RAYONIER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(Unaudited)
(Dollars in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended
September 30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
SALES
|
$
|
384,784
|
|
|
$
|
386,163
|
|
|
$
|
1,187,580
|
|
|
$
|
1,070,830
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
Cost of sales
|
287,150
|
|
|
259,201
|
|
|
850,866
|
|
|
738,480
|
|
Selling and general expenses
|
15,326
|
|
|
15,476
|
|
|
48,354
|
|
|
50,633
|
|
Other operating (income) expense, net
|
(1,341
|
)
|
|
306
|
|
|
(4,553
|
)
|
|
(6,128
|
)
|
|
301,135
|
|
|
274,983
|
|
|
894,667
|
|
|
782,985
|
|
Equity in income of New Zealand joint venture
|
—
|
|
|
66
|
|
|
562
|
|
|
249
|
|
OPERATING INCOME BEFORE GAIN ON CONSOLIDATION OF NEW ZEALAND JOINT VENTURE
|
83,649
|
|
|
111,246
|
|
|
293,475
|
|
|
288,094
|
|
Gain related to consolidation of New Zealand joint venture (Note 6)
|
—
|
|
|
—
|
|
|
16,098
|
|
|
—
|
|
OPERATING INCOME
|
83,649
|
|
|
111,246
|
|
|
309,573
|
|
|
288,094
|
|
Interest expense
|
(13,031
|
)
|
|
(8,253
|
)
|
|
(30,768
|
)
|
|
(36,133
|
)
|
Interest and miscellaneous (expense) income, net
|
(746
|
)
|
|
234
|
|
|
1,911
|
|
|
294
|
|
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
69,872
|
|
|
103,227
|
|
|
280,716
|
|
|
252,255
|
|
Income tax expense
|
(11,505
|
)
|
|
(23,949
|
)
|
|
(31,200
|
)
|
|
(54,287
|
)
|
INCOME FROM CONTINUING OPERATIONS
|
58,367
|
|
|
79,278
|
|
|
249,516
|
|
|
197,968
|
|
DISCONTINUED OPERATIONS, NET (Note 2)
|
|
|
|
|
|
|
|
Income from discontinued operations, net of income tax expense of $0, $646, $22,273 and $2,573
|
—
|
|
|
1,282
|
|
|
44,477
|
|
|
5,108
|
|
NET INCOME
|
58,367
|
|
|
80,560
|
|
|
293,993
|
|
|
203,076
|
|
Less: Net income attributable to noncontrolling interest
|
1,022
|
|
|
—
|
|
|
1,749
|
|
|
—
|
|
NET INCOME ATTRIBUTABLE TO RAYONIER INC.
|
57,345
|
|
|
80,560
|
|
|
292,244
|
|
|
203,076
|
|
OTHER COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
24,259
|
|
|
5,373
|
|
|
(2,967
|
)
|
|
3,115
|
|
New Zealand joint venture cash flow hedges
|
3,433
|
|
|
878
|
|
|
4,209
|
|
|
86
|
|
Amortization of pension and postretirement plans, net of income tax expense of $1,579, $1,482, $5,403 and $4,332
|
3,639
|
|
|
3,401
|
|
|
12,326
|
|
|
9,943
|
|
Total other comprehensive income
|
31,331
|
|
|
9,652
|
|
|
13,568
|
|
|
13,144
|
|
COMPREHENSIVE INCOME
|
89,698
|
|
|
90,212
|
|
|
307,561
|
|
|
216,220
|
|
Less: Comprehensive income (loss) attributable to noncontrolling interest
|
8,594
|
|
|
—
|
|
|
(909
|
)
|
|
—
|
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.
|
$
|
81,104
|
|
|
$
|
90,212
|
|
|
$
|
308,470
|
|
|
$
|
216,220
|
|
EARNINGS PER COMMON SHARE (Note 3)
|
|
|
|
|
|
|
|
BASIC EARNINGS PER SHARE ATTRIBUTABLE TO RAYONIER INC.
|
|
|
|
|
|
|
|
Continuing Operations
|
$
|
0.45
|
|
|
$
|
0.65
|
|
|
$
|
1.97
|
|
|
$
|
1.62
|
|
Discontinued Operations
|
—
|
|
|
0.01
|
|
|
0.36
|
|
|
0.04
|
|
Net Income
|
$
|
0.45
|
|
|
$
|
0.66
|
|
|
$
|
2.33
|
|
|
$
|
1.66
|
|
DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO RAYONIER INC.
|
|
|
|
|
|
|
|
Continuing Operations
|
$
|
0.44
|
|
|
$
|
0.61
|
|
|
$
|
1.89
|
|
|
$
|
1.54
|
|
Discontinued Operations
|
—
|
|
|
0.01
|
|
|
0.34
|
|
|
0.04
|
|
Net Income
|
$
|
0.44
|
|
|
$
|
0.62
|
|
|
$
|
2.23
|
|
|
$
|
1.58
|
|
See Notes to Consolidated Financial Statements.
RAYONIER INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
September 30, 2013
|
|
December 31, 2012
|
ASSETS
|
CURRENT ASSETS
|
|
|
|
Cash and cash equivalents
|
$
|
260,738
|
|
|
$
|
280,596
|
|
Accounts receivable, less allowance for doubtful accounts of $595 and $417
|
124,360
|
|
|
100,359
|
|
Inventory
|
|
|
|
Finished goods
|
115,635
|
|
|
103,568
|
|
Work in progress
|
3,304
|
|
|
4,446
|
|
Raw materials
|
12,823
|
|
|
17,602
|
|
Manufacturing and maintenance supplies
|
2,223
|
|
|
2,350
|
|
Total inventory
|
133,985
|
|
|
127,966
|
|
Deferred tax assets
|
62,914
|
|
|
15,845
|
|
Prepaid and other current assets
|
59,184
|
|
|
41,508
|
|
Total current assets
|
641,181
|
|
|
566,274
|
|
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION
|
2,103,503
|
|
|
1,573,309
|
|
PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
Land
|
23,168
|
|
|
27,383
|
|
Buildings
|
184,933
|
|
|
147,445
|
|
Machinery and equipment
|
1,761,590
|
|
|
1,444,012
|
|
Construction in progress
|
17,157
|
|
|
268,459
|
|
Total property, plant and equipment, gross
|
1,986,848
|
|
|
1,887,299
|
|
Less — accumulated depreciation
|
(1,118,416
|
)
|
|
(1,180,261
|
)
|
Total property, plant and equipment, net
|
868,432
|
|
|
707,038
|
|
INVESTMENT IN JOINT VENTURE (Note 6)
|
—
|
|
|
72,419
|
|
OTHER ASSETS
|
205,004
|
|
|
203,911
|
|
TOTAL ASSETS
|
$
|
3,818,120
|
|
|
$
|
3,122,951
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
CURRENT LIABILITIES
|
|
|
|
Accounts payable
|
$
|
98,970
|
|
|
$
|
70,381
|
|
Current maturities of long-term debt
|
10,000
|
|
|
150,000
|
|
Accrued taxes
|
20,146
|
|
|
13,824
|
|
Accrued payroll and benefits
|
26,484
|
|
|
28,068
|
|
Accrued interest
|
13,854
|
|
|
7,956
|
|
Accrued customer incentives
|
10,771
|
|
|
10,849
|
|
Other current liabilities
|
51,191
|
|
|
18,640
|
|
Current liabilities for dispositions and discontinued operations (Note 13)
|
8,446
|
|
|
8,105
|
|
Total current liabilities
|
239,862
|
|
|
307,823
|
|
LONG-TERM DEBT
|
1,646,337
|
|
|
1,120,052
|
|
NON-CURRENT LIABILITIES FOR DISPOSITIONS AND DISCONTINUED OPERATIONS (Note 13)
|
67,125
|
|
|
73,590
|
|
PENSION AND OTHER POSTRETIREMENT BENEFITS (Note 15)
|
158,663
|
|
|
159,582
|
|
OTHER NON-CURRENT LIABILITIES
|
21,254
|
|
|
23,900
|
|
COMMITMENTS AND CONTINGENCIES (Notes 11, 12 and 14)
|
|
|
|
SHAREHOLDERS’ EQUITY
|
|
|
|
Common Shares, 480,000,000 shares authorized, 126,224,421 and 123,332,444 shares issued and outstanding
|
687,357
|
|
|
670,749
|
|
Retained earnings
|
995,249
|
|
|
876,634
|
|
Accumulated other comprehensive loss
|
(93,153
|
)
|
|
(109,379
|
)
|
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY
|
1,589,453
|
|
|
1,438,004
|
|
Noncontrolling interest
|
95,426
|
|
|
—
|
|
TOTAL SHAREHOLDERS’ EQUITY
|
1,684,879
|
|
|
1,438,004
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
3,818,120
|
|
|
$
|
3,122,951
|
|
See Notes to Consolidated Financial Statements.
RAYONIER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
2013
|
|
2012
|
OPERATING ACTIVITIES
|
|
|
|
Net income
|
$
|
293,993
|
|
|
$
|
203,076
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
Depreciation, depletion and amortization
|
132,810
|
|
|
100,130
|
|
Non-cash cost of real estate sold
|
4,349
|
|
|
3,005
|
|
Stock-based incentive compensation expense
|
8,993
|
|
|
12,212
|
|
Amortization of debt discount/premium
|
887
|
|
|
5,367
|
|
Deferred income taxes
|
42,832
|
|
|
(6,028
|
)
|
Tax benefit of AFMC for CBPC exchange
|
(18,761
|
)
|
|
(11,660
|
)
|
Non-cash adjustments to unrecognized tax benefit liability
|
3,966
|
|
|
—
|
|
Amortization of losses from pension and postretirement plans
|
16,835
|
|
|
14,275
|
|
Gain on sale of discontinued operations, net
|
(42,670
|
)
|
|
—
|
|
Gain related to consolidation of New Zealand joint venture
|
(16,098
|
)
|
|
—
|
|
Loss on early redemption of exchangeable notes
|
3,017
|
|
|
—
|
|
Other
|
(8,538
|
)
|
|
(332
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
Receivables
|
(18,710
|
)
|
|
(14,169
|
)
|
Inventories
|
(9,040
|
)
|
|
(646
|
)
|
Accounts payable
|
13,712
|
|
|
(13,326
|
)
|
Income tax receivable/payable
|
(2,482
|
)
|
|
52,189
|
|
All other operating activities
|
5,863
|
|
|
16,416
|
|
Payment to exchange AFMC for CBPC
|
(70,311
|
)
|
|
—
|
|
Expenditures for dispositions and discontinued operations
|
(6,411
|
)
|
|
(6,867
|
)
|
CASH PROVIDED BY OPERATING ACTIVITIES
|
334,236
|
|
|
353,642
|
|
INVESTING ACTIVITIES
|
|
|
|
Capital expenditures
|
(122,482
|
)
|
|
(112,015
|
)
|
Purchase of additional interest in New Zealand joint venture
|
(139,879
|
)
|
|
—
|
|
Purchase of timberlands
|
(11,650
|
)
|
|
(11,632
|
)
|
Jesup mill cellulose specialties expansion (gross purchases of $140,820 and $130,718, net of purchases on account of $3,428 and $25,936)
|
(137,392
|
)
|
|
(104,782
|
)
|
Proceeds from disposition of Wood Products business, net of income tax payments of $16,027
|
68,063
|
|
|
—
|
|
Change in restricted cash
|
3,989
|
|
|
(12,796
|
)
|
Other
|
159
|
|
|
4,281
|
|
CASH USED FOR INVESTING ACTIVITIES
|
(339,192
|
)
|
|
(236,944
|
)
|
FINANCING ACTIVITIES
|
|
|
|
Issuance of debt
|
607,885
|
|
|
355,000
|
|
Repayment of debt
|
(453,463
|
)
|
|
(198,653
|
)
|
Dividends paid
|
(175,079
|
)
|
|
(152,358
|
)
|
Proceeds from the issuance of common shares
|
9,205
|
|
|
20,732
|
|
Excess tax benefits on stock-based compensation
|
8,189
|
|
|
7,057
|
|
Debt issuance costs
|
—
|
|
|
(3,698
|
)
|
Repurchase of common shares
|
(11,303
|
)
|
|
(7,783
|
)
|
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES
|
(14,566
|
)
|
|
20,297
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
(336
|
)
|
|
(123
|
)
|
CASH AND CASH EQUIVALENTS
|
|
|
|
Change in cash and cash equivalents
|
(19,858
|
)
|
|
136,872
|
|
Balance, beginning of year
|
280,596
|
|
|
78,603
|
|
Balance, end of period
|
$
|
260,738
|
|
|
$
|
215,475
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
Cash paid during the period:
|
|
|
|
Interest
|
$
|
26,930
|
|
|
$
|
18,239
|
|
Income taxes
|
$
|
88,024
|
|
|
$
|
14,912
|
|
Non-cash investing activity:
|
|
|
|
Capital assets purchased on account
|
$
|
29,738
|
|
|
$
|
52,727
|
|
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
|
)
|
|
$
|
—
|
|
Partial conversion of Senior Exchangeable Notes to equity
|
$
|
1,497
|
|
|
$
|
—
|
|
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 one subsequent event was identified that warranted disclosure. See Note 16 —
Debt
for additional information.
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
nine
months ended
September 30, 2013
.
The following table summarizes the operating results of the Company’s discontinued operations and the related gain for the three and
nine
months ended
September 30, 2013
and 2012, as presented in “Income from discontinued operations, net” in the Consolidated Statements of Income and Comprehensive Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Sales
|
$
|
—
|
|
|
$
|
22,825
|
|
|
$
|
16,968
|
|
|
$
|
65,865
|
|
Cost of sales and other
|
—
|
|
|
(20,897
|
)
|
|
(14,258
|
)
|
|
(58,184
|
)
|
Gain on sale of discontinued operations
|
—
|
|
|
—
|
|
|
64,040
|
|
|
—
|
|
Income from discontinued operations before income taxes
|
—
|
|
|
1,928
|
|
|
66,750
|
|
|
7,681
|
|
Income tax expense
|
—
|
|
|
(646
|
)
|
|
(22,273
|
)
|
|
(2,573
|
)
|
Income from discontinued operations, net
|
$
|
—
|
|
|
$
|
1,282
|
|
|
$
|
44,477
|
|
|
$
|
5,108
|
|
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 September 30,
|
|
Nine Months Ended September 30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Wood chip purchases
|
$
|
—
|
|
|
$
|
3,270
|
|
|
$
|
1,650
|
|
|
$
|
9,507
|
|
Saw timber procurement services
|
—
|
|
|
282
|
|
|
223
|
|
|
856
|
|
Total intercompany
|
$
|
—
|
|
|
$
|
3,552
|
|
|
$
|
1,873
|
|
|
$
|
10,363
|
|
|
|
3.
|
EARNINGS PER COMMON SHARE
|
The following table provides details of the calculations of basic and diluted earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Income from continuing operations
|
$
|
58,367
|
|
|
$
|
79,278
|
|
|
$
|
249,516
|
|
|
$
|
197,968
|
|
Less: Income from continuing operations attributable to noncontrolling interest
|
1,022
|
|
|
—
|
|
|
1,749
|
|
|
—
|
|
Income from continuing operations attributable to Rayonier Inc.
|
$
|
57,345
|
|
|
$
|
79,278
|
|
|
$
|
247,767
|
|
|
$
|
197,968
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations attributable to Rayonier Inc.
|
$
|
—
|
|
|
$
|
1,282
|
|
|
$
|
44,477
|
|
|
$
|
5,108
|
|
|
|
|
|
|
|
|
|
Net income attributable to Rayonier Inc.
|
$
|
57,345
|
|
|
$
|
80,560
|
|
|
$
|
292,244
|
|
|
$
|
203,076
|
|
|
|
|
|
|
|
|
|
Shares used for determining basic earnings per common share
|
126,122,151
|
|
|
122,848,705
|
|
|
125,549,133
|
|
|
122,552,910
|
|
Dilutive effect of:
|
|
|
|
|
|
|
|
Stock options
|
468,286
|
|
|
603,761
|
|
|
501,324
|
|
|
667,960
|
|
Performance and restricted shares
|
546,247
|
|
|
755,884
|
|
|
518,138
|
|
|
735,653
|
|
Assumed conversion of Senior Exchangeable Notes (a)
|
2,168,254
|
|
|
3,683,936
|
|
|
2,176,414
|
|
|
3,148,423
|
|
Assumed conversion of warrants (a) (b)
|
1,608,466
|
|
|
2,067,380
|
|
|
2,043,965
|
|
|
1,443,606
|
|
Shares used for determining diluted earnings per common share
|
130,913,404
|
|
|
129,959,666
|
|
|
130,788,974
|
|
|
128,548,552
|
|
Basic earnings per common share attributable to Rayonier Inc.:
|
|
|
|
|
|
|
|
Continuing operations
|
$
|
0.45
|
|
|
$
|
0.65
|
|
|
$
|
1.97
|
|
|
$
|
1.62
|
|
Discontinued operations
|
—
|
|
|
0.01
|
|
|
0.36
|
|
|
0.04
|
|
Net income
|
$
|
0.45
|
|
|
$
|
0.66
|
|
|
$
|
2.33
|
|
|
$
|
1.66
|
|
Diluted earnings per common share attributable to Rayonier Inc.:
|
|
|
|
|
|
|
|
Continuing operations
|
$
|
0.44
|
|
|
$
|
0.61
|
|
|
$
|
1.89
|
|
|
$
|
1.54
|
|
Discontinued operations
|
—
|
|
|
0.01
|
|
|
0.34
|
|
|
0.04
|
|
Net income
|
$
|
0.44
|
|
|
$
|
0.62
|
|
|
$
|
2.23
|
|
|
$
|
1.58
|
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Anti-dilutive shares excluded from the computations of diluted earnings per share:
|
|
|
|
|
|
|
|
Stock options, performance and restricted shares
|
101,884
|
|
|
123,217
|
|
|
167,487
|
|
|
261,759
|
|
Assumed conversion of exchangeable note hedges (a)
|
2,168,254
|
|
|
3,683,936
|
|
|
2,176,414
|
|
|
3,148,423
|
|
Total
|
2,270,138
|
|
|
3,807,153
|
|
|
2,343,901
|
|
|
3,410,182
|
|
(a) The Senior Exchangeable Notes due 2012 (the “2012 Notes”) matured in October 2012 and
$31.5 million
of the Senior Exchangeable Notes due 2015 (the “2015 Notes”) were redeemed by the noteholders in September 2013; however, no additional shares were issued due to offsetting exchangeable note hedges. Similarly, Rayonier will not issue additional shares upon future exchange or maturity of 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 included for the three and nine months ended September 30, 2012. The full dilutive effect of the 2015 Notes was included for the three and nine months ended September 30, 2012, while only a proportional amount based on the length of time the
$31.5 million
balance was outstanding before the exchange was included for the three and nine months ended September 30, 2013.
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 associated with the 2015 Notes if the stock price exceeds
$39.24
per share. For further information, 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 associated with the 2012 Notes in the first nine months of 2013 were primarily due to an increase in the average stock price from
$45.65
in the nine months ended
September 30, 2012
to
$56.42
, partially offset by a decrease in dilutive shares due to the maturity of the warrants. The shares used for the assumed conversion of the warrants decreased in the third quarter of 2013 as there was no dilutive impact from the warrants on the 2012 Notes.
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. 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 original 2009 tax return.
In the first quarter of 2013 management approved the exchange of approximately
120 million
gallons of black liquor for the CBPC previously claimed for the AFMC, resulting in a
$18.8 million
tax benefit. In the third quarter 2012, management approved the exchange of approximately
22 million
gallons, bringing the total number of exchange gallons approved year-to date to
82 million
for 2012. The impact of the exchanges in 2012 was
$2.6 million
and
$11.7 million
for the quarter and year-to-date periods, respectively. Third quarter 2012 results also reflect the reversal of a
$3.4 million
interest expense accrual based on IRS guidance stating interest payments are not required for AFMC exchanged for the CBPC, based upon the manner of the Company's original claim. For additional information on the AFMC and CBPC, see Note 8 —
Income Taxes
in the Company’s 2012 Annual Report.
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
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 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 September 30,
|
|
2013
|
|
2012
|
Income tax expense at federal statutory rate
|
$
|
24
|
|
|
35.0
|
%
|
|
$
|
36
|
|
|
35.0
|
%
|
REIT income not subject to tax
|
(11
|
)
|
|
(15.7
|
)
|
|
(6
|
)
|
|
(5.9
|
)
|
Other
|
1
|
|
|
0.5
|
|
|
(2
|
)
|
|
(2.3
|
)
|
Income tax expense before discrete items
|
14
|
|
|
19.8
|
%
|
|
28
|
|
|
26.8
|
%
|
Exchange of AFMC for CBPC
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(3.1
|
)
|
Other
|
(2
|
)
|
|
(3.3
|
)
|
|
(1
|
)
|
|
(0.5
|
)
|
Income tax expense as reported
|
$
|
12
|
|
|
16.5
|
%
|
|
$
|
24
|
|
|
23.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
2013
|
|
2012
|
Income tax expense at federal statutory rate
|
$
|
98
|
|
|
35.0
|
%
|
|
$
|
88
|
|
|
35.0
|
%
|
REIT income not subject to tax
|
(37
|
)
|
|
(13.2
|
)
|
|
(18
|
)
|
|
(7.2
|
)
|
Other
|
(1
|
)
|
|
(0.5
|
)
|
|
(3
|
)
|
|
(1.3
|
)
|
Income tax expense before discrete items
|
60
|
|
|
21.3
|
%
|
|
67
|
|
|
26.5
|
%
|
Exchange of AFMC for CBPC
|
(19
|
)
|
|
(6.7
|
)
|
|
(12
|
)
|
|
(4.6
|
)
|
Gain related to consolidation of New Zealand joint venture
|
(5
|
)
|
|
(2.0
|
)
|
|
—
|
|
|
—
|
|
Other
|
(5
|
)
|
|
(1.5
|
)
|
|
(1
|
)
|
|
(0.4
|
)
|
Income tax expense as reported
|
$
|
31
|
|
|
11.1
|
%
|
|
$
|
54
|
|
|
21.5
|
%
|
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
nine
months ended
September 30, 2013
and
2012
, income tax expense related to discontinued operations was
$22.3 million
(
$21.4 million
from the gain on sale) and
$2.6 million
, respectively. For the three months ended September 30,
2012
, income tax related to discontinued operations was
$0.6 million
. See
Note 2
—
Sale of Wood Products Business
for additional information.
Unrecognized Tax Benefits
In accordance with generally accepted accounting principles, the Company recognizes the impact of a tax position if a position is “more likely than not” to prevail. During third quarter 2013, the Company filed an amended 2009 federal income tax return reflecting an increased domestic production deduction due to the inclusion of the CBPC income. As required, the Company recorded a
$4.8 million
liability related to this uncertain tax position.
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
September 30, 2013
and
December 31, 2012
, the Company had
$6.6 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.
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
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 (“New Zealand 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 New Zealand 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
September 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 New Zealand JV forests and operates a log trading business.
The purchase price of the additional interest in the New Zealand 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 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 additional consideration to the New Zealand 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.
In the second quarter of 2013, the contingent consideration was 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 New Zealand JV as an equity method investment.
The additional 39 percent interest acquired resulted in the Company obtaining a controlling financial interest in the New Zealand 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 New Zealand 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.
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
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 New Zealand JV
. Subsequent to the acquisition date,
$96.0 million
of the noncontrolling interest’s shareholder loans were converted to
preferred equity
.
The Company’s operating results for the
nine
months ended
September 30, 2013
reflect
26 percent
of the New Zealand 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 New Zealand JV included in the Company’s Consolidated Statements of Income and Comprehensive Income from the acquisition date to the period ended
September 30, 2013
are as follows:
|
|
|
|
|
|
Revenue and earnings from
April 4, 2013 to September 30, 2013
|
Sales
|
$
|
98,717
|
|
Net Income
|
4,997
|
|
The following represents the pro forma consolidated sales and net income for the 2013 and 2012 third quarter and year-to-date periods as if the additional interest in the New Zealand JV had been acquired on January 1, 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Sales
|
$
|
384,784
|
|
|
$
|
437,881
|
|
|
$
|
1,222,106
|
|
|
$
|
1,216,691
|
|
Net Income
|
$
|
58,367
|
|
|
$
|
78,598
|
|
|
$
|
292,234
|
|
|
$
|
197,330
|
|
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
nine
months ended
September 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
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
96,335
|
|
|
96,335
|
|
Net income
|
—
|
|
|
—
|
|
|
292,244
|
|
|
—
|
|
|
1,749
|
|
|
293,993
|
|
Dividends ($1.37 per share)
|
—
|
|
|
—
|
|
|
(173,629
|
)
|
|
—
|
|
|
—
|
|
|
(173,629
|
)
|
Issuance of shares under incentive stock plans
|
967,566
|
|
|
9,205
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,205
|
|
Stock-based compensation
|
—
|
|
|
9,020
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,020
|
|
Excess tax benefit on stock-based compensation
|
—
|
|
|
8,189
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,189
|
|
Repurchase of common shares
|
(210,810
|
)
|
|
(11,303
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,303
|
)
|
Equity portion of convertible debt (Note 16)
|
—
|
|
|
1,497
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,497
|
|
Settlement of warrants (Note 16)
|
2,135,221
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Amortization of pension and postretirement plans
|
—
|
|
|
—
|
|
|
—
|
|
|
12,326
|
|
|
—
|
|
|
12,326
|
|
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
237
|
|
|
(3,204
|
)
|
|
(2,967
|
)
|
Joint venture cash flow hedges
|
—
|
|
|
—
|
|
|
—
|
|
|
3,663
|
|
|
546
|
|
|
4,209
|
|
Balance, September 30, 2013
|
126,224,421
|
|
|
$
|
687,357
|
|
|
$
|
995,249
|
|
|
$
|
(93,153
|
)
|
|
$
|
95,426
|
|
|
$
|
1,684,879
|
|
|
|
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 New Zealand JV, bringing its total ownership to
65 percent
. As a result, 100 percent of the New Zealand 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 New Zealand JV’s assets and liabilities are fully consolidated at
September 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.
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
The Performance Fibers segment included
two
major product lines, cellulose specialties and absorbent materials. Beginning in the third quarter of 2013 and in conjunction with the completion of the cellulose specialties expansion (“CSE”) project, the Company’s Jesup mill discontinued producing absorbent material and began producing commodity viscose during the multi-year transition to higher cellulose specialties volume. Commodity viscose is a dissolving wood pulp used primarily in the manufacture of textiles. Commodity Viscose/Other includes commodity viscose and off-grade.
The Company’s remaining operations include harvesting and selling timber acquired 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:
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
ASSETS
|
2013
|
|
2012
|
Forest Resources
|
$
|
2,216,727
|
|
|
$
|
1,690,030
|
|
Real Estate
|
88,002
|
|
|
112,647
|
|
Performance Fibers
|
1,122,779
|
|
|
902,309
|
|
Wood Products (a)
|
—
|
|
|
18,454
|
|
Other Operations
|
29,056
|
|
|
23,296
|
|
Corporate and other
|
361,556
|
|
|
376,215
|
|
Total
|
$
|
3,818,120
|
|
|
$
|
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 September 30,
|
|
Nine Months Ended September 30,
|
SALES
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Forest Resources
|
$
|
111,260
|
|
|
$
|
59,853
|
|
|
$
|
277,422
|
|
|
$
|
164,711
|
|
Real Estate
|
14,088
|
|
|
13,043
|
|
|
51,761
|
|
|
37,369
|
|
Performance Fibers
|
224,243
|
|
|
288,221
|
|
|
761,456
|
|
|
793,586
|
|
Other Operations
|
35,295
|
|
|
26,293
|
|
|
97,394
|
|
|
76,702
|
|
Intersegment Eliminations
|
(102
|
)
|
|
(1,247
|
)
|
|
(453
|
)
|
|
(1,538
|
)
|
Total
|
$
|
384,784
|
|
|
$
|
386,163
|
|
|
$
|
1,187,580
|
|
|
$
|
1,070,830
|
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
OPERATING INCOME(LOSS)
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Forest Resources
|
$
|
23,172
|
|
|
$
|
11,184
|
|
|
$
|
57,317
|
|
|
$
|
27,438
|
|
Real Estate
|
7,521
|
|
|
8,420
|
|
|
30,468
|
|
|
20,897
|
|
Performance Fibers
|
62,663
|
|
|
101,455
|
|
|
233,415
|
|
|
265,812
|
|
Other Operations
|
(301
|
)
|
|
(419
|
)
|
|
1,643
|
|
|
(201
|
)
|
Corporate and other (c)
|
(9,406
|
)
|
|
(9,394
|
)
|
|
(13,270
|
)
|
|
(25,852
|
)
|
Total
|
$
|
83,649
|
|
|
$
|
111,246
|
|
|
$
|
309,573
|
|
|
$
|
288,094
|
|
|
|
(c)
|
The nine months ended
September 30, 2013
includes a
$16.1 million
gain related to the consolidation of the New Zealand JV. See
Note 6
—
Joint Venture Investment
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
DEPRECIATION, DEPLETION AND AMORTIZATION
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Forest Resources
|
$
|
28,475
|
|
|
$
|
18,793
|
|
|
$
|
72,210
|
|
|
$
|
52,662
|
|
Real Estate
|
2,074
|
|
|
1,288
|
|
|
8,720
|
|
|
4,733
|
|
Performance Fibers
|
22,340
|
|
|
15,077
|
|
|
51,142
|
|
|
41,577
|
|
Corporate and other
|
262
|
|
|
368
|
|
|
738
|
|
|
1,158
|
|
Total
|
$
|
53,151
|
|
|
$
|
35,526
|
|
|
$
|
132,810
|
|
|
$
|
100,130
|
|
|
|
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 derivative 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 New Zealand 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 New Zealand 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
September 30, 2013
, the Company’s interest rate contracts had maturity dates through January 2020.
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
Fuel Hedge Contracts
The Company uses fuel swap contracts to manage its New Zealand 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
September 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.
The following table demonstrates the impact of the Company’s derivatives on the Consolidated Statements of Income and Comprehensive Income for the third quarter and
nine
months ended
September 30, 2013
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2013
|
|
Income Statement Location
|
|
Three Months Ended
|
|
Nine Months Ended
|
Derivatives designated as cash flow hedges:
|
|
|
|
|
|
Foreign currency exchange contracts
|
Other comprehensive income (loss)
|
|
$
|
2,602
|
|
|
$
|
1,093
|
|
|
Other operating income (expense)
|
|
(619
|
)
|
|
(619
|
)
|
Foreign currency option contracts
|
Other comprehensive income (loss)
|
|
832
|
|
|
468
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
Foreign currency exchange contracts
|
Other operating income (expense)
|
|
360
|
|
|
1,786
|
|
Foreign currency option contracts
|
Other operating income (expense)
|
|
480
|
|
|
(1,011
|
)
|
Interest rate swaps
|
Interest and other miscellaneous income
|
|
2,079
|
|
|
4,729
|
|
Fuel hedges
|
Cost of sales - benefit
|
|
(162
|
)
|
|
(14
|
)
|
During the next 12 months, the amount of the
September 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
$1.5 million
.
The following table contains the notional amounts of the derivative financial instruments recorded in the Consolidated Balance Sheets at
September 30, 2013
:
|
|
|
|
|
|
September 30, 2013
|
|
Notional Amount (a)
|
Derivatives designated as cash flow hedges:
|
|
Foreign currency exchange contracts
|
$
|
23,500
|
|
Foreign currency option contracts
|
32,000
|
|
|
|
Derivatives not designated as hedging instruments:
|
|
Foreign currency exchange contracts
|
$
|
8,650
|
|
Foreign currency option contracts
|
16,000
|
|
Interest rate swaps
|
185,013
|
|
Fuel contracts
|
41
|
|
(a) All notional amounts are stated in thousands of 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
September 30, 2013
:
|
|
|
|
|
|
|
|
September 30, 2013
|
|
Location on Balance Sheet
|
|
Fair Value Assets (Liabilities) (a)
|
Derivatives designated as cash flow hedges:
|
|
|
|
Foreign currency exchange contracts
|
Other current liabilities
|
|
(9
|
)
|
|
Other assets
|
|
1,101
|
|
Foreign currency option contracts
|
Other current liabilities
|
|
(286
|
)
|
|
Other assets
|
|
755
|
|
|
|
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
Foreign currency exchange contracts
|
Prepaid and other current assets
|
|
204
|
|
Foreign currency option contracts
|
Other current liabilities
|
|
(56
|
)
|
|
Other assets
|
|
200
|
|
Interest rate swaps
|
Other current liabilities
|
|
(2,949
|
)
|
|
Other non-current liabilities
|
|
(4,164
|
)
|
Fuel contracts
|
Other current liabilities
|
|
(109
|
)
|
|
|
|
|
Total derivative contracts:
|
|
|
|
Prepaid and other current assets
|
|
|
204
|
|
Other assets
|
|
|
2,056
|
|
Total derivative assets
|
|
|
$
|
2,260
|
|
|
|
|
|
Other current liabilities
|
|
|
(3,409
|
)
|
Other non-current liabilities
|
|
|
(4,164
|
)
|
Total derivative liabilities
|
|
|
$
|
(7,573
|
)
|
|
|
(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
September 30, 2013
and
December 31, 2012
, using market information and what management believes to be appropriate valuation methodologies under generally accepted accounting principles:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 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
|
$
|
260,738
|
|
|
$
|
260,738
|
|
|
$
|
—
|
|
|
$
|
280,596
|
|
|
$
|
280,596
|
|
|
$
|
—
|
|
Restricted cash (a)
|
6,569
|
|
|
6,569
|
|
|
—
|
|
|
10,559
|
|
|
10,559
|
|
|
—
|
|
Current maturities of long-term debt
|
(10,000
|
)
|
|
—
|
|
|
(16,900
|
)
|
(b)
|
(150,000
|
)
|
|
—
|
|
|
(150,000
|
)
|
Long-term debt
|
(1,646,337
|
)
|
|
—
|
|
|
(1,739,813
|
)
|
|
(1,120,052
|
)
|
|
—
|
|
|
(1,250,341
|
)
|
Interest rate swaps (c)
|
(7,113
|
)
|
|
—
|
|
|
(7,113
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Foreign currency exchange contracts (c)
|
1,296
|
|
|
—
|
|
|
1,296
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Foreign currency option contracts (c)
|
613
|
|
|
—
|
|
|
613
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Fuel contracts (c)
|
(109
|
)
|
|
—
|
|
|
(109
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(a)
|
Restricted cash is recorded in “Other Assets” and represents the proceeds from LKE sales deposited with a third-party intermediary.
|
|
|
(b)
|
The fair market value of current maturities of long-term-term debt represents the value of the debt and equity associated with the early redemption of a portion of the Senior Exchangeable Notes due 2015. The Company has a hedge agreement that offsets the
$6.9 million
equity portion of the current maturity. See
Note 16
—
Debt
for more information regarding the exchange of the notes.
|
|
|
(c)
|
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 option 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
September 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)
|
|
7,328
|
|
|
1,151
|
|
Total financial commitments
|
|
$
|
27,787
|
|
|
$
|
16,194
|
|
|
|
(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
September 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 during 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. Rayonier’s commitments have changed primarily due to the acquisition of a controlling interest in the New Zealand JV and sale of the Wood Products business. The following table shows the increase in the Company’s commitments, as of
September 30, 2013
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forestry Rights (a)
|
|
Forest
Leases (b)
|
|
Operating Leases (c)
|
|
Purchase Obligations (d)
|
Remaining 2013
|
$
|
474
|
|
|
$
|
290
|
|
|
$
|
315
|
|
|
2,088
|
|
2014
|
1,639
|
|
|
1,153
|
|
|
883
|
|
|
8,645
|
|
2015
|
1,639
|
|
|
1,153
|
|
|
612
|
|
|
8,345
|
|
2016
|
1,639
|
|
|
1,153
|
|
|
1,632
|
|
|
9,577
|
|
2017
|
1,639
|
|
|
1,153
|
|
|
2,410
|
|
|
8,597
|
|
Thereafter
|
42,642
|
|
|
57,799
|
|
|
17,789
|
|
|
6,005
|
|
|
$
|
49,672
|
|
|
$
|
62,701
|
|
|
$
|
23,641
|
|
|
$
|
43,257
|
|
(a) Forestry rights grant access to the leased land for the purpose of harvesting. The majority of the New Zealand 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).
(c) Operating leases include New Zealand leases on buildings, machinery and equipment under various operating leases and a Jesup mill natural gas transportation lease.
|
|
(d)
|
Pursuant to the Wood Products purchase and sale agreement, Rayonier contracted with Interfor to purchase wood chips produced at the lumber mills for use at Rayonier’s Jesup mill. Purchase obligations include obligations under this agreement as well as payments expected to be made on derivative financial instruments held in New Zealand.
|
The New Zealand JV has a number of Crown Forest Licenses (“CFL”) with the New Zealand government, which are excluded from the table above. 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 September 30, 2013, the New Zealand 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:
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
|
2013
|
|
2012
|
|
Balance, beginning of period
|
$
|
81,695
|
|
|
$
|
90,824
|
|
|
Expenditures charged to liabilities
|
(6,411
|
)
|
|
(9,926
|
)
|
|
Increase to liabilities
|
287
|
|
|
797
|
|
|
Balance, end of period
|
75,571
|
|
|
81,695
|
|
|
Less: Current portion
|
(8,446
|
)
|
|
(8,105
|
)
|
|
Non-current portion
|
$
|
67,125
|
|
|
$
|
73,590
|
|
|
The Company is exposed to the risk of reasonably possible additional losses in excess of the established liabilities. As of September 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 recorded are shown in the following tables:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
Postretirement
|
|
Three Months Ended September 30,
|
|
Three Months Ended September 30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Components of Net Periodic Benefit Cost
|
|
|
|
|
|
|
|
Service cost
|
$
|
2,011
|
|
|
$
|
2,102
|
|
|
$
|
330
|
|
|
$
|
227
|
|
Interest cost
|
3,953
|
|
|
4,321
|
|
|
231
|
|
|
242
|
|
Expected return on plan assets
|
(5,966
|
)
|
|
(6,369
|
)
|
|
—
|
|
|
—
|
|
Amortization of prior service cost
|
322
|
|
|
327
|
|
|
6
|
|
|
6
|
|
Amortization of losses
|
4,792
|
|
|
4,394
|
|
|
98
|
|
|
156
|
|
Net periodic benefit cost
|
$
|
5,112
|
|
|
$
|
4,775
|
|
|
$
|
665
|
|
|
$
|
631
|
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
Postretirement
|
|
Nine Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Components of Net Periodic Benefit Cost
|
|
|
|
|
|
|
|
Service cost
|
$
|
6,441
|
|
|
$
|
6,143
|
|
|
$
|
828
|
|
|
$
|
664
|
|
Interest cost
|
12,740
|
|
|
12,630
|
|
|
711
|
|
|
706
|
|
Expected return on plan assets
|
(19,356
|
)
|
|
(18,618
|
)
|
|
—
|
|
|
—
|
|
Amortization of prior service cost
|
1,032
|
|
|
956
|
|
|
19
|
|
|
18
|
|
Amortization of losses
|
15,308
|
|
|
12,846
|
|
|
533
|
|
|
455
|
|
Net periodic benefit cost
|
$
|
16,165
|
|
|
$
|
13,957
|
|
|
$
|
2,091
|
|
|
$
|
1,843
|
|
|
|
|
|
|
|
|
|
In 2013, the Company has no mandatory pension contribution requirements and does not expect to make any 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
. In first and second quarter 2013,
8,313,511
of warrants were settled, resulting in the issuance of
2,135,221
Rayonier common shares.
As of
June 30, 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
September 30, 2013
.
According to 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
September 30, 2013
,
three
groups of note holders elected to exercise their right to redeem
$41.5 million
of the notes. As of September 30, 2013,
two
redemptions in the amount of
$31.5 million
have settled. The third redemption of
$10 million
was settled on October 3, 2013 and classified as short-term debt at September 30, 2013. In accordance with Accounting Standards Codification (“ASC”) 470-50,
Modifications and Extinguishments [Debt]
, the fair value of the debt prior to redemption was compared to its carrying amount and the difference expensed, along with unamortized discount and issuance costs. As a result, Rayonier recorded a loss on debt extinguishment of
$3 million
in the third quarter.
Based upon the average stock price for the
30
trading days ended
September 30, 2013
, these notes again became exchangeable at the option of the holder for the calendar quarter ending
December 31, 2013
. The remaining balance of the notes is classified as long-term debt at
September 30, 2013
due to the ability and intent of the Company to refinance them on a long-term basis.
During the
nine
months ended
September 30, 2013
, the Company had
no
net activity on its
$450 million
unsecured revolving credit facility. The Company had
$172 million
of available borrowings under this facility at
September 30, 2013
, net of
$3 million
to secure its outstanding letters of credit. During the
nine
months ended
September 30, 2013
, the Company borrowed an additional
$200 million
on the term credit agreement 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 New Zealand JV’s debt was consolidated effective on that date. See
Note 6
—
Joint Venture Investment
for further information.
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
The New Zealand JV’s debt consisted of the following at
September 30, 2013
:
|
|
|
|
|
|
September 30, 2013
|
Senior Secured Facilities Agreement
|
|
Revolving Credit Facility due 2016 at variable interest rate of 4.39%
|
$
|
194,533
|
|
Working Capital Facility due 2014
|
—
|
|
|
|
Noncontrolling interest shareholder loan at a 0% interest rate
|
31,717
|
|
|
|
Total debt
|
226,250
|
|
Less: Current maturities of long-term debt
|
—
|
|
Long-term debt
|
$
|
226,250
|
|
Senior Secured Facilities Agreement
The New Zealand JV is party to a
$214 million
variable rate Senior Secured Facilities Agreement
comprised of two tranches. Tranche A, a $195 million revolving cash advance facility expires September 2016 and Tranche B, a $19 million working capital facility expires July 2014.
Although the maximum amounts available under the agreement are denominated in
New Zealand dollars
, advances on Tranche A are also available in U.S. dollars. This agreement is secured by a Security Trust Deed that provides recourse only to the New Zealand JV’s assets; there is no recourse to Rayonier Inc. or any of its subsidiaries.
Revolving Credit Facility
As of
September 30, 2013
the Senior Secured Facilities Agreement had
$195 million
outstanding on Tranche A at
4.39 percent
due
September 2016
.
The interest rate is indexed to the 90 day New Zealand Bank bill rate and is generally repriced quarterly. The margin on the index rate fluctuates based on the interest coverage ratio.
The New Zealand JV manages these rates through interest rate swaps, as discussed at
Note 9
—
Derivative Financial Instruments and Hedging Activities
.
Working Capital Facility
The
$19 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
September 30, 2013
, there was no outstanding balance on the Working Capital Facility.
Shareholder Loan
The shareholder loan is an interest-free loan from the noncontrolling New Zealand JV interest in the amount of
$32 million
.
This loan represents part of the noncontrolling party’s investment in the New Zealand JV. The loan is secured by timberlands owned by the New Zealand 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
September 30, 2013
due to the ability and intent of the Company 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 1.25 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 40 percent.
At September 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.
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
Subsequent Event
On
October 3, 2013
, the third settlement of Senior Exchangeable Notes due 2015 in the amount of
$10 million
was completed. As a result, Rayonier recorded a
$1 million
loss on the redemption in the fourth quarter.
|
|
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
|
237
|
|
|
809
|
|
|
530
|
|
|
1,576
|
|
Amounts reclassified from accumulated other comprehensive income
|
—
|
|
|
2,854
|
|
|
11,796
|
|
(a)
|
14,650
|
|
Net other comprehensive income
|
237
|
|
|
3,663
|
|
|
12,326
|
|
|
16,226
|
|
Balance as of September 30, 2013
|
$
|
39,066
|
|
|
$
|
35
|
|
|
$
|
(132,254
|
)
|
|
$
|
(93,153
|
)
|
|
|
(a)
|
This accumulated other comprehensive income component is 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
nine
months ended
September 30, 2013
:
|
|
|
|
|
|
|
|
Details about accumulated other comprehensive income components
|
|
Amount reclassified from accumulated other comprehensive income
|
|
Affected line item in the income statement
|
Loss from New Zealand joint venture cash flow hedges
|
|
$
|
2,159
|
|
|
Gain related to consolidation of New Zealand joint venture
|
Realized loss on foreign exchange contracts
|
|
1,069
|
|
|
Other operating (income) expense, net
|
Noncontrolling interest benefit
|
|
(374
|
)
|
|
Comprehensive income (loss) attributable to noncontrolling interest
|
Total loss reclassified from accumulated other comprehensive income
|
|
$
|
2,854
|
|
|
|
|
|
18.
|
OTHER OPERATING INCOME (EXPENSE), NET
|
Other operating income (expense), net was comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Lease income, primarily from hunting leases
|
$
|
4,367
|
|
|
$
|
1,357
|
|
|
$
|
9,141
|
|
|
$
|
6,263
|
|
Other non-timber income
|
573
|
|
|
433
|
|
|
1,651
|
|
|
2,324
|
|
Foreign currency (loss) gain
|
(2,050
|
)
|
|
(979
|
)
|
|
511
|
|
|
(1,165
|
)
|
Loss on sale or disposal of property, plant & equipment
|
(276
|
)
|
|
(75
|
)
|
|
(974
|
)
|
|
(1,807
|
)
|
Insurance recoveries
|
—
|
|
|
—
|
|
|
—
|
|
|
2,319
|
|
Gain on foreign currency exchange contracts
|
221
|
|
|
—
|
|
|
156
|
|
|
—
|
|
Legal and corporate development costs
|
(1,494
|
)
|
|
(1,042
|
)
|
|
(5,932
|
)
|
|
(1,806
|
)
|
Total
|
$
|
1,341
|
|
|
$
|
(306
|
)
|
|
$
|
4,553
|
|
|
$
|
6,128
|
|
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 September 30, 2013
|
|
Rayonier Inc.
(Parent
Guarantor)
|
|
ROC (Subsidiary Guarantor)
|
|
Rayonier TRS
Holdings Inc.
(Issuer)
|
|
Non-
guarantors
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
SALES
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
384,784
|
|
|
$
|
—
|
|
|
$
|
384,784
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
—
|
|
|
287,150
|
|
|
—
|
|
|
287,150
|
|
Selling and general expenses
|
—
|
|
|
2,276
|
|
|
—
|
|
|
13,050
|
|
|
—
|
|
|
15,326
|
|
Other operating expense (income), net
|
—
|
|
|
738
|
|
|
—
|
|
|
(2,740
|
)
|
|
661
|
|
|
(1,341
|
)
|
|
—
|
|
|
3,014
|
|
|
—
|
|
|
297,460
|
|
|
661
|
|
|
301,135
|
|
OPERATING (LOSS) INCOME
|
—
|
|
|
(3,014
|
)
|
|
—
|
|
|
87,324
|
|
|
(661
|
)
|
|
83,649
|
|
Interest expense
|
(3,190
|
)
|
|
(162
|
)
|
|
(7,115
|
)
|
|
(2,564
|
)
|
|
—
|
|
|
(13,031
|
)
|
Interest and miscellaneous income (expense), net
|
2,538
|
|
|
770
|
|
|
(4,325
|
)
|
|
271
|
|
|
—
|
|
|
(746
|
)
|
Equity in income from subsidiaries
|
57,932
|
|
|
58,802
|
|
|
39,544
|
|
|
—
|
|
|
(156,278
|
)
|
|
—
|
|
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
57,280
|
|
|
56,396
|
|
|
28,104
|
|
|
85,031
|
|
|
(156,939
|
)
|
|
69,872
|
|
Income tax benefit (expense)
|
65
|
|
|
1,536
|
|
|
3,627
|
|
|
(16,671
|
)
|
|
(62
|
)
|
|
(11,505
|
)
|
NET INCOME
|
57,345
|
|
|
57,932
|
|
|
31,731
|
|
|
68,360
|
|
|
(157,001
|
)
|
|
58,367
|
|
Less: Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
1,022
|
|
|
—
|
|
|
1,022
|
|
NET INCOME ATTRIBUTABLE TO RAYONIER INC.
|
57,345
|
|
|
57,932
|
|
|
31,731
|
|
|
67,338
|
|
|
(157,001
|
)
|
|
57,345
|
|
OTHER COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
17,887
|
|
|
17,887
|
|
|
2,084
|
|
|
24,259
|
|
|
(37,858
|
)
|
|
24,259
|
|
New Zealand joint venture cash flow hedges
|
2,233
|
|
|
2,231
|
|
|
2,231
|
|
|
3,434
|
|
|
(6,696
|
)
|
|
3,433
|
|
Amortization of pension and postretirement plans, net of income tax
|
3,639
|
|
|
3,639
|
|
|
2,747
|
|
|
2,747
|
|
|
(9,133
|
)
|
|
3,639
|
|
Total other comprehensive loss
|
23,759
|
|
|
23,757
|
|
|
7,062
|
|
|
30,440
|
|
|
(53,687
|
)
|
|
31,331
|
|
COMPREHENSIVE INCOME
|
81,104
|
|
|
81,689
|
|
|
38,793
|
|
|
98,800
|
|
|
(210,688
|
)
|
|
89,698
|
|
Less: Comprehensive income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
8,594
|
|
|
—
|
|
|
8,594
|
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.
|
$
|
81,104
|
|
|
$
|
81,689
|
|
|
$
|
38,793
|
|
|
$
|
90,206
|
|
|
$
|
(210,688
|
)
|
|
$
|
81,104
|
|
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 September 30, 2012
|
|
Rayonier Inc.
(Parent
Guarantor)
|
|
ROC (Subsidiary Guarantor)
|
|
Rayonier TRS
Holdings Inc.
(Issuer)
|
|
Non-
guarantors
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
SALES
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
386,163
|
|
|
$
|
—
|
|
|
$
|
386,163
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
—
|
|
|
259,201
|
|
|
—
|
|
|
259,201
|
|
Selling and general expenses
|
—
|
|
|
2,762
|
|
|
—
|
|
|
12,714
|
|
|
—
|
|
|
15,476
|
|
Other operating expense (income), net
|
—
|
|
|
730
|
|
|
—
|
|
|
(424
|
)
|
|
—
|
|
|
306
|
|
|
—
|
|
|
3,492
|
|
|
—
|
|
|
271,491
|
|
|
—
|
|
|
274,983
|
|
Equity in income of New Zealand joint venture
|
—
|
|
|
—
|
|
|
—
|
|
|
66
|
|
|
—
|
|
|
66
|
|
OPERATING (LOSS) INCOME
|
—
|
|
|
(3,492
|
)
|
|
—
|
|
|
114,738
|
|
|
—
|
|
|
111,246
|
|
Interest (expense) income
|
(3,136
|
)
|
|
(196
|
)
|
|
(10,244
|
)
|
|
5,323
|
|
|
—
|
|
|
(8,253
|
)
|
Interest and miscellaneous income (expense), net
|
1,630
|
|
|
1,594
|
|
|
(980
|
)
|
|
(2,010
|
)
|
|
—
|
|
|
234
|
|
Equity in income from subsidiaries
|
82,066
|
|
|
85,241
|
|
|
73,635
|
|
|
—
|
|
|
(240,942
|
)
|
|
—
|
|
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
80,560
|
|
|
83,147
|
|
|
62,411
|
|
|
118,051
|
|
|
(240,942
|
)
|
|
103,227
|
|
Income tax (expense) benefit
|
—
|
|
|
(1,081
|
)
|
|
4,096
|
|
|
(26,964
|
)
|
|
—
|
|
|
(23,949
|
)
|
INCOME FROM CONTINUING OPERATIONS
|
80,560
|
|
|
82,066
|
|
|
66,507
|
|
|
91,087
|
|
|
(240,942
|
)
|
|
79,278
|
|
DISCONTINUED OPERATIONS, NET
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net of income tax
|
—
|
|
|
—
|
|
|
—
|
|
|
1,282
|
|
|
—
|
|
|
1,282
|
|
NET INCOME
|
80,560
|
|
|
82,066
|
|
|
66,507
|
|
|
92,369
|
|
|
(240,942
|
)
|
|
80,560
|
|
OTHER COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
5,373
|
|
|
5,373
|
|
|
107
|
|
|
4,887
|
|
|
(10,367
|
)
|
|
5,373
|
|
New Zealand joint venture cash flow hedges
|
878
|
|
|
878
|
|
|
—
|
|
|
879
|
|
|
(1,757
|
)
|
|
878
|
|
Amortization of pension and postretirement plans, net of income tax
|
3,401
|
|
|
3,401
|
|
|
2,578
|
|
|
(4,959
|
)
|
|
(1,020
|
)
|
|
3,401
|
|
Total other comprehensive income
|
9,652
|
|
|
9,652
|
|
|
2,685
|
|
|
807
|
|
|
(13,144
|
)
|
|
9,652
|
|
COMPREHENSIVE INCOME
|
$
|
90,212
|
|
|
$
|
91,718
|
|
|
$
|
69,192
|
|
|
$
|
93,176
|
|
|
$
|
(254,086
|
)
|
|
$
|
90,212
|
|
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 Nine Months Ended September 30, 2013
|
|
Rayonier Inc.
(Parent
Guarantor)
|
|
ROC (Subsidiary Guarantor)
|
|
Rayonier TRS
Holdings Inc.
(Issuer)
|
|
Non-
guarantors
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
SALES
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,187,580
|
|
|
$
|
—
|
|
|
$
|
1,187,580
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
—
|
|
|
850,866
|
|
|
—
|
|
|
850,866
|
|
Selling and general expenses
|
—
|
|
|
7,357
|
|
|
—
|
|
|
40,997
|
|
|
—
|
|
|
48,354
|
|
Other operating (income) expense, net
|
(1,701
|
)
|
|
1,187
|
|
|
—
|
|
|
(4,039
|
)
|
|
—
|
|
|
(4,553
|
)
|
|
(1,701
|
)
|
|
8,544
|
|
|
—
|
|
|
887,824
|
|
|
—
|
|
|
894,667
|
|
Equity in income of New Zealand joint venture
|
—
|
|
|
—
|
|
|
—
|
|
|
562
|
|
|
—
|
|
|
562
|
|
OPERATING INCOME (LOSS) BEFORE GAIN ON CONSOLIDATION OF NEW ZEALAND JOINT VENTURE
|
1,701
|
|
|
(8,544
|
)
|
|
—
|
|
|
300,318
|
|
|
—
|
|
|
293,475
|
|
Gain related to consolidation of New Zealand joint venture
|
—
|
|
|
—
|
|
|
—
|
|
|
16,098
|
|
|
—
|
|
|
16,098
|
|
OPERATING INCOME (LOSS)
|
1,701
|
|
|
(8,544
|
)
|
|
—
|
|
|
316,416
|
|
|
—
|
|
|
309,573
|
|
Interest (expense) income
|
(9,879
|
)
|
|
(680
|
)
|
|
(20,730
|
)
|
|
521
|
|
|
—
|
|
|
(30,768
|
)
|
Interest and miscellaneous income (expense), net
|
6,716
|
|
|
2,403
|
|
|
(5,873
|
)
|
|
(1,335
|
)
|
|
—
|
|
|
1,911
|
|
Equity in income from subsidiaries
|
293,706
|
|
|
298,802
|
|
|
198,981
|
|
|
—
|
|
|
(791,489
|
)
|
|
—
|
|
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
292,244
|
|
|
291,981
|
|
|
172,378
|
|
|
315,602
|
|
|
(791,489
|
)
|
|
280,716
|
|
Income tax benefit (expense)
|
—
|
|
|
1,725
|
|
|
9,164
|
|
|
(42,089
|
)
|
|
—
|
|
|
(31,200
|
)
|
INCOME FROM CONTINUING OPERATIONS
|
292,244
|
|
|
293,706
|
|
|
181,542
|
|
|
273,513
|
|
|
(791,489
|
)
|
|
249,516
|
|
DISCONTINUED OPERATIONS, NET
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net of income tax
|
—
|
|
|
—
|
|
|
—
|
|
|
44,477
|
|
|
—
|
|
|
44,477
|
|
NET INCOME
|
292,244
|
|
|
293,706
|
|
|
181,542
|
|
|
317,990
|
|
|
(791,489
|
)
|
|
293,993
|
|
Less: Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
1,749
|
|
|
—
|
|
|
1,749
|
|
NET INCOME ATTRIBUTABLE TO RAYONIER INC.
|
292,244
|
|
|
293,706
|
|
|
181,542
|
|
|
316,241
|
|
|
(791,489
|
)
|
|
292,244
|
|
OTHER COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
237
|
|
|
237
|
|
|
629
|
|
|
(2,967
|
)
|
|
(1,103
|
)
|
|
(2,967
|
)
|
New Zealand joint venture cash flow hedges
|
3,663
|
|
|
3,663
|
|
|
1,014
|
|
|
4,209
|
|
|
(8,340
|
)
|
|
4,209
|
|
Amortization of pension and postretirement plans, net of income tax
|
12,326
|
|
|
12,326
|
|
|
9,578
|
|
|
9,578
|
|
|
(31,482
|
)
|
|
12,326
|
|
Total other comprehensive income
|
16,226
|
|
|
16,226
|
|
|
11,221
|
|
|
10,820
|
|
|
(40,925
|
)
|
|
13,568
|
|
COMPREHENSIVE INCOME
|
308,470
|
|
|
309,932
|
|
|
192,763
|
|
|
328,810
|
|
|
(832,414
|
)
|
|
307,561
|
|
Less: Comprehensive loss attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
(909
|
)
|
|
—
|
|
|
(909
|
)
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.
|
$
|
308,470
|
|
|
$
|
309,932
|
|
|
$
|
192,763
|
|
|
$
|
329,719
|
|
|
$
|
(832,414
|
)
|
|
$
|
308,470
|
|
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 Nine Months Ended September 30, 2012
|
|
Rayonier Inc.
(Parent
Guarantor)
|
|
ROC (Subsidiary Guarantor)
|
|
Rayonier TRS
Holdings Inc.
(Issuer)
|
|
Non-Guarantors
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
SALES
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,070,830
|
|
|
$
|
—
|
|
|
$
|
1,070,830
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
—
|
|
|
738,480
|
|
|
—
|
|
|
738,480
|
|
Selling and general expenses
|
—
|
|
|
7,977
|
|
|
—
|
|
|
42,656
|
|
|
—
|
|
|
50,633
|
|
Other operating expense (income), net
|
—
|
|
|
742
|
|
|
—
|
|
|
(6,870
|
)
|
|
—
|
|
|
(6,128
|
)
|
|
—
|
|
|
8,719
|
|
|
—
|
|
|
774,266
|
|
|
—
|
|
|
782,985
|
|
Equity in income of New Zealand joint venture
|
—
|
|
|
—
|
|
|
—
|
|
|
249
|
|
|
—
|
|
|
249
|
|
OPERATING (LOSS) INCOME
|
—
|
|
|
(8,719
|
)
|
|
—
|
|
|
296,813
|
|
|
—
|
|
|
288,094
|
|
Interest (expense) income
|
(7,502
|
)
|
|
(646
|
)
|
|
(30,713
|
)
|
|
2,728
|
|
|
—
|
|
|
(36,133
|
)
|
Interest and miscellaneous income (expense), net
|
5,086
|
|
|
4,580
|
|
|
(3,022
|
)
|
|
(6,350
|
)
|
|
—
|
|
|
294
|
|
Equity in income from subsidiaries
|
205,492
|
|
|
211,635
|
|
|
179,787
|
|
|
—
|
|
|
(596,914
|
)
|
|
—
|
|
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
203,076
|
|
|
206,850
|
|
|
146,052
|
|
|
293,191
|
|
|
(596,914
|
)
|
|
252,255
|
|
Income tax (expense) benefit
|
—
|
|
|
(1,358
|
)
|
|
12,313
|
|
|
(65,242
|
)
|
|
—
|
|
|
(54,287
|
)
|
INCOME FROM CONTINUING OPERATIONS
|
203,076
|
|
|
205,492
|
|
|
158,365
|
|
|
227,949
|
|
|
(596,914
|
)
|
|
197,968
|
|
DISCONTINUED OPERATIONS, NET
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net of income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
5,108
|
|
|
—
|
|
|
5,108
|
|
NET INCOME
|
203,076
|
|
|
205,492
|
|
|
158,365
|
|
|
233,057
|
|
|
(596,914
|
)
|
|
203,076
|
|
OTHER COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
3,115
|
|
|
3,115
|
|
|
483
|
|
|
2,633
|
|
|
(6,231
|
)
|
|
3,115
|
|
New Zealand joint venture cash flow hedges
|
86
|
|
|
86
|
|
|
—
|
|
|
86
|
|
|
(172
|
)
|
|
86
|
|
Amortization of pension and postretirement plans, net of income tax
|
9,943
|
|
|
9,943
|
|
|
7,537
|
|
|
—
|
|
|
(17,480
|
)
|
|
9,943
|
|
Total other comprehensive income
|
13,144
|
|
|
13,144
|
|
|
8,020
|
|
|
2,719
|
|
|
(23,883
|
)
|
|
13,144
|
|
COMPREHENSIVE INCOME
|
$
|
216,220
|
|
|
$
|
218,636
|
|
|
$
|
166,385
|
|
|
$
|
235,776
|
|
|
$
|
(620,797
|
)
|
|
$
|
216,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING BALANCE SHEETS
As of September 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
|
$
|
172,938
|
|
|
$
|
4,933
|
|
|
$
|
20,995
|
|
|
$
|
61,872
|
|
|
$
|
—
|
|
|
$
|
260,738
|
|
Accounts receivable, less allowance for doubtful accounts
|
—
|
|
|
22
|
|
|
1,596
|
|
|
122,742
|
|
|
—
|
|
|
124,360
|
|
Inventory
|
—
|
|
|
—
|
|
|
—
|
|
|
133,985
|
|
|
—
|
|
|
133,985
|
|
Deferred tax assets
|
—
|
|
|
—
|
|
|
—
|
|
|
62,914
|
|
|
—
|
|
|
62,914
|
|
Prepaid and other current assets
|
—
|
|
|
4,604
|
|
|
654
|
|
|
53,926
|
|
|
—
|
|
|
59,184
|
|
Total current assets
|
172,938
|
|
|
9,559
|
|
|
23,245
|
|
|
435,439
|
|
|
—
|
|
|
641,181
|
|
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION
|
—
|
|
|
—
|
|
|
—
|
|
|
2,103,503
|
|
|
—
|
|
|
2,103,503
|
|
NET PROPERTY, PLANT AND EQUIPMENT
|
—
|
|
|
2,399
|
|
|
—
|
|
|
866,033
|
|
|
—
|
|
|
868,432
|
|
INVESTMENT IN SUBSIDIARIES
|
1,520,817
|
|
|
1,749,463
|
|
|
1,316,652
|
|
|
—
|
|
|
(4,586,932
|
)
|
|
—
|
|
INTERCOMPANY NOTES RECEIVABLE
|
223,022
|
|
|
—
|
|
|
20,400
|
|
|
—
|
|
|
(243,422
|
)
|
|
—
|
|
OTHER ASSETS
|
3,808
|
|
|
31,732
|
|
|
3,938
|
|
|
165,526
|
|
|
—
|
|
|
205,004
|
|
TOTAL ASSETS
|
$
|
1,920,585
|
|
|
$
|
1,793,153
|
|
|
$
|
1,364,235
|
|
|
$
|
3,570,501
|
|
|
$
|
(4,830,354
|
)
|
|
$
|
3,818,120
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
—
|
|
|
$
|
884
|
|
|
$
|
854
|
|
|
$
|
97,232
|
|
|
$
|
—
|
|
|
$
|
98,970
|
|
Current maturities of long-term debt
|
—
|
|
|
—
|
|
|
10,000
|
|
|
—
|
|
|
—
|
|
|
10,000
|
|
Accrued taxes
|
—
|
|
|
3,529
|
|
|
—
|
|
|
16,617
|
|
|
—
|
|
|
20,146
|
|
Accrued payroll and benefits
|
—
|
|
|
12,969
|
|
|
—
|
|
|
13,515
|
|
|
—
|
|
|
26,484
|
|
Accrued interest
|
6,132
|
|
|
578
|
|
|
3,930
|
|
|
3,214
|
|
|
—
|
|
|
13,854
|
|
Accrued customer incentives
|
—
|
|
|
—
|
|
|
—
|
|
|
10,771
|
|
|
—
|
|
|
10,771
|
|
Other current liabilities
|
—
|
|
|
9,358
|
|
|
—
|
|
|
41,833
|
|
|
—
|
|
|
51,191
|
|
Current liabilities for dispositions and discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
8,446
|
|
|
—
|
|
|
8,446
|
|
Total current liabilities
|
6,132
|
|
|
27,318
|
|
|
14,784
|
|
|
191,628
|
|
|
—
|
|
|
239,862
|
|
LONG-TERM DEBT
|
325,000
|
|
|
—
|
|
|
1,029,770
|
|
|
291,567
|
|
|
—
|
|
|
1,646,337
|
|
NON-CURRENT LIABILITIES FOR DISPOSITIONS AND DISCONTINUED OPERATIONS
|
—
|
|
|
—
|
|
|
—
|
|
|
67,125
|
|
|
—
|
|
|
67,125
|
|
PENSION AND OTHER POSTRETIREMENT BENEFITS
|
—
|
|
|
131,037
|
|
|
—
|
|
|
27,626
|
|
|
—
|
|
|
158,663
|
|
OTHER NON-CURRENT LIABILITIES
|
—
|
|
|
8,818
|
|
|
—
|
|
|
12,436
|
|
|
—
|
|
|
21,254
|
|
INTERCOMPANY PAYABLE
|
—
|
|
|
105,163
|
|
|
—
|
|
|
102,854
|
|
|
(208,017
|
)
|
|
—
|
|
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY
|
1,589,453
|
|
|
1,520,817
|
|
|
319,681
|
|
|
2,781,839
|
|
|
(4,622,337
|
)
|
|
1,589,453
|
|
Noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
95,426
|
|
|
—
|
|
|
95,426
|
|
TOTAL SHAREHOLDERS’ EQUITY
|
1,589,453
|
|
|
1,520,817
|
|
|
319,681
|
|
|
2,877,265
|
|
|
(4,622,337
|
)
|
|
1,684,879
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
1,920,585
|
|
|
$
|
1,793,153
|
|
|
$
|
1,364,235
|
|
|
$
|
3,570,501
|
|
|
$
|
(4,830,354
|
)
|
|
$
|
3,818,120
|
|
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 Nine Months Ended September 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
|
$
|
389,405
|
|
|
$
|
394,700
|
|
|
$
|
84,000
|
|
|
$
|
291,478
|
|
|
$
|
(825,347
|
)
|
|
$
|
334,236
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
—
|
|
|
(335
|
)
|
|
—
|
|
|
(122,147
|
)
|
|
—
|
|
|
(122,482
|
)
|
Purchase of additional interest in New Zealand joint venture
|
—
|
|
|
—
|
|
|
—
|
|
|
(139,879
|
)
|
|
—
|
|
|
(139,879
|
)
|
Purchase of timberlands
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,650
|
)
|
|
—
|
|
|
(11,650
|
)
|
Jesup mill cellulose specialties expansion
|
—
|
|
|
—
|
|
|
—
|
|
|
(137,392
|
)
|
|
—
|
|
|
(137,392
|
)
|
Proceeds from the disposition of Wood Products business
|
—
|
|
|
—
|
|
|
—
|
|
|
68,063
|
|
|
—
|
|
|
68,063
|
|
Change in restricted cash
|
—
|
|
|
—
|
|
|
—
|
|
|
3,989
|
|
|
—
|
|
|
3,989
|
|
Investment in Subsidiaries
|
(138,178
|
)
|
|
(138,178
|
)
|
|
(316,836
|
)
|
|
—
|
|
|
593,192
|
|
|
—
|
|
Other
|
—
|
|
|
1,701
|
|
|
—
|
|
|
(1,542
|
)
|
|
—
|
|
|
159
|
|
CASH USED FOR INVESTING ACTIVITIES
|
(138,178
|
)
|
|
(136,812
|
)
|
|
(316,836
|
)
|
|
(340,558
|
)
|
|
593,192
|
|
|
(339,192
|
)
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of debt
|
175,000
|
|
|
—
|
|
|
375,000
|
|
|
57,885
|
|
|
—
|
|
|
607,885
|
|
Repayment of debt
|
(325,000
|
)
|
|
—
|
|
|
(56,527
|
)
|
|
(71,936
|
)
|
|
—
|
|
|
(453,463
|
)
|
Dividends paid
|
(175,079
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(175,079
|
)
|
Proceeds from the issuance of common shares
|
9,205
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,205
|
|
Excess tax benefits on stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
8,189
|
|
|
—
|
|
|
8,189
|
|
Repurchase of common shares
|
(11,303
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,303
|
)
|
Issuance of intercompany notes
|
(4,000
|
)
|
|
—
|
|
|
—
|
|
|
4,000
|
|
|
—
|
|
|
—
|
|
Intercompany distributions
|
—
|
|
|
(256,921
|
)
|
|
(84,000
|
)
|
|
108,766
|
|
|
232,155
|
|
|
—
|
|
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES
|
(331,177
|
)
|
|
(256,921
|
)
|
|
234,473
|
|
|
106,904
|
|
|
232,155
|
|
|
(14,566
|
)
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
—
|
|
|
—
|
|
|
—
|
|
|
(336
|
)
|
|
—
|
|
|
(336
|
)
|
CASH AND CASH EQUIVALENTS
|
|
|
|
|
|
|
|
|
|
|
|
Change in cash and cash equivalents
|
(79,950
|
)
|
|
967
|
|
|
1,637
|
|
|
57,488
|
|
|
—
|
|
|
(19,858
|
)
|
Balance, beginning of year
|
252,888
|
|
|
3,966
|
|
|
19,358
|
|
|
4,384
|
|
|
—
|
|
|
280,596
|
|
Balance, end of period
|
$
|
172,938
|
|
|
$
|
4,933
|
|
|
$
|
20,995
|
|
|
$
|
61,872
|
|
|
$
|
—
|
|
|
$
|
260,738
|
|
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 Nine Months Ended September 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
|
$
|
23,916
|
|
|
$
|
105,407
|
|
|
$
|
12,000
|
|
|
$
|
317,407
|
|
|
$
|
(105,088
|
)
|
|
$
|
353,642
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
—
|
|
|
(240
|
)
|
|
—
|
|
|
(111,775
|
)
|
|
—
|
|
|
(112,015
|
)
|
Purchase of timberlands
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,632
|
)
|
|
—
|
|
|
(11,632
|
)
|
Jesup mill cellulose specialties expansion
|
—
|
|
|
—
|
|
|
—
|
|
|
(104,782
|
)
|
|
—
|
|
|
(104,782
|
)
|
Change in restricted cash
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,796
|
)
|
|
—
|
|
|
(12,796
|
)
|
Investment in Subsidiaries
|
—
|
|
|
—
|
|
|
(5,536
|
)
|
|
—
|
|
|
5,536
|
|
|
—
|
|
Other
|
—
|
|
|
(69
|
)
|
|
—
|
|
|
4,350
|
|
|
—
|
|
|
4,281
|
|
CASH USED FOR INVESTING ACTIVITIES
|
—
|
|
|
(309
|
)
|
|
(5,536
|
)
|
|
(236,635
|
)
|
|
5,536
|
|
|
(236,944
|
)
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of debt
|
325,000
|
|
|
—
|
|
|
15,000
|
|
|
15,000
|
|
|
—
|
|
|
355,000
|
|
Repayment of debt
|
(120,000
|
)
|
|
(30,000
|
)
|
|
(23,153
|
)
|
|
(25,500
|
)
|
|
—
|
|
|
(198,653
|
)
|
Dividends paid
|
(152,358
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(152,358
|
)
|
Proceeds from the issuance of common shares
|
20,732
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,732
|
|
Excess tax benefits on stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
7,057
|
|
|
—
|
|
|
7,057
|
|
Debt issuance costs
|
(3,698
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,698
|
)
|
Repurchase of common shares
|
(7,783
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,783
|
)
|
Issuance of intercompany notes
|
(9,000
|
)
|
|
—
|
|
|
—
|
|
|
9,000
|
|
|
—
|
|
|
—
|
|
Intercompany distributions
|
—
|
|
|
(24,529
|
)
|
|
(12,000
|
)
|
|
(63,023
|
)
|
|
99,552
|
|
|
—
|
|
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES
|
52,893
|
|
|
(54,529
|
)
|
|
(20,153
|
)
|
|
(57,466
|
)
|
|
99,552
|
|
|
20,297
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
—
|
|
|
—
|
|
|
—
|
|
|
(123
|
)
|
|
—
|
|
|
(123
|
)
|
CASH AND CASH EQUIVALENTS
|
|
|
|
|
|
|
|
|
|
|
|
Change in cash and cash equivalents
|
76,809
|
|
|
50,569
|
|
|
(13,689
|
)
|
|
23,183
|
|
|
—
|
|
|
136,872
|
|
Balance, beginning of year
|
—
|
|
|
8,977
|
|
|
59,976
|
|
|
9,650
|
|
|
—
|
|
|
78,603
|
|
Balance, end of period
|
$
|
76,809
|
|
|
$
|
59,546
|
|
|
$
|
46,287
|
|
|
$
|
32,833
|
|
|
$
|
—
|
|
|
$
|
215,475
|
|
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 September 30, 2013
|
|
Rayonier Inc.
(Parent
Issuer)
|
|
Subsidiary Guarantors
|
|
Non-
guarantors
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
SALES
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
384,784
|
|
|
$
|
—
|
|
|
$
|
384,784
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
287,150
|
|
|
—
|
|
|
287,150
|
|
Selling and general expenses
|
—
|
|
|
2,276
|
|
|
13,050
|
|
|
—
|
|
|
15,326
|
|
Other operating expense (income), net
|
—
|
|
|
738
|
|
|
(2,740
|
)
|
|
661
|
|
|
(1,341
|
)
|
|
—
|
|
|
3,014
|
|
|
297,460
|
|
|
661
|
|
|
301,135
|
|
OPERATING (LOSS) INCOME
|
—
|
|
|
(3,014
|
)
|
|
87,324
|
|
|
(661
|
)
|
|
83,649
|
|
Interest expense
|
(3,190
|
)
|
|
(7,277
|
)
|
|
(2,564
|
)
|
|
—
|
|
|
(13,031
|
)
|
Interest and miscellaneous income (expense), net
|
2,538
|
|
|
(3,555
|
)
|
|
271
|
|
|
—
|
|
|
(746
|
)
|
Equity in income from subsidiaries
|
57,932
|
|
|
66,610
|
|
|
—
|
|
|
(124,542
|
)
|
|
—
|
|
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
57,280
|
|
|
52,764
|
|
|
85,031
|
|
|
(125,203
|
)
|
|
69,872
|
|
Income tax benefit (expense)
|
65
|
|
|
5,168
|
|
|
(16,671
|
)
|
|
(67
|
)
|
|
(11,505
|
)
|
NET INCOME
|
57,345
|
|
|
57,932
|
|
|
68,360
|
|
|
(125,270
|
)
|
|
58,367
|
|
Less: Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
1,022
|
|
|
—
|
|
|
1,022
|
|
NET INCOME ATTRIBUTABLE TO RAYONIER INC.
|
57,345
|
|
|
57,932
|
|
|
67,338
|
|
|
(125,270
|
)
|
|
57,345
|
|
OTHER COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
17,887
|
|
|
17,887
|
|
|
24,259
|
|
|
(35,774
|
)
|
|
24,259
|
|
New Zealand joint venture cash flow hedges
|
2,233
|
|
|
2,231
|
|
|
3,434
|
|
|
(4,465
|
)
|
|
3,433
|
|
Amortization of pension and postretirement plans, net of income tax
|
3,639
|
|
|
3,639
|
|
|
2,747
|
|
|
(6,386
|
)
|
|
3,639
|
|
Total other comprehensive income
|
23,759
|
|
|
23,757
|
|
|
30,440
|
|
|
(46,625
|
)
|
|
31,331
|
|
COMPREHENSIVE INCOME
|
81,104
|
|
|
81,689
|
|
|
98,800
|
|
|
(171,895
|
)
|
|
89,698
|
|
Less: Comprehensive income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
8,594
|
|
|
—
|
|
|
8,594
|
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.
|
$
|
81,104
|
|
|
$
|
81,689
|
|
|
$
|
90,206
|
|
|
$
|
(171,895
|
)
|
|
$
|
81,104
|
|
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 September 30, 2012
|
|
Rayonier Inc.
(Parent
Issuer)
|
|
Subsidiary Guarantors
|
|
Non-
guarantors
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
SALES
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
386,163
|
|
|
$
|
—
|
|
|
$
|
386,163
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
259,201
|
|
|
—
|
|
|
259,201
|
|
Selling and general expenses
|
—
|
|
|
2,762
|
|
|
12,714
|
|
|
—
|
|
|
15,476
|
|
Other operating income (expense), net
|
—
|
|
|
730
|
|
|
(424
|
)
|
|
—
|
|
|
306
|
|
|
—
|
|
|
3,492
|
|
|
271,491
|
|
|
—
|
|
|
274,983
|
|
Equity in income of New Zealand joint venture
|
—
|
|
|
—
|
|
|
66
|
|
|
—
|
|
|
66
|
|
OPERATING (LOSS) INCOME
|
—
|
|
|
(3,492
|
)
|
|
114,738
|
|
|
—
|
|
|
111,246
|
|
Interest (expense) income
|
(3,136
|
)
|
|
(10,440
|
)
|
|
5,323
|
|
|
—
|
|
|
(8,253
|
)
|
Interest and miscellaneous income (expense), net
|
1,630
|
|
|
614
|
|
|
(2,010
|
)
|
|
—
|
|
|
234
|
|
Equity in income from subsidiaries
|
82,066
|
|
|
92,369
|
|
|
—
|
|
|
(174,435
|
)
|
|
—
|
|
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
80,560
|
|
|
79,051
|
|
|
118,051
|
|
|
(174,435
|
)
|
|
103,227
|
|
Income tax benefit (expense)
|
—
|
|
|
3,015
|
|
|
(26,964
|
)
|
|
—
|
|
|
(23,949
|
)
|
INCOME FROM CONTINUING OPERATIONS
|
80,560
|
|
|
82,066
|
|
|
91,087
|
|
|
(174,435
|
)
|
|
79,278
|
|
DISCONTINUED OPERATIONS, NET
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net of income taxes
|
—
|
|
|
—
|
|
|
1,282
|
|
|
—
|
|
|
1,282
|
|
NET INCOME
|
80,560
|
|
|
82,066
|
|
|
92,369
|
|
|
(174,435
|
)
|
|
80,560
|
|
OTHER COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
5,373
|
|
|
5,373
|
|
|
4,887
|
|
|
(10,260
|
)
|
|
5,373
|
|
New Zealand joint venture cash flow hedges
|
878
|
|
|
878
|
|
|
879
|
|
|
(1,757
|
)
|
|
878
|
|
Amortization of pension and postretirement plans, net of income tax
|
3,401
|
|
|
3,401
|
|
|
(4,959
|
)
|
|
1,558
|
|
|
3,401
|
|
Total other comprehensive income
|
9,652
|
|
|
9,652
|
|
|
807
|
|
|
(10,459
|
)
|
|
9,652
|
|
COMPREHENSIVE INCOME
|
$
|
90,212
|
|
|
$
|
91,718
|
|
|
$
|
93,176
|
|
|
$
|
(184,894
|
)
|
|
$
|
90,212
|
|
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 Nine Months Ended September 30, 2013
|
|
Rayonier Inc.
(Parent
Issuer)
|
|
Subsidiary Guarantors
|
|
Non-
guarantors
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
SALES
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,187,580
|
|
|
$
|
—
|
|
|
$
|
1,187,580
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
850,866
|
|
|
—
|
|
|
850,866
|
|
Selling and general expenses
|
—
|
|
|
7,357
|
|
|
40,997
|
|
|
—
|
|
|
48,354
|
|
Other operating (income) expense, net
|
(1,701
|
)
|
|
1,187
|
|
|
(4,039
|
)
|
|
—
|
|
|
(4,553
|
)
|
|
(1,701
|
)
|
|
8,544
|
|
|
887,824
|
|
|
—
|
|
|
894,667
|
|
Equity in income of New Zealand joint venture
|
—
|
|
|
—
|
|
|
562
|
|
|
—
|
|
|
562
|
|
OPERATING INCOME (LOSS) BEFORE GAIN ON CONSOLIDATION OF NEW ZEALAND JOINT VENTURE
|
1,701
|
|
|
(8,544
|
)
|
|
300,318
|
|
|
—
|
|
|
293,475
|
|
Gain on consolidation of New Zealand joint venture
|
—
|
|
|
—
|
|
|
16,098
|
|
|
—
|
|
|
16,098
|
|
OPERATING INCOME (LOSS)
|
1,701
|
|
|
(8,544
|
)
|
|
316,416
|
|
|
—
|
|
|
309,573
|
|
Interest (expense) income
|
(9,879
|
)
|
|
(21,410
|
)
|
|
521
|
|
|
—
|
|
|
(30,768
|
)
|
Interest and miscellaneous income (expense), net
|
6,716
|
|
|
(3,470
|
)
|
|
(1,335
|
)
|
|
—
|
|
|
1,911
|
|
Equity in income from subsidiaries
|
293,706
|
|
|
316,241
|
|
|
—
|
|
|
(609,947
|
)
|
|
—
|
|
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
292,244
|
|
|
282,817
|
|
|
315,602
|
|
|
(609,947
|
)
|
|
280,716
|
|
Income tax benefit (expense)
|
—
|
|
|
10,889
|
|
|
(42,089
|
)
|
|
—
|
|
|
(31,200
|
)
|
INCOME FROM CONTINUING OPERATIONS
|
292,244
|
|
|
293,706
|
|
|
273,513
|
|
|
(609,947
|
)
|
|
249,516
|
|
DISCONTINUED OPERATIONS, NET
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net of income taxes
|
—
|
|
|
—
|
|
|
44,477
|
|
|
—
|
|
|
44,477
|
|
NET INCOME
|
292,244
|
|
|
293,706
|
|
|
317,990
|
|
|
(609,947
|
)
|
|
293,993
|
|
Less: Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
1,749
|
|
|
—
|
|
|
1,749
|
|
NET INCOME ATTRIBUTABLE TO RAYONIER INC.
|
292,244
|
|
|
293,706
|
|
|
316,241
|
|
|
(609,947
|
)
|
|
292,244
|
|
OTHER COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
237
|
|
|
237
|
|
|
(2,967
|
)
|
|
(474
|
)
|
|
(2,967
|
)
|
New Zealand joint venture cash flow hedges
|
3,663
|
|
|
3,663
|
|
|
4,209
|
|
|
(7,326
|
)
|
|
4,209
|
|
Amortization of pension and postretirement plans, net of income tax
|
12,326
|
|
|
12,326
|
|
|
9,578
|
|
|
(21,904
|
)
|
|
12,326
|
|
Total other comprehensive income
|
16,226
|
|
|
16,226
|
|
|
10,820
|
|
|
(29,704
|
)
|
|
13,568
|
|
COMPREHENSIVE INCOME
|
308,470
|
|
|
309,932
|
|
|
328,810
|
|
|
(639,651
|
)
|
|
307,561
|
|
Less: Comprehensive loss attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(909
|
)
|
|
—
|
|
|
(909
|
)
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.
|
$
|
308,470
|
|
|
$
|
309,932
|
|
|
$
|
329,719
|
|
|
$
|
(639,651
|
)
|
|
$
|
308,470
|
|
|
|
|
|
|
|
|
|
|
|
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 Nine Months Ended September 30, 2012
|
|
Rayonier Inc.
(Parent
Issuer)
|
|
Subsidiary Guarantors
|
|
All Other
Subsidiaries
(Non-
guarantors)
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
SALES
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,070,830
|
|
|
$
|
—
|
|
|
$
|
1,070,830
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
738,480
|
|
|
—
|
|
|
738,480
|
|
Selling and general expenses
|
—
|
|
|
7,977
|
|
|
42,656
|
|
|
—
|
|
|
50,633
|
|
Other operating expense (income), net
|
—
|
|
|
742
|
|
|
(6,870
|
)
|
|
—
|
|
|
(6,128
|
)
|
|
—
|
|
|
8,719
|
|
|
774,266
|
|
|
—
|
|
|
782,985
|
|
Equity in income of New Zealand joint venture
|
—
|
|
|
—
|
|
|
249
|
|
|
—
|
|
|
249
|
|
OPERATING (LOSS) INCOME
|
—
|
|
|
(8,719
|
)
|
|
296,813
|
|
|
—
|
|
|
288,094
|
|
Interest (expense) income
|
(7,502
|
)
|
|
(31,359
|
)
|
|
2,728
|
|
|
—
|
|
|
(36,133
|
)
|
Interest and miscellaneous income (expense), net
|
5,086
|
|
|
1,558
|
|
|
(6,350
|
)
|
|
—
|
|
|
294
|
|
Equity in income from subsidiaries
|
205,492
|
|
|
233,057
|
|
|
—
|
|
|
(438,549
|
)
|
|
—
|
|
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
203,076
|
|
|
194,537
|
|
|
293,191
|
|
|
(438,549
|
)
|
|
252,255
|
|
Income tax benefit (expense)
|
—
|
|
|
10,955
|
|
|
(65,242
|
)
|
|
—
|
|
|
(54,287
|
)
|
INCOME FROM CONTINUING OPERATIONS
|
203,076
|
|
|
205,492
|
|
|
227,949
|
|
|
(438,549
|
)
|
|
197,968
|
|
DISCONTINUED OPERATIONS, NET
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net of income tax
|
—
|
|
|
—
|
|
|
5,108
|
|
|
—
|
|
|
5,108
|
|
NET INCOME
|
203,076
|
|
|
205,492
|
|
|
233,057
|
|
|
(438,549
|
)
|
|
203,076
|
|
OTHER COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
3,115
|
|
|
3,115
|
|
|
2,633
|
|
|
(5,748
|
)
|
|
3,115
|
|
New Zealand joint venture cash flow hedges
|
86
|
|
|
86
|
|
|
86
|
|
|
(172
|
)
|
|
86
|
|
Amortization of pension and postretirement plans, net of income tax
|
9,943
|
|
|
9,943
|
|
|
—
|
|
|
(9,943
|
)
|
|
9,943
|
|
Total other comprehensive income
|
13,144
|
|
|
13,144
|
|
|
2,719
|
|
|
(15,863
|
)
|
|
13,144
|
|
COMPREHENSIVE INCOME
|
$
|
216,220
|
|
|
$
|
218,636
|
|
|
$
|
235,776
|
|
|
$
|
(454,412
|
)
|
|
$
|
216,220
|
|
|
|
|
|
|
|
|
|
|
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING BALANCE SHEETS
As of September 30, 2013
|
|
Rayonier Inc.
(Parent
Issuer)
|
|
Subsidiary Guarantors
|
|
Non-
guarantors
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
ASSETS
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
172,938
|
|
|
$
|
25,928
|
|
|
$
|
61,872
|
|
|
$
|
—
|
|
|
$
|
260,738
|
|
Accounts receivable, less allowance for doubtful accounts
|
—
|
|
|
1,618
|
|
|
122,742
|
|
|
—
|
|
|
124,360
|
|
Inventory
|
—
|
|
|
—
|
|
|
133,985
|
|
|
—
|
|
|
133,985
|
|
Deferred tax asset
|
—
|
|
|
—
|
|
|
62,914
|
|
|
—
|
|
|
62,914
|
|
Prepaid and other current assets
|
—
|
|
|
5,258
|
|
|
53,926
|
|
|
—
|
|
|
59,184
|
|
Total current assets
|
172,938
|
|
|
32,804
|
|
|
435,439
|
|
|
—
|
|
|
641,181
|
|
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION
|
—
|
|
|
—
|
|
|
2,103,503
|
|
|
—
|
|
|
2,103,503
|
|
NET PROPERTY, PLANT AND EQUIPMENT
|
—
|
|
|
2,399
|
|
|
866,033
|
|
|
—
|
|
|
868,432
|
|
INVESTMENT IN JOINT VENTURE
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
INVESTMENT IN SUBSIDIARIES
|
1,520,817
|
|
|
2,746,434
|
|
|
—
|
|
|
(4,267,251
|
)
|
|
—
|
|
INTERCOMPANY NOTES RECEIVABLE
|
223,022
|
|
|
20,400
|
|
|
—
|
|
|
(243,422
|
)
|
|
—
|
|
OTHER ASSETS
|
3,808
|
|
|
35,670
|
|
|
165,526
|
|
|
—
|
|
|
205,004
|
|
TOTAL ASSETS
|
$
|
1,920,585
|
|
|
$
|
2,837,707
|
|
|
$
|
3,570,501
|
|
|
$
|
(4,510,673
|
)
|
|
$
|
3,818,120
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
—
|
|
|
$
|
1,738
|
|
|
$
|
97,232
|
|
|
$
|
—
|
|
|
$
|
98,970
|
|
Current maturities of long-term debt
|
—
|
|
|
10,000
|
|
|
—
|
|
|
—
|
|
|
10,000
|
|
Accrued taxes
|
—
|
|
|
3,529
|
|
|
16,617
|
|
|
—
|
|
|
20,146
|
|
Accrued payroll and benefits
|
—
|
|
|
12,969
|
|
|
13,515
|
|
|
—
|
|
|
26,484
|
|
Accrued interest
|
6,132
|
|
|
4,508
|
|
|
3,214
|
|
|
—
|
|
|
13,854
|
|
Accrued customer incentives
|
—
|
|
|
—
|
|
|
10,771
|
|
|
—
|
|
|
10,771
|
|
Other current liabilities
|
—
|
|
|
9,358
|
|
|
41,833
|
|
|
—
|
|
|
51,191
|
|
Current liabilities for dispositions and discontinued operations
|
—
|
|
|
—
|
|
|
8,446
|
|
|
—
|
|
|
8,446
|
|
Total current liabilities
|
6,132
|
|
|
42,102
|
|
|
191,628
|
|
|
—
|
|
|
239,862
|
|
LONG-TERM DEBT
|
325,000
|
|
|
1,029,770
|
|
|
291,567
|
|
|
—
|
|
|
1,646,337
|
|
NON-CURRENT LIABILITIES FOR DISPOSITIONS AND DISCONTINUED OPERATIONS
|
—
|
|
|
—
|
|
|
67,125
|
|
|
—
|
|
|
67,125
|
|
PENSION AND OTHER POSTRETIREMENT BENEFITS
|
—
|
|
|
131,037
|
|
|
27,626
|
|
|
—
|
|
|
158,663
|
|
OTHER NON-CURRENT LIABILITIES
|
—
|
|
|
8,818
|
|
|
12,436
|
|
|
—
|
|
|
21,254
|
|
INTERCOMPANY PAYABLE
|
—
|
|
|
105,163
|
|
|
102,854
|
|
|
(208,017
|
)
|
|
—
|
|
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY
|
1,589,453
|
|
|
1,520,817
|
|
|
2,781,839
|
|
|
(4,302,656
|
)
|
|
1,589,453
|
|
Noncontrolling interest
|
—
|
|
|
—
|
|
|
95,426
|
|
|
—
|
|
|
95,426
|
|
TOTAL SHAREHOLDERS’ EQUITY
|
1,589,453
|
|
|
1,520,817
|
|
|
2,877,265
|
|
|
(4,302,656
|
)
|
|
1,684,879
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
1,920,585
|
|
|
$
|
2,837,707
|
|
|
$
|
3,570,501
|
|
|
$
|
(4,510,673
|
)
|
|
$
|
3,818,120
|
|
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 Nine Months Ended September 30, 2013
|
|
Rayonier Inc.
(Parent
Issuer)
|
|
Subsidiary Guarantors
|
|
Non-
guarantors
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
CASH PROVIDED BY OPERATING ACTIVITIES
|
$
|
389,405
|
|
|
$
|
394,700
|
|
|
$
|
291,478
|
|
|
$
|
(741,347
|
)
|
|
$
|
334,236
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
—
|
|
|
(335
|
)
|
|
(122,147
|
)
|
|
—
|
|
|
(122,482
|
)
|
Purchase of additional interest in New Zealand joint venture
|
—
|
|
|
—
|
|
|
(139,879
|
)
|
|
—
|
|
|
(139,879
|
)
|
Purchase of timberlands
|
—
|
|
|
—
|
|
|
(11,650
|
)
|
|
—
|
|
|
(11,650
|
)
|
Jesup mill cellulose specialties expansion
|
—
|
|
|
—
|
|
|
(137,392
|
)
|
|
—
|
|
|
(137,392
|
)
|
Proceeds from the disposition of Wood Products business
|
—
|
|
|
—
|
|
|
68,063
|
|
|
—
|
|
|
68,063
|
|
Change in restricted cash
|
—
|
|
|
—
|
|
|
3,989
|
|
|
—
|
|
|
3,989
|
|
Investment in Subsidiaries
|
(138,178
|
)
|
|
(455,014
|
)
|
|
—
|
|
|
593,192
|
|
|
—
|
|
Other
|
—
|
|
|
1,701
|
|
|
(1,542
|
)
|
|
—
|
|
|
159
|
|
CASH USED FOR INVESTING ACTIVITIES
|
(138,178
|
)
|
|
(453,648
|
)
|
|
(340,558
|
)
|
|
593,192
|
|
|
(339,192
|
)
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Issuance of debt
|
175,000
|
|
|
375,000
|
|
|
57,885
|
|
|
—
|
|
|
607,885
|
|
Repayment of debt
|
(325,000
|
)
|
|
(56,527
|
)
|
|
(71,936
|
)
|
|
—
|
|
|
(453,463
|
)
|
Dividends paid
|
(175,079
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(175,079
|
)
|
Proceeds from the issuance of common shares
|
9,205
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,205
|
|
Excess tax benefits on stock-based compensation
|
—
|
|
|
—
|
|
|
8,189
|
|
|
—
|
|
|
8,189
|
|
Debt issuance costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Repurchase of common shares
|
(11,303
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,303
|
)
|
Issuance of intercompany notes
|
(4,000
|
)
|
|
—
|
|
|
4,000
|
|
|
—
|
|
|
—
|
|
Intercompany distributions
|
—
|
|
|
(256,921
|
)
|
|
108,766
|
|
|
148,155
|
|
|
—
|
|
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES
|
(331,177
|
)
|
|
61,552
|
|
|
106,904
|
|
|
148,155
|
|
|
(14,566
|
)
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
—
|
|
|
—
|
|
|
(336
|
)
|
|
—
|
|
|
(336
|
)
|
CASH AND CASH EQUIVALENTS
|
|
|
|
|
|
|
|
|
|
Change in cash and cash equivalents
|
(79,950
|
)
|
|
2,604
|
|
|
57,488
|
|
|
—
|
|
|
(19,858
|
)
|
Balance, beginning of year
|
252,888
|
|
|
23,324
|
|
|
4,384
|
|
|
—
|
|
|
280,596
|
|
Balance, end of period
|
$
|
172,938
|
|
|
$
|
25,928
|
|
|
$
|
61,872
|
|
|
$
|
—
|
|
|
$
|
260,738
|
|
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 Nine Months Ended September 30, 2012
|
|
Rayonier Inc.
(Parent
Issuer)
|
|
Subsidiary Guarantors
|
|
Non-
guarantors
|
|
Consolidating
Adjustments
|
|
Total
Consolidated
|
CASH PROVIDED BY OPERATING ACTIVITIES
|
$
|
23,916
|
|
|
$
|
105,407
|
|
|
$
|
317,407
|
|
|
$
|
(93,088
|
)
|
|
$
|
353,642
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
—
|
|
|
(240
|
)
|
|
(111,775
|
)
|
|
—
|
|
|
(112,015
|
)
|
Purchase of timberlands
|
—
|
|
|
—
|
|
|
(11,632
|
)
|
|
—
|
|
|
(11,632
|
)
|
Jesup mill cellulose specialties expansion
|
—
|
|
|
—
|
|
|
(104,782
|
)
|
|
—
|
|
|
(104,782
|
)
|
Change in restricted cash
|
—
|
|
|
—
|
|
|
(12,796
|
)
|
|
—
|
|
|
(12,796
|
)
|
Investment in Subsidiaries
|
—
|
|
|
(5,536
|
)
|
|
—
|
|
|
5,536
|
|
|
—
|
|
Other
|
—
|
|
|
(69
|
)
|
|
4,350
|
|
|
—
|
|
|
4,281
|
|
CASH USED FOR INVESTING ACTIVITIES
|
—
|
|
|
(5,845
|
)
|
|
(236,635
|
)
|
|
5,536
|
|
|
(236,944
|
)
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Issuance of debt
|
325,000
|
|
|
15,000
|
|
|
15,000
|
|
|
—
|
|
|
355,000
|
|
Repayment of debt
|
(120,000
|
)
|
|
(53,153
|
)
|
|
(25,500
|
)
|
|
—
|
|
|
(198,653
|
)
|
Dividends paid
|
(152,358
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(152,358
|
)
|
Proceeds from the issuance of common shares
|
20,732
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,732
|
|
Excess tax benefits on stock-based compensation
|
—
|
|
|
—
|
|
|
7,057
|
|
|
—
|
|
|
7,057
|
|
Debt issuance costs
|
(3,698
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,698
|
)
|
Repurchase of common shares
|
(7,783
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,783
|
)
|
Issuance of intercompany notes
|
(9,000
|
)
|
|
—
|
|
|
9,000
|
|
|
—
|
|
|
—
|
|
Intercompany distributions
|
—
|
|
|
(24,529
|
)
|
|
(63,023
|
)
|
|
87,552
|
|
|
—
|
|
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES
|
52,893
|
|
|
(62,682
|
)
|
|
(57,466
|
)
|
|
87,552
|
|
|
20,297
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
—
|
|
|
—
|
|
|
(123
|
)
|
|
—
|
|
|
(123
|
)
|
CASH AND CASH EQUIVALENTS
|
|
|
|
|
|
|
|
|
|
Change in cash and cash equivalents
|
76,809
|
|
|
36,880
|
|
|
23,183
|
|
|
—
|
|
|
136,872
|
|
Balance, beginning of year
|
—
|
|
|
68,953
|
|
|
9,650
|
|
|
—
|
|
|
78,603
|
|
Balance, end of period
|
$
|
76,809
|
|
|
$
|
105,833
|
|
|
$
|
32,833
|
|
|
$
|
—
|
|
|
$
|
215,475
|
|