<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ........... TO ............
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
Indicate by check mark whether the registrant (l) has filed all reports
required to be filed by Section l3 or l5(d) of the Securities Exchange Act
of l934 during the preceding l2 months and (2) has been subject to such
filing requirements for the past 90 days.
YES (X) NO ( )
As of November 4, 1997, there were 28,470,634 Common Shares of the
Registrant outstanding.
<PAGE> 2
RAYONIER INC.
TABLE OF CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
Item l. Financial Statements
Statements of Consolidated Income for the
Three Months and Nine Months
Ended September 30, 1997 and 1996 1
Consolidated Balance Sheets as of September 30, 1997
and December 3l, 1996 2
Statements of Consolidated Cash Flows for the
Nine Months Ended September 30, 1997 and 1996 3
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 4-6
Item 3. Selected Operating Data 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 6. Exhibits and Reports on Form 8-K 8
Signature 8
Exhibit Index 9
i
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following unaudited financial statements reflect, in the opinion of Rayonier
Inc. (Rayonier or the Company), all adjustments (which include only normal
recurring adjustments) necessary for a fair presentation of the results of
operations, the financial position and the cash flows for the periods presented.
Certain reclassifications have been made to the prior year's financial
statements to conform to current year presentation. For a full description of
accounting policies, please refer to Notes to Consolidated Financial Statements
in the 1996 Annual Report on Form l0-K.
RAYONIER INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
(UNAUDITED)
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
----------------------------- -----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
SALES $ 266,853 $ 285,104 $ 817,064 $ 875,751
------------ ------------ ------------ ------------
Costs and expenses
Cost of sales 216,726 245,659 666,867 726,120
Selling and general expenses 10,402 9,672 30,636 27,913
Other operating income, net (2,169) (1,276) (3,881) (2,172)
------------ ------------ ------------ ------------
224,959 254,055 693,622 751,861
------------ ------------ ------------ ------------
OPERATING INCOME 41,894 31,049 123,442 123,890
Interest expense (6,080) (6,434) (17,987) (20,677)
Interest and miscellaneous income (expense), net (523) 2,490 431 5,451
Minority interest (5,072) (4,778) (19,359) (21,315)
------------ ------------ ------------ ------------
Income before income taxes 30,219 22,327 86,527 87,349
Provision for income taxes (6,978) (6,759) (25,129) (24,900)
------------ ------------ ------------ ------------
NET INCOME $ 23,241 $ 15,568 $ 61,398 $ 62,449
============ ============ ============ ============
NET INCOME PER COMMON SHARE $ 0.79 $ 0.52 $ 2.08 $ 2.08
============ ============ ============ ============
Weighted average Common Shares 29,397,120 29,979,270 29,553,852 30,031,852
============ ============ ============ ============
</TABLE>
1
<PAGE> 4
RAYONIER INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and short-term investments $ 10,836 $ 3,432
Accounts receivable, less allowance for doubtful
accounts of $4,947 and $4,674 104,126 123,435
Inventories
Finished goods 58,350 68,441
Work in process 17,799 20,128
Raw materials 40,607 39,650
Manufacturing and maintenance supplies 24,495 26,695
---------- ----------
Total inventories 141,251 154,914
Timber stumpage purchases 25,955 31,416
Other current assets 12,008 13,223
Deferred income taxes 17,692 23,168
---------- ----------
Total current assets 311,868 349,588
OTHER ASSETS 49,998 50,026
TIMBER STUMPAGE PURCHASES 18,508 23,341
TIMBER, TIMBERLANDS AND LOGGING ROADS,
NET OF DEPLETION AND AMORTIZATION 496,980 490,298
PROPERTY, PLANT AND EQUIPMENT
Land, buildings, machinery and equipment 1,267,754 1,190,786
Less - accumulated depreciation 557,229 506,308
---------- ----------
710,525 684,478
---------- ----------
$1,587,879 $1,597,731
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 74,583 $ 87,609
Bank loans and current maturities 3,585 2,243
Accrued taxes 17,687 11,497
Accrued payroll and benefits 13,591 18,340
Accrued interest 8,497 5,154
Other current liabilities 54,865 55,976
Current reserves for dispositions and discontinued operations 26,424 40,003
---------- ----------
Total current liabilities 199,232 220,822
DEFERRED INCOME TAXES 100,992 89,484
LONG-TERM DEBT 433,208 430,667
NON-CURRENT RESERVES FOR DISPOSITIONS
AND DISCONTINUED OPERATIONS 178,426 183,975
OTHER NON-CURRENT LIABILITIES 33,216 30,529
MINORITY INTEREST 17,095 18,864
SHAREHOLDERS' EQUITY
Common Shares, 60,000,000 shares authorized, 28,553,288
and 29,282,455 shares issued and outstanding 112,564 145,679
Retained earnings 513,146 477,711
---------- ----------
625,710 623,390
---------- ----------
$1,587,879 $1,597,731
========== ==========
</TABLE>
2
<PAGE> 5
RAYONIER INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
-----------------------
1997 1996
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 61,398 $ 62,449
Non-cash items included in income
Depreciation, depletion and amortization 71,247 71,608
Deferred income taxes 9,971 7,544
Write-off of property, plant and equipment 2,100 7,060
Increase (decrease) in other non-current liabilities 2,687 (149)
Change in accounts receivable, inventories
and accounts payable 19,946 2,119
Decrease in current timber stumpage purchases 5,461 14,868
Decrease (increase) in other current assets 1,215 (11,195)
Increase in accrued liabilities 3,673 7,432
Reduction in reserves for dispositions -- (3,750)
--------- ---------
CASH FROM OPERATING ACTIVITIES 177,698 157,986
--------- ---------
INVESTING ACTIVITIES
Capital expenditures, net of sales, retirements and
reclassifications of $(236) and $11,488 (106,076) (123,614)
Expenditures for dispositions and discontinued operations,
net of tax benefits of $7,013 and $850 (12,115) (1,474)
Decrease in timber stumpage purchases and other assets 4,861 10,973
--------- ---------
CASH USED FOR INVESTING ACTIVITIES (113,330) (114,115)
--------- ---------
FINANCING ACTIVITIES
Issuance of debt 225,117 17,472
Repayments of debt (221,234) (30,575)
Dividends paid (25,963) (25,696)
Repurchase of Common Shares (35,331) (11,215)
Issuance of Common Shares 2,216 1,376
(Decrease) increase in minority interest (1,769) 619
--------- ---------
CASH USED FOR FINANCING ACTIVITIES (56,964) (48,019)
--------- ---------
CASH AND SHORT-TERM INVESTMENTS
Increase (decrease) during the period 7,404 (4,148)
Balance, beginning of period 3,432 10,932
--------- ---------
Balance, end of period $ 10,836 $ 6,784
========= =========
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ 19,493 $ 19,760
========= =========
Income taxes, net of refunds $ 6,191 $ 7,865
========= =========
</TABLE>
3
<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The sales and operating income of Rayonier's business segments for the three and
nine months ended September 30, 1997 and 1996 were as follows (thousands of
dollars):
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
----------------------- -----------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
SALES
TIMBER AND WOOD PRODUCTS
Log trading and merchandising $ 64,989 $ 81,612 $ 199,299 $ 238,970
Timberlands management and stumpage 43,986 38,934 137,645 148,939
Wood products 34,898 27,769 103,198 75,536
Intrasegment eliminations (6,089) (9,970) (18,007) (33,922)
--------- --------- --------- ---------
Total Timber and Wood Products 137,784 138,345 422,135 429,523
--------- --------- --------- ---------
SPECIALTY PULP PRODUCTS
Chemical cellulose 76,243 87,245 243,309 244,521
Fluff and specialty paper pulps 49,236 41,554 132,393 138,877
--------- --------- --------- ---------
Total Specialty Pulp Products 125,479 128,799 375,702 383,398
--------- --------- --------- ---------
Intersegment eliminations (682) (1,682) (1,660) (4,094)
--------- --------- --------- ---------
Total before dispositions 262,581 265,462 796,177 808,827
Dispositions 4,272 19,642 20,887 66,924
--------- --------- --------- ---------
Total sales $ 266,853 $ 285,104 $ 817,064 $ 875,751
========= ========= ========= =========
OPERATING INCOME
Timber and Wood Products $ 31,421 $ 26,354 $ 100,112 $ 96,003
Specialty Pulp Products 13,861 11,016 35,272 44,767
Corporate and other (4,159) (3,947) (12,506) (10,136)
Intersegment eliminations (8) (94) 143 112
--------- --------- --------- ---------
Total before dispositions 41,115 33,329 123,021 130,746
Dispositions 779 (2,280) 421 (6,856)
--------- --------- --------- ---------
Total operating income $ 41,894 $ 31,049 $ 123,442 $ 123,890
========= ========= ========= =========
</TABLE>
RESULTS OF OPERATIONS
SALES AND OPERATING INCOME
Sales for the three and nine month periods ended September 30, 1997 were below
the previous year's results due to the closure of the Port Angeles, WA pulp mill
on February 28, 1997, lower export log prices in Pacific Rim markets, and lower
pulp pricing. Operating income for the third quarter was $42 million, $11
million or 35 percent above the same period in the prior year, resulting from
improved log trading margins, stronger timber harvesting, increased pulp
volumes, lower pulp production costs and the absence of Port Angeles losses.
Year to date operating income of $123 million was comparable to prior year
results, as increased wood products earnings and the absence of losses from the
Port Angeles pulp mill offset lower average pulp and stumpage pricing.
4
<PAGE> 7
Timber and Wood Products
Timber and Wood Products' sales for the third quarter of 1997 were in line with
the 1996 third quarter, while sales for the nine month period were $7 million
below last year's results. The decline in nine month sales reflects lower North
American export log prices and lower Northwest U.S. stumpage prices primarily
during the first half of the year, partially offset by stronger lumber volumes
and prices. Operating income for the quarter of $31 million was 19 percent
higher than the same period in the prior year due to improved log trading
margins and stronger timber harvesting than past seasonal patterns produced.
Year to date operating income of $100 million was $4 million above last year
primarily due to stronger lumber and log trading results.
Log trading and merchandising sales declined from 1996 due to lower North
American export log prices and lower New Zealand log volumes resulting from
weakness in Asian wood markets. Operating income improved from 1996, resulting
from more favorable margins in New Zealand.
Timberlands management and stumpage sales and operating income were above last
year's third quarter results due to stronger U.S. timber harvesting, while year
to date sales and operating income were below prior year reflecting weaker
Northwest U.S. stumpage prices primarily during the first half of 1997. New
Zealand stumpage prices for the third quarter and year to date were lower than
in the comparable periods of 1996.
Wood products sales and operating results for the nine month period improved
over the prior year due to increased capacity and productivity along with
stronger sales volumes and higher lumber prices. Operating income for the third
quarter declined slightly from the 1996 third quarter as a result of marketing
expenditures associated with the Company's new medium-density fiber board (MDF)
plant in New Zealand. During October, the MDF plant became operational. The
plant is projected to incur operating losses during the fourth quarter and
during 1998 as Rayonier develops markets in the Pacific Rim for its
premium-quality Patinna(TM) brand. In the fourth quarter, those losses are
estimated to be $3.5 million.
Specialty Pulp Products
Sales of Specialty Pulp Products (from the Company's ongoing Jesup and
Fernandina mills) were $125 million compared to $129 million for last year's
third quarter. Operating income was $14 million, $3 million above the 1996 third
quarter as a result of higher volumes and lower manufacturing costs per ton as
the Company continued to implement its strategic cost-reduction program. Pulp
selling prices improved compared to the second quarter but were lower than third
quarter 1996 levels. Sales for the first nine months of 1997 were $376 million
compared to $383 million for the prior period and operating income was $35
million, a decrease of $9 million or 21 percent from 1996. Results were below
the prior year primarily due to lower chemical cellulose and fluff pulp prices,
partly offset by lower production costs and higher pulp shipments.
Dispositions
Dispositions reflect results of the Company's Port Angeles mill, permanently
closed in February 1997, with product sales arising from inventory run-off.
Improved results over 1996 primarily reflect the absence of operating losses
following the mill's closure.
OTHER INCOME / EXPENSE
Interest expense was $18 million for the first nine months of 1997, $3 million
favorable to 1996, reflecting lower average debt levels due to reduced
investment in working capital and timber stumpage. Capitalized interest in
connection with the Company's New Zealand MDF facility was $4.8 million and $2.0
million for the first nine months of 1997 and 1996. Third quarter 1997
capitalized interest was $1.8 million. Effective October 1, the Company will no
longer capitalize interest on this project.
Interest and miscellaneous income (expense), net declined $3 million from the
prior year third quarter and $5 million on a year to date basis primarily due to
the absence of mark-to-market gains on forward exchange contracts. The Company
uses forward contracts to mitigate the impact of New Zealand /U.S. dollar
exchange rate fluctuations on New Zealand operating expenses.
Minority interest in the earnings of Rayonier's subsidiary, Rayonier
Timberlands, L.P. (RTLP) was $2 million less than the first nine months of 1996,
primarily reflecting lower Northwest U.S. stumpage prices. The minority
participation in the earnings of RTLP will change from approximately 24 percent
to approximately 1 percent effective January 1, 2001.
The effective tax rate for the first nine months of 1997 was 29.0 percent
compared to 28.5 percent in 1996. These tax rates are below the statutory rates
as 1997 reflects research and investment tax credits while the prior year
includes certain tax benefits recognized in 1996 that pertained to prior years.
5
<PAGE> 8
NET INCOME
Net income for the third quarter was $23.2 million or $0.79 per Common Share, 49
percent above 1996 third quarter earnings of $15.6 million, or $0.52 cents per
Common Share. The improvement came from stronger operating results, as well as
higher research and investment tax credits. Net income for the nine months ended
September 30, 1997 was $61 million or $2.08 per Common Share, comparable to last
year's results.
Fourth quarter earnings are expected to be lower than the third quarter (but
higher than the second quarter) resulting from the onset of MDF losses, less
capitalized interest and lower wood products pricing.
OTHER ITEMS
Statement of Financial Accounting Standards (SFAS) No. 128, Earnings Per Share
(EPS), issued in February, 1997 establishes standards for computing and
presenting EPS and is effective for both interim and annual periods ending after
December 15, 1997. SFAS No. 128 does not permit early application of its
provisions. The statement replaces the presentation of primary EPS with a
presentation of basic EPS, as defined. The Company's pro forma basic EPS
determined in accordance with SFAS No. 128 was $0.81 and $0.53 for the three
months ended September 30, 1997 and 1996, respectively, and $2.12 and $2.11 for
the nine months ended September 30, 1997 and 1996, respectively. Pro forma
diluted EPS would be unchanged from the currently reported income per Common
share.
On November 5, 1997 the Company announced it will enter into a second joint
venture in New Zealand. The Company will sell a 75 percent interest in two New
Zealand forests (12,100 acres) and purchase a 25 percent stake in two forests
(3,700 acres) owned by a timber investment fund for net cash proceeds of $11.6
million. The Company expects to record a pretax gain of approximately $8.1
million, $5.5 million after-tax, or 19 cents per common share. Actual results
will depend on currency exchange rates in effect at the close, which is expected
in the fourth quarter of 1997. Rayonier will have management and marketing
responsibilities for the joint venture, which involves 15,800 acres of timber on
New Zealand's North Island. The Company also announced that in two unrelated
transactions it had purchased 500 acres of timberland and acquired harvest
rights on an additional 2,500 acres from private owners in New Zealand for
approximately $11 million.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow from operating activities of $178 million for the first nine months of
1997 increased $20 million from 1996 as a result of reduced working capital
requirements. EBITDA (defined as earnings from continuing operations before
significant non-recurring items, provision for dispositions, interest expense,
income taxes and depreciation, depletion and amortization) for the first nine
months of 1997 of $176 million decreased $4 million from the comparable period
of 1996. Cash from operating activities helped to finance capital expenditures
of $106 million, dividends of $26 million and the repurchase of Common Shares
for $35 million. In connection with the previously announced one-year increase
in the Company's share repurchase program to $50 million for 1997, the Company
repurchased 840,500 shares during the first nine months at an average cost of
$42.04. Over the same period of 1996, the Company purchased 303,000 shares at an
average cost of $37.04 per share for $11 million. Third quarter ending debt was
$437 million and the debt-to-capital-ratio was 41.1 percent compared to 41.0
percent at December 31, 1996.
During the second quarter of 1997, the Company issued approximately $101 million
of securities to an investment bank in the United Kingdom. The proceeds of this
financing were used to retire commercial paper and bank loans. Due to United
Kingdom tax law changes that increased the effective cost of this financing, the
Company refinanced those securities in July 1997 with the issuance of additional
commercial paper.
The Company has unsecured credit facilities totaling $300 million, which are
used for direct borrowings and as support for $135 million of outstanding
commercial paper. As of September 30, 1997, the Company had $165 million of
available borrowings under its revolving credit facilities. In addition, through
currently effective shelf registration statements filed with the Securities and
Exchange Commission, the Company may offer up to $141 million of new public debt
securities. The Company believes that internally generated funds combined with
available external financing will enable Rayonier to fund capital expenditures,
share repurchases, working capital and other liquidity needs for the foreseeable
future.
6
<PAGE> 9
SAFE HARBOR
Except for the information about past operations and results, the comments in
this report are forward-looking and are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Changes in
the following important factors, among others, could cause actual results to
differ materially from those expressed in the forward-looking statements:
competitive products and pricing, as well as fluctuations in demand,
particularly for specialty fluff pulps and for export and domestic logs and wood
products, including MDF; the impact of such market factors on the Company's
timber sales in the United States and New Zealand; production costs for
specialty pulps, particularly for raw materials and chemicals; governmental
policies and regulations affecting the environment, import and export controls
and taxes; and interest rate and currency movements.
ITEM 3. SELECTED OPERATING DATA
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
1997 1996 1997 1996
----- ----- ----- -----
<S> <C> <C> <C> <C>
TIMBER AND WOOD PRODUCTS
Log sales volume
North America - million board feet 54 72 174 206
New Zealand - thousand cubic meters 277 312 802 1,078
Other - thousand cubic meters 56 30 247 85
Timber sales volume
Northwest U.S. - million board feet 39 34 147 148
Southeast U.S. - thousand short green tons 567 532 1,711 1,639
New Zealand - thousand cubic meters 336 267 835 815
Lumber sales volume - million board feet 85 71 248 205
Intercompany sales volume
Logs - million board feet 0 2 1 6
Northwest U.S. timber stumpage
- million board feet 1 6 11 19
Southeast U.S. timber stumpage
- thousand short green tons 22 40 60 116
New Zealand - thousand cubic meters 175 209 446 667
SPECIALTY PULP PRODUCTS
Pulp sales volume (a)
Chemical cellulose sales - thousand metric tons 88 93 277 256
Fluff and specialty paper pulp sales - thousand metric tons 94 79 255 244
Production as a percentage of capacity 102.9% 101.4% 100.1% 100.4%
SELECTED SUPPLEMENTAL INFORMATION (millions of U.S. dollars)
New Zealand - Sales $24.3 $21.5 $63.9 $72.5
===== ===== ===== =====
New Zealand - Operating Income $ 4.3 $ 1.5 $ 6.7 $ 4.9
===== ===== ===== =====
(a) Excludes Port Angeles statistics reflected below:
Chemical cellulose sales - thousand metric tons 4 21 22 69
Fluff and specialty paper pulp sales - thousand metric tons 0 6 5 14
</TABLE>
7
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Rayonier is one of two defendants in an action instituted on April
10, 1997 in the U.S. District Court for the Southern District of Georgia.
The action seeks contribution and indemnity in the amount $57 million for
damages incurred by Powell Duffryn, Inc. as the result of a fire and
explosion that occurred in April 1995 at its marine terminal and storage
facility in Savannah, Georgia. Crude sulfate turpentine produced by
Rayonier and others was stored at the facility at the time of the
explosion. Powell Duffryn and its insurers have sued to recover sums
already paid to third party claimants, expenses incurred to remediate
Powell Duffryn's property and adjoining lands, and an unstated amount for
damages and loss to Powell Duffryn's property. Rayonier is vigorously
defending the action and, based on advice of counsel, believes that its
liability, if any, will not be material and will be covered by its product
liability insurance. Accordingly, Rayonier does not expect the ultimate
outcome of this litigation to have any material impact on its consolidated
financial position or results of operations.
Rayonier's Form 10-K for 1996 reported an action in the U.S.
District Court for the Western District of Louisiana brought by the U.S.
Environmental Protection Agency against Marine Shale Processors, Inc.
("MSP") in which Rayonier's wholly-owned subsidiary, Southern Wood
Piedmont Company ("SWP"), was an intervenor. This action was settled in
August 1997 on terms requiring no payment by SWP and limiting SWP's
potential liability for material it sent to MSP.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) See Exhibit Index.
(b) Rayonier Inc. did not file a report on Form 8-K during the quarter
covered by this report.
SIGNATURE
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of l934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
RAYONIER INC. (Registrant)
---------------------------
BY KENNETH P. JANETTE
------------------
Kenneth P. Janette
Vice President and Corporate Controller
November 12, 1997 (Chief Accounting Officer)
8
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION LOCATION
----------- ----------- --------
<S> <C> <C>
2 Plan of acquisition, reorganization, None
arrangement, liquidation or succession
3.1 Amended and restated articles of incorporation No amendments
3.2 By-laws No amendments
4 Instruments defining the rights of security holders, Not required to be filed. The
including indentures Registrant hereby agrees to file
with the Commission a copy of
any instrument defining the rights
of holders of the Registrant's
long-term debt upon request of
the Commission.
10 Other material contracts None
11 Statement re computation of per share earnings Not required to be filed
12 Statement re computation of ratios Filed herewith
15 Letter re unaudited interim financial information None
18 Letter re change in accounting principles None
19 Report furnished to security holders None
22 Published report regarding matters None
submitted to vote of security holders
23 Consents of experts and counsel None
24 Power of attorney None
27 Financial data schedule Filed herewith
99 Additional exhibits None
</TABLE>
9
<PAGE> 1
EXHIBIT 12
RAYONIER INC. AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
(UNAUDITED)
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
--------------------
1997 1996
-------- --------
<S> <C> <C>
Earnings:
Net Income $ 61,398 $ 62,449
Add:
Income Taxes 25,129 24,900
Minority Interest 19,359 21,315
Amortization of Capitalized Interest 806 1,473
-------- --------
106,692 110,137
Adjustments to Earnings for Fixed Charges:
Interest and Other Financial Charges 17,987 20,677
Interest Factor Attributable to Rentals 1,640 1,083
-------- --------
19,627 21,760
-------- --------
EARNINGS AS ADJUSTED $126,319 $131,897
======== ========
Fixed Charges:
Fixed Charges above $ 19,627 $ 21,760
Capitalized Interest 4,849 1,994
-------- --------
TOTAL FIXED CHARGES $ 24,476 $ 23,754
======== ========
RATIO OF EARNINGS AS ADJUSTED TO
TOTAL FIXED CHARGES 5.16 5.55
======== ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 10,836
<SECURITIES> 0
<RECEIVABLES> 109,073
<ALLOWANCES> 4,947
<INVENTORY> 141,251
<CURRENT-ASSETS> 311,868
<PP&E> 1,267,754
<DEPRECIATION> 557,229
<TOTAL-ASSETS> 1,587,879
<CURRENT-LIABILITIES> 199,232
<BONDS> 433,208
112,564
0
<COMMON> 0
<OTHER-SE> 513,146
<TOTAL-LIABILITY-AND-EQUITY> 1,587,879
<SALES> 817,064
<TOTAL-REVENUES> 817,064
<CGS> 666,867
<TOTAL-COSTS> 666,867
<OTHER-EXPENSES> 45,683
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,987
<INCOME-PRETAX> 86,527
<INCOME-TAX> 25,129
<INCOME-CONTINUING> 61,398
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 61,398
<EPS-PRIMARY> 2.08
<EPS-DILUTED> 2.08
</TABLE>
