##### 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 June 30, 2010

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  ̈    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 July 31, 2010, was 12,499,486.









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##### Table of Contents

TABLE OF CONTENTS  SECOND QUARTER 2010 FORM 10-Q REPORT



|           |  |                                                                                       |  |           
|---------- |  | ------------------------------------------------------------------------------------- |  | ----------
|           |  |                                                                                       |  | PageNumber
|           |  |                                                                                      
|           |  | 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.    |  | Quantitive and Qualitative Disclosures About Market Risk                              |  | 30        
|           |  |                                                                                      
|Item 4.    |  | Controls and Procedures                                                               |  | 30        
|           |  |                                                                                      
|           |  | 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.    |  | (Removed and Reserved)                                                                |  | 32        
|           |  |                                                                                      
|Item 5.    |  | Other Information                                                                     |  | 32        
|           |  |                                                                                      
|Item 6.    |  | Exhibits                                                                              |  | 33        
|           |  |                                                                                      
|Signatures |  |                                                                                       |  | 34        



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##### Table of Contents

PART I  FINANCIAL INFORMATION

Item 1.    Financial Statements

DELTIC TIMBER CORPORATION

AND
SUBSIDIARIES

Consolidated Balance Sheets

(Thousands of dollars)



|                                                                                               |  |                         |         |   |                  |         |  
|---------------------------------------------------------------------------------------------- |  | ----------------------- | ------- | - | ---------------- | ------- | -
|                                                                                               |  | (Unaudited)June 30,2010 |         |   | December 31,2009 |        
|Assets                                                                                         |  |                         |         |   |                  |         |  
|Current assets                                                                                 |  |                         |         |   |                  |         |  
|Cash and cash equivalents                                                                      |  | $                       | 4,803   |   |                  | 4,783   |  
|Trade accounts receivable, net of allowance for doubtful accounts of $58 and $68, respectively |  |                         | 6,078   |   |                  | 4,888   |  
|Other receivables                                                                              |  |                         | 72      |   |                  | 86      |  
|Inventories                                                                                    |  |                         | 6,214   |   |                  | 5,917   |  
|Prepaid expenses and other current assets                                                      |  |                         | 3,294   |   |                  | 2,842   |  
|                                                                                               |  |                         |         |   |                  |         |  
|Total current assets                                                                           |  |                         | 20,461  |   |                  | 18,516  |  
|                                                                                               |  |                        
|Investment in real estate held for development and sale                                        |  |                         | 56,162  |   |                  | 56,096  |  
|Investment in Del-Tin Fiber                                                                    |  |                         | 9,516   |   |                  | 9,104   |  
|Other investments and noncurrent receivables                                                   |  |                         | 1,683   |   |                  | 4,882   |  
|Timber and timberlands  net                                                                   |  |                         | 228,336 |   |                  | 228,893 |  
|Property, plant, and equipment  net                                                           |  |                         | 33,059  |   |                  | 33,886  |  
|Deferred charges and other assets                                                              |  |                         | 986     |   |                  | 826     |  
|                                                                                               |  |                         |         |   |                  |         |  
|Total assets                                                                                   |  | $                       | 350,203 |   |                  | 352,203 |  
|                                                                                               |  |                         |         |   |                  |         |  
|                                                                                               |  |                        
|Liabilities and Stockholders Equity                                                           |  |                         |         |   |                  |         |  
|Current liabilities                                                                            |  |                         |         |   |                  |         |  
|Trade accounts payable                                                                         |  | $                       | 2,998   |   |                  | 2,824   |  
|Current maturities of long-term debt                                                           |  |                         | 1,111   |   |                  | 1,111   |  
|Accrued taxes other than income taxes                                                          |  |                         | 2,652   |   |                  | 1,824   |  
|Income taxes payable                                                                           |  |                         | 616     |   |                  | 362     |  
|Deferred revenues and other accrued liabilities                                                |  |                         | 9,831   |   |                  | 6,981   |  
|                                                                                               |  |                         |         |   |                  |         |  
|Total current liabilities                                                                      |  |                         | 17,208  |   |                  | 13,102  |  
|                                                                                               |  |                        
|Long-term debt, excluding current maturities                                                   |  |                         | 78,667  |   |                  | 91,222  |  
|Deferred tax liabilities  net                                                                 |  |                         | 5,230   |   |                  | 5,448   |  
|Other noncurrent liabilities                                                                   |  |                         | 26,492  |   |                  | 26,132  |  
|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                                                                 |  |                         | 77,784  |   |                  | 78,290  |  
|Retained earnings                                                                              |  |                         | 160,672 |   |                  | 155,638 |  
|Treasury stock                                                                                 |  |                         | (10,867 | ) |                  | (12,548 | )
|Accumulated other comprehensive loss                                                           |  |                         | (5,111  | ) |                  | (5,209  | )
|                                                                                               |  |                         |         |   |                  |         |  
|Total stockholders equity                                                                     |  |                         | 222,606 |   |                  | 216,299 |  
|                                                                                               |  |                         |         |   |                  |         |  
|                                                                                               |  |                        
|Total liabilities and stockholders equity                                                     |  | $                       | 350,203 |   |                  | 352,203 |  
|                                                                                               |  |                         |         |   |                  |         |  

See accompanying notes to consolidated financial statements.



1



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##### Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated
Statements of Income

(Unaudited)

(Thousands of dollars,
except per share amounts)



|                                                             |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|------------------------------------------------------------ |  | -------------------------- | ------ | - | ------------------------ | ------ | - | ---- | ------ | - | ---- | ------ | -
|                                                             |  | Three Months EndedJune 30, |        |   | Six Months EndedJune 30, |       
|                                                             |  | 2010                       |        |   | 2009                     |        |   | 2010 |        |   | 2009 |       
|                                                             |  |                            |        |  
|Net sales                                                    |  | $                          | 38,937 |   |                          | 29,121 |   |      | 70,872 |   |      | 51,983 |  
|                                                             |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|Costs and expenses                                           |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|Cost of sales                                                |  |                            | 23,636 |   |                          | 21,207 |   |      | 45,100 |   |      | 38,654 |  
|Depreciation, amortization, and cost of fee timber harvested |  |                            | 3,370  |   |                          | 3,276  |   |      | 6,419  |   |      | 6,692  |  
|General and administrative expenses                          |  |                            | 4,721  |   |                          | 3,173  |   |      | 8,484  |   |      | 6,381  |  
|                                                             |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|                                                             |  |                            |        |  
|Total costs and expenses                                     |  |                            | 31,727 |   |                          | 27,656 |   |      | 60,003 |   |      | 51,727 |  
|                                                             |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|                                                             |  |                            |        |  
|Operating income                                             |  |                            | 7,210  |   |                          | 1,465  |   |      | 10,869 |   |      | 256    |  
|                                                             |  |                            |        |  
|Equity in earnings of Del-Tin Fiber                          |  |                            | 2,203  |   |                          | 878    |   |      | 2,691  |   |      | 1,635  |  
|Interest income                                              |  |                            | 30     |   |                          | 7      |   |      | 128    |   |      | 9      |  
|Interest and other debt expense                              |  |                            | (909   | ) |                          | (925   | ) |      | (1,822 | ) |      | (1,828 | )
|Interest capitalized                                         |  |                            | 17     |   |                          | 38     |   |      | 33     |   |      | 101    |  
|Other income/(expenses)                                      |  |                            | 50     |   |                          | (3     | ) |      | 52     |   |      | 130    |  
|                                                             |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|                                                             |  |                            |        |  
|Income before income taxes                                   |  |                            | 8,601  |   |                          | 1,460  |   |      | 11,951 |   |      | 303    |  
|                                                             |  |                            |        |  
|Income taxes                                                 |  |                            | (3,008 | ) |                          | (488   | ) |      | (4,105 | ) |      | (505   | )
|                                                             |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|Net income/(loss)                                            |  | $                          | 5,593  |   |                          | 972    |   |      | 7,846  |   |      | (202   | )
|                                                             |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|                                                             |  |                            |        |  
|Earnings per common share                                    |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|Basic                                                        |  | $                          | .45    |   |                          | .08    |   |      | .63    |   |      | (.02   | )
|Diluted                                                      |  | $                          | .45    |   |                          | .08    |   |      | .63    |   |      | (.02   | )
|                                                             |  |                            |        |  
|Dividends per common share                                   |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|Paid                                                         |  | $                          | .075   |   |                          | .075   |   |      | .150   |   |      | .150   |  
|Declared                                                     |  | $                          | .150   |   |                          | .150   |   |      | .225   |   |      | .225   |  
|                                                             |  |                            |        |  
|Weighted average common shares outstanding (thousands)       |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|Basic                                                        |  |                            | 12,368 |   |                          | 12,318 |   |      | 12,359 |   |      | 12,309 |  
|Diluted                                                      |  |                            | 12,415 |   |                          | 12,391 |   |      | 12,429 |   |      | 12,309 |  

See accompanying notes to consolidated
financial statements.



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DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated
Statements of Cash Flows

(Unaudited)

(Thousands of dollars)



|                                                                                        |  |                          |         |   |      |        |  
|--------------------------------------------------------------------------------------- |  | ------------------------ | ------- | - | ---- | ------ | -
|                                                                                        |  | Six Months EndedJune 30, |        
|                                                                                        |  | 2010                     |         |   | 2009 |       
|                                                                                        |  |                         
|Operating activities                                                                    |  |                          |         |   |      |        |  
|Net income/(loss)                                                                       |  | $                        | 7,846   |   |      | (202   | )
|Adjustments to reconcile net income/(loss) to net cash provided by operating activities |  |                          |         |   |      |        |  
|Depreciation, amortization, and cost of fee timber harvested                            |  |                          | 6,419   |   |      | 6,692  |  
|Deferred income taxes                                                                   |  |                          | (440    | ) |      | 574    |  
|Real estate development expenditures                                                    |  |                          | (906    | ) |      | (557   | )
|Real estate costs recovered upon sale                                                   |  |                          | 552     |   |      | 708    |  
|Timberland costs recovered upon sale                                                    |  |                          | 321     |   |      | 377    |  
|Equity in earnings of Del-Tin Fiber                                                     |  |                          | (2,691  | ) |      | (1,635 | )
|Stock-based compensation expense                                                        |  |                          | 977     |   |      | 855    |  
|Net increase in liabilities for pension and other postretirement benefits               |  |                          | 422     |   |      | 394    |  
|Net decrease in deferred compensation for stock-based liabilities                       |  |                          | (504    | ) |      | (1,020 | )
|(Increase)/decrease in operating working capital other than cash and cash equivalents   |  |                          | 1,741   |   |      | (162   | )
|Other  changes in assets and liabilities                                               |  |                          | 251     |   |      | (543   | )
|                                                                                        |  |                          |         |   |      |        |  
|Net cash provided by operating activities                                               |  |                          | 13,988  |   |      | 5,481  |  
|                                                                                        |  |                          |         |   |      |        |  
|                                                                                        |  |                         
|Investing activities                                                                    |  |                          |         |   |      |        |  
|Capital expenditures requiring cash, excluding real estate development                  |  |                          | (5,172  | ) |      | (6,220 | )
|Net change in purchased stumpage inventory                                              |  |                          | (300    | ) |      | (91    | )
|Advances to Del-Tin Fiber                                                               |  |                          | (691    | ) |      | (2,907 | )
|Repayments from Del-Tin Fiber                                                           |  |                          | 2,970   |   |      | 2,860  |  
|Net change in funds held by trustee                                                     |  |                          | 3,067   |   |      | 2,639  |  
|Other  net                                                                             |  |                          | 553     |   |      | 738    |  
|                                                                                        |  |                          |         |   |      |        |  
|Net cash provided/(required) by investing activities                                    |  |                          | 427     |   |      | (2,981 | )
|                                                                                        |  |                          |         |   |      |        |  
|                                                                                        |  |                         
|Financing activities                                                                    |  |                          |         |   |      |        |  
|Proceeds from borrowings                                                                |  |                          | 2,000   |   |      | 3,500  |  
|Repayments of notes payable and long-term debt                                          |  |                          | (14,556 | ) |      | (2,556 | )
|Treasury stock purchases                                                                |  |                          | (26     | ) |      | (1,112 | )
|Common stock dividends paid                                                             |  |                          | (1,875  | ) |      | (1,866 | )
|Proceeds from stock option exercises                                                    |  |                          | 164     |   |      | 654    |  
|Excess tax benefits from stock-based compensation expense                               |  |                          | 57      |   |      | 16     |  
|Other  net                                                                             |  |                          | (159    | ) |      | (159   | )
|                                                                                        |  |                          |         |   |      |        |  
|Net cash required by financing activities                                               |  |                          | (14,395 | ) |      | (1,523 | )
|                                                                                        |  |                          |         |   |      |        |  
|Net increase in cash and cash equivalents                                               |  |                          | 20      |   |      | 977    |  
|Cash and cash equivalents at January 1                                                  |  |                          | 4,783   |   |      | 2,413  |  
|                                                                                        |  |                          |         |   |      |        |  
|Cash and cash equivalents at June 30                                                    |  | $                        | 4,803   |   |      | 3,390  |  
|                                                                                        |  |                          |         |   |      |        |  

See accompanying notes to consolidated financial statements.



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DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated
Statements of Stockholders Equity

(Unaudited)

(Thousands of dollars)



|                                                                                                 |  |                          |         |   |      |         |  
|------------------------------------------------------------------------------------------------ |  | ------------------------ | ------- | - | ---- | ------- | -
|                                                                                                 |  | Six Months EndedJune 30, |        
|                                                                                                 |  | 2010                     |         |   | 2009 |        
|                                                                                                 |  |                         
|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 2010 and 2009 |  |                          | 128     |   |      | 128     |  
|                                                                                                 |  |                          |         |   |      |         |  
|                                                                                                 |  |                         
|Capital in excess of par value                                                                   |  |                          |         |   |      |         |  
|Balance at beginning of period                                                                   |  |                          | 78,290  |   |      | 78,660  |  
|Exercise of stock options                                                                        |  |                          | (3      | ) |      | (101    | )
|Stock based compensation expense                                                                 |  |                          | 977     |   |      | 855     |  
|Restricted stock awards                                                                          |  |                          | (1,540  | ) |      | (1,859  | )
|Tax effect of stock awards                                                                       |  |                          | 60      |   |      | (190    | )
|                                                                                                 |  |                          |         |   |      |         |  
|Balance at end of period                                                                         |  |                          | 77,784  |   |      | 77,365  |  
|                                                                                                 |  |                          |         |   |      |         |  
|                                                                                                 |  |                         
|Retained earnings                                                                                |  |                          |         |   |      |         |  
|Balance at beginning of period                                                                   |  |                          | 155,638 |   |      | 155,683 |  
|Net income/(loss)                                                                                |  |                          | 7,846   |   |      | (202    | )
|Common stock dividends declared                                                                  |  |                          | (2,812  | ) |      | (2,799  | )
|                                                                                                 |  |                          |         |   |      |         |  
|Balance at end of period                                                                         |  |                          | 160,672 |   |      | 152,682 |  
|                                                                                                 |  |                          |         |   |      |         |  
|                                                                                                 |  |                         
|Treasury stock                                                                                   |  |                          |         |   |      |         |  
|Balance at beginning of period  363,208 and 412,177 shares, respectively                        |  |                          | (12,548 | ) |      | (14,400 | )
|Shares purchased  606 and 35,571 shares, respectively                                           |  |                          | (26     | ) |      | (1,112  | )
|Shares issued for incentive plans  49,421 and 74,204 shares, respectively                       |  |                          | 1,707   |   |      | 2,615   |  
|                                                                                                 |  |                          |         |   |      |         |  
|Balance at end of period  314,393 and 373,544 shares, respectively                              |  |                          | (10,867 | ) |      | (12,897 | )
|                                                                                                 |  |                          |         |   |      |         |  
|                                                                                                 |  |                         
|Accumulated other comprehensive loss                                                             |  |                          |         |   |      |         |  
|Balance at beginning of period                                                                   |  |                          | (5,209  | ) |      | (6,907  | )
|Change in other comprehensive income, net of tax                                                 |  |                          | 98      |   |      | 177     |  
|                                                                                                 |  |                          |         |   |      |         |  
|Balance at end of period                                                                         |  |                          | (5,111  | ) |      | (6,730  | )
|                                                                                                 |  |                          |         |   |      |         |  
|                                                                                                 |  |                         
|Total stockholders equity                                                                       |  | $                        | 222,606 |   |      | 210,548 |  
|                                                                                                 |  |                          |         |   |      |         |  

See accompanying notes to consolidated financial statements.



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DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated
Statements of Other Comprehensive Income/(Loss)

(Unaudited)

(Thousands of
dollars)



|                                                                              |  |                          |       |   |      |      |  
|----------------------------------------------------------------------------- |  | ------------------------ | ----- | - | ---- | ---- | -
|                                                                              |  | Six Months EndedJune 30, |      
|                                                                              |  | 2010                     |       |   | 2009 |     
|Net income/(loss)                                                             |  | $                        | 7,846 |   |      | (202 | )
|                                                                              |  |                          |       |   |      |      |  
|Other comprehensive income                                                    |  |                          |       |   |      |      |  
|Items related to employee benefit plans:                                      |  |                          |       |   |      |      |  
|Reclassification adjustment for gains/(losses) included in net income/(loss): |  |                          |       |   |      |      |  
|Amortization of prior service cost                                            |  |                          | 4     |   |      | 25   |  
|Amortization of actuarial loss                                                |  |                          | 256   |   |      | 365  |  
|Amortization of plan amendment                                                |  |                          | (99   | ) |      | (99  | )
|Income tax expense related to items of other comprehensive loss               |  |                          | (63   | ) |      | (114 | )
|                                                                              |  |                          |       |   |      |      |  
|Other comprehensive income                                                    |  |                          | 98    |   |      | 177  |  
|                                                                              |  |                          |       |   |      |      |  
|Comprehensive income/(loss)                                                   |  | $                        | 7,944 |   |      | (25  | )
|                                                                              |  |                          |       |   |      |      |  

See accompanying notes to consolidated financial statements.



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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, 2009. 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 June 30, 2010, and the results of its operations and cash flows for the three months and six months ended
June 30, 2010 and 2009. 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.

Recently Issued Accounting Pronouncements

Financial Accounting Standards update No. 2010-06, Improving Disclosures about Fair Value Measurements is effective
January 1, 2010, for the Company and requires more detailed information about valuation techniques, inputs used in determining fair value, and transfers into and out of Level 1 and Level 2 of the fair value hierarchy.

Effective January 1, 2011, the Company must comply with new revenue recognition guidance established by Financial Accounting Standards Update
No. 2009-13, Multiple-Deliverable Revenue Arrangements. The Company believes there will be little or no impact to its financial statements.

Note 2  Inventories

Inventories at
the balance sheet dates consisted of the following:



|                       |  |              |       |              |      
|---------------------- |  | ------------ | ----- | ------------ | -----
|(Thousands of dollars) |  | June 30,2010 |       | Dec. 31,2009
|                       |  |             
|Logs                   |  | $            | 2,014 |              | 1,367
|Lumber                 |  |              | 3,782 |              | 4,211
|Materials and supplies |  |              | 418   |              | 339  
|                       |  |              |       |              |      
|                       |  | $            | 6,214 |              | 5,917
|                       |  |              |       |              |      



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##### 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)         |  | June 30,2010 |       | Dec. 31,2009
|                               |  |             
|Short-term deferred tax assets |  | $            | 2,147 |              | 1,989
|Prepaid expenses               |  |              | 405   |              | 216  
|Other current assets           |  |              | 742   |              | 637  
|                               |  |              |       |              |      
|                               |  | $            | 3,294 |              | 2,842
|                               |  |              |       |              |      

Note 4  Investment in Del-Tin Fiber

The Company owns 50 percent of the membership of Del-Tin Fiber L.L.C. (Del-Tin), which operates a medium density fiberboard
(MDF) plant near El Dorado, Arkansas. The Companys membership in Del-Tin is discussed in more detail in Note 4  Investment in Del-Tin Fiber, in the Companys 2009 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, which included both
a five-year term loan and a long-term bond obligation. In connection with the bond obligation, Del-Tin obtained a letter of credit in support of the bond obligation and both Deltic and the other joint venture partner agreed to guarantee
Del-Tins performance under the letter of credit at inception. The Companys guarantee under the letter of credit expires on August 31, 2011. 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/performance risk associated with this guarantee, Deltic continues to consider the risk minimal based on Del-Tins balance sheet, past
performance, and length of time remaining on the guarantee. The Companys guarantee of the $30,000,000, five-year term loan expired in September of 2009.

At June 30, 2010, and December 31, 2009, the Companys share of the underlying net assets of Del-Tin exceeded its investment by
$16,118,000 and $16,580,000, respectively. The difference relates primarily to the Companys write-off of its carrying amount for its investment in Del-Tin as of December 31, 2002, which was not recorded by Del-Tin. The equity in earnings
of Del-Tin recognized by the Company exceeds its ownership percentage of Del-Tins earnings because the difference in basis between the Company and Del-Tin is being adjusted to account for Del-Tins operating results as if it were a
consolidated subsidiary.



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##### 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 as of the balance sheet dates and results of operations
consisted of the following:



|                                       |  |              |        |             |       
|-------------------------------------- |  | ------------ | ------ | ----------- | ------
|(Thousands of dollars)                 |  | June 30,2010 |        | Jan. 2,2010
|Condensed Balance Sheet Information    |  |              |        |             |       
|Current assets                         |  | $            | 9,767  |             | 7,396 
|Property, plant, and equipment  net   |  |              | 73,297 |             | 75,438
|Other noncurrent assets                |  |              | 43     |             | 63    
|                                       |  |              |        |             |       
|Total assets                           |  | $            | 83,107 |             | 82,897
|                                       |  |              |        |             |       
|                                       |  |             
|Current liabilities                    |  | $            | 2,839  |             | 2,528 
|Long-term debt                         |  |              | 29,000 |             | 29,000
|Members capital                       |  |              | 51,268 |             | 51,369
|                                       |  |              |        |             |       
|Total liabilities and members capital |  | $            | 83,107 |             | 82,897
|                                       |  |              |        |             |       

Condensed Income statement Information



|                                    |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|----------------------------------- |  | -------------------------- | ------ | - | ------------------------ | ------ | - | ---- | ------ | - | ---- | ------ | -
|                                    |  | Three Months EndedJune 30, |        |   | Six Months EndedJune 30, |       
|(Thousands of dollars)              |  | 2010                       |        |   | 2009                     |        |   | 2010 |        |   | 2009 |       
|Net sales                           |  | $                          | 21,049 |   |                          | 13,200 |   |      | 36,465 |   |      | 27,063 |  
|                                    |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|Costs and expenses                  |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|Cost of sales                       |  |                            | 14,712 |   |                          | 9,801  |   |      | 27,522 |   |      | 20,541 |  
|Depreciation                        |  |                            | 1,524  |   |                          | 1,153  |   |      | 2,817  |   |      | 2,328  |  
|General and administrative expenses |  |                            | 747    |   |                          | 511    |   |      | 1,344  |   |      | 1,066  |  
|                                    |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|Total costs and expenses            |  |                            | 16,983 |   |                          | 11,465 |   |      | 31,683 |   |      | 23,935 |  
|                                    |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|                                    |  |                            |        |  
|Operating income                    |  |                            | 4,066  |   |                          | 1,735  |   |      | 4,782  |   |      | 3,128  |  
|Interest income                     |  |                            | 58     |   |                          | 26     |   |      | 98     |   |      | 52     |  
|Interest and other debt expenses    |  |                            | (192   | ) |                          | (344   | ) |      | (369   | ) |      | (601   | )
|Other loss                          |  |                            | (46    | ) |                          | (6     | ) |      | (54    | ) |      | (6     | )
|                                    |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|Net income                          |  | $                          | 3,886  |   |                          | 1,411  |   |      | 4,457  |   |      | 2,573  |  
|                                    |  |                            |        |   |                          |        |   |      |        |   |      |        |  



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##### 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)                                                    |  | June 30,2010 |         |   | Dec. 31,2009 |        
|Purchased stumpage inventory                                              |  | $            | 2,748   |   |              | 2,449   |  
|Timberlands                                                               |  |              | 91,863  |   |              | 92,032  |  
|Fee timber                                                                |  |              | 226,224 |   |              | 224,002 |  
|Logging facilities                                                        |  |              | 2,398   |   |              | 2,301   |  
|                                                                          |  |              |         |   |              |         |  
|                                                                          |  |              | 323,233 |   |              | 320,784 |  
|Less accumulated cost of fee timber harvested and facilities depreciation |  |              | (96,781 | ) |              | (94,096 | )
|                                                                          |  |              |         |   |              |         |  
|Strategic timber and timberlands                                          |  |              | 226,452 |   |              | 226,688 |  
|Non-strategic timber and timberlands                                      |  |              | 1,884   |   |              | 2,205   |  
|                                                                          |  |              |         |   |              |         |  
|                                                                          |  | $            | 228,336 |   |              | 228,893 |  
|                                                                          |  |              |         |   |              |         |  

In 1999, the Company initiated a program to identify non-strategic timberlands for possible sale. As of June 30,
2010 and December 31, 2009, approximately 5,200 and 6,000 acres of non-strategic timberlands were available for sale, respectively. Included in the Woodlands operating income are gains from sales of non-strategic hardwood bottomland of $856,000
and $1,227,000 for the three months ended June 30, 2010 and 2009, respectively, and $1,119,000 and $1,535,000 for the six months ended June 30, 2010 and 2009, respectively.

Note 6  Property, Plant, and Equipment

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



|                              |  |              |         |   |              |         |  
|----------------------------- |  | ------------ | ------- | - | ------------ | ------- | -
|(Thousands of dollars)        |  | June 30,2010 |         |   | Dec. 31,2009 |        
|Land                          |  | $            | 125     |   |              | 125     |  
|Land improvements             |  |              | 5,596   |   |              | 5,463   |  
|Buildings and structures      |  |              | 11,064  |   |              | 11,056  |  
|Machinery and equipment       |  |              | 97,256  |   |              | 94,993  |  
|                              |  |              |         |   |              |         |  
|                              |  |              | 114,041 |   |              | 111,637 |  
|Less accumulated depreciation |  |              | (80,982 | ) |              | (77,751 | )
|                              |  |              |         |   |              |         |  
|                              |  | $            | 33,059  |   |              | 33,886  |  
|                              |  |              |         |   |              |         |  



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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 six months ended June 30, 2010, was 35 percent and 34 percent, respectively. The
Companys policy is to recognize interest expense related to unrecognized tax benefits in interest expense and penalties in other expenses. During the six months ended June 30, 2010, the Company recognized $2,000 in interest expense from
these items. The Company had approximately $19,000 accrued in deferred revenues and other accrued liabilities for interest and penalties at June 30, 2010. If the Company were to prevail on all unrecognized tax benefits recorded on the balance
sheet, approximately $2,281,000 would benefit the effective rate.

The Company is no longer subject to U.S. federal and state
examinations by tax authorities for years before 2006.

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)        |  | June 30,2010 |       | Dec. 31,2009
|                              |  |             
|Deferred revenues  current   |  | $            | 4,521 |              | 3,614
|Dividend payable              |  |              | 937   |              |     
|Vacation accrual              |  |              | 992   |              | 938  
|Deferred compensation         |  |              | 2,055 |              | 1,054
|All other current liabilities |  |              | 1,326 |              | 1,375
|                              |  |              |       |              |      
|                              |  | $            | 9,831 |              | 6,981
|                              |  |              |       |              |      

Note 9  Other Noncurrent Liabilities

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



|                                              |  |              |        |              |       
|--------------------------------------------- |  | ------------ | ------ | ------------ | ------
|(Thousands of dollars)                        |  | June 30,2010 |        | Dec. 31,2009
|                                              |  |             
|Accumulated postretirement benefit obligation |  | $            | 8,722  |              | 8,355 
|Accrued pension liability                     |  |              | 8,784  |              | 8,877 
|Deferred revenue  long term portion          |  |              | 1,082  |              | 1,494 
|Other noncurrent liabilities                  |  |              | 7,904  |              | 7,406 
|                                              |  |              |        |              |       
|                                              |  | $            | 26,492 |              | 26,132
|                                              |  |              |        |              |       



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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 MonthsEnded June 30, |      |   | Six MonthsEnded June 30, |     
|(Thousands of dollars)                    |  | 2010                       |      |   | 2009                     |      |   | 2010 |      |   | 2009 |      
|Funded qualified retirement plan          |  |                            |      |   |                          |      |   |      |      |   |      |       |  
|Service cost                              |  | $                          | 283  |   |                          | 276  |   |      | 565  |   |      | 553   |  
|Interest cost                             |  |                            | 407  |   |                          | 397  |   |      | 814  |   |      | 793   |  
|Expected return on plan assets            |  |                            | (361 | ) |                          | (298 | ) |      | (722 | ) |      | (595  | )
|Amortization of prior service cost        |  |                            | 4    |   |                          | 16   |   |      | 9    |   |      | 31    |  
|Amortization of actuarial loss            |  |                            | 108  |   |                          | 171  |   |      | 216  |   |      | 342   |  
|                                          |  |                            |      |   |                          |      |   |      |      |   |      |       |  
|Net retirement expense                    |  | $                          | 441  |   |                          | 562  |   |      | 882  |   |      | 1,124 |  
|                                          |  |                            |      |   |                          |      |   |      |      |   |      |       |  
|                                          |  |                            |      |  
|Unfunded nonqualified retirement plan     |  |                            |      |   |                          |      |   |      |      |   |      |       |  
|Service cost                              |  | $                          | 33   |   |                          | 28   |   |      | 66   |   |      | 56    |  
|Interest cost                             |  |                            | 57   |   |                          | 49   |   |      | 114  |   |      | 98    |  
|Amortization of prior service cost        |  |                            | (2   | ) |                          | (2   | ) |      | (5   | ) |      | (5    | )
|Amortization of actuarial loss            |  |                            | 20   |   |                          | 11   |   |      | 40   |   |      | 23    |  
|                                          |  |                            |      |   |                          |      |   |      |      |   |      |       |  
|Net retirement expense                    |  | $                          | 108  |   |                          | 86   |   |      | 215  |   |      | 172   |  
|                                          |  |                            |      |   |                          |      |   |      |      |   |      |       |  
|                                          |  |                            |      |  
|Other postretirement benefits             |  |                            |      |   |                          |      |   |      |      |   |      |       |  
|Service cost                              |  | $                          | 82   |   |                          | 81   |   |      | 164  |   |      | 162   |  
|Interest cost                             |  |                            | 116  |   |                          | 119  |   |      | 233  |   |      | 238   |  
|Amortization of plan amendment            |  |                            | (49  | ) |                          | (49  | ) |      | (99  | ) |      | (99   | )
|                                          |  |                            |      |   |                          |      |   |      |      |   |      |       |  
|Net other postretirement benefits expense |  | $                          | 149  |   |                          | 151  |   |      | 298  |   |      | 301   |  
|                                          |  |                            |      |   |                          |      |   |      |      |   |      |       |  

The Company made contributions to its qualified plan of $750,000 during the first six months of 2010, and expects to
continue to fund the plan at the same level over the remainder of 2010.

Recently enacted U.S. health care legislation is expected to
affect companies that offer post employment benefits to employees. Based on managements current understanding of this new legislation and the types of benefits currently offered by the benefit plan, the financial impact to the Company was
immaterial and did not require a remeasurement of its other post-retirement benefits obligation.



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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 June 30, 2010 and 2009, included $497,000 and $443,000, respectively, of
stock-based compensation expense reflected in general and administrative expenses. For the six months ended June 30, 2010 and 2009, the amounts were $977,000 and $855,000, respectively.

Assumptions for the valuation of 2010 stock options and restricted stock performance units consisted of the following:



|                                                      |  |      |       |  
|----------------------------------------------------- |  | ---- | ----- | -
|                                                      |  | 2010 |      
|Expected term of options (in years)                   |  |      | 6.27  |  
|Weighted expected volatility                          |  |      | 34.57 | %
|Dividend yield                                        |  |      | .61   | %
|Risk-free interest rate performance restricted shares |  |      | 2.13  | %
|Risk-free interest rate  options                     |  |      | 3.92  | %
|Stock price as of valuation date                      |  | $    | 44.84 |  

Stock Options  A summary of
stock options as of June 30, 2010, and changes during the six-month period then ended are presented below:



|                               |  |         |   |  |                              |       |                                                 |     |                               |   |    
|------------------------------ |  | ------- | - |  | ---------------------------- | ----- | ----------------------------------------------- | --- | ----------------------------- | - | ---
|Options                        |  | Shares  |   |  | WeightedAverageExercisePrice |       | WeightedAverageRemainingContractualTerm (Years) |     | AggregateIntrinsicValue($000)
|Outstanding at January 1, 2010 |  | 168,914 |   |  | $                            | 42.97 |                                                 |     |                               |   |    
|                               |  |         |   | 
|Granted                        |  | 32,159  |   |  |                              | 44.84 |                                                 |     |                               |   |    
|Exercised                      |  | (4,858  | ) |  |                              | 33.78 |                                                 |     |                               |   |    
|                               |  |         |   |  |                              |       |                                                 |     |                               |   |    
|Outstanding at June 30, 2010   |  | 196,215 |   |  | $                            | 43.51 |                                                 | 6.6 |                               | $ | 691
|                               |  |         |   |  |                              |       |                                                 |     |                               |   |    
|                               |  |         |   | 
|Exercisable at June 30, 2010   |  | 111,496 |   |  | $                            | 43.38 |                                                 | 5.1 |                               | $ | 482
|                               |  |         |   |  |                              |       |                                                 |     |                               |   |    

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 June 30, 2010, 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 June 30, 2010, there was $1,000,000 of unrecognized compensation cost related to nonvested stock options. That cost is expected to be recognized over
a weighted-average period of 2.2 years.



12



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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 June 30, 2010, and changes during the six-month period then ended are presented below:



|                             |  |         |   |  |                                     |      
|---------------------------- |  | ------- | - |  | ----------------------------------- | -----
|Nonvested Restricted Stock   |  | Shares  |   |  | WeightedAverageGrant-DateFair Value
|Nonvested at January 1, 2010 |  | 70,963  |   |  | $                                   | 46.89
|                             |  |        
|Granted                      |  | 20,733  |   |  |                                     | 44.84
|Vested                       |  | (12,231 | ) |  |                                     | 53.23
|                             |  |         |   |  |                                     |      
|                             |  |        
|Nonvested at June 30, 2010   |  | 79,465  |   |  | $                                   | 45.38
|                             |  |         |   |  |                                     |      

As of June 30, 2010, there was $1,831,000 of unrecognized compensation cost related to nonvested
restricted stock. That cost is expected to be recognized over a weighted-average period of 2.1 years.

Performance Units  A
summary of nonvested restricted stock performance units as of June 30, 2010, and changes during the six months then ended are presented below:



|                                             |  |        |   |  |                                     |      
|-------------------------------------------- |  | ------ | - |  | ----------------------------------- | -----
|Nonvested Restricted Stock Performance Units |  | Shares |   |  | WeightedAverageGrant-DateFair Value
|Nonvested at January 1, 2010                 |  | 46,874 |   |  | $                                   | 51.15
|                                             |  |       
|Granted                                      |  | 14,471 |   |  |                                     | 58.66
|Vested                                       |  | (9,359 | ) |  |                                     | 55.93
|                                             |  |        |   |  |                                     |      
|                                             |  |       
|Nonvested at June 30, 2010                   |  | 51,986 |   |  | $                                   | 52.38
|                                             |  |        |   |  |                                     |      

As of June 30, 2010, there was $1,537,000 of unrecognized compensation cost related to nonvested
restricted stock performance units. That cost is expected to be recognized over a weighted-average period of 2.3 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 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 June 30, 2010, are presented in the following table:



|                                   |  |              |                                                               |                                                 |                             |         |                               |  |  
|---------------------------------- |  | ------------ | ------------------------------------------------------------- | ----------------------------------------------- | --------------------------- | ------- | ----------------------------- |  | -
|                                   |  | June 30,2010 |                                                               | Fair Value Measurements at Reporting Date Using
|(Thousands of dollars)             |  |              | Quoted prices inActive Markets 
forIdenticalLiabilitiesInputs |                                                 | SignificantObservableInputs |         | SignificantUnobservableInputs
|                                   |  | Level 1      |                                                               | Level 2                                         |                             | Level 3
|Liabilities                        |  |              |                                                               |                                                 |                             |         |                               |  |  
|Nonqualified employee savings plan |  | $            | 629                                                           |                                                 | 629                         |         |                              |  | 
|                                   |  |              |                                                               |                                                 |                             |         |                               |  |  

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 refinanced.

The following table presents the carrying amounts and estimated fair values of financial instruments held by the Company at June 30, 2010. 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.



|                                              |  |                |        |                     |       
|--------------------------------------------- |  | -------------- | ------ | ------------------- | ------
|                                              |  | 2010          
|(Thousands of dollars)                        |  | CarryingAmount |        | EstimatedFair Value
|Financial liabilities                         |  |                |        |                     |       
|Long-term debt, including current liabilities |  | $              | 79,778 |                     | 85,250



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DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to
Consolidated Financial Statements



Note 14  Earnings per Common Share

The amounts used in computing earnings per share consisted of the following:



|                                                                                                           |      |                            |        |                          |        |  |        |  |        |  
|---------------------------------------------------------------------------------------------------------- | ---- | -------------------------- | ------ | ------------------------ | ------ |  | ------ |  | ------ | -
|(Thousands, except per share amounts)                                                                      |      | Three Months EndedJune 30, |        | Six Months EndedJune 30, |       
|                                                                                                           | 2010 |                            | 2009   |                          | 2010   |  | 2009   | 
|Net income/(loss)                                                                                          |      | $                          | 5,593  |                          | 972    |  | 7,846  |  | (202   | )
|                                                                                                           |      |                            |        |                          |        |  |        |  |        |  
|                                                                                                           |      |                            |        |                         
|Weighted average number of common shares used in basic EPS                                                 |      |                            | 12,368 |                          | 12,318 |  | 12,359 |  | 12,309 |  
|Potentially dilutive shares                                                                                |      |                            | 47     |                          | 73     |  | 70     |  | n/a    |  
|                                                                                                           |      |                            |        |                          |        |  |        |  |        |  
|Weighted average number of common shares and dilutive potential common stock used in EPS assuming dilution |      |                            | 12,415 |                          | 12,391 |  | 12,429 |  | 12,309 |  
|                                                                                                           |      |                            |        |                          |        |  |        |  |        |  
|                                                                                                           |      |                            |        |                         
|Earnings per common share                                                                                  |      |                            |        |                          |        |  |        |  |        |  
|Basic                                                                                                      |      | $                          | .45    |                          | .08    |  | .63    |  | (.02   | )
|Assuming dilution                                                                                          |      | $                          | .45    |                          | .08    |  | .63    |  | (.02   | )

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 77,534 and 102,407 for the three months and six months ended June 30, 2010 and 2009, 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 30,259 and 16,040 at June 30, 2010 and 2009, respectively. At
June 30, 2009, common stock equivalents that could potentially dilute earnings per share were 79,738. These were not included in the computation of loss per share because their effect would have been anti-dilutive.

Note 15  Supplemental Cash Flow Disclosures

Additional information concerning cash flows is as follows:



|                          |  |                          |       |      |      
|------------------------- |  | ------------------------ | ----- | ---- | -----
|                          |  | Six Months EndedJune 30,
|(Thousands of dollars)    |  | 2010                     |       | 2009
|Income taxes paid in cash |  | $                        | 3,750 |      | 14   
|Interest paid             |  |                          | 1,690 |      | 1,726



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##### Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

Note 15  Supplemental Cash Flow Disclosures (cont.)



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



|                             |  |                          |       |      |      
|---------------------------- |  | ------------------------ | ----- | ---- | -----
|                             |  | Six Months EndedJune 30,
|(Thousands of dollars)       |  | 2010                     |       | 2009
|Issuance of restricted stock |  | $                        | 1,540 |      | 1,859
|Land exchanges               |  |                          |      |      | 35   

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



|                                                |  |                          |        |   |      |        |  
|----------------------------------------------- |  | ------------------------ | ------ | - | ---- | ------ | -
|                                                |  | Six Months EndedJune 30, |       
|(Thousands of dollars)                          |  | 2010                     |        |   | 2009 |       
|Trade accounts receivable                       |  | $                        | (1,190 | ) |      | (3,114 | )
|Other receivables                               |  |                          | 14     |   |      | 13     |  
|Inventories                                     |  |                          | (297   | ) |      | 1,711  |  
|Prepaid expenses and other current assets       |  |                          | (313   | ) |      | (675   | )
|Trade accounts payable                          |  |                          | 174    |   |      | 819    |  
|Accrued taxes other than income taxes           |  |                          | 828    |   |      | 829    |  
|Deferred revenues and other accrued liabilities |  |                          | 2,525  |   |      | 255    |  
|                                                |  |                          |        |   |      |        |  
|                                                |  | $                        | 1,741  |   |      | (162   | )
|                                                |  |                          |        |   |      |        |  

Note 16  Variable Interest Entity

The acquisition of certain timberlands in Calhoun County, Arkansas, in October 2009, was structured to qualify as the second step of a reverse
like-kind exchange under Internal Revenue Code Section 1031 and Internal Revenue Service (IRS), Revenue Procedure 2000-37. Prior to closing on the purchase, the Company assigned all of its rights and duties under the purchase and
sale agreement to Hampton Acquisition, LLC (Hampton), a company unaffiliated with Deltic. Hampton, as an exchange accommodation titleholder, acquired the timberlands. Deltic loaned to Hampton an amount equal to the purchase price of the
assets.

Based on the provisions of the FASB codification related to consolidations of variable interest entities, FASC 810-10, the
Company determined that Hampton is a variable interest entity for which Deltic was the primary beneficiary. Accordingly, Hampton was consolidated into Deltic subsequent to the completion of the purchase of timberlands on October 7, 2009. As a
result of the consolidation, Deltic included $6,100,000 on the balance sheet in timber and timberland assets, and recognized on the income statement the revenues and expenses attributed to the property.

The second step of this reverse like-kind exchange was concluded on April 14, 2010, and all assets were transferred to Deltic on that date.



16



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##### Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to
Consolidated Financial Statements



Note 17  Business Segments

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



|                                                             |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|------------------------------------------------------------ |  | -------------------------- | ------ | - | ------------------------ | ------ | - | ---- | ------ | - | ---- | ------ | -
|                                                             |  | Three Months EndedJune 30, |        |   | Six Months EndedJune 30, |       
|(Thousands of dollars)                                       |  | 2010                       |        |   | 2009                     |        |   | 2010 |        |   | 2009 |       
|Net sales                                                    |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|Woodlands                                                    |  | $                          | 11,416 |   |                          | 10,303 |   |      | 20,439 |   |      | 20,198 |  
|Mills                                                        |  |                            | 29,896 |   |                          | 20,788 |   |      | 54,511 |   |      | 36,816 |  
|Real Estate                                                  |  |                            | 2,432  |   |                          | 3,055  |   |      | 4,728  |   |      | 4,627  |  
|Eliminations*                                                |  |                            | (4,807 | ) |                          | (5,025 | ) |      | (8,806 | ) |      | (9,658 | )
|                                                             |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|                                                             |  | $                          | 38,937 |   |                          | 29,121 |   |      | 70,872 |   |      | 51,983 |  
|                                                             |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|                                                             |  |                            |        |  
|Income before income taxes                                   |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|Operating income                                             |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|Woodlands                                                    |  | $                          | 6,458  |   |                          | 6,463  |   |      | 11,537 |   |      | 12,137 |  
|Mills                                                        |  |                            | 6,204  |   |                          | (1,948 | ) |      | 8,703  |   |      | (5,500 | )
|Real Estate                                                  |  |                            | (537   | ) |                          | (452   | ) |      | (1,251 | ) |      | (1,477 | )
|Corporate                                                    |  |                            | (4,443 | ) |                          | (2,947 | ) |      | (7,912 | ) |      | (5,837 | )
|Eliminations                                                 |  |                            | (472   | ) |                          | 349    |   |      | (208   | ) |      | 933    |  
|                                                             |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|Operating income                                             |  |                            | 7,210  |   |                          | 1,465  |   |      | 10,869 |   |      | 256    |  
|Equity in earnings of Del-Tin Fiber                          |  |                            | 2,203  |   |                          | 878    |   |      | 2,691  |   |      | 1,635  |  
|Interest income                                              |  |                            | 30     |   |                          | 7      |   |      | 128    |   |      | 9      |  
|Interest and other debt expense                              |  |                            | (909   | ) |                          | (925   | ) |      | (1,822 | ) |      | (1,828 | )
|Interest capitalized                                         |  |                            | 17     |   |                          | 38     |   |      | 33     |   |      | 101    |  
|Other income/(loss)                                          |  |                            | 50     |   |                          | (3     | ) |      | 52     |   |      | 130    |  
|                                                             |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|                                                             |  | $                          | 8,601  |   |                          | 1,460  |   |      | 11,951 |   |      | 303    |  
|                                                             |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|                                                             |  |                            |        |  
|Depreciation, amortization, and cost of fee timber harvested |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|Woodlands                                                    |  | $                          | 1,583  |   |                          | 1,307  |   |      | 2,802  |   |      | 2,697  |  
|Mills                                                        |  |                            | 1,657  |   |                          | 1,831  |   |      | 3,354  |   |      | 3,698  |  
|Real Estate                                                  |  |                            | 112    |   |                          | 116    |   |      | 224    |   |      | 253    |  
|Corporate                                                    |  |                            | 18     |   |                          | 22     |   |      | 39     |   |      | 44     |  
|                                                             |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|                                                             |  | $                          | 3,370  |   |                          | 3,276  |   |      | 6,419  |   |      | 6,692  |  
|                                                             |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|                                                             |  |                            |        |  
|Capital expenditures                                         |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|Woodlands                                                    |  | $                          | 911    |   |                          | 778    |   |      | 2,334  |   |      | 4,744  |  
|Mills                                                        |  |                            | 1,583  |   |                          | 815    |   |      | 2,408  |   |      | 1,394  |  
|Real Estate                                                  |  |                            | 680    |   |                          | 465    |   |      | 1,215  |   |      | 633    |  
|Corporate                                                    |  |                            | 72     |   |                          |       |   |      | 121    |   |      | 42     |  
|                                                             |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|                                                             |  | $                          | 3,246  |   |                          | 2,058  |   |      | 6,078  |   |      | 6,813  |  
|                                                             |  |                            |        |   |                          |        |   |      |        |   |      |        |  

*Primarily intersegment sales of timber from Woodlands to Mills.



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##### Table of Contents

Item 2.    Managements Discussion and Analysis of Financial
Condition and Results of Operations

Executive Overview

The Company recorded net income of $5.5 million for the second quarter of 2010, compared to $1 million for the same period of 2009. The Woodlands
segment, Deltics core operation, reported operating income of $6.4 million during the second quarter of both 2010 and 2009. The Mills segment posted strong results in the current-year quarter of $6.2 million, an improvement of $8.1 million
from the $1.9 million loss reported a year ago. The increase in Mills operating income was primarily due to a $105 per thousand board feet higher unit sales price and a six percent increase in the volume of lumber sold. The Real Estate segment
recorded a loss of $.5 million in 2010s second quarter compared to a loss of $.4 million in 2009 due to decreases in both the average sales price per residential lot sold and the number of lots sold. The Corporate segments general and
administrative expenses were $1.5 million higher during the current-year quarter than the same period a year ago, mainly due to higher employee incentive plan expenses resulting from the significantly improved net income. Deltic owns a 50 percent
interest in Del-Tin Fiber, L.L.C. and recorded equity income of $2.2 million for the second quarter of 2010, an increase from $.8 million for the same quarter of 2009. The increase is largely the result of an earthquake in Chile on February 27,
2010, that interrupted the supply of MDF moldings normally imported from there, hence increasing domestic demand and sales prices.

The
majority of Deltics operations are within the commodity-based wood and wood products sector, with a significant diversification in real estate development on a portion of its landholdings. The Companys operating environments are affected
by a number of factors including general economic conditions, employment levels, interest rates, credit availability and associated costs, imports, foreign exchange rates, housing starts, new and existing home inventories, residential and commercial
real estate foreclosures, residential repair and remodeling, commercial construction, industry capacity and production levels, the availability of raw materials, and weather conditions. The U.S. housing and commercial real estate markets continue to
be sluggish due to uncertain future economic conditions, and concerns over higher unemployment rates, combined with continued tight credit requirements for real estate developers. These conditions, combined with Junes reduction in housing
starts and an increase in Canadian lumber imports, have exerted downward pressure on U.S. lumber markets and lumber pricing since their peak around the middle of 2010s second quarter. Given its relative size and the nature of most commodity
markets, the Company has little or no control over pricing or demand levels for its lumber products. However, the Company will continue its efforts to improve operating efficiencies, reduce controllable manufacturing costs, manage production levels
to match market demand, and explore other cost reducing measures.

For the second quarter of 2010, the pine sawtimber harvest increased
2,684 tons, to 169,290 tons, when compared to the 2009 second quarter harvest of 166,606 tons. The average per-ton sales price decreased seven percent, to $28 per ton, from the 2009 second quarter per-ton price of $30. While stumpage prices are
lower than they were a year ago, pine sawtimber prices have been trending upward since the beginning of 2010. The pine pulpwood harvest of 96,095 tons was an increase of 18,901 tons from the harvest in the second quarter of 2009. Because of low
fiber inventories at area papermills during the current-year quarter, the average sales price received for pine pulpwood sold increased $3 per ton when compared to a year ago, to $13 per ton. The Company sold approximately 520 acres of
recreational-use hardwood bottomland at an average sales price of $2,085 per acre during the second quarter of 2010 compared to sales of 724 acres at an average price of $2,089 per acre for the same period of 2009. Hunting lease income of $.5
million was reported for the second quarters of both 2010 and 2009.

Total mineral revenues, consisting of lease rentals and oil and gas
royalties for the second quarter of 2010 were $1.6 million, compared to $1 million in the second quarter of 2009. The majority of this revenue comes from an area known as the Fayetteville Shale Play, an unconventional natural gas
reservoir now being developed in the state of Arkansas. The Company has under lease or held by production approximately 31,600 net mineral acres in the Fayetteville Shale Play. During the second quarter of 2010, the Company received net royalty
payments of $.7 million from the defined Fayetteville Shale Play, compared to $.3 million received in the second quarter of 2009. The increase is due to a larger number of wells in production when compared to a year ago. The total of all oil and gas
net royalty



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##### Table of Contents

income, inclusive of the Fayetteville Shale Play, was $.9 million and $.4 million for the second quarter of 2010 and 2009, respectively. Total income from mineral lease rentals was $.5 million in
the second quarter of both 2010 and 2009. In addition, there has recently been renewed interest in extracting oil found in the lower portion of the Smackover limestone formation in some of the Arkansas counties and Louisiana parishes located along
the Arkansas/Louisiana border. Deltic has been approached regarding the possibility of leasing the lands in this area on which it owns the mineral interests. The ultimate benefit to Deltic from mineral leases remains speculative and unknown to the
Company and is contingent on the level of crude oil and natural gas prices and the successful extraction of oil and natural gas from these areas.

During most of the second quarter of 2010, the Mills segment continued to benefit from a lumber supply shortage that began in the first quarter.
Because of Deltics vertical integration strategy of owning both timberlands and sawmills, the Company was well positioned to capitalize on the higher lumber prices caused by the supply-side shortages. The average sales price received for
lumber sold of $345 per MBF in the second quarter of 2010 was a $105, or 44 percent, increase from the same period a year ago. Lumber sales were 69.8 million board feet in the current period of 2010, an increase of 3.7 million board feet
from the second quarter of 2009, as the Company operated its mills for more hours to capitalize on the market opportunity. As logging conditions improved during the second quarter, mills that had previously been impacted by log availability resumed
production. This production, along with increased imports from Canada, caused the lumber market to begin to soften in mid-May as the lumber supply increased. Deltic continues to plan for approximately one-half of required stumpage for its
sawmills to come from Company fee timberlands. Because of the historically volatile nature of the wood products market and current market conditions, Deltic will continue to evaluate market conditions and adjust operating hours as needed in order to
match production with market demand.

The Real Estate segment sold four residential lots during the second quarter of 2010 with an
average per-lot sales price of $48,200 compared to five lots sold at an average per-lot sales price of $53,400 in 2009s second quarter. Because of the low cost basis in all of its developments, the Company is able to maintain lot sales prices,
while waiting on the residential real estate market to improve. Deltic is currently developing one neighborhood of smaller-sized lots. All 20 of these lots were placed under contract during the first quarter of 2010, prior to the Company beginning
construction. Any future development activity will depend upon the demand for Deltics residential lots. Commercial real estate sales activity is by nature less predictable than residential activity. No commercial sales occurred in the second
quarter of either 2010 or 2009. In July of 2010, a major health care provider in Arkansas closed on the second phase of a two-part commercial real estate purchase to be developed as a lifestyle medical center. The 19-acre acquisition is located near
the Promenade at Chenal, an upscale shopping center within Chenal Valley, and was originally scheduled to close in 2011.

Operating results for Del-Tin are affected by the overall MDF market and the plants operating performance. Equity in earnings of Del-Tin
increased $1.4 million, to $2.2 million during the second quarter of 2010, when compared to 2009, due primarily to increased sales volume and prices for MDF sold. When an earthquake in Chile on February 27, 2010 created molding supply
interruptions to the U.S. during the quarter, Del-Tin benefited from the opportunity to fill demand as building supply retailers turned to U.S. manufacturers of MDF moldings to fill their inventory needs. With regard to the Companys equity
position in Del-Tin, Deltic continues to reduce depreciation expense related to the add-back per thousand square feet manufactured, which relates to the impairment taken by the Company in 2002 that was not recorded at the Del-Tin level. The
difference in basis between the Company and Del-Tin is being adjusted to account for Del-Tins operating results as if it were a consolidated subsidiary. (For further discussion, refer to Note 4 to the consolidated financial statements.)



19



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##### Table of Contents

Results of Operations

In the following tables, Deltics net sales and results of operations are presented for the quarters ended June 30, 2010 and 2009.
Explanations of significant variances and additional analyses for the Companys consolidated and segment operations follow the tables.



|                                                |  |                        |      |   |      |      |  
|----------------------------------------------- |  | ---------------------- | ---- | - | ---- | ---- | -
|                                                |  | Quarter Ended June 30, |     
|(Millions of dollars, except per share amounts) |  | 2010                   |      |   | 2009 |     
|Net sales                                       |  |                        |      |   |      |      |  
|Woodlands                                       |  | $                      | 11.5 |   |      | 10.3 |  
|Mills                                           |  |                        | 29.9 |   |      | 20.8 |  
|Real Estate                                     |  |                        | 2.4  |   |      | 3.0  |  
|Eliminations                                    |  |                        | (4.8 | ) |      | (5.0 | )
|                                                |  |                        |      |   |      |      |  
|Net sales                                       |  | $                      | 39.0 |   |      | 29.1 |  
|                                                |  |                        |      |   |      |      |  
|                                                |  |                       
|Operating income                                |  |                        |      |   |      |      |  
|Woodlands                                       |  | $                      | 6.4  |   |      | 6.4  |  
|Mills                                           |  |                        | 6.2  |   |      | (1.9 | )
|Real Estate                                     |  |                        | (.5  | ) |      | (.4  | )
|Corporate                                       |  |                        | (4.4 | ) |      | (2.9 | )
|Eliminations                                    |  |                        | (.5  | ) |      | .3   |  
|                                                |  |                        |      |   |      |      |  
|Operating income                                |  |                        | 7.2  |   |      | 1.5  |  
|Equity in earnings of Del-Tin Fiber             |  |                        | 2.2  |   |      | .8   |  
|Interest and other debt expense                 |  |                        | (.9  | ) |      | (.9  | )
|Other income                                    |  |                        |     |   |      | .1   |  
|Income taxes                                    |  |                        | (3.0 | ) |      | (.5  | )
|                                                |  |                        |      |   |      |      |  
|Net income                                      |  | $                      | 5.5  |   |      | 1.0  |  
|                                                |  |                        |      |   |      |      |  
|                                                |  |                       
|Income per common share                         |  |                        |      |   |      |      |  
|Basic and diluted                               |  | $                      | .45  |   |      | .08  |  

Consolidated

The $4.5 million increase in net income was primarily attributed to improved financial results for the Companys Mills segment
and increased equity in earnings of Del-Tin Fiber, which were partially offset by decreased operating income from the Real Estate segment and increased Corporate general and administrative expenses.

Operating income increased $5.7 million. The Woodlands segment operating income was unchanged from the prior year. Increased revenues from pine
pulpwood sales and net oil and gas royalties were primarily offset by a decreased net margin from timberland sold, lower revenues from pine sawtimber sales, increased maintenance expense for roads on the Companys fee timberlands, and an
increased cost of fee timber harvested. The Mills segments operating income improved $8.1 million mainly due to a $105, or 44 percent, increase in the average unit sales price per MBF of lumber sold, combined with a six percent increase in the
lumber sales volume. The Real Estate segments results decreased $.1 million mainly due to reduced sales activity. Corporate expense increased $1.5 million due to higher general and administrative expenses.



20



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##### Table of Contents

Woodlands

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



|                                  |  |                        |       |      |      
|--------------------------------- |  | ---------------------- | ----- | ---- | -----
|                                  |  | Quarter Ended June 30,
|                                  |  | 2010                   |       | 2009
|Gross sales (millions of dollars) |  |                        |       |      |      
|Pine sawtimber                    |  | $                      | 4.7   |      | 4.9  
|Pine pulpwood                     |  |                        | 1.2   |      | .8   
|Hardwood sawtimber                |  |                        | .2    |      | .1   
|Hardwood pulpwood                 |  |                        | .5    |      | .3   
|Oil and gas lease rentals         |  |                        | .5    |      | .5   
|Oil and gas royalties (gross)     |  |                        | 1.1   |      | .5   
|Hunting leases                    |  |                        | .5    |      | .5   
|                                  |  |                       
|Sales volume (thousands of tons)  |  |                        |       |      |      
|Pine sawtimber                    |  |                        | 169.3 |      | 166.6
|Pine pulpwood                     |  |                        | 96.1  |      | 77.2 
|Hardwood sawtimber                |  |                        | 4.4   |      | 4.6  
|Hardwood pulpwood                 |  |                        | 29.5  |      | 34.2 
|                                  |  |                       
|Sales price (per ton)             |  |                        |       |      |      
|Pine sawtimber                    |  | $                      | 28    |      | 30   
|Pine pulpwood                     |  |                        | 13    |      | 10   
|Hardwood sawtimber                |  |                        | 36    |      | 28   
|Hardwood pulpwood                 |  |                        | 15    |      | 8    
|                                  |  |                       
|Timberland                        |  |                        |       |      |      
|Net sales (millions of dollars)   |  | $                      | 1.1   |      | 1.5  
|Sales volume (acres)              |  |                        | 520   |      | 724  
|Sale price (per acre)             |  | $                      | 2,100 |      | 2,100

Net sales increased $1.2 million in 2010
when compared to the 2009 second quarter. Sales of pine sawtimber decreased $.3 million due to a lower average sales price of $28 per ton, which was seven percent lower than 2009s $30 per ton price, partially offset by a two percent increase
in harvest volume. Sales of pine pulpwood increased $.4 million due to a 30 percent increase in the average per-ton sales price, and a 24 percent higher harvest volume. Revenues from hardwood pulpwood were $.2 million higher than in 2009. Revenues
from easements and rights-of-way were $.2 million higher in 2010 versus 2009. Oil and gas royalties in the second quarter of 2010 increased $.6 million when compared to the same period of 2009. Revenues from timberland sales decreased $.4 million
due to 204 fewer acres sold in 2010 versus 2009. The current years revenues from hauling stumpage to other mills increased $.3 million from 2009 second quarter. Operating income was $6.4 million in both 2010 and 2009. The increase in
current-period net sales was offset by increased road maintenance expense, silviculture expense, cost for hauling stumpage to other mills, and the cost of fee timber harvested.



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##### Table of Contents

Mills

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



|                                |  |                        |      |      |     
|------------------------------- |  | ---------------------- | ---- | ---- | ----
|                                |  | Quarter Ended June 30,
|                                |  | 2010                   |      | 2009
|Net sales (millions of dollars) |  |                        |      |      |     
|Lumber                          |  | $                      | 24.1 |      | 15.8
|Residual by-products            |  |                        | 4.4  |      | 4.1 
|                                |  |                       
|Lumber                          |  |                        |      |      |     
|Finished production (MMBF)      |  |                        | 70.9 |      | 61.8
|Sales volume (MMBF)             |  |                        | 69.8 |      | 66.1
|Sales price (per MBF)           |  | $                      | 345  |      | 240 

Net sales increased $9.1 million, or 44
percent, due to higher average lumber sales prices and increased lumber sales volume. The average lumber sales price in the second quarter of 2010 increased $105 per MBF from the second quarter of 2009 and the lumber sales volume increased six
percent, or 3.7 million board feet, from the second quarter 2009. Operating income increased $8.1 million due to the same factors affecting net sales.

Real Estate

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



|                                           |  |                        |     |      |    
|------------------------------------------ |  | ---------------------- | --- | ---- | ---
|                                           |  | Quarter Ended June 30,
|                                           |  | 2010                   |     | 2009
|Net sales (millions of dollars)            |  |                        |     |      |    
|Residential lots                           |  | $                      | .2  |      | .3 
|Speculative home                           |  |                        |    |      | .6 
|Chenal Country Club                        |  |                        | 2.1 |      | 2.1
|                                           |  |                       
|Sales volume                               |  |                        |     |      |    
|Residential lots                           |  |                        | 4   |      | 5  
|Speculative home                           |  |                        |    |      | 1  
|                                           |  |                       
|Average sales price (thousands of dollars) |  |                        |     |      |    
|Residential lots                           |  | $                      | 48  |      | 53 
|Speculative home                           |  |                        |    |      | 556

Net sales for the second quarter 2010
decreased $.6 million from the second quarter 2009 due to a decrease in the number of residential lots closed and to decreased revenues from speculative home sales in the current-year quarter. The current-year loss from operations was $.1 million
more than 2009 due to the same factors affecting net sales.

Corporate

The $1.5 million increase in operating expense for Corporate functions was due primarily to higher general and administrative expenses, primarily
employee incentive plan expenses, resulting from the improved financial results for the quarter.



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##### Table of Contents

Eliminations

Intersegment sales of timber from Deltics Woodlands to the Mills segment decreased $.2 million to $4.8 million. The decrease was due to a
lower transfer price from the Woodlands segment, partially offset by an increase in the volume of logs coming into Deltic sawmills from its 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 second quarter of 2010, Deltics equity in Del-Tin was $2.2 million compared to $.8 million for the same period of 2009. The $1.4
million increase in the second quarter of 2010 when compared to 2009 was due to a higher sales price per thousand square feet, (MSF) and increased sales volume. The increase in both price and volume were primarily due to an earthquake in
Chile on February 27, 2010, which caused an interruption in their exports of moldings to the U.S. Additional selected financial and statistical data for Del-Tin is shown in the following table.



|                                |  |                       |      |      |     
|------------------------------- |  | --------------------- | ---- | ---- | ----
|                                |  | Quarter EndedJune 30,
|                                |  | 2010                  |      | 2009
|Net sales (millions of dollars) |  | $                     | 21.0 |      | 13.1
|Finished production (MMSF)      |  |                       | 39.3 |      | 26.0
|Board sales (MMSF)              |  |                       | 39.9 |      | 25.6
|Sales price (per MSF)           |  | $                     | 528  |      | 515 

Income Taxes

The effective income tax rate was 35 percent for 2010 and 33 percent for 2009.

Six Months Ended June 30, 2010 Compared with Six Months Ended June 30, 2009

In the following tables, Deltics net sales and results of operations are presented for the six months ended June 30, 2010 and 2009.
Explanations of significant variances and additional analyses for the Companys consolidated and segment operations follow the tables.



|                                                |  |                           |      |   |      |      |  
|----------------------------------------------- |  | ------------------------- | ---- | - | ---- | ---- | -
|                                                |  | Six Months Ended June 30, |     
|(Millions of dollars, except per share amounts) |  | 2010                      |      |   | 2009 |     
|Net sales                                       |  |                           |      |   |      |      |  
|Woodlands                                       |  | $                         | 20.5 |   |      | 20.2 |  
|Mills                                           |  |                           | 54.5 |   |      | 36.8 |  
|Real Estate                                     |  |                           | 4.7  |   |      | 4.6  |  
|Eliminations                                    |  |                           | (8.8 | ) |      | (9.6 | )
|                                                |  |                           |      |   |      |      |  
|Net sales                                       |  | $                         | 70.9 |   |      | 52.0 |  
|                                                |  |                           |      |   |      |      |  



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##### Table of Contents

|                                                |  |                           |      |   |      |      |  
|----------------------------------------------- |  | ------------------------- | ---- | - | ---- | ---- | -
|                                                |  | Six Months Ended June 30, |     
|(Millions of dollars, except per share amounts) |  | 2010                      |      |   | 2009 |     
|Operating income and net income/(loss)          |  |                           |      |   |      |      |  
|Woodlands                                       |  | $                         | 11.5 |   |      | 12.1 |  
|Mills                                           |  |                           | 8.7  |   |      | (5.5 | )
|Real Estate                                     |  |                           | (1.2 | ) |      | (1.4 | )
|Corporate                                       |  |                           | (7.9 | ) |      | (5.8 | )
|Eliminations                                    |  |                           | (.2  | ) |      | .9   |  
|                                                |  |                           |      |   |      |      |  
|Operating income                                |  |                           | 10.9 |   |      | .3   |  
|Equity in earnings of Del-Tin Fiber             |  |                           | 2.7  |   |      | 1.6  |  
|Interest income                                 |  |                           | .1   |   |      |     |  
|Interest and other debt expense                 |  |                           | (1.8 | ) |      | (1.8 | )
|Interest capitalized                            |  |                           |     |   |      | .1   |  
|Other income                                    |  |                           |     |   |      | .1   |  
|Income taxes                                    |  |                           | (4.1 | ) |      | (.5  | )
|                                                |  |                           |      |   |      |      |  
|Net income/(loss)                               |  | $                         | 7.8  |   |      | (.2  | )
|                                                |  |                           |      |   |      |      |  
|                                                |  |                          
|Income/(loss) per common share                  |  |                           |      |   |      |      |  
|Basic and diluted                               |  | $                         | .63  |   |      | (.02 | )

Consolidated

The $8 million increase in net income is primarily due to improved operating results from the Mills and Real Estate segments and increased equity in
earnings from Del-Tin Fiber, partially offset by decreased operating results for the Woodlands segment and higher Corporate general and administrative expenses.

Operating income increased $10.6 million from 2009. The Woodlands segment decreased $.6 million due to decreased revenues from pine sawtimber
sales, fewer acres of timberland sold, and increased maintenance expense for roads on the Companys fee timberlands in 2010. The Mills segment increased $14.2 million due to a higher average unit lumber sales price and increased sales volumes.
The Real Estate segments operating loss decreased $.2 million due to an increase in residential lots sold and to a higher average per-lot sales price. Corporate expenses increased $2.1 million mainly due to higher general and administrative
expenses.

Woodlands

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



|                                 |  |                           |       |      |      
|-------------------------------- |  | ------------------------- | ----- | ---- | -----
|                                 |  | Six Months Ended June 30,
|                                 |  | 2010                      |       | 2009
|Net sales (millions of dollars)  |  |                           |       |      |      
|Pine sawtimber                   |  | $                         | 8.5   |      | 9.5  
|Pine pulpwood                    |  |                           | 2.4   |      | 1.8  
|Hardwood sawtimber               |  |                           | .2    |      | .2   
|Hardwood pulpwood                |  |                           | .6    |      | .5   
|Oil and gas lease rentals        |  |                           | 1.0   |      | 1.0  
|Oil and gas royalties (gross)    |  |                           | 2.1   |      | 1.0  
|Hunting leases                   |  |                           | 1.0   |      | .9   
|                                 |  |                          
|Sales volume (thousands of tons) |  |                           |       |      |      
|Pine sawtimber                   |  |                           | 315.8 |      | 322.1
|Pine pulpwood                    |  |                           | 175.5 |      | 167.0
|Hardwood sawtimber               |  |                           | 5.4   |      | 8.0  
|Hardwood pulpwood                |  |                           | 42.8  |      | 67.4 



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##### Table of Contents

|                                |  |                           |       |      |      
|------------------------------- |  | ------------------------- | ----- | ---- | -----
|                                |  | Six Months Ended June 30,
|                                |  | 2010                      |       | 2009
|Sales price (per ton)           |  |                           |       |      |      
|Pine sawtimber                  |  | $                         | 27    |      | 29   
|Pine pulpwood                   |  |                           | 14    |      | 11   
|Hardwood sawtimber              |  |                           | 35    |      | 30   
|Hardwood pulpwood               |  |                           | 15    |      | 8    
|                                |  |                          
|Timberland                      |  |                           |       |      |      
|Net sales (millions of dollars) |  | $                         | 1.5   |      | 1.9  
|Sales volume (acres)            |  |                           | 752   |      | 1,001
|Sales price (per acre)          |  | $                         | 1,900 |      | 1,900

Net sales increased $.3 million. The
per-ton sales price and harvest volumes for pine sawtimber decreased, causing $.9 million less in sales. There was a $.6 million increase in pine pulpwood revenues. Royalty income was $1.1 million more than in 2009. Sales of timberland decreased $.5
million and other income from well-site damages decreased $.2 million from the prior year. The decrease in operating results was due to increased silviculture, road maintenance, and fee timber harvested expenses, which were partially offset by the
increase in net sales.

Mills

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



|                                |  |                           |       |      |      
|------------------------------- |  | ------------------------- | ----- | ---- | -----
|                                |  | Six Months Ended June 30,
|                                |  | 2010                      |       | 2009
|Net sales (millions of dollars) |  |                           |       |      |      
|Lumber                          |  | $                         | 43.8  |      | 28.1 
|Residual by-products            |  |                           | 8.2   |      | 7.2  
|                                |  |                          
|Lumber                          |  |                           |       |      |      
|Finished production (MMBF)      |  |                           | 131.4 |      | 115.1
|Sales volume (MMBF)             |  |                           | 133.5 |      | 118.4
|Sales price (per MBF)           |  | $                         | 328   |      | 238  

Net sales increased $17.7 million due to
higher lumber prices and sales volume. The average sales price increased 38 percent from 2009, while sales volume increased 13 percent. Total operating income increased $14.2 million due to the factors impacting net sales.

Real Estate

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



|                                |  |                           |     |      |    
|------------------------------- |  | ------------------------- | --- | ---- | ---
|                                |  | Six Months Ended June 30,
|                                |  | 2010                      |     | 2009
|Net sales (millions of dollars) |  |                           |     |      |    
|Residential lots                |  | $                         | 1.0 |      | .3 
|Speculative home                |  |                           |    |      | .6 
|Chenal Country Club             |  |                           | 3.5 |      | 3.6
|                                |  |                          
|Sales volume                    |  |                           |     |      |    
|Residential lots                |  |                           | 10  |      | 5  
|Speculative home                |  |                           |    |      | 1  



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##### Table of Contents

|                                           |  |                           |    |      |    
|------------------------------------------ |  | ------------------------- | -- | ---- | ---
|                                           |  | Six Months Ended June 30,
|                                           |  | 2010                      |    | 2009
|Average sales price (thousands of dollars) |  |                           |    |      |    
|Residential lots                           |  | $                         | 97 |      | 53 
|Speculative home                           |  |                           |   |      | 556

Net sales increased $.1 million due to the
increase in residential lots sold and to a higher average sales price per-lot, partially offset by decreased sales at Chenal Country Club and revenues from speculative home sales. The increase 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 $2.1 million higher due to increased general and administrative expenses primarily employee
incentive plan expense and professional fees.

Eliminations

Intersegment sales of timber from Deltics Woodlands to the Mills segment decreased $.8 million to $8.8 million. The decrease was due to a
lower transfer price for logs coming into Company sawmills from fee timberlands and a slightly lower volume of logs. Logs supplied by the Woodlands segment to Company sawmills are transferred at prices that approximate market.

Equity in Del-Tin Fiber

For
the first six months of 2010, equity in earnings of Del-Tin Fiber was $2.7 million, an increase of $1.1 million compared to 2009 due mainly to increased sales volume along with a slightly lower raw material cost. Additional selected financial and
statistical data for Del-Tin Fiber is shown in the following table.



|                                |  |                          |      |      |     
|------------------------------- |  | ------------------------ | ---- | ---- | ----
|                                |  | Six Months EndedJune 30,
|                                |  | 2010                     |      | 2009
|Net sales (millions of dollars) |  | $                        | 36.5 |      | 27.1
|Finished production (MMSF)      |  |                          | 69.7 |      | 52.5
|Board sales (MMSF)              |  |                          | 71.4 |      | 52.4
|Sales price (per MSF)           |  | $                        | 511  |      | 516 

Income Taxes

The effective income tax rate was 34 percent for the first six months ended June 30, 2010, and 167 percent for the same period of 2009. A
discrete tax charge related to a 2009 change in state tax law caused the increased prior-period rate.



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##### Table of Contents

Liquidity and Capital Resources

Cash Flows and Capital Expenditures

Net cash provided by operating activities totaled $14 million for the first six months of 2010 compared to $5.5 million for the same period of 2009.
Changes in operating working capital, other than cash and cash equivalents, provided cash of $1.7 million in 2010 and required cash of $.2 million in 2009. 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 $6.1 million in the current-year period and $6.8 million a year ago. Capital expenditures by segment consisted of the following:



|                                                |  |                          |       |      |       |  
|----------------------------------------------- |  | ------------------------ | ----- | ---- | ----- | -
|                                                |  | Six Months EndedJune 30, |      
|(Thousands of dollars)                          |  | 2010                     |       | 2009 |      
|Woodlands, including land exchanges             |  | $                        | 2,334 |      | 4,744 |  
|Mills                                           |  |                          | 2,408 |      | 1,394 |  
|Real Estate, including development expenditures |  |                          | 1,215 |      | 633   |  
|Corporate                                       |  |                          | 121   |      | 42    |  
|                                                |  |                          |       |      |       |  
|Capital expenditures                            |  |                          | 6,078 |      | 6,813 |  
|Non-cash land exchange                          |  |                          |      |      | (36   | )
|                                                |  |                          |       |      |       |  
|Capital expenditures requiring cash             |  | $                        | 6,078 |      | 6,777 |  
|                                                |  |                          |       |      |       |  

The net change in purchased stumpage inventory to be utilized in the Companys sawmilling operations required
cash of $.3 million in 2010 and $.1 million in 2009. Deltic advanced $.7 million to Del-Tin, and received repayments of $3 million in 2010. This compares to advances and repayments of $2.9 million to Del-Tin in 2009. 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 $3.1 million in 2010, and $2.6 million in 2009. The Company borrowed $2 million and repaid
$14.6 million of debt in 2010 and had net borrowings of $.9 million in 2009. There have been no treasury stock purchases in 2010, while there were $1.1 million in treasury stock purchases in 2009. Dividends of $1.9 million were paid in 2010 and
2009. Proceeds from exercises of stock options and the related tax benefits were $.2 million in 2010 and $.7 million in 2009.

Financial Condition

Working
capital totaled $3.3 million at June 30, 2010, and $5.4 million at December 31, 2009. Deltics working capital ratio at June 30, 2010 was 1.19 to 1, compared to 1.41 to 1 at the end of 2009. Cash and cash equivalents at the end
of the second quarter of 2010 was unchanged from December 31, 2009. Deltics long-term debt to stockholders equity ratio was .353 to 1 at June 30, 2010 and .422 to 1 at December 31, 2009.

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 $300 million, inclusive of a $50 million letter of credit feature. The agreement will expire on September 9, 2012. As of June 30, 2010, $263 million was available. The credit agreement contains restrictive covenants,
including limitations on



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##### Table of Contents

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 included in the Companys 2009 annual report on Form 10-K.)

The table below sets forth the
covenants in the credit facility and status with respect to these covenants as of June 30, 2010 and December 31, 2009.



|                                                                                                          |  |                       |  |                               |  |                              
|--------------------------------------------------------------------------------------------------------- |  | --------------------- |  | ----------------------------- |  | -----------------------------
|                                                                                                          |  | CovenantsRequirements |  | Actual Ratios atJune 30, 2010 |  | Actual Ratios atDec. 31, 2009
|Leverage ratio should be less than:                                                                       |  | .65 to 1              |  | .299 to 1                     |  | .332 to 1                    
|Fixed charge coverage ratio should be greater than:                                                       |  | 2.5 to 1              |  | 6.73 to 1                     |  | 5.14 to 1                    
|Minimum timber market value must be greater than 175% of total senior indebtedness, presented as a ratio: |  | 1.75 to 1             |  | 4.39 to 1                     |  | 3.97 to 1                    

Based on managements current
operating projections, the Company believes it will remain in compliance with the debt covenants. 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 it 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 March 31, 2010, 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 2010, 35,571 shares were purchased 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 ($14.8 million at June 30, 2010) of Del-Tin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.

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



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##### Table of Contents

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 2009 annual report on Form 10-K.)

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 |       | During2010 |     | 2011to 2012 |      | 2013to 2014 |      | After2014
|Contractual cash payment obligations                   |  |       |       |            |     |             |      |             |      |           |     
|Real estate development committed capital costs        |  | $     | 3.5   |            | .4  |             | 2.4  |             | .7   |           |    
|Woodlands land acquisition and committed capital costs |  |       | .1    |            | .1  |             |     |             |     |           |    
|Mills committed capital costs                          |  |       | .8    |            | .8  |             |     |             |     |           |    
|Long-term debt                                         |  |       | 79.8  |            | .6  |             | 39.2 |             |     |           | 40.0
|Interest on debt*                                      |  |       | 16.9  |            | 1.5 |             | 5.8  |             | 4.8  |           | 4.8 
|Retirement plans                                       |  |       | 14.8  |            | .6  |             | 2.5  |             | 2.9  |           | 8.8 
|Other postretirement benefits                          |  |       | 4.5   |            | .2  |             | .8   |             | .9   |           | 2.6 
|Unrecognized tax benefits                              |  |       | 2.7   |            |    |             | 1.7  |             | 1.0  |           |    
|Other liabilities                                      |  |       | 4.4   |            | .9  |             | 3.1  |             | .4   |           |    
|                                                       |  |       |       |            |     |             |      |             |      |           |     
|                                                       |  | $     | 127.5 |            | 5.1 |             | 55.5 |             | 10.7 |           | 56.2
|                                                       |  |       |       |            |     |             |      |             |      |           |     
|Other commercial commitment expirations                |  |       |       |            |     |             |      |             |      |           |     
|Guarantee of indebtedness of Del-Tin Fiber             |  | $     | 14.8  |            |    |             | 14.8 |             |     |           |    
|Timber cutting agreements                              |  |       | .3    |            | .2  |             | .1   |             |     |           |    
|Letters of credit                                      |  |       | .4    |            |    |             | .3   |             | .1   |           |    
|                                                       |  |       |       |            |     |             |      |             |      |           |     
|                                                       |  | $     | 15.5  |            | .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.



29



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##### Table of Contents

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 2009 annual report on Form 10-K, and this disclosure should be read in conjunction with this Form 10-Q.

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 165,000 to 175,000 tons in the third quarter of 2010 and 550,000 to 600,000 tons for the year.
Finished lumber sales volume will continue to be subject to market conditions, and is estimated at 65 to 75 million board feet for the third quarter and 240 to 260 million board feet for the year. Residential lot sales are projected to be
two to five lots and 20 to 30 lots for the third quarter and the year, respectively. Deltic has already closed on the sale of approximately 19 acres of commercial real estate in Chenal Valley during the third quarter of 2010.

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 2009 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 June 30, 2010, 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.



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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 2009 annual report on
Form 10-K.

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

Issuer Purchase of Equity Securities



|                               |  |                               |  |                            |  |                                                                              |  |                                                                                               
|------------------------------ |  | ----------------------------- |  | -------------------------- |  | ---------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------
|Period                         |  | TotalNumber ofSharesPurchased |  | AveragePrice PaidPer Share |  | Total Number ofShares Purchasedas Part of PubliclyAnnounced Plansor Programs |  | Maximum ApproximateDollar Value of Sharesthat May Yet BePurchased Under 
thePlans or Programs1
|April 1 through April 30, 2010 |  |                              |  |                           |  |                                                                             |  | $20,434,011                                                                                   
|May 1 through May 31, 2010     |  |                              |  |                           |  |                                                                             |  | $20,434,011                                                                                   
|June 1 through June 30, 2010   |  |                              |  |                           |  |                                                                             |  | $20,434,011                                                                                   

1In 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.    Removed and Reserved

None.

Item 5.    Other Information

None.



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##### Table of Contents

Item 6.    Exhibits



|                   |  |                                                                                                 
|------------------ |  | ------------------------------------------------------------------------------------------------
|Index to Exhibits 
|                   | 
|ExhibitDesignation |  | 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.                        



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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: |  | August 3, 2010 |  |  |  | By: |  | /s/ Ray C. Dillon               
|      |  |                |  |  |  |     |  | Ray C. Dillon, President        
|      |  |                |  |  |  |     |  | (Principle Executive Officer)   
|      |  |                |  | 
|Date: |  | August 3, 2010 |  |  |  | By: |  | /s/ Kenneth D. Mann             
|      |  |                |  |  |  |     |  | Kenneth D. Mann, Vice President,
|      |  |                |  |  |  |     |  | Finance and Administration      
|      |  |                |  |  |  |     |  | (Principle Financial Officer)   
|      |  |                |  | 
|Date: |  | August 3, 2010 |  |  |  | By: |  | /s/ Byrom L. Walker             
|      |  |                |  |  |  |     |  | Byrom L. Walker, Controller     
|      |  |                |  |  |  |     |  | (Principal Accounting Officer)  



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