DELTIC TIMBER CORP - 10-Q Quarterly Report

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, 2004

¨	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 Preferred Stock Purchase Rights		New York Stock Exchange, Inc.

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, 2004, was 12,133,582.

TABLE OF CONTENTS - SECOND QUARTER 2004 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	28

Item 4.	Controls and Procedures	28

	*PART II - Other Information*

Item 1.	Legal Proceedings	29

Item 2.	Changes in Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	29

Item 3.	Defaults Upon Senior Securities	29

Item 4.	Submission of Matters to a Vote of Security Holders	30

Item 5.	Other Information	30

Item 6.	Exhibits and Reports on Form 8-K	30

Signatures		31

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated Balance Sheets

(Thousands of dollars)


	June 30, 2004			Dec. 31, 2003
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	1,899		1,687
Trade accounts receivable		5,624		4,350
Allowance for doubtful accounts		(126	)	(107	)
Other receivables		883		1,041
Inventories		4,311		5,778
Prepaid expenses and other current assets		1,619		1,461

Total current assets		14,210		14,210

Investment in real estate held for development and sale		38,915		40,539
Investment in Del-Tin Fiber		541		—
Investments and noncurrent receivables		2,042		6,660
Timber and timberlands - net		217,947		215,040
Property, plant, and equipment - net		35,588		36,882
Deferred charges and other assets		933		979

Total assets	$	310,176		314,310

Liabilities and Stockholders’ Equity
Current liabilities
Current maturities of long-term debt	$	64		64
Trade accounts payable		1,895		2,772
Accrued taxes other than income taxes		1,846		1,246
Income taxes payable		1,075		151
Deferred revenues and other accrued liabilities		3,230		2,843

Total current liabilities		8,110		7,076

Long-term debt		102,024		115,056
Deferred tax liabilities - net		12,922		12,559
Other noncurrent liabilities		10,438		9,385
Stockholders’ equity
Cumulative preferred stock - $.01 par, authorized 20,000,000 shares, none issued		—		—
Common stock - $.01 par, authorized 50,000,000 shares, 12,813,879 shares issued		128		128
Capital in excess of par value		70,794		69,459
Retained earnings		122,405		119,888
Unamortized restricted stock awards		(1,059	)	(14	)
Treasury stock		(15,462	)	(19,103	)
Accumulated other comprehensive income		(124	)	(124	)

Total stockholders’ equity		176,682		170,234

Total liabilities and stockholders’ equity	$	310,176		314,310

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,
	2004			2003		2004		2003
Net sales	$	33,997		34,960		61,808		67,389

Costs and expenses
Cost of sales		22,565		23,455		40,762		45,013
Depreciation, amortization, and cost of fee timber harvested		2,690		3,467		5,603		6,999
General and administrative expenses		2,961		1,924		5,770		3,824

Total costs and expenses		28,216		28,846		52,135		55,836

Operating income		5,781		6,114		9,673		11,553

Equity in Del-Tin Fiber		260		(547	)	26		(2,392	)
Interest income		60		16		118		44
Interest and other debt expense		(1,517	)	(1,923	)	(3,100	)	(3,546	)
Other income/(expense)		(1	)	56		(5	)	101

Income/(loss) before income taxes		4,583		3,716		6,712		5,760

Income taxes		(1,833	)	(1,299	)	(2,687	)	(2,129	)

Net income/(loss)	$	2,750		2,417		4,025		3,631

Earnings per common share
Basic	$	.23		.20		.33		.31
Assuming dilution	$	.23		.20		.33		.30

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

Average common shares outstanding (thousands)		12,120		11,900		12,071		11,903

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)


	2004			2003
Operating activities
Net income	$	4,025		3,631
Adjustments to reconcile net income to net cash provided/(required) by operating activities
Depreciation, amortization, and cost of fee timber harvested		5,603		6,999
Deferred income taxes		265		(982	)
Real estate costs recovered upon sale		3,799		4,804
Timberland costs recovered upon sale		192		600
Equity in Del-Tin Fiber		(26	)	2,392
Net increase/(decrease) in provisions for pension and other postretirement benefits		1,415		1,037
(Increase)/decrease in operating working capital other than cash and cash equivalents		1,636		731
Other – net		20		287

Net cash provided/(required) by operating activities		16,929		19,499

Investing activities
Capital expenditures requiring cash		(10,419	)	(16,186	)
Net change in purchased stumpage inventory		167		(1,787	)
Advances to Del-Tin Fiber		(516	)	(4,561	)
(Increase)/decrease in funds held by trustee		4,396		372
Other – net		901		645

Net cash provided/(required) by investing activities		(5,471	)	(21,517	)

Financing activities
Proceeds from borrowings		—		11,539
Repayments of notes payable and long-term debt		(13,032	)	(6,362	)
Treasury stock purchases		—		(377	)
Increase/(decrease) in bank overdraft		—		(913	)
Common stock dividends paid		(1,508	)	(1,488	)
Proceeds from stock option exercises		3,294		—

Net cash provided/(required) by financing activities		(11,246	)	2,399

Net increase/(decrease) in cash and cash equivalents		212		381
Cash and cash equivalents at January 1		1,687		1,057

Cash and cash equivalents at June 30	$	1,899		1,438

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)


	2004			2003
Cumulative preferred stock - $.01 par, authorized 20,000,000 shares, none issued	$	—		—

Common stock - $.01 par, authorized 50,000,000 shares, 12,813,879 shares issued at end of period in 2004 and 2003		128		128

Capital in excess of par value
Balance at beginning of year		69,459		69,075
Exercise of stock options		629		—
Tax benefits on stock options		292		—
Restricted stock awards		414		—

Balance at end of period		70,794		69,075

Retained earnings
Balance at beginning of year		119,888		114,165
Net income		4,025		3,631
Common stock dividends declared		(1,508	)	(1,487	)

Balance at end of period		122,405		116,309

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