<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 JUNE 30, 1999
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 August 3, 1999, there were outstanding 27,765,142 Common Shares of
the Registrant.
<PAGE> 2
RAYONIER INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item l. Financial Statements
Statements of Consolidated Income for the
Three Months and Six Months Ended June 30, 1999 and 1998 1
Consolidated Balance Sheets as of June 30, 1999
and December 3l, 1998 2
Statements of Consolidated Cash Flows for the
Six Months Ended June 30, 1999 and 1998 3
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 5-8
Item 3. Selected Operating Data 9
Selected Supplemental Financial Data 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 11
Signature 11
Exhibit Index 12
</TABLE>
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.
For a full description of accounting policies, please refer to Notes to
Consolidated Financial Statements in the l998 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 Six Months
Ended June 30, Ended June 30,
-------------------------- --------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
SALES $ 258,023 $ 254,011 $ 484,419 $ 479,425
--------- --------- --------- ---------
Costs and expenses
Cost of sales 215,198 210,301 403,879 394,480
Selling and general expenses 9,785 9,412 19,250 17,759
Other operating income, net (711) (874) (1,905) (2,143)
--------- --------- --------- ---------
224,272 218,839 421,224 410,096
--------- --------- --------- ---------
OPERATING INCOME 33,751 35,172 63,195 69,329
Interest expense (7,683) (9,072) (15,387) (16,984)
Interest and miscellaneous (expense) income, net (233) 202 481 497
--------- --------- --------- ---------
Income before income taxes 25,835 26,302 48,289 52,842
Provision for income taxes (8,758) (7,862) (16,082) (16,206)
--------- --------- --------- ---------
NET INCOME $ 17,077 $ 18,440 $ 32,207 $ 36,636
========= ========= ========= =========
NET INCOME PER COMMON SHARE
Basic EPS $ 0.62 $ 0.65 $ 1.16 $ 1.29
========= ========= ========= =========
Diluted EPS $ 0.60 $ 0.64 $ 1.14 $ 1.27
========= ========= ========= =========
</TABLE>
1
<PAGE> 4
RAYONIER INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(THOUSANDS OF DOLLARS)
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
---------- ----------
<S> <C> <C>
CURRENT ASSETS
Cash and short-term investments $ 5,717 $ 6,635
Accounts receivable, less allowance for doubtful
accounts of $4,863 and $4,843 108,332 118,762
Inventories
Finished goods 58,901 47,109
Work in process 12,659 15,762
Raw materials 11,484 13,212
Manufacturing and maintenance supplies 24,846 22,827
---------- ----------
Total inventories 107,890 98,910
Timber purchase agreements 37,914 35,776
Other current assets 13,540 13,192
Deferred income taxes 7,180 8,559
---------- ----------
Total current assets 280,573 281,834
OTHER ASSETS 61,248 65,988
TIMBER PURCHASE AGREEMENTS 21,284 20,922
TIMBER, TIMBERLANDS AND LOGGING ROADS,
NET OF DEPLETION AND AMORTIZATION 544,807 544,190
PROPERTY, PLANT AND EQUIPMENT
Land, buildings, machinery and equipment 1,327,668 1,304,188
Less - accumulated depreciation 646,723 616,266
---------- ----------
680,945 687,922
---------- ----------
$1,588,857 $1,600,856
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 70,124 $ 65,844
Bank loans and current maturities 5,965 4,094
Accrued taxes 15,841 8,728
Accrued payroll and benefits 23,536 21,460
Accrued interest 7,586 6,182
Other current accrued liabilities 41,552 44,279
Current reserves for dispositions and discontinued operations 19,732 22,167
---------- ----------
Total current liabilities 184,336 172,754
DEFERRED INCOME TAXES 122,462 115,405
LONG-TERM DEBT 446,404 485,850
NON-CURRENT RESERVES FOR DISPOSITIONS
AND DISCONTINUED OPERATIONS 154,062 159,198
OTHER NON-CURRENT LIABILITIES 30,274 28,690
SHAREHOLDERS' EQUITY
Common Shares, 60,000,000 shares authorized,
27,772,207 and 27,767,309 shares issued and outstanding 76,958 79,561
Retained earnings 574,361 559,398
---------- ----------
651,319 638,959
---------- ----------
$1,588,857 $1,600,856
========== ==========
</TABLE>
2
<PAGE> 5
RAYONIER INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
--------------------------
1999 1998
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 32,207 $ 36,636
Non-cash items included in income
Depreciation, depletion and amortization 50,124 47,760
Deferred income taxes 5,663 8
Increase in other non-current liabilities 1,584 1,270
Change in accounts receivable, inventories
and accounts payable 5,730 (6,100)
Increase in current timber purchase agreements (2,138) (7,600)
(Increase) decrease in other current assets (348) 2,670
Increase (decrease) in accrued liabilities 7,866 (13,243)
--------- ---------
CASH FROM OPERATING ACTIVITIES 100,688 61,401
--------- ---------
INVESTING ACTIVITIES
Capital expenditures, net of sales and retirements
of $311 and $2,186 (43,764) (48,686)
Acquisition of Rayonier Timberlands, L.P. Class A Units -- (48,821)
Expenditures for dispositions and discontinued operations,
net of tax benefits of $2,773 and $2,504 (4,798) (4,321)
Change in timber purchase agreements and other assets 4,378 (8,325)
--------- ---------
CASH USED FOR INVESTING ACTIVITIES (44,184) (110,153)
--------- ---------
FINANCING ACTIVITIES
Issuance of debt 99,861 183,910
Repayments of debt (137,436) (89,027)
Dividends paid (17,244) (17,539)
Repurchase of Common Shares (5,600) (8,710)
Issuance of Common Shares 2,997 2,038
Buyout of minority interest -- (16,959)
--------- ---------
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES (57,422) 53,713
--------- ---------
CASH AND SHORT-TERM INVESTMENTS
(Decrease) increase in cash and short-term investments (918) 4,961
Balance, beginning of period 6,635 10,661
--------- ---------
Balance, end of period $ 5,717 $ 15,622
========= =========
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ 14,132 $ 15,980
========= =========
Income taxes $ 4,622 $ 11,718
========= =========
</TABLE>
3
<PAGE> 6
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
1. EARNINGS PER COMMON SHARE
The following table provides details of the calculation of basic and
diluted EPS in accordance with Statement of Financial Accounting Standards
(SFAS) No. 128, "Earnings Per Share" for the three months and six months
ended June 30, 1999 and 1998.
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
----------------------------- -----------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Income $ 17,077 $ 18,440 $ 32,207 $ 36,636
=========== =========== =========== ===========
Shares used for determining basic EPS 27,785,931 28,273,886 27,796,186 28,290,854
Dilutive effect of:
Stock options 307,947 337,795 269,111 312,159
Contingent shares 240,000 231,084 240,000 231,084
----------- ----------- ----------- -----------
Shares used for determining diluted EPS 28,333,878 28,842,765 28,305,297 28,834,097
=========== =========== =========== ===========
Basic EPS $ 0.62 $ 0.65 $ 1.16 $ 1.29
=========== =========== =========== ===========
Diluted EPS $ 0.60 $ 0.64 $ 1.14 $ 1.27
=========== =========== =========== ===========
</TABLE>
4
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
SEGMENT INFORMATION
Rayonier operates in two major business segments: Timber and Wood Products,
and Specialty Pulp Products. The Timber and Wood Products segment includes
two reportable business units: Forest Resources and Trading, and Wood
Products. Chemical Cellulose, and Fluff and Specialty Paper Pulps are product
lines within the Specialty Pulp Products segment.
The amounts and relative contributions to sales and operating income
attributable to each of Rayonier's reportable business units for the three
months and six months ended June 30, 1999 and 1998 were as follows (thousands of
dollars):
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
-------------------------- --------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
SALES
Timber and Wood Products
Forest Resources and Trading $ 119,102 $ 99,645 $ 219,144 $ 184,074
Wood Products 32,786 32,276 57,414 61,483
--------- --------- --------- ---------
Total Timber and Wood Products 151,888 131,921 276,558 245,557
--------- --------- --------- ---------
Specialty Pulp Products
Chemical Cellulose 69,945 75,786 132,785 143,531
Fluff and Specialty Paper Pulps 36,296 46,784 75,325 91,898
--------- --------- --------- ---------
Total Specialty Pulp Products 106,241 122,570 208,110 235,429
--------- --------- --------- ---------
Intersegment Eliminations (106) (480) (249) (1,561)
--------- --------- --------- ---------
Total Sales $ 258,023 $ 254,011 $ 484,419 $ 479,425
========= ========= ========= =========
OPERATING INCOME
Timber and Wood Products
Forest Resources and Trading $ 29,892 $ 34,416 $ 58,409 $ 69,706
Wood Products 1,964 (3,576) 1,063 (9,230)
--------- --------- --------- ---------
Total Timber and Wood Products 31,856 30,840 59,472 60,476
Specialty Pulp Products 6,156 7,693 12,022 15,585
Corporate and Other (4,261) (3,361) (8,299) (6,732)
--------- --------- --------- ---------
Total Operating Income $ 33,751 $ 35,172 $ 63,195 $ 69,329
========= ========= ========= =========
</TABLE>
RESULTS OF OPERATIONS
SALES AND OPERATING INCOME
Sales for the second quarter of 1999 were $258 million, $4 million higher than
the second quarter of 1998, while sales for the six months ended June 30, 1999
of $484 million were $5 million higher than the prior year. Sales increases in
the Timber and Wood Products segment, principally due to higher trading
activity, were partially offset by reduced sales in the Specialty Pulp Products
segment due to lower pulp volume and chemical cellulose prices.
Operating income for the second quarter of 1999 of $34 million was $1 million
below prior year, while operating income for the six-month period ended June 30,
1999 of $63 million was $6 million below prior year. Forest Resources and
Trading operating results for both periods decreased due to lower timber prices,
land sales and Southeast U.S. timber volume. Specialty Pulp Products operating
results for both periods declined due to decreased volume and chemical cellulose
prices. However, improvements in Wood Products due to stronger lumber prices
partially offset these decreases.
5
<PAGE> 8
TIMBER AND WOOD PRODUCTS
Timber and Wood Products sales for the second quarter were $152 million, $20
million higher than prior year resulting from higher trading activity and
slightly improved Wood Products sales. Sales for the six month period were $277
million, $31 million higher than the prior year, reflecting higher trading
activity partially offset by lower timber and wood products sales. Operating
income for the three months ended June 30, 1999 of $32 million was $1 million
above prior year. Year to date operating income of $59 million declined $1
million from last year as improved Wood Products results were offset by lower
income from Forest Resources and Trading.
FOREST RESOURCES AND TRADING
Forest Resources and Trading sales for the three month period ended June 30,
1999 were $119 million, $19 million above prior year, resulting from growth
of wood products trading activities and higher Northwest U.S. timber volume.
These improvements were partially offset by lower Southeast U.S. timber
prices and land sales. For the six month period ending June 30, 1999 sales
were $219 million, $35 million above 1998 principally due to the higher wood
products trading activity and improved log trading volume in Asian and U.S.
domestic markets, partially offset by lower Southeast U.S. timber volume,
timber prices and land sales.
Operating income for the second quarter was $30 million, $5 million below
1998 resulting from lower Southeast U.S. timber prices and land sales
partially offset by higher Northwest U.S. timber volume. Operating income for
the first half of 1999 of $58 million was $11 million below prior year due to
reduced timber prices in both the Northwest and Southeast U.S. and from lower
land sales. Prices declined in the Northwest U.S. due to the impact of the
Asian economic crisis on export products and in the Southeast U.S. due to
reduced pulpwood demand resulting from pulp and paper mill closures and
downtime in the region. Timber prices were unusually high in Southeast U.S.
markets during the first half of 1998 due to unusually wet weather that led
to restricted supply because of difficult logging conditions.
WOOD PRODUCTS
Wood Products sales for the second quarter ended June 30, 1999 were $33
million, relatively unchanged from the prior year, and for the six month
period were $57 million, $4 million below 1998. Higher prices and volume for
Southeast U.S. lumber, driven by continued strong U.S. housing demand, and
improved markets for the Company's medium-density fiberboard (MDF) plant were
offset by the absence of lumber sales from the Company's Plummer, ID mill
which closed in July 1998 after the facility was damaged by fire.
Operating income of $2 million and $1 million for the second quarter and
first half of 1999, respectively, were $6 million and $10 million above prior
year results. The improvement resulted from higher prices and lower operating
costs for both lumber and MDF.
SPECIALTY PULP PRODUCTS
Sales of Specialty Pulp Products for the second quarter of 1999 were $106
million, $16 million below prior year due to lower volume and chemical cellulose
prices. For the six month period, sales were $208 million, $27 million lower
than 1998. The decline was primarily due to weaker demand for both fluff and
chemical cellulose pulps and lower chemical cellulose pricing.
Operating income of $6 million and $12 million for the second quarter and first
half of 1999, respectively, were $2 million and $4 million below prior year. The
decline resulted from lower fluff and chemical cellulose pulp volumes, lower
chemical cellulose pricing and 45 days of market related shutdown costs for the
Fernandina Beach, FL pulp mill, partially offset by lower wood and manufacturing
costs.
CORPORATE AND OTHER
Corporate and other costs for the second quarter and six months to date of 1999
were above 1998 reflecting higher general and administrative expenses.
OTHER INCOME / EXPENSE
Interest expense of $15 million for the first six months of 1999 was $2 million
below 1998 due to lower average interest rates and debt balances. Miscellaneous
expense in the second quarter of 1999 included $0.5 million in costs associated
with refinancing debt at lower interest rates. For the six months ended June 30,
1999 miscellaneous income was equal to last year, with the adverse impact of the
debt refinancing expense offset by favorable first quarter interest income
related to a contract settlement.
6
<PAGE> 9
The effective tax rate of 33.3 percent for the first six months of 1999 compared
to 30.7 percent in 1998. The 1998 rate is lower than the 1999 rate due to higher
prior years' research and development tax credits, and tax benefits from foreign
operations.
NET INCOME
Net income for the second quarter of 1999 was $17.1 million or $0.60 per Common
Share, compared to $18.4 million, or $0.64 per Common Share in 1998. Net income
for the six months ended June 30, 1999 was $32 million or $1.14 per share
compared to $37 million or $1.27 per share last year.
OTHER ITEMS
The Company is optimistic about market conditions in the coming months based on
a gradual improvement in Asian markets and a continued strong outlook for U.S.
housing. Improvement is also expected to continue in MDF product and customer
mix. Specialty Pulp earnings should strengthen due to higher fluff prices,
although chemical cellulose market weakness remains. Despite normal second-half
timber harvest reductions, the Company expects to largely sustain second quarter
earnings levels in the third quarter.
On July 29, 1999, the Company announced that it had signed a definitive
agreement to purchase approximately 980,000 acres of timberland in Florida,
Georgia and Alabama from Smurfit-Stone Container Corporation for $725 million.
The transaction is expected to close early in the fourth quarter of 1999. The
Company indicated that it will finance the acquisition with $225 million in cash
and $500 million in pre-committed long-term notes to be issued by a wholly-owned
Rayonier partnership that will hold all of the Company's U.S. timberlands. The
Company expects to realize approximately $20 million per year in benefits by
operating the timberlands similarly to its own management program by selling
timber on an arms-length basis at auction and by eliminating overlapping
marketing and management costs. At existing prices, the Company believes that
the acquisition properties will contribute approximately $70 million annually to
EBITDA (defined as earnings from continuing operations before significant
non-recurring items, provision for dispositions, interest expense, income taxes
and depreciation, depletion and amortization). Assuming an early fourth quarter
closing, the after-tax earnings dilution in the fourth quarter is estimated at
18 cents per share.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow from operating activities of $101 million for the first six months of
1999 increased $39 million from 1998 as a result of decreased working capital
requirements. EBITDA for the first six months of 1999 of $114 million decreased
$4 million from 1998 results primarily due to lower operating income at both
Forest Resources and Trading, and Specialty Pulp Products. Cash from operating
activities helped to finance capital expenditures of $44 million, dividends of
$17 million and the repurchase of Common Shares for $6 million and also reduce
debt by $38 million. In 1999, second quarter ending debt was $452 million and
the debt-to-capital-ratio was 41.0 percent compared to debt of $490 million and
a debt-to-capital-ratio of 43.4 percent at December 31, 1998.
The Company repurchased 124,300 of its shares during the first six months of
1999 at an average price of $45.05 per share for a total cost of $5.6 million.
Over the same period of 1998, the Company repurchased 190,294 shares, at an
average cost of $45.77 per share for a total cost of $8.7 million.
The Company has unsecured credit facilities totaling $300 million, which were
used as support for $125 million of outstanding commercial paper. At June 30,
1999, the Company had $175 million available under its revolving credit
facilities. In addition, the Company has on file with the Securities and
Exchange Commission shelf registration statements to offer $150 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.
YEAR 2000 COMPLIANCE
Rayonier began its company-wide Year 2000 Project in 1996 and expects all phases
to be completed by the end of the third quarter of 1999. The Project is designed
to identify Year 2000 problems and take corrective action covering business and
process control systems, networking communications, personal computer
applications, embedded microprocessors and third party supplier and customer
risks. The Company has engaged outside consultants to advise on, assist in and
monitor compliance. The project team reports directly to the Company's senior
executive officers and regularly provides program updates to the Audit Committee
of the Board of Directors.
As of June 30, 1999, the Company has identified potential Year 2000 problems
with its internal systems (hardware, software, and process control devices) and
completed most of the necessary corrective actions. Minor efforts remaining for
full compliance will be completed in the third quarter of 1999. Outside advisors
have assisted in planning and monitoring this effort. The evaluation
7
<PAGE> 10
of external suppliers has been completed and contingency plans for critical
suppliers that are not Year 2000 compliant are being developed. These
contingency plans will also be completed before the end of the third quarter of
1999.
The total amount expended on the Year 2000 Project through the first half of
1999 was approximately $3 million and the Company estimates that future costs
could range up to $1 million. Many of the Company's systems were upgraded or
replaced in the ordinary course of business during the last five years, and
costs related to those upgrades and replacements are not included in the Year
2000 Project expenses.
The Company believes that with the completion of its Year 2000 Project as
scheduled, the risks will be minimized and the possibility of significant
interruptions of operations reduced. However, if the Company and its third party
suppliers and customers do not complete in a timely manner their assessment,
remediation and testing for Year 2000 compliance, there can be no assurance that
Year 2000 problems will not materially adversely affect the Company's results of
operations or its relationships with its suppliers and customers. The Company
has identified its hypercritical systems, the failure of which could constitute
a worst case scenario, and is finalizing contingency plans to deal with any Year
2000 related failures.
SAFE HARBOR
Comments about market trends, anticipated earnings and future activities,
including disclosures about the Company's Year 2000 project, are forward-looking
and are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Changes in factors referred to in such
disclosures, and changes in the following additional important factors, among
others, could cause actual results to differ materially from those expressed in
the forward-looking statements: failure of one or more conditions to closing the
acquisition of the Smurfit-Stone timberlands to be satisfied; failure to realize
operational efficiencies; fluctuations in demand for specialty chemical
cellulose and fluff pulps, export and domestic logs, and wood products; the
impact of such market factors on the Company's timber sales in the U.S. and New
Zealand; production costs for wood products and for specialty pulps,
particularly for raw materials such as wood and chemicals; adverse weather
conditions in the Company's operating areas; the possibility of forest fires;
governmental policies and regulations affecting the environment, import and
export controls, and taxes; and interest rate and currency movements.
8
<PAGE> 11
ITEM 3. SELECTED OPERATING DATA
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
---------------- -----------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
TIMBER AND WOOD PRODUCTS
Log trading sales volume
North America, in millions of board feet 45 36 75 69
New Zealand, in thousands of cubic meters 319 225 591 376
Other, in thousands of cubic meters 162 51 272 89
Timber sales volume
Northwest U.S., in millions of board feet 67 57 132 124
Southeast U.S., in thousands of short green tons 598 621 1,131 1,230
New Zealand, in thousands of cubic meters 321 244 591 370
Lumber sales volume, in millions of board feet 68 83(a) 124 157(a)
Medium-density fiberboard sales volume,
in thousands of cubic meters 31 24 58 37
Intercompany timber sales volume
Northwest U.S., in millions of board feet 8 3 18 5
Southeast U.S., in thousands of short green tons 4 18 11 50
New Zealand, in thousands of cubic meters 148 94 269 154
SPECIALTY PULP PRODUCTS
Pulp sales volume
Chemical cellulose, in thousands of metric tons 81 86 155 163
Fluff and specialty paper pulp, in thousands of metric tons 69 89 146 175
Production as a percent of capacity 87.0% 98.7% 94.0% 98.6%
</TABLE>
(a) Includes sales for the three months and six months ended June 30, 1998 of
20 and 37, respectively, by the Plummer, ID lumber mill, which closed in
July 1998 after fire damaged the facility.
9
<PAGE> 12
SELECTED SUPPLEMENTAL FINANCIAL DATA (thousands of dollars, except per share
data)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------------------ -------------------------
1999 1998 1999 1998
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
GEOGRAPHICAL DATA (NON-U.S.)
Sales
New Zealand $ 21,521 $ 16,545 $ 39,805 $ 27,611
Other 11,101 4,977 21,083 8,113
-------- -------- -------- ---------
Total $ 32,622 $ 21,522 $ 60,888 $ 35,724
======== ======== ======== =========
Operating Income
New Zealand $ (1,068) $ (3,222) $ (2,703) $ (8,502)
Other 38 (918) (268) (2,167)
-------- -------- -------- ---------
Total $ (1,030) $ (4,140) $ (2,971) $ (10,669)
======== ======== ======== =========
FOREST RESOURCES
Sales
Northwest U.S. $ 23,716 $ 20,589 $ 47,582 $ 47,423
Southeast U.S. 14,754 23,555 31,696 45,135
New Zealand 7,430 5,878 12,792 9,334
-------- -------- -------- ---------
Total $ 45,900 $ 50,022 $ 92,070 $ 101,892
======== ======== ======== =========
Operating Income
Northwest U.S. $ 18,704 $ 14,493 $ 37,270 $ 35,475
Southeast U.S. 10,532 17,965 22,995 34,342
New Zealand 2,467 2,446 3,465 3,101
-------- -------- -------- ---------
Total $ 31,703 $ 34,904 $ 63,730 $ 72,918
======== ======== ======== =========
EBITDA per Share
Northwest U.S. $ 0.70 $ 0.55 $ 1.39 $ 1.30
Southeast U.S. 0.46 0.73 0.99 1.37
New Zealand 0.21 0.18 0.35 0.26
-------- -------- -------- ---------
Total $ 1.37 $ 1.46 $ 2.73 $ 2.93
======== ======== ======== =========
</TABLE>
10
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Rayonier's 10-K for 1998 reported that the U.S. Court of Appeals for the
Eleventh Circuit on March 10, 1999 affirmed summary judgment in favor of
Rayonier in an action brought by Powell-Duffryn Terminals. Subsequently, on
March 31, 1999, Powell-Duffryn filed a motion for rehearing by the same court.
This motion was denied on May 11, 1999.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of the Company was held on May 21, 1999. At
that meeting, three directors were elected as follows (there were no broker
non-votes with respect to the election of directors):
<TABLE>
<CAPTION>
Votes For Votes Withheld
--------- --------------
<S> <C> <C>
Director of Class II, Term Expires in 2002:
Paul G. Kirk, Jr 23,112,469 111,779
Carl S. Sloane 23,115,384 108,864
Gordon I. Ulmer 23,112,476 111,772
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) See Exhibit Index.
(b) Rayonier Inc. filed a current report on Form 8-K on July 29, 1999,
including a press release issued on that date.
SIGNATURE
Pursuant to the requirements of Section 13 of the Securities
Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
RAYONIER INC. (Registrant)
---------------------------
BY GEORGE C. KAY
--------------
George C. Kay
Vice President and
Corporate Controller
August 13, 1999 (Chief Accounting Officer)
11
<PAGE> 14
EXHIBIT INDEX
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 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>
12
<PAGE> 1
EXHIBIT 12
RAYONIER INC. AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
(UNAUDITED)
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
--------------------------
1999 1998
------- -------
<S> <C> <C>
Earnings:
Net Income $32,207 $36,636
Add:
Income Taxes 16,082 16,206
Amortization of Capitalized Interest 1,184 1,122
------- -------
Additions to Net Income 17,266 17,328
------- -------
Adjustments to Earnings for Fixed Charges:
Interest and Other Financial Charges 15,387 16,984
Interest Factor Attributable to Rentals 875 987
------- -------
Adjustments for Fixed Charges 16,262 17,971
------- -------
EARNINGS AS ADJUSTED $65,735 $71,935
======= =======
Fixed Charges:
Fixed Charges above $16,262 $17,971
Capitalized Interest 150 194
------- -------
TOTAL FIXED CHARGES $16,412 $18,165
======= =======
RATIO OF EARNINGS AS ADJUSTED TO
TOTAL FIXED CHARGES 4.01 3.96
======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 5,717
<SECURITIES> 0
<RECEIVABLES> 113,195
<ALLOWANCES> 4,863
<INVENTORY> 107,890
<CURRENT-ASSETS> 280,573
<PP&E> 1,327,668
<DEPRECIATION> 646,723
<TOTAL-ASSETS> 1,588,857
<CURRENT-LIABILITIES> 184,336
<BONDS> 446,404
0
0
<COMMON> 76,958
<OTHER-SE> 574,361
<TOTAL-LIABILITY-AND-EQUITY> 1,588,857
<SALES> 484,419
<TOTAL-REVENUES> 484,419
<CGS> 403,879
<TOTAL-COSTS> 403,879
<OTHER-EXPENSES> 16,864
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,387
<INCOME-PRETAX> 48,289
<INCOME-TAX> 16,082
<INCOME-CONTINUING> 32,207
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,207
<EPS-BASIC> 1.16
<EPS-DILUTED> 1.14
</TABLE>
