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 September 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 September 30, 2004, was 12,181,307.

TABLE OF CONTENTS - THIRD 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	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	29

*PART II - Other Information*

Item 1.	Legal Proceedings	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 3.	Defaults Upon Senior Securities	30

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

Item 5.	Other Information	30

Item 6.	Exhibits	31

Signatures		32

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated Balance Sheets

(Thousands of dollars)


	Sept. 30, 2004			Dec. 31, 2003
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	6,018		1,687
Trade accounts receivable		6,382		4,350
Allowance for doubtful accounts		(26	)	(107	)
Other receivables		12		1,041
Inventories		5,473		5,778
Prepaid expenses and other current assets		1,961		1,461

Total current assets		19,820		14,210

Investment in real estate held for development and sale		36,713		40,539
Investment in Del-Tin Fiber		4,665		—
Investments and noncurrent receivables		2,091		6,660
Timber and timberlands - net		215,145		215,040
Property, plant, and equipment - net		35,541		36,882
Deferred charges and other assets		828		979

Total assets	$	314,803		314,310

Liabilities and Stockholders’ Equity
Current liabilities
Current maturities of long-term debt	$	40		64
Trade accounts payable		3,906		2,772
Accrued taxes other than income taxes		1,275		1,246
Income taxes payable		1,577		151
Deferred revenues and other accrued liabilities		5,508		2,843

Total current liabilities		12,306		7,076

Long-term debt		92,032		115,056
Guarantee of indebtedness of Del-Tin Fiber		3,450		—
Deferred tax liabilities - net		14,185		12,559
Other noncurrent liabilities		11,175		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		71,199		69,459
Retained earnings		125,829		119,888
Unamortized restricted stock awards		(1,000	)	(14	)
Treasury stock		(14,377	)	(19,103	)
Accumulated other comprehensive income		(124	)	(124	)

Total stockholders’ equity		181,655		170,234

Total liabilities and stockholders’ equity	$	314,803		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 September 30,					Nine Months Ended September 30,
	2004			2003		2004		2003
Net sales	$	43,255		30,730		105,063		98,119

Costs and expenses
Cost of sales		28,762		22,324		69,524		67,337
Depreciation, amortization, and cost of fee timber harvested		2,784		3,126		8,387		10,125
General and administrative expenses		4,083		1,862		9,853		5,686

Total costs and expenses		35,629		27,312		87,764		83,148

Operating income		7,626		3,418		17,299		14,971

Equity in Del-Tin Fiber		424		(1,598	)	450		(3,990	)
Interest income		203		306		321		350
Interest and other debt expense		(1,486	)	(1,599	)	(4,586	)	(5,145	)
Other income/(expense)		(3	)	61		(8	)	162

Income/(loss) before income taxes		6,764		588		13,476		6,348

Income taxes		(2,582	)	(254	)	(5,269	)	(2,383	)

Net income/(loss)	$	4,182		334		8,207		3,965

Earnings per common share
Basic	$	.34		.03		.68		.33
Assuming dilution		.34		.03		.67		.33

Dividends declared per common share	$	.0625		.0625		.1875		.1875

Average common shares outstanding (thousands)		12,146		11,919		12,096		11,909

See accompanying notes to consolidated financial statements.

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)

Nine Months Ended September 30,

(Thousands of dollars)


	2004			2003
Operating activities
Net income	$	8,207		3,965
Adjustments to reconcile net income to net cash provided/(required) by operating activities
Depreciation, amortization, and cost of fee timber harvested		8,387		10,125
Deferred income taxes		1,403		(345	)
Real estate costs recovered upon sale		9,358		7,660
Timberland costs recovered upon sale		206		826
Equity in Del-Tin Fiber		(450	)	3,990
Net increase/(decrease) in provisions for pension and other postretirement benefits		2,138		1,512
(Increase)/decrease in operating working capital other than cash and cash equivalents		4,711		(1,287	)
Other - net		277		94

Net cash provided/(required) by operating activities		34,237		26,540

Investing activities
Capital expenditures requiring cash		(16,520	)	(20,827	)
Net change in purchased stumpage inventory		2,383		(1,594	)
Advances to Del-Tin Fiber		(1,515	)	(7,244	)
Distributions from Del-Tin Fiber		750		—
(Increase)/decrease in funds held by trustee		4,413		(14	)
Other - net		1,419		1,293

Net cash provided/(required) by investing activities		(9,070	)	(28,386	)

Financing activities
Proceeds from borrowings		—		11,539
Repayments of notes payable and long-term debt		(23,048	)	(6,593	)
Treasury stock purchases		—		(377	)
Increase/(decrease) in bank overdraft		—		(913	)
Common stock dividends paid		(2,266	)	(2,232	)
Proceeds from stock option exercises		4,478		1,572

Net cash provided/(required) by financing activities		(20,836	)	2,996

Net increase/(decrease) in cash and cash equivalents		4,331		1,150
Cash and cash equivalents at January 1		1,687		1,057

Cash and cash equivalents at September 30	$	6,018		2,207

See accompanying notes to consolidated financial statements.

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity (Unaudited)

Nine Months Ended September 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		784		182
Tax benefits on stock options		508		202
Restricted stock awards		448		—

Balance at end of period		71,199		69,459

Retained earnings
Balance at beginning of year		119,888		114,165
Net income		8,207		3,965
Common stock dividends declared		(2,266	)	(2,232	)

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