1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ........... TO ............
COMMISSION FILE NUMBER 1-6780
RAYONIER INC.
Incorporated in the State of North Carolina
I.R.S. Employer Identification Number l3-2607329
l177 Summer Street, Stamford, Connecticut 06905-5529
(Principal Executive Office)
Telephone Number: (203) 348-7000
Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section l3 or l5(d) of the Securities Exchange Act of l934 during
the preceding l2 months and (2) has been subject to such filing requirements for
the past 90 days.
YES (X) NO ( )
As of August 3, 1998, there were 28,172,309 Common Shares of the Registrant
outstanding.
2
RAYONIER INC.
TABLE OF CONTENTS
PAGE
----
PART I. FINANCIAL INFORMATION
Item l. Financial Statements
Statements of Consolidated Income for the
Three Months and Six Months
Ended June 30, 1998 and 1997 1
Consolidated Balance Sheets as of June 30, 1998
and December 3l, 1997 2
Statements of Consolidated Cash Flows for the
Six Months Ended June 30, 1998 and 1997 3
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 5-7
Item 3. Selected Operating Data 8
Selected Supplemental Financial Data 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 6. Exhibits and Reports on Form 8-K 10
Signature 10
Exhibit Index 11
i
3
PART I. FINANCIAL INFORMATION
ITEM L. FINANCIAL STATEMENTS
The following unaudited financial statements reflect, in the opinion of Rayonier
Inc. (Rayonier or the Company), all adjustments (which include only normal
recurring adjustments) necessary for a fair presentation of the results of
operations, the financial position and the cash flows for the periods presented.
For a full description of accounting policies, please refer to Notes to
Consolidated Financial Statements in the l997 Annual Report on Form l0-K.
RAYONIER INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
(UNAUDITED)
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
1998 1997 1998 1997
--------- --------- --------- ---------
SALES $ 254,011 $ 290,073 $ 479,425 $ 550,211
--------- --------- --------- ---------
Costs and expenses
Cost of sales 210,301 240,360 394,480 450,141
Selling and general expenses 9,412 9,729 17,759 20,234
Other operating income, net (874) (1,091) (2,143) (1,712)
--------- --------- --------- ---------
218,839 248,998 410,096 468,663
--------- --------- --------- ---------
OPERATING INCOME 35,172 41,075 69,329 81,548
Interest expense (9,072) (6,051) (16,984) (11,907)
Interest and miscellaneous income, net 202 557 497 954
Minority interest -- (6,208) -- (14,287)
--------- --------- --------- ---------
Income before income taxes 26,302 29,373 52,842 56,308
Provision for income taxes (7,862) (9,612) (16,206) (18,151)
--------- --------- --------- ---------
NET INCOME $ 18,440 $ 19,761 $ 36,636 $ 38,157
========= ========= ========= =========
NET INCOME PER COMMON SHARE
Basic EPS $ 0.65 $ 0.68 $ 1.29 $ 1.31
========= ========= ========= =========
Diluted EPS $ 0.64 $ 0.67 $ 1.27 $ 1.29
========= ========= ========= =========
1
4
RAYONIER INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(THOUSANDS OF DOLLARS)
ASSETS
June 30, December 31,
1998 1997
---------- ----------
CURRENT ASSETS
Cash and short-term investments $ 15,622 $ 10,661
Accounts receivable, less allowance for doubtful
accounts of $4,514 and $4,481 115,174 115,704
Inventories
Finished goods 48,376 51,398
Work in process 18,072 17,491
Raw materials 18,633 19,740
Manufacturing and maintenance supplies 25,426 25,519
---------- ----------
Total inventories 110,507 114,148
Timber purchase agreements 39,358 31,758
Other current assets 11,285 13,955
Deferred income taxes 21,144 24,288
---------- ----------
Total current assets 313,090 310,514
OTHER ASSETS 63,966 55,791
TIMBER PURCHASE AGREEMENTS 28,398 28,248
TIMBER, TIMBERLANDS AND LOGGING ROADS,
NET OF DEPLETION AND AMORTIZATION 548,639 497,110
PROPERTY, PLANT AND EQUIPMENT
Land, buildings, machinery and equipment 1,297,044 1,266,431
Less - accumulated depreciation 594,931 562,536
---------- ----------
702,113 703,895
---------- ----------
$1,656,206 $1,595,558
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 63,998 $ 74,269
Bank loans and current maturities 3,963 4,194
Accrued taxes 16,703 10,973
Accrued payroll and benefits 22,957 18,694
Accrued interest 7,274 6,076
Other current liabilities 41,651 66,085
Current reserves for dispositions and discontinued operations 26,587 26,247
---------- ----------
Total current liabilities 183,133 206,538
DEFERRED INCOME TAXES 112,810 113,442
LONG-TERM DEBT 516,439 421,325
NON-CURRENT RESERVES FOR DISPOSITIONS
AND DISCONTINUED OPERATIONS 165,450 172,615
OTHER NON-CURRENT LIABILITIES 33,267 31,997
MINORITY INTEREST -- 16,959
SHAREHOLDERS' EQUITY
Common Shares, 60,000,000 shares authorized, 28,193,693
and 28,283,634 shares issued and outstanding 95,504 102,175
Retained earnings 549,603 530,507
---------- ----------
645,107 632,682
---------- ----------
$1,656,206 $1,595,558
========== ==========
2
5
RAYONIER INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
(THOUSANDS OF DOLLARS)
Six Months
Ended June 30,
--------------
1998 1997
--------- ---------
OPERATING ACTIVITIES
Net income $ 36,636 $ 38,157
Non-cash items included in income
Depreciation, depletion and amortization 47,760 47,572
Deferred income taxes 8 10,893
Increase in other non-current liabilities 1,270 809
Change in accounts receivable, inventories
and accounts payable (6,100) 16,632
(Increase) decrease in current timber purchase agreements (7,600) 9,018
Decrease in other current assets 2,670 460
Decrease in accrued liabilities (13,243) (12,414)
--------- ---------
CASH FROM OPERATING ACTIVITIES 61,401 111,127
--------- ---------
INVESTING ACTIVITIES
Capital expenditures, net of sales and retirements
of $2,186 and $240 (48,686) (76,933)
Acquisition of Rayonier Timberlands, L.P.Class A Units (48,821) --
Expenditures for dispositions and discontinued operations,
net of tax benefits of $2,504 and $5,707 (4,321) (9,817)
Change in timber purchase agreements and other assets (8,325) 1,206
--------- ---------
CASH USED FOR INVESTING ACTIVITIES (110,153) (85,544)
--------- ---------
FINANCING ACTIVITIES
Issuance of debt 183,910 139,682
Repayments of debt (89,027) (120,162)
Dividends paid (17,539) (17,454)
Repurchase of Common Shares (8,710) (23,145)
Issuance of Common Shares 2,038 1,407
Buyout of minority interest (16,959) (590)
--------- ---------
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES 53,713 (20,262)
--------- ---------
CASH AND SHORT-TERM INVESTMENTS
Increase in cash and short term investments 4,961 5,321
Balance, beginning of period 10,661 3,432
--------- ---------
Balance, end of period $ 15,622 $ 8,753
========= =========
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ 15,980 $ 14,386
========= =========
Income taxes $ 11,718 $ 3,693
========= =========
3
6
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
1. EARNINGS PER COMMON SHARE
In 1997, the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 128, "Earnings Per Share." The following table provides details
of the calculation of basic and diluted EPS for the three and six months
ended June 30, 1998 and 1997.
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
Net Income $ 18,440 $ 19,761 $ 36,636 $ 38,157
=========== =========== =========== ===========
Shares used for determining basic EPS 28,273,886 28,958,213 28,290,854 29,094,176
Dilutive effect of:
Stock options 337,795 351,933 312,159 304,595
Contingent shares 231,084 223,500 231,084 223,500
----------- ----------- ----------- -----------
Shares used for determining diluted EPS 28,842,765 29,533,646 28,834,097 29,622,271
=========== =========== =========== ===========
Basic EPS $ 0.65 $ 0.68 $ 1.29 $ 1.31
=========== =========== =========== ===========
Diluted EPS $ 0.64 $ 0.67 $ 1.27 $ 1.29
=========== =========== =========== ===========
2. NEW ACCOUNTING STANDARD
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133 "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes accounting
and reporting standards requiring that derivative instruments be recorded
on the balance sheet as either an asset or liability measured at fair
value. SFAS No.133 requires that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge accounting criteria
are met.
SFAS No.133 is effective for fiscal years beginning after June 15, 1999,
but may be adopted as of the beginning of any fiscal quarter after
issuance. SFAS No.133 is not expected to have a material impact on the
Company's consolidated financial position or results of operations.
4
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The sales and operating income of Rayonier's business segments for the three and
six months ended June 30, 1998 and 1997 were as follows (thousands of dollars):
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
1998 1997 1998 1997
--------- --------- --------- ---------
SALES
TIMBER AND WOOD PRODUCTS
Trading and merchandising $ 52,849 $ 77,573 $ 88,006 $ 134,310
Timberlands management 50,022 44,145 101,892 93,659
Wood products 32,276 38,637 61,483 68,300
Intrasegment eliminations (3,226) (5,631) (5,824) (11,918)
--------- --------- --------- ---------
Total Timber and Wood Products 131,921 154,724 245,557 284,351
--------- --------- --------- ---------
SPECIALTY PULP PRODUCTS
Chemical cellulose 75,786 86,850 143,531 167,066
Fluff and specialty paper pulps 46,784 39,963 91,898 83,157
--------- --------- --------- ---------
Total Specialty Pulp Products 122,570 126,813 235,429 250,223
--------- --------- --------- ---------
Intersegment eliminations (480) (353) (1,561) (978)
--------- --------- --------- ---------
Total before dispositions 254,011 281,184 479,425 533,596
Dispositions -- 8,889 -- 16,615
--------- --------- --------- ---------
Total sales $ 254,011 $ 290,073 $ 479,425 $ 550,211
========= ========= ========= =========
OPERATING INCOME
Timber and Wood Products $ 30,840 $ 35,044 $ 60,476 $ 68,691
Specialty Pulp Products 7,693 9,024 15,585 21,411
Corporate and other (3,637) (4,203) (6,712) (8,347)
Intersegment eliminations 276 39 (20) 151
--------- --------- --------- ---------
Total before dispositions 35,172 39,904 69,329 81,906
Dispositions -- 1,171 -- (358)
--------- --------- --------- ---------
Total operating income $ 35,172 $ 41,075 $ 69,329 $ 81,548
========= ========= ========= =========
RESULTS OF OPERATIONS
SALES AND OPERATING INCOME
Sales for the second quarter of 1998 were $254 million, $36 million or 12
percent lower than the second quarter of 1997. Sales for the six months ended
June 30, 1998 of $479 million were $71 million or 13 percent lower than the
prior year. Sales declined primarily due to sharply reduced Asian demand for
logs, lower chemical cellulose volume, decreased lumber selling prices and the
absence of disposition sales from the Company's Port Angeles pulp mill,
permanently closed in February 1997. Operating income for the second quarter of
1998 of $35 million was $6 million less than the prior year. Operating income
for the six month period was $69 million, $12 million or 15 percent less than
the prior year, as a result of losses from the Company's medium-density
fiberboard (MDF) plant, lower lumber margins and unfavorable pulp sales mix and
volume. Adverse weather conditions in the first half of the year also disrupted
production schedules and raised the cost of wood fiber at the Company's pulp
and sawmills.
5
8
TIMBER AND WOOD PRODUCTS
Timber and Wood Products' sales for the three month period ended June 30, 1998
were $132 million, $23 million below last year's results. Sales for the six
month period were $246 million, $39 million below 1997, reflecting lower log
trading activity in Asian markets. Operating income for the quarter of $31
million was $4 million lower than the same period last year. Year to date
operating income of $60 million was $8 million lower than 1997, as strong
Southeast U.S. timber earnings were more than offset by lower lumber margins,
and losses at the Company's MDF plant in New Zealand, which began commercial
operations October 1, 1997.
Trading and merchandising sales of $88 million were $46 million lower than 1997,
reflecting significantly reduced North American and New Zealand export log
volumes and selling prices resulting from a stronger U.S. dollar and weakness
in Asian wood markets. Operating income was slightly lower than 1997.
Timberlands management sales of $102 million were $8 million above last year due
to higher timber prices, volumes and land sales in the Southeast U.S. Operating
income improved $10 million from 1997 as a result of the strong Southeast U.S.
timber market, due to unusually wet weather conditions early in the year that
led to restricted supply, and increased land sales.
Wood products sales of $62 million were $7 million lower than 1997. Operating
income declined $17 million from 1997 as a result of lower sales prices and
higher log costs affecting lumber, and losses from the MDF business, as it
continued to develop markets and increase production.
SPECIALTY PULP PRODUCTS
Sales of Specialty Pulp Products were $123 million compared to $127 million for
last year's second quarter. Sales for the first six months of 1998 were $235
million, $15 million lower than 1997. The decline was primarily due to lower
sales volumes and an unfavorable sales mix, due to reduced customer demand for
chemical cellulose pulps. Operating income for the first six months was $16
million, a decrease of $6 million from 1997, as a result of lower volumes for
chemical cellulose, higher wood costs and production shortfalls.
OTHER INCOME / EXPENSE
Interest expense was $17 million for the first six months of 1998, $5 million
higher than 1997, reflecting lower capitalized interest following start up of
the MDF plant and interest expense associated with the $66 million purchase of
the publicly traded Class A Units of the Company's U.S. timberlands partnership
in January. Elimination of the minority interest in the partnership contributed
approximately $16 million to pretax earning in the first six months of 1998,
partially offset by higher interest and depletion costs.
The effective tax rate of 30.7 percent for the first half of 1998 is lower than
the first half 1997 effective rate of 32.2 percent due to R & D tax credits
recognized in the current year.
NET INCOME
Net income for the second quarter was $18.4 million or $0.64 per Common Share,
compared to $19.8 million, or $0.67 cents per Common Share in 1997. Net income
for the six months ended June 30, 1998 was $36.6 million or $1.27 per Common
Share, slightly below the $38.2 million, or $1.29 per Common Share earned last
year.
OTHER ITEMS
Preliminary indications are that forest fires in the Southeast U.S. in early
July affected approximately 26,000 acres of Rayonier timberland. As a result,
the Company expects to take a writedown in the third quarter of approximately $5
million pretax, 10 cents per share after-tax, for the book value of destroyed
immature timber. In addition, second-half earnings will be negatively impacted
by the sale of lower-priced, fire damaged timber.
Earnings for the year are now projected to be lower than last year as the
Company faces difficult market conditions in the second half for Specialty Pulp,
and for timber and wood products in New Zealand, because of the Asian economic
situation. The Company may take some market-related downtime in Specialty Pulp
and MDF. Southeast U.S. timber markets, which were strong in the first half,
will be temporarily affected by a glut of fire-damaged timber. Markets are
reasonably good for U.S. wood products and Northwest timber, although Northwest
timber volumes are typically lower in the second half of the year.
6
9
In January 1998, Rayonier acquired all of the publicly traded Class A Units of
its master limited partnership, Rayonier Timberlands, L.P., for a cash purchase
price of $13.00 per unit. The acquisition was accounted for under the purchase
method and was financed by the utilization of existing credit facilities.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow from operating activities of $61 million for the first six months of
1998 decreased $50 million from 1997 as a result of increased working capital
requirements. EBITDA (defined as earnings from continuing operations before
significant non-recurring items, provision for dispositions, interest expense,
income taxes and depreciation, depletion and amortization) for the first six
months of 1998 of $118 million increased $2 million from 1997 results. Cash from
operating activities and additional borrowings helped to finance capital
expenditures of $51 million, dividends of $18 million and the repurchase of
Common Shares for $9 million. The Company also increased its borrowings to
finance the $66 million acquisition of the outstanding publicly traded Class A
Unit minority interest in Rayonier Timberlands L.P.
The Company repurchased 190,294 of its shares during the first six months of
1998 at an average cost of $45.77. Over the same period of 1997, in connection
with an expanded one-year repurchase program, the Company repurchased 579,100
shares at an average cost of $39.97 per share for $23 million. In July 1998, the
Company increased the number of common shares authorized to be repurchased by
200,000. Second quarter ending debt was $520 million and the
debt-to-capital-ratio was 44.7 percent compared to 40.2 percent at December 31,
1997.
The Company has unsecured credit facilities totaling $300 million, which were
used for direct borrowings of $40 million and as support for $150 million of
outstanding commercial paper. As of June 30, 1998, the Company had $110 million
of available borrowings under its revolving credit facilities. In addition,
through currently effective shelf registration statements filed with the
Securities and Exchange Commission, the Company may offer up to $100 million of
new public debt securities. The Company believes that internally generated
funds, combined with available external financing, will enable Rayonier to fund
capital expenditures, share repurchases, working capital and other liquidity
needs for the foreseeable future.
SAFE HARBOR
Comments about anticipated earnings and activities in the second half of the
year are forward-looking and are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Changes in the following
important factors, among others, could cause actual results to differ materially
from those expressed in the forward-looking statements: changes in the estimates
of fire damage; additional fires and other adverse weather conditions in the
Company's operating areas; competitive products and pricing, as well as
fluctuations in demand, particularly for specialty fluff pulps, export and
domestic logs, and wood products; the impact of such market factors on the
Company's timber sales in the U.S. and New Zealand; the impact of Asian market
conditions on prices and volumes; production costs for MDF and for specialty
pulps, particularly for raw materials and chemicals; governmental policies and
regulations affecting the environment, import and export controls and taxes; and
interest rate and currency movements.
7
10
ITEM 3. SELECTED OPERATING DATA
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
1998 1997 1998 1997
---- ---- ---- ----
TIMBER AND WOOD PRODUCTS
Trading volume
North America logs, in millions of board feet 36 75 69 120
New Zealand logs, in thousands of cubic meters 225 288 376 525
Other logs, in thousands of cubic meters 51 58 89 191
Timber sales volume
Northwest U.S., in millions of board feet 57 49 124 108
Southeast U.S., in thousands of short green tons 621 534 1,230 1,144
New Zealand, in thousands of cubic meters 244 288 370 499
Lumber sales volume, in millions of board feet 83 89 157 163
Medium-density fiberboard sales volume, 24 -- 37 --
in thousands of cubic meters
Intercompany sales volume
Northwest U.S. timber, in millions of board feet 3 4 5 10
Southeast U.S. timber, in thousands of short green tons 18 13 50 38
New Zealand timber in thousands of cubic meters 94 141 154 271
SPECIALTY PULP PRODUCTS
Pulp sales volume (a)
Chemical cellulose, in thousands of metric tons 86 100 163 189
Fluff and specialty paper pulp, in thousands of metric tons 89 80 175 161
Production as a percent of capacity 98.7% 98.4% 98.6% 98.6%
(a) Excludes 1997 second quarter and six months sales by the Port Angeles pulp
mill of 9 and 18, respectively, for chemical cellulose and 1 and 5,
respectively, for fluff and specialty paper pulp.
8
11
SELECTED SUPPLEMENTAL FINANCIAL DATA (thousand of dollars, except per share
data)
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
1998 1997 1998 1997
-------- -------- --------- --------
GEOGRAPHICAL DATA (NON-U.S.)
Sales
New Zealand $ 16,545 $ 22,430 $ 27,611 $ 39,581
Other 4,977 7,077 8,113 15,607
-------- -------- --------- --------
Total $ 21,522 $ 29,507 $ 35,724 $ 55,188
======== ======== ========= --------
Operating Income
New Zealand $ (3,222) $ 2,179 $ (8,502) $ 2,390
Other (918) (925) (2,167) (1,942)
-------- -------- --------- --------
Total $ (4,140) $ 1,254 $ (10,669) $ 448
======== ======== ========= ========
TIMBERLANDS MANAGEMENT
Sales
Northwest U.S. $ 20,589 $ 20,450 $ 47,423 $ 46,820
Southeast U.S. 23,555 15,551 45,135 32,741
New Zealand 5,878 8,144 9,334 14,098
-------- -------- --------- --------
Total $ 50,022 $ 44,145 $ 101,892 $ 93,659
======== ======== ========= ========
Operating Income
Northwest U.S. $ 14,493 $ 15,037 $ 35,475 $ 36,597
Southeast U.S 17,965 11,084 34,342 22,927
New Zealand 2,446 2,104 3,101 3,304
-------- -------- --------- --------
Total $ 34,904 $ 28,225 $ 72,918 $ 62,828
======== ======== --------- ========
EBITDA per Share
Northwest U.S. $ 0.55 $ 0.52 $ 1.30 $ 1.26
Southeast U.S 0.73 0.45 1.37 0.94
New Zealand 0.18 0.17 0.26 0.29
-------- -------- --------- --------
Total $ 1.46 $ 1.14 $ 2.93 $ 2.49
======== ======== ========= ========
9
12
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On April 20, 1998, the U.S. District Court for the Southern District of
Georgia granted summary judgment in favor of Rayonier in the action
brought by Powell-Duffryn Terminals which was reported in Rayonier's 10-K
for 1997. The plaintiffs filed a notice of appeal on June 10, 1998 with
the U.S. Court of Appeals for the Eleventh Circuit.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of the Company was held on May 15, 1998. At
that meeting, three directors were elected as follows (there were no broker
non-votes with respect to the election of directors):
Votes For Votes Withheld
--------- --------------
Director of Class I, Term Expires in 2001:
Ronald M. Gross 25,777,784 192,112
Katherine D. Ortega 25,774,844 195,052
Burnell R. Roberts 25,769,878 200,018
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) See Exhibit Index.
(b) Rayonier Inc. did not file a report on Form 8-K during the quarter
covered by this report.
SIGNATURE
Pursuant to the requirements of Section 13 of the Securities
Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
RAYONIER INC. (Registrant)
BY /s/ KENNETH P. JANETTE
----------------------------------------
Kenneth P. Janette
Vice President and Corporate Controller
August 14, 1998 (Chief Accounting Officer)
10
13
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION LOCATION
----------- ----------- --------
2 Plan of acquisition, reorganization, None
arrangement, liquidation or succession
3.1 Amended and restated articles of incorporation No amendments
3.2 By-laws No amendments
4 Instruments defining the rights of security holders, Not required to be filed. The
including indentures Registrant hereby agrees to file
with the Commission a copy of
any instrument defining the rights
of holders of the Registrant's
long-term debt upon request of
the Commission.
10 Material contracts None
11 Statement re computation of per share earnings Not required to be filed
12 Statement re computation of ratios Filed herewith
15 Letter re unaudited interim financial information None
18 Letter re change in accounting principles None
19 Report furnished to security holders None
22 Published report regarding matters None
submitted to vote of security holders
23 Consents of experts and counsel None
24 Power of attorney None
27 Financial data schedule Filed herewith
99 Additional exhibits None
11
1
EXHIBIT 12
RAYONIER INC. AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
(UNAUDITED)
(THOUSANDS OF DOLLARS)
Six Months
Ended June 30,
--------------
1998 1997
------- -------
Earnings:
Net Income $36,636 $38,157
Add:
Income Taxes 16,206 18,151
Minority Interest -- 14,287
Amortization of Capitalized Interest 1,122 536
------- -------
53,964 71,131
Adjustments to Earnings for Fixed Charges:
Interest and Other Financial Charges 16,984 11,907
Interest Factor Attributable to Rentals 987 1,094
------- -------
17,971 13,001
------- -------
EARNINGS AS ADJUSTED $71,935 $84,132
======= =======
Fixed Charges:
Fixed Charges above $17,971 $13,001
Capitalized Interest 194 3,076
------- -------
TOTAL FIXED CHARGES $18,165 $16,077
======= =======
RATIO OF EARNINGS AS ADJUSTED TO
TOTAL FIXED CHARGES 3.96 5.23
======= =======
5
1,000
6-MOS
DEC-31-1998
JAN-01-1998
JUN-30-1998
15,622
0
119,688
4,514
110,507
313,090
1,297,044
594,931
1,656,206
183,133
516,439
0
0
95,504
549,603
1,656,206
479,425
479,425
394,480
394,480
15,119
0
16,984
52,842
16,206
36,636
0
0
0
36,636
1.29
1.27
