-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LwT0Zh3AAe1Iw8tThl8AZphxparC1kSTk4/yMTnkxvt96y02hdzGaGK13RnxfIKJ mnFNoR0Y8PN+Bk1BDrXunQ== 0000928585-00-000005.txt : 20000202 0000928585-00-000005.hdr.sgml : 20000202 ACCESSION NUMBER: 0000928585-00-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991130 FILED AS OF DATE: 20000114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DELTA & PINE LAND CO CENTRAL INDEX KEY: 0000902277 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE PRODUCTION - CROPS [0100] IRS NUMBER: 621040440 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-14136 FILM NUMBER: 507876 BUSINESS ADDRESS: STREET 1: ONE COTTON ROW CITY: SCOTT STATE: MI ZIP: 38772 BUSINESS PHONE: 6017423351 MAIL ADDRESS: STREET 1: ONE COTTON ROW CITY: SCOTT STATE: MS ZIP: 38772 10-Q 1 QUARTERLY REPORT 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, 1999 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: (662) 742-4500 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: 38,721,614 shares outstanding as of January 6, 2000. DELTA AND PINE LAND COMPANY AND SUBSIDIARIES INDEX Page No. PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements Consolidated Balance Sheets - November 30, 1998, August 31, 1999, and November 30, 1999 2 Consolidated Statements of Operations - Three Months Ended November 30, 1998 and November 30, 1999 3 Consolidated Statements of Cash Flows - Three Months Ended November 30, 1998 and November 30, 1999 4 Notes to Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 PART II. OTHER INFORMATION Item 1. Legal Proceedings 14 Item 4. Submission of Matters to a Vote of Security Holders 14 Item 5. Business 14 Item 6. Exhibits and Reports on Form 8-K 21 Signatures 22 PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements DELTA AND PINE LAND COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) (Unaudited)
November 30, August 31, November 30, 1998 1999 1999 ---- ---- ---- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 5,625 $ 7,552 5,544 Receivables, net 13,246 147,926 8,456 Inventories 92,511 47,727 76,142 Prepaid expenses 3,661 1,473 1,635 Income tax receivable 6,710 - - Deferred income taxes 4,408 12,865 12,865 ----- ------ ------ Total current assets 126,161 217,543 104,642 ------- ------- ------- PROPERTY, PLANT and EQUIPMENT, net 68,028 65,166 65,030 EXCESS OF COST OVER NET ASSETS OF BUSINESS ACQUIRED, net 4,549 4,458 4,428 INTANGIBLES, net 3,495 4,365 4,346 OTHER ASSETS 2,232 4,226 3,233 ----- ----- ----- $ 204,465 $ 295,758 181,679 ========= ========= ======= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable $ 1,263 $ 3,819 1,981 Accounts payable 33,239 19,990 39,352 Accrued expenses 28,714 140,149 22,405 Income taxes payable - 8,082 1,698 ----- ----- ----- Total current liabilities 63,216 172,040 65,436 ------ ------- ------ LONG-TERM DEBT, less current maturities 56,080 17,000 21,700 ------ ------ ------ DEFERRED INCOME TAXES 5,020 5,773 5,773 ----- ----- ----- MINORITY INTEREST IN SUBSIDIARIES 5,611 11,541 9,036 ----- ------ ----- STOCKHOLDERS' EQUITY: Preferred stock, par value $0.10 per share; 2,000,000 shares 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 1,066,667 shares authorized; 1,066,667, 1,066,667 107 107 107 Common stock, par value $0.10 per share; 100,000,000 shares authorized; 38,519,604; 38,664,565 and 38,832,269 shares issued; 38,405,338; 38,550,299 adn 38,718,003 shares outstanding 3,852 3,866 3,883 Capital in excess of par value 36,314 41,179 42,318 Retained earnings 38,494 48,970 38,268 Accumulated other comprehensive loss (2,056) (2,545) (2,669) Treasury stock at cost, 114,266; 114,266 and 114,266 shares (2,173) (2,173) (2,173) ------ ------ ------ Total stockholders' equity 74,538 89,404 79,734 ------ ------ ------ $ 204,465 $ 295,758 181,679 ========= ========= =======
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) November 30, November 30, 1998 1999 ---- ---- NET SALES AND LICENSING FEES $ 7,195 $ 4,549 COST OF SALES 4,947 4,248 ----- ----- GROSS PROFIT 2,248 301 ----- --- OPERATING EXPENSES: Research and development 4,235 4,358 Selling 3,829 3,239 General and administrative 2,960 3,084 Special charges and unusual charges related to acquisitions 818 467 --- --- 11,842 11,148 ------ ------ OPERATING LOSS (9,594) (10,847) INTEREST INCOME (EXPENSE), net of capitalized interest of $32 and $15 (531) 83 OTHER (237) 198 ---- --- LOSS BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE (10,362) (10,566) INCOME TAX BENEFIT 3,923 4,015 ----- ----- NET LOSS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE (6,439) (6,551) CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR STARTUP COSTS, NET - (2,965) ------ ------ NET LOSS (6,439) (9,516) DIVIDENDS ON PREFERRED STOCK (24) (24) ----- ----- NET LOSS APPLICABLE TO COMMON SHARES $ (6,463) $ (9,540) ====== ====== BASIC EARNINGS PER SHARE: NET LOSS PER SHARE BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $ (0.17) $ (0.17) CUMULATIVE EFFECT OF ACCOUNTING CHANGE - (0.08) ----- ----- NET LOSS $ (0.17) $ (0.25) ====== ====== NUMBER OF SHARES USED IN BASIC EARNINGS PER SHARE CALCULATIONS 38,380 38,662 ====== ====== DILUTED EARNINGS PER SHARE: NET LOSS PER SHARE BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $ (0.17) $ (0.17) CUMULATIVE EFFECT OF ACCOUNTING CHANGE - (0.08) ------ ----- NET LOSS $ (0.17) $ (0.25) ========= ========== NUMBER OF SHARES USED IN DILUTED EARNINGS PER SHARE CALCULATIONS 38,380 38,662 ====== ====== DIVIDENDS PER COMMON SHARE $ 0.03 $ 0.03 ========= ==========
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) November 30, November 30, 1998 1999 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (6,439) $ (9,516) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 1,668 1,742 Minority interest in subsidiaries 2,697 (2,505) Changes in current assets and liabilities: Receivables 91,533 139,470 Inventories (42,014) (28,415) Prepaid expenses (2,467) (162) Accounts payable 10,408 19,362 Accrued expenses (63,328) (117,744) Income taxes payable (1,148) (6,384) Decrease in intangible and other assets 139 1,014 --- ----- Net cash used in operating activities (8,951) (3,138) ------ ------ CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (2,822) (1,578) Proceeds from sale of investment - - ------ ------ Net cash used in investing activities (2,822) (1,578) ------ ------ CASH FLOWS FROM FINANCING ACTIVITIES: Payments of short-term debt (10,000) (2,800) Payments of long-term debt - (11,400) Dividends paid (1,176) (1,186) Proceeds from long-term debt 9,010 17,062 Proceeds from short-term debt 10,000 - Proceeds from exercise of stock options and tax benefit of stock option exercises 479 1,156 --- ----- Net cash provided by financing activities 8,313 2,832 ----- ----- EFFECTS OF FOREIGN CURRENCY TRANSLATION 1,023 (124) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,437) (2,008) CASH AND CASH EQUIVALENTS, as of August 31 8,062 7,552 ----- ----- CASH AND CASH EQUIVALENTS, as of November 30 $ 5,625 $ 5,544 ========= ========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the three months for: Interest paid, net of capitalized interest $ 600 $ 300 Income taxes $ 100 $ 0
The accompanying notes are an integral part of these statements. 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' ("D&PL" or the "Company") business, the results of operations for the three month periods ended November 30, 1998 and November 30, 1999 or for any quarterly period, 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, 1999. Certain prior year balances have been reclassified to conform to the current year presentation. 2. ABANDONMENT OF MERGER WITH MONSANTO On May 8, 1998, the Company entered into a merger agreement with Monsanto Company ("Monsanto"), pursuant to which the Company would be merged with and into Monsanto. On December 20, 1999, Monsanto withdrew its pre-merger notification filed pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR Act") effectively terminating Monsanto's efforts to gain government approval of the merger. On January 3, 2000, Monsanto paid to the Company a termination fee and expenses totaling $81 million, as required by the merger agreement. The Company and Monsanto continue to have substantive negotiations to resolve other issues that the Company has raised related to the merger agreement. 3. RECENT ACCOUNTING PRONOUNCEMENTS SFAS No. 130, "Reporting Comprehensive Income", establishes standards for reporting comprehensive income and its components in financial statements. Comprehensive income, as defined, includes all non-shareowner changes in equity and consists of net income, foreign currency translation adjustments, unrealized gains and losses on available-for-sale securities, and minimum pension liability adjustments. Total comprehensive income for the three months ended November 30, 1998 and 1999 was (in thousands):
Three Months Ended November 30, 1998 1999 ---- ---- Net (loss) $ (6,439) $ (9,516) Other comprehensive (loss) income: Foreign currency translation (losses) and gains 1,023 (124) Income tax benefit (expense) related to other comprehensive income (387) 47 ---- -- Other comprehensive (loss) income, net of tax 636 (77) --- --- Total comprehensive (loss) applicable to common stockholders $ (5,803) $ (9,593) ========= ========
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," establishes standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports issued to shareholders. The Company is in a single line of business and operating in two business segments, domestic and international. The Company's reportable segments offer similar products; however, the business units are managed separately due to the geographic dispersion of their operations. The Company's chief operating decision maker utilizes revenue information in assessing performance and making overall operating decisions and resource allocations. Profit and loss information is reported by segment to the chief operating decision maker and the Company's Board of Directors. Information about the Company's segments for the three months ended November 30, 1998 and 1999 is as follows (in thousands): Three Months Ended November 30, --------------- 1998 1999 ---- ---- Net Sales Domestic $ 1,087 $ 442 International 6,108 4,107 ----- ----- $ 7,195 $ 4,549 ========= ======== Operating Loss Domestic $ 9,558 $ 10,033 International 36 814 -- --- $ 9,594 $ 10,847 ========= ======== Material Changes in Assets: Inventories increased approximately 28,415 to 76,142 at November 30, 1999 from 47,727 at August 31, 1999. These increases reflect the seasonal nature of the Company's business. The Company purchases bulk seed in its first and second fiscal quarters and begins production for the current year's selling season. The increases at November 30, 1999 from August 31, 1999, in inventories and accounts payable are primarily related to those two items and are consistent with Company's historical experience. Receivables decreased approximately 139,470 to 8,456 at November 30, 1999 from 147,926 at August 31, 1999. This decrease is primarily related to the collection of technology fees from Monsanto. Subsequent to receipt of the technology fees from Monsanto, the Company paid Monsanto its royalty for the Bollgard and Roundup Ready licensing fees which is reflected in the reduction of accrued expenses from August 31, 1999 to November 30, 1999. SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits," revises employers' disclosures about pension and other postretirement benefit plans. It does not change the measurement or recognition of those plans. This statement is effective for fiscal years beginning after December 15, 1997. The Company adopted the year end disclosure requirements of SFAS No. 132 in fiscal 1999. SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," establishes accounting and reporting standards for the derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. The effective date of this statement was delayed via the issuance of SFAS No. 137. The effective date for SFAS No. 133 is now for fiscal years beginning after June 15, 2000, though earlier adoption is encouraged and retroactive application is prohibited. Therefore D&PL must adopt the statement no later than September 1, 2000. Management does not expect the adoption of this statement to have a material impact on D&PL's results of operations, financial position or cash flows. SOP 98-5, "Reporting on the Costs of Startup Activities," requires that costs related to start-up activities be expensed as incurred and all previously capitalized costs be written off. Effective September 1, 1999, the Company adopted the requirements of SOP 98-5. The effect of adopting this statement resulted in a write-off, net of tax, of approximately $2,965,000 ( or $0.08 per share). The adjustment of $2,965,000, after income tax benefits of $1,817,000, to retroactively apply the new method is recorded in income of the first fiscal quarter of 2000. 4. INVENTORIES Inventories consisted of the following (in thousands): November 30, August 31, November 30, 1998 1999 1999 ---- ---- ---- Finished goods $ 60,434 $ 43,528 $ 52,260 Raw materials 34,519 15,774 33,811 Growing crops 493 1,564 750 Supplies and other 688 969 745 --- --- --- 96,134 61,835 87,566 Less reserves (3,623) (14,108) (11,424) ------ ------- ------- $ 92,511 $ 47,727 $ 76,142 ========= ========= ========== Substantially all finished goods and raw material inventory is valued at the lower of average cost or market. Growing crops are recorded at cost. 5. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of the following (in thousands):
November 30, August 31, November 30, 1998 1999 1999 ---- ---- ---- Land and improvements $ 4,564 $ 4,113 $ 4,198 Buildings and improvements 36,750 35,251 37,722 Machinery and equipment 43,172 43,291 45,961 Germplasm 7,500 7,500 7,500 Breeder and foundation seed 2,000 2,000 2,000 Construction in progress 2,950 4,789 1,115 ----- ----- ----- 96,936 96,944 98,496 Less accumulated depreciation (28,908) (31,778) (33,466) ------- ------- ------- $ 68,028 $ 65,166 $ 65,030 ============== ============= ==============
6. CONTINGENCIES On October 14, 1999, the Company, Monsanto and UAP/GA Ag. Chem. Inc. were named as defendants in two lawsuits filed by two cotton farmers in the United States District Court for the Western District of North Carolina. The suits allege, among other things, that certain varieties sold by the Company that contain the Roundup Ready gene performed poorly, specifically including lack of tolerance to Roundup and poor germination. The Company and Monsanto have investigated the claims to determine the cause or causes of the alleged problems. Pursuant to the terms of the Roundup Ready Agreement between D&PL and Monsanto, D&PL has tendered the defense of these claims to Monsanto and requested indemnity. Pursuant to the Roundup Ready Agreement, Monsanto is contractually obligated to defend and indemnify the Company against all claims arising out of the failure of the Roundup glyphosate tolerance gene. D&PL will not have a right to indemnification from Monsanto, however, for any claim involving defective varietal characteristics separate from or in addition to the failure of the herbicide tolerance gene, and such claims are contained in these complaints. D&PL believes these claims will be resolved without any material impact on the Company's consolidated financial statements. On June 11, 1999, D&PL, Monsanto, Asgrow Seed Company, SF Services, Terral Seed, Inc., Valley Farmers Co-Op, Red River Co-Op, and Central Louisiana Grain Co-Op were named as defendants in a lawsuit filed in the Fourth Judicial District, Parish of Natchitoches, State of Louisiana. The suit alleges, among other things, that certain soybean seeds which contain the Roundup Ready(R) gene did not perform as advertised and did not produce promised yields. The plaintiffs in this case are seeking certification of a class of all purchasers of Roundup Ready soybeans during the years of 1997 and 1998. The Company and Monsanto are presently investigating the claim; however, they believe it to be without merit and their plan is to vigorously defend this lawsuit. Pursuant to the terms of the Roundup Ready Soybean Agreement between D&PL and Monsanto, D&PL has tendered the defense of this claim to Monsanto. Pursuant to the Roundup Ready Soybean Agreement, Monsanto is contractually obligated to defend and indemnify any and all claims arising out of the failure of glyphosate gene tolerance, and certain other types of claims. D&PL will have no right to indemnification from Monsanto, however, for any claim involving defects in seed and/or promotional representations made solely by D&PL without Monsanto's approval. Such claims appear to be contained within this complaint. D&PL believes this claim will be resolved without any material impact on the Company's consolidated financial statements. The Company and Monsanto are named as defendants in four pending lawsuits filed in the State of Texas. Two lawsuits were filed in Lamb County, Texas on April 5, 1999; one lawsuit was filed in Lamb County, Texas on April 14, 1999; and one lawsuit was filed in Hockley County, Texas, on April 21, 1999. These lawsuits were removed to the United States District Court, Lubbock Division, but subsequently were remanded back to the state court where they were filed. In each case the plaintiff alleges, among other things, that certain cottonseed acquired from Paymaster which contained the Roundup Ready gene did not perform as the farmers had anticipated. These lawsuits also include varietal claims aimed solely at the Company. This litigation is identical to seed arbitration claims previously filed in the State of Texas which were concluded in the Company's favor. The Company and Monsanto have investigated the claims to determine the cause or causes of the alleged problems. Pursuant to the terms of the Roundup Ready Agreement between D&PL and Monsanto, D&PL has tendered the defense of these claims to Monsanto and requested indemnity. Pursuant to the Roundup Ready Agreement, Monsanto is contractually obligated to defend and indemnify the Company against all claims arising out of the failure of the Roundup glyphosate tolerance gene. D&PL will not have a right to indemnification from Monsanto, however, for any claim involving defective varietal characteristics separate from or in addition to the failure of the herbicide tolerance gene, and such claims are contained in these complaints. D&PL believes these claims will be resolved without any material impact on the Company's consolidated financial statements. The Company, Monsanto and other parties were named as defendants in a lawsuit filed in the Superior Court of Calhoun County, Georgia on April 19, 1999, which has been removed to the United States District Court of the Middle District of Georgia, Albany Division. The Company and Monsanto are presently investigating the claim to determine the cause or causes, if any, of the alleged problems. Pursuant to the terms of the Roundup Ready Agreement between D&PL and Monsanto, D&PL has tendered the defense of this claim to Monsanto and requested indemnity, as Monsanto is contractually obligated to defend and indemnify the Company against all claims arising out of the failure of the Roundup glyphosate tolerance gene. D&PL will not have a right to indemnification from Monsanto, however, for any claim involving defects in seed separate from or in addition to the failure of the herbicide tolerance gene, and such claims are contained in these complaints. This case was the subject of a seed arbitration case filed in Georgia during 1997 which was concluded in the Company's favor. D&PL believes this lawsuit will be resolved without any material impact on the Company's consolidated financial statements. On November 15, 1999, Monsanto and local cotton seed distributors were named in a lawsuit filed in the Court of Common Pleas, County of Hampton, State of South Carolina. This case was subsequently removed to the United States District Court, District of South Carolina, Beaufort Division. This case requests class action treatment and alleges that a wide variety of the Company's transgenic cotton products were defective because they grew plants which produced cotton bolls that contained immature, defective and rotten seed in the bolls. The plaintiff in this case seeks class certification of purchases of a wide variety of seed purchased during the 1999 crop year. The Company and Monsanto are presently investigating the claim; however, they believe it to be without merit and their plan is to vigorously defend this lawsuit, with particular emphasis on defending the class action allegations. The Company has tendered the defense of this claim to Monsanto and requested indemnity. Pursuant to the Roundup Ready(R) Agreement, Monsanto is contractually obligated to indemnify and defend the Company against all claims arising out the failure of the glyphosate tolerance gene. The Company will not have a right to indemnification from Monsanto, however, for any claim involving defective varietal characteristics separate from or in addition to the failure of the herbicide tolerance gene, and such claims are contained in these complaints. The Company believes this claim is not one that is likely to receive class treatment. Accordingly, D&PL believes that this claim will be resolved without any material impact on the Company's consolidated financial statements. On November 15, 1999, the Company, Monsanto and certain local cottonseed distributors were named in an additional case filed in the Court of Common Pleas, State of South Carolina. This case has been removed to the United States District Court, District of South Carolina, Beaufort Division. This case alleges that a wide variety of the Company's transgenic cotton products were defective because they grew plants that produced cotton bolls that contained immature, defective and rotten seed in the bolls during the 1999 crop year. The Company and Monsanto are presently investigating the claim; however, they believe it to be without merit and their plan is to vigorously defend this lawsuit. The Company has tendered the defense of this claim to Monsanto and requested indemnity. Pursuant to the Roundup Ready(R) Agreement, Monsanto is contractually obligated to indemnify and defend the Company against all claims arising out the failure of the glyphosate tolerance gene. The Company will not have a right to indemnification from Monsanto, however, for any claim involving defective varietal characteristics separate from or in addition to the failure of the herbicide tolerance gene, and such claims are contained in this complaint. The Company believes that this claim will be resolved without any material impact on the Company's consolidated financial statements. On November 15, 1999, the Company, Monsanto and certain local cottonseed distributors were named in a lawsuit filed in United States District Court, District of South Carolina, Beaufort Division. This case requests class action treatment and alleges that a wide variety of the Company's transgenic cotton products were defective because they grew plants that produced cotton bolls containing immature, defective and rotten seed in the bolls. The plaintiff in this case seeks class certification of purchases of a wide variety of seed purchased during the 1999 crop year. The Company and Monsanto are presently investigating the claim; however, they believe it to be without merit and their plan is to vigorously defend this lawsuit, with particular emphasis on defending the class action allegations. The Company has tendered the defense of this claim to Monsanto and requested indemnity. Pursuant to the Roundup Ready(R) Agreement, Monsanto is contractually obligated to indemnify and defend the Company against all claims arising out the failure of the glyphosate tolerance gene. The Company will not have a right to indemnification from Monsanto, however, for any claim involving defective varietal characteristics separate from or in addition to the failure of the herbicide tolerance gene, and such claims are contained in these complaints. The Company believes this claim is not one that is likely to receive class treatment. Accordingly, D&PL believes that this claim will be resolved without any material impact on the Company's consolidated financial statements. On March 30, 1999, the Company, Asgrow Seed Company, L.L.C., and Terra International were named as defendants in a lawsuit filed in the Fourth Judicial District Court, Parish of Morehouse, State of Louisiana, which has now been removed to the United States District Court for the Western District of Louisiana. The suit alleges, among other things, that certain soybean seed which contained the Roundup Ready gene did not properly germinate and did not perform as the farmer had anticipated and, in particular, did not fully protect their crops from damage following the application of Roundup. The Company and Monsanto are presently investigating the claim to determine the cause or causes, if any, of the alleged problem. Pursuant to the terms of the Roundup Ready Agreement between D&PL and Monsanto, D&PL has tendered the defense of this claim to Monsanto. Pursuant to the Roundup Ready Agreement, Monsanto is contractually obligated to defend and indemnify any and all claims arising out of the failure of the glyphosate tolerance gene. D&PL believes this case can be resolved without any material impact on the Company's consolidated financial statements. In 1999 and 1998, 45 farmers in Mississippi filed seed arbitration claims against the Company and Monsanto with the Mississippi Department of Agriculture arising from the 1998 cotton crop. The Mississippi Department of Agriculture dismissed all but 19 of those claims due to the failure of the farmer to provide adequate information. Those farmers, however, still have a right to pursue litigation should they so choose. The remaining arbitration claims were heard in March of 1999. The Company was exonerated from liability in 16 of those cases. Three cases resulted in the suggestion of nominal damages. Each of those farmers has, likewise, the right to pursue litigation should they so choose. Five of the 16 unsuccessful claimants from the 1998 crop year filed suit on May 21, 1999, in the Circuit Court of Bolivar County, Mississippi, against the Company and Monsanto. The Company and Monsanto are presently investigating the claims. Pursuant to the terms of the Roundup Ready Agreement between D&PL and Monsanto, D&PL has tendered the defense of these claims to Monsanto and requested indemnity, as Monsanto is contractually obligated to defend and indemnify the Company against all claims arising out of the failure of the Roundup glyphosate tolerance gene. D&PL will not have a right to indemnification from Monsanto, however, for any claim involving defects in seed separate from or in addition to the failure of the herbicide tolerance gene, and such claims are contained in these complaints. Additionally, 14 farmers in Mississippi have seed arbitration claims against the Company with the Mississippi Department of Agriculture arising from the 1999 cotton crop year. The Mississippi Department of Agriculture has not yet scheduled a hearing on any of these claims. The Company believes these claims can be resolved without any material impact on the Company's consolidated financial statements. In 1999 and 1998, approximately 210 cotton farmers in Georgia had filed seed arbitration claims arising from the 1998 cotton crop against the Company, and in some cases, Monsanto. Approximately 180 of those cases have now been settled. Those settlements were achieved without any material impact on the Company's consolidated financial statements. The remaining claimants who had filed for the 1998 crop year still have the right to pursue litigation if they so choose. The Company believes that these claims can be resolved without any material impact on the Company's consolidated financial statements. In 1999, approximately 178 cotton farmers in Georgia filed seed arbitration cases against the Company and, in some cases, against Monsanto, alleging damages for their 1999 crops. Although hearings were originally scheduled for 6 of these claims in January of 2000, the Georgia Seed Arbitration Council dismissed those cases without hearing determining that the claims fell outside the jurisdiction of that body. Similar orders of dismissal have been entered for 21 other cases pending before the Georgia Seed Arbitration Council and it is anticipated that a significant number of the remaining cases will likewise be dismissed without hearing. The Company and Monsanto are in the process of investigating these claims to determine the cause or causes, if any, of the alleged problems. Pursuant to the terms of the Roundup Ready Agreement between D&PL and Monsanto, D&PL has tendered the defense of these seed arbitration claims to Monsanto and has requested indemnity. Pursuant to the Roundup Ready Agreement, Monsanto is contractually obligated to defend and indemnify the Company against all claims arising out of the failure of the Roundup glyphosate tolerance gene. The Company will not have a right to indemnification, however, for any claim involving defects in the seed, separate from or in addition to the failure of the herbicide tolerance gene, and such claims are contained in some of the seed arbitration claims filed. Based upon information received to date, the Company believes these claims can be resolved without any material impact on the Company's consolidated financial statements. In 1998, one claim was filed with the Arkansas Seed Arbitration Council. A Motion to Dismiss has been filed. This case alleges that certain Roundup Ready cottonseed marketed by the Company in 1997 failed to perform as farmers had anticipated and caused the farmers to suffer crop loss. Pursuant to the Roundup Ready Agreement between D&PL and Monsanto, D&PL has tendered the defense of this claim to Monsanto. Pursuant to the Roundup Ready Agreement, Monsanto is contractually obligated to defend and indemnify any and all claims arising out of the failure of the glyphosate gene tolerance. D&PL believes this case can be resolved without any material impact on the Company's consolidated financial statements. During 1999, five farmers in the State of Alabama filed seed arbitration claims against the Company for their 1999 crop year. The Company is in the process of investigating these claims to determine the cause or causes, if any, of the alleged problems. Pursuant to the terms of the Roundup Ready Agreement between D&PL and Monsanto, D&PL has tendered the defense of these seed arbitration claims to Monsanto and has requested indemnity. Pursuant to the Roundup Ready Agreement, Monsanto is contractually obligated to defend and indemnify the Company against all claims arising out of the failure of the Roundup glyphosate tolerance gene. The Company will not have a right to indemnification, however, for any claim involving defects in the seed, separate from or in addition to the failure of the herbicide tolerance gene, and such claims are contained in some of the seed arbitration claims filed. Based upon information received to date, the Company believes these claims can be resolved without any material impact on the Company's consolidated financial statements. In 1998 and 1999, three farmers in the State of Florida filed seed arbitration claims against the Company from the 1998 crop year. Two of those claims have now been resolved and a hearing was conducted on the remaining claim with the resulting ruling absolving the Company from liability. That farmer has the right to pursue litigation in the event he chooses to do so. Additionally, 5 farmers in the State of Florida have filed arbitration claims against the Company for the 1999 crop year. The Florida Department of Agriculture has not yet scheduled hearings on any of these claims. The Company believes these claims can be resolved without any material impact on the Company's consolidated financial statements. In 1999, 110 farmers in the State of South Carolina have filed seed arbitration claims against the Company. The Company and Monsanto are in the process of investigating these claims to determine the cause or causes, if any, of the alleged problem. Pursuant to the terms of the Roundup Ready(R) Agreement between the Company and Monsanto, the Company has tendered the defense of these seed arbitration claims to Monsanto and requested indemnity. Pursuant to the Roundup Ready(R) Agreement, Monsanto is contractually obligated to defend and indemnify the Company against all claims arising out of the failure of the Roundup glyphosate tolerance gene. D&PL will have no right to indemnification, however, from any claims involving defective seed, separate from or in additional to the failure of the herbicide tolerance gene, such claims are contained in the seed arbitration claims filed in South Carolina. The South Carolina Department of Agriculture has not yet scheduled a hearing on any of these claims. The Company believes the claims to be without merit and that the farmers complaints are environmentally induced and not related to seed performance; accordingly, the Company believes these claims can be resolved without any material impact on the Company's consolidated financial statements. In May 1998, five individual alleged shareholders brought suits against Monsanto, the Company and its Board of Directors ("Directors") in the Court of Chancery in New Castle County, Delaware. The complaints alleged that the consideration to be paid in the proposed merger of the Company with Monsanto is inadequate and that the Company's Directors breached their fiduciary duties to the Company's stockholders by voting to approve the Agreement and Plan of Merger, and that Monsanto aided and abetted the alleged breach of fiduciary duty. The complaints were consolidated into one action, which sought a declaration that the action was maintainable as a class action, that the merger be enjoined, or alternatively, rescinded, and/or an award of unspecified compensatory damages if the merger was consummated. A settlement agreement was reached with the named plaintiffs in November 1998. The settlement agreement provides that it will be null and void if the merger is not consummated for any reason. On December 30, 1999, two of the alleged stockholders who filed lawsuits in May 1998 challenging the proposed merger with Monsanto filed another lawsuit against Monsanto, the Company and its Board of Directors in the Court of Chancery of New Castle County, Delaware. That complaint purports to assert derivative claims on behalf of the Company, as well as a class action on behalf of the Company's stockholders, seeking damages or other relief in connection with Monsanto's termination of its agreement to merge with the Company. The complaint was served on the Company's registered agent in Delaware on January 11, 2000. The Company believes that the complaint is without merit and the directors have not yet been served. In October 1996, Mycogen Plant Science, Inc. and Agrigenetics, Inc. (collectively "Mycogen") 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, which went to trial in January 1998, sought injunctions against alleged infringement, compensatory damages, treble damages and attorney's fees and court costs. A jury found in favor of D&PL and Monsanto on issues of infringement. Mycogen subsequently re-filed a motion for a new trial and for a judgment in favor of Mycogen as a matter of law. The trial court has ruled in these motions holding for Mycogen on certain issues but sustaining the jury verdict in favor of D&PL and Monsanto. Mycogen has appealed to the U.S. Court of Appeals for the Federal Circuit. 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. On December 22, 1999, suit was filed in Federal Court of Australia, Victoria District Registry, General Division, by Mycogen against an affiliate of the Company, DeltaPine Australia Pty., Ltd., alleging similar infringement of certain Mycogen patents. To the knowledge of the Company, its affiliate has not yet been served in this matter. Due to Monsanto's obligation to indemnify D&PL, the Company believes that the resolution of these matters will not have a material impact on the Company's consolidated 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 $700,000 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 a material impact on the Company's consolidated financial statements. The Company continues to offer seed for sale in Guatemala. 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 18. D&PL has responded to the CID, employees were examined in 1997 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. On August 9, 1999, D&PL and Monsanto received Civil Investigative Demands from the USDOJ, seeking to determine whether there have been any inappropriate exchanges of information between Monsanto and D&PL or if any prior acquisitions are likely to have substantially lessened competition in the sale or development of cottonseed or cottonseed genetic traits. D&PL is complying with the USDOJ's request for information and documents and with the recent Civil Investigative Demand. 7. EARNINGS PER SHARE The table below reconciles basic and diluted earnings per share at November 30:
Basic: 1998 1999 ---- ---- Loss before cumulative effect of accounting change $ (6,439) $ (6,551) Preferred stock dividends (24) (24) --- --- Net loss before cumulative effect of accounting change applicable to common stockholders $ (6,463) $ (6,575) =========== =========== Weighted average shares outstanding 38,380 38,662 ====== ====== Basic earnings per share $ (0.17) $ (0.17) =========== =========== Diluted: Net loss before cumulative effect of accounting change applicable to common stockholders $ (6,463) $ (6,575) Add Back: Preferred stock dividends 24 24 -- -- Net loss before cumulative effect of accounting change $ (6,439) $ (6,551) =========== =========== Weighted average shares outstanding 38,380 38,662 ------ ------ Diluted shares outstanding 38,380 38,662 ====== ====== Diluted earnings per share $ (0.17) $ (0.17) =========== ===========
PART I. Item 2. Management's Discussion And Analysis Of Financial Condition And Results Of Operations Overview On May 8, 1998, Delta and Pine Land Company and subsidiaries, a Delaware Corporation ("D&PL" or the "Company") entered into a merger agreement with Monsanto Company ("Monsanto"), pursuant to which the Company would be merged with and into Monsanto. On December 20, 1999, Monsanto withdrew its filing under the HSR Act thereby effectively abandoning plans to consummate the merger. On January 3, 2000, Monsanto paid D&PL $81 million as a termination fee and expenses. D&PL and Monsanto continue negotiations with respect to matters raised by D&PL arising out of the merger agreement. Pursuant to the merger agreement, D&PL can pursue other remedies. RESULTS OF OPERATIONS The following sets forth selected operating data of the Company (in thousands): For the Three Months Ended -------------------------- November 30, November 30, 1998 1999 ---- ---- Operating results - Net sales and licensing fees $ 7,195 $ 4,549 Gross profit 2,248 301 Operating expenses: Research and development 4,235 4,358 Selling 3,829 3,239 General and administrative 2,960 3,084 Special and unusual charges related to acquisitions 818 467 Operating loss (9,594) (10,847) Loss before income taxes and cumulative effect of accounting change (10,362) (10,566) Net loss applicable to common shares before accounting change (6,463) (6,575) The following sets forth selected balance sheet data of the Company as of the following periods (in thousands):
November 30, August 31, November 30, 1998 1999 1999 ----------------- ----------------- ------------------ Balance sheet summary- Current assets $ 126,161 $ 217,543 $ 104,642 Current liabilities 63,216 172,040 65,436 Working capital 62,945 45,503 396,206 Property, plant and equipment, net 68,028 65,166 65,030 Total assets 204,465 295,758 181,679 Outstanding borrowings 57,343 20,819 23,681 Stockholders' equity 74,538 89,404 79,734
Three months ended November 30, 1999, compared to three months ended November 30, 1998: Net sales and licensing fees decreased approximately $2.7 million to $4.5 million from $7.2 million. The decrease in net sales and licensing fees is primarily the result of decreased sales by the Company's joint venture in China which were partially offset by sales of the Company's new joint venture in Brazil. Additionally, the reduction in revenues is related to the loss of contract ginning revenues which resulted from the sale of the Company's site at Centre, Alabama. Operating expenses decreased from $11.8 million in the first fiscal quarter of 1999 to $11.1 million in fiscal 2000. This decrease is primarily attributable to cost savings as which are the result of the Company's July 1999 restructuring program and fewer expenses in connection with the planned merger with Monsanto. The Company reported net interest income of $0.08 million in the first fiscal quarter of 2000 compared to net interest expense of $0.53 million in the first fiscal quarter of 1999. This change is primarily due to lower average outstanding borrowings and higher interest rates earned on cash equivalents. 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 18 years D&PL has borrowed on a short-term basis to meet seasonal working capital needs. In the United States, 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 customers 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 licensing 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 licensing 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 licensing fees. In April 1998, the Company entered into a syndicated credit facility with its existing lender and two other financial institutions which provides for aggregate borrowings of $110 million. This agreement provides a base commitment of $55 million and a seasonal commitment of $55 million. The base commitment is a long-term loan that may be borrowed upon at any time and is due April 1, 2001. 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 April 1, 2001. 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. At November 30, 1999, the Company had $33.3 million available for borrowing under the base commitment. In addition the lead lender has approved a $25.0 million credit line that can be activated by the Company as needed. On April 15, 1999, the Company activated the previously approved $25.0 million additional seasonal credit facility. Such facility was available from April 15, 1999 to September 1, 1999 and incurred interest at rates comparable to the existing facility. The financial covenants under the loan agreements require the Company to: (a) maintain a ratio of total liabilities to tangible net worth at August 31, of less than or equal to 2.25 to 1 (4.0 to 1.0 at the Company's other quarter ends) (b) maintain a fixed charge ratio at the end of each quarter greater than or equal to 2.0 to 1.0 and (c) maintain at all times tangible net worth of not less than the sum of (i) $40 million plus (ii) 50% of net income (but not losses) determined on the last day of each fiscal year, commencing with August 31, 1998. At November 30, 1999, the Company was in compliance with these covenants. Capital expenditures for the first fiscal quarter of 2000 were $1.6 million which was a decrease from $2.8 million in the first fiscal quarter of 1999. The Company anticipates that domestic capital expenditures will approximate $8.0 million in 2000, excluding expected capital expenditures for foreign joint ventures which will be funded by cash from operations, borrowings or investments from joint venture partners, as necessary. Capital expenditures in 2000 for international ventures are expected to range from $1.0 million to $2.0 million depending on the timing and outcome of such projects. Cash provided from operations, early payments from customers and borrowings under the loan agreement should be sufficient to meet the Company's 2000 working capital needs. In the first quarter of fiscal 2000, the Board of Directors authorized a quarterly dividend of $0.03 per share, paid December 13, 1999 to the stockholders of record on November 30, 1999. It is anticipated that quarterly dividends of $0.03 per share will continue to be paid although the Board of Directors reviews this policy quarterly. The Company is currently evaluating its options relating to the receipt of the $81 million termination fee and expenses from Monsanto. The Company plans to utilize these funds to maximize shareholder value. PART II. OTHER INFORMATION Item 1. Legal Proceedings See Part I, Item 1, Footnote 6 Item 2. Changes in Securities and Use of Proceeds. Not Applicable. Item 3. Defaults Upon Senior Securities. Not Applicable. Item 4. Submission of Matters to a Vote of Security Holders Not Applicable. Item 5. Business On May 8, 1998, the Company entered into a Merger Agreement with Monsanto, pursuant to which D&PL would have been merged with and into Monsanto. On December 20, 1999, Monsanto withdrew its pre-merger notification filed pursuant to the HSR Act thereby terminating Monsanto's efforts to obtain government approval of the merger. On January 3, 2000 Monsanto paid D&PL $81 million as a termination fee and expenses pursuant to the agreement. Domestic Delta and Pine Land Company, a Delaware corporation, and subsidiaries (collectively, "D&PL" or the "Company") 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 to its product line. In 1996, D&PL commenced commercial sales in the United States of cotton planting seed containing Bollgard(R) gene technology licensed from Monsanto which expresses a protein toxic to certain lepidopteran cotton pests. Since 1997, D&PL has marketed in the U.S. cotton planting seed that contains a gene that provides tolerance to glyphosate-based herbicides ("Roundup Ready(R) Cotton"). In 1997, D&PL commenced commercial sales in the U.S. of soybean planting seed that contains a gene that provides tolerance to glyphosate-based herbicides ("Roundup Ready Soybeans"). International During the 1980's, as a component of its long-term growth strategy, the Company began to market its products, primarily cottonseed, internationally. Over a period of years, the Company has strengthened and expanded its international staff in order to support its expanding international business, primarily through joint ventures. 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 gene technology and Roundup Ready gene technology licensed from Monsanto is effective and could bring value to farmers. 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. Prior to 1999, a majority of the Company's international sales resulted from exports from the U.S. of the Company's products rather than direct in-country operations. In 1999, direct in-country operations through joint ventures or subsidiaries (primarily, Australia, China and South Africa) comprised over one-half of total international sales which represent approximately 10% of consolidated sales. Joint Ventures D&M International, LLC, is a venture formed in 1995 through which D&PL (the managing member) and Monsanto plan to introduce, in combination, cotton planting seed in international markets combining D&PL's acid delinting technology and elite germplasm and Monsanto's Bollgard and Roundup Ready gene technologies. In November 1995, D&M International, LLC formed a subsidiary, D&PL China Pte Ltd. ("D&PL China"). In November 1996, D&PL China formed with parties in Hebei Province, one of the major cotton producing regions in the People's Republic of China, Hebei Ji Dai Cottonseed Technology Company Ltd. ("Ji Dai"), a joint venture controlled by D&PL China. In June 1997, Ji Dai commenced construction of a cottonseed conditioning and storage facility in Shijiazhuang, Hebei Province, China, under terms of the joint venture agreement. The new facility was completed in December 1997 and seed processing and sales commenced in 1998. In December 1997, D&M International, LLC, formed a joint venture with Ciagro S.R.L. ("Ciagro"), a distributor of agricultural inputs in the Argentine cotton region, for the production and sale of genetically improved cottonseed. CDM Mandiyu S.R.L., is owned 60% by D&M International, LLC, and 40% by Ciagro. The cotton region, primarily comprised of the Provinces of Chaco, Santiago del Estero, Salta and Jujuy, presently has 1.2 million acres of cotton requiring 10,000 tons of cotton planting seed per year. CDM Mandiyu S.R.L. has been licensed to sell D&PL cotton varieties containing Monsanto's Bollgard gene technology. Sales of such varieties commenced in 1999. Future plans include the production and sale of Roundup Ready cottonseed varieties pending government approval. In July 1998, D&PL China and the Anhui Provincial Seed Corporation formed a joint venture, Anhui An Dai Cotton Seed Technology Company, Ltd. ("An Dai") which is located in Hefei City, Anhui Province, China. Under the terms of the joint venture agreement, the newly formed entity will produce, condition and sell acid delinted D&PL varieties of cottonseed which contain Monsanto's Bollgard gene. In the fall of 1998, An Dai harvested sufficient seed from seed plots in Anhui to plant up to 250,000 acres. The joint venture did not receive authority to operate from the Chinese government until after the 1999 selling season was completed. Therefore, commercial sales are expected to commence in early 2000. In November 1998, D&M International LLC and Maeda Administracao e Participacoes Ltda, an affiliate of Agropem - Agro Pecuria Maeda S.A., formed a joint venture in Minas Gerais, Brazil. The new company, MDM Maeda Deltapine Monsanto Algodao Ltda., will produce, condition and sell acid-delinted D&PL varieties of cotton planting seed. The new company produced and delinted enough cottonseed of conventional varieties in 1999 to plant up to 900,000 acres. The newly formed company will introduce transgenic cottonseed varieties, both Bollgard and Roundup Ready, to the Brazilian market as soon government approvals are obtained. Subsidiaries The Company's delinting plants in Groblersdal, South Africa and Catamarca, Argentina process foundation seed grown in these countries. The use of Southern Hemisphere winter nurseries and seed production programs such as these can 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. The Company maintains a winter nursery in Costa Rica and is currently constructing a delinting plant there to process foundation seed for export to the United States. Multiple winter nursery locations are used to manage seed production risks. Deltapine Australia Pty. Ltd., a wholly owned Australian subsidiary of DPLC, conducts breeding, production, conditioning and marketing of cotton planting seed in Australia. Certain varieties developed in Australia are well adapted to other Southern Hemisphere cotton producing countries and Australian developed varieties are exported to these areas. The Company sells seed of both conventional and transgenic varieties in Australia. The Company, through its Australian operations, is identifying smaller potential export markets for the Company's products throughout Southeast Asia. The adaptability of the Company's germplasm must be evaluated in the target markets before such sales can be made. The recent instability of the economies in some of the countries in this region will make successful market development difficult. Employees As of October 31, 1999, the Company employed a total of 555 full time employees worldwide. Due to the nature of the business, the Company utilizes seasonal employees in its delinting plants and its research and foundation seed programs. The maximum number of seasonal employees approximates 300 and typically occurs in October and November of each year. The Company considers its employee relations to be good. 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) for all outstanding shares of the three companies. The merger was accounted for as a pooling-of-interests. The Company continues to market upland picker cottonseed varieties under the Sure Grow brand. Additionally, the Sure Grow breeding program has full 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 1,066,667 shares (after all stock splits) of the Company's Series M Convertible Non-Voting Preferred Stock. In 1994, D&PL acquired the Paymaster and Lankart cotton planting seed business ("Paymaster"), for approximately $14.0 million. Since the 1940's, the Paymaster(R) and Lankart(R) upland stripper cottonseed varieties have been developed for and marketed primarily in the High Plains of Texas and Oklahoma (the "High Plains"). 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 portion of that seed is actually sold by Paymaster. Farmer-saved seed accounts for a significant portion of the seed needed to plant the acreage in this market area. Prior to 1997, 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, the certified seed program was discontinued and the Company, in addition to producing parent seed, commenced delinting, conditioning and bagging finished seed. Unconditioned seed is also supplied by D&PL to two contract processors who delint, condition and bag seed for a fee. This finished seed is sold by Paymaster 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 a third party to develop Pima varieties that allows D&PL the right of first refusal for any Pima varieties developed under this program. 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 is lethal to 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. 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 Deltapine 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. Pursuant to the terms of the Bollgard Agreement, farmers must buy a limited use sublicense for the technology from D&M Partners, a partnership of D&PL and Monsanto, in order to purchase seed containing the Bollgard gene technology. The distributor/dealers who coordinate the farmer licensing process receive a service payment not to exceed 20% of the technology sublicensing fee. After the dealers and distributors are compensated, D&M Partners pays Monsanto a royalty equal to 71% of the net sublicense fee (technology sublicensing fees less distributor/dealer payments) and D&PL retains 29% for its services. The license agreement continues until the later of the expiration of all patent rights or October 2008. D&M Partners contracts the billing and collection activities for Bollgard and Roundup Ready licensing fees to Monsanto, and therefore may be affected by Monsanto's year 2000 compliance issues. See "Year 2000 Readiness Disclosure" and "Outlook" sections contained. Pursuant to the Bollgard Agreement, Monsanto must defend and indemnify D&PL against claims of patent infringement, including all damages awarded or amounts paid in settlements. Monsanto must also indemnify D&PL against a) costs of inventory and b) lost profits on inventory which becomes unsaleable because of patent infringement claims. Monsanto must defend any claims of failure of performance of a Bollgard gene. Monsanto and D&PL share the cost of any product performance claims in proportion to each party's share of the royalty. Indemnity from Monsanto only covers performance claims involving failure of performance of the Bollgard gene and not claims arising from other causes. D&PL has also developed transgenic cotton varieties that are tolerant to Roundup, a glyphosate-based 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 cottonseed. The Roundup Ready Agreement grants a license to D&PL and certain of its affiliates the right in the United States to sell cottonseed of D&PL's varieties that contain Monsanto's Roundup Ready gene. The Roundup Ready gene makes cotton plants tolerant to contact with Roundup herbicide. Similar to the Bollgard Agreement, farmers must execute limited use sublicenses in order to purchase seed containing the Roundup Ready Gene. The distributors/dealers who coordinate the farmer licensing process receive a portion of the technology sublicensing fee. D&PL's portion of the Roundup Ready technology fee varies depending on the technology fee per acre established by Monsanto. In 1998 and 1999, D&M Partners paid Monsanto approximately 70% of the Roundup Ready technology fees and D&PL retained the remaining 30%. Monsanto must defend and indemnify D&PL against claims of patent infringement, including all damages awarded or amounts paid in settlements. Monsanto will also indemnify D&PL against the cost of inventory that becomes unsaleable because of patent infringement claims, but Monsanto is not required to indemnify D&PL against lost profits on such unsaleable seed. In contrast with the Bollgard Gene License where the cost of gene performance claims will be shared in proportion to the division of sublicense revenue, Monsanto must defend and must bear the full cost of any claims of failure of performance of the Roundup Ready Gene. In both agreements, generally, D&PL is responsible for varietal/seed performance issues, and Monsanto is responsible for failure of the genes. In 1999, the Company offered for sale 18 cotton planting seed varieties that contained the Bollgard gene technology, 16 cotton planting seed varieties that contain the Roundup Ready gene technology, 16 varieties that contain both technologies, and 54 conventional varieties. 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 and has provisions similar to the Roundup Ready Agreement for cottonseed. On July 27, 1999, United States Patent No. 5,929,300 was issued to the United States of America as represented by the Secretary of Agriculture (USDA) entitled POLLEN BASED TRANSFORMATION SYSTEM USING SOLID MEDIA. D&PL has an option to obtain a license for pollen transformation, subject to certain rights reserved to the USDA. D&PL has notified the USDA of its intention to exercise its rights. The patent covers transformation of plants. In March 1998, D&PL was granted United States Patent No. 5,723,765, entitled CONTROL OF PLANT GENE EXPRESSION. This patent is owned jointly by D&PL and the United States of America, as represented by the Secretary of Agriculture. The patent broadly covers plants and seed, both transgenic and conventional, of all species for a system designed to allow control of progeny seed viability without harming the crop. The principal application of the technology will be to control unauthorized planting of seed of proprietary varieties (sometimes called "brown bagging") by making such practice non-economic since unauthorized saved seed will not germinate, and would be useless for planting. The patent has the prospect of opening significant worldwide seed markets to the sale of transgenic technology in varietal crops in which crop seed currently is saved and used in subsequent seasons as planting seed. D&PL has stated it intends that licensing of this technology will be made widely available to other seed companies. Both patents were developed from a research program conducted pursuant to a Cooperative Research and Development Agreement between D&PL and the U.S. Department of Agriculture's Agricultural Research Service in Lubbock, Texas. The technologies resulted from basic research and will require further development, which is already underway, in order to be used in commercial seed. The Company estimates that it will be several years before these technologies could be available commercially. 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 license, research and development, confidentiality and material transfer agreements with 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 enabling and other 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 certificate owner. Some foreign countries provide similar legal protection for breeders of crop varieties. 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 cottonseed requires delinting prior to seed treatment with chemicals and 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. Additionally, Federal patent law makes unlawful any unauthorized planting of seed containing patented genetic technology saved from prior crops. In connection with its seed operations, the Company farms approximately 2,600 acres in the U.S., primarily for research purposes and 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 expected to be planted with such seed when the seed is shipped. Prior to 1998, licensing fees were based on the estimated number of acres that farmers represented would be planted with the seed purchased. In 1998 and 1999, the licensing fee charged to farmers was based on pre-established planting rates for seven geographic regions and the estimated number of seed contained in each bag which may vary by variety, location grown, and other factors. Revenue is recognized based on the established technology fee per unit shipped to each geographic region. 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 (including Bollgard and Roundup Ready technologies) 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 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 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 on 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. Euro Currency Conversion On January 1, 1999, the euro became the common legal currency of 11 of the 15 member countries of the European Union. On that date, the participating countries fixed conversion rates between their sovereign currencies ("legacy currencies") and the euro. On January 4, 1999, the euro began trading on currency exchanges and became available for non-cash transactions. The legacy currencies will remain legal tender through December 31, 2001. Beginning January 2, 2002, euro-denominated bills and coins will be introduced, and by July 1, 2002, legacy currencies will no longer be legal tender. To date, D&PL has not been affected by the euro currency conversion. Year 2000 Readiness Disclosure Beginning in 1996, D&PL initiated its Global Year 2000 program to ensure that its infrastructure and information systems comply with the systems requirements for the year 2000. The program includes the following phases: identifying systems that need to be replaced or fixed; assessing the extent of the work required; prioritizing the work; and successfully completing the associated action plans. D&PL has essentially completed the first three phases of the program and is now primarily in the implementation phase. Based on available knowledge, the majority of systems, including critical business systems, comply with year 2000 requirements, due in large part to the installation in fiscal 1997 of a third party software system that is year 2000 compliant, at a cost in excess of $3.0 million. Contingency plans were developed for all critical vendor products and services. These plans identify critical functions, acceptable delay times and business resumption strategies. The major task remaining is completion of the implementation of the Desktop Redeployment Plan. The Company continues to evaluate the estimated costs associated with the year 2000 compliance based on actual experience. While the year 2000 efforts involve additional costs, D&PL believes, based on available information, that it will be able to manage its in-house year 2000 transition issues without any material adverse effect on its business operations or financial position. Total cost incurred to date for year 2000 considerations (excluding third party software) approximate $600,000 and the Company estimates an additional $250,000 will be spent to complete the year 2000 compliance process. D&PL also has contacted its major suppliers and customers to assess their preparations for the year 2000. These actions are taken to help mitigate the possible external impact of year 2000 issues. Even so, presently it is not feasible to fully assess the potential consequences if service interruptions occur from suppliers or in such infrastructure areas as utilities, communications, transportation, banking and government. In addition, it is not feasible to fully assess the potential consequences if D&PL's customers are not compliant. D&PL has developed business continuity plans to minimize the impact of such external events. D&M Partners (a partnership of which D&PL owns 90% and Monsanto owns 10%) contracts with Monsanto to 1) administer sublicensing to farmers the right to use the Bollgard and Roundup Ready technologies, 2) bill for such technologies and 3) collect the sublicensing revenues for using technology. In its 1998 Annual Report, Monsanto disclosed that all year 2000 remediation work for its internal systems would be completed by the third calendar quarter of 1999. Monsanto also plans to have contingency plans in place by the third quarter of 1999 in areas deemed high risk. The Company is not able to predict at the present time the impact, if any, on its business if Monsanto is unable to resolve its year 2000 issues successfully. D&PL's discussion of the year 2000 computer issue contains forward-looking information. D&PL believes that its critical computer systems will be year 2000-compliant and that the costs to achieve compliance will not materially affect its financial condition, operating results, or cash flows. Nevertheless, factors that could cause actual results to differ from the Company's expectations include the successful implementation of year 2000 initiatives by its customers and suppliers, changes in the availability and cost of resources to implement year 2000 changes, and D&PL's ability to successfully identify and correct all systems affected by the year 2000 issue. 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, year 2000 issues 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: On December 20, 1999, Monsanto withdrew its pre-notification filed under the HSR Act thereby abandoning their efforts to consummate the merger. Monsanto's failure to complete the merger with Monsanto may have a material effect on the Company. However, such effect is not known at this time. Demand for D&PL's seed will be affected by government programs and policies 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 and new technologies that may compete with the Bollgard and Roundup Ready gene technologies. The Company's seed products and technologies contained therein 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 domestic and international operations of D&PL include the use of and the acceptance of products that were produced from plants that were genetically modified, the testing, quarantine and other restrictions relating to the import and export of plants and seed products and the availability (or lack thereof) 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. The recent publicity related to genetically modified organisms ("GMO's") or products made from plants that contain GMO's may have an effect on the Company's sales in the future. In 1999, approximately 80% of the Company's cotton seed that was sold contained either the Bollgard, Roundup Ready, or both gene technologies and 64% of the Company's soybean seed sales contained the Roundup Ready gene technology. Although many farmers have rapidly adopted these technologies, the alleged concern over finished products that contain GMO's could impact demand for crops raised from seed containing such traits. 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 and predictable than domestic profitability and growth. Overall profitability will depend on the factors noted above as well as weather conditions, government policies in all countries where the Company sells products and operates, 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. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. 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, 1999. 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, 2000 /s/ Roger D. Malkin ------------------- Roger D. Malkin, Chairman and Chief Executive Officer Date: January 14, 2000 /s/ W. Thomas Jagodinski ------------------------ W. Thomas Jagodinski, Vice President - Finance and Treasurer EXHIBIT 11.01
COMPUTATION OF EARNINGS PER SHARE (IN THOUSANDS, EXCEPT PER SHARE DATA) FOR THE THREE MONTHS ENDED -------------------------- November 30, November 30, 1998 1999 ---- ---- BASIC EARNINGS PER SHARE: WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING DURING THE PERIOD 38,380 38,662 ====== ====== NET LOSS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE APPLICABLE TO CUMULATIVE EFFECT OF ACCOUNTING CHANGE - (2,965) ------ NET LOSS APPLICABLE TO COMMON SHARES $ (6,463) $ (9,540) ========== ========== BASIC EARNINGS PER SHARE $ (0.17) $ (0.25) ========== ========== DILUTED EARNINGS PER SHARE: WEIGHTED AVERAGE NUMBER OF SHARES 38,380 38,662 OF COMMON STOCK OUTSTANDING DURING THE PERIOD WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING DURING THE PERIOD FOR COMPUTATION OF DILUTED EARNINGS PER SHARE 38,380 38,662 ====== ====== NET LOSS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE APPLICABLE TO COMMON STOCKHOLDERS $ (6,463) $ (6,551) CUMULATIVE EFFECT OF ACCOUNTING CHANGE - (2,965) ------ NET LOSS APPLICABLE TO COMMON SHARES $ (6,439) $ (9,516) ========== ========== DILUTED EARNINGS PER SHARE $ (0.17) $ (0.25) ========== ==========
EX-27 2 FDS --
5 0000902277 Delta and Pine Land Company 1,000 3-MOS Aug-31-2000 Sep-01-1999 Nov-30-1999 5,544 0 8,931 475 76,142 104,642 65,030 1,742 181,679 65,436 21,700 0 107 3,883 75,744 181,679 4,549 4,549 4,248 11,148 (198) 0 (83) (10,566) (4,015) (6,551) 0 0 (2,965) (9,516) (0.25) (0.25)
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