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 INCOME AND COMPREHENSIVE INCOME
	For the Three Months Ended June 30, 2017
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments			Total Consolidated
SALES	—			—				$194,719		—				$194,719
Costs and Expenses
Cost of sales	—			—			143,687			—			143,687
Selling and general expenses	—			4,248			5,998			—			10,246
Other operating expense (income), net	—			20			(6,127		)	—			(6,107		)
	—			4,268			143,558			—			147,826
OPERATING (LOSS) INCOME	—			(4,268		)	51,161			—			46,893
Interest expense	(3,139		)	(4,883		)	(609		)	—			(8,631		)
Interest and miscellaneous income (expense), net	2,345			695			(3,036		)	—			4
Equity in income from subsidiaries	26,955			35,580			—			(62,535		)	—
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	26,161			27,124			47,516			(62,535		)	38,266
Income tax expense	—			(169		)	(7,324		)	—			(7,493		)
INCOME FROM CONTINUING OPERATIONS	26,161			26,955			40,192			(62,535		)	30,773
DISCONTINUED OPERATIONS, NET
Income from discontinued operations, net of income taxes	—			—			—			—			—
NET INCOME	26,161			26,955			40,192			(62,535		)	30,773
Less: Net income attributable to noncontrolling interest	—			—			4,612			—			4,612
NET INCOME ATTRIBUTABLE TO RAYONIER INC.	26,161			26,955			35,580			(62,535		)	26,161
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment, net of income tax	17,199			—			21,484			(17,199		)	21,484
Cash flow hedges, net of income tax	(2,686		)	(5,021		)	3,033			2,686			(1,988		)
Amortization of pension and postretirement plans, net of income tax	116			116			—			(116		)	116
Total other comprehensive income	14,629			(4,905		)	24,517			(14,629		)	19,612
COMPREHENSIVE INCOME	40,790			22,050			64,709			(77,164		)	50,385
Less: Comprehensive income attributable to noncontrolling interest	—			—			9,595			—			9,595
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.		$40,790			$22,050			$55,114			($77,164	)		$40,790



	CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
	For the Three Months Ended June 30, 2016
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments			Total Consolidated
SALES	—			—				$261,550		—				$261,550
Costs and Expenses
Cost of sales	—			—			138,194			—			138,194
Selling and general expenses	—			2,643			8,609			—			11,252
Other operating income (expense), net	—			1,343			(10,806		)	—			(9,463		)
	—			3,986			135,997			—			139,983
OPERATING (LOSS) INCOME	—			(3,986		)	125,553			—			121,567
Interest expense	(3,139		)	(4,384		)	(438		)	—			(7,961		)
Interest and miscellaneous income (expense), net	2,109			685			(2,545		)	—			249
Equity in income from subsidiaries	110,851			119,275			—			(230,126		)	—
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	109,821			111,590			122,570			(230,126		)	113,855
Income tax expense	—			(739		)	(1,537		)	—			(2,276		)
NET INCOME	109,821			110,851			121,033			(230,126		)	111,579
Less: Net income attributable to noncontrolling interest	—			—			1,758			—			1,758
NET INCOME ATTRIBUTABLE TO RAYONIER INC.	109,821			110,851			119,275			(230,126		)	109,821
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment, net of income tax	10,941			—			13,219			(10,941		)	13,219
Cash flow hedges, net of income tax	(12,850		)	(14,102		)	1,626			12,850			(12,476		)
Amortization of pension and postretirement plans, net of income tax	632			632			—			(632		)	632
Total other comprehensive (loss) income	(1,277		)	(13,470		)	14,845			1,277			1,375
COMPREHENSIVE INCOME	108,544			97,381			135,878			(228,849		)	112,954
Less: Comprehensive income attributable to noncontrolling interest	—			—			4,410			—			4,410
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.		$108,544			$97,381			$131,468			($228,849	)		$108,544



	CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
	For the Six Months Ended June 30, 2017
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments			Total Consolidated
SALES	—			—				$381,232		—				$381,232
Costs and Expenses
Cost of sales	—			—			280,100			—			280,100
Selling and general expenses	—			7,784			12,052			—			19,836
Other operating expense (income), net	—			131			(14,989		)	—			(14,858		)
	—			7,915			277,163			—			285,078
OPERATING (LOSS) INCOME	—			(7,915		)	104,069			—			96,154
Interest expense	(6,278		)	(9,741		)	(1,027		)	—			(17,046		)
Interest and miscellaneous income (expense), net	4,547			1,383			(5,408		)	—			522
Equity in income from subsidiaries	61,734			78,323			—			(140,057		)	—
INCOME BEFORE INCOME TAXES	60,003			62,050			97,634			(140,057		)	79,630
Income tax expense	—			(316		)	(13,458		)	—			(13,774		)
NET INCOME	60,003			61,734			84,176			(140,057		)	65,856
Less: Net income attributable to noncontrolling interest	—			—			5,853			—			5,853
NET INCOME ATTRIBUTABLE TO RAYONIER INC.	60,003			61,734			78,323			(140,057		)	60,003
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment, net of income tax	19,202			—			23,916			(19,202		)	23,916
Cash flow hedges, net of income tax	(115		)	(2,389		)	2,954			115			565
Amortization of pension and postretirement plans, net of income tax	233			233			—			(233		)	233
Total other comprehensive income	19,320			(2,156		)	26,870			(19,320		)	24,714
COMPREHENSIVE INCOME	79,323			59,578			111,046			(159,377		)	90,570
Less: Comprehensive income attributable to noncontrolling interest	—			—			11,247			—			11,247
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.		$79,323			$59,578			$99,799			($159,377	)		$79,323



	CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
	For the Six Months Ended June 30, 2016
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments			Total Consolidated
SALES	—			—				$396,393		—				$396,393
Costs and Expenses
Cost of sales	—			—			246,166			—			246,166
Selling and general expenses	—			5,581			15,450			—			21,031
Other operating expense (income), net	—			188			(15,556		)	—			(15,368		)
	—			5,769			246,060			—			251,829
OPERATING (LOSS) INCOME	—			(5,769		)	150,333			—			144,564
Interest expense	(6,278		)	(6,528		)	(2,253		)	—			(15,059		)
Interest and miscellaneous income (expense), net	4,147			1,366			(6,886		)	—			(1,373		)
Equity in income from subsidiaries	126,424			138,272			—			(264,696		)	—
INCOME BEFORE INCOME TAXES	124,293			127,341			141,194			(264,696		)	128,132
Income tax expense	—			(917		)	(578		)	—			(1,495		)
NET INCOME	124,293			126,424			140,616			(264,696		)	126,637
Less: Net income attributable to noncontrolling interest	—			—			2,344			—			2,344
NET INCOME ATTRIBUTABLE TO RAYONIER INC.	124,293			126,424			138,272			(264,696		)	124,293
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment, net of income tax	10,737			(4,606		)	20,629			(10,737		)	16,023
Cash flow hedges, net of income tax	(26,773		)	(28,988		)	2,738			26,773			(26,250		)
Amortization of pension and postretirement plans, net of income tax	1,249			1,249			—			(1,249		)	1,249
Total other comprehensive (loss) income	(14,787		)	(32,345		)	23,367			14,787			(8,978		)
COMPREHENSIVE INCOME	109,506			94,079			163,983			(249,909		)	117,659
Less: Comprehensive income attributable to noncontrolling interest	—			—			8,153			—			8,153
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.		$109,506			$94,079			$155,830			($249,909	)		$109,506



	CONDENSED CONSOLIDATING BALANCE SHEETS
	As of June 30, 2017
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments			Total Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$81,157			$12,585			$42,817		—				$136,559
Accounts receivable, less allowance for doubtful accounts	—			1,911			28,270			—			30,181
Insurance settlement receivable	73,000			—			—			—			73,000
Inventory	—			—			26,363			—			26,363
Prepaid expenses	—			1,848			12,879			—			14,727
Other current assets	—			14			4,383			—			4,397
Total current assets	154,157			16,358			114,712			—			285,227
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	—			—			2,509,485			—			2,509,485
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS	—			—			74,888			—			74,888
NET PROPERTY, PLANT AND EQUIPMENT	—			105			21,455			—			21,560
RESTRICTED CASH	—			—			11,781			—			11,781
INVESTMENT IN SUBSIDIARIES	1,516,570			2,812,673			—			(4,329,243		)	—
INTERCOMPANY RECEIVABLE	32,573			(622,196		)	589,623			—			—
OTHER ASSETS	2			7,452			42,399			—			49,853
TOTAL ASSETS		$1,703,302			$2,214,392			$3,364,343			($4,329,243	)		$2,952,794
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	—				$2,186			$26,510		—				$28,696
Insurance settlement payable	73,000			—			—			—			73,000
Current maturities of long-term debt	31,525			—			—			—			31,525
Accrued taxes	—			(41		)	5,415			—			5,374
Accrued payroll and benefits	—			2,460			2,632			—			5,092
Accrued interest	3,047			1,940			238			—			5,225
Other current liabilities	—			647			29,069			—			29,716
Total current liabilities	107,572			7,192			63,864			—			178,628
LONG-TERM DEBT, NET OF DEFERRED FINANCING COSTS	291,725			663,473			78,423			—			1,033,621
PENSION AND OTHER POSTRETIREMENT BENEFITS	—			32,274			(685		)	—			31,589
OTHER NON-CURRENT LIABILITIES	—			13,844			27,002			—			40,846
INTERCOMPANY PAYABLE	(267,715		)	(18,961		)	286,676			—			—
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY	1,571,720			1,516,570			2,812,673			(4,329,243		)	1,571,720
Noncontrolling interest	—			—			96,390			—			96,390
TOTAL SHAREHOLDERS’ EQUITY	1,571,720			1,516,570			2,909,063			(4,329,243		)	1,668,110
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$1,703,302			$2,214,392			$3,364,343			($4,329,243	)		$2,952,794



	CONDENSED CONSOLIDATING BALANCE SHEETS
	As of December 31, 2016
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments			Total Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$21,453			$9,461			$54,995		—				$85,909
Accounts receivable, less allowance for doubtful accounts	—			2,991			17,673			—			20,664
Inventory	—			—			21,379			—			21,379
Prepaid expenses	—			427			11,380			—			11,807
Assets held for sale	—			—			23,171			—			23,171
Other current assets	—			236			1,638			—			1,874
Total current assets	21,453			13,115			130,236			—			164,804
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	—			—			2,291,015			—			2,291,015
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS	—			—			70,374			—			70,374
NET PROPERTY, PLANT AND EQUIPMENT	—			177			13,857			—			14,034
RETRICTED CASH	—			—			71,708			—			71,708
INVESTMENT IN SUBSIDIARIES	1,422,081			2,671,428			—			(4,093,509		)	—
INTERCOMPANY RECEIVABLE	26,472			(611,571		)	585,099			—			—
OTHER ASSETS	2			46,846			26,977			—			73,825
TOTAL ASSETS		$1,470,008			$2,119,995			$3,189,266			($4,093,509	)		$2,685,760
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	—				$1,194			$21,143		—				$22,337
Current maturities of long-term debt	31,676			—			—			—			31,676
Accrued taxes	—			(111		)	2,768			—			2,657
Accrued payroll and benefits	—			5,013			4,264			—			9,277
Accrued interest	3,047			2,040			253			—			5,340
Other current liabilities	—			165			20,514			—			20,679
Total current liabilities	34,723			8,301			48,942			—			91,966
LONG-TERM DEBT, NET OF DEFERRED FINANCING COSTS	291,390			663,343			75,472			—			1,030,205
PENSION AND OTHER POSTRETIREMENT BENEFITS	—			32,541			(685		)	—			31,856
OTHER NON-CURRENT LIABILITIES	—			12,690			22,291			—			34,981
INTERCOMPANY PAYABLE	(267,715		)	(18,961		)	286,676			—			—
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY	1,411,610			1,422,081			2,671,428			(4,093,509		)	1,411,610
Noncontrolling interest	—			—			85,142			—			85,142
TOTAL SHAREHOLDERS’ EQUITY	1,411,610			1,422,081			2,756,570			(4,093,509		)	1,496,752
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$1,470,008			$2,119,995			$3,189,266			($4,093,509	)		$2,685,760



	CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
	For the Six Months Ended June 30, 2017
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments		Total Consolidated
CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES		($7,648	)		$59,557			$76,406		—			$128,315
INVESTING ACTIVITIES
Capital expenditures	—			—			(29,840		)	—		(29,840		)
Real estate development investments	—			—			(5,599		)	—		(5,599		)
Purchase of timberlands	—			—			(237,235		)	—		(237,235		)
Net proceeds from large disposition	—			—			42,029			—		42,029
Rayonier office building under construction	—			—			(5,573		)	—		(5,573		)
Change in restricted cash	—			—			59,927			—		59,927
Investment in subsidiaries	—			6,932			—			(6,932	)	—
Other	—			—			1,033			—		1,033
CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES	—			6,932			(175,258		)	(6,932	)	(175,258		)
FINANCING ACTIVITIES
Issuance of debt	—			25,000			38,389			—		63,389
Repayment of debt	—			(15,000		)	(45,422		)	—		(60,422		)
Dividends paid	(62,825		)	—			—			—		(62,825		)
Proceeds from the issuance of common shares under incentive stock plan	3,206			—			—			—		3,206
Proceeds from the issuance of common shares under equity offering	152,390			—			—			—		152,390
Repurchase of common shares	—			—			—			—		—
Intercompany distributions	(25,419		)	(73,365		)	91,852			6,932		—
Other	—			—			—			—		—
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES	67,352			(63,365		)	84,819			6,932		95,738
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			1,855			—		1,855
CASH AND CASH EQUIVALENTS
Change in cash and cash equivalents	59,704			3,124			(12,178		)	—		50,650
Balance, beginning of year	21,453			9,461			54,995			—		85,909
Balance, end of period		$81,157			$12,585			$42,817		—			$136,559



	CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
	For the Six Months Ended June 30, 2016
	Rayonier Inc. (Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments		Total Consolidated
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES		($4,055	)		($7,193	)		$88,227		—			$76,979
INVESTING ACTIVITIES
Capital expenditures	—			—			(26,180		)	—		(26,180		)
Real estate development investments	—			—			(3,018		)	—		(3,018		)
Purchase of timberlands	—			—			(276,614		)	—		(276,614		)
Assets purchased in business acquisition	—			—			(1,113		)	—		(1,113		)
Net proceeds from large disposition	—			—			126,965			—		126,965
Rayonier office building under construction	—			—			(1,155		)	—		(1,155		)
Change in restricted cash	—			—			17,985			—		17,985
Investment in subsidiaries	—			262,505			—			(262,505	)	—
Other	—			—			(2,066		)	—		(2,066		)
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES	—			262,505			(165,196		)	(262,505	)	(165,196		)
FINANCING ACTIVITIES
Issuance of debt	—			518,000			135,775			—		653,775
Repayment of debt	—			(135,000		)	(291,173		)	—		(426,173		)
Dividends paid	(61,409		)	—			—			—		(61,409		)
Proceeds from the issuance of common shares	644			—			—			—		644
Repurchase of common shares	—			(690		)	—			—		(690		)
Debt issuance costs	—			(818		)	—			—		(818		)
Intercompany distributions	137,844			(638,434		)	238,085			262,505		—
Other	(139		)	—			—			—		(139		)
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES	76,940			(256,942		)	82,687			262,505		165,190
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			904			—		904
CASH AND CASH EQUIVALENTS
Change in cash and cash equivalents	72,885			(1,630		)	6,622			—		77,877
Balance, beginning of year	2,472			13,217			36,088			—		51,777
Balance, end of period		$75,357			$11,587			$42,710		—			$129,654