
22.	CONSOLIDATING FINANCIAL STATEMENTS

The condensed consolidating financial information below follows the same accounting policies as described in the consolidated financial statements, except for the use of the equity method of accounting to reflect ownership interests in wholly-owned subsidiaries, which are eliminated upon consolidation, and the allocation of certain expenses of Rayonier Inc. incurred for the benefit of its subsidiaries.

In October 2007, TRS issued $300 million of 3.75% Senior Exchangeable Notes due 2012, and in August 2009 TRS issued $172.5 million of 4.50% Senior Exchangeable Notes due 2015. The notes for both transactions are non-callable and are guaranteed by Rayonier Inc. as the Parent Guarantor and Rayonier Operating Company LLC ("ROC") as the Subsidiary Guarantor. In connection with these exchangeable notes, the Company provides the following condensed consolidating financial information in accordance with SEC Regulation S-X Rule 3-10, Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.



	CONDENSED CONSOLIDATING STATEMENTS OF INCOME For the Year Ended December 31, 2011
	Rayonier Inc. (Parent Guarantor)		ROC (Subsidiary Guarantor)			Rayonier TRS Holdings Inc. (Issuer)			Subsidiaries of Rayonier TRS Holdings Inc. (Non- guarantors)			All Other Subsidiaries (Non- guarantors)			Consolidating Adjustments			Total Consolidated
SALES	$	—	$	—		$	—		$	1,374,090		$	263,808		$	(149,256	)	$	1,488,642
Costs and Expenses
Cost of sales	—		—			—			1,036,494			129,335			(92,097		)	1,073,732
Selling and general expenses	—		10,710			—			53,102			2,729			—			66,541
Other operating expense (income), net	—		117			—			10,181			(14,127		)	—			(3,829		)
	—		10,827			—			1,099,777			117,937			(92,097		)	1,136,444
Equity in income of New Zealand joint venture	—		—			—			726			3,362			—			4,088
OPERATING (LOSS) INCOME	—		(10,827		)	—			275,039			149,233			(57,159		)	356,286
Interest expense	621		(1,133		)	(49,555		)	766			(1,474		)	—			(50,775		)
Interest and miscellaneous income (expense), net	—		5,280			(4,508		)	(55,495		)	55,574			—			851
Equity in income from subsidiaries	275,384		281,892			170,048			—			—			(727,324		)	—
INCOME BEFORE INCOME TAXES	276,005		275,212			115,985			220,310			203,333			(784,483		)	306,362
Income tax benefit (expense)	—		172			19,733			(50,262		)	—			—			(30,357		)
NET INCOME	$	276,005	$	275,384		$	135,718		$	170,048		$	203,333		$	(784,483	)	$	276,005



	CONDENSED CONSOLIDATING STATEMENTS OF INCOME For the Year Ended December 31, 2010
	Rayonier Inc. (Parent Guarantor)		ROC (Subsidiary Guarantor)			Rayonier TRS Holdings Inc. (Issuer)			Subsidiaries of Rayonier TRS Holdings Inc. (Non- guarantors)			All Other Subsidiaries (Non- guarantors)			Consolidating Adjustments			Total Consolidated
SALES	$	—	$	—		$	—		$	1,234,254		$	225,524		$	(144,545	)	$	1,315,233
Costs and Expenses
Cost of sales	—		—			—			992,543			119,682			(122,126		)	990,099
Selling and general expenses	—		10,122			—			53,874			3,106			—			67,102
Other operating expense (income), net	—		385			—			3,184			(14,043		)	(45		)	(10,519		)
	—		10,507			—			1,049,601			108,745			(122,171		)	1,046,682
Equity in income of New Zealand joint venture	—		—			—			810			223			—			1,033
OPERATING (LOSS) INCOME BEFORE GAIN ON SALE OF A PORTION OF INTEREST IN NEW ZEALAND JOINT VENTURE	—		(10,507		)	—			185,463			117,002			(22,374		)	269,584
Gain on sale of a portion of interest in New Zealand joint venture	—		—			—			7,697			4,670			—			12,367
OPERATING (LOSS) INCOME	—		(10,507		)	—			193,160			121,672			(22,374		)	281,951
Interest expense	—		239			(50,313		)	(256		)	(133		)	—			(50,463		)
Interest and miscellaneous income (expense), net	—		12,952			(4,309		)	(26,955		)	19,627			—			1,315
Equity in income from subsidiaries	217,586		221,578			137,471			—			—			(576,635		)	—
INCOME BEFORE INCOME TAXES	217,586		224,262			82,849			165,949			141,166			(599,009		)	232,803
Income tax (expense) benefit	—		(6,676		)	19,937			(28,478		)	—			—			(15,217		)
NET INCOME	$	217,586	$	217,586		$	102,786		$	137,471		$	141,166		$	(599,009	)	$	217,586



	CONDENSED CONSOLIDATING STATEMENTS OF INCOME For the Year Ended December 31, 2009
	Rayonier Inc. (Parent Guarantor)		ROC (Subsidiary Guarantor)			Rayonier TRS Holdings Inc. (Issuer)			Subsidiaries of Rayonier TRS Holdings Inc. (Non- guarantors)			All Other Subsidiaries (Non- guarantors)			Consolidating Adjustments			Total Consolidated
SALES	$	—	$	—		$	—		$	1,016,463		$	193,019		$	(40,915	)	$	1,168,567
Costs and Expenses
Cost of sales	—		—			—			831,167			129,165			(45,560		)	914,772
Selling and general expenses	—		11,349			—			47,953			3,331			—			62,633
Other operating expense (income), net	—		84			—			(204,268		)	(15,388		)	(1,600		)	(221,172		)
	—		11,433			—			674,852			117,108			(47,160		)	756,233
Equity in income (loss) of New Zealand joint venture	—		—			—			357			(3,183		)	—			(2,826		)
OPERATING (LOSS) INCOME	—		(11,433		)	—			341,968			72,728			6,245			409,508
Interest expense	—		(113		)	(47,761		)	64			(4,631		)	—			(52,441		)
Interest and miscellaneous income (expense), net	—		5,244			(3,832		)	(4,518		)	4,981			(65		)	1,810
Equity in income from subsidiaries	312,541		328,682			282,186			—			—			(923,409		)	—
INCOME BEFORE INCOME TAXES	312,541		322,380			230,593			337,514			73,078			(917,229		)	358,877
Income tax (expense) benefit	—		(9,839		)	18,831			(55,328		)	—			—			(46,336		)
NET INCOME	$	312,541	$	312,541		$	249,424		$	282,186		$	73,078		$	(917,229	)	$	312,541



	CONDENSED CONSOLIDATING BALANCE SHEETS As of December 31, 2011
	Rayonier Inc. (Parent Guarantor)		ROC (Subsidiary Guarantor)		Rayonier TRS Holdings Inc. (Issuer)		Subsidiaries of Rayonier TRS Holdings Inc. (Non- guarantors)			All Other Subsidiaries (Non- guarantors)		Consolidating Adjustments			Total Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	—	$	8,977	$	59,976	$	7,398		$	2,252	$	—		$	78,603
Accounts receivable, less allowance for doubtful accounts	—		3		—		94,399			606		—			95,008
Inventory	—		—		—		133,300			—		(11,302		)	121,998
Intercompany interest receivable	—		—		—		—			3,848		(3,848		)	—
Income tax receivable	—		4		—		1,941			—		—			1,945
Prepaid and other current assets	—		2,324		808		34,996			8,820		—			46,948
Total current assets	—		11,308		60,784		272,034			15,526		(15,150		)	344,502
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	—		—		—		39,824			1,462,027		1,860			1,503,711
NET PROPERTY, PLANT AND EQUIPMENT	—		2,551		—		456,754			2,247		—			461,552
INVESTMENT IN JOINT VENTURE	—		—		—		(11,006		)	80,225		—			69,219
INVESTMENT IN SUBSIDIARIES	1,238,661		1,490,444		1,156,896		—			—		(3,886,001		)	—
INTERCOMPANY NOTES RECEIVABLE	204,420		—		19,073		—			—		(223,493		)	—
OTHER ASSETS	—		26,850		6,491		702,087			6,856		(551,920		)	190,364
TOTAL ASSETS	$	1,443,081	$	1,531,153	$	1,243,244	$	1,459,693		$	1,566,881	$	(4,674,704	)	$	2,569,348
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	—	$	1,801	$	10	$	69,648		$	1,414	$	—		$	72,873
Current maturities of long-term debt	—		—		28,110		—			—		—			28,110
Accrued payroll and benefits	—		13,810		—		10,563			2,473		—			26,846
Accrued interest	8		246		5,442		739			609		—			7,044
Accrued customer incentives	—		—		—		10,369			—		—			10,369
Other current liabilities	—		1,859		—		13,133			8,086		—			23,078
Current liabilities for dispositions and discontinued operations	—		—		—		9,931			—		—			9,931
Total current liabilities	8		17,716		33,562		114,383			12,582		—			178,251
LONG-TERM DEBT	120,000		30,000		580,647		—			88,582		—			819,229
NON-CURRENT LIABILITIES FOR DISPOSITIONS AND DISCONTINUED OPERATIONS	—		—		—		80,893			—		—			80,893
PENSION AND OTHER POSTRETIREMENT BENEFITS	—		112,904		—		27,719			—		—			140,623
OTHER NON-CURRENT LIABILITIES	—		20,210		—		6,396			673		—			27,279
INTERCOMPANY PAYABLE	—		111,662		—		73,406			203,208		(388,276		)	—
TOTAL LIABILITIES	120,008		292,492		614,209		302,797			305,045		(388,276		)	1,246,275
TOTAL SHAREHOLDERS’ EQUITY	1,323,073		1,238,661		629,035		1,156,896			1,261,836		(4,286,428		)	1,323,073
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,443,081	$	1,531,153	$	1,243,244	$	1,459,693		$	1,566,881	$	(4,674,704	)	$	2,569,348



	CONDENSED CONSOLIDATING BALANCE SHEETS As of December 31, 2010
	Rayonier Inc. (Parent Guarantor)		ROC (Subsidiary Guarantor)		Rayonier TRS Holdings Inc. (Issuer)		Subsidiaries of Rayonier TRS Holdings Inc. (Non-guarantors)			All Other Subsidiaries (Non- guarantors)			Consolidating Adjustments			Total Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	—	$	29,759	$	283,258	$	1,280		$	35,166		$	—		$	349,463
Accounts receivable, less allowance for doubtful accounts	—		1		—		81,288			1,351			—			82,640
Inventory	—		—		—		123,432			—			(13,397		)	110,035
Intercompany interest receivable	—		—		—		—			4,320			(4,320		)	—
Income tax receivable	—		1,750		—		19,984			—			—			21,734
Prepaid and other current assets	—		1,273		842		38,697			4,502			—			45,314
Total current assets	—		32,783		284,100		264,681			45,339			(17,717		)	609,186
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	—		—		—		37,398			1,098,870			1,663			1,137,931
NET PROPERTY, PLANT AND EQUIPMENT	—		2,819		—		380,577			1,711			197			385,304
INVESTMENT IN JOINT VENTURE	—		—		—		(12,282		)	80,765			—			68,483
INVESTMENT IN SUBSIDIARIES	1,251,582		1,392,465		987,381		—			—			(3,631,428		)	—
OTHER ASSETS	—		26,642		9,351		664,664			13,153			(551,061		)	162,749
TOTAL ASSETS	$	1,251,582	$	1,454,709	$	1,280,832	$	1,335,038		$	1,239,838		$	(4,198,346	)	$	2,363,653
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	—	$	823	$	20	$	55,052		$	2,090		$	—		$	57,985
Current maturities of long-term debt	—		—		93,057		—			—			—			93,057
Accrued payroll and benefits	—		13,507		—		9,590			2,369			—			25,466
Accrued interest	—		12		5,591		603			—			—			6,206
Accrued customer incentives	—		—		—		9,759			—			—			9,759
Other current liabilities	—		2,608		—		28,354			10,013			—			40,975
Current liabilities for dispositions and discontinued operations	—		—		—		11,500			—			—			11,500
Total current liabilities	—		16,950		98,668		114,858			14,472			—			244,948
LONG-TERM DEBT	—		—		675,103		—			—			—			675,103
NON-CURRENT LIABILITIES FOR DISPOSITIONS AND DISCONTINUED OPERATIONS	—		—		—		81,660			—			—			81,660
PENSION AND OTHER POSTRETIREMENT BENEFITS	—		63,759		—		2,576			—			—			66,335
OTHER NON-CURRENT LIABILITIES	—		19,811		—		23,552			662			—			44,025
INTERCOMPANY PAYABLE	—		102,607		—		125,011			(3,751		)	(223,867		)	—
TOTAL LIABILITIES	—		203,127		773,771		347,657			11,383			(223,867		)	1,112,071
TOTAL SHAREHOLDERS’ EQUITY	1,251,582		1,251,582		507,061		987,381			1,228,455			(3,974,479		)	1,251,582
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,251,582	$	1,454,709	$	1,280,832	$	1,335,038		$	1,239,838		$	(4,198,346	)	$	2,363,653



	CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS For the Year Ended December 31, 2011
	Rayonier Inc. (Parent Guarantor)			ROC (Subsidiary Guarantor)			Rayonier TRS Holdings Inc. (Issuer)			Subsidiaries of Rayonier TRS Holdings Inc. (Non- guarantors)			All Other Subsidiaries (Non- guarantors)			Consolidating Adjustments			Total Consolidated
CASH PROVIDED BY OPERATING ACTIVITIES	$	283,409		$	332,577		$	15,000		$	138,595		$	276,793		$	(614,104	)	$	432,270
INVESTING ACTIVITIES
Capital expenditures	—			(270		)	—			(104,321		)	(39,931		)	—			(144,522		)
Purchase of timberlands	—			—			—			(24,366		)	(296,533		)	—			(320,899		)
Jesup mill cellulose specialties expansion	—			—			—			(42,894		)	—			—			(42,894		)
Intercompany purchase of real estate	—			—			—			(12,394		)	—			12,394			—
Change in restricted cash	—			—			—			—			8,323			—			8,323
Investment in Subsidiaries	(19,259		)	(99,988		)	(35,828		)	—			—			155,075			—
Other	—			69			—			10,607			702			—			11,378
CASH USED FOR INVESTING ACTIVITIES	(19,259		)	(100,189		)	(35,828		)	(173,368		)	(327,439		)	167,469			(488,614		)
FINANCING ACTIVITIES
Issuance of debt	120,000			105,000			—			—			235,000			—			460,000
Repayment of debt	—			(75,000		)	(168,057		)	—			(256,000		)	—			(499,057		)
Dividends paid	(185,272		)	—			—			—			—			—			(185,272		)
Proceeds from the issuance of common shares	13,451			—			—			—			—			—			13,451
Excess tax benefits on stock-based compensation	—			—			—			5,681			—			—			5,681
Debt issuance costs	—			(675		)	(676		)	—			(676		)	—			(2,027		)
Repurchase of common shares	(7,909		)	—			—			—			—			—			(7,909		)
Issuance of intercompany notes	(204,420		)	—			(18,961		)	18,961			204,420			—			—
Intercompany distributions	—			(282,495		)	(14,760		)	15,632			(165,012		)	446,635			—
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES	(264,150		)	(253,170		)	(202,454		)	40,274			17,732			446,635			(215,133		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			—			617			—			—			617
CASH AND CASH EQUIVALENTS
(Decrease) increase in cash and cash equivalents	—			(20,782		)	(223,282		)	6,118			(32,914		)	—			(270,860		)
Balance, beginning of year	—			29,759			283,258			1,280			35,166			—			349,463
Balance, end of year	$	—		$	8,977		$	59,976		$	7,398		$	2,252		$	—		$	78,603



	CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS For the Year Ended December 31, 2010
	Rayonier Inc. (Parent Guarantor)			ROC (Subsidiary Guarantor)			Rayonier TRS Holdings Inc. (Issuer)			Subsidiaries of Rayonier TRS Holdings Inc. (Non- guarantors)			All Other Subsidiaries (Non- guarantors)			Consolidating Adjustments			Total Consolidated
CASH PROVIDED BY OPERATING ACTIVITIES	$	143,387		$	177,502		$	30,000		$	307,384		$	181,333		$	(344,216	)	$	495,390
INVESTING ACTIVITIES
Capital expenditures	—			(2,251		)	—			(103,421		)	(32,777		)	—			(138,449		)
Purchase of timberlands	—			—			—			—			(5,360		)	—			(5,360		)
Intercompany purchase of timberlands	—			—			—			—			(46,700		)	46,700			—
Intercompany purchase of real estate	—			—			—			(41,253		)	—			41,253			—
Change in restricted cash	—			—			—			—			(8,231		)	—			(8,231		)
Investment in Subsidiaries	—			—			145,975			—			—			(145,975		)	—
Other	—			—			—			11,589			(2,205		)	—			9,384
CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES	—			(2,251		)	145,975			(133,085		)	(95,273		)	(58,022		)	(142,656		)
FINANCING ACTIVITIES
Issuance of debt	—			—			75,000			—			82,000			—			157,000
Repayment of debt	—			(5,000		)	(4,650		)	—			(87,000		)	—			(96,650		)
Dividends paid	(163,673		)	—			—			—			—			—			(163,673		)
Proceeds from the issuance of common shares	26,314			—			—			—			—			—			26,314
Excess tax benefits on stock-based compensation	—			—			—			5,411			—			—			5,411
Debt issuance costs	—			—			(561		)	—			—			—			(561		)
Repurchase of common shares	(6,028		)	—			—			—			—			—			(6,028		)
Intercompany distributions	—			(143,387		)	(30,000		)	(180,610		)	(48,241		)	402,238			—
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES	(143,387		)	(148,387		)	39,789			(175,199		)	(53,241		)	402,238			(78,187		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			—			(48		)	—			—			(48		)
CASH AND CASH EQUIVALENTS
Increase (decrease) in cash and cash equivalents	—			26,864			215,764			(948		)	32,819			—			274,499
Balance, beginning of year	—			2,895			67,494			2,228			2,347			—			74,964
Balance, end of year	$	—		$	29,759		$	283,258		$	1,280		$	35,166		$	—		$	349,463



	CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS For the Year Ended December 31, 2009
	Rayonier Inc. (Parent Guarantor)			ROC (Subsidiary Guarantor)			Rayonier TRS Holdings Inc. (Issuer)			Subsidiaries of Rayonier TRS Holdings Inc. (Non- guarantors)			All Other Subsidiaries (Non- guarantors)			Consolidating Adjustments			Total Consolidated
CASH PROVIDED BY OPERATING ACTIVITIES	$	135,985		$	144,143		$	38,000		$	133,320		$	185,400		$	(329,549	)	$	307,299
INVESTING ACTIVITIES
Capital expenditures	—			(4		)	—			(62,018		)	(32,239		)	2,594			(91,667		)
Change in restricted cash	—			—			—			—			1,399			—			1,399
Investment in Subsidiaries	—			—			37,362			—			—			(37,362		)	—
Other	—			—			—			(3,980		)	1,504			—			(2,476		)
CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES	—			(4		)	37,362			(65,998		)	(29,336		)	(34,768		)	(92,744		)
FINANCING ACTIVITIES
Issuance of debt	—			5,000			177,500			—			85,000			—			267,500
Repayment of debt	—			(20,000		)	(155,064		)	—			(132,579		)	—			(307,643		)
Dividends paid	(158,218		)	—			—			—			—			—			(158,218		)
Proceeds from the issuance of common shares	11,115			—			—			—			—			—			11,115
Excess tax benefits on stock-based compensation	—			—			—			2,720			—			—			2,720
Purchase of exchangeable note hedge	—			—			(23,460		)	—			—			—			(23,460		)
Proceeds from issuance of warrant	12,506			—			—			—			—			—			12,506
Debt issuance costs	—			—			(4,678		)	—			—			—			(4,678		)
Repurchase of common shares	(1,388		)	—			—			—			—			—			(1,388		)
Intercompany distributions	—			(135,985		)	(38,000		)	(79,332		)	(111,000		)	364,317			—
CASH USED FOR FINANCING ACTIVITIES	(135,985		)	(150,985		)	(43,702		)	(76,612		)	(158,579		)	364,317			(201,546		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			—			270			—			—			270
CASH AND CASH EQUIVALENTS
(Decrease) increase in cash and cash equivalents	—			(6,846		)	31,660			(9,020		)	(2,515		)	—			13,279
Balance, beginning of year	—			9,741			35,834			11,248			4,862			—			61,685
Balance, end of year	$	—		$	2,895		$	67,494		$	2,228		$	2,347		$	—		$	74,964

Rayonier Inc. may issue additional securities in the future and such securities may be guaranteed by certain subsidiaries of Rayonier as presented in the condensed consolidating financial statements below. The subsidiary guarantors column includes ROC, Rayonier Louisiana Timberlands LLC, Rayonier TRS Holdings Inc. and substantially all domestic subsidiaries of TRS Holdings Inc. The subsidiary non-guarantors consist of RFR, Rayonier Gulf Timberlands, LLC and foreign subsidiaries and other minor domestic subsidiaries of Rayonier Inc. In connection with these securities, the Company provides the following condensed consolidating financial information in accordance with SEC Regulation S-X Rule 3-10, Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.



	CONDENSED CONSOLIDATING STATEMENTS OF INCOME For the Year Ended December 31, 2011
	Rayonier Inc.(Parent Issuer)		Subsidiary Guarantors			All Other Subsidiaries (Non- guarantors)			Consolidating Adjustments			Total Consolidated
SALES	$	—	$	1,254,352		$	383,546		$	(149,256	)	$	1,488,642
Costs and Expenses
Cost of sales	—		928,477			237,350			(92,095		)	1,073,732
Selling and general expenses	—		51,564			14,977			—			66,541
Other operating expense (income), net	—		13,493			(17,322		)	—			(3,829		)
	—		993,534			235,005			(92,095		)	1,136,444
Equity in income of New Zealand joint venture	—		—			4,088			—			4,088
OPERATING INCOME	—		260,818			152,629			(57,161		)	356,286
Interest expense	621		(49,922		)	(1,474		)	—			(50,775		)
Interest and miscellaneous (expense) income, net	—		(54,762		)	55,613			—			851
Equity in income from subsidiaries	275,384		148,848			—			(424,232		)	—
INCOME BEFORE INCOME TAXES	276,005		304,982			206,768			(481,393		)	306,362
Income tax expense	—		(29,598		)	(759		)	—			(30,357		)
NET INCOME	$	276,005	$	275,384		$	206,009		$	(481,393	)	$	276,005



	CONDENSED CONSOLIDATING STATEMENTS OF INCOME For the Year Ended December 31, 2010
	Rayonier Inc.(Parent Issuer)		Subsidiary Guarantors				All Other Subsidiaries (Non- guarantors)			Consolidating Adjustments			Total Consolidated
SALES	$	—	$	1,139,271		—	$	320,507		$	(144,545	)	$	1,315,233
Costs and Expenses
Cost of sales	—		907,500				204,725			(122,126		)	990,099
Selling and general expenses	—		53,477				13,625			—			67,102
Other operating expense (income), net	—		5,362				(15,836		)	(45		)	(10,519		)
	—		966,339				202,514			(122,171		)	1,046,682
Equity in income of New Zealand joint venture	—		—				1,033			—			1,033
OPERATING INCOME BEFORE GAIN ON SALE OF A PORTION OF INTEREST IN NEW ZEALAND JOINT VENTURE	—		172,932				119,026			(22,374		)	269,584
Gain on sale of a portion of interest in New Zealand joint venture	—		—				12,367			—			12,367
OPERATING INCOME	—		172,932				131,393			(22,374		)	281,951
Interest expense	—		(50,330		)		(133		)	—			(50,463		)
Interest and miscellaneous (expense) income, net	—		(18,322		)		19,637			—			1,315
Equity in income from subsidiaries	217,586		126,904				—			(344,490		)	—
INCOME BEFORE INCOME TAXES	217,586		231,184				150,897			(366,864		)	232,803
Income tax expense	—		(13,598		)		(1,619		)	—			(15,217		)
NET INCOME	$	217,586	$	217,586			$	149,278		$	(366,864	)	$	217,586



	CONDENSED CONSOLIDATING STATEMENTS OF INCOME For the Year Ended December 31, 2009
	Rayonier Inc.(Parent Issuer)		Subsidiary Guarantors			All Other Subsidiaries (Non- guarantors)			Consolidating Adjustments			Total Consolidated
SALES	$	—	$	975,906		$	233,576		$	(40,915	)	$	1,168,567
Costs and Expenses
Cost of sales	—		798,668			161,664			(45,560		)	914,772
Selling and general expenses	—		49,971			12,662			—			62,633
Other operating income, net	—		(204,029		)	(15,543		)	(1,600		)	(221,172		)
	—		644,610			158,783			(47,160		)	756,233
Equity in income of New Zealand joint venture	—		—			(2,826		)	—			(2,826		)
OPERATING INCOME	—		331,296			71,967			6,245			409,508
Interest expense	—		(47,810		)	(4,631		)	—			(52,441		)
Interest and miscellaneous (expense) income, net	—		(3,291		)	5,166			(65		)	1,810
Equity in income from subsidiaries	312,541		78,528			—			(391,069		)	—
INCOME BEFORE INCOME TAXES	312,541		358,723			72,502			(384,889		)	358,877
Income tax expense	—		(46,182		)	(154		)	—			(46,336		)
NET INCOME	$	312,541	$	312,541		$	72,348		$	(384,889	)	$	312,541



	CONDENSED CONSOLIDATING BALANCE SHEETS As of December 31, 2011
	Rayonier Inc.(Parent Issuer)			Subsidiary Guarantors			All Other Subsidiaries (Non- guarantors)		Consolidating Adjustments			Total Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	—		$	58,132		$	20,471	$	—		$	78,603
Accounts receivable, less allowance for doubtful accounts	—			90,658			4,350		—			95,008
Inventory	—			132,323			977		(11,302		)	121,998
Intercompany interest receivable	—			—			3,848		(3,848		)	—
Income tax receivable	—			1,945			—		—			1,945
Prepaid and other current assets	—			37,421			9,527		—			46,948
Total current assets	—			320,479			39,173		(15,150		)	344,502
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	—			117,243			1,384,608		1,860			1,503,711
NET PROPERTY, PLANT AND EQUIPMENT	—			458,497			3,055		—			461,552
INVESTMENT IN JOINT VENTURE	—			—			69,219		—			69,219
INVESTMENT IN SUBSIDIARIES	1,238,661			801,838			—		(2,040,499		)	—
INTERCOMPANY NOTES RECEIVABLE	204,420			—			—		(204,420		)	—
OTHER ASSETS	—			710,663			31,622		(551,921		)	190,364
TOTAL ASSETS	$	1,443,081		$	2,408,720		$	1,527,677	$	(2,810,130	)	$	2,569,348
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	—		$	65,732		$	7,141	$	—		$	72,873
Current maturities of long-term debt	—			28,110			—		—			28,110
Accrued payroll and benefits	—		—	23,070		—	3,776		—			26,846
Accrued interest	8		—	6,427		—	609		—			7,044
Accrued customer incentives	—		—	10,369		—	—		—			10,369
Other current liabilities	—			14,157			8,921		—			23,078
Current liabilities for dispositions and discontinued operations	—			9,931			—		—			9,931
Total current liabilities	8			157,796			20,447		—			178,251
LONG-TERM DEBT	120,000			610,647			88,582		—			819,229
NON-CURRENT LIABILITIES FOR DISPOSITIONS AND DISCONTINUED OPERATIONS	—			80,893			—		—			80,893
PENSION AND OTHER POSTRETIREMENT BENEFITS	—			140,623			—		—			140,623
OTHER NON-CURRENT LIABILITIES	—			25,894			1,385		—			27,279
INTERCOMPANY PAYABLE	—			154,206			214,997		(369,203		)	—
TOTAL LIABILITIES	120,008			1,170,059			325,411		(369,203		)	1,246,275
TOTAL SHAREHOLDERS’ EQUITY	1,323,073			1,238,661			1,202,266		(2,440,927		)	1,323,073
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,443,081		$	2,408,720		$	1,527,677	$	(2,810,130	)	$	2,569,348



	CONDENSED CONSOLIDATING BALANCE SHEETS As of December 31, 2010
	Rayonier Inc.(Parent Issuer)		Subsidiary Guarantors		All Other Subsidiaries (Non- guarantors)		Consolidating Adjustments			Total Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	—	$	303,746	$	45,717	$	—		$	349,463
Accounts receivable, less allowance for doubtful accounts	—		76,193		6,447		—			82,640
Inventory	—		121,559		1,873		(13,397		)	110,035
Intercompany interest receivable	—		—		4,320		(4,320		)	—
Income tax receivable	—		21,734		—		—			21,734
Prepaid and other current assets	—		37,324		7,990		—			45,314
Total current assets	—		560,556		66,347		(17,717		)	609,186
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	—		37,398		1,098,870		1,663			1,137,931
NET PROPERTY, PLANT AND EQUIPMENT	—		382,700		2,407		197			385,304
INVESTMENT IN JOINT VENTURE	—		—		68,483		—			68,483
INVESTMENT IN SUBSIDIARIES	1,251,582		900,436		—		(2,152,018		)	—
OTHER ASSETS	—		674,610		39,200		(551,061		)	162,749
TOTAL ASSETS	$	1,251,582	$	2,555,700	$	1,275,307	$	(2,718,936	)	$	2,363,653
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	—	$	50,737	$	7,248	$	—		$	57,985
Current maturities of long-term debt	—		93,057		—		—			93,057
Accrued payroll and benefits	—		22,206		3,260		—			25,466
Accrued interest	—		6,206		—		—			6,206
Accrued customer incentives	—		9,759		—		—			9,759
Other current liabilities	—		29,806		11,169		—			40,975
Current liabilities for dispositions and discontinued operations	—		11,500		—		—			11,500
Total current liabilities	—		223,271		21,677		—			244,948
LONG-TERM DEBT	—		675,103		—		—			675,103
NON-CURRENT LIABILITIES FOR DISPOSITIONS AND DISCONTINUED OPERATIONS	—		81,660		—		—			81,660
PENSION AND OTHER POSTRETIREMENT BENEFITS	—		66,335		—		—			66,335
OTHER NON-CURRENT LIABILITIES	—		42,728		1,297		—			44,025
INTERCOMPANY PAYABLE	—		215,021		8,846		(223,867		)	—
TOTAL LIABILITIES	—		1,304,118		31,820		(223,867		)	1,112,071
TOTAL SHAREHOLDERS’ EQUITY	1,251,582		1,251,582		1,243,487		(2,495,069		)	1,251,582
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,251,582	$	2,555,700	$	1,275,307	$	(2,718,936	)	$	2,363,653



	CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS For the Year Ended December 31, 2011
	Rayonier Inc.(Parent Issuer)			Subsidiary Guarantors			All Other Subsidiaries (Non- guarantors)			Consolidating Adjustments			Total Consolidated
CASH PROVIDED BY OPERATING ACTIVITIES	$	283,409		$	425,705		$	283,044		$	(559,888	)	$	432,270
INVESTING ACTIVITIES
Capital expenditures	—			(105,184		)	(39,338		)	—			(144,522		)
Purchase of timberlands	—			(102,302		)	(218,597		)	—			(320,899		)
Jesup mill cellulose specialties expansion	—			(42,894		)	—			—			(42,894		)
Intercompany purchase of real estate	—			(12,394		)	—			12,394			—
Change in restricted cash	—			—			8,323			—			8,323
Investment in Subsidiaries	(19,259		)	(22,259		)	—			41,518			—
Other	—			10,676			702			—			11,378
CASH USED FOR INVESTING ACTIVITIES	(19,259		)	(274,357		)	(248,910		)	53,912			(488,614		)
FINANCING ACTIVITIES
Issuance of debt	120,000			105,000			235,000			—			460,000
Repayment of debt	—			(243,057		)	(256,000		)	—			(499,057		)
Dividends paid	(185,272		)	—			—			—			(185,272		)
Proceeds from the issuance of common shares	13,451			—			—			—			13,451
Excess tax benefits on stock-based compensation	—			5,681			—			—			5,681
Debt issuance costs	—			(1,351		)	(676		)	—			(2,027		)
Repurchase of common shares	(7,909		)	—			—			—			(7,909		)
Issuance of intercompany notes	(204,420		)	—			204,420			—			—
Intercompany distributions	—			(263,235		)	(242,741		)	505,976			—
CASH USED FOR FINANCING ACTIVITIES	(264,150		)	(396,962		)	(59,997		)	505,976			(215,133		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			617			—			617
CASH AND CASH EQUIVALENTS
Decrease in cash and cash equivalents	—			(245,614		)	(25,246		)	—			(270,860		)
Balance, beginning of year	—			303,746			45,717			—			349,463
Balance, end of year	$	—		$	58,132		$	20,471		$	—		$	78,603



	CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS For the Year Ended December 31, 2010
	Rayonier Inc.(Parent Issuer)			Subsidiary Guarantors			All Other Subsidiaries (Non- guarantors)			Consolidating Adjustments			Total Consolidated
CASH PROVIDED BY OPERATING ACTIVITIES	$	143,387		$	441,039		$	190,545		$	(279,581	)	$	495,390
INVESTING ACTIVITIES
Capital expenditures	—			(105,053		)	(33,396		)	—			(138,449		)
Purchase of timberlands	—			—			(5,360		)	—			(5,360		)
Intercompany purchase of timberlands	—			—			(46,700		)	46,700			—
Intercompany purchase of real estate	—			(41,253		)	—			41,253			—
Change in restricted cash	—			—			(8,231		)	—			(8,231		)
Other	—			11,589			(2,205		)	—			9,384
CASH USED FOR INVESTING ACTIVITIES	—			(134,717		)	(95,892		)	87,953			(142,656		)
FINANCING ACTIVITIES
Issuance of debt	—			75,000			82,000			—			157,000
Repayment of debt	—			(9,650		)	(87,000		)	—			(96,650		)
Dividends paid	(163,673		)	—			—			—			(163,673		)
Proceeds from the issuance of common shares	26,314			—			—			—			26,314
Excess tax benefits on stock-based compensation	—			5,411			—			—			5,411
Debt issuance costs	—			(561		)	—			—			(561		)
Repurchase of common shares	(6,028		)	—			—			—			(6,028		)
Intercompany distributions	—			(143,387		)	(48,241		)	191,628			—
CASH USED FOR FINANCING ACTIVITIES	(143,387		)	(73,187		)	(53,241		)	191,628			(78,187		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			(48		)	—			(48		)
CASH AND CASH EQUIVALENTS
Increase in cash and cash equivalents	—			233,135			41,364			—			274,499
Balance, beginning of year	—			70,611			4,353			—			74,964
Balance, end of year	$	—		$	303,746		$	45,717		$	—		$	349,463



	CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS For the Year Ended December 31, 2009
	Rayonier Inc.(Parent Issuer)			Subsidiary Guarantors			All Other Subsidiaries (Non- guarantors)			Consolidating Adjustments			Total Consolidated
CASH PROVIDED BY OPERATING ACTIVITIES	$	135,985		$	240,338		$	180,555		$	(249,579	)	$	307,299
INVESTING ACTIVITIES
Capital expenditures	—			(61,998		)	(32,263		)	2,594			(91,667		)
Change in restricted cash	—			—			1,399			—			1,399
Other	—			(3,980		)	1,504			—			(2,476		)
CASH USED FOR INVESTING ACTIVITIES	—			(65,978		)	(29,360		)	2,594			(92,744		)
FINANCING ACTIVITIES
Issuance of debt	—			182,500			85,000			—			267,500
Repayment of debt	—			(175,064		)	(132,579		)	—			(307,643		)
Dividends paid	(158,218		)	—			—			—			(158,218		)
Proceeds from the issuance of common shares	11,115			—			—			—			11,115
Excess tax benefits on stock-based compensation	—			2,720			—			—			2,720
Purchase of exchangeable note hedge	—			(23,460		)	—			—			(23,460		)
Proceeds from issue of warrant	12,506			—			—			—			12,506
Debt issuance costs	—			(4,678		)	—			—			(4,678		)
Repurchase of common shares	(1,388		)	—			—			—			(1,388		)
Intercompany distributions	—			(135,985		)	(111,000		)	246,985			—
CASH USED FOR FINANCING ACTIVITIES	(135,985		)	(153,967		)	(158,579		)	246,985			(201,546		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			270			—			270
CASH AND CASH EQUIVALENTS
Increase (decrease) in cash and cash equivalents	—			20,393			(7,114		)	—			13,279
Balance, beginning of year	—			50,218			11,467			—			61,685
Balance, end of year	$	—		$	70,611		$	4,353		$	—		$	74,964