UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(x) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended November 30, 1997 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 -- 37,852,087 shares outstanding as of January 5,
1998.
<PAGE>
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
INDEX
Page No.
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets - November 30, 1996,
August 31, 1997, and November 30, 1997 1
Consolidated Statements of Operations - Three Months
Ended November 30, 1996 and November 30, 1997 2
Consolidated Statements of Cash Flows - Three Months
Ended November 30, 1996 and November 30, 1997 3
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
(Unaudited)
<TABLE>
<S> <C> <C> <C>
November 30, August 31, November 30,
1996 1997 1997
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,519 $1,890 $4,140
Receivables, net 6,446 95,437 11,000
Inventories 60,779 42,886 68,447
Prepaid expenses 1,463 2,167 1,878
Income tax receivable - - 2,295
Deferred income taxes 1,907 3,069 3,069
-------------- ------------- -------------
Total current assets 72,114 145,449 90,829
-------------- ------------- -------------
PROPERTY, PLANT and EQUIPMENT, net 57,893 63,022 65,111
EXCESS OF COST OVER NET ASSETS OF
BUSINESS ACQUIRED, net 4,769 4,689 4,659
INTANGIBLES, net 3,176 3,674 3,615
OTHER ASSETS 4,439 3,822 2,515
============== ============= =============
$ 142,391 $ 220,656 $ 166,729
============== ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 12,708 $ 259 $ 11,995
Accounts payable 17,868 19,113 32,673
Accrued expenses 11,136 91,196 11,775
Income taxes payable 1,823 1,956 -
-------------- ------------- -------------
Total current liabilities 43,535 112,524 56,443
-------------- ------------- -------------
LONG-TERM DEBT, less current maturities 31,463 30,572 36,114
DEFERRED INCOME TAXES 2,888 4,038 4,038
MINORITY INTEREST IN SUBSIDIARIES - 991 1,149
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;
429,319 shares authorized; no shares issued or outstanding Series M
Convertible Non-Voting Preferred, par value $0.10 per
share;
1,066,666 shares authorized; 800,000 shares issued and 80 80 80
outstanding
Common stock, par value $0.10 per share;
50,000,000 shares authorized; 37,581,209; 37,724,116 and
37,954,711 shares issued; 37,581,209; 37,609,849
and 37,840,445 shares outstanding 3,758 3,772 3,795
Capital in excess of par value 20,910 22,865 25,626
Retained earnings 39,988 48,894 43,094
Cumulative foreign currency translation adjustments (231) (907) (1,437)
Treasury stock at cost, 0; 114,266 and 114,266 shares - (2,173) (2,173)
-------------- ------------- -------------
Total stockholders' equity 64,505 72,531 68,985
-------------- ------------- -------------
$142,391 $ 220,656 $ 166,729
============== ============= =============
</TABLE>
The accompanying notes are an integral part of these balance sheets.
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
(in thousands, except per share amounts)
(Unaudited)
<TABLE>
<S> <C> <C>
November 30, November 30,
1996 1997
NET SALES AND LICENSING FEES $ 6,317 $ 5,340
COST OF SALES 5,129 3,273
-------------- --------------
GROSS PROFIT 1,188 2,067
-------------- --------------
OPERATING EXPENSES:
Research and development 2,590 3,632
Selling 2,421 2,876
General and administrative 2,594 2,602
Unusual charges related to acquisitions 396 47
---------------- ----------------
8,001 9,157
--------------- ----------------
OPERATING LOSS (6,813) (7,090)
INTEREST EXPENSE, net of capitalized interest of $132 and $57 (269) (343)
OTHER 257 66
-------------- ----------------
LOSS BEFORE INCOME TAXES (6,825) (7,367)
INCOME TAX BENEFIT 2,457 2,726
------------- ------------------
NET LOSS (4,368) (4,641)
DIVIDENDS ON PREFERRED STOCK (13) (24)
----------------- --------------------
NET LOSS APPLICABLE TO COMMON SHARES $ (4,381) $ (4,665)
=============== ==================
PRIMARY EARNINGS PER SHARE:
NET LOSS PER SHARE $ (0.12) $ ( 0.12)
============== =================
NUMBER OF SHARES USED IN PRIMARY EARNINGS
PER SHARE CALCULATIONS 37,573 37,721
=============== ===============
FULLY DILUTED EARNINGS PER SHARE:
NET LOSS PER SHARE $ (0.12) $ (0.12)
================= =================
NUMBER OF SHARES USED IN FULLY DILUTED EARNINGS
PER SHARE CALCULATIONS 37,573 37,721
================ ================
DIVIDENDS PER SHARE $ 0.017 $ 0.030
================ ================
</TABLE>
The accompanying notes are an integral part of these statements.
DELTA AND PINE LAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
(in thousands)
(Unaudited)
<TABLE>
<S> <C> <C>
November 30, November 30,
1996 1997
---------------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ $
(4,368) (4,641)
Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:
Depreciation and amortization 1,189 1,807
Minority interest in subsidiaries - 158
Changes in current assets and liabilities:
Receivables 60,204 84,437
Inventories (19,319) (25,561)
Prepaid expenses (100) 289
Accounts payable 2,914 13,560
Accrued expenses (43,943) (79,421)
Income taxes payable (1,515) (4,251)
Decrease in intangible and other assets 278 46
-------------- ---------------
Net cash used in operating activities (4,660) (13,577)
-------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (4,010) (4,426)
Proceeds from sale of investment - 1,350
-------------- ---------------
Net cash used in investing activities (4,010) (3,076)
-------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of short-term debt - (3,861)
Payments of long-term debt (2) (35,092)
Dividends paid (648) (1,159)
Proceeds from long-term debt - 40,634
Proceeds from short-term debt 10,113 15,597
Proceeds from exercise of stock options and tax benefit
of stock option exercises 166 2,784
-------------- ---------------
Net cash provided by financing activities 9,629 18,903
-------------- ---------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 959 2,250
CASH AND CASH EQUIVALENTS, as of August 31 560 1,890
============== ===============
CASH AND CASH EQUIVALENTS, as of November 30 $ $
1,519 4,140
============== ===============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the three months for:
Interest paid, net of capitalized interest $ $
300 325
Income taxes $ $
- -
</TABLE>
The accompanying notes are an integral part of these statements.
<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 consolidated 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 month periods ended November 30, 1996 and November 30, 1997, 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, 1997.
In October 1997, the Board of Directors authorized a 4 for 3 stock split for all
common and preferred shares outstanding effected in the form of a dividend, with
no change in par value, distributed on November 20, 1997 to stockholders of
record on November 10, 1997. This stock split has been reflected in the
accompanying financial statements.
Certain prior year balances have been reclassified to conform to the current
year presentation.
2. RECENT ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share", was issued effective for both interim and annual periods ending after
December 15, 1997. This statement requires, among other things, the presentation
of basic earnings per share and diluted earnings per share. Earlier adoption is
prohibited. Basic earnings per share excludes dilution and is computed by
dividing income available to common stockholders by the weighted-average number
of common shares outstanding for the period. Diluted earnings per share reflects
the potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock or resulted in
the issuance of common stock that then shared in the earnings of the entity.
Diluted earnings per share is computed similarly to fully diluted earnings per
share. The proforma effects of this accounting change for the three months ended
November 30, were as follows:
Per share amounts 1996 1997
- -------------------------------------------------------------------------------
Primary EPS as reported $ (0.12) $ (0.12)
- -------------------------------------------------------------------------------
Basic EPS $ (0.12) $ (0.12)
- -----------------------------------------------------------------------------
Fully diluted EPS as reported $ (0.12) $ (0.12)
- --------------------------------------------------------------------------------
Diluted EPS $ (0.12) $ (0.12)
- ------------------------------------------------------------------- ------------
SFAS No. 130, "Reporting Comprehensive Income", establishes new standards for
reporting comprehensive income and its components (revenues, expenses, gains and
losses) in financial statements. This statement is effective for fiscal years
beginning after December 15, 1997. The Company does not expect the adoption of
SFAS No. 130 to have a material effect on its financial statements.
<PAGE>
3. INVENTORIES
Inventories consisted of the following (in thousands):
<TABLE>
<S> <C> <C> <C>
November 30, August 31, November 30,
1996 1997 1997
Finished goods $ 31,544 $ 28,114 $ 29,638
Raw materials 28,991 16,121 40,068
Growing crops 665 300 109
Supplies and other 1,513 876 1,252
---------------- -------------------------------
62,713 45,411 71,067
Less reserves (1,934) (2,525) (2,620)
--------------- -------------- ---------------
$ 60,779 $ 42,886 $ 68,447
============= ============ =============
</TABLE>
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):
<TABLE>
<S> <C> <C> <C>
November 30, August 31, November 30,
1996 1997 1997
Land and improvements $ 3,864 $ 4,360 $ 4,419
Buildings and improvements 26,189 32,425 33,755
Machinery and equipment 32,675 32,734 36,569
Germplasm, breeder and foundation seed 9,500 9,500 9,500
Construction in progress 7,300 8,276 6,608
--------------- --------------- ---------------
79,528 87,295 90,851
Less accumulated depreciation (21,635) (24,273) (25,740)
--------------- -------------- ---------------
$ 57,893 $ 63,022 $ 65,111
============== ============= ==============
</TABLE>
5. CONTINGENCIES
Between August 1997 and October 1997, numerous farmers filed arbitration claims
against the Company and Monsanto Company ("Monsanto") with state agencies,
primarily Mississippi. The complainants allege that Roundup Ready seed marketed
by the Company failed to perform as anticipated resulting in deformed or missing
bolls and some further assert substantial yield losses in their 1997 crops. The
Company and Monsanto are presently investigating these claims to determine the
cause or causes of the problems alleged. Pursuant to the terms of the Roundup
Ready Gene License and Seed Services Agreement (the "Roundup Agreement") between
D&PL and Monsanto, Monsanto has assumed responsibility for the defense of these
claims. Pursuant to the Roundup Agreement, Monsanto is contractually obligated
to defend and indemnify the Company against all claims arising out of failure of
the Roundup Ready glyphosate tolerance gene. D&PL will not have a right to
indemnification from Monsanto, however, for any claims involving defective
varietal characteristics separate from or in addition to failure of the
herbicide-tolerance gene. D&PL believes that these claims will be resolved
without any material impact on the Company's financial statements.
The Company, Monsanto and other third parties were named as defendants in a
lawsuit filed in the District Court of Falls County, Texas, in August 1996.
Another lawsuit was filed in October 1996, in the District Court for
Natchitoches Parish, Louisiana. A second Texas lawsuit brought in 1996 was
settled in 1997 with no material impact on the Company or its financial
statements. In the two remaining cases, the plaintiffs allege, among other
things, that D&PL's NuCOTN varieties, which contain Monsanto's Bollgard(TM)
gene, did not perform as these farmers had anticipated and, in particular, did
not fully protect their cotton crops from certain lepidopteran insects. Pursuant
to the terms of the Bollgard Gene License and Seed Services Agreement (the
"Bollgard Agreement") between D&PL and Monsanto, Monsanto has assumed
responsibility for the defense of these claims. Some of these claims for failure
of the Bollgard gene are subject to a duty of defense by Monsanto and prorata
indemnification under the Bollgard Agreement. Under the applicable indemnity
provisions of the Bollgard Agreement, defense costs and liability to the
plaintiffs on any failure of the technology would be apportioned 71% to Monsanto
and 29% to D&PL. Some of the claims in this litigation concern failure of
Monsanto's express warranties relating to insect resistance and those claims may
not be within the scope of D&PL's indemnity obligation to Monsanto. On the other
hand, some of the claims made in the litigation concern the quality of seed and
seed coat treatments, or other varietal aspects of NuCOTN, not involving failure
of performance of the Bollgard gene or express representations with respect
thereto and, therefore, may not be within the scope of Monsanto's indemnity
obligation to D&PL. D&PL intends to cooperate with Monsanto in its anticipated
vigorous defense of these suits. D&PL believes that these suits will be resolved
without any material impact on the Company's financial statements.
In October 1996, Mycogen Plant Science, Inc. ("Mycogen") and Agrigenetics, Inc.
filed a lawsuit in U.S. District Court in Delaware naming D&PL, Monsanto and
DeKalb Genetics as defendants alleging that two of Mycogen's recently issued
patents have been infringed by the defendants by making, selling, and licensing
seed that contains the Bollgard gene. The suit seeks injunctions against alleged
infringement, compensatory damages, treble damages and attorney's fees and court
costs. Pursuant to the terms of the Bollgard Agreement, Monsanto is required to
defend D&PL against patent infringement claims and indemnify D&PL against
damages from any patent infringement claims and certain other losses and costs.
Due to Monsanto's obligation to indemnify D&PL, the Company believes that the
resolution of this matter will not have a material impact on the Company or its
financial statements.
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 Guatemalan
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 that the
resolution of the matter will not have material impact on the Company or its
financial statements. 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 such matters will be resolved without any material
effect on the Company's financial position or its results of operations.
On July 18, 1996, the United States Department of Justice, Antitrust Division
("USDOJ"), served a Civil Investigative Demand ("CID") on D&PL seeking
information and documents in connection with its investigation of the
acquisition by D&PL of the stock of Arizona Processing, Inc., Ellis Brothers
Seed, Inc. and Mississippi Seed, Inc. (which own the outstanding common stock of
Sure Grow Seed, Inc). The CID states that the USDOJ is investigating whether
these transactions may have violated the provisions of Section 7 of the Clayton
Act, 15 USC ss. 18. D&PL has responded to the CID, employees have been examined
by the USDOJ, and D&PL is committed to full cooperation with the USDOJ. At the
present time, the ultimate outcome of the investigation cannot be predicted.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
Delta and Pine Land Company and subsidiaries ("D&PL" or the "Company"), a
Delaware corporation, is primarily engaged in the breeding, production,
conditioning and marketing of proprietary varieties of cotton planting seed in
the United States and other cotton producing nations. D&PL also breeds,
produces, conditions and distributes soybean planting seed in the United States.
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. The Company has used its extensive classical plant breeding
programs to develop a gene pool necessary for producing cotton varieties with
improved agronomic traits important to farmers, such as crop yield, and to
textile manufacturers, such as enhanced fiber characteristics.
In 1980, D&PL added soybean seed and in 1988 hybrid sorghum seed to its product
line. In 1988, D&PL also commenced distributing corn hybrids acquired from
others. In 1995, the Company sold its corn and sorghum business to Mycogen Plant
Science, Inc. ("Mycogen"). D&PL and Mycogen entered into a joint marketing
agreement whereby both companies sold 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 the 1980's, as a component of its long-term growth strategy, the Company
began to market its products, primarily cotton seed, internationally. The
Company has strengthened and expanded its international staff in order to
support its expanding joint venture activities. In foreign countries, cotton
acreage is often planted with farmer-saved seed which has not been delinted or
treated and is of low overall quality. Management believes that D&PL has an
attractive opportunity to penetrate foreign markets because of its widely
adaptable, superior cotton varieties, technological know-how in producing and
conditioning high-quality seed and brand name recognition. Furthermore, in many
countries the Bollgard(TM) gene technology licensed from Monsanto Company
("Monsanto") would be effective and help farmers in those countries to control
certain lepidopteran cotton pests.
D&PL sells its products in foreign countries through (i) export sales from the
U.S., (ii) direct in-country operations and to a lesser degree (iii)
distributors or licensees. The method varies and evolves, depending upon the
Company's assessment of the potential size and profitability of the market,
governmental policies, currency and credit risks, sophistication of the target
country's agricultural economy, and costs (as compared to risks) of commencing
physical operations in a particular country. To date, a majority of the
Company's international sales have resulted from exports from the U.S. of the
Company's products rather than direct in-country operations.
D&M International, LLC, is a venture formed in 1995 through which D&PL (the
managing member) and Monsanto plan to introduce in combination D&PL's acid
delinting technology and Monsanto's Bollgard gene technology. In November 1995,
D&M International, LLC formed a subsidiary, D&PL China Pte Ltd. ("D&PL China").
In November 1996, D&PL China concluded negotiations with parties in Hebei
Province, one of the major cotton producing regions in the People's Republic of
China, to form Hebei Ji Dai Cotton Seed Technology Company Ltd. ("Ji Dai"), a
joint venture controlled by D&PL China. In June 1997, Ji Dai commenced
construction of a new cotton seed conditioning and storage facility in Hebei,
China, under terms of the joint venture agreement. The new facility was
completed in November 1997. During the 1997 growing season, the joint venture
harvested sufficient seed (assuming normal production runs) to produce seed
sufficient to plant up to 500,000 acres of Bollgard cotton in Hebei in 1998.
In December 1997, D&M International, LLC announced a joint venture with Centro
Integral Agropecuario ("CIAGRO"), a distributor of agricultural inputs in the
Argentine cotton region, for the production and sale of genetically improved
cotton seed. The new joint venture will be called CDM Mandiyu and will be owned
60% by D&M International, LLC and 40% by CIAGRO. The cotton region, comprised of
the Provinces of Chaco, Santiago del Estero, Catamarca and Jujuy, presently has
2.5 million acres of cotton requiring 21,000 tons of cotton planting seed per
year. The new venture, CDM Mandiyu, will produce high quality cotton seed,
integrating CIAGRO's local market and distribution knowledge and D&PL's cotton
breeding and production capabilities with Monsanto's biotechnology expertise.
CDM Mandiyu will be licensed to sell D&PL cotton varieties containing Monsanto's
Bollgard gene technology. Commercialization is planned for calendar 1998, after
final approvalfrom certain Argentinian governmental agencies. Future plans
include the production and sale of Roundup Ready(R) cotton,
which is estimated to take place in fiscal 1999.
Monsanto's Bollgard gene is currently sold in cotton seed varieties owned by
D&PL in the United States, Mexico and Australia.
The Company reached an agreement with parties in Zimbabwe to form a joint
venture that will provide high quality acid delinted seed to farmers in
Zimbabwe. Initially, the seed processing facility will process and sell locally
developed and owned varieties which will be genetically transformed so they
contain the Bollgard gene technology and potentially other technologies
developed in the future. The introduction of these technologies into locally
developed germplasm is expected to provide both large commercial growers as well
as the small communal growers a significant economic advantage over those who
don't use these technologies. This project is presently on hold pending
Zimbabwean government approval.
The Company and parties in Latin America are negotiating to form joint ventures
that will process locally, and/or form distributorships that will import, acid
delinted cotton seed for sale in certain Latin America countries. Initial plans
call for the introduction of D&PL transgenic varieties which have already
performed well in these countries as well as the transformation of locally
developed germplasm into varieties that contain the Bollgard gene technology and
potentially other new technologies. The ventures will also evaluate for
suitability D&PL germplasm developed in the Southern Hemisphere and elsewhere.
The Company's recently completed delinting plants in South Africa and Argentina
processed for the first time foundation seed grown in these countries. Such seed
was exported to the U.S. for sale in the Spring of 1997. The use of Southern
Hemisphere winter nurseries and seed production programs such as these can
dramatically accelerate the introduction of new varieties because D&PL can raise
at least two crops per year by taking advantage of the Southern Hemisphere
growing season. Through these locations, the Company is also evaluating local
market opportunities for the Company's cotton and, where feasible, soybean seed
varieties.
The Company's 1996 reorganization of its business among its key operating units
including Deltapine, Paymaster (which includes the stripper varieties acquired
in 1994 and the Hartz varieties acquired in 1996), Sure Grow and International,
has been in effect for over one year now. This new structure has created healthy
competition among the brands, particularly in the sales and research and
development areas.
In 1997, D&PL announced a production and cost optimization program aimed to
improve operating efficiencies. The Company expects this program will reduce its
unit cost of production and reduce the operating expense growth rate in future
years. As part of this program, the Company idled three of its higher cost
delinting facilities and reduced its work force at these facilities. The Company
also reduced its work force further with a voluntary early retirement plan. D&PL
believes its reconfigured production capabilities will allow it to continue to
meet the accelerating demand for its insect resistant and herbicide tolerant
transgenic products on a cost efficient basis to the farmer.
The Company is currently addressing its "Year 2000" computer software issues and
has formulated a plan to resolve these matters. Management believes the
Company's applications on operating systems software will be Year 2000 compliant
before 2000. The Company expects no material costs or interruptions to its
operations because a significant portion of the Company's software was replaced
by the purchase of computer software that is already Year 2000 compliant.
Acquisitions
In 1996, D&PL acquired Ellis Brothers Seed, Inc., Arizona Processing, Inc. and
Mississippi Seed, Inc., which own the outstanding common stock of Sure Grow
Seed, Inc., (the "Sure Grow Companies") in exchange for stock valued at
approximately $70 million on the day of closing. D&PL exchanged 2.8 million
shares of its common stock (after all stock splits effected through November
1997) for all outstanding shares of the three companies. The merger was
accounted for as a pooling-of-interests. The acquired companies have continued
to market upland picker cotton seed varieties under their existing brand, Sure
Grow. Additionally, through the Company, the Sure Grow breeding program now has
access to Monsanto's Bollgard and Roundup Ready gene technologies.
In 1996, the Company acquired Hartz Cotton, Inc. from Monsanto, which included
inventories of cotton planting seed of Hartz upland picker varieties, germplasm,
breeding stocks, trademarks, trade names and other assets, for approximately
$6.0 million. The consideration consisted primarily of 800,000 shares (after all
stock splits effected through November 1997) of the Company's Series M
Convertible Non-Voting Preferred Stock. Additional shares may be issued to
Monsanto depending on the sales and profitability levels achieved by the product
line acquired.
Since the 1940's, the Paymaster(R) and Lankart(R) upland stripper cotton seed
varieties have been developed for and marketed primarily in the High Plains of
Texas and Oklahoma ("High Plains"). In 1994, D&PL acquired the Paymaster and
Lankart cotton planting seed business ("Paymaster"), 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 in the High Plains, only a small
portion of that seed is actually sold by Paymaster. Farmer-saved seed accounted
for up to 85% of the seed needed to plant the acreage in this market area.
Through 1996 the seed needed to plant the remaining acreage was 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 paid a royalty to
Paymaster on certified seed sales. Beginning in fiscal 1997, D&PL's, operations
department, in addition to producing parent seed, commenced delinting,
conditioning and bagging unconditioned seed. Unconditioned seed is also supplied
by D&PL to a limited number of contract processors who delint, condition and bag
seed for a fee. This finished seed is sold by Paymaster as registered seed to
distributors and dealers.
The Company acquired in 1994 from the Supima Association of America ("Supima")
certain planting seed inventory, the right to use the Supima(R) trade name and
trademark and the right to distribute Pima extra-long staple (fiber-length)
cotton varieties. D&PL also entered into a research agreement with Supima's
university collaborator that allows D&PL the right of first refusal for any Pima
varieties developed under this program which D&PL partially funds. Pima seed is
produced, conditioned and sold by D&PL to distributors and dealers.
Biotechnology
Collaborative biotechnology licensing agreements which were executed with
Monsanto in 1992 and subsequently revised in 1993 and 1996, provide for the
commercialization of Monsanto's Bollgard ("Bacillus thuringiensis" or "Bt") gene
technology in D&PL's varieties. The selected Bt is a bacterium found naturally
in soil and produces proteins toxic to certain lepidopteran larvae, the
principal cotton pests in many cotton growing areas. Monsanto created a
transgenic cotton plant by inserting Bt genes into cotton plant tissue. This
transgenic plant tissue causes the death of certain lepidopteran larvae that
consume it. The gene and related technology were patented or licensed from
others by Monsanto and were licensed to D&PL for use under the trade name
Bollgard. In D&PL's primary markets, the cost of insecticides is the largest
single expenditure for many cotton growers, exceeding the cost of seed. The
insect resistant capabilities of transgenic cotton containing the Bollgard gene
may reduce the amount of insecticide required to be applied by cotton growers
using planting seed containing the Bollgard gene. In October 1995, Monsanto was
notified that the United States Environmental Protection Agency ("EPA") had
completed its initial registration of the Bollgard gene technology, thus
clearing the way for commercial sales of seed containing the Bollgard gene. In
1996, D&PL sold commercially for the first time two NuCOTN varieties, which
contained the Bollgard gene, in accordance with the terms of the Bollgard Gene
License and Seed Services Agreement (the "Bollgard Agreement") between the
Company and Monsanto. This initial EPA registration expires on January 1, 2001,
at which time the EPA will, among other things, reevaluate the effectiveness of
the insect resistance management plan and decide whether to convert the
registration to a non-expiring (and/or unconditional) registration.
D&PL has also developed transgenic cotton and transgenic soybean varieties that
are tolerant to Roundup(R) , a herbicide sold by Monsanto. In 1996, such Roundup
Ready plants were approved by the Food and Drug Administration, the USDA, and
the EPA. In February 1996, the Company and Monsanto executed the Roundup Ready
Gene License and Seed Services Agreement (the "Roundup Ready Agreement") which
provides for the commercialization of Roundup Ready cotton seed. In February
1997, the Company and Monsanto executed the Roundup Ready Soybean License
Agreement (the "Roundup Ready Soybean Agreement") which provides for the
commercialization of Roundup Ready soybean seed.
Since 1987, D&PL has conducted research using genes provided by DuPont to
develop soybean plants that are tolerant to certain DuPont ALS(R) herbicides.
Such plants enable farmers to apply these herbicides for weed control without
significantly affecting the agronomics of the soybean plants. Since soybean seed
containing the ALS herbicide-tolerant trait was not genetically engineered, sale
of this seed does not require government approval, although the herbicide to
which they express tolerance must be EPA approved.
The Company has agreements with other providers of technology that the Company
is evaluating for potential commercial applications and/or introduction. The
Company also contracts with third parties to perform research on the Company's
behalf for germplasm protection techniques and enabling technologies that the
Company believes have potential commercial applications in varietal crops around
the world.
Commercial Seed
Seed of all commercial plant species is either varietal or hybrid. D&PL's cotton
and soybean seed are varietals. Varietal plants can be reproduced from seed
produced by a parent plant, with the offspring exhibiting only minor genetic
variations. The Plant Variety Protection Act of 1970, as amended in 1994, in
essence prohibits, with limited exceptions, purchasers of varieties protected
under the amended Act from selling seed harvested from these varieties without
permission of the plant variety protection owner. Some foreign countries provide
similar protection.
Although cotton is varietal and, therefore, can be grown from seed of parent
plants saved by the growers, most farmers in D&PL's primary domestic markets
purchase seed from commercial sources each season because cotton seed requires
delinting in order to be sown by modern planting equipment. Delinting and
conditioning may be done either by a seed company on its proprietary seed or by
independent delinters for farmers. Modern cotton farmers in upland picker areas
generally recognize the greater assurance of genetic purity, quality and
convenience that professionally grown and conditioned seed offers compared to
seed they might save.
In connection with its seed operations, the Company also farms approximately
2,600 acres, primarily for production of cotton and soybean foundation seed. The
Company has annual agreements with various growers to produce seed for cotton
and soybeans. The growers plant parent seed purchased from the Company and
follow quality assurance procedures required for seed production. If the grower
adheres to established Company quality assurance standards throughout the
growing season and if the seed meets Company standards upon harvest, the Company
may be obligated to purchase specified minimum quantities of seed, usually in
its first and second fiscal quarters, at prices equal to the commodity market
price of the seed plus a grower premium. The Company then conditions the seed
for sale.
The majority of the Company's sales are made from early in the second fiscal
quarter through the beginning of the fourth fiscal quarter. Varying climatic
conditions can change the quarter in which seed is delivered, thereby shifting
sales and the Company's earnings between quarters. Thus, seed production,
distribution and sales are seasonal and interim results will not necessarily be
indicative of the Company's results for a fiscal year.
Revenues from domestic seed sales are generally recognized when seed is shipped.
Revenues from Bollgard and Roundup Ready licensing fees are recognized based on
the number of acres estimated to be planted with such seed when the seed is
shipped. Domestically, the Company promotes its cotton and soybean seed directly
to farmers and sells its seed through distributors and dealers. All of the
Company's domestic seed products are subject to return or credit, which vary
from year to year. The annual level of returns and, ultimately, net sales are
influenced by various factors, principally commodity prices of other crops and
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 and Roundup Ready genes differ from estimates,
adjustments to the Company's operating results are recorded when such
differences become known, typically in the Company's fourth quarter. All
significant returns occur or are accounted for by fiscal year end. International
export seed revenues are recognized upon the date seed is shipped or the date
letters of credit are cleared, whichever is later. Generally, international
export sales are not subject to return.
Outlook
From time to time, the Company may make forward-looking statements relating to
such matters as anticipated financial performance, existing products, technical
developments, new products, research and development activities and similar
matters. The Private Securities Litigation Reform Act of 1995 provides a safe
harbor for forward-looking statements. In order to comply with the terms of the
safe harbor, the Company notes that a variety of factors could cause the
Company's actual results and experience to differ materially from the
anticipated results or other expectations expressed in the Company's
forward-looking statements. The risks and uncertainties that may affect the
operations, performance, development and results of the Company's business
include those noted elsewhere in this Item and the following:
Demand for D&PL's seed will 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.
The planting seed market is highly competitive and D&PL varieties face
competition from a number of seed companies, diversified chemical
companies, agricultural biotechnology companies, governmental agencies and
academic and scientific institutions. A number of chemical and
biotechnology companies have seed production and/or distribution
capabilities to ensure market access for new seed products. The Company's
seed products may encounter substantial competition from technological
advances by others or products from new market entrants. Many of the
Company's competitors are, or are affiliated with, large diversified
companies that have substantially greater resources than the Company.
The production, distribution or sale of crop seed in or to foreign markets
may be subject to special risks, including fluctuations in foreign
currency, exchange rate controls, expropriation, nationalization and other
agricultural, economic, tax and regulatory policies of foreign
governments. Particular policies which may affect the international
operations of D&PL include the testing and quarantine and other
restrictions relating to the import and export of plants and seed products
and the availability of proprietary protection for plant products. In
addition, United States government policies, particularly those affecting
foreign trade and investment, may impact the Company's international
operations.
Overall profitability will depend on weather conditions, government
policies in all countries where the Company sells products, worldwide
commodity prices, the Company's ability to successfully open new
international markets, the Company's ability to successfully continue the
development of the High Plains market, the technology partners' ability to
obtain timely government approval (and maintain such approval) for
existing and 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 successfully complete these projects may affect
future profitability.
Due to the varying levels of agricultural and social development of the
international markets in which the Company operates and because of factors
within the particular international markets targeted by the Company,
international profitability and growth may be less stable than domestic
profitability and growth have been in the past.
RESULTS OF OPERATIONS
The following sets forth selected operating data of the Company (in thousands):
For the Three Months Ended
November 30, November 30,
1996 1997
--------------- ---------
Operating results -
Net sales and licensing fees 6,317 5,340
Gross profit 1,188 2,067
Operating expenses:
Research and development 2,590 3,632
Selling 2,421 2,876
General and administrative 2,594 2,602
Unusual charges related to 396 47
acquisitions
Operating loss (6,813) (7,090)
Loss before income taxes (6,825) (7,367)
Net loss applicable to common shares (4,381) (4,665)
The following sets forth selected balance sheet data of the Company as of the
following periods (in thousands):
<TABLE>
<S> <C> <C> <C>
November 30, August 31, November 30,
1996 1997 1997
------------------ ------------------ -------------------
Balance sheet summary-
Current assets $72,114 $ 145,449 $ 90,829
Current liabilities 43,535 112,524 56,443
Working capital 28,579 32,925 34,386
Property, plant and equipment, net 57,893 63,022 65,111
Total assets 142,391 220,656 166,729
Outstanding borrowings 44,171 30,831 48,109
Stockholders' equity 64,505 72,531 68,985
</TABLE>
Three months ended November 30, 1997, compared to three months ended November
30, 1996:
Net sales and licensing fees decreased approximately $1.0 million to $5.3
million from $6.3 million. The decrease in net sales and licensing fees is
primarily the result of lower than expected sales of cotton seed in Australia
and the timing of seed shipments to Mexico and Spain.
Operating expenses increased from $8.0 million in the first fiscal quarter of
1997 to $9.1 million in fiscal 1998. This expected increase is attributable to
additional product development, research and promotional costs, the effects of
which were partially offset by lower costs associated with the United States
Department of Justice review of the acquisition by D&PL of the stock of Arizona
Processing, Inc., Ellis Brothers Seed, Inc. and Mississippi Seed, Inc.
Interest expense increased by 26% to $0.34 million from $0.27 million primarily
due to lower 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 16 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 by the first fiscal quarter of the following
year. 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.
The Company records receivables for technology fees on Bollgard and Roundup
Ready seed sales as the seed is shipped, usually in the Company's second and
third quarters. The Company has contracted the billing and collection activities
for Bollgard and Roundup Ready seed technology fees to Monsanto. In September,
the technology fees are due at which time D&PL receives payment from Monsanto.
D&PL then pays Monsanto its royalty for the Bollgard and Roundup Ready
technology fees.
The Company borrows funds from a financial institution to meet its working
capital needs. This agreement provides a core commitment of $50 million and a
seasonal commitment of $25 million. The core commitment is a long-term loan that
may be borrowed upon at any time and is due January 1, 2000. 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, 2000. Each commitment
offers variable and fixed interest rate options and requires the Company to pay
facility or commitment fees and to comply with certain financial covenants.
Capital expenditures for the first fiscal quarter of 1998 were $4.4 million.
Domestic projects for fiscal 1998 include additional bagged seed storage to
centralize warehousing of bagged seed and minimize storage and handling costs
and an upgrade of computer hardware.The primary International project for fiscal
1998 to date is the completion of a new cotton seed conditioning and storage
facility in Hebei, China. Management believes that domestic and International
capital expenditures
will approximate $7.5 million and $8.0 million, respectively, in fiscal 1998.
These capital projects will be funded by cash from operations, borrowings or
investments from joint venture partners, as necessary.
In October 1997, the Board of Directors authorized a 4 for 3 stock split for all
common and preferred shares outstanding effected in the form of a dividend, with
no change in par value, distributed on November 20, 1997 to stockholders of
record on November 10, 1997. This stock split has been reflected in the
accompanying financial statements. A quarterly dividend rate of $0.03 per share
was maintained after the split, which represents a 25% increase in the dividend
rate.
In the first quarter of fiscal 1998, the Board of Directors authorized a
quarterly dividend of $0.03 per share, paid December 15, 1997 to the
stockholders of record on December 1, 1997. It is anticipated that quarterly
dividends of $0.03 per share will continue to paid in the future, although the
Board of Directors reviews this policy quarterly.
Cash provided from operations, early payments from customers and borrowings
under the loan agreement should be sufficient to meet the Company's 1998 working
capital needs.
The Company is currently negotiating a $110 million Senior Credit Facility with
its existing lender and two participating institutions. The planned facility
will include a $55 million core facility due in 2001 and a $55 million seasonal
facility available September 1 through June 30 each year, also due in 2001. The
new agreement will have covenants and pricing structures similar to the existing
agreements.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
10.29 .. Employment Agreement between Delta and Pine Land Company
and W. Thomas Jagodinski effective September 1, 1997.
10.30 ...Employment Agreement between Arizona Processing, Inc. and
Earl E. Dykes dated May 20, 1996.
10.31 ...Letter Agreement between Delta and Pine Land Company and
James H. Willeke dated September 1, 1995.
11.01 ...Computation of Earnings Per Share
27.01 Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended November 30,
1997.
<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: January 14, 1998 /s/ Roger D. Malkin
-------------------
Roger D. Malkin, Chairman and
Chief Executive Officer
Date: January 14, 1998 /s/ W. Thomas Jagodinski
W. Thomas Jagodinski,
Vice President - Finance and Treasurer
EMPLOYEE EMPLOYER RESTATED AGREEMENT
THIS AGREEMENT is made and
entered into as of September 1, 1997, by and between Delta & Pine Land Company,
a Delaware corporation, with offices at One Cotton Row, Scott, Mississippi 38772
(hereinafter called the "Corporation") and W. T. Jagodinksi, of 8836 Silverbark
Dr., Germantown, Tennessee (hereinafter referred to as "Employee"). WHEREAS, the
Corporation is engaged in the business of breeding, producing, conditioning and
marketing cotton planting seed, and maintains its principal office in Scott,
Mississippi; and WHEREAS, the Employee has heretofore served as an Employee of
the Corporation at the will of both the Corporation and the Employee and without
the formality of a written employment agreement; and WHEREAS, the parties have
agreed that it is appropriate to increase the base compensation payable to
Employee and the parties find it to be in their respective best interests to
modify the terms of the employment relationship which exists between the
parties; and WHEREAS, the Corporation desires to secure a non-competition
covenant from Employee; and WHEREAS, the parties to this Agreement believe it is
in their respective best interests to formalize an employment agreement and
thereby provide certain additional benefits and considerations in favor of both
the Corporation and the Employee. NOW, THEREFORE, in consideration of the mutual
covenants contained therein, and other good and valuable considerations, the
receipt and sufficiency of which is acknowledged by and between the parties, the
parties agree as follows: I. PURPOSE OF AGREEMENT It is the specific intent of
the parties to outline the agreed-upon terms of employment of the Employee. It
is also the specific intent of the parties to protect the Employee from any
adverse actions directed toward the Employee resulting from any Change in
Control or in Anticipation of a Change in Control as the terms are utilized in
this Agreement. The parties understand and acknowledge that if a Change in
Control should take place that notwithstanding the past performance of the
Employee, his loyalty to the Corporation, or his abilities or continued
performance, that persons assuming control of the Corporation might elect to
arbitrarily terminate the Employee, assign him to duties and responsibilities
beneath his status and capacity, transfer him to unacceptable locales or
communities, or otherwise take steps which would be designed to elicit his
resignation or create a situation where he could be terminated for other than
good cause as defined herein. Accordingly, this Agreement is entered into for
the purpose of both providing for the continued employment of the Employee under
current ownership circumstances, and further to protect the Employee in the
event of a Change in Control or actions taken in Anticipation of a Change in
Control. Nothing in this Agreement is intended to alter or affect stock options
which have been granted or which may hereinafter be granted to the Employee. II.
EMPLOYMENT 1. The Corporation hereby employs, engages and hires Employee as the
Corporation's Vice President of Finance and Treasurer. The Employee shall have
and agrees to assume primary responsibility, subject at all times to the
reasonable control of the President, Chief Executive Officer and the Board of
Directors, for supervising and overseeing accounting, finance and treasury
functions of the Corporation. 2. The Employee agrees to make available to the
Corporation all of his professional and managerial knowledge and skill, and to
provide such portion of his time as may be reasonably required for the proper
fulfillment of his duties. 3. Employee shall perform such other duties as are
customarily performed by one holding such position in other, same or similar
businesses or enterprises as that engaged in by the Corporation. 4. Employee
shall serve in such additional offices and capacities to which he may be
appointed or elected, from time to time, by the Board of Directors of the
Corporation. 5. Employee agrees that he will at all times faithfully,
industriously and to the best of his reasonable ability, experience and talents
perform all of the duties that may be required of and from him pursuant to the
expressed terms of this Agreement. 6. The parties agree that the Employee will
perform his duties in Scott, Mississippi or Shelby County, Tennessee, or in such
other place or places as the Corporation and the Employee shall both agree upon,
subject to reasonable business-related travel required by the Employer of the
Employee consistent with travel required of other executive officers of the
Corporation. III. TERM 1. The term of this Agreement shall be for a period of
two (2) years from the date hereof. The Agreement shall automatically be
extended each day so that at on any given date, the time remaining under this
contract shall be for an additional two (2) year period, unless a party shall
have given written notice to the other party of said party's intent to terminate
the automatic extensions which otherwise take place daily. 2. The parties agree
that, except as a result of a Change in Control or in Anticipation of a Change
in Control, either party can provide for an early termination of this Agreement
upon three (3) months written notice to the other. If the Employee gives such
notice (except as a result of Change in Control or in Anticipation of a Change
in Control), the Corporation may elect to immediately terminate the Employee
without providing the employment benefits otherwise due to the Employee during
the remainder of the three (3) month period. Otherwise, the Employee will
continue to perform his duties as required under this Agreement during said
three (3) month period. If the Corporation elects to make an early termination
of employment (except as a result of Change in Control or in Anticipation of a
Change in Control), then the Employee shall remain in the employ of the
Corporation for a period of three (3) months and receive all benefits otherwise
payable to him pursuant to this Agreement. 3. If the Employee is terminated at
the time of or following a Change in Control or in Anticipation of a Change in
Control, or if the Employee resigns at the time of or following a Change in
Control, the Employee shall receive the benefits outlined in Section V herein.
4. If, during the term of this Agreement but before a Change in Control, the
Employee shall become unable to perform his duties by reason of illness or
incapacity for a continuous period of six (6) months, or for a total of eight
(8) months or more during any twelve (12) month period, then the Corporation
may, at its option, terminate this Agreement upon 30 days written notice, and
make payment to the Employee of the compensation payable to the Employee
pursuant to the terms of this Agreement as though the Agreement were terminated
by the Corporation as allowed in paragraph 2 of this Section. The Corporation
shall thereafter have no further obligations to the Employee or liabilities
under this Agreement. IV. COMPENSATION OF EMPLOYEE The Corporation shall pay the
Employee for all services to be performed under this Agreement as follows: 1.
Effective as of the date of this Agreement, the Corporation will pay Employee an
annual base salary of $150,000.00. Compensation shall be payable in equal
monthly installments or more frequently if compensation is generally paid more
frequently to other executive officers of the Corporation. Increases in the
annual base compensation shall be considered annually by the Board of Directors
for the Corporation and the Employee's compensation shall be subject to upward
adjustment from time to time as determined by the Board of Directors of the
Corporation. Increases in the Employee's compensation will be paid in conformity
with the Corporation's practice for payment of other executive officers of the
Corporation as such practice may be established or modified from time to time.
The Employee's compensation may not be reduced. 2. The Corporation will pay the
Employee bonuses consistent with standard practices of the Corporation in paying
bonuses to other executive officers of the Corporation. 3. The Corporation will
provide Employee employee benefits, such as group health insurance, including
executive medical plan benefits, long term disability, accidental death and
dismemberment, life insurance, the use of a company provided vehicle, a company
provided cellular telephone and all expenses associated therewith, participation
in retirement plans, profit sharing plans, 401K plans, savings plans and all
other fringe benefits upon the same terms as are or shall be granted or made
available by the Corporation to its other executive officers. 4. The Employee is
expected and encouraged from time to time to incur expenses for the promotion of
the business of the Corporation. The Corporation shall timely reimburse the
Employee for all reasonable and necessary expenses and disbursements incurred by
Employee in the performance of his duties in keeping with past practices. The
Employee shall, from time to time, but not more frequently than weekly nor less
frequently than quarterly, submit a report to the Chief Operating Officer (or
his designee) of the Corporation in a form with such detail as will constitute a
proper record for tax deductible expenses together with necessary vouchers and
receipts therefore. Expenses of a type which are typically reimbursed to other
executive officers of the Corporation shall be timely paid or reimbursed by the
Corporation. V. TERMINATION - CHANGE IN CONTROL 1. This Section is intended to
provide the Employee with reasonable protections against possible adverse
employment consequences resulting from a "Change in Control" or in Anticipation
of a "Change in Control". 2. Following a Change in Control or at the time of a
Change in Control or if, in Anticipation of a Change in Control, the employment
of the Employee is terminated by the Employee or by the Corporation for any
reason other than "cause" as the term is used herein, or disability as provided
in Section III, or the voluntary retirement of the Employee after he has reached
the age of 59-1/2 years, the Corporation shall pay the Employee,as a severance
package, compensation designed to compensate him for at least the two-year
period from the date of termination of employment which is contemplated by this
Agreement, as follows: (a) The Corporation shall immediately pay the Employee a
lump sum payment, in cash, in an amount equal to the largest annual amount of
salary and bonus compensation (total compensation reported on the Employee's W-2
and any 1099s issued by the Corporation, excluding stock option compensation)
paid to the Employee during any one calendar year which ends during the five (5)
years prior to the date of termination; and (b) The Corporation shall also pay
the Employee on a semi-monthly basis for 12 consecutive months commencing on the
first normal pay period following such termination, 1/2 of 1/12th (1/24th)of the
lump sum payment determined in the immediate preceding paragraph; and (c) The
Corporation shall maintain for the benefit of the Employee and his spouse and
any dependents, at the expense of the Corporation, for 24 months from the date
of termination of employment, all Employee benefit programs and arrangements,
including but not limited to health insurance, including executive medical plan
benefits, group life insurance, individual life insurance coverage, accidental
death and dismemberment coverage, long term disability coverage, and other
fringe benefits or benefit plans generally afforded other executive officers of
the Corporation. If any such coverage cannot be maintained because of
requirements of the insurance or other companies providing such benefits, the
Corporation shall provide and pay for alternative coverage providing essentially
identical benefits. The above period is to be in addition to that period of time
that the Employee may elect COBRA coverage under such applicable benefit plans.
It is the specific intent of the parties that the Employee shall be retained as
an Employee of the Corporation for the 24-month period for the sole and
exclusive purpose of receiving all such benefits. In this regard, it is the
specific agreement of the parties that those benefits which are typically
available under COBRA coverage, at the expense of the Employee, will be
available to the Employee at his expense for a period of 18 months following the
expiration of the 24 months listed above, even though COBRA coverage might
otherwise be unavailable as provided by law; and (d) The Corporation shall make
available at its expense for the Employee's use for 24 months following the
termination date, a cellular telephone and a company vehicle of the same make
and model which would otherwise have been made available to the Employee had he
remained in the employ of the Corporation in accordance with the vehicle policy
in effect as of the date of the Change in Control; and (e) In lieu of shares of
common stock of the Corporation issuable upon exercise of options previously
granted to the Employee under the Corporation's stock option plans, the Employee
may elect to surrender to the Corporation his rights in all outstanding stock
options then exercisable, if any, which are held by him, and upon such surrender
the Corporation shall pay the Employee an amount in cash equal to the aggregate
difference, on a per share basis, between (i) the option prices of the shares
subject to such surrendered options; and (ii) the higher of the average
aggregate price per share paid (in cash or other consideration) in connection
with any Change in Control or the then fair market value of the shares,
whichever is greater; and (f) Employee will likely be required to employ a
reputable national exective career transition agency to assist him in locating
and securing suitable employment opportunities. To compensate Employee for the
costs which he will likely incur, the Corporation will pay to Employee at the
time of termination an amount equal to 20% of the amount determined under
Section V 2(a). Employee will be responsible for any and all expenses in
pursuing an executive level employment or job opportunity search and the
Corporation shall have no other or further obligations to Employee except as
otherwise provided in this Agreement. (g) The Corporation shall continue to
cover the Employee under its Directors and Officers liability insurance policy
in substantially the form of coverage as such policy may be in effect as to the
Employee on the date of termination, for the longer of thirty six (36) months
following the termination of employment or such period as similar such coverage
is maintained by the Corporation, its successors or assigns for the benefit of
former directors and officers, whichever period is longer; and (h) The
Corporation shall provide the Employee with a job title ( Vice President -
Special Projects), reasonable secretarial assistance, a voice mailbox, and a
mail drop service to allow the Employee to initiate and continue his job search
as though he were still actively employed by the Corporation, and actively
handling Corporation matters. 3. It is specifically understood that the payments
to be made under Section V 2 above shall not be conditioned upon the Employee
performing any duties whatsoever on behalf of the Corporation except as is
specifically outlined in this Agreement. 4. In the event of a Change in Control,
or in Anticipation of a Change in Control, if the employment of the Employee
with the Corporation is terminated and if the Corporation does not honor the
terms, conditions and provisions of this Agreement, and if the Employee is
required to seek and secure independent legal counsel, then the Corporation
agrees to pay to the Employee all ordinary reasonable legal expenses and all
expenses of litigation reasonably incurred by the Employee in protecting his
rights under this Agreement. 5. In the event that any benefits provided and/or
payments made to or on behalf of Employee pursuant to this Section V (other than
those payments pursuant to Section V paragraph 2 (a) and Section V paragraph 2
(b)) are deemed to be taxable to the Employee for federal or state income tax
purposes, the Corporation agrees to tax protect such payments by grossing up
said taxable amount, using the highest marginal Federal and State income tax
rates in effect (including FICA and Medicare taxes) for that year and paying to
the Employee such additional amounts. Said payment amounts shall be calculated
quarterly (on a calendar-year basis) and paid to the Employee by the fifteenth
day of the second month following the close of each quarter. Final adjustments,
if any, will be made for each calendar year by March 15 of the following
calendar year and paid to the Employee by that date. VI. NON-COMPETITION 1.
Employer desires Employee to agree not to compete with the Corporation in the
event of the termination of employment following a Change in Control or in
Anticipation of a Change in Control. Employer is not willing to enter into this
Agreement without such a covenant. As additional consideration for the agreement
of Employer to make payments to or otherwise compensate Employee under this
Agreement, Employer has required Employee to give a Non-Competition Covenant.
Employer may not waive the non-competition obligations in this Section and be
relieved of any of its other obligations under this Agreement. 2. In the event
of a Change in Control or in Anticipation of a Change in Control, for the
one-year period following the termination of Employee's employment with the
Corporation for any reason, Employee shall not, without the prior written
consent of the Board of Directors of the Corporation, which consent may be
withheld at the sole, absolute and uncontrolled discretion of such Board of
Directors, engage or participate in, assist or have an interest in, whether as
an officer, director, partner, owner, employee or otherwise, the operation,
management or conduct of any business or enterprise that engages in the cotton
seed breeding, production and marketing process in the same geographical area
with any line of business in which the Corporation is now engaged. 3. Nothing in
this Section shall prohibit Employee from acquiring or holding, for investment
purposes only, securities or ownership interest of any entity which may compete
directly or indirectly with the Corporation. 4. Nothing in this Section shall
prohibit the Employee from seeking or securing employment with a corporation
which has a subsidiary or affiliate whose business activities include cotton
seed breeding, production and marketing so long as Employee's job duties and
responsibilities do not require or allow the Employee to directly engage in any
activities which would be in violation of this Section, and so long as he does
not violate any of his confidentiality obligations to the Corporation as
referred to in Section VIII. 5. In the event of a breach of this Agreement by
Employee, Employer may seek injunctive relief to prohibit the Employee from
engaging in prohibited competition and/or Employer may initiate legal
proceedings to collect actual damages to Employer resulting from such breach. A
breach by Employee shall not allow Employer to terminate its obligations to
Employee under the other provisions of this Agreement. VII. DEFINITIONS 1. As
used herein the term "Change in Control" shall mean (a) the transfer of
ownership (whether directly, indirectly, beneficially or of record) of shares in
excess of twenty percent (20%) of the outstanding shares of common stock of the
Corporation by a person or group of persons (including without limitation, a
corporation, trust, partnership, joint venture, individual or other entity), or
(b) the merger or consolidation into or with any other company, or sale of
assets of the Corporation to another corporation, (i.e., where the Corporation
is not the surviving and operating Corporation or where the stockholders prior
to such transaction(s) do now own at least 80% of the outstanding common stock
of the surviving Corporation after such transaction(s)) or (c) the persons who
are Directors of the Corporation as of the date hereof cease to constitute a
majority of the Board of Directors of the Corporation during any 36 month period
after a transaction described in (a) or (b). "Change in Control" shall also mean
(i) any merger, consolidation, reorganization, or other business combination
pursuant to which the business of the Corporation is combined with that of one
or more purchasers, or one or more persons or other business entities formed by
or affiliated with a purchaser, including, without limitation, any joint
venture, or (ii) the acquisition, directly or indirectly, by one or more
purchasers of more than twenty percent (20%) of the then outstanding capital
stock of the Corporation by way of a tender or exchange offer, negotiated
purchase or other means, or (iii) the acquisition, directly or indirectly, by
one or more purchasers of all or substantially all of the assets of, or of any
right to, all or substantially of the revenues or income of the Corporation by
way of a negotiated purchase, exchange, joint venture, lease, license or other
similar means, or (iv) the acquisition, directly or indirectly, by one or more
purchasers of control of the Corporation, other than through the acquisition of
the Corporation's voting capital stock, or (v)in the event that a fee is paid
by the Corporation to any major investment banking firm for services in any
transaction or a series of transactions other than as described in (i) through
(iv) above. The occurrence of any one of the above events in the immediate
preceding two paragraphs shall constitute a "Change in Control ". 2.
"Anticipation of a Change in Control" means any action taken during the
twelve-month period prior to a Change in Control. Specifically, the termination
of the Employee, other than for cause as defined below, during the twelve-month
period prior to a Change in Control will be conclusively presumed to constitute
a termination of the Employee in Anticipation of a Change in Control. 3.
"Cause", as the term is used with respect to the termination of the Employee for
cause, shall mean a conviction of the Employee of a felony involving moral
turpitude. VIII. RATIFICATION OF CONFIDENTIALITY AGREEMENT The parties
understand and acknowledge that the Employee previously executed a
Confidentiality Agreement on or about the ______ day of _______________, 19___.
The parties wish to restate said Agreement and ratify the terms, conditions and
provisions thereof. The termination of the Employee's employment, except in
violation of this Agreement, shall not affect the obligations of the Employee to
the Corporation with respect to the Confidentiality Agreement. IX. MISCELLANEOUS
PROVISIONS 1. This Agreement shall constitute the entire agreement between the
parties and any prior understanding or representations of any kind preceding the
date of this Agreement and shall not be binding upon either party, except to the
extent incorporated in this Agreement. 2. Any modification of this Agreement or
additional obligation assumed by either party in connection with this Agreement
shall be binding only if evidenced in writing and signed by the party to be
charged. 3. It is agreed that this Agreement shall be governed by construed and
enforced in accordance with the laws of the State of Mississippi. 4. Any notice
provided for or concerning this Agreement shall be in writing and shall be
deemed sufficiently given when sent by certified or registered mail if sent to
the respective addresses of the parties as set forth in the beginning of this
Agreement. Either party may give written notice to the other that the addresses
to be utilized for notice purposes have been altered.
IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date first written above.
DELTA & PINE LAND COMPANY a Delaware corporation
W.T. Jagodinski By:/s/ W.T. Jagodinski
Title:Vice President - Finance STATE OF MISSISSIPPI COUNTY OF Bolivar
Personally appeared before me, W.T. Jagodinski, with whom I am personally
acquainted and who acknowledged that he executed the within instrument for the
purposes therein contained. Witness my hand, at office, this 14th day of
January, 1998. My commission
expires: March 5, 1998 Notary Public /s/ Dorothy Dexter Hester
STATE OF MISSISSIPPI COUNTY OF
Bolivar Before me, a Notary Public in and for said state and county, duly
commissioned and qualified, personally appeared
Roger D. Malkin, with whom I am personally acquainted (or
proved to me on the basis of satisfactory evidence), and who, upon oath,
acknowledged himself to be Chairman and Chief Executive Officer of Delta
& Pine Land Company, the
within named bargainor, a Delaware corporation, and that he executed the
foregoing instrument for the purpose therein contained, by signing the name of
the corporation by himself as /s/Roger D. Malkin. Witness my hand,
at office this 14th day of January, 1998. (SEAL)Notary Public: Dorothy
Dexter Hester My
commission expires:March 5, 1998__
EMPLOYMENT AGREEMENT
AGREEMENT made this the 20th day of May 1996 between
ARIZONA PROCESSING, INC., for itself and its affiliated entities, successors and
assigns (collectively "EMPLOYER"), and EARL E. DYKES ("EMPLOYEE"). 1. Job
Description. In exchange for the considerations and covenants set forth below,
EMPLOYER employs EMPLOYEE as General Manager of Arizona Processing, Inc. (API)
and Executive Vice President of Sure Grow Seed, Inc. (SGS), Ellis Brothers Seed,
Inc. (EBS) and Mississippi Seed, Inc. (MSI). EMPLOYEE shall direct the
day-to-day operations of API, assist, as requested, the Chief Operating Officer
of SGS, EBS and MSI in the performance of his job duties, participate in
strategy planning for all of the above named entitles, and/or perform other
assigned responsibilities consistent with those of other executives in similar
positions with other D&PL operating companies.. 2. Term. The term of this
Employment Agreement shall commence on date of closing of the Transaction
contemplated by an Agreement between SURE GROW SEED, INC., and related parties,
and DELTA AND PINE LAND COMPANY ("D&PL"), and related parties, dated May 20,
1996, and shall end on September 1, 2001, subject to extension by mutual
agreement. 3. Compensation. (a) Salary: EMPLOYEE shall receive an initial base
salary of $140,000.00 per year, payable semi-monthly, subject to periodic
reviews and adjustments. At no time shall the annual salary of the EMPLOYEE be
reduced below the salary in effect at the time of such review unless all
executives in similar positions in D&PL Companies are subject to company-wide
pro rata cuts. (b) Bonus Program: Upon commencement of this Employment
Agreement, EMPLOYEE shall be eligible for immediate participation in the merit
bonus program applicable to other employees of D&PL and its affiliates with
similar job responsibilities. In the event of the termination of EMPLOYEE'S
employment other than for Cause (as defined in Section 8 below), all accrued but
unpaid compensation (including bonus and vacation time), if any, shall be paid
to the EMPLOYEE immediately upon such termination. (c) Additional Benefits:
EMPLOYEE shall also receive additional employment benefits as follows: (1)
Automobile: EMPLOYEE will be furnished with a company-provided automobile and be
reimbursed on a current basis for all expenses incurred for normal operation in
accordance with EMPLOYER'S policies relating to company-provided automobiles.
(2) Expenses: EMPLOYEE shall receive full reimbursement for all expenses,
including reasonable travel expenses (including transportation, room, and
meals), incurred in the performance of his duties in accordance with EMPLOYER'S
personnel policies. (3) Health Insurance: EMPLOYEE will be eligible to
participate in the D&PL'S executive health and disability insurance plan under
either single or family coverage plans at EMPLOYEE'S election. (4) Stock
Options: Upon commencement of this Employment Agreement, EMPLOYEE shall be
immediately eligible for discretionary employee stock options as may be granted
by D&PL'S Board of Directors from time to time. (5) Other Benefits: Upon
commencement of this Employment Agreement, EMPLOYEE shall be immediately
eligible for and provided with office space and facilities, paid vacations, sick
leave, holidays and other benefits provided to employees of equivalent positions
within D&PL. 4. Best Efforts. During the term of this Employment Agreement,
EMPLOYEE will work exclusively for EMPLOYER and will devote his best efforts to
accomplishment of his job responsibilities. 5. Ownership of Breeding Materials
and Varieties. In consideration for his employment by EMPLOYER, EMPLOYEE hereby
conveys to EMPLOYER any cotton germplasm and other cotton breeding materials in
his possession or control not presently owned by EMPLOYER and all records
relating thereto and transfers to EMPLOYER all rights he has to such cotton
germplasm and materials. EMPLOYEE agrees that all cotton strains, lines,
varieties and other inventions, discoveries or works developed through
EMPLOYEE'S efforts during his employment by EMPLOYER and all records related
thereto shall be and become the sole property of EMPLOYER. EMPLOYEE shall assist
EMPLOYER, at EMPLOYER'S expense, in obtaining, defending and enforcing any
cotton Certificates of Plant Variety Protection, patents, copyrights and other
protection of rights therein. 6. Confidentiality. Without the written consent of
EMPLOYER, EMPLOYEE will not at any time during or after employment by EMPLOYER
divulge to any person, firm or corporation any information concerning the
business of EMPLOYER or its affiliated entities. This covenant shall not apply
to any information: (a) which at the time of disclosure is or thereafter
becomes, through no action by EMPLOYEE, available to the public generally; (b)
which is communicated to the EMPLOYEE by any third party under no obligation of
confidentiality to EMPLOYER or its affiliated parties; (c) which has been or
which may be hereafter independently developed by EMPLOYEE without utilizing
information received from EMPLOYER or its affiliated parties; or (d) which
EMPLOYER authorizes to be released to the public. 7. Covenant against
Competition. Until the later of September 1, 2001, or two (2) years after the
expiration or other termination of this Employment Agreement and any renewal or
extension(s) thereof, EMPLOYEE shall not engage in any cotton industry
management functions or any cotton industry agricultural research for himself or
on behalf of any person, firm, partnership or corporation which breeds or sells
cotton seed (other than D&PL and its affiliated entities) nor engage in selling
or promoting cotton seed for the benefit of himself or any person, firm,
partnership or corporation (other than D&PL and its affiliated entities). In the
event that EMPLOYEE'S employment (a) is terminated by mutual written agreement
either prior to or after September 1, 2000, whereby this covenant against
competition is expressly released, or (b) is terminated by EMPLOYER, on or after
September 1, 2000, unless such termination on or after September 1, 2000, is (i)
for Cause (ad defined in Section 8), (ii) is occasioned by EMPLOYEE'S disability
(as defined in Section 8), or (iii) occurs upon the expiration of the term of
this Agreement or any mutually agreed upon extension thereof, this covenant
against competition will terminate concurrently with such employment
termination. 8. Termination. EMPLOYEE'S employment may be terminated by mutual
written agreement. EMPLOYEE'S employment with EMPLOYER may be terminated by
EMPLOYER without EMPLOYEE'S agreement only (a) for Cause or (b) upon EMPLOYEE'S
death or a disability which prevents EMPLOYEE from performing his job duties for
a period of six (6) months or more or (c) upon expiration of the term of this
Agreement or any mutually agreed upon extension thereof. Except as expressly
provided in Section 7, all covenants in this Agreement shall survive the
expiration or termination of this Agreement. Cause shall be defined as and
limited to fraud, embezzlement, conduct constituting a material breach of this
Agreement (provided EMPLOYER has given EMPLOYEE written notice of such breach
and 30 days following receipt of such notice to cure such breach) or violation
of EMPLOYER'S written policies and reasonable written instructions and
directives (provided EMPLOYER has given EMPLOYEE written notice of such
violation and 30 days following receipt of such notice to cure such breach) or
indictment for a felony under the laws of the United States or any state. 9.
Modification and Enforcement of Agreement. There will be no waiver or
modification of this Agreement nor any individual portion of this Agreement
except by mutual written amendment specifically for that purpose, signed by the
EMPLOYEE and by an authorized officer of EMPLOYER. In addition to other
remedies, this Agreement shall be specifically enforceable. This Agreement shall
be governed by the laws of the State of Alabama. 10. Benefit. This Agreement
shall bind all parties, their respective heirs, executors, administrators,
successors and assigns, but nothing contained herein shall be construed as an
authorization or right of any party to assign its rights or obligations
hereunder. 11. Waiver of Breach or Violation not Deemed Continuing. The waiver
by either party of a breach or violation of any provision of this Agreement
shall not operate as or be construed to be a waiver of any subsequent breach
thereof. 12. Notices. Any and all notices required or permitted to be given
under this Agreement will be sufficient if furnished in writing and personally
delivered or sent by facsimile transmission or certified or registered mail,
postage prepaid, return receipt requested, to EMPLOYEE'S last known residence in
the case of the EMPLOYEE or to its principal office in the case of the EMPLOYER.
13. Authority. The provisions of this Agreement have been authorized by all
required corporate action. 14. Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be an original, but all of which
shall be deemed to be one and the same instrument, regardless of whether any one
or more of the parties hereto signed the same counterpart. WITNESS our
signatures, effective on the date set forth above. /s/ Earl E. Dykes /s/ W. A.
Ellis, Jr.
June 27, 1995
Mr. Jim Willeke
Hartz Seed
Post Office Box 946
Stuttgart, Arkansas 72160
Dear Jim:
Upon the completion of the currently contemplated acquisition of Hartz Seed
Company's
cotton seed assets by Delta and Pine Land Company we plan to form a separate
operating division within D&PL combining the operations of Hartz Cotton with our
Paymaster activities. On behalf of Delta and Pine Land Company, I am pleased to
offer you the position as President of this new Paymaster/Hartz Division. To
properly direct the activities of this new division you will be required to
establish division headquarters in Lubbock, Texas and move your residence to
that area. The company will, or course, pay the cost of your move to the Lubbock
area in accordance with standard company policy. To help facilitate your move to
the Lubbock area, the company will pay the normal (or actual, if less) broker's
commission on the sale of your home in Little Rock, Arkansas and will loan you
$50,000 on a non interest-bearing demand note. If, on the third anniversary of
your employment, you are an employee of the company in good standing we will
forgive the note. You will have to consult your own advisors as to the required
tax treatment of this loan but we will cooperate in any reasonable manner to aid
you in receiving the most favorable tax treatment possible. The decision
concerning which division personnel will operate from the headquarters site and
should also relocate to the Lubbock area will be your decision to make, but I
will be happy to consult and offer advice as you see fit. During the term of
your employment with the company we expect you to devote your full business
time, energy and efforts to the affairs of the company with the intent of
achieving the best possible results for D&PL. You will be expected to avoid
whenever possible any situations representing a conflict of interest and to
notify me when circumstances preclude you from avoiding such conflicts. All
company employees are required to adhere to a Mr. Jim Willeke June 27, 1995 Page
Two standard of confidentiality which will require that you do not disclose to
anyone outside the company's employ any information which is proprietary or
would be potentially damaging to the company's best interest if disclosed.
Confidentiality would extend for a period of five (5) years after employment
term. You will be expected also to comply with all confidentiality agreements to
which the company is a party. Any patentable or otherwise protectable
discoveries relating to our business while in the company's employ would become
company property unless we agree in writing that such discovery was wholly
developed without company cost and outside normal company business hours. The
company will reimburse you for all normal and reasonable expenses in connection
with the conduct of your normal business duties which are reportable on standard
company expense report forms not less frequently than once per month. I will
review and approve your expenses as I do for other company officers. You would
be able to take expense advances reasonable in relation to anticipated
activities as appropriate. All expense advance balances must be balanced out
however not less often than quarterly. Since entertaining of business contacts
would be an expected activity in your position, the company will provide a
membership (initiation fee and monthly dues) to a Country Club in the Lubbock
area which is mutually agreeable to you and me. The amount of this item will be
taxable income to you. Jim, the compensation and benefits we are offering you in
this position are: . Starting base salary of $155,000 per year paid semimonthly
and subject to all standard company withholding. . Participation in the
company's incentive bonus program with the potential for annual bonuses up to
50% of base compensation. You will be guaranteed an initial bonus of $55,000
covering the period from employment through the end of our 1995/96 fiscal year,
payable approximately September 30, 1996. Mr. Jim Willeke June 27, 1995 Page
Three . A stock options grant of 27,500 shares of the company's common stock
under the company's existing stock option plan. Our stock option plan vests at
the rate of 20% per year beginning on the first day after the first anniversary
of the grant. The option price of shares is determined by the quoted market
price on the date of grant. The vesting of your options would continue only so
long as you are an active employee of the company other than the plan's standard
provisions in case of death or disability while employed. . You will be provided
a company car of your choice in accordance with the company's auto policy
relating to company officers. . You will be entitled to vacation in accordance
with company policy and you will receive credit for your years of service with
Hartz in determining vacation days allowable. . You will be entitled to the
company's standard fringe benefit package for company vice presidents including
life and executive medical coverage, participation in 401(k) and retirement
plans and any other benefits added from time to time. For benefits and vesting
purposes of retirement you will receive credit for your years of service with
Hartz. Your participation in the cost of the executive medical plan would be
according to the company policy in existence as amended from time to time. As I
have relayed to you, all employees of the company are employed on an at will
basis. However, if anytime during the initial three years of your employment
with the company you should be terminated without good cause (good cause meaning
fraud, dishonesty, dereliction of duty, violation of fiduciary responsibility or
confidentiality standards, conviction of a felony, willful conduct injurious to
the company or other conduct generally regarded as good cause for termination)
the company will pay you a one-time termination payment of $250,000. Jim, both
Roger and I believe you have the potential to be both an outstanding employee of
Delta and Pine Land Company and to earn even broader responsibilities in the
future. We look forward to working with you in the coming years to achieving the
potential growth and success that the Paymaster/Hartz Division and Delta and
Pine Land Company offers. Mr. Jim Willeke June 27, 1995 Page Four If this offer
is agreeable please sign one copy and return to me. Yours very truly, Agreed
To:/s/ Jim WillekeJune 27, 1995 Date
EXHIBIT 11.01
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE THREE MONTHS ENDED
<TABLE>
<S> <C> <C>
November 30, November 30,
1996 1997
---------------- ----------------
PRIMARY EARNINGS PER SHARE:
NUMBER OF SHARES OF COMMON STOCK
OUTSTANDING AT THE BEGINNING OF
PERIOD 37,564 37,610
WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK ISSUED DURING THE
PERIOD 9 111
---------------- ----------------
WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING
DURING THE PERIOD FOR COMPUTATION
OF PRIMARY EARNINGS PER SHARE 37,573 37,721
================ ================
FULLY DILUTED EARNINGS PER SHARE:
NUMBER OF SHARES OF COMMON STOCK
OUTSTANDING AT THE BEGINNING OF 37,564 37,610
PERIOD
WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK ISSUED DURING THE
PERIOD 9 111
---------------- ----------------
WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING
DURING THE PERIOD FOR COMPUTATION
OF FULLY DILUTED EARNINGS PER SHARE 37,573 37,721
================ ================
NET LOSS APPLICABLE TO COMMON SHARES $ (4,381) $ (4,665)
================ ================
NET LOSS PER COMMON SHARE:
PRIMARY $ (0.12) $ (0.12)
================ ================
FULLY DILUTED $ ( 0.12) $ (0.12)
================ ================
</TABLE>
<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>
<CIK> 0000902277
<NAME> Delta and Pine Land Company
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> NOV-30-1997
<CASH> 4,140
<SECURITIES> 0
<RECEIVABLES> 11,000
<ALLOWANCES> 0
<INVENTORY> 68,447
<CURRENT-ASSETS> 90,829
<PP&E> 90,851
<DEPRECIATION> 25,740
<TOTAL-ASSETS> 166,729
<CURRENT-LIABILITIES> 56,443
<BONDS> 48,109
0
80
<COMMON> 3,795
<OTHER-SE> 65,110
<TOTAL-LIABILITY-AND-EQUITY> 166,729
<SALES> 5,340
<TOTAL-REVENUES> 5,340
<CGS> 3,273
<TOTAL-COSTS> 3,273
<OTHER-EXPENSES> (66)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 343
<INCOME-PRETAX> (7,367)
<INCOME-TAX> (2,726)
<INCOME-CONTINUING> (4,665)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,665)
<EPS-PRIMARY> (0.12)
<EPS-DILUTED> (0.12)
</TABLE>
