JACKSONVILLE, Fla.--(BUSINESS WIRE)--Jan. 25, 2005--Rayonier (NYSE:RYN) today reported fourth quarter net income of $13.5 million, or 26 cents per share. This compared to $24.2 million, or 47 cents per share, in third quarter 2004 and $2.0 million, or 4 cents per share, in fourth quarter 2003. Full-year 2004 net income of $156.9 million, or $3.08 per share, compared to $50 million, or $1.16 per share, in 2003. Results for 2004 included a first quarter net tax benefit of $49.7 million, or 98 cents per share, related to the company's conversion to a REIT.
Lee Nutter, Chairman, President and CEO said: "We had a very strong first year as a REIT and are enthusiastic about the opportunities it provides to grow the company, capitalize on tax-efficient transactions and further increase shareholder value. In 2004, prices improved in all of our businesses and demand was strong, especially for Northwest timber, higher-and-better use (HBU) properties and our premium cellulose specialties. Our strong cash flow enabled us to pay dividends of $111 million, make an $89 million timberland acquisition, invest $89 million in our businesses and end the year with cash and cash equivalents of $84 million."
Fourth quarter and third quarter 2004 results included tax benefits from like-kind exchange (LKE) transactions of 2 cents and 20 cents per share, respectively, while last year's fourth quarter included a tax benefit of 9 cents per share associated with the settlement of a foreign currency denominated inter-company loan. Also, fourth quarter 2003 was adversely affected by 3 cents per share for costs associated with the company's conversion to a REIT and 6 cents per share due to a delay of some Northwest timber sales until 2004 to take advantage of the company's conversion to a REIT.
Fourth quarter earnings were below third quarter primarily due to the lower LKE benefits. Operating results were also lower due to higher performance fibers and lumber manufacturing costs and weaker lumber prices, partially offset by increased sales of HBU properties and higher timber margins. Compared to fourth quarter 2003, earnings were up significantly, primarily due to improved pricing for performance fibers, Northwest U.S. timber and wood products and increased sales of HBU properties.
Cash provided by operating activities for the year of $295 million was $87 million above 2003. Cash Available for Distribution (CAD) for the year was $168 million, $55 million above 2003. (CAD is a non-GAAP measure defined and reconciled to GAAP in the attached exhibits.) Year-end cash and cash equivalents increased $63 million to $84 million compared with 2003. Cash flow improved significantly due to stronger operating earnings, a more efficient tax structure and lower working capital requirements, partly offset by $20 million in discretionary pension fund contributions.
Sales of $298 million were $19 million above third quarter and $26 million above fourth quarter 2003. Sales for the year of $1.2 billion compared to sales of $1.1 billion in 2003.
Debt at year-end of $659 million was $40 million above year-end 2003. The increase in debt is primarily due to a higher level of borrowing at the taxable REIT subsidiary level to fund purchases of HBU properties from Rayonier Forest Resources, the company's REIT qualifying subsidiary, which contributed to the higher cash balance at the parent company. The debt-to-capital ratio declined to 45.3 percent from 46.5 percent at year-end 2003, primarily due to the positive impact on shareholders' equity from the aforementioned first quarter 2004 net tax benefit.
Timber and Land
Sales of $59 million were $12 million above both the third quarter and fourth quarter 2003. Operating income of $28 million was $11 million and $7 million above third quarter and fourth quarter 2003, respectively. Performance improved compared to both prior periods primarily due to increased HBU property sales, timber volume and Northwest U.S. timber prices. Fourth quarter 2004 results included an adverse impact of approximately $3 million due to hurricane-related market conditions.
Performance Fibers
Sales of $154 million were $12 million above third quarter primarily due to increased cellulose specialties volume. However, operating income of $5 million declined $11 million from third quarter primarily due to increased wood, chemicals, energy and maintenance costs. Compared to fourth quarter 2003, sales and operating income increased by $13 million and $11 million, respectively, primarily due to higher cellulose specialties and absorbent materials prices.
Wood Products
Sales of $44 million were essentially unchanged from third quarter as increased MDF volume was offset by lower lumber prices. Operating income of $1 million was $3 million below third quarter primarily due to lower prices and higher manufacturing costs in the lumber operations. Compared to fourth quarter 2003, sales improved $3 million while operating income declined $2 million as higher selling prices were more than offset by increased manufacturing costs.
Other Operations
Sales of $41 million were $5 million and $1 million below third quarter and fourth quarter 2003, respectively. Operating income of $1 million was essentially flat compared to third quarter and fourth quarter 2003.
Other Items
Corporate expenses of $9.4 million were $1.4 million above third quarter primarily due to higher stock price-based incentive compensation expenses. Compared to fourth quarter 2003, corporate expenses decreased $1.5 million primarily due to lower stock price-based incentive compensation expenses and the absence of REIT conversion costs.
Fourth quarter 2004 had a net tax benefit of $1.2 million, primarily due to benefits from a 9 percent appreciation in the New Zealand dollar and a favorable change in the mix of income between non-taxable and taxable REIT subsidiary activities. Fourth quarter 2003 had a net tax benefit of $6.5 million also primarily due to benefits related to the appreciation in the New Zealand dollar. The annual effective tax rate, before the first quarter discrete items, was 11.8 percent compared to 14.1 percent for 2003 (see Schedule I). The low rate for 2004 was due to the tax benefits associated with the company's REIT structure and the recognition of LKE benefits. The 2003 level was also well below the statutory rate primarily due to foreign and other tax credits.
Outlook
Nutter said: "Entering 2005, we are experiencing strong demand for all our products. We will continue to capitalize on our tax-efficient REIT structure by optimizing the use of the company's consistently strong cash flow to pursue growth opportunities and meet investor objectives."
The company said first quarter 2005 earnings are expected to be above fourth quarter 2004 primarily due to seasonally stronger Northwest timber volume and improved performance fibers and lumber results. However, earnings are expected to be somewhat below first quarter 2004 primarily due to lower sales of HBU properties.
Rayonier has more than 2 million acres of timber and land in the U.S. and New Zealand and is the world's premier supplier of high performance specialty cellulose fibers. Approximately 40 percent of the company's sales are outside the U.S. to customers in more than 50 countries.
Reported results are preliminary and not final until filing of the 2004 Form 10-K with the Securities and Exchange Commission and, therefore, remain subject to subsequent event adjustments. Comments about anticipated demand, pricing, volumes, earnings, land sales and timberland acquisitions are forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The following important factors, among others, could cause actual results to differ materially from those expressed in the forward-looking statements: changes in global market trends and world events; interest rate and currency movements; fluctuations in demand for or supply of cellulose specialties, absorbent materials, timber, wood products or real estate and entry of new competitors into these markets; adverse weather conditions affecting production, timber availability and sales, or distribution; changes in production costs for wood products or performance fibers, particularly for raw materials such as wood, energy and chemicals; unexpected delays in the closing of land sale transactions; changes in law or policy that might limit or restrict the development of real estate, particularly in the southeastern U.S.; the ability of the Company to identify and complete timberland acquisitions; the Company's ability to satisfy complex rules in order to qualify as a REIT; the availability of tax deductions and the ability of the company to complete tax-efficient exchanges of real estate; and implementation or revision of governmental policies and regulations affecting the environment, endangered species, import and export controls or taxes, including changes in tax laws that could reduce the benefits associated with REIT status. For additional factors that could impact future results, please see the company's most recent Form 10-K on file with the Securities and Exchange Commission.
A conference call will be held on Tuesday, January 25 at 4:15 p.m. EST to discuss these results. Interested parties are invited to listen to the live webcast by logging onto http://www.rayonier.com and following the link. Supplemental materials will be available at the website. A replay will be available on the site shortly after the call where it will be archived for one month. Also, investors may access the "listen only" conference call by dialing 913-981-5584.
For further information, visit the company's web site at http://www.rayonier.com. Complimentary copies of Rayonier press releases and other financial documents are also available by mail or fax by calling 1-800-RYN-7611.
RAYONIER
FINANCIAL HIGHLIGHTS
DECEMBER 31, 2004 (unaudited)
(millions of dollars, except per share information)
Three Months Ended Year Ended
------------------------------- -------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2004 2004 2003 2004 2003
---------- ---------- --------- --------- ---------
Profitability
Sales $297.5 $278.9 $271.5 $1,207.0 $1,100.9
Operating
income $25.8 $31.2 $7.7 $169.8 $102.6
Net income $13.5 $24.2 $2.0 $156.9 $50.0
Net income per
diluted common
share $0.26 $0.47 $0.04 $3.08 $1.16
Pro forma net
income per
diluted common
share (a) (b) $0.26 $0.47 $0.04 $2.10 $1.02
Operating
income as a
percent of sales 8.7% 11.2% 2.8% 14.1% 9.3%
ROE (annualized)
(a) (c) 7.4% 12.8% 1.6% 14.2% 7.0%
Year Ended Dec. 31,
---------------------
2004 2003
------ ------
Capital Resources and Liquidity
Cash provided by operating
activities $295.4 $208.2
Cash used for investing
activities $(180.8) $(90.6)
Cash used for financing
activities $(52.0) $(115.3)
Cash Available for
Distribution (CAD) (d) (f) $167.9 $113.2
Adjusted EBITDA (e) (f) $335.1 $268.3
Issuance (repayment) of
debt, net $41.5 $(33.5)
Debt $658.9 $618.5
Debt/capital 45.3% 46.5%
(a) Full year 2004 excludes first quarter reversal of deferred
taxes not required after REIT conversion of $77.9 million, or $1.53
per share and additional taxes for repatriation of foreign earnings of
($28.2) million, or ($0.55) per share, for a net effect of $49.7
million, or $0.98 per share. See reconciliation on Schedule G.
(b) 2003 per share data has been restated for the December 19,
2003 15.1% special stock dividend.
(c) Major land sales and REIT conversion costs are not annualized.
(d) Cash Available for Distribution (CAD) is defined as cash
provided by operating activities less both custodial and discretionary
capital spending, less the tax benefit on the exercise of stock
options and the change in committed cash. Cash Available for
Distribution is a non-GAAP measure of cash generated during a period
that is available for dividend distribution, repurchase of the
Company's common shares, debt reduction and for strategic acquisitions
net of associated financing. See reconciliation on Schedule G.
(e) Adjusted EBITDA is defined as earnings from continuing
operations before interest expense, income taxes, depreciation,
depletion, amortization and the non-cash cost basis of land sold.
Adjusted EBITDA is a non-GAAP measure of operating cash generating
capacity of the Company. See reconciliation on Schedule H.
(f) Management considers these measures to be important to
estimate the enterprise and shareholder values of the Company as a
whole and of its core segments, and for allocating capital resources.
- A -
RAYONIER
CONDENSED STATEMENTS OF CONSOLIDATED INCOME
DECEMBER 31, 2004 (unaudited)
(millions of dollars, except per share information)
Three Months Ended Year Ended
-------------------- --------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2004 2004 2003 2004 2003
-------- -------- -------- -------- --------
Sales $297.5 $278.9 $271.5 $1,207.0 $1,100.9
-------- -------- -------- --------- ---------
Costs and
expenses
Cost of sales 261.6 236.5 249.2 984.5 950.6
Selling and
general
expenses 14.8 13.0 16.9 60.6 56.0
Other
operating
income, net (4.7) (1.8) (2.3) (7.9) (8.3)
-------- -------- -------- --------- ---------
Operating
income 25.8 31.2 7.7 169.8 102.6
Interest
expense (12.2) (11.5) (11.8) (46.9) (48.7)
Interest and
miscellaneous
income
(expense), net (1.3) 0.7 (0.4) 0.5 1.9
-------- -------- -------- --------- ---------
Income before
taxes 12.3 20.4 (4.5) 123.4 55.8
Income tax
benefit
(expense) (a) 1.2 3.8 6.5 33.5 (5.8)
-------- -------- -------- --------- ---------
Net income (a) $13.5 $24.2 $2.0 $156.9 $50.0
======== ======== ======== ========= =========
Net income per
Common Share
Basic EPS $0.27 $0.48 $0.05 $3.16 $1.18
======== ======== ======== ========= =========
Diluted EPS $0.26 $0.47 $0.04 $3.08 $1.16
======== ======== ======== ========= =========
Pro forma net
income per
Common Share (b)(c)
Adjusted basic
EPS $0.27 $0.48 $0.04 $2.15 $1.03
======== ======== ======== ========= =========
Adjusted
diluted EPS $0.26 $0.47 $0.04 $2.10 $1.02
======== ======== ======== ========= =========
Weighted
average Common
Shares used
for
determining
Basic EPS 49,901,206 49,720,050 43,424,436 49,630,576 42,262,835
========== ========== ========== ========== ==========
Diluted EPS 51,289,861 51,123,431 44,556,647 51,022,175 43,093,092
========== ========== ========== ========== ==========
(a) Full year 2004 includes reversal of deferred taxes not
required after REIT conversion of $77.9 million and additional taxes
for repatriation of foreign earnings of ($28.2) million.
(b) Full year 2004 excludes reversal of deferred taxes not
required after REIT conversion of $1.58 per basic share and $1.53 per
diluted share and additional taxes for repatriation of foreign
earnings of ($0.57) per basic share and ($0.55) per diluted share, for
a net of $1.01 per basic share and $0.98 per diluted share. See
reconciliation on Schedule G.
(c) 2003 per share data has been restated for the December 19, 2003
15.1% special dividend.
- B -
RAYONIER
BUSINESS SEGMENT SALES AND OPERATING INCOME (LOSS)
DECEMBER 31, 2004 (unaudited)
(millions of dollars)
Three Months Ended Year Ended
------------------------------ -------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2004 2004 2003 2004 2003
--------- ---------- --------- --------- ---------
Sales
Timber and Land
Timber $44.2 $39.2 $38.6 $185.8 $153.2
Land 14.6 7.3 8.6 95.6 106.1
--------- ---------- --------- --------- ---------
Total Timber
and Land 58.8 46.5 47.2 281.4 259.3
--------- ---------- --------- --------- ---------
Performance Fibers
Cellulose
specialties 115.2 103.3 104.7 418.8 377.8
Absorbent
materials 39.1 39.4 37.1 163.5 156.5
--------- ---------- --------- --------- ---------
Total Performance
Fibers 154.3 142.7 141.8 582.3 534.3
--------- ---------- --------- --------- ---------
Wood Products
Lumber 30.9 33.2 30.2 126.2 97.0
MDF 13.0 11.0 11.1 44.2 41.3
--------- ---------- --------- --------- ---------
Total Wood
Products 43.9 44.2 41.3 170.4 138.3
--------- ---------- --------- --------- ---------
Other Operations 40.9 45.8 42.2 173.9 171.5
Intersegment
eliminations (0.4) (0.3) (1.0) (1.0) (2.5)
--------- ---------- --------- --------- ---------
Total sales $297.5 $278.9 $271.5 $1,207.0 $1,100.9
========= ========== ========= ========= =========
Operating income (loss)
Timber and Land
Timber $16.4 $12.6 $14.5 $71.9 $51.3
Land 11.7 4.9 7.0 75.3 87.3
--------- ---------- --------- --------- ---------
Total Timber
and Land 28.1 17.5 21.5 147.2 138.6
Performance Fibers 5.4 16.7 (5.7) 46.6 (2.6)
Wood Products
Lumber 1.4 5.2 3.3 14.4 (0.2)
MDF (0.9) (1.3) (0.7) (4.1) (2.3)
--------- ---------- --------- --------- ---------
Total Wood
Products 0.5 3.9 2.6 10.3 (2.5)
--------- ---------- --------- --------- ---------
Other Operations 1.2 0.8 0.8 6.2 (0.3)
Corporate (9.4) (8.0) (10.9) (40.3) (34.8)
Intersegment
eliminations and
other (Including
Corporate FX) - 0.3 (0.6) (0.2) 4.2
--------- ---------- --------- --------- ---------
Total operating
income $25.8 $31.2 $7.7 $169.8 $102.6
========= ========== ========= ========= =========
- C -
RAYONIER
CONDENSED CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF CASH FLOWS
DECEMBER 31, 2004 (unaudited)
(millions of dollars)
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2004 2003
----------- -------------
Assets
Current assets $300.7 $244.6
Timber, timberlands and logging roads,
net of depletion and amortization 1,053.5 994.8
Property, plant and equipment 1,447.4 1,414.5
Less - accumulated depreciation 984.1 912.3
----------- -------------
463.3 502.2
----------- -------------
Other assets 116.4 98.4
----------- -------------
$1,933.9 $1,840.0
=========== =============
Liabilities and Shareholders' Equity
Current liabilities $197.5 $147.3
Deferred income taxes 50.7 121.8
Long-term debt 655.3 614.9
Non-current reserves for dispositions and
discontinued operations 133.9 141.5
Other non-current liabilities 100.1 103.4
Shareholders' equity 796.4 711.1
----------- -------------
$1,933.9 $1,840.0
=========== =============
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended
--------------------------
December 31, December 31,
2004 2003
------------ ------------
Cash provided by operating activities:
Net Income $156.9 $50.0
Depreciation, depletion, amortization
and non-cash cost basis of land sold 164.8 163.8
Other non-cash items included in income (51.8)(a) 2.1
Changes in working capital and other
assets and liabilities 25.5 (7.7)
----------- -------------
295.4 208.2
----------- -------------
Cash used for investing activities:
Capital expenditures, net of sales and
retirements (89.3) (85.2)
Purchase of assets previously leased - (5.4)
Increase in restricted cash (2.2) -
Purchase of Alabama timberlands (89.3) -
----------- -------------
(180.8) (90.6)
----------- -------------
Cash used for financing activities:
Issuance (repayment) of debt, net 41.5 (33.5)
Dividends paid (111.2) (105.5)
Issuance of common shares 17.7 23.7
----------- -------------
(52.0) (115.3)
----------- -------------
Effect of exchange rate changes on cash 0.1 0.2
----------- -------------
Cash and cash equivalents:
Increase in cash and cash equivalents 62.7 2.5
Balance, beginning of year 21.4 18.9
----------- -------------
Balance, end of year $84.1 $21.4
=========== =============
(a) Mainly reversal of deferred taxes not required after REIT
conversion of ($77.9) million and additional taxes for repatriation of
foreign earnings of $28.2 million.
- D -
RAYONIER
SELECTED SUPPLEMENTAL FINANCIAL DATA
DECEMBER 31, 2004 (unaudited)
(millions of dollars)
Three Months Ended Year Ended
--------------------------- ------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2004 2004 2003 2004 2003
-------- --------- -------- --------- ---------
Geographical Data
(Non-U.S.)
Sales
New Zealand $26.3 $23.3 $22.6 $93.7 $86.1
Other 3.8 7.1 2.6 26.3 11.8
-------- --------- -------- -------- ---------
Total $30.1 $30.4 $25.2 $120.0 $97.9
======== ========= ======== ======== =========
Operating income
(loss)
New Zealand $1.0 $2.0 $(0.3) $2.2 $3.5
Other 1.8 (1.0) 0.8 (0.2) (0.7)
-------- --------- -------- -------- ---------
Total $2.8 $1.0 $0.5 $2.0 $2.8
======== ========= ======== ======== =========
Timber
Sales
Northwest U.S. $17.8 $17.0 $14.3 $81.0 $58.5
Southeast U.S. 17.8 14.9 18.7 76.8 74.7
New Zealand 8.6 7.3 5.6 28.0 20.0
-------- --------- -------- -------- ---------
Total $44.2 $39.2 $38.6 $185.8 $153.2
======== ========= ======== ======== =========
Operating income
Northwest U.S. $8.1 $8.0 $4.9 $41.9 $26.4
Southeast U.S. 6.6 2.7 7.6 23.8 19.7
New Zealand 1.7 1.9 2.0 6.2 5.2
-------- --------- -------- -------- ---------
Total $16.4 $12.6 $14.5 $71.9 $51.3
======== ========= ======== ======== =========
Adjusted EBITDA by
Segment
Timber and Land $44.6 $30.1 $35.8 $218.2 $210.0
Performance Fibers 23.6 37.2 14.3 124.4 76.1
Wood Products 5.2 8.3 6.5 26.8 11.0
Other Operations 1.4 1.2 1.1 7.3 0.5
Corporate and other (11.2) (7.3) (11.6) (41.6) (29.3)
-------- --------- -------- -------- ---------
Total $63.6 $69.5 $46.1 $335.1 $268.3
======== ========= ======== ======== =========
- E -
RAYONIER
SELECTED OPERATING INFORMATION
DECEMBER 31, 2004 (unaudited)
Three Months Ended Year Ended
--------------------------- ------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2004 2004 2003 2004 2003
-------- --------- -------- ------- --------
Timber and Land
Sales volume - Timber
Northwest U.S.,
in millions of
board feet 55 61 47 285 225
Southeast U.S.,
in thousands of
short green tons 1,060 842 1,036 4,291 4,524
New Zealand,
in thousands of
metric tons 209 173 186 646 632
Timber sales volume -
Intercompany
Southeast U.S.,
in thousands of
short green tons 14 8 24 43 48
New Zealand,
in thousands of
metric tons 4 7 41 11 126
Acres sold 5,891 2,134 2,727 30,419 (a) 40,595
Performance Fibers
Sales Volume
Cellulose
specialties,
in thousands of
metric tons 125 112 121 453 435
Absorbent
materials,
in thousands of
metric tons 62 61 64 266 273
Production as a
percent of capacity 96.1% 98.4% 89.0% 98.7% 96.6%
Wood Products
Lumber sales volume,
in millions of
board feet 86 87 88 347 310
Medium-density
fiberboard
sales volume,
in thousands of
cubic meters 46 41 46 166 177
(a) Excludes 5,487 acres associated with a Northeast Florida sale
($26 million) of timber lease rights.
- F -
RAYONIER
RECONCILIATION OF NON-GAAP MEASURES
DECEMBER 31, 2004 (unaudited)
(millions of dollars, except per share information)
Year Ended
------------------
Dec. 31, Dec. 31,
2004 2003
-------- --------
Cash Available for Distribution (CAD)
Cash provided by operating activities $295.4 $208.2
Capital spending (a) (89.3) (85.2)
Purchase of assets previously leased - (5.4)
Like-kind exchange tax benefits on
third party land sales (b) (11.3) -
Like-kind exchange tax benefits on
intercompany land sales (b) (19.0) -
Change in committed cash (3.5) 0.4
Tax benefit on exercise of stock options (4.4) (4.8)
-------- --------
Cash Available for Distribution (CAD) $167.9 $113.2
======== ========
(a) Capital Spending is net of sales and retirements and excludes
strategic acquisitions.
(b) Represents taxes that would have been paid if the Company had
not completed LKE transactions.
Three Months Ended Year Ended
--------------------------- ------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2004 2004 2003 2004 2003
-------- --------- -------- -------- ---------
Net income per
Common Share
Basic EPS $0.27 $0.48 $0.05 $3.16 $1.18
======== ========= ======== ======== =========
Diluted EPS $0.26 $0.47 $0.04 $3.08 $1.16
======== ========= ======== ======== =========
Deferred taxes not
required after
REIT conversion
Basic EPS - - - (1.58) -
======== ========= ======== ======== =========
Diluted EPS - - - (1.53) -
======== ========= ======== ======== =========
Additional taxes for
repatriation of
foreign earnings
Basic EPS - - - 0.57 -
======== ========= ======== ======== =========
Diluted EPS - - - 0.55 -
======== ========= ======== ======== =========
Impact of
December 19, 2003
15.1% special
dividend
Basic EPS - - (0.01) - (0.15)
======== ========= ======== ======== =========
Diluted EPS - - - - (0.14)
======== ========= ======== ======== =========
Pro forma net income
per Common Share
Adjusted basic EPS $0.27 $0.48 $0.04 $2.15 $1.03
======== ========= ======== ======== =========
Adjusted diluted EPS $0.26 $0.47 $0.04 $2.10 $1.02
======== ========= ======== ======== =========
- G -
RAYONIER
RECONCILIATION OF NON-GAAP MEASURES (a)
DECEMBER 31, 2004 (unaudited)
(millions of dollars)
Timber Corporate
and Performance Wood Other and
Land Fibers Products Operations other Total
------ ----------- -------- ---------- ----- -----
Adjusted EBITDA
Three Months Ended
December 31, 2004
Cash provided by
operating
activities $29.2 $32.5 $6.8 $5.6 $(12.8) $61.3
Income tax
benefit - - - - (1.2) (1.2)
Interest expense - - - - 12.2 12.2
Working capital
increases
(decreases) 8.6 (9.0) (1.5) (4.1) (2.4) (8.4)
Other balance
sheet changes 6.8 0.1 (0.1) (0.1) (7.0) (0.3)
------- ------- ------ ------ -------- -------
Adjusted EBITDA $44.6 $23.6 $5.2 $1.4 $(11.2) $63.6
======= ======= ====== ====== ======== =======
September 30, 2004
Cash provided by
operating
activities $26.9 $47.0 $9.1 $6.3 $(12.9) $76.4
Income tax
benefit - - - - (3.8) (3.8)
Interest expense - - - - 11.5 11.5
Working capital
increases
(decreases) (0.1) (9.5) (0.7) (5.2) (6.3) (21.8)
Other balance
sheet changes 3.3 (0.3) (0.1) 0.1 4.2 7.2
------- ------- ------ ------ -------- -------
Adjusted EBITDA $30.1 $37.2 $8.3 $1.2 $(7.3) $69.5
======= ======= ====== ====== ======== =======
December 31, 2003
Cash provided by
operating
activities $37.2 $21.8 $9.8 $(5.7) $(27.7) $35.4
Income tax
benefit - - - - (6.5) (6.5)
Interest expense - - - - 11.8 11.8
Working capital
increases
(decreases) (4.5) (7.4) (3.2) 8.6 19.1 12.6
Other balance
sheet changes 3.1 (0.1) (0.1) (1.8) (8.3) (7.2)
------- ------- ------ ------ -------- -------
Adjusted EBITDA $35.8 $14.3 $6.5 $1.1 $(11.6) $46.1
======= ======= ====== ====== ======== =======
Year Ended
December 31, 2004
Cash provided by
operating
activities $210.1 $125.8 $25.3 $17.8 $(83.6) $295.4
Income tax
benefit - - - - (33.5) (33.5)
Interest expense - - - - 46.9 46.9
Working capital
increases
(decreases) (2.9) (2.6) 1.8 (9.8) (21.8)(b) (35.3)
Other balance
sheet changes 11.0 1.2 (0.3) (0.7) 50.4 (c) 61.6
------- ------- ------ ------ -------- -------
Adjusted EBITDA $218.2 $124.4 $26.8 $7.3 $(41.6) $335.1
======= ======= ====== ====== ======== =======
December 31, 2003
Cash provided by
operating
activities $230.7 $73.3 $11.1 $- $(106.9) $208.2
Income tax
expense - - - - 5.8 5.8
Interest expense - - - - 48.7 48.7
Working capital
increases
(decreases) (16.9) 3.4 0.2 1.9 29.3 17.9
Other balance
sheet changes (3.8) (0.6) (0.3) (1.4) (6.2) (12.3)
------- ------- ------ ------ -------- -------
Adjusted EBITDA $210.0 $76.1 $11.0 $0.5 $(29.3) $268.3
======= ======= ====== ====== ======== =======
(a) Unusual, non-trade intercompany items between the segments
have been eliminated.
(b) Mainly higher taxes.
(c) Includes reversal of deferred taxes not required after REIT
conversion partly offset by additional taxes for repatriation of
foreign earnings.
- H -
RAYONIER
RECONCILIATION OF STATUTORY INCOME TAX TO REPORTED INCOME TAX
DECEMBER 31, 2004 (unaudited)
(millions of dollars, except percentages)
Three Months Ended
------------------
Dec. 31, Sept. 30, Dec. 31,
2004 2004 2003
------------- ------------- -----------
$ % $ % $ %
------ ------ ------ ------ ----- -----
Income tax provision at the
U.S. statutory rate $(4.3) (35.0) $(7.1) (35.0) $1.6 35.0
REIT income not subject to
federal tax 5.4 43.7 9.7 47.6 - -
Lost deduction on REIT
interest expense and
overhead expenses
associated with REIT
activities (1.6) (12.9) (1.7) (8.4) - -
State and local income taxes,
foreign exchange rate
changes and permanent
differences 4.7 38.1 3.1 15.5 4.9 N/M
------ ------ ------ ------ ----- -----
Income tax benefit (expense)
before discrete items $4.2 33.9 $4.0 19.7 $6.5 N/M
Exchange rate changes on
tax on undistributed
foreign
earnings (3.0) (24.3) (1.6) (7.9) - -
Return to accrual adjustment - - 1.4 6.8 - -
Tax benefit from interim
partial IRS audit
settlement - - - - - -
------ ------ ------ ------ ----- -----
Income tax benefit
(expense) $1.2 9.6 $3.8 18.6 $6.5 N/M
====== ====== ====== ====== ===== =====
N/M = Not Meaningful
Year Ended
--------------------------
Dec. 31, Dec. 31,
2004 2003
--------- --------
$ % $ %
----- ---- ---- ----
Income tax provision at the
U.S. statutory rate $(43.2) (35.0) $(19.5) (35.0)
REIT income not subject to
federal tax 36.2 29.3 - -
Lost deduction on REIT
interest expense and
overhead expenses
associated with REIT
activities (11.6) (9.4) - -
State and local income taxes,
foreign exchange rate
changes and permanent
differences 4.0 3.3 11.7 20.9
-------- ------- ------- -----
Income tax benefit (expense)
before discrete items (a) $(14.6) (11.8) $(7.8) (14.1)
Exchange rate changes on
tax on undistributed foreign
earnings (3.0) (2.4) - -
Return to accrual adjustment 1.4 1.2 (0.3) (0.5)
Tax benefit from interim partial
IRS audit settlement - - 2.3 4.2
-------- ------- ------- -----
Income tax benefit
(expense) (a) $(16.2) (13.0) $(5.8) (10.4)
======== ======= ======= =====
(a) Year ended December 31, 2004 excludes first quarter reversal
of deferred taxes not required after REIT conversion of $77.9 million
and additional taxes for repatriation of foreign earnings of ($28.2)
million.
- I -
CONTACT:
Rayonier, Jacksonville
Media Contact:
Jay Fredericksen, 904-357-9106
or
Investor Contact:
Parag Bhansali, 904-357-9155
SOURCE: Rayonier
