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 March 2012, Rayonier Inc. issued $325 million of 3.75% Senior Notes due 2022. 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.

The subsidiary guarantors, Rayonier Operating Company LLC (“ROC”) and Rayonier TRS Holdings Inc., are wholly-owned by the Parent Company, Rayonier Inc. The notes are fully and unconditionally guaranteed on a joint and several basis by the guarantor subsidiaries.



	CONDENSED CONSOLIDATING STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME
	For the Three Months Ended September 30, 2016
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments			Total Consolidated
SALES	—			—				$171,421		—				$171,421
Costs and Expenses
Cost of sales	—			—			116,624			—			116,624
Selling and general expenses	—			5,904			4,703			—			10,607
Other operating expense (income), net	—			190			(5,689		)	—			(5,499		)
	—			6,094			115,638			—			121,732
OPERATING (LOSS) INCOME	—			(6,094		)	55,783			—			49,689
Interest expense	(3,139		)	(5,150		)	(255		)	—			(8,544		)
Interest and miscellaneous income (expense), net	2,199			694			(2,635		)	—			258
Equity in income from subsidiaries	40,295			50,315			—			(90,610		)	—
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	39,355			39,765			52,893			(90,610		)	41,403
Income tax benefit (expense)	—			530			(1,309		)	—			(779		)
NET INCOME	39,355			40,295			51,584			(90,610		)	40,624
Less: Net income attributable to noncontrolling interest	—			—			1,269			—			1,269
NET INCOME ATTRIBUTABLE TO RAYONIER INC.	39,355			40,295			50,315			(90,610		)	39,355
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment, net of income tax	9,793			—			12,020			(9,791		)	12,022
Cash flow hedges, net of income tax	4,044			3,530			665			(4,044		)	4,195
Actuarial change and amortization of pension and postretirement plans, net of income tax	632			632			—			(632		)	632
Total other comprehensive income	14,469			4,162			12,685			(14,467		)	16,849
COMPREHENSIVE INCOME	53,824			44,457			64,269			(105,077		)	57,473
Less: Comprehensive income attributable to noncontrolling interest	—			—			3,649			—			3,649
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.		$53,824			$44,457			$60,620			($105,077	)		$53,824



	CONDENSED CONSOLIDATING STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME
	For the Three Months Ended September 30, 2015
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments			Total Consolidated
SALES	—			—				$151,657		—				$151,657
Costs and Expenses
Cost of sales	—			—			116,044			—			116,044
Selling and general expenses	—			4,412			6,277			—			10,689
Other operating income, net	—			16			(2,871		)	—			(2,855		)
	—			4,428			119,450			—			123,878
OPERATING (LOSS) INCOME	—			(4,428		)	32,207			—			27,779
Interest expense	(3,227		)	(2,240		)	(2,114		)	—			(7,581		)
Interest and miscellaneous income (expense), net	1,980			583			(4,121		)	—			(1,558		)
Equity in income from subsidiaries	20,916			26,647			—			(47,563		)	—
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	19,669			20,562			25,972			(47,563		)	18,640
Income tax benefit (expense)	—			354			187			—			541
NET INCOME	19,669			20,916			26,159			(47,563		)	19,181
Less: Net loss attributable to noncontrolling interest	—			—			(488		)	—			(488		)
NET INCOME ATTRIBUTABLE TO RAYONIER INC.	19,669			20,916			26,647			(47,563		)	19,669
OTHER COMPREHENSIVE (LOSS) INCOME
Foreign currency translation adjustment, net of income tax	(8,662		)	(8,662		)	(13,370		)	17,324			(13,370		)
Cash flow hedges, net of income tax	(13,954		)	(13,954		)	(14,120		)	27,908			(14,120		)
Actuarial change and amortization of pension and postretirement plans, net of income tax	890			890			117			(1,007		)	890
Total other comprehensive loss	(21,726		)	(21,726		)	(27,373		)	44,225			(26,600		)
COMPREHENSIVE LOSS	(2,057		)	(810		)	(1,214		)	(3,338		)	(7,419		)
Less: Comprehensive loss attributable to noncontrolling interest	—			—			(5,363		)	—			(5,363		)
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO RAYONIER INC.		($2,057	)		($810	)		$4,149			($3,338	)		($2,056	)



	CONDENSED CONSOLIDATING STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME
	For the Nine Months Ended September 30, 2016
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments			Total Consolidated
SALES	—			—				$567,814		—				$567,814
Costs and Expenses
Cost of sales	—			—			362,790			—			362,790
Selling and general expenses	—			11,485			20,153			—			31,638
Other operating expense (income), net	—			378			(21,245		)	—			(20,867		)
	—			11,863			361,698			—			373,561
OPERATING (LOSS) INCOME	—			(11,863		)	206,116			—			194,253
Interest expense	(9,417		)	(11,678		)	(2,508		)	—			(23,603		)
Interest and miscellaneous income (expense), net	6,346			2,059			(9,520		)	—			(1,115		)
Equity in income from subsidiaries	166,719			188,588			—			(355,307		)	—
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	163,648			167,106			194,088			(355,307		)	169,535
Income tax expense	—			(387		)	(1,887		)	—			(2,274		)
NET INCOME	163,648			166,719			192,201			(355,307		)	167,261
Less: Net income attributable to noncontrolling interest	—			—			3,613			—			3,613
NET INCOME ATTRIBUTABLE TO RAYONIER INC.	163,648			166,719			188,588			(355,307		)	163,648
OTHER COMPREHENSIVE INCOME (LOSS)				—
Foreign currency translation adjustment, net of income tax	20,529			(4,607		)	32,653			(20,529		)	28,046
Cash flow hedges, net of income tax	(22,733		)	(25,458		)	3,403			22,733			(22,055		)
Actuarial change and amortization of pension and postretirement plans, net of income tax	1,881			1,881			—			(1,881		)	1,881
Total other comprehensive (loss) income	(323		)	(28,184		)	36,056			323			7,872
COMPREHENSIVE INCOME	163,325			138,535			228,257			(354,984		)	175,133
Less: Comprehensive income attributable to noncontrolling interest	—			—			11,808			—			11,808
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.		$163,325			$138,535			$216,449			($354,984	)		$163,325



	CONDENSED CONSOLIDATING STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME
	For the Nine Months Ended September 30, 2015
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments			Total Consolidated
SALES	—			—				$407,764		—				$407,764
Costs and Expenses
Cost of sales	—			—			326,966			—			326,966
Selling and general expenses	—			15,691			18,624			—			34,315
Other operating (income) expense, net	—			(445		)	(15,122		)	—			(15,567		)
	—			15,246			330,468			—			345,714
OPERATING (LOSS) INCOME	—			(15,246		)	77,296			—			62,050
Interest expense	(9,564		)	(7,304		)	(7,740		)	—			(24,608		)
Interest and miscellaneous income (expense), net	5,787			1,956			(11,993		)	—			(4,250		)
Equity in income from subsidiaries	39,657			58,010			—			(97,667		)	—
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	35,880			37,416			57,563			(97,667		)	33,192
Income tax benefit (expense)	—			2,241			(932		)	—			1,309
NET INCOME	35,880			39,657			56,631			(97,667		)	34,501
Less: Net loss attributable to noncontrolling interest	—			—			(1,379		)	—			(1,379		)
NET INCOME ATTRIBUTABLE TO RAYONIER INC.	35,880			39,657			58,010			(97,667		)	35,880
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment, net of income tax	(37,100		)	(37,100		)	(53,088		)	74,201			(53,087		)
Cash flow hedges, net of income tax	(16,465		)	(16,465		)	(17,983		)	32,930			(17,983		)
Actuarial change and amortization of pension and postretirement plans, net of income tax	2,414			2,414			132			(2,546		)	2,414
Total other comprehensive (loss) income	(51,151		)	(51,151		)	(70,939		)	104,585			(68,656		)
COMPREHENSIVE (LOSS) INCOME	(15,271		)	(11,494		)	(14,308		)	6,918			(34,155		)
Less: Comprehensive loss attributable to noncontrolling interest	—			—			(18,884		)	—			(18,884		)
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO RAYONIER INC.		($15,271	)		($11,494	)		$4,576			$6,918			($15,271	)



	CONDENSED CONSOLIDATING BALANCE SHEETS
	As of September 30, 2016
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments			Total Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$59,966			$5,320			$44,753		—				$110,039
Accounts receivable, less allowance for doubtful accounts	—			2,050			22,681			—			24,731
Inventory	—			—			16,064			—			16,064
Prepaid expenses	—			985			11,579			—			12,564
Assets held for sale	—			—			47,361			—			47,361
Other current assets	—			242			3,127			—			3,369
Total current assets	59,966			8,597			145,565			—			214,128
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	—			—			2,325,489			—			2,325,489
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS	—			—			70,324			—			70,324
NET PROPERTY, PLANT AND EQUIPMENT	—			213			10,863			—			11,076
INVESTMENT IN SUBSIDIARIES	1,339,173			2,644,299			—			(3,983,472		)	—
INTERCOMPANY RECEIVABLE	23,396			(606,285		)	582,889			—			—
OTHER ASSETS	3			21,937			28,441			—			50,381
TOTAL ASSETS		$1,422,538			$2,068,761			$3,163,571			($3,983,472	)		$2,671,398
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	—				$2,106			$21,629		—				$23,735
Current maturities of long-term debt	31,752			—			—			—			31,752
Accrued taxes	—			(149		)	7,041			—			6,892
Accrued payroll and benefits	—			3,115			3,109			—			6,224
Accrued interest	6,094			1,960			259			—			8,313
Other current liabilities	—			372			22,855			—			23,227
Total current liabilities	37,846			7,404			54,893			—			100,143
LONG-TERM DEBT, NET OF DEFERRED FINANCING COSTS	291,222			663,292			78,774			—			1,033,288
PENSION AND OTHER POSTRETIREMENT BENEFITS	—			35,386			(684		)	—			34,702
OTHER NON-CURRENT LIABILITIES	—			42,466			12,218			—			54,684
INTERCOMPANY PAYABLE	(267,715		)	(18,960		)	286,675			—			—
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY	1,361,185			1,339,173			2,644,299			(3,983,472		)	1,361,185
Noncontrolling interest	—			—			87,396			—			87,396
TOTAL SHAREHOLDERS’ EQUITY	1,361,185			1,339,173			2,731,695			(3,983,472		)	1,448,581
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$1,422,538			$2,068,761			$3,163,571			($3,983,472	)		$2,671,398



	CONDENSED CONSOLIDATING BALANCE SHEETS
	As of December 31, 2015
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments			Total Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$2,472			$13,217			$36,088		—				$51,777
Accounts receivable, less allowance for doubtful accounts	—			1,870			18,352			—			20,222
Inventory	—			—			15,351			—			15,351
Prepaid expenses	—			443			12,211			—			12,654
Other current assets	—			4,876			805			—			5,681
Total current assets	2,472			20,406			82,807			—			105,685
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	—			—			2,066,780			—			2,066,780
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS	—			—			65,450			—			65,450
NET PROPERTY, PLANT AND EQUIPMENT	—			330			6,412			—			6,742
INVESTMENT IN SUBSIDIARIES	1,321,681			2,212,405			—			(3,534,086		)	—
INTERCOMPANY RECEIVABLE	34,567			(610,450		)	575,883			—			—
OTHER ASSETS	3			18,718			52,560			—			71,281
TOTAL ASSETS		$1,358,723			$1,641,409			$2,849,892			($3,534,086	)		$2,315,938
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	609				$1,463			$19,407		—				$21,479
Accrued taxes	—			(10		)	3,695			—			3,685
Accrued payroll and benefits	—			3,594			3,443			—			7,037
Accrued interest	3,047			666			2,440			—			6,153
Other current liabilities	—			262			20,841			—			21,103
Total current liabilities	3,656			5,975			49,826			—			59,457
LONG-TERM DEBT, NET OF DEFERRED FINANCING COSTS	322,697			280,978			226,879			—			830,554
PENSION AND OTHER POSTRETIREMENT BENEFITS	—			34,822			(685		)	—			34,137
OTHER NON-CURRENT LIABILITIES	—			16,914			13,136			—			30,050
INTERCOMPANY PAYABLE	(255,714		)	(18,961		)	274,675			—			—
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY	1,288,084			1,321,681			2,212,405			(3,534,086		)	1,288,084
Noncontrolling interest	—			—			73,656			—			73,656
TOTAL SHAREHOLDERS’ EQUITY	1,288,084			1,321,681			2,286,061			(3,534,086		)	1,361,740
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$1,358,723			$1,641,409			$2,849,892			($3,534,086	)		$2,315,938



	CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
	For the Nine Months Ended September 30, 2016
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments		Total Consolidated
CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES		($578	)		$26,589			$137,897		—			$163,908
INVESTING ACTIVITIES
Capital expenditures	—			—			(40,246		)	—		(40,246		)
Real estate development investments	—			—			(4,815		)	—		(4,815		)
Purchase of timberlands	—			—			(353,828		)	—		(353,828		)
Assets purchased in business acquisition	—			—			(1,113		)	—		(1,113		)
Net proceeds from large disposition	—			—			126,965			—		126,965
Rayonier office building under construction	—			—			(3,933		)	—		(3,933		)
Change in restricted cash	—			—			22,430			—		22,430
Investment in subsidiaries	—			(285,937		)	—			285,937		—
Other	—			—			444			—		444
CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES	—			(285,937		)	(254,096		)	285,937		(254,096		)
FINANCING ACTIVITIES
Issuance of debt	—			548,000			146,096			—		694,096
Repayment of debt	—			(140,000		)	(314,419		)	—		(454,419		)
Dividends paid	(92,095		)	—			—			—		(92,095		)
Proceeds from the issuance of common shares	889			—			—			—		889
Repurchase of common shares	(690		)	—			—			—		(690		)
Debt issuance costs	—			(818		)	—			—		(818		)
Issuance of intercompany notes	(12,000		)	—			12,000			—		—
Intercompany distributions	162,107			(155,731		)	279,561			(285,937	)	—
Other	(139		)	—			—			—		(139		)
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES	58,072			251,451			123,238			(285,937	)	146,824
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			1,626			—		1,626
CASH AND CASH EQUIVALENTS
Change in cash and cash equivalents	57,494			(7,897		)	8,665			—		58,262
Balance, beginning of year	2,472			13,217			36,088			—		51,777
Balance, end of period		$59,966			$5,320			$44,753		—			$110,039



	CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
	For the Nine Months Ended September 30, 2015
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments			Total Consolidated
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES		$77,316			$92,414			$64,901			($91,228	)		$143,403
INVESTING ACTIVITIES
Capital expenditures	—			(78		)	(37,133		)	—			(37,211		)
Real estate development investments	—			—			(2,029		)	—			(2,029		)
Purchase of timberlands	—			—			(88,466		)	—			(88,466		)
Rayonier office building under construction	—			—			(369		)	—			(369		)
Change in restricted cash	—			—			(17,835		)	—			(17,835		)
Investment in subsidiaries	—			(75,946		)	—			75,946			—
Other	—			—			3,039			—			3,039
CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES	—			(76,024		)	(142,793		)	75,946			(142,871		)
FINANCING ACTIVITIES
Issuance of debt	—			374,000			5,027			—			379,027
Repayment of debt	—			(294,472		)	(6,399		)	—			(300,871		)
Dividends paid	(94,280		)	—			—			—			(94,280		)
Proceeds from the issuance of common shares	1,322			—			—			—			1,322
Repurchase of common shares	(73,621		)	—			—			—			(73,621		)
Debt issuance costs	—			(1,678		)	—			—			(1,678		)
Intercompany distributions	—			(91,585		)	76,303			15,282			—
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES	(166,579		)	(13,735		)	74,931			15,282			(90,101		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			(6,234		)	—			(6,234		)
CASH AND CASH EQUIVALENTS
Change in cash and cash equivalents	(89,263		)	2,655			(9,195		)	—			(95,803		)
Balance, beginning of year	102,218			8,105			51,235			—			161,558
Balance, end of period		$12,955			$10,760			$42,040		—				$65,755