<PAGE>
<PAGE>
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, 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>
<PAGE>
RAYONIER TIMBERLANDS, L.P.
TABLE OF CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Income for the
Second Quarter and the Six Months
Ended June 30, 1994 and 1993 1
Balance Sheets as of June 30, 1994
and December 31, 1993 2
Statements of Cash Flows for the
Six Months Ended June 30, 1994 and 1993 3
Notes to Financial Statements 4 - 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Six Months
Ended June 30, 1994 and 1993 8 - 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
Signature 11
Exhibit Index 12
i
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<PAGE>
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
(unaudited)
(thousands of dollars, except per unit data)
<TABLE>
<CAPTION> Six Months Ended
Second Quarter June 30,
---------------- -----------------
1994 1993 1994 1993
------ ------ ------ ------
<S> <C> <C> <C> <C>
SALES
Timber sales
Unaffiliated parties $29,220 $26,380 $78,457 $49,173
Rayonier 3,713 3,575 8,253 11,895
------ ------ ------ ------
32,933 29,955 86,710 61,068
Timberland sales 74 417 508 513
------ ------ ------ ------
33,007 30,372 87,218 61,581
COSTS AND EXPENSES ------ ------ ------ ------
Cost of timber sold
Unaffiliated parties 4,883 3,696 10,779 6,892
Rayonier 566 498 1,077 1,681
------ ------ ------ ------
5,449 4,194 11,856 8,573
Cost of timberland sold 21 84 112 92
Forest management, overhead
and general and
administrative expenses 2,798 2,893 5,663 5,332
Commission expense paid to
affiliate 86 89 86 432
------ ------ ------ ------
8,354 7,260 17,717 14,429
------ ------ ------ ------
OTHER OPERATING INCOME 837 487 993 670
------ ------ ------ ------
OPERATING INCOME 25,490 23,599 70,494 47,822
------ ------ ------ ------
OTHER INCOME AND DEDUCTIONS
Primary Account interest
income from Rayonier 580 1,307 1,889 2,656
Secondary Account interest
expense to Rayonier (2,720) (2,359) (5,404) (4,684)
Minority interest of General
Partners in RTOC (234) (225) (670) (458)
------ ------ ------ ------
(2,374) (1,277) (4,185) (2,486)
------ ------ ------ ------
PARTNERSHIP INCOME $23,116 $22,322 $66,309 $45,336
====== ====== ====== ======
Income Per Publicly Traded
Class A Unit* $ 1.24 $ 1.19 $ 3.43 $ 2.42
====== ====== ====== ======
Income Per Rayonier Owned
Class A Unit* $ 1.24 $ 1.18 $ 3.43 $ 2.39
====== ====== ====== ======
* Refer to calculations on page 6.
</TABLE>
1
<PAGE>
<PAGE>
RAYONIER TIMBERLANDS, L.P.
BALANCE SHEETS
(unaudited)
(thousands of dollars)
ASSETS
<TABLE> June 30, December 31,
<CAPTION> 1994 1993
-------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 298 $ 16
Receivables - net 15,324 4,798
Inventories 509 362
Prepaid logging roads 3,258 3,948
Primary Account short-term
investment notes of Rayonier 35,000 106,200
Trade and intercompany receivables
from Rayonier and affiliates 4,354 4,146
------- -------
Total current assets 58,743 119,470
LONG TERM RECEIVABLES 220 1,123
OTHER ASSETS - 112
FIXED ASSETS - NET 944 983
TIMBER, TIMBERLANDS AND LOGGING
ROADS, LESS DEPLETION AND
AMORTIZATION 269,038 265,769
------- -------
$328,945 $387,457
======= =======
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES
Advance deposits $ 6,329 $ 5,282
Accounts payable 4,267 2,257
Accrued liabilities
Taxes 2,187 1,580
All other 592 611
Current timber obligations 148 138
Advances from Rayonier 107 73
------- -------
Total current liabilities 13,630 9,941
SECONDARY ACCOUNT LONG-TERM
NOTES PAYABLE TO RAYONIER 132,200 120,900
LONG-TERM TIMBER OBLIGATIONS 667 793
MINORITY INTEREST OF GENERAL
PARTNERS IN RTOC 5,283 6,017
PARTNERS' CAPITAL
General Partners 5,235 5,962
Limited Partners (20,000,000
Class A Depositary Units
and 20,000,000 Class B
Depositary Units
issued and outstanding) 171,930 243,844
------- -------
$328,945 $387,457
======= =======
</TABLE>
2
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<PAGE>
RAYONIER TIMBERLANDS, L.P.
STATEMENTS OF CASH FLOWS
(unaudited)
(thousands of dollars)
<TABLE>
<CAPTION> Six Months Ended June 30,
-------------------------
1994 1993
------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Partnership income $ 66,309 $ 45,336
Non-cash items included
in income
Depletion, depreciation
and amortization 3,679 4,060
Minority interest of
General Partners in RTOC 670 458
Increase in receivables (10,526) (811)
Decrease in prepaid logging roads 690 800
Increase in advance deposits 1,047 1,918
Increase in accounts payable
and accrued liabilities 2,598 486
Other changes in working capital (321) (148)
------- -------
Cash provided by operating
activities 64,146 52,099
======= =======
INVESTING ACTIVITIES
Capital expenditures less sales
and retirements of $103 and $64
in 1994 and 1993 (6,909) (6,757)
Increase in Primary Account
short-term investment notes
of Rayonier (8,600) (58,800)
Settlement of Primary Account
short-term investment notes
of Rayonier 79,800 51,100
Decrease in long-term receivables 903 -
Decrease in other assets 112 11
------- -------
Cash provided by (used for)
investing activities 65,306 (14,446)
======= =======
FINANCING ACTIVITIES
Decrease in timber obligations (116) (323)
Increase in Secondary Account
long-term notes payable to
Rayonier 11,300 11,100
Partnership distributions (138,950) (48,422)
Distributions to General
Partners of RTOC - net (1,404) (485)
Recontributions by Rayonier
and General Partners of RTLP - 550
------- -------
Cash used for financing
activities (129,170) (37,580)
======= =======
CASH
Net increase in cash 282 73
Balance at beginning of year 16 263
------- -------
Balance at end of period $ 298 $ 336
======= =======
Supplemental disclosures of
cash flow information
Cash received for interest
- Primary Account $ 1,889 $ 2,658
======= =======
</TABLE>
3
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<PAGE>
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>
<PAGE>
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 six months ended June 30, 1994 and 1993 is as follows, in thousands of
dollars:
<TABLE>
<CAPTION> Limited General
Partners Partners Total
--------- -------- -------
<S> <C> <C> <C>
Balance, January 1, 1994 $ 243,844 $ 5,962 $ 249,806
Partnership Income 65,646 663 66,309
Partnership Distributions
- net (137,560) (1,390) (138,950)
-------- ------ --------
Balance, June 30, 1994 $ 171,930 $ 5,235 $ 177,165
======== ====== ========
Balance, January 1, 1993 $ 257,366 $ 6,097 $ 263,463
Partnership Income 44,882 454 45,336
Partnership Distributions
- net (47,394) (478) (47,872)
-------- ------ --------
Balance, June 30, 1993 $ 254,854 $ 6,073 $ 260,927
======== ====== ========
</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, the Partnership will not incur foreign sales
commission expense for sales made after August 10, 1993. However, during
the second quarter of 1994, the Partnership recorded commission expenses of
$0.1 million to adjust its accrual for commissions on sales made prior to
the legislation's effective date.
In addition to the RTLP distributions, RTOC distributed $1.4 million and
$0.5 million to its General Partners during the first six months of 1994
and 1993, respectively. Recontributions were made to RTOC by the General
Partners for their interest in the commission expense paid.
5
<PAGE>
<PAGE>
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 six months ended June 30,
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 $ 86,710 $ 508 $ 61,068 $ 513
Interest and Other
Income - net 2,471 (4,993) 3,115 (4,473)
Costs and Expenses (15,919) (1,712) (12,529) (1,468)
Interest of General
Partners in RTOC (733) 62 (516) 54
------- ------- ------- -------
Partnership Income
before Commission
Expense 72,529 (6,135) 51,138 (5,374)
Commission Expense
- net of 1%
General Partner
interest (85) - (428) -
------- ------- -------- ------
Partership Income $ 72,444 $(6,135) $ 50,710 $(5,374)
======= ======= ======= =======
<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 $ 17,433 $ 51,471 $ 12,291 $ 36,290
4% of Secondary
Account (62) (183) (54) (161)
------- ------- -------- --------
17,371 51,288 12,237 36,129
Commission Expense - (81) - (407)
-------- ------- -------- --------
Total Income for
Class A Units $ 17,371 $ 51,207 $ 12,237 $ 35,722
======= ======= ======= =======
Units Outstanding 5,060,000 14,940,000 5,060,000 14,940,000
========= ========== ========= ==========
Income Per Class
A Unit $ 3.43 $ 3.43 $ 2.42 $ 2.39
</TABLE> ==== ==== ==== ====
6
<PAGE>
<PAGE>
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 six months ended June 30, 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 $86,710 $ 508 $61,068 $ 513
Interest and Other
Income - net 2,471 (4,993) 3,115 (4,473)
Costs and Expenses
- other than non-cash
items, commissions
and the General
Partners' interest
in RTOC (12,334) (1,528) (8,564) (1,314)
Capital Expenditures (1,379) (5,633) (1,152) (5,669)
General Partners'
interest in RTOC (755) 116 (545) 109
------- -------- ------- -------
Operating Cash Flow
before
Commission Expense 74,713 (11,530) 53,922 (10,834)
Commission Expense
- net of 1% General
Partner interest (85) - (428) -
------- -------- ------- --------
Operating Cash Flow $74,628 $(11,530) $53,494 $(10,834)
======= ======== ======= ========
<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 $17,957 $ 53,020 $12,960 $ 38,266
4% of Secondary
Account (117) (344) (110) (323)
------- ------- ------- -------
17,840 52,676 12,850 37,943
Commission Expense - (81) - (407)
------- ------- ------- -------
Operating Cash
Flow Allocable to
Class A Units $17,840 $ 52,595 $12,850 $ 37,536
====== ====== ====== ======
Units Outstanding 5,060,000 14,940,000 5,060,000 14,940,000
========= ========== ========= ==========
Primary Account
Cash Flow Per Unit $ 3.55 $ 3.54 $ 2.56 $ 2.53
Secondary Account
Cash Flow Per Unit (.02) (.02) (.02) (.02)
------- ------ ------- -------
Operating Cash Flow
Allocable to a
Class A Unit $ 3.53 $ 3.52 $ 2.54 $ 2.51
======= ====== ======= =======
</TABLE>
7
<PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations - Six Months Ended June 30, 1994 and 1993
Results of Operations
- ---------------------
Results for the first six months of 1994 improved over the comparable 1993
level with exceptionally strong first quarter results responsible for most
of the first half improvement.
The following table summarizes the sales, operating income, partnership
income and selected operating statistics of the Partnership, for the
periods indicated, by United States geographic region (in thousands of
dollars):
<TABLE>
<CAPTION> Second Quarter Six Months
Ended June 30, Ended June 30,
1994 1993 1994 1993
------- ------- ------- -------
<S> <C> <C> <C> <C>
Timber Sales
Northwest $22,034 $18,600 $63,988 $35,161
Southeast 10,899 11,355 22,722 25,907
------ ------ ------ ------
Total Timber Sales 32,933 29,955 86,710 61,068
------ ------ ------ ------
Timberland Sales
Northwest 10 - 291 82
Southeast 64 417 217 431
------ ------ ------ ------
Total Timberland Sales 74 417 508 513
------ ------ ------ ------
Total Sales $33,007 $30,372 $87,218 $61,581
====== ====== ====== ======
Operating Income
Northwest $17,591 $15,318 $54,139 $29,207
Southeast 8,421 8,847 17,316 19,976
Corporate and Other (522) (566) (961) (1,361)
------ ------ ------ ------
Total Operating Income $25,490 $23,599 $70,494 $47,822
====== ====== ====== ======
Partnership Income $23,116 $22,322 $66,309 $45,336
====== ====== ====== ======
Selected Operating
Statistics
Northwest Harvest Volumes
Stumpage (thousands
of MBF) 24.7 32.5 78.8 68.1
Delivered Logs
(thousands of MBF) 13.7 5.2 25.3 13.3
------ ------ ------ ------
Total Northwest 38.4 37.7 104.1 81.4
====== ====== ====== ======
Southeast Harvest Volumes
Pine (thousands of
tons) 415.6 445.9 850.6 998.2
Hardwoods (thousands
of tons) 35.9 23.7 50.6 42.7
------ ------ ------ -------
Total Southeast 451.5 469.6 901.2 1,040.9
====== ====== ====== =======
</TABLE>
Sales for the six months ended June 30, 1994 were $87.2 million,
representing an increase of $25.6 million, or 42 percent, over the first
half of 1993. Timber sales were $86.7 million, increasing $25.6 million,
or 42 percent, over the comparable 1993 period primarily as a result of
exceptionally strong first quarter results in the Northwest region.
Timberland sales were basically flat to prior year with $0.5 million
realized in both 1994 and 1993.
Partnership income for the first six months was $66.3 million or $3.43 per
(publicly traded) Class A Unit, an increase of $21.0 million, or 1.01 per
Class A Unit, over 1993 first half results. Operating cash flow allocable
to a Class A Unit rose $0.99 to $3.53 for the six months ended June 30,
1994.
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. Unfavorable market conditions during the second
half of 1993 caused customers to delay harvesting existing stumpage
contracts until 1994. As a result, sales volume in the Northwest region
was abnormally high in the first six months of 1994 with the combined
stumpage and delivered log volume 28 percent greater than that of the prior
8
<PAGE>
<PAGE>
year. Stumpage prices for the first half of 1994 were 55 percent greater
than those realized in the 1993's first half as stumpage prices were also
favorably impacted by the carryover of higher priced 1993 contracts.
Delivered log prices for the first six months of 1994 remained relatively
unchanged reflecting an increase in the quality of the log mix sold offset
by declining log market prices. As a result of increased harvest levels
and higher stumpage prices, sales for the Northwest region increased 82
percent to $64.3 million while operating income for the region increased 85
percent to $54.1 million.
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, first
half sales declined 13 percent to $22.9 million and operating income
declined 13percent to $17.3 million reflecting lower pine volume resulting
from softer demand in the pulp and paper industry and uncertainty over
lumber prices in the sawlog market. Pine harvest volume decreased
approximately 15 percent as pulp and lumber mills reduced their wood
inventories from higher winter levels. Southeast pine prices remained
relatively unchanged from last year.
The harvest level of stumpage and delivered logs in the Northwest and pine
in the Southeast for the first six months of 1994 represents approximately
50 percent and 44 percent, respectively, of the current projection of this
year's harvests whereas in the first half of 1993 the harvest levels of
stumpage and delivered logs in the Northwest and pine in the Southeast were
57 percent and 58 percent, respectively, of the actual full year harvests.
However, management cannot predict whether the projected contracted harvest
for the full year will be cut by its customers. See Future Operations.
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 half of 1994 primarily due to lower commission expenses
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. During the second quarter of 1994, the Partnership recorded
commission expenses of $0.1 million to adjust its accrual for prior year
commission expenses. 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 six months of 1994 were $17.7
million, an increase of $3.3 million over 1993. The increase was primarily
in the cost of timber sold reflecting additional logging costs in the
Northwest region resulting from increased contract logging and commercial
thinning activities.
Interest income, earned mainly from the Primary Account's short-term
investment notes of Rayonier, decreased $0.8 million to $1.9 million in
1994 due to a lower average balance of short-term investment notes of
Rayonier. Interest expense, on increased loans and advances to the
Secondary Account by Rayonier, rose $0.7 million to $5.4 million.
Second quarter 1994 sales of $33.0 million were $2.6 million higher than
1993 second quarter sales and Partnership income of $23.1 million increased
$0.8 million from the prior year. Income per Class A Unit rose $0.05 to
$1.24 while operating cash flow allocable to a Class A Unit increased $0.06
to $1.30.
In the Northwest region, second quarter harvest prices remained
significantly ahead of prior year levels as customers continued to close
out 1992 and 1993 contract commitments. Northwest sales volume in the
second quarter was basically flat with the prior year but 42 percent below
the first quarter's exceptionally high level. As a result of the increased
prices, second quarter operating income rose 15 percent in this region over
1993.
In the Southeast region, sales in the second quarter declined 7 percent to
$11.0 million. Second quarter operating income declined 5 percent to $8.4
million, due to lower pine volume resulting from softer seasonal demand in
the pulp and paper industry and uncertainty over lumber prices in the
sawlog market. Southeast pine prices, however, remained relatively level
with last year.
Future Operations
- -----------------
Contract terms allow customers to harvest their commitments over various
time periods, and therefore, volume currently under contract may not be
fully cut within this fiscal year. As of June 30, 1994, volume
representing approximately 95 percent of the projected 1994 stumpage and
pine harvest had been cut or committed under contract whereas volume
representing more than 100 percent of the final 1993 harvest had been cut
or committed for as of June 30, 1993. In 1993, a substantial volume of
timber under contract that was expected to be cut was carried over into
1994.
9
<PAGE>
<PAGE>
At June 30, 1994, Rayonier held contracts representing approximately 15
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 held contracts representing
approximately 27 percent and 18 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.
Liquidity and Cash Flow
- -----------------------
As of June 30, 1994, the Partnership was due trade and intercompany
receivables from Rayonier and affiliates of $4.4 million. In addition, the
Primary Account of the Partnership held $35.0 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, second quarter interest income of
the Partnership was significantly below that of the prior year and interest
income for the remainder of 1994 is expected to be lower than the prior
year.
The Secondary Account of the Partnership had total outstanding debt of
$133.1 million at June 30, 1994 including long-term notes payable to
Rayonier of $132.2 million that mainly represent the obligations incurred
as a result of Secondary Account advances by Rayonier. Capital
expenditures for the six months ended June 30, 1994 and 1993 were $7.0
million and $6.8 million, respectively. Funding of future capital
requirements is expected to continue from Rayonier.
On June 30, 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. Quarterly
distributions of $1.4 million and $1.2 million were also made to Class B
unitholders and to the General Partners in the second quarter of 1994 and
1993, respectively. On June 30, 1993, recontributions of $0.2 million were
made by Rayonier and the General Partners of RTLP relating to the
commission expense paid to a Rayonier affiliated foreign sales corporation.
On July 18, 1994 the Board of Directors of Rayonier Forest Resources
Company announced a third quarter distribution of $1.30 per Class A Unit.
The distribution will be paid September 30, 1994 to unitholders of record
on August 31, 1994.
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. Available cash flows will be substantially
reduced 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
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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.
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 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
August 11, 1994
11
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION LOCATION
----------- ------------------------------------------ --------
2 Plan of acquisition, reorganization, None
arrangement, liquidation or succession
4 Instruments defining the rights of security None
holders, including indentures
10 Material contracts None
11 Statement re computation of per share None
earnings
15 Letter re unaudited interim financial None
information
18 Letter re change in accounting principles None
19 Report furnished to security holders None
22 Published report regarding matters submitted None
to vote of security holders
23 Consents of experts and counsel None
24 Power of attorney None
99 Additional exhibits None
12
