JACKSONVILLE, Fla.--(BUSINESS WIRE)--Jan. 23, 2007--Rayonier (NYSE:RYN) today reported fourth quarter income from continuing operations of $50.0 million, or 64 cents per share. This compares to $55.0 million, or 70 cents per share, in the third quarter and $56.4 million, or 73 cents per share, in fourth quarter 2005. Full-year 2006 income from continuing operations was $171.1 million, or $2.19 per share, compared to $207.8 million, or $2.68 per share, in 2005.
Fourth quarter 2006 included a special item gain of $3.7 million, or 5 cents per share, for a deferred tax adjustment. Third quarter included special item gains of $5.3 million, or 7 cents per share, and fourth quarter 2005 included special item gains of $30.1 million, or 39 cents per share. In 2006 special items totaled $15.5 million, or 20 cents per share, compared to $85.9 million, or $1.11 per share, in 2005. (See Schedule H for details.)
Lee Nutter, Chairman, President and CEO, said: "We had another very successful year with strong and improved results in each of our three core businesses. In Timber, we increased the geographic footprint of our holdings with the purchase of 228,000 acres in six states and are now the 5th largest private timberland owner in the U.S. Also, we monetized 20 percent of our equity interest in a 354,000 acre Rayonier-managed New Zealand joint venture and, with a 40 percent interest, we remain the largest investor. In Performance Fibers, we continued to see very strong demand for our high-value cellulose specialties and secured long-term contracts for 80 percent of that production into 2011 with the world's largest manufacturers of acetate-based products and other key customers. In Real Estate, despite a softening in residential markets, operating income for the year was 39 percent higher than 2005 due to continued interest in our extensive and diverse development and rural properties. Also, as part of our strategy to move up the real estate value chain we entered into our first 'participation' agreements with two premier developers."
Net income in the fourth quarter was $55.3 million, or 71 cents per share, compared to $55.0 million, or 70 cents per share, in third quarter 2006, and $56.4 million, or 73 cents per share, in fourth quarter 2005. Fourth quarter 2006 included income from discontinued operations of $5.3 million, or 7 cents per share, reflecting a reduction in environmental reserves. Full-year 2006 net income was $176.4 million, or $2.26 per share, compared to $182.8 million, or $2.36 per share, in 2005.
Excluding special items, fourth quarter income from continuing operations was below third quarter primarily due to lower Real Estate sales partly offset by improved Performance Fibers results. On the same basis, earnings improved compared to fourth quarter 2005 primarily due to stronger Performance Fibers results and increased Real Estate sales partly offset by lower Northwest timber volume and Southeast timber prices.
Sales for the fourth quarter increased to $329 million from $312 million in the third quarter and $316 million in fourth quarter 2005. Sales for the year of $1.2 billion were 4 percent higher than in 2005.
Cash provided by operating activities for 2006 of $307 million was $53 million above 2005 due to higher operating earnings and lower working capital requirements. Cash Available for Distribution (CAD) of $178 million for 2006 was $9 million above 2005 mainly due to higher operating earnings. (CAD is a non-GAAP measure defined and reconciled to GAAP in the attached exhibits.)
Debt at year-end of $659 million was $101 million above year-end 2005 largely due to timberland acquisitions. The debt-to-capital ratio was 42.1 percent compared to 38.7 percent at prior year-end. Cash was $40 million compared to $146 million at year-end 2005.
Timber
Sales of $47 million and operating income of $19 million were $3 million and $2 million above third quarter, respectively, primarily due to higher Southeast volume and hunting lease income partly offset by lower Southeast prices and Northwest volume. Compared to fourth quarter 2005, sales and operating income decreased $9 million and $5 million, respectively, mainly due to lower Northwest volume and Southeast prices.
Real Estate
Sales of $35 million and operating income of $30 million were $12 million and $8 million below third quarter, respectively, primarily due to fewer development acres sold, partially offset by an increase in the price and number of rural acres sold. Compared to fourth quarter 2005, sales and operating income increased $15 million and $14 million, respectively, mainly due to an increase in development and rural acres sold and improved rural prices.
Performance Fibers
Sales and operating income of $196 million and $33 million, respectively, were $33 million and $12 million above third quarter primarily due to increased volume. Operating income also benefited from lower manufacturing costs, including a favorable property tax settlement which resulted in the reversal of $4.9 million in accruals from prior years. Compared to fourth quarter 2005, sales and operating income improved $23 million and $26 million, respectively, largely due to higher cellulose specialties prices and volume, while operating income also benefited from the property tax settlement and lower manufacturing costs.
Wood Products
Sales of $21 million were $5 million below third quarter due to a decline in volume and prices, while an operating loss of $4 million was unfavorable to third quarter by $1 million due to reduced prices partly offset by lower manufacturing costs. Compared to fourth quarter 2005, sales and operating income declined $13 million and $7 million, respectively, also due to weaker prices partially offset by lower manufacturing costs.
Other Operations
Sales of $29 million were $3 million below third quarter and $4 million lower than fourth quarter 2005, however, operating income of $1 million was up from essentially break even results in both comparative periods primarily due to settlement of a coal royalty dispute.
Other Items
Corporate expenses of $11.3 million were $4.2 million above third quarter mainly due to higher stock-price based incentive compensation and business development expenses. Compared to fourth quarter 2005, expenses increased $0.9 million largely due to higher incentive compensation.
Intersegment eliminations and other of $0.5 million income was comparable to third quarter and $3.4 million favorable to fourth quarter 2005 primarily due to an increase in disposition reserves in that quarter.
Interest expense of $13.8 million was $2.8 million above third quarter due to a litigation-related accrual and higher debt. Compared to fourth quarter 2005, interest expense increased $1.8 million mainly due to the legal matter.
Interest and other income of $2.5 million was $0.5 million below third quarter. Compared to fourth quarter 2005, it was $1.7 lower largely due to a gain on sale of a manufacturing asset in that quarter.
Income from discontinued operations was $5.3 million in fourth quarter 2006 due to a more cost-effective remediation plan at a closed facility resulting in a reduction in environmental reserves.
The full-year and fourth quarter 2006 effective tax rates, before discrete items, were 16.3 and 20.7 percent, respectively, compared to 14.2 and 14.9 percent in the 2005 comparable periods. The increase was primarily due to lower tax benefits from foreign operations, partly offset by higher REIT income. The 2005 rates included a $6.5 million tax benefit from the sale of New Zealand timber assets. Including discrete items, the full year and fourth quarter 2006 rates were 10.0 and 11.4 percent, respectively. (See Schedule J for details.)
Outlook
"Our focus this year is on integrating the 2006 timberland acquisitions into our operations, continuing to move up the value chain in real estate through additional 'participation' agreements and on high-return cost improvement projects at our Performance Fibers mills," Nutter said.
"Our mix of core businesses gives Rayonier strength and balance. As a result, excluding special items, we expect another good year with earnings generally in line with 2006. While the housing slowdown will put pressure on timber and real estate markets in the near term, the impact should be mostly offset by the strength of our Performance Fibers business. First quarter results are expected to be slightly below first quarter 2006 primarily due to lower timber earnings."
Rayonier is a leading international forest products company with three core businesses: Timber, Real Estate and Performance Fibers. It owns, leases or manages 2.7 million acres of timber and land in the U.S., New Zealand and Australia. The company's holdings include approximately 200,000 acres with residential and commercial development potential along the fast-growing Interstate 95 corridor between Savannah, Georgia, and Daytona Beach, Florida. Its Performance Fibers business is the world's leading producer of high-value specialty cellulose fibers. Approximately 40 percent of the company's sales are outside the U.S. to customers in more than 50 countries. Rayonier is structured as a real estate investment trust.
Except for historical information, the statements made in this press release are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements, which include statements regarding anticipated earnings, revenues, volumes, pricing, costs and other statements relating to Rayonier's financial and operational performance, in some cases are identified by the use of words such as "may," "will," "should," "expect," "estimate," "believe," "anticipate" and other similar language. The following important factors, among others, could cause actual results to differ materially from those expressed in the forward-looking statements contained in this release: changes in global market trends and world events; interest rate and currency movements; changes in key management personnel; 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, policy or political environment 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 continue to qualify as a REIT; the ability of the company to complete tax-efficient exchanges of real estate; and implementation or revision of governmental policies, laws and regulations affecting the environment, endangered species, timber harvesting, 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 23, at 2:00 p.m. EST to discuss these results. Interested parties are invited to listen to the live webcast by logging onto 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 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, 2006 (unaudited)
(millions of dollars, except per share information)
Three Months Ended Year Ended
------------------------------ -------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2006 2006 2005 2006 2005
--------- --------- --------- --------- ---------
Profitability
Sales $328.5 $312.0 $315.9 $1,229.8 $1,180.7
Operating income $67.8 $65.7 $36.0 $221.8 $183.2
Income from
continuing
operations $50.0 $55.0 $56.4 $171.1 $207.8
Discontinued
operations $5.3 $- $- $5.3 $(25.0)
Net income $55.3 $55.0 $56.4 $176.4 $182.8
Income per
diluted common
share
Continuing
operations $0.64 $0.70 $0.73 $2.19 $2.68
Net income $0.71 $0.70 $0.73 $2.26 $2.36
Pro forma
income from
continuing
operations
(a)(d) $0.59 $0.63 $0.34 $1.99 $1.57
Operating income
as a percent
of sales 20.6% 21.1% 11.4% 18.0% 15.5%
Adjusted ROE
(a)(d) N/M N/M N/M 17.4% 14.5%
Year Ended
December 31,
2006 2005
--------- ---------
Capital Resources and
Liquidity
Continuing operations:
Cash provided by
operating activities $306.9 $254.1
Cash used for
investing
activities $(385.2) $(23.7)
Cash used for
financing
activities $(29.8) $(215.6)
Adjusted EBITDA
(b) (d) $370.1 $352.8
Cash Available for
Distribution (CAD) (c) (d) $177.8 $169.0
Borrowing/(repayment)
of debt, net $99.7 $(98.6)
12/31/06 12/31/05
--------- ---------
Debt $659.0 $558.5
Debt / capital 42.1% 38.7%
Cash $40.2 $146.2
Average diluted shares
outstanding (millions) 78.2 77.6
(a), (b), (c) and (d), see Schedule B.
N/M - Not meaningful.
- A -
RAYONIER
FOOTNOTES FOR SCHEDULE A
DECEMBER 31, 2006 (unaudited)
(a) Pro forma income from continuing operations and Adjusted ROE
are non-GAAP measures. See Schedule H for reconciliation to
the nearest GAAP measure.
(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 of continuing operations
less capital spending, adjusted for equity based
compensation amounts, proceeds from matured energy forward
contracts, the 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, 2006 (unaudited)
(millions of dollars, except per share information)
Three Months Ended Year Ended
----------------------------------- ----------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2006 2006 2005 2006 2005
----------- ----------- ----------- ----------------------
Sales $328.5 $312.0 $315.9 $1,229.8 $1,180.7
----------- ----------- ----------- ----------------------
Costs and
expenses
Cost of
sales 249.6 231.5 260.0 952.7 942.1
Selling and
general
expenses 18.4 14.5 17.7 63.5 64.4
Other
operating
loss/
(income),
net (7.3) 0.3 2.2 (8.2) (9.0)
----------- ----------- ----------- ----------------------
Operating
income 67.8 65.7 36.0 221.8 183.2
Gain on sale
of portion
of New
Zealand JV - - 37.0 7.8 37.0
----------- ----------- ----------- ----------------------
Income from
continuing
operations,
including
gain on
sale of
portion of
New Zealand
joint
venture 67.8 65.7 73.0 229.6 220.2
Interest
expense (13.8) (11.0) (12.0) (48.9) (47.0)
Interest and
other
income, net 2.5 3.0 4.2 9.5 17.7
----------- ----------- ----------- ----------------------
Income
before
taxes 56.5 57.7 65.2 190.2 190.9
Income tax
(expense)/
benefit (6.5) (2.7) (8.8) (19.1) 16.9
----------- ----------- ----------- ----------------------
Income from
continuing
operations $50.0 $55.0 $56.4 $171.1 $207.8
Discontinued
operations,
net 5.3 - - 5.3 (25.0)
----------- ----------- ----------- ----------------------
Net income $55.3 $55.0 $56.4 $176.4 $182.8
=========== =========== =========== ======================
Income per
Common
Share:
Basic
From
continuing
operations $0.65 $0.71 $0.75 $2.23 $2.75
=========== =========== =========== ======================
Net income $0.72 $0.71 $0.75 $2.30 $2.42
=========== =========== =========== ======================
Diluted
From
continuing
operations $0.64 $0.70 $0.73 $2.19 $2.68
=========== =========== =========== ======================
Net income $0.71 $0.70 $0.73 $2.26 $2.36
=========== =========== =========== ======================
Pro forma
income from
continuing
operations
(a) (d)
Adjusted
diluted EPS $0.59 $0.63 $0.34 $1.99 $1.57
=========== =========== =========== ======================
Weighted
average
Common
Shares used
for
determining
Basic EPS 76,679,126 76,508,135 75,844,885 76,486,690 75,504,800
=========== =========== =========== ======================
Diluted EPS 78,331,461 78,062,219 78,002,090 78,158,691 77,644,252
=========== =========== =========== ======================
(a) See Schedule H for a reconciliation to the nearest GAAP measure.
(d) See Schedule B.
- C -
RAYONIER
BUSINESS SEGMENT SALES AND OPERATING INCOME (LOSS)
DECEMBER 31, 2006 (unaudited)
(millions of dollars)
Three Months Ended Year Ended
------------------------------ -------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2006 2006 2005 2006 2005
--------- ---------- --------- --------- ---------
Sales
Timber $47.2 $44.3 $55.7 $207.0 $207.6
Real Estate 34.8 46.3 19.9 112.0 85.8
Performance
Fibers
Cellulose
specialties 146.0 120.3 124.7 499.4 448.6
Absorbent
materials 50.1 43.2 48.0 172.0 179.4
--------- ---------- --------- --------- ---------
Total
Performance
Fibers 196.1 163.5 172.7 671.4 628.0
--------- ---------- --------- --------- ---------
Wood Products 21.3 26.3 34.1 111.4 136.6
Other
Operations 29.2 31.7 33.6 128.3 123.5
Intersegment
eliminations (0.1) (0.1) (0.1) (0.3) (0.8)
--------- ---------- --------- --------- ---------
Total sales $328.5 $312.0 $315.9 $1,229.8 $1,180.7
========= ========== ========= ========= =========
Operating
income/(loss)
Timber $18.9 $17.1 $23.5 $89.6 $86.7
Real Estate 29.9 37.6 15.9 88.6 63.7
Performance
Fibers 32.7 21.2 6.6 79.9 53.1
Wood Products (4.1) (3.3) 2.8 (2.8) 16.4
Other
Operations 1.2 0.1 0.5 1.3 0.9
Corporate (11.3) (7.1) (10.4) (35.0) (36.5)
Intersegment
eliminations
and other
(Including
Corporate FX) 0.5 0.1 (2.9) 0.2 (1.1)
--------- ---------- --------- --------- ---------
Total
operating
income $67.8 $65.7 $36.0 $221.8 $183.2
========= ========== ========= ========= =========
- D -
RAYONIER
CONDENSED CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF CASH FLOWS
DECEMBER 31, 2006 (unaudited)
(millions of dollars)
CONDENSED CONSOLIDATED BALANCE SHEETS
Dec. 31, Dec. 31,
2006 2005
--------- ---------
Assets
Current assets $299.9 $354.1
Timber, timberlands and logging roads, net of
depletion and amortization 1,127.5 927.0
Property, plant and equipment 1,365.0 1,352.4
Less - accumulated depreciation (1,011.2) (991.1)
--------- ---------
353.8 361.3
--------- ---------
Investment in New Zealand JV 61.2 81.7
Other assets 116.0 115.0
--------- ---------
$1,958.4 $1,839.1
========= =========
Liabilities and Shareholders' Equity
Current liabilities $193.3 $170.1
Deferred income taxes 5.2 32.2
Long-term debt 655.4 555.2
Non-current reserves for dispositions and
discontinued operations 111.8 128.0
Other non-current liabilities 86.3 68.7
Shareholders' equity 906.4 884.9
--------- ---------
$1,958.4 $1,839.1
========= =========
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended
-------------------
Dec. 31, Dec. 31,
2006 2005
--------- ---------
Cash provided by operating activities of
continuing operations:
Income from continuing operations $171.1 $207.8
Depreciation, depletion, amortization and non-
cash basis of real estate sold 148.9 159.2
Other non-cash items included in income (13.2) (85.9)
Changes in working capital and other assets
and liabilities 0.1 (27.0)
--------- ---------
306.9 254.1
--------- ---------
Cash used for investing activities of continuing
operations:
Capital expenditures, net of sales and
retirements (105.5) (85.3)
Purchase of timberlands and real estate (298.9) (23.5)
Proceeds from sale of New Zealand timberlands - 186.8
Investment in New Zealand joint venture - (121.9)
Proceeds from sale of portion of New Zealand
joint venture 21.8 -
Proceeds from sale of other assets - 13.1
Decrease in restricted cash 1.3 3.3
Other (3.9) 3.8
--------- ---------
(385.2) (23.7)
--------- ---------
Cash used for financing activities:
Borrowing/(repayment) of debt, net 99.7 (98.6)
Dividends paid (143.9) (129.2)
Issuance of common shares 10.8 15.1
Repurchase of common shares (0.5) -
Excess tax benefits from equity-based
compensation(a) 4.1 -
Cash in lieu of fractional shares - (0.4)
Payment on forward currency contract - (2.5)
--------- ---------
(29.8) (215.6)
--------- ---------
Effect of exchange rate changes on cash 2.1 (0.1)
--------- ---------
Cash provided by discontinued operations - 47.4
--------- ---------
Cash and cash equivalents:
(Decrease)/increase in cash and cash
equivalents (106.0) 62.1
Balance, beginning of year 146.2 84.1
--------- ---------
Balance, end of year $40.2 $146.2
========= =========
(a) SFAS No. 123(R) requires the excess tax benefits on
equity-based compensation to be included as a financing
activity. Since the Company did not adopt SFAS No. 123(R) until
January 1, 2006, no adjustment is required for the year ended
December 31, 2005.
- E -
RAYONIER
SELECTED SUPPLEMENTAL FINANCIAL DATA
DECEMBER 31, 2006 (unaudited)
(millions of dollars)
Three Months Ended Year Ended
------------------------------ -------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2006 2006 2005 2006 2005
--------- ---------- --------- --------- ---------
Geographical Data
(Non-U.S.)
Sales
New Zealand $10.3 $8.5 $12.8 $32.5 $48.9
Other 3.7 3.5 2.8 15.4 9.9
--------- ---------- --------- --------- ---------
Total $14.0 $12.0 $15.6 $47.9 $58.8
========= ========== ========= ========= =========
Operating income
(loss)
New Zealand $0.3 $(0.1) $(1.8) $(1.2) $1.2
Other 1.0 (0.3) 1.5 (0.2) 0.1
--------- ---------- --------- --------- ---------
Total $1.3 $(0.4) $(0.3) $(1.4) $1.3
========= ========== ========= ========= =========
Timber
Sales
Northwest U.S. $21.9 $24.4 $27.4 $108.6 $98.5
Southeast U.S. 22.2 17.2 24.6 87.9 86.2
New Zealand 3.1 2.7 3.7 10.5 22.9
--------- ---------- --------- --------- ---------
Total $47.2 $44.3 $55.7 $207.0 $207.6
========= ========== ========= ========= =========
Operating income
Northwest U.S. $9.6 $12.6 $13.9 $59.6 $55.1
Southeast U.S. 8.6 4.3 11.2 30.6 29.3
New Zealand 0.7 0.2 (1.6) (0.6) 2.3
--------- ---------- --------- --------- ---------
Total $18.9 $17.1 $23.5 $89.6 $86.7
========= ========== ========= ========= =========
Adjusted EBITDA by
Segment(a)
Timber $33.4 $27.3 $39.2 $142.8 $146.9
Real Estate 32.0 43.9 17.0 102.9 79.1
Performance
Fibers 53.3 40.9 29.0 152.7 129.9
Wood Products (2.6) (1.4) 4.5 4.1 23.5
Other Operations 1.4 0.3 0.9 2.0 2.4
Corporate and
other (10.9) (6.7) (12.8) (34.4) (29.0)
--------- ---------- --------- --------- ---------
Total $106.6 $104.3 $77.8 $370.1 $352.8
========= ========== ========= ========= =========
(a) Adjusted EBITDA is a non-GAAP measure, see Schedule I for
reconciliation to nearest GAAP measure.
- F -
RAYONIER
SELECTED OPERATING INFORMATION
DECEMBER 31, 2006 (unaudited)
Three Months Ended Year Ended
---------------------------- ------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2006 2006 2005 2006 2005
-------- ---------- -------- -------- ---------
Timber
Northwest U.S., in
millions of board
feet 51 59 70 274 263
Southeast U.S., in
thousands of short
green tons 1,363 926 1,325 4,740 4,832
Real Estate
Acres sold
Development 4,020 4,606 1,099 9,377 6,036
Rural 2,400 1,426 1,480 16,099 23,587
Northwest U.S. 713 58 128 775 403
-------- ---------- -------- -------- ---------
Total 7,133 6,090 2,707 26,251 30,026
Performance Fibers
Sales Volume
Cellulose
specialties, in
thousands of metric
tons 137 112 130 474 470
Absorbent materials,
in thousands of
metric tons 76 68 75 272 276
Production as a
percent of capacity 103.9% 101.9% 101.2% 101.2% 100.5%
Lumber
Sales volume, in
millions of board
feet 83 91 89 350 351
- G -
RAYONIER
RECONCILIATION OF NON-GAAP MEASURES
DECEMBER 31, 2006 (unaudited)
(millions of dollars, except per share information)
CASH AVAILABLE FOR DISTRIBUTION:
Year Ended
------------------
Dec. 31, Dec. 31,
2006 2005
-------- ---------
Cash provided by operating activities $306.9 $254.1
Capital spending (a) (105.5) (85.3)
Proceeds from matured forward energy contracts - 3.9
(Increase) decrease in committed cash (19.1) 1.8
Equity based compensation adjustments/other 0.3 (2.3)
Like-kind exchange tax benefits on
third party real estate sales (b) (4.8) (3.2)
-------- ---------
Cash Available for Distribution $177.8 $169.0
======== =========
(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 FROM CONTINUING OPERATIONS AND ADJUSTED RETURN ON
EQUITY:
Three Months Ended Year Ended
-------------------------- -----------------------------
Dec. 31, Sept.30, Dec. 31, Dec. 31, Dec. 31,
2006 2006 2005 2006 2005
-------------------------- -------------- --------------
per per per per per
diluted diluted diluted diluted diluted
share share share $ share $ share
-------------------------- -------------- --------------
Income from
Continuing
Operations $0.64 $0.70 $0.73 $171.1 $2.19 $207.8 $2.68
Sale of
portion of
New Zealand
JV - - - (6.5) (0.08) - -
IRS audit
settlements
including
adjustment
of accrued
interest - (0.07) - (5.3) (0.07) (24.8) (0.32)
Deferred tax
adjustment (0.05) - - (3.7) (0.05) - -
Tax
associated
with
repatriation
of foreign
earnings - - - - - (25.4) (0.33)
Arbitration
award - - - - - (5.2) (0.07)
New Zealand
timberlands
sale - - (0.39) - - (30.5) (0.39)
-------------------------- -------------- --------------
Pro forma
Income from
Continuing
Operations $0.59 $0.63 $0.34 $155.6 $1.99 $121.9 $1.57
Divided by:
Average
Equity N/M N/M N/M $895.7 N/M $840.7 N/M
-------------------------- -------------- --------------
Adjusted ROE N/M N/M N/M 17.4% N/M 14.5% N/M
========================== ============== ==============
N/M - Not meaningful.
- H -
RAYONIER
RECONCILIATION OF NON-GAAP MEASURES (a)
DECEMBER 31, 2006 (unaudited)
(millions of dollars)
ADJUSTED EBITDA:
Corp-
Perfor- Other orate
Real mance Wood Oper- and
Timber Estate Fibers Products ations other Total
------- ------------------------ --------------- -------
Three Months Ended
December 31, 2006
Cash
provided by
operating
activities $36.7 $37.4 $45.2 $(2.2) $8.0 $(40.5) $84.6
Income
tax
expense - - - - - 6.5 6.5
Interest,
net - - - - - 11.1 11.1
Working
capital
increases
(decreases) (8.2) (1.4) 7.9 (0.4) (5.3) 9.2 1.8
Other
balance
sheet
changes 4.9 (4.0) 0.2 - (1.3) 2.8 2.6
------- ------- ------- -------- ------ -------- -------
Adjusted
EBITDA $33.4 $32.0 $53.3 $(2.6) $1.4 $(10.9) $106.6
======= ======= ======= ======== ====== ======== =======
September 30, 2006
Cash
provided by
operating
activities $24.7 $39.8 $37.7 $0.8 $(2.0) $(11.8) $89.2
Income
tax
expense - - - - - 2.7 2.7
Interest,
net - - - - - 8.1 8.1
Working
capital
increases
(decreases) (1.3) 0.7 2.4 (2.2) 2.1 (14.8) (13.1)
Other
balance
sheet
changes 3.9 3.4 0.8 - 0.2 9.1 17.4
------- ------- ------- -------- ------ -------- -------
Adjusted
EBITDA $27.3 $43.9 $40.9 $(1.4) $0.3 $(6.7) $104.3
======= ======= ======= ======== ====== ======== =======
December 31, 2005
Cash
provided by
operating
activities $49.7 $15.4 $58.1 $5.2 $(5.6) $(74.8) $48.0
Income
tax
expense - - - - - 8.8 8.8
Interest,
net - - - - - 9.8 9.8
Working
capital
increases
(decreases) 3.0 6.2 (29.7) (0.7) 6.5 1.2 (13.5)
Other
balance
sheet
changes (13.5) (4.6) 0.6 - - 42.2 24.7
------- ------- ------- -------- ------ -------- -------
Adjusted
EBITDA $39.2 $17.0 $29.0 $4.5 $0.9 $(12.8) $77.8
======= ======= ======= ======== ====== ======== =======
Year Ended
December 31, 2006
Cash
provided by
operating
activities $158.3 $103.0 $127.3 $5.6 $13.6 $(100.9) $306.9
Income
tax
expense - - - - - 19.1 19.1
Interest,
net - - - - - 39.1 39.1
Working
capital
increases
(decreases) (11.8) 0.2 24.6 (1.5) (10.5) (3.3) (2.3)
Other
balance
sheet
changes (3.7) (0.3) 0.8 - (1.1) 11.6 7.3
------- ------- ------- -------- ------ -------- -------
Adjusted
EBITDA $142.8 $102.9 $152.7 $4.1 $2.0 $(34.4) $370.1
======= ======= ======= ======== ====== ======== =======
December 31, 2005
Cash
provided by
operating
activities $164.8 $80.8 $132.4 $22.3 $(4.6) $(141.6) $254.1
Income
tax
benefit - - - - - (16.9) (16.9)
Interest,
net - - - - - 38.8 38.8
Working
capital
increases
(decreases) (3.6) 4.9 (2.4) 1.2 5.5 10.8 16.4
Other
balance
sheet
changes (14.3) (6.6) (0.1) - 1.5 79.9 60.4
------- ------- ------- -------- ------ -------- -------
Adjusted
EBITDA $146.9 $79.1 $129.9 $23.5 $2.4 $(29.0) $352.8
======= ======= ======= ======== ====== ======== =======
(a) Unusual, non-trade intercompany items between the segments have
been eliminated.
- I -
RAYONIER
RECONCILIATION OF STATUTORY INCOME TAX TO REPORTED INCOME TAX
DECEMBER 31, 2006 (unaudited)
(millions of dollars, except percentages)
Three Months Ended
--------------------------------------------
Dec. 31, Sept. 30, Dec. 31,
2006 2006 2005
-------------- -------------- --------------
$ % $ % $ %
------- ------ ------- ------ ------- ------
Income tax provision
at the U.S. statutory
rate $(19.7) (35.0) $(20.2) (35.0) $(22.8) (35.0)
REIT income not
subject to federal
tax 12.5 22.2 14.4 25.0 11.1 17.0
Lost deduction on REIT
interest expense and
overhead expenses
associated with REIT
activities (4.0) (7.1) (2.8) (4.9) (2.9) (4.4)
Discrete items
included in pretax
income - - - - - -
Foreign, state and
local income taxes,
foreign exchange rate
changes and permanent
differences (0.5) (0.8) 0.5 0.7 4.9 7.5
------- ------ ------- ------ ------- ------
Income tax (expense)
benefit before
discrete items $(11.7) (20.7) $(8.1) (14.2) $(9.7) (14.9)
Favorable IRS audit
settlements - - 4.8 8.3 - -
Built-in gain
adjustments 1.5 2.7 2.8 4.9 - -
Return to accrual
adjustments - - (1.2) (2.1) (0.2) (0.3)
Prior year foreign tax
credit reserve - - (1.0) (1.7) - -
Deferred tax
adjustments 3.7 6.6 - - 1.5 2.3
U.S. tax
(expense)/benefit on
repatriation of
foreign earnings - - - - (0.4) (0.6)
Tax on favorable
arbitration award - - - - - -
Exchange rate changes
on tax on
undistributed foreign
earnings - - - - - -
Non-realizability of
New Zealand tax
credits on U.S.
withholding tax for
prior years'
intercompany note
interest - - - - - -
------- ------ ------- ------ ------- ------
Income tax (expense)
benefit $(6.5) (11.4) $(2.7) (4.8) $(8.8) (13.5)
======= ====== ======= ====== ======= ======
(a) Adjusted for change in pretax income due to discrete items.
- J -
RAYONIER
RECONCILIATION OF STATUTORY INCOME TAX TO REPORTED INCOME TAX
DECEMBER 31, 2006 (unaudited)
(millions of dollars, except percentages)
-
Year Ended
------------------------------
Dec. 31, Dec. 31,
2006 2005
--------------- --------------
$ % $ %
-------- ------ ------- ------
Income tax provision at the U.S.
statutory rate $(66.5) (35.0) $(66.8) (35.0)
REIT income not subject to federal
tax 46.3 24.4 39.9 20.9
Lost deduction on REIT interest
expense and overhead expenses
associated with REIT activities
(12.7) (6.7) (11.6) (6.1)
Discrete items included in pretax
income - - 4.9 1.6 (a)
Foreign, state and local income
taxes, foreign exchange rate
changes and permanent differences
1.8 1.0 8.4 4.4
-------- ------ ------- ------
Income tax (expense) benefit before
discrete items $(31.1) (16.3) $(25.2) (14.2)
Favorable IRS audit settlements
5.3 2.8 19.8 11.0 (a)
Built-in gain adjustments 4.3 2.2 - -
Return to accrual adjustments (0.3) (0.2) (0.3) (0.2)
Prior year foreign tax credit
reserve (1.0) (0.5) - -
Deferred tax adjustments 3.7 2.0 1.5 0.8
U.S. tax (expense)/benefit on
repatriation of foreign earnings - - 25.4 13.3
Tax on favorable arbitration award
- - (3.0) (1.2)(a)
Exchange rate changes on tax on
undistributed foreign earnings
- - 1.6 0.8
Non-realizability of New Zealand tax
credits on U.S. withholding tax for
prior years' intercompany note
interest - - (2.9) (1.5)
-------- ------ ------- ------
Income tax (expense) benefit $(19.1) (10.0) $16.9 8.8
======== ====== ======= ======
(a) Adjusted for change in pretax income due to discrete items.
- J -
CONTACT: Rayonier, Jacksonville
Media Contact:
Jay Fredericksen, 904-357-9106
or
Investor Contact:
Parag Bhansali, 904-357-9155
SOURCE: Rayonier
