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Rayonier Reports Second Quarter 2007 Results

July 24, 2007

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

Contact

Mark McHugh

Senior Vice President and Chief Financial Officer

Phone: (904) 357-9100

investorrelations@rayonier.com

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