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 March 31, 2005

¨	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 March 31, 2005, was 12,249,119.

TABLE OF CONTENTS - FIRST QUARTER 2005 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	15

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25

Item 4.	Controls and Procedures	25

*PART II - Other Information*

Item 1.	Legal Proceedings	26

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26

Item 3.	Defaults Upon Senior Securities	26

Item 4.	Submission of Matters to a Vote of Security Holders	26

Item 5.	Other Information	26

Item 6.	Exhibits	26

Signatures		27

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated Balance Sheets

(Thousands of dollars)


	March 31, 2005			Dec. 31, 2004
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	3,660		859
Trade accounts receivable		6,672		6,508
Allowance for doubtful accounts		(20	)	(26	)
Other receivables		22		23
Inventories		6,080		5,566
Prepaid expenses and other current assets		1,458		1,786

Total current assets		17,872		14,716
Investment in real estate held for development and sale		36,681		37,418
Investment in Del-Tin Fiber		5,425		3,858
Investments and noncurrent receivables		1,890		1,829
Timber and timberlands - net		216,123		214,710
Property, plant, and equipment - net		36,983		35,767
Deferred charges and other assets		630		689

Total assets	$	315,604		308,987

Liabilities and Stockholders’ Equity
Current liabilities
Current maturities of long-term debt	$	32		32
Trade accounts payable		3,475		4,080
Accrued taxes other than income taxes		1,566		1,293
Income taxes payable		1,536		—
Deferred revenues and other accrued liabilities		3,613		3,467

Total current liabilities		10,222		8,872
Long-term debt		89,016		85,724
Deferred tax liabilities - net		14,016		14,351
Guarantee of indebtedness of Del-Tin Fiber		3,105		3,278
Other noncurrent liabilities		11,655		11,343
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		72,085		71,483
Retained earnings		130,298		128,516
Unamortized restricted stock awards		(2,061	)	(924	)
Treasury stock		(12,848	)	(13,772	)
Accumulated other comprehensive income		(12	)	(12	)

Total stockholders’ equity		187,590		185,419

Total liabilities and stockholders’ equity	$	315,604		308,987

See accompanying notes to consolidated financial statements.

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Income (Unaudited)

Three Months Ended March 31,

(Thousands of dollars, except per share amounts)


	2005			2004
Net sales	$	39,435		27,811

Costs and expenses
Cost of sales		26,822		18,197
Depreciation, amortization, and cost of fee timber harvested		2,957		2,913
General and administrative expenses		3,324		2,809

Total costs and expenses		33,103		23,919

Operating income		6,332		3,892
Equity in Del-Tin Fiber		(715	)	(234	)
Interest income		25		58
Interest and other debt expense		(1,403	)	(1,583	)
Other income/(expense)		—		(4	)

Income before income taxes		4,239		2,129
Income taxes		(1,692	)	(854	)

Net income	$	2,547		1,275

Earnings per common share
Basic	$	.21		.11
Assuming dilution	$	.21		.11
Dividends declared per common share	$	.0625		.0625

Average common shares outstanding (thousands)		12,227		12,021

See accompanying notes to consolidated financial statements.

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)

Three Months Ended March 31,

(Thousands of dollars)


	2005			2004
Operating activities
Net income	$	2,547		1,275
Adjustments to reconcile net income to net cash provided/(required) by operating activities
Depreciation, amortization, and cost of fee timber harvested		2,957		2,913
Deferred income taxes		(229	)	356
Real estate costs recovered upon sale		1,923		1,338
Timberland costs recovered upon sale		—		64
Equity in Del-Tin Fiber		715		234
Net increase/(decrease) in provisions for pension and other postretirement benefits		257		664
(Increase)/decrease in operating working capital other than cash and cash equivalents		931		(186	)
Other - net		110		(117	)

Net cash provided/(required) by operating activities		9,211		6,541

Investing activities
Capital expenditures requiring cash		(5,409	)	(3,829	)
Net change in purchased stumpage inventory		(1,624	)	71
Advances to Del-Tin Fiber		(2,455	)	(115	)
(Increase)/decrease in funds held by trustee		—		1,738
Other - net		281		253

Net cash provided/(required) by investing activities		(9,207	)	(1,882	)

Financing activities
Proceeds from borrowings		4,000		—
Repayments of notes payable and long-term debt		(708	)	(7,016	)
Common stock dividends paid		(765	)	(750	)
Proceeds from stock option exercises		209		2,896
Other		61		—

Net cash provided/(required) by financing activities		2,797		(4,870	)

Net increase/(decrease) in cash and cash equivalents		2,801		(211	)
Cash and cash equivalents at January 1		859		1,687

Cash and cash equivalents at March 31	$	3,660		1,476

See accompanying notes to consolidated financial statements.

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity (Unaudited)

Three Months Ended March 31,

(Thousands of dollars)


	2005			2004
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 in 2004 and 2003		128		128

Capital in excess of par value
Balance at beginning of year		71,483		69,459
Exercise of stock options		50		510
Tax benefits on stock options		43		246
Restricted stock awards		509		129

Balance at end of period		72,085		70,344

Retained earnings
Balance at beginning of year		128,516		119,888
Net income		2,547		1,275
Common stock dividends		(765	)	(750	)

Balance at end of period		130,298		120,413

Unamortized restricted stock awards
Balance at beginning of year		(924	)	(14	)
Stock awards		(1,254	)	(422	)
Amortization to expense		117		31

Balance at end of period		(2,061	)	(405	)

Treasury stock
Balance at beginning of year – 605,401 and 845,600 shares, respectively		(13,772	)	(19,103	)
Shares issued for incentive plans – 40,641 and 126,348 shares, respectively		924		2,854

Balance at end of period – 564,760 and 719,252 shares, respectively		(12,848	)	(16,249	)

Accumulated other comprehensive income		(12	)	(124	)

Total stockholders’ equity	$	187,590		174,107

See accompanying notes to consolidated financial statements.

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2005

(Unaudited, except for December 31, 2004)

Note 1 – Interim Financial Statements

The interim financial information included herein is unaudited; however, such information reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows for the interim periods. All such adjustments are of a normal, recurring nature. The results of operations for the first three months of the year are not necessarily indicative of the results of operations which might be expected for the entire year.

The financial statements in Deltic’s 2004 annual report on Form 10-K include a summary of significant accounting policies of the Company and should be read in conjunction with this Form 10-Q. Certain prior period amounts have been reclassified to conform with 2005 presentation format.

Note 2 – Impact of Recently Effective Accounting Pronouncements

In December, 2004, the FASB issued a revision to SFAS 123, Accounting for Stock-Based Compensation. This revision will require the Company to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. This revised statement was effective as to the beginning of the first interim or an

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