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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549



FORM 10-Q



(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended June 30, 2005



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



Securities
registered pursuant to Section 12(b) of the Act:



|                                                                  |  |                                          
|----------------------------------------------------------------- |  | -----------------------------------------
|Title of each class                                               |  | Name of each exchange on which registered
|Common Stock, $.01 Par Value                                      |  | New York Stock Exchange, Inc.            
|                                                                  | 
|Series A Participating Cumulative Preferred Stock Purchase Rights |  | New York Stock Exchange, Inc.            



Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No ̈.



Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934).    Yes  x    No ̈.



Number of shares of Common
Stock, $.01 Par Value, outstanding at June 30, 2005, was 12,250,494.



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##### Table of Contents



TABLE OF CONTENTS - SECOND QUARTER 2005 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                            |  | 31        
|                               |  |                                                                                      
|Item 4.                        |  | Controls and Procedures                                                               |  | 31        
|                               | 
|PART II - Other Information    |  |                                                                                      
|                               |  |                                                                                      
|Item 1.                        |  | Legal Proceedings                                                                     |  | 33        
|                               |  |                                                                                      
|Item 2.                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 33        
|                               |  |                                                                                      
|Item 3.                        |  | Defaults Upon Senior Securities                                                       |  | 33        
|                               |  |                                                                                      
|Item 4.                        |  | Submission of Matters to a Vote of Security Holders                                   |  | 34        
|                               |  |                                                                                      
|Item 5.                        |  | Other Information                                                                     |  | 34        
|                               |  |                                                                                      
|Item 6.                        |  | Exhibits and Reports on Form 8-K                                                      |  | 34        
|                               | 
|Signatures                     |  | 35                                                                                   



2005 Restatement



As described in the Companys Annual Report on Form 10-K/A-1 for the year ended
December 31, 2004, Deltic has restated its financial statements and other information for the years 2002 through 2004, for the third quarter of 2002, and for each quarter in 2003 and 2004.



For further discussion of the effects of the 2005 restatement on the periods covered by this
report, see Part 1, Item 1. Financial Statements, Note 1 to consolidated financial statements, Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations, and Item 4. Controls and Procedures.



2



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##### Table of Contents

PART I - FINANCIAL INFORMATION



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



DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated Balance Sheets

(Thousands of
dollars)



|                                                                                 |  |              |         |   |              |         |  
|-------------------------------------------------------------------------------- |  | ------------ | ------- | - | ------------ | ------- | -
|                                                                                 |  | June 30,2005 |         |   | Dec. 31,2004 |        
|                                                                                 |  | (unaudited)  |         |   |              |        
|Assets                                                                           |  |              |         |   |              |         |  
|Current assets                                                                   |  |              |         |   |              |         |  
|Cash and cash equivalents                                                        |  | $            | 2,631   |   |              | 859     |  
|Trade accounts receivable                                                        |  |              | 8,379   |   |              | 6,508   |  
|Allowance for doubtful accounts                                                  |  |              | (22     | ) |              | (26     | )
|Other receivables                                                                |  |              | 22      |   |              | 660     |  
|Inventories                                                                      |  |              | 6,949   |   |              | 5,566   |  
|Prepaid expenses and other current assets                                        |  |              | 1,513   |   |              | 1,786   |  
|                                                                                 |  |              |         |   |              |         |  
|Total current assets                                                             |  |              | 19,472  |   |              | 15,353  |  
|Investment in real estate held for development and sale                          |  |              | 35,484  |   |              | 37,418  |  
|Investment in Del-Tin Fiber                                                      |  |              | 5,364   |   |              | 3,858   |  
|Investments and noncurrent receivables                                           |  |              | 2,141   |   |              | 1,829   |  
|Timber and timberlands - net                                                     |  |              | 213,610 |   |              | 212,666 |  
|Property, plant, and equipment - net                                             |  |              | 38,806  |   |              | 35,767  |  
|Deferred charges and other assets                                                |  |              | 564     |   |              | 689     |  
|                                                                                 |  |              |         |   |              |         |  
|Total assets                                                                     |  | $            | 315,441 |   |              | 307,580 |  
|                                                                                 |  |              |         |   |              |         |  
|Liabilities and Stockholders Equity                                             |  |              |         |   |              |         |  
|Current liabilities                                                              |  |              |         |   |              |         |  
|Current maturities of long-term debt                                             |  | $            | 32      |   |              | 32      |  
|Trade accounts payable                                                           |  |              | 4,869   |   |              | 4,080   |  
|Accrued taxes other than income taxes                                            |  |              | 1,846   |   |              | 1,293   |  
|Income taxes payable                                                             |  |              | 761     |   |              |        |  
|Deferred revenues and other accrued liabilities                                  |  |              | 3,089   |   |              | 3,467   |  
|                                                                                 |  |              |         |   |              |         |  
|Total current liabilities                                                        |  |              | 10,597  |   |              | 8,872   |  
|Long-term debt                                                                   |  |              | 84,008  |   |              | 85,724  |  
|Deferred tax liabilities - net                                                   |  |              | 13,079  |   |              | 14,272  |  
|Guarantee of indebtedness of Del-Tin Fiber                                       |  |              | 2,933   |   |              | 3,278   |  
|Other noncurrent liabilities                                                     |  |              | 12,760  |   |              | 11,343  |  
|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                                                   |  |              | 72,132  |   |              | 71,483  |  
|Retained earnings                                                                |  |              | 134,577 |   |              | 127,188 |  
|Unamortized restricted stock awards                                              |  |              | (1,945  | ) |              | (924    | )
|Treasury stock                                                                   |  |              | (12,816 | ) |              | (13,772 | )
|Accumulated other comprehensive income                                           |  |              | (12     | ) |              | (12     | )
|                                                                                 |  |              |         |   |              |         |  
|Total stockholders equity                                                       |  |              | 192,064 |   |              | 184,091 |  
|                                                                                 |  |              |         |   |              |         |  
|Total liabilities and stockholders equity                                       |  | $            | 315,441 |   |              | 307,580 |  
|                                                                                 |  |              |         |   |              |         |  



See accompanying notes
to consolidated financial statements.



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DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Income (Unaudited)

(Thousands of dollars, except per share amounts)



|                                                             |  |                            |        |   |                          |        |   |      |        |   |            |        |  
|------------------------------------------------------------ |  | -------------------------- | ------ | - | ------------------------ | ------ | - | ---- | ------ | - | ---------- | ------ | -
|                                                             |  | Three Months EndedJune 30, |        |   | Six Months EndedJune 30, |       
|                                                             |  | 2005                       |        |   | 2004                     |        |   | 2005 |        |   | 2004       |       
|                                                             |  |                            |        |   | (Restated)               |        |   |      |        |   | (Restated) |       
|Net sales                                                    |  | $                          | 45,980 |   |                          | 33,997 |   |      | 85,415 |   |            | 61,808 |  
|                                                             |  |                            |        |   |                          |        |   |      |        |   |            |        |  
|Costs and expenses                                           |  |                            |        |   |                          |        |   |      |        |   |            |        |  
|Cost of sales                                                |  |                            | 29,896 |   |                          | 22,566 |   |      | 56,718 |   |            | 40,697 |  
|Depreciation, amortization, and cost of fee timber harvested |  |                            | 2,881  |   |                          | 2,690  |   |      | 5,838  |   |            | 5,603  |  
|General and administrative expenses                          |  |                            | 3,107  |   |                          | 2,961  |   |      | 6,431  |   |            | 5,770  |  
|                                                             |  |                            |        |   |                          |        |   |      |        |   |            |        |  
|Total costs and expenses                                     |  |                            | 35,884 |   |                          | 28,217 |   |      | 68,987 |   |            | 52,070 |  
|                                                             |  |                            |        |   |                          |        |   |      |        |   |            |        |  
|Operating income                                             |  |                            | 10,096 |   |                          | 5,780  |   |      | 16,428 |   |            | 9,738  |  
|Equity in Del-Tin Fiber                                      |  |                            | 738    |   |                          | 260    |   |      | 23     |   |            | 26     |  
|Interest income                                              |  |                            | 135    |   |                          | 60     |   |      | 160    |   |            | 118    |  
|Interest and other debt expense                              |  |                            | (1,457 | ) |                          | (1,517 | ) |      | (2,860 | ) |            | (3,100 | )
|Other income/(expense)                                       |  |                            | (3     | ) |                          | (1     | ) |      | (3     | ) |            | (5     | )
|                                                             |  |                            |        |   |                          |        |   |      |        |   |            |        |  
|Income/(loss) before income taxes                            |  |                            | 9,509  |   |                          | 4,582  |   |      | 13,748 |   |            | 6,777  |  
|Income taxes                                                 |  |                            | (3,136 | ) |                          | (1,833 | ) |      | (4,828 | ) |            | (2,710 | )
|                                                             |  |                            |        |   |                          |        |   |      |        |   |            |        |  
|Net income/(loss)                                            |  | $                          | 6,373  |   |                          | 2,749  |   |      | 8,920  |   |            | 4,067  |  
|                                                             |  |                            |        |   |                          |        |   |      |        |   |            |        |  
|Earnings per common share                                    |  |                            |        |   |                          |        |   |      |        |   |            |        |  
|Basic                                                        |  | $                          | .52    |   |                          | .23    |   |      | .73    |   |            | .34    |  
|Assuming dilution                                            |  | $                          | .52    |   |                          | .23    |   |      | .72    |   |            | .34    |  
|Dividends declared per common share                          |  | $                          | .0625  |   |                          | .0625  |   |      | .1250  |   |            | .1250  |  
|                                                             |  |                            |        |   |                          |        |   |      |        |   |            |        |  
|Average common shares outstanding (thousands)                |  |                            | 12,249 |   |                          | 12,120 |   |      | 12,238 |   |            | 12,071 |  
|                                                             |  |                            |        |   |                          |        |   |      |        |   |            |        |  



See accompanying notes
to consolidated financial statements.



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DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)

Six Months Ended June 30,

(Thousands of
dollars)



|                                                                                            |  |      |         |   |            |         |  
|------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---------- | ------- | -
|                                                                                            |  | 2005 |         |   | 2004       |        
|                                                                                            |  |      |         |   | (Restated) |        
|Operating activities                                                                        |  |      |         |   |            |         |  
|Net income                                                                                  |  | $    | 8,920   |   |            | 4,067   |  
|Adjustments to reconcile net income to net cash provided/(required) by operating activities |  |      |         |   |            |         |  
|Depreciation, amortization, and cost of fee timber harvested                                |  |      | 5,838   |   |            | 5,603   |  
|Deferred income taxes                                                                       |  |      | (1,264  | ) |            | 267     |  
|Real estate costs recovered upon sale                                                       |  |      | 5,932   |   |            | 3,799   |  
|Timberland costs recovered upon sale                                                        |  |      | 7       |   |            | 192     |  
|Equity in Del-Tin Fiber                                                                     |  |      | (23     | ) |            | (26     | )
|Net increase/(decrease) in provisions for pension and other postretirement benefits         |  |      | 395     |   |            | 1,415   |  
|(Increase)/decrease in operating working capital other than cash and cash equivalents       |  |      | (507    | ) |            | 1,657   |  
|Other - net                                                                                 |  |      | 1,359   |   |            | 20      |  
|                                                                                            |  |      |         |   |            |         |  
|Net cash provided/(required) by operating activities                                        |  |      | 20,657  |   |            | 16,994  |  
|                                                                                            |  |      |         |   |            |         |  
|Investing activities                                                                        |  |      |         |   |            |         |  
|Capital expenditures requiring cash                                                         |  |      | (14,445 | ) |            | (10,419 | )
|Net change in purchased stumpage inventory                                                  |  |      | (429    | ) |            | 102     |  
|Advances to Del-Tin Fiber                                                                   |  |      | (3,228  | ) |            | (516    | )
|Distributions from Del-Tin Fiber                                                            |  |      | 1,400   |   |            |        |  
|(Increase)/decrease in funds held by trustee                                                |  |      |        |   |            | 4,396   |  
|Other - net                                                                                 |  |      | 760     |   |            | 901     |  
|                                                                                            |  |      |         |   |            |         |  
|Net cash provided/(required) by investing activities                                        |  |      | (15,942 | ) |            | (5,536  | )
|                                                                                            |  |      |         |   |            |         |  
|Financing activities                                                                        |  |      |         |   |            |         |  
|Proceeds from borrowings                                                                    |  |      | 6,000   |   |            |        |  
|Repayments of notes payable and long-term debt                                              |  |      | (7,716  | ) |            | (13,032 | )
|Common stock dividends paid                                                                 |  |      | (1,531  | ) |            | (1,508  | )
|Proceeds from stock option exercises                                                        |  |      | 246     |   |            | 3,294   |  
|Other                                                                                       |  |      | 58      |   |            |        |  
|                                                                                            |  |      |         |   |            |         |  
|Net cash provided/(required) by financing activities                                        |  |      | (2,943  | ) |            | (11,246 | )
|                                                                                            |  |      |         |   |            |         |  
|Net increase/(decrease) in cash and cash equivalents                                        |  |      | 1,772   |   |            | 212     |  
|Cash and cash equivalents at January 1                                                      |  |      | 859     |   |            | 1,687   |  
|                                                                                            |  |      |         |   |            |         |  
|Cash and cash equivalents at June 30                                                        |  | $    | 2,631   |   |            | 1,899   |  
|                                                                                            |  |      |         |   |            |         |  



See accompanying notes
to consolidated financial statements.



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DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Stockholders Equity (Unaudited)

Six Months Ended June 30,

(Thousands of
dollars)



|                                                                                                                  |  |      |         |   |            |         |  
|----------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---------- | ------- | -
|                                                                                                                  |  | 2005 |         |   | 2004       |        
|                                                                                                                  |  |      |         |   | (Restated) |        
|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 at end of period in 2005 and 2004 |  |      | 128     |   |            | 128     |  
|                                                                                                                  |  |      |         |   |            |         |  
|Capital in excess of par value                                                                                    |  |      |         |   |            |         |  
|Balance at beginning of year                                                                                      |  |      | 71,483  |   |            | 69,459  |  
|Exercise of stock options                                                                                         |  |      | 58      |   |            | 629     |  
|Tax benefits on stock options                                                                                     |  |      | 45      |   |            | 292     |  
|Restricted stock awards                                                                                           |  |      | 546     |   |            | 414     |  
|                                                                                                                  |  |      |         |   |            |         |  
|Balance at end of period                                                                                          |  |      | 72,132  |   |            | 70,794  |  
|                                                                                                                  |  |      |         |   |            |         |  
|Retained earnings                                                                                                 |  |      |         |   |            |         |  
|Balance at beginning of year                                                                                      |  |      | 127,188 |   |            | 119,124 |  
|Net income                                                                                                        |  |      | 8,920   |   |            | 4,067   |  
|Common stock dividends declared                                                                                   |  |      | (1,531  | ) |            | (1,508  | )
|                                                                                                                  |  |      |         |   |            |         |  
|Balance at end of period                                                                                          |  |      | 134,577 |   |            | 121,683 |  
|                                                                                                                  |  |      |         |   |            |         |  
|Unamortized restricted stock awards                                                                               |  |      |         |   |            |         |  
|Balance at beginning of year                                                                                      |  |      | (924    | ) |            | (14     | )
|Stock awards                                                                                                      |  |      | (1,292  | ) |            | (1,182  | )
|Amortization to expense                                                                                           |  |      | 271     |   |            | 137     |  
|                                                                                                                  |  |      |         |   |            |         |  
|Balance at end of period                                                                                          |  |      | (1,945  | ) |            | (1,059  | )
|                                                                                                                  |  |      |         |   |            |         |  
|Treasury stock                                                                                                    |  |      |         |   |            |         |  
|Balance at beginning of year  605,401 and 845,600 shares, respectively                                           |  |      | (13,772 | ) |            | (19,103 | )
|Shares purchased  7,052 shares in 2004                                                                           |  |      |        |   |            | (254    | )
|Shares issued for incentive plans  42,016 and 172,355 shares, respectively                                       |  |      | 956     |   |            | 3,895   |  
|                                                                                                                  |  |      |         |   |            |         |  
|Balance at end of period  563,385 and 680,297 shares, respectively                                               |  |      | (12,816 | ) |            | (15,462 | )
|                                                                                                                  |  |      |         |   |            |         |  
|Accumulated other comprehensive income                                                                            |  |      | (12     | ) |            | (124    | )
|                                                                                                                  |  |      |         |   |            |         |  
|Total stockholders equity                                                                                        |  | $    | 192,064 |   |            | 175,960 |  
|                                                                                                                  |  |      |         |   |            |         |  



See accompanying notes
to consolidated financial statements.



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DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2005

(Unaudited, except for December
31, 2004)



Note 1  Interim Financial Statements



The interim financial information included herein is unaudited; however,
such information reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the Companys financial position, results of operations, and cash flows for the interim periods. All such adjustments are of
a normal, recurring nature. The results of operations for the first six months of the year are not necessarily indicative of the results of operations which might be expected for the entire year.



The financial statements in Deltics 2004 annual report on Form
10-K/A-1 include a summary of significant accounting policies of the Company and should be read in conjunction with this Form 10-Q. Certain prior period amounts have been reclassified to conform with the 2005 presentation format.



2005 Restatement



As described in the Companys Annual Report on Form 10-K/A-1 for the year ended December 31, 2004, Deltic has restated
its financial statements and other information for the years 2002 through 2004, for the third quarter of 2002, and for each quarter in 2003 and 2004. The restatement related to the correction of an overstatement of the carrying value of the
Companys inventory of third-party purchases of standing timber inventory used to supply its Ola sawmill. The effect of the restatement on Deltics Consolidated Balance Sheet at the end of the reported periods is immaterial and the
restatement has no effect on the Companys net cash flows.



In order to operate its two sawmills economically, the Company relies on purchases of timber (raw material) from third parties to supplement its own timber harvests from Company owned timberlands. Deltic has an active timber procurement
function for each of its sawmills. Sawmill inventory of third-party purchases of standing timber is comprised of timber purchased by the sawmill from third parties that has not yet been harvested and delivered to the mill. When these types of
purchases are made by the Companys procurement function, ownership of the timber located on the designated tract of land transfers to the Company, however, ownership of the land itself does not transfer. The carrying value of this purchased
stumpage inventory is grouped with the Companys wholly-owned timberlands and reported as the line item Timber and Timberlands on Deltics Consolidated Balance Sheet. Over the past five years, such purchased stumpage inventory has
represented 2.3 percent to 5.5 percent of the total Timber and Timberlands line- item balance.



At the time that a tract of procurement timber is purchased, an inventory amount based on the cash payment and an estimated volume derived from estimates
made by the procurement foresters are established. An estimated average cost per ton is obtained by dividing the original cost of the purchased timber on the tract by the original estimated volume of that timber. As the timber is harvested and
brought into the mill, reductions in the purchased timber carrying balance are recorded using the calculated average cost per ton. Once all harvestable timber is removed from a tract the procurement personnel communicate the closing of the tract to
the accounting function. Upon this notification, a final adjustment is made to mill log cost based on any amount remaining in inventory (increase in the case of undercut or decrease in the case of overcut).



In mid-July 2005, the Companys procurement manager for its Ola sawmill
disclosed to senior management that the volume of certain tracts of third-party purchased standing timber inventory for the Ola mill was overstated. The Ola Mill procurement manager largely controlled the information being received by Deltics
accounting personnel. The overstatement arose from his failure to timely report to Deltics accounting personnel and his having concealed from accounting personnel the differences between actual harvest volumes and the original estimates of
timber volume, determined when the tracts were acquired.



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DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2005

(Unaudited, except for December
31, 2004)



Note 1  Interim Financial Statements (cont.)



The following table sets forth the effects of the 2005 restatement on
certain line items within the Companys previously reported Consolidated Statements of Income for the quarter and six months ended June 30, 2004.



|                                                 |  |                                 |        |   |                               |        |   |                      |        |   |            |        |  
|------------------------------------------------ |  | ------------------------------- | ------ | - | ----------------------------- | ------ | - | -------------------- | ------ | - | ---------- | ------ | -
|Quarterly Information (Unaudited)                |  | Three months endedJune 30, 2004 |        |   | Six months endedJune 30, 2004 |       
|(Thousands of dollars, except per share amounts) |  | Aspreviouslyreported            |        |   | Asrestated                    |        |   | Aspreviouslyreported |        |   | Asrestated |       
|Consolidated Statement of Income                 |  |                                 |        |   |                               |        |   |                      |        |   |            |        |  
|Cost of sales                                    |  | $                               | 22,565 |   |                               | 22,566 |   |                      | 40,762 |   |            | 40,697 |  
|Total costs and expenses                         |  |                                 | 28,216 |   |                               | 28,217 |   |                      | 52,135 |   |            | 52,070 |  
|Operating income                                 |  |                                 | 5,781  |   |                               | 5,780  |   |                      | 9,673  |   |            | 9,738  |  
|Income/(loss) before income taxes                |  |                                 | 4,583  |   |                               | 4,582  |   |                      | 6,712  |   |            | 6,777  |  
|Income taxes                                     |  |                                 | (1,833 | ) |                               | (1,833 | ) |                      | (2,687 | ) |            | (2,710 | )
|Net income/(loss)                                |  |                                 | 2,750  |   |                               | 2,749  |   |                      | 4,025  |   |            | 4,067  |  
|Earnings per common share                        |  |                                 |        |   |                               |        |   |                      |        |   |            |        |  
|Basic                                            |  | $                               | .23    |   |                               | .23    |   |                      | .33    |   |            | .34    |  
|Assuming dilution                                |  |                                 | .23    |   |                               | .23    |   |                      | .33    |   |            | .34    |  



Note 2  Impact of Recently
Effective Accounting Pronouncements



In December 2004, the
FASB issued a revision to SFAS 123, Accounting for Stock-Based Compensation. This revision will require the Company to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value
of the award. This revised statement was to be effective as of the beginning of the first interim or annual reporting period that begins after June 15, 2005. In April, 2005 the Securities and Exchange Commission announced the adoption of a new rule
that amends the compliance dates for SFAS 123 (Revised) and allows for the implementation of SFAS 123 (Revised) at the beginning of the first fiscal year that begins after June 15, 2005. Accordingly, the Company has elected to adopt the revised
statement effective for its first quarter 2006 financial statements as opposed to the third quarter 2005 financial statements as previously disclosed.



In March 2005, the FASB issued Financial Accounting Standards Board Interpretation (FIN) No. 47, Accounting for Conditional Asset Retirement
Obligations. This interpretation clarifies the term conditional asset retirement obligation as used in SFAS 143, Accounting for Asset Retirement Obligations, and is effective no later than the end of fiscal years ending after December
15, 2005. The Company does not expect the adoption of FIN 47 to have a material effect on its consolidated financial statements.



8



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##### Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2005

(Unaudited, except for December
31, 2004)



Note 2  Impact of Recently Effective Accounting Pronouncements (cont.)



In May 2005, the FASB issued SFAS 154, Accounting Changes and Error
Corrections. This statement requires all changes in accounting principles to be accounted for by retrospective application to the financial statements for prior periods unless it is impracticable to do so. SFAS 154 carries forward previously issued
guidance with respect to accounting for changes in estimates, changes in the reporting entity and the correction of errors. This statement is effective for accounting changes made in fiscal years beginning after December 15, 2005. The Company does
not expect the adoption of SFAS 154 to have a material effect on its consolidated financial statements.



Note 3  Earnings per Common Share



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



|                                                                                                           |  |                            |        |                          |        |      |        |            |       
|---------------------------------------------------------------------------------------------------------- |  | -------------------------- | ------ | ------------------------ | ------ | ---- | ------ | ---------- | ------
|                                                                                                           |  | Three Months EndedJune 30, |        | Six Months EndedJune 30,
|(Thousands, except per share amounts)                                                                      |  | 2005                       |        | 2004                     |        | 2005 |        | 2004      
|                                                                                                           |  |                            |        | (Restated)               |        |      |        | (Restated)
|Net income                                                                                                 |  | $                          | 6,373  |                          | 2,749  |      | 8,920  |            | 4,067 
|                                                                                                           |  |                            |        |                          |        |      |        |            |       
|Weighted average number of common shares used in basic EPS                                                 |  |                            | 12,249 |                          | 12,120 |      | 12,238 |            | 12,071
|Effect of dilutive stock options                                                                           |  |                            | 55     |                          | 64     |      | 70     |            | 69    
|                                                                                                           |  |                            |        |                          |        |      |        |            |       
|Weighted average number of common shares and dilutive potential common stock used in EPS assuming dilution |  |                            | 12,304 |                          | 12,184 |      | 12,308 |            | 12,140
|                                                                                                           |  |                            |        |                          |        |      |        |            |       
|Earnings per common share                                                                                  |  |                            |        |                          |        |      |        |            |       
|Basic                                                                                                      |  | $                          | .52    |                          | .23    |      | .73    |            | .34   
|Assuming dilution                                                                                          |  | $                          | .52    |                          | .23    |      | .72    |            | .34   



9



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##### Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2005

(Unaudited, except for December
31, 2004)



Note 4  Stock-Based Compensation



Deltic has a stock-based compensation plan for which the Company applies the recognition and measurement principles of APB
25, Accounting for Stock Issued to Employees, and related interpretations in accounting for those plans. Stock-based employee compensation expense is accrued for the intrinsic value, if any, of stock options or restricted stock granted over the
applicable vesting periods using the straight-line method. Grants of restricted stock subject to predefined performance criteria are accounted for in accordance with variable-plan accounting. Options granted by the Company have an exercise price
equal to the market value of the underlying common stock on the date of grant.



The effect on net income/(loss) and earnings per share if the Company had applied the fair value recognition provisions of the Financial Accounting Standards Boards Statement of Financial Accounting Standards
(SFAS) 123, Accounting for Stock-Based Compensation, consisted of the following:



|                                                                                                                                                                            |  |                            |       |   |                          |       |   |      |       |   |            |       |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ----- | - | ------------------------ | ----- | - | ---- | ----- | - | ---------- | ----- | -
|                                                                                                                                                                            |  | Three Months EndedJune 30, |       |   | Six Months EndedJune 30, |      
|(Thousands, except per share amounts)                                                                                                                                       |  | 2005                       |       |   | 2004                     |       |   | 2005 |       |   | 2004       |      
|                                                                                                                                                                            |  |                            |       |   | (Restated)               |       |   |      |       |   | (Restated) |      
|Net income, as reported                                                                                                                                                     |  | $                          | 6,373 |   |                          | 2,749 |   |      | 8,920 |   |            | 4,067 |  
|Plus total stock-based compensation expense determined under the intrinsic value method for awards, net of related tax effects, included in
the determination of net income |  |                            | 147   |   |                          | 95    |   |      | 263   |   |            | 258   |  
|Less pro forma total stock-based compensation expense determined under the fair value method for all awards, net of related tax
effects                                     |  |                            | (212  | ) |                          | (172  | ) |      | (399  | ) |            | (452  | )
|                                                                                                                                                                            |  |                            |       |   |                          |       |   |      |       |   |            |       |  
|Pro forma net income                                                                                                                                                        |  | $                          | 6,308 |   |                          | 2,672 |   |      | 8,784 |   |            | 3,873 |  
|                                                                                                                                                                            |  |                            |       |   |                          |       |   |      |       |   |            |       |  
|Basic earnings per share                                                                                                                                                    |  |                            |       |   |                          |       |   |      |       |   |            |       |  
|As reported                                                                                                                                                                 |  | $                          | .52   |   |                          | .23   |   |      | .73   |   |            | .34   |  
|Pro forma                                                                                                                                                                   |  | $                          | .51   |   |                          | .22   |   |      | .72   |   |            | .32   |  
|Dilutive earnings per share                                                                                                                                                 |  |                            |       |   |                          |       |   |      |       |   |            |       |  
|As reported                                                                                                                                                                 |  | $                          | .52   |   |                          | .23   |   |      | .72   |   |            | .34   |  
|Pro forma                                                                                                                                                                   |  | $                          | .51   |   |                          | .22   |   |      | .71   |   |            | .32   |  



For the pro forma net
income calculation in the preceding table, the fair value of each option on the date of grant was estimated using the Black-Scholes option-pricing model and the following assumptions for awards in 2005 and 2004, respectively: dividend yields of .81
percent and .90 percent; expected volatilty of 31.54 percent and 30.00 percent; risk-free interest rates of 3.83 percent and 4.10 percent; and expected lives of five years. Using these assumptions, the weighted average grant-date fair value per
share of options granted in 2005 and 2004 was $15.35 and $9.50, respectively.



10



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##### Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2005

(Unaudited, except for December
31, 2004)



Note 5  Inventories



Inventories at the balance sheet dates consisted of the following:



|                       |  |              |       |              |      
|---------------------- |  | ------------ | ----- | ------------ | -----
|(Thousands of dollars) |  | June 30,2005 |       | Dec. 31,2004
|Logs                   |  | $            | 2,897 |              | 1,005
|Lumber                 |  |              | 3,689 |              | 4,253
|Materials and supplies |  |              | 363   |              | 308  
|                       |  |              |       |              |      
|                       |  | $            | 6,949 |              | 5,566
|                       |  |              |       |              |      



Note 6  Investment in Del-Tin
Fiber



Deltic owns 50 percent of the membership of Del-Tin
Fiber, which completed construction and commenced production operations of a medium density fiberboard (MDF) plant near El Dorado, Arkansas, during 1998.



Prior to August 26, 2004, the Company had agreed to a contingent equity contribution agreement with Del-Tin Fiber and the
group of banks from whom Del-Tin Fiber had obtained its $89,000,000 credit facility. Under this agreement, Deltic and the other 50 percent owner of the joint venture had agreed to fund any deficiency in contributions to either Del-Tin Fibers
required sinking fund or debt service reserve, up to a cumulative total of $17,500,000 for each owner. In addition, each owner had committed to a production support agreement, under which each owner had agreed to make support obligation payments to
Del-Tin Fiber to provide, on the occurrence of certain events, additional funds for payment of debt service until the plant was able to successfully complete a minimum production test. Both owners had also agreed, in a series of one-year term
commitments, to fund any operating working capital needs until the facility was able to consistently generate sufficient funds to meet its cash requirements.



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 $60,000,000 of its
$89,000,000 industrial revenue bonds. Under the new credit agreement, the lenders, on September 1, 2004, loaned Del-Tin Fiber $30,000,000 which will be 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 $29,689,000 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 ($27,595,000 at June 30, 2005) of
Del-Tins obligations under its credit agreement. This new credit agreement of Del-Tin Fiber fully replaces Del-Tin Fibers prior credit facility, resulting in Deltics previous contingent equity contribution agreement of $17,500,000,
the production support agreement, and the need for the series of one-year operating working capital commitments being fully extinguished.



11



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##### Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2005

(Unaudited, except for December
31, 2004)



Note 6  Investment in Del-Tin Fiber (cont.)



The Company has adopted the provisions of FASB Interpretation 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 (FIN
45). In accordance with FIN 45, Deltic estimated the fair value of its guarantee of Del-Tin Fibers credit agreement to be $3,450,000 and included this non-cash amount in the Companys 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.
Simultaneously, the offsetting amount which represents the difference between the Companys recorded investment in Del-Tin Fiber and its underlying equity in the net assets of the joint venture is being amortized over the same period as the
guarantee. The amortization of the guarantee and the basis difference are netted for purposes of financial reporting and result in no net income statement effect. At June 30, 2005, Deltics remaining liability regarding the guarantee was
$2,933,000.



The financial position for Del-Tin Fiber as of
the balance sheet dates and results of operations for the periods ended June 30 consisted of the following:



|                                                 |  |               |         |               |        
|------------------------------------------------ |  | ------------- | ------- | ------------- | -------
|(Thousands of dollars)                           |  | June 30, 2005 |         | Dec. 31, 2004
|Condensed Balance Sheet Information              |  |               |         |               |        
|Current assets                                   |  | $             | 9,371   |               | 7,107  
|Property, plant, and equipment - net             |  |               | 92,579  |               | 93,201 
|Other noncurrent assets                          |  |               | 472     |               | 528    
|                                                 |  |               |         |               |        
|Total assets                                     |  | $             | 102,422 |               | 100,836
|                                                 |  |               |         |               |        
|Current liabilities                              |  | $             | 11,430  |               | 10,616 
|Long-term debt                                   |  |               | 48,500  |               | 51,500 
|Members capital/(deficit)                       |  |               | 42,492  |               | 38,720 
|                                                 |  |               |         |               |        
|Total liabilities and members capital/(deficit) |  | $             | 102,422 |               | 100,836
|                                                 |  |               |         |               |        



12



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##### Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2005

(Unaudited, except for December
31, 2004)



Note 6  Investment in Del-Tin Fiber (cont.)



|                                         |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|---------------------------------------- |  | -------------------------- | ------ | - | ------------------------ | ------ | - | ---- | ------ | - | ---- | ------ | -
|                                         |  | Three Months EndedJune 30, |        |   | Six Months EndedJune 30, |       
|(Thousands of dollars)                   |  | 2005                       |        |   | 2004                     |        |   | 2005 |        |   | 2004 |       
|Condensed Income Statement               |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|Information                              |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|Net sales                                |  | $                          | 15,659 |   |                          | 15,746 |   |      | 25,640 |   |      | 30,616 |  
|                                         |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|Costs and expenses                       |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|Cost of sales                            |  |                            | 11,185 |   |                          | 12,293 |   |      | 19,820 |   |      | 24,397 |  
|Depreciation                             |  |                            | 1,599  |   |                          | 1,554  |   |      | 2,709  |   |      | 3,090  |  
|General and administrative expenses      |  |                            | 648    |   |                          | 638    |   |      | 1,162  |   |      | 1,256  |  
|Gain on involuntary conversion of assets |  |                            | 76     |   |                          |       |   |      | 875    |   |      |       |  
|                                         |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|Total costs and expenses                 |  |                            | 13,508 |   |                          | 14,485 |   |      | 24,566 |   |      | 28,743 |  
|                                         |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|Operating income/(loss)                  |  |                            | 2,151  |   |                          | 1,261  |   |      | 1,074  |   |      | 1,873  |  
|Interest income                          |  |                            | 6      |   |                          | 72     |   |      | 10     |   |      | 134    |  
|Interest and other debt expense          |  |                            | (698   | ) |                          | (783   | ) |      | (1,354 | ) |      | (1,565 | )
|Other income/(loss)                      |  |                            | 18     |   |                          | (31    | ) |      | 316    |   |      | (96    | )
|                                         |  |                            |        |   |                          |        |   |      |        |   |      |        |  
|Net income/(loss)                        |  | $                          | 1,477  |   |                          | 519    |   |      | 46     |   |      | 346    |  
|                                         |  |                            |        |   |                          |        |   |      |        |   |      |        |  



Note 7  Timber and
Timberlands



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



|                                                                           |  |              |         |   |              |         |  
|-------------------------------------------------------------------------- |  | ------------ | ------- | - | ------------ | ------- | -
|(Thousands of dollars)                                                     |  | June 30,2005 |         |   | Dec. 31,2004 |        
|Purchased stumpage inventory                                               |  | $            | 5,378   |   |              | 4,949   |  
|Timberlands                                                                |  |              | 79,891  |   |              | 79,650  |  
|Fee timber                                                                 |  |              | 199,105 |   |              | 196,406 |  
|Logging facilities                                                         |  |              | 1,778   |   |              | 1,778   |  
|                                                                           |  |              |         |   |              |         |  
|                                                                           |  |              | 286,152 |   |              | 282,783 |  
|Less accumulated costs of fee timber harvested and facilities depreciation |  |              | (72,542 | ) |              | (70,117 | )
|                                                                           |  |              |         |   |              |         |  
|                                                                           |  | $            | 213,610 |   |              | 212,666 |  
|                                                                           |  |              |         |   |              |         |  



13



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##### Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2005

(Unaudited, except for December
31, 2004)



Note 8  Property, Plant, and Equipment



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



|                              |  |              |         |   |              |         |  
|----------------------------- |  | ------------ | ------- | - | ------------ | ------- | -
|(Thousands of dollars)        |  | June 30,2005 |         |   | Dec. 31,2004 |        
|Land                          |  | $            | 125     |   |              | 125     |  
|Land improvements             |  |              | 4,424   |   |              | 4,268   |  
|Buildings and structures      |  |              | 5,603   |   |              | 5,402   |  
|Machinery and equipment       |  |              | 80,437  |   |              | 74,572  |  
|                              |  |              |         |   |              |         |  
|                              |  |              | 90,589  |   |              | 84,367  |  
|Less accumulated depreciation |  |              | (51,783 | ) |              | (48,600 | )
|                              |  |              |         |   |              |         |  
|                              |  | $            | 38,806  |   |              | 35,767  |  
|                              |  |              |         |   |              |         |  



Note 9  Employee and Retiree
Benefit Plans



The components of net periodic retirement
expense and other postretirement benefits expense for the periods ended June 30 consisted of the following:



|                                     |  |                             |      |   |                             |      |   |      |     |      |    
|------------------------------------ |  | --------------------------- | ---- | - | --------------------------- | ---- | - | ---- | --- | ---- | ---
|                                     |  | Three Months Ended June 30,
|                                     |  | RetirementPlans             |      |   | OtherPostretirementBenefits
|(Thousands of dollars)               |  | 2005                        |      |   | 2004                        |      |   | 2005 |     | 2004
|Service cost                         |  | $                           | 200  |   |                             | 207  |   |      | 93  |      | 98 
|Interest cost                        |  |                             | 305  |   |                             | 291  |   |      | 124 |      | 136
|Expected return on plan assets       |  |                             | (242 | ) |                             | (234 | ) |      |    |      |   
|Amortization of transition amount    |  |                             |     |   |                             |     |   |      |    |      |   
|Amortization of prior service cost   |  |                             | 13   |   |                             | 13   |   |      | 4   |      |   
|Amortization of net (gain)/loss      |  |                             | 34   |   |                             | 47   |   |      | 16  |      | 44 
|                                     |  |                             |      |   |                             |      |   |      |     |      |    
|Net periodic benefit cost            |  |                             | 310  |   |                             | 324  |   |      | 237 |      | 278
|Cost of special termination benefits |  |                             |     |   |                             | 325  |   |      |    |      |   
|                                     |  |                             |      |   |                             |      |   |      |     |      |    
|Total expense                        |  | $                           | 310  |   |                             | 649  |   |      | 237 |      | 278
|                                     |  |                             |      |   |                             |      |   |      |     |      |    



14



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##### Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2005

(Unaudited, except for December
31, 2004)



Note 9  Employee and Retiree Benefit Plans (cont.)



|                                     |  |                           |      |   |                             |       |   |      |     |      |    
|------------------------------------ |  | ------------------------- | ---- | - | --------------------------- | ----- | - | ---- | --- | ---- | ---
|                                     |  | Six Months Ended June 30,
|                                     |  | RetirementPlans           |      |   | OtherPostretirementBenefits
|(Thousands of dollars)               |  | 2005                      |      |   | 2004                        |       |   | 2005 |     | 2004
|Service cost                         |  | $                         | 400  |   |                             | 403   |   |      | 186 |      | 198
|Interest cost                        |  |                           | 610  |   |                             | 567   |   |      | 248 |      | 275
|Expected return on plan assets       |  |                           | (484 | ) |                             | (458  | ) |      |    |      |   
|Amortization of transition amount    |  |                           |     |   |                             |      |   |      |    |      |   
|Amortization of prior service cost   |  |                           | 26   |   |                             | 25    |   |      | 8   |      |   
|Amortization of net (gain)/loss      |  |                           | 68   |   |                             | 91    |   |      | 32  |      | 89 
|                                     |  |                           |      |   |                             |       |   |      |     |      |    
|Net periodic benefit cost            |  |                           | 620  |   |                             | 628   |   |      | 474 |      | 562
|Cost of special termination benefits |  |                           |     |   |                             | 475   |   |      |    |      |   
|                                     |  |                           |      |   |                             |       |   |      |     |      |    
|Total expense                        |  | $                         | 620  |   |                             | 1,103 |   |      | 474 |      | 562
|                                     |  |                           |      |   |                             |       |   |      |     |      |    



Note 10  Supplemental Cash
Flow Disclosures



Income taxes paid, net of refunds, were
$4,307,000 and $1,207,000 in the 2005 and 2004 periods, respectively. Interest paid, net of amounts capitalized, was $2,776,000 and $2,979,000 in the first six months of 2005 and 2004, respectively.



(Increases)/decreases in operating working capital, other than cash and cash
equivalents, for the six months ended June 30 consisted of the following:



|                                                |  |      |        |   |            |        |  
|----------------------------------------------- |  | ---- | ------ | - | ---------- | ------ | -
|(Thousands of dollars)                          |  | 2005 |        |   | 2004       |       
|                                                |  |      |        |   | (Restated) |       
|Trade accounts receivable                       |  | $    | (1,875 | ) |            | (1,255 | )
|Other receivables                               |  |      | 638    |   |            | 165    |  
|Inventories                                     |  |      | (1,383 | ) |            | 1,468  |  
|Prepaid expenses and other current assets       |  |      | 344    |   |            | (61    | )
|Trade accounts payable                          |  |      | 790    |   |            | (877   | )
|Accrued taxes other than income taxes           |  |      | 553    |   |            | 594    |  
|Income taxes payable                            |  |      | 806    |   |            | 1,232  |  
|Deferred revenues and other accrued liabilities |  |      | (380   | ) |            | 391    |  
|                                                |  |      |        |   |            |        |  
|                                                |  | $    | (507   | ) |            | 1,657  |  
|                                                |  |      |        |   |            |        |  



15



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##### Table of Contents

DELTIC TIMBER CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2005

(Unaudited, except for December
31, 2004)



Note 11  Business Segments



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



|                                                             |  |                            |        |   |                          |        |   |      |         |   |            |        |  
|------------------------------------------------------------ |  | -------------------------- | ------ | - | ------------------------ | ------ | - | ---- | ------- | - | ---------- | ------ | -
|                                                             |  | Three Months EndedJune 30, |        |   | Six Months EndedJune 30, |       
|(Thousands of dollars)                                       |  | 2005                       |        |   | 2004                     |        |   | 2005 |         |   | 2004       |       
|                                                             |  |                            |        |   | (Restated)               |        |   |      |         |   | (Restated) |       
|Net sales                                                    |  |                            |        |   |                          |        |   |      |         |   |            |        |  
|Woodlands                                                    |  | $                          | 9,201  |   |                          | 7,230  |   |      | 18,939  |   |            | 15,424 |  
|Mills                                                        |  |                            | 31,810 |   |                          | 25,610 |   |      | 62,048  |   |            | 46,122 |  
|Real Estate                                                  |  |                            | 10,060 |   |                          | 5,161  |   |      | 15,094  |   |            | 8,991  |  
|Eliminations*                                                |  |                            | (5,091 | ) |                          | (4,004 | ) |      | (10,666 | ) |            | (8,729 | )
|                                                             |  |                            |        |   |                          |        |   |      |         |   |            |        |  
|                                                             |  | $                          | 45,980 |   |                          | 33,997 |   |      | 85,415  |   |            | 61,808 |  
|                                                             |  |                            |        |   |                          |        |   |      |         |   |            |        |  
|Income/(loss) before income taxes                            |  |                            |        |   |                          |        |   |      |         |   |            |        |  
|Operating income                                             |  |                            |        |   |                          |        |   |      |         |   |            |        |  
|Woodlands                                                    |  | $                          | 6,615  |   |                          | 4,481  |   |      | 13,455  |   |            | 9,930  |  
|Mills                                                        |  |                            | 3,058  |   |                          | 2,854  |   |      | 4,797   |   |            | 3,211  |  
|Real Estate                                                  |  |                            | 3,458  |   |                          | 663    |   |      | 4,478   |   |            | 1,255  |  
|Corporate                                                    |  |                            | (2,855 | ) |                          | (2,720 | ) |      | (5,889  | ) |            | (5,290 | )
|Eliminations                                                 |  |                            | (180   | ) |                          | 502    |   |      | (413    | ) |            | 632    |  
|                                                             |  |                            |        |   |                          |        |   |      |         |   |            |        |  
|Operating income                                             |  |                            | 10,096 |   |                          | 5,780  |   |      | 16,428  |   |            | 9,738  |  
|Equity in Del-Tin Fiber                                      |  |                            | 738    |   |                          | 260    |   |      | 23      |   |            | 26     |  
|Interest income                                              |  |                            | 135    |   |                          | 60     |   |      | 160     |   |            | 118    |  
|Interest and other debt expense                              |  |                            | (1,457 | ) |                          | (1,517 | ) |      | (2,860  | ) |            | (3,100 | )
|Other income/(expense)                                       |  |                            | (3     | ) |                          | (1     | ) |      | (3      | ) |            | (5     | )
|                                                             |  |                            |        |   |                          |        |   |      |         |   |            |        |  
|                                                             |  | $                          | 9,509  |   |                          | 4,582  |   |      | 13,748  |   |            | 6,777  |  
|                                                             |  |                            |        |   |                          |        |   |      |         |   |            |        |  
|Depreciation, amortization, and cost of fee timber harvested |  |                            |        |   |                          |        |   |      |         |   |            |        |  
|Woodlands                                                    |  | $                          | 1,261  |   |                          | 1,109  |   |      | 2,578   |   |            | 2,482  |  
|Mills                                                        |  |                            | 1,438  |   |                          | 1,401  |   |      | 2,885   |   |            | 2,750  |  
|Real Estate                                                  |  |                            | 141    |   |                          | 138    |   |      | 287     |   |            | 292    |  
|Corporate                                                    |  |                            | 41     |   |                          | 42     |   |      | 88      |   |            | 79     |  
|                                                             |  |                            |        |   |                          |        |   |      |         |   |            |        |  
|                                                             |  | $                          | 2,881  |   |                          | 2,690  |   |      | 5,838   |   |            | 5,603  |  
|                                                             |  |                            |        |   |                          |        |   |      |         |   |            |        |  
|Capital expenditures                                         |  |                            |        |   |                          |        |   |      |         |   |            |        |  
|Woodlands                                                    |  | $                          | 1,962  |   |                          | 3,433  |   |      | 3,081   |   |            | 6,019  |  
|Mills                                                        |  |                            | 3,362  |   |                          | 1,210  |   |      | 6,054   |   |            | 1,374  |  
|Real Estate                                                  |  |                            | 3,692  |   |                          | 1,867  |   |      | 5,236   |   |            | 2,878  |  
|Corporate                                                    |  |                            | 20     |   |                          | 80     |   |      | 74      |   |            | 148    |  
|                                                             |  |                            |        |   |                          |        |   |      |         |   |            |        |  
|                                                             |  | $                          | 9,036  |   |                          | 6,590  |   |      | 14,445  |   |            | 10,419 |  
|                                                             |  |                            |        |   |                          |        |   |      |         |   |            |        |  



|* | Intersegment sales of timber from Woodlands to Mills
|- | ----------------------------------------------------



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##### Table of Contents

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



2005 Restatement



As discussed in the 2005 Restatement section on page 2 and further described in Note 1 to the consolidated financial statements, the Company has restated
its financial statements and other information for the years 2002 through 2004, for the third quarter of 2002, and for each quarter in 2003 and 2004.



Executive Overview



The Company recorded net income of $6.4 million for the second quarter of 2005 compared to $2.8 million for the same period of 2004. Once again, all three
operating segments of the Company  Woodlands, Mills, and Real Estate  contributed to the current quarter earnings. Deltics Woodlands segment continued its role as the established core operation of the Company during the second
quarter, providing $6.6 million in operating income. Deltics sawmills have continued to benefit from the combination of increased production efficiencies and the current market conditions for softwood lumber products. The Real Estate segment
reported operating income for the second quarter of $3.5 million, which is five times that of the same period last year. In addition, continued strong demand for the Companys residential offerings was once again confirmed by our successful
offering of 72 residential lots in Chenal Valley during the month of June. Our 50 percent-owned joint venture, Del-Tin Fiber, returned to profitability during the second quarter after the fire-related temporary production curtailment experienced
during the first quarter of 2005.



With the exception of its
diversification in real estate development, Deltic is primarily a wood products producer operating in a commodity-based business environment. 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. Despite recent steady increases by the
Federal Reserve in the Federal Funds Rate, U.S. mortgage interest rates have remained flat through the second quarter of 2005. Consequently, housing starts in the U.S., fueled by the continuation of these relatively low mortgage interest rates,
remained strong during the second quarter of 2005. In fact, many analysts have revised their current year housing outlooks upward with forecasts now being reported at levels equal to 2004s historic performance. Consequently, the high demand
for softwood lumber products experienced in 2004, has continued thus far in 2005, resulting in the retention of appropriate pricing levels within the industry. Given its relative size and the nature of most commodity markets, the Company has little
or no control over pricing levels for its wood products. Therefore, the Company will continually seek to wring controllable costs and expenses from its manufacturing process. Sales of real estate are affected by general economic conditions and
interest rates, specifically as such factors are manifested in the Companys operating area of central Arkansas.



For the second quarter of 2005, pine sawtimber harvest levels increased 24,417 tons, to 155,840 tons, when compared to the second quarter of 2004. Pine
sawtimber harvest levels for the six months ending June 30, 2005, increased 11 percent to 355,042 tons when compared to the same period of last year. The Companys plan to keep 2005s total pine sawtimber harvest volume comparable to the
level in 2004 remains in place. However, sawmills within the segments geographic operating area have yet to fully recover from their over-depletion of log inventories, caused by delayed logging operations that were hindered by higher than
normal levels of rainfall at the start of the year. This extended the increased demand and corresponding price for pine sawtimber logs within the region into the second quarter, and Deltic again increased harvesting activities during the period to
take full advantage of these premium prices. Ultimately, the Companys ability to sell pine sawtimber at acceptable prices in the future will be dependent upon the size or existence of markets for manufactured lumber and other wood products.



17



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##### Table of Contents

Activities to sell timberland identified as having a higher and better use or as being non-strategic remain in place. However, Deltic continues to consider
these sales only to the extent that the returns on these transactions meet increased expectations. Consequently, there were limited timberland sales during the second quarter of 2005. Timberland designated as higher and better use consists of tracts
with market values that exceed the lands worth as a timber growing platform. Non-strategic timberland consist primarily of tracts too small to allow efficient timber management, those geographically isolated from other Company fee lands, and
acreage otherwise not deemed strategic to Deltics operations or growth.



The Company remains pleased with the growing efficiencies within its sawmills, which combined during the second quarter with the current sellers market for softwood lumber products resulting in our Mills
segments continuation of quarterly operating income. As with any commodity market, the Company expects the historical volatility of lumber prices to continue in the future. The segment achieved record volume levels of quarterly lumber
production and sales during the second quarter of 2005. The Company continues to anticipate that a significant percentage of logs supplied to both of its sawmills will come from strategically located Company fee timberlands.



The Real Estate segment closed the sale of 90 residential lots during the
second quarter at an almost 40 percent higher average sales price per lot when compared to the same quarter of last year. The reported average sales price for residential lots for a specific period is largely dependent upon the mix of lot sales
closed in that period. Deltics lot development plans provide for a mix of lot offerings that represent most real estate market segments for planned communities. Sales activity levels for the Companys real estate developments are affected
by economic conditions that influence the level of housing starts in the central Arkansas region, including general economic conditions and interest rates. As previously mentioned, relatively low mortgage interest rates continued into the second
quarter of 2005 and demand for residential lots in the Companys Chenal Valley development remains high. During the second quarter, our Real Estate segment reaped a majority portion of the benefit of our successful January 20th offering of 138
residential lots for sale in two Chenal Valley neighborhoods. The Little Rock real estate market continues to indicate its sustained demand for our developed holdings which was evidenced in June, 2005, by our second successful residential offering
of the year, consisting of 72 lots in a single Chenal Valley neighborhood. Our current plans are to develop approximately 300 more lots within Chenal Valley by the end of 2005. In Deltics other two active developments, Red Oak Ridge and Chenal
Downs, a total of 5 lots were sold, leaving 39 developed lots in Red Oak Ridge and 24 in Chenal Downs uncommitted as of June 30, 2005. While Chenal Downs is fully developed, Deltic plans to develop approximately 40 additional lots within Red Oak
Ridge in 2005. Future annual development activity will be dependent upon the demand for the Companys residential lots, which is expected to remain strong as long as mortgage interest rates remain at or near current levels.



During 2004, the Company disclosed plans for a 1,170-acre upscale residential
development, The Ridges at Nowlin Creek, on a portion of its large land holdings located west of Chenal Valley. Construction activity at this site has not yet begun. A portion of the development is located within the watershed of Lake Maumelle, a
principal source of drinking water for Little Rock. Due to this environmentally sensitive locale, the Company intends to implement the most modern and proven best management practices to create a low impact development in order to protect water
quality in the lake. The Company continues to finalize environmental and civil engineering features of the development and attempt to reach an accord with local utilities and government agencies that the development will be fully protective of water
quality. The local water utility has commissioned preparation of a new watershed management plan which the Company hopes will reflect current scientific principles that will be compatible with the Companys low impact development plans.
However, at a meeting held July 14, 2005, the utilitys commissioners directed its staff: to explore a resolution with Deltic that among other things would set the value of that portion of the Companys development located within the
lakes watershed (approximately 665 acres) by agreement in the event the utility determines to acquire such property at a later date; to report back to the commission on September 8, 2005; and, if no reasonable resolution is reached with
Deltic, to pursue previously adopted authority to commence a condemnaton action to acquire the lands. The Company is engaged in discussions with the utility in an effort to reach an accord as to value or to another effective alternative to address
the utilitys stated concerns.



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##### Table of Contents

Commercial real estate sales activity is by nature less predictable than residential activity. No
commercial sales occurred in the second quarter of 2005 or 2004. With the number of residents in Chenal Valley, and other west Little Rock areas, growing steadily and momentum created from previous sales of commercial acreage in the development,
interest in the Companys remaining commercial acreage remains strong. On April 6, 2004, RED Development LLC announced plans for The Promenade at Chenal, a 48-acre, open-air, lifestyle shopping center. The sales contract regarding
this site remains in its feasibility period, and originally was scheduled to close before the end of 2004. However, as is the inherent unpredictable nature of commercial real estate sales, the initial contract has been extended and is now scheduled
to close later in 2005. Some extensions of similar contracts in the past have been followed by the termination of the commercial sale. No commercial acreage is included in the Chenal Downs or the planned Ridges at Nowlin Creek developments. Red Oak
Ridge is planned to include approximately 80 acres of commercial property. The Company may begin to develop and offer commercial sites as this developments population density increases.



Operating results for Del-Tin Fiber are affected by the overall MDF market
and the plants operating performance, and both experienced significant improvements during the recently ended year of 2004. However, the facilitys 2005 operations were hindered by a temporary production curtailment caused by a fire
sustained at the plant during the first quarter. The presence of the unscheduled downtime caused by the fire has forced the facility to reduce its 2005 projected total production volume. However, the efficiencies and improved key manufacturing
components established during 2004, which are still present at the plant, should allow the joint venture to once again estimate its production near its designed capacity of 150 million square feet for 2005. Del-Tin Fiber returned to profitability
during the second quarter of 2005. Deltics focus remains on the continuation of the facilitys recent operating and financial improvements throughout the remainder of 2005.



Results of Operations



Three Months Ended June 30, 2005 Compared with Three Months Ended

June 30, 2004



In the following tables,
Deltics net sales and results of operations are presented for the quarters ended June 30, 2005 and 2004. Explanations of significant variances and additional analyses for the Companys consolidated and segmental operations follow the
tables.



|                                                |  |                        |      |   |            |      |  
|----------------------------------------------- |  | ---------------------- | ---- | - | ---------- | ---- | -
|                                                |  | Quarter Ended June 30, |     
|(Millions of dollars, except per share amounts) |  | 2005                   |      |   | 2004       |     
|                                                |  |                        |      |   | (Restated) |     
|Net sales                                       |  |                        |      |   |            |      |  
|Woodlands                                       |  | $                      | 9.2  |   |            | 7.2  |  
|Mills                                           |  |                        | 31.8 |   |            | 25.6 |  
|Real Estate                                     |  |                        | 10.1 |   |            | 5.2  |  
|Eliminations                                    |  |                        | (5.1 | ) |            | (4.0 | )
|                                                |  |                        |      |   |            |      |  
|Net sales                                       |  | $                      | 46.0 |   |            | 34.0 |  
|                                                |  |                        |      |   |            |      |  
|Operating income/(loss) and net income/(loss)   |  |                        |      |   |            |      |  
|Woodlands                                       |  | $                      | 6.6  |   |            | 4.4  |  
|Mills                                           |  |                        | 3.1  |   |            | 3.0  |  
|Real Estate                                     |  |                        | 3.5  |   |            | .7   |  
|Corporate                                       |  |                        | (2.9 | ) |            | (2.7 | )
|Eliminations                                    |  |                        | (.2  | ) |            | .5   |  
|                                                |  |                        |      |   |            |      |  
|Operating income                                |  |                        | 10.1 |   |            | 5.9  |  



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##### Table of Contents

|                                                |  |                        |      |   |            |      |  
|----------------------------------------------- |  | ---------------------- | ---- | - | ---------- | ---- | -
|                                                |  | Quarter Ended June 30, |     
|(Millions of dollars, except per share amounts) |  | 2005                   |      |   | 2004       |     
|                                                |  |                        |      |   | (Restated) |     
|Equity in Del-Tin Fiber                         |  |                        | .7   |   |            | .2   |  
|Interest income                                 |  |                        | .2   |   |            |     |  
|Interest and other debt expense                 |  |                        | (1.5 | ) |            | (1.5 | )
|Other income/(expense)                          |  |                        |     |   |            |     |  
|Income taxes                                    |  |                        | (3.1 | ) |            | (1.8 | )
|                                                |  |                        |      |   |            |      |  
|Net income                                      |  | $                      | 6.4  |   |            | 2.8  |  
|                                                |  |                        |      |   |            |      |  
|Earnings per common share                       |  |                        |      |   |            |      |  
|Basic                                           |  | $                      | .52  |   |            | .23  |  
|Assuming dilution                               |  | $                      | .52  |   |            | .23  |  



Consolidated



The $3.6 million increase in net income was the result of
improved financial results for the Companys Woodlands, Mills, and Real Estate segments, as well as improved financial results of Del-Tin Fiber. Each of Deltics operating segments experienced increases in sales volumes and pricing levels
within key business drivers of their operations when compared to the second quarter of 2004.



Operating income increased $4.2 million. The Woodlands segment increased $2.2 million due primarily to an increased pine sawtimber harvest level and an increased average per-ton pine sawtimber price. Deltics
Mills segment operations improved $.1 million due mainly to a 19 percent increase in finished lumber sales volume at a slightly higher average lumber sales price, offset by increased raw material costs. Real Estate operating income increased $2.8
million, primarily the result of a 76 percent increase in the number of residential lots sold at a higher average price per lot. Corporate operating expense was essentially unchanged, increasing $.2 million due to higher general and administrative
expenses.



Woodlands



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



|                                 |  |                        |       |      |      
|-------------------------------- |  | ---------------------- | ----- | ---- | -----
|                                 |  | Quarter Ended June 30,
|                                 |  | 2005                   |       | 2004
|Net sales (millions of dollars)  |  |                        |       |      |      
|Pine sawtimber                   |  | $                      | 7.3   |      | 5.1  
|Pine pulpwood                    |  |                        | .7    |      | .4   
|Hardwood sawtimber               |  |                        | .2    |      |     
|Hardwood pulpwood                |  |                        | .1    |      | .1   
|Sales volume (thousands of tons) |  |                        |       |      |      
|Pine sawtimber                   |  |                        | 155.8 |      | 131.4
|Pine pulpwood                    |  |                        | 72.1  |      | 66.3 
|Hardwood sawtimber               |  |                        | 2.5   |      | 1.0  
|Hardwood pulpwood                |  |                        | 13.8  |      | 18.9 
|Sales price (per ton)            |  |                        |       |      |      
|Pine sawtimber                   |  | $                      | 47    |      | 39   
|Pine pulpwood                    |  |                        | 9     |      | 7    
|Hardwood sawtimber               |  |                        | 60    |      | 28   
|Hardwood pulpwood                |  |                        | 8     |      | 5    



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##### Table of Contents

|                                |  |                        |       |      |      
|------------------------------- |  | ---------------------- | ----- | ---- | -----
|                                |  | Quarter Ended June 30,
|                                |  | 2005                   |       | 2004
|Timberland                      |  |                        |       |      |      
|Net sales (millions of dollars) |  | $                      | .2    |      | .5   
|Sales volume (acres)            |  |                        | 18    |      | 479  
|Sales price (per acre)          |  | $                      | 8,546 |      | 1,117



Total net sales
increased $2 million, which was driven almost entirely by the increase in sales volume of pine sawtimber at a higher average sales price. Total revenues from the sale of other timber species increased as well during the second quarter of 2005,
however, these were virtually offset by the segments reduction in timberland sales. Operating income increased $2.2 million primarily as a result of the increased sales of pine sawtimber combined with only a 16 percent increase in the cost of
fee timber harvested due mainly to the mix of pine sawtimber harvest volume by company.



Mills



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



|                                |  |                        |      |      |     
|------------------------------- |  | ---------------------- | ---- | ---- | ----
|                                |  | Quarter Ended June 30,
|                                |  | 2005                   |      | 2004
|Net sales (millions of dollars) |  |                        |      |      |     
|Lumber                          |  | $                      | 26.7 |      | 22.0
|Residual by-products            |  |                        | 3.8  |      | 2.8 
|Lumber                          |  |                        |      |      |     
|Finished production (MMBF)      |  |                        | 67.5 |      | 55.6
|Sales volume (MMBF)             |  |                        | 69.3 |      | 58.3
|Sales price (per MBF)           |  |                        | 385  |      | 377 



Total net sales
increased $6.2 million, or 24 percent, due to the segments record level of finished lumber sales volume combined with slightly higher average sales prices. The improvement in operating results of $.1 million was due primarily to the increase
in net sales, offset by increased log costs.



Real Estate



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



|                                |  |                        |     |      |    
|------------------------------- |  | ---------------------- | --- | ---- | ---
|                                |  | Quarter Ended June 30,
|                                |  | 2005                   |     | 2004
|Net sales (millions of dollars) |  |                        |     |      |    
|Residential lots                |  | $                      | 8.0 |      | 3.2
|Commercial sites                |  |                        |    |      |   
|Undeveloped acreage             |  |                        |    |      |   
|Chenal Country Club             |  |                        | 1.9 |      | 1.8
|Sales volume                    |  |                        |     |      |    
|Residential lots                |  |                        | 90  |      | 51 
|Commercial acres                |  |                        |    |      |   
|Undeveloped acreage             |  |                        |    |      |   



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##### Table of Contents

|                                           |  |                        |    |      |   
|------------------------------------------ |  | ---------------------- | -- | ---- | --
|                                           |  | Quarter Ended June 30,
|                                           |  | 2005                   |    | 2004
|Average sales price (thousands of dollars) |  |                        |    |      |   
|Residential lots                           |  | $                      | 88 |      | 64
|Commercial acres                           |  |                        |   |      |  
|Undeveloped acreage                        |  |                        |   |      |  



Total net sales
increased $4.9 million or 94 percent. The number of residential lots sold increased by 76 percent due primarily to closings resulting from the lots offered for sale at the end of January 2005, with a 39 percent increase in average sales price per
lot due to sales mix. The increase in the Real Estate segments operating income was due primarily to the same factors impacting net sales.



Corporate



Operating expense for Corporate functions remained relatively flat, increasing just $.2 million due primarily to increased professional fees.



Eliminations



Intersegment sales of timber from Deltics Woodlands to the Mills
segment increased $1.1 million to $5.1 million. The increase was due to increases in both the volume and price of logs coming into Deltics sawmills from the Companys fee timberlands. Logs supplied by the Woodlands segment to the
Companys sawmills are transferred at prices that approximate market.



Equity in Del-Tin Fiber



For the second quarter of 2005, equity in Del-Tin Fiber improved $.5 million due to the improvements in MDF prices and plant operating performance when compared to the second quarter of 2004.



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



|                                |  |                        |      |      |     
|------------------------------- |  | ---------------------- | ---- | ---- | ----
|                                |  | Quarter Ended June 30,
|                                |  | 2005                   |      | 2004
|Net sales (millions of dollars) |  | $                      | 15.7 |      | 15.7
|Finished production (MMSF)      |  |                        | 39.4 |      | 38.9
|Board sales (MMSF)              |  |                        | 37.6 |      | 39.9
|Sales price (per MSF)           |  | $                      | 416  |      | 394 



Average sales price
increased six percent due to the improvements in the MDF market and to a change in product mix to include a greater percentage of thin board and an increase in premium-grade production. Manufacturing cost per MSF sold was down two percent due to the
lowering of certain variable costs of manufacturing and the spreading of the plants fixed costs to the increased production volume.



Income Taxes



The effective income tax rate was 33 percent and 40 percent in the 2005 and 2004 periods, respectively. The decrease was primarily due to lower effective
rates for state income taxes caused by a reduction in the estimated valuation allowance related to state tax loss carryforwards as it is now more likely than not that a greater portion of these state net operating losses will be utilized.



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##### Table of Contents

Six Months Ended June 30, 2005 Compared with Six Months Ended

June 30, 2004



In the following tables, Deltics net sales and results of operations are presented for the six-month periods ended June 30, 2005 and 2004.
Explanations of significant variances and additional analyses for the Companys consolidated and segmental operations follow the tables.



|                                                |  |                           |       |   |            |      |  
|----------------------------------------------- |  | ------------------------- | ----- | - | ---------- | ---- | -
|                                                |  | Six Months Ended June 30, |      
|(Millions of dollars, except per share amounts) |  | 2005                      |       |   | 2004       |     
|                                                |  |                           |       |   | (Restated) |     
|Net sales                                       |  |                           |       |   |            |      |  
|Woodlands                                       |  | $                         | 18.9  |   |            | 15.4 |  
|Mills                                           |  |                           | 62.0  |   |            | 36.1 |  
|Real Estate                                     |  |                           | 15.1  |   |            | 9.0  |  
|Eliminations                                    |  |                           | (10.6 | ) |            | (8.7 | )
|                                                |  |                           |       |   |            |      |  
|Net sales                                       |  | $                         | 85.4  |   |            | 61.8 |  
|                                                |  |                           |       |   |            |      |  
|Operating income/(loss) and net income/(loss)   |  |                           |       |   |            |      |  
|Woodlands                                       |  | $                         | 13.4  |   |            | 9.9  |  
|Mills                                           |  |                           | 4.8   |   |            | 3.3  |  
|Real Estate                                     |  |                           | 4.5   |   |            | 1.3  |  
|Corporate                                       |  |                           | (5.9  | ) |            | (5.3 | )
|Eliminations                                    |  |                           | (.4   | ) |            | .6   |  
|                                                |  |                           |       |   |            |      |  
|Operating income                                |  |                           | 16.4  |   |            | 9.8  |  
|Equity in Del-Tin Fiber                         |  |                           |      |   |            |     |  
|Interest income                                 |  |                           | .2    |   |            | .1   |  
|Interest and other debt expense                 |  |                           | (2.9  | ) |            | (3.1 | )
|Other income/(expense)                          |  |                           |      |   |            |     |  
|Income taxes                                    |  |                           | (4.8  | ) |            | (2.7 | )
|                                                |  |                           |       |   |            |      |  
|Net income                                      |  | $                         | 8.9   |   |            | 4.1  |  
|                                                |  |                           |       |   |            |      |  
|Earnings per common share                       |  |                           |       |   |            |      |  
|Basic                                           |  | $                         | .73   |   |            | .34  |  
|Assuming dilution                               |  | $                         | .72   |   |            | .34  |  



Consolidated



The $4.8 million increase in net income was the result of
improved financial results for the Companys Woodlands, Mills, and Real Estate segments. Each of Deltics operating segments experienced increases in sales volumes and pricing levels within key business drivers of their operations when
compared to the six months ended June 30, 2004.



Operating
income increased $6.6 million. The Woodlands segment increased $3.5 million due primarily to an increased pine sawtimber harvest level and an increased average per-ton pine sawtimber price. Deltics Mills segment operations improved $1.5
million due mainly to a 25 percent increase in finished lumber sales volume at a six percent higher average lumber sales price, offset by increased raw material costs. Real Estate operating income increased $3.2 million, primarily the result of a 55
percent increase in the number of residential lots sold at a higher average price per lot. Corporate operating expense increased $.6 million due to increased general and administrative expenses.



23



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Woodlands



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



|                                 |  |                           |       |      |      
|-------------------------------- |  | ------------------------- | ----- | ---- | -----
|                                 |  | Six Months Ended June 30,
|                                 |  | 2005                      |       | 2004
|Net sales (millions of dollars)  |  |                           |       |      |      
|Pine sawtimber                   |  | $                         | 15.0  |      | 11.6 
|Pine pulpwood                    |  |                           | 1.4   |      | .9   
|Hardwood sawtimber               |  |                           | .2    |      | .1   
|Hardwood pulpwood                |  |                           | .2    |      | .2   
|Sales volume (thousands of tons) |  |                           |       |      |      
|Pine sawtimber                   |  |                           | 335.0 |      | 302.2
|Pine pulpwood                    |  |                           | 132.4 |      | 133.8
|Hardwood sawtimber               |  |                           | 2.6   |      | 3.0  
|Hardwood pulpwood                |  |                           | 23.4  |      | 41.8 
|Sales price (per ton)            |  |                           |       |      |      
|Pine sawtimber                   |  | $                         | 45    |      | 38   
|Pine pulpwood                    |  |                           | 10    |      | 6    
|Hardwood sawtimber               |  |                           | 60    |      | 30   
|Hardwood pulpwood                |  |                           | 8     |      | 5    
|Timberland                       |  |                           |       |      |      
|Net sales (millions of dollars)  |  | $                         | .2    |      | .8   
|Sales volume (acres)             |  |                           | 18    |      | 717  
|Sales price (per acre)           |  | $                         | 8,546 |      | 1,076



Total net sales
increased $3.5 million, which was driven almost entirely by the increase in sales volume of pine sawtimber at a much higher average sales price. Total revenues from the sale of other timber species increased as well during the first six months of
2005, however, these were virtually offset by the segments reduction in timberland sales. Operating income increased $3.5 million primarily as a result of the increased sales of pine sawtimber, combined with only a 5 percent increase in the
cost of fee timber harvested due mainly to the mix of pine sawtimber harvest volume by company.



Mills



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



|                                |  |                           |       |      |      
|------------------------------- |  | ------------------------- | ----- | ---- | -----
|                                |  | Six Months Ended June 30,
|                                |  | 2005                      |       | 2004
|Net sales (millions of dollars) |  |                           |       |      |      
|Lumber                          |  | $                         | 52.2  |      | 39.7 
|Residual by-products            |  |                           | 7.6   |      | 5.2  
|Lumber                          |  |                           |       |      |      
|Finished production (MMBF)      |  |                           | 130.6 |      | 107.4
|Sales volume (MMBF)             |  |                           | 138.0 |      | 110.8
|Sales price (per MBF)           |  |                           | 378   |      | 358  



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##### Table of Contents

Total net sales increased $15.9 million, or 35 percent, due to the segments record level of
finished lumber sales volume combined with six percent higher average sales prices. The improvement in operating results of $1.5 million was due primarily to the increase in net sales, partially offset by increased log costs.



Real Estate



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



|                                           |  |                           |      |      |    
|------------------------------------------ |  | ------------------------- | ---- | ---- | ---
|                                           |  | Six Months Ended June 30,
|                                           |  | 2005                      |      | 2004
|Net sales (millions of dollars)            |  |                           |      |      |    
|Residential lots                           |  | $                         | 10.6 |      | 5.5
|Commercial sites                           |  |                           | .6   |      | .3 
|Undeveloped acreage                        |  |                           | .4   |      |   
|Chenal Country Club                        |  |                           | 3.0  |      | 2.8
|Sales volume                               |  |                           |      |      |    
|Residential lots                           |  |                           | 127  |      | 82 
|Commercial acres                           |  |                           | .99  |      | 2  
|Undeveloped acreage                        |  |                           | 6.7  |      |   
|Average sales price (thousands of dollars) |  |                           |      |      |    
|Residential lots                           |  | $                         | 84   |      | 67 
|Commercial acres                           |  |                           | 633  |      | 152
|Undeveloped acreage                        |  |                           | 64   |      |   



Total net sales
increased $6.1 million or 68 percent. The number of residential lots sold increased by 55 percent which combined with a 24 percent increase in average sales price per lot due to sales mix. The increase in the Real Estate segments operating
income was due primarily to the same factors impacting net sales.



Corporate



The increase in operating expense
for Corporate functions of $.6 million was due primarily to increased professional fees.



Eliminations



Intersegment sales of timber from Deltics Woodlands to the Mills segment increased $1.9 million to $10.6 million. The increase was due to increases in both the volume and price of logs coming into Deltics sawmills from Company
fee timberlands. Logs supplied by the Woodlands segment to the Companys sawmills are transferred at prices that approximate market.



Equity in Del-Tin Fiber



For the first six months of 2005 and 2004, equity in Del-Tin Fiber was at break-even results. Both 2005 and 2004 experienced profitable second quarters
which were essentially offset by first quarter losses reported by the joint venture. The facilitys first quarter of 2005, operations were hindered by a temporary production curtailment caused by a fire sustained at the plant.



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##### Table of Contents

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



|                                |  |                           |      |      |     
|------------------------------- |  | ------------------------- | ---- | ---- | ----
|                                |  | Six Months Ended June 30,
|                                |  | 2005                      |      | 2004
|Net sales (millions of dollars) |  | $                         | 25.6 |      | 30.6
|Finished production (MMSF)      |  |                           | 62.9 |      | 76.9
|Board sales (MMSF)              |  |                           | 62.0 |      | 80.1
|Sales price (per MSF)           |  | $                         | 414  |      | 382 



Average sales price
increased eight percent due to the improvements in the MDF market and to a change in product mix to include a greater percentage of thin board and an increase in premium-grade production. Manufacturing cost per MSF sold was up eight percent due to
decreased production volume and costs related to repair damage from the first quarter fire in the plant.



Income Taxes



The effective income tax rate was 35 percent and 40 percent in the 2005 and 2004 periods, respectively. The decrease was primarily due to lower effective
rates for state income taxes caused by a reduction in the estimated valuation allowance related to state tax loss carryforwards as it is now more likely than not that a greater portion of these state net operating losses will be utilized.



Liquidity and Capital Resources



Cash Flows and Capital Expenditures



Net cash provided by operating activities totaled $20.7 million for the
first half of 2005 compared to $17 million for the same period in 2004. Changes in operating working capital, other than cash and cash equivalents, required cash of $.5 million in the 2005 period and provided cash of $1.6 million in 2004. The
Companys accompanying Consolidated Statements of Cash Flows identify other differences between net income/(loss) and cash provided by operating activities for each reporting period.



Capital expenditures required cash of $14.4 million in the current-year period and $10.4 million a year ago. Capital
expenditures by segment consisted of the following:



|                       |  |                           |        |      |       
|---------------------- |  | ------------------------- | ------ | ---- | ------
|                       |  | Six Months Ended June 30,
|                       |  | 2005                      |        | 2004
|(Thousands of dollars) |  |                           |        |      |       
|Woodlands              |  | $                         | 3,081  |      | 6,019 
|Mills                  |  |                           | 6,054  |      | 1,374 
|Real Estate            |  |                           | 5,236  |      | 2,878 
|Corporate              |  |                           | 74     |      | 148   
|                       |  |                           |        |      |       
|Capital expenditures   |  | $                         | 14,445 |      | 10,419
|                       |  |                           |        |      |       



The net change in
purchased stumpage inventory to be utilized in the Companys sawmill operations required cash of $.4 million in 2005, but provided cash of $.2 million in 2004. The Company made advances to Del-Tin Fiber of $3.2 million during the current
period, which increased $2.7 million from the corresponding period of 2004 due to cost to repair fire damage in the plant during the first quarter and to the production curtailment at the facility resulting from downtime due to the fire. In 2005,
the Company received cash distributions from Del-Tin Fiber of $1.4 million during the second quarter to reimburse the Company for a portion of the fire-related advances with no such distributions occurring



26



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##### Table of Contents

during the first half of 2004. During 2004, $4.4 million of proceeds from sales of timberland that were previously held by a trustee were used to acquire
timberland designated as replacement property for income tax purposes, as required for tax-deferred exchanges. In 2005, Deltic borrowed $6 million and made repayments of debt of $7.7 million. During 2004, Deltic made repayments of
previous borrowings under its revolving credit facility of $13 million. Deltic paid dividends on common stock of $1.5 million during the current period, consistent with the $1.5 million dividend payments in 2004. In 2005, proceeds from stock option
exercises amounted to $.2 million, a decrease of $3.1 million when compared to 2004.



Financial Condition



Working capital totaled $8.9 million at June 30, 2005, and $6.5 million at December 31, 2004. Deltics working capital ratio at June 30, 2005, was 1.84 to 1, compared to 1.73 to 1 at the end of 2004. Cash and cash equivalents at the
end of the second quarter of 2005 were $2.6 million compared to $.9 million at the end of 2004. During the first half of 2005, total indebtedness of the Company decreased $1.7 million to $84 million. Deltics long-term debt to
stockholders equity ratio was .434 to 1 at June 30, 2005, compared to .462 to 1 at year-end 2004.



Liquidity



The primary sources of the Companys liquidity are internally generated funds, access to outside financing, and working capital. The Companys
current strategy for growth continues to emphasize its timberland acquisition program, in addition to expanding lumber production as market conditions allow and developing real estate at Chenal Valley, Red Oak Ridge and The Ridges at Nowlin Creek.



To facilitate these growth plans, the Company has an agreement
with a group of banks which provides an unsecured, committed revolving credit facility totaling $125 million, inclusive of a $50 million letter of credit feature. The agreement will expire on July 15, 2007. As of June 30, 2005, $111 million was
available in excess of all borrowings outstanding under or supported by the facility. The credit agreement contains restrictive covenants, including limitations on the incurrence of debt and requirements to maintain certain financial ratios.



In December 2000, the Companys Board of Directors
authorized a stock repurchase program of up to $10 million of Deltic common stock. As of June 30, 2005, the Company had expended $2.1 million under this program, with the purchase of 96,206 shares at an average cost of $22.34 per share; no shares
have been purchased in 2005 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



Prior to August 26, 2004, the Company had agreed to a
contingent equity contribution agreement with Del-Tin Fiber and the group of banks from whom Del-Tin Fiber had obtained its $89 million credit facility. Under this agreement, Deltic and the other 50 percent owner of the joint venture had agreed to
fund any deficiency in contributions to either Del-Tin Fibers required sinking fund or debt service reserve, up to a cumulative total of $17.5 million for each owner. In addition, each owner had committed to a production support agreement,
under which each owner had agreed to make support obligation payments to Del-Tin Fiber to provide, on the occurrence of certain events, additional funds for payment of debt service until the plant was able to successfully complete a minimum
production test. Both owners had also agreed, in a series of one-year term commitments, to fund any operating working capital needs until the facility was able to consistently generate sufficient funds to meet its cash requirements.



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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 will be 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 ($27.6 million at June 30, 2005) of Del-Tins obligations under its credit agreement. This credit agreement of Del-Tin Fiber fully replaces Del-Tin Fibers prior credit facility, resulting in Deltics previous contingent
equity contribution agreement of $17.5 million, the production support agreement, and the one-year commitment being fully extinguished.



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, Deltic initially 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 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. At June 30, 2005, Deltics remaining liability regarding the guarantee was $2.9 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 13 to the consolidated financial statements included in the Companys 2004 annual report on Form 10-K/A-1.)



Tabular summaries of the Companys contractual cash payment obligations and other commercial commitment expirations as of June 30, 2005, by period,
are presented in the following tables.



|                                       |  |       |       |            |     |             |      |             |      |           |     
|-------------------------------------- |  | ----- | ----- | ---------- | --- | ----------- | ---- | ----------- | ---- | --------- | ----
|(Millions of dollars)                  |  | Total |       | During2005 |     | 2006to 2007 |      | 2008to 2009 |      | After2009
|Contractual cash payment obligations   |  |       |       |            |     |             |      |             |      |           |     
|Real estate development infrastructure |  | $     | 2.3   |            | 1.7 |             | .6   |             |     |           |    
|Long-term debt                         |  |       | 84.0  |            |    |             | 14.0 |             | 50.0 |           | 20.0
|Interest on debt1                      |  |       | 23.0  |            | 5.1 |             | 9.9  |             | 5.9  |           | 2.1 
|Retirement plans                       |  |       | 3.5   |            | .3  |             | 1.4  |             | 1.8  |           |    
|Other postretirement benefits          |  |       | 6.9   |            | .2  |             | .8   |             | 1.1  |           | 4.8 
|Other long-term liabilities            |  |       | 2.4   |            | .1  |             | .4   |             | .4   |           | 1.5 
|                                       |  |       |       |            |     |             |      |             |      |           |     
|                                       |  | $     | 122.1 |            | 7.4 |             | 27.1 |             | 59.2 |           | 28.4
|                                       |  |       |       |            |     |             |      |             |      |           |     



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##### Table of Contents

|                                           |  |       |      |            |     |             |      |             |     |           |  
|------------------------------------------ |  | ----- | ---- | ---------- | --- | ----------- | ---- | ----------- | --- | --------- | -
|(Millions of dollars)                      |  | Total |      | During2005 |     | 2006to 2007 |      | 2008to 2009 |     | After2009
|Other commercial commitment expirations    |  |       |      |            |     |             |      |             |     |           |  
|Guarantee of indebtedness of Del-Tin Fiber |  | $     | 27.6 |            | 1.5 |             | 20.9 |             | 5.2 |           | 
|Timber cutting agreements                  |  |       | .6   |            | .2  |             | .4   |             |    |           | 
|Operating leases                           |  |       | .2   |            |    |             | .1   |             | .1  |           | 
|Letters of credit                          |  |       | .9   |            | .3  |             | .4   |             | .2  |           | 
|                                           |  |       |      |            |     |             |      |             |     |           |  
|                                           |  | $     | 29.3 |            | 2.0 |             | 21.8 |             | 5.5 |           | 
|                                           |  |       |      |            |     |             |      |             |     |           |  



|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 2004 annual report on Form 10-K/A-1, and this disclosure should be read in conjunction with this Form 10-Q. There have been no changes in these identified critical policies, nor have there been any initially adopted accounting
policies having a material impact on reported financial results.



Impact of
Recently Effective Accounting Pronouncements



(For
information regarding the impact of recently effective accounting pronouncements, refer to Note 2 to the consolidated financial statements.)



Outlook



Pine sawtimber harvest levels are expected to be 120,000 to 140,000 tons in the third quarter of 2005 and 550,000 to 575,000 tons for the year. Significant sales of timberland identified to have a higher and better
use or to be non-strategic are not anticipated, but may reach 100 to 250 acres for the year. Finished lumber production and sales volume will continue to be subject to market conditions, and is estimated at 65 to 75 million board feet for the third
quarter and 275 to 285 million board feet for the year. Residential lot sales are projected to be 15 to 20 lots and 290 to 310 lots for the third quarter and the year, respectively.



29



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##### Table of Contents

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.



30



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##### 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 2004 annual report on Form 10-K/A-1. 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 (Deltic or the Company) has established disclosure controls and procedures to ensure that material
information relating to the Company, including its consolidated subsidiaries, is made known to the officers who certify the Companys financial reports and to other members of senior management and the Board of Directors.



Based on their evaluation as of June 30, 2005, 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) were not 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 because of
the following material weaknesses in internal control over financial reporting related to accounting for third-party purchased stumpage timber inventory:



| |  |  | a lack of segregation of duties related to the timber procurement function, in that the procurement manager calculated the estimated volumes on purchased tracts of third-party
standing timber, approved purchases of tracts of third-party standing timber up to the level of his approval authority, monitored logging activity on all procured tracts, reported such logging activity to accounting personnel, maintained the records
of expiration dates for logging rights for all procured tracts, obtained extensions to original expiration dates for all procured tracts, and determined the timing of reporting to accounting personnel that logging activities on procured tracts had
been completed;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a lack of frequent and comprehensive review of status updates for each respective tract of third- party standing timber;
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | a lack of established procedures requiring adjustment in the carrying value of procured tracts when there are no current reports of logging activity reported to accounting
personnel, unless an affirmative justification is timely presented and approved; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a lack of training and education designed to ensure that all relevant personnel involved in third-party purchased standing timber inventory transactions understand and apply the
proper accounting procedures.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As of the date of
this report, the Companys management plans and intends to implement and thoroughly test new policies and procedures that are intended to fully remediate the material weaknesses in internal control over financial reporting with respect to
accounting for third-party purchased standing timber inventory. These remedial actions include:



| |  |  | Substantially increasing the segregation of duties related to the acquisition of and accounting for third-party purchased standing timber inventory, including a reduction in the
expenditure authority levels of mill procurement personnel to increase involvement of management in acquisitions;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



31



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##### Table of Contents

| |  |  | institution of new requirements in connection with third-party purchased standing timber inventory for the creation and wider distribution of records and documentation beginning
with the original estimation process prior to acquisition of tracts of third-party purchased standing timber inventory and continuing through the final harvest and volume reconciliation for each tract;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | imposition of more frequent and comprehensive status updates for each respective tract of third- party purchased standing timber inventory with active participation by both
procurement and accounting personnel;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | establishment of default procedures that require adjustments in the carrying value of respective tracts where no current reports of logging activity are being made by procurement
personnel to accounting personnel, unless an affirmative justification is timely presented and approved;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | additional training and education designed to ensure that all relevant personnel involved in the transactions understand and apply the proper accounting for third-party purchased
standing timber inventory; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | extension of the Companys sub-certification requirements relating to information supplied which may form a part of the Companys accounting books and records to include
all procurement managers and supervisors.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Changes in
Internal Control Over Financial Reporting



There was
no change in the Companys internal control over financial reporting during the quarter ended June 30, 2005, that materially affected, or is reasonably likely to materially affect, such internal control over financial reporting. However,
subsequent to June 30, 2005, Deltic began implementation of the remedial actions described above.



32



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##### Table of Contents

PART II - OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------



From time to time, the Company is involved in litigation incidental to its business. Currently, there are no material legal proceedings.



|Item 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
|April 1 through April 30, 2005 |  |                               |  |                           |  |                                                                              |  | $                                                                                              | 7,851,000
|May 1 through May 31, 2005     |  |                               |  |                           |  |                                                                              |  | $                                                                                              | 7,851,000
|June 1 through June 30, 2005   |  |                               |  |                           |  |                                                                              |  | $                                                                                              | 7,851,000



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



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



None.



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##### Table of Contents

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



The annual meeting of the stockholders of Deltic Timber Corporation (Deltic or the Company) was held on April 28, 2005. Pursuant
to the Companys Amended and Restated Certificate of Incorporation, its Board of Directors consists of three classes who hold office for staggered terms of three years. Set forth below is a listing of the directors elected at the April 28,
2005, annual meeting, the results of such election and the names of directors whose term of office continued after the meeting.



|                       |  |                        |  |               
|---------------------- |  | ---------------------- |  | --------------
|Director               |  | Votes for              |  | Votes Withheld
|O. H. Darling, Jr.     |  | 11,607,529             |  | 142,399       
|Christoph Keller, III  |  | 11,038,991             |  | 710,937       
|R. Madison Murphy      |  | 11,034,878             |  | 715,050       
|Alex R. Lieblong       |  | (Term expires in 2006) |  |               
|Robert C. Nolan        |  | (Term expires in 2006) |  |               
|Ray C. Dillon          |  | (Term expires in 2006) |  |               
|R. Hunter Pierson, Jr. |  | (Term expires in 2007) |  |               
|J. Thurston Roach      |  | (Term expires in 2007) |  |               
|John C. Shealy         |  | (Term expires in 2007) |  |               



In addition to the
election of three Class II directors at the April 28, 2005 annual meeting, stockholders were requested to ratify the prior appointment of KPMG LLP by the Board of Directors as Deltics independent auditors for 2005. Stockholders ratified the
appointment of KPMG LLP by a vote of 11,627,639 shares in favor and 122,289 shares against or withheld.



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



None.



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



| | (a) | 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.




34



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SIGNATURES



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



|                          |  |                                     |  |       |  |                 |  |                
|------------------------- |  | ----------------------------------- |  | ----- |  | --------------- |  | ---------------
|DELTIC TIMBER CORPORATION |  |                                     |  |      
|                          |  |                                     |  |      
|By:                       |  | /s/    RAY C. DILLON                |  |       |  | Date:           |  | August 12, 2005
|                          |  | Ray C. Dillon, President            |  |       |  |                 |  |                
|                          |  | (Principal Executive Officer)       |  |       |  |                 |  |                
|                          |  |                                     | 
|/s/    CLEFTON D.
VAUGHAN |  |                                     |  | Date: |  | August 12, 2005
|                          |  | Clefton D. Vaughan, Vice President, |  |       |  |                 |  |                
|                          |  | Finance and Administration          |  |       |  |                 |  |                
|                          |  | (Principal Financial Officer)       |  |       |  |                 |  |                
|                          |  |                                     | 
|/s/    KENNETH D.
MANN    |  |                                     |  | Date: |  | August 12, 2005
|                          |  | Kenneth D. Mann, Controller         |  |       |  |                 |  |                
|                          |  | (Principal Accounting Officer)      |  |       |  |                 |  |                



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