<PAGE>
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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 MARCH 31, 1997
OR
[ ] 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 (I.R.S. Employer
incorporation or organization) Identification Number)
200 Peach 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) 881-6634
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
Securities registered pursuant to Section 12(g) of the Act: None
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 .
--- ---
The aggregate market value of the Common Stock held by non-affiliates of the
registrant, based on the closing sales price of the Common Stock on the New York
Stock Exchange on April 30, 1997, was $150,939,432. For purposes of this
computation, all officers, directors, and 5% beneficial owners of the registrant
are deemed to be affiliates. Such determination should not be deemed an
admission that such directors, officers, or 5% benficial owners are, in fact,
affiliates of the registrant.
Number of shares of Common Stock, $.01 Par Value, outstanding at April 30, 1997,
was 12,798,323.
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<PAGE>
TABLE OF CONTENTS - FIRST QUARTER 1997 FORM 10-Q REPORT
Page
Numbers
-------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Change in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DELTIC TIMBER CORPORATION
Consolidated Balance Sheets
-------------------------------
(Thousands of dollars)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---------- ------------
<S> <C> <C>
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 428 16,635
U. S. government securities 11,890 1,527
Accounts receivable, less allowance for doubtful accounts 7,217 5,718
Inventories 4,965 5,436
Prepaid expenses and other current assets 2,932 2,386
-------- -------
Total current assets 27,432 31,702
Investment in real estate held for development and sale 19,322 19,558
Investment in Del-Tin Fiber, L.L.C. 10,083 6,811
Timber and timberlands - net 97,638 90,320
Property, plant, and equipment - net 28,579 28,902
Deferred charges and other assets 3,057 2,785
-------- -------
Total assets $186,111 180,078
======== =======
Liabilities and Stockholders' Equity
Current liabilities
Current maturities of long-term debt $ 1,739 1,698
Trade accounts payable 2,222 2,031
Accrued taxes other than income taxes 1,047 780
Other accrued liabilities 1,510 942
Income taxes 3,353 493
-------- -------
Total current liabilities 9,871 5,944
Long-term debt 1,002 2,685
Accrued postretirement benefits 2,268 2,187
Deferred credits and other liabilities 2,997 2,554
Stockholders' equity
Preferred stock - -
Common stock 128 128
Capital in excess of par value 68,372 68,372
Retained earnings 101,473 98,208
-------- -------
Total stockholders' equity 169,973 166,708
-------- -------
Total liabilities and stockholders' equity $186,111 180,078
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
3
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DELTIC TIMBER CORPORATION
Consolidated Statements of Income (Unaudited)
Three Months Ended March 31
------------------------------------------------
(Thousands of dollars, except per share amounts)
<TABLE>
<CAPTION>
1997 1996
--------- -------
<S> <C> <C>
Net sales $24,364 19,318
------- ------
Costs and expenses
Cost of sales 13,655 12,608
Depreciation, amortization, and
cost of fee timber harvested 1,260 1,285
General and administrative expenses 1,634 1,166
------- ------
Total costs and expenses 16,549 15,059
------- ------
Operating income 7,815 4,259
Interest income 351 678
Interest expense (81) (70)
Other income 31 367
------- ------
Income before income taxes 8,116 5,234
Income taxes (3,251) (2,083)
------- ------
Net income $ 4,865 3,151
======= ======
Net income per Common share* $ .38 .25
======= ======
Dividends per Common Share $ .0625 N/A
======= ======
Average Common shares outstanding (thousands)* 12,798 12,798
======= ======
</TABLE>
*1996 amounts are presented on a pro forma basis. The spin-off distribution of
the Company's Common Stock did not occur until December 31, 1996.
See accompanying notes to consolidated financial statements.
4
<PAGE>
DELTIC TIMBER CORPORATION
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended March 31
-------------------------------------------------
(Thousands of dollars)
<TABLE>
<CAPTION>
1997 1996
-------- -------
<S> <C> <C>
Operating activities
Net income $ 4,865 3,151
Adjustments to reconcile above income to
net cash provided by operating activities
Depreciation, amortization, and cost of fee timber harvested 1,260 1,285
Deferred income taxes (27) 162
Gains from dispositions of assets (30) (47)
Real estate costs recovered upon sale 819 684
(Increase)/decrease in operating working
capital other than cash and cash equivalents 1,513 (2,121)
Other 279 181
-------- -------
Net cash provided by operating activities 8,679 3,295
-------- -------
Investing activities
Capital expenditures requiring cash (4,910) (1,919)
Net change in purchased stumpage inventory (4,139) (1,685)
Purchases of U. S. government securities (12,501) -
Maturities of U. S. government securities 2,138 -
Proceeds from dispositions of property, plant, and equipment 51 64
Net (additions)/reductions to noncurrent receivable from Murphy - 583
Advances to Del-Tin Fiber, L.L.C. (3,000) -
Other - net 13 (35)
-------- -------
Net cash required by investing activities (22,348) (2,992)
-------- -------
Financing activities
Cash required for reductions of long-term debt (1,738) (355)
Dividends paid (800) -
-------- -------
Net cash required by financing activities (2,538) (355)
-------- -------
Net increase/(decrease) in cash and cash equivalents (16,207) (52)
Cash and cash equivalents at January 1 16,635 1,431
-------- -------
Cash and cash equivalents at March 31 $ 428 1,379
======== =======
Supplemental disclosures
Cash income taxes paid, net of refunds $ 239 -
======== =======
Interest paid $ 237 61
======== =======
Additions to debt - owner financed purchased stumpage
inventory $ 95 -
======== =======
Dividends declared, not paid $ 800 -
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
DELTIC TIMBER CORPORATION
Consolidated Statements of Stockholders' Equity
Three Months Ended March 31
-----------------------------------------------
(Thousands of dollars)
<TABLE>
<CAPTION>
1997 1996
-------- -------
<S> <C> <C>
Cumulative Preferred Stock - $.01 par, authorized
20,000,000 shares, none issued $ - -
Common Stock - $.01 par, authorized 50,000,000
shares, 12,798,323 shares issued 128 128
Capital in excess of par value 68,372 68,372
Retained earnings
Balance at January 1 98,208 103,860
Net income for the quarter 4,865 3,151
Dividends declared (1,600) -
-------- -------
Balance at March 31 101,473 107,011
-------- -------
Total stockholders' equity $169,973 166,708
======== =======
</TABLE>
6
<PAGE>
DELTIC TIMBER CORPORATION
Notes to Consolidated Financial Statements
March 31, 1997
------------------------------------------
NOTE A - 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 financial statements in Deltic's 1996
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 1997
presentation format.
NOTE B - NET INCOME PER COMMON SHARE
This amount is computed by dividing net income for each period by the weighted
average number of Common shares outstanding during the period. For 1996, this
amount is presented on a pro forma basis and is calculated based on the number
of shares issued in connection with the spin-off. The effects of assuming
issuance of Common Stock for outstanding stock options were immaterial and do
not impact the amounts presented.
NOTE C - INVENTORIES
Inventories consisted of the following at the balance sheet dates:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- ------------
<S> <C> <C>
(Thousands of dollars)
Logs $1,495 1,366
Finished products 3,359 3,912
Materials and supplies 111 158
------ ------
$4,965 5,436
====== ======
</TABLE>
7
<PAGE>
DELTIC TIMBER CORPORATION
Notes to Consolidated Financial Statements
March 31, 1997
------------------------------------------
NOTE D - TIMBER AND TIMBERLANDS
Timber and timberlands consisted of the following at the balance sheet dates:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---------- -------------
<S> <C> <C>
(Thousands of dollars)
Purchased stumpage inventory $ 11,468 7,235
Timberlands 37,967 37,401
Fee timber 74,941 71,919
Logging facilities 1,588 1,588
-------- -------
125,964 118,143
Less accumulated costs of fee timber
harvested and facilities depreciation (28,326) (27,823)
-------- -------
$ 97,638 90,320
======== =======
</TABLE>
NOTE E - PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment consisted of the following at the balance
sheet dates:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---------- -------------
<S> <C> <C>
(Thousands of dollars)
Land and land improvements $ 7,325 7,272
Buildings and structures 7,036 6,836
Machinery and equipment 45,919 45,782
-------- -------
60,280 59,890
Less accumulated depreciation (31,701) (30,988)
-------- -------
$ 28,579 28,902
======== =======
</TABLE>
NOTE F - IMPACT OF ACCOUNTING PRONOUNCEMENTS
In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings per Share."
SFAS 128 establishes the requirements for the computation of basic earnings
per share and dilutive earnings per share and is effective for financial
statements issued for periods ending after December 15, 1997. The effect of
adoption of SFAS 128 is not expected to materially impact the Company's
earnings per share.
8
<PAGE>
DELTIC TIMBER CORPORATION
Notes to Consolidated Financial Statements
March 31, 1997
------------------------------------------
NOTE G - BUSINESS SEGMENTS (UNAUDITED)
Information about the Company's business segments is summarized in the
following tables.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
(Thousands of dollars) 1997 1996
--------- -------
<S> <C> <C>
Net sales
Forest Products $20,682 17,810
Real Estate 2,579 1,311
Agriculture 1,103 197
------- ------
$24,364 19,318
======= ======
Income before income taxes
Forest Products $ 7,493 4,793
Real Estate 1,285 375
Agriculture 498 (31)
Corporate (1,461) (878)
------- ------
Operating income 7,815 4,259
Interest income 351 678
Interest expense (81) (70)
Other income 31 367
------- ------
$ 8,116 5,234
======= ======
Depreciation, amortization, and
cost of fee timber harvested
Forest Products $ 1,070 1,063
Real Estate 62 5
Agriculture 119 132
Corporate 9 85
------- ------
$ 1,260 1,285
======= ======
Capital expenditures
Forest Products $ 4,149 285
Real Estate 569 1,355
Agriculture 105 113
Corporate 87 166
------- ------
$ 4,910 1,919
======= ======
</TABLE>
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net income for the first quarter of 1997 was $4.9 million, $.38 a share, an
increase of 54 percent when compared to first quarter of 1996 net income of $3.2
million ($.25 a share on a pro forma basis). Net cash provided by operating
activities was $8.7 million, an increase of $5.4 million from a year ago.
In the current quarter, operating income increased $3.5 million. The Forest
Products segment increased $2.7 million due primarily to a 28-percent increase
in finished lumber sales price and an 18-percent increase in the average price
for pine sawtimber sold. Real Estate operations increased $.9 million as a
result of an increase in average sales price for residential lots and the sale
of a 13-acre commercial tract. Agriculture segment results increased $.5 million
over the first quarter of 1996 due primarily to the timing of product sales. The
cost of corporate functions increased $.6 million from a year ago.
Forest Products segment generated net sales of $20.7 million in the current
quarter compared to $17.8 million a year ago. Sales of pine sawtimber increased
$1 million as the result of a $63 per thousand board feet Doyle scale ("MBF-DS")
increase in average sales price to $407 per MBF-DS with virtually unchanged pine
sawtimber harvest levels. Finished lumber sales increased $3.5 million due to an
$82 per thousand board feet rise in sales price from $298 per thousand board
feet a year ago and a five-percent increase in sales volume to 36.8 million
board feet. Operating income was $7.5 million for the first quarter of 1997
compared to $4.8 million in the first quarter of 1996, a 56-percent increase,
primarily the result of increased sales of finished lumber and pine sawtimber,
partially offset by higher log cost incurred for sawmill operations.
Real Estate operations recorded net sales of $2.6 million in the first
quarter of 1997 compared to $1.3 million in the first quarter of 1996.
Residential lot sales at the Company's Chenal Valley development decreased by
nine lots to 18 lots. However, the average sales price increased from $46,000 to
$63,000 per lot, an increase of 37 percent. A 13-acre commercial tract was sold
in the first quarter of 1997 for $100,000 per acre, while no commercial
development acreage was sold during the first quarter of 1996. Operating income
was $1.3 million for the current quarter compared to $.4 million a year ago, due
to the same factors impacting net sales.
Agriculture segment net sales totaled $1.1 million in the current quarter
compared to $.2 million a year ago and operating income was $.5 million in the
first quarter of 1997 compared to break-even results during the first quarter of
1996, the result of the timing of product sales.
Corporate operating expense was $1.5 million compared to $.9 million a year
ago due to increased general and administrative expenses incurred as a public
company.
Interest income decreased $.3 million when compared to the first quarter of
1996, due mainly to settlement of the interest-bearing receivable from Murphy
Oil Corporation, Deltic's parent prior to the spin-off. Income tax expense
increased to $3.2 million for the current quarter from $2.1 million a year ago,
due to higher pretax earnings.
10
<PAGE>
FINANCIAL CONDITION
During the first quarter of 1997, net cash provided by operating activities
totaled $8.7 million compared to $3.3 million during the first quarter of 1996.
Changes in operating working capital, other than cash and cash equivalents,
provided cash of $1.5 million for the first three months of 1997, but required
cash of $2.1 million for the 1996 period.
Capital expenditures required cash of $4.9 million in the current quarter
and $1.9 million a year ago. The increase was primarily due to $3.5 million
utilized to acquire additional timberlands. Total capital expenditures,
including those not requiring cash, are summarized by segment in the following
table .
<TABLE>
<CAPTION>
-----------------------------------------
Three Months
Ended March 31,
-----------------------------------------
(Thousands of dollars) 1997 1996
-----------------------------------------
<S> <C> <C>
Forest Products $4,149 285
Real Estate 569 1,355
Agriculture 105 113
Corporate 87 166
-----------------------------------------
$4,910 1,919
=========================================
</TABLE>
The net change in purchased stumpage inventory required cash of $4.1
million in the first quarter of 1997 and $1.7 million a year ago. During the
current quarter, the Company invested cash of $10.4 million in U.S. government
securities, made advances to Del-Tin Fiber, L.L.C. of $3 million, and paid
dividends of $.8 million. Cash required to repay long-term debt amounted to $1.7
million in the first quarter of 1997 and $.4 million in the first quarter of
1996. These uses of funds resulted in an $8.2 million reduction in working
capital from December 31, 1996, to $17.6 million at March 31, 1997.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company is involved in litigation incidental to its
business. Currently, there are no material legal proceedings.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
12
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
DELTIC TIMBER CORPORATION
By: /s/Ron L. Pearce Date: May 14, 1997
---------------------------------- ------------
Ron L. Pearce, President
(Principal Executive Officer)
/s/Clefton D. Vaughan Date: May 14, 1997
----------------------------------- ------------
Clefton D. Vaughan, Vice President,
Finance and Administration
(Principal Financial Officer)
/s/Emily R. Evers Date: May 14, 1997
----------------------------------- ------------
Emily R. Evers, Controller
(Principal Accounting Officer)
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> MAR-31-1997 MAR-31-1996
<CASH> 428 16,635
<SECURITIES> 11,890 1,527
<RECEIVABLES> 7,386 5,827
<ALLOWANCES> 169 109
<INVENTORY> 4,965 5,436
<CURRENT-ASSETS> 2,932 2,386
<PP&E> 60,280 59,890
<DEPRECIATION> 31,701 30,988
<TOTAL-ASSETS> 186,111 180,078
<CURRENT-LIABILITIES> 9,871 5,944
<BONDS> 0 0
0 0
0 0
<COMMON> 128 128
<OTHER-SE> 169,845 166,580
<TOTAL-LIABILITY-AND-EQUITY> 186,111 180,078
<SALES> 24,364 19,318
<TOTAL-REVENUES> 24,746 20,363
<CGS> 13,655 12,608
<TOTAL-COSTS> 14,915 13,893
<OTHER-EXPENSES> 1,634 1,166
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 81 70
<INCOME-PRETAX> 8,116 5,234
<INCOME-TAX> 3,251 2,083
<INCOME-CONTINUING> 4,865 4,865
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 4,865 3,151
<EPS-PRIMARY> .38 .25
<EPS-DILUTED> .38 .25
</TABLE>
