<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 March 31, 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)
Delaware 71-0795870
(State or other jurisdiction of (I.R.S. Employer Identifi-
incorporation or organization) cation Number)
210 East Elm Street, P. O. Box 7200, 71731-7200
El Dorado, Arkansas
(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 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 April 30, 2000,
was 12,314,429.
================================================================================
<PAGE>
TABLE OF CONTENTS - FIRST QUARTER 2000 FORM 10-Q REPORT
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
PART I - Financial Information
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 13
PART II - Other Information
Item 1. Legal Proceedings 14
Item 2. Changes in Securities and Use of Proceeds 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DELTIC TIMBER CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets
------------------------------------
(Thousands of dollars)
<TABLE>
<CAPTION>
March 31, Dec. 31,
2000 1999
-------- -------
(unaudited)
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 6,249 4,782
U.S. government securities - 936
Trade accounts receivable - net 6,236 4,648
Other receivables 1,255 1,341
Inventories 6,425 9,411
Prepaid expenses and other current assets 5,004 4,396
-------- -------
Total current assets 25,169 25,514
Investment in real estate held for development and sale 36,191 35,210
Investment in Del-Tin Fiber 2,292 3,727
Timber and timberlands - net 167,351 164,740
Property, plant, and equipment - net 44,048 44,312
Deferred charges and other assets 3,785 4,395
-------- -------
Total assets $278,836 277,898
======== =======
Liabilities and Stockholders' Equity
Current liabilities
Current maturities of long-term debt $ 172 203
Notes payable - 13
Trade accounts payable 3,812 2,928
Accrued taxes other than income taxes 1,504 1,162
Other accrued liabilities 1,201 517
-------- -------
Total current liabilities 6,689 4,823
Long-term debt 55,434 55,570
Deferred credits and other noncurrent liabilities 9,506 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 120,876 120,033
Unamortized restricted stock awards (642) (205)
Treasury stock (11,912) (10,356)
-------- -------
Total stockholders' equity 177,207 178,408
-------- -------
Total liabilities and stockholders' equity $278,836 277,898
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
DELTIC TIMBER CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
Three Months Ended March 31,
-----------------------------------------------
(Thousands of dollars, except per share amounts)
<TABLE>
<CAPTION>
2000 1999
------- ------
<S> <C> <C>
Net sales $33,471 31,325
------- ------
Costs and expenses
Cost of sales 20,647 17,652
Depreciation, amortization, and
cost of fee timber harvested 3,999 3,071
General and administrative expenses 2,360 1,833
------- ------
Total costs and expenses 27,006 22,556
------- ------
Operating income 6,465 8,769
Equity in loss of Del-Tin Fiber (2,252) (1,629)
Interest income 55 67
Interest and other debt expense (1,030) (779)
Other income/(expense) 87 79
------- ------
Income before income taxes 3,325 6,507
Income taxes (1,143) (2,612)
------- ------
Net income $ 2,182 3,895
======= ======
Earnings per common share
Basic $ .13 .26
======= ======
Assuming dilution $ .13 .26
======= ======
Dividends declared per common share $ .0625 .0625
======= ======
Average common shares outstanding (thousands) 12,374 12,745
======= ======
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
DELTIC TIMBER CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended March 31,
-------------------------------------------------
(Thousands of dollars)
<TABLE>
<CAPTION>
2000 1999
------- ------
<S> <C> <C>
Operating activities
Net income $ 2,182 3,895
Adjustments to reconcile above income to
net cash provided/(required) by operating activities
Depreciation, amortization, and cost of fee timber harvested 3,999 3,071
Deferred income taxes 609 882
(Gains)/losses from sales of assets (20) (13)
Real estate costs recovered upon sale 1,107 2,121
Equity in loss of Del-Tin Fiber 2,252 1,629
(Increase)/decrease in operating working capital
other than cash and cash equivalents 2,791 (3,863)
Other 431 (79)
------- ------
Net cash provided/(required) by operating activities 13,351 7,643
------- ------
Investing activities
Capital expenditures requiring cash (6,968) (7,392)
Net change in purchased stumpage inventory (1,848) (2,096)
Proceeds from sales of assets 38 24
Investment in and advances to Del-Tin Fiber - net (775) -
Purchases of U.S. government securities (12) -
Maturities of U.S. government securities 948 -
Other - net 338 112
------- ------
Net cash provided/(required) by investing activities (8,279) (9,352)
------- ------
Financing activities
Proceeds from long-term borrowings - 6,000
Repayments of notes payable and long-term debt (181) (616)
Treasury stock purchases (2,079) (5,641)
Increase/(decrease) in bank overdraft (6) 419
Preferred stock dividends paid (566) (566)
Common stock dividends paid (773) (799)
------- ------
Net cash provided/(required) by financing activities (3,605) (1,203)
------- ------
Net increase/(decrease) in cash and cash equivalents 1,467 (2,912)
Cash and cash equivalents at January 1 4,782 8,160
------- ------
Cash and cash equivalents at March 31 $ 6,249 5,248
======= ======
Supplemental disclosures
Income taxes paid, net of refunds $ 74 523
======= ======
Interest paid, net of amounts capitalized $ 297 136
======= ======
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
DELTIC TIMBER CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity (Unaudited)
Three Months Ended March 31,
-----------------------------------------------------------
(Thousands of dollars)
<TABLE>
<CAPTION>
2000 1999
-------- -------
<S> <C> <C>
Cumulative preferred stock - $.01 par,
20,000,000 shares authorized, 600,000 shares
issued as redeemable preferred stock $ - -
-------- -------
Common stock - $.01 par, 50,000,000 shares authorized;
12,813,879 shares issued 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 2,182 3,895
Preferred stock dividends accrued (566) (566)
Common stock dividends declared (773) (799)
-------- -------
Balance at end of period 120,876 117,028
-------- -------
Unamortized restricted stock awards
Balance at beginning of year (205) (300)
Stock awards (472) -
Amortization to expense 35 25
-------- -------
Balance at end of period (642) (275)
-------- -------
Treasury stock
Balance at beginning of year - 419,544 and zero shares,
respectively (10,356) -
Shares purchased - 94,206 shares in 2000 and 231,813
shares in 1999 (2,079) (5,641)
Shares issued for incentive plans - 21,400 shares in 2000 523 -
-------- -------
Balance at end of period (at cost) - 492,350 and 231,813 shares,
respectively (11,912) (5,641)
-------- -------
Total stockholders' equity $177,207 180,048
======== =======
</TABLE>
6
<PAGE>
DELTIC TIMBER CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 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 year amounts have been reclassified to conform with the 2000
presentation format.
Note 2 - Earnings per Common Share
The amounts used in computing earnings per share consisted of the following:
Three Months Ended
March 31,
-------------------
(Thousands of dollars) 2000 1999
------- ------
Net income $ 2,182 3,895
Less Preferred dividends (566) (566)
------- ------
Income available to common shareholders $ 1,616 3,329
======= ======
Weighted average number of common shares
used in basic EPS 12,374 12,745
Effect of dilutive stock options 11 14
------- ------
Weighted average number of common shares
and dilutive potential common stock used in
EPS assuming dilution 12,385 12,759
======= ======
Earnings per common share
Basic $ .13 .26
======= ======
Assuming dilution $ .13 .26
======= ======
Note 3 - Inventories
Inventories at the balance sheet dates consisted of the following:
Mar. 31, Dec. 31,
2000 1999
-------- --------
Logs $ 2,400 2,170
Finished products 3,765 6,966
Materials and supplies 260 275
------- -----
$ 6,425 9,411
======= =====
7
<PAGE>
DELTIC TIMBER CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 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 the three months ended March 31 consisted of the
following:
March 31, Dec. 31,
(Thousands of Dollars) 2000 1999
-------- -------
(unaudited)
Condensed Balance Sheet Information
Current assets $ 8,453 7,354
Property, plant, and equipment - net 98,006 98,492
Other noncurrent assets 4,685 4,108
-------- -------
Total assets $111,144 109,954
======== =======
Current liabilities $ 16,511 12,356
Long-term debt 89,000 89,000
Other noncurrent liabilities - 10
Members' capital/(deficit) 5,633 8,588
-------- -------
Total liabilities and members' capital/(deficit) $111,144 109,954
======== =======
Three Months Ended March 31,
----------------------------
(Thousands of dollars) 2000 1999
-------- -------
(unaudited)
Condensed Income Statement Information
Net sales $ 8,672 6,436
-------- -------
Costs and expenses
Cost of manufacturing 9,879 7,598
Depreciation 1,279 927
General and administrative expenses 338 203
-------- -------
Total costs and expenses 11,496 8,728
-------- -------
Operating income/(loss) (2,824) (2,292)
Interest income 52 38
Interest and other debt expense (1,733) (1,210)
-------- -------
Net income/(loss) $ (4,505) (3,464)
======== =======
8
<PAGE>
DELTIC TIMBER CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2000
------------------------------------------
(Unaudited, except for December 31, 1999)
Note 5 - Timber and Timberlands
Timber and timberlands at the balance sheet dates consisted of the following:
<TABLE>
<CAPTION>
Mar. 31, Dec. 31,
(Thousands of dollars) 2000 1999
-------- -------
<S> <C> <C>
Purchased stumpage inventory $ 12,445 10,597
Timberlands 62,698 62,287
Fee timber 128,767 125,851
Logging facilities 1,646 1,642
-------- -------
205,556 200,377
Less accumulated costs of fee timber harvested
and facilities depreciation (38,205) (35,637)
-------- -------
$167,351 164,740
======== =======
</TABLE>
Note 6 - Property, Plant, and Equipment
Property, plant, and equipment at the balance sheet dates consisted of the
following:
<TABLE>
<CAPTION>
Mar. 31, Dec. 31,
(Thousands of dollars) 2000 1999
-------- -------
<S> <C> <C>
Land $ 4,587 4,425
Land improvements 4,217 4,061
Buildings and structures 5,287 4,946
Machinery and equipment 71,640 71,234
-------- -------
85,731 84,666
Less accumulated depreciation (41,683) (40,354)
-------- -------
$ 44,048 44,312
======== =======
</TABLE>
9
<PAGE>
DELTIC TIMBER CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2000
-------------------------------------------
(Unaudited, except for December 31, 1999)
Note 7 - Business Segments
Information about the Company's business segments consisted of the following:
Three Months Ended
March 31,
--------------------------
(Thousands of dollars) 2000 1999
--------- ----------
Net sales
Woodlands $10,861 8,244
Mills 21,043 18,288
Real Estate 2,838 7,745
Agriculture 3,730 448
Eliminations* (5,001) (3,400)
------- ------
$33,471 31,325
======= ======
Income before income taxes
Operating income
Woodlands $ 7,329 5,785
Mills 773 457
Real Estate 297 4,071
Agriculture 332 90
Corporate (2,150) (1,643)
Eliminations (116) 9
------- ------
Operating income 6,465 8,769
Equity in loss of Del-Tin Fiber (2,252) (1,629)
Interest income 55 67
Interest and other debt expense (1,030) (779)
Other income/(expense) 87 79
------- ------
$ 3,325 6,507
======= ======
Depreciation, amortization, and
cost of fee timber harvested
Woodlands $ 2,622 1,774
Mills 1,085 971
Real Estate 78 116
Agriculture 142 145
Corporate 72 65
------- ------
$ 3,999 3,071
======= ======
Capital expenditures
Woodlands $ 3,393 1,322
Mills 890 2,762
Real Estate 2,449 3,213
Agriculture 1 49
Corporate 235 46
------- ------
$ 6,968 7,392
======= ======
*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
Net income for the first quarter of 2000 was $2.2 million, $.13 a share, a
decrease of $1.7 million when compared to first quarter 1999 earnings of $3.9
million, $.26 a share. Net sales totaled $33.5 million in the current quarter, a
seven percent increase from $31.3 million in 1999. Operating income for the 2000
period was $6.5 million, a decrease of 26 percent when compared to $8.8 million
in the same quarter of 1999. Net cash provided by operating activities increased
by $5.8 million from the first quarter of 1999 to $13.4 million.
In the current quarter, operating income decreased $2.3 million. The
Company's Woodlands segment increased $1.5 million due primarily to a 35 percent
increase in the pine sawtimber harvest level and a two percent increase in the
average price for pine sawtimber sold, partially offset by a $.8 million
increase in the cost of fee timber harvested. The Mills segment increased $.3
million as a result of a 21 percent increase in the volume of lumber sold and a
two percent decrease in the average manufacturing cost per thousand board feet
("MBF") of finished lumber sold. Real Estate operations decreased $3.8 million
primarily due to the sale of an approximately 72-acre commercial site during the
first quarter of 1999.
The Woodlands segment's net sales totaled $10.9 million in the current
quarter compared to $8.2 million a year ago. Sales of pine sawtimber increased
$2.8 million as a result of a 53,000 ton increase in the harvest level to
205,000 tons and a $1 per ton increase in the average sales price of pine
sawtimber sold to $48 per ton. Operating income was $7.3 million in 2000
compared to $5.8 million in 1999, an increase of 27 percent, due mainly to the
increase in net sales, partially offset by a $.8 million increase in the cost of
fee timber harvested resulting from the increase in harvest levels.
The Company's Mills segment reported net sales of $21.1 million for the
first quarter of 2000 compared to $18.3 million in the first quarter of 1999.
Finished lumber sales increased $3 million due to a 21 percent increase in sales
volume to 50.2 million board feet, partially offset by a $5 drop in the average
sales price per MBF sold to $364. Operating income was $.8 million in 2000
which compares to $.5 million in 1999. This increase was due primarily to the
increase in net sales and a $16 reduction in the log cost per MBF of lumber
produced.
The Real Estate segment recorded net sales of $2.8 million in the current-
year period compared to $7.7 million a year ago. A .7-acre commercial site was
sold in the current quarter for $206,500 per acre, while a 72-acre commercial
site was sold in the first quarter of 1999 for $60,000 per acre. Residential lot
sales decreased by 12 lots to 36, while the average sales price decreased from
$54,200 to $48,900 per lot due to sales mix. Operating income was $.3 million
in the first quarter of 2000 compared to $4.1 million during the first quarter
of 1999, primarily the result of the prior-year quarter benefiting from the
margin from higher commercial development sales.
Agriculture operations reported net sales of $3.7 million in 2000 compared
to $.5 million in 1999 due to the current period including sales of carryover
soybeans and corn that were grown during 1999 and held in inventory at the end
of 1999 because of depressed commodity prices. Operating income was $.3 million
in the first quarter of 2000 compared to $.1 million for the first quarter of
1999, due primarily to the timing of sales.
11
<PAGE>
Corporate operating expense was $2.1 million for the first three months of
2000 compared to $1.7 million in 1999, resulting from a $.5 million increase in
general and administrative expenses, primarily due to higher costs of awards
under the Company's incentive plans. Equity in the loss of Del-Tin Fiber
recorded by the Company was $2.3 million in the current quarter, which compares
to $1.6 million a year ago. The prior-year quarter benefited from prior-period
items related to plant start-up costs. Income tax expense decreased $1.5 million
to $1.1 million due primarily to lower pretax income and lower state income
taxes.
Financial Condition
During the first quarter of 2000, net cash provided by operating activities
totaled $13.4 million compared to $7.6 million during the first quarter of 1999.
Changes in operating working capital, other than cash and cash equivalents,
provided cash of $2.8 million for the first three months of 2000, but required
cash of $3.9 million for the 1999 period.
Capital expenditures required cash of $7 million in the current quarter and
$7.4 million a year ago. Total capital expenditures, summarized by segment,
consisted of the following:
---------------------------------------------
Three Months
Ended March 31,
---------------------------------------------
(Thousands of dollars) 2000 1999
---------------------------------------------
Woodlands $3,393 1,322
Mills 890 2,762
Real Estate 2,449 3,213
Agriculture 1 49
Corporate 235 46
---------------------------------------------
Total capital expenditures 6,968 7,392
Owner-financed expenditures - -
---------------------------------------------
Expenditures requiring cash $6,968 7,392
=============================================
The net change in purchased stumpage inventory to be utilized in the
Company's sawmill operations required cash of $1.8 million in 2000 and $2.1
million in 1999. The Company advanced Del-Tin Fiber L.L.C. $.8 million during
the current quarter. Maturities of U.S. government securities provided $.9
million in 2000. During both periods, Deltic paid dividends of $1.4 million,
consisting of $.8 million for common stock and $.6 million for redeemable
preferred stock. In the prior year, borrowings under the Company's revolving
credit facility provided $6 million. Deltic made repayments of debt in the
amount of $.2 million in 2000 and $.6 million in the 1999 period. Purchases of
treasury stock utilized $2.1 million in the current quarter and $5.6 million a
year ago. These net sources of funds resulted in a $1.5 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 March
31, 2000, Deltic had repurchased 94,200 shares at an average cost of $22.08 per
share under this program.
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 and authorized common
stock repurchase programs, for the foreseeable future.
12
<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.
13
<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
None.
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.
14
<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: May 12, 2000
------------------------------------- -----------------------
Ron L. Pearce, President
(Principal Executive Officer)
/s/ Clefton D. Vaughan Date: May 12, 2000
------------------------------------- -----------------------
Clefton D. Vaughan, Vice President,
Finance and Administration
(Principal Financial Officer)
/s/ Emily R. Evers Date: May 12, 2000
------------------------------------- -----------------------
Emily R. Evers, Controller
(Principal Accounting Officer)
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 6,249
<SECURITIES> 0
<RECEIVABLES> 7,742
<ALLOWANCES> 251
<INVENTORY> 6,425
<CURRENT-ASSETS> 25,169
<PP&E> 85,731
<DEPRECIATION> 41,683
<TOTAL-ASSETS> 278,836
<CURRENT-LIABILITIES> 6,689
<BONDS> 0
30,000
0
<COMMON> 128
<OTHER-SE> 177,079
<TOTAL-LIABILITY-AND-EQUITY> 278,836
<SALES> 33,471
<TOTAL-REVENUES> 33,613
<CGS> 20,647
<TOTAL-COSTS> 24,646
<OTHER-EXPENSES> 2,252
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,030
<INCOME-PRETAX> 3,325
<INCOME-TAX> 1,143
<INCOME-CONTINUING> 2,182
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,181
<EPS-BASIC> 0.13
<EPS-DILUTED> 0.13
</TABLE>
