o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
PAGE | ||||
Item 2.02. | ||||
Item 4.02. | ||||
Item 5.02. | ||||
Item 8.01. | ||||
Item 9.01. | ||||
ITEM 2.02. | Results of Operations and Financial Condition |
ITEM 4.02. | Nonreliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review |
ITEM 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers |
ITEM 8.01 | Other Events |
• | enhancing senior finance management supervision and review of the depletion rate estimates and coordination with Rayonier’s technical and operations personnel as to volumes of merchantable timber included in the calculation of depletion expense, |
• | instituting more formal procedures around the review and approval of changes to the estimate of merchantable timber inventory and its effect on the calculation of depletion expense, and |
• | implementing controls over user access and changes to system data used in the depletion rate estimates. |
ITEM 9.01. | Financial Statements and Exhibits |
(d) | Exhibits. |
Exhibit No. | Exhibit | ||
99.1 | Press release dated November 10, 2014. |
RAYONIER INC. (Registrant) | ||
BY: | /s/ H. EDWIN KIKER | |
H. Edwin Kiker | ||
Senior Vice President and Chief Financial Officer | ||
EXHIBIT NO. | DESCRIPTION | LOCATION | ||
99.1 | Press release dated November 10, 2014. | Furnished herewith. |
News Release |
Contact | ||
Investors | Ed Kiker | 904-357-9186 |
Media | James Golden/Mahmoud Siddig Joele Frank, Wilkinson Brimmer Katcher | 212-355-4449 |
• | Announces results of internal review of the Company’s operations |
• | Realigns strategy and lowers future expected harvest volumes to support sustainable timber harvesting |
• | Revises guidance for 2014 and provides outlook for 2015 |
• | Reduces regular quarterly dividend |
• | Restates financial results for the first and second quarters of 2014 to correct understatements in depletion expense and corresponding overstatements in income from continuing operations |
• | Amends Form 10-K to correct merchantable timber inventory and reflect material weakness |
Three Months Ended | |||||||||||||
(millions of dollars, except earnings per share (EPS)) | September 30, 2014 | September 30, 2013 | |||||||||||
$ | EPS | $ | EPS | ||||||||||
Net income attributable to Rayonier | $33 | $0.25 | $57 | $0.44 | |||||||||
Cumulative adjustment for out-of-period error in depletion expense4 | 3 | 0.02 | — | — | |||||||||
Discontinued operations, net1 | — | — | (43 | ) | (0.33 | ) | |||||||
Pro forma net income2 | $36 | $0.27 | $14 | $0.11 | |||||||||
Nine Months Ended | |||||||||||||
(millions of dollars, except earnings per share (EPS)) | September 30, 2014 | September 30, 2013 | |||||||||||
$ | EPS | $ | EPS | ||||||||||
Net income attributable to Rayonier | $90 | $0.69 | $292 | $2.23 | |||||||||
Cost related to the spin-off of the Performance Fibers business | 4 | 0.03 | — | — | |||||||||
Gain related to consolidation of New Zealand JV3 | — | — | (16 | ) | (0.12 | ) | |||||||
Cumulative adjustment for out-of-period error in depletion expense4 | 3 | 0.02 | — | — | |||||||||
Discontinued operations, net1 | (43 | ) | (0.33 | ) | (220 | ) | (1.68 | ) | |||||
Pro forma net income2 | $54 | $0.41 | $56 | $0.43 | |||||||||
• | The Company included in the merchantable timber inventory disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (the “Initial Form 10-K”), timber in specially designated parcels located in restricted, environmentally sensitive or economically inaccessible areas. The inclusion of this timber was incorrect, inconsistent with Rayonier’s historical definition of merchantable timber inventory, and a significant change from prior years. The Company’s revised estimate of merchantable timber inventory, as of December 31, 2013, is set forth below. |
(Tons in 000s) | As disclosed in the Initial Form 10-K | As disclosed in the Amended Form 10-K | Percentage Difference | ||||||||
Atlantic | 37,121 | 34,324 | (8 | )% | |||||||
Gulf | 28,534 | 24,641 | (14 | )% | |||||||
Northern | 9,097 | 7,370 | (19 | )% | |||||||
New Zealand | 13,792 | 13,792 | — | % | |||||||
Total | 88,544 | 80,127 | (10 | )% | |||||||
• | For roughly a decade, the average rate at which Rayonier harvested timber in the U.S. Pacific Northwest exceeded the rate those timberlands could support on a long-term basis. Going forward, Rayonier intends to manage its timberlands on a “sustainable yield” basis; that is, Rayonier expects to harvest, on average, levels of timber that can be sustained into perpetuity based on its estimates of biological growth and the expected productivity resulting from its reforestation and silvicultural efforts. Rayonier estimates that the annual sustainable yield in its timberlands in the U.S. Pacific Northwest is approximately 160 MMBF (or 1.3 million tons), as compared to the average annual harvest level over the past ten years (2004 to 2013) of approximately 228 MMBF (or 1.8 million tons). Rayonier anticipates reducing the harvest level in its timberlands in the U.S. Pacific Northwest to 125 MMBF (or 1.0 million tons) annually by 2017 and maintaining that level for approximately five to ten years thereafter in order to allow for inventory replenishment and age class smoothing. Rayonier expects that its average annual harvest level in its timberlands in the U.S. Pacific Northwest for 2015 through 2019 will be approximately 140 MMBF (or 1.1 million tons). |
• | Rayonier has periodically generated income and cash flow from the sale of non-strategic timberlands. Going forward, Rayonier expects to reduce its reliance on planned sales of non-strategic timberlands to augment cash flow generation and instead rely primarily on supporting cash flow from the operation, rather than sale, of its timberlands. Rayonier believes that reducing reliance on the sale of such properties to augment cash flow generation will support the sustainability of its timberlands and harvesting activities over the long-term. Over the past five years (2009 to 2013), sales of non-strategic timberlands totaled approximately 157,000 acres and $233 million (excluding 128,000 acres and $57 million for the sale of Rayonier’s New York timberlands in 2013). Rayonier expects that sales of non-strategic timberlands will be significantly lower going forward. |
• | On November 7, 2014, Rayonier’s Board of Directors declared a fourth quarter cash dividend of $0.25 per common share, payable on December 31, 2014, to shareholders of record on December 17, 2014. This represents a 17% reduction from the third quarter dividend of $0.30 per common share, reflecting Rayonier’s expectation of reduced cash available for distribution due to lower expected annual harvest levels, as well as reduced reliance on sales of non-strategic timberlands to augment cash flow generation. |
• | As a result of the incorrect and inconsistent inclusion of timber in specially designated parcels located in restricted, environmentally sensitive or economically inaccessible areas in the merchantable timber inventory for 2014 as discussed above, Rayonier concluded that it understated depletion expense in cost of goods sold in the quarterly periods ended March 31, 2014 and June 30, 2014, which resulted in a corresponding overstatement of income from continuing operations. In addition, management determined that there was a material weakness in Rayonier’s internal controls related to merchantable timber inventory as of December 31, 2013, March 31, 2014, June 30, 2014 and September 30, 2014. The Company has filed amendments to its Forms 10-Q for the quarterly periods ended March 31, 2014 and June 30, 2014 and restated its interim consolidated financial statements for those periods. Rayonier determined that errors in depletion expense calculated in the years ended December 31, 2013, and 2012 were immaterial and did not require restatement. The cumulative effect of the immaterial errors in depletion expense for these and prior periods are reflected in Rayonier’s financial statements for the third quarter of 2014 as an out-of-period adjustment. |
• | Manage Timberlands on a Sustainable Yield Basis for Long-Term Results: The Company intends to actively manage its timberlands to maximize net present value over the long term by achieving an optimal balance among biological timber growth, generation of cash flow from harvesting activities, and responsible environmental stewardship. Going forward, Rayonier’s harvesting strategy is designed to produce a long-term, sustainable yield, although it may adjust harvest levels periodically to capitalize on then-current economic conditions in its markets. |
• | Increase the Size and Quality of Timberland Holdings through Acquisitions: Rayonier intends to selectively pursue timberland acquisition opportunities that improve the average productivity of its timberland holdings and support cash flow generation from harvesting activities. The Company will maintain a disciplined approach and rigorous adherence to strategic and financial metrics in its acquisition strategy. The Company generally expects to focus its acquisition efforts in the most commercially desirable timber-producing regions of the U.S. South and U.S. Pacific Northwest, particularly on timberlands with an age class profile that complements the age class profile of its existing timberland holdings. |
• | Optimize Portfolio Value: Rayonier continuously assesses potential alternative uses of its timberlands, as some of its properties may become more valuable for development, conservation, recreation or other purposes. The Company intends to capitalize on the value of its portfolio by opportunistically monetizing such higher and better use (“HBU”) properties. While the majority of Rayonier’s HBU sales involve rural and recreational land, the Company also selectively pursues various land-use entitlements on certain properties for residential and industrial development, including mega-site certified industrial and commercial properties, in order to enhance the long-term value potential of such properties. The Company generally expects that sales of HBU property (i.e., rural HBU and development HBU) will comprise approximately 1% of its Southern timberland holdings on an annual basis. |
• | Focus on Timberland Operations to Support Cash Flow Generation: Rayonier periodically generates income and cash flow from the sale of non-strategic timberlands, in particular as the Company seeks to optimize its portfolio by disposing of less desirable properties. However, going forward, the Company expects to reduce its reliance on planned sales of non-HBU timberlands to augment cash flow generation and instead rely primarily on supporting cash flow from the operation, rather than sale, of its timberlands. Reducing reliance on the sale of such properties to augment cash flow generation will support the sustainability of Rayonier’s harvesting activities over the long term. |
• | Promote Best-in-Class Disclosure and Responsible Stewardship: Rayonier intends to become an industry leader in transparent disclosure, particularly relating to its timberland holdings and harvest schedules. In addition, the Company is committed to responsible stewardship and environmentally and economically sustainable forestry. Rayonier believes that its continued commitment to transparency and stewardship of its |
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||
2014 | 2014 | 2013 | 2014 | 2013 | ||||||||||
(Restated) | ||||||||||||||
SALES | $149.8 | $163.1 | $159.3 | $456.2 | $421.2 | |||||||||
Costs and Expenses | ||||||||||||||
Cost of sales | 118.1 | 123.1 | 129.0 | 357.1 | 333.5 | |||||||||
Selling and general expenses | 8.8 | 13.9 | 13.1 | 35.9 | 41.2 | |||||||||
Other operating income, net | (9.2 | ) | (11.5 | ) | (2.8 | ) | (20.9 | ) | (11.1 | ) | ||||
OPERATING INCOME BEFORE GAIN ON CONSOLIDATION OF NEW ZEALAND JOINT VENTURE | 32.1 | 37.6 | 20.0 | 84.1 | 57.6 | |||||||||
Gain related to consolidation of New Zealand joint venture | — | — | — | — | 16.1 | |||||||||
OPERATING INCOME | 32.1 | 37.6 | 20.0 | 84.1 | 73.7 | |||||||||
Interest expense | (9.6 | ) | (15.6 | ) | (10.8 | ) | (35.9 | ) | (30.6 | ) | ||||
Interest and miscellaneous (expense) income, net | (1.7 | ) | (4.4 | ) | (1.0 | ) | (7.1 | ) | 1.8 | |||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 20.8 | 17.6 | 8.2 | 41.1 | 44.9 | |||||||||
Income tax benefit (expense) | 11.3 | (13.6 | ) | 6.8 | 5.3 | 28.8 | ||||||||
INCOME FROM CONTINUING OPERATIONS | 32.1 | 4.0 | 15.0 | 46.4 | 73.7 | |||||||||
Income from discontinued operations, net | — | 12.1 | 43.4 | 43.1 | 220.2 | |||||||||
NET INCOME | 32.1 | 16.1 | 58.4 | 89.5 | 293.9 | |||||||||
Less: Net (loss) income attributable to noncontrolling interest | (0.6 | ) | (0.3 | ) | 1.0 | (1.0 | ) | 1.7 | ||||||
NET INCOME ATTRIBUTABLE TO RAYONIER INC. | $32.7 | $16.4 | $57.4 | $90.5 | $292.2 | |||||||||
EARNINGS PER COMMON SHARE | ||||||||||||||
BASIC EARNINGS PER SHARE ATTRIBUTABLE TO RAYONIER INC. | ||||||||||||||
Continuing Operations | $0.26 | $0.03 | $0.11 | $0.38 | $0.57 | |||||||||
Discontinued Operations | — | 0.10 | 0.34 | 0.34 | 1.76 | |||||||||
Net Income | $0.26 | $0.13 | $0.45 | $0.72 | $2.33 | |||||||||
DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO RAYONIER INC. | ||||||||||||||
Continuing Operations | $0.25 | $0.03 | $0.11 | $0.36 | $0.55 | |||||||||
Discontinued Operations | — | 0.09 | 0.33 | 0.33 | 1.68 | |||||||||
Net Income | $0.25 | $0.12 | $0.44 | $0.69 | $2.23 | |||||||||
Pro forma Net Income (a) | $0.27 | $0.06 | $0.11 | $0.41 | $0.43 | |||||||||
Weighted Average Common | ||||||||||||||
Shares used for determining | ||||||||||||||
Basic EPS | 126,501,837 | 126,434,376 | 126,122,151 | 126,428,279 | 125,549,133 | |||||||||
Diluted EPS | 129,790,513 | 132,299,665 | 130,913,404 | 131,681,660 | 130,788,974 |
September 30, | December 31, | |||||
2014 | 2013 (a) | |||||
Assets | ||||||
Cash and cash equivalents | $182.8 | $199.6 | ||||
Other current assets | 68.8 | 319.5 | ||||
Timber and timberlands, net of depletion and amortization | 2,058.4 | 2,049.4 | ||||
Property, plant and equipment | 14.4 | 1,981.1 | ||||
Less - accumulated depreciation | (7.9 | ) | (1,120.3 | ) | ||
Net property, plant and equipment | 6.5 | 860.8 | ||||
Other assets | 161.1 | 256.2 | ||||
$2,477.6 | $3,685.5 | |||||
Liabilities and Shareholders’ Equity | ||||||
Current maturities of long-term debt | $130.5 | $112.5 | ||||
Other current liabilities | 81.1 | 163.6 | ||||
Long-term debt | 605.2 | 1,461.7 | ||||
Non-current liabilities for dispositions and discontinued operations | — | 69.5 | ||||
Other non-current liabilities | 49.9 | 122.9 | ||||
Total Rayonier Inc. shareholders’ equity | 1,524.3 | 1,661.2 | ||||
Noncontrolling interest | 86.6 | 94.1 | ||||
Total shareholders’ equity | 1,610.9 | 1,755.3 | ||||
$2,477.6 | $3,685.5 |
(a) | Includes the Performance Fibers business that was spun-off on June 27, 2014. |
Nine Months Ended September 30, | ||||||
2014 | 2013 | |||||
Cash provided by operating activities: | ||||||
Net income | $89.5 | $293.9 | ||||
Depreciation, depletion and amortization | 92.5 | 81.7 | ||||
Non-cash cost of real estate sold | 6.5 | 4.3 | ||||
Gain on sale of discontinued operations, net | — | (42.7 | ) | |||
Depreciation, depletion and amortization from discontinued operations | 38.0 | 51.7 | ||||
Other items to reconcile net income to cash provided by operating activities | 10.1 | 32.7 | ||||
Changes in working capital and other assets and liabilities | 44.1 | (17.1 | ) | |||
Tax payment to IRS to exchange AFMC for CBPC | — | (70.3 | ) | |||
280.7 | 334.2 | |||||
Cash used for investing activities: | ||||||
Capital expenditures | (105.7 | ) | (122.1 | ) | ||
Purchase of additional interest in New Zealand joint venture | — | (139.9 | ) | |||
Purchase of timberlands | (93.2 | ) | (11.7 | ) | ||
Jesup mill cellulose specialties expansion (gross purchases of $0 and $140.8, net of purchases on account of $0 and $3.4) | — | (137.4 | ) | |||
Proceeds from disposition of Wood Products business | — | 68.1 | ||||
Change in restricted cash | 47.3 | 4.0 | ||||
Other | (0.4 | ) | (0.2 | ) | ||
(152.0 | ) | (339.2 | ) | |||
Cash used for financing activities: | ||||||
Increase in debt, net of issuance costs | 109.8 | 154.4 | ||||
Dividends paid | (225.9 | ) | (175.1 | ) | ||
Proceeds from the issuance of common shares | 4.6 | 9.2 | ||||
Excess tax benefits on stock-based compensation | — | 8.2 | ||||
Repurchase of common shares | (1.8 | ) | (11.3 | ) | ||
Purchase of timberland deeds for Rayonier Advanced Materials | (12.7 | ) | — | |||
Debt issuance funds distributed to Rayonier Advanced Materials | (924.9 | ) | — | |||
Proceeds from spin-off of Rayonier Advanced Materials | 906.2 | — | ||||
Other | (0.7 | ) | — | |||
(145.4 | ) | (14.6 | ) | |||
Effect of exchange rate changes on cash | (0.1 | ) | (0.3 | ) | ||
Cash and cash equivalents: | ||||||
Change in cash and cash equivalents | (16.8 | ) | (19.9 | ) | ||
Balance, beginning of year | 199.6 | 280.6 | ||||
Balance, end of period | $182.8 | $260.7 |
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||
2014 | 2014 | 2013 | 2014 | 2013 | ||||||||||
(Restated) | ||||||||||||||
Sales | ||||||||||||||
Forest Resources | $108.0 | $101.1 | $111.3 | $313.8 | $277.4 | |||||||||
Real Estate | 26.7 | 34.0 | 14.1 | 66.2 | 51.8 | |||||||||
Other Operations | 15.1 | 29.2 | 34.0 | 80.0 | 92.5 | |||||||||
Intersegment Eliminations | — | (1.2 | ) | (0.1 | ) | (3.8 | ) | (0.5 | ) | |||||
Total sales | $149.8 | $163.1 | $159.3 | $456.2 | $421.2 | |||||||||
Pro forma operating income (a) | ||||||||||||||
Forest Resources (a) | $21.8 | $19.9 | $23.2 | $67.3 | $57.3 | |||||||||
Real Estate | 16.4 | 27.8 | 7.5 | 44.9 | 30.5 | |||||||||
Other Operations | 2.5 | (0.1 | ) | (0.4 | ) | 2.0 | 1.4 | |||||||
Corporate and other (a) | (6.0 | ) | (10.0 | ) | (10.3 | ) | (27.5 | ) | (31.6 | ) | ||||
Pro forma operating income (a) | $34.7 | $37.6 | $20.0 | $86.7 | $57.6 |
(a) | The three and nine months ended September 30, 2014 exclude $2.6 million of expense in the Forest Resources segment related to a cumulative out-of period adjustment for depletion expense. The nine months ended September 30, 2013 excludes a $16.1 million gain related to the consolidation of the New Zealand joint venture. Pro forma operating income is a non-GAAP measure. See Schedule E for reconciliation. |
CASH AVAILABLE FOR DISTRIBUTION (a): | ||||||||||||
Three Months Ended | Six Months Ended | Nine Months Ended | ||||||||||
March 31, | June 30 | September 30, | September 30, | |||||||||
2014 (c) | 2014 | 2014 | 2013 | |||||||||
Cash provided by operating activities | $99.3 | $226.4 | $280.7 | $334.2 | ||||||||
Capital expenditures (b) | (36.8 | ) | (80.5 | ) | (105.7 | ) | (122.1 | ) | ||||
Change in committed cash | 4.7 | 4.8 | 5.0 | 0.5 | ||||||||
Excess tax benefits on stock-based compensation | (1.2 | ) | — | — | 8.2 | |||||||
Other | 5.6 | 3.7 | 3.8 | 1.0 | ||||||||
Discontinued operations | — | (64.1 | ) | (64.1 | ) | (127.1 | ) | |||||
Cash Available for Distribution | $71.6 | $90.3 | $119.7 | $94.7 |
EBITDA and Adjusted EBITDA: | |||||||||||||||
Three Months Ended | |||||||||||||||
As Previously Reported (c) | As Restated (c) | As Previously Reported | As Restated | ||||||||||||
March 31, 2014 | June 30, 2014 | September 30, 2014 | |||||||||||||
Net income | $43.3 | $41.3 | $18.1 | $16.1 | $32.1 | ||||||||||
Interest, net, continuing operations | 14.0 | 14.0 | 16.2 | 16.2 | 11.3 | ||||||||||
Income tax expense (benefit), continuing operations | 7.7 | 7.7 | 13.5 | 13.5 | (11.3 | ) | |||||||||
Depreciation, depletion and amortization | 46.8 | 48.8 | 28.3 | 30.3 | 34.0 | ||||||||||
Discontinued operations (d) | — | — | 28.6 | 28.6 | — | ||||||||||
EBITDA (e) | 111.8 | 111.8 | 104.7 | 104.7 | 66.1 | ||||||||||
Non-cash cost of real estate sold | 1.0 | 1.0 | 2.3 | 2.3 | 3.2 | ||||||||||
Adjusted EBITDA (f) | $112.8 | $112.8 | $107.0 | $107.0 | $69.3 | ||||||||||
Six Months Ended | Nine Months Ended | Forecast | |||||||||||||
As Previously Reported | As Restated | ||||||||||||||
June 30, 2014 | September 30, 2014 | 2015 | |||||||||||||
Net income | $61.5 | $57.5 | $89.5 | ~ $65 - 75 | |||||||||||
Interest, net, continuing operations | 27.9 | 27.9 | 39.2 | ~ $30 | |||||||||||
Income tax expense (benefit), continuing operations | 5.9 | 5.9 | (5.3 | ) | ~ ($5 - 10) | ||||||||||
Depreciation, depletion and amortization | 54.5 | 58.5 | 92.5 | ~ $105 - $110 | |||||||||||
Discontinued operations (d) | 66.6 | 66.6 | 66.6 | — | |||||||||||
EBITDA (e) | 216.4 | 216.4 | 282.5 | ~ $190 - $210 | |||||||||||
Non-cash cost of real estate sold | 3.3 | 3.3 | 6.5 | ~ $10 | |||||||||||
Adjusted EBITDA (f) | $219.7 | $219.7 | $289.0 | ~ $200 - $220 |
(a) | Cash Available for Distribution (CAD) is defined as cash provided by operating activities adjusted for capital spending, strategic divestitures, the change in committed cash, and other items which include cash provided by discontinued operations, excess tax benefits on stock-based compensation and the change in capital expenditures purchased on account. CAD is a non-GAAP measure of cash generated during a period that is available for dividend distribution, repurchase of the Company’s common shares, debt reduction and strategic acquisitions. CAD is not necessarily indicative of the CAD that may be generated in future periods. |
(b) | Capital expenditures exclude strategic capital of $10.6 million, $74.8 million and $93.2 million for timberland acquisitions during the year-to-date periods ended March 31, 2014, June 30, 2014 and September 30, 2014, respectively. For the nine months ended September 30, 2013, strategic capital totaled $139.9 million for the additional interest in the New Zealand joint venture and $11.7 million for timberland acquisitions. |
(c) | Includes the Performance Fibers business that was spun-off on June 27, 2014. |
(d) | Includes income, interest, income tax expense, and depreciation and amortization from discontinued operations. |
(e) | EBITDA is defined as earnings before interest, taxes, depreciation, depletion and amortization. EBITDA is a non-GAAP measure used by our Chief Operating Decision Maker, existing shareholders and potential shareholders to measure how the Company is performing relative to the assets under management. |
(f) | Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, depletion, amortization and the non-cash basis of real estate sold. Adjusted EBITDA is a non-GAAP measure used by our Chief Operating Decision Maker, existing shareholders and potential shareholders to measure how the Company is performing relative to the assets under management. |
PRO FORMA OPERATING INCOME AND NET INCOME: | ||||||||||||||||||
Three Months Ended | ||||||||||||||||||
September 30, 2014 | June 30, 2014 | September 30, 2013 | ||||||||||||||||
(Restated) | ||||||||||||||||||
$ | Per Diluted Share | $ | Per Diluted Share | $ | Per Diluted Share | |||||||||||||
Operating income | $32.1 | $37.6 | $20.0 | |||||||||||||||
Cumulative adjustment for out-of-period error in depletion expense (a) | 2.6 | — | — | |||||||||||||||
Pro forma operating income | $34.7 | $37.6 | $20.0 | |||||||||||||||
Net income attributable to Rayonier Inc. | $32.7 | $0.25 | $16.4 | $0.12 | $57.4 | $0.44 | ||||||||||||
Cost related to the spin-off of the Performance Fibers business | — | — | 3.8 | 0.03 | — | — | ||||||||||||
Cumulative adjustment for out-of-period error in depletion expense (a) | 2.6 | 0.02 | — | — | — | — | ||||||||||||
Discontinued operations, net | — | — | (12.1 | ) | (0.09 | ) | (43.4 | ) | (0.33 | ) | ||||||||
Pro forma net income | $35.3 | $0.27 | $8.1 | $0.06 | $14.0 | $0.11 | ||||||||||||
Nine Months Ended | ||||||||||||||||||
September 30, 2014 | September 30, 2013 | |||||||||||||||||
$ | Per Diluted Share | $ | Per Diluted Share | |||||||||||||||
Operating income | $84.1 | $73.7 | ||||||||||||||||
Gain related to consolidation of New Zealand joint venture | — | (16.1 | ) | |||||||||||||||
Cumulative adjustment for out-of-period error in depletion expense (a) | 2.6 | — | ||||||||||||||||
Pro forma operating income | $86.7 | $57.6 | ||||||||||||||||
Net income attributable to Rayonier Inc. | $90.5 | $0.69 | $292.2 | $2.23 | ||||||||||||||
Gain related to consolidation of New Zealand joint venture | — | — | (16.1 | ) | (0.12 | ) | ||||||||||||
Cost related to the spin-off of the Performance Fibers business | 3.8 | 0.03 | — | — | ||||||||||||||
Cumulative adjustment for out-of-period error in depletion expense (a) | 2.6 | 0.02 | — | — | ||||||||||||||
Discontinued operations | (43.1 | ) | (0.33 | ) | (220.2 | ) | (1.68 | ) | ||||||||||
Pro forma net income | $53.8 | $0.41 | $55.9 | $0.43 |
(a) | In reviewing its depletion expense calculation, the Company determined that prior years included immaterial understatements of depletion expense as a result of including in merchantable timber inventory certain volumes that should have been excluded. The estimated cumulative effect of these prior year immaterial errors were recorded as additional depletion expense in the third quarter of 2014. |
Condensed Statements of Consolidated Income and Non-GAAP Measures | ||||||||||||||||||
Three Months Ended March 31, 2014 | Three Months Ended June 30, 2014 | |||||||||||||||||
As Previously Reported (a) | Restatement | As Restated (a) | As Previously Reported | Restatement | As Restated | |||||||||||||
Operating Income | $65.0 | $(2.0) | $63.0 | $39.6 | $(2.0) | $37.6 | ||||||||||||
Income from Continuing Operations | 43.3 | (2.0 | ) | 41.3 | 6.0 | (2.0 | ) | 4.0 | ||||||||||
Income from Discontinued Operations, net | — | — | — | 12.1 | — | 12.1 | ||||||||||||
Net Income | 43.3 | (2.0 | ) | 41.3 | 18.1 | (2.0 | ) | 16.1 | ||||||||||
Net Income Attributable to Rayonier Inc. | 43.4 | (2.0 | ) | 41.4 | 18.4 | (2.0 | ) | 16.4 | ||||||||||
Diluted Earnings Per Share Attributable to Rayonier Inc. | ||||||||||||||||||
Continuing Operations | $0.34 | $(0.02) | $0.32 | $0.05 | $(0.02) | $0.03 | ||||||||||||
Discontinued Operations | — | — | — | 0.09 | — | 0.09 | ||||||||||||
Net Income | $0.34 | $(0.02) | $0.32 | $0.14 | $(0.02) | $0.12 | ||||||||||||
Cash available for distribution (b) | $71.6 | — | $71.6 | |||||||||||||||
EBITDA (b) | $111.8 | — | $111.8 | $104.7 | — | $104.7 | ||||||||||||
Six Months Ended June 30, 2014 | ||||||||||||||||||
As Previously Reported | Restatement | As Restated | ||||||||||||||||
Operating Income | $56.0 | $(4.0) | $52.0 | |||||||||||||||
Income from Continuing Operations | 18.4 | (4.0 | ) | 14.4 | ||||||||||||||
Income from Discontinued Operations, net | 43.1 | — | 43.1 | |||||||||||||||
Net Income | 61.5 | (4.0 | ) | 57.5 | ||||||||||||||
Net Income Attributable to Rayonier Inc. | 61.8 | (4.0 | ) | 57.8 | ||||||||||||||
Diluted Earnings Per Share Attributable to Rayonier Inc. | ||||||||||||||||||
Continuing Operations | $0.14 | $(0.03) | $0.11 | |||||||||||||||
Discontinued Operations | 0.33 | — | 0.33 | |||||||||||||||
Net Income | $0.47 | $(0.03) | $0.44 | |||||||||||||||
Cash available for distribution (b) | $90.3 | — | $90.3 | |||||||||||||||
EBITDA (b) | $216.4 | — | $216.4 |
(a) | Includes the Performance Fibers business that was spun-off on June 27, 2014. |
(b) | Cash available for distribution and EBITDA are non-GAAP measures. See Schedule E for reconciliations to the nearest GAAP measure. |
Condensed Consolidated Balance Sheets | ||||||||||||||||||
March 31, 2014 | June 30, 2014 | |||||||||||||||||
As Previously Reported | Restatement | As Restated | As Previously Reported | Restatement | As Restated | |||||||||||||
Timber and timberlands, net of depletion and amortization | $2,069.5 | $(1.9) | $2,067.6 | $2,121.6 | $(4.0) | $2,117.6 | ||||||||||||
Retained earnings | 996.5 | (1.9 | ) | 994.6 | 891.6 | (4.0 | ) | 887.6 |