JACKSONVILLE, Fla.--(BUSINESS WIRE)--Oct. 24, 2006--Rayonier (NYSE:RYN) today reported third quarter net income of $55.0 million, or 70 cents per share. This compares to $42.8 million, or 55 cents per share, in the second quarter and $75.0 million, or 96 cents per share, in third quarter 2005.
Results included a special item gain of $5.3 million, or 7 cents per share, for prior years' IRS audit settlements, including associated interest expense. Second quarter included a special item gain of $6.5 million, or 8 cents per share, while third quarter 2005 included three special item gains totaling $39.1 million, or 50 cents per share.
Lee Nutter, Chairman, President and CEO, said: "As expected, results were very good, reflecting the balance of our three core businesses. Particularly strong results were achieved by Performance Fibers, which continues to experience growing demand for its high-value cellulose specialties, and our Real Estate business, which closed several significant transactions - including our first participation agreement. In addition to realizing immediate proceeds from the sale, the agreement allows us to share in future revenues generated from the developed property."
Third quarter results, excluding special items, were above the second quarter primarily due to the increased value of real estate transactions and reduced performance fibers costs, partly offset by a normal seasonal decline in Northwest timber sales volume and lower prices. Compared to third quarter 2005, earnings improved primarily due to higher real estate sales and stronger cellulose specialties prices, partly offset by lumber prices.
Sales for the third quarter of $312 million were comparable to the second quarter and $13 million above third quarter 2005.
Cash provided by operating activities of $222 million for the nine months ended September 30 was $16 million above the comparable period in 2005 primarily due to lower working capital requirements. For the same period, Cash Available for Distribution (CAD) of $146 million was $15 million below 2005 mainly due to capital spending for a major energy cost reduction project, partly offset by reduced working capital requirements. (CAD is a non-GAAP measure defined and reconciled to GAAP in the attached exhibits.)
Debt of $556 million and a debt-to-capital ratio of 37.8 percent at quarter-end were $2 million and 0.9 percent below year-end 2005, respectively. Cash at September 30 was $169 million.
Timber
Sales of $44 million and operating income of $17 million were $17 million and $13 million below second quarter, respectively, primarily due to the normal seasonal decline in the Northwest and unfavorable volume and price in the Southeast, but were comparable to third quarter 2005.
Real Estate
Sales of $46 million and operating income of $38 million were $29 million and $27 million above second quarter, respectively, due to a significant increase in the number of higher value development acres sold, partly offset by fewer rural acres sold. Sales and operating income rose $19 million and $16 million, respectively, over third quarter 2005, due to an increase in both the quantity and per acre price of development acres sold, partially offset by fewer rural acres sold. The strong average per acre price for development property primarily was due to location.
Performance Fibers
Sales of $164 million were $2 million below second quarter but operating income increased $6 million to $21 million primarily due to improved production resulting in lower manufacturing costs, partially offset by sales mix. Compared to third quarter 2005, sales increased $4 million mainly due to higher cellulose specialties prices, partly offset by the sales mix. Operating income improved $6 million primarily due to the higher cellulose specialties prices, partly offset by energy costs.
Wood Products
Due to a dramatic drop in lumber prices, sales of $26 million and an operating loss of $3 million were $6 million and $5 million below second quarter, respectively, and $9 million and $8 million below third quarter 2005.
Other Operations
Sales of $32 million were $4 million below second quarter while essentially breakeven operating income was unchanged. Sales and operating income were basically unchanged from third quarter 2005.
Other Items
Corporate expenses of $7.1 million were comparable to second quarter and $3.1 million below third quarter 2005, primarily due to lower stock price-based incentive compensation.
Interest expense of $11.0 million was $0.9 million below second quarter primarily due to lower tax interest expense, but $1.2 million above third quarter 2005 mainly due to increased tax interest expense and higher interest rates.
Interest and other income of $3.0 million was $1.2 million above second quarter mainly due to higher interest income, but $8.9 million below third quarter 2005, largely due to an arbitration award in that quarter.
Excluding discrete items, the year-to-date effective tax rate was 14.6 percent compared to 13.9 percent for the same period in 2005 due to the absence of research and development credits. The third quarter tax expense of $2.7 million included the previously noted favorable settlement of tax audits for prior years of $4.8 million (excluding interest). Additionally, three other discrete items netted to a $0.6 million benefit in the quarter (see Schedule J for details).
Outlook
The company said it continues to expect that full year earnings will be above 2005. Fourth quarter results should be less than the third quarter (excluding special items), primarily due to lower real estate sales, but somewhat above fourth quarter 2005 because of higher cellulose specialties prices, reduced Performance Fibers costs and increased real estate sales, partly offset by weaker lumber prices.
"Although real estate and timber markets are somewhat uncertain, we remain optimistic given the mix of our businesses, their geographic breadth and the balance they provide," Nutter said. "Global demand remains exceptionally strong for our high-value specialty cellulose products and is expected to result in significant price improvement with the completion of annual pricing negotiations under multi-year contracts. In Real Estate, we will continue to focus on maximizing the value of our diverse properties, including the pursuit of additional participation transactions. Although our Timber business has begun to feel some effects of the housing slowdown, we expect the impact will be softened somewhat by the geographical diversity of our holdings."
About Rayonier
Rayonier is a leading international forest products company with three core businesses: Timber, Real Estate and Performance Fibers. It owns, leases or manages 2.5 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. Approximately 40 percent of the company's sales are outside the U.S. to customers in more than 50 countries.
Except for historical information, the statements made in this press release are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements, which include statements regarding anticipated earnings, revenues, volumes, pricing, costs and other statements relating to Rayonier's financial and operational performance, in some cases are identified by the use of words such as "may," "will," "should," "expect," "estimate," "believe," "anticipate" and other similar language. The following important factors, among others, could cause actual results to differ materially from those expressed in the forward-looking statements contained in this release: changes in global market trends and world events; interest rate and currency movements; fluctuations in demand for, or supply of, cellulose specialty products, absorbent materials, timber, wood products or real estate and entry of new competitors into these markets; adverse weather conditions affecting production, timber availability and sales, or distribution; changes in production costs for wood products or performance fibers, particularly for raw materials such as wood, energy and chemicals; unexpected delays in the entry into or closing of real estate sale transactions; changes in law, policy or political environment that might condition, limit or restrict the development of real estate; the ability of the company to identify and complete timberland and higher-value real estate acquisitions; the company's ability to continue to qualify as a REIT; the ability of the company to complete tax-efficient exchanges of real estate; and implementation or revision of governmental policies and regulations affecting the environment, endangered species, timber harvesting, import and export controls or taxes, including changes in tax laws that could reduce the benefits associated with REIT status. For additional factors that could impact future results, please see the company's most recent Form 10-K on file with the Securities and Exchange Commission. Rayonier assumes no obligation to update these statements except as may be required by law.
A conference call will be held on Tuesday, October 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
SEPTEMBER 30, 2006 (unaudited)
(millions of dollars, except per share information)
Three Months Ended Nine Months Ended
----------------------------------------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2006 2006 2005 2006 2005
--------- --------- --------------------------------
Profitability
Sales $312.0 $312.1 $299.5 $901.3 $864.8
Operating income $65.7 $51.0 $51.0 $154.0 $147.2
Income from
continuing
operations $55.0 $42.8 $74.9 $121.1 $151.3
Discontinued
operations $- $- $0.1 $- $(24.9)
Net income $55.0 $42.8 $75.0 $121.1 $126.4
Income per
diluted common
share
Continuing
operations $0.70 $0.55 $0.96 $1.55 $1.95
Net income $0.70 $0.55 $0.96 $1.55 $1.63
Pro forma
income from
continuing
operations
(a) $0.63 $0.47 $0.46 $1.40 $1.23
Operating income
as a percent of
sales 21.1% 16.3% 17.0% 17.1% 17.0%
ROE (b) 15.0% 12.9% 14.7% 15.0% 14.7%
Nine Months Ended Sept. 30,
---------------------------
2006 2005
------------ -----------
Capital Resources and Liquidity
Continuing operations:
Cash provided by operating activities $222.3 $206.1
Cash used for investing activities $(99.4) $(77.9)
Cash used for financing activities $(101.5) $(150.0)
Adjusted EBITDA (c) (e) $263.5 $275.0
Cash Available for Distribution (CAD)
(d) (e) $146.3 $161.6
(Repayment)/borrowing of debt, net $(2.7) $(67.8)
09/30/06 12/31/05
------------ -----------
Debt $556.3 $558.5
Debt / capital 37.8% 38.7%
Cash $168.8 $146.2
Average diluted shares outstanding
(millions) 78.0 77.6
(a), (b), (c), (d) and (e), see
Schedule B.
- A -
RAYONIER
FOOTNOTES FOR SCHEDULE A
SEPTEMBER 30, 2006 (unaudited)
(a) Pro forma income from continuing operations is a non-GAAP
measure. See Schedule H for reconciliation to the nearest GAAP
measure.
(b) Year-to-date percentages are annualized; major land sales are
not.
(c) Adjusted EBITDA is defined as earnings from continuing operations
before interest, taxes, depreciation, depletion, amortization
and the non-cash cost basis of real estate sold. Adjusted EBITDA
is a non-GAAP measure of operating cash generating capacity of
the Company. See reconciliation on Schedule I.
(d) Cash Available for Distribution (CAD) is defined as cash provided
by operating activities of continuing operations less capital
spending, adjusted for equity based compensation amounts,
proceeds from matured energy forward contracts, the tax benefits
associated with certain strategic acquisitions and the change in
committed cash. CAD is a non-GAAP measure of cash generated
during a period that is available for dividend distribution,
repurchase of the Company's common shares, debt reduction and
for strategic acquisitions net of associated financing. See
reconciliation on Schedule H.
(e) 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
SEPTEMBER 30, 2006 (unaudited)
(millions of dollars, except per share information)
Three Months Ended Nine Months Ended
----------------------------------- -----------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2006 2006 2005 2006 2005
----------- ----------- ----------- ----------- -----------
Sales $312.0 $312.1 $299.5 $901.3 $864.8
----------- ----------- ----------- ----------- -----------
Costs and
expenses
Cost of
sales 231.5 247.4 237.7 703.1 682.1
Selling
and
general
expenses 14.5 14.4 16.9 45.1 46.7
Other
operating
loss/
(income),
net 0.3 (0.7) (6.1) (0.9) (11.2)
----------- ----------- ----------- ----------- -----------
Operating
income 65.7 51.0 51.0 154.0 147.2
Gain on
sale of
portion of
New
Zealand JV - 7.8 - 7.8 -
----------- ----------- ----------- ----------- -----------
Income from
conti-
nuing
opera-
tions,
including
gain on
sale of
portion of
New
Zealand
joint
venture 65.7 58.8 51.0 161.8 147.2
Interest
expense (11.0) (11.9) (9.8) (35.1) (35.0)
Interest
and other
income,
net 3.0 1.8 11.9 7.0 13.4
----------- ----------- ----------- ----------- -----------
Income
before
taxes 57.7 48.7 53.1 133.7 125.6
Income tax
(expense)/
benefit (2.7) (5.9) 21.8 (12.6) 25.7
----------- ----------- ----------- ----------- -----------
Income from
continuing
operations $55.0 $42.8 $74.9 $121.1 $151.3
Dis-
continued
oper-
ations, net - - 0.1 - (24.9)
----------- ----------- ----------- ----------- -----------
Net income $55.0 $42.8 $75.0 $121.1 $126.4
=========== =========== =========== =========== ===========
Income per
Common
Share:
Basic
From
conti-
nuing
opera-
tions $0.71 $0.56 $0.99 $1.58 $2.00
=========== =========== =========== =========== ===========
Net
income $0.71 $0.56 $0.99 $1.58 $1.67
=========== =========== =========== =========== ===========
Diluted
From
conti-
nuing
opera-
tions $0.70 $0.55 $0.96 $1.55 $1.95
=========== =========== =========== =========== ===========
Net
income $0.70 $0.55 $0.96 $1.55 $1.63
=========== =========== =========== =========== ===========
Pro forma
income
from
conti-
nuing
opera-
tions (a)
Adjusted
basic
EPS $0.64 $0.48 $0.47 $1.43 $1.25
=========== =========== =========== =========== ===========
Adjusted
diluted
EPS $0.63 $0.47 $0.46 $1.40 $1.23
=========== =========== =========== =========== ===========
Weighted
average
Common
Shares
used for
determi-
ning
Basic EPS 76,508,135 76,465,269 75,658,512 76,421,839 75,390,193
=========== =========== =========== =========== ===========
Diluted
EPS 78,062,219 77,969,132 77,753,165 78,039,382 77,490,723
=========== =========== =========== =========== ===========
(a) See Schedule H for a reconciliation to the nearest GAAP measure.
- C -
RAYONIER
BUSINESS SEGMENT SALES AND OPERATING INCOME (LOSS)
SEPTEMBER 30, 2006 (unaudited)
(millions of dollars)
Three Months Ended Nine Months Ended
------------------------------- ---------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2006 2006 2005 2006 2005
---------- --------- ---------- ---------- ----------
Sales
Timber $44.3 $61.1 $45.5 $159.8 $151.9
Real Estate 46.3 17.8 27.6 77.2 65.9
Performance
Fibers
Cellulose
specialties 120.3 126.4 114.8 353.4 323.9
Absorbent
materials 43.2 39.4 44.3 121.9 131.4
---------- --------- ---------- ---------- ----------
Total
Performance
Fibers 163.5 165.8 159.1 475.3 455.3
---------- --------- ---------- ---------- ----------
Wood Products 26.3 32.2 35.6 90.1 102.5
Other
Operations 31.7 35.3 32.1 99.1 89.9
Intersegment
eliminations (0.1) (0.1) (0.4) (0.2) (0.7)
---------- --------- ---------- ---------- ----------
Total sales $312.0 $312.1 $299.5 $901.3 $864.8
========== ========= ========== ========== ==========
Operating
income/(loss)
Timber $17.1 $29.8 $16.4 $70.7 $63.2
Real Estate 37.6 10.9 21.8 58.7 47.8
Performance
Fibers 21.2 15.7 15.6 47.2 46.5
Wood Products (3.3) 2.0 4.6 1.3 13.6
Other
Operations 0.1 0.4 0.6 0.1 0.4
Corporate (7.1) (7.1) (10.2) (23.7) (26.1)
Intersegment
eliminations
and other
(Including
Corporate FX) 0.1 (0.7) 2.2 (0.3) 1.8
---------- --------- ---------- ---------- ----------
Total
operating
income $65.7 $51.0 $51.0 $154.0 $147.2
========== ========= ========== ========== ==========
- D -
RAYONIER
CONDENSED CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF CASH FLOWS
SEPTEMBER 30, 2006 (unaudited)
(millions of dollars)
CONDENSED CONSOLIDATED BALANCE SHEETS
Sept. 30, Dec. 31,
2006 2005
------------ -----------
Assets
Current assets $390.8 $354.1
Timber, timberlands and logging roads,
net of depletion and amortization 906.9 927.0
Property, plant and equipment 1,392.1 1,352.4
Less - accumulated depreciation (1,032.2) (991.1)
------------ -----------
359.9 361.3
------------ -----------
Investment in New Zealand JV 58.7 81.7
Other assets 155.7 115.0
------------ -----------
$1,872.0 $1,839.1
============ ===========
Liabilities and Shareholders' Equity
Current liabilities $185.9 $170.1
Deferred income taxes 25.2 32.2
Long-term debt 555.1 555.2
Non-current reserves for dispositions and
discontinued operations 121.3 128.0
Other non-current liabilities 69.5 68.7
Shareholders' equity 915.0 884.9
------------ -----------
$1,872.0 $1,839.1
============ ===========
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
Nine Months Ended
------------------------
Sept. 30, Sept. 30,
2006 2005
------------ -----------
Cash provided by operating activities of
continuing operations:
Income from continuing operations $121.1 $151.3
Depreciation, depletion, amortization and
non-cash cost basis of real estate sold 109.6 119.6
Other non-cash items included in income (7.5) (34.0)
Changes in working capital and other
assets and liabilities (0.9) (30.8)
------------ -----------
222.3 206.1
------------ -----------
Cash used for investing activities of
continuing operations:
Capital expenditures, net of sales and
retirements (87.9) (51.5)
Purchase of timberlands and properties
previously leased (30.5) (12.9)
Proceeds from sale of portion of New
Zealand JV 21.7 -
Increase in restricted cash (3.6) (13.5)
Proceeds from matured energy forward
contracts 0.9 -
------------ -----------
(99.4) (77.9)
------------ -----------
Cash used for financing activities:
(Repayment)/borrowing of debt, net (2.7) (67.8)
Dividends paid (107.8) (93.5)
Issuance of common shares 7.0 11.3
Repurchase of common shares (0.5) -
Excess tax benefits from equity-based
compensation(a) 2.5 -
------------ -----------
(101.5) (150.0)
------------ -----------
Effect of exchange rate changes on cash 1.2 (0.1)
------------ -----------
Cash provided by discontinued operations - 47.4
------------ -----------
Cash and cash equivalents:
Increase in cash and cash equivalents 22.6 25.5
Balance, beginning of year 146.2 84.1
------------ -----------
Balance, end of period $168.8 $109.6
============ ===========
(a) SFAS No. 123R requires the excess tax
benefits on equity-based compensation to be
included as a financing activity. Since the
Company did not adopt SFAS No. 123R until
January 1, 2006, no adjustment is required
for the nine months ended September 30, 2005.
- E -
RAYONIER
SELECTED SUPPLEMENTAL FINANCIAL DATA
SEPTEMBER 30, 2006 (unaudited)
(millions of dollars)
Three Months Ended Nine Months Ended
-------------------------------- ---------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2006 2006 2005 2006 2005
----------- --------- ---------- ---------- ----------
Geographical
Data (Non-
U.S.)
Sales
New Zealand $8.5 $8.2 $13.1 $22.2 $36.1
Other 3.5 3.7 1.6 11.7 7.1
----------- --------- ---------- ---------- ----------
Total $12.0 $11.9 $14.7 $33.9 $43.2
=========== ========= ========== ========== ==========
Operating
income
(loss)
New Zealand $(0.1) $(0.3) $1.5 $(1.5) $3.0
Other (0.3) (0.5) (0.8) (1.2) (1.4)
----------- --------- ---------- ---------- ----------
Total $(0.4) $(0.8) $0.7 $(2.7) $1.6
=========== ========= ========== ========== ==========
Timber
Sales
Northwest
U.S. $24.4 $35.2 $18.8 $86.7 $71.1
Southeast
U.S. 17.2 23.5 19.1 65.7 61.6
New Zealand 2.7 2.4 7.6 7.4 19.2
----------- --------- ---------- ---------- ----------
Total $44.3 $61.1 $45.5 $159.8 $151.9
=========== ========= ========== ========== ==========
Operating
income
Northwest
U.S. $12.6 $21.4 $8.8 $50.0 $41.2
Southeast
U.S. 4.3 8.8 5.9 22.0 18.1
New Zealand 0.2 (0.4) 1.7 (1.3) 3.9
----------- --------- ---------- ---------- ----------
Total $17.1 $29.8 $16.4 $70.7 $63.2
=========== ========= ========== ========== ==========
Adjusted
EBITDA by
Segment(a)
Timber $27.3 $43.3 $31.0 $109.4 $107.7
Real Estate 43.9 15.5 27.0 70.9 62.1
Performance
Fibers 40.9 33.1 35.2 99.4 100.9
Wood
Products (1.4) 3.8 6.4 6.7 19.0
Other
Operations 0.3 0.5 1.1 0.6 1.5
Corporate
and other (6.7) (7.9) (0.1) (23.5) (16.2)
----------- --------- ---------- ---------- ----------
Total $104.3 $88.3 $100.6 $263.5 $275.0
=========== ========= ========== ========== ==========
(a) Adjusted EBITDA is a non-GAAP measure, see Schedule I for
reconciliation to nearest GAAP measure.
- F -
RAYONIER
SELECTED OPERATING INFORMATION
SEPTEMBER 30, 2006 (unaudited)
Three Months Ended Nine Months Ended
------------------------------- ---------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2006 2006 2005 2006 2005
---------- --------- ---------- ---------- ----------
Timber
Northwest U.S.,
in millions of
board feet 59 89 48 223 193
Southeast U.S.,
in thousands
of short green
tons 926 1,204 1,080 3,377 3,507
Real Estate
Acres sold
Development 4,606 7 2,411 5,357 4,937
Rural 1,426 9,613 7,930 13,699 22,107
Northwest U.S. 58 4 44 62 275
---------- --------- ---------- ---------- ----------
Total 6,090 9,624 10,385 19,118 27,319
Performance
Fibers
Sales Volume
Cellulose
specialties,
in thousands
of metric
tons 112 121 120 337 340
Absorbent
materials, in
thousands of
metric tons 68 63 65 196 201
Production as a
percent of
capacity 101.9% 99.2% 100.9% 100.1% 100.2%
Lumber
Sales volume,
in millions of
board feet 91 92 89 267 262
- G -
RAYONIER
RECONCILIATION OF NON-GAAP MEASURES
SEPTEMBER 30, 2006 (unaudited)
(millions of dollars, except per share information)
CASH AVAILABLE FOR DISTRIBUTION:
Nine Months Ended
----------------------
Sept. 30, Sept. 30,
2006 2005
---------- ----------
Cash provided by operating activities $222.3 $206.1
Capital spending (a) (87.9) (51.5)
Proceeds from matured forward energy
contracts 0.9 -
Decrease in committed cash 10.9 10.0
Equity based compensation adjustments 4.2 (1.0)
Like-kind exchange tax benefits on third
party real estate sales (b) (4.1) (2.0)
---------- ----------
Cash Available for Distribution $146.3 $161.6
========== ==========
(a) Capital spending is net of sales and retirements and excludes
strategic acquisitions and dispositions.
(b) Represents taxes that would have been paid if the Company had not
completed LKE transactions.
PRO FORMA
INCOME FROM
CONTINUING
OPERATIONS:
Three Months Ended Nine Months Ended
-------------------------------- ---------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2006 2006 2005 2006 2005
---------- ---------- ---------- ---------- ----------
Income from
Continuing
Operations
per Common
Share
Basic EPS $0.71 $0.56 $0.99 $1.58 $2.00
========== ========== ========== ========== ==========
Diluted EPS $0.70 $0.55 $0.96 $1.55 $1.95
========== ========== ========== ========== ==========
Sale of
portion of
New Zealand
JV
Basic EPS - (0.08) - (0.08) -
========== ========== ========== ========== ==========
Diluted EPS - (0.08) - (0.08) -
========== ========== ========== ========== ==========
IRS audit
settlements
including
adjustment
of accrued
interest
Basic EPS (0.07) - (0.11) (0.07) (0.34)
========== ========== ========== ========== ==========
Diluted EPS (0.07) - (0.10) (0.07) (0.32)
========== ========== ========== ========== ==========
Tax
associated
with
repatria-
tion of
foreign
earnings
Basic EPS - - (0.34) - (0.34)
========== ========== ========== ========== ==========
Diluted EPS - - (0.33) - (0.33)
========== ========== ========== ========== ==========
Arbitration
award
Basic EPS - - (0.07) - (0.07)
========== ========== ========== ========== ==========
Diluted EPS - - (0.07) - (0.07)
========== ========== ========== ========== ==========
Pro forma
Income from
Continuing
Operations per
Common Share
Adjusted
basic EPS $0.64 $0.48 $0.47 $1.43 $1.25
========== ========== ========== ========== ==========
Adjusted
diluted
EPS $0.63 $0.47 $0.46 $1.40 $1.23
========== ========== ========== ========== ==========
- H -
RAYONIER
RECONCILIATION OF NON-GAAP MEASURES (a)
SEPTEMBER 30, 2006 (unaudited)
(millions of dollars)
ADJUSTED EBITDA:
Corp-
Perfor- Wood Other orate
Real mance Prod- Opera- and
Timber Estate Fibers ucts tions other Total
------- -------- -------- ------ ------- ------- -------
Three Months
Ended
September 30,
2006
Cash
provided by
operating
activities $24.7 $39.8 $37.7 $0.8 $(2.0) $(11.8) $89.2
Income tax
expense - - - - - 2.7 2.7
Interest,
net - - - - - 8.1 8.1
Working
capital
increases
(decreases) (1.3) 0.7 2.4 (2.2) 2.1 (14.8) (13.1)
Other
balance
sheet
changes 3.9 3.4 0.8 - 0.2 9.1 17.4
------- -------- -------- ------ ------- ------- -------
Adjusted
EBITDA $27.3 $43.9 $40.9 $(1.4) $0.3 $(6.7) $104.3
======= ======== ======== ====== ======= ======= =======
June 30, 2006
Cash
provided by
operating
activities $53.1 $18.3 $14.8 $6.3 $7.1 $(17.3) $82.3
Income tax
expense - - - - - 5.9 5.9
Interest,
net - - - - - 9.9 9.9
Working
capital
increases
(decreases) (6.8) (3.8) 18.5 (2.5) (6.4) (0.5) (1.5)
Other
balance
sheet
changes (3.0) 1.0 (0.2) - (0.2) (5.9) (8.3)
------- -------- -------- ------ ------- ------- -------
Adjusted
EBITDA $43.3 $15.5 $33.1 $3.8 $0.5 $(7.9) $88.3
======= ======== ======== ====== ======= ======= =======
September 30,
2005
Cash
provided by
operating
activities $32.0 $29.8 $19.6 $8.6 $2.5 $(9.3) $83.2
Income tax
benefit - - - - - (21.9) (21.9)
Interest,
net - - - - - 5.7 5.7
Working
capital
increases
(decreases) (0.4) 1.0 16.3 (2.2) (1.4) (3.5) 9.8
Other
balance
sheet
changes (0.6) (3.8) (0.7) - - 28.9 23.8
------- -------- -------- ------ ------- ------- -------
Adjusted
EBITDA $31.0 $27.0 $35.2 $6.4 $1.1 $(0.1) $100.6
======= ======== ======== ====== ======= ======= =======
Nine Months
Ended
September 30,
2006
Cash
provided by
operating
activities $121.6 $65.6 $82.1 $7.8 $5.6 $(60.4) $222.3
Income tax
expense - - - - - 12.6 12.6
Interest,
net - - - - - 28.0 28.0
Working
capital
increases
(decreases) (3.6) 1.6 16.7 (1.1) (5.2) (12.5) (4.1)
Other
balance
sheet
changes (8.6) 3.7 0.6 - 0.2 8.8 4.7
------- -------- -------- ------ ------- ------- -------
Adjusted
EBITDA $109.4 $70.9 $99.4 $6.7 $0.6 $(23.5) $263.5
======= ======== ======== ====== ======= ======= =======
September 30,
2005
Cash
provided by
operating
activities $115.1 $65.4 $74.3 $17.1 $1.0 $(66.8) $206.1
Income tax
benefit - - - - - (25.7) (25.7)
Interest,
net - - - - - 29.0 29.0
Working
capital
increases
(decreases) (6.6) (1.3) 27.3 1.9 (1.0) 9.6 29.9
Other
balance
sheet
changes (0.8) (2.0) (0.7) - 1.5 37.7 35.7
------- -------- -------- ------ ------- ------- -------
Adjusted
EBITDA $107.7 $62.1 $100.9 $19.0 $1.5 $(16.2) $275.0
======= ======== ======== ====== ======= ======= =======
(a) Unusual, non-trade intercompany items between the segments have
been eliminated.
- I -
RAYONIER
RECONCILIATION OF STATUTORY INCOME TAX TO REPORTED
INCOME TAX
SEPTEMBER 30, 2006 (unaudited)
(millions of dollars, except percentages)
Three Months Ended
--------------------------------------------
Sept. 30, June 30, Sept. 30,
2006 2006 2005
-------------- -------------- --------------
$ % $ % $ %
------- ------ ------- ------ ------- ------
Income tax provision
at the U.S.
statutory rate $(20.2) (35.0) $(17.0) (35.0) $(18.6) (35.0)
REIT income not
subject to federal
tax 14.4 25.0 11.4 23.4 10.4 19.6
Lost deduction on
REIT interest
expense and overhead
expenses associated
with REIT activities (2.8) (4.9) (2.7) (5.6) (3.2) (6.0)
Discrete items
included in pretax
income - - - - 4.9 6.5 (a)
Foreign, state and
local income taxes,
foreign exchange
rate changes and
permanent
differences 0.5 0.7 1.5 3.2 2.3 4.3
------- ------ ------- ------ ------- ------
Income tax (expense)
benefit before
discrete items $(8.1) (14.2) $(6.8) (14.0) $(4.2) (10.6)
Favorable IRS audit
settlements 4.8 8.3 - - 3.1 6.9 (a)
Reversal of prior
year built-in gain
reserve 2.8 4.9 - - - -
Return to accrual
adjustments (1.2) (2.1) 0.9 1.9 (0.1) (0.2)
Prior year foreign
tax credit reserve (1.0) (1.7) - - - -
U.S. tax benefit on
repatriation of
foreign earnings - - - - 25.8 48.6
Tax on favorable
arbitration award - - - - (3.0) (3.9)(a)
Exchange rate changes
on tax on
undistributed
foreign earnings - - - - 0.2 0.4
Non-realizability of
New Zealand tax
credits on U.S.
withholding tax for
prior years'
intercompany note
interest - - - - - -
------- ------ ------- ------ ------- ------
Income tax (expense)
benefit $(2.7) (4.8) $(5.9) (12.1) $21.8 41.2
======= ====== ======= ====== ======= ======
(a) Adjusted for change in pretax income due to discrete items.
Nine Months Ended
------------------------------
Sept. 30, Sept. 30,
2006 2005
--------------- --------------
$ % $ %
-------- ------ ------- ------
Income tax provision at the U.S.
statutory rate $(46.8) (35.0) $(44.0) (35.0)
REIT income not subject to federal
tax 33.8 25.3 28.8 22.9
Lost deduction on REIT interest
expense and overhead expenses
associated with REIT activities (8.7) (6.5) (8.7) (6.8)
Discrete items included in pretax
income - - 4.9 2.2 (a)
Foreign, state and local income
taxes, foreign exchange rate changes
and permanent differences 2.3 1.6 3.5 2.8
-------- ------ ------- ------
Income tax (expense) benefit before
discrete items $(19.4) (14.6) $(15.5) (13.9)
Favorable IRS audit settlements 5.3 4.0 19.8 16.4 (a)
Reversal of prior year built-in gain
reserve 2.8 2.1 - -
Return to accrual adjustments (0.3) (0.2) (0.1) (0.1)
Prior year foreign tax credit reserve (1.0) (0.7) - -
U.S. tax benefit on repatriation of
foreign earnings - - 25.8 20.5
Tax on favorable arbitration award - - (3.0) (1.4)(a)
Exchange rate changes on tax on
undistributed foreign earnings - - 1.6 1.3
Non-realizability of New Zealand tax
credits on U.S. withholding tax for
prior years' intercompany note
interest - - (2.9) (2.4)
-------- ------ ------- ------
Income tax (expense) benefit $(12.6) (9.4) $25.7 20.4
======== ====== ======= ======
(a) Adjusted for change in pretax income due to discrete items.
- J -
CONTACT: Rayonier, Jacksonville
Media Contact:
Jay Fredericksen, 904-357-9106
or
Investor Contact:
Parag Bhansali, 904-357-9155
SOURCE: Rayonier
