RAYONIER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(Unaudited)
(Dollars in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended
June 30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
SALES
|
$
|
409,077
|
|
|
$
|
348,096
|
|
|
$
|
802,796
|
|
|
$
|
684,667
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
Cost of sales
|
297,698
|
|
|
243,571
|
|
|
563,716
|
|
|
479,279
|
|
Selling and general expenses
|
16,929
|
|
|
15,892
|
|
|
33,028
|
|
|
35,157
|
|
Other operating expense (income), net
|
291
|
|
|
(5,295
|
)
|
|
(3,212
|
)
|
|
(6,433
|
)
|
|
314,918
|
|
|
254,168
|
|
|
593,532
|
|
|
508,003
|
|
Equity in income of New Zealand joint venture
|
304
|
|
|
170
|
|
|
562
|
|
|
184
|
|
OPERATING INCOME BEFORE GAIN ON CONSOLIDATION OF NEW ZEALAND JOINT VENTURE
|
94,463
|
|
|
94,098
|
|
|
209,826
|
|
|
176,848
|
|
Gain related to consolidation of New Zealand joint venture (Note 6)
|
16,098
|
|
|
—
|
|
|
16,098
|
|
|
—
|
|
OPERATING INCOME
|
110,561
|
|
|
94,098
|
|
|
225,924
|
|
|
176,848
|
|
Interest expense
|
(10,019
|
)
|
|
(16,056
|
)
|
|
(17,736
|
)
|
|
(27,880
|
)
|
Interest and miscellaneous income, net
|
2,598
|
|
|
84
|
|
|
2,656
|
|
|
60
|
|
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
103,140
|
|
|
78,126
|
|
|
210,844
|
|
|
149,028
|
|
Income tax expense
|
(15,249
|
)
|
|
(12,035
|
)
|
|
(19,695
|
)
|
|
(30,338
|
)
|
INCOME FROM CONTINUING OPERATIONS
|
87,891
|
|
|
66,091
|
|
|
191,149
|
|
|
118,690
|
|
DISCONTINUED OPERATIONS, NET (Note 2)
|
|
|
|
|
|
|
|
Income from discontinued operations, net of income tax expense of $0, $1,505, $22,273 and $1,927
|
—
|
|
|
2,988
|
|
|
44,477
|
|
|
3,825
|
|
NET INCOME
|
87,891
|
|
|
69,079
|
|
|
235,626
|
|
|
122,515
|
|
Net income attributable to noncontrolling interest
|
727
|
|
|
—
|
|
|
727
|
|
|
—
|
|
NET INCOME ATTRIBUTABLE TO RAYONIER INC.
|
87,164
|
|
|
69,079
|
|
|
234,899
|
|
|
122,515
|
|
OTHER COMPREHENSIVE (LOSS) INCOME
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
(28,201
|
)
|
|
(8,081
|
)
|
|
(27,226
|
)
|
|
(2,255
|
)
|
New Zealand joint venture cash flow hedges
|
222
|
|
|
(1,998
|
)
|
|
775
|
|
|
(793
|
)
|
Amortization of pension and postretirement plans, net of income tax expense of $1,620, $1,482, $3,824 and $2,850
|
3,717
|
|
|
3,401
|
|
|
8,687
|
|
|
6,541
|
|
Total other comprehensive (loss) income
|
(24,262
|
)
|
|
(6,678
|
)
|
|
(17,764
|
)
|
|
3,493
|
|
COMPREHENSIVE INCOME
|
63,629
|
|
|
62,401
|
|
|
217,862
|
|
|
126,008
|
|
Comprehensive loss attributable to noncontrolling interest
|
(9,505
|
)
|
|
—
|
|
|
(9,505
|
)
|
|
—
|
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.
|
$
|
73,134
|
|
|
$
|
62,401
|
|
|
$
|
227,367
|
|
|
$
|
126,008
|
|
EARNINGS PER COMMON SHARE (Note 3)
|
|
|
|
|
|
|
|
BASIC EARNINGS PER SHARE ATTRIBUTABLE TO RAYONIER INC.
|
|
|
|
|
|
|
|
Continuing Operations
|
$
|
0.69
|
|
|
$
|
0.54
|
|
|
$
|
1.52
|
|
|
$
|
0.97
|
|
Discontinued Operations
|
—
|
|
|
0.02
|
|
|
0.36
|
|
|
0.03
|
|
Net Income
|
$
|
0.69
|
|
|
$
|
0.56
|
|
|
$
|
1.88
|
|
|
$
|
1.00
|
|
DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO RAYONIER INC.
|
|
|
|
|
|
|
|
Continuing Operations
|
$
|
0.67
|
|
|
$
|
0.52
|
|
|
$
|
1.46
|
|
|
$
|
0.93
|
|
Discontinued Operations
|
—
|
|
|
0.02
|
|
|
0.34
|
|
|
0.03
|
|
Net Income
|
$
|
0.67
|
|
|
$
|
0.54
|
|
|
$
|
1.80
|
|
|
$
|
0.96
|
|
See Notes to Consolidated Financial Statements.
RAYONIER INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
June 30, 2013
|
|
December 31, 2012
|
ASSETS
|
CURRENT ASSETS
|
|
|
|
Cash and cash equivalents
|
$
|
343,581
|
|
|
$
|
280,596
|
|
Accounts receivable, less allowance for doubtful accounts of $685 and $417
|
116,538
|
|
|
100,359
|
|
Inventory
|
|
|
|
Finished goods
|
79,121
|
|
|
103,568
|
|
Work in progress
|
3,047
|
|
|
4,446
|
|
Raw materials
|
14,620
|
|
|
17,602
|
|
Manufacturing and maintenance supplies
|
2,303
|
|
|
2,350
|
|
Total inventory
|
99,091
|
|
|
127,966
|
|
Deferred tax assets
|
55,563
|
|
|
15,845
|
|
Prepaid and other current assets
|
67,444
|
|
|
41,508
|
|
Total current assets
|
682,217
|
|
|
566,274
|
|
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION
|
2,080,611
|
|
|
1,573,309
|
|
PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
Land
|
22,996
|
|
|
27,383
|
|
Buildings
|
166,578
|
|
|
147,445
|
|
Machinery and equipment
|
1,644,945
|
|
|
1,444,012
|
|
Construction in progress
|
123,621
|
|
|
268,459
|
|
Total property, plant and equipment, gross
|
1,958,140
|
|
|
1,887,299
|
|
Less — accumulated depreciation
|
(1,105,708
|
)
|
|
(1,180,261
|
)
|
Total property, plant and equipment, net
|
852,432
|
|
|
707,038
|
|
INVESTMENT IN JOINT VENTURE (Note 6)
|
—
|
|
|
72,419
|
|
OTHER ASSETS
|
212,791
|
|
|
203,911
|
|
TOTAL ASSETS
|
$
|
3,828,051
|
|
|
$
|
3,122,951
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
CURRENT LIABILITIES
|
|
|
|
Accounts payable
|
$
|
133,255
|
|
|
$
|
70,381
|
|
Current maturities of long-term debt
|
75,463
|
|
|
150,000
|
|
Accrued taxes
|
20,158
|
|
|
13,824
|
|
Accrued payroll and benefits
|
20,489
|
|
|
28,068
|
|
Accrued interest
|
9,835
|
|
|
7,956
|
|
Accrued customer incentives
|
10,743
|
|
|
10,849
|
|
Other current liabilities
|
51,842
|
|
|
18,640
|
|
Current liabilities for dispositions and discontinued operations (Note 13)
|
8,686
|
|
|
8,105
|
|
Total current liabilities
|
330,471
|
|
|
307,823
|
|
LONG-TERM DEBT
|
1,591,834
|
|
|
1,120,052
|
|
NON-CURRENT LIABILITIES FOR DISPOSITIONS AND DISCONTINUED OPERATIONS (Note 13)
|
69,442
|
|
|
73,590
|
|
PENSION AND OTHER POSTRETIREMENT BENEFITS (Note 15)
|
158,594
|
|
|
159,582
|
|
OTHER NON-CURRENT LIABILITIES
|
27,590
|
|
|
23,900
|
|
COMMITMENTS AND CONTINGENCIES (Notes 11, 12 and 14)
|
|
|
|
SHAREHOLDERS’ EQUITY
|
|
|
|
Common Shares, 480,000,000 shares authorized, 126,119,760 and 123,332,444 shares issued and outstanding
|
679,803
|
|
|
670,749
|
|
Retained earnings
|
1,000,647
|
|
|
876,634
|
|
Accumulated other comprehensive loss
|
(116,911
|
)
|
|
(109,379
|
)
|
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY
|
1,563,539
|
|
|
1,438,004
|
|
Noncontrolling interest
|
86,581
|
|
|
—
|
|
TOTAL SHAREHOLDERS’ EQUITY
|
1,650,120
|
|
|
1,438,004
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
3,828,051
|
|
|
$
|
3,122,951
|
|
See Notes to Consolidated Financial Statements.
RAYONIER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
2013
|
|
2012
|
OPERATING ACTIVITIES
|
|
|
|
Net income
|
$
|
235,626
|
|
|
$
|
122,515
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
Depreciation, depletion and amortization
|
79,659
|
|
|
64,592
|
|
Non-cash cost of real estate sold
|
2,593
|
|
|
2,401
|
|
Stock-based incentive compensation expense
|
6,226
|
|
|
9,460
|
|
Amortization of debt discount/premium
|
837
|
|
|
3,863
|
|
Deferred income taxes
|
38,107
|
|
|
(15,044
|
)
|
Tax benefit of AFMC for CBPC exchange
|
(18,761
|
)
|
|
—
|
|
Amortization of losses from pension and postretirement plans
|
11,617
|
|
|
9,391
|
|
Gain on sale of discontinued operations, net
|
(42,670
|
)
|
|
—
|
|
Gain related to consolidation of New Zealand joint venture
|
(16,098
|
)
|
|
—
|
|
Other
|
(8,936
|
)
|
|
(586
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
Receivables
|
(11,782
|
)
|
|
(13,773
|
)
|
Inventories
|
27,325
|
|
|
7,096
|
|
Accounts payable
|
19,535
|
|
|
(9,518
|
)
|
Income tax receivable/payable
|
(5,626
|
)
|
|
31,758
|
|
All other operating activities
|
(7,654
|
)
|
|
1,524
|
|
Payment to exchange AFMC for CBPC
|
(70,311
|
)
|
|
—
|
|
Expenditures for dispositions and discontinued operations
|
(4,015
|
)
|
|
(4,803
|
)
|
CASH PROVIDED BY OPERATING ACTIVITIES
|
235,672
|
|
|
208,876
|
|
INVESTING ACTIVITIES
|
|
|
|
Capital expenditures
|
(94,126
|
)
|
|
(76,246
|
)
|
Purchase of additional interest in New Zealand joint venture
|
(139,879
|
)
|
|
—
|
|
Purchase of timberlands
|
(10,447
|
)
|
|
(8,687
|
)
|
Jesup mill cellulose specialties expansion (gross purchases of $114,449 and $72,662, net of purchases on account of $14,264 and $8,664)
|
(100,185
|
)
|
|
(63,998
|
)
|
Proceeds from disposition of Wood Products business, net of income tax payments of $11,137
|
72,953
|
|
|
—
|
|
Change in restricted cash
|
7,603
|
|
|
(14,427
|
)
|
Other
|
20,076
|
|
|
(704
|
)
|
CASH USED FOR INVESTING ACTIVITIES
|
(244,005
|
)
|
|
(164,062
|
)
|
FINANCING ACTIVITIES
|
|
|
|
Issuance of debt
|
455,000
|
|
|
355,000
|
|
Repayment of debt
|
(273,087
|
)
|
|
(188,110
|
)
|
Dividends paid
|
(113,222
|
)
|
|
(98,201
|
)
|
Proceeds from the issuance of common shares
|
6,643
|
|
|
3,980
|
|
Excess tax benefits on stock-based compensation
|
7,399
|
|
|
4,234
|
|
Debt issuance costs
|
—
|
|
|
(3,653
|
)
|
Repurchase of common shares
|
(11,241
|
)
|
|
(7,783
|
)
|
CASH PROVIDED BY FINANCING ACTIVITIES
|
71,492
|
|
|
65,467
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
(174
|
)
|
|
219
|
|
CASH AND CASH EQUIVALENTS
|
|
|
|
Change in cash and cash equivalents
|
62,985
|
|
|
110,500
|
|
Balance, beginning of year
|
280,596
|
|
|
78,603
|
|
Balance, end of period
|
$
|
343,581
|
|
|
$
|
189,103
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
Cash paid during the period:
|
|
|
|
Interest
|
$
|
16,754
|
|
|
$
|
10,936
|
|
Income taxes
|
$
|
84,508
|
|
|
$
|
10,989
|
|
Non-cash investing activity:
|
|
|
|
Capital assets purchased on account
|
$
|
59,729
|
|
|
$
|
30,175
|
|
Non-cash financing activity:
|
|
|
|
Shareholder debt assumed in acquisition of New Zealand joint venture
|
$
|
125,532
|
|
|
$
|
—
|
|
Conversion of shareholder debt to equity noncontrolling interest
|
$
|
(95,961
|
)
|
|
$
|
—
|
|
See Notes to Consolidated Financial Statements.
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
Basis of Presentation
The unaudited consolidated financial statements and notes thereto of Rayonier Inc. and its subsidiaries (“Rayonier” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, these financial statements and notes reflect all adjustments (all of which are normal recurring adjustments) necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented. These statements and notes should be read in conjunction with the financial statements and supplementary data included in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2012
, as filed with the SEC.
Reclassifications
Certain 2012 amounts have been reclassified to agree with the current year presentation. See
Note 2
—
Sale of Wood Products Business
for information regarding reclassifications for discontinued operations.
New Accounting Standards
In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-11,
Disclosures about Offsetting Assets and Liabilities.
The standard requires enhanced disclosures about assets and liabilities that are subject to a master netting agreement or when the right of offset exists. In January 2013, the FASB issued ASU No. 2013-01,
Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities.
This pronouncement limits the scope of ASU No. 2011-1. The standards’ disclosure requirements are retrospective and were effective beginning in first quarter 2013. See
Note 9
—
Derivative Financial Instruments and Hedging Activities
for the disclosures required under this guidance.
In February 2013, the FASB issued ASU No. 2013-02,
Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income
. This standard requires reporting, in one place, information about reclassifications out of AOCI by component. An entity is required to present, either on the face of the financial statements or in the notes, significant amounts reclassified out of AOCI by the respective line items of net income, but only if the amount is reclassified in its entirety in the same reporting period. For amounts that are not required to be reclassified to net income in their entirety, an entity is required to cross-reference to other currently required disclosures that provide additional detail about those amounts. The information required by this standard must be presented in one place, either parenthetically on the face of the financial statements by income statement line item or in a note. See
Note 17
—
Accumulated Other Comprehensive Loss
for the disclosures required under this guidance.
In March 2013, the FASB issued ASU No. 2013-05,
Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity.
This standard requires a parent entity to release a related foreign entity’s cumulative translation adjustment into net income only if its sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. The cumulative translation adjustment should be released into net income if the transaction results in the loss of a controlling financial interest in a foreign entity or results in an acquirer obtaining control of an acquiree in which it held an equity interest immediately before the acquisition date. ASU No. 2013-05 will be effective for first quarter 2014. The Company does not expect that the adoption of this standard will have a material impact on the consolidated financial statements.
Subsequent Events
The Company evaluated events and transactions that occurred after the balance sheet date but before financial statements were issued
, and two subsequent events were identified that warranted disclosure. On
July 19, 2013
, the Board of Directors approved an increase in the quarterly dividend per share from
$0.44
per share to
$0.49
per share effective for the third quarter 2013 distribution. Additionally, the New Zealand JV negotiated an amendment to its debt facility, as discussed in
Note 16
—
Debt
.
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
2.
|
SALE OF WOOD PRODUCTS BUSINESS
|
On March 1, 2013, Rayonier completed the sale of its Wood Products business (consisting of three lumber mills in Baxley, Swainsboro and Eatonton, Georgia) to International Forest Products Limited (“Interfor”)
for
$80 million plus a working capital adjustment
. The sale is consistent with the Company’s strategic plan to fully position its manufacturing operations in the specialty chemicals sector. Rayonier will not have significant continuing involvement in the operations of the Wood Products business. Accordingly, the operating results of the
Wood Products business, formerly reported as a separate operating segment
, are classified as discontinued operations in the Company’s Consolidated Statements of Income and Comprehensive Income for all periods presented. Certain administrative and general costs historically allocated to the Wood Products segment, which will remain with the Company after the sale, are reported in continuing operations.
Rayonier recognized an after-tax gain of
$42.7 million
on the sale. The gain is included in “Income from discontinued operations, net” on the Consolidated Statements of Income and Comprehensive Income for the
six
months ended
June 30, 2013
.
The following table summarizes the operating results of the Company’s discontinued operations and the related gain for the three and
six
months ended
June 30, 2013
and 2012, as presented in “Income from discontinued operations, net” in the Consolidated Statements of Income and Comprehensive Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Sales
|
$
|
—
|
|
|
$
|
23,830
|
|
|
$
|
16,968
|
|
|
$
|
43,039
|
|
Cost of sales and other
|
—
|
|
|
(19,337
|
)
|
|
(14,258
|
)
|
|
(37,287
|
)
|
Gain on sale of discontinued operations
|
—
|
|
|
—
|
|
|
64,040
|
|
|
—
|
|
Income from discontinued operations before income taxes
|
—
|
|
|
4,493
|
|
|
66,750
|
|
|
5,752
|
|
Income tax expense
|
—
|
|
|
(1,505
|
)
|
|
(22,273
|
)
|
|
(1,927
|
)
|
Income from discontinued operations, net
|
$
|
—
|
|
|
$
|
2,988
|
|
|
$
|
44,477
|
|
|
$
|
3,825
|
|
The sale did not meet the “held for sale” criteria prior to the period it was completed. The major classes of Wood Products assets and liabilities included in the sale were as follows:
|
|
|
|
|
|
March 1, 2013
|
Accounts receivable, net
|
$
|
4,127
|
|
Inventory
|
4,270
|
|
Prepaid and other current assets
|
2,053
|
|
Property, plant and equipment, net
|
9,990
|
|
Total assets
|
$
|
20,440
|
|
|
|
Total liabilities
|
$
|
596
|
|
Cash flows from discontinued operations are immaterial both individually and in the aggregate. As such, they are included with cash flows from continuing operations in the Consolidated Statements of Cash Flows.
Pursuant to the purchase and sale agreement, Rayonier will provide Interfor with saw timber procurement services for the three lumber mills through December 31, 2013. Rayonier also contracted with Interfor to purchase wood chips produced at the lumber mills for use at Rayonier’s Jesup mill and market other wood chips produced by the mills to third parties on Interfor’s behalf. The Company will purchase 100 percent of the Baxley mill chips for five years and 25 percent of the Swainsboro mill chips through 2013. The purchase price of these chips will be based on the average price paid by the Company to unrelated third parties.
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
Prior to the Wood Products sale, saw timber procurement services for and wood chip purchases from the lumber mills were intercompany transactions eliminated in consolidation as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Wood chip purchases
|
$
|
—
|
|
|
$
|
3,003
|
|
|
$
|
1,650
|
|
|
$
|
6,237
|
|
Saw timber procurement services
|
—
|
|
|
287
|
|
|
223
|
|
|
574
|
|
Total intercompany
|
$
|
—
|
|
|
$
|
3,290
|
|
|
$
|
1,873
|
|
|
$
|
6,811
|
|
|
|
3.
|
EARNINGS PER COMMON SHARE
|
The following table provides details of the calculations of basic and diluted earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Income from continuing operations
|
$
|
87,891
|
|
|
$
|
66,091
|
|
|
$
|
191,149
|
|
|
$
|
118,690
|
|
Income from continuing operations attributable to noncontrolling interest
|
727
|
|
|
—
|
|
|
727
|
|
|
—
|
|
Income from continuing operations attributable to Rayonier Inc.
|
$
|
87,164
|
|
|
$
|
66,091
|
|
|
$
|
190,422
|
|
|
$
|
118,690
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations attributable to Rayonier Inc.
|
$
|
—
|
|
|
$
|
2,988
|
|
|
$
|
44,477
|
|
|
$
|
3,825
|
|
|
|
|
|
|
|
|
|
Net income attributable to Rayonier Inc.
|
$
|
87,164
|
|
|
$
|
69,079
|
|
|
$
|
234,899
|
|
|
$
|
122,515
|
|
|
|
|
|
|
|
|
|
Shares used for determining basic earnings per common share
|
126,027,297
|
|
|
122,455,464
|
|
|
125,257,876
|
|
|
122,403,388
|
|
Dilutive effect of:
|
|
|
|
|
|
|
|
Stock options
|
504,321
|
|
|
669,298
|
|
|
519,014
|
|
|
692,622
|
|
Performance and restricted shares
|
386,228
|
|
|
726,368
|
|
|
384,910
|
|
|
727,968
|
|
Assumed conversion of Senior Exchangeable Notes (a)
|
2,217,058
|
|
|
2,669,808
|
|
|
2,173,658
|
|
|
2,830,382
|
|
Assumed conversion of warrants (a) (b)
|
1,632,345
|
|
|
890,189
|
|
|
2,250,361
|
|
|
1,077,217
|
|
Shares used for determining diluted earnings per common share
|
130,767,249
|
|
|
127,411,127
|
|
|
130,585,819
|
|
|
127,731,577
|
|
Basic earnings per common share attributable to Rayonier Inc.:
|
|
|
|
|
|
|
|
Continuing operations
|
$
|
0.69
|
|
|
$
|
0.54
|
|
|
$
|
1.52
|
|
|
$
|
0.97
|
|
Discontinued operations
|
—
|
|
|
0.02
|
|
|
0.36
|
|
|
0.03
|
|
Net income
|
$
|
0.69
|
|
|
$
|
0.56
|
|
|
$
|
1.88
|
|
|
$
|
1.00
|
|
Diluted earnings per common share attributable to Rayonier Inc.:
|
|
|
|
|
|
|
|
Continuing operations
|
$
|
0.67
|
|
|
$
|
0.52
|
|
|
$
|
1.46
|
|
|
$
|
0.93
|
|
Discontinued operations
|
—
|
|
|
0.02
|
|
|
0.34
|
|
|
0.03
|
|
Net income
|
$
|
0.67
|
|
|
$
|
0.54
|
|
|
$
|
1.80
|
|
|
$
|
0.96
|
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Anti-dilutive shares excluded from the computations of diluted earnings per share:
|
|
|
|
|
|
|
|
Stock options, performance and restricted shares
|
199,245
|
|
|
318,666
|
|
|
207,097
|
|
|
326,777
|
|
Assumed conversion of exchangeable note hedges (a)
|
2,217,058
|
|
|
2,669,808
|
|
|
2,173,658
|
|
|
2,830,382
|
|
Total
|
2,416,303
|
|
|
2,988,474
|
|
|
2,380,755
|
|
|
3,157,159
|
|
(a) The Senior Exchangeable Notes due 2012 (the “2012 Notes”) matured in October 2012; however, no additional shares were issued due to offsetting exchangeable note hedges. Similarly, Rayonier will not issue additional shares upon maturity of the Senior Exchangeable Notes due 2015 (the “2015 Notes”) due to offsetting hedges. Accounting Standards Codification 260,
Earnings Per Share
requires the assumed conversion of the Notes to be included in dilutive shares if the average stock price for the period exceeds the strike prices, while the assumed conversion of the hedges is excluded since they are anti-dilutive. As such, the dilutive effect of the assumed conversion of the 2012 Notes was only included for the three and six months ended June 30, 2012, while the effect of the 2015 Notes was included for all periods presented.
The warrants sold in conjunction with the 2012 Notes began maturing on
January 15, 2013
and matured ratably through
March 27, 2013
. As a result,
2,037,303
shares were issued through the end of the first quarter and
97,918
shares were issued in the first week of April. The dilutive impact of these warrants was calculated based on the length of time they were outstanding before settlement. Rayonier will distribute additional shares upon maturity of the warrants for the 2015 Notes if the stock price exceeds
$39.35
per share. For information on the potential dilutive impact of the Senior Exchangeable Notes, warrants and exchangeable note hedges, see Note 11 —
Debt
in the 2012 Annual Report on Form 10-K and
Note 16
—
Debt
of this Form 10-Q.
(b) The higher shares used for the assumed conversion of the warrants were primarily due to an increase in the average stock price from
$43.74
for the three months ended
June 30, 2012
to
$57.15
for the three months ended
June 30, 2013
and from
$44.40
for the six months ended
June 30, 2012
to
$56.34
for the six months ended
June 30, 2013
. The impact of the higher stock price was partially offset by a decrease in dilutive shares due to the maturity of the warrants on the Notes due 2012.
Rayonier is a real estate investment trust (“REIT”). In general, only its taxable REIT subsidiaries, whose businesses include the Company’s non-REIT qualified activities, and foreign operations are subject to corporate income taxes. However, the Company was subject to U.S. federal corporate income tax on built-in gains (the excess of fair market value over tax basis for property held upon REIT election at January 1, 2004) on taxable sales of such property during calendar years 2004 through 2010. In 2011, the law provided a built-in-gains tax holiday. In 2013, the law provided a built-in gains tax holiday for 2012 (retroactive) and 2013. Accordingly, the provision for corporate income taxes relates principally to current and deferred taxes on taxable REIT subsidiaries’ income and foreign operations.
Alternative Fuel Mixture Credit (“AFMC”) and Cellulosic Biofuel Producer Credit (“CBPC”)
The U.S. Internal Revenue Code allowed two credits for taxpayers that produced and used an alternative fuel in the operation of their business through December 31, 2009. The AFMC is a
$.50
per gallon refundable tax credit (which is not taxable), while the CBPC is a
$1.01
per gallon credit that is nonrefundable, taxable and has limitations based on an entity’s tax liability. Rayonier produces and uses an alternative fuel (“black liquor”) at its Jesup, Georgia and Fernandina Beach, Florida performance fibers mills, which qualified for both credits. The Company claimed the AFMC on its 2009 tax return.
In the first quarter of 2013 and the second quarter of 2012, management approved the exchange of approximately
120 million
and
60 million
gallons respectively, of black liquor previously claimed for the AFMC for the CBPC. As a result, the Company recorded a
$19 million
tax benefit in first quarter 2013. The second quarter 2012 impact of the exchange was a
$9.1 million
tax benefit partially offset by a
$3.4 million
interest expense accrual. The IRS later released guidance stating interest payments are not required for AFMC funds exchanged for the CBPC, based upon the manner of the Company's original claim. As such, Rayonier subsequently reversed the interest expense in third quarter 2012. For additional information on the AFMC and CBPC, see Note 8 —
Income Taxes
in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.
Provision for Income Taxes from Continuing Operations
The Company’s effective tax rate is below the
35 percent
U.S. statutory tax rate primarily due to tax benefits associated with being a REIT. The Company’s effective tax rate in 2013 was lower than 2012 primarily due to recording the additional AFMC exchange, the federal research and experimentation tax credit and a
$4.9 million
benefit associated with the completion of an
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
internal transfer of properties.
The table below reconciles the U.S. statutory rate to the Company’s effective tax rate for each period presented (in millions of dollars):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
2013
|
|
2012
|
Income tax expense at federal statutory rate
|
$
|
36
|
|
|
35.0
|
%
|
|
$
|
27
|
|
|
35.0
|
%
|
REIT income not subject to tax
|
(15
|
)
|
|
(14.3
|
)
|
|
(6
|
)
|
|
(8.7
|
)
|
Income tax expense before discrete items
|
21
|
|
|
20.7
|
%
|
|
21
|
|
|
26.3
|
%
|
Exchange of AFMC for CBPC
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
(10.9
|
)
|
Other
|
(6
|
)
|
|
(5.9
|
)
|
|
—
|
|
|
—
|
|
Income tax expense as reported
|
$
|
15
|
|
|
14.8
|
%
|
|
$
|
12
|
|
|
15.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
2013
|
|
2012
|
Income tax expense at federal statutory rate
|
$
|
74
|
|
|
35.0
|
%
|
|
$
|
52
|
|
|
35.0
|
%
|
REIT income not subject to tax
|
(26
|
)
|
|
(12.4
|
)
|
|
(12
|
)
|
|
(8.1
|
)
|
Other
|
(2
|
)
|
|
(0.7
|
)
|
|
(1
|
)
|
|
(0.5
|
)
|
Income tax expense before discrete items
|
46
|
|
|
21.9
|
%
|
|
39
|
|
|
26.4
|
%
|
Exchange of AFMC for CBPC
|
(19
|
)
|
|
(8.9
|
)
|
|
(9
|
)
|
|
(6.0
|
)
|
Gain related to consolidation of New Zealand joint venture
|
(5
|
)
|
|
(2.7
|
)
|
|
—
|
|
|
—
|
|
Other
|
(2
|
)
|
|
(1.0
|
)
|
|
—
|
|
|
—
|
|
Income tax expense as reported
|
$
|
20
|
|
|
9.3
|
%
|
|
$
|
30
|
|
|
20.4
|
%
|
Provision for Income Taxes from Discontinued Operations
In the first quarter, Rayonier completed the sale of its Wood Products business for
$80 million plus a working capital adjustment
. For the six months ended
June 30, 2013
and
2012
, income tax expense related to discontinued operations was
$22.3 million
(
$21.4 million
from the gain on sale) and
$1.9 million
, respectively. For the three months ended June 30,
2012
, income tax related to discontinued operations was
$1.5 million
. See
Note 2
—
Sale of Wood Products Business
for additional information.
In order to qualify for like-kind exchange (“LKE”) treatment, the proceeds from real estate sales must be deposited with a third-party intermediary. These proceeds are accounted for as restricted cash until a suitable replacement property is acquired. In the event LKE purchases are not completed, the proceeds are returned to the Company after
180 days
and reclassified as available cash. As of
June 30, 2013
and
December 31, 2012
, the Company had
$3.0 million
and
$10.6 million
, respectively, of proceeds from real estate sales classified as restricted cash in Other Assets, which were deposited with an LKE intermediary.
|
|
6.
|
JOINT VENTURE INVESTMENT
|
On
April 4, 2013
(the “acquisition date”), the Company acquired an additional
39 percent
ownership interest in
Matariki Forestry Group
,
a joint venture (“JV”) that owns or leases approximately 0.3 million acres of New Zealand timberlands.
As a result of the acquisition, Rayonier is a
65 percent
owner of the JV and 100 percent of the results of its operations subsequent to April 4, 2013 have been included in the Company’s consolidated financial statements, along with 100 percent of the JV’s assets and liabilities at
June 30, 2013
. The portions of the consolidated financial position and results of operations attributable to the JV’s
35 percent
noncontrolling interest are also shown separately. Rayonier New Zealand Limited (“RNZ”), a wholly-owned subsidiary of Rayonier Inc., continues to serve as the manager of the JV forests and operates a log trading business.
The purchase price of the additional interest in the JV was
$139.9 million
, which included
$3.3 million
of contingent consideration and was financed through our term credit agreement. As the purchase price was in New Zealand dollars, the Company
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
purchased foreign currency forward contracts to mitigate foreign currency risk on the purchase price. As a result, the Company recorded a benefit of
$1.7 million
and received that amount upon maturity of the contracts on April 2, 2013.
The contingent consideration arrangement required the Company to pay an additional consideration to the JV’s selling (former) shareholders equal to a multiple of the increase in log prices for a six month period beginning in November 2012.
We estimated the fair value of the contingent consideration arrangement at the acquisition date to be
$3.3 million
.
Fair value was determined using an average of the cost and freight (CFR) selling price of China A-grade 3.8 meter logs.
As of June 30, 2013, the contingent consideration had been determined and paid in the amount of
$3.3 million
.
Prior to the acquisition date, the Company accounted for its
26 percent
interest in the JV as an equity method investment.
The additional 39 percent interest acquired resulted in the Company obtaining a controlling financial interest in the JV and accordingly, the purchase was accounted for as a step-acquisition. Upon consolidation, the Company recognized a $10.1 million deferred gain, which resulted from the original sale of its New Zealand operations to the joint venture in 2005 and a $6 million benefit due to the required fair market value remeasurement of the Company’s equity interest in the JV held before the purchase of the additional interest.
Both gains are included in the line item
“Gain related to consolidation of New Zealand joint venture”
in the Consolidated Statements of Income and Comprehensive Income. The acquisition-date fair value of the previous equity interest was
$93.3 million
.
We have applied estimates and judgments in order to determine the fair value of assets acquired and liabilities assumed at the acquisition date. In determining fair value we utilized valuation methodologies including discounted cash flow analysis. The assumptions made in performing these valuations include assumptions as to discount rates, foreign exchange rates, and commodity prices. Any significant change in key assumptions may cause the acquisition accounting to be revised.
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date:
|
|
|
|
|
|
April 4, 2013
|
Accounts receivable, net
|
$
|
9,777
|
|
Inventory
|
2,465
|
|
Other current assets
|
6,767
|
|
Timber and timberlands, net
|
545,287
|
|
Other assets
|
25,436
|
|
Total identifiable assets acquired
|
589,732
|
|
Accounts payable
|
11,679
|
|
Current maturities of long-term debt
|
3,843
|
|
Accrued interest
|
2,038
|
|
Other current liabilities
|
3,624
|
|
Long-term debt (third party)
|
196,319
|
|
Long-term debt (shareholders) (a)
|
125,532
|
|
Other non-current liabilities
|
13,565
|
|
Total liabilities assumed
|
356,600
|
|
Net identifiable assets
|
233,132
|
|
Less: Fair value of equity method investment
|
(93,253
|
)
|
Purchase price
|
$
|
139,879
|
|
(a) Long-term debt included
$125.5 million
of
shareholder loans payable to the noncontrolling interest by the JV
. Subsequent to the acquisition date,
$96.0 million
of the noncontrolling interest’s shareholder loans were converted to
preferred equity
.
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
The Company’s operating results for the three and six months ended June 30, 2013 reflect 26 percent of the JV’s income prior to the acquisition date, as reported in “Equity in income of New Zealand joint venture” in the Consolidated Statements of Income and Comprehensive Income. The amounts of revenue and earnings of the JV included in the Company’s Consolidated Statements of Income and Comprehensive Income from the acquisition date to the period ended June 30, 2013 are as follows:
|
|
|
|
|
|
Revenue and earnings from
April 4, 2013 to June 30, 2013
|
Sales
|
$
|
47,426
|
|
Net Income
|
2,076
|
|
The following represents the pro forma consolidated sales and net income as if the JV had been included in the consolidated results of the Company for the three and six months ended
June 30, 2013
and
2012
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Sales
|
$
|
409,077
|
|
|
$
|
399,228
|
|
|
$
|
837,322
|
|
|
$
|
778,810
|
|
Net Income
|
$
|
87,891
|
|
|
$
|
67,376
|
|
|
$
|
233,867
|
|
|
$
|
118,730
|
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
An analysis of shareholders’ equity for the six months ended
June 30, 2013
and the year ended
December 31, 2012
is shown below (share amounts not in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rayonier Inc. Shareholders
|
|
|
|
|
|
Common Shares
|
|
Retained
Earnings
|
|
Accumulated Other Comprehensive Income/(Loss)
|
|
Non-controlling Interest
|
|
Total Shareholders’
Equity
|
|
Shares
|
|
Amount
|
|
Balance, December 31, 2011
|
122,035,177
|
|
|
$
|
630,286
|
|
|
$
|
806,235
|
|
|
$
|
(113,448
|
)
|
|
$
|
—
|
|
|
$
|
1,323,073
|
|
Net income
|
—
|
|
|
—
|
|
|
278,685
|
|
|
—
|
|
|
—
|
|
|
278,685
|
|
Dividends ($1.68 per share)
|
—
|
|
|
—
|
|
|
(208,286
|
)
|
|
—
|
|
|
—
|
|
|
(208,286
|
)
|
Issuance of shares under incentive stock plans
|
1,467,024
|
|
|
25,495
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,495
|
|
Stock-based compensation
|
—
|
|
|
15,116
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,116
|
|
Excess tax benefit on stock-based compensation
|
—
|
|
|
7,635
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,635
|
|
Repurchase of common shares
|
(169,757
|
)
|
|
(7,783
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,783
|
)
|
Net loss from pension and postretirement plans
|
—
|
|
|
—
|
|
|
—
|
|
|
(496
|
)
|
|
—
|
|
|
(496
|
)
|
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
4,352
|
|
|
—
|
|
|
4,352
|
|
Joint venture cash flow hedges
|
—
|
|
|
—
|
|
|
—
|
|
|
213
|
|
|
—
|
|
|
213
|
|
Balance, December 31, 2012
|
123,332,444
|
|
|
$
|
670,749
|
|
|
$
|
876,634
|
|
|
$
|
(109,379
|
)
|
|
$
|
—
|
|
|
$
|
1,438,004
|
|
Acquisition of noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
96,086
|
|
|
96,086
|
|
Net income
|
—
|
|
|
—
|
|
|
234,899
|
|
|
—
|
|
|
727
|
|
|
235,626
|
|
Dividends ($0.88 per share)
|
—
|
|
|
—
|
|
|
(110,886
|
)
|
|
—
|
|
|
—
|
|
|
(110,886
|
)
|
Issuance of shares under incentive stock plans
|
861,838
|
|
|
6,643
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,643
|
|
Stock-based compensation
|
—
|
|
|
6,253
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,253
|
|
Excess tax benefit on stock-based compensation
|
—
|
|
|
7,399
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,399
|
|
Repurchase of common shares
|
(209,743
|
)
|
|
(11,241
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,241
|
)
|
Settlement of warrants (Note 16)
|
2,135,221
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Amortization of pension and postretirement plans
|
—
|
|
|
—
|
|
|
—
|
|
|
8,687
|
|
|
—
|
|
|
8,687
|
|
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,650
|
)
|
|
(9,576
|
)
|
|
(27,226
|
)
|
Joint venture cash flow hedges
|
—
|
|
|
—
|
|
|
—
|
|
|
1,431
|
|
|
(656
|
)
|
|
775
|
|
Balance, June 30, 2013
|
126,119,760
|
|
|
$
|
679,803
|
|
|
$
|
1,000,647
|
|
|
$
|
(116,911
|
)
|
|
$
|
86,581
|
|
|
$
|
1,650,120
|
|
|
|
8.
|
SEGMENT AND GEOGRAPHICAL INFORMATION
|
Rayonier operates in three reportable business segments: Forest Resources, Real Estate and Performance Fibers. Prior to the first quarter of 2013, the Company operated in four reportable business segments, which included Wood Products. In March 2013, the Company sold its Wood Products business and its operations are shown as discontinued operations for all periods presented. See
Note 2
—
Sale of Wood Products Business
for additional information. On April 4, 2013, Rayonier acquired an additional 39 percent interest in the JV, bringing its total ownership to 65 percent. As a result, the JV’s results of operations have been consolidated and included within the Forest Resources segment since April 4, when the Company acquired control of the entity. Accordingly, the JV’s assets and liabilities are fully consolidated at
June 30, 2013
. See
Note 6
—
Joint Venture Investment
for further information regarding the Company’s joint venture.
Forest Resources sales include all activities related to the harvesting of timber. Real Estate sales include all property sales, including those designated for higher and better use (“HBU”). The assets of the Real Estate segment include HBU property held by the Company’s real estate subsidiary, TerraPointe LLC. The Performance Fibers segment includes two major product lines, cellulose specialties and absorbent materials. The Company’s remaining operations include harvesting and selling timber acquired
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
from third parties (log trading). These operations are reported in “Other Operations.” Sales between operating segments are made based on estimated fair market value, and intercompany sales, purchases and profits (losses) are eliminated in consolidation. The Company evaluates financial performance based on the operating income of the segments.
Operating income (loss) as presented in the Consolidated Statements of Income and Comprehensive Income is equal to segment income (loss). Certain income (loss) items in the Consolidated Statements of Income and Comprehensive Income are not allocated to segments. These items, which include gains (losses) from certain asset dispositions, interest income (expense), miscellaneous income (expense) and income tax (expense) benefit, are not considered by management to be part of segment operations.
Total assets, sales, operating income (loss) and depreciation, depletion and amortization by segment including Corporate were as follows:
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
ASSETS
|
2013
|
|
2012
|
Forest Resources
|
$
|
2,275,145
|
|
|
$
|
1,690,030
|
|
Real Estate
|
85,018
|
|
|
112,647
|
|
Performance Fibers
|
1,067,673
|
|
|
902,309
|
|
Wood Products (a)
|
—
|
|
|
18,454
|
|
Other Operations
|
31,045
|
|
|
23,296
|
|
Corporate and other
|
369,170
|
|
|
376,215
|
|
Total
|
$
|
3,828,051
|
|
|
$
|
3,122,951
|
|
|
|
(a)
|
The Company sold its Wood Products segment during the first quarter of 2013. See
Note 2
—
Sale of Wood Products Business
for additional information.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
SALES
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Forest Resources
|
$
|
109,060
|
|
|
$
|
52,663
|
|
|
$
|
166,162
|
|
|
$
|
104,858
|
|
Real Estate
|
13,376
|
|
|
11,680
|
|
|
37,673
|
|
|
24,326
|
|
Performance Fibers
|
253,025
|
|
|
254,509
|
|
|
537,213
|
|
|
505,364
|
|
Other Operations
|
33,872
|
|
|
29,268
|
|
|
62,099
|
|
|
50,409
|
|
Intersegment Eliminations (b)
|
(256
|
)
|
|
(24
|
)
|
|
(351
|
)
|
|
(290
|
)
|
Total
|
$
|
409,077
|
|
|
$
|
348,096
|
|
|
$
|
802,796
|
|
|
$
|
684,667
|
|
|
|
(b)
|
Intersegment eliminations primarily reflect sales from our Forest Resources segment to our Performance Fibers segment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
OPERATING INCOME(LOSS)
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Forest Resources
|
$
|
20,890
|
|
|
$
|
8,249
|
|
|
$
|
34,145
|
|
|
$
|
16,254
|
|
Real Estate
|
6,105
|
|
|
5,999
|
|
|
22,947
|
|
|
12,477
|
|
Performance Fibers
|
79,081
|
|
|
83,727
|
|
|
170,751
|
|
|
164,357
|
|
Other Operations
|
1,779
|
|
|
1,148
|
|
|
1,944
|
|
|
218
|
|
Corporate and other (c)
|
2,706
|
|
|
(5,025
|
)
|
|
(3,863
|
)
|
|
(16,458
|
)
|
Total
|
$
|
110,561
|
|
|
$
|
94,098
|
|
|
$
|
225,924
|
|
|
$
|
176,848
|
|
|
|
(c)
|
The three and six months ended
June 30, 2013
includes a $16.1 million gain related to the consolidation of the New Zealand JV. See
Note 6
—
Joint Venture Investment
.
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
DEPRECIATION, DEPLETION AND AMORTIZATION
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Forest Resources
|
$
|
27,291
|
|
|
$
|
17,066
|
|
|
$
|
43,735
|
|
|
$
|
33,900
|
|
Real Estate
|
2,469
|
|
|
1,600
|
|
|
6,646
|
|
|
3,445
|
|
Performance Fibers
|
13,649
|
|
|
15,139
|
|
|
28,802
|
|
|
26,500
|
|
Corporate and other
|
258
|
|
|
374
|
|
|
476
|
|
|
747
|
|
Total
|
$
|
43,667
|
|
|
$
|
34,179
|
|
|
$
|
79,659
|
|
|
$
|
64,592
|
|
|
|
9.
|
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
|
The Company is exposed to market risk related to potential fluctuations in foreign currency exchange rates, interest rates and fuel prices. The Company’s New Zealand JV uses derivative financial instruments to mitigate the financial impact of exposure to these risks.
Accounting for derivative financial instruments is governed by ASC Topic 815, “Derivatives and Hedging,” (“ASC 815”). In accordance with ASC 815, the Company records its derivatives instruments at fair value as either assets or liabilities in the Consolidated Balance Sheets. Changes in the instruments’ fair value are accounted for based on their intended use. Gains and losses on derivatives that are designated and qualify for cash flow hedge accounting are recorded as a component of accumulated other comprehensive income (“AOCI”) and reclassified into earnings when the hedged transaction materializes. The ineffective portion of any hedge as well as changes in the fair value of derivatives not designated as hedging instruments and those which are no longer effective as hedging instruments, are recognized immediately in earnings.
Foreign Currency Exchange and Option Contracts
The functional currency of the Company’s New Zealand-based operations and JV is the New Zealand dollar. These operations are exposed to foreign currency risk on export sales and ocean freight payments which are predominately denominated in US dollars. The Company typically hedges at least
70 percent
of its estimated foreign currency exposure with respect to the following three months forecasted sales and purchases and
50 percent
of the forward twelve months.
The fair value of foreign currency exchange contracts is determined by a mark to market valuation which estimates fair value by discounting the difference between the contracted forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate.The fair value of foreign currency option contracts is based on a mark to market calculation using the Black Scholes option pricing model.
Interest Rate Swaps
The Company uses interest rate swaps to manage the JV’s exposure to interest rate movements on its variable rate debt attributable to changes in the New Zealand Bank bill rate. By converting a portion of these borrowings from floating rates to fixed rates the Company has reduced the impact of interest rate changes on its expected future cash outflows. As of
June 30, 2013
, the Company’s interest rate contracts had maturity dates through January 2020.
Fuel Hedge Contracts
The Company uses fuel swap contracts to manage its JV’s exposure to changes in New Zealand’s domestic diesel prices. The fuel swaps are quoted by domestic banks in New Zealand dollar price terms. As of
June 30, 2013
all of the contracts had maturities of less than one year. The fair value of the fuel swap contracts is determined by a mark to market valuation which estimates fair value by discounting the difference between the contracted forward price and the current forward price for the residual maturity of the contract.
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
The following table demonstrates the impact of the Company’s derivatives on the Consolidated Statements of Income and Comprehensive Income for the second quarter and six months ended
June 30, 2013
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2013
|
|
Income Statement Location
|
|
Three Months Ended
|
|
Six Months Ended
|
Derivatives designated as cash flow hedges:
|
|
|
|
|
|
Foreign currency exchange contracts
|
Other comprehensive income/(loss) (a)
|
|
$
|
(1,509
|
)
|
|
$
|
(1,509
|
)
|
Foreign currency option contracts
|
Other comprehensive income/(loss) (a)
|
|
(363
|
)
|
|
(363
|
)
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
Foreign currency exchange contracts
|
Other operating (expense) income
|
|
(456
|
)
|
|
1,426
|
|
Foreign currency option contracts
|
Other operating (expense) income
|
|
(1,491
|
)
|
|
(1,491
|
)
|
Interest rate swaps
|
Interest and other miscellaneous income
|
|
2,650
|
|
|
2,650
|
|
Fuel hedges
|
Cost of sales - benefit
|
|
148
|
|
|
148
|
|
|
|
(a)
|
See
Note 17
—
Accumulated Other Comprehensive Loss
.
|
During the next 12 months, the amount of the
June 30, 2013
AOCI balance, net of tax, expected to be reclassified into earnings as a result of the maturation of the Company’s derivative instruments is a loss of approximately
$1.9 million
.
The following table contains the notional amounts of the derivative financial instruments recorded in the Consolidated Balance Sheet at
June 30, 2013
:
|
|
|
|
|
June 30, 2013
|
|
Notional Amount (a)
|
Derivatives designated as cash flow hedges:
|
|
Foreign currency exchange contracts
|
19,000
|
|
Foreign currency option contracts
|
26,000
|
|
|
|
Derivatives not designated as hedging instruments:
|
|
Foreign currency exchange contracts
|
7,020
|
|
Foreign currency option contracts
|
30,000
|
|
Interest rate swaps
|
172,497
|
|
Fuel contracts
|
40
|
|
(a) All notional amounts are stated in dollars except fuel contracts which are denominated in thousands of barrels.
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
The following table contains the fair values of the derivative financial instruments recorded in the Consolidated Balance Sheet at
June 30, 2013
:
|
|
|
|
|
|
|
|
June 30, 2013
|
|
Location on Balance Sheet
|
|
Fair Value Assets (Liabilities) (a)
|
Derivatives designated as cash flow hedges:
|
|
|
|
Foreign currency exchange contracts
|
Other current liabilities
|
|
(891
|
)
|
Foreign currency option contracts
|
Other current liabilities
|
|
(363
|
)
|
|
|
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
Foreign currency exchange contracts
|
Other current liabilities
|
|
(174
|
)
|
Foreign currency option contracts
|
Other current liabilities
|
|
(352
|
)
|
Interest rate swaps
|
Other current liabilities
|
|
(2,843
|
)
|
|
Other non-current liabilities
|
|
(6,443
|
)
|
Fuel contracts
|
Other assets
|
|
69
|
|
|
|
|
|
Total derivative contracts:
|
|
|
|
Other assets
|
|
|
69
|
|
Total derivative assets
|
|
|
$
|
69
|
|
|
|
|
|
Other current liabilities
|
|
|
(4,623
|
)
|
Other non-current liabilities
|
|
|
(6,443
|
)
|
Total derivative liabilities
|
|
|
$
|
(11,066
|
)
|
|
|
(a)
|
See
Note 10
—
Fair Value Measurements
for further information on the fair value of our derivatives including their classification within the fair value hierarchy.
|
Offsetting Derivatives
Derivative financial instruments are presented at their gross fair values in the Consolidated Balance Sheets. The Company’s derivative financial instruments are not subject to master netting arrangements which would allow the right of offset.
|
|
10.
|
FAIR VALUE MEASUREMENTS
|
Fair Value of Financial Instruments
The Accounting Standards Codification established a three-level hierarchy that prioritizes the inputs used to measure fair value as follows:
Level 1
— Quoted prices in active markets for identical assets or liabilities.
Level 2
—
Observable inputs other than quoted prices included in Level 1.
Level 3
—
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
The following table presents the carrying amount, estimated fair values and categorization under the fair value hierarchy of financial instruments held by the Company at
June 30, 2013
and
December 31, 2012
, using market information and what management believes to be appropriate valuation methodologies under generally accepted accounting principles:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2013
|
|
December 31, 2012
|
Asset (liability)
|
Carrying
Amount
|
|
Fair Value
|
|
Carrying
Amount
|
|
Fair Value
|
|
|
|
Level 1
|
|
Level 2
|
|
|
|
Level 1
|
|
Level 2
|
Cash and cash equivalents
|
$
|
343,581
|
|
|
$
|
343,581
|
|
|
$
|
—
|
|
|
$
|
280,596
|
|
|
$
|
280,596
|
|
|
$
|
—
|
|
Restricted cash (a)
|
2,956
|
|
|
2,956
|
|
|
—
|
|
|
10,559
|
|
|
10,559
|
|
|
—
|
|
Current maturities of long-term debt
|
(75,463
|
)
|
|
—
|
|
|
(75,463
|
)
|
|
(150,000
|
)
|
|
—
|
|
|
(150,000
|
)
|
Long-term debt
|
(1,591,834
|
)
|
|
—
|
|
|
(1,718,249
|
)
|
|
(1,120,052
|
)
|
|
—
|
|
|
(1,250,341
|
)
|
Interest rate swaps (b)
|
(9,286
|
)
|
|
—
|
|
|
(9,286
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Foreign currency exchange contracts (b)
|
(1,065
|
)
|
|
—
|
|
|
(1,065
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Foreign currency option contracts (b)
|
(716
|
)
|
|
—
|
|
|
(716
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Fuel contracts (b)
|
69
|
|
|
—
|
|
|
69
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(a)
|
Restricted cash is recorded in “Other Assets” and represents the proceeds from LKE sales deposited with a third-party intermediary.
|
|
|
(b)
|
See
Note 9
—
Derivative Financial Instruments and Hedging Activities
for information regarding the Balance Sheet classification of the Company’s derivative financial instruments.
|
Rayonier uses the following methods and assumptions in estimating the fair value of its financial instruments:
Cash and cash equivalents and Restricted cash
—
The carrying amount is equal to fair market value
.
Debt
—
The fair value of fixed rate debt is based upon quoted market prices for debt with similar terms and maturities.
The variable rate debt adjusts with changes in the market rate, therefore the carrying value approximates fair value.
Interest rate swap agreements
—
The fair value of interest rate contracts is determined by discounting the expected future cash flows, for each instrument, at prevailing interest rates.
Foreign currency exchange contracts
—
The fair value of foreign currency exchange contracts is determined by a mark-to-market valuation which estimates fair value by discounting the difference between the contracted forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate.
Foreign currency option contracts
—
The fair value of foreign currency options contracts is based on a mark-to-market calculation using the Black-Scholes option pricing model.
Fuel contracts
—
The fair value of diesel fuel contracts is determined by a mark-to-market valuation which estimates fair value by discounting the difference between the contracted forward price and the current forward price for the residual maturity of the contract.
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
The Company provides financial guarantees as required by creditors, insurance programs, and various governmental agencies. As of
June 30, 2013
, the following financial guarantees were outstanding:
|
|
|
|
|
|
|
|
|
|
Financial Commitments
|
|
Maximum Potential
Payment
|
|
Carrying Amount
of Liability
|
Standby letters of credit (a)
|
|
$
|
18,205
|
|
|
$
|
15,000
|
|
Guarantees (b)
|
|
2,254
|
|
|
43
|
|
Surety bonds (c)
|
|
7,231
|
|
|
1,360
|
|
Total financial commitments
|
|
$
|
27,690
|
|
|
$
|
16,403
|
|
|
|
(a)
|
Approximately
$15 million
of the standby letters of credit serve as credit support for industrial revenue bonds. The remaining letters of credit support various insurance related agreements, primarily workers’ compensation and pollution liability policy requirements. These letters of credit will expire at
various dates during 2013 and 2014
and will be renewed as required.
|
|
|
(b)
|
In conjunction with a timberland sale and note monetization in the first quarter of 2004, the Company issued a make-whole agreement pursuant to which it guaranteed
$2.3 million
of obligations of a special-purpose entity that was established to complete the monetization. At
June 30, 2013
, the Company has a
de minimus liability
to reflect the fair market value of its obligation to perform under the make-whole agreement.
|
|
|
(c)
|
Rayonier issues surety bonds primarily to secure timber harvesting obligations in the State of Washington and to provide collateral for the Company’s workers’ compensation self-insurance program in that state. These surety bonds expire at
various dates between 2013 and 2014
and are expected to be renewed as required.
|
As disclosed in the Company’s Annual Report on Form 10-K, Rayonier leases certain buildings, machinery and equipment under various operating leases. The Company’s commitments have not materially changed since December 31, 2012 except as related to the acquisition of a controlling interest in the New Zealand joint venture. The following table shows the increase in the Company’s commitments, as of
June 30, 2013
, as a result of the JV acquisition:
|
|
|
|
|
|
|
|
|
|
Forestry Rights (a)
|
|
Forest
Leases (b)
|
Remaining 2013
|
$
|
884
|
|
|
$
|
541
|
|
2014
|
1,528
|
|
|
1,075
|
|
2015
|
1,528
|
|
|
1,075
|
|
2016
|
1,528
|
|
|
1,075
|
|
2017
|
1,528
|
|
|
1,075
|
|
Thereafter
|
39,757
|
|
|
53,889
|
|
|
$
|
46,753
|
|
|
$
|
58,730
|
|
(a)
Forestry rights grant access to the leased land for the purpose of harvesting. The majority of the JV’s forestry rights terminate with the harvest of the land’s existing crop and require the land to be left in the cut condition upon termination.
(b)
Forest leases have an average term between 30 and 99 years. Annual rent is indexed to the Consumer Price Index or current market values. A number of these leases require the land to be returned in a fully stocked condition (replanted).
The JV has a number of Crown Forest Licenses (“CFL”) with the New Zealand government. The leases extend indefinitely and may only be terminated upon a 35 year termination notice from the government. If no termination notice is given, the leases renew automatically each year for a one year term. As of June 30, 2013, the JV has three CFL’s under termination notice, with one terminating in 2034 and the remaining two expiring in 2062. The annual license fee is determined based on current market value, with three yearly rent reviews.
The total annual license fee on the CFL’s is
$2.7 million
per year.
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
13.
|
LIABILITIES FOR DISPOSITIONS AND DISCONTINUED OPERATIONS
|
An analysis of the liabilities for dispositions and discontinued operations follows:
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
2013
|
|
2012
|
|
Balance, beginning of period
|
$
|
81,695
|
|
|
$
|
90,824
|
|
|
Expenditures charged to liabilities
|
(4,015
|
)
|
|
(9,926
|
)
|
|
Increase to liabilities
|
448
|
|
|
797
|
|
|
Balance, end of period
|
78,128
|
|
|
81,695
|
|
|
Less: Current portion
|
(8,686
|
)
|
|
(8,105
|
)
|
|
Non-current portion
|
$
|
69,442
|
|
|
$
|
73,590
|
|
|
The Company is exposed to the risk of reasonably possible additional losses in excess of the established liabilities. As of June 30, 2013, this amount could range up to $29 million, attributable to several of the applicable sites, and arises from uncertainty over the availability, feasibility and effectiveness of certain remediation technologies, additional or different contamination that may be discovered, development of new or more effective environmental remediation technologies, potential changes in applicable law and regulations, and the exercise of discretion in interpretation of applicable law and regulations by governmental agencies.
The Company believes established liabilities are sufficient for probable costs expected to be incurred over the next
20 years
with respect to its dispositions and discontinued operations.
Remedial actions for these sites vary, but include on-site (and in certain cases off-site) removal or treatment of contaminated soils and sediments, recovery and treatment/remediation of groundwater, and source remediation and/or control.
Rayonier is engaged in various legal actions, including certain environmental proceedings, and has been named as a defendant in various other lawsuits and claims arising in the normal course of business. While the Company has procured reasonable and customary insurance covering risks normally occurring in connection with its businesses, it has in certain cases retained some risk through the operation of self-insurance, primarily in the areas of workers’ compensation, property insurance and general liability. These other lawsuits and claims, either individually or in the aggregate, are not expected to have a material adverse effect on the Company’s financial position, results of operations, or cash flow.
|
|
15.
|
EMPLOYEE BENEFIT PLANS
|
The Company has four qualified non-contributory defined benefit pension plans covering a significant majority of its employees
and
an unfunded plan that provides benefits in excess of amounts allowable under current tax law in the qualified plans
.
Currently, all qualified plans are closed to new participants.
Employee benefit plan liabilities are calculated using actuarial estimates and management assumptions. These estimates are based on historical information, along with certain assumptions about future events. Changes in assumptions, as well as changes in actual experience, could cause the estimates to change.
The net pension and postretirement benefit costs that have been recognized during the stated periods are shown in the following tables:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
Postretirement
|
|
Three Months Ended June 30,
|
|
Three Months Ended June 30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Components of Net Periodic Benefit Cost
|
|
|
|
|
|
|
|
Service cost
|
$
|
2,011
|
|
|
$
|
2,102
|
|
|
$
|
249
|
|
|
$
|
227
|
|
Interest cost
|
3,953
|
|
|
4,321
|
|
|
240
|
|
|
242
|
|
Expected return on plan assets
|
(5,966
|
)
|
|
(6,369
|
)
|
|
—
|
|
|
—
|
|
Amortization of prior service cost
|
322
|
|
|
327
|
|
|
6
|
|
|
6
|
|
Amortization of losses
|
4,791
|
|
|
4,394
|
|
|
218
|
|
|
156
|
|
Net periodic benefit cost
|
$
|
5,111
|
|
|
$
|
4,775
|
|
|
$
|
713
|
|
|
$
|
631
|
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
Postretirement
|
|
Six Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Components of Net Periodic Benefit Cost
|
|
|
|
|
|
|
|
Service cost
|
$
|
4,430
|
|
|
$
|
4,042
|
|
|
$
|
498
|
|
|
$
|
437
|
|
Interest cost
|
8,787
|
|
|
8,309
|
|
|
480
|
|
|
465
|
|
Expected return on plan assets
|
(13,390
|
)
|
|
(12,248
|
)
|
|
—
|
|
|
—
|
|
Amortization of prior service cost
|
710
|
|
|
629
|
|
|
13
|
|
|
12
|
|
Amortization of losses
|
10,516
|
|
|
8,451
|
|
|
436
|
|
|
299
|
|
Net periodic benefit cost
|
$
|
11,053
|
|
|
$
|
9,183
|
|
|
$
|
1,427
|
|
|
$
|
1,213
|
|
|
|
|
|
|
|
|
|
In 2013, the Company has no mandatory pension contribution requirements, but may make discretionary contributions.
The warrants sold in conjunction with the issuance of the 3.75% Senior Exchangeable Notes due 2012 began maturing on
January 15, 2013
and continued to mature through
March 27, 2013
. As of
June 30, 2013
, all of the
8,313,511
warrants have settled, resulting in the issuance of
2,135,221
Rayonier common shares.
As of
March 31, 2013
, the
$172.5 million
4.50
% Senior Exchangeable Notes due
2015
became exchangeable at the option of the holders for the calendar quarter ending
June 30, 2013
.
Per the indenture, in order for the notes to become exchangeable, the Company’s stock price must exceed 130 percent of the exchange price for 20 trading days during a period of 30 consecutive trading days as of the last day of the quarter.
During the three months ended
June 30, 2013
, the note holders did not elect to exercise the exchange option. Based upon the average stock price for the 30 trading days ended
June 30, 2013
, these notes again became exchangeable at the option of the holder for the calendar quarter ending
September 30, 2013
. The entire balance of the notes remained classified as long-term debt at
June 30, 2013
due to the ability and intent of the Company to refinance them on a long-term basis.
During the
six
months ended
June 30, 2013
, the Company made net repayments of
$15 million
on its
$450 million
unsecured revolving credit facility. The Company had
$187 million
of available borrowings under this facility at
June 30, 2013
. The Company also borrowed an additional
$200 million
on the term credit agreement during the second quarter of 2013 for general corporate purposes. Additional draws totaling
$140 million
remain available on the term credit agreement.
Joint Venture Debt
On
April 4, 2013
, Rayonier acquired an additional
39 percent
interest in its New Zealand JV, bringing its total ownership to
65 percent
and as a result, the JV’s debt was consolidated effective on that date. See
Note 6
—
Joint Venture Investment
for further information.
The JV’s debt consisted of the following at
June 30, 2013
:
|
|
|
|
|
|
June 30, 2013
|
Senior Secured Facilities Agreement
|
|
Revolving Credit Facility due 2014 at variable interest rate of 3.61%
|
$
|
123,488
|
|
Revolving Credit Facility due 2016 at variable interest rate of 3.76%
|
57,885
|
|
Working Capital Facility due 2013 at variable interest rate of 3.94%
|
463
|
|
|
|
Noncontrolling interest shareholder loan at a 0% interest rate
|
29,571
|
|
|
|
Total debt
|
211,407
|
|
Less: Current maturities of long-term debt
|
(463
|
)
|
Long-term debt
|
$
|
210,944
|
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
Senior Secured Facilities Agreement
The New Zealand JV is party to a
$199 million
variable rate Senior Secured Facilities Agreement,
comprised of two tranches of revolving credit facilities and a working capital facility
. Although the maximum amounts available under the agreement are denominated in
New Zealand dollars
, advances are also available in U.S. dollars. This agreement is secured by a Security Trust Deed that provides recourse only to the JV’s assets; there is no recourse to Rayonier Inc. or any of its subsidiaries.
Revolving Credit Facilities
As of June 30, 2013 the Senior Secured Facilities Agreement had $123 million outstanding on Tranche A at
3.61 percent
due
September 2014
and $58 million outstanding on Tranche B at
3.76 percent
due
September 2016
. The interest rates for both tranches are indexed to the
90 day New Zealand bank bill rate
and are generally repriced at quarterly intervals. The margin on the index rate fluctuates based on the interest coverage ratio. The JV manages these rates through interest rate swaps, as discussed at
Note 9
—
Derivative Financial Instruments and Hedging Activities
.
Working Capital Facility
The
$18 million
Working Capital Facility is available for short-term operating cash flow needs of the New Zealand JV. This facility holds a variable interest rate indexed to the
Official Cash Rate set by the Reserve Bank of New Zealand
. The margin ranges from
1.17 percent
to
1.44 percent
based on the interest coverage ratio and the length of time each borrowing is outstanding. At June 30, 2013, $0.5 million is outstanding at
3.94 percent
and due
September 2013
.
Shareholder Loan
The shareholder loan is an interest-free loan from the noncontrolling JV interest in the amount of $30 million.
This loan represents part of the noncontrolling party’s investment in the JV. The loan is secured by timberlands owned by the JV and is subordinated to the Senior Secured Facilities Agreement. Although Rayonier Inc. is not liable for this loan, the shareholder loan instrument contains features with characteristics of both debt and equity and is therefore required to be classified as debt and consolidated.
As the loan is effectively at call, the carrying amount is deemed to be the fair value. The entire balance of the shareholder loan remained classified as long-term debt at
June 30, 2013
due to the ability and intent of the JV to refinance it on a long-term basis.
Debt Covenants
In connection with the New Zealand JV’s Senior Secured Facilities Agreement, covenants must be met, including
generation of sufficient cash flows to meet a minimum interest coverage ratio of 1.50 to 1 on a quarterly basis and maintenance of a leverage ratio of bank debt versus the forest and land valuation below the covenant's maximum ratio of 35 percent.
At June 30, 2013, the New Zealand JV was in compliance with all its covenants.
There were no other significant changes to the Company’s outstanding debt as reported in Note 11 —
Debt
in the Company’s
2012
Annual Report on Form 10-K.
Subsequent Event
On
July 5, 2013
the New Zealand JV negotiated amendments to the existing Senior Secured Facilities Agreement.
The amended and restated Senior Secured Facilities Agreement is now comprised of two tranches; a
$181 million
revolving cash advance facility (“Tranche A”) expiring
September 2016
and an
$18 million
working capital facility (“Tranche B”) expiring
July 2014
. In addition to the extended maturity dates, the amended and restated agreement provides for favorable changes to the interest rate margin and covenant requirements. The margin for revolving cash advance borrowings now ranges from
0.75 percent
to
0.85 percent
(previously
0.775 percent
to
1.05 percent
). There was no change to the working capital facility interest rate.
The maximum leverage ratio was increased to 40 percent and the interest coverage ratio was amended to allow a minimum ratio of 1.25 to 1, provided that the ratio is not below 1.50 to 1 for any two consecutive quarters.
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
17.
|
ACCUMULATED OTHER COMPREHENSIVE LOSS
|
Accumulated Other Comprehensive Loss was comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation gains
|
|
New Zealand joint venture cash flow hedges
|
|
Unrecognized components of employee benefit plans, net of tax
|
|
Total
|
Balance as of December 31, 2012
|
$
|
38,829
|
|
|
$
|
(3,628
|
)
|
|
$
|
(144,580
|
)
|
|
$
|
(109,379
|
)
|
Other comprehensive income before reclassifications
|
(17,650
|
)
|
(a)
|
(728
|
)
|
|
530
|
|
|
(17,848
|
)
|
Amounts reclassified from accumulated other comprehensive income
|
—
|
|
|
2,159
|
|
|
8,157
|
|
(b)
|
10,316
|
|
Net other comprehensive income
|
(17,650
|
)
|
|
1,431
|
|
|
8,687
|
|
|
(7,532
|
)
|
Balance as of June 30, 2013
|
$
|
21,179
|
|
|
$
|
(2,197
|
)
|
|
$
|
(135,893
|
)
|
|
$
|
(116,911
|
)
|
|
|
(a)
|
The loss is due to a six cent decrease in the New Zealand dollar exchange rate.
|
|
|
(b)
|
These accumulated other comprehensive income components are included in the computation of net periodic pension cost. See
Note 15
—
Employee Benefit Plans
for additional information.
|
The following table presents details of the amounts reclassified in their entirety from AOCI for the six-month period ended June 30, 2012:
|
|
|
|
|
|
|
|
Details about accumulated other comprehensive income components
|
|
Amount reclassified from accumulated other comprehensive income
|
|
Affected line item in the statement where net income is presented
|
New Zealand joint venture cash flow hedges
|
|
$
|
2,159
|
|
|
Gain related to consolidation of New Zealand joint venture
|
|
|
18.
|
OTHER OPERATING (EXPENSE) INCOME, NET
|
Other operating (expense) income, net was comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Lease income, primarily from hunting leases
|
$
|
2,313
|
|
|
$
|
2,520
|
|
|
$
|
4,774
|
|
|
$
|
4,905
|
|
Other non-timber income
|
604
|
|
|
1,048
|
|
|
1,078
|
|
|
1,891
|
|
Foreign currency gain (loss)
|
979
|
|
|
680
|
|
|
795
|
|
|
(185
|
)
|
Loss on sale or disposal of property, plant & equipment
|
(269
|
)
|
|
(711
|
)
|
|
(698
|
)
|
|
(1,732
|
)
|
Insurance recoveries
|
—
|
|
|
2,319
|
|
|
—
|
|
|
2,319
|
|
Loss on foreign currency contracts
|
(1,947
|
)
|
|
—
|
|
|
(65
|
)
|
|
—
|
|
Legal and corporate development costs
|
(1,971
|
)
|
|
(561
|
)
|
|
(2,672
|
)
|
|
(765
|
)
|
Total
|
$
|
(291
|
)
|
|
$
|
5,295
|
|
|
$
|
3,212
|
|
|
$
|
6,433
|
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
19.
|
CONSOLIDATING FINANCIAL STATEMENTS
|
The condensed consolidating financial information below follows the same accounting policies as described in the consolidated financial statements, except for the use of the equity method of accounting to reflect ownership interests in wholly-owned subsidiaries, which are eliminated upon consolidation, and the allocation of certain expenses of Rayonier Inc. incurred for the benefit of its subsidiaries.
In
August 2009
TRS issued
$172.5 million
of
4.50%
Senior Exchangeable Notes due
2015
. The notes are guaranteed by Rayonier Inc. as the Parent Guarantor and Rayonier Operating Company LLC (“ROC”) as the Subsidiary Guarantor. In connection with these exchangeable notes, the Company provides the following condensed consolidating financial information in accordance with SEC Regulation S-X Rule 3-10,
Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
For the Three Months Ended June 30, 2013
|
|
Rayonier Inc.
(Parent
Guarantor)
|
|
ROC (Subsidiary Guarantor)
|
|
Rayonier TRS
Holdings Inc.
(Issuer)
|
|
Non-
guarantors
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
SALES
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
409,077
|
|
|
$
|
—
|
|
|
$
|
409,077
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
—
|
|
|
297,698
|
|
|
—
|
|
|
297,698
|
|
Selling and general expenses
|
—
|
|
|
2,680
|
|
|
—
|
|
|
14,249
|
|
|
—
|
|
|
16,929
|
|
Other operating expense (income), net
|
180
|
|
|
(74
|
)
|
|
—
|
|
|
846
|
|
|
(661
|
)
|
|
291
|
|
|
180
|
|
|
2,606
|
|
|
—
|
|
|
312,793
|
|
|
(661
|
)
|
|
314,918
|
|
Equity in income of New Zealand joint venture
|
—
|
|
|
—
|
|
|
—
|
|
|
304
|
|
|
—
|
|
|
304
|
|
OPERATING (LOSS) INCOME BEFORE GAIN ON CONSOLIDATION OF NEW ZEALAND JOINT VENTURE
|
(180
|
)
|
|
(2,606
|
)
|
|
—
|
|
|
96,588
|
|
|
661
|
|
|
94,463
|
|
Gain related to consolidation of New Zealand joint venture
|
—
|
|
|
—
|
|
|
—
|
|
|
16,098
|
|
|
—
|
|
|
16,098
|
|
OPERATING (LOSS) INCOME
|
(180
|
)
|
|
(2,606
|
)
|
|
—
|
|
|
112,686
|
|
|
661
|
|
|
110,561
|
|
Interest (expense) income
|
(3,414
|
)
|
|
(266
|
)
|
|
(6,997
|
)
|
|
658
|
|
|
—
|
|
|
(10,019
|
)
|
Interest and miscellaneous income (expense), net
|
1,759
|
|
|
1,104
|
|
|
(797
|
)
|
|
532
|
|
|
—
|
|
|
2,598
|
|
Equity in income from subsidiaries
|
89,064
|
|
|
91,235
|
|
|
35,968
|
|
|
—
|
|
|
(216,267
|
)
|
|
—
|
|
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
87,229
|
|
|
89,467
|
|
|
28,174
|
|
|
113,876
|
|
|
(215,606
|
)
|
|
103,140
|
|
Income tax (expense) benefit
|
(65
|
)
|
|
(403
|
)
|
|
2,847
|
|
|
(17,691
|
)
|
|
63
|
|
|
(15,249
|
)
|
INCOME FROM CONTINUING OPERATIONS
|
87,164
|
|
|
89,064
|
|
|
31,021
|
|
|
96,185
|
|
|
(215,543
|
)
|
|
87,891
|
|
DISCONTINUED OPERATIONS, NET
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net of income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
NET INCOME
|
87,164
|
|
|
89,064
|
|
|
31,021
|
|
|
96,185
|
|
|
(215,543
|
)
|
|
87,891
|
|
Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
727
|
|
|
—
|
|
|
727
|
|
NET INCOME ATTRIBUTABLE TO RAYONIER INC
|
87,164
|
|
|
89,064
|
|
|
31,021
|
|
|
95,458
|
|
|
(215,543
|
)
|
|
87,164
|
|
OTHER COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
(18,625
|
)
|
|
(28,201
|
)
|
|
(1,725
|
)
|
|
(18,625
|
)
|
|
38,975
|
|
|
(28,201
|
)
|
New Zealand joint venture cash flow hedges
|
878
|
|
|
222
|
|
|
(1,873
|
)
|
|
877
|
|
|
118
|
|
|
222
|
|
Amortization of pension and postretirement plans, net of income tax
|
3,717
|
|
|
3,717
|
|
|
2,819
|
|
|
6,831
|
|
|
(13,367
|
)
|
|
3,717
|
|
Total other comprehensive loss
|
(14,030
|
)
|
|
(24,262
|
)
|
|
(779
|
)
|
|
(10,917
|
)
|
|
25,726
|
|
|
(24,262
|
)
|
COMPREHENSIVE INCOME
|
73,134
|
|
|
64,802
|
|
|
30,242
|
|
|
85,268
|
|
|
(189,817
|
)
|
|
63,629
|
|
Comprehensive loss attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,505
|
)
|
|
—
|
|
|
(9,505
|
)
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.
|
$
|
73,134
|
|
|
$
|
64,802
|
|
|
$
|
30,242
|
|
|
$
|
94,773
|
|
|
$
|
(189,817
|
)
|
|
$
|
73,134
|
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
For the Three Months Ended June 30, 2012
|
|
Rayonier Inc.
(Parent
Guarantor)
|
|
ROC (Subsidiary Guarantor)
|
|
Rayonier TRS
Holdings Inc.
(Issuer)
|
|
Non-
guarantors
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
SALES
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
348,096
|
|
|
$
|
—
|
|
|
$
|
348,096
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
—
|
|
|
243,571
|
|
|
—
|
|
|
243,571
|
|
Selling and general expenses
|
—
|
|
|
1,904
|
|
|
—
|
|
|
13,988
|
|
|
—
|
|
|
15,892
|
|
Other operating income, net
|
—
|
|
|
(109
|
)
|
|
—
|
|
|
(5,186
|
)
|
|
—
|
|
|
(5,295
|
)
|
|
—
|
|
|
1,795
|
|
|
—
|
|
|
252,373
|
|
|
—
|
|
|
254,168
|
|
Equity in income of New Zealand joint venture
|
—
|
|
|
—
|
|
|
—
|
|
|
170
|
|
|
—
|
|
|
170
|
|
OPERATING (LOSS) INCOME
|
—
|
|
|
(1,795
|
)
|
|
—
|
|
|
95,893
|
|
|
—
|
|
|
94,098
|
|
Interest expense
|
(3,117
|
)
|
|
(212
|
)
|
|
(10,243
|
)
|
|
(2,484
|
)
|
|
—
|
|
|
(16,056
|
)
|
Interest and miscellaneous income (expense), net
|
1,544
|
|
|
1,659
|
|
|
(834
|
)
|
|
(2,285
|
)
|
|
—
|
|
|
84
|
|
Equity in income from subsidiaries
|
70,652
|
|
|
70,948
|
|
|
60,407
|
|
|
—
|
|
|
(202,007
|
)
|
|
—
|
|
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
69,079
|
|
|
70,600
|
|
|
49,330
|
|
|
91,124
|
|
|
(202,007
|
)
|
|
78,126
|
|
Income tax benefit (expense)
|
—
|
|
|
52
|
|
|
4,043
|
|
|
(16,130
|
)
|
|
—
|
|
|
(12,035
|
)
|
INCOME FROM CONTINUING OPERATIONS
|
69,079
|
|
|
70,652
|
|
|
53,373
|
|
|
74,994
|
|
|
(202,007
|
)
|
|
66,091
|
|
DISCONTINUED OPERATIONS, NET
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net of income tax
|
—
|
|
|
—
|
|
|
—
|
|
|
2,988
|
|
|
—
|
|
|
2,988
|
|
NET INCOME
|
69,079
|
|
|
70,652
|
|
|
53,373
|
|
|
77,982
|
|
|
(202,007
|
)
|
|
69,079
|
|
OTHER COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
(8,081
|
)
|
|
(8,081
|
)
|
|
478
|
|
|
(8,081
|
)
|
|
15,684
|
|
|
(8,081
|
)
|
New Zealand joint venture cash flow hedges
|
(1,998
|
)
|
|
(1,998
|
)
|
|
—
|
|
|
(1,998
|
)
|
|
3,996
|
|
|
(1,998
|
)
|
Amortization of pension and postretirement plans, net of income tax
|
3,401
|
|
|
3,401
|
|
|
2,579
|
|
|
2,579
|
|
|
(8,559
|
)
|
|
3,401
|
|
Total other comprehensive (loss) income
|
(6,678
|
)
|
|
(6,678
|
)
|
|
3,057
|
|
|
(7,500
|
)
|
|
11,121
|
|
|
(6,678
|
)
|
COMPREHENSIVE INCOME
|
$
|
62,401
|
|
|
$
|
63,974
|
|
|
$
|
56,430
|
|
|
$
|
70,482
|
|
|
$
|
(190,886
|
)
|
|
$
|
62,401
|
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATING STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
For the Six Months Ended June 30, 2013
|
|
Rayonier Inc.
(Parent
Guarantor)
|
|
ROC (Subsidiary Guarantor)
|
|
Rayonier TRS
Holdings Inc.
(Issuer)
|
|
Non-
guarantors
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
SALES
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
802,796
|
|
|
$
|
—
|
|
|
$
|
802,796
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
—
|
|
|
563,716
|
|
|
—
|
|
|
563,716
|
|
Selling and general expenses
|
—
|
|
|
5,081
|
|
|
—
|
|
|
27,947
|
|
|
—
|
|
|
33,028
|
|
Other operating (income) expense, net
|
(1,701
|
)
|
|
449
|
|
|
—
|
|
|
(1,299
|
)
|
|
(661
|
)
|
|
(3,212
|
)
|
|
(1,701
|
)
|
|
5,530
|
|
|
—
|
|
|
590,364
|
|
|
(661
|
)
|
|
593,532
|
|
Equity in income of New Zealand joint venture
|
—
|
|
|
—
|
|
|
—
|
|
|
562
|
|
|
—
|
|
|
562
|
|
OPERATING (LOSS) INCOME BEFORE GAIN ON CONSOLIDATION OF NEW ZEALAND JOINT VENTURE
|
1,701
|
|
|
(5,530
|
)
|
|
—
|
|
|
212,994
|
|
|
661
|
|
|
209,826
|
|
Gain related to consolidation of New Zealand joint venture
|
—
|
|
|
—
|
|
|
—
|
|
|
16,098
|
|
|
—
|
|
|
16,098
|
|
OPERATING INCOME (LOSS)
|
1,701
|
|
|
(5,530
|
)
|
|
—
|
|
|
229,092
|
|
|
661
|
|
|
225,924
|
|
Interest expense
|
(6,689
|
)
|
|
(518
|
)
|
|
(13,615
|
)
|
|
3,086
|
|
|
—
|
|
|
(17,736
|
)
|
Interest and miscellaneous income (expense), net
|
4,178
|
|
|
1,633
|
|
|
(1,548
|
)
|
|
(1,607
|
)
|
|
—
|
|
|
2,656
|
|
Equity in income from subsidiaries
|
235,774
|
|
|
240,000
|
|
|
159,437
|
|
|
—
|
|
|
(635,211
|
)
|
|
—
|
|
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
234,964
|
|
|
235,585
|
|
|
144,274
|
|
|
230,571
|
|
|
(634,550
|
)
|
|
210,844
|
|
Income tax (expense) benefit
|
(65
|
)
|
|
189
|
|
|
5,537
|
|
|
(25,418
|
)
|
|
62
|
|
|
(19,695
|
)
|
INCOME FROM CONTINUING OPERATIONS
|
234,899
|
|
|
235,774
|
|
|
149,811
|
|
|
205,153
|
|
|
(634,488
|
)
|
|
191,149
|
|
DISCONTINUED OPERATIONS, NET
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net of income tax
|
—
|
|
|
—
|
|
|
—
|
|
|
44,477
|
|
|
—
|
|
|
44,477
|
|
NET INCOME
|
234,899
|
|
|
235,774
|
|
|
149,811
|
|
|
249,630
|
|
|
(634,488
|
)
|
|
235,626
|
|
Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
727
|
|
|
—
|
|
|
727
|
|
NET INCOME ATTRIBUTABLE TO RAYONIER INC
|
234,899
|
|
|
235,774
|
|
|
149,811
|
|
|
248,903
|
|
|
(634,488
|
)
|
|
234,899
|
|
OTHER COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
(17,650
|
)
|
|
(27,226
|
)
|
|
(1,485
|
)
|
|
(17,650
|
)
|
|
36,785
|
|
|
(27,226
|
)
|
New Zealand joint venture cash flow hedges
|
1,431
|
|
|
775
|
|
|
(1,873
|
)
|
|
1,431
|
|
|
(989
|
)
|
|
775
|
|
Amortization of pension and postretirement plans, net of income tax
|
8,687
|
|
|
8,687
|
|
|
6,831
|
|
|
6,831
|
|
|
(22,349
|
)
|
|
8,687
|
|
Total other comprehensive (loss) income
|
(7,532
|
)
|
|
(17,764
|
)
|
|
3,473
|
|
|
(9,388
|
)
|
|
13,447
|
|
|
(17,764
|
)
|
COMPREHENSIVE INCOME
|
227,367
|
|
|
218,010
|
|
|
153,284
|
|
|
240,242
|
|
|
(621,041
|
)
|
|
217,862
|
|
Comprehensive loss attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,505
|
)
|
|
—
|
|
|
(9,505
|
)
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.
|
$
|
227,367
|
|
|
$
|
218,010
|
|
|
$
|
153,284
|
|
|
$
|
249,747
|
|
|
$
|
(621,041
|
)
|
|
$
|
227,367
|
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATING STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
For the Six Months Ended June 30, 2012
|
|
Rayonier Inc.
(Parent
Guarantor)
|
|
ROC (Subsidiary Guarantor)
|
|
Rayonier TRS
Holdings Inc.
(Issuer)
|
|
Non-Guarantors
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
SALES
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
684,667
|
|
|
$
|
—
|
|
|
$
|
684,667
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
—
|
|
|
479,279
|
|
|
—
|
|
|
479,279
|
|
Selling and general expenses
|
—
|
|
|
5,215
|
|
|
—
|
|
|
29,942
|
|
|
—
|
|
|
35,157
|
|
Other operating expense (income), net
|
—
|
|
|
12
|
|
|
—
|
|
|
(6,445
|
)
|
|
—
|
|
|
(6,433
|
)
|
|
—
|
|
|
5,227
|
|
|
—
|
|
|
502,776
|
|
|
—
|
|
|
508,003
|
|
Equity in income of New Zealand joint venture
|
—
|
|
|
—
|
|
|
—
|
|
|
184
|
|
|
—
|
|
|
184
|
|
OPERATING (LOSS) INCOME
|
—
|
|
|
(5,227
|
)
|
|
—
|
|
|
182,075
|
|
|
—
|
|
|
176,848
|
|
Interest expense
|
(4,366
|
)
|
|
(450
|
)
|
|
(20,469
|
)
|
|
(2,595
|
)
|
|
—
|
|
|
(27,880
|
)
|
Interest and miscellaneous income (expense), net
|
3,455
|
|
|
2,986
|
|
|
(2,042
|
)
|
|
(4,339
|
)
|
|
—
|
|
|
60
|
|
Equity in income from subsidiaries
|
123,426
|
|
|
126,394
|
|
|
106,152
|
|
|
—
|
|
|
(355,972
|
)
|
|
—
|
|
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
122,515
|
|
|
123,703
|
|
|
83,641
|
|
|
175,141
|
|
|
(355,972
|
)
|
|
149,028
|
|
Income tax (expense) benefit
|
—
|
|
|
(277
|
)
|
|
8,217
|
|
|
(38,278
|
)
|
|
—
|
|
|
(30,338
|
)
|
INCOME FROM CONTINUING OPERATIONS
|
122,515
|
|
|
123,426
|
|
|
91,858
|
|
|
136,863
|
|
|
(355,972
|
)
|
|
118,690
|
|
DISCONTINUED OPERATIONS, NET
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net of income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
3,825
|
|
|
—
|
|
|
3,825
|
|
NET INCOME
|
122,515
|
|
|
123,426
|
|
|
91,858
|
|
|
140,688
|
|
|
(355,972
|
)
|
|
122,515
|
|
OTHER COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
(2,255
|
)
|
|
(2,255
|
)
|
|
376
|
|
|
(2,255
|
)
|
|
4,134
|
|
|
(2,255
|
)
|
New Zealand joint venture cash flow hedges
|
(793
|
)
|
|
(793
|
)
|
|
—
|
|
|
(793
|
)
|
|
1,586
|
|
|
(793
|
)
|
Amortization of pension and postretirement plans, net of income tax
|
6,541
|
|
|
6,541
|
|
|
4,959
|
|
|
4,959
|
|
|
(16,459
|
)
|
|
6,541
|
|
Total other comprehensive income
|
3,493
|
|
|
3,493
|
|
|
5,335
|
|
|
1,911
|
|
|
(10,739
|
)
|
|
3,493
|
|
COMPREHENSIVE INCOME
|
$
|
126,008
|
|
|
$
|
126,919
|
|
|
$
|
97,193
|
|
|
$
|
142,599
|
|
|
$
|
(366,711
|
)
|
|
$
|
126,008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING BALANCE SHEETS
As of June 30, 2013
|
|
Rayonier Inc.
(Parent
Guarantor)
|
|
ROC (Subsidiary Guarantor)
|
|
Rayonier TRS
Holdings Inc.
(Issuer)
|
|
Non-
guarantors
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
170,442
|
|
|
$
|
6,449
|
|
|
$
|
26,790
|
|
|
$
|
139,900
|
|
|
$
|
—
|
|
|
$
|
343,581
|
|
Accounts receivable, less allowance for doubtful accounts
|
—
|
|
|
15
|
|
|
892
|
|
|
115,631
|
|
|
—
|
|
|
116,538
|
|
Inventory
|
—
|
|
|
—
|
|
|
—
|
|
|
99,091
|
|
|
—
|
|
|
99,091
|
|
Deferred tax assets
|
—
|
|
|
—
|
|
|
—
|
|
|
55,563
|
|
|
—
|
|
|
55,563
|
|
Prepaid and other current assets
|
—
|
|
|
2,136
|
|
|
639
|
|
|
64,669
|
|
|
—
|
|
|
67,444
|
|
Total current assets
|
170,442
|
|
|
8,600
|
|
|
28,321
|
|
|
474,854
|
|
|
—
|
|
|
682,217
|
|
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION
|
—
|
|
|
—
|
|
|
—
|
|
|
2,080,611
|
|
|
—
|
|
|
2,080,611
|
|
NET PROPERTY, PLANT AND EQUIPMENT
|
—
|
|
|
2,217
|
|
|
—
|
|
|
850,215
|
|
|
—
|
|
|
852,432
|
|
INVESTMENT IN SUBSIDIARIES
|
1,575,156
|
|
|
1,696,714
|
|
|
1,037,668
|
|
|
—
|
|
|
(4,309,538
|
)
|
|
—
|
|
INTERCOMPANY NOTES RECEIVABLE
|
217,073
|
|
|
—
|
|
|
20,166
|
|
|
—
|
|
|
(237,239
|
)
|
|
—
|
|
OTHER ASSETS
|
3,928
|
|
|
30,171
|
|
|
4,513
|
|
|
174,179
|
|
|
—
|
|
|
212,791
|
|
TOTAL ASSETS
|
$
|
1,966,599
|
|
|
$
|
1,737,702
|
|
|
$
|
1,090,668
|
|
|
$
|
3,579,859
|
|
|
$
|
(4,546,777
|
)
|
|
$
|
3,828,051
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
—
|
|
|
$
|
1,129
|
|
|
$
|
505
|
|
|
$
|
131,621
|
|
|
$
|
—
|
|
|
$
|
133,255
|
|
Current maturities of long-term debt
|
75,000
|
|
|
—
|
|
|
—
|
|
|
463
|
|
|
—
|
|
|
75,463
|
|
Accrued taxes
|
—
|
|
|
2,603
|
|
|
—
|
|
|
17,555
|
|
|
—
|
|
|
20,158
|
|
Accrued payroll and benefits
|
—
|
|
|
10,689
|
|
|
—
|
|
|
9,800
|
|
|
—
|
|
|
20,489
|
|
Accrued interest
|
3,060
|
|
|
538
|
|
|
3,753
|
|
|
2,484
|
|
|
—
|
|
|
9,835
|
|
Accrued customer incentives
|
—
|
|
|
—
|
|
|
—
|
|
|
10,743
|
|
|
—
|
|
|
10,743
|
|
Other current liabilities
|
—
|
|
|
3,189
|
|
|
—
|
|
|
48,653
|
|
|
—
|
|
|
51,842
|
|
Current liabilities for dispositions and discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
8,686
|
|
|
—
|
|
|
8,686
|
|
Total current liabilities
|
78,060
|
|
|
18,148
|
|
|
4,258
|
|
|
230,005
|
|
|
—
|
|
|
330,471
|
|
LONG-TERM DEBT
|
325,000
|
|
|
—
|
|
|
979,511
|
|
|
287,323
|
|
|
—
|
|
|
1,591,834
|
|
NON-CURRENT LIABILITIES FOR DISPOSITIONS AND DISCONTINUED OPERATIONS
|
—
|
|
|
—
|
|
|
—
|
|
|
69,442
|
|
|
—
|
|
|
69,442
|
|
PENSION AND OTHER POSTRETIREMENT BENEFITS
|
—
|
|
|
130,244
|
|
|
—
|
|
|
28,350
|
|
|
—
|
|
|
158,594
|
|
OTHER NON-CURRENT LIABILITIES
|
—
|
|
|
13,989
|
|
|
—
|
|
|
13,601
|
|
|
—
|
|
|
27,590
|
|
INTERCOMPANY PAYABLE
|
—
|
|
|
165
|
|
|
—
|
|
|
265,823
|
|
|
(265,988
|
)
|
|
—
|
|
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY
|
1,563,539
|
|
|
1,575,156
|
|
|
106,899
|
|
|
2,598,734
|
|
|
(4,280,789
|
)
|
|
1,563,539
|
|
Noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
86,581
|
|
|
—
|
|
|
86,581
|
|
TOTAL SHAREHOLDERS’ EQUITY
|
1,563,539
|
|
|
1,575,156
|
|
|
106,899
|
|
|
2,685,315
|
|
|
(4,280,789
|
)
|
|
1,650,120
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
1,966,599
|
|
|
$
|
1,737,702
|
|
|
$
|
1,090,668
|
|
|
$
|
3,579,859
|
|
|
$
|
(4,546,777
|
)
|
|
$
|
3,828,051
|
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING BALANCE SHEETS
As of December 31, 2012
|
|
Rayonier Inc.
(Parent
Guarantor)
|
|
ROC (Subsidiary Guarantor)
|
|
Rayonier TRS
Holdings Inc.
(Issuer)
|
|
Non-
guarantors
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
252,888
|
|
|
$
|
3,966
|
|
|
$
|
19,358
|
|
|
$
|
4,384
|
|
|
$
|
—
|
|
|
$
|
280,596
|
|
Accounts receivable, less allowance for doubtful accounts
|
—
|
|
|
386
|
|
|
—
|
|
|
99,973
|
|
|
—
|
|
|
100,359
|
|
Inventory
|
—
|
|
|
—
|
|
|
—
|
|
|
127,966
|
|
|
—
|
|
|
127,966
|
|
Deferred tax assets
|
—
|
|
|
—
|
|
|
—
|
|
|
15,845
|
|
|
—
|
|
|
15,845
|
|
Prepaid and other current assets
|
—
|
|
|
1,566
|
|
|
691
|
|
|
39,251
|
|
|
—
|
|
|
41,508
|
|
Total current assets
|
252,888
|
|
|
5,918
|
|
|
20,049
|
|
|
287,419
|
|
|
—
|
|
|
566,274
|
|
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION
|
—
|
|
|
—
|
|
|
—
|
|
|
1,573,309
|
|
|
—
|
|
|
1,573,309
|
|
NET PROPERTY, PLANT AND EQUIPMENT
|
—
|
|
|
2,321
|
|
|
—
|
|
|
704,717
|
|
|
—
|
|
|
707,038
|
|
INVESTMENT IN JOINT VENTURE
|
—
|
|
|
—
|
|
|
—
|
|
|
72,419
|
|
|
—
|
|
|
72,419
|
|
INVESTMENT IN SUBSIDIARIES
|
1,445,205
|
|
|
1,677,782
|
|
|
1,452,027
|
|
|
—
|
|
|
(4,575,014
|
)
|
|
—
|
|
INTERCOMPANY NOTES RECEIVABLE
|
213,863
|
|
|
14,000
|
|
|
19,831
|
|
|
—
|
|
|
(247,694
|
)
|
|
—
|
|
OTHER ASSETS
|
4,148
|
|
|
27,779
|
|
|
5,182
|
|
|
166,802
|
|
|
—
|
|
|
203,911
|
|
TOTAL ASSETS
|
$
|
1,916,104
|
|
|
$
|
1,727,800
|
|
|
$
|
1,497,089
|
|
|
$
|
2,804,666
|
|
|
$
|
(4,822,708
|
)
|
|
$
|
3,122,951
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
—
|
|
|
$
|
2,099
|
|
|
$
|
33
|
|
|
$
|
68,249
|
|
|
$
|
—
|
|
|
$
|
70,381
|
|
Current maturities of long-term debt
|
150,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
150,000
|
|
Accrued taxes
|
—
|
|
|
485
|
|
|
—
|
|
|
13,339
|
|
|
—
|
|
|
13,824
|
|
Accrued payroll and benefits
|
—
|
|
|
15,044
|
|
|
—
|
|
|
13,024
|
|
|
—
|
|
|
28,068
|
|
Accrued interest
|
3,100
|
|
|
379
|
|
|
3,197
|
|
|
1,280
|
|
|
—
|
|
|
7,956
|
|
Accrued customer incentives
|
—
|
|
|
—
|
|
|
—
|
|
|
10,849
|
|
|
—
|
|
|
10,849
|
|
Other current liabilities
|
—
|
|
|
2,925
|
|
|
—
|
|
|
15,715
|
|
|
—
|
|
|
18,640
|
|
Current liabilities for dispositions and discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
8,105
|
|
|
—
|
|
|
8,105
|
|
Total current liabilities
|
153,100
|
|
|
20,932
|
|
|
3,230
|
|
|
130,561
|
|
|
—
|
|
|
307,823
|
|
LONG-TERM DEBT
|
325,000
|
|
|
—
|
|
|
718,321
|
|
|
76,731
|
|
|
—
|
|
|
1,120,052
|
|
NON-CURRENT LIABILITIES FOR DISPOSITIONS AND DISCONTINUED OPERATIONS
|
—
|
|
|
—
|
|
|
—
|
|
|
73,590
|
|
|
—
|
|
|
73,590
|
|
PENSION AND OTHER POSTRETIREMENT BENEFITS
|
—
|
|
|
129,156
|
|
|
—
|
|
|
30,426
|
|
|
—
|
|
|
159,582
|
|
OTHER NON-CURRENT LIABILITIES
|
—
|
|
|
16,432
|
|
|
—
|
|
|
7,468
|
|
|
—
|
|
|
23,900
|
|
INTERCOMPANY PAYABLE
|
—
|
|
|
116,075
|
|
|
—
|
|
|
137,797
|
|
|
(253,872
|
)
|
|
—
|
|
TOTAL SHAREHOLDERS’ EQUITY
|
1,438,004
|
|
|
1,445,205
|
|
|
775,538
|
|
|
2,348,093
|
|
|
(4,568,836
|
)
|
|
1,438,004
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
1,916,104
|
|
|
$
|
1,727,800
|
|
|
$
|
1,497,089
|
|
|
$
|
2,804,666
|
|
|
$
|
(4,822,708
|
)
|
|
$
|
3,122,951
|
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2013
|
|
Rayonier Inc.
(Parent
Guarantor)
|
|
ROC (Subsidiary Guarantor)
|
|
Rayonier TRS
Holdings Inc.
(Issuer)
|
|
Non-
guarantors
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
CASH PROVIDED BY OPERATING ACTIVITIES
|
$
|
248,552
|
|
|
$
|
247,599
|
|
|
$
|
64,000
|
|
|
$
|
212,977
|
|
|
$
|
(537,456
|
)
|
|
$
|
235,672
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
—
|
|
|
(89
|
)
|
|
—
|
|
|
(94,037
|
)
|
|
—
|
|
|
(94,126
|
)
|
Purchase of additional interest in New Zealand joint venture
|
—
|
|
|
—
|
|
|
—
|
|
|
(139,879
|
)
|
|
—
|
|
|
(139,879
|
)
|
Purchase of timberlands
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,447
|
)
|
|
—
|
|
|
(10,447
|
)
|
Intercompany purchase of real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
984
|
|
|
(984
|
)
|
|
—
|
|
Jesup mill cellulose specialties expansion
|
—
|
|
|
—
|
|
|
—
|
|
|
(100,185
|
)
|
|
—
|
|
|
(100,185
|
)
|
Proceeds from the disposition of Wood Products business
|
—
|
|
|
—
|
|
|
—
|
|
|
72,953
|
|
|
—
|
|
|
72,953
|
|
Change in restricted cash
|
—
|
|
|
—
|
|
|
—
|
|
|
7,603
|
|
|
—
|
|
|
7,603
|
|
Investment in Subsidiaries
|
(138,178
|
)
|
|
(138,178
|
)
|
|
(249,481
|
)
|
|
—
|
|
|
525,837
|
|
|
—
|
|
Other
|
—
|
|
|
1,700
|
|
|
—
|
|
|
18,376
|
|
|
—
|
|
|
20,076
|
|
CASH (USED FOR) INVESTING ACTIVITIES
|
(138,178
|
)
|
|
(136,567
|
)
|
|
(249,481
|
)
|
|
(244,632
|
)
|
|
524,853
|
|
|
(244,005
|
)
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of debt
|
175,000
|
|
|
—
|
|
|
280,000
|
|
|
—
|
|
|
—
|
|
|
455,000
|
|
Repayment of debt
|
(250,000
|
)
|
|
—
|
|
|
(23,087
|
)
|
|
—
|
|
|
—
|
|
|
(273,087
|
)
|
Dividends paid
|
(113,222
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(113,222
|
)
|
Proceeds from the issuance of common shares
|
6,643
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,643
|
|
Excess tax benefits on stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
7,399
|
|
|
—
|
|
|
7,399
|
|
Repurchase of common shares
|
(11,241
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,241
|
)
|
Intercompany distributions
|
—
|
|
|
(108,549
|
)
|
|
(64,000
|
)
|
|
159,946
|
|
|
12,603
|
|
|
—
|
|
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES
|
(192,820
|
)
|
|
(108,549
|
)
|
|
192,913
|
|
|
167,345
|
|
|
12,603
|
|
|
71,492
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
—
|
|
|
—
|
|
|
—
|
|
|
(174
|
)
|
|
—
|
|
|
(174
|
)
|
CASH AND CASH EQUIVALENTS
|
|
|
|
|
|
|
|
|
|
|
|
Change in cash and cash equivalents
|
(82,446
|
)
|
|
2,483
|
|
|
7,432
|
|
|
135,516
|
|
|
—
|
|
|
62,985
|
|
Balance, beginning of year
|
252,888
|
|
|
3,966
|
|
|
19,358
|
|
|
4,384
|
|
|
—
|
|
|
280,596
|
|
Balance, end of period
|
$
|
170,442
|
|
|
$
|
6,449
|
|
|
$
|
26,790
|
|
|
$
|
139,900
|
|
|
$
|
—
|
|
|
$
|
343,581
|
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2012
|
|
Rayonier Inc.
(Parent
Guarantor)
|
|
ROC (Subsidiary Guarantor)
|
|
Rayonier TRS
Holdings Inc.
(Issuer)
|
|
Non-
guarantors
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
CASH PROVIDED BY OPERATING ACTIVITIES
|
$
|
3,173
|
|
|
$
|
51,579
|
|
|
$
|
12,000
|
|
|
$
|
181,124
|
|
|
$
|
(39,000
|
)
|
|
$
|
208,876
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
—
|
|
|
(165
|
)
|
|
—
|
|
|
(76,081
|
)
|
|
—
|
|
|
(76,246
|
)
|
Purchase of timberlands
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,687
|
)
|
|
—
|
|
|
(8,687
|
)
|
Jesup mill cellulose specialties expansion
|
—
|
|
|
—
|
|
|
—
|
|
|
(63,998
|
)
|
|
—
|
|
|
(63,998
|
)
|
Change in restricted cash
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,427
|
)
|
|
—
|
|
|
(14,427
|
)
|
Investment in Subsidiaries
|
(5,181
|
)
|
|
—
|
|
|
(39,436
|
)
|
|
—
|
|
|
44,617
|
|
|
—
|
|
Other
|
—
|
|
|
(69
|
)
|
|
—
|
|
|
(635
|
)
|
|
—
|
|
|
(704
|
)
|
CASH USED FOR INVESTING ACTIVITIES
|
(5,181
|
)
|
|
(234
|
)
|
|
(39,436
|
)
|
|
(163,828
|
)
|
|
44,617
|
|
|
(164,062
|
)
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of debt
|
325,000
|
|
|
—
|
|
|
15,000
|
|
|
15,000
|
|
|
—
|
|
|
355,000
|
|
Repayment of debt
|
(120,000
|
)
|
|
(30,000
|
)
|
|
(23,110
|
)
|
|
(15,000
|
)
|
|
—
|
|
|
(188,110
|
)
|
Dividends paid
|
(98,201
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(98,201
|
)
|
Proceeds from the issuance of common shares
|
3,980
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,980
|
|
Excess tax benefits on stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
4,234
|
|
|
—
|
|
|
4,234
|
|
Debt issuance costs
|
(3,653
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,653
|
)
|
Repurchase of common shares
|
(7,783
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,783
|
)
|
Intercompany distributions
|
—
|
|
|
5,181
|
|
|
(9,233
|
)
|
|
9,669
|
|
|
(5,617
|
)
|
|
—
|
|
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES
|
99,343
|
|
|
(24,819
|
)
|
|
(17,343
|
)
|
|
13,903
|
|
|
(5,617
|
)
|
|
65,467
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
—
|
|
|
—
|
|
|
—
|
|
|
219
|
|
|
—
|
|
|
219
|
|
CASH AND CASH EQUIVALENTS
|
|
|
|
|
|
|
|
|
|
|
|
Change in cash and cash equivalents
|
97,335
|
|
|
26,526
|
|
|
(44,779
|
)
|
|
31,418
|
|
|
—
|
|
|
110,500
|
|
Balance, beginning of year
|
—
|
|
|
8,977
|
|
|
59,976
|
|
|
9,650
|
|
|
—
|
|
|
78,603
|
|
Balance, end of period
|
$
|
97,335
|
|
|
$
|
35,503
|
|
|
$
|
15,197
|
|
|
$
|
41,068
|
|
|
$
|
—
|
|
|
$
|
189,103
|
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
In
March 2012
, Rayonier Inc. issued
$325 million
of
3.75%
Senior Notes due
2022
. The notes are fully and unconditionally guaranteed by ROC and Rayonier TRS Holdings Inc. In connection with these notes, the Company provides the following consolidating financial information in accordance with SEC Regulation S-X Rule 3-10,
Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
For the Three Months Ended June 30, 2013
|
|
Rayonier Inc.
(Parent
Issuer)
|
|
Subsidiary Guarantors
|
|
Non-
guarantors
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
SALES
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
409,077
|
|
|
$
|
—
|
|
|
$
|
409,077
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
297,698
|
|
|
—
|
|
|
297,698
|
|
Selling and general expenses
|
—
|
|
|
2,680
|
|
|
14,249
|
|
|
—
|
|
|
16,929
|
|
Other operating expense (income), net
|
180
|
|
|
(74
|
)
|
|
846
|
|
|
(661
|
)
|
|
291
|
|
|
180
|
|
|
2,606
|
|
|
312,793
|
|
|
(661
|
)
|
|
314,918
|
|
Equity in income of New Zealand joint venture
|
—
|
|
|
—
|
|
|
304
|
|
|
—
|
|
|
304
|
|
OPERATING (LOSS) INCOME BEFORE GAIN ON CONSOLIDATION OF NEW ZEALAND JOINT VENTURE
|
(180
|
)
|
|
(2,606
|
)
|
|
96,588
|
|
|
661
|
|
|
94,463
|
|
Gain on consolidation of New Zealand joint venture
|
—
|
|
|
—
|
|
|
16,098
|
|
|
—
|
|
|
16,098
|
|
OPERATING (LOSS) INCOME
|
(180
|
)
|
|
(2,606
|
)
|
|
112,686
|
|
|
661
|
|
|
110,561
|
|
Interest (expense) income
|
(3,414
|
)
|
|
(7,263
|
)
|
|
658
|
|
|
—
|
|
|
(10,019
|
)
|
Interest and miscellaneous income, net
|
1,759
|
|
|
307
|
|
|
532
|
|
|
—
|
|
|
2,598
|
|
Equity in income from subsidiaries
|
89,064
|
|
|
96,185
|
|
|
—
|
|
|
(185,249
|
)
|
|
—
|
|
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
87,229
|
|
|
86,623
|
|
|
113,876
|
|
|
(184,588
|
)
|
|
103,140
|
|
Income tax (expense) benefit
|
(65
|
)
|
|
2,441
|
|
|
(17,691
|
)
|
|
66
|
|
|
(15,249
|
)
|
INCOME FROM CONTINUING OPERATIONS
|
87,164
|
|
|
89,064
|
|
|
96,185
|
|
|
(184,522
|
)
|
|
87,891
|
|
DISCONTINUED OPERATIONS, NET
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net of income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
NET INCOME
|
87,164
|
|
|
89,064
|
|
|
96,185
|
|
|
(184,522
|
)
|
|
87,891
|
|
Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
727
|
|
|
—
|
|
|
727
|
|
NET INCOME ATTRIBUTABLE TO RAYONIER INC.
|
87,164
|
|
|
89,064
|
|
|
95,458
|
|
|
(184,522
|
)
|
|
87,164
|
|
OTHER COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
(18,625
|
)
|
|
(28,201
|
)
|
|
(18,625
|
)
|
|
37,250
|
|
|
(28,201
|
)
|
New Zealand joint venture cash flow hedges
|
878
|
|
|
221
|
|
|
877
|
|
|
(1,754
|
)
|
|
222
|
|
Amortization of pension and postretirement plans, net of income tax
|
3,717
|
|
|
3,718
|
|
|
6,831
|
|
|
(10,549
|
)
|
|
3,717
|
|
Total other comprehensive loss
|
(14,030
|
)
|
|
(24,262
|
)
|
|
(10,917
|
)
|
|
24,947
|
|
|
(24,262
|
)
|
COMPREHENSIVE INCOME
|
73,134
|
|
|
64,802
|
|
|
85,268
|
|
|
(159,575
|
)
|
|
63,629
|
|
Comprehensive loss attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(9,505
|
)
|
|
—
|
|
|
(9,505
|
)
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.
|
$
|
73,134
|
|
|
$
|
64,802
|
|
|
$
|
94,773
|
|
|
$
|
(159,575
|
)
|
|
$
|
73,134
|
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
For the Three Months Ended June 30, 2012
|
|
Rayonier Inc.
(Parent
Issuer)
|
|
Subsidiary Guarantors
|
|
Non-
guarantors
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
SALES
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
348,096
|
|
|
$
|
—
|
|
|
$
|
348,096
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
243,571
|
|
|
—
|
|
|
243,571
|
|
Selling and general expenses
|
—
|
|
|
1,904
|
|
|
13,988
|
|
|
—
|
|
|
15,892
|
|
Other operating income, net
|
—
|
|
|
(109
|
)
|
|
(5,186
|
)
|
|
—
|
|
|
(5,295
|
)
|
|
—
|
|
|
1,795
|
|
|
252,373
|
|
|
—
|
|
|
254,168
|
|
Equity in income of New Zealand joint venture
|
—
|
|
|
—
|
|
|
170
|
|
|
—
|
|
|
170
|
|
OPERATING (EXPENSE) INCOME
|
—
|
|
|
(1,795
|
)
|
|
95,893
|
|
|
—
|
|
|
94,098
|
|
Interest expense
|
(3,117
|
)
|
|
(10,455
|
)
|
|
(2,484
|
)
|
|
—
|
|
|
(16,056
|
)
|
Interest and miscellaneous income (expense), net
|
1,544
|
|
|
825
|
|
|
(2,285
|
)
|
|
—
|
|
|
84
|
|
Equity in income from subsidiaries
|
70,652
|
|
|
77,982
|
|
|
—
|
|
|
(148,634
|
)
|
|
—
|
|
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
69,079
|
|
|
66,557
|
|
|
91,124
|
|
|
(148,634
|
)
|
|
78,126
|
|
Income tax benefit (expense)
|
—
|
|
|
4,095
|
|
|
(16,130
|
)
|
|
—
|
|
|
(12,035
|
)
|
INCOME (LOSS) FROM CONTINUING OPERATIONS
|
69,079
|
|
|
70,652
|
|
|
74,994
|
|
|
(148,634
|
)
|
|
66,091
|
|
DISCONTINUED OPERATIONS, NET
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net of income taxes
|
—
|
|
|
—
|
|
|
2,988
|
|
|
—
|
|
|
2,988
|
|
NET INCOME (LOSS)
|
69,079
|
|
|
70,652
|
|
|
77,982
|
|
|
(148,634
|
)
|
|
69,079
|
|
OTHER COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
(8,081
|
)
|
|
(8,080
|
)
|
|
(8,081
|
)
|
|
16,161
|
|
|
(8,081
|
)
|
New Zealand joint venture cash flow hedges
|
(1,998
|
)
|
|
(1,998
|
)
|
|
(1,998
|
)
|
|
3,996
|
|
|
(1,998
|
)
|
Gain from pension and postretirement plans, net of income tax
|
3,401
|
|
|
3,401
|
|
|
2,579
|
|
|
(5,980
|
)
|
|
3,401
|
|
Total other comprehensive loss
|
(6,678
|
)
|
|
(6,677
|
)
|
|
(7,500
|
)
|
|
14,177
|
|
|
(6,678
|
)
|
COMPREHENSIVE INCOME (LOSS)
|
$
|
62,401
|
|
|
$
|
63,975
|
|
|
$
|
70,482
|
|
|
$
|
(134,457
|
)
|
|
$
|
62,401
|
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATING STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
For the Six Months Ended June 30, 2013
|
|
Rayonier Inc.
(Parent
Issuer)
|
|
Subsidiary Guarantors
|
|
Non-
guarantors
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
SALES
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
802,796
|
|
|
$
|
—
|
|
|
$
|
802,796
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
563,716
|
|
|
—
|
|
|
563,716
|
|
Selling and general expenses
|
—
|
|
|
5,081
|
|
|
27,947
|
|
|
—
|
|
|
33,028
|
|
Other operating (income) expense, net
|
(1,701
|
)
|
|
449
|
|
|
(1,299
|
)
|
|
(661
|
)
|
|
(3,212
|
)
|
|
(1,701
|
)
|
|
5,530
|
|
|
590,364
|
|
|
(661
|
)
|
|
593,532
|
|
Equity in income of New Zealand joint venture
|
—
|
|
|
—
|
|
|
562
|
|
|
—
|
|
|
562
|
|
OPERATING INCOME BEFORE GAIN ON CONSOLIDATION OF NEW ZEALAND JOINT VENTURE
|
1,701
|
|
|
(5,530
|
)
|
|
212,994
|
|
|
661
|
|
|
209,826
|
|
Gain on consolidation of New Zealand joint venture
|
—
|
|
|
—
|
|
|
16,098
|
|
|
—
|
|
|
16,098
|
|
OPERATING INCOME (LOSS)
|
1,701
|
|
|
(5,530
|
)
|
|
229,092
|
|
|
661
|
|
|
225,924
|
|
Interest (expense) income
|
(6,689
|
)
|
|
(14,133
|
)
|
|
3,086
|
|
|
—
|
|
|
(17,736
|
)
|
Interest and miscellaneous income (expense), net
|
4,178
|
|
|
85
|
|
|
(1,607
|
)
|
|
—
|
|
|
2,656
|
|
Equity in income from subsidiaries
|
235,774
|
|
|
249,630
|
|
|
—
|
|
|
(485,404
|
)
|
|
—
|
|
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
234,964
|
|
|
230,052
|
|
|
230,571
|
|
|
(484,743
|
)
|
|
210,844
|
|
Income tax benefit (expense)
|
(65
|
)
|
|
5,722
|
|
|
(25,418
|
)
|
|
66
|
|
|
(19,695
|
)
|
INCOME FROM CONTINUING OPERATIONS
|
234,899
|
|
|
235,774
|
|
|
205,153
|
|
|
(484,677
|
)
|
|
191,149
|
|
DISCONTINUED OPERATIONS, NET
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net of income taxes
|
—
|
|
|
—
|
|
|
44,477
|
|
|
—
|
|
|
44,477
|
|
NET INCOME
|
234,899
|
|
|
235,774
|
|
|
249,630
|
|
|
(484,677
|
)
|
|
235,626
|
|
Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
727
|
|
|
—
|
|
|
727
|
|
NET INCOME ATTRIBUTABLE TO RAYONIER INC.
|
234,899
|
|
|
235,774
|
|
|
248,903
|
|
|
(484,677
|
)
|
|
234,899
|
|
OTHER COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
(17,650
|
)
|
|
(27,226
|
)
|
|
(17,650
|
)
|
|
35,300
|
|
|
(27,226
|
)
|
New Zealand joint venture cash flow hedges
|
1,431
|
|
|
775
|
|
|
1,431
|
|
|
(2,862
|
)
|
|
775
|
|
Gain from pension and postretirement plans, net of income tax
|
8,687
|
|
|
8,687
|
|
|
6,831
|
|
|
(15,518
|
)
|
|
8,687
|
|
Total other comprehensive income
|
(7,532
|
)
|
|
(17,764
|
)
|
|
(9,388
|
)
|
|
16,920
|
|
|
(17,764
|
)
|
COMPREHENSIVE INCOME
|
227,367
|
|
|
218,010
|
|
|
240,242
|
|
|
(467,757
|
)
|
|
217,862
|
|
Comprehensive loss attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(9,505
|
)
|
|
—
|
|
|
(9,505
|
)
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.
|
$
|
227,367
|
|
|
$
|
218,010
|
|
|
$
|
249,747
|
|
|
$
|
(467,757
|
)
|
|
$
|
227,367
|
|
|
|
|
|
|
|
|
|
|
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATING STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
For the Six Months Ended June 30, 2012
|
|
Rayonier Inc.
(Parent
Issuer)
|
|
Subsidiary Guarantors
|
|
All Other
Subsidiaries
(Non-
guarantors)
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
SALES
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
684,667
|
|
|
$
|
—
|
|
|
$
|
684,667
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
479,279
|
|
|
—
|
|
|
479,279
|
|
Selling and general expenses
|
—
|
|
|
5,215
|
|
|
29,942
|
|
|
—
|
|
|
35,157
|
|
Other operating expense (income), net
|
—
|
|
|
12
|
|
|
(6,445
|
)
|
|
—
|
|
|
(6,433
|
)
|
|
—
|
|
|
5,227
|
|
|
502,776
|
|
|
—
|
|
|
508,003
|
|
Equity in income of New Zealand joint venture
|
—
|
|
|
—
|
|
|
184
|
|
|
—
|
|
|
184
|
|
OPERATING (LOSS) INCOME
|
—
|
|
|
(5,227
|
)
|
|
182,075
|
|
|
—
|
|
|
176,848
|
|
Interest expense
|
(4,366
|
)
|
|
(20,919
|
)
|
|
(2,595
|
)
|
|
—
|
|
|
(27,880
|
)
|
Interest and miscellaneous income (expense), net
|
3,455
|
|
|
944
|
|
|
(4,339
|
)
|
|
—
|
|
|
60
|
|
Equity in income from subsidiaries
|
123,426
|
|
|
140,688
|
|
|
—
|
|
|
(264,114
|
)
|
|
—
|
|
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
122,515
|
|
|
115,486
|
|
|
175,141
|
|
|
(264,114
|
)
|
|
149,028
|
|
Income tax benefit (expense)
|
—
|
|
|
7,940
|
|
|
(38,278
|
)
|
|
—
|
|
|
(30,338
|
)
|
INCOME FROM CONTINUING OPERATIONS
|
122,515
|
|
|
123,426
|
|
|
136,863
|
|
|
(264,114
|
)
|
|
118,690
|
|
DISCONTINUED OPERATIONS, NET
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net of income tax
|
—
|
|
|
—
|
|
|
3,825
|
|
|
—
|
|
|
3,825
|
|
NET INCOME
|
122,515
|
|
|
123,426
|
|
|
140,688
|
|
|
(264,114
|
)
|
|
122,515
|
|
OTHER COMPREHENSIVE INCOME
|
|
|
|
|
|
|
—
|
|
|
|
Foreign currency translation adjustment
|
(2,255
|
)
|
|
(2,255
|
)
|
|
(2,255
|
)
|
|
4,510
|
|
|
(2,255
|
)
|
New Zealand joint venture cash flow hedges
|
(793
|
)
|
|
(793
|
)
|
|
(793
|
)
|
|
1,586
|
|
|
(793
|
)
|
Gain from pension and postretirement plans, net of income tax
|
6,541
|
|
|
6,541
|
|
|
4,959
|
|
|
(11,500
|
)
|
|
6,541
|
|
Total other comprehensive income
|
3,493
|
|
|
3,493
|
|
|
1,911
|
|
|
(5,404
|
)
|
|
3,493
|
|
COMPREHENSIVE INCOME
|
$
|
126,008
|
|
|
$
|
126,919
|
|
|
$
|
142,599
|
|
|
$
|
(269,518
|
)
|
|
$
|
126,008
|
|
|
|
|
|
|
|
|
|
|
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING BALANCE SHEETS
As of June 30, 2013
|
|
Rayonier Inc.
(Parent
Issuer)
|
|
Subsidiary Guarantors
|
|
Non-
guarantors
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
ASSETS
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
170,442
|
|
|
$
|
33,239
|
|
|
$
|
139,900
|
|
|
$
|
—
|
|
|
$
|
343,581
|
|
Accounts receivable, less allowance for doubtful accounts
|
—
|
|
|
907
|
|
|
115,631
|
|
|
—
|
|
|
116,538
|
|
Inventory
|
—
|
|
|
—
|
|
|
99,091
|
|
|
—
|
|
|
99,091
|
|
Deferred tax asset
|
—
|
|
|
—
|
|
|
55,563
|
|
|
—
|
|
|
55,563
|
|
Prepaid and other current assets
|
—
|
|
|
2,775
|
|
|
64,669
|
|
|
—
|
|
|
67,444
|
|
Total current assets
|
170,442
|
|
|
36,921
|
|
|
474,854
|
|
|
—
|
|
|
682,217
|
|
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION
|
—
|
|
|
—
|
|
|
2,080,611
|
|
|
—
|
|
|
2,080,611
|
|
NET PROPERTY, PLANT AND EQUIPMENT
|
—
|
|
|
2,217
|
|
|
850,215
|
|
|
—
|
|
|
852,432
|
|
INVESTMENT IN JOINT VENTURE
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
INVESTMENT IN SUBSIDIARIES
|
1,575,156
|
|
|
2,627,483
|
|
|
—
|
|
|
(4,202,639
|
)
|
|
—
|
|
INTERCOMPANY NOTES RECEIVABLE
|
217,073
|
|
|
20,166
|
|
|
—
|
|
|
(237,239
|
)
|
|
—
|
|
OTHER ASSETS
|
3,928
|
|
|
34,684
|
|
|
174,179
|
|
|
—
|
|
|
212,791
|
|
TOTAL ASSETS
|
$
|
1,966,599
|
|
|
$
|
2,721,471
|
|
|
$
|
3,579,859
|
|
|
$
|
(4,439,878
|
)
|
|
$
|
3,828,051
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
—
|
|
|
$
|
1,634
|
|
|
$
|
131,621
|
|
|
$
|
—
|
|
|
$
|
133,255
|
|
Current maturities of long-term debt
|
75,000
|
|
|
—
|
|
|
463
|
|
|
—
|
|
|
75,463
|
|
Accrued taxes
|
—
|
|
|
2,603
|
|
|
17,555
|
|
|
—
|
|
|
20,158
|
|
Accrued payroll and benefits
|
—
|
|
|
10,689
|
|
|
9,800
|
|
|
—
|
|
|
20,489
|
|
Accrued interest
|
3,060
|
|
|
4,291
|
|
|
2,484
|
|
|
—
|
|
|
9,835
|
|
Accrued customer incentives
|
—
|
|
|
—
|
|
|
10,743
|
|
|
—
|
|
|
10,743
|
|
Other current liabilities
|
—
|
|
|
3,189
|
|
|
48,653
|
|
|
—
|
|
|
51,842
|
|
Current liabilities for dispositions and discontinued operations
|
—
|
|
|
—
|
|
|
8,686
|
|
|
—
|
|
|
8,686
|
|
Total current liabilities
|
78,060
|
|
|
22,406
|
|
|
230,005
|
|
|
—
|
|
|
330,471
|
|
LONG-TERM DEBT
|
325,000
|
|
|
979,511
|
|
|
287,323
|
|
|
—
|
|
|
1,591,834
|
|
NON-CURRENT LIABILITIES FOR DISPOSITIONS AND DISCONTINUED OPERATIONS
|
—
|
|
|
—
|
|
|
69,442
|
|
|
—
|
|
|
69,442
|
|
PENSION AND OTHER POSTRETIREMENT BENEFITS
|
—
|
|
|
130,244
|
|
|
28,350
|
|
|
—
|
|
|
158,594
|
|
OTHER NON-CURRENT LIABILITIES
|
—
|
|
|
13,989
|
|
|
13,601
|
|
|
—
|
|
|
27,590
|
|
INTERCOMPANY PAYABLE
|
—
|
|
|
165
|
|
|
265,823
|
|
|
(265,988
|
)
|
|
—
|
|
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY
|
1,563,539
|
|
|
1,575,156
|
|
|
2,598,734
|
|
|
(4,173,890
|
)
|
|
1,563,539
|
|
Noncontrolling interest
|
—
|
|
|
—
|
|
|
86,581
|
|
|
—
|
|
|
86,581
|
|
TOTAL SHAREHOLDERS’ EQUITY
|
1,563,539
|
|
|
1,575,156
|
|
|
2,685,315
|
|
|
(4,173,890
|
)
|
|
1,650,120
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
1,966,599
|
|
|
$
|
2,721,471
|
|
|
$
|
3,579,859
|
|
|
$
|
(4,439,878
|
)
|
|
$
|
3,828,051
|
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING BALANCE SHEETS
As of December 31, 2012
|
|
Rayonier Inc.
(Parent
Issuer)
|
|
Subsidiary Guarantors
|
|
Non-
guarantors
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
ASSETS
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
252,888
|
|
|
$
|
23,324
|
|
|
$
|
4,384
|
|
|
$
|
—
|
|
|
$
|
280,596
|
|
Accounts receivable, less allowance for doubtful accounts
|
—
|
|
|
386
|
|
|
99,973
|
|
|
—
|
|
|
100,359
|
|
Inventory
|
—
|
|
|
—
|
|
|
127,966
|
|
|
—
|
|
|
127,966
|
|
Deferred tax assets
|
—
|
|
|
—
|
|
|
15,845
|
|
|
—
|
|
|
15,845
|
|
Prepaid and other current assets
|
—
|
|
|
2,257
|
|
|
39,251
|
|
|
—
|
|
|
41,508
|
|
Total current assets
|
252,888
|
|
|
25,967
|
|
|
287,419
|
|
|
—
|
|
|
566,274
|
|
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION
|
—
|
|
|
—
|
|
|
1,573,309
|
|
|
—
|
|
|
1,573,309
|
|
NET PROPERTY, PLANT AND EQUIPMENT
|
—
|
|
|
2,321
|
|
|
704,717
|
|
|
—
|
|
|
707,038
|
|
INVESTMENT IN JOINT VENTURE
|
—
|
|
|
—
|
|
|
72,419
|
|
|
—
|
|
|
72,419
|
|
INVESTMENT IN SUBSIDIARIES
|
1,445,205
|
|
|
2,354,270
|
|
|
—
|
|
|
(3,799,475
|
)
|
|
—
|
|
INTERCOMPANY NOTES RECEIVABLE
|
213,863
|
|
|
33,831
|
|
|
—
|
|
|
(247,694
|
)
|
|
—
|
|
OTHER ASSETS
|
4,148
|
|
|
32,961
|
|
|
166,802
|
|
|
—
|
|
|
203,911
|
|
TOTAL ASSETS
|
$
|
1,916,104
|
|
|
$
|
2,449,350
|
|
|
$
|
2,804,666
|
|
|
$
|
(4,047,169
|
)
|
|
$
|
3,122,951
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
—
|
|
|
$
|
2,132
|
|
|
$
|
68,249
|
|
|
$
|
—
|
|
|
$
|
70,381
|
|
Current maturities of long-term debt
|
150,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
150,000
|
|
Accrued taxes
|
—
|
|
|
485
|
|
|
13,339
|
|
|
—
|
|
|
13,824
|
|
Accrued payroll and benefits
|
—
|
|
|
15,044
|
|
|
13,024
|
|
|
—
|
|
|
28,068
|
|
Accrued interest
|
3,100
|
|
|
3,576
|
|
|
1,280
|
|
|
—
|
|
|
7,956
|
|
Accrued customer incentives
|
—
|
|
|
—
|
|
|
10,849
|
|
|
—
|
|
|
10,849
|
|
Other current liabilities
|
—
|
|
|
2,925
|
|
|
15,715
|
|
|
—
|
|
|
18,640
|
|
Current liabilities for dispositions and discontinued operations
|
—
|
|
|
—
|
|
|
8,105
|
|
|
—
|
|
|
8,105
|
|
Total current liabilities
|
153,100
|
|
|
24,162
|
|
|
130,561
|
|
|
—
|
|
|
307,823
|
|
LONG-TERM DEBT
|
325,000
|
|
|
718,321
|
|
|
76,731
|
|
|
—
|
|
|
1,120,052
|
|
NON-CURRENT LIABILITIES FOR DISPOSITIONS AND DISCONTINUED OPERATIONS
|
—
|
|
|
—
|
|
|
73,590
|
|
|
—
|
|
|
73,590
|
|
PENSION AND OTHER POSTRETIREMENT BENEFITS
|
—
|
|
|
129,156
|
|
|
30,426
|
|
|
—
|
|
|
159,582
|
|
OTHER NON-CURRENT LIABILITIES
|
—
|
|
|
16,432
|
|
|
7,468
|
|
|
—
|
|
|
23,900
|
|
INTERCOMPANY PAYABLE
|
—
|
|
|
116,074
|
|
|
137,797
|
|
|
(253,871
|
)
|
|
—
|
|
TOTAL SHAREHOLDERS’ EQUITY
|
1,438,004
|
|
|
1,445,205
|
|
|
2,348,093
|
|
|
(3,793,298
|
)
|
|
1,438,004
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
1,916,104
|
|
|
$
|
2,449,350
|
|
|
$
|
2,804,666
|
|
|
$
|
(4,047,169
|
)
|
|
$
|
3,122,951
|
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2013
|
|
Rayonier Inc.
(Parent
Issuer)
|
|
Subsidiary Guarantors
|
|
Non-
guarantors
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
CASH PROVIDED BY OPERATING ACTIVITIES
|
$
|
248,552
|
|
|
$
|
247,599
|
|
|
$
|
212,977
|
|
|
$
|
(473,456
|
)
|
|
$
|
235,672
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
—
|
|
|
(89
|
)
|
|
(94,037
|
)
|
|
—
|
|
|
(94,126
|
)
|
Purchase of additional interest in New Zealand joint venture
|
—
|
|
|
—
|
|
|
(139,879
|
)
|
|
—
|
|
|
(139,879
|
)
|
Purchase of timberlands
|
—
|
|
|
—
|
|
|
(10,447
|
)
|
|
—
|
|
|
(10,447
|
)
|
Intercompany purchase of real estate
|
—
|
|
|
—
|
|
|
984
|
|
|
(984
|
)
|
|
—
|
|
Jesup mill cellulose specialties expansion
|
—
|
|
|
—
|
|
|
(100,185
|
)
|
|
—
|
|
|
(100,185
|
)
|
Proceeds from the disposition of Wood Products business
|
—
|
|
|
—
|
|
|
72,953
|
|
|
—
|
|
|
72,953
|
|
Change in restricted cash
|
—
|
|
|
—
|
|
|
7,603
|
|
|
—
|
|
|
7,603
|
|
Investment in Subsidiaries
|
(138,178
|
)
|
|
(387,659
|
)
|
|
—
|
|
|
525,837
|
|
|
—
|
|
Other
|
—
|
|
|
1,700
|
|
|
18,376
|
|
|
—
|
|
|
20,076
|
|
CASH (USED FOR) INVESTING ACTIVITIES
|
(138,178
|
)
|
|
(386,048
|
)
|
|
(244,632
|
)
|
|
524,853
|
|
|
(244,005
|
)
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Issuance of debt
|
175,000
|
|
|
280,000
|
|
|
—
|
|
|
—
|
|
|
455,000
|
|
Repayment of debt
|
(250,000
|
)
|
|
(23,087
|
)
|
|
—
|
|
|
—
|
|
|
(273,087
|
)
|
Dividends paid
|
(113,222
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(113,222
|
)
|
Proceeds from the issuance of common shares
|
6,643
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,643
|
|
Excess tax benefits on stock-based compensation
|
—
|
|
|
—
|
|
|
7,399
|
|
|
—
|
|
|
7,399
|
|
Debt issuance costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Repurchase of common shares
|
(11,241
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,241
|
)
|
Issuance of intercompany notes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Intercompany distributions
|
—
|
|
|
(108,549
|
)
|
|
159,946
|
|
|
(51,397
|
)
|
|
—
|
|
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES
|
(192,820
|
)
|
|
148,364
|
|
|
167,345
|
|
|
(51,397
|
)
|
|
71,492
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
—
|
|
|
—
|
|
|
(174
|
)
|
|
—
|
|
|
(174
|
)
|
CASH AND CASH EQUIVALENTS
|
|
|
|
|
|
|
|
|
|
Change in cash and cash equivalents
|
(82,446
|
)
|
|
9,915
|
|
|
135,516
|
|
|
—
|
|
|
62,985
|
|
Balance, beginning of year
|
252,888
|
|
|
23,324
|
|
|
4,384
|
|
|
—
|
|
|
280,596
|
|
Balance, end of period
|
$
|
170,442
|
|
|
$
|
33,239
|
|
|
$
|
139,900
|
|
|
$
|
—
|
|
|
$
|
343,581
|
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2012
|
|
Rayonier Inc.
(Parent
Issuer)
|
|
Subsidiary Guarantors
|
|
Non-
guarantors
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
CASH PROVIDED BY OPERATING ACTIVITIES
|
$
|
3,173
|
|
|
$
|
54,346
|
|
|
$
|
181,124
|
|
|
$
|
(29,767
|
)
|
|
$
|
208,876
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
—
|
|
|
(165
|
)
|
|
(76,081
|
)
|
|
—
|
|
|
(76,246
|
)
|
Purchase of timberlands
|
—
|
|
|
—
|
|
|
(8,687
|
)
|
|
—
|
|
|
(8,687
|
)
|
Jesup mill cellulose specialties expansion
|
—
|
|
|
—
|
|
|
(63,998
|
)
|
|
—
|
|
|
(63,998
|
)
|
Change in restricted cash
|
—
|
|
|
—
|
|
|
(14,427
|
)
|
|
—
|
|
|
(14,427
|
)
|
Investment in Subsidiaries
|
(5,181
|
)
|
|
(39,436
|
)
|
|
—
|
|
|
44,617
|
|
|
—
|
|
Other
|
—
|
|
|
(69
|
)
|
|
(635
|
)
|
|
—
|
|
|
(704
|
)
|
CASH (USED FOR) INVESTING ACTIVITIES
|
(5,181
|
)
|
|
(39,670
|
)
|
|
(163,828
|
)
|
|
44,617
|
|
|
(164,062
|
)
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Issuance of debt
|
325,000
|
|
|
15,000
|
|
|
15,000
|
|
|
—
|
|
|
355,000
|
|
Repayment of debt
|
(120,000
|
)
|
|
(53,110
|
)
|
|
(15,000
|
)
|
|
—
|
|
|
(188,110
|
)
|
Dividends paid
|
(98,201
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(98,201
|
)
|
Proceeds from the issuance of common shares
|
3,980
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,980
|
|
Excess tax benefits on stock-based compensation
|
—
|
|
|
—
|
|
|
4,234
|
|
|
—
|
|
|
4,234
|
|
Debt issuance costs
|
(3,653
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,653
|
)
|
Repurchase of common shares
|
(7,783
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,783
|
)
|
Intercompany distributions
|
—
|
|
|
5,181
|
|
|
9,669
|
|
|
(14,850
|
)
|
|
—
|
|
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES
|
99,343
|
|
|
(32,929
|
)
|
|
13,903
|
|
|
(14,850
|
)
|
|
65,467
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
—
|
|
|
—
|
|
|
219
|
|
|
—
|
|
|
219
|
|
CASH AND CASH EQUIVALENTS
|
|
|
|
|
|
|
|
|
|
Change in cash and cash equivalents
|
97,335
|
|
|
(18,253
|
)
|
|
31,418
|
|
|
—
|
|
|
110,500
|
|
Balance, beginning of year
|
—
|
|
|
68,953
|
|
|
9,650
|
|
|
—
|
|
|
78,603
|
|
Balance, end of period
|
$
|
97,335
|
|
|
$
|
50,700
|
|
|
$
|
41,068
|
|
|
$
|
—
|
|
|
$
|
189,103
|
|