JACKSONVILLE, Fla.--(BUSINESS WIRE)--July 24, 2007--Rayonier (NYSE:RYN) today reported second quarter net income of $33.3 million, or 42 cents per share, which reflects a special item charge of $10.1 million, or 13 cents per share, for a write-down of the book value of timber destroyed by forest fires in Southeast Georgia and Northeast Florida. This compares to $35.1 million, or 45 cents per share, in first quarter 2007 and $42.9 million, or 55 cents per share, in second quarter 2006.
Second quarter 2006 included a special item gain of $6.5 million, or 8 cents per share, on the sale of a portion of the company's investment in a New Zealand timber consortium. (See Schedule H for details.)
Lee M. Thomas, Chairman, President and CEO, said: "We are pleased with our second quarter despite the difficulties we experienced with the wildfires. Earnings and cash flow were very good, with particularly strong results from Performance Fibers and Real Estate."
Second quarter earnings, excluding the special item, improved over first quarter 2007 as stronger Real Estate and Performance Fibers results were partially offset by lower Eastern (see Schedule F for description of region) timber prices and reduced timber volumes due, in part, to the impact of salvage timber from the forest fires. Excluding the special item, compared to second quarter 2006, earnings improved mainly due to stronger Performance Fibers and Real Estate results partly offset by lower Western (see Schedule F for description of region) timber volumes and fire-impacted timber prices. The charge taken for the forest fires reflects the company's most recent estimate of damage and is lower than its previously reported estimate of $15 to $18 million. A final number will be available once all damage surveying has been completed.
Sales for the second quarter of $300 million were comparable to first quarter 2007 but $12 million below second quarter 2006.
Cash provided by operating activities of $132 million for the six months ended June 30 was $1 million below the 2006 comparable period due to the timing of a $17 million interest payment, partly offset by higher earnings. For the same period, Cash Available for Distribution (CAD) of $107 million was $25 million above 2006 primarily due to improved earnings partially offset by increased cash taxes. (CAD is a non-GAAP measure defined and reconciled to GAAP in the attached exhibits.)
Debt of $667 million was $8 million above year-end 2006. The debt-to-capital ratio of 41.5 percent was comparable to year-end 2006. Cash and cash equivalents at June 30, 2007 was $16 million.
Timber
Sales of $57 million and operating income of $21 million (excluding the $10 million forest fire charge) were $8 million and $5 million below first quarter, respectively, primarily due to lower Eastern prices and U.S. volumes. On the same basis, compared to second quarter 2006, sales and operating income decreased $4 million and $9 million, respectively, mainly due to reduced Western volumes and lower Eastern prices.
Real Estate
Sales of $29 million and operating income of $24 million were $8 million and $9 million above first quarter, respectively, primarily because most sales, due to timing, were of development acres rather than rural, a reversal from the first quarter. For the same reason, compared to second quarter 2006, sales and operating income increased $11 million and $13 million.
Performance Fibers
Sales and operating income of $168 million and $31 million, respectively, were $1 million and $4 million above first quarter primarily due to increased prices. Compared to second quarter 2006, sales and operating income improved $2 million and $15 million, respectively, reflecting higher cellulose specialty prices.
Wood Products
Sales of $24 million were $4 million above first quarter due to increased volume, while the operating loss of $1 million was a $3 million improvement due to cost reductions and slightly improved prices. Compared to second quarter 2006, sales and operating income declined $8 million and $3 million, respectively, due to weaker prices partially offset by lower manufacturing costs.
Other Operations
Sales of $23 million were $5 million below first quarter and $12 million lower than second quarter 2006, reflecting the impact of our exit from the wood products trading business in the Northwest U.S. The operating loss of $1 million was comparable to first quarter but unfavorable by $1 million compared to second quarter 2006 mainly due to coal royalty income in last year's quarter.
Other Items
Corporate expenses of $8.6 million were $0.5 million below first quarter mainly due to lower stock-price based incentive compensation. Compared to second quarter 2006, expenses increased $1.5 million mainly due to higher incentive and stock-price based compensation.
Interest expense of $13.6 million was comparable to first quarter but $1.7 million above second quarter 2006, mainly due to higher debt.
The second quarter effective tax rate, before discrete items, was 20.9 percent, compared to 14.0 percent in second quarter 2006, primarily due to lower REIT income, which included the fire loss charge, and higher foreign earnings in 2006 taxed below the U.S. statutory rate. Excluding the fire loss charge, the effective rate was 17.0 percent. (See Schedule J for details.)
Outlook
"We are on track for another good year and continue to expect that full-year earnings will be comparable to 2006, excluding special items," Thomas said. "The strength of our Performance Fibers business should more than offset the impact of the housing slowdown on timber prices and we are seeing strong interest in our rural properties. Given the confidence we have in our businesses and their ability to consistently generate strong cash flow, we announced yesterday a 6.4 percent increase in our third quarter dividend, raising it from 47 to 50 cents per share."
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: the cyclical and competitive nature of the forest products and real estate industries; 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; changes in energy and raw material prices, particularly for our performance fibers and wood products businesses; changes in global market trends and world events, including those that could impact customer demand; changes in environmental laws and regulations, including laws regarding air emissions and water discharges, remediation of contaminated sites, timber harvesting, and endangered species, that may restrict or adversely impact our ability to conduct our business; the lengthy, uncertain and costly process associated with the ownership or development of real estate, especially in Florida, which also may be affected by changes in law, policy and other political factors beyond our control; changes in demand for our real estate and unexpected delays in the entry into or closing of real estate transactions; adverse weather conditions, including natural disasters, affecting production, distribution and availability of raw materials such as wood, energy and chemicals; our ability to identify and complete timberland and higher value real estate acquisitions; the geographic concentration of a significant portion of our timberland; changes in key management and personnel; interest rate and currency movements; our capacity to incur additional debt; changes in import and export controls or taxes; our ability to continue to qualify as a REIT and to fund distributions using cash generated through our taxable REIT subsidiaries; the ability to complete like-kind-exchanges of timberlands and real estate; changes in tax laws that could reduce the benefits associated with REIT status; and additional factors described in 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, July 24, at 2:00 p.m. EDT 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
JUNE 30, 2007 (unaudited)
(millions of dollars, except per share information)
Three Months Ended Six Months Ended
--------------------------- ------------------
June 30, March 31, June 30, June 30, June 30,
2007 2007 2006 2007 2006
-------- --------- -------- --------- --------
Profitability
Sales $300.4 $299.7 $312.1 $600.1 $589.3
Operating income $55.7 $55.2 $59.0 $110.9 $96.2
Pro forma operating
income (a) $65.8 $55.2 $51.2 $121.0 $88.4
Net income $33.3 $35.1 $42.9 $68.4 $66.2
Income per diluted
common share
Net income $0.42 $0.45 $0.55 $0.87 $0.85
Pro forma net income
(a) (d) $0.55 $0.45 $0.47 $1.00 $0.77
Pro forma operating
income as a percent
of sales (a) (d) 21.9% 18.4% 16.4% 20.2% 15.0%
Adjusted ROE (a) (d) 18.6% 15.2% 16.4% 16.9% 13.4%
Average diluted shares
outstanding
(millions) 78.8 78.5 78.0 78.6 78.0
Six Months Ended
June 30,
---------------------
2007 2006
---------- ----------
Capital Resources and Liquidity
Cash provided by operating activities $131.6 $133.1
Cash used for investing activities $(106.0) $(47.7)
Cash used for financing activities $(49.8) $(66.3)
Adjusted EBITDA (b) (d) $201.9 $159.2
Cash Available for Distribution (CAD) (c)
(d) $106.6 $81.7
06/30/07 12/31/06
---------- ----------
Debt $666.8 $659.0
Debt / capital 41.5% 41.8%
Cash $16.3 $40.2
(a), (b), (c) and (d), see Schedule B.
- A -
RAYONIER
FOOTNOTES FOR SCHEDULE A
JUNE 30, 2007 (unaudited)
(a) Pro forma operating income and net income, 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 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,
adjusted for equity based compensation amounts, the tax
benefits associated with certain strategic acquisitions, the
change in committed cash and other items which include the
proceeds from matured energy forward contracts and the change
in capital expenditures purchased on account. 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
JUNE 30, 2007 (unaudited)
(millions of dollars, except per share information)
Three Months Ended Six Months Ended
-------------------------------- ---------------------
June 30, March 31, June 30, June 30, June 30,
2007 2007 2006 2007 2006
---------- ---------- ---------- ---------- ----------
Sales $300.4 $299.7 $312.1 $600.1 $589.3
---------- ---------- ---------- ---------- ----------
Costs and
expenses
Cost of sales
(b) 231.2 231.7 247.2 462.9 471.4
Selling and
general
expenses 16.2 15.8 14.4 32.0 30.6
Other
operating
income, net (2.7) (3.0) (0.7) (5.7) (1.1)
---------- ---------- ---------- ---------- ----------
Operating income
before gain on
sale of
New Zealand
timber
assets 55.7 55.2 51.2 110.9 88.4
Gain on sale of
New Zealand
timber assets - - 7.8 - 7.8
---------- ---------- ---------- ---------- ----------
Operating income
(b) 55.7 55.2 59.0 110.9 96.2
Interest expense (13.6) (13.6) (11.9) (27.2) (24.1)
Interest and
other income,
net 1.1 1.0 1.7 2.1 4.0
---------- ---------- ---------- ---------- ----------
Income before
taxes 43.2 42.6 48.8 85.8 76.1
Income tax
expense (9.9) (7.5) (5.9) (17.4) (9.9)
---------- ---------- ---------- ---------- ----------
Net income $33.3 $35.1 $42.9 $68.4 $66.2
========== ========== ========== ========== ==========
Income per
Common Share:
Basic
Net income $0.43 $0.45 $0.56 $0.88 $0.87
========== ========== ========== ========== ==========
Diluted
Net income $0.42 $0.45 $0.55 $0.87 $0.85
========== ========== ========== ========== ==========
Pro forma net
income (a)
Adjusted
diluted EPS $0.55 $0.45 $0.47 $1.00 $0.77
========== ========== ========== ========== ==========
Weighted average
Common
Shares used for
determining
Basic EPS 77,446,494 77,130,711 76,465,269 77,298,865 76,377,976
========== ========== ========== ========== ==========
Diluted EPS 78,766,692 78,528,221 77,969,132 78,583,246 77,989,798
========== ========== ========== ========== ==========
(a) Non-GAAP measure, see Schedule H for a reconciliation to the
nearest GAAP measure.
(b) Cost of sales and operating income for the three and six months
ended June 30, 2007 include the $10.1 million charge for an
estimate of timber destroyed by forest fires. Cost of sales and
operating income for the three and six months ended June 30,
2007, excluding the fire losses were $221.1 million and $65.8
million, and $452.8 million and $121.0 million, respectively.
Operating income for the three and six months ended June 30, 2006
includes a $7.8 million gain on sale of New Zealand timber
assets.
- C -
RAYONIER
BUSINESS SEGMENT SALES AND OPERATING INCOME (LOSS)
JUNE 30, 2007 (unaudited)
(millions of dollars)
Three Months Ended Six Months Ended
------------------------------- -------------------
June 30, March 31, June 30, June 30, June 30,
2007 2007 2006 2007 2006
--------- ---------- ---------- --------- ---------
Sales
Timber $56.7 $65.0 $61.1 $121.7 $115.5
Real Estate 29.2 21.0 17.8 50.2 30.9
Performance
Fibers
Cellulose
specialties 129.0 129.5 126.4 258.5 233.1
Absorbent
materials 38.8 36.9 39.4 75.7 78.7
--------- ---------- ---------- --------- ---------
Total
Performance
Fibers 167.8 166.4 165.8 334.2 311.8
--------- ---------- ---------- --------- ---------
Wood Products 23.8 19.7 32.2 43.5 63.8
Other
Operations 22.9 27.6 35.3 50.5 67.4
Intersegment
eliminations - - (0.1) - (0.1)
--------- ---------- ---------- --------- ---------
Total sales $300.4 $299.7 $312.1 $600.1 $589.3
========= ========== ========== ========= =========
Pro forma
operating
income/(loss)
(a)
Timber $21.1 $26.3 $29.8 $47.4 $53.6
Real Estate 24.0 15.2 10.9 39.2 21.1
Performance
Fibers 31.0 27.1 15.9 58.1 26.1
Wood Products (0.7) (3.3) 2.0 (4.0) 4.6
Other
Operations (1.0) (1.3) 0.4 (2.3) -
Corporate (8.6) (9.1) (7.1) (17.7) (16.6)
Intersegment
eliminations
and other - 0.3 (0.7) 0.3 (0.4)
--------- ---------- ---------- --------- ---------
Pro forma
operating
income (a) $65.8 $55.2 $51.2 $121.0 $88.4
========= ========== ========== ========= =========
(a)Timber segment operating income for the three and six months ended
June 30, 2007 and 2006 excludes the $10.1 million fire loss and
the $7.8 million gain on sale of NZ timber assets, respectively.
Pro forma operating income is a non-GAAP measure, see Schedule H
for a reconciliation to the nearest GAAP measure.
- D -
RAYONIER
CONDENSED CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF CASH FLOWS
JUNE 30, 2007 (unaudited)
(millions of dollars)
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2007 2006
------------- -------------
Assets
Current assets $278.1 $300.3
Timber, timberlands and logging roads,
net of depletion and amortization 1,093.3 1,127.5
Property, plant and equipment 1,395.8 1,365.0
Less - accumulated depreciation (1,035.8) (1,011.2)
------------- -------------
360.0 353.8
------------- -------------
Investment in New Zealand JV 62.8 61.2
Other assets 165.1 121.8
------------- -------------
$1,959.3 $1,964.6
============= =============
Liabilities and Shareholders' Equity
Current liabilities $156.1 $193.3
Long-term debt 666.2 655.4
Non-current liabilities for
dispositions and discontinued
operations 108.4 111.8
Other non-current liabilities 89.7 86.1
Shareholders' equity 938.9 918.0
------------- -------------
$1,959.3 $1,964.6
============= =============
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
Six Months Ended
---------------------------
June 30, June 30,
2007 2006
------------- -------------
Cash provided by operating activities:
Net Income $68.4 $66.2
Depreciation, depletion, amortization
and non-cash basis of real estate
sold 81.6 71.1
Non-cash charge for forest fire losses 9.6 -
Other non-cash items included in
income 11.3 (4.0)
Changes in working capital and other
assets and liabilities (39.3) (0.2)
------------- -------------
131.6 133.1
------------- -------------
Cash used for investing activities:
Capital expenditures (51.2) (61.6)
Purchase of timberlands and wood
chipping facilities (11.7) (4.3)
Proceeds from sale of portion of New
Zealand joint venture - 21.7
Increase in restricted cash (43.2) (4.2)
Other 0.1 0.7
------------- -------------
(106.0) (47.7)
------------- -------------
Cash used for financing activities:
Borrowing/(repayment) of debt, net 7.0 (1.5)
Dividends paid (72.7) (71.8)
Issuance of common shares 11.2 5.3
Repurchase of common shares - (0.5)
Excess tax benefits from equity-based
compensation 4.7 2.2
------------- -------------
(49.8) (66.3)
------------- -------------
Effect of exchange rate changes on cash 0.3 (0.3)
------------- -------------
Cash and cash equivalents:
(Decrease)/increase in cash and cash
equivalents (23.9) 18.8
Balance, beginning of year 40.2 146.2
------------- -------------
Balance, end of period $16.3 $165.0
============= =============
- E -
RAYONIER
SELECTED SUPPLEMENTAL FINANCIAL DATA
JUNE 30, 2007 (unaudited)
(millions of dollars)
Three Months Ended Six Months
Ended
-------------------- -------------
June March June June June
30, 31, 30, 30, 30,
2007 2007 2006 2007 2006
------ ------ ------ ------ ------
Geographical Data (Non-U.S.)
Sales
New Zealand $11.7 $12.3 $8.2 $24.0 $13.7
Other 2.4 2.0 3.7 4.4 8.2
------ ------ ------ ------ ------
Total $14.1 $14.3 $11.9 $28.4 $21.9
====== ====== ====== ====== ======
Operating income (loss)
New Zealand $1.1 $0.8 $(0.3) $1.9 $(1.4)
Other (0.5) (0.5) (0.5) (1.0) (0.9)
------ ------ ------ ------ ------
Total $0.6 $0.3 $(0.8) $0.9 $(2.3)
====== ====== ====== ====== ======
Timber
Sales
Western U.S. (a) $29.2 $30.7 $35.2 $59.9 $62.3
Eastern U.S. (a) 24.5 31.1 23.5 55.6 48.5
New Zealand 3.0 3.2 2.4 6.2 4.7
------ ------ ------ ------ ------
Total $56.7 $65.0 $61.1 $121.7 $115.5
====== ====== ====== ====== ======
Pro forma operating income
(loss) (b)
Western U.S. (a) $15.8 $18.0 $21.4 $33.8 $37.4
Eastern U.S. (a) (b) 3.8 7.8 8.8 11.6 17.7
New Zealand (b) 1.5 0.5 (0.4) 2.0 (1.5)
------ ------ ------ ------ ------
Total $21.1 $26.3 $29.8 $47.4 $53.6
====== ====== ====== ====== ======
Adjusted EBITDA by Segment (c)
Timber $37.2 $48.0 $43.3 $85.2 $82.1
Real Estate 26.6 18.8 15.5 45.4 27.0
Performance Fibers 48.8 42.4 33.1 91.2 58.5
Wood Products 0.9 (1.7) 3.8 (0.8) 8.1
Other Operations (0.4) (1.3) 0.5 (1.7) 0.3
Corporate and other (8.7) (8.7) (7.9) (17.4) (16.8)
------ ------ ------ ------ ------
Total $104.4 $97.5 $88.3 $201.9 $159.2
====== ====== ====== ====== ======
(a) Due to the Company's 2006 timberland acquisitions in five new
states (Oklahoma, Arkansas, Texas, Louisiana, and New York), the
Company has renamed its Timber segment regions from Southern and
Northwestern to Eastern and Western, respectively. The Eastern
region represents the Company's operations in Florida, Georgia,
Alabama, Oklahoma, Arkansas, Texas, Louisiana, and New York,
while the Western region represents the Company's operations in
Washington State.
(b) Timber segment operating income for the three and six months
ended June 30, 2007 and 2006 excludes the $10.1 million fire
loss and the $7.8 million gain on sale of NZ timber assets,
respectively. Pro forma operating income is a non-GAAP measure,
see Schedule H for a reconciliation to the nearest GAAP measure.
(c) Adjusted EBITDA is a non-GAAP measure, see Schedule I for
reconciliation to nearest GAAP measure.
- F -
RAYONIER
SELECTED OPERATING INFORMATION
JUNE 30, 2007 (unaudited)
Three Months Ended Six Months Ended
------------------------------ -------------------
June 30, March 31, June 30, June 30, June 30,
2007 2007 2006 2007 2006
--------- ---------- --------- --------- ---------
Timber
Western U.S.
in millions of
board feet 72 79 89 151 164
Eastern U.S.
in thousands of
short green tons 1,293 1,643 1,204 2,936 2,451
Real Estate
Acres sold
Development 3,882 123 7 4,005 751
Rural 156 5,867 9,613 6,023 12,273
Northwest U.S. 210 148 4 358 4
--------- ---------- --------- --------- ---------
Total 4,248 6,138 9,624 10,386 13,028
Performance Fibers
Sales Volume
Cellulose
specialties,
in thousands of
metric tons 111 114 121 225 225
Absorbent
materials,
in thousands of
metric tons 56 55 63 111 128
Production as a
percent of
capacity 98.6% 98.7% 99.2% 98.6% 99.0%
Lumber
Sales volume,
in millions of
board feet 87 73 92 160 176
- G -
RAYONIER
RECONCILIATION OF NON-GAAP MEASURES
JUNE 30, 2007 (unaudited)
(millions of dollars, except per share information)
CASH AVAILABLE FOR DISTRIBUTION:
Six Months Ended
---------------------
June 30, June 30,
2007 2006
--------- ---------
Cash provided by
operating activities $131.6 $133.1
Capital spending (a) (51.2) (61.6)
Decrease in committed
cash 25.6(b) 7.9
Equity based
compensation
adjustments 2.9 4.2
Like-kind exchange tax
benefits on third
party real estate
sales (c) (2.4) (2.6)
Other 0.1 0.7
--------- ---------
Cash Available for
Distribution $106.6 $81.7
========= =========
(a) Capital spending excludes strategic acquisitions and dispositions.
(b) Primarily 2006 interest paid in 2007 and previously reflected as a
reduction in 2006 CAD.
(c) Represents taxes that would have been paid if the Company had not
completed LKE transactions.
PRO FORMA OPERATING INCOME, NET INCOME AND ADJUSTED RETURN ON EQUITY:
Three Months Ended
-----------------------------------------------
June 30, March 31, June 30,
2007 2007 2006
--------------- --------------- ---------------
Per Per Per
Diluted Diluted Diluted
PRO FORMA NET INCOME $ Share $ Share $ Share
------ -------- ------ -------- ------ --------
Operating Income $55.7 N/M $55.2 N/M $59.0 N/M
Sale of New Zealand
timber assets - - (7.8)
Forest fire loss 10.1 - -
------ ------ ------
Pro Forma Operating
Income $65.8 $55.2 $51.2
====== ====== ======
Net Income $33.3 $0.42 $35.1 $0.45 $42.9 $0.55
Sale of New Zealand
timber assets - - - - (6.5) (0.08)
Forest fire loss 10.1 0.13 - - - -
------ -------- ------ -------- ------ --------
Pro Forma Net Income $43.4 $0.55 $35.1 $0.45 $36.4 $0.47
======== ======== ========
Annualized Pro Forma
Net Income $173.6 $140.4 $145.6
Divided by: Average
Equity $932.6 $922.1 $889.2
------ ------ ------
Adjusted ROE 18.6% 15.2% 16.4%
====== ====== ======
Six Months Ended
--------------------------------
June 30, June 30,
2007 2006
--------------- ----------------
PRO FORMA NET INCOME Per Per
Diluted Diluted
$ Share $ Share
------ -------- ------ ---------
Operating Income $110.9 N/M $96.2 N/M
Sale of New Zealand
timber assets - (7.8)
Forest fire loss 10.1 -
------ ------
Pro Forma Operating
Income $121.0 $88.4
====== ======
Net Income $68.4 $0.87 $66.2 $0.85
Sale of New Zealand
timber assets - - (6.5) (0.08)
Forest fire loss 10.1 0.13 - -
------ -------- ------ ---------
Pro Forma Net Income $78.5 $1.00 $59.7 $0.77
======== =========
Annualized Pro Forma
Net Income $157.0 $119.4
Divided by: Average
Equity $928.5 $893.7
------ ------
Adjusted ROE 16.9% 13.4%
====== ======
N/M: Not meaningful.
- H -
RAYONIER
RECONCILIATION OF NON-GAAP MEASURES
JUNE 30, 2007 (unaudited)
(millions of dollars)
ADJUSTED EBITDA:
Corp-
Other orate
Real Performance Wood Opera- and
Timber Estate Fibers Products tions other Total
------ ------- ----------- -------- ------ ------- ------
Three Months
Ended
June 30, 2007
Cash
provided by
operating
activities $39.2 $27.0 $43.4 $(0.8) $(1.2) $(28.4) $79.2
Income tax
expense - - - - - 9.9 9.9
Interest,
net - - - - - 12.4 12.4
Working
capital
increases
(decreases)
(6.4) (0.6) 5.3 1.7 (3.1) 11.6 8.5
Other
balance
sheet
changes 4.4 0.2 0.1 - 3.9 (14.2) (5.6)
------ ------- ----------- -------- ------ ------- ------
Adjusted
EBITDA $37.2 $26.6 $48.8 $0.9 $(0.4) $(8.7) $104.4
====== ======= =========== ======== ====== ======= ======
March 31,
2007
Cash
provided by
operating
activities $47.3 $19.0 $45.4 $(1.3) $(7.3) $(50.7) $52.4
Income tax
expense - - - - - 7.5 7.5
Interest,
net - - - - - 12.6 12.6
Working
capital
increases
(decreases)
2.4 (1.0) (2.8) (0.4) 6.0 25.4 29.6
Other
balance
sheet
changes (1.7) 0.8 (0.2) - - (3.5) (4.6)
------ ------- ----------- -------- ------ ------- ------
Adjusted
EBITDA $48.0 $18.8 $42.4 $(1.7) $(1.3) $(8.7) $97.5
====== ======= =========== ======== ====== ======= ======
June 30, 2006
Cash
provided by
operating
activities $53.1 $18.7 $14.8 $6.3 $7.1 $(17.7) $82.3
Income tax
expense - - - - - 5.9 5.9
Interest,
net - - - - - 9.9 9.9
Working
capital
increases
(decreases) (6.8) (3.1) 18.2 (2.5) (6.4) (0.9) (1.5)
Other
balance
sheet
changes (3.0) (0.1) 0.1 - (0.2) (5.1) (8.3)
------ ------- ----------- -------- ------ ------- ------
Adjusted
EBITDA $43.3 $15.5 $33.1 $3.8 $0.5 $(7.9) $88.3
====== ======= =========== ======== ====== ======= ======
Six Months
Ended
June 30, 2007
Cash
provided by
operating
activities $86.5 $46.0 $88.8 $(2.1) $(8.5) $(79.1) $131.6
Income tax
expense - - - - - 17.4 17.4
Interest,
net - - - - - 25.0 25.0
Working
capital
increases
(decreases) (4.0) (1.6) 2.5 1.3 2.9 37.0 38.1
Other
balance
sheet
changes 2.7 1.0 (0.1) - 3.9 (17.7) (10.2)
------ ------- ----------- -------- ------ ------- ------
Adjusted
EBITDA $85.2 $45.4 $91.2 $(0.8) $(1.7) $(17.4) $201.9
====== ======= =========== ======== ====== ======= ======
June 30, 2006
Cash
provided by
operating
activities $96.9 $26.2 $44.4 $7.0 $7.6 $(49.0) $133.1
Income tax
expense - - - - - 9.9 9.9
Interest,
net - - - - - 19.9 19.9
Working
capital
increases
(decreases) (2.3) 0.9 14.0 1.1 (7.3) 2.6 9.0
Other
balance
sheet
changes (12.5) (0.1) 0.1 - - (0.2) (12.7)
------ ------- ----------- -------- ------ ------- ------
Adjusted
EBITDA $82.1 $27.0 $58.5 $8.1 $0.3 $(16.8) $159.2
====== ======= =========== ======== ====== ======= ======
- I -
RAYONIER
RECONCILIATION OF STATUTORY INCOME TAX TO REPORTED INCOME TAX
JUNE 30, 2007 (unaudited)
(millions of dollars, except percentages)
Three Months Ended
---------------------------------------------
June 30, March 31, June 30,
2007 2007 2006
-------------- -------------- ---------------
$ % $ % $ %
------- ------ ------- ------ ------- -------
Income tax provision at
the U.S. statutory rate $(15.1) (35.0) $(14.9) (35.0) $(17.0) (35.0)
REIT income not subject
to federal tax 9.0 20.8 10.7 25.2 11.4 23.4
Lost deduction on REIT
interest expense and
overhead expenses
associated with REIT
activities (2.9) (6.7) (3.1) (7.2) (2.7) (5.6)
Foreign, state and local
income taxes, foreign
exchange rate changes
and permanent
differences - - 0.2 0.3 1.5 3.2
------- ------ ------- ------ ------- -------
Income tax expense
before discrete items
(a) $(9.0) (20.9) $(7.1) (16.7) $(6.8) (14.0)
Deferred tax adjustments
/ Other (0.9) (2.1) (0.4) (0.9) 0.9 1.9
------- ------ ------- ------ ------- -------
Income tax expense (a) $(9.9) (23.0) $(7.5) (17.6) $(5.9) (12.1)
======= ====== ======= ====== ======= =======
Six Months Ended
------------------------------
June 30, June 30,
2007 2006
--------------- --------------
$ % $ %
-------- ------ ------- ------
Income tax provision at
the U.S. statutory
rate $(30.0) (35.0) $(26.6) (35.0)
REIT income not subject
to federal tax 19.7 23.0 19.4 25.5
Lost deduction on REIT
interest expense and
overhead expenses
associated with REIT
activities (6.0) (7.0) (5.9) (7.8)
Foreign, state and
local income taxes,
foreign exchange rate
changes and permanent
differences 0.2 0.2 1.8 2.4
-------- ------ ------- ------
Income tax expense
before discrete items
(a) $(16.1) (18.8) $(11.3) (14.9)
Deferred tax
adjustments / Other (1.3) (1.5) 1.4 1.9
-------- ------ ------- ------
Income tax expense (a) $(17.4) (20.3) $(9.9) (13.0)
======== ====== ======= ======
(a) The effective tax rate before discrete items and excluding the
forest fires loss was 17.0 percent and 16.9 percent for the second
quarter and six months ended June 30, 2007, respectively. For the
same periods, the effective tax rate including discrete items and
excluding the forest fires loss charge was 18.7 percent and 18.2
percent, respectively.
- J -
CONTACT: Rayonier, Jacksonville
Media Contact:
Jay Fredericksen, 904-357-9106
or
Investor Contact:
Parag Bhansali, 904-357-9155
SOURCE: Rayonier
