
15.	CONSOLIDATING FINANCIAL STATEMENTS

The 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, Rayonier TRS Holdings Inc. ("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 fully and unconditionally 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 AND COMPREHENSIVE INCOME For the Three Months Ended June 30, 2012
	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	$	—		$	—		$	—		$	345,227		$	43,584		$	(16,885	)	$	371,926
Costs and Expenses
Cost of sales	—			—			—			250,845			26,716			(15,006		)	262,555
Selling and general expenses	—			1,904			—			13,067			1,279			—			16,250
Other operating income, net	—			(109		)	—			(2,330		)	(4,011		)	1,151			(5,299		)
	—			1,795			—			261,582			23,984			(13,855		)	273,506
Equity in income of New Zealand joint venture	—			—			—			167			3			—			170
OPERATING (LOSS) INCOME	—			(1,795		)	—			83,812			19,603			(3,030		)	98,590
Interest expense	(3,117		)	(212		)	(10,243		)	(1,635		)	(849		)	—			(16,056		)
Interest and miscellaneous income (expense), net	1,544			1,659			(834		)	(4,135		)	1,851			—			85
Equity in income from subsidiaries	70,652			70,948			60,407			—			—			(202,007		)	—
INCOME BEFORE INCOME TAXES	69,079			70,600			49,330			78,042			20,605			(205,037		)	82,619
Income tax benefit (expense)	—			52			4,043			(17,635		)	—			—			(13,540		)
NET INCOME	69,079			70,652			53,373			60,407			20,605			(205,037		)	69,079
OTHER COMPREHENSIVE (LOSS) INCOME	(6,678		)	(6,678		)	698			698			(10,556		)	15,838			(6,678		)
COMPREHENSIVE INCOME	$	62,401		$	63,974		$	54,071		$	61,105		$	10,049		$	(189,199	)	$	62,401



	CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the Three Months Ended June 30, 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	$	—	$	—		$	—		$	330,812		$	43,589		$	(17,004	)	$	357,397
Costs and Expenses
Cost of sales	—		—			—			251,107			30,257			(18,592		)	262,772
Selling and general expenses	—		2,215			—			12,985			792			—			15,992
Other operating expense (income), net	—		36			—			1,903			(1,230		)	—			709
	—		2,251			—			265,995			29,819			(18,592		)	279,473
Equity in income of New Zealand joint venture	—		—			—			167			982			—			1,149
OPERATING (LOSS) INCOME	—		(2,251		)	—			64,984			14,752			1,588			79,073
Interest expense	—		(261		)	(12,161		)	(144		)	(62		)	—			(12,628		)
Interest and miscellaneous income (expense), net	—		1,303			(1,117		)	(4,992		)	5,120			—			314
Equity in income from subsidiaries	56,454		57,748			44,783			—			—			(158,985		)	—
INCOME BEFORE INCOME TAXES	56,454		56,539			31,505			59,848			19,810			(157,397		)	66,759
Income tax (expense) benefit	—		(85		)	4,845			(15,065		)	—			—			(10,305		)
NET INCOME	56,454		56,454			36,350			44,783			19,810			(157,397		)	56,454
OTHER COMPREHENSIVE INCOME	10,235		10,235			360			360			8,020			(18,975		)	10,235
COMPREHENSIVE INCOME	$	66,689	$	66,689		$	36,710		$	45,143		$	27,830		$	(176,372	)	$	66,689



	CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the Six Months Ended June 30, 2012
	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	$	—		$	—		$	—		$	680,665		$	81,755		$	(34,714	)	$	727,706
Costs and Expenses
Cost of sales	—			—			—			497,899			53,534			(35,565		)	515,868
Selling and general expenses	—			5,215			—			28,579			2,074			—			35,868
Other operating expense (income), net	—			12			—			(818		)	(6,792		)	1,152			(6,446		)
	—			5,227			—			525,660			48,816			(34,413		)	545,290
Equity in income (loss) of New Zealand joint venture	—			—			—			338			(154		)	—			184
OPERATING (LOSS) INCOME	—			(5,227		)	—			155,343			32,785			(301		)	182,600
Interest expense	(4,366		)	(450		)	(20,469		)	(948		)	(1,647		)	—			(27,880		)
Interest and miscellaneous income (expense), net	3,455			2,986			(2,042		)	(8,039		)	3,699			—			59
Equity in income from subsidiaries	123,426			126,394			106,152			—			—			(355,972		)	—
INCOME BEFORE INCOME TAXES	122,515			123,703			83,641			146,356			34,837			(356,273		)	154,779
Income tax (expense) benefit	—			(277		)	8,217			(40,204		)	—			—			(32,264		)
NET INCOME	122,515			123,426			91,858			106,152			34,837			(356,273		)	122,515
OTHER COMPREHENSIVE INCOME (LOSS)	$	3,493		$	3,493		$	800		$	800		$	(3,424	)	$	(1,669	)	$	3,493
COMPREHENSIVE INCOME	$	126,008		$	126,919		$	92,658		$	106,952		$	31,413		$	(357,942	)	$	126,008



	CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the Six Months Ended June 30, 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	$	—	$	—		$	—		$	659,077		$	86,421		$	(30,371	)	$	715,127
Costs and Expenses
Cost of sales	—		—			—			495,404			58,254			(33,375		)	520,283
Selling and general expenses	—		4,931			—			26,055			1,439			—			32,425
Other operating expense (income), net	—		85			—			2,201			(3,694		)	(1		)	(1,409		)
	—		5,016			—			523,660			55,999			(33,376		)	551,299
Equity in income of New Zealand joint venture	—		—			—			361			2,462			—			2,823
OPERATING (LOSS) INCOME	—		(5,016		)	—			135,778			32,884			3,005			166,651
Interest expense	—		(391		)	(25,211		)	(256		)	(87		)	—			(25,945		)
Interest and miscellaneous income (expense), net	—		2,640			(2,191		)	(10,016		)	10,172			—			605
Equity in income from subsidiaries	114,865		117,792			89,218			—			—			(321,875		)	—
INCOME BEFORE INCOME TAXES	114,865		115,025			61,816			125,506			42,969			(318,870		)	141,311
Income tax (expense) benefit	—		(160		)	10,002			(36,288		)	—			—			(26,446		)
NET INCOME	114,865		114,865			71,818			89,218			42,969			(318,870		)	114,865
OTHER COMPREHENSIVE INCOME	$	12,049	$	12,049		$	509		$	509		$	7,830		$	(20,897	)	$	12,049
COMPREHENSIVE INCOME	$	126,914	$	126,914		$	72,327		$	89,727		$	50,799		$	(339,767	)	$	126,914



	CONDENSED CONSOLIDATING BALANCE SHEETS As of June 30, 2012
	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	$	97,335	$	35,503	$	15,197	$	8,020		$	33,048	$	—		$	189,103
Accounts receivable, less allowance for doubtful accounts	—		90		—		106,621			2,583		—			109,294
Inventory	—		—		—		126,681			—		(13,830		)	112,851
Intercompany interest receivable	—		—		—		—			3,111		(3,111		)	—
Prepaid and other current assets	—		836		763		80,541			6,943		—			89,083
Total current assets	97,335		36,429		15,960		321,863			45,685		(16,941		)	500,331
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	—		—		—		40,375			1,454,261		1,789			1,496,425
NET PROPERTY, PLANT AND EQUIPMENT	—		2,461		—		557,123			3,192		—			562,776
INVESTMENT IN JOINT VENTURE	—		—		—		(10,550		)	75,004		—			64,454
INVESTMENT IN SUBSIDIARIES	1,383,682		1,584,771		1,260,411		—			—		(4,228,864		)	—
INTERCOMPANY NOTES RECEIVABLE	204,476		—		19,452		—			—		(223,928		)	—
OTHER ASSETS	3,544		26,804		4,998		687,091			19,717		(549,563		)	192,591
TOTAL ASSETS	$	1,689,037	$	1,650,465	$	1,300,821	$	1,595,902		$	1,597,859	$	(5,017,507	)	$	2,816,577
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	—	$	1,291	$	11	$	69,147		$	2,283	$	—		$	72,732
Accrued taxes	—		487		—		36,260			4,214		—			40,961
Accrued payroll and benefits	—		11,126		—		10,417			1,762		—			23,305
Accrued interest	3,927		413		10,295		3,450			609		—			18,694
Accrued customer incentives	—		—		—		7,031			—		—			7,031
Other current liabilities	—		2,504		—		8,293			13,390		—			24,187
Current liabilities for dispositions and discontinued operations	—		—		—		9,843			—		—			9,843
Total current liabilities	3,927		15,821		10,306		144,441			22,258		—			196,753
LONG-TERM DEBT	325,000		—		604,997		—			88,096		—			1,018,093
NON-CURRENT LIABILITIES FOR DISPOSITIONS AND DISCONTINUED OPERATIONS	—		—		—		76,596			—		—			76,596
PENSION AND OTHER POSTRETIREMENT BENEFITS	—		113,772		—		26,301			—		—			140,073
OTHER NON-CURRENT LIABILITIES	—		17,972		—		6,360			620		—			24,952
INTERCOMPANY PAYABLE	—		119,218		—		81,793			210,689		(411,700		)	—
TOTAL LIABILITIES	328,927		266,783		615,303		335,491			321,663		(411,700		)	1,456,467
TOTAL SHAREHOLDERS’ EQUITY	1,360,110		1,383,682		685,518		1,260,411			1,276,196		(4,605,807		)	1,360,110
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,689,037	$	1,650,465	$	1,300,821	$	1,595,902		$	1,597,859	$	(5,017,507	)	$	2,816,577



	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		)	—
Prepaid and other current assets	—		2,328			808		36,937			8,820		—			48,893
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 taxes	—		(27		)	—		3,934			1,316		—			5,223
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	—		1,886			—		9,199			6,770		—			17,855
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 STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 2012
	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	$	3,173		$	51,579		$	12,000		$	94,485		$	86,639		$	(39,000	)	$	208,876
INVESTING ACTIVITIES
Capital expenditures	—			(165		)	—			(58,025		)	(18,056		)	—			(76,246		)
Purchase of timberlands	—			—			—			—			(8,687		)	—			(8,687		)
Jesup mill cellulose specialties expansion	—			—			—			(63,998		)	—			—			(63,998		)
Change in restricted cash	—			—			—			—			(14,427		)	—			(14,427		)
Investment in Subsidiaries	(5,181		)	—			(39,436		)	—			—			44,617			—
Other	—			(69		)	—			(962		)	327			—			(704		)
CASH USED FOR INVESTING ACTIVITIES	(5,181		)	(234		)	(39,436		)	(122,985		)	(40,843		)	44,617			(164,062		)
FINANCING ACTIVITIES
Issuance of debt	325,000			—			15,000			—			15,000			—			355,000
Repayment of debt	(120,000		)	(30,000		)	(23,110		)	—			(15,000		)	—			(188,110		)
Dividends paid	(98,201		)	—			—			—			—			—			(98,201		)
Proceeds from the issuance of common shares	3,980			—			—			—			—			—			3,980
Excess tax benefits on stock-based compensation	—			—			—			4,234			—			—			4,234
Debt issuance costs	(3,653		)	—			—			—			—			—			(3,653		)
Repurchase of common shares	(7,783		)	—			—			—			—			—			(7,783		)
Intercompany distributions	—			5,181			(9,233		)	24,669			(15,000		)	(5,617		)	—
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES	99,343			(24,819		)	(17,343		)	28,903			(15,000		)	(5,617		)	65,467
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			—			219			—			—			219
CASH AND CASH EQUIVALENTS
Change in cash and cash equivalents	97,335			26,526			(44,779		)	622			30,796			—			110,500
Balance, beginning of year	—			8,977			59,976			7,398			2,252			—			78,603
Balance, end of period	$	97,335		$	35,503		$	15,197		$	8,020		$	33,048		$	—		$	189,103



	CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 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	$	87,805		$	104,011		$	15,000		$	97,347		$	81,107		$	(190,403	)	$	194,867
INVESTING ACTIVITIES
Capital expenditures	—			(238		)	—			(47,800		)	(17,173		)	—			(65,211		)
Purchase of timberlands	—			—			—			—			(12,976		)	—			(12,976		)
Jesup mill cellulose specialties expansion	—			—			—			(3,576		)	—			—			(3,576		)
Change in restricted cash	—			—			—			—			8,323			—			8,323
Investment in Subsidiaries	—			—			24,778			—			—			(24,778		)	—
Other	—			—			—			2,698			(72		)	—			2,626
CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES	—			(238		)	24,778			(48,678		)	(21,898		)	(24,778		)	(70,814		)
FINANCING ACTIVITIES
Issuance of debt	—			—			—			—			70,000			—			70,000
Repayment of debt	—			—			(75,000		)	—			(70,000		)	—			(145,000		)
Dividends paid	(87,871		)	—			—			—			—			—			(87,871		)
Proceeds from the issuance of common shares	7,894			—			—			—			—			—			7,894
Excess tax benefits on stock-based compensation	—			—			—			4,900			—			—			4,900
Debt issuance costs	—			(480		)	(703		)	—			(480		)	—			(1,663		)
Repurchase of common shares	(7,828		)	—			—			—			—			—			(7,828		)
Intercompany distributions	—			(87,325		)	(15,000		)	(43,336		)	(69,520		)	215,181			—
CASH USED FOR FINANCING ACTIVITIES	(87,805		)	(87,805		)	(90,703		)	(38,436		)	(70,000		)	215,181			(159,568		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			—			232			—			—			232
CASH AND CASH EQUIVALENTS
Change in cash and cash equivalents	—			15,968			(50,925		)	10,465			(10,791		)	—			(35,283		)
Balance, beginning of year	—			29,759			283,258			1,280			35,166			—			349,463
Balance, end of period	$	—		$	45,727		$	232,333		$	11,745		$	24,375		$	—		$	314,180

In March 2012, Rayonier Inc. issued $325 million of 3.75% Senior Notes due 2022. The notes are fully and unconditionally guaranteed by the following subsidiaries of Rayonier Inc.: ROC, Rayonier Louisiana Timberlands LLC, Rayonier TRS Holdings Inc. and substantially all domestic subsidiaries of TRS Holdings Inc. In connection with these 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 AND COMPREHENSIVE INCOME For the Three Months Ended June 30, 2012
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			All Other Subsidiaries (Non- guarantors)			Consolidating Adjustments			Total Consolidated
SALES	$	—		$	315,293		$	73,518		$	(16,885	)	$	371,926
Costs and Expenses
Cost of sales	—			224,027			53,534			(15,006		)	262,555
Selling and general expenses	—			11,841			4,409			—			16,250
Other operating income, net	—			(2,561		)	(3,889		)	1,151			(5,299		)
	—			233,307			54,054			(13,855		)	273,506
Equity in income of New Zealand joint venture	—			—			170			—			170
OPERATING INCOME	—			81,986			19,634			(3,030		)	98,590
Interest expense	(3,117		)	(12,089		)	(850		)	—			(16,056		)
Interest and miscellaneous income (expense), net	1,544			(3,320		)	1,861			—			85
Equity in income from subsidiaries	70,652			17,014			—			(87,666		)	—
INCOME BEFORE INCOME TAXES	69,079			83,591			20,645			(90,696		)	82,619
Income tax expense	—			(12,939		)	(601		)	—			(13,540		)
NET INCOME	69,079			70,652			20,044			(90,696		)	69,079
OTHER COMPREHENSIVE LOSS	(6,678		)	(6,678		)	(10,079		)	16,757			(6,678		)
COMPREHENSIVE INCOME	$	62,401		$	63,974		$	9,965		$	(73,939	)	$	62,401



	CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the Three Months Ended June 30, 2011
	Rayonier Inc. (Parent Issuer)		Subsidiary Guarantors			All Other Subsidiaries (Non- guarantors)			Consolidating Adjustments			Total Consolidated
SALES	$	—	$	294,277		$	80,123		$	(17,003	)	$	357,397
Costs and Expenses
Cost of sales	—		217,793			63,571			(18,592		)	262,772
Selling and general expenses	—		11,785			4,207			—			15,992
Other operating expense (income), net	—		794			(85		)	—			709
	—		230,372			67,693			(18,592		)	279,473
Equity in income of New Zealand joint venture	—		—			1,149			—			1,149
OPERATING INCOME	—		63,905			13,579			1,589			79,073
Interest expense	—		(12,566		)	(62		)	—			(12,628		)
Interest and miscellaneous (expense) income, net	—		(4,823		)	5,137			—			314
Equity in income from subsidiaries	56,454		20,328			—			(76,782		)	—
INCOME BEFORE INCOME TAXES	56,454		66,844			18,654			(75,193		)	66,759
Income tax (expense) benefit	—		(10,390		)	85			—			(10,305		)
NET INCOME	56,454		56,454			18,739			(75,193		)	56,454
OTHER COMPREHENSIVE INCOME	10,235		10,235			8,142			(18,377		)	10,235
COMPREHENSIVE INCOME	$	66,689	$	66,689		$	26,881		$	(93,570	)	$	66,689



	CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the Six Months Ended June 30, 2012
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			All Other Subsidiaries (Non- guarantors)			Consolidating Adjustments			Total Consolidated
SALES	$	—		$	627,935		$	134,485		$	(34,714	)	$	727,706
Costs and Expenses
Cost of sales	—			451,535			99,898			(35,565		)	515,868
Selling and general expenses	—			27,539			8,329			—			35,868
Other operating income, net	—			(1,581		)	(6,017		)	1,152			(6,446		)
	—			477,493			102,210			(34,413		)	545,290
Equity in income of New Zealand joint venture	—			—			184			—			184
OPERATING INCOME	—			150,442			32,459			(301		)	182,600
Interest expense	(4,366		)	(21,867		)	(1,647		)	—			(27,880		)
Interest and miscellaneous income (expense), net	3,455			(7,109		)	3,713			—			59
Equity in income from subsidiaries	123,426			33,669			—			(157,095		)	—
INCOME BEFORE INCOME TAXES	122,515			155,135			34,525			(157,396		)	154,779
Income tax expense	—			(31,709		)	(555		)	—			(32,264		)
NET INCOME	122,515			123,426			33,970			(157,396		)	122,515
OTHER COMPREHENSIVE INCOME (LOSS)	3,493			3,493			(3,049		)	(444		)	3,493
COMPREHENSIVE INCOME	$	126,008		$	126,919		$	30,921		$	(157,840	)	$	126,008



	CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the Six Months Ended June 30, 2011
	Rayonier Inc. (Parent Issuer)		Subsidiary Guarantors			All Other Subsidiaries (Non- guarantors)			Consolidating Adjustments			Total Consolidated
SALES	$	—	$	590,528		$	154,970		$	(30,371	)	$	715,127
Costs and Expenses
Cost of sales	—		433,359			120,299			(33,375		)	520,283
Selling and general expenses	—		24,554			7,871			—			32,425
Other operating expense (income), net	—		1,854			(3,262		)	(1		)	(1,409		)
	—		459,767			124,908			(33,376		)	551,299
Equity in income of New Zealand joint venture	—		—			2,823			—			2,823
OPERATING INCOME	—		130,761			32,885			3,005			166,651
Interest expense	—		(25,858		)	(87		)	—			(25,945		)
Interest and miscellaneous (expense) income, net	—		(9,586		)	10,191			—			605
Equity in income from subsidiaries	114,865		45,702			—			(160,567		)	—
INCOME BEFORE INCOME TAXES	114,865		141,019			42,989			(157,562		)	141,311
Income tax expense	—		(26,154		)	(292		)	—			(26,446		)
NET INCOME	114,865		114,865			42,697			(157,562		)	114,865
OTHER COMPREHENSIVE INCOME	12,049		12,049			7,861			(19,910		)	12,049
COMPREHENSIVE INCOME	$	126,914	$	126,914		$	50,558		$	(177,472	)	$	126,914



	CONDENSED CONSOLIDATING BALANCE SHEETS As of June 30, 2012
	Rayonier Inc. (Parent Issuer)		Subsidiary Guarantors		All Other Subsidiaries (Non- guarantors)		Consolidating Adjustments			Total Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	97,335	$	45,695	$	46,073	$	—		$	189,103
Accounts receivable, less allowance for doubtful accounts	—		100,423		8,871		—			109,294
Inventory	—		125,688		993		(13,830		)	112,851
Intercompany interest receivable	—		—		3,111		(3,111		)	—
Prepaid and other current assets	—		81,623		7,460		—			89,083
Total current assets	97,335		353,429		66,508		(16,941		)	500,331
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	—		115,833		1,378,803		1,789			1,496,425
NET PROPERTY, PLANT AND EQUIPMENT	—		558,690		4,086		—			562,776
INVESTMENT IN JOINT VENTURE	—		—		64,454		—			64,454
INVESTMENT IN SUBSIDIARIES	1,383,682		839,141		—		(2,222,823		)	—
INTERCOMPANY NOTES RECEIVABLE	204,476		—		—		(204,476		)	—
OTHER ASSETS	3,544		694,655		43,955		(549,563		)	192,591
TOTAL ASSETS	$	1,689,037	$	2,561,748	$	1,557,806	$	(2,992,014	)	$	2,816,577
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	—	$	68,140	$	4,592	$	—		$	72,732
Accrued taxes	—		36,879		4,082		—			40,961
Accrued payroll and benefits	—		20,853		2,452		—			23,305
Accrued interest	3,927		14,158		609		—			18,694
Accrued customer incentives	—		7,031		—		—			7,031
Other current liabilities	—		10,096		14,091		—			24,187
Current liabilities for dispositions and discontinued operations	—		9,843		—		—			9,843
Total current liabilities	3,927		167,000		25,826		—			196,753
LONG-TERM DEBT	325,000		604,997		88,096		—			1,018,093
NON-CURRENT LIABILITIES FOR DISPOSITIONS AND DISCONTINUED OPERATIONS	—		76,596		—		—			76,596
PENSION AND OTHER POSTRETIREMENT BENEFITS	—		140,073		—		—			140,073
OTHER NON-CURRENT LIABILITIES	—		23,469		1,483		—			24,952
INTERCOMPANY PAYABLE	—		165,931		226,317		(392,248		)	—
TOTAL LIABILITIES	328,927		1,178,066		341,722		(392,248		)	1,456,467
TOTAL SHAREHOLDERS’ EQUITY	1,360,110		1,383,682		1,216,084		(2,599,766		)	1,360,110
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,689,037	$	2,561,748	$	1,557,806	$	(2,992,014	)	$	2,816,577



	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		)	—
Prepaid and other current assets	—		39,366		9,527		—			48,893
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 taxes	—		3,838		1,385		—			5,223
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	—		10,319		7,536		—			17,855
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 STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 2012
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			All Other Subsidiaries (Non- guarantors)			Consolidating Adjustments			Total Consolidated
CASH PROVIDED BY OPERATING ACTIVITIES	$	3,173		$	139,606		$	81,097		$	(15,000	)	$	208,876
INVESTING ACTIVITIES
Capital expenditures	—			(58,219		)	(18,027		)	—			(76,246		)
Purchase of timberlands	—			(101		)	(8,586		)	—			(8,687		)
Jesup mill cellulose specialties expansion	—			(63,998		)	—			—			(63,998		)
Change in restricted cash	—			—			(14,427		)	—			(14,427		)
Investment in Subsidiaries	(5,181		)	—			—			5,181			—
Other	—			(1,030		)	326			—			(704		)
CASH USED FOR INVESTING ACTIVITIES	(5,181		)	(123,348		)	(40,714		)	5,181			(164,062		)
FINANCING ACTIVITIES
Issuance of debt	325,000			15,000			15,000			—			355,000
Repayment of debt	(120,000		)	(53,110		)	(15,000		)	—			(188,110		)
Dividends paid	(98,201		)	—			—			—			(98,201		)
Proceeds from the issuance of common shares	3,980			—			—			—			3,980
Excess tax benefits on stock-based compensation	—			4,234			—			—			4,234
Debt issuance costs	(3,653		)	—			—			—			(3,653		)
Repurchase of common shares	(7,783		)	—			—			—			(7,783		)
Intercompany distributions	—			5,181			(15,000		)	9,819			—
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES	99,343			(28,695		)	(15,000		)	9,819			65,467
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			219			—			219
CASH AND CASH EQUIVALENTS
Change in cash and cash equivalents	97,335			(12,437		)	25,602			—			110,500
Balance, beginning of year	—			58,132			20,471			—			78,603
Balance, end of period	$	97,335		$	45,695		$	46,073		$	—		$	189,103



	CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 2011
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			All Other Subsidiaries (Non- guarantors)			Consolidating Adjustments			Total Consolidated
CASH PROVIDED BY OPERATING ACTIVITIES	$	87,805		$	178,470		$	85,437		$	(156,845	)	$	194,867
INVESTING ACTIVITIES
Capital expenditures	—			(48,003		)	(17,208		)	—			(65,211		)
Purchase of timberlands	—			—			(12,976		)	—			(12,976		)
Jesup mill cellulose specialties expansion	—			(3,576		)	—			—			(3,576		)
Change in restricted cash	—			—			8,323			—			8,323
Other	—			2,698			(72		)	—			2,626
CASH USED FOR INVESTING ACTIVITIES	—			(48,881		)	(21,933		)	—			(70,814		)
FINANCING ACTIVITIES
Issuance of debt	—			—			70,000			—			70,000
Repayment of debt	—			(75,000		)	(70,000		)	—			(145,000		)
Dividends paid	(87,871		)	—			—			—			(87,871		)
Proceeds from the issuance of common shares	7,894			—			—			—			7,894
Excess tax benefits on stock-based compensation	—			4,900			—			—			4,900
Debt issuance costs	—			(1,183		)	(480		)	—			(1,663		)
Repurchase of common shares	(7,828		)	—			—			—			(7,828		)
Intercompany distributions	—			(87,325		)	(69,520		)	156,845			—
CASH USED FOR FINANCING ACTIVITIES	(87,805		)	(158,608		)	(70,000		)	156,845			(159,568		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			232			—			232
CASH AND CASH EQUIVALENTS
Change in cash and cash equivalents	—			(29,019		)	(6,264		)	—			(35,283		)
Balance, beginning of year	—			303,746			45,717			—			349,463
Balance, end of period	$	—		$	274,727		$	39,453		$	—		$	314,180