<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 March 31, 1994
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 1-8997
RAYONIER TIMBERLANDS, L.P.
A Delaware Limited Partnership
I.R.S. Employer Identification No. 06-1148227
1177 SUMMER STREET, STAMFORD, CT 06905-5529
(Principal Executive Office)
Telephone Number: (203) 348-7000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
YES (x) NO ( )
<PAGE> 2
RAYONIER TIMBERLANDS, L.P.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Income for the Quarters Ended
March 31, 1994 and 1993 1
Balance Sheets as of March 31, 1994 and
December 31, 1993 2
Statements of Cash Flows for the Quarters Ended
March 31, 1994 and 1993 3
Notes to Financial Statements 4 - 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8 - 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 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 Forest Resources Company, the managing general partner of Rayonier
Timberlands, L.P., 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, see notes to financial statements in
the 1993 annual report on Form 10-K.
RAYONIER TIMBERLANDS, L.P.
STATEMENTS OF INCOME
For the Quarters Ended March 31, 1994 and 1993
(unaudited)
(thousands of dollars, except per unit data)
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
SALES
Timber sales
Unaffiliated parties $49,237 $22,793
Rayonier 4,540 8,320
------ ------
53,777 31,113
Timberland sales 434 96
------ ------
54,211 31,209
------ ------
COSTS AND EXPENSES
Cost of timber sold
Unaffiliated parties 5,896 3,196
Rayonier 511 1,183
------ ------
6,407 4,379
Cost of timberland sold 91 8
Forest management, overhead and general
and administrative expenses 2,865 2,439
Commission expense paid to affiliate - 343
------ ------
9,363 7,169
------ ------
OTHER OPERATING INCOME 156 183
------ ------
OPERATING INCOME 45,004 24,223
------ ------
OTHER INCOME AND DEDUCTIONS
Primary Account interest income from Rayonier 1,309 1,349
Secondary Account interest expense to Rayonier (2,684) (2,325)
Minority interest of General Partners in RTOC (436) (233)
------ ------
(1,811) (1,209)
------ ------
PARTNERSHIP INCOME $43,193 $23,014
====== ======
Income Per Publicly Traded Class A Unit* $ 2.19 $ 1.23
====== ======
Income Per Rayonier Owned Class A Unit* $ 2.19 $ 1.21
====== ======
</TABLE>
* Refer to calculations on page 6.
1
<PAGE> 4
RAYONIER TIMBERLANDS, L.P.
BALANCE SHEETS
(unaudited)
(thousands of dollars)
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1994 1993
--------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 15 $ 16
Receivables - net 13,017 4,798
Inventories 596 362
Prepaid logging roads 3,147 3,948
Primary Account short-term investment notes of Rayonier 36,000 106,200
Trade and intercompany receivables from Rayonier and affiliates 3,993 4,146
--------- ----------
Total current assets 56,768 119,470
LONG TERM RECEIVABLES 2,420 1,123
OTHER ASSETS 92 112
FIXED ASSETS - NET 963 983
TIMBER, TIMBERLANDS AND LOGGING ROADS,
LESS DEPLETION AND AMORTIZATION 267,623 265,769
--------- ----------
$ 327,866 $ 387,457
========= ==========
</TABLE>
LIABILITIES AND PARTNERS' CAPITAL
<TABLE>
<S> <C> <C>
CURRENT LIABILITIES
Advance deposits $ 5,648 $ 5,282
Accounts payable 5,255 2,257
Accrued liabilities
Taxes 1,780 1,580
All other 535 611
Current timber obligations 148 138
Advances from Rayonier 87 73
--------- ----------
Total current liabilities 13,453 9,941
SECONDARY ACCOUNT LONG-TERM NOTES
PAYABLE TO RAYONIER 127,000 120,900
LONG-TERM TIMBER OBLIGATIONS 667 793
MINORITY INTEREST OF GENERAL PARTNERS IN RTOC 5,326 6,017
PARTNERS' CAPITAL
General Partners 5,278 5,962
Limited Partners (20,000,000 Class A Depositary
Units and 20,000,000 Class B Depositary Units
issued and outstanding) 176,142 243,844
--------- ----------
$ 327,866 $ 387,457
========= ==========
</TABLE>
2
<PAGE> 5
RAYONIER TIMBERLANDS, L.P.
STATEMENTS OF CASH FLOWS
For the Quarters Ended March 31, 1994 and 1993
(unaudited)
(thousands of dollars)
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Partnership income $ 43,193 $ 23,014
Non-cash items included in income
Depletion, depreciation and amortization 1,945 2,229
Minority interest of General Partners in RTOC 436 233
Increase in receivables (8,219) (971)
Decrease in prepaid logging roads 801 235
Increase in advance deposits 366 1,811
Increase in accounts payable and
accrued liabilities 3,122 191
Other changes in working capital (67) (196)
-------- -------
Cash provided by operating activities 41,577 26,546
======== =======
INVESTING ACTIVITIES
Capital expenditures less sales and retirements
of $87 and $3 in 1994 and 1993 (3,779) (3,267)
Increase in Primary Account
short-term investment notes of Rayonier (4,800) (29,500)
Settlement of Primary Account short-term
investment notes of Rayonier 75,000 25,000
Increase in long-term receivables (1,297) -
Decrease (increase) in other assets 20 (12)
-------- -------
Cash provided by (used for) investing activities 65,144 (7,779)
======== =======
FINANCING ACTIVITIES
Decrease in timber obligations (116) (323)
Increase in Secondary Account long-term notes
payable to Rayonier 6,100 6,100
Partnership distributions (111,579) (24,211)
Distributions to General Partners of RTOC - net (1,127) (242)
Recontributions by Rayonier and
General Partners of RTLP - 390
-------- -------
Cash used for financing activities (106,722) (18,286)
======== =======
CASH
Net (decrease) increase in cash during quarter (1) 481
Balance at beginning of quarter 16 263
------- -------
Balance at end of quarter $ 15 $ 744
======= =======
Supplemental disclosures of cash flow information
Cash received for interest - Primary Account $ 1,309 $ 1,351
======= =======
</TABLE>
3
<PAGE> 6
RAYONIER TIMBERLANDS, L.P.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Rayonier Timberlands, L.P. (RTLP), a Delaware limited partnership, began
operations on November 20, 1985 succeeding to substantially all of the
timberlands business of Rayonier Inc. (Rayonier). Rayonier Forest Resources
Company (RFR), a wholly owned subsidiary of Rayonier, is the Managing General
Partner of RTLP and Rayonier is the Special General Partner of RTLP.
RTLP operates through Rayonier Timberlands Operating Company, L.P. (RTOC), a
Delaware limited partnership, in which RTLP holds a 99 percent limited partner
interest, and RFR and Rayonier together hold a 1 percent general partner
interest. RFR is the Managing General Partner of RTOC and Rayonier is the
Special General Partner of RTOC.
In addition to its General Partners' interests, Rayonier is also a Limited
Partner and owns 74.7 percent of RTLP's issued and outstanding Class A Units
and 100 percent of RTLP's issued and outstanding Class B Units.
RTLP and RTOC have no officers, directors or employees. The officers,
directors and employees of Rayonier and RFR perform all management and business
activities for RTLP and RTOC.
ALLOCATIONS OF PARTNERSHIP INTEREST
RTLP records all of its activities in two accounts, the Primary Account and the
Secondary Account. The Class A unitholders, the Class B unitholders and the
General Partners all participate in both accounts, but in different
percentages. The participation in the revenues and expenses of RTLP is as
follows:
<TABLE>
<CAPTION>
Primary Secondary
Account Account
------- -------
<S> <C> <C>
Class A unitholders 95% 4%
Class B unitholders 4% 95%
General Partners 1% 1%
---- ----
Total 100% 100%
==== ====
</TABLE>
IN ACCORDANCE WITH RTLP'S PARTNERSHIP AGREEMENT THE PRIMARY ACCOUNT WILL BE
CLOSED AT THE END OF THE INITIAL TERM ON DECEMBER 31, 2000. SUBSEQUENT TO THAT
DATE THE CLASS A UNITHOLDERS WILL ONLY PARTICIPATE IN 4 PERCENT OF THE REVENUES
AND EXPENSES OF RTLP, AND CASH FLOW ONLY AFTER ALL SECONDARY ACCOUNT DEBT HAS
BEEN REPAID.
INVESTING AND FINANCING ACTIVITIES
The excess of operating cash flow generated by the Primary Account over amounts
distributed to unitholders are invested with Rayonier in accordance with the
Partnership Agreement and are repayable on demand. Interest is due quarterly
and the stated interest rates are at least equivalent to the rate Rayonier
would be charged by an outside party for equivalent short-term borrowings.
The Partnership has expenditures that relate primarily to timber that will be
harvested after the Initial Term, such as costs of site preparation, planting,
reforestation, pre-commercial thinning and similar activities, all of which are
allocated to the Secondary Account of the Partnership. Rayonier funds these
expenditures on behalf of the Partnership and, in accordance with the
Partnership Agreement, RTLP incurs obligations to Rayonier which mature on
January 1, 2001.
Under the terms of the Partnership Agreement, cash credited to the Primary
Account may not be loaned or otherwise used for the benefit of the Secondary
Account. Accordingly, the Partnership is not permitted to use proceeds from
the Primary Account Short-Term Investment Notes of Rayonier to repay the
Secondary Account Long-Term Notes Payable to Rayonier.
4
<PAGE> 7
RAYONIER TIMBERLANDS, L.P.
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
PARTNERS' CAPITAL
An analysis of the activity in the Partners' Capital accounts of RTLP for the
quarters ended March 31, 1994 and 1993 is as follows, in thousands of dollars:
<TABLE>
<CAPTION>
Limited Partners General Partners Total
---------------- ---------------- -----
<S> <C> <C> <C>
Balance, January 1, 1994 $ 243,844 $ 5,962 $ 249,806
Partnership Income 42,761 432 43,193
Partnership Distributions - net (110,463) (1,116) (111,579)
-------- ------ --------
Balance, March 31, 1994 $ 176,142 $ 5,278 $ 181,420
======== ====== ========
Balance, January 1, 1993 $ 257,366 $ 6,097 $ 263,463
Partnership Income 22,784 230 23,014
Partnership Distributions - net (23,583) (238) (23,821)
-------- ------ --------
Balance, March 31, 1993 $ 256,567 $ 6,089 $ 262,656
======== ====== ========
</TABLE>
Partnership Distributions - net represent RTLP distributions less
recontributions by Rayonier and RFR. The amount recontributed by Rayonier and
RFR is equal to the foreign sales commission expense paid by the Partnership
during the period, which is fully allocated to Rayonier and the General
Partners. Effective August 10, 1993 legislation was enacted eliminating tax
benefits related to log exports for foreign sales corporations. Accordingly,
no foreign sales commission expense and therefore no recontributions were
recorded during the first quarter of 1994.
In addition to the RTLP distributions, RTOC distributed $1,127,000 and $245,000
to its General Partners during the first quarter of 1994 and 1993,
respectively. Recontributions were made in 1993 to RTOC by the General
Partners for their interest in the commission expense paid.
5
<PAGE> 8
RAYONIER TIMBERLANDS, L.P.
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
2. COMPUTATION OF INCOME PER CLASS A UNIT
The Partnership Agreement provides for the allocation of Partnership income
among the General and Limited Partners. The following tables present the
computation of income per Class A Unit for the quarters ended March 31, 1994
and 1993 (thousands of dollars, except per unit data):
<TABLE>
<CAPTION>
1994 1993
------------------------ ------------------------
Primary Secondary Primary Secondary
Account Account Account Account
------- ------- ------- -------
<S> <C> <C> <C> <C>
Timber and Timberland Sales $53,776 $ 435 $31,113 $ 96
Interest and Other Income - net 1,362 (2,581) 1,409 (2,202)
Costs and Expenses (8,463) (900) (6,181) (645)
Interest of General Partners
in RTOC (466) 30 (264) 28
------ ------ ------ ------
Partnership Income before
Commission Expense 46,209 (3,016) 26,077 (2,723)
Commission Expense - net of 1%
General Partner interest - - (340) -
------ ------ ------ ------
Partnership Income $46,209 $(3,016) $25,737 $(2,723)
====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Publicly Rayonier Publicly Rayonier
Traded Owned Traded Owned
A Units A Units A Units A Units
------- ------- ------- -------
<S> <C> <C> <C> <C>
Income for Class A Units
before Commission Expense
95% of Primary Account $11,106 $32,793 $ 6,268 $18,506
4% of Secondary Account (31) (90) (28) (81)
------ ------ ------ ------
11,075 32,703 6,240 18,425
Commission Expense - - - (323)
------ ------ ------ ------
Total Income for Class A Units $11,075 $32,703 $ 6,240 $18,102
====== ====== ====== ======
Units Outstanding 5,060,000 14,940,000 5,060,000 14,940,000
========= ========== ========= ==========
Income Per Class A Unit $ 2.19 $ 2.19 $ 1.23 $ 1.21
====== ====== ====== ======
</TABLE>
6
<PAGE> 9
RAYONIER TIMBERLANDS, L.P.
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
3. OPERATING CASH FLOW ALLOCABLE TO CLASS A UNITS
Operating cash flow allocable to a Class A Unit is calculated by multiplying 99
percent (Limited Partners' interest in RTLP) of operating cash flow allocated
to the Primary and Secondary Accounts by the respective 95 percent and 4
percent Class A Unit interest in those accounts. In determining operating cash
flow, Partnership results are adjusted for non-cash costs and expenses without
the effects of changes in working capital. The following tables present the
calculations of operating cash flow allocable to Class A Units for the quarters
ended March 31, 1994 and 1993 (thousands of dollars, except per unit data):
<TABLE>
<CAPTION>
1994 1993
------------------------- -------------------------
Primary Secondary Primary Secondary
Account Account Account Account
------- ------- ------- -------
<S> <C> <C> <C> <C>
Timber and Timberland Sales $53,776 $ 435 $31,113 $ 96
Interest and Other Income - net 1,362 (2,581) 1,409 (2,202)
Costs and Expenses - other than
non-cash items, commissions
and the General Partners'
interest in RTOC (6,565) (777) (3,999) (596)
Capital Expenditures (961) (2,905) (731) (2,539)
General Partners' interest
in RTOC (476) 58 (278) 52
------ ------ ------ ------
Operating Cash Flow before
Commission Expense 47,136 (5,770) 27,514 (5,189)
Commission Expense - net of
1% General Partner interest - - (340) -
------ ------ ------ ------
Operating Cash Flow $47,136 $(5,770) $27,174 $(5,189)
====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Publicly Rayonier Publicly Rayonier
Traded Owned Traded Owned
A Units A Units A Units A Units
------- ------- ------- -------
<S> <C> <C> <C> <C>
Cash Allocable to Class A Units
before Commission Expense
95% of Primary Account $11,329 $33,450 $ 6,613 $19,525
4% of Secondary Account (58) (173) (53) (155)
------ ------ ------ ------
11,271 33,277 6,560 19,370
Commission Expense - - - (323)
------ ------ ------ ------
Operating Cash Flow
Allocable to Class A Units $11,271 $33,277 $ 6,560 $19,047
====== ====== ====== ======
Units Outstanding 5,060,000 14,940,000 5,060,000 14,940,000
========= ========== ========= ==========
Primary Account Cash Flow
Per Unit $ 2.24 $ 2.24 $ 1.31 $ 1.28
Secondary Account Cash Flow
Per Unit (.01) (.01) (.01) (.01)
------ ------ ------ ------
Operating Cash Flow
Allocable to a Class A Unit $ 2.23 $ 2.23 $ 1.30 $ 1.27
====== ====== ====== ======
</TABLE>
7
<PAGE> 10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
First quarter 1994 results improved over the comparable 1993 level primarily as
a result of timber sales contract harvesting carried over from the last half of
1993.
The following table summarizes the sales, operating income and selected
operating statistics of the Partnership, for the periods indicated, by United
States geographic region (in thousands of dollars):
<TABLE>
<CAPTION>
For the Quarter Ended March 31,
-------------------------------
1994 1993
---- ----
<S> <C> <C>
TIMBER SALES
Northwest $41,954 $16,561
Southeast 11,823 14,552
------ ------
Total Timber Sales 53,777 31,113
------ ------
TIMBERLAND SALES
Northwest 281 82
Southeast 153 14
------ ------
Total Timberland Sales 434 96
------ ------
TOTAL SALES $54,211 $31,209
====== ======
OPERATING INCOME
Northwest $36,548 $13,889
Southeast 8,895 11,129
Corporate and Other (439) (795)
------ ------
Total Operating Income $45,004 $24,223
====== ======
PARTNERSHIP INCOME $43,193 $23,014
====== ======
SELECTED OPERATING STATISTICS
Northwest Harvest Volumes
Stumpage (thousands of MBF) 54.1 35.6
Delivered Logs (thousands of MBF) 11.6 8.1
------ ------
Total Northwest 65.7 43.7
====== ======
Southeast Harvest Volumes
Pine (thousands of tons) 435.0 552.3
Hardwoods (thousands of tons) 14.7 19.0
------ ------
Total Southeast 449.7 571.3
====== ======
</TABLE>
Sales for the quarter ended March 31, 1994 were $54.2 million, representing an
increase of $23.0 million, or 74 percent, over the results of the first quarter
1993. Timber sales were $53.8 million, increasing $22.7 million, or 73
percent, over the comparable 1993 period primarily as a result of timber sales
contract harvesting in the Northwest region that was carried over from the last
half of 1993. Timberland sales of $0.4 million in 1994 were $0.3 million
higher than the 1993 period.
Partnership income for the first quarter of 1994 was $43.2 million or $2.19 per
(publicly traded) Class A Unit compared to $23.0 million or $1.23 per Class A
Unit for the first three months of 1993. Operating cash flow allocable to a
Class A Unit was $2.23 per unit as compared to $1.30 per unit in the prior
year.
In the Northwest, most of the timber from Partnership lands is resold by the
Partnership's customers into log export markets, primarily in Japan, Korea and
China. In this region, both volume and prices were significantly greater than
prior year. Prices realized on stumpage contracts in the first quarter of 1994
were almost double those realized in 1993's first quarter. Stumpage volume in
this year's first quarter was approximately 50 percent greater than that of the
prior year as declining export prices in 1993 caused Partnership customers to
delay harvesting their contracts until 1994. As a result, sales for the
Northwest region increased 154 percent to $42.2 million while operating income
for the region increased 163 percent to $36.5 million. Management estimates
that
8
<PAGE> 11
additional Partnership income of approximately $14 million or $0.66 per Class A
Unit resulted from 1993 volume carried over to 1994.
In the Southeast, pulpwood timber harvested from Partnership lands is sold by
customers to mills for the production of pulp and paper with sawlog timber sold
to lumber and plywood manufacturers. In this region, sales declined 18 percent
to $12.0 million and operating income declined 20 percent to $8.9 million
reflecting lower sales volumes due to softening demand in the pulp and paper
industry. Pine harvest volume decreased approximately 21 percent as pulp and
lumber mills reduced their wood inventories from higher winter levels. First
quarter 1994 average pine prices remained relatively unchanged when compared to
first quarter 1993's prices.
The harvest level of stumpage in the Northwest and pine in the Southeast for
the first quarter of 1994 represents approximately 34 percent and 24 percent,
respectively, of the current projection of this year's harvests whereas in the
first quarter of 1993 the stumpage and pine harvest volumes were 33 percent and
32 percent, respectively, of the actual full year harvests.
Corporate and other operating income is comprised of general and administrative
expenses not specifically attributable to either the Northwest or Southeast
region. Corporate expenses decreased $0.4 million during the first quarter of
1994 primarily due to the elimination of commission expenses that were paid to
a foreign sales corporation affiliated with the Partnership's Special General
Partner, Rayonier. Legislation, enacted effective August 10, 1993, eliminated
tax benefits related to log exports for foreign sales corporations. The
Partnership's commission expense had been fully allocated to Rayonier and the
General Partners, and therefore the legislation did not impact the earnings or
cash flows of the publicly traded Class A Units. For a full description, see
Notes to Financial Statements - Note 1 - Special Allocations in the
Partnership's 1993 annual report on Form 10-K.
Operating costs and expenses for the first quarter of 1994 were $9.4 million,
an increase of $2.2 million over 1993. Cost of timber sold rose $2.0 million
in 1994, reflecting higher logging costs in the Northwest region resulting from
increased contract logging and pre-commercial thinning activities. Forest
management, overhead and general and administrative expenses increased $0.4
million reflecting higher spending related to road maintenance and
environmental impact research.
Interest income, earned mainly from the Primary Account's short-term investment
notes of Rayonier, decreased slightly to $1.3 million in 1994 due to lower
interest rates. Interest expense, on increased loans and advances to the
Secondary Account by Rayonier, rose $0.4 million to $2.7 million.
FUTURE OPERATIONS
As of March 31, 1994, volume representing approximately 80 percent of the
projected 1994 stumpage and pine harvest had been cut or committed under
contract whereas volume representing 85 percent of the final 1993 harvest had
been cut or committed for as of March 31, 1993. At March 31, 1994, Rayonier
accounts for approximately 12 percent and 1 percent of the uncut volume under
contract in the Northwest and Southeast regions, respectively. In addition,
three customers under common ownership and one additional customer account for
approximately 41 percent and 19 percent, respectively, of the uncut volume in
the Northwest while one customer accounts for approximately 10 percent of the
uncut volume under contract in the Southeast; none of these customers are
affiliated with the Partnership. Contract terms allow for harvesting over
various time periods and volume currently under contract may not be fully cut
within this fiscal year.
LIQUIDITY AND CASH FLOW
As of March 31, 1994, the Partnership was due trade and intercompany
receivables from Rayonier and affiliates of $4.0 million. In addition, the
Primary Account of the Partnership held $36.0 million of short-term investment
notes of Rayonier resulting from the cumulative net cash flow, since inception,
of the Primary Account after distributions to unitholders. The Partnership can
call the short-term investment notes at any time to fund Partnership working
capital requirements, capital expenditures and reserves. At the end of the
first quarter of 1994, the Partnership called, or otherwise had mature, $75.0
million of the short-term investment notes to fund a special distribution of
$4.00 per Class A Unit paid on March 31, 1994. As a result of this
transaction, interest income of the Partnership for the remainder of 1994 will
be significantly lower than that of the prior year.
9
<PAGE> 12
The Secondary Account of the Partnership had total outstanding debt of $127.9
million at March 31, 1994 including long-term notes payable to Rayonier of
$127.0 million that mainly represent the obligations incurred as a result of
Secondary Account advances by Rayonier. Capital expenditures for the quarters
ended March 31, 1994 and 1993 were $3.9 million and $3.3 million, respectively.
Funding of future capital requirements is expected to continue from Rayonier.
On March 31, 1994 and 1993, the Partnership made quarterly distributions of
$26.0 million ($1.30 per Unit) and $23.0 million ($1.15 per Unit), respectively
to all outstanding Class A unitholders. In addition, the Partnership made a
special distribution of $80.0 million ($4.00 per Unit) on March 31, 1994. The
special distribution was declared following a determination by the Managing
General Partner that cash and investment balances would likely exceed funding
requirements for the balance of the Initial Term ending on December 31, 2000.
Quarterly distributions of $1.4 million and $1.2 million were also made to
Class B unitholders and to the General Partners in the first quarter of 1994
and 1993, respectively. Furthermore, $4.2 million was distributed to Class B
unitholders and to the General Partners in connection with the special
distribution. On March 31, 1993, recontributions of $0.4 million were made by
Rayonier and the General Partners of RTLP relating to the commission expense
paid to a Rayonier affiliated foreign sales corporation.
When the Initial Term ends on December 31, 2000, the Primary Account of the
Partnership will be closed but there will not be any redemption of the
partners' capital accounts. The interest of Class A unitholders in the
Partnership's future revenues, expenses and cash flows will then decrease from
95 percent to 4 percent. Positive cash flows will be substantially affected by
Secondary Account debt that will have to be repaid. As a result, it is
expected that the market price of Class A Units should begin to decline
substantially sometime prior to December 31, 2000.
10
<PAGE> 13
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) See Exhibit Index
(b) Rayonier Timberlands, L.P. did not file any Report on Form 8-K during
the quarter covered by this report.
SIGNATURES
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 TIMBERLANDS, L.P.
(A Delaware Limited Partnership)
By: RAYONIER FOREST RESOURCES
COMPANY
Managing General Partner
By GEORGE S. ARESON
------------------------
George S. Areson
Acting Corporate Controller
May 16, 1994
11
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION LOCATION
----------- --------------------------------------------- --------
<S> <C> <C>
2 Plan of acquisition, reorganization, None
arrangement, liquidation or
succession
4 Instruments defining the rights None
of security holders, including
indentures
10.1 Form of Indemnification Agreement Filed herewith
between Rayonier Inc., Special
General Partner of Registrant,
and directors of Registrant's
Managing General Partner who
are not also directors of Rayonier Inc.
10.2 Other material contracts None
11 Statement re computation None
of per share earnings
15 Letter re unaudited interim None
financial information
18 Letter re change in accounting None
principles
19 Report furnished to security holders None
22 Published report regarding None
matters submitted to vote
of security holders
23 Consents of experts and counsel None
24 Power of attorney None
99 Additional exhibits None
</TABLE>
12
<PAGE> 1
EXHIBIT 10.1
- - ---------------
Name of Director
INDEMNIFICATION AGREEMENT
AGREEMENT, effective as of February 28, 1994 between Rayonier Inc., a
North Carolina corporation (the "Company"), and ----------------------- (the
"Indemnitee").
WHEREAS, the Indemnitee has been requested by the Company to serve as
a director of Rayonier Forest Resources Company ("RFR"), a Delaware corporation
and a wholly owned subsidiary of the Company, which is the managing general
partner of Rayonier Timberlands, L.P. and Rayonier Timberlands Operating
Company, L.P. (both such partnerships being collectively referred to as the
"Partnerships"); and /FS
WHEREAS, in recognition of the Indemnitee's need for substantial
protection against personal liability, the Company wishes to provide in this
Agreement for the indemnification of and the advancement of expenses to the
Indemnitee to the fullest extent permitted by law and as set forth in this
Agreement, and, to the extent insurance is maintained, for the continued
coverage of Indemnitee under the Company's directors and officers liability
insurance policies.
NOW, THEREFORE, in consideration of the premises and of the Indemnitee
continuing to serve RFR at the Company's request, and intending to be legally
bound hereby, the parties hereto do hereby covenant and agree as follows:
1. INDEMNITY. The Company shall hold harmless and indemnify (or cause
RFR to indemnify) the Indemnitee against all expenses and liabilities incurred
by the Indemnitee in connection with any actual or threatened claim, action,
suit or proceeding, whether civil, criminal, administrative, investigative or
other, whether brought by another party or by or in the right of RFR or the
Company or otherwise, in which the Indemnitee may be involved in any manner, as
a party, witness or otherwise, or in which the Indemnitee is threatened to be
made so involved, by reason of the fact that the Indemnitee was or is a
director of RFR (any such claim, action suit or proceeding being hereinafter
referred to as an "Action"). The term "expenses" shall include fees and
expenses of counsel selected by the Indemnitee and "liabilities" shall include
amounts of judgments, excise taxes, fines, penalties and amounts paid in
settlement.
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2. ADVANCEMENT OF EXPENSES. The Company shall pay in advance (or
cause RFR to pay in advance) all expenses incurred by the Indemnitee in
defending an Action in advance of the final disposition of such Action,
provided the Indemnitee complies with his obligations under Section 3.
3. OBLIGATIONS OF THE INDEMNITEE. Promptly after receipt by the
Indemnitee of notice of the commencement of any Action in respect of which the
Indemnitee may seek indemnification or advancement of Expenses, the Indemnitee
shall notify the Company in writing of the commencement of such Action, but the
omission so to notify the Company shall not relieve the Company or RFR of any
obligation it may have to indemnify or advance expenses to the Indemnitee
otherwise than under this Agreement. The Indemnitee agrees that he shall
immediately reimburse the Company (or RFR, as the case may be) for any amount
advanced or paid by the Company or RFR to the Indemnitee under this Agreement
(1) if it shall be finally determined that the Indemnitee did not act in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of RFR or (2) upon receipt by the Indemnitee of the amount so
advanced by the Company or RFR under any insurance policy or other agreement.
4. TERM OF AGREEMENT. This Agreement shall continue until and
terminate upon the later of (i) the tenth anniversary after the date that the
Indemnitee shall have ceased to serve as a director of RFR or (ii) the final
termination of all pending Actions in respect of which Indemnitee is granted
rights of indemnification or advancement of expenses hereunder, including any
Action commenced by the Indemnitee to enforce the Indemnitee's rights under
this Agreement.
5. SUCCESS; PARTIAL INDEMNITY, ETC. To the extent that the Indemnitee
has been successful on the merits or otherwise in defense of any or all claims
made against him in an Action or in defense of any issue or matter therein,
including dismissal without prejudice, the Indemnitee shall be indemnified
against all expenses incurred in connection therewith. If the Indemnitee is
entitled under any provision of this Agreement to indemnification by the
Company for some or a portion of the expenses, judgments, settlements,
penalties or fines paid as a result of a Action but not, however, for all of
the total amount thereof, the Company shall nevertheless indemnify the
Indemnitee for the portion thereof to which the Indemnitee is entitled.
6. BURDEN OF PROOF. In connection with any determination as to
whether the Indemnitee is entitled to be indemnified hereunder, the person or
persons or entity or body making such determination shall presume that the
Indemnitee is entitled to indemnification under this Agreement and the burden
of overcoming such presumption by clear and convincing evidence shall be on the
Company.
7. NONEXCLUSIVITY, ETC. The rights of the Indemnitee hereunder shall
be in addition to any other rights the Indemnitee may have under the
Certificate of
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Incorporation or by-laws of RFR, the Delaware General Corporation Law, the
partnership agreement of either Partnership or otherwise.
8. CONTRIBUTION. In the event the indemnification provided for in
Section 1 of this Agreement is unavailable to the Indemnitee in connection with
any Action under any Federal law, the Company, in lieu of indemnifying the
Indemnitee, shall contribute to the expenses incurred by the Indemnitee in such
proportion as deemed fair and reasonable by the reviewing party, in light of
all the circumstances of the Action giving rise to such expenses, in order to
reflect (i) the relative benefits received by the Company or RFR and the
Indemnitee as a result of the event(s) and/or transaction(s) giving rise to
such Action and (ii) the relative fault of each.
9. LIABILITY INSURANCE. To the extent the Company maintains an
insurance policy or policies providing directors' and officers' liability
insurance, the Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer.
10. PERIOD OF LIMITATIONS. No legal action shall be brought and no
cause of action shall be asserted by or in the right of the Company against the
Indemnitee, the Indemnitee's spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a
legal action within such two-year period; provided, however, that if any
shorter period of limitations is otherwise applicable to any such cause of
action such shorter period shall govern.
11. PROCEDURES VALID. The Company shall be precluded from asserting
in any judicial proceeding or arbitration commenced pursuant to this Agreement
that the procedures and presumptions of this Agreement are not valid, binding
and enforceable and shall stipulate in any such court or before any such
arbitrator that the Company is bound by all the provisions of this Agreement.
If a determination is made that the Indemnitee is entitled to indemnification,
the Company shall be bound by such determination in any judicial proceeding or
arbitration
12. AMENDMENTS, ETC. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both of the parties
hereto. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.
13. SUBROGATION. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of the Indemnitee, who shall execute an appropriate document in
favor of the Company to secure such rights.
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14. NO DUPLICATION OF PAYMENTS. The Company shall not be liable under
this Agreement to make any payment in connection with any Action to the extent
the Indemnitee has otherwise actually received payment (under any insurance
policy or otherwise) of the amounts otherwise indemnifiable hereunder.
15. BINDING EFFECT, ETC. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors, assigns (including any direct or indirect successor by
purchase, merger or consolidation or otherwise to all or substantially all of
the business and/or assets of the Company), spouses, heirs, executors and
personal and legal representatives. This Agreement shall continue in effect
regardless of whether Indemnitee continues to serve as a director of RFR at the
Company's request. In the event of his demise, this agreement shall be
enforceable by the Indemnitee's legal representatives as fully as if the
Indemnitee had survived.
16. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in such state without giving effect to the
principles of conflicts of laws
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
RAYONIER INC.
By ------------------------
Chairman, President and Chief
Executive Officer
--------------------------------
[Name and Address of Indemnitee]
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