Apply Advanced Silviculture to Increase the Productivity of our Timberlands. We use our forestry expertise and disciplined financial approach to determine the appropriate silviculture programs and investments to maximize returns. This includes re-planting a significant portion of our harvested acres with improved seedlings we have developed through many years of ~~non-strategic timberlands~~research and cultivation. Over time, we expect these improved seedlings will result in ~~the Southeast. See~~ ~~Note 8~~ — ~~Timberland Acquisitions~~ ~~for additional information about our timberland acquisitions.~~higher volumes per acre and a higher value product mix.

Our Atlantic U.S. timberland holdings consist of approximately 1.1 million acres. Approximately two-thirds of this land supports intensively managed plantations of predominantly slash pine and loblolly pine. The other third of this land is too wet to support pine plantations, but supports productive natural stands of slash pine, cypress, black gum, water oaks, red maple, sweetgum and other commercial hardwood species.

Our Gulf States U.S. timberland holdings consist of approximately 0.7 million acres. Approximately four-fifths of this land supports pine plantations of predominantly loblolly pine. The other one-fifth of this land is too wet or too steep to support pine plantations, but supports productive natural stands of loblolly pine, water oaks, black gum, sweetgum and other commercial hardwood species.

Our Northern U.S. timberland holdings are located in the state of Washington and consist of approximately 0.4 million acres. These timberlands consist primarily of second and third growth western-hemlock, Douglas-fir, Sitka spruce, and western red cedar. Approximately 86 percent of the merchantable volume of the Washington timberlands is western-hemlock and Douglas-fir. A small percentage of the Washington timberlands consists of natural hardwood stands of predominantly red alder.

In the Atlantic and Gulf regions, rotation ages range from 21 to 28 years for pine plantations and from 35 to 60 years for natural hardwood stands. End use markets for these timberlands include pulp, paper, wood products and biomass facilities. In the Northern region, rotation ages range from 35 to 50 years, with the primary product being sawtimber. In New Zealand, rotation

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~~ages range~~

Increase the Size and Quality of our Timberland Holdings through Acquisitions. We intend to selectively pursue timberland acquisition opportunities that improve the average productivity of our timberland holdings and support cash flow generation from 26our annual harvesting activities. We expect there will be an ample supply of attractive timberlands available for sale as a result of anticipated sales from a number of Timberland Investment Management Organizations (“TIMOs”). This acquisition strategy requires a disciplined approach and rigorous adherence to ~~32 years~~strategic and financial metrics. Generally, we expect to focus our acquisition efforts on the most commercially desirable timber-producing regions of the U.S. South and U.S. Pacific Northwest, particularly on timberlands with an age class profile that complements the age class profile of our existing timberland holdings. We acquired 62,000 acres of timberland in 2014, 17,000 acres in 2013, and 88,000 acres in 2012.

Optimize our Portfolio Value. We continuously assess potential alternative uses of our timberlands, as some of our properties may become more valuable for ~~radiata pine. The~~development, residential, recreation or other purposes. We intend to capitalize on the value of our portfolio by opportunistically monetizing such HBU properties. While the majority of our HBU sales involve rural and recreational land, we also selectively pursue various land-use entitlements on certain properties for residential, commercial and industrial development in order to enhance the ~~harvested logs supply pulp, panel~~long-term value potential of such properties. For selected development properties, we also invest in infrastructure improvements, such as roadways and ~~lumber mills located~~utilities, to accelerate the marketability and improve the value of such properties. We generally expect that sales of HBU property (i.e., rural HBU and development HBU) will comprise approximately 1% of our Southern timberland holdings on an annual basis.

Focus on Timberland Operations to Support Cash Flow Generation. As described above, we rely primarily on annual harvesting activities and ongoing sales of rural and development HBU to generate cash flow from our timberland holdings. However, we also periodically generate income and cash flow from the sale of non-strategic (i.e., non-HBU) timberlands, in particular as we seek to optimize our portfolio by disposing of less desirable properties. Our strategy is to limit reliance on planned sales of non-HBU timberlands to augment cash flow generation and instead rely primarily on supporting cash flow from the operation, rather than sale, of our timberlands. We believe this strategy will support the sustainability of our harvesting activities over the long term.

Promote Best-in-Class Disclosure and Responsible Stewardship. We intend to be an industry leader in transparent disclosure, particularly relating to our timberland holdings, harvest schedules, inventory and age-class profiles. In addition, we are committed to responsible stewardship and environmentally and economically sustainable forestry. We believe our continued commitment to transparency and the stewardship of our assets and capital will allow us to maintain our timberlands’ productivity, more effectively attract and deploy capital and enhance our reputation as a preferred timber supplier.

Segment Information

We previously reported our financial results in three segments — Forest Resources, Real Estate and Other Operations. Effective with the fourth quarter of 2014, the Company realigned its segment reporting into five segments to reflect the way management now assesses the performance of the Company's business units. As part of this realignment, the previously reported Forest Resources segment has been disaggregated into three geographically distinct segments: Southern Timber, Pacific Northwest Timber and New Zealand ~~with~~Timber. These three segments reflect all activities related to the ~~remainder exported~~harvesting of timber and other value-added activities, such as ~~logs into Asian markets.~~recreational leases, within each respective geography. The New Zealand Timber segment also reflects any land sales that occur within our New Zealand portfolio. Our Real Estate segment continues to reflect all U.S. land sales; however, within our Real Estate segment we have realigned our sales categories. In particular, conservation sales previously reported as Rural are now reported within the Non-Strategic / Timberlands sales category, while Development sales are now reported as Development Improved and Development Unimproved. Our final segment, Trading, reflects the log trading activities conducted by our New Zealand JV, which were previously reported in Other Operations. All prior period amounts previously reported have been reclassified to reflect the realigned segments.

~~Merchantable~~Discussion of Timber Inventory and Sustainable Yield

We define gross timber inventory as an estimate of all standing timber volume beyond the specified age at which we commence calculating our timber inventory for inclusion in our inventory tracking systems. The age at which we commence calculating our timber inventory is an10 years for our Southern timberlands, 20 years for our Pacific Northwest timberlands, and 20 years for our New Zealand timberlands. Our estimate of gross timber ~~volume based on the earliest economically harvestable age. Estimates are~~inventory is based on an inventory system that involves periodic statistical ~~sampling. Adjustments~~sampling and growth modeling. Periodic adjustments are made on the basis of growth estimates, harvest information, and environmental and operational restrictions. Gross timber inventory includes certain timber that we do not deem to be of a merchantable age as well as certain timber located in restricted, environmentally sensitive or economically inaccessible areas.

We define merchantable timber inventory as an estimate of timber volume beyond a specified age that approximates such timber’s earliest economically harvestable age. Our estimate includes certain timber located in restricted or environmentally sensitive areas based on an estimate of lawfully recoverable volumes from such areas. The estimate does not include volumes in restricted or environmentally sensitive areas that may not be lawfully harvested or volumes located in economically inaccessible areas. The merchantable age ~~(age~~(i.e., the age at which timber moves from pre-merchantable to merchantable) is 15 years for our Southern timberlands, with the ~~Atlantic and Gulf regions excluding~~exception of Oklahoma which is 17 years, ~~for Oklahoma,~~ 35 years for ~~the Northern region~~our Pacific Northwest timberlands, and 20 years for radiata pine in our New ~~Zealand.~~ Zealand timberlands. Our estimated merchantable timber inventory changes over time as timber is harvested, as pre-merchantable timber converts to merchantable timber, as existing merchantable timber inventory grows, and as we periodically update our statistical sampling and growth and yield models. We estimate our merchantable timber inventory annually for purposes of calculating a per unit depletion rate.

Timber ~~located~~inventory is generally measured and expressed in ~~restricted~~short green tons (SGT) in our Southern Timberlands, in thousand board feet (MBF) or ~~environmentally sensitive areas~~million board feet (MMBF) in our Pacific Northwest Timberlands, and in cubic meters (m³) in our New Zealand Timberlands. For conversion purposes, one MBF and one m³ is ~~not included~~equal to approximately 8.0 and 1.13 short green tons, respectively. For comparison purposes, we provide inventory estimates for our Pacific Northwest and New Zealand timberlands in ~~the merchantable inventory shown below.~~MBF and cubic meters, respectively, as well as in short green tons.

The following table sets forth the estimated volumes of merchantable timber inventory by location ~~and type,~~in short green tons as of September 30, 2014 for the South and Pacific Northwest and as of December 31, ~~2013~~ ~~(in thousands of short green tons):~~2014 for New Zealand:

Location Softwood Hardwood Total %
Atlantic 24,379
12,742
37,121
42
Gulf 20,103
8,431
28,534
32
Northern 8,489
608
9,097
10
New Zealand 13,251
541
13,792
16
88,544
100



(in thousands of short green tons)
Location	Merchantable Inventory (a)	%
South	64,241	75
Pacific Northwest	6,323	7
New Zealand	15,123	18
	85,687	100


(a)	Depletion rate calculations for the upcoming year are based on estimated volumes of merchantable inventory at December 31, 2014 for all regions.

We define sustainable yield as the average harvest level that can be sustained into perpetuity based on our estimates of biological growth and the expected productivity resulting from our reforestation and silvicultural efforts. Our estimated sustainable yield may change over time based on changes in silvicultural techniques and resulting timber yields, changes in environmental laws and restrictions, changes in the statistical sampling and estimates of our merchantable timber inventory, acquisitions and dispositions of timberlands, the expiration or renewal of timberland leases, casualty losses, and other factors. Moreover, our harvest level in any given year may deviate from our estimated sustainable yield due to variations in the age class of our timberlands, the product mix of our harvest (i.e., pulpwood versus sawtimber), our deliberate acceleration or deferral of harvest in response to market conditions, our thinning activity (in which we periodically remove smaller trees to enhance long-term sawtimber potential), or other factors.

We manage our U.S. timberlands in accordance with the requirements of the Sustainable Forestry Initiative^® (“SFI”) program, a comprehensive system of environmental principles, objectives and performance measures that combines the perpetual growing and harvesting of trees with the protection of wildlife, plants, soil and water quality. Through application of our site-specific silvicultural expertise and financial discipline, we manage timber in a way that ~~optimizes~~is designed to optimize site preparation, tree species selection, competition control, fertilization, timing of thinning and final harvest. We also have a genetic seedling improvement program to enhance the productivity and quality of our ~~timber~~timberlands and overall forest health. In addition, non-timber income opportunities associated with our timberlands such as recreational ~~licenses and specialty forest products,~~leases, as well as considerations for the future higher and better uses of the land, are integral parts of our site-specific management philosophy. All these activities are designed to maximize value while complying with SFI requirements.

~~Our~~ The timberland holdings of the Matariki Forestry Group, a joint venture (“New Zealand ~~JV’s timberland holdings~~JV”) are certified under the Forest Stewardship Certification^® (“FSC”) program. FSC provides an internationally recognized standard for responsible forest management.

Southern Timber

As of December 31, 2014, our Southern timberlands acreage consisted of approximately 1.9 million acres (including approximately 273,000 acres of leased lands) located in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, Tennessee and Texas. Approximately two-thirds of this land supports intensively managed plantations of predominantly loblolly and slash pine. The other one-third of this land is too wet to support pine plantations, but supports productive natural stands primarily consisting of a variety of hardwood species. In the Southern region, rotation ages range from 21 to 28 years for pine plantations and from 35 to 60 years for natural hardwood stands. Key consumers of our timber include pulp, paper, wood products and biomass facilities.

We estimate that the gross timber inventory and merchantable timber inventory of our Southern timberlands was 82 million tons and 64 million tons, respectively, as of September 30, 2014. We estimate that the sustainable yield of our Southern timberlands, including both pine and hardwoods, is approximately 5.4 to 5.7 million tons annually. We expect that the average annual harvest volume of our Southern timberlands over the next five years (2015 to 2019) will be at or near the lower end of this range. For additional information, see Item 1 — Business — Discussion of Timber Inventory and Sustainable Yield.

In 2014, we acquired approximately 62,000 acres of U.S. timberlands located almost exclusively in the South. For additional information, see Note 8 — Timberland Acquisitions.

The following table provides a breakdown of our Southern timberlands acreage and timber inventory by product as of September 30, 2014 (inventory volumes are estimated at December 31 to calculate a depletion rate for the upcoming year):



(volumes in thousands of SGT)
Age Class		Acres (000’s)	Pine Pulpwood	Pine Sawtimber	Hardwood Pulpwood	Hardwood Sawtimber	Total
Pine Plantation
	0 to 4 years	228	—	—	—	—	—
	5 to 9 years	244	—	—	—	—	—
	10 to 14 years	269	8,707	999	50	1	9,757
	15 to 19 years	249	12,193	5,614	74	2	17,883
	20 to 24 years	134	5,259	5,625	82	3	10,969
	25 to 29 years	64	1,978	4,076	92	4	6,150
	30 + years	27	730	1,925	74	8	2,737
Total Pine Plantation		1,215	28,867	18,239	372	18	47,496
Natural Pine (Plantable) (a)		71	899	1,963	1,519	301	4,682
Natural Mixed Pine/Hardwood (b)		544	4,200	6,631	15,359	4,065	30,255
Forested Acres and Gross Inventory		1,830	33,966	26,833	17,250	4,384	82,433
Plus: Non-Forested Acres (c)		71
Gross Acres		1,901
Less: Pre-Merchantable Age Class Inventory (d)							(10,165)
Less: Volume in Environmentally Sensitive/Legally Restricted Areas							(8,027)
Merchantable Timber Inventory							64,241


(a)	Consists of natural stands that are convertible to pine plantation once harvested.


(b)	Consists of all non-plantable natural stands, including those that are in environmentally sensitive or economically inaccessible areas.


(c)	Includes roads, rights of way and all other non-forested areas.


(d)	Includes inventory that is less than 15 years old or less than 17 years old in Oklahoma.

Pacific Northwest Timber

As of December 31, 2014, our Pacific Northwest timberlands consisted of approximately 372,000 acres located in the state of Washington, of which approximately 286,000 acres were designated as productive acres, meaning land that is capable of growing merchantable timber and where the harvesting of timber is not constrained by physical, environmental or regulatory restrictions. These timberlands primarily comprise second and third rotation western hemlock and Douglas-fir, as well as a small amount of of other softwood species, such as western red cedar. A small percentage also consists of natural hardwood stands of predominantly red alder. In the Pacific Northwest, rotation ages range from 35 to 50 years. Our product mix in the Pacific Northwest is heavily weighted to sawtimber, which is sold to domestic wood products facilities as well as into exports markets primarily serving the Pacific Rim.

We estimate that the gross timber inventory and merchantable timber inventory of our Pacific Northwest timberlands was 2,005 MMBF and 791 MMBF, respectively, as of September 30, 2014.We estimate that the sustainable yield of our Pacific Northwest timberlands is approximately 160 MMBF (or 1.3 million tons) annually. However, due to historical harvesting in excess of our sustainable yield in this region, we anticipate reducing the harvest level in our Pacific Northwest timberlands to 125 MMBF (or 1.0 million tons) by 2017 and maintaining that level for approximately five to ten years thereafter in order to allow for inventory replenishment and age class smoothing. We expect to gradually reach our long-term sustainable yield of 160 MMBF (or 1.3 million tons) during the course of the next full rotation cycle. We expect that the average annual harvest volume of our Pacific Northwest timberlands over the next five years (2015 to 2019) will be approximately 140 MMBF (or 1.1 million tons). For additional information, see Item 1 — Business — Discussion of Timber Inventory and Sustainable Yield.

The following table provides a breakdown of our Pacific Northwest timberlands acreage and timber inventory by product and age class as of September 30, 2014 (inventory volumes are estimated at December 31 to calculate a depletion rate for the upcoming year):



(volumes in MBF)
	Age Class	Acres (000’s)	Softwood Pulpwood (a)	Softwood Sawtimber (a)	Total
Commercial Forest
	0 to 4 years	44	—	—	—
	5 to 9 years	52	—	—	—
	10 to 14 years	32	—	—	—
	15 to 19 years	20	—	—	—
	20 to 24 years	28	34,974	96,611	131,585
	25 to 29 years	43	61,521	375,052	436,573
	30 to 34 years	29	54,272	398,964	453,236
	35 to 39 years	17	33,433	289,245	322,678
	40 to 44 years	7	15,740	145,454	161,194
	45 to 49 years	2	5,524	51,583	57,107
	50+ years	7	18,908	200,483	219,391
Total Commercial Forest		281	224,372	1,557,392	1,781,764
Non-Commercial Forest (b)		5	3,830	42,089	45,919
Productive Forested Acres		286
Restricted Forest (c)		27	15,029	162,048	177,077
Total Forested Acres and Gross Inventory		313	243,231	1,761,529	2,004,760
Plus: Non-Forested Acres (d)		59
Gross Acres		372
Less: Pre-Merchantable Age Class Inventory (e)					(1,022,433)
Less: Volume in Environmentally Sensitive/Legally Restricted Areas					(190,919)
Merchantable Timber Inventory (MBF)					791,408
Conversion factor for MBF to SGT					7.99
Merchantable Timber Inventory (SGT)					6,323,350


(a)	Includes a negligible amount of red alder hardwood.


(b)	Includes non-commercial forests with limited productivity.


(c)	Includes significant portions of riparian management zones, legally restricted forests, and environmentally sensitive areas.


(d)	Includes core riparian management zones, roads, rights of way, and all other non-forested areas.


(e)	Includes commercial forest and non-commercial forest inventory that is less than 35 years old.

New Zealand Timber

As of December 31, 2014, our New Zealand timberlands consisted of approximately 451,000 acres (including approximately 266,000 acres of leased lands), of which approximately 309,000 acres (including approximately 174,000 acres of leased lands) were designated as productive or plantation acres, meaning land that is capable of growing merchantable timber and where the harvesting of timber is not constrained by physical, environmental or regulatory restrictions. The leased acres are generally leased through long-term arrangements including Crown Forest Licenses (“CFLs”), forestry rights and other leases. Rayonier’s wholly owned subsidiary, Rayonier New Zealand Limited (“RNZ”) serves as the manager of the New Zealand JV timberlands. Our New Zealand timberlands serve a domestic sawmilling market and also export logs to Pacific Rim markets. For additional information, see Note 4 — Joint Venture Investment.

In April 2013, we acquired an additional 39 percent interest in the New Zealand JV, bringing our total ownership to 65 percent. As a result, the New Zealand JV’s results of operations have been consolidated and comprise the New Zealand Timber segment. The minority owner’s interest in the New Zealand JV and its earnings are reported as noncontrolling interest in our financial statements.

We estimate that the gross timber inventory and merchantable timber inventory of our New Zealand timberlands was 13.4 million cubic meters as of December 31, 2014. We estimate that the sustainable yield of our New Zealand timberlands is approximately 2 million cubic meters (or 2.3 million tons) annually. We expect that the average annual harvest volume of our New Zealand timberlands over the next five years (2015 to 2019) will be generally in line with our sustainable yield. For additional information, see Item 1 — Business — Discussion of Timber Inventory and Sustainable Yield.

The following table provides a breakdown of our New Zealand timberlands acreage and merchantable timber inventory by age class estimated as of December 31, 2014 (inventory volumes at December 31 are used to calculate a depletion rate for the upcoming year):



(volumes in M m³)
Age Class		Acres (000’s)	Pulpwood	Sawtimber	Total
Radiata Pine
	0 to 4 years	61	—	—	—
	5 to 9 years	44	—	—	—
	10 to 14 years	53	—	—	—
	15 to 19 years	52	—	—	—
	20 to 24 years	31	1,326	4,198	5,524
	25 to 29 years	21	1,274	3,023	4,297
	30 + years	6	400	861	1,261
	Total Radiata Pine	268	3,000	8,082	11,082
Other (a)		41	1,204	1,097	2,301
Forested Acres and Merchantable Timber Inventory		309	4,204	9,179	13,383
Conversion factor for m³ to SGT					1.13
Total Merchantable Timber (thousands of SGT)					15,123
Plus: Non-Productive Acres (b)		142
Gross Acres		451


(a)	Includes primarily Douglas-fir age 30 and over.


(b)	Includes natural forest and other non-planted acres.

Real Estate

~~Our~~All of our U.S. land sales, including HBU and non-HBU, are reported in our Real Estate subsidiary owns approximately 0.1 million acres of land. We segregate our real estate holdings into three groups: development HBU, rural HBU (including conservation properties) and non-strategic timberlands. Development properties are predominantly located in the 11 coastal counties between Savannah, Georgia and Daytona Beach, Florida. Our strategy is to monetize selected development properties, to sell rural properties at a premium to timberland values and to divest non-strategic timberland holdings.

~~Performance Fibers~~

We are the leading global producer of high-value cellulose, a natural polymer, used as a raw material to manufacture a broad range of consumer-oriented products such as cigarette filters, liquid crystal displays, impact-resistant plastics, thickeners for food products, pharmaceuticals, cosmetics, high-tenacity rayon yarn for tires and industrial hoses, food casings, paints and lacquers. Purified cellulose is an organic material primarily derived from either wood or cotton and sold as cellulose specialties or commodity viscose, depending on its purity level. Cellulose specialties typically contain over 95 percent cellulose, while commodity viscose typically contains less than 95 percent cellulose. Cellulose specialties generally command a price premium, earn higher margins and benefit from greater demand stability through the economic cycle relative to commodity viscose.

Our cellulose specialties require high levels of purity and process knowledge, and are custom engineered and manufactured to customers’ exacting specifications. Our customers (primarily specialty chemical companies) place a high premium on products that have great impact in terms of form, function and composition as they modify our fibers through various chemical reactions, which require high purity and uniformity for efficient production. As a result, cellulose specialties require a stringent qualification process as any inconsistencies in purity and/or uniformity can result in negative and costly consequences to our customers.

Our production facilities are located in Jesup, Georgia, and Fernandina Beach, Florida. The Jesup mill can produce approximately 520,000 metric tons of cellulose specialties annually, or approximately 77 percent of our total capacity. The Fernandina Beach mill can produce approximately 155,000 metric tons of cellulose specialties annually, or approximately 23

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~~Index to Financial Statements~~

percent of our total capacity. Combined, these facilities manufacture more than 25 different grades of purified cellulose. Production capacity represents the nameplate, or rated, capacities at each mill.

Historically, about one-third of our production was absorbent materials, a commodity product mainly used in disposable baby diapers, feminine hygiene products, incontinence pads, convalescent bed pads, industrial towels and wipes, and non-woven fabrics. In May 2011, our board of directors approved a capital project to convert our absorbent material production line located in the Jesup mill to cellulose specialties. The decision was based on increased demand from our customers for high-value cellulose specialties and our desire to exit commodity-like product lines. Management believes this conversion positions us as the only fully dedicated supplier of cellulose specialties. The CSE project cost $385 million and converted approximately 260,000 metric tons of absorbent materials capacity into approximately 190,000 metric tons of cellulose specialties capacity. The project was completed in June 2013, after significant modifications to the production line and increased capacity of ancillary systems.

In July 2013, we restarted the converted production line and began the qualification process for the line’s production with our customers. One key customer has now approved commercial shipments and others are near completion. We expect all customers to complete the qualification process in the first half of 2014.segment. Beginning in the ~~third~~fourth quarter of ~~2013,~~2014, we ~~began producing viscose~~realigned our Real Estate sales categories to include four types of property sales: Unimproved Development, Improved Development, Rural and ~~commodity grades. Commodity viscose is~~Non-Strategic / Timberlands. Sales categories for 2014 and for prior periods presented have been reclassified to conform to these new category definitions.

The Improved Development category comprises properties sold for development for which Rayonier, through a ~~dissolving wood pulp used primarily~~taxable REIT subsidiary, has invested in site improvements such as infrastructure, roadways, utilities, amenities and/or other improvements designed to enhance marketability and create parcels, pads and/or lots for sale. The Unimproved Development category comprises properties sold for development, which Rayonier has not invested in site improvements such as infrastructure.

The Rural category comprises properties sold in rural markets to buyers interested in the ~~manufacture of textiles. As cellulose specialties demand grows over the next several years, we expect to increase our~~property for rural residential or recreational use. Previously, Rural included sales of ~~cellulose specialties and complete~~properties for conservation purposes; however, under the ~~transition to a dedicated cellulose specialties supplier.~~

~~Approximately 58 percent of Performance Fibers~~new sales category definitions, conservation sales are ~~exported, primarily~~now included with Non-Strategic / Timberland sales.

The Non-Strategic / Timberland category includes: 1) sales of non-core timberlands that do not meet our strategic criteria, 2) sales of core timberlands for which we obtain attractive values, and 3) sales of properties to ~~customers in Asia~~conservation interests that wish to preserve the land for habitat, public recreation, natural growth, buffer zones or other environmental purposes.

We maintain a detailed land classification analysis for all of our timberland and ~~Europe. We have long-term volume contracts with most of the world’s cellulose specialties-based product manufacturers, representing a significant~~HBU acres. The vast majority of our ~~cellulose specialties production.~~HBU properties are managed as timberland and generate cash flow from timber operations prior to their sale or, in the case of Improved Development properties, prior to improvement.

Trading

Our Trading segment reflects log trading activities in New Zealand and Australia conducted by our New Zealand JV. Our Trading segment complements the New Zealand Timber segment by providing added market intelligence, increasing the scale of export operations and achieving cost savings that directly benefit the New Zealand Timber segment.

Trading activities are broadly categorized as either managed export services or procured logs. For managed export services, the New Zealand JV does not take title to the log cargo but arranges sales, shipping and export documentation services for other forest owners for an agreed commission. For procured logs, the New Zealand JV buys logs directly from other forest owners at New Zealand ports and exports them in its own name. Income from this business is generated by achieving a sales margin over the purchase price of the procured logs. The Trading segment generally utilizes a managed export service arrangement for logs sourced from third parties outside of New Zealand, and generally utilizes a procured log arrangement for logs sourced from third parties within New Zealand. For managed export services, Trading segment revenues reflect only the commission earned on the sale. For procured logs sales, Trading segment revenues reflect the full sales price of the logs.

In ~~January~~ 2014, ~~we announced~~Trading volume was approximately 1.7 million cubic meters of logs. Approximately 1.0 million cubic meters of logs were sourced from outside New Zealand, primarily Australia, of which over 98 percent were undertaken through managed export service arrangements. Approximately 0.7 million cubic meters of logs were purchased directly from third parties in New Zealand through procured log arrangements, with 54 percent purchased from two key suppliers. Approximately 61 percent of third-party purchases in New Zealand were purchased at spot prices, with the ~~planned separation~~New Zealand JV thereby assuming some price risk on subsequent resale. The remaining 39 percent were purchased on a fixed margin basis, with the New Zealand JV thereby earning a spread on the resale price irrespective of ~~our Performance Fibers business from the Forest Resources and Real Estate businesses.~~subsequent price fluctuations. The ~~separation will result in two independent, publicly-traded companies~~New Zealand JV generally seeks to mitigate its risk of loss on procured logs by ~~means~~securing export orders prior to or concurrent with its spot purchases of a tax-free spin-off of the Performance Fibers business to Rayonier shareholders. The separation, which is subject to a number of conditions including final Board approval, receipt of a favorable private letter ruling from the IRS and effectiveness of a registration statement on Form 10, is expected to be completed in mid-2014.

~~Other~~

~~The primary business of our Other segment is trading~~ logs.

Discontinued Operations and Dispositions

In June 2014, we completed the tax-free spin-off of our Performance Fibers business. The spin-off resulted in two independent, publicly-traded companies, with the Performance Fibers business being spun off to Rayonier shareholders as a newly formed public company named Rayonier Advanced Materials Inc. ("Rayonier Advanced Materials"). On June 27, 2014, the shareholders of record received one share of Rayonier Advanced Materials common stock for every three common shares of Rayonier held as of the close of business on the record date of June 18, 2014. In March 2013, the Company sold its Wood Products business to International Forest Products Limited for $80 million plus a working capital adjustment. ~~The sale is consistent with our strategic plan to fully position our manufacturing~~Accordingly, the operating results of the Performance Fibers and Wood Products business segments are reported as discontinued operations in the ~~specialty chemical sector. The results~~Company’s Consolidated Statements of ~~operations of the Wood Products segment are shown as discontinued operations~~Income and Comprehensive Income for all periods presented. Certain administrative and general costs historically allocated to the businesses that remained with Rayonier are reported in continuing operations.

The December 31, 2014 Consolidated Balance Sheet reports only continuing operations and reflects the contribution of approximately $1.2 billion of assets and corresponding liabilities and equity to Rayonier Advanced Materials in connection with the spin-off of the Performance Fibers business. The December 31, 2013 Consolidated Balance Sheet includes the Performance Fibers business.

The Consolidated Statements of Cash Flows for 2014, 2013 and 2012 have not been restated to exclude Performance Fibers and Wood Products cash flows. Cash flows for the year ended December 31, 2014 also reflect transactions related to the Performance Fibers spin-off, including borrowings to arrange the capital structure prior to the separation, proceeds received upon the spin-off and the use of proceeds to pay down debt and pay a special dividend.

See Note 3 — ~~Sale of Wood Products Business~~Discontinued Operations for additional information. regarding the spin-off of the Performance Fibers business and sale of the Wood Products business.

~~Included in the~~The December 31, 2013 Consolidated Balance ~~Sheets are~~Sheet includes environmental liabilities relating to prior dispositions and discontinued operations, ~~which include our Port Angeles, Washington Performance Fibers~~including a former dissolving pulp mill that was closed in 1997; our wholly-owned subsidiary, Southern Wood Piedmont Company (“SWP”), which ceased operations other than environmental investigation and remediation activities in 1989; and other miscellaneous assets held for disposition. SWP owns or has liability for nine inactivesite, former wood treating sites ~~that are subject to the Resource Conservation~~ and ~~Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 and/or~~ other ~~similar federal or state statutes relating to the investigation and remediation of~~miscellaneous environmentally-impacted sites. ~~We classify environmental remediation activities~~In connection with the spin-off of the Performance Fibers business, all prior dispositions and discontinued operations were contributed to Rayonier Advanced Materials. As part of the separation agreement, Rayonier has been indemnified, released and discharged from any liability related to ~~SWP as discontinued operations in the Consolidated Statements of Income and Comprehensive Income.~~these sites. See Note 17—Liabilities for Dispositions and Discontinued Operations for additional ~~information~~.information.

Foreign Sales and Operations

Sales from non-U.S. operations originate from our New Zealand Timber and Trading operations and comprised approximately 1647 percent of consolidated ~~2013~~2014 sales. See Note 5 — Segment and Geographical Information for additional information.

~~Intellectual Property~~

We own numerous patents, trademarks and trade secrets, and have developed significant know-how, particularly relating to the production of purified cellulose in our Performance Fibers business. We intend to continue taking steps as necessary to protect our intellectual property, including, when appropriate, filing patent applications for inventions that are deemed important to our operations. Our U.S. patents generally have a duration of 20 years from the date of filing.

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Competition

Timber

Timber markets in our ~~Atlantic, Gulf~~Southern and ~~Northern~~Pacific Northwest regions are relatively fragmented. In the ~~Atlantic and Gulf regions,~~Southern region, we compete with Plum Creek Timber Company, Weyerhaeuser Company and ~~Timberland Investment Management Organizations~~TIMOs such as Hancock Timber Resource Group, Resource Management ~~Services,~~Service, Forest Investment Associates and ~~The~~ Campbell ~~Group,~~Global, as well as numerous other large and small privately held timber companies. In the ~~Northern~~Pacific Northwest region, we compete with Weyerhaeuser Company, Hancock Timber Resource Group, Green Diamond Resource Company, ~~The~~ Campbell ~~Group,~~Global, Port Blakely Tree Farms, Pope Resources, the State of Washington Department of Natural Resources and the Bureau of Indian ~~Affairs are significant competitors.~~Affairs. Other competition in the ~~Northern~~Pacific Northwest region consists of log imports from Canada. In all markets, price is the principal method of competition.

In New Zealand, there are four major private timberland owners — Hancock Natural Resources Group, Kaingaroa Timberlands, Matariki Forests (our New Zealand JV) and Ernslaw One. These owners account for approximately 3739 percent of New Zealand planted forests. The New Zealand JV competes with these and other smaller New Zealand timber companies for supply into New Zealand domestic and export markets, predominantly China, South Korea and ~~Korea.~~India. Logs supplied into Asian markets compete with export supply from both Russia and North ~~American suppliers.~~America.

~~Performance Fibers~~Real Estate

~~Potential entrants to the cellulose specialties~~In our Real Estate business, ~~face considerable challenges. Significant intellectual~~we compete with other owners of entitled and unentitled properties. Each property technical expertise, research and development capabilities and experience are needed to design the customized fibers and then manufacture them to exacting customer specifications. Qualification time is often lengthy, extending six to nine months. Resulting customer relationships are typically long term, based on a deep understandinghas unique attributes, but overall quantity of customer production processes and the technical expertise to problem solve production issues and support new product development. A substantial investment is needed to establish a production line and to obtain required production technologies. Additionally, significant capital and maintenance expenditures are required annually to ensure the facilities operate reliably.

~~Cellulose Specialties~~

~~Product performance, technical service~~supply and price for residential, commercial, industrial and rural properties in the geographic areas in which we operate are ~~principal methods~~the most significant competitive drivers.

Trading

Our log trading operations are based out of ~~competition in cellulose specialties. Product performance is primarily determined~~New Zealand and performed by our New Zealand JV. The New Zealand market remains very competitive with over 20 entities competing for export log supply at different ports across the ~~purity and uniformity~~country. We are one of the cellulose specialties. We are able to produce the greatest breadth of high-value, uniform cellulose specialties through our diverse manufacturing processes, sources of wood cellulose fibers and our proprietary processes.

We compete with both domestic and foreign producers in cellulose specialties. Principal competitors include Buckeye Technologies, Inc., Borregaard and Sateri Holdings Ltd. We also compete against Tembec, Inc., Neucel Specialty Cellulose Ltd, Sappi Ltd, Cosmo Specialty Fibers, Inc., and Aditya Birla Group in limited applications. Some competitors use both wood and to a small extent cotton linter fibers as a source for cellulose fibers. Although cotton linter fibers can be a higher purity source of cellulose, the variability of their fiber structure and limited availability negatively impact their ability to be a reliable substitute product.

Global production capacity for cellulose specialties has recently increased. In addition to our CSE project which added approximately 190,000 metric tons of cellulose specialties capacity, a few competitors have announced capacity expansions. Buckeye Technologies recently completed a project to increase its cellulose specialties capacity by approximately 40,000 metric tons at its Perry, Florida operation. Tembec, Inc. announced plans to increase capacity by 15,000 metric tons. These additional cellulose specialties capacities did not adversely affect our 2013 results.

~~Commodity Viscose~~

The principal method of competition in commodity viscose is price, as purity and uniformity are less critical differentiators. We compete with both domestic and foreign producers in commodity viscose. There are approximately 42 competitors that derive their commodity viscose from wood and 17 competitors that derive their commodity viscose from cotton linters. Although cellulose specialties can generally be sold to meet commodity viscose demand, the opposite is typically not true for commodity viscose.

Recently, there have been significant production capacity increases by commodity viscose producers. We believe global capacity totaled 5.7 million metric tons at the end of 2013, and an additional 1.0 million metric tons of capacity has been announced and is expected to be completedlarger log trading companies in the ~~next two years.~~

~~Table~~region with access to multiple export ports and a range of ~~Contents~~different export markets.

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Customers

In ~~2013~~,On a post-spin basis, no individual customer (or group of customers under ~~the~~ common ~~control~~control) represented 10 percent or more of Eastman Chemical Company (and its affiliates) and Nantong Cellulose represented approximately 21 percent and 19 percent of our Performance Fibers segment’s sales, respectively, and 13 percent and 11 percent of2014 consolidated ~~sales, respectively. The~~sales. As such, there is not a risk that the loss of ~~either of these customers could~~one customer would have a material adverse effect on ~~the Company and the Performance Fibers segment’s~~our results of operations.

Seasonality

Our ~~Forest Resources,~~Southern Timber, Pacific Northwest Timber, New Zealand Timber, Real Estate and ~~Performance Fibers~~Trading segments’ results are normally not impacted by seasonal changes. However, particularly wet weather in areas of our Southern Timber operations can hinder access for harvesting, thereby temporarily reducing supply in the affected areas and generally strengthening prices. Conversely, extended dry weather in an area tends to suppress prices as timber is more accessible for harvesting.

Environmental Matters

See Item 1A — Risk Factors ~~Item 3 —~~ ~~Legal Proceedings,~~ ~~Item 7 —~~ ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations— Environmental Regulation~~, and Note 17 — Liabilities for Dispositions and Discontinued Operations.

~~Raw Materials and Energy~~

The Performance Fibers manufacturing processes require significant amounts of wood to produce purified cellulose. We purchase approximately 1.8 million short green tons of hardwood chips and 2.3 million short green tons of softwood chips per year. The cost of timber is directly affected by supply and demand fluctuations in the wood products and pulp and paper markets, and also by weather.

Our Performance Fibers manufacturing processes also require significant amounts of chemicals, including caustic soda (sodium hydroxide), sulfuric acid, sodium chlorate, and various deresinators. These chemicals are purchased under negotiated supply agreements with third parties.

The manufacturing processes also require a significant amount of energy. The great majority of our energy is produced through the burning of lignin and other residual biomass in recovery and power boilers located at our Performance Fibers mills. However, the mills still require fuel oil, natural gas and electricity to supplement their energy requirements.

Raw materials and energy are subject to significant changes in prices and availability. We continually pursue reductions in usage and costs of key raw materials, supplies and services and do not foresee any material constraints in the near term from pricing or availability.

Research and Development

The quality and consistency of our Performance Fibers segment’s cellulose specialties and its premier research and development capabilities create a significant competitive advantage, resulting in a premium price for our products. The research and development efforts of our Performance Fibers business are primarily directed at further developing existing core products and technologies, improving the quality of cellulose fiber grades, improving manufacturing efficiency and environmental controls, and reducing fossil fuel consumption.

The research and development activities of our timber operations include genetic seedling improvement, growth and yield modeling, and applied silvicultural programs to identify management practices that will improve financial returns from our timberlands. We also contribute to research cooperatives that undertake forestry research and development.

Employee Relations

We currently employ approximately ~~1,600~~320 people, of ~~whom~~which approximately ~~1,500~~240 are in the United States. ~~Approximately 900 of our hourly Performance Fibers employees are covered by collective bargaining agreements. The majority of our hourly employees are represented by one of several labor unions.~~ We believe relations with our employees are satisfactory.

On June 30, 2012, collective bargaining agreements covering approximately 700 hourly employees at our Jesup mill expired. Negotiations were successfully concluded on March 28, 2013, and the unions ratified a new agreement on April 12, 2013 that will expire on June 30, 2017. Collective bargaining agreements at the Fernandina Beach, Florida mill expire April 30, 2014, and negotiations are expected to begin shortly.

Availability of Reports and Other Information

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and amendments to those reports filed or furnished pursuant to Sections 13(a) or 14 of the Securities Exchange Act of 1934 are made

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available to the public free of charge in the Investor Relations section of our website www.rayonier.com, shortly after we electronically file such material with, or furnish them to, the Securities and Exchange Commission (“SEC”). Our corporate governance guidelines and charters of all committees of our board of directors are also available on our website. The information on the Company’s website is not incorporated by reference into this annual report on Form 10-K.


Item 1A.	~~RISK FACTORS~~Risk Factors

Our operations are subject to a number of ~~risks, including those listed below.~~risks. When considering an investment in our securities, you should carefully read and consider these risks, together with all other information in this ~~Report.~~Annual Report on Form 10-K. If any of the events described in the following risk factors actually occur, our business, financial condition or operating results, as well as the market price of our securities, could be materially adversely affected.

~~Business and Operating Risks~~

~~There~~We are ~~risks associated with~~exposed to the ~~spin-off of our Performance Fibers business.~~

~~The Company’s planned spin-off of its Performance Fibers business is subject to a number of risks, including the following:~~

~~Risk of Non-Consummation.~~ ~~The Company expects the distribution~~cyclicality of the common shares of the new company that was formed to hold the Performance Fibers business to occur in mid-2014. However, the spin-off remains subject to a number of conditions, including: (i) final approval by the Company’s board of directors, (ii) receipt by the Company of a favorable private letter ruling from the IRS and (iii) the effectiveness of a registration statement on Form 10 relating to the securities of the new Performance Fibers company. There can be no assurance that any or all of these conditions will be met and that the spin-off will be completed in the manner and timeframe currently contemplated, or at all.

~~Risk Relating to Resources~~. The execution of the proposed spin-off transaction will require significant time and attention from management, which may distract management from the operation of our businesses and the execution of our other initiatives. Our employees may also be distracted due to uncertainty about their future roles with each of the separate companies pending the completion of the spin-off transaction.

~~Risks of Not Obtaining Benefits from the Spin-Off. The Company may not achieve some or all of the expected benefits of the spin-off, or may not achieve them in a timely fashion.~~

~~Risks Relating to Less Diversification~~. If the spin-off is completed, the Company’s operational and financial profile will change as a result of the separation of the Performance Fibers business from the Company’s other businesses. As a result, the Company’s diversification of revenue sources will diminish, and it is possible that the Company’s results of operations, cash flows, working capital and financing requirements may be subject to increased volatility.

~~The~~ markets ~~we operate in are subject to factors beyond our control.~~

The end markets for our Forest Resources, Real Estate and Performance Fibers businesses are influenced by a variety of factors beyond our control. For example, the demand for real estate can be affected by availability of capital, changes in interest rates, availability and terms of financing, local economic conditions, the employment rate, new housing starts, population growth and demographics. The demand for sawtimber is primarily affected by the level of new residential and commercial construction activity. Sawtimber pricing, while recently trending upward, continues to be below historic levels. The supply of timber and logs has historically increased during favorable pricing environments, which then causes downward pressure on prices. Both our Real Estate and Forest Resources businesses have been negatively impacted by the economic downturn, primarily due to the decline in housing starts, excess supply of existing housing inventory, above-normal unemployment and the tightening of credit availability for real estate and construction related projects.

~~The industries~~ in which we operate ~~are highly competitive.~~

~~Our Performance Fibers business faces competition from domestic~~ and foreign producers of high purity cellulose specialties and producers of products that can substitute for them in certain applications, such as cotton linters. Moreover, the entry of new competitors and the expansion of existing competitors could create excess capacity,other factors beyond our control, which might cause us to lose sales or result in price reductions. For example, over the past 24 months some manufacturers of commodity viscose have publicly announced plans to convert facilities to manufacture, or claimed to have already commenced production of, high purity cellulose specialties that may compete with our products. In addition to our recently completed cellulose specialties expansion project, which added approximately 190,000 metric tons of cellulose specialties capacity, a few competitors have announced expansions of their capacity.

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Buckeye Technologies recently completed a project to increase its cellulose specialties capacity by approximately 40,000 metric tons at its Perry, Florida operation. Tembec, Inc. announced plans to increase capacity by 15,000 metric tons. We also believe that Sateri Holdings Ltd. increased capacity 5,000 to 10,000 metric tons per year over the past three years. Although the Performance Fibers business plans to gradually increase production in line with demand, the additional capacity could adversely affect ~~product pricing. Actions by~~ our ~~competitors and any excess production capacity could adversely affect our business, financial condition and results of operations.~~

In our Forest Resources business, competitive pressures are primarily driven by quantity of product supply and quality of the timber offered by competitors in the domestic and export markets, each of which may impact pricing.

With respect to our Real Estate business, we compete with other owners of entitled and unentitled properties. Each property has unique attributes, but overall quantity of supply and price for residential, commercial, industrial and rural properties in the geographic areas in which we operate are the most significant competitive drivers.

We are dependent on a relatively few large customers for a majority of our Performance Fibers sales. The loss of all or a substantial portion of our sales to any of these large customers could have a material adverse effect on the Company.

We are subject to risks related to customer concentration because of the relative importance of our largest customers, many of whom have been doing business with Rayonier for decades, and the ability of those customers to influence pricing and other contract terms. We depend on major acetate tow manufacturers for a substantial portion of our sales. Our five largest customers, which account for approximately 70 percent of sales from our Performance Fibers business, are all either well known global diversified specialty chemical companies or state owned enterprises. Although we strive to broaden and diversify our customer base, a significant portion of our revenue is derived from a relatively small number of large-volume customers, and the loss of all or a substantial portion of sales to any of these customers, or significant unfavorable changes to pricing or terms contained in our contracts with them, could adversely affect our business, financial condition or results of operations. We are also subject to credit risk associated with this customer concentration. If one or more of our largest customers were to become bankrupt, insolvent or otherwise were unable to pay for its products, we may incur significant write-offs of accounts that may have a material adverse effect on our business, financial condition and results of operations.

~~Our Performance Fibers business is exposed to risks associated with the cyclicality of the business of certain of our customers, which may adversely affect our business and~~ results of operations.

Some of the industries in which our end-use customers participate, such as the construction ~~automotive~~ and ~~textile~~home building industries, the global pulp and paper industries and the real estate industry, are cyclical in nature, ~~thus posing a risk~~exposing us to ~~us which is~~risks beyond our ~~control.~~control, including general macroeconomic conditions, both in the U.S. and globally, as well as local economic conditions.

In our Timber segments, the level of new residential construction activity and, to a lesser extent, home repair and remodeling activity, is the primary driver of sawtimber demand. In addition, demand for logs can be affected by the demand for wood chips in the pulp and paper and engineered wood products markets, as well as the bio-energy production markets. The ongoing level of activity in these markets is subject to fluctuation due to future changes in economic conditions, interest rates, credit availability, population growth, weather conditions and other factors. Changes in global economic conditions, such as new timber supply sources and changes in currency exchange rates, foreign interest rates and foreign and domestic trade policies, can also negatively impact demand for our timber and logs. In addition, the industries in which these customers participate are highly competitive ~~to a large extent driven by end-use applications,~~ and may experience overcapacity or reductions in demand, all of which may affect demand for and pricing of our products. For example, the supply of timber and logs has historically increased during favorable pricing environments, which then causes downward pressure on prices, which can have an adverse effect on our business.

In our Real Estate segment, our inability to sell our HBU properties at attractive prices could have a significant effect on our results of operations. Demand for real estate can be affected by the availability of capital, changes in interest rates, availability and terms of financing governmental agencies, developers, conservation organizations, individuals and others seeking to purchase our timberlands, our ability to obtain land use entitlements and other permits necessary for our development activities, local real estate market economic conditions, competition from other sellers of land and real estate developers, the relative illiquidity of real estate investments, employment rates, new housing starts, population growth, demographics and federal, state and local land use, zoning and environmental protections laws or regulations (including any changes in laws or regulations). In addition, changes in investor interest in purchasing timberlands could reduce our ability to execute sales of non-strategic timberlands.

These macroeconomic and cyclical factors impacting our operations are beyond our control and, if such conditions deteriorate or do not continue to improve, could have an adverse effect on our business.

Weather and other natural conditions may limit our timber harvest and sales.

Weather conditions and extreme events, timber growth cycles and restrictions on access (for example, due to prolonged wet conditions) and other factors, including damage by fire, insect infestation, disease, prolonged drought and natural disasters such as wind storms and hurricanes, may limit harvesting of our timberlands. The ~~consequences~~volume and value of timber that can be harvested from our timberlands may be reduced by any such fire, insect infestation, disease, severe weather, prolonged drought, natural disasters and other causes beyond our control. As is typical in the forestry industry, we do not maintain insurance for any loss to our timber, including losses due to fire and these other causes. These and other factors beyond our control could reduce our timber inventory and accordingly, our sustainable yield, thereby adversely affecting our financial results and cash flows.

Entitlement and development of real estate entail a lengthy, uncertain and costly approval process, which could adversely affect our ability to grow the businesses in our Real Estate segment.

Entitlement and development of real estate entail extensive approval processes involving multiple regulatory jurisdictions. It is common for a project to require multiple approvals, permits and consents from U.S. federal, state and local governing and regulatory bodies. For example, in Florida, real estate projects must generally comply with the provisions of the Community Planning Act and local land use, zoning and development regulations. In addition, development projects in Florida that exceed certain specified regulatory thresholds (and are not located in a jurisdiction classified as a dense urban land area) require approval of a comprehensive Development of Regional Impact (“DRI”) application. Compliance with these and other regulations and the DRI process is usually lengthy and costly, and significant conditions can be imposed on a developer with respect to a particular project. In addition, development of properties containing delineated wetlands may require one or more permits from the U.S. federal government and/or state and local governmental agencies. Any of these issues can materially affect the cost, timing and economic viability of our real estate projects.

The real estate entitlement process is frequently a political one, which involves uncertainty and often extensive negotiation and concessions in order to secure the necessary approvals and permits. In the U.S., a significant amount of our development property is located in counties in which local governments face challenging issues relating to growth and development, including zoning and future land use, public services, water availability, transportation and other infrastructure, and funding for same, and the requirements of state law, especially in the case of Florida under the Community Planning Act and DRI process. In addition, anti-development groups are active, especially in Florida, in filing litigation to oppose particular entitlement activities and development projects, and in seeking legislation and other anti-development limitations on real estate development activities. We expect this ~~could~~type of anti-development activity to continue in the future.

Issues affecting real estate development also include the ~~reduction, delay~~availability of potable water for new development projects. For example, the Georgia Legislature enacted the Comprehensive Statewide Watershed Management Planning Act, which, among other things, created a governmental entity called the Georgia Water Council which was charged with preparing a comprehensive water management plan for the state and presenting it to the Georgia Legislature. It is unclear at this time how the plan will affect the cost and timing of real estate development along the southern Georgia coast, where the Company has significant timberland holdings with downstream real estate development potential. Concerns about the availability of potable water also exist in certain Florida counties, which could impact future growth opportunities.

Changes in the laws, or ~~cancellation~~interpretation or enforcement thereof, regarding the use and development of ~~customer orders,~~real estate, changes in the political composition of state and ~~bankruptcy~~local governmental bodies, and the identification of ~~customers, suppliers~~new facts regarding our properties could lead to new or ~~other creditors. The occurrence of any of these events may~~greater costs and delays and liabilities that could materially adversely affect our business, profitability or financial ~~condition and results of operation.~~condition.

Changes in ~~raw material~~energy and ~~manufacturing input prices~~fuel costs could affect our results of operations and financial condition.

~~Raw material~~Energy costs ~~and energy, such as wood, chemicals, oil and natural gas~~ are a significant operating expense ~~particularly~~for our logging and hauling contractors and for the ~~Performance Fibers business. The~~contractors who support the customers of our standing timber. Energy costs ~~of raw materials and energy~~ can be volatile and are susceptible to rapid and substantial increases or decreases due to factors beyond our control, such as changing economic conditions, political unrest, instability in energy-producing nations, and supply and demand considerations. ~~For example, caustic soda, a key manufacturing input for Performance Fibers, has historically had significant price volatility. The~~Although the price of oil has ~~also substantially increased~~recently decreased, increases in ~~recent years, and we have, at times, experienced limited availability~~the price of ~~hardwood, primarily due to wet weather conditions which can limit harvesting, each of which~~oil could adversely affect our business, financial condition and results of operations. In addition, an increase in ~~our Forest Resources business, the rising cost of~~ fuel costs, and its impact on the cost and availability of transportation for our products, both domestically and internationally, and the cost and availability of third party logging and ~~trucking services,~~hauling contractors, could have a material adverse effect on the operating costs of our contractors and our standing timber customers, as well as in defining economically accessible timber stands. Such factors could in turn have a material adverse effect on our business, financial condition and results of ~~operations.~~operations, particularly in our Timber segments and Trading segment.

We depend on third parties for logging and transportation services and increases in the costs ~~and~~or decreases in the availability of ~~transportation~~quality service providers could adversely affect our business.

Our ~~business depends~~Timber segments depend on logging and transportation services provided by third parties, both domestically and internationally. We rely on these providers for transportation of the products that we manufacture as well as delivery of our raw materials to our manufacturing facilities. A significant portion of the products we manufacture and raw materials we use are transported in the United Statesinternationally, including by railroad, trucks, or ~~trucks, and internationally by ship.~~

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ships. If any of our transportation providers were to fail to deliver ~~the goods that we manufacture~~timber supply or logs to our customers in a timely manner, or ~~damaged them~~were to damage timber supply or logs during transport, we may be unable to sell ~~those products~~it at full value, or at all. ~~Similarly, if any~~During the global financial crisis and subsequent downturn in U.S. housing starts, timber harvest volumes declined significantly. As a result, many logging contractors, particularly cable logging operators in the U.S. West, permanently shut down their operations. As harvest levels have returned to higher levels with the recovery in U.S. housing starts, this shortage of ~~these providers were~~logging contractors has resulted in sharp increases in logging costs and in the availability of logging contractors. It is expected that the supply of qualified logging contractors will be impacted by the availability of debt financing for equipment purchases as well as a sufficient supply of adequately trained loggers. As housing starts continue to ~~fail~~recover, harvest levels are expected to ~~deliver raw materials to us in a timely manner, we may be unable to timely manufacture our products in response to customer demand.~~

increase, placing more pressure on the existing supply of logging contractors. Any significant failure or unavailability of third-party logging or transportation providers, or increases in transportation rates or fuel costs, may result in higher logging costs or the inability to ~~deliver raw materials or finished products~~capitalize on stronger log prices to the extent logging contractors cannot be secured at a competitive cost. Such events could harm our reputation, negatively affect our customer relationships and adversely affect our business. ~~In addition, increases in transportation rates or fuel costs could adversely affect our financial condition and results of operations.~~

A material disruption at one of our manufacturing facilities could prevent us from meeting customer demand, reduce our sales or adversely affect our business, financial condition and results of operation.12

~~Any of our manufacturing facilities, or a part of any particular facility, could cease operations unexpectedly due to a number of events, including:~~

~~unscheduled maintenance outages;~~

~~prolonged power failures;~~

~~equipment failure;~~

~~a chemical spill or release;~~

~~explosion of a boiler or other pressure vessel;~~

~~fires, floods, windstorms, earthquakes, hurricanes or other catastrophes;~~

~~terrorism or threats of terrorism; and~~

~~other operational problems.~~

Furthermore, depending on the nature, extent and length of any operational interruption due to any such event, the results could adversely affect our business, financial condition and results of operations.

Future tobacco legislation, campaigns to discourage smoking, increases in tobacco taxes, increased costs of tobacco products and increased use of non-filtered substitutes could adversely affect our business, financial condition and results of operations.

The majority of our Performance Fibers are used to manufacture acetate tow, the filter component of a cigarette. Our sales for this end-use have historically accounted for an important portion of our total sales revenue. Significant increases in cigarette costs and potential actions taken by the United States and other countries to discourage smoking, such as tax increases on tobacco products and, future legislation, may have a material adverse effect on the demand for tobacco products. Additionally, increased use of e-cigarettes or smokeless tobacco products may affect demand for cigarettes. Reduced sales of tobacco products that use acetate-based filters could adversely affect our business, financial condition and results of operations.

We are subject to risks associated with doing business outside of the ~~United States.~~U.S.

Although the majority of our ~~business is to~~ customers are in the ~~United States,~~U.S., a ~~significant~~ portion of our sales ~~in particular in the Performance Fibers business,~~ are to ~~customer locations~~end markets outside of the ~~United States,~~U.S., including China, ~~the European Union~~South Korea, Japan, Taiwan, India and ~~other international markets.~~New Zealand. The export of our products into international markets results in risks ~~that are~~ inherent in conducting business ~~under~~pursuant to international laws, regulations and customs. ~~Sales to customers outside of the United States made up approximately 58 percent of our revenue in fiscal year~~ ~~2013~~. We expect that international sales will continue to contribute to future growth. The risks associated with our business outside the ~~United States~~U.S. include:

changes in and reinterpretations of the laws, regulations and enforcement priorities of the countries in which ~~we sell~~ our ~~products;~~products are sold;

responsibility to comply with anti-bribery laws such as the U.S. Foreign Corrupt Practices Act and similar anti-bribery laws in other jurisdictions;

trade protection laws, policies and measures and other regulatory requirements affecting trade and investment, including loss or modification of exemptions for taxes and tariffs, imposition of new tariffs and duties and import and export licensing requirements;

difficulty in establishing, staffing and managing non-U.S. operations;

product damage or losses incurred during shipping;

potentially negative consequences from changes in or interpretations of tax laws;

~~political instability and actual~~economic or ~~anticipated military or~~ political ~~conflicts;~~

~~economic~~ instability, inflation, recessions and interest rate and exchange rate fluctuations; and

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uncertainties regarding non-U.S. judicial systems, rules and ~~procedures; and~~

~~minimal or limited protection of intellectual property in some countries.~~procedures.

These risks could adversely affect our business, financial condition and results of operations.

~~A Chinese anti-dumping investigation has resulted~~We and certain of our current and former officers and directors have been named as parties to various lawsuits relating to matters arising out of our previously announced internal review and the restatement of our consolidated financial statements, and may be named in ~~preliminary duties on~~further litigation or become subject to regulatory proceedings or government enforcement actions.

The matters that led to our ~~lower purity commodity viscose products, which could affect sales~~internal review and the restatement of our consolidated financial statements have exposed us to greater risks associated with litigation, regulatory proceedings and government enforcement actions. We and certain of our current and former officers and directors are the ~~products into China.~~

~~In February 2013, China’s Ministry~~subjects of ~~Commerce (“MOFCOM”) notified the Company and~~ a number of purported class action lawsuits and demand letters. In addition, we are currently the subject of an ongoing private SEC inquiry. These actions arise from our announcement on November 10, 2014 regarding the results of our internal review and the restatement of our consolidated financial statements for the first and second quarters of 2014. We and our current and former officers and directors may, in the future, be subject to additional private and governmental actions relating to such matters. We cannot predict the duration, outcome or impact of these pending matters, but the lawsuits could result in judgments against us and officers and directors who are now or may become named as defendants. In addition, subject to certain limitations, we are obligated to indemnify and advance expenses for our current and former officers and directors in connection with such lawsuits and regulatory proceedings or government enforcement actions and any related litigation or settlements amounts.

Regardless of the outcome, these lawsuits, and any other ~~parties~~litigation, regulatory proceedings, or government enforcement actions that ~~it had commenced~~may be brought against us or our current or former officers and directors, could be time-consuming, result in significant expense, and divert the attention and resources of our management and other key employees. Our legal expenses incurred in defending the lawsuits and responding to any government inquiries could be significant. In addition, an ~~anti-dumping investigation into imports~~unfavorable outcome in any of dissolving, cotton and bamboo pulp into China from the United States, Canada and Brazil during 2012. In November 2013, MOFCOM issued its preliminary determination in respect of its investigation. Pursuant to the preliminary determination, our lower purity commodity viscose,these matters could exceed coverage provided under potentially applicable insurance policies, which is primarily utilized to produce viscose staple fiber for use in the manufacture of fabrics, was assessed an interim duty of 21.7 percent, effective November 7, 2013. The Company’s high-value cellulose acetate products were specifically excluded from assessment of any dumping duty, and our other high-value cellulose products were, likewise, exempted from any dumping duty.

The Company has challenged the basis of MOFCOM’s duty calculation for commodity viscose, and is evaluating other potential commercial and legal options. MOFCOM’s final determination is expected in the second quarter of 2014 and would be expected to remain in place for five years. If the final determination retains the duty level for our Performance Fibers business set by the preliminary determination, the duty wouldlimited. Any such unfavorable outcomes could have ana material adverse effect on our business, financial condition, results of operations and cash flows. Further, we could be required to pay damages or additional penalties, or have other remedies imposed against us, or our current or former directors or officers, which could harm our reputation, business, financial condition, results of operations or cash flows.

Our estimates of timber inventories and growth rates may be inaccurate, include risks inherent to such estimates and may impair our ability to realize expected revenues.

We rely upon estimates of merchantable timber inventories (which include judgments regarding inventories that may be lawfully and economically harvested), timber growth rates and end-product yields when acquiring and managing working forests. These estimates, which are inherently inexact and uncertain in nature, are central to forecasting our anticipated timber revenues and expected cash flows. Growth rates and end-product yield estimates are developed using statistical sampling and growth and yield modeling in conjunction with industry research cooperatives and by in-house forest biometricians using measurements of trees in research plots spread across our timberland holdings. The growth equations predict the ~~sales~~rate of ~~commodity viscose into China~~height and diameter growth of trees so that foresters can estimate the volume of timber that may be present in the tree stand at a given age. Tree growth varies by soil type, geographic area, and climate. Inappropriate application of growth equations in forest management planning may lead to inaccurate estimates of future volumes. If the ~~Company.~~assumptions we rely upon change or these estimates are inaccurate, our ability to manage our timberlands in a sustainable or profitable manner may be diminished, which may cause our results of operations and our stock price to be adversely affected.

Our businesses are subject to extensive environmental laws and regulations that may restrict or adversely affect our ability to conduct our business.

Environmental laws and regulations are constantly changing and are generally becoming more restrictive. Laws, regulations and related judicial decisions and administrative interpretations affecting our business are subject to change, and new laws and regulations are frequently enacted. These changes may adversely affect our ability to harvest and sell timber, ~~operate our manufacturing facilities,~~ remediate contaminated properties and/or entitle real estate. These laws and regulations may relate to, among other things, the protection of timberlands and endangered species, recreation and aesthetics, protection and restoration of natural resources, ~~air emissions,~~ wastewater discharges, receiving water quality, timber harvesting practices, and remedial standards for contaminated property and groundwater. Over time, the complexity and stringency of these laws and regulations have increased and the enforcement of these laws and regulations has intensified. Moreover, environmental policies of the current U.S. administration are more restrictive in the aggregate ~~more restrictive~~ for industry and landowners than those of the previous administration. For example, the U.S. Environmental Protection Agency (“EPA”) has pursued a number of initiatives that, if implemented, could impose additional operational and pollution control obligations on industrial facilities like those of ~~Rayonier,~~Rayonier’s customers, especially in the area of air emissions and wastewater and stormwater control. In 2013, the EPA issued final regulations that significantly tighten emissions limits of certain air pollutants from industrial boilers, which will result in our expenditure of significant capital for compliance. In addition, as a result of certain ~~recent~~ judicial rulings and EPA initiatives, including some that would require timberland operators to obtain permits to ~~carry out~~conduct certain ordinary course forestry activities, silvicultural practices on our timberlands could be impacted in the future. Environmental laws and regulations will likely continue to become more restrictive and over time could adversely affect our business, financial condition and results of operations.

If regulatory and environmental permits are delayed, restricted or rejected, a variety of our operations could be adversely affected. ~~In connection with a variety of operations on our properties, we~~We are required to seek permission from government agencies in the states and countries in which we operate to perform certain ~~activities.~~activities related to our properties. Any of these agencies could delay review of, or reject, any of our filings. In our ~~Forest Resources business,~~Southern Timber, Pacific Northwest Timber and New Zealand Timber segments, any delay associated with a filing could result in a delay or restriction in replanting, thinning, insect control, fire control or harvesting, any of which could have an adverse effect on our operating results. For example, in Washington State, we are required to file a Forest Practice Application for each unit of timberland to be harvested. These applications may be denied, conditioned or restricted by the regulatory ~~agency or appealed~~agency. Actions by ~~other parties, including citizen groups. Appeals or actions of~~ the regulatory agencies could delay or restrict timber harvest activities pursuant to these permits. Delays or harvest restrictions on a significant number of applications could have an adverse effect on our operating results. ~~In our Performance Fibers businesses, many modifications and capital projects at our manufacturing facilities require one or more environmental permits, or amendments to existing permits.~~ Delays in obtaining these environmental permits could have an adverse effect on our results of operations.

~~Our Performance Fibers mills are subject to stringent environmental laws, regulations and permits that may limit operations and production.~~ Many of our operations are subject to stringent environmental laws, regulations and permits that contain conditions governing how we operate our facilities and, in many cases, how much product we can produce. These laws, regulations and permits, now and in the future, may restrict our current production and limit our ability to increase production, and impose significant

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costs on our operations with respect to environmental compliance. It is expected that, overall, costs will likely increase over time as environmental laws, regulations and permit conditions become more stringent, and as the expectations of the communities in which we operate become more demanding.

Environmental groups and interested individuals may seek to delay or prevent a variety of ~~operations~~operations.. We expect that environmental groups and interested individuals will intervene with increasing frequency in the regulatory processes in the states and countries where we own, lease or manage ~~timberlands, and operate mills.~~timberlands. For example, in Washington State, environmental groups and interested individuals may appeal individual forest practice applications or file petitions with the Forest Practices Board to challenge the regulations under which forest practices are approved. These and other challenges could materially delay or prevent operations on our properties. ~~Also,~~For example, interveners at times may bring legal action in Florida in opposition to entitlement and change of use of timberlands to commercial, industrial or residential use. Delays or restrictions due to the intervention of environmental groups or interested individuals could adversely affect our operating results. In addition to intervention in regulatory proceedings, interested groups and individuals may file or threaten to file lawsuits that seek to prevent us from obtaining permits, implementing capital improvements or pursuing operating plans. Any ~~lawsuit~~threatened or ~~even a threatened~~actual lawsuit could delay harvesting on our timberlands, affect how we operate or limit our ability to modify or invest in our ~~mills.~~real estate. Among the remedies that could be enforced in a lawsuit is a judgment preventing or restricting harvesting on a portion of our ~~timberlands, or adversely affecting the timing, projected operating benefits or cost of capital projects at our mills.~~timberlands.

The impact of existing regulatory restrictions on future harvesting activities may be significant. ~~Federal,~~U.S. federal, state and local laws and regulations, as well as those of other countries, which are intended to protect threatened and endangered species, as well as waterways and wetlands, limit and may prevent timber harvesting, road building and other activities on our timberlands. ~~The~~Restrictions relating to threatened and endangered species ~~restrictions~~ apply to activities that would adversely impact a protected species or significantly degrade its habitat. The size of the restricted area ~~subject to restriction will vary~~varies depending on the protected species, ~~at issue,~~ the time of year and other factors, but can range from less than one acre to several thousand acres. A number of species that naturally live on or near our timberlands, including, among others, the northern spotted owl, marbled murrelet, ~~bald eagle,~~ several species of salmon and trout in the Pacific Northwest, and the red cockaded woodpecker, ~~bald eagle, wood stork,~~ Red Hills salamander and flatwoods salamander in the Southeast, are protected under the Federal Endangered Species Act (the “ESA”) or similar U.S. federal and state laws. ~~Other~~A significant number of other species, such as the gopher tortoise and long-eared bat are currently under review for possible ~~protection.~~protection under the ESA. As we gain additional information regarding the presence of threatened or endangered species on our timberlands, or if other regulations, such as those that require buffers to protect water bodies, become more restrictive, the amount of our timberlands subject to harvest restrictions could increase.

~~Our Performance Fibers mills are subject to stringent environmental laws and regulations concerning air emissions, wastewater discharge, water usage and waste handling and disposal.~~ Many of our operations are subject to stringent environmental laws, regulations and permits which contain conditions that govern how we operate our facilities and, in many cases, how much product we can produce. These laws, regulations and permits, now and in the future,We formerly owned or operated or may restrict our current production and limit our ability to increase production, and impose significant costs on our operations with respect to environmental compliance. It is expected that, overall, costs will likely increase over time as environmental laws, regulations and permit conditions become more stringent, and as the expectations of the communities in which we operate become more demanding.

~~We currently~~ own or ~~may~~ acquire timberlands or properties that may require environmental remediation or otherwise be subject to environmental and other liabilities. We ~~currently own,~~owned or ~~formerly~~ operated manufacturing facilities and discontinued operations that ~~it does~~we do not currently own, and we may currently own or may acquire timberlands and other properties in the future ~~which~~that are subject to environmental liabilities, such as remediation of soil, sediment and groundwater contamination and other existing or potential liabilities. ~~For more detail, see~~ ~~Note 17~~ — ~~Liabilities~~In connection with the spin-off of our Performance Fibers business, and pursuant to the related Separation and Distribution Agreement between us and Rayonier Advanced Materials, Rayonier Advanced Materials has assumed any environmental liability of ours in connection with the manufacturing facilities and discontinued operations related to the Performance Fibers business and has agreed to indemnify and hold us harmless in connection with such environmental liabilities. However, in the event we seek indemnification from Rayonier Advanced Materials, we cannot provide any assurance that a court will enforce our indemnification right if challenged by Rayonier Advanced Materials or that Rayonier Advanced Materials will be able to fund any amounts for ~~Dispositions and Discontinued Operations. The~~indemnification owed to us. In addition, the cost of investigation and remediation of contaminated timberlands and properties that we currently own or acquire in the future could increase operating costs and adversely affect financial results. Although we believe we currently have adequate reserves for the investigation and remediation of our properties, legal requirements relating to assessment and remediation of these properties continue to become more stringent and there can be no assurance that actual expenditures will not exceed expectations, or that other unknown liabilities will not be discovered in the future. We have incurred and expect to continue to incur significant capital, operating and other expenditures complying with applicable environmental laws and regulations and as a result of remedial obligations. We could also incur substantial costs, such as civil or criminal fines, sanctions and enforcement actions (including orders limiting our operations or requiring corrective measures, installation of pollution control equipment or other remedial actions), clean-up and closure costs, and third-party claims for property damage and personal injury as a result of violations of, or liabilities under, environmental laws and ~~regulations.~~

~~Entitlement and development of real estate entail a lengthy, uncertain and costly approval process.~~

~~Entitlement and development of real estate entail extensive approval processes involving multiple regulatory jurisdictions. It is common for a project~~regulations related to require multiple approvals, permits and consents from federal, state and local governing and regulatory bodies. For example, in Florida, real estate projects must generally comply with the provisions of the Local Government Comprehensive Planning and Land Development Regulation Act (the “Growth Management Act”) and local land use and

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development regulations. In addition, in Florida, development projects that exceed certain specified regulatory thresholds require approval of a comprehensive Development of Regional Impact (“DRI”) application. Compliance with the Growth Management Act, local land development regulations and the DRI process is usually lengthy and costly and significant conditions can be imposed on a developer with respect to a particular project. In addition, development of properties containing delineated wetlands may require onesuch timberlands or ~~more permits from the federal government. Any of these issues can materially affect the cost and timing of our real estate projects.~~properties.

The real estate entitlement process is frequently a political one, which involves uncertainty and often extensive negotiation and concessions in order to secure the necessary approvals and permits. A significant amount of our development property is located in countiesindustries in which local governments face challenging issues relating to growth and development, including zoning and future land use, public services, water availability, transportation and other infrastructure and funding for same, and the requirements of state law, especially in the case of Florida under the Growth Management Act and DRI process. In addition, anti-development groupswe operate are active, especially in Florida, in filing litigation to oppose particular entitlement activities and development projects, and in seeking legislation and other anti-growth limitations on real estate development activities. We expect that this type of anti-growth activity may continue in the future.

Issues affecting real estate development also include the availability of potable water for new development projects. For example, in Georgia, the Legislature enacted the Comprehensive Statewide Watershed Management Planning Act, which, among other things, created a governmental entity called the Georgia Water Council which was charged with preparing a comprehensive water management plan for the state and presenting it to the Georgia Legislature. It is unclear at this time how the plan will affect the cost and timing of real estate development along the I-95 coastal corridor in southern Georgia, where the Company has significant real estate holdings. Concerns about the availability of potable water also exists in certain Florida counties, which could impact growth.

Changes in the interpretation or enforcement of these laws, the enactment of new laws regarding the use and development of real estate, changes in the political composition of state and local governmental bodies, and the identification of new facts regarding our properties could lead to new or greater costs and delays and liabilities that could materially adversely affect our business, profitability or financial condition.

~~Changes in demand for our real estate and delays in the timing of real estate transactions may affect our revenues and operating results.~~

A number of factors, including changes in demographics, tightening of credit, high unemployment and a slowing of commercial or residential real estate development, particularly along the I-95 coastal corridor in Florida and Georgia, could reduce the demand for our properties and negatively affect our results of operations.

In addition, there are inherent uncertainties in the timing of real estate transactions that could adversely affect our operating results. Delays in the completion of transactions or the termination of potential transactions can be caused by factors beyond our control. These events have in the past and may in the future adversely affect our operating results.highly competitive.

The ~~impacts of climate-related initiatives, at the international, federal~~markets in which we operate are highly competitive, and ~~state levels, remain uncertain at this time.~~

There continue to be numerous international, federal and state-level initiatives and proposals to address domestic and global climate issues. Within the United States, most of these proposals would regulate and/or tax, in one fashion or another, the production of carbon dioxide and other “greenhouse gases” to facilitate the reduction of carbon compound emissions to the atmosphere, and provide tax and other incentives to produce and use more “clean energy.”

~~In late 2009, the EPA issued an “endangerment finding” under the Clear Air Act~~we compete with ~~respect to certain greenhouse gases, and this finding could lead to the regulation of carbon dioxide as a criteria pollutant under the Clean Air Act and~~companies that have significant ramifications for Rayonier and the industry in general. In this regard, the EPA has published various proposed regulations, which are currently subject to numerous legal challenges, affecting the operation of existing and new industrial facilitiessubstantially greater financial resources that emit carbon dioxide. In addition, as a result of the EPA’s decision to regulate greenhouse gases under the Clean Air Act, the states will now have to consider them in permitting new or modified facilities.

Overall, it is reasonably likely that legislative and regulatory activity in this area will in some way affect Rayonier, but it is unclear at this time whether such impact will be, in the aggregate, positive, negative, neutral or material. For example, while Rayonier’s Performance Fibers mills produce greenhouse gases and utilize fossil fuels, they also generate a substantial amount of their energy from wood fiber (often referred to as “biomass”), which may be viewed more favorably than fossil fuels in future legislative and regulatory proposals, but that is uncertain at this time. However, to date, many environmental groups have generally opposed the use of biomass for energy production due to their concerns about deforestation. We continue to monitor political and

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~~Index to Financial Statements~~

~~regulatory developments in this area, but their overall impact on Rayonier, from a cost, benefit and financial performance standpoint, remains uncertain at this time.~~

~~Investment returns on pension assets may be lower than expected or interest rates may decline, requiring us to make significant additional cash contributions to our benefit plans.~~

We sponsor several defined benefit pension plans, which cover many of our salaried and hourly employees. The Federal Pension Protection Act of 2006 requires that certain capitalization levels be maintainedwe do in each of these ~~benefit plans. Because it is unknown what~~businesses. The competitive pressures relating to our Timber segments are primarily driven by quantity of product supply and quality of the ~~investment return on pension assets~~timber offered by competitors in the domestic and export markets, each of which may impact pricing. With respect to our Real Estate segment, we compete with other owners of entitled and unentitled properties. Each property has unique attributes, but overall quantity of supply and price for residential, commercial, industrial and rural properties in the geographic areas in which we operate are the most significant competitive drivers. The market in which our Trading segment operates remains very competitive with over 20 entities competing for export log supply at different ports across New Zealand.

Our business will be ~~in future years or what interest rates may be at any point in time, no assurances can be given that applicable law will not require us~~adversely affected if we are unable to make future ~~material plan contributions. Any such contributions could adversely affect our financial condition~~

~~See Item 7 —~~ ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations— Critical Accounting Policies and Use of Estimates~~ ~~for additional information about these plans, including funding status.~~

~~Our joint venture partners may have interests that differ from ours and may take actions that adversely affect us.~~acquisitions.

We ~~participate in a joint venture in New Zealand,~~have pursued, and ~~may enter into other joint venture projects; for example, as part of our real estate strategy. A joint venture involves potential risks such as:~~

~~not having voting control over the joint venture;~~

~~the venture partners at any time may have economic or business interests or goals that are inconsistent with ours;~~

~~the venture partners may take actions contrary to our instructions or requests, or contrary to our policies or objectives with respect to the investment; and,~~

~~the venture partners could experience financial difficulties.~~

~~Actions by our venture partners may subject property owned by the joint venture to liabilities greater than those contemplated by the joint venture agreement or to other adverse consequences.~~

~~Our Performance Fibers business exposes us to potential product liability claims, which could adversely affect our financial condition and performance.~~

The development, manufacture and sale of cellulose specialties by Rayonier, including products manufactured for use by the food, cigarette, automotive, and pharmaceutical industries, involves a risk of exposure to product liability claims, and related adverse publicity. A product liability claim or judgment against us could also result in substantial and unexpected expenditures, affect confidence in our products, and divert management’s attention from other responsibilities. Although we maintain product liability insurance, there can be no assurance that this type or the level of coverage is adequate or that we will be ableintend to continue to ~~maintain~~pursue, acquisitions of timberland and real estate properties that meet our ~~existing insurance or obtain comparable insurance at a reasonable cost, if at all. A partially or completely uninsured judgment against us could have a material adverse effect on~~investment criteria and achieve our ~~results~~strategic goals of ~~operations or financial condition. Although we have standard contracting policies~~growing the size and ~~controls, we may not always be able to contractually limit our exposure to third-party claims should our failure to perform result in downstream supply disruptions or product recalls.~~

~~The inability to make or effectively integrate future acquisitions may affect our results.~~

~~As part~~average quality of our ~~growth strategy, we may pursue additional acquisitions of complementary businesses and product lines and~~ land ~~and invest in joint ventures.~~base. The ability to grow through acquisitions or other investments depends upon our ability to identify, negotiate, complete and integrate suitable acquisitions or joint venture ~~arrangements.~~partnerships. In addition, the discount rate we use in our acquisition underwriting has to meet our internal hurdle rate while also being competitive with that of other timberland REITs and TIMOs. In particular, our future success and growth depend upon our ability to make acquisitions that increase merchantable timber inventory and complement the existing age class structure of our ownership. If we ~~fail~~are unable to ~~successfully integrate~~make acquisitions ~~into~~on acceptable terms or that do not support our ~~existing business,~~strategic goals, our revenues and cash flows may stagnate or decline.

Our inability to access the capital markets could adversely affect our business ~~financial condition~~ and ~~results~~competitive position.

Due to the REIT income distribution requirements, we rely significantly on external sources of ~~operations could~~capital to finance growth and acquisitions. Both our ability to obtain financing and the related costs of borrowing are affected by a number of factors, many of which are outside of our control, including a decline in general market conditions, decreased market liquidity, a downgrade to our public debt rating, increases in interest rates, an unfavorable market perception of our growth potential, a decrease in our current or estimated future earnings or a decrease in the market price of our common stock. If capital is not available when needed, or is available only on unfavorable terms relative to other timberland REITs or TIMOs, or not at all, we may be ~~adversely affected.~~

~~Our~~unable to complete acquisitions or otherwise take advantage of business opportunities or respond to competitive pressures. In July 2014, Standard & Poor’s Ratings Services (S&P) lowered our credit ratings, including our corporate credit rating, to “BBB” from “BBB+.” In November 2014, S&P further lowered our credit ratings to “BBB-.” As of December 31, 2014, our credit ratings from S&P and Moody’s Investors Service (Moody’s) were BBB- and Baa2, respectively. Any combination of the factors described above, including our failure to maintain ~~satisfactory labor relations~~our investment grade credit rating, could ~~have a material adverse effect~~prevent us from obtaining the capital we require on ~~our business.~~

~~As of~~ ~~December 31, 2013, approximately 55 percent of our work force is unionized. These workers~~terms that are ~~exclusively in our Performance Fibers business. As a result, we are required~~acceptable to negotiate the wages, benefits and other terms with these employees collectively. Our financial results could be adversely affected if labor negotiations were to restrict the efficiency of our operations. In addition, our inability to negotiate acceptable contracts with any of these unions as existing agreements expire could result in strikesus, or ~~work stoppages by the affected workers. If our unionized employees were to engage in a strike or other work stoppage, we could experience a significant disruption of our operations,~~at all, which could adversely affect our business, ~~financial condition~~liquidity and ~~results of operations. For example, collective bargaining agreements at our Fernandina Beach, Florida mill expire on April 30, 2014, and negotiations are expected to begin shortly.~~

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~~Weather and other natural conditions may increase the prices of and reduce access to raw materials.~~

We use large quantities of wood as a raw material in our fiber manufacturing process. Weather conditions, timber growth cycles and restrictions on access to timberlands for harvesting (for example, due to prolonged wet conditions) may limit the availability and increase the price of wood, as may other factors, including damage by fire, insect infestation, disease, prolonged drought and natural disasters such as wind storms and hurricanes.

Raw materials are available from a number of suppliers and we have not historically experienced material supply interruptions or substantial sustained price increases; however, our requirements for certain raw materials, such as wood, may increase as a result of the recent Jesup mill expansion. As a result, we may not be able to purchase sufficient quantities of these raw materials to meet our production requirements at prices acceptable to us during times of tight supply caused by weather and other natural conditions. An insufficient supply of wood could materially adversely affect our business, financial condition, results of operations and cash flow.

~~Weather and other natural conditions may limit our timber harvest and sales.~~

Weather conditions, timber growth cycles and restrictions on access may limit harvesting of our timberlands, as may other factors, including damage by fire, insect infestation, disease, prolonged drought and natural disasters such as wind storms and hurricanes.

~~We do not insure against losses of timber from any causes, including fire.~~

The volume and value of timber that can be harvested from our timberlands may be reduced by fire, insect infestation, severe weather, disease, natural disasters and other causes beyond our control. A reduction in our timber inventory could adversely affect our financial results and cash flows. As is typical in the forestry industry, we do not maintain insurance for any loss to our timber, including losses due to these causes.

~~A significant portion of the timberland that we own, lease or manage is concentrated in limited geographic areas.~~

~~We own, lease or manage approximately~~ ~~2.6 million~~ acres of timberland and real estate located primarily in the United States and New Zealand. Approximately 79 percent of our U.S. timberlands are located in four states: Alabama, Florida, Georgia, and Washington. Accordingly, if the level of production from these forests substantially declines, or if the demand for timber in those regions declines, it could have a material adverse effect on our overall production levels and our revenues.

~~We are dependent upon attracting and retaining key personnel, the loss of whom could adversely affect our business.~~

We believe that our success depends, to a significant extent, upon our ability to attract and retain key senior management and operations management personnel. Our failure to recruit and retain these key personnel could adversely affect our business, financial condition or results of operations.

~~Failure to protect our intellectual property could negatively affect our future performance and growth.~~

We rely on process knowledge, confidentiality agreements and internal security measures to protect our trade secrets and other intellectual property, particularly in our Performance Fibers business. Failure to protect this intellectual property could negatively affect our future performance and growth.competitive position.

Increases in market interest rates may adversely affect the price of our common shares.

One of the factors that may influence the price of our common shares is our annual dividend yield as compared to yields on other financial instruments. Thus, an increase in market interest rates will result in higher yields on other financial instruments, which could adversely affect relative attractiveness of an investment in the Company and, accordingly, the price of our common shares.

There are risks to the Company associated with the recently completed spin-off of our Performance Fibers business.

The Company faces a number of risks related to the spin-off of our Performance Fibers business on June 27, 2014, including the following:

We ~~have~~may not achieve the expected benefits from the spin-off. After the spin-off, we believe that we will be able to, among other things, better focus our financial and operational resources, and design and implement corporate strategies and policies targeted toward our specific businesses, growth profile and strategic priorities, implement and maintain a ~~significant amount~~capital structure designed to meet our specific needs and more effectively respond to industry dynamics. However, the Company may not achieve some or all of ~~debt~~the expected benefits of the spin-off, and the ~~capacity~~spin-off could lead to ~~incur~~disruption of our operations, loss of, or inability to recruit or retain, and key personnel needed to operate and grow our business. If we fail to achieve some or all of the benefits that we expect to achieve as a standalone company, or do not achieve them in a timely or cost-effective manner, our business, financial condition and results of operations could be materially and adversely affected.

Our business is less diversified. Our operational and financial profile has changed as a result of the spin-off of the Performance Fibers business. As a result, our diversification of revenue sources has diminished without the revenue previously generated by the Performance Fibers business, and it is possible that our results of operations, cash flows, working capital and financing requirements may be subject to increased volatility related to the timber business and the markets we serve. If we are unable to manage that volatility, our business, financial condition and results of operations could be materially and adversely affected.

Investment returns on pension assets may be lower than expected or interest rates may decline, requiring us to make significant additional ~~debt.~~cash contributions to our benefit plans.

AsWe sponsor defined benefit pension plans, which cover a portion of our salaried and hourly employees. The Federal Pension Protection Act of 2006 requires that certain capitalization levels be maintained in each of these benefit plans. At December 31, ~~2013~~,2014, our qualified plan was underfunded by $32 million, but we ~~had~~ ~~$1.6 billion~~ ~~of debt outstanding.~~are not subject to any pension contribution requirements in 2015. Because it is unknown what the investment return on pension assets will be in future years or what interest rates may be at any point in time, we cannot provide any assurance that applicable law will not require us to make future material plan contributions. Any such contributions could adversely affect our financial condition. See Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — ~~Contractual Financial Obligations~~Critical Accounting Policies and Use of Estimates for the payment schedule of our long-term debt obligations. We expect that existing cash, cash equivalents, cash provided from operations and our bank credit facilities will be sufficient to meet ongoing cash requirements. Moreover, we have the borrowing capacity to incur significant additional debt and may do so if we enter into one or more strategic, merger, acquisition or other corporate or investment opportunities, or otherwise invest capital in one or more of our businesses. However, failure to generate sufficient cash as our debt becomes due, or to renew credit lines prior to their expiration, may adversely affect our business, financial condition, operating results and cash flow.information about these plans, including funding status.

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The impacts of climate-related initiatives, at the international, U.S. federal and state levels, remain uncertain at this time.

There continue to be numerous international, U.S. federal and state-level initiatives and proposals to address domestic and global climate issues. Within the U.S., most of these proposals would regulate and/or tax the production of carbon dioxide and other “greenhouse gases” to facilitate the reduction of carbon compound emissions into the atmosphere, and provide tax and other incentives to produce and use “cleaner” energy.

In late 2009, the EPA issued an “endangerment finding” under the Clean Air Act with respect to certain greenhouse gases, leading to the regulation of carbon dioxide as a pollutant under the Clean Air Act and having significant ramifications for Rayonier and the industry in general. In this regard, the EPA has published various regulations, affecting the operation of existing and new industrial facilities that emit carbon dioxide. As a result of the EPA’s decision to regulate greenhouse gases under the Clean Air Act, states will now have to consider them in permitting new or modified facilities.

Overall, it is reasonably likely that legislative and regulatory activity in this area will in some way affect Rayonier and the U.S. customers of our Southern Timber and Pacific Northwest Timber segments, but it is unclear at this time what the nature of the impact will be. We continue to monitor political and regulatory developments in this area, but their overall impact on Rayonier, from a cost, benefit and financial performance standpoint remains uncertain at this time. In addition, the EPA has yet to finalize the treatment of biomass under greenhouse gas regulatory schemes leaving Rayonier’s biomass customers in a position of uncertainty.

REIT and Tax-Related Risks

If we fail to remain qualified as a REIT, we will have reduced funds available for distribution to our shareholders because our REIT income will be subject to taxation.

We intend to continue to operate in accordance with REIT requirements pursuant to the Internal Revenue Code of 1986, as amended (the “Code”), and related U.S. Treasury regulations and administrative guidance. Qualification as a REIT involves the application of highly technical and complex provisions of the Code, which are subject to change, perhaps retroactively, and which are not within our control. We cannot assure that we will remain qualified as a REIT or that new legislation, U.S. Treasury regulations, administrative interpretations or court decisions will not significantly affect our ability to remain qualified as a REIT or the U.S. federal income tax consequences of such qualification.

We continually monitor and test our compliance with all REIT requirements. In particular, we regularly test our compliance with the REIT “asset tests,” which require generally that, at the close of each calendar quarter, (1) at least 75 percent of the market value of our total assets must consist of REIT-qualifying interests in real property (such as timberlands), including leaseholds and options to acquire real property and leaseholds, as well as cash and cash items and certain other specified assets and (2) no more than 25 percent of the market value of our total assets may consist of the securities of one or more “taxable REIT subsidiaries” or other assets that are not qualifying assets for purposes of the 75 percent test in clause (1) above. It should be noted, however, that under the applicable REIT requirements, mere fluctuation of the relative values of a REIT’s assets from one period to the next, without the occurrence of one or more specific events described in the Code and applicable REIT regulations, does not require a revaluation of those assets for purposes of the REIT asset tests.

If in any taxable year we fail to qualify as a REIT, we will not be allowed a deduction for dividends paid to shareholders in computing our taxable income and we will be subject to U.S. federal income tax on our taxable income. In addition, we will be disqualified from treatment as a REIT for the four taxable years following the year during which the qualification was lost, unless we are entitled to relief under certain provisions of the Code. As a result, our net income and the cash available for distribution to our shareholders could be reduced for up to five years or longer.

As of December 31, ~~2013 and as of the date of filing of this Annual Report on Form 10-K,~~2014, Rayonier is in compliance with the asset tests described above. A failure to comply with the asset tests ultimately could cause us to fail to qualify as a REIT and to lose the associated benefits of REIT status, which could have a material adverse effect on our financial condition.

If we fail to remain qualified as a REIT, we may need to borrow funds or liquidate some investments or assets to pay ~~the~~any resulting additional tax liability. Accordingly, cash available for distribution to our shareholders would be reduced.

~~The extent of our use of taxable REIT subsidiaries may affect the price of our common shares relative to the share price of other REITs.~~

~~We conduct a significant portion~~Certain of our business activities are potentially subject to prohibited transactions tax.

As a REIT, we will be subject to a 100 percent tax on any net income from “prohibited transactions.” In general, prohibited transactions are sales or other dispositions of property to customers in the ordinary course of business. Sales of logs, and dealer sales of timberlands or other real estate, constitute prohibited transactions.

We intend to avoid the 100 percent prohibited transactions tax by conducting activities that would otherwise be prohibited transactions through one or more taxable REIT subsidiaries. ~~Our use~~We may not, however, always be able to identify timberland properties that become part of ~~taxable REIT subsidiaries enables us to engage in non-REIT qualifying business activities such as the production and sale of cellulose specialty fibers, non-passive~~our “dealer” real estate ~~activities including dealer~~sales business. Therefore, if we sell timberlands which we incorrectly identify as property not held for sale to customers in the ordinary course of ~~HBU property and other real estate, and~~business or which subsequently become properties held for sale to customers in the ~~sale~~ordinary course of ~~logs. Taxable REIT subsidiaries are~~business, we may be subject to ~~corporate-level income~~the 100 percent prohibited transactions tax. Therefore, we pay income taxes on the income generated by our taxable REIT subsidiaries. Our use of taxable REIT subsidiaries may cause the market to value our common shares differently than the shares of other REITs, which may not use taxable REIT subsidiaries as extensively as we use them.

Our ~~status as a REIT~~cash dividends are not guaranteed and may ~~affect our ability~~fluctuate.

Generally, REITs are required to ~~expand our taxable REIT subsidiaries’ operations.~~

~~Taxable REIT subsidiaries are limited in size based upon a REIT’s real estate assets. Under the Code, no more than 25~~distribute 90 percent of ~~the value~~their ordinary taxable income, but not their net capital gains income. Accordingly, we do not generally believe that we are required to distribute material amounts of ~~the gross assets of a REIT may be comprised of securities of one or more taxable REIT subsidiaries. This limitation may affect our ability to increase the size~~cash since substantially all of our taxable income is generally treated as capital gains income. However, a REIT ~~subsidiaries’~~must pay corporate level tax on its undistributed taxable income and capital gains.

Our Board of Directors, in its sole discretion, determines the amount of quarterly dividends to be paid to our shareholders based on consideration of a number of factors. These factors include, but are not limited to, our results of operations, cash flow and capital requirements, economic conditions, tax considerations, borrowing capacity and other factors, including debt covenant restrictions that may impose limitations on cash payments, future acquisitions and divestitures, harvest levels, changes in ~~particular,~~the price and demand for our ~~Performance Fibers business.~~products and general market demand for timberlands, including those timberland properties that have higher and better uses. Consequently, our dividend levels may fluctuate.

Lack of shareholder ownership and transfer restrictions in our articles of incorporation may affect our ability to qualify as a REIT.

In order to qualify as a REIT, an entity cannot have five or fewer individuals who own, directly or indirectly after applying attribution of ownership rules, 50 percent or more of the value of its outstanding shares during the last six months in each calendar year. Although it is not required by law or the REIT provisions of the Code, almost all REITs have adopted ownership and transfer restrictions in their articles of incorporation or organizational documents which seek to assure compliance with that rule. While we are not in violation of the ownership rules, we do not have, nor do we have any current plans to adopt, share ownership and transfer restrictions. As such, the possibility exists that five or fewer individuals could acquire 50 percent or more of the value of our outstanding shares, which could result in our disqualification as a REIT.

1518

~~Table of Contents~~

~~Index to Financial Statements~~

~~We may be limited in our ability to fund shareholder distributions using cash generated from our taxable REIT subsidiaries’ operations.~~

The ability of the REIT to receive dividends from our taxable REIT subsidiaries is limited by provisions of the Code. Specifically, at least 75 percent of a REIT’s annual gross income must be derived from passive real estate rents, royalties and gains including sales of our standing timber and other types of qualifying real estate income and no more than 25 percent of our gross income may consist of dividends from our taxable REIT subsidiaries and other passive non-real estate income.

This limitation on our ability to receive dividends from our taxable REIT subsidiaries may impact our ability to fund cash distributions to our shareholders using cash flows from our taxable REIT subsidiaries. We can, however, under current law, issue stock dividends for up to 80 percent of our regular dividend distribution.

~~Certain of our business activities are potentially subject to prohibited transactions tax.~~

As a REIT, we will be subject to a 100 percent tax on any net income from “prohibited transactions.” In general, prohibited transactions are sales or other dispositions of property to customers in the ordinary course of business. Sales of cellulose specialty fibers which we produce and sales of logs constitute prohibited transactions. In addition, dealer sales of timberlands or other real estate constitute prohibited transactions.

~~Our cash dividends are not guaranteed and may fluctuate.~~

Generally, REITs are required to distribute 90 percent of their ordinary taxable income, but not their net capital gains income. Accordingly, we do not generally believe that we are required to distribute material amounts of cash since substantially all of our taxable income is generally treated as capital gains income. However, a REIT must pay corporate level tax on its undistributed capital gains.

Our board of directors, in its sole discretion, determines the amount of quarterly dividends to be provided to our shareholders based on consideration of a number of factors. These factors include, but are not limited to, our results of operations, cash flow and capital requirements, economic conditions, tax considerations, borrowing capacity and other factors, including debt covenant restrictions that may impose limitations on cash payments, future acquisitions and divestitures, harvest levels, changes in the price and demand for our products and general market demand for timberlands, including those timberland properties that have higher and better uses. Consequently, our dividend levels may fluctuate.


Item 1B.	UNRESOLVED STAFF COMMENTS

None.

~~Table of Contents~~

~~Index to Financial Statements~~


Item 2.	PROPERTIES

The following table ~~details the significant properties we own or lease by reportable segment (acres in millions) at~~ provides a breakdown of our timberland holdings as of September 30, 2014 and December 31, ~~2013~~:2014:

Segment/Operations Location Total Acres Fee-Owned Acres
Long-Term
Leased Acres
Forest Resources Atlantic 1.1
0.8
0.3
Gulf States 0.7
0.7
—
Northern 0.4
0.4
—
New Zealand (a) 0.3
0.1
0.2
Total Forest Resources Acres 2.5
2.0
0.5
Real Estate U.S. 0.1
0.1
—
Total Forest Resources and Real Estate Acres 2.6
2.1
0.5



		~~Capacity/Function~~	~~Owned/Leased~~
~~Performance Fibers~~	~~Jesup, Georgia~~	~~520,000 metric tons of pulp~~	~~Owned~~
	~~Fernandina Beach, Florida~~	~~155,000 metric tons of pulp~~	~~Owned~~
	~~Jesup, Georgia~~	~~Research Facility~~	~~Owned~~

~~Wood Chipping Facilities~~	~~Offerman, Georgia~~	~~800,000 short green tons of wood chips~~	~~Owned~~
	~~Eastman, Georgia~~	~~350,000 short green tons of wood chips~~	~~Owned~~
	~~Barnesville, Georgia~~	~~350,000 short green tons of wood chips~~	~~Owned~~
	~~Quitman, Georgia~~	~~200,000 short green tons of wood chips~~	~~Owned~~
	~~Jarratt, Virginia~~	~~250,000 short green tons of wood chips~~	~~Owned~~

~~Corporate and Other~~	~~Jacksonville, Florida~~	~~Corporate Headquarters~~	~~Leased~~



(acres in 000s)	As of September 30, 2014			As of December 31, 2014
	Owned	Leased	Total	Owned	Leased	Total
Southern
Alabama	294	24	318	309	24	333
Arkansas	—	19	19	—	18	18
Florida	282	105	387	281	105	386
Georgia	576	129	705	575	125	700
Louisiana	127	1	128	126	1	127
Mississippi	92	—	92	91	—	91
Oklahoma	92	—	92	92	—	92
Tennessee	1	—	1	1	—	1
Texas	159	—	159	158	—	158
	1,623	278	1,901	1,633	273	1,906

Pacific Northwest
Washington	371	1	372	371	1	372

New Zealand (a)	188	266	454	185	266	451
Total	2,182	545	2,727	2,189	540	2,729

(a)

Represents legal acres owned and leased by the New Zealand JV, in which Rayonier owns a 65 percent interest. As of December 31, 2014, legal acres in New Zealand were comprised of 309,000 plantable acres and 142,000 non-productive acres. We have historically reported only net plantable acres for our New Zealand timberland holdings, which resulted in total timberland holdings of 2.6 million acres versus the 2.7 million acres shown above.

The following tables detail activity for owned and leased acres in our timberland holdings by state from December 31, 2013 to December 31, 2014:



(acres in 000s)	Acres Owned
	December 31, 2013	Acquisitions	Sales		Other (a)		December 31, 2014
Southern
Alabama	295	19	(5	)	—		309
Florida	292	15	(26	)	—		281
Georgia	566	17	(8	)	—		575
Louisiana	128	—	(2	)	—		126
Mississippi	92	—	(1	)	—		91
Oklahoma	92	—	—		—		92
Tennessee	1	—	—		—		1
Texas	149	11	(2	)	—		158
	1,615	62	(44	)	—		1,633

Pacific Northwest
Washington	371	—	—		—		371

New Zealand (b)	188	—	(2	)	(1	)	185
Total	2,174	62	(46	)	(1	)	2,189


(a)	Includes changes in classifications between acres owned and leased.


(b)	Represents legal acres owned by the New Zealand JV, in which Rayonier has a 65 percent interest.



(acres in 000s)	Acres Leased
	December 31, 2013	New Leases	Expired Leases (a)		Other (b)		December 31, 2014
Southern
Alabama	24	—	—		—		24
Arkansas	18	—	—		—		18
Florida	105	—	—		—		105
Georgia	130	—	(4	)	(1	)	125
Louisiana	1	—	—		—		1
	278	—	(4	)	(1	)	273

Pacific Northwest
Washington	1	—	—		—		1

New Zealand (c)	267	—	(2	)	1		266
Total	546	—	(6	)	—		540


(a)	Includes acres previously under lease that have been harvested.


(b)	Includes activity for the purchase of leased acres and changes in classification between owned and leased acres.


(c)	Represents legal acres leased by the New Zealand JV, in which Rayonier has a 65 percent interest.

U.S. leases typically have initial terms of approximately 30 to 65 years, with renewal provisions in some cases. New Zealand timberland lease terms range between 30 and 99 years. Such leases are generally non-cancellable and require minimum annual rental payments. The New Zealand JV also has a number of CFLs with the New Zealand government. A CFL consists of a license to use public or government owned land to operate a commercial forest. The CFLs extend indefinitely and may only be terminated upon a 35 year termination notice from the government. If no termination notice is given, the CFLs renew automatically each year for a one year term.

As of December 31, 2014, the New Zealand JV has four CFLs (18,000 acres) under termination notice, terminating in 2034, 2046 and 2049 and two fixed term CFLs (2,000 acres) expiring in 2062. The following table details the Company’s acres under lease as of December 31, 2014 by type of lease and lease expiration:



(acres in 000s)
Location	Type of Lease	Total	2015 - 2024	2025 - 2034	2035 - 2044	Thereafter
Southern U.S.	Fixed Term	244	151	47	40	6
	Fixed Term with Renewal Option	29	28	1	—	—
Pacific Northwest	Fixed Term	1	1	—	—	—
New Zealand (a)	CFL - Perpetual	95	64	—	—	31
	CFL - Fixed Term	2	—	—	—	2
	CFL - Terminating	18	—	2	—	16
	Forestry Right	135	58	5	53	19
	Fixed Term	16	—	—	—	16
Total Acres under Long-term Leases		540	302	55	93	90


(a)	Represents all legal acres leased by the New Zealand JV, in which Rayonier has a 65 percent interest.

In addition to our timberland holdings, we lease properties for our office locations. Our ~~manufacturing facilities are maintained through ongoing capital investments, regular maintenance~~significant leased properties include our corporate headquarters in Jacksonville, Florida; our Southern Timber and ~~equipment upgrades. During~~ ~~2013~~,Real Estate operations in Fernandina Beach, Florida and Lufkin, Texas; our ~~Performance Fibers manufacturing facilities produced at or near capacity levels for most of the year.~~

Pacific Northwest Timber operations in Hoquiam, Washington and our New Zealand Timber and Trading headquarters in Auckland, New Zealand.


Item 3.	LEGAL PROCEEDINGS

The ~~Company has been named as a defendant~~information set forth under “Contingencies” in ~~various lawsuits and claims arising~~Note 18 in the normal course of business. While we have procured reasonable and customary insurance covering risks normally occurring in connection with our businesses, we have in certain cases retained some risk through the operation of self-insurance, primarily in the areas of workers’ compensation, property insurance and general liability. In our opinion, these pending lawsuits and claims, both individually and in the aggregate, are not expected to have a material adverse effect on our financial position, results of operations, or cash flow.

~~Antidumping Investigation~~. In February 2013, China’s Ministry of Commerce (“MOFCOM”) initiated an anti-dumping investigation of imports of dissolving wood, cotton and bamboo pulp into China from the U.S., Canada and Brazil during 2012. In November 2013, MOFCOM issued a preliminary determination that Rayonier’s lower purity product used in commodity viscose applications will be subject to a 21.7 percent interim duty effective November 7, 2013. However, our high-value cellulose acetate products, which constitute a large majority of our sales into China, were specifically excluded from assessment of any dumping duty, and our other high-value cellulose products were, likewise, exempted from any dumping duty because their higher quality specifications do not meet the preliminary determination’s specifications applicable to lower-purity products that are dutiable under the preliminary determination. Other U.S. producers were assessed duties ranging from 18.7 percent to 21.7 percent, while all but one Canadian producer were assessed a duty of 13 percent, and a Brazilian producer was assessed a duty of 6.8 percent.

These determinations by MOFCOM are preliminary and subject to change upon the completion of its investigation and issuance of its final determination. The Company has challenged the basis of MOFCOM’s duty calculation for commodity viscose, and is evaluating other potential commercial and legal options. MOFCOM’s final determination is expected in the second quarter of 2014 and would be expected to remain in place for five years. If the final determination retains the duty level for our Performance Fibers business set by the preliminary determination, the duty could have an adverse effect on the sales of commodity viscose into

~~Table of Contents~~

~~Index to Financial Statements~~

China by the Company.We are evaluating all potential product and market segment options in the event that MOFCOM’s preliminary duty is not materially reduced or eliminated, and do not expect that the preliminary duty will materially affect our overall business results.

~~Notice of Intent to Sue - Jesup Mill.~~ In November of 2013, we received a “sixty day letter” from lawyers representing a non-profit environmental organization, the Altamaha Riverkeeper. In the letter, the Altamaha Riverkeeper threatened to file a citizen suit against Rayonier as permitted under the federal Clean Water Act and the Georgia Water Quality Control Act due to what the letter alleges to be ongoing violations of such laws, if we do not correct such violations within 60 days of the letter. The allegations relatenotes to the ~~color and odor~~consolidated financial statements under Item 15 of ~~treated effluent discharged into the Altamaha River~~Part IV of this report “Exhibits, Financial Statement Schedules,” is incorporated herein by ~~Rayonier’s Jesup, Georgia mill.~~

The mill’s treated effluent is discharged pursuant to a permit issued by the Environmental Protection Division of the Georgia Department of Natural Resources (“EPD”), as well as the terms of a consent order entered into in 2008 (and later amended) by EPD and Rayonier. We disagree with the Altamaha Riverkeeper and believe that we are in compliance with applicable law relating to the Jesup mill’s discharge, including compliance with the terms of its permit and consent order with EPD. Assuming that no resolution can be reached, it is possible that Altamaha Riverkeeper will file a lawsuit against Rayonier in respect of its claims.

~~For further information on environmental issues, see Item 7 —~~ ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~ — ~~Environmental Regulation,Note 17~~ — ~~Liabilities for Dispositions and Discontinued Operationsand Note 18 —~~ ~~Contingencies.~~reference.


Item 4.	MINE SAFETY DISCLOSURES

Not applicable.

1821

~~Table of Contents~~

~~Index to Financial Statements~~

PART II


Item 5.	MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Prices of our Common Shares; Dividends

The table below reflects, for the quarters indicated, the dividends declared per share and the range of market prices of our common shares as reported in the consolidated transaction reporting system of the NYSE, the only exchange on which our shares are listed, under the trading symbol RYN.

On June 27, 2014, we spun off our Performance Fibers business to our shareholders as a newly formed publicly traded company named Rayonier Advanced Materials. On June 27, 2014, the shareholders of record received one share of Rayonier Advanced Materials common stock for every three common shares of Rayonier held as of the close of business on the record date of June 18, 2014. The low end of the second quarter 2014 range as well as the third and fourth quarter 2014 ranges in the following table reflect post-spin market price information and therefore are not comparable to pre-spin share prices from earlier periods.


	High		Low		Dividends		High	Low	Dividends
2014
Fourth Quarter							$34.04	$25.87	$0.25
Third Quarter							$35.79	$30.46	$0.80	(a)
Second Quarter							$48.82	$34.76	$0.49
First Quarter							$47.29	$40.81	$0.49
2013
Fourth Quarter	$	58.84	$	39.49	$	0.49	$58.84	$39.49	$0.49
Third Quarter	$	59.87	$	53.84	$	0.49	$59.87	$53.84	$0.49
Second Quarter	$	60.62	$	51.04	$	0.44	$60.62	$51.04	$0.44
First Quarter	$	59.72	$	52.17	$	0.44	$59.72	$52.17	$0.44
2012
Fourth Quarter	$	51.86	$	47.45	$	0.44
Third Quarter	$	51.87	$	44.82	$	0.44
Second Quarter	$	46.04	$	41.33	$	0.40
First Quarter	$	47.56	$	43.38	$	0.40


(a)	Third quarter 2014 dividends include a $0.50 per share special dividend related to restricted cash proceeds received from Rayonier Advanced Materials in connection with the spin-off.

In February 2012, we filed a universal shelf registration giving us the ability to issue and sell an indeterminate amount of various types of debt and equity securities. In March 2012, we issued $325 million of 3.75% Senior Notes due 2022 under the universal shelf registration statement. In May 2004, we completed a Form S-4 acquisition shelf registration to offer and issue 7.0 million common shares for the acquisition of other businesses, assets or properties. As of December 31, 2014, no common shares have been offered or issued under the Form S-4 shelf registration.

See Note 21 — Incentive Stock Plans for information on securities that are authorized for issuance under The Rayonier Incentive Stock Plan (“the Stock Plan”).

On ~~February 28, 2014,~~March 2, 2015, the Company announced a first quarter dividend of 4925 cents per share payable March 31, ~~2014,~~2015, to shareholders of record on March 17, ~~2014.~~2015. There were approximately ~~7,560~~7,237 shareholders of record of our Common Shares on February ~~21, 2014.~~20, 2015.

Issuer Repurchases

In 1996, we began a Common Share repurchase program (the “anti-dilutive program”) to minimize the dilutive effect of our employee incentive stock plans on earnings per share. This program limits the number of shares that may be purchased each year to the greater of 1.5 percent of outstanding shares at the beginning of the year or the number of incentive shares issued to employees during the year. In October 2000, July 2003 and October 2011, our board of directors authorized the purchase of additional shares totaling 2.1 million. These shares were authorized separately from the anti-dilutive program, and do not have expiration dates. In ~~2013~~,2014, there were no shares repurchased under these plans. As of December 31, ~~2013~~,2014, there were ~~3,785,046~~3,828,927 shares available for ~~repurchase.~~repurchase under these plans.

The following table provides information regarding our purchases of Rayonier common stock during the quarter ended December 31, ~~2013:~~2014:


Period		Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs		Total Number of Shares Purchased (a)	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
October 1 to October 31	October 1 to October 31	411	$	57.11	—	3,785,046	October 1 to October 31	—	—	—	3,828,927
November 1 to November 30	November 1 to November 30	—	$	—	—	3,785,046	November 1 to November 30	—	—	—	3,828,927
December 1 to December 31	December 1 to December 31	—	$	—	—	3,785,046	December 1 to December 31	684	$27.94	—	3,828,927
	Total	411			—	3,785,046	Total	684		—	3,828,927



Large accelerated filer x		Accelerated filer o
Non-accelerated filer o		Smaller reporting company o



	Page

Management’s Report on Internal Control over Financial Reporting	F- 1
Reports of Independent Registered Public Accounting Firms	F- 2
Consolidated Statements of Income and Comprehensive Income for the Three Years Ended December 31, ~~2013~~2014	F- 54
Consolidated Balance Sheets as of December 31, ~~2013~~2014 and ~~2012~~2013	F- 65
Consolidated Statements of Cash Flows for the Three Years Ended December 31, ~~2013~~2014	F- 76
Notes to Consolidated Financial Statements	F- 98

INDEX TO FINANCIAL STATEMENT SCHEDULES
Schedule II — Valuation and Qualifying Accounts	F- 6772
All other financial statement schedules have been omitted because they are not applicable, the required matter is not present, or the required information has been otherwise supplied in the financial statements or the notes thereto.
Signatures	F- 6873
Exhibit Index



	2009	2010	2011	2012	2013	2014
Rayonier Inc.	$100	$130	$172	$207	$174	$164
S&P 500^®	100	115	117	136	180	205
FTSE NAREIT All Equity REITs	100	128	139	166	171	218
S&P^© 1500 Paper & Forest Products Index	100	108	118	155	199	216



	At or For the Years Ended December 31,
	2013			2012			2011			2010			2009
	(dollar amounts in millions, except per share data)
Profitability:
Sales (a)	$	1,708		$	1,483		$	1,421		$	1,247		$	1,118
Operating income (b)	423			401			357			279			419
Net income (c)	374			279			276			218			313
Diluted earnings per common share	2.86			2.17			2.20			1.79			2.60
Financial Condition:
Total assets (d)	$	3,686		$	3,123		$	2,569		$	2,364		$	2,253
Total debt (e)	1,574			1,270			847			768			700
Shareholders’ equity	1,755			1,438			1,323			1,252			1,146
Shareholders’ equity — per share	13.90			11.66			10.84			10.34			9.61
Cash Flows:
Cash provided by operating activities (f)	$	545		$	446		$	432		$	495		$	307
Cash used for investing activities
Capital expenditures	$	159		$	158		$	145		$	138		$	92
Purchase of additional interest in New Zealand joint venture	140			—			—			—			—
Purchase of timberlands and other (g)	20			107			321			5			—
Jesup mill cellulose specialties expansion	141			201			43			—			—
Proceeds from disposition of Wood Products business	(63		)	—			—			—			—
Other	72			7			(20		)	—			1
Total cash used for investing activities	$	469		$	473		$	489		$	143		$	93
Cash used for (provided by) financing activities	157			(229		)	215			78			202
Depreciation, depletion and amortization	191			146			133			139			153
Cash dividends paid	237			207			185			164			158
Dividends paid — per share	$	1.86		$	1.68		$	1.52		$	1.36		$	1.33
Non-GAAP Financial Measures:
EBITDA (h)
Forest Resources	$	180		$	121		$	110		$	92		$	77
Real Estate	73			40			59			75			80
Performance Fibers	386			420			354			272			242
Other Operations	2			—			1			1			(3		)
Corporate and other	37			(21		)	(32		)	(15		)	172
Total EBITDA (b)	$	678		$	560		$	492		$	425		$	568
Debt to EBITDA	2.3 to 1			2.3 to 1			1.7 to 1			1.8 to 1			1.2 to 1
Performance Ratios (%):
Operating income to sales	25			27			25			22			37
Return on equity (i)	23			20			21			18			30
Return on capital (i)	12			11			13			11			18
Debt to capital	47			47			39			38			38
Other:
Timberland and real estate acres — owned, leased, or managed, in millions of acres	2.6			2.7			2.7			2.4			2.5



	At or For the Years Ended December 31,
	2014	2013	2012	2011	2010
	(dollar amounts in millions, except per share data)
Profitability:
Sales (a)	$604	$660	$379	$391	$355
Operating income (a)(b)	98	109	32	55	55
Income from continuing operations attributable to Rayonier Inc. (a)(b)	56	104	17	58	49
Diluted earnings per common share from continuing operations	0.43	0.80	0.13	0.47	0.40

Financial Condition:
Total assets (a)	$2,453	$3,686	$3,123	$2,569	$2,364
Total debt (a)(c)	752	1,574	1,270	847	768
Shareholders’ equity	1,575	1,755	1,438	1,323	1,252
Shareholders’ equity — per share	12.51	13.90	11.66	10.84	10.34

Cash Flows:
Cash provided by operating activities (d)	$317	$545	$446	$432	$495
Cash used for investing activities	193	469	473	489	143
Cash used for (provided by) financing activities	161	157	(229)	215	78
Depreciation, depletion and amortization	120	117	85	77	82
Cash dividends paid	258	237	207	185	164
Dividends paid — per share	$2.03	$1.86	$1.68	$1.52	$1.36

Non-GAAP Financial Measures:
Adjusted EBITDA (e)
Southern Timber	$98	$87	$76	$56	$70
Pacific Northwest Timber	51	54	43	48	26
New Zealand Timber	45	38	2	4	—
Real Estate	70	84	45	63	82
Trading	2	2	—	1	1
Corporate and other	(31)	(45)	(44)	(36)	(47)
Total Adjusted EBITDA (e)	$235	$220	$122	$136	$132

Other:
Timberland and real estate acres — owned, leased, or managed, in millions of acres	2.7	2.7	2.7	2.7	2.4



x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Item	Item		Page	Item		Page
		PART I			PART I
1.		Business	1		Business	1
1A.		Risk Factors	7		Risk Factors	11
1B.		Unresolved Staff Comments	16		Unresolved Staff Comments	19
2.		Properties	17		Properties	19
3.		Legal Proceedings	17		Legal Proceedings	21
4.		Mine Safety Disclosures	18		Mine Safety Disclosures	21
		PART II			PART II
5.		Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	19		Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	22
6.		Selected Financial Data	21		Selected Financial Data	25
7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	24		Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
7A.		Quantitative and Qualitative Disclosures about Market Risk	41		Quantitative and Qualitative Disclosures about Market Risk	48
8.		Financial Statements and Supplementary Data	41		Financial Statements and Supplementary Data	48
9.		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	41		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	48
9A.		Controls and Procedures	42		Controls and Procedures	49
9B.		Other Information	42		Other Information	50
		PART III			PART III
10.		Directors, Executive Officers and Corporate Governance	43		Directors, Executive Officers and Corporate Governance	51
11.		Executive Compensation	43		Executive Compensation	51
12.		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	43		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	51
13.		Certain Relationships and Related Transactions, and Director Independence	43		Certain Relationships and Related Transactions, and Director Independence	51
14.		Principal Accounting Fees and Services	43		Principal Accounting Fees and Services	51
		PART IV			PART IV
15.		Exhibits, Financial Statement Schedules	44		Exhibits, Financial Statement Schedules	52



Location	Softwood	Hardwood	Total	%
Atlantic	24,379	12,742	37,121	42
Gulf	20,103	8,431	28,534	32
Northern	8,489	608	9,097	10
New Zealand	13,251	541	13,792	16
			88,544	100



Segment/Operations	Location	Total Acres	Fee-Owned Acres	Long-Term Leased Acres
Forest Resources	Atlantic	1.1	0.8	0.3
	Gulf States	0.7	0.7	—
	Northern	0.4	0.4	—
	New Zealand (a)	0.3	0.1	0.2
Total Forest Resources Acres		2.5	2.0	0.5
Real Estate	U.S.	0.1	0.1	—
Total Forest Resources and Real Estate Acres		2.6	2.1	0.5


~~(1)~~(a)	Repurchased to satisfy the minimum tax withholding requirements related to the vesting of restricted shares under the Rayonier Incentive Stock Plan.



	2008		2009		2010		2011		2012		2013
Rayonier Inc.	$	100	$	142	$	185	$	245	$	295	$	249
S&P 500^®	$	100	$	126	$	146	$	149	$	172	$	228
FTSE NAREIT All Equity REITs	$	100	$	198	$	214	$	234	$	307	$	394
S&P^© 1500 Paper & Forest Products Index	$	100	$	128	$	164	$	177	$	212	$	218



	For the Years Ended December 31,
	2013	2012	2011	2010	2009
Selected Operating Data:
Forest Resources
Sales volume (thousands of short green tons)
Atlantic	3,247	3,310	3,406	3,571	4,532
Gulf States	2,044	2,011	1,335	1,359	1,726
Northern	1,979	1,947	1,665	1,369	1,402
New Zealand Domestic	1,271	—	—	—	—
New Zealand Export	651	—	—	—	—
Total	9,192	7,268	6,406	6,299	7,660
Real Estate — acres sold
Development	326	261	606	472	789
Rural	16,983	16,237	14,821	15,868	15,628
Non-Strategic Timberlands (j)	159,637	14,425	12,191	44,556	53,703
Total Acres Sold	176,946	30,923	27,618	60,896	70,120
Performance Fibers
Sales volume (thousands of metric tons)
Cellulose specialties	486	503	504	480	464
Viscose / other (k)	51	—	—	—	—
Absorbent materials	106	214	227	238	270
Total	643	717	731	718	734


(a)	On April 4, 2013, ~~included $146 million~~the Company increased its interest in ~~sales from the consolidation of~~ the New Zealand ~~JV.~~JV to 65 percent and began consolidating the New Zealand JV's results of operations and balance sheet.


~~(d)~~	~~2013 included an increase in total assets of approximately $577 million related to the consolidation of the New Zealand JV.~~


Item 1.	BUSINESS


~~(e)~~	~~The 2013 amount included an additional $224 million of debt related to the consolidation of the New Zealand JV.~~ 2011 included $105 million of notes assumed in a timberland acquisition.


~~(f)~~(d)	The 2010 results included a cash refund from the IRS of $189 million related to the ~~AFMC.~~Alternative Fuel Mixture Credit (“AFMC”).


~~(g)~~(e)	~~Total timberland acquisitions for 2011 of $426 million included $105 million of notes assumed.~~


~~(i)~~(f)	~~Return on equity is calculated by dividing net income by the average of the opening (1/1/XX)~~2013 and ~~ending (12/31/XX) shareholders’ equity for each period presented. Return on capital is calculated by dividing net income by the sum of average shareholders’ equity and average outstanding debt.~~prior results include sales volumes from New York timberlands.


~~(j)~~(g)	New Zealand sales volume for 2013 includes volumes sold subsequent to the April 2013 consolidation.


(h)	The 2013 results included a fourth quarter sale of approximately 128,000 acres of New York ~~timberland holdings.~~timberlands.


~~(k)~~	~~Beginning in the third quarter of 2013, viscose and commodity grades are being produced as the Company begins its multi-year transition to producing only cellulose specialties.~~


		Forest Resources		Real Estate		Performance Fibers		Other			Corporate and other			Total				Southern Timber	Pacific Northwest Timber	New Zealand Timber	Real Estate	Trading	Corporate and other	Total
2013
2014																	2014
Operating income ~~(a)~~	Operating income ~~(a)~~	$	81	$	56	$	311	$	2		$	(27	)	$	423		Operating income ~~(a)~~	$46	$30	$9	$48	$2	$(37)	$98
Add:	Depreciation, depletion and amortization	99		17		75		—			—			191			Depreciation, depletion and amortization	52	21	32	13	—	2	120
Add:	Income from discontinued operations	—		—		—		—			63			63			Non-cash cost of land sold	—	—	4	9	—	—	13
Add:	Depreciation, depletion and amortization from discontinued operations	—		—		—		—			1			1			Internal review and restatement costs	—	—	—	—	—	4	4
EBITDA		$	180	$	73	$	386	$	2		$	37		$	678
2012
Adjusted EBITDA (a)																	Adjusted EBITDA (a)	$98	$51	$45	$70	$2	$(31)	$235
2013																	2013
Operating income(b)	Operating income(b)	$	46	$	32	$	359	$	—		$	(36	)	$	401		Operating income(b)	$38	$33	$10	$56	$2	$(30)	$109
Add:	Depreciation, depletion and amortization	75		8		61		—			2			146			Depreciation, depletion and amortization	49	21	28	18	—	1	117
Add:	Income from discontinued operations	—		—		—		—			11			11			Non-cash cost of land sold	—	—	—	10	—	—	10
Add:	Depreciation, depletion and amortization from discontinued operations	—		—		—		—			2			2
EBITDA		$	121	$	40	$	420	$	—		$	(21	)	$	560
2011
Operating income (b)		$	47	$	47	$	298	$	1		$	(36	)	$	357
Less:																	Gain related to consolidation of New Zealand JV	—	—	—	—	—	(16)	(16)
Adjusted EBITDA (a)																	Adjusted EBITDA (a)	$87	$54	$38	$84	$2	$(45)	$220
2012																	2012
Operating income (loss)																	Operating income (loss)	$23	$21	$2	$32	—	$(46)	$32
Add:	Depreciation, depletion and amortization	63		12		56		—			2			133			Depreciation, depletion and amortization	53	22	—	8	—	2	85
Add:	Loss from discontinued operations	—		—		—		—			(1		)	(1		)	Non-cash cost of land sold	—	—	—	5	—	—	5
Adjusted EBITDA (a)																	Adjusted EBITDA (a)	$76	$43	$2	$45	—	$(44)	$122
2011																	2011
Operating income																	Operating income	$13	$29	$4	$47	$1	$(39)	$55
Add:	Depreciation, depletion and amortization from discontinued operations	—		—		—		—			3			3			Depreciation, depletion and amortization	43	19	—	12	—	3	77
EBITDA		$	110	$	59	$	354	$	1		$	(32	)	$	492
Add:																	Non-cash cost of land sold	—	—	—	4	—	—	4
Adjusted EBITDA (a)																	Adjusted EBITDA (a)	$56	$48	$4	$63	$1	$(36)	$136
2010	2010																2010
Operating income (c)	Operating income (c)	$	33	$	53	$	214	$	1		$	(22	)	$	279		Operating income (c)	$29	$8	—	$53	$1	$(36)	$55
Add:	Depreciation, depletion and amortization	59		22		58		—			—			139			Depreciation, depletion and amortization	41	18	—	22	—	1	82
Add:	Income from discontinued operations	—		—		—		—			3			3			Non-cash cost of land sold	—	—	—	7	—	—	7
Add:	Depreciation, depletion and amortization from discontinued operations	—		—		—		—			4			4
EBITDA		$	92	$	75	$	272	$	1		$	(15	)	$	425
2009
Operating income (loss) (d)		$	7	$	56	$	184	$	(3	)	$	175		$	419
Add:	Depreciation, depletion and amortization	70		24		58		—			1			153
Add:	Loss from discontinued operations	—		—		—		—			(9		)	(9		)
Add:	Depreciation, depletion and amortization from discontinued operations	—		—		—		—			5			5
EBITDA		$	77	$	80	$	242	$	(3	)	$	172		$	568
Less:																	Gain on sale of portion of New Zealand JV interest	—	—	—	—	—	(12)	(12)
Adjusted EBITDA (a)																	Adjusted EBITDA (a)	$70	$26	—	$82	$1	$(47)	$132


(a)	Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, depletion, amortization, the non-cash cost of real estate sold (excluding strategic divestitures), the gain related to the consolidation of the New Zealand joint venture, discontinued operations, separation costs related to Performance Fibers spin-off and internal review and restatement costs.


(b)	Corporate and other included a $16 million gain related to the consolidation of the New Zealand JV.


~~(b)~~	~~Corporate and other included a $7 million increase to a disposition reserve. See~~ ~~Note 17~~ — ~~Liabilities for Dispositions and Discontinued Operationsfor additional information.~~


(c)	Corporate and other included a gain of $12 million from the sale of a portion of the Company’s interest in the New Zealand JV.


~~(d)~~	~~Corporate and other included $205 million related to the AFMC. See~~ ~~Note 10~~ — ~~Income Taxes~~— ~~Alternative Fuel Mixture Credit (“AFMC”) and Cellulosic Biofuel Producer Credit (“CBPC”)~~ ~~for additional information.~~


Item 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



	~~Impact on:~~
~~Change in Assumption~~	~~Pension Expense~~	~~Projected Benefit~~ ~~Obligation~~
~~25 bp decrease in discount rate~~	~~+ 1.6 million~~	~~+ 13.0 million~~
~~25 bp increase in discount rate~~	~~- 1.6 million~~	~~- 12.4 million~~
~~25 bp decrease in long-term return on assets~~	~~+ 0.7 million~~
~~25 bp increase in long-term return on assets~~	~~- 0.7 million~~



Financial Information (in millions)	2013			2012			2011
Sales
Forest Resources
Atlantic	$	70		$	64		$	71
Gulf States	54			45			31
Northern	110			110			102
New Zealand (a)	148			11			11
Total Forest Resources	382			230			215
Real Estate
Development	4			2			4
Rural	37			39			33
Non-Strategic Timberlands (b)	108			16			34
Total Real Estate	149			57			71
Performance Fibers
Cellulose specialties	930			935			824
Viscose/other (c)	39			—			—
Absorbent materials (c)	73			158			196
Total Performance Fibers	1,042			1,093			1,020
Other Operations	138			105			122
Intersegment Eliminations	(3		)	(2		)	(7		)
Total Sales	$	1,708		$	1,483		$	1,421

Operating Income
Forest Resources	$	81		$	46		$	47
Real Estate	56			32			47
Performance Fibers	311			359			298
Other Operations	2			—			1
Corporate and other (d)	(27		)	(36		)	(36		)
Operating Income	423			401			357
Interest Expense	(44		)	(45		)	(50		)
Interest/Other Income	3			—			1
Income Tax Expense (e)	(50		)	(85		)	(31		)
Income from Continuing Operations	332			271			277
Discontinued Operations, Net (f)	42			8			(1		)
Net Income	374			279			276
Less: Net Income Attributable to Noncontrolling Interest	2			—			—
Net Income Attributable to Rayonier Inc.	$	372		$	279		$	276


(a)	2012 sales, operating income and Adjusted EBITDA reflect a 26% minority interest in the New Zealand JV. 2013 included $146 million in sales from the consolidation of the New Zealand JV.


(c)	Beginning in the third quarter of 2013 and in conjunction with the completion of the CSE project, the Company’s Jesup mill reduced production of absorbent materials and began producing viscose and other commodity grades as the Company begins its multi-year transition to producing only cellulose specialties.


~~(d)~~	The 2013 results included a $16 million gain related to the consolidation of the New Zealand JV. ~~The 2011 results included~~


(d)	Adjusted EBITDA is a ~~$7 million increase in a disposition reserve. See~~ ~~Note 17~~non-GAAP measure defined and reconciled at Item 6 — ~~Liabilities~~Selected Financial Data.