<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, 1995
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 Number 06-1148227
1177 Summer Street, Stamford, Connecticut 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>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Income for the Three Months and
Six Months Ended June 30, 1995 and 1994 1
Balance Sheets as of June 30, 1995 and
December 31, 1994 2
Statements of Cash Flows for the Six Months Ended
June 30, 1995 and 1994 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
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
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. Certain
reclassifications have been made to the prior year's financial statements to
conform to current year presentation. For a full description of accounting
policies, see Notes to Financial Statements in the 1994 Annual Report on Form
10-K.
RAYONIER TIMBERLANDS, L.P.
STATEMENTS OF INCOME
(UNAUDITED)
(THOUSANDS OF DOLLARS, EXCEPT PER UNIT INFORMATION)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
--------------------------- ---------------------------
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
SALES
Timber sales
Unaffiliated parties $ 30,207 $ 29,220 $ 67,049 $ 78,457
Rayonier 6,575 3,713 15,817 8,253
--------- --------- --------- ---------
36,782 32,933 82,866 86,710
Timberland sales 83 74 2,554 508
--------- --------- --------- ---------
36,865 33,007 85,420 87,218
--------- --------- --------- ---------
COSTS AND EXPENSES
Cost of timber sold
Unaffiliated parties 4,678 4,883 9,720 10,779
Rayonier 1,048 566 2,301 1,077
--------- --------- --------- ---------
5,726 5,449 12,021 11,856
Cost of timberland sold 41 21 680 112
Forest management, overhead, and general
and administrative expenses 3,046 2,798 5,786 5,663
Commission expense paid to affiliate 0 86 0 86
--------- --------- --------- ---------
8,813 8,354 18,487 17,717
--------- --------- --------- ---------
OTHER OPERATING INCOME 742 837 965 993
--------- --------- --------- ---------
OPERATING INCOME 28,794 25,490 67,898 70,494
--------- --------- --------- ---------
OTHER INCOME AND DEDUCTIONS
Primary Account interest income from Rayonier 1,229 580 2,453 1,889
Secondary Account interest expense to Rayonier (3,233) (2,720) (6,369) (5,404)
Minority interest of General Partners in RTOC (268) (234) (640) (670)
--------- --------- --------- ---------
(2,272) (2,374) (4,556) (4,185)
--------- --------- --------- ---------
PARTNERSHIP INCOME $ 26,522 $ 23,116 $ 63,342 $ 66,309
========= ========= ========= =========
INCOME PER PUBLICLY TRADED CLASS A UNIT* $ 1.44 $ 1.24 $ 3.28 $ 3.43
========= ========= ========= =========
INCOME PER RAYONIER OWNED CLASS A UNIT* $ 1.44 $ 1.24 $ 3.28 $ 3.43
========= ========= ========= =========
</TABLE>
* Refer to calculations on page 6.
1
<PAGE> 4
RAYONIER TIMBERLANDS, L.P.
BALANCE SHEETS
(UNAUDITED)
(THOUSANDS OF DOLLARS)
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
-------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 145 $ 150
Receivables - net 11,941 9,942
Inventories 293 322
Prepaid logging roads 3,162 3,919
Primary Account short-term investment notes of Rayonier 45,300 42,700
Trade and intercompany receivables from Rayonier and affiliates 4,213 4,211
-------- --------
Total current assets 65,054 61,244
PRIMARY ACCOUNT LONG-TERM INVESTMENT NOTES OF RAYONIER 5,000 5,000
FIXED ASSETS - NET 916 914
TIMBER, TIMBERLANDS, AND LOGGING ROADS,
LESS DEPLETION AND AMORTIZATION 273,109 270,656
-------- --------
$344,079 $337,814
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES
Advance deposits $ 9,700 $ 5,061
Accounts payable 1,655 1,674
Accrued liabilities
Taxes 2,231 1,527
All other 557 553
Current timber obligations 159 148
Advances from Rayonier 102 66
-------- --------
Total current liabilities 14,404 9,029
SECONDARY ACCOUNT LONG-TERM NOTES
PAYABLE TO RAYONIER 154,850 143,800
LONG-TERM TIMBER OBLIGATIONS 507 645
MINORITY INTEREST OF GENERAL PARTNERS IN RTOC 5,201 5,302
PARTNERS' CAPITAL
General Partners 5,153 5,253
Limited Partners (20,000,000 Class A Depositary
Units and 20,000,000 Class B Depositary Units
issued and outstanding) 163,964 173,785
-------- --------
$344,079 $337,814
======== ========
</TABLE>
2
<PAGE> 5
RAYONIER TIMBERLANDS, L.P.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
-----------------------------
1995 1994
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES
Partnership income $ 63,342 $ 66,309
Non-cash items included in income
Depletion, depreciation, and amortization 4,271 3,679
Minority interest of General Partners in RTOC 640 670
Increase in receivables (1,999) (10,526)
Decrease in prepaid logging roads 757 802
Increase in advance deposits 4,639 1,047
Increase in accounts payable and accrued liabilities 689 2,598
Other changes in working capital 63 (321)
---------- ----------
Cash provided by operating activities 72,402 64,258
---------- ----------
INVESTING ACTIVITIES
Capital expenditures less sales and retirements
of $612 and $103 in 1995 and 1994 (6,726) (6,909)
Increase in Primary Account investment
notes of Rayonier (81,000) (8,600)
Settlement of Primary Account investment
notes of Rayonier 78,400 79,800
Decrease in long-term receivables - 903
---------- ----------
Cash (used for) provided by investing activities (9,326) 65,194
---------- ----------
FINANCING ACTIVITIES
Decrease in timber obligations (127) (116)
Increase in Secondary Account long-term notes
payable to Rayonier 11,050 11,300
Partnership distributions (73,263) (138,950)
Distributions to General Partners of RTOC (741) (1,404)
---------- ----------
Cash used for financing activities (63,081) (129,170)
---------- ----------
CASH
Net (decrease) increase in cash (5) 282
Balance at beginning of year 150 16
---------- ----------
Balance at end of period $ 145 $ 298
========== ==========
Supplemental disclosures of cash flow information
Cash received for interest - Primary Account $ 2,453 $ 1,889
========== ==========
Cash paid for interest - Secondary Account $ 6,400 $ 5,443
========== ==========
</TABLE>
3
<PAGE> 6
RAYONIER TIMBERLANDS, L.P.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER UNIT INFORMATION)
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.
The officers, directors, and employees of Rayonier and RFR perform all
management and business activities for RTLP and RTOC. RTLP and RTOC have no
officers, directors, or employees.
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 follows:
<TABLE>
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 PARTICIPATE IN 4 PERCENT OF THE REVENUES AND
EXPENSES OF RTLP AND 4 PERCENT OF ITS CASH FLOW 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 is invested with Rayonier in accordance with the
Partnership Agreement and is 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 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 that 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 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)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER UNIT INFORMATION)
PARTNERS' CAPITAL
An analysis of the activity in the Partners' Capital accounts of RTLP for the
six months ended June 30, 1995 and 1994 follows:
<TABLE>
<CAPTION>
Limited Partners General Partners Total
---------------- ---------------- ---------
<S> <C> <C> <C>
Balance, January 1, 1995 $ 173,785 $ 5,253 $ 179,038
Partnership income 62,709 633 63,342
Partnership distributions (72,530) (733) (73,263)
--------- --------- ---------
Balance, June 30, 1995 $ 163,964 $ 5,153 $ 169,117
========= ========= =========
Balance, January 1, 1994 $ 243,844 $ 5,962 $ 249,806
Partnership income 65,646 663 66,309
Partnership distributions (137,560) (1,390) (138,950)
--------- --------- ---------
Balance, June 30, 1994 $ 171,930 $ 5,235 $ 177,165
========= ========= =========
</TABLE>
Partnership distributions 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 expense
of $86 to adjust its final accrual for commissions on sales made prior to the
legislation's effective date.
In 1994, RTLP distributions included a special distribution of $80.0 million
($4.00 per Unit) paid on March 31,1994. In addition to the RTLP distributions,
RTOC distributed $741 and $1,404 to its General Partners during the first six
months of 1995 and 1994, respectively.
5
<PAGE> 8
RAYONIER TIMBERLANDS, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER UNIT INFORMATION)
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, 1995
and 1994:
<TABLE>
<CAPTION>
1995 1994
--------------------------- ---------------------------
Primary Secondary Primary Secondary
Account Account Account Account
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Timber and timberland sales $ 82,866 $ 2,554 $ 86,710 $ 508
Interest and other income - net 3,130 (6,081) 2,471 (4,993)
Costs and expenses (16,100) (2,387) (15,919) (1,712)
Interest of General Partners in RTOC (699) 59 (733) 62
--------- --------- --------- ---------
Partnership income before commission expense 69,197 (5,855) 72,529 (6,135)
Commission expense - net of 1%
General Partner interest - - (85) -
--------- --------- --------- ---------
PARTNERSHIP INCOME $ 69,197 $ (5,855) $ 72,444 $ (6,135)
========= ========= ========= =========
</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 $ 16,631 $ 49,106 $ 17,433 $ 51,471
4% of Secondary Account (59) (175) (62) (183)
------------ ------------ ------------ ------------
16,572 48,931 17,371 51,288
Commission expense - - - (81)
------------ ------------ ------------ ------------
Total income for Class A Units $ 16,572 $ 48,931 $ 17,371 $ 51,207
============ ============ ============ ============
Units outstanding 5,060,000 14,940,000 5,060,000 14,940,000
============ ============ ============ ============
INCOME PER CLASS A UNIT $ 3.28 $ 3.28 $ 3.43 $ 3.43
============ ============ ============ ============
</TABLE>
6
<PAGE> 9
RAYONIER TIMBERLANDS, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER UNIT INFORMATION)
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, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
--------------------------- ----------------------------
Primary Secondary Primary Secondary
Account Account Account Account
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Timber and timberland sales $ 82,866 $ 2,554 $ 86,710 $ 508
Interest and other income - net 3,130 (6,081) 2,471 (4,993)
Costs and expenses - other than non-cash
items, commissions, and the General
Partners' interest in RTOC (11,930) (1,681) (12,334) (1,528)
Capital expenditures (857) (6,481) (1,379) (5,633)
General Partners' interest in RTOC (732) 117 (755) 116
--------- --------- --------- ---------
Operating cash flow before
commission expense 72,477 (11,572) 74,713 (11,530)
Commission expense - net of 1% General
Partner interest - - (85) -
--------- --------- --------- ---------
OPERATING CASH FLOW $ 72,477 $ (11,572) $ 74,628 $ (11,530)
========= ========= ========= =========
</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 $ 17,420 $ 51,433 $ 17,957 $ 53,020
4% of Secondary Account (117) (346) (117) (344)
------------ ------------ ------------ ------------
17,303 51,087 17,840 52,676
Commission expense - - - (81)
------------ ------------ ------------ ------------
OPERATING CASH FLOW ALLOCABLE TO
CLASS A UNITS $ 17,303 $ 51,087 $ 17,840 $ 52,595
============ ============ ============ ============
Units outstanding 5,060,000 14,940,000 5,060,000 14,940,000
============ ============ ============ ============
Primary Account cash flow per unit $ 3.44 $ 3.44 $ 3.55 $ 3.54
Secondary Account cash flow per unit (.02) (.02) (.02) (.02)
------------ ------------ ------------ ------------
OPERATING CASH FLOW PER CLASS A UNIT $ 3.42 $ 3.42 $ 3.53 $ 3.52
============ ============ ============ ============
</TABLE>
7
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
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 (thousands):
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------------------- -------------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
TIMBER SALES
Northwest $ 23,714 $ 22,034 $ 49,399 $ 63,988
Southeast 13,068 10,899 33,467 22,722
-------- -------- -------- --------
36,782 32,933 82,866 86,710
-------- -------- -------- --------
TIMBERLAND SALES
Northwest - 10 - 291
Southeast 83 64 2,554 217
-------- -------- -------- --------
83 74 2,554 508
-------- -------- -------- --------
TOTAL SALES $ 36,865 $ 33,007 $ 85,420 $ 87,218
======== ======== ======== ========
OPERATING INCOME
Northwest $ 18,554 $ 17,591 $ 39,803 $ 54,139
Southeast 10,741 8,421 29,019 17,316
Corporate and other (501) (522) (924) (961)
-------- -------- -------- --------
$ 28,794 $ 25,490 $ 67,898 $ 70,494
======== ======== ======== ========
PARTNERSHIP INCOME $ 26,522 $ 23,116 $ 63,342 $ 66,309
======== ======== ======== ========
SELECTED OPERATING STATISTICS
Northwest harvest volumes
Stumpage (thousands of MBF) 30.8 24.7 68.4 78.8
Delivered logs (thousands of MBF) 11.6 13.7 20.1 25.3
-------- -------- -------- --------
42.4 38.4 88.5 104.1
======== ======== ======== ========
Southeast harvest volumes
Pine (thousands of tons) 410.8 415.6 1,001.1 850.6
Hardwoods (thousands of tons) 50.3 35.9 91.3 50.6
-------- -------- -------- --------
461.1 451.5 1,092.4 901.2
======== ======== ======== ========
</TABLE>
Sales for the six months ended June 30, 1995 were $85.4 million, which was $1.8
million, or 2 percent, lower than the first six months of 1994. Timber sales
were $82.9 million, down $3.8 million, or 4 percent, from the comparable 1994
period. Timberland sales were $2.5 million, up $2.0 million from 1994.
Partnership income for the first six months was $63.3 million or $3.28 per Class
A Unit, which was $3.0 million, or 15 cents per Class A Unit, lower than 1994
results which included an exceptionally strong first quarter. Operating cash
flow allocable to each Class A Unit was $3.42, down 11 cents per Class A Unit.
Most of the timber from Partnership lands in the Northwest is resold by the
Partnership's customers into log export markets, primarily in Japan, Korea and
China. In the Northwest region, 1995 volume and prices were lower than the prior
year. Unfavorable market conditions in late 1993 caused many customers to defer
harvesting high-priced contracts until early 1994, resulting in unusually high
harvest levels and prices in the first quarter of 1994. For the six month period
ended June 30, 1995, the combined stumpage and log harvest volume and prices
declined approximately 15 percent and 8 percent, respectively. As a result,
sales for the Northwest region decreased $14.9 million, or 23 percent, to $49.4
million while operating income for the region decreased $14.3 million, or 26
percent, to $39.8 million.
8
<PAGE> 11
In the Southeast, pulpwood timber is sold by the Partnership customers for the
production of pulp and paper with sawlog timber sold to lumber and plywood
manufacturers. In this region, sales for the first half of 1995 increased $13.1
million, or 57 percent, to $36.0 million and operating income increased $11.7
million, or 68 percent, to $29.0 million, reflecting higher pine harvest volume
and stronger prices. Pine harvest volume increased approximately 18 percent and
prices were up 24 percent due to stronger demand from the pulp and paper
industry.
Operating costs and expenses for the first six months of 1995 were $18.5
million, up $0.8 million from 1994. The increase was primarily due to higher
depletion costs resulting from increased harvest volumes in the Southeast region
and higher costs associated with the increase in timberland sales.
Interest income, earned mainly from the Primary Account's investment notes of
Rayonier, increased $0.6 million to $2.5 million in 1995 due to higher interest
rates in 1995 partially offset by a lower average balance of investment notes of
Rayonier. Interest expense, on increased loans and advances to the Secondary
Account by Rayonier, rose $1.0 million to $6.4 million.
Second quarter 1995 Partnership income of $26.5 million, or $1.44 per Class A
Unit, was $3.4 million, or 20 cents per Class A Unit, above the 1994 second
quarter. Operating cash flow allocable to each Class A Unit was $1.50, up 20
cents per Class A Unit over last year. Sales for the quarter were $36.9 million,
$3.9 million higher than last year's second quarter.
In the Northwest region, second quarter stumpage prices were approximately 8
percent lower than the prior year second quarter; however, overall harvest
volume was approximately 10 percent higher than the prior year. As a result,
second quarter sales rose $1.7 million to $23.7 million and operating income
rose $1.0 million to $18.6 million.
In the Southeast region, second quarter sales increased $2.2 million to $13.2
million and operating income increased $2.3 million to $10.7 million, reflecting
improved stumpage prices resulting from strong demand from the pulp and paper
industry. Pine harvest volume approximated the prior year second quarter.
FUTURE OPERATIONS
The harvest level for the first six months of 1995 in the Northwest and in the
Southeast represented approximately 50 percent and 55 percent, respectively, of
the current projection of their 1995 harvests. As of June 30, 1994, the harvest
levels in the Northwest and in the Southeast were 54 percent and 44 percent,
respectively, of the actual full year harvests.
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, 1995, volume representing approximately
114 percent of the projected 1995 harvest of stumpage and pine was cut or
committed under contract. As of June 30, 1994, 102 percent of the final 1994
harvest was cut or committed.
At June 30, 1995, Rayonier held contracts representing approximately 4 percent
and 10 percent of the uncut volume under contract in the Northwest and Southeast
regions, respectively. In addition, three customers under common ownership held
contracts representing approximately 34 percent of the uncut volume under
contract in the Northwest. Two additional customers held contracts representing
approximately 15 percent and 11 percent, respectively, of the uncut Northwest
volume under contract. These five customers are not affiliated with the
Partnership.
LIQUIDITY AND CASH FLOW
As of June 30, 1995, the Partnership was due trade and intercompany receivables
from Rayonier and affiliates of $4.2 million. In addition, the Primary Account
of the Partnership held $45.3 million of short-term investment notes of Rayonier
and an additional $5.0 million of long-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
investment notes at any time to fund Partnership working capital requirements,
capital expenditures, and reserves.
The Secondary Account of the Partnership had total outstanding debt of $155.6
million at June 30, 1995 including long-term notes payable to Rayonier of $154.9
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, 1995 and 1994 were $7.3 million and $7.0 million, respectively. Funding of
future capital requirements is expected to continue from Rayonier.
On June 30, 1995 and 1994, the Partnership made quarterly distributions of $31.6
million ($1.58 per Unit) and $26.0 million ($1.30 per Unit), respectively, to
all outstanding Class A unitholders. Quarterly distributions of $1.7 million and
$1.4 million also were made to Class B unitholders and to the General Partners
in the second quarter of 1995 and 1994, respectively.
9
<PAGE> 12
On July 21, 1995 the Board of Directors of Rayonier Forest Resources Company
announced a third quarter distribution of $1.58 per Class A Unit. The
distribution will be paid September 29, 1995 to unitholders of record on August
31, 1995. When the Board announced the first quarter 1995 distribution of $1.90,
it indicated it expected that subsequent quarters' distributions in 1995 would
be less. Distributions are intended to approximate actual Partnership results
each year by keeping the distribution relatively constant in the second, third,
and fourth quarters and by making an adjustment in the first quarter of the
following year to bring the cumulative distribution in line with Partnership
results. The Board indicated that it would continue to maintain a minimum of
cash in working capital to be distributed following the end of the Initial Term.
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.
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 KENNETH P. JANETTE
---------------------------------------
Kenneth P. Janette
Vice President and Corporate Controller
(Chief Accounting Officer)
August 14, 1995
11
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION LOCATION
----------- ----------- --------
<S> <C> <C>
2 Plan of acquisition, reorganization, arrangement, None
liquidation, or succession
3(a) Partnership Agreement of the Partnership No amendments
3(b) Forms of Class A Certificate of Limited Partnership No amendments
and Class B Certificate of Limited Partnership
of the Partnership
3(c) Partnership Agreement of Operating Partnership No amendments
3(d) Forms of Class A Certificate of Limited Partnership No amendments
and Class B Certificate of Limited Partnership
of the Operating Partnership
4 Instruments defining the rights of security holders, None
including indentures
10 Material contracts None
11 Statement re computation of per share earnings Not applicable
15 Letter re unaudited interim financial information None
18 Letter re change in accounting principles Not applicable
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
27 Financial data schedule Filed herewith
99 Additional exhibits None
</TABLE>
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 145
<SECURITIES> 0
<RECEIVABLES> 11,941
<ALLOWANCES> 0
<INVENTORY> 293
<CURRENT-ASSETS> 65,054
<PP&E> 1,819
<DEPRECIATION> 903
<TOTAL-ASSETS> 344,079
<CURRENT-LIABILITIES> 14,404
<BONDS> 154,850
<COMMON> 0
0
0
<OTHER-SE> 169,117
<TOTAL-LIABILITY-AND-EQUITY> 344,079
<SALES> 85,420
<TOTAL-REVENUES> 85,420
<CGS> 12,701
<TOTAL-COSTS> 12,701
<OTHER-EXPENSES> 5,461
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,916
<INCOME-PRETAX> 63,342
<INCOME-TAX> 0
<INCOME-CONTINUING> 63,342
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 63,342
<EPS-PRIMARY> 3.28
<EPS-DILUTED> 3.28
</TABLE>
