RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS

Subsequent to the filing of its second quarter 2014 Form 10-Q, the Company identified issues related to its historical timber harvest levels, its estimate of merchantable timber inventory and the effect of such estimate on its calculation of depletion expense in each of the quarterly periods ended March 31, 2014 and June 30, 2014. The Company concluded that it had understated its depletion expense in cost of goods sold (referred to as “Cost of sales” in the Company’s consolidated statements of income and comprehensive income) by approximately $2.0 million for each period. As a result, the financial amounts noted below have been restated from amounts previously reported.

The following tables summarize the effect of these restatements for the periods ended June 30, 2014 and March 31, 2014:



	Consolidated Statements of Income and Comprehensive Income for the Three Months Ended June 30, 2014
	As Previously Reported			Restatement			As Restated
Operating Income	$	39,568		$	(1,991	)	$	37,577
Income Tax Expense	(13,515		)	(42		)	(13,557		)
Income from Continuing Operations	6,056			(2,032		)	4,024
Income from Discontinued Operations, net	12,084			—			12,084
Net Income	18,140			(2,032		)	16,108
Net Income Attributable to Rayonier Inc.	18,385			(2,032		)	16,353
Basic Earnings Per Share Attributable to Rayonier Inc.
Continuing Operations	$	0.05		$	(0.02	)	$	0.03
Discontinued Operations	0.10			—			0.10
Net Income	$	0.15		$	(0.02	)	$	0.13
Diluted Earnings Per Share Attributable to Rayonier Inc.
Continuing Operations	$	0.05		$	(0.02	)	$	0.03
Discontinued Operations	0.09			—			0.09
Net Income	$	0.14		$	(0.02	)	$	0.12



	Consolidated Statements of Income and Comprehensive Income for the Six Months Ended June 30, 2014
	As Previously Reported			Restatement			As Restated
Operating Income	$	55,962		$	(3,959	)	$	52,003
Income Tax Expense	(5,939		)	(22		)	(5,961		)
Income from Continuing Operations	18,340			(3,981		)	14,359
Income from Discontinued Operations, net	43,092			—			43,092
Net Income	61,432			(3,981		)	57,451
Net Income Attributable to Rayonier Inc.	61,760			(3,981		)	57,779
Basic Earnings Per Share Attributable to Rayonier Inc.
Continuing Operations	$	0.15		$	(0.03	)	$	0.12
Discontinued Operations	0.34			—			0.34
Net Income	$	0.49		$	(0.03	)	$	0.46
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



	Consolidated Balance Sheet as of June 30, 2014
	As Previously Reported		Restatement			As Restated
Prepaid and Other Current Assets	$	21,565	$	(22	)	$	21,543
Timber and Timberlands, Net of Depletion and Amortization	2,121,614		(3,959		)	2,117,655
Retained earnings	891,629		(3,981		)	887,648



	Consolidated Statements of Income and Comprehensive Income for the Three Months Ended March 31, 2014
	As Previously Reported (a)			Restatement			As Restated (a)
Operating Income	$	65,008		$	(1,969	)	$	63,039
Income Tax Expense	(7,732		)	20			(7,712		)
Income from Continuing Operations	43,292			(1,949		)	41,343
Net Income	43,292			(1,949		)	41,343
Net Income Attributable to Rayonier Inc.	43,375			(1,949		)	41,426
Basic Earnings Per Share Attributable to Rayonier Inc.
Continuing Operations	$	0.34		$	(0.01	)	$	0.33
Discontinued Operations	—			—			—
Net Income	$	0.34		$	(0.01	)	$	0.33
Diluted Earnings Per Share Attributable to Rayonier Inc.
Continuing Operations	$	0.34		$	(0.02	)	$	0.32
Discontinued Operations	—			—			—
Net Income	$	0.34		$	(0.02	)	$	0.32


(a)	Includes the Performance Fibers business that was spun-off on June 27, 2014.



	Consolidated Balance Sheet as of March 31, 2014
	As Previously Reported		Restatement			As Restated
Prepaid and Other Current Assets	$	54,557	$	20		$	54,577
Timber and Timberlands, Net of Depletion and Amortization	2,069,518		(1,969		)	2,067,549
Retained earnings	996,573		(1,949		)	994,624

In addition, in reviewing its depletion expense calculations, 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 totaled $2.6 million and was recorded as additional depletion expense in the third quarter of 2014.