<PAGE>
================================================================================
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, 2000
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)
<TABLE>
<S> <C>
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
</TABLE>
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 ____.
---
Number of shares of Common Stock, $.01 Par Value, outstanding at July 31, 2000,
was 12,191,729.
================================================================================
<PAGE>
TABLE OF CONTENTS - SECOND QUARTER 2000 FORM 10-Q REPORT
<TABLE>
<CAPTION>
Page
Number
------
PART I - Financial Information
<S> <C>
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk 15
PART II - Other Information
Item 1. Legal Proceedings 16
Item 2. Changes in Securities and Use of Proceeds 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DELTIC TIMBER CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets
--------------------------------
(Thousands of dollars)
<TABLE>
June 30, Dec. 31,
2000 1999
--------- -------
(unaudited)
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 5,394 4,782
U.S. government securities - 936
Trade accounts receivable - net 6,470 4,648
Other receivables 3,511 1,341
Inventories 5,378 9,411
Prepaid expenses and other current assets 6,419 4,396
------- --------
Total current assets 27,172 25,514
Investment in real estate held for development and sale 35,456 35,210
Investment in Del-Tin Fiber 2,584 3,727
Timber and timberlands - net 166,290 164,740
Property, plant, and equipment - net 44,504 44,312
Deferred charges and other assets 3,650 4,395
------- --------
Total assets $ 279,656 277,898
======= ========
Liabilities and Stockholders' Equity
Current liabilities
Current maturities of long-term debt $ 172 203
Notes payable - 13
Trade accounts payable 2,475 2,928
Accrued taxes other than income taxes 1,633 1,162
Other accrued liabilities 542 517
------- --------
Total current liabilities 4,822 4,823
Long-term debt 59,426 55,570
Deferred credits and other noncurrent liabilities 10,049 9,097
Redeemable preferred stock 30,000 30,000
Stockholders' equity
Preferred stock - -
Common stock 128 128
Capital in excess of par value 68,757 68,808
Retained earnings 121,783 120,033
Unamortized restricted stock awards (590) (205)
Treasury stock (14,719) (10,356)
------- --------
Total stockholders' equity 175,359 178,408
------- --------
Total liabilities and stockholders' equity $ 279,656 277,898
======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
DELTIC TIMBER CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
---------------------------------------------
(Thousands of dollars, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ---------------------
2000 1999 2000 1999
--------- ------- -------- -------
<S> <C> <C> <C> <C>
Net sales $ 30,232 32,171 63,703 63,496
-------- ------- -------- -------
Costs and expenses
Cost of sales 18,357 19,542 39,004 37,194
Depreciation, amortization, and
cost of fee timber harvested 3,373 2,750 7,372 5,821
General and administrative expenses 1,692 1,825 4,052 3,658
-------- ------- -------- -------
Total costs and expenses 23,422 24,117 50,428 46,673
-------- ------- -------- -------
Operating income 6,810 8,054 13,275 16,823
Equity in loss of Del-Tin Fiber (2,599) (1,997) (4,851) (3,626)
Interest income 39 53 94 120
Interest and other debt expense (1,053) (964) (2,083) (1,743)
Other income/(expense) 110 93 197 172
-------- ------- -------- -------
Income before income taxes 3,307 5,239 6,632 11,746
Income taxes (1,065) (2,137) (2,208) (4,749)
-------- ------- -------- -------
Net income $ 2,242 3,102 4,424 6,997
======== ======= ======== =======
Earnings per common share
Basic $ .14 .20 .27 .47
======== ======= ======== =======
Assuming dilution $ .14 .20 .27 .46
======== ======= ======== =======
Dividends declared per common share $ .0625 .0625 .125 .125
======== ======= ======== =======
Average common shares outstanding
(thousands) 12,259 12,453 12,316 12,613
======== ======= ======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
DELTIC TIMBER CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended June 30,
_________________________________________________
(Thousands of dollars)
<TABLE>
<CAPTION>
2000 1999
-------- -------
<S> <C> <C>
Operating activities
Net income $ 4,424 6,997
Adjustments to reconcile above income to
net cash provided/(required) by operating activities
Depreciation, amortization, and cost of fee timber harvested 7,372 5,821
Deferred income taxes 680 1,869
(Gains)/losses from sales of assets (1,866) (1,149)
Proceeds from sales of operating assets 2,322 3,150
Real estate costs recovered upon sale 2,686 3,457
Equity in loss of Del-Tin Fiber 4,851 3,626
(Increase)/decrease in operating working capital
other than cash and cash equivalents (1,934) (8,547)
Other 1,047 650
-------- -------
Net cash provided/(required) by operating activities 19,582 15,874
-------- -------
Investing activities
Capital expenditures requiring cash (10,972) (15,569)
Net change in purchased stumpage inventory (2,280) (189)
Investment in and advances to Del-Tin Fiber - net (3,623) (2,235)
Purchases of U.S. government securities (12) -
Maturities of U.S. government securities 948 -
Other - net 723 279
-------- -------
Net cash provided/(required) by investing activities (15,216) (17,714)
-------- -------
Financing activities
Proceeds from long-term borrowings 4,000 14,000
Repayments of notes payable and long-term debt (189) (2,616)
Treasury stock purchases (4,886) (10,356)
Increase/(decrease) in bank overdraft (5) 718
Preferred stock dividends paid (1,131) (1,131)
Common stock dividends paid (1,543) (1,583)
-------- -------
Net cash provided/(required) by financing activities (3,754) (968)
-------- -------
Net increase/(decrease) in cash and cash equivalents 612 (2,808)
Cash and cash equivalents at January 1 4,782 8,160
-------- -------
Cash and cash equivalents at June 30 $ 5,394 5,352
======== =======
Supplemental disclosures
Income taxes paid, net of refunds $ 1,104 3,229
======== =======
Interest paid, net of amounts capitalized $ 1,935 1,682
======== =======
Dividends declared, not paid $ - 788
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
DELTIC TIMBER CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity (Unaudited)
Six Months Ended June 30,
-----------------------------------------------------------
(Thousands of dollars)
<TABLE>
<CAPTION>
2000 1999
----------- ---------
<S> <C> <C>
Cumulative preferred stock - $.01 par, authorized
20,000,000 shares, 600,000 shares issued as
redeemable preferred stock $ - -
---------- -----------
Common stock - $.01 par, authorized 50,000,000 shares;
12,813,879 shares issued in 1999 and 1998 128 128
---------- -----------
Capital in excess of par value
Balance at beginning of year 68,808 68,808
Restricted stock awards (51) -
---------- -----------
Balance at end of period 68,757 68,808
---------- -----------
Retained earnings
Balance at beginning of year 120,033 114,498
Net income 4,424 6,997
Preferred stock dividends accrued (1,131) (1,131)
Common stock dividends declared (1,543) (2,371)
---------- -----------
Balance at end of period 121,783 117,993
---------- -----------
Unamortized restricted stock awards
Balance at beginning of year (205) -
Stock awards (472) (378)
Amortization to expense 87 126
---------- -----------
Balance at end of period (590) (252)
---------- -----------
Treasury stock
Balance at beginning of year - 419,544 and zero shares,
respectively (10,356) -
Shares purchased - 224,006 shares in 2000 and 419,542
shares in 1999 (4,886) (10,356)
Shares issued for incentive plans - 21,400 shares in 2000 523 -
---------- -----------
Balance at end of period - 622,150 and 419,542 shares,
respectively (14,719) (10,356)
---------- -----------
Total stockholders' equity $ 175,359 176,321
========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
DELTIC TIMBER CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2000
-----------------------------------------
(Unaudited, except for December 31, 1999)
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 financial statements in Deltic's 1999 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 2000 presentation format.
Note 2 - Earnings per Common Share
The amounts used in computing earnings per share consisted of the following:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
<S> <C> <C> <C>
(Thousands, except per share 2000 1999 2000 1999
amounts) --------- --------- --------- ---------
Net income $ 2,242 3,102 4,424 6,997
Less preferred dividends (565) (565) (1,131) (1,131)
--------- --------- --------- ---------
Income available to common
shareholders $ 1,677 2,537 3,293 5,866
========= ========= ========= =========
Weighted average number of
common shares used in basic EPS 12,259 12,453 12,316 12,613
Effect of dilutive stock options 11 21 11 18
--------- --------- --------- ---------
Weighted average number of
common shares and dilutive
potential common stock used
in EPS assuming dilution 12,270 12,474 12,327 12,631
========= ========= ========= =========
Earnings per common share
Basic $ .14 .20 .27 .47
========= ========= ========= =========
Assuming dilution $ .14 .20 .27 .46
========= ========= ========= =========
</TABLE>
Note 3 - Inventories
Inventories at the balance sheet dates consisted of the following:
<TABLE>
<CAPTION>
June 30, Dec. 31,
(Thousands of dollars) 2000 1999
--------- ---------
<S> <C> <C>
Logs $ 1,671 2,170
Finished products 3,222 6,966
Materials and supplies 485 275
--------- ---------
$ 5,378 9,411
========= =========
</TABLE>
7
<PAGE>
DELTIC TIMBER CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2000
-----------------------------------------
(Unaudited, except for December 31, 1999)
Note 4 - Investment in Del-Tin Fiber
The Company owns 50 percent of the membership interest of Del-Tin Fiber. The
Company's investment in Del-Tin Fiber is carried at cost, adjusted for the
Company's proportionate share of undistributed earnings or losses. Prior to
December 1999, Deltic recorded its equity in the operating results of Del-
Tin Fiber on a one-month lag basis.
The financial position for Del-Tin Fiber as of the balance sheet dates and
results of operations for periods ended June 30 consisted of the following:
<TABLE>
<CAPTION>
June 30, Dec. 31,
(Thousands of Dollars) 2000 1999
---------- ---------
<S> <C> <C>
Condensed Balance Sheet Information
Current assets $ 7,409 7,354
Property, plant, and equipment - net 99,327 98,492
Other noncurrent assets 4,668 4,108
------- -------
Total assets $ 111,404 109,954
======= =======
Current liabilities $ 16,255 12,356
Long-term debt 89,000 89,000
Other noncurrent liabilities 17 10
Members' capital/(deficit) 6,132 8,588
------- -------
Total liabilities and members' capital/(deficit) $ 111,404 109,954
======= =======
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ -----------------------
2000 1999 2000 1999
------ ------ ------ ------
<S> <C> <C> <C> <C>
Condensed Income Statement
Information
Net sales $ 8,666 7,306 17,338 13,742
------- ------- ------- -------
Costs and expenses
Cost of sales 10,282 8,825 20,161 16,423
Depreciation 1,261 963 2,540 1,890
General and administrative expenses 452 227 790 430
------- ------- ------- -------
Total costs and expenses 11,995 10,015 23,491 18,743
------- ------- ------- -------
Operating income/(loss) (3,329) (2,709) (6,153) (5,001)
Interest income 49 101 101 139
Interest and other debt expense (1,917) (2,027) (3,650) (3,237)
------- ------- ------- -------
Net income/(loss) $ (5,197) (4,635) (9,702) (8,099)
======= ======= ======= =======
</TABLE>
8
<PAGE>
DELTIC TIMBER CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2000
------------------------------------------
(Unaudited, except for December 31, 1999)
Note 5 - Timber and Timberlands
Timber and timberlands at the balance sheet dates consisted of the
following:
June 30, Dec. 31,
(Thousands of dollars) 2000 1999
-------- -------
Purchased stumpage inventory $ 12,877 10,597
Timberlands 62,790 62,287
Fee timber 128,928 125,851
Logging facilities 1,665 1,642
-------- -------
206,260 200,377
Less accumulated costs of fee timber harvested
and facilities depreciation (39,970) (35,637)
-------- -------
$166,290 164,740
======== =======
Note 6 - Property, Plant, and Equipment
Property, plant, and equipment at the balance sheet dates consisted of the
following:
June 30, Dec. 31,
(Thousands of dollars) 2000 1999
-------- --------
Land $ 4,587 4,425
Land improvements 4,221 4,061
Buildings and structures 5,299 4,946
Machinery and equipment 72,964 71,234
-------- --------
87,071 84,666
Less accumulated depreciation (42,567) (40,354)
-------- --------
$ 44,504 44,312
======== ========
9
<PAGE>
DELTIC TIMBER CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2000
------------------------------------------
(Unaudited, except for December 31, 1999)
Note 7 - Business Segments
Information about the Company's business segments consisted of the
following:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ----------------------
(Thousands of dollars) 2000 1999 2000 1999
------- ------ ------ ------
<S> <C> <C> <C> <C>
Net sales
Woodlands $10,504 8,332 21,365 16,576
Mills 19,816 22,569 40,859 40,857
Real Estate 4,145 3,967 6,983 11,712
Agriculture 400 300 4,130 748
Eliminations* (4,633) (2,997) (9,634) (6,397)
------- ------- ------- -------
$30,232 32,171 63,703 63,496
======= ======= ======= =======
Income before income taxes
Operating income
Woodlands $ 7,811 6,269 15,140 12,054
Mills (567) 2,536 206 2,993
Real Estate 797 879 1,094 4,950
Agriculture 112 28 444 118
Corporate (1,511) (1,643) (3,661) (3,286)
Eliminations 168 (15) 52 (6)
------- ------- ------- -------
Operating income 6,810 8,054 13,275 16,823
Equity in loss of Del-Tin Fiber (2,599) (1,997) (4,851) (3,626)
Interest income 39 53 94 120
Interest and other debt expense (1,053) (964) (2,083) (1,743)
Other income/(expense) 110 93 197 172
------- ------- ------- -------
$ 3,307 5,239 6,632 11,746
======= ======= ======= =======
Depreciation, amortization, and
cost of fee timber harvested
Woodlands $ 1,948 1,307 4,570 3,082
Mills 1,132 1,107 2,217 2,077
Real Estate 79 125 157 241
Agriculture 142 147 284 293
Corporate 72 64 144 128
------- ------- ------- -------
$ 3,373 2,750 7,372 5,821
======= ======= ======= =======
Capital expenditures
Woodlands $ 1,237 3,190 4,630 4,512
Mills 1,336 1,727 2,226 4,489
Real Estate 1,335 2,875 3,784 6,088
Agriculture 52 321 53 370
Corporate 44 64 279 110
------- ------- ------- -------
$ 4,004 8,177 10,972 15,569
======= ======= ======= =======
</TABLE>
*Intersegment sales of timber from Woodlands to Mills.
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Three Months Ended June 30, 2000 Compared with Three Months Ended
June 30, 1999
Net income for the second quarter of 2000 was $2.2 million, $.14 a share, a
decrease of $.9 million when compared to second quarter 1999 earnings of $3.1
million, $.20 a share. Net sales totaled $30.2 million in the current quarter, a
six percent decrease from $32.2 million in 1999. Operating income for the 2000
period was $6.8 million, a decrease of $1.3 million from 1999. Net cash provided
by operating activities decreased by $2 million from the second quarter of 1999
to $6.2 million.
In the current quarter, operating income decreased $1.3 million. The
Company's Woodlands segment increased $1.5 million due primarily to a 24 percent
increase in the pine sawtimber harvest level and a four percent increase in the
price for pine sawtimber sold, partially offset by a $.6 million increase in the
cost of fee timber harvested. The Mills segment decreased $3.1 million primarily
as a result of a 15 percent decrease in lumber sales price.
The Woodlands segment reported net sales of $10.5 million for the current
quarter compared to $8.4 million a year ago. Sales of pine sawtimber increased
$1.6 million as a result of a 29,800 ton increase in the harvest level to
152,400 tons and a $2 per ton increase in the sales price of pine sawtimber sold
to $47 per ton. Net sales included the sale of a hardwood timberland tract by
the Company that resulted in a gain of $1.8 million in the second quarter of
2000, an increase of $.7 million from the $1.1 million realized from a similar
sale in 1999. (The gain for the prior year was previously reported in "Other
Income" in the 1999 Consolidated Statement of Income, but has been reclassified
to net sales for the Woodlands segment in order to be comparable to the current
year reporting format, which resulted from the Company's initiative, as approved
by its Board of Directors, to identify land which is non-strategic or which
could be sold for higher and better usage.) Operating income was $7.8 million in
2000 compared to $6.3 million in 1999, an increase of 25 percent, due mainly to
the increase in net sales, partially offset by a $.6 million increase in the
cost of fee timber harvested resulting primarily from the increase in harvest
levels.
The Mills segment's net sales totaled $19.8 million for the second quarter
of 2000 compared to $22.6 million in the second quarter of 1999. Finished lumber
sales decreased $2.5 million due to a $59 drop in the sales price realized per
thousand board feet ("MBF") of lumber sold to $339, while sales volume increased
three percent to 50.6 million board feet. A loss from operations of $.6 million
in 2000 compared to operating income of $2.5 million in 1999 due primarily to
the decrease in net sales, despite the increase in sales volume, which resulted
in a negative margin of $11 per MBF sold in 2000.
The Company's Real Estate segment recorded net sales of $4.2 million in the
current-year period compared to $4 million a year ago. Residential lot sales
increased by 2 lots to 52, while the average sales price per lot increased by
$1,100 to $51,300 due to sales mix. Operating income was $.8 million in the
second quarter of 2000 compared to $.9 million during the second quarter 1999
due to a reduced gross profit margin from lots sold.
Agriculture operations reported net sales of $.4 million in 2000 compared
to $.2 million in 1999 as the result of the current period including increased
sales of carryover soybeans held as inventory at the end of each of the
respective preceding years because of depressed commodity prices. Operating
income was $.1 million for the current period compared to break-even results for
the 1999 period due mainly to the increase in net sales.
11
<PAGE>
During the current quarter, the Company received the preliminary bids
related to the potential sale of its agriculture properties. Negotiations with
prospective buyers will continue during the third quarter of 2000. Based upon
these preliminary bids, the Company is "cautiously optimistic" that it will be
able to achieve its objective of exchanging its existing farmland for timberland
in a tax-efficient manner.
Corporate operating expense was $1.5 million in the second quarter of 2000,
compared to $1.6 million for the same period of 1999. Equity in the loss of Del-
Tin Fiber was $2.6 million which compares to a loss of $2 million a year ago.
Income tax expense of $1.1 million for the current quarter decreased $1.1
million due to lower pretax income and lower state income taxes.
Six Months Ended June 30, 2000 Compared with Six Months Ended
June 30, 1999
For the first six months of 2000, net income totaled $4.4 million, $.27 a
share, compared to net income for the six months ended June 30, 1999 of $7
million, $.47 a share. The decrease was primarily the result of lower operating
income from the Company's Mills and Real Estate segments and an increase in
equity loss from Del-Tin Fiber, partially offset by increased operating income
from the Woodlands segment and decreased income tax expense.
Operating income for the first half of 2000 was $13.3 million, a decrease
of $3.6 million from 1999. The Company's Woodlands operations increased $3
million as the result of a 30 percent increase in harvest level for pine
sawtimber to 357,400 tons and a four percent increase in the sales price for
pine sawtimber, partially offset by an increase in the cost of fee timber
harvested. The Mills segment decreased $2.8 million due primarily to a $34 per
MBF decrease in average lumber sales price. Real Estate operations decreased
$3.9 million primarily as a result of 1999 benefiting from the sale of a 72-acre
commercial site and reduced residential lot sales for the 2000 period.
The Woodlands segment produced net sales of $21.4 million during the six
months ended June 30, 2000, an increase of $4.8 million when compared to $16.6
million during 1999. Pine sawtimber sales increased $4.3 million as the result
of a 30 percent increase in sales volume to 357,400 tons, combined with a $2 per
ton increase in the sales price received for pine sawtimber to $48 per ton.
Sales of pine and hardwood pulpwood decreased $.3 million as a result of
decreased harvest levels and sales price. Net sales included the sale of a non-
strategic hardwood timberland tract that generated a gain of $1.8 million in
2000, compared to a gain of $1.1 million for a similar sale in 1999. Operating
income was $15.1 million for the first half of 2000, compared to $12.1 million
in 1999 due to the increase in net sales, partially offset by a $1.5 million
increase in the cost of fee timber harvested resulting from the increase in
harvest levels and a higher cost per ton of timber harvested due primarily to
recent timberland acquisitions.
Mill operations recorded net sales of $40.9 million for the first six
months of both 2000 and 1999. Finished lumber sales increased $.5 million due to
an 11 percent increase in sales volume to 100.9 million board feet, offset by a
nine percent decrease in the average sales price per MBF sold to $351. Operating
income for 2000 was $.2 million compared to $3 million for the 1999 period. The
decrease was due primarily to the decrease in sales price, partially offset by a
$3 per MBF decrease in the cost of lumber sold resulting from a reduction in the
log cost per MBF of lumber produced.
Real Estate operations reported net sales of $7 million during the first
half of 2000 compared to $11.7 million during 1999. The first six months of 1999
benefited from the sale of a 72-acre commercial site for $60,000 per acre, while
2000 included the sale of a .7-acre site for $206,500 per acre. Residential lot
sales totaled 88 lots compared to 98 in 1999, while the average sales price of
$50,300 decreased $1,800 per lot due to the mix of lots sold. Operating income
of $1.1 million in 2000 decreased $3.9 million from the first half of 1999 as
the result of the reduction in net sales, partially offset by the related
decrease in sales commission expense.
12
<PAGE>
The Agriculture segment produced net sales of $4.1 million in the first six
months of 2000 compared to $.7 million in 1999 due to the current period
including significantly greater sales of carryover soybeans and corn. These
farm products were grown in 1999 and held in inventory at the end of 1999
because of depressed commodity prices. Operating income was $.4 million in the
first half of 2000 compared to $.1 million in 1999 due primarily to the timing
of sales.
Corporate operating expense was $3.6 million for the 2000 period, an
increase of $.3 million from 1999 as the result of higher general and
administrative expenses. Equity in the loss of Del-Tin Fiber recorded by the
Company was $4.9 million in the current year, which compares to $3.6 million a
year ago. Financial results for Del-Tin Fiber continue to be unsatisfactory due
to lower average sales price than expected for medium density fiberboard ("MDF")
and higher production costs. However, the facility's production of MDF has
improved following modifications to critical equipment, with the month of June
resulting in a record for volume produced. Income tax expense decreased $2.6
million to $2.2 million for the first half of 2000 due to decreased pretax
income and lower state income taxes.
Financial Condition
For the first six months of 2000, net cash provided by operating activities
totaled $19.6 million compared to $15.9 million for the same period of 1999.
Changes in operating working capital, other than cash and cash equivalents,
required cash of $1.9 million for the first half of 2000 and $8.5 million for
the first six months of 1999.
Capital expenditures required cash of $11 million in the current year-to-
date period and $15.6 million a year ago. Capital expenditures by segment
consisted of the following:
--------------------------------------------------------
Six Months
Ended June 30,
--------------------------------------------------------
(Thousands of dollars) 2000 1999
-------------------------------------- ------- ------
Woodlands $ 4,630 4,512
Mills 2,226 4,489
Real Estate 3,784 6,088
Agriculture 53 370
Corporate 279 110
-------------------------------------- ------- ------
Capital expenditures requiring cash $10,972 15,569
====================================== ======= ======
The net change in purchased stumpage inventory to be utilized in the
Company's sawmills operations required cash of $2.3 million during the first six
months of 2000 and $.2 million in the first half of 1999. Maturities of U.S.
government securities provided $.9 million in the current year. During the six
months ended June 30, 2000, the Company advanced $3.6 million to Del-Tin Fiber
and paid dividends of $2.7 million, consisting of $1.6 million for common stock
and $1.1 million for redeemable preferred stock. In the current year, borrowings
under the Company's revolving credit facility provided $4 million, while
purchases of treasury stock required cash of $4.9 million. These net sources of
funds resulted in a $.6 million increase in the Company's cash and cash
equivalents since December 31, 1999.
On February 23, 2000, the Company's Board of Directors authorized a stock
repurchase program of up to $10 million of its common stock. Under the program,
the Company can purchase shares through the open market and privately negotiated
transactions at prices deemed appropriate by Deltic's management. As of June
30, 2000, Deltic had repurchased 224,000 shares at an average cost of $21.81
per share under this program.
13
<PAGE>
Deltic's management believes that the cash generated by its operating
activities and the remaining amount available under its credit facility will be
sufficient to meet its expected cash needs and planned expenditures, including
those of the Company's continued timberland acquisition program and authorized
common stock repurchase program, for the foreseeable future.
Statements included herein that are not historical in nature are intended
to be, and are hereby identified as, "forward-looking statements" within the
meaning of the federal securities laws. Such statements reflect the Company's
current expectations and involve certain risks and uncertainties. Actual results
could differ materially from those included in such forward-looking statements.
Factors that could cause such differences include the cyclical nature of the
industry, changes in interest rates and general economic conditions, adverse
weather, cost and availability of materials used to manufacture the Company's
products, and the risk factors described from time to time in the reports and
disclosure documents filed by the Company with the Securities and Exchange
Commission.
14
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company's market risk has not changed significantly from that set forth
under the caption "Quantitative and Qualitative Disclosures About Market Risk",
in Item 7A of Part II of its 1999 annual report on Form 10-K. Those disclosures
should be read in conjunction with this Form 10-Q.
15
<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 and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of the stockholders of Deltic Timber Corporation
("Deltic" or "the Company") was held on April 27, 2000. Pursuant to the
Company's Amended and Restated Certificate of Incorporation, its Board of
Directors consist of three classes who holds office for staggered terms of three
years. Set forth below is a listing of the directors elected at the April 27,
2000 annual meeting, the results of such election and the names of directors
whose term of office continued after the meeting.
<TABLE>
<CAPTION>
Director Votes for Votes Withheld
------------------ ------------- --------------
<S> <C> <C>
Robert C. Nolan 11,071,130 211,832
Ron L. Pearce 10,746,134 536,828
Alex R. Lieblong 11,070,947 212,015
William L. Rosoff (Term expires in 2001)
John C. Shealy (Term expires in 2001)
R. Hunter Pierson, Jr. (Term expires in 2001)
O. H. Darling, Jr. (Term expires in 2002)
Rev. Christoph Keller, III (Term expires in 2002)
R. Madison Murphy (Term expires in 2002)
</TABLE>
In addition to the election of three Class I directors at the April
27, 2000 annual meeting, the prior appointment of KPMG LLP by the Board of
Directors as Deltic's independent auditors for 2000 was ratified with 11,227,496
shares voted in favor, 32,164 shares voted against, and 23,301 shares
abstaining.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule.
(b) Reports on Form 8-K
None.
16
<PAGE>
SIGNATURES
Pursuant to the requirements 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: August 10, 2000
---------------------------------- ----------------------------
Ron L. Pearce, President
(Principal Executive Officer)
/s/ Clefton D. Vaughan Date: August 10, 2000
------------------------------------- ----------------------------
Clefton D. Vaughan, Vice President,
Finance and Administration
(Principal Financial Officer)
/s/ Emily R. Evers Date: August 10, 2000
------------------------------------- ----------------------------
Emily R. Evers, Controller
(Principal Accounting Officer)
17
