FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(x)Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended May 31, 1996 or
( )Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File Number: 000-21788
Exact name of registrant as specified in its charter:
DELTA AND PINE LAND COMPANY
State of Incorporation: Delaware
I.R.S. Employer Identification Number: 62-1040440
Address of Principal Executive Offices (including zip code)
One Cotton Row, Scott, Mississippi 38772
Registrant's telephone number, including area code:
(601) 742-4000
Indicate by check mark whether Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES (x) NO ( )
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Common Stock, $0.10 Par Value -- 20,998,130 shares outstanding
as of June 25, 1996.
<PAGE>
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets -- May 31, 1995,
August 31, 1995, and May 31, 1996
Consolidated Statements of Income -- Three Months Ended May 31,
1995 and May 31, 1996
Consolidated Statements of Income -- Nine Months Ended May 31,
1995 and May 31, 1996
Consolidated Statements of Cash Flows -- Nine Months Ended May 31,
1995 and May 31, 1996
Notes to Consolidated Financial Statements
Item 2.Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
SIGNATURES
</PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
(As (As
Restated) Restated)
May 31, August 31, May 31,
1995 1995 1996
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,745 $ 8,192 $ 5,992
Receivables 23,571 5,252 81,129
Inventories 18,951 20,168 36,403
Prepaid expenses 823 1,159 1,215
Deferred income taxes 945 1,525 1,525
Total current assets 50,035 36,296 126,264
PROPERTY, PLANT and EQUIPMENT, net 36,734 41,091 50,428
NOTES RECEIVABLE FROM EMPLOYEES 1,147 833 421
EXCESS OF COST OVER NET ASSETS OF
BUSINESSES ACQUIRED, net 1,472 1,463 5,988
INTANGIBLE ASSETS, net 3,173 3,236 3,260
OTHER ASSETS 4,208 4,623 4,561
$96,769 $87,542 $190,922
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $3,052 $ 650 $19,437
Accounts payable 6,281 6,142 9,186
Accrued expenses 24,025 11,746 58,098
Income taxes payable 10,013 6,157 10,882
Total current liabilities 43,371 24,695 97,603
LONG-TERM DEBT 810 12,814 16,677
DEFERRED INCOME TAXES 1,455 2,173 3,726
COMMITMENTS AND CONTINGENCIES (Note 5)
STOCKHOLDERS' EQUITY:
Convertible preferred stock, par
value $0.10 per share; 2,000,000
shares authorized, 450,000 shares
issued and outstanding - - 45
Common stock, par value $0.10 per
share; 50,000,000 shares
authorized; 20,849,055,
20,855,655 and 20,957,431
shares issued and outstanding 2,085 2,086 2,096
Capital in excess of par value 12,631 12,626 19,538
Retained earnings 36,554 32,751 51,027
Cumulative foreign currency
translation adjustments (137) 397 210
Total stockholders' equity 51,133 47,860 72,916
$96,769 $87,542 $190,922
The accompanying notes are an integral part of these balance sheets.
</PAGE>
<PAGE>
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED
(in thousands, except per share amounts)
(As Restated)
May 31, May 31,
1995 1996
NET SALES AND LICENSING FEES 49,189 83,061
COST OF SALES 26,245 51,915
GROSS PROFIT 22,944 31,146
OPERATING EXPENSES:
Research and development 1,828 2,954
Selling 1,918 2,088
General and administrative 4,321 4,681
8,067 9,723
OPERATING INCOME 14,877 21,423
INTEREST EXPENSE, net (641) (663)
OTHER 24 105
INCOME BEFORE INCOME TAXES 14,260 20,865
PROVISION FOR INCOME TAXES 4,984 7,499
NET INCOME 9,276 13,366
DIVIDENDS ON PREFERRED STOCK - (13)
NET INCOME APPLICABLE TO COMMON SHARES $ 9,276 $ 13,353
PRIMARY EARNINGS PER SHARE:
NET INCOME PER SHARE $0.44 $ 0.61
NUMBER OF SHARES USED IN PRIMARY EARNINGS
PER SHARE CALCULATIONS 21,148 21,996
FULLY DILUTED EARNINGS PER SHARE:
NET INCOME PER SHARE $ - $ 0.59
NUMBER OF SHARES USED IN FULLY DILUTED
EARNINGS PER SHARE CALCULATIONS - 22,546
DIVIDENDS PER SHARE $0.02 $ 0.03
The accompanying notes are an integral part of these statements.
</PAGE>
<PAGE>
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED
(in thousands, except per share amounts)
(As Restated)
May 31, May 31,
1995 1996
NET SALES AND LICENSING FEES $ 97,533 $ 151,379
COST OF SALES 51,962 93,026
GROSS PROFIT 45,571 58,353
OPERATING EXPENSES:
Research and development 4,888 6,411
Selling 4,822 6,262
General and administrative 11,055 12,777
20,765 25,450
OPERATING INCOME 24,806 32,903
INTEREST EXPENSE, net (2,021) (1,601)
OTHER 238 270
INCOME BEFORE INCOME TAXES 23,023 31,572
PROVISION FOR INCOME TAXES 8,699 11,530
NET INCOME 14,324 20,042
DIVIDENDS ON PREFERRED STOCK - (25)
NET INCOME APPLICABLE TO COMMON SHARES $14,324 $20,017
PRIMARY EARNINGS PER SHARE:
NET INCOME PER SHARE $ 0.68 $0.92
NUMBER OF SHARES USED IN PRIMARY EARNINGS
PER SHARE CALCULATIONS 20,994 21,774
FULLY DILUTED EARNINGS PER SHARE:
NET INCOME PER SHARE $ - $0.91
NUMBER OF SHARES USED IN FULLY DILUTED
EARNINGS PER SHARE CALCULATIONS - 21,906
DIVIDENDS PER SHARE $0.06 $0.08
The accompanying notes are an integral part of these statements.
</PAGE>
<PAGE>
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
(in thousands)
(As Restated)
May 31, May 31,
1995 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $14,324 $ 20,042
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and Amortization 2,221 2,770
(Increase) decrease in notes receivable
from employees (119) 412
Decrease in intangible and other assets. 204 202
Changes in current assets and liabilities:
Accounts and notes receivable (21,701) (75,878)
Inventories 975 (15,460)
Prepaid expenses 373 (56)
Accounts payable 1,918 3,044
Accrued expenses 15,429 45,852
Income taxes payable 5,989 4,725
Other, net 113 (82)
Net cash provided by (used in)
operating activities 19,726 (14,429)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of business - (1,035)
Purchases of property and equipment (5,614) (9,783)
Proceeds from the sale of property
and equipment 113 -
Net cash used in investing activities (5,501) (10,818)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of short-term debt (28,731) (21,698)
Payment of long-term debt (15,000) -
Dividends paid (1,158) (1,684)
Proceeds from long-term debt 3,109 3,863
Proceeds from short-term 30,788 40,485
Proceeds from exercise of stock
options and tax benefit
of stock option exercises - 2,081
Other 60 -
Net cash (used in) provided by financing
activities (10,932) 23,047
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 3,293 (2,200)
CASH AND CASH EQUIVALENTS, as of
August 31 2,452 8,192
CASH AND CASH EQUIVALENTS, as of May 31 $ 5,745 $ 5,992
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the nine months
for:
Interest $ 1,800 $ 1,600
Income taxes $ 2,600 $ 6,400
The accompanying notes are an integral part of these statements.
</PAGE>
<PAGE>
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except percentages and share amounts)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been
prepared in accordance with the generally accepted accounting
principles for interim financial information and Article 10 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for the fair
presentation of the consolidated financial statements have
been included. Due to the seasonal nature of Delta and Pine Land
Company and subsidiaries' (the "Company") business, the results of
operations for the three or nine month periods ended May 31, 1995
and May 31, 1996, are not necessarily indicative of the results to
be expected for the full year. For further information
reference should be made to the consolidated financial
statements and footnotes thereto included in the Company's Annual
Report to Stockholders on Form 10-K for the fiscal year ended
August 31, 1995.
In October, 1995, the Board of Directors authorized a 4 for 3
stock split effected in the form of a dividend, with no change
in the par value per share, distributed on December 15, 1995 to
the stockholders of record on December 1, 1995. In March 1996,
the Board of Directors authorized a 3 for 2 stock split for
common and preferred shares outstanding to be effected in the
form of a dividend, with no change in par value per share,
distributed on April 15, 1996 to stockholders of record on March
29, 1996. Both stock splits have been reflected in the
accompanying financial statements.
The reported results for 1995 (as restated) and 1996 include the
results of operations of Arizona Processing, Inc., Ellis Brothers
Seed, Inc. and Mississippi Seed, Inc. (the "Sure Grow
Companies"), with which the Company merged in May 1996 in a
pooling-of-interests transaction.
2. RECENT ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards ("SFAS") No.
116, "Accounting for Contributions Received and Contributions
Made", is effective for fiscal years beginning after December 15,
1994. Although the Company periodically makes contributions to
universities and other non-profit organizations, the
Company's consolidated financial statements are not
significantly affected by this statement.
SFAS No. 114, "Accounting by Creditors for Impairment of a
Loan", requires the recognition of an impairment of a loan by a
creditor. SFAS No. 118 subsequently amended SFAS No. 114. The
Company was not affected by either of these statements.
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed Of", was issued effective
for fiscal years beginning after December 15, 1995. The Company
was not affected by this statement.
SFAS No. 123, "Accounting for Stock-Based Compensation", was
issued effective for fiscal years beginning December 15, 1995. The
Company has not yet implemented this statement, nor has it decided
which method to use. However, the Company does not think the
effects of this statement will be material to the Company's
consolidated financial statements taken as a whole.
3. INVENTORIES
Inventories consisted of the following (in thousands):
May 31, August 31, May 31,
1995 1995 1996
(As (As
Restated) Restated)
Finished goods $ 14,890 $ 17,534 $ 22,295
Raw materials 4,980 3,975 15,418
Growing crops 251 731 293
Supplies and other 794 750 955
20,915 22,290 38,961
Less reserves (1,964) (2,822) (2,558)
$ 18,951 $ 20,168 $ 36,403
Substantially all finished goods and raw material inventory is
valued at the lower of average cost or market. Growing crops
are recorded at cost.
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following (in
thousands):
May 31, August 31, May 31,
1995 1995 1996
(As (As
Restated) Restated)
Land and improvements $ 3,287 $ 3,349 $ 3,687
Buildings and improvements 16,474 16,943 22,081
Machinery and equipment 22,463 23,056 28,866
Germplasm, breeder and
foundation seed 8,000 8,000 9,500
Construction in progress 2,675 6,494 5,485
52,899 57,842 69,619
Less accumulated
depreciation (16,165) (16,751) (19,191)
$ 36,734 $ 41,091 $ 50,428
5. CONTINGENCIES
A corporation owned by the son of the Company's former
Guatemalan distributor sued in 1989 asserting that the
Company violated an agreement with it by granting to another
entity an exclusive license in certain areas of Central America
and southern Mexico. The suit seeks damages of 5,300,000
quetzales (approximately $900,000 at current exchange rates)
and an injunction preventing the Company from distributing
seed through any other licensee in that region. The
Guatemalan court, where this action is proceeding, has twice
declined to approve the injunction sought. Management believes
the assertions are without merit. The Company continues to
offer seed for sale in Guatemala.
The Company is involved in various other claims arising in the
normal course of business. Management believes all such matters
are without merit and will be resolved without any material
effect on the Company's financial position or its results of
operations.
</PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Since 1915, D&PL has bred, produced and/or marketed upland
picker varieties of cotton planting seed for cotton varieties that
are grown primarily east of Texas and in Arizona. In the
1980's, D&PL added soybean and hybrid sorghum seed to its
product line and commenced distributing corn hybrids acquired
from others. In 1995, the Company sold its corn and sorghum
business to Mycogen. As a part of this sale, Mycogen and D&PL
entered into a joint marketing agreement whereby both companies
will sell D&PL's remaining corn and sorghum varieties through
1997. The two parties will exchange certain operating facilities
in the future upon the satisfactory completion of
environmental site assessments and remediation procedures as
necessary.
In May, 1996, D&PL acquired Ellis Brothers Seed, Inc.,
Arizona Processing, Inc. and Mississippi Seed, Inc. ( the "Sure
Grow Companies") in a stock transaction valued at approximately
$70 million. D&PL exchanged 1.5 million shares of its common
stock for all outstanding shares of the three companies. The
merger was accounted for as a pooling of interests. The
acquired companies will continue their current operations marketing
cotton seed under their existing brand, Sure Grow. The Sure Grow
breeding program will have immediate access to Monsanto's Bollgard
and Roundup Ready technologies. The accompanying financial
statements have been restated to include the results of
operations of the acquired companies as if the merger had occurred
at the beginning of the earliest period presented. The acquired
companies are on a fiscal year ending June 30. The quarterly and
year to date results as of and for the third quarter ended March
31, 1996 for these three subsidiaries are consolidated with the
Company's results as of and for the comparable period ended May 31,
1996.
Since the 1940's, the Paymaster (Registered) and Lankart
(Registered) upland stripper cotton seed varieties have been
developed for and marketed primarily in the Texas High Plains.
In 1994, D&PL acquired the Paymaster and Lankart varieties, all
related cotton planting seed inventories, germplasm, breeding
stocks, trademarks, trade names and other assets, for
approximately $14.0 million. Although the Paymaster varieties are
planted on approximately 80% of the estimated 4.0 to 5.0 million
cotton acres planted in the Texas High Plains, only a small
portion of that seed is actually sold by Paymaster. Farmer-saved
seed and seed from other sources accounted for up to 85% of the
seed needed to plant the acreage in this market area. The seed
needed to plant the remaining acreage is sold by Paymaster and
its 12 sales associates through a certified seed program.
Under this program, Paymaster sold parent seed to its contract
growers who planted, produced and harvested the progeny of the
parent seed, which Paymaster then purchased from the growers.
The progeny of the parent seed was then sold by Paymaster to
the sales associates who in turn delinted, conditioned, bagged and
sold it to others as certified seed. The sales associates pay a
royalty to Paymaster on certified seed sales. The Company
has informed its associates that, beginning in fiscal 1997,
unconditioned seed will be supplied by Paymaster to contractors
who will delint, condition and bag the seed for a tolling fee.
The seed will then be sold directly by Paymaster through
distributors and dealers. Current associates will have the
option to participate as contract delinters for Paymaster,
subject to meeting specified quality standards.
In 1994, D&PL acquired from the Supima Association bulk and
bagged inventory, the right to use the Supima (Registered)
trade name and trademark and the right to distribute Pima extra
long staple (fiberlength) varieties. D&PL also entered into a
research agreement with its university collaborator that allows
D&PL the right of first refusal for any Pima varieties developed
under this program. Pima seed will be produced, conditioned and
marketed directly by D&PL.
In October, 1995, the United States Environmental Protection
Agency ("EPA") completed its review process of the Bollgard
(Trademark) gene technology, thus clearing the way for Monsanto
and D&PL to license the technology and sell cotton planting seed
containing the Bollgard gene. In the second quarter of 1996, D&PL
commenced commercial sales of NuCOTN varieties, which contain the
Bollgard gene, in accordance with the terms of the D&PL/Monsanto
collaborative biotechnology licensing agreements.
Since 1987, D&PL has conducted research using its technology along
with that provided by DuPont to develop cotton and soybean plants
that are tolerant to certain DuPont ALS (Registered)
herbicides. Such plants would enable farmers to apply these
herbicides for weed control without adversely affecting the
agronomics of the cotton or soybean plants. In 1994, D&PL and
DuPont signed a commercialization agreement whereby D&PL commenced
producing quantities of seed of herbicide-tolerant cotton
varieties sufficient for their planned commercial introduction.
Since soybean seed containing the ALS herbicide-tolerant
trait was not genetically engineered, sale of this seed will not
require government approval, although the herbicide to which they
express tolerance must be EPA approved. In February, 1996,
DuPont and D&PL mutually terminated the cotton
commercialization agreement. The termination of this
agreement did not materially impact the Company's current results
of operations and management does not believe it will materially
impact future operations.
D&PL is also developing transgenic cotton and transgenic
soybean varieties that are tolerant to Roundup, a herbicide sold
by Monsanto. In 1996, such Roundup Ready plants were approved by
the Food and Drug Administration, the USDA, and the EPA. D&PL
and Monsanto are currently negotiating a commercialization
agreement for transgenic soybean seed. In 1996, D&PL and
Monsanto entered a Roundup Ready gene commercialization
agreement for cotton.
The Company and Monsanto formed D&M International LLC (D&M) in
1995, a venture through which they plan to introduce, in
combination, both D&PL's cotton seed delinting technology and
Monsanto's Bollgard gene technology. D&M and certain Singapore
investors formed D&PL China Pte Ltd ("D&PL China") which is
continuing the efforts started by D&PL in 1993 to form up to five
joint ventures in the People's Republic of China ("China"), one
of the world's largest cotton-producing countries. Currently,
the Company (through D&M or D&PL China) is negotiating with three
parties to form joint ventures to test, produce, condition, treat
and distribute high-quality cotton planting seed in China.
While initial negotiations have been progressing, no joint
venture operating agreements have been finalized in China.
In 1995, D&PL formed a branch in South Africa to take advantage of
the Southern Hemisphere growing season to accelerate seed
production of cotton varieties containing the Bollgard and Roundup
Ready (Trademark) genes. The growing season there occurs during
the Northern Hemisphere's winter season. In addition, the South
African branch will work to develop the cotton seed market in Sub-
Saharan Africa.
In South America, D&PL continues its long-term strategy of
producing cotton varieties that compliment Southern Hemisphere
growing conditions. In addition, the Company is continuing its
development of markets for the major cotton producing regions on
this continent. D&PL Argentina, Inc. was formed in 1996 to
accelerate seed production of the Company's new varieties and to
further develop the South American market.
Revenues from domestic seed sales are generally recognized when
seed is shipped. Revenues from Bollgard licensing fees are
recognized based on the number of acres estimated to be planted
with such seed when the seed is shipped. International revenues
are recognized upon the later of when seed is shipped or when
letters of credit are cleared. All of the Company's domestic seed
products are subject to return or credit, which vary from year to
year. Generally, international sales are not subject to return.
The annual level of returns and, ultimately, net sales are
influenced by various factors, principally weather conditions
occurring in the spring planting season during the Company's
third and fourth quarters. The Company provides for estimated
returns as sales occur. To the extent actual returns and
actual acreage planted with seed containing the Bollgard gene
differ from estimates, adjustments to the Company's operating
results are recorded when such differences become known. All
significant returns occur or are accounted for by fiscal year
end.
Domestic demand for D&PL's seed will continue to be affected
by government programs and, most importantly, by weather. Demand
for seed is also influenced by commodity prices and the demand
for a crop's end uses such as textiles, animal feed, food
and raw materials for industrial use. These factors along with
weather influence the cost and availability of seed for
subsequent seasons. Weather impacts crop yields, commodity
prices and the planting decisions that farmers make regarding
both original planting commitments and, when necessary,
replanting levels.
Further growth in profitability will depend on weather
conditions, government policies in all countries where the Company
sells products, commodity prices, the Company's ability to
successfully open new international markets, the Company's
ability to successfully continue the development of the Texas
High Plains market, Monsanto's and DuPont's ability to obtain
timely government approval for additional biotechnology products on
which they and the Company are working and the Company's ability
to produce sufficient commercial quantities of high quality
planting seed of these products. Any delay in or inability to
capitalize on these projects may affect future profitability.
Due to the varying levels of agricultural and social
development of the international markets in which D&PL operates
and because of factors within the particular international
markets targeted by the Company, international profitability and
growth may take longer and be less stable than domestic
profitability has been in the past.
RESULTS OF OPERATIONS
The following sets forth selected financial operating data of the
Company (in thousands):
For the Three Months Ended For the Nine Months Ended
May 31, May 31, May 31, May 31,
1995 1996 1995 1996
(As Restated) (As Restated)
Operating results -
Net sales and
licensing fees $ 49,189 $83,061 $ 97,533 $ 151,379
Gross profit 22,944 31,146 45,571 58,353
Operating expenses:
Research and
development 1,828 2,954 4,888 6,411
Selling 1,918 2,088 4,822 6,262
General and
administrative 4,321 4,681 11,055 12,777
Operating income 14,877 21,423 24,806 32,903
Income before income
taxes 14,260 20,865 23,023 31,572
Net income 9,276 13,366 14,324 20,042
The following sets forth selected balance sheet data of the Company
as of the following periods (in thousands):
May 31, August 31, May 31,
1995 1995 1996
(As Restated) (As Restated)
Balance sheet summary-
Current assets $ 50,035 $ 36,296 $ 126,264
Current liabilities 43,371 24,695 97,603
Working capital 6,664 11,601 28,661
Property, plant and 36,734 41,091 50,428
equipment, net
Total assets 96,769 87,542 190,922
Outstanding 3,862 13,464 36,114
borrowings
Stockholders' equity 51,133 47,860 72,916
Three months ended May 31, 1996, compared to three months ended May
31, 1995:
Net sales and licensing fees increased approximately $33.9
million to $83.1 million from $49.2 million. The increase in
net sales and licensing fees is the result of the introduction
of transgenic seed products as well as increased export seed
shipments to Mexico and Greece. In addition, D&PL recognized
revenues of $2.5 million related to fees from Monsanto during
the third quarter relating to certain transgenic seed
commercialization agreements. Gross margins decreased during the
period primarily related to the costs of the transgenic
technology associated with NuCOTN and higher raw material (fuzzy
seed) costs. D&PL records the transgenic licensing fees net
of certain returns and allowances. D&PL records fees paid to
Monsanto for Bollgard technology fees in cost of sales.
Operating expenses increased from $8.1 million in the third quarter
of 1995 to $9.7 million in 1996. This expected increase is
attributable to increases in product development and promotional
costs related to NuCOTN sales as well as costs incurred for certain
acquisitions.
Nine months ended May 31, 1996, compared to nine months ended May
31, 1995:
Net sales and licensing fees increased approximately $53.9
million to $151.4 million from $97.5 million. The increase in
net sales and licensing fees is the result of the
commercial introduction of transgenic seed products as well as
increased export seed shipments to Mexico and Greece. In
addition, D&PL recognized revenues of $2.5 million from
Monsanto relating to certain transgenic seed
commercialization agreements. Gross margins decreased during the
period primarily related to the costs of the transgenic technology
associated with NuCOTN and higher raw material (fuzzy seed) costs.
D&PL records the transgenic licensing fees net of certain returns
and allowances. D&PL records fees paid to Monsanto for Bollgard
technology fees in cost of sales.
Operating expenses increased from $20.8 million in 1995 to $25.4
million in 1996. This expected increase is attributable to
increases in product development and promotional costs as well
as expenses incurred for certain acquisitions.
Interest expense decreased by 20% to $1.6 million from $2.0
million, attributable to higher outstanding borrowings, more than
offset by lower average interest rates and an increase in
capitalized interest.
LIQUIDITY AND CAPITAL RESOURCES
The seasonal nature of the Company's business significantly impacts
cash flow and working capital requirements. The Company
maintains credit facilities, uses early payments by customers
and uses cash from operations to fund working capital needs.
For more than 15 years D&PL has borrowed on a short-term basis
to meet seasonal working capital needs.
D&PL purchases seed from contract growers in its first and second
fiscal quarters. Seed conditioning, treating and packaging commence
late in the first fiscal quarter and continue through the third
fiscal quarter. Seasonal borrowings normally commence in the first
fiscal quarter and peak in the third fiscal quarter. Loan
repayments normally begin in the middle of the third fiscal quarter
and are typically completed early in the fourth fiscal quarter.
D&PL also offers distributors, dealers and farmers financial
incentives to make early payments. To the extent D&PL attracts
early payments from customers, bank borrowings under the credit
facility are reduced.
In January 1996, the Company and a financial institution entered
into a new agreement that replaced the existing facility. The
new facility provided for unsecured borrowings consisting of a
base commitment of $15.0 million and a seasonal commitment
of $45.0 million, plus additional availability of $15.0 million
at the Company's discretion. In June 1996, the base commitment
was increased to $30.0 million and the seasonal commitment
reduced to $30.0 million to accommodate the anticipated
changes in borrowings related to the acquisition of the Sure Grow
Companies. The base commitment is a long-term loan that may be
borrowed upon at any time and is due January 1, 1999. The
seasonal commitment is a working capital loan that may be
drawn upon from September 1 through June 30 of each fiscal year
and expires January 1, 1999. Commencing in January 1997 and in
each January thereafter, both facilities are renewable for another
three year term. Each commitment offers variable and fixed
interest rate options and requires the Company to pay facility fees
and to comply with certain financial covenants.
As a result of the merger with the Sure Grow Companies, D&PL
assumed the liabilities of the acquired companies of which
approximately $8.1 million related to lines of credit with
several financial institutions with interest based on the
institutions' prime rates. The remaining debt assumed
primarily consists of several installment notes for purchases
of equipment payable to various financial institutions and
finance companies.
Current assets and liabilities, including bank borrowings,
fluctuate throughout the year due to the seasonal nature of
the agriculture industry. Inventory levels depend, in part, on
timing of bulk seed receipts, conditioning and shipping and the
related cost of bulk seed and conditioning. Inventory levels
have increased as compared with the third quarter of 1995 due to
the introduction of the transgenic seed products. Specifically,
D&PL, during the 1995 growing season, contracted with its
growers to produce enough non-transgenic seed to meet sales
projections for the 1996 season in the event that the EPA did not
approve the sales of seed containing the Bollgard gene technology.
The EPA ultimately approved such technology in October, 1995,
which was beyond the date that D&PL could reduce its purchase
contracts for nontransgenic seed. In addition, the reduction in
planted cotton acres from 16.6 in 1995 around 14.0 in 1996
further contributed to increased inventory levels since D&PL sold
fewer units in the 1996 season.
Capital expenditures through the third quarter of 1996
were approximately $9.8 million as the Company continues to
facilitate growth in its traditional and transgenic seed
products. This investment strategy included the commencement
in 1995 of a special $13.0 million upgrade of its bulk seed
stabilization, storage, handling and processing facilities at
three of its cotton seed plants. In addition, a cotton seed
processing plant acquired in the Paymaster acquisition has been
technologically upgraded. Such expenditures will be funded from
cash on hand and borrowings under the Company's credit facility.
Management believes that capital expenditures will be
approximately $15.0 million in 1996 and $10.0 to $12.0 million
in 1997, excluding expected capital expenditures for foreign joint
ventures which will be funded by cash from operations,
borrowings or investments from joint venture partners, as
necessary.
In the third quarter of fiscal 1996, the Board of Directors
authorized a quarterly dividend of $0.03 per share, paid June
14, 1996 to the stockholders of record on June 1, 1996, which
represented an increase in the dividend rate due to the new
number of shares outstanding as a result of the stock splits
previously described.
Cash provided from operations and borrowings under the loan
agreement should be sufficient to meet the Company's 1996 and 1997
working capital needs.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
11.01 Computation of Earnings Per Share
(b) Reports on Form 8-K.
On June 4, 1996, the Company filed Form 8-K dated May 20, 1996,
regarding the acquisition of Arizona Processing, Inc., Ellis
Brothers Seed, Inc. and Mississippi Seed, Inc. (the "Sure Grow
Companies"). Item 2, Acquisition or Disposition of Assets, and
Item 7, Financial Statements and Exhibits, were included in the
report.
</PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
DELTA AND PINE LAND COMPANY
Date: July 15, 1996 /s/ Roger D. Malkin
Roger D. Malkin, Chairman
and Chief Executive Officer
Date: July 15, 1996 /s/ W. Thomas Jagodinski
W. Thomas Jagodinski, Vice
President - Finance and
Treasurer
<PAGE>
EXHIBIT 11.01
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE THREE MONTHS ENDED
(As Restated)
May 31, May 31,
1995 1996
PRIMARY EARNINGS PER SHARE:
NUMBER OF SHARES OF COMMON STOCK
OUTSTANDING AT THE BEGINNING OF
PERIOD 20,849 20,864
WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK ISSUED DURING THE
PERIOD - 55
WEIGHTED AVERAGE NUMBER OF SHARES
ATTRIBUTED TO OPTIONS 299 1,077
WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING
DURING THE PERIOD FOR COMPUTATION
OF PRIMARY EARNINGS PER SHARE 21,148 21,996
FULLY DILUTED EARNINGS PER SHARE:
NUMBER OF SHARES OF COMMON STOCK
OUTSTANDING AT THE BEGINNING OF
PERIOD - 20,864
WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK ISSUED DURING THE
PERIOD - 55
WEIGHTED AVERAGE NUMBER OF CONVERTIBLE
PREFERRED STOCK OUTSTANDING DURING
THE PERIOD - 450
WEIGHTED AVERAGE NUMBER OF SHARES
ATTRIBUTED TO OPTIONS - 1,177
WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING
DURING THE PERIOD FOR COMPUTATION
OF FULLY DILUTED EARNINGS PER SHARE - 22,546
NET INCOME APPLICABLE TO COMMON SHARES $ 9,276 $ 13,353
NET INCOME PER COMMON SHARE:
PRIMARY $ 0.44 $ 0.61
FULLY DILUTED $ - $ 0.59
</PAGE>
<PAGE>
EXHIBIT 11.01
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE NINE MONTHS ENDED
(As Restated)
May 31, May 31,
1995 1996
PRIMARY EARNINGS PER SHARE:
NUMBER OF SHARES OF COMMON STOCK
OUTSTANDING AT THE
BEGINNING OF PERIOD 20,849 20,856
WEIGHTED AVERAGE NUMBER OF
SHARES OF COMMON STOCK ISSUED
DURING THE PERIOD - 25
WEIGHTED AVERAGE NUMBER OF
SHARES ATTRIBUTED TO OPTIONS
WEIGHTED AVERAGE NUMBER OF
SHARES OF COMMON STOCK
OUTSTANDING DURING THE PERIOD FOR
COMPUTATION OF PRIMARY EARNINGS PER 20,994 21,774
SHARE
FULLY DILUTED EARNINGS PER
SHARE:
NUMBER OF SHARES OF COMMON
STOCK OUTSTANDING AT THE
BEGINNING OF PERIOD - 20,856
WEIGHTED AVERAGE NUMBER OF
SHARES OF COMMON STOCK ISSUED
DURING THE PERIOD WEIGHTED
AVERAGE NUMBER OF CONVERTIBLE
PREFERRED STOCK ISSUED
DURING THE PERIOD - 203
WEIGHTED AVERAGE NUMBER OF
SHARES ATTRIBUTED TO OPTIONS - 822
WEIGHTED AVERAGE NUMBER OF
SHARES OF COMMON STOCK
OUTSTANDING DURING THE PERIOD FOR
COMPUTATION OF FULLY DILUTED EARNINGS - 21,906
PER SHARE
NET INCOME APPLICABLE TO COMMON $ 14,324 $ 20,017
SHARES
NET INCOME PER COMMON SHARE:
PRIMARY $ 0.68 $ 0.92
FULLY DILUTED $ - $ 0.91
</PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-Q and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS 3-MOS 3-MOS
<FISCAL-YEAR-END> AUG-31-1995 AUG-31-1996 AUG-31-1995 AUG-31-1996
<PERIOD-END> MAY-31-1995 MAY-31-1996 MAY-31-1995 MAY-31-1996
<CASH> 5,745 5,992 5,745 5,992
<SECURITIES> 0 0 0 0
<RECEIVABLES> 23,571 81,129 23,571 81,129
<ALLOWANCES> 0 0 0 0
<INVENTORY> 18,951 36,403 18,951 36,403
<CURRENT-ASSETS> 50,035 126,264 50,035 126,264
<PP&E> 52,899 69,619 52,899 69,619
<DEPRECIATION> 16,165 19,191 16,165 19,191
<TOTAL-ASSETS> 96,769 190,922 96,769 190,922
<CURRENT-LIABILITIES> 43,371 97,603 43,371 97,603
<BONDS> 810 16,677 810 16,677
0 0 0 0
0 45 0 45
<COMMON> 2,085 2,096 2,085 2,096
<OTHER-SE> 49,048 70,775 49,048 70,775
<TOTAL-LIABILITY-AND-EQUITY> 96,769 190,922 96,769 190,922
<SALES> 97,533 151,379 49,189 83,061
<TOTAL-REVENUES> 97,533 151,379 49,189 83,061
<CGS> 51,962 93,026 26,245 51,915
<TOTAL-COSTS> 51,962 93,026 26,245 51,915
<OTHER-EXPENSES> 21,003 25,720 8,091 9,828
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 2,021 1,601 641 663
<INCOME-PRETAX> 23,023 31,572 14,260 20,865
<INCOME-TAX> 8,699 11,530 4,984 7,499
<INCOME-CONTINUING> 14,324 20,017 9,276 13,353
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 14,324 20,017 9,276 13,353
<EPS-PRIMARY> 0.68 0.92 0.44 0.61
<EPS-DILUTED> 0 0.91 0 0.59
</TABLE>
