JACKSONVILLE, Fla., Jan 24, 2006 (BUSINESS WIRE) -- Rayonier (NYSE:RYN) today reported fourth quarter income from continuing operations of $56.4 million, or 73 cents per share. This compares to $74.9 million, or 96 cents per share, in the third quarter and $14 million, or 18 cents per share, in fourth quarter 2004. Full-year 2005 income from continuing operations was $207.8 million, or $2.68 per share, compared to $160.1 million, or $2.09 per share, in 2004.
Net income in the fourth quarter was also $56.4 million, or 73 cents per share, compared to $75 million, or 96 cents per share, in third quarter 2005, and $13.5 million, or 18 cents per share, in fourth quarter 2004. Full-year 2005 net income was $182.8 million, or $2.36 per share, compared to $156.9 million, or $2.05 per share, in 2004.
Lee Nutter, Chairman, President and CEO, said: "We had another very good year with strong performances from our core businesses as we continued to deliver on our strategies to create value for shareholders. We formed a real estate subsidiary, TerraPointe, to capture the growing value of our extensive higher-and-better-use properties, monetized our New Zealand timberlands and simultaneously expanded our presence there with a REIT-qualifying joint venture, increased production of our high-value cellulose specialties and sold non-core businesses. Our shareholders benefited from two dividend increases totaling 26 percent and a 22 percent increase in share price."
The fourth quarter included a special item gain of $30.5 million, or 39 cents per share, on the sale of New Zealand timber assets to the joint venture while third quarter items totaled $39.1 million, or 50 cents per share. Special items totaled $86.3 million, or $1.11 per share, in full-year 2005 and $49.7 million, or 65 cents per share, in 2004 (see Schedule H for details).
Excluding special items, fourth quarter income from continuing operations was below third quarter, primarily due to higher performance fibers manufacturing costs and reduced real estate sales partly offset by increased timber volume. On the same basis, earnings improved compared to fourth quarter 2004, primarily due to increased timber prices and real estate sales. Fourth quarter 2005 results included a $3 million charge, or 2 cents per share, to increase disposition reserves related to the closed Port Angeles, Washington, mill.
Sales for the fourth quarter increased to $316 million from $300 million in the third quarter and $285 million in fourth quarter 2004. Sales for the year of $1.2 billion were comparable to 2004.
Cash provided by operating activities for 2005 of $263 million was $30 million below 2004 due to working capital increases partly offset by higher operating earnings. Cash Available for Distribution (CAD) of $167 million for 2005 was comparable to 2004. (CAD is a non-GAAP measure defined and reconciled to GAAP in the attached exhibits.)
Debt at year-end of $559 million was $100 million below year-end 2004 primarily due to strong operating cash flow, net proceeds from the monetization of the New Zealand timber assets and sale of the medium-density-fiberboard business. The debt-to-capital ratio was 38.7 percent compared to 45.3 percent at prior year-end. Debt less cash was $412 million, a reduction of $163 million. Cash at December 31, 2005, was $146 million.
Timber
Sales of $56 million and operating income of $24 million were $10 million and $7 million above third quarter, respectively, primarily due to higher U.S. timber volume, increased Southeast prices and income from timberland-related activities partly offset by an operating loss incurred during startup of the New Zealand joint venture. Compared to fourth quarter 2004, sales and operating income increased $12 million and $7 million, respectively, mainly due to higher U.S. timber prices and volume partly offset by the joint venture's operating results.
Real Estate
Sales of $20 million and operating income of $16 million were $8 million and $6 million below third quarter, respectively, primarily due to reduced sales of development and rural properties partly offset by higher per acre prices for development properties. The company previously announced that a fourth quarter transaction had been terminated and that it now plans to develop the property. Compared to fourth quarter 2004, sales and operating income increased $5 million and $4 million, respectively, mainly due to higher per acre prices for development properties.
Performance Fibers
Sales of $173 million were $14 million above third quarter but operating income of $7 million declined $9 million due to increased raw material costs and lower absorbent materials selling prices. Compared to fourth quarter 2004, sales and operating income improved $18 million and $1 million, respectively, primarily due to higher volume and cellulose specialties prices mostly offset by increased raw material costs.
Wood Products
Sales and operating income of $34 million and $3 million, respectively, were both $2 million below third quarter, primarily due to lower prices. Compared to fourth quarter 2004, sales and operating income were up $3 million and $2 million, respectively, mainly due to higher prices.
Other Operations
Sales of $34 million were $2 million above third quarter while slightly positive operating results were essentially unchanged. Compared to fourth quarter 2004, sales and operating income declined $7 million and $1 million, respectively, mainly due to lower trading activity.
Other Items
Corporate expenses of $10.4 million were comparable to third quarter and $1 million above fourth quarter 2004.
Intersegment eliminations and other expense of $2.9 million was $5.1 million and $3 million more than third quarter 2005 and fourth quarter 2004, respectively, primarily due to the previously noted $3 million increase in disposition reserves. Third quarter also included $1.9 million in proceeds from an insurance settlement.
Interest expense of $12 million was $2.2 million above third quarter, primarily due to favorable tax audit related adjustments in that quarter, and was comparable to fourth quarter 2004.
Interest and other income of $4.2 million was $7.7 million below the third quarter, which included a $7.8 million arbitration award, but $5.5 million above fourth quarter 2004, primarily due to higher interest income and a gain on sale of a manufacturing asset.
The full-year effective tax rate, before discrete items, was 14.2 percent compared to 11.6 percent for 2004, primarily due to reduced like-kind-exchange and non-U.S. operations tax benefits. Fourth quarter 2005 income tax expense of $8.8 million included $6.5 million relating to the sale of the New Zealand timber assets and a $1.5 million discrete tax benefit from favorable adjustments of costs between taxable and non-taxable entities. Fourth quarter 2004 included a net tax benefit of $1.1 million, primarily due to a 9 percent appreciation in the New Zealand dollar and a favorable change in the mix of income between taxable and non-taxable entities (see Schedule J for details).
Outlook
"Entering 2006, we have well-positioned core businesses and continue to experience strong demand and pricing for most of our products, particularly real estate properties and our premium cellulose specialties," Nutter said. "As a result, excluding special items, we expect another very good year with full-year earnings somewhat above 2005, despite a first quarter that will be below fourth quarter 2005, primarily due to the timing of real estate transactions.
"In real estate, we continue to focus on moving up the value chain, while in performance fibers we recently implemented price increases for 2006 for cellulose specialties. In addition, contracts for most of our cellulose specialties volume, including all acetate sales, provide for a surcharge to help offset the sharp rise in energy costs."
Rayonier owns, leases or manages 2.5 million acres of timberland in the U.S., New Zealand and Australia. Its real estate subsidiary, TerraPointe LLC, is focused on maximizing the value of its extensive higher-and-better use properties, particularly in the fast growing counties along Interstate 95 between Savannah, Georgia, and Daytona Beach, Florida, where Rayonier owns approximately 200,000 acres. The company is also the world's leading producer of high performance cellulose specialty products. Approximately 40 percent of Rayonier'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 2005 Form 10-K with the Securities and Exchange Commission and, therefore, remain subject to adjustment. Statements regarding earnings, anticipated demand and pricing for our products, manufacturing costs, and real estate transactions are "forward-looking statements" made pursuant to the safe harbor provisions of federal securities laws. 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 specialty products, 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 entry into or closing of real estate sale transactions; changes in law or policy that might condition, limit or restrict the development of real estate; the ability of the company to identify and complete timberland and higher-value real estate 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. Rayonier assumes no obligation to update these statements except as may be required by law.
A conference call will be held on Tuesday, January 24, 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, 2005 (unaudited)
(millions of dollars, except per share information)
Three Months Ended Year Ended
----------------------------- -------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2005 2005 2004 2005 2004
--------- --------- --------- --------- ---------
Profitability
Sales $ 315.9 $ 299.5 $ 284.5 $1,180.7 $1,162.8
Operating income $ 36.0 $ 51.0 $ 26.3 $ 183.2 $ 172.7
Income from
continuing
operations $ 56.4 $ 74.9 $ 14.0 $ 207.8 $ 160.1
Discontinued
operations $ - $ 0.1 $ (0.5) $ (25.0) $ (3.2)
Net income $ 56.4 $ 75.0 $ 13.5 $ 182.8 $ 156.9
Income per diluted
common share
Continuing
operations $ 0.73 $ 0.96 $ 0.18 $ 2.68 $ 2.09
Net income $ 0.73 $ 0.96 $ 0.18 $ 2.36 $ 2.05
Pro forma income
from continuing
operations (see
schedule H) $ 0.34 $ 0.46 $ 0.18 $ 1.57 $ 1.44
Operating income
as a percent of
sales 11.4% 17.0% 9.2% 15.5% 14.9%
ROE (annualized)
(a) 14.2% 14.7% 15.1% 14.2% 15.1%
Year Ended Dec. 31,
-------------------
2005 2004
--------- ---------
Capital Resources
and Liquidity
Continuing
operations:
Cash provided by
operating
activities $ 262.7 $ 292.3
Cash used for
investing
activities $ (32.2) $ (179.2)
Cash used for
financing
activities $ (215.6) $ (52.0)
Adjusted EBITDA
(b) (d) $ 360.1 $ 330.6
Cash Available for
Distribution
(CAD) (c) (d) $ 166.8 $ 166.4
(Repayment)/
borrowing of
debt, net $ (98.6) $ 41.5
Debt $ 558.5 $ 658.9
Debt / capital 38.7% 45.3%
Cash $ 146.2 $ 84.1
(a), (b), (c) and (d), see Schedule B.
- A -
RAYONIER
FOOTNOTES FOR SCHEDULE A
DECEMBER 31, 2005 (unaudited)
Schedule A
(a) Based on year-to-date percent; major land sales and REIT
conversion costs are not annualized.
(b) Adjusted EBITDA is defined as earnings from continuing operations
before interest, taxes, depreciation, depletion, amortization and
the non-cash cost basis of real estate sold. Adjusted EBITDA is
a non-GAAP measure of operating cash generating capacity of the
Company. See reconciliation on Schedule I.
(c) Cash Available for Distribution (CAD) is defined as cash provided
by operating activities less capital spending, the tax benefit on
the exercise of stock options, tax benefits associated with
certain strategic acquisitions and the change in committed cash.
CAD 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 H.
(d) 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.
In addition, analysts, investors and creditors use these measures
when analyzing the financial condition and cash generating
ability of the Company.
- B -
RAYONIER
CONDENSED STATEMENTS OF CONSOLIDATED INCOME
DECEMBER 31, 2005 (unaudited)
(millions of dollars, except per share information)
Three Months Ended Year Ended
----------------------------------- -----------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2005 2005 2004 2005 2004
----------- ----------- ----------- ----------- -----------
Sales $ 315.9 $ 299.5 $ 284.5 $ 1,180.7 $ 1,162.8
----------- ----------- ----------- ----------- -----------
Costs and
expenses
Cost of
sales 260.0 237.7 247.9 942.1 937.0
Selling
and
general
expenses 17.7 16.9 14.4 64.4 59.3
Other
operating
(income)/
expense,
net 2.2 (6.1) (4.1) (9.0) (6.2)
----------- ----------- ----------- ----------- -----------
Operating
income 36.0 51.0 26.3 183.2 172.7
Gain on
sale of New
Zealand
timberlands
(a) 37.0 - - 37.0 -
Interest
expense (12.0) (9.8) (12.1) (47.0) (46.7)
Interest
and other
income/
(expense),
net 4.2 11.9 (1.3) 17.7 0.5
----------- ----------- ----------- ----------- -----------
Income
before
taxes 65.2 53.1 12.9 190.9 126.5
Income
tax
(expense)/
benefit (8.8) 21.8 1.1 16.9 33.6
----------- ----------- ----------- ----------- -----------
Income
from
continuing
oper-
ations $ 56.4 $ 74.9 $ 14.0 $ 207.8 $ 160.1
Discon-
tinued
operations,
net - 0.1 (0.5) (25.0) (3.2)
----------- ----------- ----------- ----------- -----------
Net
income $ 56.4 $ 75.0 $ 13.5 $ 182.8 $ 156.9
=========== =========== =========== =========== ===========
Income per
Common
Share (b):
Basic
From con-
tinuing
oper-
ations $ 0.75 $ 0.99 $ 0.19 $ 2.75 $ 2.15
=========== =========== =========== =========== ===========
Net
income $ 0.75 $ 0.99 $ 0.18 $ 2.42 $ 2.11
=========== =========== =========== =========== ===========
Diluted
From con-
tinuing
oper-
ations $ 0.73 $ 0.96 $ 0.18 $ 2.68 $ 2.09
=========== =========== =========== =========== ===========
Net
income $ 0.73 $ 0.96 $ 0.18 $ 2.36 $ 2.05
=========== =========== =========== =========== ===========
Pro forma
income
from
continuing
oper-
ations (c)
Adjusted
basic
EPS $ 0.35 $ 0.47 $ 0.19 $ 1.60 $ 1.48
=========== =========== =========== =========== ===========
Adjusted
diluted
EPS $ 0.34 $ 0.46 $ 0.18 $ 1.57 $ 1.44
=========== =========== =========== =========== ===========
Weighted
average
Common
Shares
used for
deter-
mining
Basic
EPS 75,844,885 75,658,512 74,851,809 75,504,800 74,445,864
=========== =========== =========== =========== ===========
Diluted
EPS 78,002,090 77,753,165 76,934,792 77,644,252 76,533,263
=========== =========== =========== =========== ===========
(a) Total gain was $73.7 million, which was reduced by $36.7 million
of unrecognized gain based on our proportionate interest in the
joint venture.
(b) All share and per share amounts reflect the three-for-two stock
split on October 17, 2005.
(c) See Schedule H.
- C -
RAYONIER
BUSINESS SEGMENT SALES AND OPERATING INCOME (LOSS)
DECEMBER 31, 2005 (unaudited)
(millions of dollars)
Three Months Ended Year Ended
----------------------------- -------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2005 2005 2004 2005 2004
--------- --------- --------- --------- ---------
Sales
Timber $ 55.7 $ 45.5 $ 44.2 $ 207.6 $ 185.8
Real Estate 19.9 27.6 14.6 85.8 95.6
Performance Fibers
Cellulose
specialties 124.7 114.8 115.2 448.6 418.8
Absorbent
materials 48.0 44.3 39.1 179.4 163.5
--------- --------- --------- --------- ---------
Total
Performance
Fibers 172.7 159.1 154.3 628.0 582.3
--------- --------- --------- --------- ---------
Wood Products 34.1 35.6 30.9 136.6 126.2
Other Operations 33.6 32.1 40.9 123.5 173.9
Intersegment
eliminations (0.1) (0.4) (0.4) (0.8) (1.0)
--------- --------- --------- --------- ---------
Total sales $ 315.9 $ 299.5 $ 284.5 $1,180.7 $1,162.8
========= ========= ========= ========= =========
Operating income (loss)
Timber $ 23.5 $ 16.4 $ 16.4 $ 86.7 $ 71.9
Real Estate 15.9 21.8 11.7 63.7 75.3
Performance Fibers 6.6 15.6 5.4 53.1 46.6
Wood Products 2.8 4.6 0.9 16.4 13.2
Other Operations 0.5 0.6 1.3 0.9 6.2
Corporate (10.4) (10.2) (9.5) (36.5) (40.4)
Intersegment
eliminations
and other
(Including
Corporate FX) (2.9) 2.2 0.1 (1.1) (0.1)
--------- --------- --------- --------- ---------
Total operating
income $ 36.0 $ 51.0 $ 26.3 $ 183.2 $ 172.7
========= ========= ========= ========= =========
- D -
RAYONIER
CONDENSED CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF CASH FLOWS
DECEMBER 31, 2005 (unaudited)
(millions of dollars)
CONDENSED CONSOLIDATED BALANCE SHEETS
Dec. 31, Dec. 31,
2005 2004
--------- ---------
Current assets $ 354.1 $ 369.4
Timber, timberlands and logging roads,
net of depletion and amortization 927.0 1,053.5
Property, plant and equipment 1,352.4 1,333.3
Less - accumulated depreciation (991.1) (936.2)
--------- ---------
361.3 397.1
--------- ---------
Investment in New Zealand JV 81.6 -
Other assets 110.9 113.9
--------- ---------
$1,834.9 $1,933.9
========= =========
Liabilities and Shareholders' Equity
Current liabilities $ 170.1 $ 246.7
Deferred income taxes 28.0 46.5
Long-term debt 555.2 610.3
Non-current reserves for dispositions and
discontinued operations 128.0 133.9
Other non-current liabilities 68.9 100.1
Shareholders' equity 884.7 796.4
--------- ---------
$1,834.9 $1,933.9
========= =========
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended
-------------------
Dec. 31, Dec. 31,
2005 2004
--------- ---------
Cash provided by operating activities of
continuing operations:
Income from continuing operations $ 207.8 $ 160.1
Depreciation, depletion, amortization and
non-cash cost basis of real estate sold 159.2 157.5
Other non-cash items included in income(1) (68.1) (52.4)
Changes in working capital and other assets
and liabilities (36.2) 27.1
--------- ---------
262.7 292.3
--------- ---------
Cash used for investing activities of continuing
operations:
Capital expenditures, net of sales and
retirements (89.9) (87.7)
Purchase of timberlands (23.5) (89.3)
Decrease/(increase) in restricted cash 3.3 (2.2)
Proceeds from sale of New Zealand timberlands
to JV 186.8 -
Proceeds from sale of other assets 13.0 -
Investment in New Zealand JV (121.9) -
--------- ---------
(32.2) (179.2)
--------- ---------
Cash used for financing activities:
(Repayment)/borrowing of debt, net (98.6) 41.5
Dividends paid (129.2) (111.2)
Cash in lieu of fractional shares (0.4) -
Issuance of common shares 15.1 17.7
Foreign exchange loss from forward contract (2.5) -
--------- ---------
(215.6) (52.0)
--------- ---------
Effect of exchange rate changes on cash (0.2) 0.1
--------- ---------
Cash provided by discontinued operations 47.4 1.5
--------- ---------
Cash and cash equivalents:
Increase in cash and cash equivalents 62.1 62.7
Balance, beginning of year 84.1 21.4
--------- ---------
Balance, end of period $ 146.2 $ 84.1
========= =========
(1) 2005 - Mainly the gain on sale of New Zealand timberlands ($30.5)
million, the U.S. tax benefit on repatriation of foreign earnings
of ($25.4) million and favorable tax settlements, including
interest, of ($19.8) million. 2004 - 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, for a net effect of ($49.7) million.
- E -
RAYONIER
SELECTED SUPPLEMENTAL FINANCIAL DATA
DECEMBER 31, 2005 (unaudited)
(millions of dollars)
Three Months Ended Year Ended
----------------------------- -------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2005 2005 2004 2005 2004
--------- --------- --------- --------- ---------
Geographical Data
(Non-U.S.)
Sales
New Zealand $ 12.8 $ 13.1 $ 13.3 $ 48.9 $ 49.5
Other 2.8 1.6 3.8 9.9 26.3
--------- --------- --------- --------- ---------
Total $ 15.6 $ 14.7 $ 17.1 $ 58.8 $ 75.8
========= ========= ========= ========= =========
Operating income
(loss)
New Zealand $ (1.8) $ 1.5 $ 1.2 $ 1.2 $ 4.8
Other 1.5 (0.8) 1.8 0.1 (0.2)
--------- --------- --------- --------- ---------
Total $ (0.3) $ 0.7 $ 3.0 $ 1.3 $ 4.6
========= ========= ========= ========= =========
Timber
Sales
Northwest U.S. $ 27.4 $ 18.8 $ 17.8 $ 98.5 $ 81.0
Southeast U.S. 24.6 19.1 17.8 86.2 76.8
New Zealand 3.7 7.6 8.6 22.9 28.0
--------- --------- --------- --------- ---------
Total $ 55.7 $ 45.5 $ 44.2 $ 207.6 $ 185.8
========= ========= ========= ========= =========
Operating income
Northwest U.S. $ 13.9 $ 8.8 $ 8.1 $ 55.1 $ 41.9
Southeast U.S. 11.2 5.9 6.6 29.3 23.8
New Zealand (1.6) 1.7 1.7 2.3 6.2
--------- --------- --------- --------- ---------
Total $ 23.5 $ 16.4 $ 16.4 $ 86.7 $ 71.9
========= ========= ========= ========= =========
Adjusted EBITDA by
Segment
Timber $ 39.3 $ 31.6 $ 44.6 $ 148.2 $ 218.2
Real Estate (1) 17.4 26.8 - 79.4 -
Performance Fibers 29.0 35.3 23.6 129.9 124.4
Wood Products 4.5 6.4 3.6 23.5 22.3
Other Operations 0.9 1.1 1.4 2.4 7.3
Corporate and
other (11.1) 3.3 (11.2) (23.3) (41.6)
--------- --------- --------- --------- ---------
Total $ 80.0 $ 104.5 $ 62.0 $ 360.1 $ 330.6
========= ========= ========= ========= =========
(1) Real Estate became a reportable segment in the third quarter of
2005. The Timber segment includes both Timber and Real Estate in
2004.
- F -
RAYONIER
SELECTED OPERATING INFORMATION
DECEMBER 31, 2005 (unaudited)
Three Months Ended Year Ended
----------------------------- -------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2005 2005 2004 2005 2004
--------- --------- --------- --------- ---------
Timber
Northwest U.S.,
in millions of
board feet 70 48 55 263 285
Southeast U.S.,
in thousands of
short green tons 1,325 1,080 1,060 4,832 4,291
New Zealand,
in thousands of
metric tons 36 191 209 464 646
Timber sales volume -
Intercompany
Southeast U.S.,
in thousands of
short green tons 1 18 14 42 43
New Zealand,
in thousands of
metric tons - 1 4 3 11
Real Estate
Acres sold
TerraPointe -
Development 1,099 2,411 1,286 6,036 4,786
TerraPointe -
Rural 1,480 7,930 2,985 23,587 29,282
Northwest U.S. 128 44 1,621 403 1,838
--------- --------- --------- --------- ---------
Total 2,707 10,385 5,892 30,026 35,906(1)
Performance Fibers
Sales Volume
Cellulose
specialties,
in thousands of
metric tons 130 120 125 470 453
Absorbent materials,
in thousands of
metric tons 75 65 62 276 266
Production as a
percent of
capacity 104.0% 103.8% 96.1% 103.3% 98.7%
Lumber
Sales volume,
in millions of
board feet 89 89 86 351 347
(1) Includes 5,487 acres associated with a Northeast Florida sale
($26 million) of timber lease rights.
- G -
RAYONIER
RECONCILIATION OF NON-GAAP MEASURES
DECEMBER 31, 2005 (unaudited)
(millions of dollars, except per share information)
Year Ended
-------------------
Dec. 31, Dec. 31,
2005 2004
--------- ---------
Cash Available for
Distribution
Cash provided by
operating activities $ 262.7 $ 292.3
Capital spending
(a) (89.9) (87.7)
Like-kind exchange
tax benefits on
third party land
sales (b) (3.2) (11.3)
Like-kind exchange
tax benefits on
intercompany land
sales (b) - (19.0)
Decrease (increase)
in committed cash 1.8 (3.5)
Tax benefit on
exercise of
stock options (4.6) (4.4)
--------- ---------
Cash Available for
Distribution $ 166.8 $ 166.4
========= =========
(a) Capital Spending is net of sales and retirements and excludes
strategic acquisitions and dispositions.
(b) Represents taxes that would have been paid if the Company had not
completed LKE transactions.
PRO FORMA INCOME:
Three Months Ended Year Ended
----------------------------- -------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2005 2005 2004 2005 2004
--------- --------- --------- --------- ---------
Income from
Continuing
Operations per
Common Share
Basic EPS $ 0.75 $ 0.99 $ 0.19 $ 2.75 $ 2.15
========= ========= ========= ========= =========
Diluted EPS $ 0.73 $ 0.96 $ 0.18 $ 2.68 $ 2.09
========= ========= ========= ========= =========
New Zealand
timberlands sale
Basic EPS (0.40) - - (0.40) -
========= ========= ========= ========= =========
Diluted EPS (0.39) - - (0.39) -
========= ========= ========= ========= =========
Taxes associated
with repatriation
of foreign
earnings
Basic EPS - (0.34) - (0.34) 0.38
========= ========= ========= ========= =========
Diluted EPS - (0.33) - (0.33) 0.37
========= ========= ========= ========= =========
IRS audit
settlements
including
adjustment of
accrued interest
Basic EPS - (0.11) - (0.34) -
========= ========= ========= ========= =========
Diluted EPS - (0.10) - (0.32) -
========= ========= ========= ========= =========
Arbitration award
Basic EPS - (0.07) - (0.07) -
========= ========= ========= ========= =========
Diluted EPS - (0.07) - (0.07) -
========= ========= ========= ========= =========
Deferred taxes not
required after
REIT conversion
Basic EPS - - - - (1.05)
========= ========= ========= ========= =========
Diluted EPS - - - - (1.02)
========= ========= ========= ========= =========
Pro forma income
from Continuing
Operations per
Common Share
Adjusted basic
EPS $ 0.35 $ 0.47 $ 0.19 $ 1.60 $ 1.48
========= ========= ========= ========= =========
Adjusted diluted
EPS $ 0.34 $ 0.46 $ 0.18 $ 1.57 $ 1.44
========= ========= ========= ========= =========
- H -
RAYONIER
RECONCILIATION OF NON-GAAP MEASURES (1)
DECEMBER 31, 2005 (unaudited)
(millions of dollars)
Per- Other Corporate
Real formance Wood Oper- and
Timber Estate(2) Fibers Products ations other Total
------ ------- -------- -------- ------ -------- -------
Three Months
Ended
Dec. 31,
2005
Cash
provided
by oper-
ating
activ-
ities $ 54.4 $ 15.8 $ 58.9 $ 5.2 $ (5.5) $ (2.4) $126.4
Income
tax
expense - - - - - 8.8 8.8
Interest
expense - - - - - 12.0 12.0
Working
capital
increases
(de-
creases) (10.8) 1.2 (29.7) (0.7) 6.3 (6.6) (40.3)
Other
balance
sheet
changes (4.3) 0.4 (0.2) - 0.1 (22.9) (26.9)
------ ------- -------- -------- ------ -------- -------
Adjusted
EBITDA $ 39.3 $ 17.4 $ 29.0 $ 4.5 $ 0.9 $ (11.1) $ 80.0
====== ======= ======== ======== ====== ======== =======
Sept. 30,
2005
Cash
provided
by oper-
ating
activ-
ities $ 36.7 $ 25.1 $ 19.7 $ 8.6 $ 2.8 $ (9.7) $ 83.2
Income
tax
benefit - - - - - (21.8) (21.8)
Interest
expense - - - - - 9.8 9.8
Working
capital
increases
(de-
creases) (0.8) 1.8 16.3 (2.2) (1.7) (3.6) 9.8
Other
balance
sheet
changes (4.3) (0.1) (0.7) - - 28.6 23.5
------ ------- -------- -------- ------ -------- -------
Adjusted
EBITDA $ 31.6 $ 26.8 $ 35.3 $ 6.4 $ 1.1 $ 3.3 $104.5
====== ======= ======== ======== ====== ======== =======
Dec. 31,
2004
Cash
provided
by oper-
ating
activ-
ities $ 29.2 $ - $ 32.5 $ 5.6 $ 5.6 $ (13.0) $ 59.9
Income
tax
benefit - - - - - (1.1) (1.1)
Interest
expense - - - - - 12.1 12.1
Working
capital
increases
(de-
creases) 8.6 - (9.0) (2.0) (4.1) (2.4) (8.9)
Other
balance
sheet
changes 6.8 - 0.1 - (0.1) (6.8) -
------ ------- -------- -------- ------ -------- -------
Adjusted
EBITDA $ 44.6 $ - $ 23.6 $ 3.6 $ 1.4 $ (11.2) $ 62.0
====== ======= ======== ======== ====== ======== =======
Year Ended
Dec. 31,
2005
Cash
provided
by oper-
ating
activ-
ities $160.0 $ 82.0 $132.4 $ 22.3 $ (3.9) $(130.1) $262.7
Income
tax
benefit - - - - - (16.9) (16.9)
Interest
expense - - - - - 47.0 47.0
Working
capital
increases
(de-
creases) (4.8) (2.9) (2.4) 1.2 4.7 23.4(a) 19.2
Other
balance
sheet
changes (7.0) 0.3 (0.1) - 1.6 53.3(b) 48.1
------ ------- -------- -------- ------ -------- -------
Adjusted
EBITDA $148.2 $ 79.4 $129.9 $ 23.5 $ 2.4 $ (23.3) $360.1
====== ======= ======== ======== ====== ======== =======
Dec. 31,
2004
Cash
provided
by oper-
ating
activ-
ities $210.1 $ - $125.8 $ 22.6 $ 17.8 $ (84.0) $292.3
Income
tax
benefit - - - - - (33.6) (33.6)
Interest
expense - - - - - 46.7 46.7
Working
capital
increases
(de-
creases) (2.9) - (2.6) (0.3) (9.8) (21.8) (37.4)
Other
balance
sheet
changes 11.0 - 1.2 - (0.7) 51.1(c) 62.6
------ ------- -------- -------- ------ -------- -------
Adjusted
EBITDA $218.2 $ - $124.4 $ 22.3 $ 7.3 $ (41.6) $330.6
====== ======= ======== ======== ====== ======== =======
(1) Unusual, non-trade intercompany items between the segments have
been eliminated.
(2) Real Estate became a reportable segment in third quarter 2005.
The Timber segment includes Timber and Real Estate in 2004.
(a) Primarily due to higher tax payments in 2005.
(b) Includes U.S. tax benefit on repatriation of foreign earnings of
($25.4) million and favorable tax settlements, net of interest
($19.8) million.
(c) Includes reversal of deferred taxes not required after REIT
conversion of ($77.9) million partly offset by additional taxes
for repatriation of foreign earnings of $28.2 million.
- I -
RAYONIER
RECONCILIATION OF STATUTORY INCOME TAX TO REPORTED INCOME TAX
DECEMBER 31, 2005 (unaudited)
(millions of dollars, except percentages)
Three Months Ended
----------------------------------------------------
Dec. 31, Sept. 30, Dec. 31,
2005 2005 2004
---------------- ----------------- ----------------
$ % $ % $ %
------- ------- ------- ------- ------- -------
Income tax
provision at the
U.S. statutory
rate $(22.8) (35.0) $(18.6) (35.0) $ (4.4) (35.0)
REIT income not
subject to
federal tax 11.1 17.0 10.4 19.6 5.4 42.2
Lost deduction on
REIT interest
expense and
overhead
expenses
associated with
REIT activities (2.9) (4.4) (3.2) (6.0) (1.6) (12.5)
Discrete items
included in
pretax income - - 4.9 6.5 (2) - -
Foreign, state
and local income
taxes, foreign
exchange rate
changes and
permanent
differences 4.9 7.5 2.3 4.3 4.7 36.7
------- ------- ------- ------- ------- -------
Income tax
(expense)
benefit before
discrete items
(1) $ (9.7) (14.9) $ (4.2) (10.6) $ 4.1 31.4
Favorable
adjustment of
employee related
costs between
non-taxable and
taxable entities 1.5 2.3 - - - -
U.S. tax benefit
on repatriation
of foreign
earnings (0.4) (0.6) 25.8 48.6 - -
Return to accrual
adjustments (0.2) (0.3) (0.1) (0.2) - -
Favorable
IRS audit
settlements,
including
adjustment
of accrued
interest
expense/
income - - 3.1 6.9 (2) - -
Tax on favorable
arbitration
award - - (3.0) (3.9)(2) - -
Exchange rate
changes on tax
on undistributed
foreign earnings - - 0.2 0.4 (3.0) (23.4)
Non-realizability
of New Zealand
tax credits on
U.S. withholding
tax for prior
years'
intercompany
note interest - - - - - -
------- ------- ------- ------- ------- -------
Income tax
benefit
(expense) (1) $ (8.8) (13.5) $ 21.8 41.2 $ 1.1 8.0
======= ======= ======= ======= ======= =======
Year Ended
-----------------------------------
Dec. 31, Dec. 31,
2005 2004
---------------- ---------------
$ % $ %
------- ------- ------- -------
Income tax
provision at the
U.S. statutory
rate $(66.8) (35.0) $(44.2) (35.0)
REIT income not
subject to
federal tax 39.9 20.9 36.2 28.6
Lost deduction on
REIT interest
expense and
overhead
expenses
associated with
REIT activities (11.6) (6.1) (11.6) (9.2)
Discrete items
included in
pretax income 4.9 1.6 (2) - -
Foreign, state
and local income
taxes, foreign
exchange rate
changes and
permanent
differences 8.4 4.4 5.1 4.0
------- ------- ------- -------
Income tax
(expense)
benefit before
discrete items
(1) $(25.2) (14.2) $(14.5) (11.6)
Favorable
adjustment of
employee related
costs between
non-taxable and
taxable entities 1.5 0.8 - -
U.S. tax benefit
on repatriation
of foreign
earnings 25.4 13.3 - -
Return to accrual
adjustments (0.3) (0.2) 1.4 1.1
Favorable IRS
audit
settlements,
including
adjustment of
accrued interest
expense/income 19.8 11.0 (2) - -
Tax on favorable
arbitration
award (3.0) (1.2)(2) - -
Exchange rate
changes on tax
on undistributed
foreign earnings 1.6 0.8 (3.0) (2.4)
Non-realizability
of New Zealand
tax credits on
U.S. withholding
tax for prior
years'
intercompany
note interest (2.9) (1.5) - -
------- ------- ------- -------
Income tax
benefit
(expense) (1) $ 16.9 8.8 $(16.1) (12.9)
======= ======= ======= =======
(1) Twelve months ended December 31, 2004 excludes 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, for a net effect of $49.7 million.
(2) Adjusted for change in pretax income due to discrete items.
- J -
SOURCE: Rayonier
Rayonier, Jacksonville
Media Contact:
Jay Fredericksen, 904-357-9106
or
Investor Contact:
Parag Bhansali, 904-357-9155
