<PAGE> 1
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 21, 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
<PAGE> 2
RAYONIER INC.
TABLE OF CONTENTS
PAGE
----
Item 5. Other Events 1
Item 7. Financial Statements and Exhibits 1
Signature 1
Exhibit Index 2
i
<PAGE> 3
ITEM 5. OTHER EVENTS
Incorporated by reference is a news release issued by the Registrant on October
21, 1996, attached as Exhibit 99, providing information concerning the
Registrant's announcement of its intention to close its Port Angeles, WA pulp
mill by mid-1997 and to take a fourth quarter charge of $79 million after-tax,
or $2.63 per share.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) See Exhibit Index
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)
BY /s/ KENNETH P. JANETTE
-------------------------
Kenneth P. Janette
Vice President and
Corporate Controller
October 22, 1996
1
<PAGE> 4
EXHIBIT INDEX
-------------
EXHIBIT NO. DESCRIPTION LOCATION
---------- ----------- ---------
99 News Release issued Filed herewith
October 21, 1996
2
<PAGE> 1
EXHIBIT 99
NEWS RELEASE For further information
FOR RELEASE AT 4:30 P.M. E.D.T. Media Contact: Martin H. Arnold
OCTOBER 21, 1996 203-964-4621
Investor Contact: John A. Doumlele
203-964-4486
RAYONIER REPORTS THIRD QUARTER EARNINGS OF 52 CENTS PER SHARE; ANNOUNCES INTENT
TO CLOSE PORT ANGELES (WA) PULP MILL
STAMFORD, CONNECTICUT, October 21, 1996 -- Rayonier (NYSE:RYN) reported
third quarter 1996 earnings of $15.6 million, or 52 cents per share, up from
second quarter earnings of $15.4 million, or 51 cents per share. The company
also said it intends to close its Port Angeles, WA pulp mill by mid-1997 and
will take a fourth quarter charge of $79 million after-tax, or $2.63 per share.
Third quarter 1996 sales were $285 million compared to $297 million in
the second quarter, and $334 million in the 1995 third quarter. Third quarter
1995 income was $33 million, or $1.10 per share, excluding a non-recurring gain
of $24 million after-tax, or 80 cents per share. For the first nine months
income totaled $62 million, or $2.08 per share, on sales of $876 million. During
the same period last year income was $85 million or $2.82 per share, on sales of
$933 million, excluding the non-recurring gain.
"Third quarter results reflect tight cost control at all of our
operations and recently improved pricing for fluff pulp and lumber," said Ronald
M. Gross, chairman and chief executive. "In addition, we continue to generate
very strong EBITDA cash flow, running at an annual rate of about $8 a share
through the first three quarters."
SPECIALTY PULP
Specialty Pulp operating income was $9 million on sales of $148
million. This was up from second quarter income of $4 million on sales of $139
million, but down from operating income of $39 million on sales of $185 million
in the 1995 third quarter. The year-to-year comparison reflects significantly
lower 1996 fluff pulp pricing as a result of the sharp inventory
<PAGE> 2
correction that took place in late 1995 and early 1996. However, third quarter
income was up over the second quarter due to higher shipments and lower costs.
TIMBER AND WOOD PRODUCTS
Operating income was $26 million, down from $32 million in the second
quarter due to typically slower seasonal activity in Rayonier's timber stumpage
markets, but flat compared to the 1995 third quarter. Sales of Timber and Wood
Products in the 1996 third quarter were $138 million compared to $158 million
last quarter and $154 million in the 1995 third quarter. Timber harvest volumes
were higher than unusually low year-ago volumes, both in the Northwest and
Southeast, helping to offset lower stumpage prices. In New Zealand, volume and
prices continued to be affected by soft Asian export markets.
Lumber products benefited from stronger prices and lower log costs than
a year ago.
PORT ANGELES MILL CLOSURE
The company said it will close its struggling 150,000 ton-per-year Port
Angeles mill by the middle of next year. The closing schedule will allow time to
transfer customers to its two mills in the Southeast and will help employees
transition to new careers.
The company said that initial results of its ongoing strategic study of
its pulp business confirmed that the mill is not competitive in world markets
because of high wood costs due to federal environmental restrictions on
Northwest timber harvests, viscose pulp capacity additions in lower cost regions
of the world, and anticipated large expenditures for new environmental
regulations.
The mill has been unprofitable four out of the past five years and is
expected to incur an operating loss of $9 million for 1996, or 20 cents per
share after-tax.
"It is especially difficult to have to close this mill," Gross said. "I
have never been around a more dedicated and harder working group of employees.
But the high wood costs, in particular, created an insurmountable disadvantage
with competitors in lower cost wood regions of the world." Gross said the
company, in addition to providing normal severance benefits, will assist
employees with job training and placement. The mill has 365 employees.
The Port Angeles mill is expected to have net plant and equipment with
a book value of $85 million at year end. The company said it expects the
liquidation of working capital and tax benefits associated with the closure to
offset estimated cash closure costs, net of salvage, of $32 million.
<PAGE> 3
TOTAL FOURTH QUARTER CHARGES
The company announced October 9 that it would take a charge of $80 to
$100 million after-tax, or $2.67 to $3.33 per share, in the fourth quarter to
comply with an accounting pronouncement by the American Institute of Certified
Public Accountants relating to environmental monitoring costs. Rayonier will
accrue the cost of future monitoring and administration costs expected to be
incurred over the next 25 to 30 years at its discontinued (1986) Southern Wood
Piedmont wood treating operations. The annual monitoring costs were being
expensed. Over the last three years those costs were approximately $4 million or
8 cents per share annually.
Total non-recurring charges in the fourth quarter for the accounting
change, mill closure and approximately $5 million for other non-strategic
assets, will be between $159 and $179 million after-tax, or $5.30 to $5.96 per
share.
The book charges will increase the company's debt-to-capital ratio by
about 6 percentage points. As of September 30, the debt-to-capital ratio was 35
percent. The company said it does not expect its borrowing costs or debt ratings
to be affected.
OUTLOOK
"By putting these non-cash charges behind us, we are better positioned
to achieve our goals of increasing earnings growth and shareholder value over
the long-term," Gross said. "In the near term we see relatively stable markets
in Specialty Pulp, and an upturn in Northwest export and domestic log markets
should positively affect our timber stumpage sales."
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.
# # #
