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For the full year, cash provided by operating activities was
Fourth quarter net income was
Timber
Fourth quarter 2008 sales of
In the Western region, sales and operating income were down for the
quarter and year primarily due to lower prices resulting from the weak
housing market and an oversupply of salvaged timber from a
In the Eastern region, sales and operating income were higher for the quarter and year compared to prior year periods. The results in both 2008 periods reflect higher volumes and a sales mix shift from sawtimber to lower-margin pulpwood in response to the weak housing market and strong pulpwood demand. Additionally, operating income for the quarter and year benefited from an increase in recreational license income.
Real Estate
For the quarter, sales of
Full year sales of
Performance Fibers
For the quarter, sales of
Full year sales and operating income of
Other Items
For the quarter and year, corporate expenses were down
Interest expense, for the quarter and year, declined
Fourth quarter effective tax rates from continuing operations before discrete items were 12.9 percent and 7.9 percent in 2008 and 2007, respectively. Full year comparable rates were 15.2 percent and 13.3 percent in 2008 and 2007, respectively. The increased rates in 2008 were due to proportionately higher earnings from the Company's taxable REIT subsidiary.
Including discrete items, the effective tax rates from continuing operations for the quarter and year were 13.6 percent and 11.3 percent compared to a benefit of 3.9 percent and expense of 11.8 percent in 2007, respectively. (See Schedule K for further details.)
Outlook
"Despite uncertain economic times, we expect our diverse mix of
businesses to generate strong cash flows well in excess of our
"Due to the weak economy, we anticipate 2009 results will be below 2008 across our three major business units," said Thomas. "We expect that the weakened housing market will negatively impact our timber and real estate businesses, but anticipate continued interest in our non-strategic timberlands. In Performance Fibers, earnings are expected to be solid although below 2008 as strong demand for our cellulose specialties products is more than offset by higher costs and weakening fluff prices."
Further Information
A conference call will be held on
For further information, visit the company's website at www.rayonier.com.
Complimentary copies of
1 Cash available for distribution (CAD) is a non-GAAP measure defined and reconciled to GAAP in the attached exhibits.
Certain statements in this document regarding anticipated financial
outcomes including earnings guidance, if any, business and market
conditions, outlook and other similar statements relating to
The following important factors, among others, could cause actual results to differ materially from those expressed in forward-looking statements that may have been made in this document: the effect of the current financial crisis, which is impacting many areas of our economy, including the availability and cost of credit, pricing of raw materials and energy and demand for our products and real estate; the cyclical and competitive nature of the industries in which we operate; fluctuations in demand for, or supply of, our forest products and real estate offerings; entry of new competitors into our markets; changes in global economic conditions and world events, including political changes in particular regions or countries; changes in energy and raw material prices, particularly for our performance fibers and wood products businesses; impacts of the rising cost of fuel, including the cost and availability of transportation for our products, both domestically and internationally, and the cost and availability of third party logging and trucking services; unanticipated equipment maintenance and repair requirements at our manufacturing facilities; the geographic concentration of a significant portion of our timberland; our ability to identify, finance and complete timberland acquisitions; changes in environmental laws and regulations, including laws regarding air emissions and water discharges, remediation of contaminated sites, timber harvesting, delineation of wetlands, and endangered species, that may restrict or adversely impact our ability to conduct our business, or increase the cost of doing so; adverse weather conditions, natural disasters and other catastrophic events such as hurricanes, wind storms and wildfires, which can adversely affect our timberlands and the production, distribution and availability of our products and raw materials such as wood, energy and chemicals; interest rate and currency movements; our capacity to incur additional debt, and any decision we may make to do so; changes in tariffs, taxes or treaties relating to the import and export of our products or those of our competitors; the ability to complete like-kind-exchanges of property; changes in key management and personnel; our ability to continue to qualify as a REIT and to fund distributions using cash generated through our taxable REIT subsidiaries; and changes in tax laws that could reduce the benefits associated with REIT status.
In addition, specifically with respect to our Real Estate business, the
following important factors, among others, could cause actual results to
differ materially from those expressed in forward-looking statements
that may have been made in this document: the cyclical nature of the
real estate business generally, including fluctuations in demand for
both entitled and unentitled property; the lengthy, uncertain and costly
process associated with the ownership, entitlement and development of
real estate, especially in
Additional factors are described in the company's most recent Form 10-K
on file with the
RAYONIER FINANCIAL HIGHLIGHTSDECEMBER 31, 2008 (unaudited) (millions of dollars, except per share information) Three Months Ended Year Ended December September December 31, December 31, December 31, 31, 30, 2008 2008 2007 2008 2007 Profitability Sales $ 353.9 $ 308.1 $ 281.5 $ 1,232.1 $ 1,171.5 Operating $ 60.8 $ 49.0 $ 43.6 $ 223.1 $ 245.3 income Pro forma operating $ 60.8 $ 49.0 $ 44.4 $ 223.1 $ 256.2 income (a) Income from continuing $ 42.1 $ 39.7 $ 34.9 $ 159.6 $ 173.2 operations Income/ (loss) from $ 2.2 $ (9.9 ) $ (0.5 ) $ (7.6 ) $ 1.1 discontinued operations Net income $ 44.3 $ 29.8 $ 34.4 $ 152.0 $ 174.3 Income per diluted common share Continuing $ 0.53 $ 0.50 $ 0.44 $ 2.01 $ 2.19 operations Pro forma income from continuing $ 0.53 $ 0.50 $ 0.45 $ 2.01 $ 2.33 operations (a) Net income $ 0.55 $ 0.37 $ 0.44 $ 1.91 $ 2.21 Pro forma operating income as a 17.2 % 15.9 % 15.8 % 18.1 % 21.9 % percent of sales (a) Adjusted ROE N/M N/M N/M 16.8 % 19.4 % (a) Average diluted 79.4 79.6 79.3 79.4 78.9 shares (millions) Year Ended December 31, 2008 2007 Capital Resources and Liquidity Cash provided by $ 340.2 $ 324.0 operating activities Cash used for $ (330.4 ) $ (126.0 ) investing activities Cash used for $ (128.3 ) $ (57.8 ) financing activities Adjusted EBITDA (b) $ 405.5 $ 418.5 (d) Cash Available for $ 210.4 $ 235.5 Distribution (CAD) (c) (d) Dividends $ 2.00 $ 1.94 per share 12/31/08 12/31/07 Debt $ 771.0 $ 749.8 Debt / 45.5 % 43.3 % capital Cash $ 61.7 $ 181.1 (a), (b), (c) and (d), see Schedule B. - A -
RAYONIER FOOTNOTES FOR SCHEDULE ADECEMBER 31, 2008 (unaudited) (a) Pro forma operating income, pro forma income from continuing operations and adjusted ROE are non-GAAP measures. See Schedule I for reconciliation to the nearest GAAP measure. (b) Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, depletion, amortization and the non-cash cost basis of real estate sold. Adjusted EBITDA is a non-GAAP measure of the operating cash generating capacity of the Company. See reconciliation on Schedule J. (c) Cash Available for Distribution (CAD) is defined as cash provided by operating activities less capital spending, adjusted for the tax benefits associated with certain strategic acquisitions, the change in committed cash, less cash provided by discontinued operations 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 I. (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 INCOMEDECEMBER 31, 2008 (unaudited) (millions of dollars, except per share information) Three Months Ended Year Ended December 31, September 30, December 31, December 31, December 31, 2008 2008 2007 2008 2007 Sales $ 353.9 $ 308.1 $ 281.5 $ 1,232.1 $ 1,171.5 Costs and expenses Cost of sales (a) 280.6 243.6 224.0 953.9 870.1 Selling and 16.6 16.1 18.0 64.3 66.6 general expenses Other operating (4.1 ) (0.6 ) (4.1 ) (9.2 ) (10.5 ) income, net Operating income 60.8 49.0 43.6 223.1 245.3 (a) Interest expense (11.9 ) (10.5 ) (14.1 ) (45.3 ) (56.3 ) Interest and other (0.2 ) 0.3 4.1 2.1 7.3 (expense)/income, net Income before 48.7 38.8 33.6 179.9 196.3 taxes Income tax (6.6 ) 0.9 1.3 (20.3 ) (23.1 ) (expense)/benefit Income from continuing 42.1 39.7 34.9 159.6 173.2 operations Income/(loss) from discontinued 2.2 (9.9 ) (0.5 ) (7.6 ) 1.1 operations, net Net income $ 44.3 $ 29.8 $ 34.4 $ 152.0 $ 174.3 Income per Common Share: Basic Continuing $ 0.53 $ 0.51 $ 0.45 $ 2.03 $ 2.23 operations Net income $ 0.56 $ 0.38 $ 0.44 $ 1.94 $ 2.25 Diluted Continuing $ 0.53 $ 0.50 $ 0.44 $ 2.01 $ 2.19 operations Net income $ 0.55 $ 0.37 $ 0.44 $ 1.91 $ 2.21 Pro forma income from continuing $ 0.53 $ 0.50 $ 0.45 $ 2.01 $ 2.33 operations (b) Weighted average Common Shares used for determining Basic EPS 78,690,532 78,580,895 77,969,013 78,476,635 77,571,684 Diluted EPS 79,406,271 79,571,363 79,264,982 79,429,233 78,920,284 (a) Cost of sales and operating income for the three months and year endedDecember 31, 2007 included a$0.8 million and$10.9 million charge, respectively, for timber destroyed by forest fires. Cost of sales and operating income for the three months and year endedDecember 31, 2007 , excluding the fire losses were$223.2 million and$44.4 million and$859.2 million and$256.2 million , respectively. (b) Non-GAAP measure, see Schedule I for a reconciliation to the nearest GAAP measure. - C -
RAYONIER BUSINESS SEGMENT SALES, OPERATING INCOME (LOSS), AND ADJUSTED EBITDADECEMBER 31, 2008 (unaudited) (millions of dollars) Three Months Ended Year Ended December September December 31, December 31, December 31, 31, 30, 2008 2008 2007 2008 2007 Sales Timber $ 51.8 $ 40.5 $ 45.7 $ 189.7 $ 208.8 Real Estate 48.0 26.0 10.2 126.8 116.3 Performance Fibers Cellulose 163.0 156.8 143.3 599.5 539.4 specialties Absorbent 62.5 53.3 56.0 198.1 182.9 materials Total Performance 225.5 210.1 199.3 797.6 722.3 Fibers Wood Products 19.0 24.1 20.3 86.5 88.1 Other 9.6 7.4 6.0 31.5 36.0 Operations Total sales $ 353.9 $ 308.1 $ 281.5 $ 1,232.1 $ 1,171.5 Pro forma operating income/(loss) (a) Timber $ 10.3 $ (0.6 ) $ 11.3 $ 30.7 $ 68.0 Real Estate 29.9 14.0 6.0 80.3 92.8 Performance 31.8 43.0 39.8 148.6 141.0 Fibers Wood Products (3.8 ) 0.3 (2.9 ) (6.4 ) (8.4 ) Other (0.1 ) (0.3 ) (0.1 ) (0.2 ) (1.2 ) Operations Corporate and (7.3 ) (7.4 ) (9.7 ) (29.9 ) (36.0 ) other Pro forma operating $ 60.8 $ 49.0 $ 44.4 $ 223.1 $ 256.2 income (a) Adjusted EBITDA by Segment (b) Timber $ 36.1 $ 18.3 $ 30.6 $ 115.5 $ 143.9 Real Estate 44.0 22.2 7.7 112.5 106.2 Performance 49.9 57.1 58.5 204.8 209.4 Fibers Wood (2.1 ) 1.5 (1.5 ) (0.7 ) (2.3 ) Products Other 2.0 0.4 (1.6 ) 3.0 (3.0 ) Operations Corporate (7.3 ) (7.3 ) (9.4 ) (29.6 ) (35.7 ) and other Total $ 122.6 $ 92.2 $ 84.3 $ 405.5 $ 418.5 Timber segment pro forma operating income excludes the$0.8 million and (a)$10.9 million fire loss for the three months and year endedDecember 31, 2007 , respectively. Pro forma operating income is a non-GAAP measure, see Schedule I for a reconciliation to the nearest GAAP measure. (b) Adjusted EBITDA is a non-GAAP measure, see Schedule J for reconciliation to nearest GAAP measure. - D -
RAYONIER CONDENSED CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF CASH FLOWSDECEMBER 31, 2008 (unaudited) (millions of dollars) CONDENSED CONSOLIDATED BALANCE SHEETS December 31, December 31, 2008 2007 Assets Current assets $ 326.9 $ 396.2 Timber and timberlands, net of depletion and 1,255.0 1,117.2 amortization Property, plant and equipment 1,392.5 1,340.2 Less - accumulated depreciation (1,041.8 ) (994.4 ) 350.7 345.8 Investment in New Zealand JV - 62.8 Other assets 157.9 157.0 $ 2,090.5 $ 2,079.0 Liabilities and Shareholders' Equity Current liabilities $ 162.9 $ 218.4 Long-term debt 770.3 694.3 Non-current liabilities for dispositions and 96.4 103.6 discontinued operations Other non-current liabilities 137.0 81.6 Shareholders' equity 923.9 981.1 $ 2,090.5 $ 2,079.0 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, December 31, 2008 2007 Cash provided by operating activities: Net Income $ 152.0 $ 174.3 Depreciation, depletion, amortization and non-cash 179.4 163.3 basis of real estate sold Non-cash charge for forest fire losses - 10.4 Other non-cash items included in income 31.8 4.2 Changes in working capital and other assets and (23.0 ) (28.2 ) liabilities 340.2 324.0 Cash used for investing activities: Capital expenditures (104.8 ) (97.0 ) Purchase of timberlands, real estate and wood (234.0 ) (27.2 ) chipping facilities Decrease / (increase) in restricted cash 8.5 (8.8 ) Other (0.1 ) 7.0 (330.4 ) (126.0 ) Cash used for financing activities: Borrowings, net of repayments and issuance costs 21.1 69.2 Dividends paid (157.0 ) (150.6 ) Issuance of common shares 8.3 18.9 Repurchase of common shares (3.9 ) (3.2 ) Excess tax benefits from equity-based compensation 3.2 7.9 (128.3 ) (57.8 ) Effect of exchange rate changes on cash (0.9 ) 0.7 Cash and cash equivalents: (Decrease) / increase in cash and cash equivalents (119.4 ) 140.9 Balance, beginning of year 181.1 40.2 Balance, end of year $ 61.7 $ 181.1 - E -
RAYONIER SELECTED SUPPLEMENTAL FINANCIAL DATADECEMBER 31, 2008 (unaudited) (millions of dollars) Debt Maturity Schedule atDecember 31, 2008 Instrument & Total 2009 2010 2011 2012 2013 2014 Thereafter Rates Installment Notes (8.39% - $ 327.6 $ 122.0 (a) $ - $ 93.1 $ - $ - $ 112.5 $ - 8.64%) Senior Exchangeable Notes (3.75%) 300.0 - - - 300.0 - - - Revolving Credit Facility (b) (Libor + 40) 100.0 - - 100.0 - - - - Tax Exempt DebtNassau County (c) (1.30%) 23.1 - - - 23.1 - - - (6.20%) 5.3 0.6 0.7 0.7 0.7 0.8 0.9 0.9 Wayne County (c) (1.725%) 15.0 - - - - - - 15.0 $ 771.0 $ 122.6 $ 0.7 $ 193.8 $ 323.8 $ 0.8 $ 113.4 $ 15.9 (a) DueDecember 31, 2009 . (b)$250 million total;$144 million available ($6 million is unavailable due to standby letters of credit outstanding as ofDecember 31, 2008 ). (c) Rate set weekly (as ofDecember 31, 2008 ). - F -
RAYONIER SELECTED SUPPLEMENTAL SHAREHOLDERS' EQUITY DATADECEMBER 31, 2008 (unaudited) (in millions, except per share information) SHAREHOLDERS' EQUITY: Common Shares Accumulated Shareholders' Retained Other Shares Amount Earnings Comprehensive Equity (Loss)/Income Balance, December 76.9 $ 450.6 $ 496.0 $ (28.6 ) $ 918.0 31, 2006 Net Income - - 174.3 - 174.3 Dividends ($1.94 - - (151.0 ) - (151.0 ) per share) Issuance of 1.4 18.9 - - 18.9 shares Stock-based compensation - 13.5 - - 13.5 expense Net loss from pension and - - - (4.0 ) (4.0 ) postretirement plans Foreign currency translation - - - 7.0 7.0 adjustment Other (0.1 ) 4.4 - - 4.4 Balance, December 78.2 $ 487.4 $ 519.3 $ (25.6 ) $ 981.1 31, 2007 Net Income - - 152.0 - 152.0 Dividends ($2.00 - - (157.3 ) - (157.3 ) per share) Issuance of 0.7 8.3 - - 8.3 shares Stock-based compensation - 13.3 - - 13.3 expense Net loss from pension and - - - (65.5 ) (65.5 ) postretirement plans Benefit plan - - - 16.4 16.4 amendment Foreign currency translation - - - (23.5 ) (23.5 ) adjustment Other (0.1 ) (0.9 ) - - (0.9 ) Balance, December 78.8 $ 508.1 $ 514.0 $ (98.2 ) $ 923.9 31, 2008 MARKET PRICES OF OUR COMMON SHARES; DIVIDENDS: High Low Dividends 2008 Fourth Quarter $ 47.09 $ 26.58 $ 0.50 Third Quarter $ 49.54 $ 40.60 $ 0.50 Second Quarter $ 48.00 $ 41.88 $ 0.50 First Quarter $ 47.37 $ 35.36 $ 0.50 2007 Fourth Quarter $ 49.16 $ 42.46 $ 0.50 Third Quarter $ 49.55 $ 38.17 $ 0.50 Second Quarter $ 45.77 $ 42.35 $ 0.47 First Quarter $ 46.31 $ 39.83 $ 0.47 -G-
RAYONIER SELECTED SUPPLEMENTAL FINANCIAL DATA AND OPERATING INFORMATIONDECEMBER 31, 2008 (unaudited) Three Months Ended Year Ended December September December December 31, December 31, 31, 30, 31, 2008 2008 2007 2008 2007 Timber Sales Western U.S. $ 16.4 $ 16.6 $ 20.1 $ 77.7 $ 104.4 Eastern U.S. 35.4 23.9 25.6 112.0 104.4 Total $ 51.8 $ 40.5 $ 45.7 $ 189.7 $ 208.8 Pro forma operating (loss) / income (a) Western U.S. $ (2.1 ) $ (2.0 ) $ 5.7 $ 11.8 $ 49.7 (b) Eastern U.S. 13.4 1.5 6.0 20.6 19.9 (a) Other Timber (1.0 ) (0.1 ) (0.4 ) (1.7 ) (1.6 ) Total $ 10.3 $ (0.6 ) $ 11.3 $ 30.7 $ 68.0 (a) Timber segment pro forma operating income excludes the$0.8 million and$10.9 million fire loss for the three months and year endedDecember 31, 2007 , respectively. Pro forma operating income is a non-GAAP measure, see Schedule I for a reconciliation to the nearest GAAP measure. (b) The three months and year endedDecember 31, 2008 include$3 million and$6 million of additional timber depletion expense resulting from a second quarter 2008 timberland acquisition in the Western U.S. Three Months Ended Year Ended December September December December 31, December 31, 31, 30, 31, 2008 2008 2007 2008 2007 Timber Sales Volume Western U.S. in millions 48 48 47 232 254 of board feet Eastern U.S. in thousands of short 2,140 1,508 1,615 6,824 6,168 green tons Real Estate Acres sold HBU 160 294 351 501 4,356 Development HBU Rural 1,064 2,849 860 15,845 12,817 Non-Strategic 28,584 10,917 - 49,801 - Timberlands Total 29,808 14,060 1,211 66,147 17,173 Performance Fibers Sales Volume Cellulose specialties, in thousands of metric 122 124 123 471 467 tons Absorbent materials, in thousands of metric 79 67 75 253 259 tons Production as a percent of 102.8 % 102.1 % 99.4 % 100.0 % 99.1 % capacity Lumber Sales volume, in millions 76 84 81 321 329 of board feet -H-
RAYONIER RECONCILIATION OF NON-GAAP MEASURESDECEMBER 31, 2008 (unaudited) (millions of dollars, except per share information) CASH AVAILABLE FOR DISTRIBUTION: Year Ended December 31, December 31, 2008 2007 Cash provided by $ 340.2 $ 324.0 operating activities Capital expenditures (104.8 ) (97.0 ) (a) Change in committed (10.0 ) 16.9 (b) cash Like-kind exchange tax benefits on (12.1 ) (3.9 ) real estate sales (c) Other (2.9 ) (4.5 ) Cash Available $ 210.4 $ 235.5 for Distribution (a) Capital spending excludes strategic acquisitions. (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 AND INCOME FROM CONTINUING OPERATIONS: Three Months Ended December 31, September 30, December 31, 2008 2008 2007 Per Diluted Per Per $ Share $ Diluted $ Diluted Share Share Operating $ 60.8 $ 49.0 $ 43.6 Income Forest fire - - 0.8 loss Pro Forma Operating $ 60.8 $ 49.0 $ 44.4 Income Income from Continuing $ 42.1 $ 0.53 $ 39.7 $ 0.50 $ 34.9 $ 0.44 Operations Forest fire - - - - 0.8 0.01 loss Pro Forma Income from $ 42.1 $ 0.53 $ 39.7 $ 0.50 $ 35.7 $ 0.45 Continuing Operations Year Ended December 31, December 31, 2008 2007 Per Diluted Per $ Share $ Diluted Share Operating $ 223.1 $ 245.3 Income Forest fire - 10.9 loss Pro Forma Operating $ 223.1 $ 256.2 Income Income from Continuing $ 159.6 $ 2.01 $ 173.2 $ 2.19 Operations Forest fire - - 10.9 0.14 loss Pro Forma Income from $ 159.6 $ 2.01 $ 184.1 $ 2.33 Continuing Operations Pro forma income From $ 159.6 $ 184.1 Continuing Operations Divided by: average $ 952.5 $ 949.5 equity Adjusted ROE 16.8 % 19.4 % - I -
RAYONIER RECONCILIATION OF NON-GAAP MEASURESDECEMBER 31, 2008 (unaudited) (millions of dollars) ADJUSTED EBITDA: Timber Real Performance Wood Other Corporate Total Estate Fibers Products Operations and other Three Months EndedDecember 31, 2008 Cash provided by $ 22.8 $ 44.1 $ 63.7 $ 0.6 $ 2.6 $ (42.6 ) $ 91.2 operating activities Income tax - - - - - 6.9 6.9 expense Interest, - - - - - 11.4 11.4 net Working capital 13.3 (0.1 ) (13.8 ) (2.7 ) (0.6 ) 17.0 13.1 and other Adjusted $ 36.1 $ 44.0 $ 49.9 $ (2.1 ) $ 2.0 $ (7.3 ) $ 122.6 EBITDASeptember 30, 2008 Cash provided by $ 25.2 $ 24.4 $ 47.3 $ (0.3 ) $ 8.4 $ (11.6 ) $ 93.4 operating activities Income tax - - - - - 9.1 9.1 expense Interest, - - - - - 10.2 10.2 net Working capital (6.9 ) (2.2 ) 9.8 1.8 (8.0 ) (15.0 ) (20.5 ) and other Adjusted $ 18.3 $ 22.2 $ 57.1 $ 1.5 $ 0.4 $ (7.3 ) $ 92.2 EBITDADecember 31, 2007 Cash provided by $ 20.0 $ 6.5 $ 81.9 $ 0.3 $ (4.3 ) $ (44.1 ) $ 60.3 operating activities Income tax - - - - - (1.3 ) (1.3 ) benefit Interest, - - - - - 10.2 10.2 net Working capital 10.6 1.2 (23.4 ) (1.8 ) 2.7 25.8 15.1 and other Adjusted $ 30.6 $ 7.7 $ 58.5 $ (1.5 ) $ (1.6 ) $ (9.4 ) $ 84.3 EBITDA Year EndedDecember 31, 2008 Cash provided by $ 114.4 $ 115.2 $ 190.9 $ (2.0 ) $ 10.3 $ (88.6 ) $ 340.2 operating activities Income tax - - - - - 31.4 31.4 expense Interest, - - - - - 42.5 42.5 net Working capital 1.1 (2.7 ) 13.9 1.3 (7.3 ) (14.9 ) (8.6 ) and other Adjusted $ 115.5 $ 112.5 $ 204.8 $ (0.7 ) $ 3.0 $ (29.6 ) $ 405.5 EBITDADecember 31, 2007 Cash provided by $ 136.7 $ 101.2 $ 228.2 $ (0.1 ) $ (9.1 ) $ (132.9 ) $ 324.0 operating activities Income tax - - - - - 23.7 23.7 expense Interest, - - - - - 48.6 48.6 net Working capital 7.2 5.0 (18.8 ) (2.2 ) 6.1 24.9 22.2 and other Adjusted $ 143.9 $ 106.2 $ 209.4 $ (2.3 ) $ (3.0 ) $ (35.7 ) $ 418.5 EBITDA - J -
RAYONIER RECONCILIATION OF STATUTORY INCOME TAX TO REPORTED INCOME TAXDECEMBER 31, 2008 (unaudited) (millions of dollars, except percentages) Continuing Operations Three Months Ended Year Ended December 31, September 30, December 31, December 31, December 31, 2008 2008 2007 2008 2007 $ % $ % $ % $ % $ % Income tax provision at the U.S. $ (17.1 ) (35.0 ) $ (13.6 ) (35.0 ) $ (11.8 ) (35.0 ) $ (63.0 ) (35.0 ) $ (68.7 ) (35.0 ) statutory rate REIT income not subject 12.7 24.3 8.1 20.9 11.5 34.1 40.6 22.1 55.1 28.1 to federal tax Lost deduction on REIT interest expense and (2.5 ) (3.5 ) (0.8 ) (2.1 ) (3.0 ) (8.8 ) (5.3 ) (2.5 ) (12.8 ) (6.5 ) overhead expenses associated with REIT activities Foreign, state and local income taxes, foreign 0.7 1.3 0.2 0.6 0.6 1.8 0.4 0.2 0.3 0.1 exchange rate changes and permanent differences Income tax expense before $ (6.2 ) (12.9 ) $ (6.1 ) (15.6 ) $ (2.7 ) (7.9 ) $ (27.3 ) (15.2 ) $ (26.1 ) (13.3 ) discrete items Taxing authority settlements 0.4 0.8 3.8 9.7 1.1 3.2 4.1 2.3 (4.4 ) (2.2 ) and FIN 48 adjustments Return to accrual (0.8 ) (1.5 ) 3.2 8.2 2.9 8.6 2.9 1.6 7.4 3.7 adjustment / other Income tax (expense) / $ (6.6 ) (13.6 ) $ 0.9 2.3 $ 1.3 3.9 $ (20.3 ) (11.3 ) $ (23.1 ) (11.8 ) benefit Discontinued Operations Three Months Ended Year Ended December 31, 2008 December 31, 2008 $ % $ % Income tax provision from discontinued operations $ (0.8 ) (35.0 ) $ (1.2 ) (35.0 ) at U.S. statutory rate NOL valuation allowance (a) 0.4 n/m (5.4 ) n/m Reversal of APB 23 election (a) 0.1 n/m (4.3 ) n/m Other - n/m (0.2 ) n/m Income tax expense from discontinued operations $ (0.3 ) n/m $ (11.1 ) n/m The Company's decision to offer itsNew Zealand operations for sale in the third quarter of 2008 resulted in (a) (1) the establishment of a$5.4 million valuation allowance on aNew Zealand net operating loss carryforward, and (2) the reversal of the Company's Accounting Principles Board Opinion 23 election and recognition of a$4.3 million liability for U.S. taxes on unremitted foreign earnings. n/m = not meaningful - K -
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