##### 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 March 31, 2008

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  xNo   ̈.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer
and large accelerated filer 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 Securities
Exchange Act of 1934).  Yes   ̈    No  x.

Number of shares of Common Stock, $.01 Par Value, outstanding at March 31, 2008, was 12,444,950.









---

##### Table of Contents

TABLE OF CONTENTS - FIRST QUARTER 2008 FORM 10-Q REPORT



|                               |  |                                                                                       |  |   
|------------------------------ |  | ------------------------------------------------------------------------------------- |  | --
|                               |  | PageNumber                                                                           
|PART I - Financial Information
|Item 1.                        |  | Financial Statements                                                                  |  | 3 
|                               |  |                                                                                      
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 17
|                               |  |                                                                                      
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 26
|                               |  |                                                                                      
|Item 4.                        |  | Controls and Procedures                                                               |  | 26
|                              
|PART II - Other Information   
|Item 1.                        |  | Legal Proceedings                                                                     |  | 27
|                               |  |                                                                                      
|Item 1A.                       |  | Risk Factors                                                                          |  | 27
|                               |  |                                                                                      
|Item 2.                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 27
|                               |  |                                                                                      
|Item 3.                        |  | Defaults Upon Senior Securities                                                       |  | 27
|                               |  |                                                                                      
|Item 4.                        |  | Submission of Matters to a Vote of Security Holders                                   |  | 27
|                               |  |                                                                                      
|Item 5.                        |  | Other Information                                                                     |  | 27
|                               |  |                                                                                      
|Item 6.                        |  | Exhibits                                                                              |  | 28
|                               | 
|Signatures                     |  | 29                                                                                   



2



---

##### Table of Contents

PART I - FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated
Balance Sheets



(Thousands of dollars)



|                                                                                               |  |               |         |   |                  |         |  
|---------------------------------------------------------------------------------------------- |  | ------------- | ------- | - | ---------------- | ------- | -
|                                                                                               |  | (Unaudited)   |         |   |                  |        
|                                                                                               |  | March 31,2008 |         |   | December 31,2007 |        
|Assets                                                                                         |  |               |         |   |                  |         |  
|Current assets                                                                                 |  |               |         |   |                  |         |  
|Cash and cash equivalents                                                                      |  | $             | 6,412   |   |                  | 10,673  |  
|Trade accounts receivable, net of allowance for doubtful accounts of $53 and $52, respectively |  |               | 4,012   |   |                  | 3,941   |  
|Other receivables                                                                              |  |               | 188     |   |                  | 161     |  
|Inventories                                                                                    |  |               | 6,214   |   |                  | 6,156   |  
|Prepaid expenses and other current assets                                                      |  |               | 3,574   |   |                  | 2,302   |  
|                                                                                               |  |               |         |   |                  |         |  
|Total current assets                                                                           |  |               | 20,400  |   |                  | 23,233  |  
|                                                                                               |  |              
|Investment in real estate held for development and sale                                        |  |               | 46,259  |   |                  | 46,048  |  
|Investment in Del-Tin Fiber                                                                    |  |               | 7,492   |   |                  | 7,017   |  
|Other investments and noncurrent receivables                                                   |  |               | 2,539   |   |                  | 2,445   |  
|Timber and timberlandsnet                                                                     |  |               | 210,112 |   |                  | 208,428 |  
|Property, plant, and equipmentnet                                                             |  |               | 39,216  |   |                  | 39,214  |  
|Deferred charges and other assets                                                              |  |               | 2,345   |   |                  | 2,359   |  
|                                                                                               |  |               |         |   |                  |         |  
|Total assets                                                                                   |  | $             | 328,363 |   |                  | 328,744 |  
|                                                                                               |  |               |         |   |                  |         |  
|Liabilities and Stockholders Equity                                                           |  |               |         |   |                  |         |  
|Current liabilities                                                                            |  |               |         |   |                  |         |  
|Trade accounts payable                                                                         |  | $             | 2,301   |   |                  | 2,660   |  
|Current maturities of long-term debt                                                           |  |               | 3,333   |   |                  | 3,333   |  
|Accrued taxes other than income taxes                                                          |  |               | 2,033   |   |                  | 1,650   |  
|Income taxes payable                                                                           |  |               | 1,047   |   |                  | 1,371   |  
|Deferred revenues and other accrued liabilities                                                |  |               | 7,215   |   |                  | 6,934   |  
|                                                                                               |  |               |         |   |                  |         |  
|Total current liabilities                                                                      |  |               | 15,929  |   |                  | 15,948  |  
|                                                                                               |  |              
|Long-term debt, excluding current maturities                                                   |  |               | 66,667  |   |                  | 66,667  |  
|Deferred tax liabilitiesnet                                                                   |  |               | 7,221   |   |                  | 6,800   |  
|Guarantee of indebtedness of Del-Tin Fiber                                                     |  |               | 1,035   |   |                  | 1,207   |  
|Other noncurrent liabilities                                                                   |  |               | 19,830  |   |                  | 20,036  |  
|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                                                                 |  |               | 76,124  |   |                  | 76,637  |  
|Retained earnings                                                                              |  |               | 153,771 |   |                  | 155,299 |  
|Treasury stock                                                                                 |  |               | (10,746 | ) |                  | (12,385 | )
|Accumulated other comprehensive income                                                         |  |               | (1,596  | ) |                  | (1,593  | )
|                                                                                               |  |               |         |   |                  |         |  
|Total stockholders equity                                                                     |  |               | 217,681 |   |                  | 218,086 |  
|                                                                                               |  |               |         |   |                  |         |  
|Total liabilities and stockholders equity                                                     |  | $             | 328,363 |   |                  | 328,744 |  
|                                                                                               |  |               |         |   |                  |         |  

See accompanying notes to consolidated financial statements.



3



---

##### Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)



(Thousands of dollars, except per share amounts)

|                                                             |  |                             |        |   |      |        |  
|------------------------------------------------------------ |  | --------------------------- | ------ | - | ---- | ------ | -
|                                                             |  | Three Months EndedMarch 31, |       
|                                                             |  | 2008                        |        |   | 2007 |       
|Net sales                                                    |  | $                           | 27,822 |   |      | 40,377 |  
|                                                             |  |                             |        |   |      |        |  
|Costs and expenses                                           |  |                             |        |   |      |        |  
|Cost of sales                                                |  |                             | 20,588 |   |      | 20,928 |  
|Depreciation, amortization, and cost of fee timber harvested |  |                             | 3,767  |   |      | 4,059  |  
|General and administrative expenses                          |  |                             | 3,743  |   |      | 3,707  |  
|                                                             |  |                             |        |   |      |        |  
|Total costs and expenses                                     |  |                             | 28,098 |   |      | 28,694 |  
|                                                             |  |                             |        |   |      |        |  
|Operating income/(loss)                                      |  |                             | (276   | ) |      | 11,683 |  
|                                                             |  |                            
|Equity in earnings of Del-Tin Fiber                          |  |                             | 714    |   |      | 248    |  
|Interest income                                              |  |                             | 109    |   |      | 153    |  
|Interest and other debt expense                              |  |                             | (1,275 | ) |      | (1,340 | )
|Interest capitalized                                         |  |                             | 149    |   |      | 140    |  
|Other income/(expense)                                       |  |                             | 67     |   |      | 127    |  
|                                                             |  |                             |        |   |      |        |  
|Income/(loss) before income taxes                            |  |                             | (512   | ) |      | 11,011 |  
|                                                             |  |                            
|Income tax benefit/(expense)                                 |  |                             | 144    |   |      | (4,362 | )
|                                                             |  |                             |        |   |      |        |  
|Net income/(loss)                                            |  | $                           | (368   | ) |      | 6,649  |  
|                                                             |  |                             |        |   |      |        |  
|Earnings/(loss) per common share                             |  |                             |        |   |      |        |  
|Basic                                                        |  | $                           | (.03   | ) |      | .53    |  
|Assuming dilution                                            |  | $                           | (.03   | ) |      | .53    |  
|Dividends declared per common share                          |  | $                           | .075   |   |      | .075   |  
|                                                             |  |                             |        |   |      |        |  
|Average common shares outstanding (thousands)                |  |                             | 12,413 |   |      | 12,464 |  
|                                                             |  |                             |        |   |      |        |  

See accompanying notes to consolidated financial statements.



4



---

##### Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)



(Thousands of dollars)

|                                                                                      |  |                             |        |   |      |        |  
|------------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | ------ | -
|                                                                                      |  | Three Months EndedMarch 31, |       
|                                                                                      |  | 2008                        |        |   | 2007 |       
|Operating activities                                                                  |  |                             |        |   |      |        |  
|Net income/(loss)                                                                     |  | $                           | (368   | ) |      | 6,649  |  
|Adjustments to reconcile net income to net cash provided by operating activities      |  |                             |        |   |      |        |  
|Depreciation, amortization, and cost of fee timber harvested                          |  |                             | 3,767  |   |      | 4,059  |  
|Deferred income taxes                                                                 |  |                             | 677    |   |      | 2,019  |  
|Real estate costs recovered upon sale                                                 |  |                             | 534    |   |      | 1,702  |  
|Equity in earnings of Del-Tin Fiber                                                   |  |                             | (714   | ) |      | (248   | )
|Stock-based compensation expense                                                      |  |                             | 373    |   |      | 443    |  
|Net increase/(decrease) in liabilities for pension and other postretirement benefits  |  |                             | (16    | ) |      | 166    |  
|Net increase/(decrease) in deferred compensation for stock-based liabilities          |  |                             | (734   | ) |      | (607   | )
|(Increase)/decrease in operating working capital other than cash and cash equivalents |  |                             | (1,239 | ) |      | 1,696  |  
|Othernet                                                                             |  |                             | (387   | ) |      | (4,209 | )
|                                                                                      |  |                             |        |   |      |        |  
|Net cash provided by operating activities                                             |  |                             | 1,893  |   |      | 11,670 |  
|                                                                                      |  |                             |        |   |      |        |  
|Investing activities                                                                  |  |                             |        |   |      |        |  
|Capital expenditures                                                                  |  |                             | (5,573 | ) |      | (6,629 | )
|Net change in purchased stumpage inventory                                            |  |                             | (520   | ) |      | (909   | )
|Advances to Del-Tin Fiber                                                             |  |                             | (1,718 | ) |      | (646   | )
|Distributions from Del-Tin Fiber                                                      |  |                             | 1,785  |   |      | 650    |  
|Net change in funds held by trustee                                                   |  |                             | (175   | ) |      | 111    |  
|Othernet                                                                             |  |                             | 232    |   |      | 417    |  
|                                                                                      |  |                             |        |   |      |        |  
|Net cash required by investing activities                                             |  |                             | (5,969 | ) |      | (7,006 | )
|                                                                                      |  |                             |        |   |      |        |  
|Financing activities                                                                  |  |                             |        |   |      |        |  
|Treasury stock purchases                                                              |  |                             | (11    | ) |      |       |  
|Common stock dividends paid                                                           |  |                             | (932   | ) |      | (936   | )
|Proceeds from stock option exercises                                                  |  |                             | 401    |   |      | 647    |  
|Tax effect of stock based compensation expense                                        |  |                             | 357    |   |      | 212    |  
|                                                                                      |  |                             |        |   |      |        |  
|Net cash required by financing activities                                             |  |                             | (185   | ) |      | (77    | )
|                                                                                      |  |                             |        |   |      |        |  
|Net increase/(decrease) in cash and cash equivalents                                  |  |                             | (4,261 | ) |      | 4,587  |  
|Cash and cash equivalents at January 1                                                |  |                             | 10,673 |   |      | 11,359 |  
|                                                                                      |  |                             |        |   |      |        |  
|Cash and cash equivalents at March 31                                                 |  | $                           | 6,412  |   |      | 15,946 |  
|                                                                                      |  |                             |        |   |      |        |  

See accompanying notes to consolidated financial statements.



5



---

##### Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Stockholders Equity

(Unaudited)



(Thousands of dollars)



|                                                                                               |      |                             |         |      |  |         |  
|---------------------------------------------------------------------------------------------- | ---- | --------------------------- | ------- | ---- |  | ------- | -
|                                                                                               |      | Three Months EndedMarch 31, |        
|                                                                                               | 2008 |                             |         | 2007 | 
|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 2008 and 2007 |      |                             | 128     |      |  | 128     |  
|                                                                                               |      |                             |         |      |  |         |  
|Capital in excess of par value                                                                 |      |                             |         |      |  |         |  
|Balance at beginning of period                                                                 |      |                             | 76,637  |      |  | 73,999  |  
|Exercise of stock options                                                                      |      |                             | (54     | )    |  | 80      |  
|Tax benefits on stock options                                                                  |      |                             | 97      |      |  | 289     |  
|Stock based compensation expense                                                               |      |                             | 373     |      |  | 443     |  
|Restricted stock forfeitures                                                                   |      |                             | 19      |      |  | 75      |  
|Restricted stock awards                                                                        |      |                             | (1,214  | )    |  | (681    | )
|Tax benefits on restricted stock                                                               |      |                             | 266     |      |  |        |  
|                                                                                               |      |                             |         |      |  |         |  
|Balance at end of period                                                                       |      |                             | 76,124  |      |  | 74,205  |  
|                                                                                               |      |                             |         |      |  |         |  
|Retained earnings                                                                              |      |                             |         |      |  |         |  
|Balance at beginning of period                                                                 |      |                             | 155,299 |      |  | 147,406 |  
|Net income/(loss)                                                                              |      |                             | (368    | )    |  | 6,649   |  
|Common stock dividends                                                                         |      |                             | (932    | )    |  | (936    | )
|Transition to FIN 48                                                                           |      |                             |        |      |  | 523     |  
|FAS 158 measurement date transition, net of tax                                                |      |                             | (228    | )    |  |        |  
|                                                                                               |      |                             |         |      |  |         |  
|Balance at end of period                                                                       |      |                             | 153,771 |      |  | 153,642 |  
|                                                                                               |      |                             |         |      |  |         |  
|Treasury stock                                                                                 |      |                             |         |      |  |         |  
|Balance at beginning of period425,622 and 388,682 shares, respectively                        |      |                             | (12,385 | )    |  | (8,932  | )
|Shares purchased219 in 2008 and none in 2007                                                  |      |                             | (11     | )    |  |        |  
|Forfeited restricted stock382 in 2008 and 1,540 in 2007                                       |      |                             | (19     | )    |  | (75     | )
|Shares issued for incentive plans57,334 and 54,251 shares, respectively                       |      |                             | 1,669   |      |  | 1,248   |  
|                                                                                               |      |                             |         |      |  |         |  
|Balance at end of period368,929 and 335,971 shares, respectively                              |      |                             | (10,746 | )    |  | (7,759  | )
|                                                                                               |      |                             |         |      |  |         |  
|Accumulated other comprehensive income                                                         |      |                             |         |      |  |         |  
|Balance at beginning of period                                                                 |      |                             | (1,593  | )    |  | (5,120  | )
|Change in other comprehensive income/(loss) net of tax                                         |      |                             | (3      | )    |  |        |  
|                                                                                               |      |                             |         |      |  |         |  
|Balance at end of period                                                                       |      |                             | (1,596  | )    |  | (5,120  | )
|                                                                                               |      |                             |         |      |  |         |  
|Total stockholders equity                                                                     |      | $                           | 217,681 |      |  | 215,096 |  
|                                                                                               |      |                             |         |      |  |         |  

See accompanying notes to consolidated financial statements.



6



---

##### Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Other Comprehensive Income

(Unaudited)



(Thousands of dollars)



|                                                                              |      |                             |      |      |  |      
|----------------------------------------------------------------------------- | ---- | --------------------------- | ---- | ---- |  | -----
|                                                                              |      | Three Months EndedMarch 31,
|                                                                              | 2008 |                             |      | 2007
|Net income/(loss)                                                             |      | $                           | (368 | )    |  | 6,649
|                                                                              |      |                             |      |      |  |      
|Other comprehensive income/(loss)                                             |      |                             |      |      |  |      
|Items related to employee benefit plans:                                      |      |                             |      |      |  |      
|Transition change in measurement date                                         |      |                             | 18   |      |  |     
|Reclassification adjustment for gains/(losses) included in net income/(loss): |      |                             |      |      |  |      
|Amortization of prior service cost                                            |      |                             | 12   |      |  |     
|Amortization of actuarial loss                                                |      |                             | 15   |      |  |     
|Amortization of plan amendment                                                |      |                             | (50  | )    |  |     
|Income taxes expense related to items of other comprehensive income           |      |                             | 2    |      |  |     
|                                                                              |      |                             |      |      |  |      
|Net change in other comprehensive income/(loss)                               |      |                             | (3   | )    |  |     
|                                                                              |      |                             |      |      |  |      
|Comprehensive income/(loss)                                                   |      | $                           | (371 | )    |  | 6,649
|                                                                              |      |                             |      |      |  |      

See accompanying notes to consolidated financial statements.



7



---

##### Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 1  Accounting Policies

Basis of
Presentation

The consolidated financial statements have been prepared by Deltic Timber Corporation (the Company or
Deltic). Certain information and accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or
omitted pursuant to such rules and regulations of the Securities and Exchange Commission. Although management of the Company believes the disclosures contained herein are adequate to make the information presented not misleading, these consolidated
financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Companys annual report on Form 10-K for the fiscal year ended December 31, 2007. 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 March 31, 2008, and the results of its operations and cash flows for the three months ended March 31, 2008 and 2007. These consolidated financial statements are not necessarily indicative of results to be
expected for the full year.

Recently Issued Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157). SFAS 157 provides guidance for using
fair value to measure assets and liabilities and requires additional disclosure about the use of fair value measures, the information used to measure fair value, and the effect fair value measurements have on earnings. SFAS 157 does not require any
new fair value measurements. SFAS 157 for financial assets and financial liabilities is effective for the Company beginning January 1, 2008. On January 1, 2009, the beginning of the next fiscal year, the standard will also apply to
non-financial assets and non-financial liabilities of the Company. The adoption of SFAS 157 for financial assets and financial liabilities did not have a material impact on the Companys consolidated financial statements. FASB Staff Position
SFAS 157-2, Effective Date of FASB Statement No. 157 (FSP FAS 157-2) delays the effective date of SFAS 157 for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair
value in the financial statements on a recurring basis (at least annually). Management is evaluating the impact that SFAS 157 will have on its non-financial assets and non-financial liabilities. The Company believes that the impact of these items
upon adoption will not be material to its consolidated financial statements.

In February 2006, the FASB issued SFAS No. 159, The
Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of SFAS No. 115 (SFAS 159). This statement permits entities to choose to measure many financial instruments and certain other items at
fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge
accounting provisions. This statement is expected to expand the use of fair value measurement, which is consistent with the FASBs long-term measurement objectives for accounting for financial instruments. SFAS 159 is effective for the Company
beginning January 1, 2008. The adoption of SFAS 159 did not have a material effect on the Companys consolidated financial statements as management did not elect the fair value measurement option under the provisions of SFAS 159 for any of
the Companys financial assets or liabilities.



8



---

##### Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements



Note 2  Inventories

Inventories at the balance sheet dates consisted of the following:



|                       |  |               |       |              |      
|---------------------- |  | ------------- | ----- | ------------ | -----
|(Thousands of dollars) |  | March 31,2008 |       | Dec. 31,2007
|Logs                   |  | $             | 1,680 |              | 1,800
|Lumber                 |  |               | 4,133 |              | 3,994
|Materials and supplies |  |               | 401   |              | 362  
|                       |  |               |       |              |      
|                       |  | $             | 6,214 |              | 6,156
|                       |  |               |       |              |      

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)         |  | March 31,2008 |       | Dec. 31,2007
|Short-term deferred tax assets |  | $             | 1,438 |              | 1,545
|Prepaid expenses               |  |               | 1,735 |              | 278  
|Other current assets           |  |               | 401   |              | 479  
|                               |  |               |       |              |      
|                               |  | $             | 3,574 |              | 2,302
|                               |  |               |       |              |      

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 completed construction and commenced production
operations of a medium density fiberboard (MDF) plant near El Dorado, Arkansas, during 1998. The Companys membership in Del-Tin Fiber is discussed in more detail in Note 4  Investment in Del-Tin Fiber, in the Companys
2007 annual report on Form 10-K.

On August 26, 2004, the Company executed a guarantee agreement in connection with the refinancing of
the debt of Del-Tin Fiber. Under Deltics guarantee agreement, the Company unconditionally guarantees the payment of 50 percent ($19,750,000 at March 31, 2008) of Del-Tins obligations under its credit agreement. The Company estimated
the fair value of its guarantee of Del-Tin Fibers credit agreement to be $3,450,000. The Company is reducing this liability systematically over the life of the credit agreement, as the Company is released from risk under the guarantee. At
March 31, 2008, the Companys unamortized balance related to the value of the guarantee was $1,035,000.

At March 31, 2008,
and December 31, 2007, the Companys share of the underlying net assets of Del-Tin Fiber exceeded its investment by $15,846,000 and $15,820,000, respectively. The difference relates primarily to the Companys write-off of its carrying
amount for its investment in Del-Tin Fiber as of December 31, 2002, which was not recorded by Del-Tin. 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.



9



---

##### Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements



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

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



|                                       |  |               |        |              |       
|-------------------------------------- |  | ------------- | ------ | ------------ | ------
|(Thousands of dollars)                 |  | March 31,2008 |        | Dec. 31,2007
|Condensed Balance Sheet Information    |  |               |        |              |       
|Current assets                         |  | $             | 9,275  |              | 8,891 
|Property, plant, and equipmentnet     |  |               | 81,677 |              | 82,852
|Other noncurrent assets                |  |               | 74     |              | 94    
|                                       |  |               |        |              |       
|Total assets                           |  | $             | 91,026 |              | 91,837
|                                       |  |               |        |              |       
|Current liabilities                    |  | $             | 10,849 |              | 11,163
|Long-term debt                         |  |               | 33,500 |              | 35,000
|Members capital                       |  |               | 46,677 |              | 45,674
|                                       |  |               |        |              |       
|Total liabilities and members capital |  | $             | 91,026 |              | 91,837
|                                       |  |               |        |              |       



|                                       |      |                             |        |      |  |        |  
|-------------------------------------- | ---- | --------------------------- | ------ | ---- |  | ------ | -
|                                       |      | Three Months EndedMarch 31, |       
|                                       | 2008 |                             |        | 2007 | 
|Condensed Income Statement Information |      |                             |        |      |  |        |  
|Net sales                              |      | $                           | 16,046 |      |  | 15,732 |  
|                                       |      |                             |        |      |  |        |  
|Costs and expenses                     |      |                             |        |      |  |        |  
|Cost of sales                          |      |                             | 12,528 |      |  | 12,642 |  
|Depreciation                           |      |                             | 1,344  |      |  | 1,531  |  
|General and administrative expenses    |      |                             | 612    |      |  | 659    |  
|                                       |      |                             |        |      |  |        |  
|Total costs and expenses               |      |                             | 14,484 |      |  | 14,832 |  
|                                       |      |                             |        |      |  |        |  
|Operating income                       |      |                             | 1,562  |      |  | 900    |  
|Interest income                        |      |                             | 8      |      |  | 13     |  
|Interest and other debt expense        |      |                             | (537   | )    |  | (823   | )
|                                       |      |                             |        |      |  |        |  
|Net income                             |      | $                           | 1,033  |      |  | 90     |  
|                                       |      |                             |        |      |  |        |  



10



---

##### 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)                                                    |  | March 31,2008 |         |   | Dec. 31,2007 |        
|Purchased stumpage inventory                                              |  | $             | 3,978   |   |              | 3,457   |  
|Timberlands                                                               |  |               | 82,128  |   |              | 81,514  |  
|Fee timber                                                                |  |               | 210,170 |   |              | 207,992 |  
|Logging facilities                                                        |  |               | 2,004   |   |              | 1,979   |  
|                                                                          |  |               |         |   |              |         |  
|                                                                          |  |               | 298,280 |   |              | 294,942 |  
|Less accumulated cost of fee timber harvested and facilities depreciation |  |               | (88,168 | ) |              | (86,514 | )
|                                                                          |  |               |         |   |              |         |  
|                                                                          |  | $             | 210,112 |   |              | 208,428 |  
|                                                                          |  |               |         |   |              |         |  

Note 6  Property, Plant, and Equipment

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



|                              |  |               |         |   |              |         |  
|----------------------------- |  | ------------- | ------- | - | ------------ | ------- | -
|(Thousands of dollars)        |  | March 31,2008 |         |   | Dec. 31,2007 |        
|Land                          |  | $             | 125     |   |              | 125     |  
|Land improvements             |  |               | 4,937   |   |              | 4,828   |  
|Buildings and structures      |  |               | 9,938   |   |              | 9,932   |  
|Machinery and equipment       |  |               | 91,938  |   |              | 90,180  |  
|                              |  |               |         |   |              |         |  
|                              |  |               | 106,938 |   |              | 105,065 |  
|Less accumulated depreciation |  |               | (67,722 | ) |              | (65,851 | )
|                              |  |               |         |   |              |         |  
|                              |  | $             | 39,216  |   |              | 39,214  |  
|                              |  |               |         |   |              |         |  

Note 7  Income Taxes

For the quarter ended March 31, 2008, the Company has taken a state income tax position which represents approximately $390,000 of unrecognized tax benefit for the three months ended March 31, 2008. If the
Company were to prevail on all unrecognized tax benefits recorded on the balance sheet, approximately $1,195,000 would benefit the effective rate. Depending upon examinations by tax authorities or the expiration of the statue of limitations, it is
reasonably possible that the related unrecognizable tax benefits for tax positions previously taken may decrease by up to $1,237,000 within the next six months. The actual amount of such decrease, if any, will depend on several future developments
and events, many of which are outside the Companys control.

The Companys policy is to recognize interest expense related to
unrecognized tax benefits in interest expense and penalties in other expenses. During the three months ended March 31, 2008, the Company recognized $9,000 in interest expense from these items. The Company had approximately $59,000 accrued in
deferred revenues and other accrued liabilities for interest and penalties at March 31, 2008.

The Company is no longer subject to U.S.
federal and state examinations by tax authorities for years before 2004.



11



---

##### Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements



Note 8  Deferred Revenues and Other Accrued Liabilities

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



|                              |  |               |       |              |      
|----------------------------- |  | ------------- | ----- | ------------ | -----
|(Thousands of dollars)        |  | March 31,2008 |       | Dec. 31,2007
|Deferred revenuescurrent     |  | $             | 3,188 |              | 3,366
|Vacation accrual              |  |               | 905   |              | 885  
|Deferred compensation         |  |               | 1,137 |              | 1,932
|All other current liabilities |  |               | 1,985 |              | 751  
|                              |  |               |       |              |      
|                              |  | $             | 7,215 |              | 6,934
|                              |  |               |       |              |      

Note 9  Other Noncurrent Liabilities

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



|                                              |  |               |        |              |       
|--------------------------------------------- |  | ------------- | ------ | ------------ | ------
|(Thousands of dollars)                        |  | March 31,2008 |        | Dec. 31,2007
|Accumulated postretirement benefit obligation |  | $             | 8,396  |              | 8,163 
|Deferred compensation                         |  |               | 642    |              | 1,021 
|Excess thrift plan                            |  |               | 695    |              | 767   
|Excess retirement plan                        |  |               | 3,135  |              | 3,049 
|Accrued pension liability                     |  |               | 2,960  |              | 2,842 
|Deferred revenuelong term portion            |  |               | 3,929  |              | 4,116 
|All other noncurrent payables                 |  |               | 73     |              | 78    
|                                              |  |               |        |              |       
|                                              |  | $             | 19,830 |              | 20,036
|                                              |  |               |        |              |       

Note 10  Employee and Retiree Benefit Plans

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



|                                      |  |                             |      |   |      |      |  
|------------------------------------- |  | --------------------------- | ---- | - | ---- | ---- | -
|                                      |  | Three Months EndedMarch 31, |     
|(Thousands of dollars)                |  | 2008                        |      |   | 2007 |     
|Funded qualified retirement plan      |  |                             |      |   |      |      |  
|Service cost                          |  | $                           | 232  |   |      | 261  |  
|Interest cost                         |  |                             | 351  |   |      | 322  |  
|Expected return on plan assets        |  |                             | (374 | ) |      | (311 | )
|Amortization of prior service cost    |  |                             | 15   |   |      | 15   |  
|Recognized actuarial loss             |  |                             |     |   |      | 50   |  
|                                      |  |                             |      |   |      |      |  
|Net retirement expense                |  | $                           | 224  |   |      | 337  |  
|                                      |  |                             |      |   |      |      |  
|Unfunded nonqualified retirement plan |  |                             |      |   |      |      |  
|Service cost                          |  | $                           | 26   |   |      | 34   |  
|Interest cost                         |  |                             | 46   |   |      | 44   |  
|Amortization of prior service cost    |  |                             | (3   | ) |      | (3   | )
|Recognized actuarial loss             |  |                             | 6    |   |      | 10   |  
|                                      |  |                             |      |   |      |      |  
|Net retirement expense                |  | $                           | 75   |   |      | 85   |  
|                                      |  |                             |      |   |      |      |  



12



---

##### Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements



Note 10  Employee and Retiree Benefit Plans (cont.)



|                                      |  |                             |     |   |      |     |  
|------------------------------------- |  | --------------------------- | --- | - | ---- | --- | -
|                                      |  | Three Months EndedMarch 31, |    
|(Thousands of dollars)                |  | 2008                        |     |   | 2007 |    
|Other postretirement benefits         |  |                             |     |   |      |     |  
|Service cost                          |  | $                           | 69  |   |      | 114 |  
|Interest cost                         |  |                             | 122 |   |      | 112 |  
|Amortization of plan amendment        |  |                             | (50 | ) |      | (44 | )
|Recognized actuarial loss             |  |                             | 9   |   |      | 23  |  
|                                      |  |                             |     |   |      |     |  
|Other postretirement benefits expense |  | $                           | 150 |   |      | 205 |  
|                                      |  |                             |     |   |      |     |  

The Company made contributions to its qualified plan of $300,000 during the first three months of
2008.

The measurement date provisions of FASB Statement of Financial Accounting Standard No. 158, Employers Accounting for
Defined Benefits Pension and Other Postretirement Plans, (SFAS No. 158) have been adopted effective January 1, 2008. This provision requires that the plan assets and benefit obligations be measured as of the date of the
Companys year-end balance sheet date. There are two methods of implementing the measurement date change. Deltic is using option two, which is to continue to use the measurements determined for the prior fiscal year-end reporting to estimate
the effects of the change. Accordingly, the Company changed the measurement date for pension and post retirement benefit assets and obligations from September 30 to December 31. Due to the change in measurement date, the Company reduced
retained earnings by $228,000 net of income tax effect of $147,000 and decreased accumulated other comprehensive income by $3,000 net of income tax effect of $2,000.

Effective January 1, 2007, the Company no longer offers prescription drug coverage under its other postretirement benefits plan to post-65 retirees.

Note 11  Stock-Based Compensation

The Consolidated Statement of Income for the three months
ended March 31, 2008 and 2007, included $373,000 and $443,000, respectively, of stock-based compensation expense reflected in general and administrative expenses.

Stock Options  A summary of stock options as of March 31, 2008, and changes during the three-month period then ended are presented below:



|                               |  |         |   |  |                                |       |                                                  |     |                               |   |      
|------------------------------ |  | ------- | - |  | ------------------------------ | ----- | ------------------------------------------------ | --- | ----------------------------- | - | -----
|Options                        |  | Shares  |   |  | Weighted AverageExercise Price |       | Weighted AverageRemainingContractualTerm (Years) |     | AggregateIntrinsicValue($000)
|Outstanding at January 1, 2008 |  | 249,812 |   |  | $                              | 37.06 |                                                  |     |                               |   |      
|                               |  |         |   |  |                                |       |                                                  |     |                               |   |      
|Granted                        |  | 28,481  |   |  |                                |       |                                                  |     |                               |   |      
|Exercised                      |  | (15,629 | ) |  |                                |       |                                                  |     |                               |   |      
|Forfeited/expired              |  | (1,487  | ) |  |                                |       |                                                  |     |                               |   |      
|                               |  |         |   |  |                                |       |                                                  |     |                               |   |      
|Outstanding at March 31, 2008  |  | 261,177 |   |  | $                              | 39.31 |                                                  | 5.5 |                               | $ | 4,281
|                               |  |         |   |  |                                |       |                                                  |     |                               |   |      
|Exercisable at March 31, 2008  |  | 189,496 |   |  | $                              | 34.40 |                                                  | 4.2 |                               | $ | 4,036
|                               |  |         |   |  |                                |       |                                                  |     |                               |   |      



13



---

##### Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements



Note 11  Stock-Based Compensation (cont.)

Restricted Stock and Restricted Stock Units  A summary of nonvested restricted stock as of March 31, 2008, and changes during the
three-month period then ended are presented below:



|                             |  |         |   |  |                                      |      
|---------------------------- |  | ------- | - |  | ------------------------------------ | -----
|Nonvested Restricted Stock   |  | Shares  |   |  | Weighted AverageGrant-DateFair
Value
|Nonvested at January 1, 2008 |  | 66,700  |   |  | $                                    | 44.91
|                             |  |        
|Granted                      |  | 18,341  |   |  |                                      |      
|Vested                       |  | (19,611 | ) |  |                                      |      
|Forfeited                    |  | (179    | ) |  |                                      |      
|                             |  |         |   |  |                                      |      
|Nonvested at March 31, 2008  |  | 65,251  |   |  | $                                    | 51.03
|                             |  |         |   |  |                                      |      

As of March 31, 2008, there was $1,935,000 of unrecognized compensation cost related to
nonvested restricted stock. That cost is expected to be recognized over a weighted-average period of 2.4 years.

Performance Units
 A summary of nonvested restricted stock performance units as of March 31, 2008, and changes during the three months then ended are presented below:



|                                             |  |         |   |  |                                      |      
|-------------------------------------------- |  | ------- | - |  | ------------------------------------ | -----
|Nonvested Restricted Stock Performance Units |  | Shares  |   |  | Weighted AverageGrant-DateFair
Value
|Nonvested at January 1, 2008                 |  | 46,622  |   |  | $                                    | 46.29
|                                             |  |        
|Granted                                      |  | 23,364  |   |  |                                      |      
|Vested                                       |  | (23,222 | ) |  |                                      |      
|Forfeited                                    |  | (203    | ) |  |                                      |      
|                                             |  |         |   |  |                                      |      
|Nonvested at March 31, 2008                  |  | 46,561  |   |  | $                                    | 52.99
|                                             |  |         |   |  |                                      |      

As of March 31, 2008, there was $1,286,000 of unrecognized compensation cost related to
nonvested restricted stock performance units. That cost is expected to be recognized over a weighted-average period of 2.2 years.

Note 12 
Contingencies

On March 28, 2007, the Company and Central Arkansas Water (CAW), a consolidated waterworks, entered into
a full and complete settlement of a pending condemnation litigation involving 680 acres of real property located within the watershed of Lake Maumelle in western Pulaski County, Arkansas. Under the terms of the settlement, CAW paid the Company
$8,175,000 (approximately $12,000 per acre) for the land, and granted the Company a 90-year option to repurchase the land for the same amount should CAW determine the land is not needed for watershed protection or if it ceases to use the land for
such purpose. The Company recorded sales revenues of $8,175,000 and related costs of $675,000 for a net operating gain of $7,500,000 on this transaction during the three months ended March 31, 2007.



14



---

##### Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements



Note 12  Contingencies (cont.)

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

Note 13  Earnings per Common Share

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



|                                                                                                           |  |                             |        |   |      |       
|---------------------------------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | ------
|                                                                                                           |  | Three Months EndedMarch 31,
|(Thousands, except per share amounts)                                                                      |  | 2008                        |        |   | 2007
|Net income/(loss)                                                                                          |  | $                           | (368   | ) |      | 6,649 
|                                                                                                           |  |                             |        |   |      |       
|Weighted average number of common shares used in basic EPS                                                 |  |                             | 12,413 |   |      | 12,464
|Effect of dilutive stock options                                                                           |  |                             |       |   |      | 55    
|                                                                                                           |  |                             |        |   |      |       
|Weighted average number of common shares and dilutive potential common stock used in EPS assuming dilution |  |                             | 12,413 |   |      | 12,519
|                                                                                                           |  |                             |        |   |      |       
|Earnings/(loss) per common share                                                                           |  |                             |        |   |      |       
|Basic and diluted                                                                                          |  | $                           | (.03   | ) |      | .53   

The Company has equity securities that may have had a dilutive effect on earnings per share had the
Company generated income during the quarter ended March 31, 2008. Common stock equivalents that could potentially dilute earnings per share in the future were 73,093 shares. These were not included in the computation of loss per share because
their effect would have been anti-dilutive.

Note 14  Supplemental Cash Flow Disclosures

No income tax was paid for the three months ended March 31, 2008 and 2007. Interest paid, net of amounts capitalized, was $76,000 and $101,000 during
the first three months of 2008 and 2007, respectively. Non-cash activity includes a land exchange of $249,000 in the quarter ended March 31, 2008.

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



|                                                |  |                             |        |   |      |        |  
|----------------------------------------------- |  | --------------------------- | ------ | - | ---- | ------ | -
|                                                |  | Three Months EndedMarch 31, |       
|(Thousands of dollars)                          |  | 2008                        |        |   | 2007 |       
|Trade accounts receivable                       |  | $                           | (71    | ) |      | (1,118 | )
|Other receivables                               |  |                             | (27    | ) |      | 667    |  
|Inventories                                     |  |                             | (58    | ) |      | (673   | )
|Prepaid expenses and other current assets       |  |                             | (1,426 | ) |      | (344   | )
|Trade accounts payable                          |  |                             | (359   | ) |      | (147   | )
|Accrued taxes other than income taxes           |  |                             | 383    |   |      | 501    |  
|Income taxes payable                            |  |                             |       |   |      | 2,810  |  
|Deferred revenues and other accrued liabilities |  |                             | 319    |   |      |       |  
|                                                |  |                             |        |   |      |        |  
|                                                |  | $                           | (1,239 | ) |      | 1,696  |  
|                                                |  |                             |        |   |      |        |  



15



---

##### Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements



Note 15  Business Segments

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



|                                                             |  |                             |        |   |      |        |  
|------------------------------------------------------------ |  | --------------------------- | ------ | - | ---- | ------ | -
|                                                             |  | Three Months EndedMarch 31, |       
|(Thousands of dollars)                                       |  | 2008                        |        |   | 2007 |       
|Net sales                                                    |  |                             |        |   |      |        |  
|Woodlands                                                    |  | $                           | 12,620 |   |      | 14,206 |  
|Mills                                                        |  |                             | 19,800 |   |      | 22,290 |  
|Real Estate1                                                 |  |                             | 2,250  |   |      | 11,568 |  
|Eliminations2                                                |  |                             | (6,848 | ) |      | (7,687 | )
|                                                             |  |                             |        |   |      |        |  
|                                                             |  | $                           | 27,822 |   |      | 40,377 |  
|                                                             |  |                             |        |   |      |        |  
|Income/(loss) before income taxes                            |  |                             |        |   |      |        |  
|Operating income                                             |  |                             |        |   |      |        |  
|Woodlands                                                    |  | $                           | 8,446  |   |      | 9,989  |  
|Mills                                                        |  |                             | (4,459 | ) |      | (1,973 | )
|Real Estate1                                                 |  |                             | (622   | ) |      | 7,350  |  
|Corporate                                                    |  |                             | (3,480 | ) |      | (3,412 | )
|Eliminations                                                 |  |                             | (161   | ) |      | (271   | )
|                                                             |  |                             |        |   |      |        |  
|Operating income/(loss)                                      |  |                             | (276   | ) |      | 11,683 |  
|Equity in earnings of Del-Tin Fiber                          |  |                             | 714    |   |      | 248    |  
|Interest income                                              |  |                             | 109    |   |      | 153    |  
|Interest and other debt expense                              |  |                             | (1,275 | ) |      | (1,340 | )
|Interest capitalized                                         |  |                             | 149    |   |      | 140    |  
|Other income                                                 |  |                             | 67     |   |      | 127    |  
|                                                             |  |                             |        |   |      |        |  
|                                                             |  | $                           | (512   | ) |      | 11,011 |  
|                                                             |  |                             |        |   |      |        |  
|Depreciation, amortization, and cost of fee timber harvested |  |                             |        |   |      |        |  
|Woodlands                                                    |  | $                           | 1,836  |   |      | 2,055  |  
|Mills                                                        |  |                             | 1,763  |   |      | 1,826  |  
|Real Estate                                                  |  |                             | 148    |   |      | 136    |  
|Corporate                                                    |  |                             | 20     |   |      | 42     |  
|                                                             |  |                             |        |   |      |        |  
|                                                             |  | $                           | 3,767  |   |      | 4,059  |  
|                                                             |  |                             |        |   |      |        |  
|Capital expenditures                                         |  |                             |        |   |      |        |  
|Woodlands                                                    |  | $                           | 3,291  |   |      | 2,787  |  
|Mills                                                        |  |                             | 1,624  |   |      | 878    |  
|Real Estate                                                  |  |                             | 862    |   |      | 2,950  |  
|Corporate                                                    |  |                             | 45     |   |      | 14     |  
|                                                             |  |                             |        |   |      |        |  
|                                                             |  | $                           | 5,822  |   |      | 6,629  |  
|                                                             |  |                             |        |   |      |        |  



|1 | First quarter 2007 results reflect the settlement of the
litigation with the Central Arkansas Water. (For additional information, see Note 12  Contingencies.)
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

|2 | Primarily intersegment sales of timber from Woodlands to Mills.
|- | ---------------------------------------------------------------



16



---

##### Table of Contents

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

Executive Overview

The Company recorded a net loss of $.4 million for the first quarter of
2008 compared to income of $6.6 million for the same period of 2007. The Woodlands segment remained the established core operation of the Company by providing $8.4 million in operating income during the current quarter of 2008. Deltics Real
Estate and Mills segments continue to be affected by the slowdown in the U.S. housing market and each reported an operating loss in the first quarter of 2008. The Real Estate segment recorded a loss for the quarter of $.6 million in the current year
compared to income of $7.4 million for the corresponding period of 2007. The results for the 2007 period included a sale of 680 acres of undeveloped real estate at $12,000 per acre, while no undeveloped or commercial real estate sales occurred in
the first quarter of 2008. The Companys Mills segment recorded an operating loss of $4.4 million in the first quarter of 2008 compared to a loss of $2.0 million in the first quarter of 2007, due mainly to a $52 per thousand board feet
(MBF), or 18 percent, decrease in the finished lumber sales realization, to $240 per MBF. Deltic owns a 50 percent interest in Del-Tin Fiber L.L.C. and recorded income of $.7 million for the first quarter of 2008, up from $.2 million for
the same quarter of 2007.

Deltic is primarily a wood products producer operating in a commodity-based business environment, with a major
diversification in real estate development. This environment is affected by a number of factors including general economic conditions, interest rates, imports, foreign exchange rates, housing starts, residential repair and remodeling, commercial
construction, industry capacity and production levels, the availability of raw material, and weather conditions. The ongoing housing slump has brought new home sales to a 17 year low, while housing starts continue to be 37 percent below prior year
levels. Factors impacting the U.S. housing market are increased new home inventory levels which reached their highest point in 26 years, stricter lending practices brought about by sub-prime mortgage failures, current liquidity issues within the
banking industry, and uncertainties in the U.S. economy. The Companys sales of real estate were affected by these factors and resulted in a reduction in residential lot sales when compared to the first quarter of 2007. Conditions in the
housing market continue to depress the demand for softwood lumber products, thus lowering consumption levels. Given its relative size and the nature of most commodity markets, the Company has little or no control over pricing levels for its lumber
products. The Company will continue to focus on increasing operating efficiencies and reducing controllable manufacturing costs.

For the
first quarter of 2008, pine sawtimber harvest levels decreased 56,451 tons, when compared to the first quarter of 2007, to 180,374 tons. The decrease is due in part to timing related to the Companys plans to use the 2008 annual harvest
internally in its sawmills and partly to weather conditions during the first quarter of 2008. Deltic plans to keep 2008s total pine sawtimber harvest volume comparable to the level in 2007, thus continuing to manage the timberlands on a
sustainable-yield basis. The Company harvested 99,776 tons of pine pulpwood during the first quarter of 2008, a decrease of 50,338 tons from the same period in 2007. The average sales price was $16 per ton, a 14 percent increase from $14 per ton for
the first quarter of 2007. Increased prices for pulpwood have been attributed in part to reduced production of residual wood chips from area sawmills due to production curtailments caused by the depressed lumber market. The Company sold
approximately 674 acres of non-strategic hardwood bottomland at an average sales price of $2,128 per acre during the first quarter of 2008 compared to no sales of timberland for the same period of 2007.

Recent advances in technology and increased pricing levels for natural gas have resulted in the viability of expanded natural gas exploration within the
state of Arkansas. One current area of activity known as the Fayetteville Shale Play is an unconventional natural gas reservoir ranging in depth from 1,300 feet to 6,500 feet, and is spread across multiple Arkansas counties. Deltic has
leased approximately 32,000 net mineral acres in this area to various exploration enterprises and received applicable lease bonus payments and the possibility of future royalty income should production be established. The Company continues to
evaluate additional leasing requests within the currently defined boundary of the Fayetteville Shale Play, although future leasing will probably not be significant within the boundary currently defined by the Arkansas Oil and Gas Commission. The
ultimate benefit to Deltic from



17



---

##### Table of Contents

these mineral leases remains speculative and unknown to the Company and is contingent on the successful extraction and sale of natural gas from this area.
Deltics gas royalties from the defined Fayetteville Shale Play area were approximately $40,000 per month during the first quarter of 2008.

The Mills segment continued to operate in a depressed lumber market which has caused the average sales price in the first quarter of 2008 to decline $52 per MBF, to $240 per MBF, or 18 percent, from the first quarter of 2007s average
of $292 per MBF. Lumber sales were 62.5 million board feet in the current period of 2008, an increase when compared to 61.6 million board feet for the same period of 2007, due mainly to improved hourly production rates for the sawmills. As
with any commodity market, the Company expects the historical volatility of lumber prices to continue in the future. The Company plans for over half of the logs supplied to its sawmills to come from its strategically located fee timberlands.

The Real Estate segment closed the sale of seven residential lots during the first quarter of 2008, a reduction of seven residential lots
when compared to the same quarter in 2007. The average sales price per lot declined $32,000 when compared to the same quarter last year due to the mix of lots sold. Deltics lot development plans provide for lot offerings that represent most
real estate market segments for planned communities. The Company will offer one new neighborhood within Chenal Valley in August, consisting of 32 lots in the middle-tier of its three price levels, to maintain its planned lot inventory mix. The
Company sold six lots within the Chenal Valley development in the first quarter of 2008 versus 12 during the same period of 2007. In Deltics other two developments, Red Oak Ridge and Chenal Downs, one lot was sold during the first quarter of
2008 versus two during the same period of 2007. Chenal Downs is fully developed and Deltic does not plan to develop any additional lots within Red Oak Ridge during 2008. Future annual development activity will be dependent upon the demand for the
Companys residential lots. Commercial real estate sales activity is by nature less predictable than residential activity. No commercial sales occurred in the first quarter of 2008 or 2007. Multi-family housing sites continue to receive
interest, and interest in commercial real estate acreage in the area of The Promenade at Chenal, an upscale shopping center within Chenal Valley, has increased as the opening date for the center nears. Currently about one-half of the
tenants of The Promenade anticipate opening by mid-summer, with a formal grand opening of The Promenade planned for later this year. The Company had no sales of undeveloped acreage during the current period of 2008 compared to 680 acres sold at
$12,000 per acre during the same period of 2007.

Operating results for Del-Tin Fiber are affected by the overall medium density fiberboard
(MDF) market and the plants operating performance. The demand for thin board, used in store fixtures and laminated flooring, was strong in 2007 and has remained strong through the first quarter of 2008. Del-Tin produced 25 to 35
percent of its product mix in this board and plans to grow its market for this product. Cost of wood fiber, resin glue, and wax used in the manufacturing process continues to remain higher than normal, but Del-Tin has been able to recover a portion
of these costs through MDF sales price increases. Del-Tins operational income increased during the first quarter of 2008, when compared to 2007, due primarily to the greater percentage of thin board sales. 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, which 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.)

The proposed Farm Bill, currently being considered by Congress, includes a timber measure known as the Tree Act that would reduce the
federal tax rate on qualified timber gain. If passed by Congress and signed into law by the President this Act may lower Deltics effective tax rate.



18



---

##### Table of Contents

Results of Operations

In the following tables, Deltics net sales and results of operations are presented for the quarters ended March 31, 2008 and 2007. Explanations of significant variances and additional analyses for the
Companys consolidated and segment operations follow the tables.



|                                                |  |                         |      |   |      |      |  
|----------------------------------------------- |  | ----------------------- | ---- | - | ---- | ---- | -
|                                                |  | Quarter Ended March 31, |     
|(Millions of dollars, except per share amounts) |  | 2008                    |      |   | 2007 |     
|Net sales                                       |  |                         |      |   |      |      |  
|Woodlands                                       |  | $                       | 12.6 |   |      | 14.2 |  
|Mills                                           |  |                         | 19.8 |   |      | 22.3 |  
|Real Estate                                     |  |                         | 2.3  |   |      | 11.6 |  
|Eliminations                                    |  |                         | (6.9 | ) |      | (7.7 | )
|                                                |  |                         |      |   |      |      |  
|Net sales                                       |  | $                       | 27.8 |   |      | 40.4 |  
|                                                |  |                         |      |   |      |      |  
|Operating income/(loss) and net income/(loss)   |  |                         |      |   |      |      |  
|Woodlands                                       |  | $                       | 8.4  |   |      | 10.0 |  
|Mills                                           |  |                         | (4.4 | ) |      | (2.0 | )
|Real Estate                                     |  |                         | (.6  | ) |      | 7.4  |  
|Corporate                                       |  |                         | (3.5 | ) |      | (3.4 | )
|Eliminations                                    |  |                         | (.2  | ) |      | (0.3 | )
|                                                |  |                         |      |   |      |      |  
|Operating income/(loss)                         |  |                         | (.3  | ) |      | 11.7 |  
|Equity in earnings of Del-Tin Fiber             |  |                         | .7   |   |      | .2   |  
|Interest income                                 |  |                         | .1   |   |      | .2   |  
|Interest and other debt expense                 |  |                         | (1.3 | ) |      | (1.3 | )
|Interest capitalized                            |  |                         | .2   |   |      | .1   |  
|Other income                                    |  |                         | .1   |   |      | .1   |  
|Income taxes                                    |  |                         | .1   |   |      | (4.4 | )
|                                                |  |                         |      |   |      |      |  
|Net income/(loss)                               |  | $                       | (.4  | ) |      | 6.6  |  
|                                                |  |                         |      |   |      |      |  
|Earnings/(loss) per common share                |  |                         |      |   |      |      |  
|Basic                                           |  | $                       | (.03 | ) |      | .53  |  
|Assuming dilution                               |  | $                       | (.03 | ) |      | .53  |  

Consolidated

The $7 million decrease in net income is largely due to reductions in real estate sales activity, pine sawtimber harvest volume and average sales price, and lumber sales realizations, partially offset by increased
equity income from Del-Tin Fiber.

Operating income decreased $12 million. The Woodlands segment decreased $1.6 million due to lower pine
sawtimber harvest levels related to the timing of the harvest and weather conditions and reduced stumpage prices. Deltics Mills segment operations decreased $2.4 million primarily because the average lumber sales price decreased $52 per
thousand board feet (MBF) or 18 percent. Real Estate operations decreased $8 million mainly due to the sale of undeveloped real estate which occurred in 2007 and to fewer residential lot sales in 2008.



19



---

##### Table of Contents

Woodlands

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



|                                 |  |                         |       |      |      
|-------------------------------- |  | ----------------------- | ----- | ---- | -----
|                                 |  | Quarter Ended March 31,
|                                 |  | 2008                    |       | 2007
|Net sales (millions of dollars)  |  |                         |       |      |      
|Pine sawtimber                   |  | $                       | 6.7   |      | 10.1 
|Pine pulpwood                    |  |                         | 1.6   |      | 2.0  
|Hardwood sawtimber               |  |                         | .1    |      |     
|Hardwood pulpwood                |  |                         | .3    |      | .1   
|                                 |  |                        
|Sales volume (thousands of tons) |  |                         |       |      |      
|Pine sawtimber                   |  |                         | 180.4 |      | 236.8
|Pine pulpwood                    |  |                         | 99.8  |      | 150.1
|Hardwood sawtimber               |  |                         | 2.4   |      | .8   
|Hardwood pulpwood                |  |                         | 20.0  |      | 12.9 
|                                 |  |                        
|Sales price (per ton)            |  |                         |       |      |      
|Pine sawtimber                   |  | $                       | 37    |      | 42   
|Pine pulpwood                    |  |                         | 16    |      | 14   
|Hardwood sawtimber               |  |                         | 34    |      | 34   
|Hardwood pulpwood                |  |                         | 13    |      | 7    
|                                 |  |                        
|Timberland                       |  |                         |       |      |      
|Net sales (in millions)          |  | $                       | 1.4   |      |     
|Sales volume (acres)             |  |                         | 674   |      |     
|Sales price (per acre)           |  | $                       | 2,128 |      |     

Net sales decreased $1.6 million. Sales of pine sawtimber decreased $3.4 million due to a 24
percent lower sales volume at a lower sales price per ton of $37, an 12 percent decrease as compared to $42 per ton in 2007. The decreased volume is due mainly to planned timing of the pine sawtimber harvest and to weather conditions during the
first quarter of 2008 in Deltics operating region. Sales of pine pulpwood decreased $.4 million due to a 34 percent lower harvest volume which was partially offset by a 14 percent increase in the average per ton sales price. The Company sold
674 acres of non-strategic hardwood bottomland at $2,128 per acre versus no sales in the first quarter of 2007. There was a $.2 million increase in lease income and $.2 million increase in royalty income in the current period of 2008 versus the
first quarter of 2007. The decrease in operating results was due primarily to the decrease in net sales.

Mills

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



|                                |  |                         |      |      |     
|------------------------------- |  | ----------------------- | ---- | ---- | ----
|                                |  | Quarter Ended March 31,
|                                |  | 2008                    |      | 2007
|Net sales (millions of dollars) |  |                         |      |      |     
|Lumber                          |  | $                       | 15.0 |      | 18.0
|Residual by-products            |  |                         | 4.0  |      | 3.4 
|                                |  |                        
|Lumber                          |  |                         |      |      |     
|Finished production (MMBF)      |  |                         | 60.3 |      | 58.8
|Sales volume (MMBF)             |  |                         | 62.5 |      | 61.6
|Sales price (per MBF)           |  | $                       | 240  |      | 292 



20



---

##### Table of Contents

Net sales decreased $2.5 million, or 11 percent, due to lower lumber sales price. The Mills were able to
partially offset the sales decrease with lower per ton log cost and reduced direct manufacturing costs per MBF due to improved operating efficiencies.

Real Estate

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



|                                           |  |                         |     |      |    
|------------------------------------------ |  | ----------------------- | --- | ---- | ---
|                                           |  | Quarter Ended March 31,
|                                           |  | 2008                    |     | 2007
|Net sales (millions of dollars)            |  |                         |     |      |    
|Residential lots                           |  | $                       | .5  |      | 1.4
|Commercial acreage                         |  |                         |    |      |   
|Undeveloped acreage                        |  |                         |    |      | 8.2
|Chenal Country Club                        |  |                         | 1.5 |      | 1.4
|                                           |  |                        
|Sales volume                               |  |                         |     |      |    
|Residential lots                           |  |                         | 7   |      | 14 
|Commercial acres                           |  |                         |    |      |   
|Undeveloped acres                          |  |                         |    |      | 680
|                                           |  |                        
|Average sales price (thousands of dollars) |  |                         |     |      |    
|Residential lots                           |  | $                       | 68  |      | 100
|Commercial acres                           |  |                         |    |      |   
|Undeveloped acres                          |  |                         |    |      | 12 

Net sales decreased $9.3 million due to decreases in sales of undeveloped acreage and residential
lots, combined with a lower average sales price per lot due to sales mix. The decrease in the segments operating income was due primarily to the same factors impacting net sales.

Corporate

The slight increase in
operating expense for Corporate functions was due to higher general and administrative expenses.

Eliminations

Intersegment sales of timber from Deltics Woodlands to the Mills segment decreased $.8 million to $6.9 million. The decrease was due to a lower
transfer price from the Woodlands segment and a slight decline 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
first quarter of 2008, Deltics equity in Del-Tin Fiber was $.7 million compared to $.2 million for the same period of 2007. The $.5 million increase in the first quarter of 2008 when compared to 2007 is due to an increased production
percentage of thin flooring and improved operating efficiencies. Del-Tin was also able to pass along increases in wood fiber, resin glue, and wax cost in its average sales price.



21



---

##### Table of Contents

Additional selected financial and statistical data for Del-Tin Fiber is shown in the following table.



|                                |  |                         |      |      |     
|------------------------------- |  | ----------------------- | ---- | ---- | ----
|                                |  | Quarter Ended March 31,
|                                |  | 2007                    |      | 2008
|Net sales (millions of dollars) |  | $                       | 16.0 |      | 15.7
|Finished production (MMSF)      |  |                         | 29.8 |      | 30.5
|Board sales (MMSF)              |  |                         | 30.1 |      | 33.4
|Sales price (per MSF)           |  | $                       | 532  |      | 471 

Income Taxes

The effective income tax rate was 28 percent for 2008 and 40 percent for 2007. The decrease from 2007 to 2008 was primarily due to permanent differences in state income tax expense. These permanent differences created
current income tax liabilities at the state level, which exceeded any tax benefit that was created by current period losses before income tax.

Liquidity and Capital Resources

Cash Flows and Capital Expenditures

Net cash provided by operating activities totaled $1.9 million for the first three months of 2008 compared to $11.7 million for the same period in 2007.
Changes in operating working capital, other than cash and cash equivalents, required cash of $1.2 million in the 2008 period, but provided cash of $1.7 million in 2007. Changes in other net items in operating activities during 2008 decreased $.4
million while in 2007 the decrease was $4.2 million due primarily to the recognition of previously deferred undeveloped real estate acreage sales proceeds. The Companys accompanying Consolidated Statements of Cash Flows identify other
differences between net income and cash provided by operating activities for each reporting period.

Capital expenditures required cash of
$5.6 million in the current-year period and $6.6 million a year ago. Capital expenditures by segment consisted of the following:



|                                    |  |                             |       |   |      |      
|----------------------------------- |  | --------------------------- | ----- | - | ---- | -----
|                                    |  | Three MonthsEnded March 31,
|                                    |  | 2008                        |       |   | 2007
|(Thousands of dollars)              |  |                             |       |   |      |      
|Woodlands                           |  | $                           | 3,291 |   |      | 2,787
|Mills                               |  |                             | 1,624 |   |      | 878  
|Real Estate                         |  |                             | 862   |   |      | 2,950
|Corporate                           |  |                             | 45    |   |      | 14   
|                                    |  |                             |       |   |      |      
|Capital expenditures                |  |                             | 5,822 |   |      | 6,629
|Non-cash land exchange              |  |                             | (249  | ) |      |     
|                                    |  |                             |       |   |      |      
|Capital expenditures requiring cash |  | $                           | 5,573 |   |      | 6,629
|                                    |  |                             |       |   |      |      

The net change in purchased stumpage inventory to be utilized in the Companys sawmill
operations used cash of $.5 million in 2008 and $.9 million in 2007. The Companys advances to Del-Tin Fiber during the first quarter of 2008 were offset by distributions received from the joint venture, which was a net increase of $.1 million
compared to a year ago. Deltic paid dividends on common stock of $.9 million during both 2008 and 2007. In 2008, proceeds from stock option exercises amounted to $.4 million, a decrease of $.2 million when compared to 2007.



22



---

##### Table of Contents

Financial Condition

Working capital totaled $4.5 million at March 31, 2008, and $7.3 million at December 31, 2007. Deltics working capital ratio at March 31, 2008, was 1.28 to 1, compared to 1.46 to 1 at the end of
2007. Cash and cash equivalents at the end of the first quarter of 2008 were $6.4 million compared to $10.7 million at the end of 2007. During the first three months of 2008, total indebtedness of the Company remained the same as year-end 2007.
Deltics long-term debt to stockholders equity ratio was .306 to 1 at March 31, 2008 and December 31, 2007.

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, expanding lumber production as market conditions allow, and developing real estate at Chenal Valley and Red Oak Ridge.

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 Board announced a $25 million expansion of this program. As of March 31, 2008, the Company had expended $7.3 million under this program, with the purchase of 205,182 shares at an average cost of $35.60 per share; no shares
have been purchased in 2008 under this program. In its two previously completed 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, loaned Del-Tin Fiber $30 million which is repayable over five years in equal quarterly installments, beginning December 31, 2004, and
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 ($19.8 million at
March 31, 2008) of Del-Tins obligations under its credit agreement.

The Company has adopted the provisions of FASB
Interpretation (FIN) No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an interpretation of FASB Statements No. 5, 57 and 107 and a
rescission of FASB Interpretation No. 34. In accordance with FIN 45, initially Deltic estimated the fair value of its guarantee of Del-Tin Fibers credit agreement to be $3.5 million and included this non-cash amount in the
Companys March 31, 2005 Consolidated Balance Sheet as a long-term liability with an offsetting increase in the Companys investment in Del-Tin Fiber. Deltic is reducing this liability systematically over the life of the credit
agreement, as the Company is released from risk under the guarantee. As of March 31, 2008, Deltics remaining liability regarding the guarantee was $1.0 million.

The Company has both funded and unfunded noncontributory defined benefit retirement plans that cover the majority of its employees. The plans provide
defined benefits based on years of service and final average salary. Deltic also has other postretirement benefit plans covering substantially all of its employees. The health care plan is contributory with participants contributions adjusted
as needed; the life insurance plan is noncontributory. (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 2007 annual report on Form 10-K.)



23



---

##### Table of Contents

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 |       | During2008 |      | 2009to 2010 |      | 2011to 2012 |      | After2012
|Contractual cash payment obligations       |  |       |       |            |      |             |      |             |      |           |     
|Real estate development infrastructure     |  | $     | 4.1   |            |     |             | 4.1  |             |     |           |    
|Long-term debt                             |  |       | 70.0  |            | 3.3  |             | 13.3 |             | 13.3 |           | 40.1
|Interest on debt1                          |  |       | 27.5  |            | 4.4  |             | 7.5  |             | 5.9  |           | 9.7 
|Retirement plans                           |  |       | 12.0  |            | .6   |             | 1.9  |             | 2.1  |           | 7.4 
|Other postretirement benefits              |  |       | 5.6   |            | .3   |             | 1.0  |             | 1.1  |           | 3.2 
|Unrecognized tax benefits                  |  |       | 1.2   |            | 1.2  |             |     |             |     |           |    
|Other long-term liabilities                |  |       | 5.7   |            | 1.4  |             | 3.1  |             | 1.2  |           |    
|                                           |  |       |       |            |      |             |      |             |      |           |     
|                                           |  | $     | 126.1 |            | 11.2 |             | 30.9 |             | 23.6 |           | 60.4
|                                           |  |       |       |            |      |             |      |             |      |           |     
|Other commercial commitment expirations    |  |       |       |            |      |             |      |             |      |           |     
|Guarantee of indebtedness of Del-Tin Fiber |  | $     | 19.8  |            | 16.8 |             | 3.0  |             |     |           |    
|Timber cutting agreements                  |  |       | 1.1   |            | .9   |             | .2   |             |     |           |    
|Operating leases                           |  |       | .1    |            |     |             | .1   |             |     |           |    
|Letters of credit                          |  |       | .4    |            |     |             | .1   |             | .3   |           |    
|                                           |  |       |       |            |      |             |      |             |      |           |     
|                                           |  | $     | 21.4  |            | 17.7 |             | 3.4  |             | .3   |           |    
|                                           |  |       |       |            |      |             |      |             |      |           |     



|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 and stock repurchase programs, additional advances to Del-Tin Fiber, and capital expenditures, for the foreseeable
future.

Critical Accounting Policies and Estimates

Critical accounting policies are defined as those that are reflective of significant judgements 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 2007 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.)



24



---

##### Table of Contents

Outlook

Pine sawtimber harvest levels are expected to be 130,000 to 140,000 tons in the second quarter of 2008 and 550,000 to 575,000 tons for the year. Finished lumber production and sales volume will continue to be subject to market conditions,
and is estimated at 60 to 65 million board feet for the second quarter and 250 to 260 million board feet for the year. Residential lot sales are projected to be 5 to 10 lots and 50 to 60 lots for the second quarter and the year,
respectively.

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.



25



---

##### Table of Contents

|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 2007 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 March 31, 2008, 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.

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.



26



---

##### 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 2007 annual report on Form 10-K.



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

Issuer
Purchase of Equity Securities



|                             |  |                                |  |                            |       |                                                                               |   |                                                                                                |   |           
|---------------------------- |  | ------------------------------ |  | -------------------------- | ----- | ----------------------------------------------------------------------------- | - | ---------------------------------------------------------------------------------------------- | - | ----------
|Period                       |  | Total Numberof SharesPurchased |  | AveragePrice PaidPer Share |       | Total Number of SharesPurchased as Part ofPublicly AnnouncedPlans or Programs |   | Maximum Approximate DollarValue of Shares that May YetBe Purchased Under
thePlans or Programs1
|Jan. 1 through Jan. 31, 2008 |  |                               |  |                            |      |                                                                               |  |                                                                                                | $ | 27,696,122
|Feb. 1 through Feb. 28, 2008 |  | 219                            |  | $                          | 49.50 |                                                                               |  |                                                                                                | $ | 27,696,122
|Mar. 1 through Mar. 31, 2008 |  |                               |  |                            |      |                                                                               |  |                                                                                                | $ | 27,696,122



|1 | In December 2000, the Companys Board of Directors authorized a stock repurchase plan of up to $10 million of
Deltic common stock. In December 2007 this plan was expanded by $25 million. There is no stated expiration date regarding this authorization.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

None.



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

None.



|Item 5. | Other Information
|------- | -----------------

None.



27



---

##### Table of Contents

|Item 6. | Exhibits
|------- | --------



|     |  |                                                                                                 
|---- |  | ------------------------------------------------------------------------------------------------
|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.                        



28



---

##### Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.



|                          |  |                                  |  |  |  |                  
|------------------------- |  | -------------------------------- |  |  |  | -----------------
|DELTIC TIMBER CORPORATION |  |                                  |  | 
|                          |  |                                  | 
|By:                       |  | /s/ Ray C. Dillon                |  |  |  | Date: May 6, 2008
|                          |  | Ray C. Dillon, President         |  |  |  |                  
|                          |  | (Principal Executive Officer)    |  |  |  |                  
|                          |  |                                  | 
|                          |  | /s/ Kenneth D. Mann              |  |  |  | Date: May 6, 2008
|                          |  | Kenneth D. Mann, Vice President, |  |  |  |                  
|                          |  | Finance and Administration       |  |  |  |                  
|                          |  | (Principal Financial Officer)    |  |  |  |                  
|                          |  |                                  | 
|                          |  | /s/ Byrom L. Walker              |  |  |  | Date: May 6, 2008
|                          |  | Byrom L. Walker, Controller      |  |  |  |                  
|                          |  | (Principal Accounting Officer)   |  |  |  |                  



29