jagodinski Delta and Pine Land Company 662-742-4518 Media Jonathan Gasthalter/Cassandra Bujarski Sard Verbinnen & Co 212-687-8080 DATASOURCE: Delta and Pine Land Company CONTACT: investors, Tom Jagodinski, Delta and Pine Land Company, +1-662-742-4518, media, Jonathan Gasthalter or Cassandra Bujarski, Sard Verbinnen & Co, +1-212-687-8080, for Delta and Pine Land Company Web site: http://www.deltaandpine.com/

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