DELTIC TIMBER CORP - 10-Q Quarterly Report

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2003

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-12147

DELTIC TIMBER CORPORATION

(Exact name of registrant as specified in its charter)

Delaware		71-0795870
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

210 East Elm Street, P. O. Box 7200, El Dorado, Arkansas		71731-7200
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (870) 881-9400

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered
Common Stock, $.01 Par Value		New York Stock Exchange, Inc.

Series A Participating Cumulative		New York Stock Exchange, Inc.
Preferred Stock Purchase Rights

Indicate by check mark whether the 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, and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes x No ¨.

Number of shares of Common Stock, $.01 Par Value, outstanding at June 30, 2003, was 11,899,797.

TABLE OF CONTENTS—SECOND QUARTER 2003 FORM 10-Q REPORT

		Page Number
*PART I—Financial Information*

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22

Item 4.	Controls and Procedures	22
*PART II—Other Information*

Item 1.	Legal Proceedings	23

Item 2.	Changes in Securities and Use of Proceeds	23

Item 3.	Defaults Upon Senior Securities	23

Item 4.	Submission of Matters to a Vote of Security Holders	23

Item 5.	Other Information	23

Item 6.	Exhibits and Reports on Form 8-K	24

Signatures		25

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated Balance Sheets

(Thousands of dollars)

	June 30, 2003			Dec. 31, 2002
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	1,438		1,057
Trade accounts receivable—net		4,815		3,230
Other receivables		2,360		2,321
Inventories		5,117		6,257
Prepaid expenses and other current assets		1,547		1,607

Total current assets		15,277		14,472

Investment in real estate held for development and sale		39,993		42,551
Other investments and noncurrent receivables		2,212		2,558
Timber and timberlands—net		218,106		209,317
Property, plant, and equipment—net		37,987		39,572
Deferred charges and other assets		1,452		2,076

Total assets	$	315,027		310,546

Liabilities and Stockholders’ Equity
Current liabilities
Current maturities of long-term debt	$	64		70
Notes payable		215		—
Trade accounts payable		2,138		3,316
Accrued taxes other than income taxes		1,704		1,194
Bank overdraft		—		913
Income taxes payable		1,453		—
Deferred revenues and other accrued liabilities		4,687		6,854

Total current liabilities		10,261		12,347

Long-term debt		121,088		116,120
Deferred tax liabilities—net		10,973		11,955
Other noncurrent liabilities		7,905		7,162
Stockholders’ equity
Cumulative preferred stock—$.01 par, authorized 20,000,000 shares, zero shares issued		—		—
Common stock—$.01 par, authorized 50,000,000 shares, 12,813,879 shares issued		128		128
Capital in excess of par value		69,075		69,075
Retained earnings		116,309		114,165
Unamortized restricted stock awards		(62	)	(133	)
Treasury stock		(20,650	)	(20,273	)

Total stockholders’ equity		164,800		162,962

Total liabilities and stockholders’ equity	$	315,027		310,546

See accompanying notes to consolidated financial statements.

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Income (Unaudited)

(Thousands of dollars, except per share amounts)

	Three Months Ended June 30,					Six Months Ended June 30,
	2003			2002		2003		2002
Net sales	$	34,960		28,106		67,389		55,201


Costs and expenses
Cost of sales		23,455		17,726		45,013		32,773
Depreciation, amortization, and cost of fee timber harvested		3,467		4,238		6,999		9,502
General and administrative expenses		1,924		2,118		3,824		4,165

Total costs and expenses		28,846		24,082		55,836		46,440

Operating income		6,114		4,024		11,553		8,761

Equity in Del-Tin Fiber		(547	)	(2,933	)	(2,392	)	(5,326	)
Interest income		16		27		44		63
Interest and other debt expense		(1,923	)	(1,098	)	(3,546	)	(2,246	)
Other income/(expense)		56		97		101		241


Income/(loss) before income taxes		3,716		117		5,760		1,493

Income taxes		(1,299	)	(127	)	(2,129	)	(682	)

Net income/(loss)	$	2,417		(10	)	3,631		811


Earnings per common share
Basic	$	.20		(.05	)	.31		(.03	)
Assuming dilution		.20		(.05	)	.30		(.03	)

Dividends declared per common share	$	.0625		.0625		.1250		.1250


Average common shares outstanding (thousands)		11,900		11,923		11,903		11,910

See accompanying notes to consolidated financial statements.

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)

Six Months Ended June 30,

(Thousands of dollars)

	2003			2002
Operating activities
Net income	$	3,631		811
Adjustments to reconcile net income to net cash provided/(required) by operating activities
Depreciation, amortization, and cost of fee timber harvested		6,999		9,502
Deferred income taxes		(982	)	565
Real estate costs recovered upon sale		4,804		2,122
Timberland costs recovered upon sale		600		217
Equity in Del-Tin Fiber		2,392		5,326
Net increase/(decrease) in provisions for pension and other postretirement benefits		1,037		689
(Increase)/decrease in operating working capital other than cash and cash equivalents		731		(1,113	)
Other—net		287		686

Net cash provided/(required) by operating activities		19,499		18,805

Investing activities
Capital expenditures requiring cash		(16,186	)	(9,344	)
Net change in purchased stumpage inventory		(1,787	)	(570	)
Advances to Del-Tin Fiber		(4,561	)	(6,269	)
(Increase)/decrease in funds held by trustee		372		2,139
Other—net		645		431

Net cash provided/(required) by investing activities		(21,517	)	(13,613	)

Financing activities
Proceeds from borrowings		11,539		500
Repayments of notes payable and long-term debt		(6,362	)	(9,042	)
Treasury stock purchases		(377	)	—
Increase/(decrease) in bank overdraft		(913	)	—
Preferred stock dividends paid		—		(1,131	)
Common stock dividends paid		(1,488	)	(1,490	)
Proceeds from stock option exercises		—		1,224

Net cash provided/(required) by financing activities		2,399		(9,939	)

Net increase/(decrease) in cash and cash equivalents		381		(4,747	)
Cash and cash equivalents at January 1		1,057		6,122


Cash and cash equivalents at June 30	$	1,438		1,375

See accompanying notes to consolidated financial statements.

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity (Unaudited)

Six Months Ended June 30,

(Thousands of dollars)

	2003		2002
Cumulative preferred stock—$.01 par, authorized 20,000,000 shares, 600,000 shares issued as redeemable preferred stock at end of period in 2002	$	—	—

Common stock—$.01 par, authorized 50,000,000 shares, 12,813,879 shares issued at end of period in 2003 and 2002		128	128

Capital in excess of par value
Balance at beginning of year		69,075	68,766
Exercise of stock options		—	159
Tax benefits on stock options		—	113

Balance at end of period		69,075	69,038

Retained earnings
Balance at beginning of year		114,165	133,034
Net income		3,631	811

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