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 August 2009 TRS issued $172.5 million of 4.50% Senior Exchangeable Notes due 2015. The notes 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 AND COMPREHENSIVE INCOME For the Three Months Ended June 30, 2014
	Rayonier Inc. (Parent Guarantor)			ROC (Subsidiary Guarantor)			Rayonier TRS Holdings Inc. (Issuer)			Non- guarantors			Consolidating Adjustments			Total Consolidated
	(Restated)			(Restated)			(Restated)			(Restated)			(Restated)			(Restated)
SALES	$	—		$	—		$	—		$	163,145		$	—		$	163,145
Costs and Expenses
Cost of sales	—			—			—			123,096			—			123,096
Selling and general expenses	—			2,394			—			11,467			—			13,861
Other operating expense (income), net	—			1,573			—			(12,962		)	—			(11,389		)
	—			3,967			—			121,601			—			125,568
OPERATING (LOSS) INCOME	—			(3,967		)	—			41,544			—			37,577
Interest expense	(3,196		)	(225		)	(10,982		)	(1,209		)	—			(15,612		)
Interest and miscellaneous income (expense), net	2,733			(3,003		)	(1,098		)	(3,017		)	—			(4,385		)
Equity in income from subsidiaries	16,814			23,549			(54,081		)	—			13,718			—
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	16,351			16,354			(66,161		)	37,318			13,718			17,580
Income tax benefit (expense)	—			460			4,409			(18,425		)	—			(13,556		)
INCOME (LOSS) FROM CONTINUING OPERATIONS	16,351			16,814			(61,752		)	18,893			13,718			4,024
DISCONTINUED OPERATIONS, NET
Income from discontinued operations, net of income taxes	—			—			—			12,084			—			12,084
NET INCOME (LOSS)	16,351			16,814			(61,752		)	30,977			13,718			16,108
Less: Net loss attributable to noncontrolling interest	—			—			—			(245		)	—			(245		)
NET INCOME (LOSS) ATTRIBUTABLE TO RAYONIER INC.	16,351			16,814			(61,752		)	31,222			13,718			16,353
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment	2,653			2,653			513			3,517			(5,819		)	3,517
New Zealand joint venture cash flow hedges	(598		)	(598		)	(598		)	(920		)	1,794			(920		)
Amortization of pension and postretirement plans, net of income tax	58,873			58,873			92,714			92,714			(244,301		)	58,873
Total other comprehensive income	60,928			60,928			92,629			95,311			(248,326		)	61,470
COMPREHENSIVE INCOME	77,279			77,742			30,877			126,288			(234,608		)	77,578
Less: Comprehensive income attributable to noncontrolling interest	—			—			—			297			—			297
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.	$	77,279		$	77,742		$	30,877		$	125,991		$	(234,608	)	$	77,281



	CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the Three Months Ended June 30, 2013
	Rayonier Inc. (Parent Guarantor)			ROC (Subsidiary Guarantor)			Rayonier TRS Holdings Inc. (Issuer)			Non- guarantors			Consolidating Adjustments			Total Consolidated
SALES	$	—		$	—		$	—		$	154,889		$	—		$	154,889
Costs and Expenses
Cost of sales	—			—			—			127,861			—			127,861
Selling and general expenses	—			2,680			—			12,023			—			14,703
Other operating expense (income), net	180			(74		)	—			(3,069		)	(661		)	(3,624		)
	180			2,606			—			136,815			(661		)	138,940
Equity in income of New Zealand joint venture	—			—			—			304			—			304
OPERATING (LOSS) INCOME BEFORE GAIN ON CONSOLIDATION OF NEW ZEALAND JOINT VENTURE	(180		)	(2,606		)	—			18,378			661			16,253
Gain related to consolidation of New Zealand joint venture	—			—			—			16,098			—			16,098
OPERATING (LOSS) INCOME	(180		)	(2,606		)	—			34,476			661			32,351
Interest expense	(3,414		)	(266		)	(6,997		)	(674		)	—			(11,351		)
Interest and miscellaneous income (expense), net	1,759			1,104			(797		)	618			—			2,684
Equity in income from subsidiaries	89,064			91,235			35,968			—			(216,267		)	—
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	87,229			89,467			28,174			34,420			(215,606		)	23,684
Income tax (expense) benefit	(65		)	(403		)	2,847			13,505			63			15,947
INCOME FROM CONTINUING OPERATIONS	87,164			89,064			31,021			47,925			(215,543		)	39,631
DISCONTINUED OPERATIONS, NET
Income from discontinued operations, net of income taxes	—			—			—			48,260			—			48,260
NET INCOME	87,164			89,064			31,021			96,185			(215,543		)	87,891
Less: Net income attributable to noncontrolling interest	—			—			—			727			—			727
NET INCOME ATTRIBUTABLE TO RAYONIER INC.	87,164			89,064			31,021			95,458			(215,543		)	87,164
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment	(18,625		)	(28,201		)	(1,725		)	(18,625		)	38,975			(28,201		)
New Zealand joint venture cash flow hedges	878			222			(1,873		)	877			118			222
Amortization of pension and postretirement plans, net of income tax	3,717			3,717			2,819			6,831			(13,367		)	3,717
Total other comprehensive loss	(14,030		)	(24,262		)	(779		)	(10,917		)	25,726			(24,262		)
COMPREHENSIVE INCOME	73,134			64,802			30,242			85,268			(189,817		)	63,629
Less: Comprehensive loss attributable to noncontrolling interest	—			—			—			(9,505		)	—			(9,505		)
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.	$	73,134		$	64,802		$	30,242		$	94,773		$	(189,817	)	$	73,134



	CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the Six Months Ended June 30, 2014
	Rayonier Inc. (Parent Guarantor)			ROC (Subsidiary Guarantor)			Rayonier TRS Holdings Inc. (Issuer)			Non- guarantors			Consolidating Adjustments			Total Consolidated
	(Restated)			(Restated)			(Restated)			(Restated)			(Restated)			(Restated)
SALES	$	—		$	—		$	—		$	306,332		$	—		$	306,332
Costs and Expenses
Cost of sales	—			—			—			238,995			—			238,995
Selling and general expenses	—			4,544			—			22,554			—			27,098
Other operating expense (income), net	—			3,948			—			(15,712		)	—			(11,764		)
	—			8,492			—			245,837			—			254,329
OPERATING INCOME (LOSS) BEFORE GAIN ON CONSOLIDATION OF NEW ZEALAND JOINT VENTURE	—			(8,492		)	—			60,495			—			52,003
OPERATING INCOME (LOSS)	—			(8,492		)	—			60,495			—			52,003
Interest expense	(6,389		)	(468		)	(17,672		)	(1,757		)	—			(26,286		)
Interest and miscellaneous income (expense), net	5,431			(2,189		)	(2,145		)	(6,494		)	—			(5,397		)
Equity in income from subsidiaries	58,737			70,049			(22,951		)	—			(105,835		)	—
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	57,779			58,900			(42,768		)	52,244			(105,835		)	20,320
Income tax benefit (expense)	—			(163		)	7,233			(13,031		)	—			(5,961		)
INCOME FROM CONTINUING OPERATIONS	57,779			58,737			(35,535		)	39,213			(105,835		)	14,359
DISCONTINUED OPERATIONS, NET
Income from discontinued operations, net of income tax	—			—			—			43,092			—			43,092
NET INCOME	57,779			58,737			(35,535		)	82,305			(105,835		)	57,451
Less: Net loss attributable to noncontrolling interest	—			—			—			(328		)	—			(328		)
NET INCOME ATTRIBUTABLE TO RAYONIER INC.	57,779			58,737			(35,535		)	82,633			(105,835		)	57,779
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment	15,547			15,547			1,279			21,312			(32,365		)	21,320
New Zealand joint venture cash flow hedges	514			514			514			791			(1,542		)	791
Amortization of pension and postretirement plans, net of income tax	60,970			60,970			94,334			94,334			(249,638		)	60,970
Total other comprehensive income	77,031			77,031			96,127			116,437			(283,545		)	83,081
COMPREHENSIVE INCOME	134,810			135,768			60,592			198,742			(389,380		)	140,532
Less: Comprehensive income attributable to noncontrolling interest	—			—			—			5,722			—			5,722
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.	$	134,810		$	135,768		$	60,592		$	193,020		$	(389,380	)	$	134,810



	CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the Six Months Ended June 30, 2013
	Rayonier Inc. (Parent Guarantor)			ROC (Subsidiary Guarantor)			Rayonier TRS Holdings Inc. (Issuer)			Non-guarantors			Consolidating Adjustments			Total Consolidated
SALES	$	—		$	—		$	—		$	261,942		$	—		$	261,942
Costs and Expenses
Cost of sales	—			—			—			204,520			—			204,520
Selling and general expenses	—			5,081			—			23,019			—			28,100
Other operating (income) expense, net	(1,701		)	449			—			(5,859		)	(661		)	(7,772		)
	(1,701		)	5,530			—			221,680			(661		)	224,848
Equity in income of New Zealand joint venture	—			—			—			562			—			562
OPERATING INCOME (LOSS) BEFORE GAIN ON CONSOLIDATION OF NEW ZEALAND JOINT VENTURE	1,701			(5,530		)	—			40,824			661			37,656
Gain related to consolidation of New Zealand joint venture	—			—			—			16,098			—			16,098
OPERATING INCOME (LOSS)	1,701			(5,530		)	—			56,922			661			53,754
Interest (expense) income	(6,689		)	(518		)	(13,615		)	1,019			—			(19,803		)
Interest and miscellaneous income (expense), net	4,178			1,633			(1,548		)	(1,497		)	—			2,766
Equity in income from subsidiaries	235,774			240,000			159,437			—			(635,211		)	—
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	234,964			235,585			144,274			56,444			(634,550		)	36,717
Income tax (expense) benefit	(65		)	189			5,537			16,219			62			21,942
INCOME FROM CONTINUING OPERATIONS	234,899			235,774			149,811			72,663			(634,488		)	58,659
DISCONTINUED OPERATIONS, NET
Income from discontinued operations, net of income taxes	—			—			—			176,967			—			176,967
NET INCOME	234,899			235,774			149,811			249,630			(634,488		)	235,626
Less: Net income attributable to noncontrolling interest	—			—			—			727			—			727
NET INCOME ATTRIBUTABLE TO RAYONIER INC.	234,899			235,774			149,811			248,903			(634,488		)	234,899
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment	(17,650		)	(27,226		)	(1,485		)	(17,650		)	36,785			(27,226		)
New Zealand joint venture cash flow hedges	1,431			775			(1,873		)	1,431			(989		)	775
Amortization of pension and postretirement plans, net of income tax	8,687			8,687			6,831			6,831			(22,349		)	8,687
Total other comprehensive (loss) income	(7,532		)	(17,764		)	3,473			(9,388		)	13,447			(17,764		)
COMPREHENSIVE INCOME	227,367			218,010			153,284			240,242			(621,041		)	217,862
Less: Comprehensive loss attributable to noncontrolling interest	—			—			—			(9,505		)	—			(9,505		)
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.	$	227,367		$	218,010		$	153,284		$	249,747		$	(621,041	)	$	227,367



	CONDENSED CONSOLIDATING BALANCE SHEETS As of June 30, 2014
	Rayonier Inc. (Parent Guarantor)		ROC (Subsidiary Guarantor)		Rayonier TRS Holdings Inc. (Issuer)		Non- guarantors			Consolidating Adjustments			Total Consolidated
	(Restated)		(Restated)		(Restated)		(Restated)			(Restated)			(Restated)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	39,181	$	1,096	$	66,866	$	114,918		$	—		$	222,061
Restricted cash	75,000		—		—		—			—			75,000
Accounts receivable, less allowance for doubtful accounts	—		—		1,366		18,399			—			19,765
Inventory	—		—		—		18,484			—			18,484
Deferred tax assets	—		—		—		3,221			—			3,221
Prepaid and other current assets	—		3,294		—		18,249			—			21,543
Total current assets	114,181		4,390		68,232		173,271			—			360,074
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	—		—		—		2,117,655			—			2,117,655
NET PROPERTY, PLANT AND EQUIPMENT	—		332		—		5,811			—			6,143
INVESTMENT IN SUBSIDIARIES	1,608,083		1,864,809		377,891		—			(3,850,783		)	—
INTERCOMPANY NOTES RECEIVABLE	218,854		—		21,075		—			(239,929		)	—
OTHER ASSETS	3,473		21,698		3,012		119,921			—			148,104
TOTAL ASSETS	$	1,944,591	$	1,891,229	$	470,210	$	2,416,658		$	(4,090,712	)	$	2,631,976
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	—	$	3,144	$	5,882	$	18,845		$	—		$	27,871
Accrued taxes	—		—		—		13,834			—			13,834
Uncertain tax positions	—		5,780		—		—			—			5,780
Accrued payroll and benefits	—		3,229		—		2,087			—			5,316
Accrued interest	2,590		672		2,636		27,279			(23,434		)	9,743
Other current liabilities	—		1,322		—		27,543			—			28,865
Total current liabilities	2,590		14,147		8,518		89,588			(23,434		)	91,409
LONG-TERM DEBT	325,000		—		143,706		301,380			—			770,086
PENSION AND OTHER POSTRETIREMENT BENEFITS	—		24,699		—		(685		)	—			24,014
OTHER NON-CURRENT LIABILITIES	—		6,804		—		23,796			—			30,600
INTERCOMPANY PAYABLE	—		237,496		—		790			(238,286		)	—
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY	1,617,001		1,608,083		317,986		1,902,923			(3,828,992		)	1,617,001
Noncontrolling interest	—		—		—		98,866			—			98,866
TOTAL SHAREHOLDERS’ EQUITY	1,617,001		1,608,083		317,986		2,001,789			(3,828,992		)	1,715,867
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,944,591	$	1,891,229	$	470,210	$	2,416,658		$	(4,090,712	)	$	2,631,976



	CONDENSED CONSOLIDATING BALANCE SHEETS As of December 31, 2013
	Rayonier Inc. (Parent Guarantor)		ROC (Subsidiary Guarantor)		Rayonier TRS Holdings Inc. (Issuer)		Non- guarantors		Consolidating Adjustments			Total Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	130,181	$	304	$	10,719	$	58,440	$	—		$	199,644
Accounts receivable, less allowance for doubtful accounts	—		10		2,300		92,646		—			94,956
Inventory	—		—		—		138,818		—			138,818
Deferred tax assets	—		—		681		38,419		—			39,100
Prepaid and other current assets	—		2,363		6		44,207		—			46,576
Total current assets	130,181		2,677		13,706		372,530		—			519,094
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	—		—		—		2,049,378		—			2,049,378
NET PROPERTY, PLANT AND EQUIPMENT	—		2,612		—		858,209		—			860,821
INVESTMENT IN SUBSIDIARIES	1,627,315		1,837,760		1,148,221		—		(4,613,296		)	—
INTERCOMPANY NOTES RECEIVABLE	228,032		—		20,659		—		(248,691		)	—
OTHER ASSETS	3,689		32,519		3,739		216,261		—			256,208
TOTAL ASSETS	$	1,989,217	$	1,875,568	$	1,186,325	$	3,496,378	$	(4,861,987	)	$	3,685,501
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	—	$	1,522	$	1,564	$	66,207	$	—		$	69,293
Current maturities of long-term debt	—		—		112,500		—		—			112,500
Accrued taxes	—		4,855		—		3,696		—			8,551
Uncertain tax positions	—		5,780		—		4,767		—			10,547
Accrued payroll and benefits	—		11,382		—		13,566		—			24,948
Accrued interest	3,047		538		2,742		22,816		(19,612		)	9,531
Accrued customer incentives	—		—		—		9,580		—			9,580
Other current liabilities	—		2,985		—		21,342		—			24,327
Current liabilities for dispositions and discontinued operations	—		—		—		6,835		—			6,835
Total current liabilities	3,047		27,062		116,806		148,809		(19,612		)	276,112
LONG-TERM DEBT	325,000		—		847,749		288,975		—			1,461,724
NON-CURRENT LIABILITIES FOR DISPOSITIONS AND DISCONTINUED OPERATIONS	—		—		—		69,543		—			69,543
PENSION AND OTHER POSTRETIREMENT BENEFITS	—		91,471		—		4,183		—			95,654
OTHER NON-CURRENT LIABILITIES	—		11,493		—		15,732		—			27,225
INTERCOMPANY PAYABLE	—		118,227		—		125,921		(244,148		)	—
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY	1,661,170		1,627,315		221,770		2,749,142		(4,598,227		)	1,661,170
Noncontrolling interest	—		—		—		94,073		—			94,073
TOTAL SHAREHOLDERS’ EQUITY	1,661,170		1,627,315		221,770		2,843,215		(4,598,227		)	1,755,243
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,989,217	$	1,875,568	$	1,186,325	$	3,496,378	$	(4,861,987	)	$	3,685,501



	CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 2014
	Rayonier Inc. (Parent Guarantor)			ROC (Subsidiary Guarantor)			Rayonier TRS Holdings Inc. (Issuer)			Non- guarantors			Consolidating Adjustments			Total Consolidated
CASH PROVIDED BY OPERATING ACTIVITIES	$	138,535		$	150,518		$	—		$	84,350		$	(147,007	)	$	226,396
INVESTING ACTIVITIES
Capital expenditures	—			(201		)	—			(80,293		)	—			(80,494		)
Purchase of timberlands	—			—			—			(74,817		)	—			(74,817		)
Change in restricted cash	—			—			—			63,128			—			63,128
Investment in Subsidiaries	—			—			(62,800		)	—			62,800			—
Other	—			—			—			(478		)	—			(478		)
CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES	—			(201		)	(62,800		)	(92,460		)	62,800			(92,661		)
FINANCING ACTIVITIES
Issuance of debt	—			—			1,238,389			—			—			1,238,389
Repayment of debt	—			—			(1,107,062		)	—			—			(1,107,062		)
Dividends paid	(124,628		)	—			—			—			—			(124,628		)
Proceeds from the issuance of common shares	3,347			—			—			—			—			3,347
Debt issuance costs	—			—			(12,380		)	—			—			(12,380		)
Repurchase of common shares	(1,834		)	—			—			—			—			(1,834		)
Purchase of timberland deeds for Rayonier Advanced Materials	(12,677		)	—			—			—			—			(12,677		)
Debt issuance funds distributed to Rayonier Advanced Materials	(924,943		)	—			—			—			—			(924,943		)
Proceeds from spin-off of Rayonier Advanced Materials	906,200			—			—			—			—			906,200
Change in restricted cash reserved for dividends	(75,000		)	—			—			—			—			(75,000		)
Intercompany distributions	—			(149,525		)	—			65,318			84,207			—
Other	—			—			—			(680		)	—			(680		)
CASH USED FOR FINANCING ACTIVITIES	(229,535		)	(149,525		)	118,947			64,638			84,207			(111,268		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			—			(50		)	—			(50		)
CASH AND CASH EQUIVALENTS
Change in cash and cash equivalents	(91,000		)	792			56,147			56,478			—			22,417
Balance, beginning of year	130,181			304			10,719			58,440			—			199,644
Balance, end of period	$	39,181		$	1,096		$	66,866		$	114,918		$	—		$	222,061



	CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 2013
	Rayonier Inc. (Parent Guarantor)			ROC (Subsidiary Guarantor)			Rayonier TRS Holdings Inc. (Issuer)			Non- guarantors			Consolidating Adjustments			Total Consolidated
CASH PROVIDED BY OPERATING ACTIVITIES	$	248,552		$	247,599		$	64,000		$	212,977		$	(537,456	)	$	235,672
INVESTING ACTIVITIES
Capital expenditures	—			(89		)	—			(74,498		)	—			(74,587		)
Purchase of additional interest in New Zealand joint venture	—			—			—			(139,879		)	—			(139,879		)
Purchase of timberlands	—			—			—			(10,447		)	—			(10,447		)
Intercompany purchase of real estate	—			—			—			984			(984		)	—
Jesup mill cellulose specialties expansion	—			—			—			(100,185		)	—			(100,185		)
Proceeds from disposition of Wood Products business	—			—			—			72,953			—			72,953
Change in restricted cash	—			—			—			7,603			—			7,603
Investment in Subsidiaries	(138,178		)	(138,178		)	(249,481		)	—			525,837			—
Other	—			1,700			—			(1,163		)	—			537
CASH USED FOR INVESTING ACTIVITIES	(138,178		)	(136,567		)	(249,481		)	(244,632		)	524,853			(244,005		)
FINANCING ACTIVITIES
Issuance of debt	175,000			—			280,000			—			—			455,000
Repayment of debt	(250,000		)	—			(23,087		)	—			—			(273,087		)
Dividends paid	(113,222		)	—			—			—			—			(113,222		)
Proceeds from the issuance of common shares	6,643			—			—			—			—			6,643
Excess tax benefits on stock-based compensation	—			—			—			7,399			—			7,399
Repurchase of common shares	(11,241		)	—			—			—			—			(11,241		)
Intercompany distributions	—			(108,549		)	(64,000		)	159,946			12,603			—
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES	(192,820		)	(108,549		)	192,913			167,345			12,603			71,492
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			—			(174		)	—			(174		)
CASH AND CASH EQUIVALENTS
Change in cash and cash equivalents	(82,446		)	2,483			7,432			135,516			—			62,985
Balance, beginning of year	252,888			3,966			19,358			4,384			—			280,596
Balance, end of period	$	170,442		$	6,449		$	26,790		$	139,900		$	—		$	343,581

In March 2012, Rayonier Inc. issued $325 million of 3.75% Senior Notes due 2022. The notes are fully and unconditionally guaranteed by ROC and Rayonier TRS Holdings Inc. In connection with these notes, the Company provides the following 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, 2014
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments			Total Consolidated
	(Restated)			(Restated)			(Restated)			(Restated)			(Restated)
SALES	$	—		$	—		$	163,145		$	—		$	163,145
Costs and Expenses
Cost of sales	—			—			123,096			—			123,096
Selling and general expenses	—			2,394			11,467			—			13,861
Other operating expense, net	—			1,573			(12,962		)	—			(11,389		)
	—			3,967			121,601			—			125,568
OPERATING (LOSS) INCOME	—			(3,967		)	41,544			—			37,577
Interest expense	(3,196		)	(11,207		)	(1,209		)	—			(15,612		)
Interest and miscellaneous income (expense), net	2,733			(4,101		)	(3,017		)	—			(4,385		)
Equity in income from subsidiaries	16,814			31,220			—			(48,034		)	—
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	16,351			11,945			37,318			(48,034		)	17,580
Income tax benefit (expense)	—			4,869			(18,425		)	—			(13,556		)
INCOME FROM CONTINUING OPERATIONS	16,351			16,814			18,893			(48,034		)	4,024
DISCONTINUED OPERATIONS, NET
Income from discontinued operations, net of income taxes	—			—			12,084			—			12,084
NET INCOME	16,351			16,814			30,977			(48,034		)	16,108
Less: Net loss attributable to noncontrolling interest	—			—			(245		)	—			(245		)
NET INCOME ATTRIBUTABLE TO RAYONIER INC.	16,351			16,814			31,222			(48,034		)	16,353
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment	2,653			2,655			3,517			(5,308		)	3,517
New Zealand joint venture cash flow hedges	(598		)	(598		)	(920		)	1,196			(920		)
Amortization of pension and postretirement plans, net of income tax	58,873			58,873			92,714			(151,587		)	58,873
Total other comprehensive income	60,928			60,930			95,311			(155,699		)	61,470
COMPREHENSIVE INCOME	77,279			77,744			126,288			(203,733		)	77,578
Less: Comprehensive income attributable to noncontrolling interest	—			—			297			—			297
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.	$	77,279		$	77,744		$	125,991		$	(203,733	)	$	77,281



	CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the Three Months Ended June 30, 2013
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments			Total Consolidated
SALES	$	—		$	—		$	154,889		$	—		$	154,889
Costs and Expenses
Cost of sales	—			—			127,861			—			127,861
Selling and general expenses	—			2,680			12,023			—			14,703
Other operating expense (income), net	180			(74		)	(3,069		)	(661		)	(3,624		)
	180			2,606			136,815			(661		)	138,940
Equity in income of New Zealand joint venture	—			—			304			—			304
OPERATING (LOSS) INCOME BEFORE GAIN ON CONSOLIDATION OF NEW ZEALAND JOINT VENTURE	(180		)	(2,606		)	18,378			661			16,253
Gain related to consolidation of New Zealand joint venture	—			—			16,098			—			16,098
OPERATING (LOSS) INCOME	(180		)	(2,606		)	34,476			661			32,351
Interest expense	(3,414		)	(7,263		)	(674		)	—			(11,351		)
Interest and miscellaneous income, net	1,759			307			618			—			2,684
Equity in income from subsidiaries	89,064			96,185			—			(185,249		)	—
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	87,229			86,623			34,420			(184,588		)	23,684
Income tax (expense) benefit	(65		)	2,441			13,505			66			15,947
INCOME FROM CONTINUING OPERATIONS	87,164			89,064			47,925			(184,522		)	39,631
DISCONTINUED OPERATIONS, NET
Income from discontinued operations, net of income taxes	—			—			48,260			—			48,260
NET INCOME	87,164			89,064			96,185			(184,522		)	87,891
Less: Net income attributable to noncontrolling interest	—			—			727			—			727
NET INCOME ATTRIBUTABLE TO RAYONIER INC.	87,164			89,064			95,458			(184,522		)	87,164
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment	(18,625		)	(28,201		)	(18,625		)	37,250			(28,201		)
New Zealand joint venture cash flow hedges	878			221			877			(1,754		)	222
Amortization of pension and postretirement plans, net of income tax	3,717			3,718			6,831			(10,549		)	3,717
Total other comprehensive loss	(14,030		)	(24,262		)	(10,917		)	24,947			(24,262		)
COMPREHENSIVE INCOME	$	73,134		$	64,802		$	85,268		$	(159,575	)	$	63,629
Less: Comprehensive loss attributable to noncontrolling interest	$	—		$	—		$	(9,505	)	$	—		$	(9,505	)
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.	$	73,134		$	64,802		$	94,773		$	(159,575	)	$	73,134



	CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the Six Months Ended June 30, 2014
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments			Total Consolidated
	(Restated)			(Restated)			(Restated)			(Restated)			(Restated)
SALES	$	—		$	—		$	306,332		$	—		$	306,332
Costs and Expenses
Cost of sales	—			—			238,995			—			238,995
Selling and general expenses	—			4,544			22,554			—			27,098
Other operating expense (income), net	—			3,948			(15,712		)	—			(11,764		)
	—			8,492			245,837			—			254,329
OPERATING INCOME (LOSS) BEFORE GAIN ON CONSOLIDATION OF NEW ZEALAND JOINT VENTURE	—			(8,492		)	60,495			—			52,003
OPERATING INCOME (LOSS)	—			(8,492		)	60,495			—			52,003
Interest expense	(6,389		)	(18,140		)	(1,757		)	—			(26,286		)
Interest and miscellaneous income (expense), net	5,431			(4,334		)	(6,494		)	—			(5,397		)
Equity in income from subsidiaries	58,737			82,633			—			(141,370		)	—
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	57,779			51,667			52,244			(141,370		)	20,320
Income tax benefit (expense)	—			7,070			(13,031		)	—			(5,961		)
INCOME FROM CONTINUING OPERATIONS	57,779			58,737			39,213			(141,370		)	14,359
DISCONTINUED OPERATIONS, NET
Income from discontinued operations, net of income taxes	—			—			43,092			—			43,092
NET INCOME	57,779			58,737			82,305			(141,370		)	57,451
Less: Net loss attributable to noncontrolling interest	—			—			(328		)	—			(328		)
NET INCOME ATTRIBUTABLE TO RAYONIER INC.	57,779			58,737			82,633			(141,370		)	57,779
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment	15,547			15,547			21,312			(31,086		)	21,320
New Zealand joint venture cash flow hedges	514			514			791			(1,028		)	791
Amortization of pension and postretirement plans, net of income tax	60,970			60,970			94,334			(155,304		)	60,970
Total other comprehensive income	77,031			77,031			116,437			(187,418		)	83,081
COMPREHENSIVE INCOME	134,810			135,768			198,742			(328,788		)	140,532
Less: Comprehensive income attributable to noncontrolling interest	—			—			5,722			—			5,722
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.	$	134,810		$	135,768		$	193,020		$	(328,788	)	$	134,810



	CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the Six Months Ended June 30, 2013
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments			Total Consolidated
SALES	$	—		$	—		$	261,942		$	—		$	261,942
Costs and Expenses
Cost of sales	—			—			204,520			—			204,520
Selling and general expenses	—			5,081			23,019			—			28,100
Other operating (income) expense, net	(1,701		)	449			(5,859		)	(661		)	(7,772		)
	(1,701		)	5,530			221,680			(661		)	224,848
Equity in income of New Zealand joint venture	—			—			562			—			562
OPERATING INCOME (LOSS) BEFORE GAIN ON CONSOLIDATION OF NEW ZEALAND JOINT VENTURE	1,701			(5,530		)	40,824			661			37,656
Gain related to consolidation of New Zealand joint venture	—			—			16,098			—			16,098
OPERATING INCOME (LOSS)	1,701			(5,530		)	56,922			661			53,754
Interest (expense) income	(6,689		)	(14,133		)	1,019			—			(19,803		)
Interest and miscellaneous income (expense), net	4,178			85			(1,497		)	—			2,766
Equity in income from subsidiaries	235,774			249,630			—			(485,404		)	—
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	234,964			230,052			56,444			(484,743		)	36,717
Income tax (expense) benefit	(65		)	5,722			16,219			66			21,942
INCOME FROM CONTINUING OPERATIONS	234,899			235,774			72,663			(484,677		)	58,659
DISCONTINUED OPERATIONS, NET
Income from discontinued operations, net of income tax	—			—			176,967			—			176,967
NET INCOME	234,899			235,774			249,630			(484,677		)	235,626
Less: Net income attributable to noncontrolling interest	—			—			727			—			727
NET INCOME ATTRIBUTABLE TO RAYONIER INC.	234,899			235,774			248,903			(484,677		)	234,899
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment	(17,650		)	(27,226		)	(17,650		)	35,300			(27,226		)
New Zealand joint venture cash flow hedges	1,431			775			1,431			(2,862		)	775
Amortization of pension and postretirement plans, net of income tax	8,687			8,687			6,831			(15,518		)	8,687
Total other comprehensive loss	(7,532		)	(17,764		)	(9,388		)	16,920			(17,764		)
COMPREHENSIVE INCOME	227,367			218,010			240,242			(467,757		)	217,862
Less: Comprehensive loss attributable to noncontrolling interest	—			—			(9,505		)	—			(9,505		)
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.	$	227,367		$	218,010		$	249,747		$	(467,757	)	$	227,367



	CONDENSED CONSOLIDATING BALANCE SHEETS As of June 30, 2014
	Rayonier Inc. (Parent Issuer)		Subsidiary Guarantors		Non- guarantors			Consolidating Adjustments			Total Consolidated
	(Restated)		(Restated)		(Restated)			(Restated)			(Restated)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	39,181	$	67,962	$	114,918		$	—		$	222,061
Restricted cash	75,000		—		—			—			75,000
Accounts receivable, less allowance for doubtful accounts	—		1,366		18,399			—			19,765
Inventory	—		—		18,484			—			18,484
Deferred tax asset	—		—		3,221			—			3,221
Prepaid and other current assets	—		3,294		18,249			—			21,543
Total current assets	114,181		72,622		173,271			—			360,074
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	—		—		2,117,655			—			2,117,655
NET PROPERTY, PLANT AND EQUIPMENT	—		332		5,811			—			6,143
INVESTMENT IN SUBSIDIARIES	1,608,083		1,924,714		—			(3,532,797		)	—
INTERCOMPANY NOTES RECEIVABLE	218,854		21,075		—			(239,929		)	—
OTHER ASSETS	3,473		24,710		119,921			—			148,104
TOTAL ASSETS	$	1,944,591	$	2,043,453	$	2,416,658		$	(3,772,726	)	$	2,631,976
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	—	$	9,026	$	18,845		$	—		$	27,871
Accrued taxes	—		—		13,834			—			13,834
Uncertain tax positions	—		5,780		—			—			5,780
Accrued payroll and benefits	—		3,229		2,087			—			5,316
Accrued interest	2,590		3,308		27,279			(23,434		)	9,743
Other current liabilities	—		1,322		27,543			—			28,865
Total current liabilities	2,590		22,665		89,588			(23,434		)	91,409
LONG-TERM DEBT	325,000		143,706		301,380			—			770,086
PENSION AND OTHER POSTRETIREMENT BENEFITS	—		24,699		(685		)	—			24,014
OTHER NON-CURRENT LIABILITIES	—		6,804		23,796			—			30,600
INTERCOMPANY PAYABLE	—		237,496		790			(238,286		)	—
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY	1,617,001		1,608,083		1,902,923			(3,511,006		)	1,617,001
Noncontrolling interest	—		—		98,866			—			98,866
TOTAL SHAREHOLDERS’ EQUITY	1,617,001		1,608,083		2,001,789			(3,511,006		)	1,715,867
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,944,591	$	2,043,453	$	2,416,658		$	(3,772,726	)	$	2,631,976



	CONDENSED CONSOLIDATING BALANCE SHEETS As of December 31, 2013
	Rayonier Inc. (Parent Issuer)		Subsidiary Guarantors		Non- guarantors		Consolidating Adjustments			Total Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	130,181	$	11,023	$	58,440	$	—		$	199,644
Accounts receivable, less allowance for doubtful accounts	—		2,310		92,646		—			94,956
Inventory	—		—		138,818		—			138,818
Deferred tax assets	—		681		38,419		—			39,100
Prepaid and other current assets	—		2,369		44,207		—			46,576
Total current assets	130,181		16,383		372,530		—			519,094
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	—		—		2,049,378		—			2,049,378
NET PROPERTY, PLANT AND EQUIPMENT	—		2,612		858,209		—			860,821
INVESTMENT IN SUBSIDIARIES	1,627,315		2,764,211		—		(4,391,526		)	—
INTERCOMPANY NOTES RECEIVABLE	228,032		20,659		—		(248,691		)	—
OTHER ASSETS	3,689		36,258		216,261		—			256,208
TOTAL ASSETS	$	1,989,217	$	2,840,123	$	3,496,378	$	(4,640,217	)	$	3,685,501
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	—	$	3,086	$	66,207	$	—		$	69,293
Current maturities of long-term debt	—		112,500		—		—			112,500
Accrued taxes	—		4,855		3,696		—			8,551
Uncertain tax positions	—		5,780		4,767		—			10,547
Accrued payroll and benefits	—		11,382		13,566		—			24,948
Accrued interest	3,047		3,280		22,816		(19,612		)	9,531
Accrued customer incentives	—		—		9,580		—			9,580
Other current liabilities	—		2,985		21,342		—			24,327
Current liabilities for dispositions and discontinued operations	—		—		6,835		—			6,835
Total current liabilities	3,047		143,868		148,809		(19,612		)	276,112
LONG-TERM DEBT	325,000		847,749		288,975		—			1,461,724
NON-CURRENT LIABILITIES FOR DISPOSITIONS AND DISCONTINUED OPERATIONS	—		—		69,543		—			69,543
PENSION AND OTHER POSTRETIREMENT BENEFITS	—		91,471		4,183		—			95,654
OTHER NON-CURRENT LIABILITIES	—		11,493		15,732		—			27,225
INTERCOMPANY PAYABLE	—		118,227		125,921		(244,148		)	—
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY	1,661,170		1,627,315		2,749,142		(4,376,457		)	1,661,170
Noncontrolling interest	—		—		94,073		—			94,073
TOTAL SHAREHOLDERS’ EQUITY	1,661,170		1,627,315		2,843,215		(4,376,457		)	1,755,243
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,989,217	$	2,840,123	$	3,496,378	$	(4,640,217	)	$	3,685,501



	CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 2014
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments			Total Consolidated
CASH PROVIDED BY OPERATING ACTIVITIES	$	138,535		$	150,518		$	84,350		$	(147,007	)	$	226,396
INVESTING ACTIVITIES
Capital expenditures	—			(201		)	(80,293		)	—			(80,494		)
Purchase of timberlands	—			—			(74,817		)	—			(74,817		)
Change in restricted cash	—			—			63,128			—			63,128
Investment in Subsidiaries	—			(62,800		)	—			62,800			—
Other	—			—			(478		)	—			(478		)
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES	—			(63,001		)	(92,460		)	62,800			(92,661		)
FINANCING ACTIVITIES
Issuance of debt	—			1,238,389			—			—			1,238,389
Repayment of debt	—			(1,107,062		)	—			—			(1,107,062		)
Dividends paid	(124,628		)	—			—			—			(124,628		)
Proceeds from the issuance of common shares	3,347			—			—			—			3,347
Debt issuance costs	—			(12,380		)	—			—			(12,380		)
Repurchase of common shares	(1,834		)	—			—			—			(1,834		)
Purchase of timberland deeds for Rayonier Advanced Materials	(12,677		)	—			—			—			(12,677		)
Debt issuance funds distributed to Rayonier Advanced Materials	(924,943		)	—			—			—			(924,943		)
Proceeds from spin-off of Rayonier Advanced Materials	906,200			—			—			—			906,200
Change in restricted cash reserved for dividends	(75,000		)	—			—			—			(75,000		)
Intercompany distributions	—			(149,525		)	65,318			84,207			—
Other	—			—			(680		)	—			(680		)
CASH USED FOR FINANCING ACTIVITIES	(229,535		)	(30,578		)	64,638			84,207			(111,268		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			(50		)	—			(50		)
CASH AND CASH EQUIVALENTS
Change in cash and cash equivalents	(91,000		)	56,939			56,478			—			22,417
Balance, beginning of year	130,181			11,023			58,440			—			199,644
Balance, end of period	$	39,181		$	67,962		$	114,918		$	—		$	222,061



	CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 2013
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments			Total Consolidated
CASH PROVIDED BY OPERATING ACTIVITIES	$	248,552		$	247,599		$	212,977		$	(473,456	)	$	235,672
INVESTING ACTIVITIES
Capital expenditures	—			(89		)	(74,498		)	—			(74,587		)
Purchase of additional interest in New Zealand joint venture	—			—			(139,879		)	—			(139,879		)
Purchase of timberlands	—			—			(10,447		)	—			(10,447		)
Intercompany purchase of real estate	—			—			984			(984		)	—
Jesup mill cellulose specialties expansion	—			—			(100,185		)	—			(100,185		)
Proceeds from disposition of Wood Products business	—			—			72,953			—			72,953
Change in restricted cash	—			—			7,603			—			7,603
Investment in Subsidiaries	(138,178		)	(387,659		)	—			525,837			—
Other	—			1,700			(1,163		)	—			537
CASH USED FOR INVESTING ACTIVITIES	(138,178		)	(386,048		)	(244,632		)	524,853			(244,005		)
FINANCING ACTIVITIES
Issuance of debt	175,000			280,000			—			—			455,000
Repayment of debt	(250,000		)	(23,087		)	—			—			(273,087		)
Dividends paid	(113,222		)	—			—			—			(113,222		)
Proceeds from the issuance of common shares	6,643			—			—			—			6,643
Excess tax benefits on stock-based compensation	—			—			7,399			—			7,399
Repurchase of common shares	(11,241		)	—			—			—			(11,241		)
Intercompany distributions	—			(108,549		)	159,946			(51,397		)	—
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES	(192,820		)	148,364			167,345			(51,397		)	71,492
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			(174		)	—			(174		)
CASH AND CASH EQUIVALENTS
Change in cash and cash equivalents	(82,446		)	9,915			135,516			—			62,985
Balance, beginning of year	252,888			23,324			4,384			—			280,596
Balance, end of period	$	170,442		$	33,239		$	139,900		$	—		$	343,581