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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
DATE OF REPORT -- OCTOBER 9, 1996
COMMISSION FILE NUMBER 1-6780
RAYONIER INC.
Incorporated in the State of North Carolina
I.R.S. Employer Identification Number l3-2607329
l177 Summer Street, Stamford, Connecticut 06905-5529
(Principal Executive Office)
Telephone Number: (203) 348-7000
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RAYONIER INC.
TABLE OF CONTENTS
PAGE
Item 5. Other Events 1
Item 7. Financial Statements and Exhibits 1
Signature 2
Exhibit Index 3
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ITEM 5. OTHER EVENTS
The company understands that the American Institute of Certified Public
Accountants will shortly issue a Statement of Position (SOP), which becomes part
of generally accepted accounting principles, for environmental remediation
liabilities that more specifically identifies future, long term monitoring and
administration expenditures as remediation liabilities that need to be accrued
on the balance sheet as an existing obligation.
Although the company had accrued its best estimate of clean-up and closure
remediation liabilities associated with its discontinued Southern Wood Piedmont
wood treating business (discontinued in 1986), it has been treating the 25-30
year long term monitoring expenditures as a current expense in its income
statement. Conformance with the SOP is expected to be mandatory in 1997. Based
on analyzing the requirements as outlined in the latest exposure draft, the
company expects that it will elect early adoption of the Statement of Position
in 1996, and will take a pretax charge of approximately $130-160 million
(after-tax, $80-100 million) in the fourth quarter. The company has been advised
that the final pronouncement will not materially differ from the earlier draft
version.
The pretax cash expenditures for monitoring and administration activities have
been approximately $4 million per year and are expected to continue on an annual
basis, plus inflation, for approximately 25-30 years as mandated by state and
federal regulations. The company's annual cash flow will not be impacted by the
adoption of the accounting pronouncement. The company indicated that the effect
of the charge on its debt to capital ratio (which as of June 30 was 37.0%) would
be approximately 3.2 percentage points but believes that its debt ratings and
borrowing costs should not be affected as its interest and cash flow coverages
remain the same.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) See Exhibit Index
1
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of l934,
the registrant has duly caused this Report to be signed on its behalf
by the undersigned hereunto duly authorized.
RAYONIER INC. (Registrant)
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BY KENNETH P. JANETTE
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Kenneth P. Janette
Vice President and
Corporate Controller
October 9, 1996
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION LOCATION
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99 Press Release issued Filed herewith
October 9, 1996
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EXHIBIT 99
NEWS RELEASE For further information
FOR RELEASE AT 4:15 P.M. Media Contact: Martin H. Arnold
WEDNESDAY, OCTOBER 9, 1996 203-964-4621
Investor Contact: John A. Doumlele
203-964-4486
RAYONIER ANNOUNCES EARNINGS CHARGE RELATED TO ACCOUNTING PRONOUNCEMENT
STAMFORD, CONNECTICUT, October 9, 1996 -- Rayonier Inc. (NYSE:RYN)
announced in a Form 8-K filing with the SEC today that it expects to take a
fourth quarter earnings charge relating to a Statement of Position (SOP) by the
American Institute of Certified Public Accountants, to be released shortly,
which will prescribe generally accepted accounting principles for environmental
remediation liabilities. The SOP more specifically defines the accounting
treatment for both remediation and monitoring costs. Although adoption is not
mandatory until 1997, the company indicated that it will adopt the Statement of
Position in 1996. This will result in a fourth quarter pretax charge between
$130-$160 million (after-tax, $80-100 million) related to long term, future
environmental monitoring activities associated with its Southern Wood Piedmont
wood treating business that was discontinued in 1986.
"Rayonier had already accrued its best estimate of clean-up remediation
and closure liabilities after discontinuing this operation, which included
closing eleven sites," said Gerald J. Pollack, senior vice president and chief
financial officer. "However, the monitoring and administration costs, running
approximately $4 million pretax per year, have been considered an ongoing
obligation and expensed each year. The soon to-be-released SOP now directly
includes monitoring costs in the liabilities that must be accrued on the balance
sheet and the company will conform to this new requirement.
"This is strictly a book treatment and the company's cash flow will not
change as a result of this pronouncement as the expenditures were already being
incurred and will continue to be incurred, plus inflation, at approximately the
same rate over the next 25-30 years resulting in the total obligation as
reflected in the pretax charge," Pollack said.
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The company said it believes that the accounting pronouncement will
allow for the obligation to either be recorded at nominal amounts or be
discounted to present value. Ron Gross, chairman and chief executive officer,
said that "although the undiscounted liability is large in relation to the
annual expenditures due to the extended time frame involved, we are electing to
book the nominal, gross amount in order to get the remaining obligations for
Southern Wood Piedmont behind us and to eliminate any impact on future earnings
per share." Rayonier said that ongoing monitoring expenditures for Southern Wood
Piedmont in 1996 would approximate 8 cents per share.
"Booking the nominal amount will raise our projected leverage by
approximately 3.2 percentage points which should not affect our debt ratings and
borrowing costs as our interest and cash flow coverages remain the same,"
Pollack said. At June 30, 1996, Rayonier's debt to capital ratio was 37.0
percent.
Rayonier is a global supplier of specialty pulps, timber and wood
products. The company has 1.5 million acres of timber in the U.S. and New
Zealand. About 60 percent of Rayonier's sales are to international customers in
70 countries. Sales in 1995 were $1.3 billion.
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