0000950123-95-002333.txt : 19950815 0000950123-95-002333.hdr.sgml : 19950815 ACCESSION NUMBER: 0000950123-95-002333 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RAYONIER INC CENTRAL INDEX KEY: 0000052827 STANDARD INDUSTRIAL CLASSIFICATION: PULP MILLS [2611] IRS NUMBER: 132607329 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06780 FILM NUMBER: 95563450 BUSINESS ADDRESS: STREET 1: 1177 SUMMER ST CITY: STAMFORD STATE: CT ZIP: 06904 BUSINESS PHONE: 2033487000 MAIL ADDRESS: STREET 1: 1177 SUMMER STREET CITY: STAMFORD STATE: CT ZIP: 06905-5529 FORMER COMPANY: FORMER CONFORMED NAME: ITT RAYONIER INC /CT/ DATE OF NAME CHANGE: 19940422 FORMER COMPANY: FORMER CONFORMED NAME: ITT RAYONIER INC DATE OF NAME CHANGE: 19920703 10-Q 1 RAYONIER, INC. - FORM 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ........... TO ............ COMMISSION FILE NUMBER 1-6780 RAYONIER INC. Incorporated in the State of North Carolina I.R.S. Employer Identification Number 13-2607329 1177 Summer Street, Stamford, Connecticut 06905-5529 (Principal Executive Office) Telephone Number: (203) 348-7000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. YES (X) NO ( ) As of August 1, 1995, there were 29,629,779 Common Shares of the Registrant outstanding. --------- 2 RAYONIER INC. TABLE OF CONTENTS
PAGE ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Statements of Consolidated Income for the Three Months and Six Months Ended June 30, 1995 and 1994 1 Consolidated Balance Sheets as of June 30, 1995 and December 31, 1994 2 Statements of Consolidated Cash Flows for the Six Months Ended June 30, 1995 and 1994 3 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 4-6 Item 3. Selected Operating Data 7 PART II. OTHER INFORMATION Item 1. Legal Proceedings 8 Item 4. Submission of Matters to a Vote of Security Holders 8 Item 6. Exhibits and Reports on Form 8-K 8 Signature 8 Exhibit Index 9
i 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The following unaudited financial statements reflect, in the opinion of Rayonier Inc. (Rayonier or the Company), all adjustments (which include only normal recurring adjustments) necessary for a fair presentation of the results of operations, the financial position, and the cash flows for the periods presented. For a full description of accounting policies, see Notes to Consolidated Financial Statements in the 1994 Annual Report on Form 10-K. RAYONIER INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED) (THOUSANDS OF DOLLARS, EXCEPT PER SHARE INFORMATION)
THREE MONTHS SIX MONTHS ENDED JUNE 30, ENDED JUNE 30, -------------------------------- -------------------------------- 1995 1994 1995 1994 ------------- ------------- ------------- ------------- SALES $ 313,564 $ 250,770 $ 599,396 $ 508,497 ------------- ------------- ------------- ------------- COSTS AND EXPENSES Cost of sales 252,213 210,222 476,257 409,354 Selling and general expenses 9,426 7,545 17,813 14,253 Other operating income, net (1,766) (2,228) (3,209) (1,513) ------------- ------------- ------------- ------------- 259,873 215,539 490,861 422,094 ------------- ------------- ------------- ------------- OPERATING INCOME 53,691 35,231 108,535 86,403 Interest expense (8,773) (7,845) (17,308) (14,591) Interest and miscellaneous income, net 999 751 1,667 1,284 Minority interest (7,272) (6,295) (16,572) (17,371) ------------- ------------- ------------- ------------- INCOME BEFORE INCOME TAXES 38,645 21,842 76,322 55,725 Income taxes (12,307) (7,728) (24,835) (19,892) ------------- ------------- ------------- ------------- NET INCOME $ 26,338 $ 14,114 $ 51,487 $ 35,833 ============= ============= ============= ============= NET INCOME PER COMMON SHARE $ 0.88 $ 0.48 $ 1.72 $ 1.21 ============= ============= ============= ============= Weighted average Common Shares outstanding 29,955,149 29,670,364 29,895,951 29,652,744 ============= ============= ============= =============
1 4 RAYONIER INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (THOUSANDS OF DOLLARS) ASSETS
JUNE 30, DECEMBER 31, 1995 1994 ---------- ------------ CURRENT ASSETS Cash $ 5,354 $ 9,178 Accounts receivable, less allowance for doubtful accounts of $4,341 and $4,358 128,998 103,892 Inventories Finished goods 60,654 39,929 Work in process 24,804 18,221 Raw materials 54,398 34,022 Manufacturing and maintenance supplies 29,719 27,567 ---------- ---------- 169,575 119,739 Deferred income taxes 4,486 4,382 Prepaid timber stumpage 47,070 47,338 Other current assets 15,596 12,692 ---------- ---------- Total current assets 371,079 297,221 OTHER ASSETS 28,416 29,439 TIMBER STUMPAGE 38,866 36,756 TIMBER, TIMBERLANDS AND LOGGING ROADS, NET OF DEPLETION AND AMORTIZATION 481,434 476,132 PROPERTY, PLANT AND EQUIPMENT Land, buildings, machinery and equipment 1,250,274 1,202,484 Less -- accumulated depreciation 562,855 530,857 ---------- ---------- 687,419 671,627 ---------- ---------- $1,607,214 $1,511,175 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 98,229 $ 83,658 Bank loans and current maturities of long-term debt 51,086 302 Accrued taxes 6,637 7,676 Accrued payroll and benefits 19,478 20,043 Other current liabilities 33,323 41,831 Current reserves for dispositions and discontinued operations 20,744 25,370 ---------- ---------- Total current liabilities 229,497 178,880 DEFERRED INCOME TAXES 137,819 127,638 LONG-TERM DEBT 482,708 482,920 NONCURRENT RESERVES FOR DISPOSITIONS AND DISCONTINUED OPERATIONS (Net of discontinued operations' assets of $12,549 and $13,023) 16,599 20,325 OTHER NONCURRENT LIABILITIES 26,374 23,695 MINORITY INTEREST 21,479 22,516 SHAREHOLDERS' EQUITY Common Shares, 60 million shares authorized, 29,621,937 and 29,574,807 shares issued and outstanding 158,439 157,581 Retained earnings 534,299 497,620 ---------- ---------- Total shareholders' equity 692,738 655,201 ---------- ---------- $1,607,214 $1,511,175 ========== ==========
2 5 RAYONIER INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED) (THOUSANDS OF DOLLARS)
SIX MONTHS ENDED JUNE 30, -------------------------- 1995 1994 ---------- ---------- OPERATING ACTIVITIES Net income $ 51,487 $ 35,833 Non-cash items included in income: Depreciation, depletion and amortization 47,238 45,448 Deferred income taxes 7,912 2,451 Increase in other noncurrent liabilities 2,679 830 Change in accounts receivable, inventories and accounts payable (60,371) (16,199) Decrease (increase) in prepaid timber stumpage 268 (15,244) (Decrease) increase in accrued taxes (1,039) 6,299 Change in reserves for dispositions and discontinued operations (2,533) (2,252) Other changes in working capital (11,977) (6,726) ---------- ---------- Cash provided by operating activities 33,664 50,440 ========== ========== INVESTING ACTIVITIES Capital expenditures, net of sales and retirements of $713 and $220 (68,332) (45,823) Expenditures for dispositions and discontinued operations, net of tax benefits of $2,165 and $2,359 (3,654) (3,981) Change in other assets and timber stumpage (1,087) (10,745) ---------- ---------- Cash used for investing activities (73,073) (60,549) ========== ========== FINANCING ACTIVITIES Issuance of debt 50,773 188,000 Repayments of debt (201) (147,981) Dividends (14,808) (10,644) Issuance of Common Shares 858 64 Decrease in minority interest (1,037) (15,962) ---------- ---------- Cash provided by financing activities 35,585 13,477 ========== ========== CASH Net (decrease) increase in cash (3,824) 3,368 Balance at beginning of period 9,178 5,989 ---------- ---------- Balance at end of period $ 5,354 $ 9,357 ========== ========== Supplemental disclosures of cash flow information Cash paid during the period for: Interest $ 16,755 $ 15,685 ========== ========== Income taxes, net of refunds $ 19,251 $ 11,316 ========== ==========
3 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The sales and operating income of Rayonier's business segments for the three months and six months ended June 30, 1995 and 1994 were as follows (thousands of dollars):
THREE MONTHS SIX MONTHS ENDED JUNE 30, ENDED JUNE 30, -------------------------- -------------------------- 1995 1994 1995 1994 ---------- ---------- ---------- ---------- SALES TIMBER AND WOOD PRODUCTS: Log Trading and Merchandising $ 121,301 $ 85,117 $ 201,302 $ 160,709 Timberlands Management and Stumpage 37,508 35,007 87,661 90,286 Wood Products 19,409 21,155 34,532 40,383 ---------- ---------- ---------- ---------- Total Before Intrasegment Eliminations 178,218 141,279 323,495 291,378 Intrasegment Eliminations (5,564) (5,334) (9,748) (9,830) ---------- ---------- ---------- ---------- TOTAL TIMBER AND WOOD PRODUCTS 172,654 135,945 313,747 281,548 ---------- ---------- ---------- ---------- SPECIALTY PULP PRODUCTS: Chemical Cellulose 82,423 74,114 166,029 145,121 Fluff and Specialty Paper Pulps 64,933 41,518 132,093 83,566 ---------- ---------- ---------- ---------- TOTAL SPECIALTY PULP PRODUCTS 147,356 115,632 298,122 228,687 ---------- ---------- ---------- ---------- Intersegment Eliminations (6,446) (807) (12,473) (1,738) ---------- ---------- ---------- ---------- TOTAL SALES $ 313,564 $ 250,770 $ 599,396 $ 508,497 ========== ========== ========== ========== OPERATING INCOME Timber and Wood Products $ 35,747 $ 37,938 $ 78,501 $ 91,428 Specialty Pulp Products 20,374 (1,001) 35,647 (469) Corporate and Other (3,330) (1,749) (5,501) (4,652) Intersegment Eliminations 900 43 (112) 96 ---------- ---------- ---------- ---------- TOTAL OPERATING INCOME $ 53,691 $ 35,231 $ 108,535 $ 86,403 ========== ========== ========== ==========
RESULTS OF OPERATIONS Sales and Operating Income Sales of $314 million for the second quarter of 1995 were $63 million or 25 percent higher than second quarter of 1994 due to stronger sales prices for Specialty Pulp Products and increased sales volume from Log Trading and Merchandising. Operating income for the quarter of $54 million was $18 million or 52 percent higher than last year's level reflecting increased pulp prices. Sales for the six months ended June 30, 1995 of $599 million were $91 million or 18 percent higher than the prior year, and operating income of $109 million increased $22 million or 26 percent from the prior year. 4 7 Timber and Wood Products Timber and Wood Products' sales in the second quarter were $173 million, up $37 million from the second quarter of 1994. The improvement in sales was driven by a significant increase in worldwide log trading volume. Operating income for the quarter of $36 million was down slightly from the second quarter of 1994 as improved log trading volume was offset by lower lumber selling prices and higher log costs. Sales for the six month period were $314 million, up $32 million from the same period of 1994, with operating income of $79 million down $13 million from the prior year period. In the first quarter of 1994, results for the Timber and Wood Products segment were unusually strong as a result of a late 1993 market correction that caused customers to delay the harvesting of high-priced Northwest timber from 1993 to 1994. Log trading and merchandising sales, which include the Company's New Zealand log sales, improved significantly from the 1994 second quarter due to stronger volume and selling prices in both export and domestic markets. However, overall margins were unchanged as higher log costs largely offset selling price gains. Timberlands management and stumpage sales and operating margins were up from last year's second quarter due to higher stumpage prices in the Southeast U.S. region and increased harvest volume in the Northwest U.S. region. Wood products sales and operating margins were down from the prior year due to lower sales prices caused by weak domestic construction activity. Wood products margins were also negatively impacted by increased log costs. Specialty Pulp Products Specialty Pulp Products' second quarter sales were $147 million, up $32 million from last year's second quarter, and operating income rose $21 million. Stronger pulp pricing and improved operating rates were partially offset by higher wood and chemical costs. First half results for Specialty Pulp Products benefited from improved prices and operating rates. Sales for the six month period increased $69 million to $298 million and operating income improved from break-even in 1994 to $36 million. Pulp markets have continued to strengthen in 1995 and Specialty Pulp Products will benefit in the third quarter from another round of fluff pulp price increases and the second substantial price increase this year for chemical cellulose. Intersegment Six months intersegment sales of $12 million in 1995 were greater than the comparable 1994 amount due to higher stumpage sales from the Timber and Wood Products segment to the Specialty Pulp Products segment. Other Items Interest expense of $17 million for the first half of 1995 increased $3 million over 1994 primarily due to higher short term interest rates. Minority interest in the earnings of Rayonier's subsidiary, Rayonier Timberlands, L.P. (RTLP), decreased $1 million to $17 million in the first half, due to decreased partnership earnings resulting from the absence of the Northwest stumpage carry-over earnings in 1994 partially offset by the favorable Southeast stumpage volume and prices. The minority participation in the earnings of RTLP will change from approximately 25 percent to approximately 1 percent effective January 1, 2001. Income Taxes The effective income tax rate for the first half of 1995 was 32.5 percent versus 35.7 percent in the 1994 first half. This decrease reflects benefits from tax reorganizations made following the spin-off from ITT as well as tax benefits on increased pulp export sales. 5 8 Net Income Net income for the second quarter was $26 million or $0.88 per common share, up $12 million or $0.40 per common share from the 1994 level. Net income for the six months ended June 30, 1995 was $51 million or $1.72 per common share, up $16 million or $0.51 per common share from 1994's net income. On July 12, 1995, the Company announced an agreement to sell for $46 million a 75 percent interest in 9 percent of its New Zealand timber base to a timber investment fund. Closing is scheduled for the third quarter at which time Rayonier will record a pretax gain of approximately $36 million, or $0.83 per common share, after tax. The net proceeds from the sale will be used to reduce debt. LIQUIDITY AND CAPITAL RESOURCES Cash flow from operating activities was $34 million in the first six months of 1995. Cash from operating activities together with an increase in debt of $51 million financed capital expenditures of $68 million, common dividends of $15 million and $4 million (after tax benefits) of environmental remediation and other costs relating to discontinued operations and units held for disposition. The Company's June 30, 1995 debt/capital ratio of 44 percent is 1 percent above the December 1994 level. EBITDA (defined as earnings before provision for dispositions, interest expense, income taxes and depreciation, depletion and amortization) for the first six months of 1995 was $141 million, or $4.71 per common share, an increase of $25 million over the comparable period of 1994. As of June 30, 1995, the Company had $51 million of bank loans and current maturities of long-term debt which includes medium-term notes scheduled to mature in the third quarter of 1995. The Company intends to refinance these notes with long-term securities issued in the public debt markets. As of June 30, 1995, the Company had $100 million of available borrowings under its revolving credit facilities. In addition, through currently effective shelf registration statements filed with the Securities and Exchange Commission, the Company may offer up to $174 million of new public debt securities. The Company believes that internally generated funds combined with available external financing will enable Rayonier to fund capital expenditures, working capital and other liquidity needs for the foreseeable future. 6 9 ITEM 3. SELECTED OPERATING DATA
THREE MONTHS SIX MONTHS ENDED JUNE 30, ENDED JUNE 30, -------------- -------------- 1995 1994 1995 1994 ---- ---- ---- ---- TIMBER AND WOOD PRODUCTS Log Sales Volume North America - millions of board feet 108 67 168 125 New Zealand - thousands of cubic meters 465 413 852 827 Other - millions of board feet 4 3 6 5 Timber Harvest Volume Northwest U.S. - millions of board feet 42 38 88 104 Southeast U.S. - thousands of short green tons 476 490 1,148 953 New Zealand - thousands of cubic meters 324 289 604 567 Lumber Sold - millions of board feet 53 56 94 105 Intercompany Sales Logs - millions of board feet 10 1 11 1 Northwest U.S. Timber Stumpage - millions of board feet 10 6 17 14 Southeast U.S. Timber Stumpage - thousands of short green tons 37 19 202 46 SPECIALTY PULP PRODUCTS Pulp Sales Volume Chemical Cellulose - thousands of metric tons 103 107 208 204 Fluff and Specialty Paper Pulps - thousands of metric tons 81 87 174 176 Production as a Percentage of Capacity 90% 84% 95% 91% SELECTED SUPPLEMENTAL INFORMATION (thousands of dollars) New Zealand - Sales $28,794 $25,933 $53,076 $50,848 ======= ======= ======= ======= New Zealand - Operating Income $ 3,714 $ 3,975 $ 7,407 $ 7,177 ======= ======= ======= =======
7 10 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company's Form 10-K for 1994 reported seven civil cases pending against the Company and its wholly owned subsidiary, Southern Wood Piedmont Company. One of these cases, Inez Tucker, et al. v. Southern Wood Piedmont Co., et al., was settled on June 12, 1995 for amounts not material to the Company and two of the other cases have been consolidated into one action. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of Shareholders of the Company was held on May 19, 1995. At that meeting, four directors were elected as follows (there were no broker non-votes with respect to the election of directors):
VOTES FOR VOTES WITHHELD --------- -------------- Directors of Class I, Term Expires in 1998: Ronald M. Gross 24,254,773 139,606 Katherine D. Ortega 24,242,677 151,702 Burnell R. Roberts 24,243,722 150,657 Director of Class III, Term Expires in 1997: Nicholas L. Trivisonno 24,244,634 149,745
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) See Exhibit Index. (b) Rayonier Inc. did not file a report on Form 8-K during the quarter covered by this report. SIGNATURE Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. RAYONIER INC. (Registrant) By /s/ KENNETH P. JANETTE ---------------------------------------- Kenneth P. Janette Vice President and Corporate Controller August 14, 1995 (Chief Accounting Officer) 8 11 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION LOCATION ----------- ----------- -------- 2 Plan of acquisition, reorganization, None arrangement, liquidation or succession 3.1 Amended and restated articles of incorporation No amendments 3.2 By-laws No amendments 4 Instruments defining the rights of security Not required to be filed. The holders, including indentures Registrant hereby agrees to file with the Commission a copy of any instrument defining the rights of holders of the Registrant's long-term debt upon request of the Commission. 10 Material contracts None 11 Statement re computation of per share earnings Not required 12 Statement re computation of ratios Filed herewith 15 Letter re unaudited interim financial information None 18 Letter re change in accounting principles None 19 Report furnished to security holders None 22 Published report regarding matters None submitted to vote of security holders 23 Consents of experts and counsel None 24 Power of attorney None 27 Financial data schedule Filed herewith 99 Additional exhibits None
9 EX-12 2 STATEMENT RE COMPUTATION OF RATIOS 1 EXHIBIT 12 RAYONIER INC. AND SUBSIDIARIES RATIO OF EARNINGS TO FIXED CHARGES (UNAUDITED) (THOUSANDS OF DOLLARS)
SIX MONTHS ENDED JUNE 30, ----------------------- 1995 1994 --------- --------- Earnings: Net Income $ 51,487 $ 35,833 Add: Income Taxes 24,835 19,892 Minority Interest 16,572 17,371 Amortization of Capitalized Interest 822 706 --------- --------- 93,716 73,802 Adjustments to Earnings for Fixed Charges: Interest and Other Financial Charges 17,308 14,591 Interest Factor Attributable to Rentals 738 880 --------- --------- 18,046 15,471 --------- --------- EARNINGS AS ADJUSTED $ 111,762 $ 89,273 ========= ========= Fixed Charges: Fixed Charges above $ 18,046 $ 15,471 Capitalized Interest 511 21 --------- --------- TOTAL FIXED CHARGES $ 18,557 $ 15,492 ========= ========= RATIO OF EARNINGS AS ADJUSTED TO TOTAL FIXED CHARGES 6.02 5.76 ========= =========
EX-27 3 FINANCIAL DATA SCHEDULE
5 1000 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 5,354 0 133,339 4,341 169,575 371,079 1,250,274 562,855 1,607,214 229,497 482,708 158,439 0 0 534,299 1,607,214 599,396 599,396 476,257 476,257 29,509 0 17,308 76,322 24,835 51,487 0 0 0 51,487 1.72 1.72