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Deltic Timber 10-Q 2012

Documents found in this filing:

  1. 10-Q
  2. Ex-31.1
  3. Ex-31.2
  4. Ex-32
  5. Ex-32
Form 10-Q
Table of Contents

 

 

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, 2012

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

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

 

 

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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 to Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   ¨    Accelerated filer   x
Non-accelerated filer   ¨  (Do not check if a small reporting company)    Smaller reporting company   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x.

Number of shares of Common Stock, $.01 Par Value, outstanding at October 19, 2012, was 12,661,474.

 

 

 


Table of Contents

TABLE OF CONTENTS – THIRD QUARTER 2012 FORM 10-Q REPORT

 

              Page
Number
 
     PART I – Financial Information   
Item    1.   Financial Statements      1   
Item    2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations      18   
Item    3.   Quantitative and Qualitative Disclosures About Market Risk      31   
Item    4.   Controls and Procedures      31   
     PART II – Other Information   
Item    1.   Legal Proceedings      32   
Item    1A.   Risk Factors      32   
Item    2.   Unregistered Sales of Equity Securities and Use of Proceeds      32   
Item    3.   Defaults Upon Senior Securities      32   
Item    4.   Mine Safety Disclosures      32   
Item    5.   Other Information      32   
Item    6.   Exhibits      33   
Signatures        34   


Table of Contents

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated Balance Sheets

 

(Thousands of dollars)

 

     (Unaudited)
Sept. 30,
2012
    December 31,
2011
 

Assets

    

Current assets

    

Cash and cash equivalents

   $ 4,690        3,291   

Trade accounts receivable, net of allowance for doubtful accounts of $91 and $65, respectively

     6,073        4,821   

Other receivables

     49        1   

Inventories

     5,437        4,353   

Prepaid expenses and other current assets

     3,127        3,862   
  

 

 

   

 

 

 

Total current assets

     19,376        16,328   

Investment in real estate held for development and sale

     55,855        57,408   

Investment in Del-Tin Fiber

     7,605        7,113   

Other investments and noncurrent receivables

     705        885   

Timber and timberlands – net

     228,799        228,274   

Property, plant, and equipment – net

     28,003        30,187   

Deferred charges and other assets

     1,272        1,675   
  

 

 

   

 

 

 

Total assets

   $ 341,615        341,870   
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities

    

Trade accounts payable

   $ 4,554        1,867   

Current maturities of long-term debt

     555        1,111   

Accrued taxes other than income taxes

     1,988        1,971   

Income taxes payable

     342        —     

Deferred revenues and other accrued liabilities

     10,834        7,761   
  

 

 

   

 

 

 

Total current liabilities

     18,273        12,710   

Long-term debt, excluding current maturities

     53,000        64,000   

Deferred tax liabilities – net

     1,022        1,211   

Other noncurrent liabilities

     35,642        36,826   

Commitments and contingencies

     —          —     

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

     81,869        80,842   

Retained earnings

     166,204        163,170   

Treasury stock

     (5,362     (7,288

Accumulated other comprehensive loss

     (9,161     (9,729
  

 

 

   

 

 

 

Total stockholders’ equity

     233,678        227,123   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 341,615        341,870   
  

 

 

   

 

 

 

See accompanying notes to consolidated financial statements.

 

1


Table of Contents

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,
 
     2012     2011     2012     2011  

Net sales

   $ 36,499        31,371        104,243        93,034   
  

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses

        

Cost of sales

     23,564        22,222        69,750        66,065   

Depreciation, amortization, and cost of fee timber harvested

     2,698        3,302        8,321        9,370   

General and administrative expenses

     5,133        3,731        13,675        11,346   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     31,395        29,255        91,746        86,781   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     5,104        2,116        12,497        6,253   

Equity in earnings of Del-Tin Fiber

     510        39        602        906   

Interest income

     7        17        13        34   

Interest and other debt expense, net of capitalized interest

     (1,003     (1,065     (3,074     (3,004

Other income/(expense)

     (13     (43     41        32   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     4,605        1,064        10,079        4,221   

Income tax expense

     (1,387     (344     (3,248     (1,354
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 3,218        720        6,831        2,867   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per common share

        

Basic

   $ .25        .06        .54        .23   

Diluted

   $ .25        .06        .54        .23   

Dividends per common share

        

Paid

   $ .075        .075        .225        .225   

Declared

   $ .075        .075        .300        .300   

Weighted average common shares outstanding (thousands)

        

Basic

     12,533        12,461        12,521        12,442   

Diluted

     12,566        12,496        12,560        12,537   

See accompanying notes to consolidated financial statements.

 

2


Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(Unaudited)

 

(Thousands of dollars)

 

     Nine Months Ended
September 30,
 
     2012     2011  

Net income

   $ 6,831        2,867   
  

 

 

   

 

 

 

Other comprehensive income/(loss)

    

Items related to employee benefit plans:

    

Reclassification adjustment for gains/(losses) included in net income:

    

Amortization of prior service cost1

     6        6   

Amortization of actuarial loss2

     1,078        116   

Amortization of plan amendment3

     (149     (149

Income tax benefit/(expense) related to items of other comprehensive income

     (367     11   
  

 

 

   

 

 

 

Other comprehensive income/(loss)

     568        (16
  

 

 

   

 

 

 

Comprehensive income

   $ 7,399        2,851   
  

 

 

   

 

 

 

 

1 

Related tax effect is $(2) and $(2) for 2012 and 2011, respectively.

2 

Related tax effect is $(424) and $(46) for 2012 and 2011, respectively.

3 

Related tax effect is $59 and $59 for 2012 and 2011, respectively.

See accompanying notes to consolidated financial statements.

 

3


Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

 

(Thousands of dollars)

 

     Nine Months Ended
September 30,
 
     2012     2011  

Operating activities

    

Net income

   $ 6,831        2,867   

Adjustments to reconcile net income to net cash provided by operating activities

    

Depreciation, amortization, and cost of fee timber harvested

     8,321        9,370   

Deferred income taxes

     (552     1,409   

Real estate development expenditures

     (1,088     (1,160

Real estate costs recovered upon sale

     1,901        1,306   

Timberland costs recovered upon sale

     370        741   

Equity in earnings of Del-Tin Fiber

     (602     (906

Stock-based compensation expense

     1,716        1,562   

Net increase in liabilities for pension and other postretirement benefits

     1,241        1   

Net decrease in deferred compensation for stock-based liabilities

     (281     (404

Decrease in operating working capital other than cash and cash equivalents

     3,879        715   

Other – changes in assets and liabilities

     (742     (1,075
  

 

 

   

 

 

 

Net cash provided by operating activities

     20,994        14,426   
  

 

 

   

 

 

 

Investing activities

    

Capital expenditures requiring cash, excluding real estate development

     (7,095     (8,835

Net change in purchased stumpage inventory

     33        (1,266

Advances to Del-Tin Fiber

     (1,715     (1,672

Repayments from Del-Tin Fiber

     1,825        2,725   

Net change in funds held by trustee

     271        —     

Other – net

     662        593   
  

 

 

   

 

 

 

Net cash required by investing activities

     (6,019     (8,455
  

 

 

   

 

 

 

Financing activities

    

Proceeds from borrowings

     3,000        10,500   

Repayments of notes payable and long-term debt

     (14,556     (13,555

Treasury stock purchases

     (19     (55

Common stock dividends paid

     (2,848     (2,829

Proceeds from stock option exercises

     693        1,488   

Excess tax benefits from stock-based compensation expense

     546        630   

Deferred financing costs

     —          (1,094

Other – net

     (392     (520
  

 

 

   

 

 

 

Net cash required by financing activities

     (13,576     (5,435
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     1,399        536   

Cash and cash equivalents at January 1

     3,291        3,831   
  

 

 

   

 

 

 

Cash and cash equivalents at September 30

   $ 4,690        4,367   
  

 

 

   

 

 

 

See accompanying notes to consolidated financial statements.

 

4


Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity

(Unaudited)

 

(Thousands of dollars)

 

     Nine Months Ended
September 30,
 
     2012     2011  

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 2012 and 2011

     128        128   
  

 

 

   

 

 

 

Capital in excess of par value

    

Balance at beginning of period

     80,842        79,081   

Exercise of stock options

     88        67   

Stock-based compensation expense

     1,716        1,562   

Restricted stock awards

     (1,393     (1,456

Tax effect of stock awards

     563        686   

Restricted stock forfeitures

     53        47   
  

 

 

   

 

 

 

Balance at end of period

     81,869        79,987   
  

 

 

   

 

 

 

Retained earnings

    

Balance at beginning of period

     163,170        164,286   

Net income

     6,831        2,867   

Common stock dividends declared

     (3,797     (3,773
  

 

 

   

 

 

 

Balance at end of period

     166,204        163,380   
  

 

 

   

 

 

 

Treasury stock

    

Balance at beginning of period – 208,296 and 308,846 shares, respectively

     (7,288     (10,758

Shares purchased – 267 and 869 shares, respectively

     (19     (55

Forfeited restricted stock – 785 and 877 shares, respectively

     (53     (47

Shares issued for incentive plans – 56,943 and 82,446 shares, respectively

     1,998        2,877   
  

 

 

   

 

 

 

Balance at end of period – 152,405 and 228,146 shares, respectively

     (5,362     (7,983
  

 

 

   

 

 

 

Accumulated other comprehensive loss

    

Balance at beginning of period

     (9,729     (2,726

Change in other comprehensive income/(loss), net of tax

     568        (16
  

 

 

   

 

 

 

Balance at end of period

     (9,161     (2,742
  

 

 

   

 

 

 

Total stockholders’ equity

   $ 233,678        232,770   
  

 

 

   

 

 

 

See accompanying notes to consolidated financial statements.

 

5


Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 1 – Accounting Policies

Basis of Presentation

The consolidated financial statements have been prepared by Deltic Timber Corporation (the “Company” or “Deltic”). Certain information and accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations of the Securities and Exchange Commission. Although management of the Company believes the disclosures contained herein are adequate to make the information presented not misleading, these consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2011. Preparation of consolidated financial statements requires management to make estimates and assumptions. These estimates and assumptions affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Management believes the accompanying consolidated financial statements contain all adjustments, including normal recurring accruals and adjustments, which in the opinion of management are necessary to present fairly its financial position as of September 30, 2012, and the results of its operations and cash flows for the three months and nine months ended September 30, 2012 and 2011. These consolidated financial statements are not necessarily indicative of results to be expected for the full year. The Company has evaluated subsequent events through the date the financial statements were issued.

Note 2 – Inventories

Inventories at the balance sheet dates consisted of the following:

 

(Thousands of dollars)    Sept. 30,
2012
     Dec. 31,
2011
 

Logs

   $ 1,278         1,100   

Lumber

     3,731         2,925   

Materials and supplies

     428         328   
  

 

 

    

 

 

 
   $ 5,437         4,353   
  

 

 

    

 

 

 

 

6


Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

Note 3 – Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets at the balance sheet dates consisted of the following:

 

(Thousands of dollars)    Sept. 30,
2012
     Dec. 31,
2011
 

Short-term deferred tax assets

   $ 2,175         2,180   

Refundable income taxes

     14         1,050   

Prepaid expenses

     476         196   

Other current assets

     462         436   
  

 

 

    

 

 

 
   $ 3,127         3,862   
  

 

 

    

 

 

 

Note 4 – Investment in Del-Tin Fiber

The Company owns 50 percent of the membership of Del-Tin Fiber LLC (“Del-Tin Fiber”), which operates a medium density fiberboard (“MDF”) plant near El Dorado, Arkansas. The Company’s membership in Del-Tin Fiber is discussed in more detail in Note 4 – Investment in Del-Tin Fiber, in the Company’s 2011 annual report on Form 10-K.

On August 26, 2004, the Company executed a guarantee agreement in connection with the refinancing of the debt of Del-Tin Fiber’s long-term bond obligation. Del-Tin Fiber issued a letter of credit in support of the bond obligation and both Deltic and the other joint venture partner agreed to guarantee Del-Tin Fiber’s performance under the letter of credit since inception. The Company’s guarantee under the letter of credit expires on August 31, 2016. In connection with the issuance of Deltic’s original guarantee of the letter of credit, the fair value of the guarantee of the bonds was determined to be de minimus. In reviewing the payment and performance risk associated with this guarantee, Deltic continues to consider the risk minimal based on Del-Tin Fiber’s balance sheet, past performance, and length of time remaining on the guarantee. On February 13, 2012, International Paper Company completed its acquisition of Temple-Inland, Inc., Deltic’s joint venture partner in Del-Tin Fiber. Temple-Inland, Inc. is now a wholly owned subsidiary of International Paper Company. The acquisition did not change the operating agreement of Del-Tin Fiber.

At September 30, 2012, and December 31, 2011, the Company’s share of the underlying net assets of Del-Tin Fiber exceeded its investment by $14,355,000 and $14,958,000, respectively. The difference relates primarily to the Company’s write-off of its carrying amount for its investment in Del-Tin Fiber as of December 31, 2002, which was not recorded by Del-Tin Fiber. The equity in earnings of Del-Tin Fiber recognized by the Company exceeds its ownership percentage of Del-Tin Fiber’s earnings because the difference in basis between the Company and Del-Tin Fiber is being adjusted to account for Del-Tin Fiber’s operating results as if it were a consolidated subsidiary.

 

7


Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

Note 4 – Investment in Del-Tin Fiber (cont.)

 

The financial position for Del-Tin Fiber as of the balance sheet dates and results of operations consisted of the following:

Condensed Balance Sheet Information

 

(Thousands of dollars)    Sept. 30,
2012
     Dec. 31,
2011
 

Current assets

   $ 9,967         7,362   

Property, plant, and equipment – net

     65,855         68,480   

Other noncurrent assets

     195         217   
  

 

 

    

 

 

 

Total assets

   $ 76,017         76,059   
  

 

 

    

 

 

 

Current liabilities

   $ 3,096         2,916   

Long-term debt

     29,000         29,000   

Members’ capital

     43,921         44,143   
  

 

 

    

 

 

 

Total liabilities and members’ capital

   $ 76,017         76,059   
  

 

 

    

 

 

 

Condensed Income Statement Information

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
(Thousands of dollars)    2012     2011     2012     2011  

Net sales

   $ 16,560        15,087        47,082        45,125   
  

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses

        

Cost of sales

     13,774        13,151        40,362        37,932   

Depreciation

     1,394        1,467        4,505        4,282   

General and administrative expenses

     588        546        1,744        1,703   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     15,756        15,164        46,611        43,917   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income/(loss)

     804        (77     471        1,208   

Interest income

     73        61        192        169   

Interest and other debt expense

     (223     (223     (605     (737

Other loss

     (37     (61     (60     (41
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income/(loss)

   $ 617        (300     (2     599   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

 

8


Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

Note 5 – Timber and Timberlands

Timber and timberlands at the balance sheet dates consisted of the following:

 

(Thousands of dollars)    Sept. 30,
2012
    Dec. 31,
2011
 

Purchased stumpage inventory

   $ 2,028        2,062   

Timberlands

     93,469        93,714   

Fee timber

     237,893        233,029   

Logging facilities

     2,601        2,601   
  

 

 

   

 

 

 
     335,991        331,406   

Less accumulated cost of fee timber harvested and facilities depreciation

     (107,975     (104,284
  

 

 

   

 

 

 

Strategic timber and timberlands

     228,016        227,122   

Non-strategic timber and timberlands

     783        1,152   
  

 

 

   

 

 

 
   $ 228,799        228,274   
  

 

 

   

 

 

 

In 1999, the Company initiated a program to identify and sell non-strategic timberlands and use the sales proceeds to purchase pine timberlands that are strategic to its operations. In 2008, Deltic identified approximately 10,000 acres of non-strategic timberlands that existed within its timberlands base to be sold. Other non-strategic acreage exists within the Company’s land base, but Deltic has not completely identified the number of acres that fit within this category. As the Company identifies these acres and determines that they are either smaller tracts of pine timberlands that cannot be strategically managed or tracts of hardwood bottomland that cannot be converted into pine growing acreage, they will be sold. As of September 30, 2012, approximately 1,714 acres of these lands were available for sale. Included in the Woodlands operating income are gains from sales of non-strategic timberland of $305,000 and $670,000 for the three months ended September 30, 2012, and 2011, respectively, and $942,000 and $1,688,000 for the nine months ended September 30, 2012 and 2011, respectively.

Note 6 – Property, Plant, and Equipment

Property, plant, and equipment at the balance sheet dates consisted of the following:

 

(Thousands of dollars)    Sept. 30,
2012
    Dec. 31,
2011
 

Land

   $ 357        357   

Land improvements

     6,317        6,141   

Buildings and structures

     13,980        13,876   

Machinery and equipment

     101,980        100,211   
  

 

 

   

 

 

 
     122,634        120,585   

Less accumulated depreciation

     (94,631     (90,398
  

 

 

   

 

 

 
   $ 28,003        30,187   
  

 

 

   

 

 

 

 

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Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

Note 7 – Income Taxes

The Company’s effective tax rate for the three months and nine months ended September 30, 2012, was 30 percent and 32 percent, respectively. The effective tax rate benefitted this period from the reversal, due to the statute of limitations, of approximately $151,000 in uncertain tax liabilities that arose in 2008. If the Company were to prevail on all unrecognized tax benefits recorded on the balance sheet, approximately $780,000 would benefit the effective rate. In addition, it is the Company’s policy to recognize interest expense related to unrecognized tax benefits in interest expense and penalties in other expenses. During the nine months ended September 30, 2012, the Company recognized $122,000 in interest expense from these items. The Company had approximately $387,000 accrued in deferred revenues and other accrued liabilities for interest and penalties at September 30, 2012.

The Company is no longer subject to U.S. federal and state examinations by tax authorities for years before 2009.

Note 8 – Deferred Revenue and Other Accrued Liabilities

Deferred revenues and other accrued liabilities at the balance sheet dates consisted of the following:

 

(Thousands of dollars)    Sept. 30,
2012
     Dec. 31,
2011
 

Deferred revenues – current

   $ 4,648         4,027   

Dividend payable

     950         —     

Vacation accrual

     1,080         954   

Deferred compensation

     1,918         1,421   

All other current liabilities

     2,238         1,359   
  

 

 

    

 

 

 
   $ 10,834         7,761   
  

 

 

    

 

 

 

Note 9 – Other Noncurrent Liabilities

Other noncurrent liabilities at the balance sheet dates consisted of the following:

 

(Thousands of dollars)    Sept. 30,
2012
     Dec. 31,
2011
 

Accumulated postretirement benefit obligation

   $ 11,402         10,904   

Excess retirement plan

     4,422         4,063   

Accrued pension liability

     13,813         14,443   

Deferred revenue – long-term portion

     2,411         3,284   

Uncertain tax positions liability

     1,325         1,771   

Other noncurrent liabilities

     2,269         2,361   
  

 

 

    

 

 

 
   $ 35,642         36,826   
  

 

 

    

 

 

 

 

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Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

Note 10 – Employee and Retiree Benefit Plans

Components of net periodic retirement expense and other postretirement benefits expense consisted of the following:

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
(Thousands of dollars)    2012     2011     2012     2011  

Funded qualified retirement plan

        

Service cost

   $ 408        257        1,223        770   

Interest cost

     405        368        1,216        1,103   

Expected return on plan assets

     (423     (415     (1,269     (1,243

Amortization of prior service cost

     5        4        14        14   

Recognized actuarial loss

     245        35        736        102   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net retirement expense

   $ 640        249        1,920        746   
  

 

 

   

 

 

   

 

 

   

 

 

 

Unfunded nonqualified retirement plan

        

Service cost

   $ 91        16        273        50   

Interest cost

     89        44        266        132   

Amortization of prior service cost

     (3     (2     (8     (8

Recognized actuarial loss

     95        4        287        14   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net retirement expense

   $ 272        62        818        188   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other postretirement benefits

        

Service cost

   $ 114        88        341        263   

Interest cost

     116        113        350        338   

Recognized actuarial loss

     19        —          55        —     

Amortization of plan amendment

     (50     (50     (149     (149
  

 

 

   

 

 

   

 

 

   

 

 

 

Net other postretirement benefits expense

   $ 199        151        597        452   
  

 

 

   

 

 

   

 

 

   

 

 

 

The Company made contributions to its qualified defined benefit pension plan of $1,800,000 during the nine months ended September 30, 2012. The Moving Ahead for Progress in the 21st Century Act, (“MAP-21”) became law on July 6, 2012, and provides significant short-term funding relief to sponsors of defined benefit pension plans. Deltic expects to utilize techniques allowed by MAP-21 to determine the level of cash payments to be made in the fourth quarter of 2012. The expected long-term rate of return on pension plan assets is 7.50 percent.

 

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Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

Note 11 – Stock-Based Compensation

The Consolidated Statement of Income for the three months ended September 30, 2012 and 2011, included $581,000 and $528,000, respectively, of stock-based compensation expense reflected in general and administrative expenses. For the nine months ended September 30, 2012 and 2011, the amounts were $1,716,000 and $1,562,000, respectively.

Assumptions for the valuation of 2012 stock options and restricted stock performance units consisted of the following:

 

     2012  

Expected term of options (in years)

     6.27   

Weighted expected volatility

     38.78

Dividend yield

     .61

Risk-free interest rate –performance restricted shares

     .60

Risk-free interest rate – options

     2.00

Stock price as of valuation date

   $ 67.67   

Restricted performance share valuation

   $ 90.61   

Grant date fair value – stock options

   $ 24.92   

Stock Options – A summary of stock options as of September 30, 2012, and changes during the nine-month period then ended are presented below:

 

Options

   Shares     Weighted
Average
Exercise
Price
     Weighted
Average
Remaining
Contractual
Term (Years)
     Aggregate
Intrinsic
Value

($000)
 

Outstanding at January 1, 2012

     128,095      $ 49.39         

Granted

     26,527        67.67         

Exercised

     (17,224     40.22         

Forfeited

     (784     50.44         
  

 

 

         

Outstanding at September 30, 2012

     136,614      $ 54.09         6.8       $ 1,590   
  

 

 

   

 

 

    

 

 

    

 

 

 

Exercisable at September 30, 2012

     67,931      $ 50.29         5.3       $ 1,017   
  

 

 

   

 

 

    

 

 

    

 

 

 

The aggregate intrinsic value in the table above is the sum of the amounts by which the quoted market price of the Company’s common stock exceeded the exercise price of the options at September 30, 2012, for those options for which the quoted market price was in excess of the exercise price. This amount changes over time based on changes in the fair market value of the Company’s stock. As of September 30, 2012, there was $1,074,000 of unrecognized compensation cost related to nonvested stock options. That cost is expected to be recognized over a weighted-average period of 1.7 years.

 

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Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

Note 11 – Stock-Based Compensation (cont.)

 

Restricted Stock and Restricted Stock Units – A summary of nonvested restricted stock as of September 30, 2012, and changes during the nine-month period then ended are presented below:

 

Nonvested Restricted Stock

   Shares     Weighted
Average
Grant-Date
Fair Value
 

Nonvested at January 1, 2012

     75,395      $ 48.18   

Granted

     18,172        67.67   

Vested

     (16,791     51.37   

Forfeited

     (368     49.42   
  

 

 

   

Nonvested at September 30, 2012

     76,408      $ 52.10   
  

 

 

   

As of September 30, 2012, there was $2,074,000 of unrecognized compensation cost related to nonvested restricted stock. That cost is expected to be recognized over a weighted-average period of 1.8 years.

Performance Units – A summary of nonvested restricted stock performance units as of September 30, 2012, and changes during the nine months then ended are presented below:

 

Nonvested Restricted Stock Performance Units

   Shares     Weighted
Average
Grant-Date
Fair Value
 

Nonvested at January 1, 2012

     49,303      $ 60.06   

Granted

     11,559        90.61   

Vested

     (9,988     53.49   

Forfeited

     (417     63.64   
  

 

 

   

Nonvested at September 30, 2012

     50,457      $ 68.33   
  

 

 

   

As of September 30, 2012, there was $1,951,000 of unrecognized compensation cost related to nonvested restricted stock performance units. That cost is expected to be recognized over a weighted-average period of 1.8 years.

Note 12 – Contingencies

At various times, the Company may be involved in litigation incidental to its operations. Currently, there are no material legal proceedings outstanding.

 

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Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

Note 13 – Fair Value Measurement

Fair Value Measurement Accounting establishes a fair value hierarchy based on the quality of inputs used to measure fair value, with level 1 being the highest quality and level 3 being the lowest quality. Level 1 inputs are quoted prices in active markets on identical assets or liabilities. Level 2 inputs are observable inputs other than quoted prices included in Level 1. Level 3 inputs are unobservable inputs which reflect assumptions about pricing by market participants.

Following is a description of the valuation methodologies used for assets and liabilities measured at fair value.

Nonqualified employee savings plan: Consists of mutual funds, which are valued at the net asset value of shares held by the plan at the balance sheet date, at quoted market prices.

The fair value measurements for the Company’s financial liabilities accounted for at fair value on a recurring basis at September 30, 2012, are presented in the following table:

 

            Fair Value Measurements at Reporting Date Using  
     Sept. 30,      Quoted Prices in
Active Markets
for Identical
Liabilities
Inputs
     Significant
Observable
Inputs
     Significant
Unobservable
Inputs
 
(Thousands of dollars)    2012      Level 1      Level 2      Level 3  

Liabilities

           

Nonqualified employee savings plan

   $ 905         905         —           —     

Long-term debt, including current liabilities – The fair value is estimated by discounting the scheduled debt payment streams to present value based on market rates for which the Company’s debt could be valued.

The following table presents the carrying amounts and estimated fair values of financial instruments at September 30, 2012 and 2011. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. The table excludes financial instruments included in current assets and liabilities, except current maturities of long-term debt, all of which have fair values approximating carrying values.

 

     September 30, 2012      September 30, 2011  
(Thousands of dollars)    Carrying
Amount
     Estimated
Fair Value
     Carrying
Amount
     Estimated
Fair Value
 

Financial liabilities

           

Long-term debt, including current liabilities

   $ 53,555         58,103         63,667         70,078   

 

14


Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

Note 14 – Earnings per Common Share

The amounts used in computing earnings per share and the effect on income and weighted average number of shares outstanding of dilutive potential common stock consisted of the following:

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
(Thousands, except per share amounts)    2012      2011      2012      2011  

Net earnings allocated to common stock

   $ 3,186         714         6,764         2,841   

Net earnings allocated to participating securities

     32         6         67         26   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income allocated to common stock and participating securities

   $ 3,218         720         6,831         2,867   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average number of common shares used in basic EPS

     12,533         12,461         12,521         12,442   

Effect of dilutive stock awards

     33         35         39         95   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average number of common shares and dilutive potential common stock used in EPS assuming dilution

     12,566         12,496         12,560         12,537   
  

 

 

    

 

 

    

 

 

    

 

 

 

Earnings per common share

           

Basic

   $ .25         .06         .54         .23   

Assuming dilution

   $ .25         .06         .54         .23   

Diluted earnings per common share is computed using the weighted average number of shares determined for the basic earnings per common share computation plus the diluted effect of common stock equivalents using the treasury stock method. Options to purchase shares, which were outstanding but not included in the computation of diluted earnings per share because the options were anti-dilutive, were 53,205 and 26,993 for the three months and nine months ended September 30, 2012 and 2011, respectively. Restricted performance shares, which were outstanding but not included in the computation of diluted earnings per share because they do not meet the metrics established for awarding, were 38,152 and 14,013 at September 30, 2012 and 2011, respectively.

 

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Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

Note 15 – Supplemental Cash Flow Disclosures

Additional information concerning cash flows is as follows:

 

     Nine Months Ended
September 30,
 
(Thousands of dollars)    2012     2011  

Income taxes paid in cash

   $ 2,171        779   

Interest paid

     1,894        2,056   

Interest capitalized

     (21     (61

Non-cash investing and financing activities excluded from the statement of cash flows include:

 

     Nine Months Ended
September 30,
 
(Thousands of dollars)    2012      2011  

Issuance of restricted stock

   $ 1,393         1,456   

Land exchanges and capital expenditures accrued, not paid

     126         318   

(Increases)/decreases in working capital, other than cash and cash equivalents, consisted of the following:

 

     Nine Months Ended
September 30,
 
(Thousands of dollars)    2012     2011  

Trade accounts receivable

   $ (1,252     (1,264

Other receivables

     (48     47   

Inventories

     (1,084     736   

Prepaid expenses and other current assets

     740        (669

Trade accounts payable

     2,561        1,608   

Accrued taxes other than income taxes

     17        18   

Income taxes payable

     342        170   

Deferred revenues and other accrued liabilities

     2,603        69   
  

 

 

   

 

 

 
   $ 3,879        715   
  

 

 

   

 

 

 

Included in cash flows from other operating activities was a decrease in deferred mineral lease rental revenue of $1,278,000 during the nine months ended September 30, 2012. This decrease was due to the amortization of prior year deferred mineral lease rental receipts in excess of current year receipts. For the period ended September 30, 2011 there was a decrease in deferred mineral lease rental revenue of $166,000 due to amortization of deferred mineral lease rental revenue in excess of receipts. Total cash payments received were $377,000 in the nine months ended September 30, 2012 and $1,761,000 in the same period of 2011. This deferred mineral lease rental amount is being recognized over the term of the lease.

 

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Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

Note 16 – Business Segments

Information about the Company’s business segments consisted of the following:

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
(Thousands of dollars)    2012     2011     2012     2011  

Net sales

        

Woodlands

   $ 9,494        11,372        28,820        31,850   

Mills

     27,546        22,352        78,057        64,576   

Real Estate

     3,187        2,290        8,425        9,426   

Eliminations*

     (3,728     (4,643     (11,059     (12,818
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 36,499        31,371        104,243        93,034   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

        

Operating income/(loss)

        

Woodlands

   $ 4,734        6,079        14,202        16,378   

Mills

     5,574        496        12,864        364   

Real Estate

     (644     (946     (1,712     (75

Corporate

     (4,887     (3,497     (12,886     (10,564

Eliminations

     327        (16     29        150   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     5,104        2,116        12,497        6,253   

Equity in earnings of Del-Tin Fiber

     510        39        602        906   

Interest income

     7        17        13        34   

Interest and other debt expense, net of capitalized interest

     (1,003     (1,065     (3,074     (3,004

Other income/(loss)

     (13     (43     41        32   
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 4,605        1,064        10,079        4,221   
  

 

 

   

 

 

   

 

 

   

 

 

 

Depreciation, amortization, and cost of fee timber harvested

        

Woodlands

   $ 1,272        1,693        3,841        4,439   

Mills

     1,307        1,482        4,117        4,546   

Real Estate

     94        107        284        322   

Corporate

     25        20        79        63   
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 2,698        3,302        8,321        9,370   
  

 

 

   

 

 

   

 

 

   

 

 

 

Capital expenditures

        

Woodlands

   $ 1,223        3,246        4,652        6,160   

Mills

     611        366        2,394        2,648   

Real Estate

     521        685        1,259        1,418   

Corporate

     —          13        4        87   
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 2,355        4,310        8,309        10,313   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

* Primarily intersegment sales of timber from Woodlands to Mills.

 

17


Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Overview

The Company reported net income of $3.2 million for the third quarter of 2012, compared to $.8 million for the same period of 2011. The increase was due primarily to improved operating results for Deltic’s Mills segment, which reported operating income of $5.6 million, an improvement of $5.1 million over the third quarter of 2011. The Mills segment continued to benefit from an improved lumber market, which resulted in a $70 per thousand board feet (“MBF”) increase in the average lumber sales price along with an increase in lumber sales volume over last year’s third quarter. The Woodlands segment reported operating income of $4.7 million, a decrease of $1.4 million from the $6.1 million reported a year ago. This was primarily due to lower revenues from the harvest of pine sawtimber, decreased oil and gas royalty revenue, and reduced sales of non-strategic recreational-use hardwood bottomland acreage. The Real Estate segment had an operating loss of $.6 million compared to a loss of $1 million a year ago. The Corporate segment’s general and administrative expenses were $1.4 million higher in the current-year quarter than in the same period a year ago, which was mainly due to increased pension and post-retirement benefit obligations caused by lower interest rates and higher employee incentive plan expenses resulting from the improved financial results for 2012. Deltic owns a 50 percent interest in Del-Tin Fiber LLC (“Del-Tin Fiber”) and recorded equity in earnings of $.5 million in the current period, compared to breakeven results in the prior year period. The improvement was mainly due to a 10 percent higher average sales price for medium density fiberboard (“MDF”) sold.

Deltic is primarily a wood products producer operating in a commodity-based business environment, but also has a significant diversification in real estate development on a portion of its land holdings. The Company’s operations and financial results are influenced by a number of key factors which include, but are not limited to, general economic conditions, U.S. employment levels, interest rates, credit availability and associated costs, lumber and building product imports, foreign exchange rates, housing starts, new and existing home inventories, residential and commercial real estate foreclosures, residential and commercial repair and remodeling, commercial construction, industry capacity and production levels, the availability of raw materials, natural gas pricing, and weather conditions. These factors, combined with the Company’s relative size, give it little or no control over pricing or demand levels for its lumber products in a commodity market. Recent economic data suggests the housing recovery may be gaining momentum with the help of low mortgage interest rates. However, persistent employment concerns and weak consumer confidence continue to bring uncertainty to the current business environment. The Company utilizes its vertical integration strategy by managing Deltic’s diverse assets to capture market-driven opportunities while increasing hourly productivity and reducing controllable costs and expenses.

In the third quarter of 2012, the pine sawtimber harvest was 175,515 tons, a decrease of 32,262 tons when compared to the 2011 third quarter harvest of 207,777 tons. This was a planned reduction in harvest for the third quarter after benefitting from favorable logging conditions in the first half of 2012 that had the Company slightly ahead of its 2012 sustainable-yield plan. The average sales price for pine sawtimber decreased slightly, to $21 per ton, from the 2011 third quarter per-ton price of $22. The third quarter of 2012’s pine pulpwood harvest of 107,494 tons was a decrease of 21,680 tons from the third quarter of 2011. The average sales price for pine pulpwood was $8 per ton for both quarters. The Company sold 195 acres of non-strategic recreational-use hardwood bottomland at an average sales price of $2,042 per acre during the third quarter of 2012 compared to sales of 500 acres at an average price of $1,821 per acre for the same period of 2011. Hunting lease income was $.6 million for the third quarter of 2012 and $.5 million in the same period of 2011.

In addition, the Woodlands segment’s financial results include other benefits from land ownership, such as revenues from mineral lease rentals, mineral royalties, and land easements. In the third quarter of both 2012 and 2011, oil and gas lease rental income was $.6 million. Oil and gas royalty payments, which are primarily from the Fayetteville Shale Play, were $.7 million in the third quarter of 2012, a $.4 million decrease from 2011, due to reduced natural gas production and lower natural gas prices that was partially offset by an increase in the number of producing wells. The ultimate benefit to Deltic from mineral leases remains speculative and unknown and is contingent on the level of natural gas and crude oil prices and the successful completion of producing wells drilled on Company lands.

 

18


Table of Contents

The average lumber sales price in the third quarter of 2012 was $321 per thousand board feet, an increase of $70 per thousand board feet, or 28 percent, when compared to the same period in 2011. The Mills segment sold 68.3 million board feet (“MMBF”) in the third quarter of 2012, an increase of .4 million board feet when compared to 67.9 million board feet sold in the third quarter a year ago. Additionally, the segment benefitted from lower raw material log costs and higher hourly productivity rates, along with the improved pricing. These factors have enabled the Mills segment to show improved operating results over the third quarter of 2011. However, as with any commodity market, the Company expects the historical lumber market volatility to continue in the future. As such, Deltic will continue to adjust production levels to meet market demand.

The Real Estate segment sold 20 residential lots during the third quarter of 2012 compared to eight in the third quarter of 2011. The average per-lot sales price was $71,300 in the third quarter of 2012, an increase of $13,500 when compared to the same period of 2011. The higher average per-lot sales price was a result of the mix of lots sold. Though there were no commercial real estate sales in the third quarter of either year, commercial real estate acreage within Chenal Valley continues to receive interest, especially for the property located near “The Promenade at Chenal”, an upscale shopping center that includes internationally branded retailers and property located adjacent to St. Vincent West, a medical center that opened recently. However, due to the unpredictable nature of commercial real estate sales activity, the Company cannot predict the timing of closing of any commercial real estate transaction.

Operating results for Del-Tin Fiber are affected by the overall MDF market and the plant’s operating performance. Equity in earnings of Del-Tin Fiber was $.5 million during the third quarter of 2012, an increase from the breakeven results for the third quarter of 2011. This increase was primarily due to an improved average per-unit sales price, which was partially offset by increased manufacturing costs. Regarding the Company’s equity position in Del-Tin Fiber, Deltic continues to reduce depreciation expense related to the add-back per thousand square feet (“MSF”) manufactured, which relates to the impairment taken by the Company in 2002 that was not recorded at the Del-Tin Fiber level. The difference in basis between the Company and Del-Tin Fiber is being adjusted to account for Del-Tin Fiber’s operating results as if it were a consolidated subsidiary. (For further discussion, refer to Note 4 to the consolidated financial statements.)

 

19


Table of Contents

Results of Operations

Three Months Ended September 30, 2012 Compared with Three Months Ended September 30, 2011

In the following tables, Deltic’s net sales and results of operations are presented for the quarters ended September 30, 2012 and 2011. Explanations of significant variances and additional analyses for the Company’s consolidated and segment operations follow the tables.

 

     Quarter Ended Sept. 30,  
(Millions of dollars, except per share amounts)    2012     2011  

Net sales

    

Woodlands

   $ 9.5        11.4   

Mills

     27.6        22.3   

Real Estate

     3.2        2.3   

Eliminations

     (3.8     (4.7
  

 

 

   

 

 

 

Net sales

   $ 36.5        31.3   
  

 

 

   

 

 

 

Operating income

    

Woodlands

   $ 4.7        6.1   

Mills

     5.6        .5   

Real Estate

     (.6     (1.0

Corporate

     (4.9     (3.5

Eliminations

     .3        .1   
  

 

 

   

 

 

 

Operating income

     5.1        2.2   

Equity in earnings of Del-Tin Fiber

     .5        —     

Interest and other debt expense

     (1.0     (1.1

Other income/(loss)

     (.1     —     

Income taxes

     (1.3     (.3
  

 

 

   

 

 

 

Net income

   $ 3.2        .8   
  

 

 

   

 

 

 

Earnings per common share

    

Basic and diluted

   $ .25        .06   

Consolidated

The $2.4 million increase in net income in the current year quarter was due to improved operating results for the Mills and Real Estate segments, along with higher equity in earnings of Del-Tin Fiber. These improvements were partially offset by reduced operating income for the Woodlands segment, and higher Corporate general and administrative expenses. In addition, income tax expense increased in 2012 due to higher pretax income.

Operating income increased $2.9 million compared to the third quarter of 2011. The Woodlands segment’s operating income was $1.4 million less than the prior year primarily due to fewer tons of pine sawtimber harvested and a lower per-ton sales price, reduced oil and gas royalty revenues, and a decrease in the number of acres of non-strategic recreational-use hardwood bottomland sold. The Mills segment’s operating income improved $5.1 million in the current-year quarter due to a higher average sales price per MBF of lumber sold, and a lower per-unit manufacturing cost. The Real Estate segment’s results increased $.4 million, primarily due to increased sales of residential lots in 2012. Equity in earnings of Del-Tin Fiber increased by $.5 million and Corporate expense increased $1.4 million due to higher general and administrative expenses.

 

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Woodlands

Selected financial and statistical data for the Woodlands segment is shown in the following table.

 

     Quarter Ended Sept. 30,  
     2012      2011  

Net sales (millions of dollars)

     

Pine sawtimber

   $ 3.8         4.6   

Pine pulpwood

     .9         1.1   

Hardwood sawtimber

     .1         .1   

Hardwood pulpwood

     .3         .2   

Oil and gas lease rentals

     .6         .6   

Oil and gas royalties

     .7         1.1   

Hunting leases

     .6         .5   

Sales volume (thousands of tons)

     

Pine sawtimber

     175.5         207.8   

Pine pulpwood

     107.5         129.2   

Hardwood sawtimber

     3.3         3.0   

Hardwood pulpwood

     23.2         33.3   

Sales price (per ton)

     

Pine sawtimber

   $ 21         22   

Pine pulpwood

     8         8   

Hardwood sawtimber

     37         31   

Hardwood pulpwood

     13         7   

Timberland

     

Net sales (millions of dollars)

   $ .4         .9   

Sales volume (acres)

     195         500   

Sales price (per acre)

   $ 2,042         1,821   

Net sales decreased $1.9 million in the third quarter of 2012 when compared to the 2011 third quarter. Sales of pine sawtimber decreased $.8 million due to a 16 percent, or 32,262 ton, decrease in the harvest volume of pine sawtimber in the current year quarter. In addition, the average sales price of $21 per ton was five percent less than in 2011’s third quarter. Pine pulpwood sales revenue decreased $.2 million from the 2011 third quarter due to fewer tons harvested. Oil and gas royalty revenue decreased $.4 million in the third quarter for 2012 due to reduced natural gas production and lower prices for natural gas, which was partially offset by an increase in the number of producing wells. Sales of timberland decreased $.5 million mainly due to a decrease in the number of acres sold in the 2012 third quarter. Operating income was $4.7 million in the third quarter of 2012 compared to $6.1 million in the third quarter of 2011. This was due to the same factors that affected net sales, but was partially offset by reduced cost of fee timber harvested and cost of timberland sold.

 

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Mills

Selected financial and statistical data for the Mills segment is shown in the following table.

 

     Quarter Ended Sept. 30,  
     2012      2011  

Net sales (millions of dollars)

     

Lumber

   $ 21.9         17.1   

Residual by-products

     4.0         3.9   

Lumber

     

Finished production (MMBF)

     69.1         66.1   

Sales volume (MMBF)

     68.3         67.9   

Sales price (per MBF)

   $ 321         251   

Net sales in the third quarter of 2012 increased $5.3 million, or 24 percent, due to a higher average lumber sales price and an increased lumber sales volume. The average lumber sales price in the third quarter of 2012 increased 28 percent, or $70 per MBF, compared to the third quarter of 2011, and the lumber sales volume increased .4 million board feet. Operating income increased $5.1 million due to the same factors affecting net sales combined with lower raw material log cost and the benefit of improved operating efficiencies.

Real Estate

Selected financial and statistical data for the Real Estate segment is shown in the following table.

 

     Quarter Ended Sept. 30,  
     2012      2011  

Net sales (millions of dollars)

     

Residential lots

   $ 1.4         .5   

Chenal Country Club

     1.6         1.7   

Sales volume

     

Residential lots

     20         8   

Average sales price (thousands of dollars)

     

Residential lots

   $ 71         58   

Net sales for the third quarter of 2012 increased $.9 million from the third quarter of 2011 due to an increase in the number of residential lots sold at a higher average sales price per lot. The current-period operating income was $.4 million more than in 2011 due to the same factors affecting net sales.

Corporate

The $1.4 million increase in Corporate expense was due primarily to higher general and administrative expenses, mainly expenses associated with pension and post-retirement benefits and employee incentive plan expenses resulting from improved financial results for 2012.

 

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Eliminations

Intersegment sales of timber from Deltic’s Woodlands to the Mills segment decreased $.9 million to $3.8 million in 2012. The decrease was due to a lower transfer price and smaller harvest volume from the Woodlands segment’s fee timberlands. Transfer prices are approximately that of market which were higher in the same quarter last year.

Equity in Del-Tin Fiber

For the third quarter of 2012, Deltic’s equity in earnings of Del-Tin Fiber was $.5 million compared to breakeven for the same period of 2011. The $.5 million increase was primarily due to a higher average sales price per MSF sold, but was partially offset by increased manufacturing cost, mainly raw material resin. Additional selected financial and statistical data for Del-Tin Fiber is shown in the following table.

 

     Quarter Ended Sept. 30,  
     2012      2011  

Net sales (millions of dollars)

   $ 16.6         15.1   

Finished production – million square feet (“MMSF”)

     30.3         28.4   

Sales volume (MMSF)

     30.5         30.6   

Sales price (per MSF)

   $ 542         494   

Income Taxes

The effective income tax rate was 30 percent for 2012 and 32 percent for 2011. The decrease in the effective income tax rate was due primarily to permanent differences and the recognition of a tax benefit due to changes in balances of uncertain tax liabilities in 2012 when compared to the same period of 2011.

 

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Nine Months Ended September 30, 2012 Compared with Nine Months Ended September 30, 2011

In the following tables, Deltic’s net sales and results of operations are presented for the nine months ended September 30, 2012 and 2011. Explanations of significant variances and additional analyses for the Company’s consolidated and segment operations follow the tables.

 

     Nine Months Ended Sept. 30,  
     2012     2011  
(Millions of dollars, except per share amounts)             

Net sales

    

Woodlands

   $ 28.8        31.9   

Mills

     78.1        64.5   

Real Estate

     8.4        9.4   

Eliminations

     (11.1     (12.8
  

 

 

   

 

 

 

Net sales

   $ 104.2        93.0   
  

 

 

   

 

 

 

Operating income and net income

    

Woodlands

   $ 14.2        16.4   

Mills

     12.9        .4   

Real Estate

     (1.7     (.1

Corporate

     (12.9     (10.6

Eliminations

     —          .2   
  

 

 

   

 

 

 

Operating income

     12.5        6.3   

Equity in earnings of Del-Tin Fiber

     .6        .9   

Interest and other debt expense

     (3.1     (3.0

Income taxes

     (3.2     (1.3
  

 

 

   

 

 

 

Net income

   $ 6.8        2.9   
  

 

 

   

 

 

 

Earnings per common share

    

Basic and diluted

   $ .54        .23   

Consolidated

Net income in 2012 increased $3.9 million due to improved operating results for the Mills segment, partially offset by reduced financial results for the Woodlands and Real Estate segments, lower equity in earnings of Del-Tin Fiber, and higher Corporate general and administrative expenses. Additionally, income tax expense increased due to higher pretax income.

Operating income increased $6.2 million from 2011. The Woodlands segment decreased $2.2 million in 2012 mainly due to decreased revenues from pine sawtimber sales, reduced oil and gas lease rental and royalty revenue, and fewer sales of non-strategic recreational-use hardwood bottomland. The Mills segment increased $12.5 million in the current year due to a higher average lumber sales price, an increased sales volume, and a lower per-unit manufacturing cost. The Real Estate segment’s operating income decreased $1.6 million from 2011, primarily because there were no sales of commercial real estate in the current year, partially offset by increased residential lot sales activity. Equity in earnings of Del-Tin Fiber decreased year-over-year by $.3 million mainly due to higher raw material costs, and Corporate expense increased $2.3 million due to higher general and administrative expenses.

 

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Woodlands

Selected financial and statistical data for the Woodlands segment is shown in the following table.

 

     Nine Months Ended Sept. 30,  
     2012      2011  

Net sales (millions of dollars)

     

Pine sawtimber

   $ 10.9         12.5   

Pine pulpwood

     3.0         2.9   

Hardwood sawtimber

     .3         .2   

Hardwood pulpwood

     .7         .6   

Oil and gas lease rentals

     1.7         1.9   

Oil and gas royalties

     2.6         3.3   

Hunting leases

     1.7         1.6   

Sales volume (thousands of tons)

     

Pine sawtimber

     505.0         523.1   

Pine pulpwood

     358.4         356.6   

Hardwood sawtimber

     7.7         8.0   

Hardwood pulpwood

     57.3         92.1   

Sales price (per ton)

     

Pine sawtimber

   $ 22         24   

Pine pulpwood

     8         8   

Hardwood sawtimber

     37         31   

Hardwood pulpwood

     13         6   

Timberland

     

Net sales (millions of dollars)

   $ 1.3         2.5   

Sales volume (acres)

     788         1,601   

Sales price (per acre)

     1,681         1,560   

In 2012, net sales decreased $3.1 million from 2011. Sales of pine sawtimber decreased $1.6 million due to a lower average sales price of $22 per ton, an eight percent decrease from 2011’s average of $24 per ton, and to a three percent decrease in harvest volume. Revenues from timberland sales decreased $1.2 million due to fewer acres of recreational-use hardwood bottomland sold in 2012. Oil and gas royalty revenue decreased $.7 million primarily due to lower natural gas prices and reduced production. Operating income was $2.2 million lower in 2012. The decrease was due to the same factors impacting net sales, partially offset by lower cost of fee timber harvested and cost of timberland sold.

Mills

Selected financial and statistical data for the Mills segment is shown in the following table.

 

     Nine Months Ended Sept. 30,  
     2012      2011  

Net sales (millions of dollars)

     

Lumber

   $ 61.9         49.6   

Residual by-products

     12.1         11.1   

 

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     Nine Months Ended Sept. 30,  
     2012      2011  

Lumber

     

Finished production (MMBF)

     204.3         191.5   

Sales volume (MMBF)

     203.7         195.2   

Sales price (per MBF)

   $ 304         254   

Net sales increased $13.6 million in 2012 due to a higher average lumber sales price and an increased sales volume. The average sales price for lumber increased 20 percent from 2011, while the sales volume increased four percent. Total operating income increased $12.5 million year-over-year due to the same factors impacting net sales, combined with lower raw material log cost and the benefit of increased hourly productivity rates.

Real Estate

Selected financial and statistical data for the Real Estate segment is shown in the following table.

 

     Nine Months Ended Sept. 30,  
     2012      2011  

Net sales (millions of dollars)

     

Residential lots

   $ 2.6         1.4   

Commercial acres

     —           2.6   

Speculative homes

     .5         —     

Chenal Country Club

     5.0         5.1   

Sales volume

     

Residential lots

     38         22   

Commercial acres

     —           26   

Speculative homes

     1         —     

Average sales price (thousands of dollars)

     

Residential lots

   $ 70         65   

Commercial acres

     —           101   

Speculative homes

     491         —     

Net sales decreased $1 million due to no sales of commercial acres during the first nine months of 2012, partially offset by an increase in the number of residential lots sold and the sale of a speculative home. The decrease in the Real Estate segment’s operating income was due mainly to the same factors affecting net sales.

Corporate

Operating expenses for Corporate functions were $2.3 million higher in the current year mainly due to increased general and administrative expenses, primarily pension and post-retirement benefits and employee incentive plan expenses resulting from improved financial results for 2012.

Eliminations

2012’s intersegment sales of timber from Deltic’s Woodlands to the Mills segment decreased $1.7 million to $11.1 million. The decrease was mainly due to a lower transfer price for logs coming into Company sawmills from fee timberlands and lower volumes transferred. Logs supplied by the Woodlands segment to Company sawmills are transferred at prices that approximate market.

 

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Equity in Del-Tin Fiber

For the first nine months of 2012, equity in earnings of Del-Tin Fiber was $.6 million, a decrease of $.3 million compared to 2011 due mainly to higher raw material and other manufacturing costs, which were partially offset by a higher per-unit sales price. Additional selected financial and statistical data for Del-Tin Fiber is shown in the following table.

 

     Nine Months Ended Sept. 30,  
     2012      2011  

Net sales (millions of dollars)

   $ 47.1         45.1   

Finished production (MMSF)

     90.8         91.3   

Sales volume (MMSF)

     91.1         91.1   

Sales price (per MSF)

   $ 517         495   

Income Taxes

The effective income tax rate was 32 percent for both nine months ended September 30, 2012, and 2011 and was less than the statutory rate due to permanent tax differences.

Liquidity and Capital Resources

Cash Flows and Capital Expenditures

Net cash provided by operating activities totaled $21 million for the first nine months of 2012 compared to $14.4 million for the same period of 2011. Changes in operating working capital, other than cash and cash equivalents provided cash of $3.9 million in 2012 and $.7 million in 2011. The Company’s accompanying Consolidated Statements of Cash Flows identifies other differences between net income and cash provided by operating activities for each reporting period.

Capital expenditures required cash of $8.2 million in the current-year period and $10 million a year ago. Capital expenditures by segment consisted of the following:

 

     Nine Months Ended
Sept. 30,
 
(Thousands of dollars)    2012     2011  

Woodlands, including land exchanges

   $ 4,652        6,160   

Mills

     2,394        2,648   

Real Estate, including development expenditures

     1,259        1,418   

Corporate

     4        87   
  

 

 

   

 

 

 

Capital expenditures

     8,309        10,313   

Non-cash land exchanges and accrued liabilities

     (126     (318
  

 

 

   

 

 

 

Capital expenditures requiring cash

   $ 8,183        9,995   
  

 

 

   

 

 

 

The net change in purchased stumpage inventory to be utilized in the Company’s sawmilling operations had minimal affect on cash in the nine months ended September 30, 2012 and required cash of $1.3 million in the same period of 2011. Deltic advanced $1.7 million to Del-Tin Fiber, and received repayments of $1.8 million in the first nine months of 2012. This compares to advances of $1.7 million and repayments of $2.7 million from Del-Tin Fiber in the first nine months of 2011. Funds held by trustees to be used for acquisitions of timberland designated as “replacement property” for income tax purposes, as required for tax-deferred exchanges, decreased $.3 million in 2012, while there was no change in 2011. The Company borrowed $3 million and repaid $14.6 million of debt in 2012 and had net repayments of debt of $3.1 million in the first nine months of 2011. The Company incurred $1.1 million in fees to facilitate an amendment and extension of its unsecured and committed revolving credit facility in

 

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2011, while there were no such costs in 2012. Dividends of $2.8 million were paid in 2012 and 2011. Proceeds from exercises of stock options and the related tax benefits were $1.2 million in 2012 and $2.1 million in 2011.

Financial Condition

Working capital totaled $1.1 million at September 30, 2012, and $3.6 million at December 31, 2011. Deltic’s working capital ratio at September 30, 2012 was 1.06 to 1, compared to 1.28 to 1 at the end of 2011. Cash and cash equivalents at the end of the third quarter of 2012 were $4.7 million, an increase of $1.4 million from the December 31, 2011 balance of $3.3 million. Deltic’s long-term debt to stockholders’ equity ratio was .227 to 1 at September 30, 2012 and .282 to 1 at December 31, 2011.

Liquidity

The primary sources of the Company’s liquidity are internally generated funds, access to outside financing, and working capital. The Company’s current strategy for growth continues to emphasize its timberland acquisition program, in addition to expanding lumber production as market conditions allow and developing residential and/or commercial properties at Chenal Valley and Red Oak Ridge.

To facilitate these growth plans, the Company has an agreement with a group of banks, which provides an unsecured and committed revolving credit facility totaling $297.5 million. In addition, the agreement includes an option to request an increase in the amount of aggregate revolving commitments by $50 million. The agreement will expire on September 9, 2015. As of September 30, 2012, $284.5 million was available. The credit agreement contains restrictive covenants, including limitations on the incurrence of debt and requirements to maintain certain financial ratios. (For additional information about the Company’s current financing arrangements, refer to Note 9 to the consolidated financial statements and Note 10 to the consolidated financial statements included in the Company’s 2011 annual report on Form 10-K.)

The table below sets forth the covenants in the credit facility and senior notes payable and status with respect to these covenants as of September 30, 2012 and December 31, 2011.

 

     Covenants
Requirements
    Actual Ratios at
Sept. 30, 2012
    Actual Ratios at
Dec. 31, 2011
 

Leverage ratio should be less than:1

     .60 to 1        .228 to 1        .262 to 1   

Total outstanding debt as a percentage of total debt allowed based on the minimum timber market value covenant:2

     —   2      39.11     43.47

Fixed charge coverage ratio should be greater than:3

     2.50 to 1        4.81 to 1        3.89 to 1   

 

1 

The leverage ratio is calculated as total debt divided by total capital. Total debt includes indebtedness for borrowed money, secured liabilities, obligations in respect of letters of credit, and guarantees. Total capital is the sum of total debt and net worth. Net worth is calculated as total assets minus total liabilities, as reflected on the balance sheet. This covenant is applied at the end of each quarter. The revolving credit facility requirement is for the leverage ratio to be less than .65 to 1.

2 

Timber market value must be greater than 200 percent of total debt (as defined in (1) above.) The timber market value is calculated by multiplying the average price received for sales of timber

 

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  for the preceding four quarters by the current quarter’s ending inventory of timber. This covenant is applied at the end of the quarter on a rolling four-quarter basis. The revolving credit facility requirement is for the timber market value to be greater than 175 percent of total debt (as defined in (1) above.)
3 

The fixed charge coverage ratio is calculated as EBITDA (earnings before interest, taxes, depreciation, depletion, and amortization) increased by non-cash compensation expense and other non-cash expenses and decreased by dividends paid and income tax paid, divided by the sum of interest expense and scheduled principal payments made on debt during the period. This covenant is applied at the end of the quarter on a rolling four-quarter basis. This covenant only applies to the Senior Notes Payable.

Based on management’s current operating projections, the Company believes it will remain in compliance with the debt covenants and have sufficient liquidity to finance operations and pay all obligations. However, depending on market conditions and the possibility of the return of economic deterioration, the Company could request amendments, or waivers for the covenants, or obtain refinancing in future periods. There can be no assurance that the Company will be able to obtain amendments or waivers, or negotiate agreeable refinancing terms should such become needed.

In December 2000, the Company’s Board of Directors authorized a stock repurchase program of up to $10 million of Deltic common stock. In December 2007, the Company’s Board of Directors expanded the program by $25 million. As of September 30, 2012, the Company had expended $14.6 million under this program, with the purchase of 370,530 shares at an average cost of $39.28 per share; no shares have been purchased in 2012, 2011, or 2010, 35,571 shares were purchased in 2009, 129,996 shares were purchased in 2008, 101,914 shares were purchased under this program in 2007, and seven shares in 2006. In its two previous repurchase programs, Deltic purchased 479,601 shares at an average cost of $20.89 and 419,542 shares at a $24.68 per share average cost, respectively.

Off-Balance Sheet Arrangements, Contractual Obligations, and Commitments

On August 26, 2004, Del-Tin Fiber refinanced its existing long-term debt by entering into a credit agreement consisting of a letter of credit and term loan with multiple lending institutions. The funds provided from this credit agreement were used, together with the existing balance in Del-Tin Fiber’s debt service reserve and bond sinking fund accounts, to redeem $60 million of its $89 million industrial revenue bonds. Under the new credit agreement, the lenders, on September 1, 2004, issued on Del-Tin Fiber’s behalf, a letter of credit in the amount of $29.7 million to support the remaining industrial revenue bonds originally issued in 1998 by Union County, Arkansas. Concurrent with this event, on August 26, 2004, Deltic executed a guarantee agreement in connection with the refinancing of the debt of Del-Tin Fiber. Under Deltic’s guarantee agreement, Deltic unconditionally guarantees the due and punctual payment of 50 percent ($14.5 million at September 30, 2012) of Del-Tin Fiber’s obligation under its credit agreement. Deltic considers the current status of the payment/performance risk of this guarantee to be low based on history and the length of time remaining on the guarantee. On February 13, 2012, International Paper Company completed its acquisition of Temple-Inland, Inc., which is Deltic’s joint venture partner in Del-Tin Fiber, LLC. Temple-Inland, Inc. is now a wholly owned subsidiary of International Paper Company. The acquisition did not change the operating agreement of Del-Tin Fiber, LLC.

The Company has both funded and unfunded noncontributory defined benefit retirement plans that cover the majority of its employees. The plans provide defined benefits based on years of service and final average salary. Deltic also has other postretirement benefit plans covering substantially all of its employees. The health care plan is contributory with participants’ contributions adjusted as needed; the life insurance plan is noncontributory. With regards to all of the Company’s employee and retiree benefit plans, Deltic is unaware of any trends, demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in the Company’s liquidity increasing or decreasing in any material way. (For information about material assumptions underlying the accounting for these plans and other components of the plans, refer to Note 15 to the consolidated financial statements included in the Company’s 2011 annual report on Form 10-K.)

 

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Tabular summaries of the Company’s contractual cash payment obligations and other commercial commitment expirations, by period, are presented in the following tables.

 

(Millions of dollars)    Total      During
2012
     2013
to 2014
     2015
to 2016
     After
2016
 

Contractual cash payment obligations

              

Real estate development committed capital costs

   $ 4.3         1.7         2.6         —           —     

Woodlands land acquisition and committed capital costs

     13.0         13.0         —           —           —     

Mills committed capital costs

     .1         .1         —           —           —     

Long-term debt

     53.6         .6         —           53.0         —     

Interest on debt*

     11.6         1.3         5.4         4.9         —     

Retirement plans

     2.8         .6         .5         .5         1.2   

Other postretirement benefits

     4.8         .1         .8         .9         3.0   

Unrecognized tax benefits

     1.3         —           1.3         —           —     

Other liabilities

     5.5         2.2         2.6         .7         —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $ 97.0         19.6         13.2         60.0         4.2   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Other commercial commitment expirations

              

Guarantee of indebtedness of Del-Tin Fiber

   $ 14.8         —           —           14.8         —     

Timber cutting agreements

     1.0         .1         .9         —           —     

Letters of credit

     .8         —           .3         .4         .1   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $ 16.6         .1         1.2         15.2         .1   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

* Interest commitments are estimated using the Company’s current interest rates for the respective debt agreements over their remaining terms to expiration.

Outlook

Deltic’s management believes that cash provided from its operations 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, real estate development, and stock repurchase programs, additional advances to Del-Tin Fiber, and capital expenditures, for the foreseeable future.

Critical Accounting Policies and Estimates

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties and potentially result in materially different results under different assumptions and conditions. The Company has prepared its consolidated financial statements in conformity with accounting principles generally accepted in the United States, which require management to make estimates and assumptions that affect the reported amounts in these financial statements and accompanying notes. Actual results could differ from those estimates under different assumptions or conditions. The Company has disclosed its critical accounting policies in its 2011 annual report on Form 10-K, and this disclosure should be read in conjunction with this Form 10-Q.

 

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Impact of Recently Effective Accounting Pronouncements

(For information regarding the impact of recently effective accounting pronouncements, refer to Note 1 to the consolidated financial statements.)

Outlook

Pine sawtimber harvest levels are expected to be 75,000 to 105,000 tons in the fourth quarter of 2012 and 580,000 to 610,000 tons for the year. Finished lumber sales volume will continue to be subject to market conditions, and is estimated at 55 to 70 million board feet for the fourth quarter and 260 to 275 million board feet for the year. Residential lot sales are projected to be 45 to 50 lots for the year of 2012.

Certain statements contained in this report that are not historical in nature constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “anticipates,” “intends,” “plans,” “estimates,” or variations of such words and similar expressions are intended to identify such forward-looking statements. These statements reflect the Company’s current expectations and involve certain risks and uncertainties, including those disclosed elsewhere in this report. Therefore, actual results could differ materially from those included in such forward-looking statements.

 

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 2011 annual report on Form 10-K. Those disclosures should be read in conjunction with this Form 10-Q.

 

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Deltic Timber Corporation (the “Company” or “Deltic”) has established disclosure controls and procedures to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to the officers who certify the Company’s financial reports and to other members of senior management and the Board of Directors.

Based on their evaluation as of September 30, 2012, the Chief Executive Officer and Chief Financial Officer of the Company have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and this information was accumulated and communicated to the Company’s Management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

Changes in Internal Control Over Financial Reporting

Deltic’s management, with the Chief Executive Officer and Chief Financial Officer, have evaluated any changes in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter, and have concluded that there was no change to Deltic’s internal control over financial reporting that has materially affected or is reasonably likely to materially affect Deltic’s internal control over financial reporting.

 

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Table of Contents

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 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in Item 1A of Part I in the Company’s 2011 annual report on Form 10-K.

 

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

Issuer Purchase of Equity Securities

 

Period

   Total
Number
of Shares
Purchased
     Average
Price Paid
Per Share
     Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
     Maximum Approximate
Dollar Value of Shares
that May Yet Be
Purchased Under the
Plans or Programs1
 

July 1 through

           

July 31, 2012

     —           —           —         $ 20,434,011   

August 1 through

           

August 31, 2012

     —           —           —         $ 20,434,011   

September 1 through

           

September 30, 2012

     —           —           —         $ 20,434,011   

 

1 

In December 2000, the Company’s Board of Directors authorized a stock repurchase plan of up to $10 million of Deltic common stock. In December 2007, this plan was expanded by $25 million. There is no stated expiration date regarding this authorization.

 

Item 3. Defaults Upon Senior Securities

None.

 

Item 4. Mine Safety Disclosures

Not applicable.

 

Item 5. Other Information

None.

 

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Table of Contents
Item 6. Exhibits

Index to Exhibits

 

Exhibit
Designation

  

Nature of Exhibit

31.1    Chief Executive Officer Certification Required by Section 302 of the Sarbanes-Oxley Act of 2002.
31.2    Chief Financial Officer Certification Required by Section 302 of the Sarbanes-Oxley Act of 2002.
32    Certification Required by Section 906 of the Sarbanes-Oxley Act of 2002.
101    Interactive Data: The following financial information from Deltic Timber Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2012, formatted in Extensible Business Reporting Language: (1) the Consolidated Balance Sheets; (2) the Consolidated Statements of Income; (3) the Consolidated Statements of Cash Flows; (4) the Consolidated Statements of Stockholders’ Equity; (5) the Consolidated Statements of Other Comprehensive Income; and (6) the Notes to Consolidated Financial Statements.

 

33


Table of Contents

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

 

Date: November 2, 2012       By:  

/s/ Ray C. Dillon

        Ray C. Dillon, President
        (Principal Executive Officer)
Date: November 2, 2012       By:  

/s/ Kenneth D. Mann

        Kenneth D. Mann, Vice President,
        Finance and Administration
        (Principal Financial Officer)
Date: November 2, 2012       By:  

/s/ Byrom L. Walker

        Byrom L. Walker, Controller
        (Principal Accounting Officer)

 

34

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