Profile: Deltic Timber Corp (DEL)

Deltic Timber Corporation (Deltic) is a natural resources company engaged primarily in the growing and harvesting of timber, and the manufacture and marketing of lumber. Deltic owns approximately 438,600 acres of timberland, primarily in Arkansas and north Louisiana. The Company is organized into four segments: woodlands, which manages all aspects of the Company’s timberlands, including harvesting and sale of timber, timberland sales and acquisitions, oil and gas mineral revenue, and hunting land leases; mills, which consists of Deltic’s two sawmills that manufacture a variety of softwood lumber products; real estate, which includes the Company’s three real estate developments and a related country club operation, and corporate. The Company’s sawmill operations are located at Ola in central Arkansas (the Ola Mill) and at Waldo in south Arkansas (the Waldo Mill). In addition to its timber and lumber operations, the Company is engaged in real estate development in central Arkansas. Deltic also holds a 50% interest in Del-Tin Fiber L.L.C. (Del-Tin Fiber), a joint venture to manufacture and market medium density fiberboard (MDF).

Woodlands

The Company’s timberlands consist primarily of Southern Pine, softwood. Deltic’s pine sawtimber is either used in the Company’s sawmills or sold to third parties. Products manufactured from this resource include dimension lumber, boards, timbers, decking, and secondary products, used primarily in residential construction. The Company’s hardwood sawtimber is sold to third parties and is primarily used in the production of railroad ties, flooring and pallets. Pulpwood consists of logs with a diameter of less than nine inches. Both pine and hardwood pulpwoods are sold to third parties for use primarily in the manufacture of paper. Deltic has developed and operates its own seed orchard. Seeds from the orchard are grown by third parties to produce genetically improved seedlings for planting.

The Company harvests timber from the timberlands in accordance with its harvest plans and sells such timber in the domestic market or converts it to lumber in its sawmills. Deltic has a wildlife management program for its properties. It leased approximately 427,000 acres to hunting clubs during the year ended December 31, 2008. In addition to managing its own timberlands, the Company also manages timberlands owned by others under management contracts with one-year renewable terms.

Mills

The Company’s two sawmills are located at Ola in central Arkansas and at Waldo in south Arkansas. The Ola Mill is equipped for utilization of smaller diameter logs, while the Waldo Mill can process both smaller and larger diameter logs. The mills produce a variety of softwood lumber products, including dimension lumber, boards, and timbers. The lumber is sold primarily to wholesale distributors, lumber treaters, and truss manufacturers in the South and Midwest and is used in residential construction, roof trusses and laminated beams.

Combined permitted annual production capacity of the two mills was 390 million board feet during the year ended December 31, 2008. The Company’s lumber output was 246 MMBF million board feet in 2008. In 2008, the Company’s two sawmills processed 1,105,944 tons of logs, either obtained from the timberlands or purchased from public and private landowners. The timberlands supplied 54%, or 597,721 tons, of the mills raw material receipt requirements, while the mills obtained 99% of the 579,770 tons of pine sawtimber harvested from the timberlands.

Real Estate

The Company is developing Chenal Valley, a planned community cenetered around championship golf courses with approximately 4,700 acres of residential and commercial properties. The property is being developed in stages, and real estate sales as of December 31, 2008, consisted primarily of residential lots, which are sold to builders or individuals, and commercial sites. In addition to Chenal Valley, Deltic has developed Chenal Downs, a 400-acre development located outside Chenal Valley, and is developing Red Oak Ridge, in Hot Springs, Arkansas. As of December 31, 2008, 2,676 lots have been developed in 32 neighborhoods and 2,501 lots have been sold, with about 2,282 residences constructed or under construction. In connection with its Chenal Valley development, the Company developed Chenal Country Club, consisting of the golf courses, a clubhouse, and related facilities for use by club members.

Del-Tin Fiber

The Del-Tin Fiber plant is located near El Dorado, Arkansas. The plant is designed to have an annual capacity of 150 million square feet on a 3/4 inch basis. MDF, which is used primarily in the furniture, flooring, and molding industries, is manufactured from sawmill residuals such as chips, shavings, and sawdust, pressed and held together by an adhesive bond. The plant produced 115 million square feet (MMSF) of MDF in 2008.