~~0000052827us-gaap:PensionPlansDefinedBenefitMember2020-04-012020-06-30~~

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended ~~June~~September 30, ~~2020~~2023


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


			For the transition period from to

RAYONIER INC.

(Exact name of registrant as specified in its charter)

North Carolina

1-6780

13-2607329

(State or other Jurisdiction of incorporation or organization)

(Commission File Number)

(I.R.S. Employer Identification Number)

Rayonier, L.P.

(Exact name of registrant as specified in its charter)

Delaware

333-237246

91-1313292

(State or other Jurisdiction of incorporation or organization)

(Commission File Number)

(I.R.S. Employer Identification Number)

1 RAYONIER WAY

WILDLIGHT, FL 32097

(Principal Executive Office)

Telephone Number: (904) 357-9100

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:


Title of each class	Trading Symbol	Exchange
Common Shares, no par value, of Rayonier Inc.	RYN	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Rayonier Inc. Yes ☒ No ☐ Rayonier, L.P. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Rayonier Inc. Yes ☒ No ☐ Rayonier, L.P. Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Rayonier Inc.

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

Rayonier, L.P.

Large Accelerated Filer

☐

Accelerated Filer

☐

Non-accelerated Filer

☒

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Rayonier Inc. o☐ Rayonier, L.P. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Rayonier Inc. Yes ☐ No ☒ Rayonier, L.P. Yes ☐ No ☒

As of ~~July 31, 2020,~~October 27, 2023, Rayonier Inc. had ~~136,512,112~~148,292,759 Common Shares outstanding. As of ~~July 31, 2020,~~October 27, 2023, Rayonier, L.P. had ~~4,446,153 Common~~2,447,848 Units outstanding.

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EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarterly period ended ~~June~~September 30, ~~2020~~2023 of Rayonier Inc., a North Carolina corporation, and Rayonier, L.P., a Delaware limited partnership. Unless stated otherwise or the context otherwise requires, references to “Rayonier” or “the Company” mean Rayonier Inc. and references to the “Operating Partnership” mean Rayonier, L.P. References to “we,” “us,” and “our” mean collectively Rayonier Inc., the Operating Partnership and entities/subsidiaries owned or controlled by Rayonier Inc. and/or the Operating Partnership.

Rayonier Inc. has elected to be taxed as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, commencing with its taxable year ended December 31, 2004. The Company is structured as an umbrella partnership REIT (“UPREIT”) under which substantially all of its business is conducted through the Operating Partnership. Rayonier Inc. is the sole general partner of the Operating Partnership. On May 8, 2020, Rayonier, L.P. acquired Pope Resources, a Delaware Limited Partnership (“Pope Resources”) and issued approximately 4.45 million operating partnership units (“OP Units” or “Redeemable ~~Common~~Operating Partnership Units”) of Rayonier, L.P. as partial merger consideration. These OP Units are generally considered to be economic equivalents to Rayonier common shares and receive distributions equal to the dividends paid on Rayonier common shares. ~~See~~ ~~Note 2 - Merger with Pope Resources~~ ~~for additional information pertaining to the merger.~~

As of ~~June~~September 30, ~~2020,~~2023, the Company owned a ~~96.8%~~ 98.4% interest in the Operating Partnership, with the remaining ~~3.2~~%1.6% interest owned by limited partners of the Operating Partnership. As the sole general partner of the ~~Operating~~Operating Partnership, Rayonier Inc. has exclusive control of the day-to-day management of the Operating Partnership.

Rayonier Inc. and the Operating Partnership are operated as one business. The management of the Operating Partnership consists of the same members as the management of Rayonier Inc. As general partner with control of the Operating Partnership, Rayonier Inc. consolidates Rayonier, L.P. for financial reporting purposes, and has no material assets or liabilities other than its investment in the Operating Partnership.

We believe combining the quarterly reports of Rayonier Inc. and Rayonier, L.P. into this single report results in the following benefits:

•Strengthens investors’ understanding of Rayonier Inc. and the Operating Partnership by enabling them to view the business as a single operating unit in the same manner as management views and operates the business;

•Creates efficiencies for investors by reducing duplicative disclosures and providing a single comprehensive document; and

•Generates time and cost savings associated with the preparation of the reports when compared to preparing separate reports for each entity.

There are a few important differences between Rayonier Inc. and the Operating Partnership in the context of how Rayonier Inc. operates as a consolidated company. The Company itself does not conduct business, other than through acting as the general partner of the Operating Partnership and issuing equity or equity-related instruments from ~~time-to-time.~~time to time. The Operating Partnership holds, directly or indirectly, substantially all of the Company’s assets. Likewise, all debt is incurred by the Operating Partnership or entities/subsidiaries owned or controlled by the Operating Partnership. The Operating Partnership conducts substantially all of the Company’s business and is structured as a partnership with no publicly traded equity.

To help investors understand the significant differences between the Company and the Operating Partnership, this report includes:

•Separate Consolidated Financial Statements for Rayonier Inc. and Rayonier, L.P.;

•A combined set of Notes to the Consolidated Financial Statements with separate discussions of per share and per unit information, noncontrolling interests and shareholders’ equity and partners’ capital, as applicable;

•A combined Management’s Discussion and Analysis of Financial Condition and Results of Operations which includes specific information related to each reporting entity;

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•A separate Part 1,I, Item 4. Controls and Procedures related to each reporting entity;

•A separate Part II, Item 2. Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities section related to each reporting entity; and

•Separate Exhibit 31 and 32 certifications for each reporting entity within Part II, Item 6.

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TABLE OF CONTENTS

Item Page
PART I - FINANCIAL INFORMATION
1.
Financial Statements (unaudited)
1
Rayonier Inc.:
Consolidated Statements of Income and Comprehensive Income for the Three and Six Months Ended June 3 0 , 2020 and 2019
1
Consolidated Balance Sheets as of June 3 0 , 2020 and December 31, 2019
2
Consolidated Statements of Changes in Shareholders’ Equity for the Quarters and Six Months ended June 30, 2020 and 2019
3
Consolidated Statements of Cash Flows for the Six Months Ended June 3 0 , 2020 and 2019
5
Rayonier, L.P.:
Consolidated Statements of Income and Comprehensive Income for the Three and Six Months Ended June 3 0 , 2020 and 2019
6
Consolidated Balance Sheets as of June 3 0 , 2020 and December 31, 2019
7
Consolidated Statements of Changes in Capital for the Quarters and Six Months ended June 30, 2020 and 2019
8
Consolidated Statements of Cash Flows for the Six Months Ended June 3 0 , 2020 and 2019
10
Notes to Consolidated Financial Statements
11
2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
54
3.
Quantitative and Qualitative Disclosures about Market Risk
81
4.
Controls and Procedures
83
PART II - OTHER INFORMATION
1A.
Risk Factors
84
1.
Legal Proceedings
84
2.
Unregistered Sales of Equity Securities and Use of Proceeds
85
6.
Exhibits
86
Signatures
88


Item		Page
	PART I - FINANCIAL INFORMATION
1.	Financial Statements (unaudited)	1
	Rayonier Inc.:
	Consolidated Statements of Income and Comprehensive Income for the Three and Nine Months Ended September 30, 2023 and 2022	1
	Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	2
	Consolidated Statements of Changes in Shareholders’ Equity for the Quarters and Nine Months Ended September 30, 2023 and 2022	3
	Consolidated Statements of Cash Flows for the Nine Months Ended Sept ember 30, 2023 and 2022	7
	Rayonier, L.P.:
	Consolidated Statements of Income and Comprehensive Income for the Three and Nine Months Ended September 30, 2023 and 2022	8
	Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	9
	Consolidated Statements of Changes in Capital for the Quarters and Nine Months Ended September 30, 2023 and 2022	10
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022	12
	Notes to Consolidated Financial Statements	13
2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	38
3.	Quantitative and Qualitative Disclosures about Market Risk	62
4.	Controls and Procedures	64
	PART II - OTHER INFORMATION
1.	Legal Proceedings	64

2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	65
5.	Other Information	66
6.	Exhibits	67
	Signatures	68

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

RAYONIER INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

AND COMPREHENSIVE INCOME

(Unaudited)

(Dollars in thousands, except per share amounts)


		Three Months Ended June 30,			Six Months Ended June 30,				Three Months Ended September 30,		Nine Months Ended September 30,
		2020	2019	2020	2019		2023	2022	2023	2022
SALES (NOTE 3)	SALES (NOTE 3)	$195,630	$184,800	$454,760	$376,346	SALES (NOTE 3)	$201,579	$195,287	$589,526	$663,674
Costs and Expenses	Costs and Expenses					Costs and Expenses
Cost of sales	Cost of sales	(154,891)	(140,454)	(364,390)	(283,705)	Cost of sales	(145,622)	(152,079)	(463,197)	(507,381)
Selling and general expenses	Selling and general expenses	(12,570)	(10,984)	(22,538)	(20,794)	Selling and general expenses	(18,947)	(16,886)	(54,677)	(49,002)
Other operating expense, net (Note 19)		(16,483)	(1,969)	(17,594)	(1,934)
Other operating (expense) income, net (Note 14)						Other operating (expense) income, net (Note 14)	(1,654)	14,581	(5,571)	14,398
		(183,944)	(153,407)	(404,522)	(306,433)		(166,223)	(154,384)	(523,445)	(541,985)
OPERATING INCOME	OPERATING INCOME	11,686	31,393	50,238	69,913	OPERATING INCOME	35,356	40,903	66,081	121,689
Interest expense		(9,820)	(7,922)	(18,036)	(15,632)
Interest expense, net						Interest expense, net	(12,598)	(9,056)	(36,755)	(26,476)
Interest and other miscellaneous income, net	Interest and other miscellaneous income, net	1,579	1,057	1,370	2,390	Interest and other miscellaneous income, net	529	1,252	21,725	990
INCOME BEFORE INCOME TAXES	INCOME BEFORE INCOME TAXES	3,445	24,528	33,572	56,671	INCOME BEFORE INCOME TAXES	23,287	33,099	51,051	96,203
Income tax expense (Note 10)		(2,990)	(3,608)	(6,696)	(7,958)
Income tax expense (Note 16)						Income tax expense (Note 16)	(547)	(1,238)	(1,777)	(8,056)
NET INCOME	NET INCOME	455	20,920	26,876	48,713	NET INCOME	22,740	31,861	49,274	88,147
Less: Net income attributable to noncontrolling interest in the Operating Partnership		(219)	—	(219)	—
Less: Net loss (income) attributable to noncontrolling interests in consolidated affiliates		1,499	(2,168)	931	(5,167)
Less: Net income attributable to noncontrolling interests in the operating partnership						Less: Net income attributable to noncontrolling interests in the operating partnership	(320)	(455)	(811)	(1,670)
Less: Net income attributable to noncontrolling interests in consolidated affiliates						Less: Net income attributable to noncontrolling interests in consolidated affiliates	(3,183)	(10,828)	(1,902)	(12,478)
NET INCOME ATTRIBUTABLE TO RAYONIER INC.	NET INCOME ATTRIBUTABLE TO RAYONIER INC.	1,735	18,752	27,588	43,546	NET INCOME ATTRIBUTABLE TO RAYONIER INC.	19,237	20,578	46,561	73,999
OTHER COMPREHENSIVE INCOME (LOSS)	OTHER COMPREHENSIVE INCOME (LOSS)					OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment, net of income tax effect of $0, $0, $0, and $0		23,258	(5,604)	(20,765)	429
Cash flow hedges, net of income tax effect of $1,741, $91, $116 and $244		(7,276)	(19,519)	(90,751)	(30,205)
Foreign currency translation adjustment, net of income tax effect of $0, $0, $0 and $0						Foreign currency translation adjustment, net of income tax effect of $0, $0, $0 and $0	(4,413)	(25,392)	(17,350)	(55,220)
Cash flow hedges, net of income tax effect of $75, $2,488, $322 and $5,677						Cash flow hedges, net of income tax effect of $75, $2,488, $322 and $5,677	7,379	20,147	7,002	66,329
Amortization of pension and postretirement plans, net of income tax expense of $0, $0, $0 and $0	Amortization of pension and postretirement plans, net of income tax expense of $0, $0, $0 and $0	217	112	434	224	Amortization of pension and postretirement plans, net of income tax expense of $0, $0, $0 and $0	2	188	4	564
Total other comprehensive income (loss)	Total other comprehensive income (loss)	16,199	(25,011)	(111,082)	(29,552)	Total other comprehensive income (loss)	2,968	(5,057)	(10,344)	11,673
COMPREHENSIVE INCOME (LOSS)		16,654	(4,091)	(84,206)	19,161
Less: Comprehensive income attributable to noncontrolling interests in the Operating Partnership		(676)	—	(676)	—
Less: Comprehensive (income) loss attributable to noncontrolling interests in consolidated affiliates		(4,917)	(815)	5,743	(5,366)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO RAYONIER INC.		$11,061	($4,906)	($79,139)	$13,795
EARNINGS PER COMMON SHARE (NOTE 14)
COMPREHENSIVE INCOME						COMPREHENSIVE INCOME	25,708	26,804	38,930	99,820
Less: Comprehensive income attributable to noncontrolling interests in the operating partnership						Less: Comprehensive income attributable to noncontrolling interests in the operating partnership	(373)	(490)	(592)	(2,147)
Less: Comprehensive income attributable to noncontrolling interests in consolidated affiliates						Less: Comprehensive income attributable to noncontrolling interests in consolidated affiliates	(2,906)	(8,029)	(884)	(6,670)
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.						COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.	$22,429	$18,285	$37,454	$91,003
EARNINGS PER COMMON SHARE (NOTE 5)						EARNINGS PER COMMON SHARE (NOTE 5)
Basic earnings per share attributable to Rayonier Inc.	Basic earnings per share attributable to Rayonier Inc.	$0.01	$0.14	$0.21	$0.34	Basic earnings per share attributable to Rayonier Inc.	$0.13	$0.14	$0.31	$0.51
Diluted earnings per share attributable to Rayonier Inc.	Diluted earnings per share attributable to Rayonier Inc.	$0.01	$0.14	$0.21	$0.34	Diluted earnings per share attributable to Rayonier Inc.	$0.13	$0.14	$0.31	$0.50

~~See Notes to Consolidated Financial Statements.~~

See Notes to Consolidated Financial Statements.

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RAYONIER INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands)


	September 30, 2023	December 31, 2022
ASSETS
CURRENT ASSETS



Cash and cash equivalents	$107,784	$114,255


Trade receivables, less allowance for doubtful accounts of $217 and $74	31,447	27,837
Other receivables	9,894	14,701
Inventory (Note 13)	33,139	23,729

Prepaid expenses	20,415	20,573
Assets held for sale (Note 19)	18,320	713
Other current assets	1,929	573
Total current assets	222,928	202,381
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	3,138,136	3,230,904
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS (NOTE 12)	106,657	115,097
PROPERTY, PLANT AND EQUIPMENT
Land	6,453	6,453
Buildings	30,121	31,020
Machinery and equipment	6,581	6,568
Construction in progress	1,331	653
Total property, plant and equipment, gross	44,486	44,694
Less — accumulated depreciation	(18,478)	(17,505)
Total property, plant and equipment, net	26,008	27,189
RESTRICTED CASH (NOTE 18)	1,804	1,152
RIGHT-OF-USE ASSETS	92,736	97,167
OTHER ASSETS	119,480	115,481
TOTAL ASSETS	$3,707,749	$3,789,371
LIABILITIES, NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$25,960	$22,100



Accrued taxes	8,920	3,734

Accrued payroll and benefits	10,443	12,564
Accrued interest	10,605	5,920
Deferred revenue	23,835	22,762

Other current liabilities	30,856	28,247
Total current liabilities	110,619	95,327
LONG-TERM DEBT, NET (NOTE 6)	1,511,470	1,514,721

PENSION AND OTHER POSTRETIREMENT BENEFITS (NOTE 15)	8,356	8,510
LONG-TERM LEASE LIABILITY	85,111	88,756
LONG-TERM DEFERRED REVENUE	11,317	6,895
OTHER NON-CURRENT LIABILITIES	78,744	88,687
CONTINGENCIES (NOTE 9)
NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP (NOTE 4)	69,820	105,763
SHAREHOLDERS’ EQUITY
Common Shares, 480,000,000 shares authorized, 148,287,338 and 147,282,631 shares issued and outstanding	1,493,511	1,462,945
Retained earnings	295,096	366,637
Accumulated other comprehensive income (Note 17)	27,504	35,813
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY	1,816,111	1,865,395
Noncontrolling interests in consolidated affiliates (Note 4)	16,201	15,317
TOTAL SHAREHOLDERS’ EQUITY	1,832,312	1,880,712
TOTAL LIABILITIES, NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND SHAREHOLDERS’ EQUITY	$3,707,749	$3,789,371

June 30, 2020 December 31, 2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents, excluding Timber Funds $87,813 $68,735
Cash and cash equivalents, Timber Funds 6,973 —
Total cash and cash equivalents 94,786 68,735
Accounts receivable, less allowance for doubtful accounts of $25 and $24 36,811 27,127
Inventory (Note 21)
10,365 14,518
Prepaid expenses 18,133 14,728
Other current assets 1,135 867
Total current assets 161,230 125,975
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION 3,332,067 2,482,047
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT
INVESTMENTS (NOTE 8)
113,920 81,791
PROPERTY, PLANT AND EQUIPMENT
Land 5,566 4,131
Buildings 29,153 23,095
Machinery and equipment 4,753 4,339
Construction in progress 382 348
Total property, plant and equipment, gross 39,854 31,913
Less — accumulated depreciation (10,444) (9,662)
Total property, plant and equipment, net 29,410 22,251
RESTRICTED CASH (NOTE 22)
475 1,233
RIGHT-OF-USE ASSETS (NOTE 4)
96,710 99,942
OTHER ASSETS 35,455 47,757
TOTAL ASSETS $3,769,267 $2,860,996
LIABILITIES, NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable $21,836 $18,160
Current maturities of long-term debt, excluding Timber Funds (Note 7)
— 82,000
Current maturities of long-term debt, Timber Funds (Note 7)
25,042 —
Accrued taxes 6,444 3,032
Accrued payroll and benefits 6,628 8,869
Accrued interest 6,500 5,205
Deferred revenue 18,434 11,440
Other current liabilities 24,405 22,480
Total current liabilities 109,289 151,186
LONG-TERM DEBT, NET OF DEFERRED FINANCING COSTS, EXCLUDING TIMBER FUNDS (NOTE 7)
1,310,506 973,129
LONG-TERM DEBT, TIMBER FUNDS (NOTE 7)
35,617 —
PENSION AND OTHER POSTRETIREMENT BENEFITS (NOTE 17)
23,767 25,311
LONG-TERM LEASE LIABILITY (NOTE 4)
87,774 90,481
OTHER NON-CURRENT LIABILITIES 178,136 83,247
COMMITMENTS AND CONTINGENCIES (NOTES 9 and 11)
NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP (NOTE 5)
110,220 —
SHAREHOLDERS’ EQUITY
Common Shares, 480,000,000 shares authorized,136,512,112 and 129,331,069 shares issued and outstanding 1,063,489 888,177
Retained earnings 531,681 583,006
Accumulated other comprehensive loss (Note 23)
(137,929) (31,202)
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY 1,457,241 1,439,981
Noncontrolling interests in consolidated affiliates (Note 5)
456,717 97,661
TOTAL SHAREHOLDERS’ EQUITY 1,913,958 1,537,642
TOTAL LIABILITIES, NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND SHAREHOLDERS’ EQUITY $3,769,267 $2,860,996

See Notes to Consolidated Financial Statements.

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RAYONIER INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

(Dollars in thousands, except share data)


	Common Shares		Retained Earnings	Accumulated Other Comprehensive Income	Noncontrolling Interests in Consolidated Affiliates	Shareholders’ Equity
	Shares	Amount
Balance, January 1, 2023	147,282,631	$1,462,945	$366,637	$35,813	$15,317	$1,880,712
Net income (loss)	—	—	8,474	—	(1,037)	7,437
Net income attributable to noncontrolling interests in the operating partnership	—	—	(174)	—	—	(174)
Dividends ($0.285 per share) (a)	—	—	(42,172)	—	—	(42,172)
Issuance of shares under the “at-the-market” equity offering, net of commissions and offering costs of $24	400	(10)	—	—	—	(10)
Issuance of shares under incentive stock plans	1,564	—	—	—	—	—
Stock-based compensation	—	2,499	—	—	—	2,499
Repurchase of common shares	(1,167)	(41)	—	—	—	(41)

Adjustment of noncontrolling interests in the operating partnership	—	—	(2,376)	—	—	(2,376)
Conversion of units into common shares	729,551	23,881	—	—	—	23,881
Amortization of pension and postretirement plan liabilities	—	—	—	1	—	1
Foreign currency translation adjustment	—	—	—	(3,552)	(181)	(3,733)
Cash flow hedges	—	—	—	(12,504)	185	(12,319)
Allocation of other comprehensive loss to noncontrolling interests in the operating partnership	—	—	—	1,110	—	1,110

Balance, March 31, 2023	148,012,979	$1,489,274	$330,389	$20,868	$14,284	$1,854,815
Net income	—	—	19,341	—	(245)	19,096
Net income attributable to noncontrolling interests in the operating partnership	—	—	(318)	—	—	(318)
Dividends ($0.285 per share) (a)	—	—	(42,279)	—	—	(42,279)
Costs associated with the “at-the-market” (ATM) equity offering program	—	(71)	—	—	—	(71)
Issuance of shares under incentive stock plans	372,149	—	—	—	—	—
Stock-based compensation	—	4,336	—	—	—	4,336
Repurchase of common shares	(126,788)	(4,147)	—	—	—	(4,147)

Adjustment of noncontrolling interests in the operating partnership	—	—	4,296	—	—	4,296
Conversion of units into common shares	10,103	304	—	—	—	304
Amortization of pension and postretirement plan liabilities	—	—	—	2	—	2
Foreign currency translation adjustment	—	—	—	(8,790)	(413)	(9,203)
Cash flow hedges	—	—	—	12,273	(331)	11,942
Allocation of other comprehensive income to noncontrolling interests in the operating partnership	—	—	—	(58)	—	(58)


Balance, June 30, 2023	148,268,443	$1,489,696	$311,429	$24,295	$13,295	$1,838,715

Table of Contents

Common Shares Retained
Earnings Accumulated
Other
Comprehensive Loss Noncontrolling Interests in Consolidated Affiliates Shareholders’
Equity
Shares Amount
Balance, January 1, 2020 129,331,069 $888,177 $583,006 ($31,202) $97,661 $1,537,642
Net income — — 25,854 — 567 26,421
Dividends ($0.27 per share) — — (34,813) — — (34,813)
Issuance of shares under incentive stock plans 2,407 66 — — — 66
Stock-based compensation — 1,510 — — — 1,510
Repurchase of common shares made under repurchase program (152,237) — (3,152) — — (3,152)
Amortization of pension and postretirement plan liabilities — — — 217 — 217
Foreign currency translation adjustment — — — (33,894) (10,129) (44,023)
Cash flow hedges — — — (82,376) (1,099) (83,475)
Distributions to noncontrolling interests in consolidated affiliates — — — — (725) (725)
Balance, March 31, 2020 129,181,239 $889,753 $570,895 ($147,255) $86,275 $1,399,668
Issuances of shares associated with the merger with Pope Resources 7,181,071 172,418 — — — 172,418
Net income (loss) — — 1,954 — (1,499) 455
Net income attributable to noncontrolling interest in the Operating Partnership — — (219) — — (219)
Dividends ($0.27 per share) (a) — — (36,957) — — (36,957)
Issuance of shares under incentive stock plans 215,970 222 — — — 222
Stock-based compensation — 2,668 — — — 2,668
Repurchase of common shares (66,168) (1,572) — — — (1,572)
Acquisition of noncontrolling interests in consolidated affiliates — — — — 372,381 372,381
Adjustment of noncontrolling interest in the Operating Partnership — — (3,992) — — (3,992)
Amortization of pension and postretirement plan liabilities — — — 217 — 217
Foreign currency translation adjustment — — — 17,872 5,386 23,258
Cash flow hedges — — — (8,306) 1,030 (7,276)
Allocation of other comprehensive income to noncontrolling interests in the Operating Partnership — — — (457) — (457)
Distributions to noncontrolling interests in consolidated affiliates — — — — (6,856) (6,856)
Balance, June 30, 2020 136,512,112 $1,063,489 $531,681 ($137,929) $456,717 $1,913,958


RAYONIER INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (CONTINUED) (Unaudited) (Dollars in thousands, except share data)



	Common Shares		Retained Earnings	Accumulated Other Comprehensive Income	Noncontrolling Interests in Consolidated Affiliates	Shareholders’ Equity
	Shares	Amount

Balance, June 30, 2023	148,268,443	$1,489,696	$311,429	$24,295	$13,295	$1,838,715
Net income	—	—	19,557	—	3,183	22,740
Net income attributable to noncontrolling interests in the operating partnership	—	—	(320)	—	—	(320)
Dividends ($0.285 per share) (a)	—	—	(42,460)	—	—	(42,460)

Issuance of shares under incentive stock plans	3,959	—	—	—	—	—
Stock-based compensation	—	3,365	—	—	—	3,365
Repurchase of common shares	(968)	(29)	—	—	—	(29)


Adjustment of noncontrolling interests in the operating partnership	—	—	6,890	—	—	6,890
Conversion of common units to common shares	15,904	479	—	—	—	479
Amortization of pension and postretirement plan liabilities	—	—	—	2	—	2
Foreign currency translation adjustment	—	—	—	(4,180)	(233)	(4,413)
Cash flow hedges	—	—	—	7,423	(44)	7,379
Allocation of other comprehensive income to noncontrolling interests in the operating partnership	—	—	—	(36)	—	(36)


Balance, September 30, 2023	148,287,338	$1,493,511	$295,096	$27,504	$16,201	$1,832,312

(a)For information regarding distributions to noncontrolling interests in the ~~Operating Partnership,~~operating partnership, see the Rayonier Inc. Consolidated ~~Statement~~s Statements of ~~Cash Flows~~Cash Flows and Note 5 4 —~~Noncontrolling~~ Noncontrolling Interests.

Table of Contents

Common Shares Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Noncontrolling Interests in Consolidated Affiliates Shareholders’
Equity
Shares Amount
Balance, January 1, 2019 129,488,675 $884,263 $672,371 $239 $97,677 $1,654,550
Net income — — 24,794 — 2,999 27,793
Dividends ($0.27 per share) — — (35,049) — — (35,049)
Issuance of shares under incentive stock plans 26,031 597 — — — 597
Stock-based compensation — 1,477 — — — 1,477
Repurchase of common shares (1,140) (33) — — — (33)
Amortization of pension and postretirement plan liabilities — — — 112 — 112
Foreign currency translation adjustment — — — 4,680 1,353 6,033
Cash flow hedges — — — (10,884) 198 (10,686)
Distributions to noncontrolling interests in consolidated affiliates — — — — (3,594) (3,594)
Balance, March 31, 2019 129,513,566 $886,304 $662,116 ($5,853) $98,633 $1,641,200
Net income — — 18,752 — 2,168 20,920
Dividends ($0.27 per share) — — (35,125) — — (35,125)
Issuance of shares under incentive stock plans 250,344 177 — — — 177
Stock-based compensation — 2,344 — — — 2,344
Repurchase of common shares (134,194) (4,207) — — — (4,207)
Amortization of pension and postretirement plan liabilities — — — 112 — 112
Foreign currency translation adjustment — — — (4,305) (1,299) (5,604)
Cash flow hedges — — — (19,465) (54) (19,519)
Balance, June 30, 2019 129,629,716 $884,618 $645,743 ($29,511) $99,448 $1,600,298
RAYONIER INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (CONTINUED)

(Unaudited)

(Dollars in thousands, except share data)


	Common Shares		Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Noncontrolling Interests in Consolidated Affiliates	Shareholders’ Equity
	Shares	Amount
Balance, January 1, 2022	145,372,961	$1,389,073	$402,307	($19,604)	$43,802	$1,815,578

Net income	—	—	29,986	—	1,012	30,998
Net income attributable to noncontrolling interests in the operating partnership	—	—	(669)	—	—	(669)
Dividends ($0.27 per share) (a)	—	—	(39,902)	—	—	(39,902)
Issuance of shares under the “at-the-market” equity offering, net of commissions and offering costs of $339	726,248	29,771	—	—	—	29,771
Issuance of shares under incentive stock plans	11,364	415	—	—	—	415
Stock-based compensation	—	2,797	—	—	—	2,797
Repurchase of common shares	(5,420)	(214)	—	—	—	(214)

Adjustment of noncontrolling interests in the operating partnership	—	—	(2,645)	—	—	(2,645)
Conversion of units into common shares	2,535	104	—	—	—	104
Amortization of pension and postretirement plan liabilities	—	—	—	188	—	188
Foreign currency translation adjustment	—	—	—	5,668	790	6,458
Cash flow hedges	—	—	—	39,822	605	40,427

Allocation of other comprehensive income to noncontrolling interests in the operating partnership	—	—	—	(101)	—	(101)
Distributions to noncontrolling interests in consolidated affiliates	—	—	—	—	(1,566)	(1,566)
Balance, March 31, 2022	146,107,688	$1,421,946	$389,077	$25,973	$44,643	$1,881,639

Net income	—	—	24,650	—	637	25,287
Net income attributable to noncontrolling interests in the operating partnership	—	—	(546)	—	—	(546)
Dividends ($0.285 per share) (a)	—	—	(42,098)	—	—	(42,098)
Costs associated with the “at-the-market” (ATM) equity offering program	—	(63)	—	—	—	(63)
Issuance of shares under incentive stock plans	304,887	1,983	—	—	—	1,983
Stock-based compensation	—	4,412	—	—	—	4,412
Repurchase of common shares	(91,820)	(3,991)	—	—	—	(3,991)

Adjustment of noncontrolling interests in the operating partnership	—	—	11,412	—	—	11,412
Conversion of units into common shares	977	42	—	—	—	42
Amortization of pension and postretirement plan liabilities	—	—	—	188	—	188
Foreign currency translation adjustment	—	—	—	(34,373)	(1,912)	(36,285)
Cash flow hedges	—	—	—	8,247	(2,492)	5,755
Allocation of other comprehensive loss to noncontrolling interests in the operating partnership	—	—	—	575	—	575
Noncontrolling interests in consolidated affiliates redemption of shares	—	—	—	—	(27,860)	(27,860)

Balance, June 30, 2022	146,321,732	$1,424,329	$382,495	$610	$13,016	$1,820,450

Table of Contents


RAYONIER INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (CONTINUED) (Unaudited) (Dollars in thousands, except share data)


	Common Shares		Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Noncontrolling Interests in Consolidated Affiliates	Shareholders’ Equity
	Shares	Amount
Balance, June 30, 2022	146,321,732	$1,424,329	$382,495	$610	$13,016	$1,820,450
Net income	—	—	21,033	—	10,828	31,861
Net income attributable to noncontrolling interests in the operating partnership	—	—	(455)	—	—	(455)
Dividends ($0.285 per share) (a)	—	—	(42,052)	—	—	(42,052)
Costs associated with the “at-the-market” (ATM) equity offering program	—	(38)	—	—	—	(38)
Issuance of shares under incentive stock plans	760	19	—	—	—	19
Stock-based compensation	—	2,636	—	—	—	2,636
Repurchase of common shares	(569)	(20)	—	—	—	(20)


Adjustment of noncontrolling interests in the operating partnership	—	—	23,363	—	—	23,363
Conversion of common units to common shares	100,902	3,696	—	—	—	3,696
Amortization of pension and postretirement plan liabilities	—	—	—	188	—	188
Foreign currency translation adjustment	—	—	—	(24,065)	(1,327)	(25,392)
Cash flow hedges	—	—	—	21,619	(1,472)	20,147
Allocation of other comprehensive loss to noncontrolling interests in the operating partnership	—	—	—	49	—	49
Distributions to noncontrolling interests in consolidated affiliates	—	—	—	—	(9,789)	(9,789)

Balance, September 30, 2022	146,422,825	$1,430,622	$384,384	($1,599)	$11,256	$1,824,663

(a)For information regarding distributions to noncontrolling interests in the operating partnership, see the Rayonier Inc. Consolidated Statements of Cash Flows and Note 4 — Noncontrolling Interests.

See Notes to Consolidated Financial Statements.

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

Six Months Ended June 30,
2020 2019
OPERATING ACTIVITIES
Net income $26,876 $48,713
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion and amortization 76,195 64,093
Non-cash cost of land and improved development 13,441 5,647
Stock-based incentive compensation expense 4,178 3,821
Deferred income taxes 9,225 7,257
Amortization of losses from pension and postretirement plans 435 224
Gain on sale of large disposition of timberlands (28,655) —
Other (10,632) 987
Changes in operating assets and liabilities, net of effects of merger with Pope Resources:
Receivables (7,604) (21,031)
Inventories (3,714) (994)
Accounts payable 4,895 5,558
All other operating activities (2,040) 2,679
CASH PROVIDED BY OPERATING ACTIVITIES 82,600 116,954
INVESTING ACTIVITIES
Capital expenditures (29,440) (29,505)
Real estate development investments (3,587) (999)
Purchase of timberlands (24,238) (26,396)
Net proceeds from large disposition of timberlands 115,666 —
Net cash consideration for merger with Pope Resources (231,068) —
Other 1,880 (3,888)
CASH USED FOR INVESTING ACTIVITIES (170,787) (60,788)
FINANCING ACTIVITIES
Issuance of debt 320,000 —
Repayment of debt (117,000) —
Dividends paid on common stock (72,204) (71,107)
Distributions to noncontrolling interests in the Operating Partnership (1,200) —
Proceeds from the issuance of common shares under incentive stock plan 66 774
Repurchase of common shares (1,572) (4,241)
Debt issuance costs (2,427) —
Repurchase of common shares made under repurchase program (3,152) —
Distributions to noncontrolling interest in consolidated affiliates (7,581) (3,594)
Other — 133
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES 114,930 (78,035)
EFFECT OF EXCHANGE RATE CHANGES ON CASH (1,450) 125
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Change in cash, cash equivalents and restricted cash 25,293 (21,744)
Balance, beginning of year 69,968 156,454
Balance, end of period $95,261 $134,710
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period:
Interest (a) $16,134 $14,377
Income taxes 1,083 705
Non-cash investing activity:
Capital assets purchased on account 2,217 3,407
Non-cash financing activity:
Equity consideration for merger with Pope Resources $172,640 —
Redeemable Common Unit consideration for merger with Pope Resources 106,752 —


	Nine Months Ended September 30,
	2023	2022
OPERATING ACTIVITIES
Net income	$49,274	$88,147
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion and amortization	114,281	114,221
Non-cash cost of land and improved development	20,189	20,289

Stock-based incentive compensation expense	10,201	9,844
Deferred income taxes	(2,855)	(6,678)
Amortization of losses from pension and postretirement plans	4	564
Timber write-offs resulting from casualty events	2,302	1,088




Other	7,822	(2,854)
Changes in operating assets and liabilities:
Receivables	251	(12,845)
Inventories	(1,190)	(6,238)
Accounts payable	3,630	6,833

All other operating activities	5,027	(2,482)
CASH PROVIDED BY OPERATING ACTIVITIES	208,936	209,889
INVESTING ACTIVITIES
Capital expenditures	(53,128)	(48,211)

Real estate development investments	(18,757)	(10,935)

Purchase of timberlands	(13,988)	(3,242)






Other	6,197	6,531
CASH USED FOR INVESTING ACTIVITIES	(79,676)	(55,857)
FINANCING ACTIVITIES
Issuance of debt	—	406,842
Repayment of debt	—	(531,842)
Dividends paid on common shares	(127,587)	(123,619)
Distributions to noncontrolling interests in the operating partnership	(2,265)	(2,754)

Proceeds from the issuance of common shares under incentive stock plan	—	2,580
Proceeds from the issuance of common shares under the “at-the-market” (ATM) equity offering program, net of commissions and offering costs	(82)	31,877


Repurchase of common shares to pay withholding taxes on vested incentive stock awards	(4,217)	(4,225)





Distributions to noncontrolling interests in consolidated affiliates	—	(16,472)


CASH USED FOR FINANCING ACTIVITIES	(134,151)	(237,613)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	(928)	(6,038)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Change in cash, cash equivalents and restricted cash	(5,819)	(89,619)
Balance, beginning of year	115,407	369,139
Balance, end of period	$109,588	$279,520


	Nine Months Ended September 30,
	2023	2022
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period:
Interest (a)	$31,556	$24,161
Income taxes (b)	4,651	14,627
Non-cash investing activity:
Capital assets purchased on account	5,161	4,882


Non-cash financing activity:
Noncontrolling interests in consolidated affiliates redemption of shares (c)	—	27,860

(a)Interest paid is presented net of patronage payments ~~received of $4.3 million an~~received ~~$4.0~~of $6.2 million and $6.0 million for the ~~six~~nine months ended ~~June~~September 30, ~~2020~~2023 and ~~June~~September 30, ~~2019,~~2022, respectively. For additional information on patronage payments, see Note 67 — Debt in the ~~2019~~2022 Form 10-K.

(b)Income taxes paid in 2022 were elevated due to timing of required tax payments for the New Zealand subsidiary following a full utilization of its net operating losses.

(c)In the second quarter of 2022, the New Zealand subsidiary made a capital distribution in order to redeem certain equity interests, resulting in the recording of a loan payable by the New Zealand subsidiary in the amount of $27.9 million.

See Notes to Consolidated Financial Statements.

Table of Contents

RAYONIER, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

AND COMPREHENSIVE INCOME

(Unaudited)

(Dollars in thousands, except per unit amounts)


		Three Months Ended June 30,			Six Months Ended June 30,				Three Months Ended September 30,		Nine Months Ended September 30,
		2020	2019	2020	2019		2023	2022	2023	2022
SALES (NOTE 3)	SALES (NOTE 3)	$195,630	$184,800	$454,760	$376,346	SALES (NOTE 3)	$201,579	$195,287	$589,526	$663,674
Costs and Expenses	Costs and Expenses					Costs and Expenses
Cost of sales	Cost of sales	(154,891)	(140,454)	(364,390)	(283,705)	Cost of sales	(145,622)	(152,079)	(463,197)	(507,381)
Selling and general expenses	Selling and general expenses	(12,570)	(10,984)	(22,538)	(20,794)	Selling and general expenses	(18,947)	(16,886)	(54,677)	(49,002)
Other operating expense, net (Note 19)		(16,483)	(1,969)	(17,594)	(1,934)
Other operating (expense) income, net (Note 14)						Other operating (expense) income, net (Note 14)	(1,654)	14,581	(5,571)	14,398
		(183,944)	(153,407)	(404,522)	(306,433)		(166,223)	(154,384)	(523,445)	(541,985)
OPERATING INCOME	OPERATING INCOME	11,686	31,393	50,238	69,913	OPERATING INCOME	35,356	40,903	66,081	121,689
Interest expense		(9,820)	(7,922)	(18,036)	(15,632)
Interest expense, net						Interest expense, net	(12,598)	(9,056)	(36,755)	(26,476)
Interest and other miscellaneous income, net	Interest and other miscellaneous income, net	1,579	1,057	1,370	2,390	Interest and other miscellaneous income, net	529	1,252	21,725	990
INCOME BEFORE INCOME TAXES	INCOME BEFORE INCOME TAXES	3,445	24,528	33,572	56,671	INCOME BEFORE INCOME TAXES	23,287	33,099	51,051	96,203
Income tax expense (Note 10)		(2,990)	(3,608)	(6,696)	(7,958)
Income tax expense (Note 16)						Income tax expense (Note 16)	(547)	(1,238)	(1,777)	(8,056)
NET INCOME	NET INCOME	455	20,920	26,876	48,713	NET INCOME	22,740	31,861	49,274	88,147
Less: Net loss (income) attributable to noncontrolling interests in consolidated affiliates		1,499	(2,168)	931	(5,167)
NET INCOME ATTRIBUTABLE TO RAYONIER, L.P. COMMON UNITHOLDERS		1,954	18,752	27,807	43,546
Less: Net income attributable to noncontrolling interests in consolidated affiliates						Less: Net income attributable to noncontrolling interests in consolidated affiliates	(3,183)	(10,828)	(1,902)	(12,478)
NET INCOME ATTRIBUTABLE TO RAYONIER, L.P. UNITHOLDERS						NET INCOME ATTRIBUTABLE TO RAYONIER, L.P. UNITHOLDERS	19,557	21,033	47,372	75,669
NET INCOME ATTRIBUTABLE TO UNITHOLDERS ATTRIBUTABLE TO:						NET INCOME ATTRIBUTABLE TO UNITHOLDERS ATTRIBUTABLE TO:
Limited Partners						Limited Partners	19,361	20,823	46,898	74,912
General Partners						General Partners	196	210	474	757
Net income attributable to unitholders						Net income attributable to unitholders	19,557	21,033	47,372	75,669
OTHER COMPREHENSIVE INCOME (LOSS)	OTHER COMPREHENSIVE INCOME (LOSS)					OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment, net of income tax effect of $0, $0, $0, and $0		23,258	(5,604)	(20,765)	429
Cash flow hedges, net of income tax effect of $1,741, $91, $116 and $244		(7,276)	(19,519)	(90,751)	(30,205)
Foreign currency translation adjustment, net of income tax effect of $0, $0, $0 and $0						Foreign currency translation adjustment, net of income tax effect of $0, $0, $0 and $0	(4,413)	(25,392)	(17,350)	(55,220)
Cash flow hedges, net of income tax effect of $75, $2,488, $322 and $5,677						Cash flow hedges, net of income tax effect of $75, $2,488, $322 and $5,677	7,379	20,147	7,002	66,329
Amortization of pension and postretirement plans, net of income tax expense of $0, $0, $0 and $0	Amortization of pension and postretirement plans, net of income tax expense of $0, $0, $0 and $0	217	112	434	224	Amortization of pension and postretirement plans, net of income tax expense of $0, $0, $0 and $0	2	188	4	564
Total other comprehensive income (loss)	Total other comprehensive income (loss)	16,199	(25,011)	(111,082)	(29,552)	Total other comprehensive income (loss)	2,968	(5,057)	(10,344)	11,673
COMPREHENSIVE INCOME (LOSS)		16,654	(4,091)	(84,206)	19,161
Less: Comprehensive (income) loss attributable to noncontrolling interests in consolidated affiliates		(4,917)	(815)	5,743	(5,366)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO RAYONIER, L.P. COMMON UNITHOLDERS		$11,737	($4,906)	($78,463)	$13,795
EARNINGS PER COMMON UNIT (NOTE 14)
COMPREHENSIVE INCOME						COMPREHENSIVE INCOME	25,708	26,804	38,930	99,820
Less: Comprehensive income attributable to noncontrolling interests in consolidated affiliates						Less: Comprehensive income attributable to noncontrolling interests in consolidated affiliates	(2,906)	(8,029)	(884)	(6,670)
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER, L.P. UNITHOLDERS						COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER, L.P. UNITHOLDERS	$22,802	$18,775	$38,046	$93,150
EARNINGS PER UNIT (NOTE 5)						EARNINGS PER UNIT (NOTE 5)
Basic earnings per unit attributable to Rayonier, L.P.	Basic earnings per unit attributable to Rayonier, L.P.	$0.01	$0.14	$0.21	$0.34	Basic earnings per unit attributable to Rayonier, L.P.	$0.13	$0.14	$0.31	$0.51
Diluted earnings per unit attributable to Rayonier, L.P.	Diluted earnings per unit attributable to Rayonier, L.P.	$0.01	$0.14	$0.21	$0.34	Diluted earnings per unit attributable to Rayonier, L.P.	$0.13	$0.14	$0.31	$0.50

~~See Notes to Consolidated Financial Statements.~~

See Notes to Consolidated Financial Statements.

Table of Contents

RAYONIER, L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands)


	September 30, 2023	December 31, 2022
ASSETS
CURRENT ASSETS



Cash and cash equivalents	$107,784	$114,255


Trade receivables, less allowance for doubtful accounts of $217 and $74	31,447	27,837
Other receivables	9,894	14,701
Inventory (Note 13)	33,139	23,729

Prepaid expenses	20,415	20,573
Assets held for sale (Note 19)	18,320	713
Other current assets	1,929	573
Total current assets	222,928	202,381
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	3,138,136	3,230,904
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS (NOTE 12)	106,657	115,097
PROPERTY, PLANT AND EQUIPMENT
Land	6,453	6,453
Buildings	30,121	31,020
Machinery and equipment	6,581	6,568
Construction in progress	1,331	653
Total property, plant and equipment, gross	44,486	44,694
Less — accumulated depreciation	(18,478)	(17,505)
Total property, plant and equipment, net	26,008	27,189
RESTRICTED CASH (NOTE 18)	1,804	1,152
RIGHT-OF-USE ASSETS	92,736	97,167
OTHER ASSETS	119,480	115,481
TOTAL ASSETS	$3,707,749	$3,789,371
LIABILITIES, REDEEMABLE OPERATING PARTNERSHIP UNITS AND CAPITAL
CURRENT LIABILITIES
Accounts payable	$25,960	$22,100



Accrued taxes	8,920	3,734

Accrued payroll and benefits	10,443	12,564
Accrued interest	10,605	5,920
Deferred revenue	23,835	22,762

Other current liabilities	30,856	28,247
Total current liabilities	110,619	95,327
LONG-TERM DEBT, NET (NOTE 6)	1,511,470	1,514,721

PENSION AND OTHER POSTRETIREMENT BENEFITS (NOTE 15)	8,356	8,510
LONG-TERM LEASE LIABILITY	85,111	88,756
LONG-TERM DEFERRED REVENUE	11,317	6,895
OTHER NON-CURRENT LIABILITIES	78,744	88,687

CONTINGENCIES (NOTE 9)
REDEEMABLE OPERATING PARTNERSHIP UNITS (NOTE 4) 2,453,269 and 3,208,827 Units outstanding, respectively	69,820	105,763
CAPITAL
General partners’ capital	17,852	18,251
Limited partners’ capital	1,767,335	1,806,895
Accumulated other comprehensive income (Note 17)	30,924	40,249
TOTAL CONTROLLING INTEREST CAPITAL	1,816,111	1,865,395
Noncontrolling interests in consolidated affiliates (Note 4)	16,201	15,317
TOTAL CAPITAL	1,832,312	1,880,712
TOTAL LIABILITIES, REDEEMABLE OPERATING PARTNERSHIP UNITS AND CAPITAL	$3,707,749	$3,789,371

June 30, 2020 December 31, 2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents, excluding Timber Funds $87,813 $68,735
Cash and cash equivalents, Timber Funds 6,973 —
Total cash and cash equivalents 94,786 68,735
Accounts receivable, less allowance for doubtful accounts of $25 and $24 36,811 27,127
Inventory (Note 21)
10,365 14,518
Prepaid expenses 18,133 14,728
Other current assets 1,135 867
Total current assets 161,230 125,975
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION 3,332,067 2,482,047
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT
INVESTMENTS (NOTE 8)
113,920 81,791
PROPERTY, PLANT AND EQUIPMENT
Land 5,566 4,131
Buildings 29,153 23,095
Machinery and equipment 4,753 4,339
Construction in progress 382 348
Total property, plant and equipment, gross 39,854 31,913
Less — accumulated depreciation (10,444) (9,662)
Total property, plant and equipment, net 29,410 22,251
RESTRICTED CASH (NOTE 22)
475 1,233
RIGHT-OF-USE ASSETS (NOTE 4)
96,710 99,942
OTHER ASSETS 35,455 47,757
TOTAL ASSETS $3,769,267 $2,860,996
LIABILITIES, REDEEMABLE OPERATING PARTNERSHIP UNITS AND CAPITAL
CURRENT LIABILITIES
Accounts payable $21,836 $18,160
Current maturities of long-term debt, excluding Timber Funds (Note 7)
— 82,000
Current maturities of long-term debt, Timber Funds (Note 7)
25,042 —
Accrued taxes 6,444 3,032
Accrued payroll and benefits 6,628 8,869
Accrued interest 6,500 5,205
Deferred revenue 18,434 11,440
Other current liabilities 24,405 22,480
Total current liabilities 109,289 151,186
LONG-TERM DEBT, NET OF DEFERRED FINANCING COSTS, EXCLUDING TIMBER FUNDS (NOTE 7)
1,310,506 973,129
LONG-TERM DEBT, TIMBER FUNDS (NOTE 7)
35,617 —
PENSION AND OTHER POSTRETIREMENT BENEFITS (NOTE 17)
23,767 25,311
LONG-TERM LEASE LIABILITY (NOTE 4)
87,774 90,481
OTHER NON-CURRENT LIABILITIES 178,136 83,247
COMMITMENTS AND CONTINGENCIES (NOTES 9 and 11)
REDEEMABLE OPERATING PARTNERSHIP UNITS (NOTE 5) 4,446,153 and 0 Common Units outstanding, respectively
110,220 —
CAPITAL
General partners’ capital 15,947 14,712
Limited partners’ capital 1,578,766 1,456,471
Accumulated other comprehensive loss (Note 23)
(137,472) (31,202)
TOTAL CONTROLLING INTEREST CAPITAL 1,457,241 1,439,981
Noncontrolling interests in consolidated affiliates (Note 5)
456,717 97,661
TOTAL CAPITAL 1,913,958 1,537,642
TOTAL LIABILITIES, REDEEMABLE OPERATING PARTNERSHIP UNITS AND CAPITAL $3,769,267 $2,860,996

See Notes to Consolidated Financial Statements.

Table of Contents

RAYONIER, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL

(Unaudited)

(Dollars in thousands, except share data)

Accumulated
Other
Comprehensive Loss Noncontrolling Interests in Consolidated Affiliates Total Capital
Common Units
General Partners’ Capital Limited Partners’ Capital
Balance, January 1, 2020 $14,712 $1,456,471 ($31,202) $97,661 $1,537,642
Distributions on common units ($0.27 per common unit) (349) (34,464) — — (34,813)
Issuance of common units under incentive stock plans 1 65 — — 66
Stock-based compensation 15 1,495 — — 1,510
Repurchase of common units made under repurchase program (32) (3,120) — — (3,152)
Net income 259 25,595 — 567 26,421
Amortization of pension and postretirement plan liabilities — — 217 — 217
Foreign currency translation adjustment — — (33,894) (10,129) (44,023)
Cash flow hedges — — (82,376) (1,099) (83,475)
Distributions to noncontrolling interests in consolidated affiliates — — — (725) (725)
Balance, March 31, 2020 $14,606 $1,446,042 ($147,255) $86,275 $1,399,668
Issuance of common units associated with the merger with Pope Resources 1,724 170,694 — — 172,418
Distributions on common units ($0.27 per common unit) (382) (37,775) — — (38,157)
Issuance of common units under incentive stock plans 2 220 — — 222
Stock-based compensation 27 2,641 — — 2,668
Repurchase of common units (15) (1,557) — — (1,572)
Adjustment of Redeemable Common Units (35) (3,433) — — (3,468)
Net income 20 1,934 — (1,499) 455
Acquisition of noncontrolling interests in consolidated affiliates — — — 372,381 372,381
Amortization of pension and postretirement plan liabilities — — 217 — 217
Foreign currency translation adjustment — — 17,872 5,386 23,258
Cash flow hedges — — (8,306) 1,030 (7,276)
Distributions to noncontrolling interests in consolidated affiliates — — — (6,856) (6,856)
Balance, June 30, 2020 $15,947 $1,578,766 ($137,472) $456,717 $1,913,958



	Units			Accumulated Other Comprehensive Income	Noncontrolling Interests in Consolidated Affiliates	Total Capital
		General Partners’ Capital	Limited Partners’ Capital
Balance, January 1, 2023		$18,251	$1,806,895	$40,249	$15,317	$1,880,712
Net income (loss)		85	8,389	—	(1,037)	7,437
Distributions on units ($0.285 per unit)		(431)	(42,602)	—	—	(43,033)
Issuance of units under the “at-the-market” equity offering, net of commissions and offering costs of $24		—	(10)	—	—	(10)

Stock-based compensation		25	2,474	—	—	2,499
Repurchase of units		—	(41)	—	—	(41)
Adjustment of Redeemable Operating Partnership Units		(6)	(573)	—	—	(579)
Conversion of units into common shares		239	23,642	—	—	23,881

Amortization of pension and postretirement plan liabilities		—	—	1	—	1
Foreign currency translation adjustment		—	—	(3,552)	(181)	(3,733)
Cash flow hedges		—	—	(12,504)	185	(12,319)

Balance, March 31, 2023		$18,163	$1,798,174	$24,194	$14,284	$1,854,815
Net income		193	19,148	—	(245)	19,096
Distributions on units ($0.285 per unit)		(429)	(42,555)	—	—	(42,984)
Costs associated with the “at-the-market” (ATM) equity offering program		(1)	(70)	—	—	(71)

Stock-based compensation		43	4,293	—	—	4,336
Repurchase of units		(41)	(4,106)	—	—	(4,147)
Adjustment of Redeemable Operating Partnership Units		46	4,579	—	—	4,625
Conversion of units into common shares		3	301	—	—	304

Amortization of pension and postretirement plan liabilities		—	—	2	—	2
Foreign currency translation adjustment		—	—	(8,790)	(413)	(9,203)
Cash flow hedges		—	—	12,273	(331)	11,942


Balance, June 30, 2023		$17,977	$1,779,764	$27,679	$13,295	$1,838,715




Net income		196	19,361	—	3,183	22,740
Distributions on units ($0.285 per unit)		(432)	(42,727)	—	—	(43,159)


Stock-based compensation		34	3,331	—	—	3,365
Repurchase of units		—	(29)	—	—	(29)
Adjustment of Redeemable Operating Partnership Units		72	7,161	—	—	7,233
Conversion of units into common shares		5	474	—	—	479


Amortization of pension and postretirement plan liabilities		—	—	2	—	2
Foreign currency translation adjustment		—	—	(4,180)	(233)	(4,413)
Cash flow hedges		—	—	7,423	(44)	7,379


Balance, September 30, 2023		$17,852	$1,767,335	$30,924	$16,201	$1,832,312

810

Table of Contents

Common Units Accumulated
Other
Comprehensive
Income (Loss) Noncontrolling Interests in Consolidated Affiliates Total Capital
General Partners’ Capital Limited Partners’ Capital
Balance, January 1, 2019 $15,566 $1,541,068 $239 $97,677 $1,654,550
Distributions on common units ($0.27 per common unit) (351) (34,698) — — (35,049)
Issuance of common units under incentive stock plans 6 591 — — 597
Stock-based compensation 15 1,462 — — 1,477
Repurchase of common units — (33) — — (33)
Net income 248 24,546 — 2,999 27,793
Amortization of pension and postretirement plan liabilities — — 112 — 112
Foreign currency translation adjustment — — 4,680 1,353 6,033
Cash flow hedges — — (10,884) 198 (10,686)
Distributions to noncontrolling interests in consolidated affiliates — — — (3,594) (3,594)
Balance, March 31, 2019 $15,484 $1,532,936 ($5,853) $98,633 $1,641,200
Distributions on common units ($0.27 per common unit) (351) (34,774) — — (35,125)
Issuance of common units under incentive stock plans 2 175 — — 177
Stock-based compensation 23 2,321 — — 2,344
Repurchase of common units (42) (4,165) — — (4,207)
Net income 188 18,564 — 2,168 20,920
Amortization of pension and postretirement plan liabilities — — 112 — 112
Foreign currency translation adjustment — — (4,305) (1,299) (5,604)
Cash flow hedges — — (19,465) (54) (19,519)
Balance, June 30, 2019 $15,304 $1,515,057 ($29,511) $99,448 $1,600,298


	Units		Accumulated Other Comprehensive Income (Loss)	Noncontrolling Interests in Consolidated Affiliates	Total Capital
	General Partners’ Capital	Limited Partners’ Capital
Balance, January 1, 2022	$17,872	$1,769,367	($15,463)	$43,802	$1,815,578
Net income	300	29,686	—	1,012	30,998
Distributions on units ($0.27 per unit)	(408)	(40,388)	—	—	(40,796)
Issuance of units under the “at-the-market” equity offering, net of commissions and offering costs of $339	298	29,473	—	—	29,771
Issuance of units under incentive stock plans	4	411	—	—	415
Stock-based compensation	28	2,769	—	—	2,797
Repurchase of units	(2)	(212)	—	—	(214)
Adjustment of Redeemable Operating Partnership Units	(25)	(2,496)	—	—	(2,521)
Conversion of units into common shares	1	103	—	—	104

Amortization of pension and postretirement plan liabilities	—	—	188	—	188
Foreign currency translation adjustment	—	—	5,668	790	6,458
Cash flow hedges	—	—	39,822	605	40,427
Distributions to noncontrolling interests in consolidated affiliates	—	—	—	(1,566)	(1,566)
Balance, March 31, 2022	$18,068	$1,788,713	$30,215	$44,643	$1,881,639

Net income	246	24,404	—	637	25,287
Distributions on units ($0.285 per unit)	(430)	(42,612)	—	—	(43,042)
Costs associated with the “at-the-market” (ATM) equity offering program	(1)	(62)	—	—	(63)
Issuance of units under incentive stock plans	20	1,963	—	—	1,983
Stock-based compensation	44	4,368	—	—	4,412
Repurchase of units	(40)	(3,951)	—	—	(3,991)
Adjustment of Redeemable Operating Partnership Units	124	12,261	—	—	12,385
Conversion of units into common shares	—	42	—	—	42

Amortization of pension and postretirement plan liabilities	—	—	188	—	188
Foreign currency translation adjustment	—	—	(34,373)	(1,912)	(36,285)
Cash flow hedges	—	—	8,247	(2,492)	5,755

Noncontrolling interests in consolidated affiliates redemption of shares	—	—	—	(27,860)	(27,860)
Balance, June 30, 2022	$18,031	$1,785,126	$4,277	$13,016	$1,820,450

Net income	210	20,823	—	10,828	31,861
Distributions on units ($0.285 per unit)	(430)	(42,537)	—	—	(42,967)
Costs associated with the “at-the-market” (ATM) equity offering program	(1)	(37)	—	—	(38)
Issuance of units under incentive stock plans	—	19	—	—	19
Stock-based compensation	27	2,609	—	—	2,636
Repurchase of units	—	(20)	—	—	(20)

Adjustment of Redeemable Operating Partnership Units	239	23,633	—	—	23,872
Conversion of units into common shares	37	3,659	—	—	3,696


Amortization of pension and postretirement plan liabilities	—	—	188	—	188
Foreign currency translation adjustment	—	—	(24,065)	(1,327)	(25,392)
Cash flow hedges	—	—	21,619	(1,472)	20,147
Distributions to noncontrolling interests in consolidated affiliates	—	—	—	(9,789)	(9,789)

Balance, September 30, 2022	$18,113	$1,793,275	$2,019	$11,256	$1,824,663

See Notes to Consolidated Financial Statements.

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RAYONIER, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)


	Nine Months Ended September 30,
	2023	2022
OPERATING ACTIVITIES
Net income	$49,274	$88,147
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion and amortization	114,281	114,221
Non-cash cost of land and improved development	20,189	20,289
Stock-based incentive compensation expense	10,201	9,844
Deferred income taxes	(2,855)	(6,678)
Amortization of losses from pension and postretirement plans	4	564
Timber write-offs resulting from casualty events	2,302	1,088





Other	7,822	(2,854)
Changes in operating assets and liabilities:
Receivables	251	(12,845)
Inventories	(1,190)	(6,238)
Accounts payable	3,630	6,833

All other operating activities	5,027	(2,482)
CASH PROVIDED BY OPERATING ACTIVITIES	208,936	209,889
INVESTING ACTIVITIES
Capital expenditures	(53,128)	(48,211)

Real estate development investments	(18,757)	(10,935)

Purchase of timberlands	(13,988)	(3,242)






Other	6,197	6,531
CASH USED FOR INVESTING ACTIVITIES	(79,676)	(55,857)
FINANCING ACTIVITIES
Issuance of debt	—	406,842
Repayment of debt	—	(531,842)
Distributions on units	(129,852)	(126,373)
Proceeds from the issuance of units under incentive stock plan	—	2,580
Proceeds from the issuance of units under the “at-the-market” (ATM) equity offering program, net of commissions and offering costs	(82)	31,877


Repurchase of units to pay withholding taxes on vested incentive stock awards	(4,217)	(4,225)





Distributions to noncontrolling interests in consolidated affiliates	—	(16,472)


CASH USED FOR FINANCING ACTIVITIES	(134,151)	(237,613)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	(928)	(6,038)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Change in cash, cash equivalents and restricted cash	(5,819)	(89,619)
Balance, beginning of year	115,407	369,139
Balance, end of period	$109,588	$279,520

Six Months Ended June 30,
2020 2019
OPERATING ACTIVITIES
Net income $26,876 $48,713
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion and amortization 76,195 64,093
Non-cash cost of land and improved development 13,441 5,647
Stock-based incentive compensation expense 4,178 3,821
Deferred income taxes 9,225 7,257
Amortization of losses from pension and postretirement plans 435 224
Gain on sale of large disposition of timberlands (28,655) —
Other (10,632) 987
Changes in operating assets and liabilities, net of effects of merger with Pope Resources:
Receivables (7,604) (21,031)
Inventories (3,714) (994)
Accounts payable 4,895 5,558
All other operating activities (2,040) 2,679
CASH PROVIDED BY OPERATING ACTIVITIES 82,600 116,954
INVESTING ACTIVITIES
Capital expenditures (29,440) (29,505)
Real estate development investments (3,587) (999)
Purchase of timberlands (24,238) (26,396)
Net proceeds from large disposition of timberlands 115,666 —
Cash consideration for merger with Pope Resources, net of cash acquired (231,068) —
Other 1,880 (3,888)
CASH USED FOR INVESTING ACTIVITIES (170,787) (60,788)
FINANCING ACTIVITIES
Issuance of debt 320,000 —
Repayment of debt (117,000) —
Distribution on common units (73,404) (71,107)
Proceeds from the issuance of common units under incentive stock plan 66 774
Repurchase of common units (1,572) (4,241)
Debt issuance costs (2,427) —
Repurchase of common units made under repurchase program (3,152) —
Distributions to noncontrolling interest in consolidated affiliates (7,581) (3,594)
Other — 133
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES 114,930 (78,035)
EFFECT OF EXCHANGE RATE CHANGES ON CASH (1,450) 125
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Change in cash, cash equivalents and restricted cash 25,293 (21,744)
Balance, beginning of year 69,968 156,454
Balance, end of period $95,261 $134,710
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period:
Interest (a) $16,134 $14,377
Income taxes 1,083 705
Non-cash investing activity:
Capital assets purchased on account 2,217 3,407
Non-cash financing activity:
Common unit consideration for merger with Pope Resources $172,640 —
Redeemable Common Unit consideration for merger with Pope Resources 106,752 —


	Nine Months Ended September 30,
	2023	2022
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period:
Interest (a)	$31,556	$24,161
Income taxes (b)	4,651	14,627
Non-cash investing activity:
Capital assets purchased on account	5,161	4,882
Non-cash financing activity:
Noncontrolling interests in consolidated affiliates redemption of shares (c)	—	27,860

(a)Interest paid is presented net of patronage payments received of ~~$4.3~~$6.2 million and ~~$4.0~~$6.0 million for the ~~six~~nine months ended ~~June~~September 30, ~~2020~~2023 and ~~June~~September 30, ~~2019,~~2022, respectively. For additional information on patronage payments, see Note 67 — Debt in the ~~2019~~2022 Form 10-K.

(b)Income taxes paid in 2022 were elevated due to timing of required tax payments for the New Zealand subsidiary following a full utilization of its net operating losses.

See Notes to Consolidated Financial Statements.

1012

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RAYONIER INC. AND SUBSIDIARIES

RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

1.BASIS OF PRESENTATION

The unaudited consolidated financial statements and notes thereto of Rayonier Inc. and its subsidiaries and Rayonier, L.P. have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”).

The Rayonier Inc. and Rayonier, L.P. year-end balance sheet information was derived from audited financial statements not included herein. In the opinion of management, these financial statements and notes reflect any adjustments (all of which are normal recurring adjustments) necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented. These statements and notes should be read in conjunction with the financial statements and supplementary data included in ~~the Company’s~~our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2022, as filed with the SEC (the ~~“2019~~“2022 Form 10-K”).

On May 7, 2020, Rayonier Inc. contributed its 100% ownership interest in Rayonier Operating Company LLC (the “Contribution”) to Rayonier, L.P. As a result of the Contribution, which constituted the transfer of all or substantially all of Rayonier’s assets under the terms of the Indenture, dated March 5, 2012 (as supplemented and amended from time to time, the “Indenture”), between Rayonier, as issuer, the subsidiary guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee, Rayonier, L.P. expressly assumed all the obligations of Rayonier under the Indenture, including obligations with respect to the outstanding $325 million in aggregate principal amount of 3.750% Senior Notes due 2022 (the “2022 Notes”) issued thereunder.

On May 7, 2020, Rayonier, Rayonier, L.P., the subsidiary guarantors party thereto and the Trustee entered into the Third Supplemental Indenture, pursuant to which (1) Rayonier, L.P. succeeded to and became substituted for the Company under the Indenture and 2022 Notes and expressly assumed all the obligations of the Company under the Indenture, including obligations with respect to the 2022 Notes, and (2) Rayonier agreed to irrevocably, fully and unconditionally guarantee, jointly and severally, the obligations of Rayonier, L.P. under Indenture, including the 2022 Notes.

On May 8, 2020, Rayonier, L.P. acquired Pope Resources and became the general partner of Pope Resources. The acquisition occurred pursuant to a series of mergers (the “Mergers”) provided for in Agreement and Plan of Merger, dated as of January 14, 2020, as amended by Amendment No. 1, dated as of April 1, 2020 (as amended, the “Merger Agreement”), by and among Rayonier Inc., Rayonier, L.P., Rayonier Operating Company LLC, Rayonier Operating Company Holdings, LLC, Pacific GP Merger Sub I, LLC, Pacific GP Merger Sub II, LLC, Pacific LP Merger Sub III, LLC, Pope Resources, Pope EGP, Inc. and Pope MGP, Inc. As of ~~June~~September 30, ~~2020,~~2023, the Company owned a ~~96.8%~~ 98.4% interest in the Operating Partnership, with the remaining ~~3.2%~~1.6% interest owned by limited partners of the Operating Partnership. As the sole general partner of the Operating Partnership, Rayonier Inc. has exclusive control of the day-to-day management of the Operating Partnership.

The Rayonier, L.P. year-end balance sheet information was derived from the separate historical unaudited financial statements of Rayonier Operating Company LLC not included herein. In the opinion of management, these financial statements and notes reflect any adjustments (all of which are normal recurring adjustments) necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented. These statements and notes should be read in conjunction with the audited consolidated financial statements as of and for the years ended December 31, 2019, 2018 and 2017 included in Exhibit 99.4 of the Operating Partnership’s Amendment No. 1 to the Current Report on Form 8-K filed with the SEC on July 17, 2020.

The Contribution was accounted for as a change in reporting entity between entities under common control in accordance with ASC 250-10-45-21. A change in reporting entity requires retrospective application for all periods as if the Contribution had been in effect since inception of common control. As a result, the unaudited consolidated financial statements and notes thereto for Rayonier, L.P. in this combined report have been prepared as if the change in reporting entity occurred on January 1, 2019.

~~Table of Contents~~

~~RAYONIER INC. AND SUBSIDIARIES~~

~~RAYONIER, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Dollar amounts in thousands unless otherwise stated)~~

The effect of the change in reporting entity on Rayonier L.P.’s operating income, net income attributable to Rayonier, L.P. and per unit amounts for the three and six months ended June 30, 2020 and 2019, are presented below (in thousands, except per unit amounts):

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Operating income — — — —
Net income attributable to Rayonier, L.P. (a) ($3,596) ($3,596) ($7,192) ($7,192)
Basic earnings per unit attributable to Rayonier, L.P. ($0.03) ($0.03) ($0.05) ($0.06)
Diluted earnings per unit attributable to Rayonier, L.P. ($0.03) ($0.03) ($0.05) ($0.06)

~~(a) The effect of the change in net income attributable to Rayonier, L.P. is due to the interest expense and guarantee fees associated with the 2022 Notes.~~

SUMMARY OF UPDATES TO SIGNIFICANT ACCOUNTING POLICIES

~~REDEEMABLE COMMON UNITS~~

Limited partners holding common units other than the Company (“Redeemable Common Units”) have the right to put any and all of the common units to the Operating Partnership in exchange for Rayonier registered common shares, on a one-for-one basis, or cash, at Rayonier’s option. Consequently, these Redeemable Common Units are classified outside of permanent partners’ capital in the Operating Partnership's accompanying balance sheets. The recorded value of the Redeemable Common Units is based on the higher of 1) initial carrying amount, increased or decreased for its share of net income or loss, other comprehensive income or loss, and dividend or 2) redemption value as measured by the closing price of Rayonier Inc. Common Stock on the balance sheet date multiplied by the total number of Redeemable Common Units outstanding.

For a full description of our other significant accounting policies, see Note 1 — Summary of Significant Accounting Policies in our 2022 Form 10-K.

REVENUE RECOGNITION

NON-TIMBER SALES

Carbon Capture and Storage Sales

Carbon capture and storage (“CCS”) sales are primarily comprised of revenue generated from granting land access and the ~~Company’s 2019 Form 10-K~~right to inject, sequester and ~~Note 1 — Summary~~permanently store carbon dioxide in a subsurface area. CCS contracts contain variable consideration arrangements, which may include variable durations, rates, access acres and carbon volumes. The determination of ~~Significant Accounting Policies~~the transaction price and the allocation of the transaction price to the performance obligations may require significant judgment and is based on management’s estimate of the most likely amount of consideration we expect to receive as of the reporting date.

Variable consideration is included in the ~~audited consolidated financial statements as of and for~~transaction price only to the ~~years ended December 31, 2019, 2018 and 2017 included in Exhibit 99.4~~extent that it is probable that a significant reversal of the ~~Operating Partnership’s Amendment No. 1 to~~amount of cumulative revenue recognized will not occur when the ~~Current Report on Form 8-K filed~~uncertainty associated with the ~~SEC on July 17, 2020.~~

~~MERGER WITH POPE RESOURCES~~

~~On May 8, 2020, we completed~~variable consideration is resolved. The estimation of variable consideration requires us to make certain judgments and assumptions regarding the ~~previously announced acquisition~~amount and timing of ~~Pope Resources. Therefore, Pope Resources’ balance sheet and results of operations are included~~future payments, which may be impacted by factors such as changes in market conditions, competition or other factors beyond our ~~consolidated financial statements from and after the date of acquisition. See~~ ~~Note 2 - Merger with Pope Resources~~, ~~Note 7 - Debt, and~~ ~~Note 20 - Charges for Integration and Restructuring~~ ~~for further information pertaining to the merger.~~

control. As a result, actual amounts of variable consideration could differ from our estimates.

We regularly review our estimates of variable consideration and, if necessary, adjust the ~~merger with Pope Resources, we have revised our reportable business segments, adding 1 additional segment, Timber Funds. Please see~~ ~~Note 6 - Segment~~transaction price and ~~Geographical information~~ ~~for more information about our revised business segments.~~

~~RECENTLY ADOPTED STANDARDS~~

~~We adopted Accounting Standards Update (“ASU”) No. 2016-13,~~ ~~Financial Instruments-Credit Losses (Topic 326)~~ ~~on January 1, 2020, with no material impact on~~related revenue recognition accordingly. Any such adjustments are recorded in the ~~consolidated financial statements.~~period in which the estimate is revised.

NEW ACCOUNTING STANDARDS

~~In March 2020, the FASB issued ASU No. 2020-04,~~ ~~Reference Rate Reform (Topic 848)~~,There have been no recently adopted or pending accounting pronouncements which provides optional guidance to ease the potential burden in accounting due to reference rate reform. The guidance in this update provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are ~~met. The amendments apply only to~~

~~Table of Contents~~

~~RAYONIER INC. AND SUBSIDIARIES~~

~~RAYONIER, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Dollar amounts in thousands unless otherwise stated)~~

~~contracts and hedging relationships that reference LIBOR~~applicable or ~~another reference rate~~are expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into on or before December 31, 2022. We are currently evaluating our contracts and the optional expedients provided by the new standard.

~~In December 2019, the FASB issued ASU No. 2019-12,~~ ~~Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes~~. The guidance issued in this update simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU No. 2019-12 also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The standard will be effective for annual reporting periods beginning after December 15, 2020, including interim reporting periods within those fiscal years. We do not expecthave a material impact on our ~~Consolidated Financial Statements.~~

On March 2, 2020, the SEC adopted amendments to the financial disclosure requirements for guarantors and issuers of guaranteed securities, as well for affiliates whose securities collateralize a registrant’s securities. The amendments revise Rules 3-10 and 3-16 of Regulation S-X, and relocate part of Rule 3-10 and all of Rule 3-16 to the new Article 13 in Regulation S-X, which is comprised of new Rules 13-01 and 13-02. We early adopted the requirements of the amendments on April 1, 2020, which included replacing guarantor condensed consolidating financial information with summarized financial information for the consolidated obligor group (Parent, Issuer, and Guarantor Subsidiaries) as well as no longer requiring guarantor cash flow information, financial information for non-guarantor subsidiaries, and a reconciliation to the consolidated results.

~~SUBSEQUENT EVENTS~~

~~We have evaluated events occurring from June 30, 2020 to the date of issuance of these Consolidated Financial Statements for potential recognition or disclosure in the~~ consolidated financial ~~statements. No events were identified that warranted recognition~~condition, results of operations, or ~~disclosure.~~cash flows.

~~2. MERGER WITH POPE RESOURCES~~

On May 8, 2020, Rayonier Inc. and Rayonier, L.P. merged with Pope Resources. Pope Resources was a master limited partnership that primarily owned and managed timberlands in the U.S. Pacific Northwest. Pope Resources also managed and co-invested in 3 private equity timber funds and developed and sold real estate properties. The merger added approximately 124,000 acres of high-quality, predominantly Douglas-fir timberlands to our Pacific Northwest timberland portfolio as well as a private equity timber fund business with 3 funds comprising approximately 141,000 acres. Additionally, the merger augmented our higher-and-better-use real estate pipeline with rural and conservation land sale opportunities and high-potential improved development projects in the West Puget Sound area.

~~Under the merger agreement, each outstanding unit representing limited partnership interests of Pope Resources was, at the option of its holder, exchanged for either:~~

~~• 3.929 shares of Rayonier Inc. common stock~~

~~• 3.929 units representing limited partnership interests of Rayonier, L.P.~~

~~• $125.00 in cash~~

Holders of Pope Resources units who did not make a valid election received shares of Rayonier Inc. common stock. The elections were subject to proration to ensure that the aggregate amount of Rayonier shares and Rayonier, L.P. units, on the one hand, and cash, on the other hand, issued in the merger equaled the amounts issued as if every Pope Resources unit converted into merger consideration received 2.751 shares of Rayonier Inc. common stock or Rayonier, L.P. units and $37.50 in cash.

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RAYONIER INC. AND SUBSIDIARIES

RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

SUBSEQUENT EVENTS

~~Upon consummation~~

Announcement of Oregon Disposition

As disclosed in our Current Report on Form 8-K filed with the SEC on November 2, 2023, we entered into an agreement for the sale of approximately 55,000 acres of timberland in Oregon to Manulife Investment Management on behalf of clients for $242 million (~$4,400 per acre). The transaction is expected to close in the fourth quarter of 2023, and $150 million of the ~~merger, all outstanding Pope Resources restricted units were converted into equivalent equity awards with respect~~proceeds are expected to ~~Rayonier Inc. common shares. Pope Resources directors and some executive employees~~be used to repay the unhedged portion of ~~Pope Resources held restricted Pope Resources units that were subject to accelerated vesting in~~our 2022 Incremental Term Loan borrowings.See Note 6 – Debt for additional information.

Defined Benefit Pension Plan Distributions

In connection with the ~~merger. Since a portion of these Pope Resources units relate to services rendered to Pope Resources prior to the merger, a portion~~termination of the ~~replacement Rayonier Inc. restricted stock awards’ fair value is included~~Company’s Defined Benefit Plan (“the Plan”), payments were disbursed to plan participants who chose the lump sum distribution option on October 31, 2023. The lump sum disbursements were sourced from Plan assets. We expect to make cash contributions to fund the Defined Benefit Plan on a plan termination basis in ~~the consideration transferred.~~2024. See ~~additional details about the replacement restricted stock awards in~~ Note ~~18 — Incentive Stock~~15 – Employee Benefit Plans. for additional information.

2. SEGMENT AND GEOGRAPHICAL INFORMATION

Sales between operating segments are made based on estimated fair market value, and intercompany sales, purchases and profits (losses) are eliminated in consolidation. We evaluate financial performance based on segment operating income and Adjusted Earnings Before Interest, Taxes, Depreciation, Depletion and Amortization (“Adjusted EBITDA”). Asset information is not reported by segment, as we do not produce asset information by segment internally.

Operating income as presented in the Consolidated Statements of Income and Comprehensive Income is equal to segment income. Certain income (loss) items in the Consolidated Statements of Income and Comprehensive Income are not allocated to segments. These items, which include interest expense, miscellaneous income (expense) and income tax benefit (expense), are not considered by management to be part of segment operations and are included under “unallocated interest expense and other.”

The following ~~table summarizes~~tables summarize the ~~total consideration transferred by Rayonier in~~segment information for the ~~merger (dollars in thousands, except per share~~three and ~~per unit data):~~nine months ended September 30, 2023 and 2022:



~~Cash consideration:~~
~~Pope Resources units outstanding as of May 8, 2020~~	~~4,366,636~~
~~Less: Pope Resources units held by us~~	~~(114,400)~~
~~Units outstanding, net~~	~~4,252,236~~
~~Cash consideration (per Pope Resources unit)~~	~~$37.50~~
~~Cash consideration for elections~~		~~$159,463~~
~~General partner interest~~		~~10,000~~
~~Repayment of Pope Resources debt~~		~~65,943~~
~~Prepayment penalty and accrued interest on Pope Resources’ debt~~		~~2,275~~
~~Closing costs paid on behalf of Pope Resources~~		~~9,637~~
~~Cash consideration transferred~~		~~$247,318~~

~~Equity consideration:~~






~~Rayonier common shares issued~~	~~7,181,071~~
~~Rayonier share price (a)~~	~~$24.01~~
~~Equity consideration for elections~~		~~$172,418~~
~~Pope Resources replacement awards (b)(c)~~		~~222~~
~~Equity consideration transferred~~		~~$172,640~~

~~Redeemable Common Unit consideration:~~
~~Redeemable Common Units issued~~	~~4,446,153~~
~~Rayonier share price (a)~~	~~$24.01~~
~~Redeemable Common Unit consideration transferred~~		~~$106,752~~






~~Fair Value of Pope Resources units held by us (d)~~		~~$11,211~~

~~Total consideration~~		~~$537,921~~


	Three Months Ended September 30,		Nine Months Ended September 30,
SALES	2023	2022	2023	2022
Southern Timber	$63,973	$64,549	$204,125	$207,584
Pacific Northwest Timber	29,325	34,397	96,061	119,834
New Zealand Timber	70,435	72,452	175,438	202,723

Real Estate	31,175	12,435	79,492	81,032
Trading	6,782	11,582	34,767	52,727

Intersegment Eliminations (a)	(111)	(128)	(357)	(226)
Total	$201,579	$195,287	$589,526	$663,674

(a)~~The closing price~~Primarily consists of ~~Rayonier common stock on the NYSE on May 7, 2020.~~

~~(b)See~~ ~~Note 18 — Incentive Stock Plans~~log marketing fees paid to our Trading segment from our Southern Timber and Pacific Northwest Timber segments for ~~additional details.~~

~~(c)Represents the fair value of Rayonier replacement restricted stock awards for restricted Pope Resources units held by employees that relate to pre-merger services rendered to Pope Resources.~~

~~(d)Based on the closing price of Pope Resources units on the NASDAQ on May 7, 2020.~~

marketing log export sales.

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RAYONIER INC. AND SUBSIDIARIES

RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

~~The following table contains the amounts of cash transferred in the merger and net cash consideration shown in the Consolidated Statements of Cash Flows for the six months ended June 30, 2020:~~


			~~June 30, 2020~~

~~Cash consideration transferred~~			~~$247,318~~
~~Less: Cash assumed in merger~~			~~(16,250)~~
~~Net cash consideration shown in the Consolidated Statements of Cash Flows~~			~~$231,068~~

~~We recognized approximately $2.5 million and $13.5 million of merger-related costs that were expensed during the first and second quarters of 2020, respectively. See~~ ~~Note 20 — Charges for Integration and Restructuring~~ ~~for descriptions of the components of merger-related costs.~~

~~The acquisition of Pope Resources has been accounted for as a business combination under ASC 805,~~ ~~Business Combinations~~, (“ASC 805”). Under ASC 805, assets acquired and liabilities assumed in a business combination must be recorded at their fair value as of the acquisition date. Recorded fair valuation of assets acquired and liabilities assumed related to the acquisition of Pope Resources is preliminary and will be completed as soon as practicable, but no later than one year after the consummation of the transaction. Pursuant to ASC 805, the financial statements will not be retrospectively adjusted for any provisional amount changes that occur in subsequent periods. Rather, we will recognize any provisional amount adjustments during the reporting period in which the adjustments are determined. We will also be required to record, in the same period's financial statements, the effect on earnings of changes in depletion, depreciation, amortization, or other income effects, if any, as a result of any change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. Our consolidated financial statements as of and for the six months ended June 30, 2020, include results of operations for Pope Resources from May 8, 2020 through June 30, 2020.

The preliminary estimate of fair value required the use of significant assumptions and estimates. Critical estimates included, but were not limited to, future expected cash flows, including projected revenues and expenses, and the applicable discount rates. These estimates were based on assumptions that we believe to be reasonable; however, actual results may differ from these estimates. The assessment of fair value is preliminary and is based on information that was available to management at the time the consolidated financial statements were prepared. Those estimates and assumptions are subject to change as we obtain additional information related to those estimates during the applicable measurement periods (up to one year from the acquisition date). The most significant open items necessary to complete are related to timberlands, property, plant and equipment, higher and better use timberlands and real estate development investments, long-term debt instruments, environmental liabilities, intangible assets and tax related matters.

~~The preliminary fair value estimates were generally based on significant inputs that are not observable in the market and thus represent Level 3 measurements as defined in ASC 820,~~ ~~Fair Value Measurement, (“ASC 820”) with the exception of certain long-term debt instruments assumed in the merger that can be valued using observable market inputs and are therefore Level 2 measurements. See~~ ~~Note 16 — Fair Value Measurements~~ ~~for further information on the fair value hierarchy.~~

~~The following summarizes the fair value methodology utilized in our preliminary fair value estimates for significant assets and liabilities:~~

~~Income Approach~~— Estimates fair value for an asset based on the present value of cash flow projected to be generated by the asset. Projected cash flows are discounted at rates of return that reflect the relative risk of achieving the cash flows and the time value of money. This approach was primarily used to value acquired timberlands in both our Pacific Northwest and Timber Funds segment.

~~Cost Approach— Estimates value by determining the current cost of replacing an asset with another of equivalent economic utility. This approach was primarily used for property and equipment.~~

~~Market Approach~~— Estimates fair value for an asset based on values of recent comparable transactions. This approach was primarily used to value higher and better use timberlands and real estate developments investments, certain land and building assets and long-term debt instruments.

~~Table of Contents~~

~~RAYONIER INC. AND SUBSIDIARIES~~

~~RAYONIER, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Dollar amounts in thousands unless otherwise stated)~~

The preliminary allocation of purchase price to the identifiable assets acquired and liabilities assumed was based on preliminary estimates of fair value as of May 8, 2020, and is as follows (in thousands):

Core Timberlands Timber Funds Total
Timberland and Real Estate Business
Cash $7,380 $8,870 $16,250
Accounts receivable 2,280 1,794 4,074
Other current assets 651 499 1,150
Timber and Timberlands 515,519 471,900 987,419
Higher and Better Use Timberlands and Real Estate Development Investments 27,722 — 27,722
Property, plant and equipment 8,307 — 8,307
Other assets 4,297 — 4,297
Total identifiable assets acquired $566,156 $483,063 $1,049,219
—
Accounts payable 274 292 566
Current maturities of long-term debt — 25,084 25,084
Accrued interest 244 275 519
Other current liabilities 7,233 1,117 8,350
Long-term debt 53,502 35,759 89,261
Long-term environmental liabilities 11,000 — 11,000
Other non-current liabilities (a) 4,137 — 4,137
Total liabilities assumed $76,390 $62,527 $138,917
Net identifiable assets $489,766 $420,536 $910,302
Less: noncontrolling interest (3,307) (369,074) (372,381)
Total net assets acquired $486,459 $51,462 $537,921


	Three Months Ended September 30,		Nine Months Ended September 30,
OPERATING INCOME	2023	2022	2023	2022
Southern Timber	$18,634	$22,474	$62,565	$76,883
Pacific Northwest Timber (a)	(557)	2,179	(6,475)	11,729
New Zealand Timber (b)	17,555	9,280	19,265	22,653

Real Estate (c)	9,187	15,749	18,720	36,953
Trading	(52)	177	356	84

Corporate and Other	(9,411)	(8,956)	(28,350)	(26,613)
Total Operating Income	35,356	40,903	66,081	121,689
Unallocated interest expense and other (d)	(12,069)	(7,804)	(15,030)	(25,486)
Total Income before Income Taxes	$23,287	$33,099	$51,051	$96,203

(a)~~Other non-current liabilities includes a $4.0~~The three and nine months ended September 30, 2022 include $1.1 million ~~deferred income tax liability~~of timber write-offs resulting from ~~the preliminary fair value adjustment to Pope Resources’ assets and liabilities.~~

~~These estimated fair values~~casualty events. Timber write-offs resulting from casualty events are ~~preliminary in nature and subject to adjustments, which could be material. We have not identified any material unrecorded pre-merger contingencies where~~recorded within the related asset, liability or impairment is probable and the amount can be reasonably estimated. Our valuations will be finalized when certain information arranged to be obtained has been received and our review of that information has been completed. Prior to the finalization of the purchase price allocation, if information becomes available that would indicate it is probable that such events had occurred and the amounts can be reasonably estimated, such items will be included in the final purchase price allocation.

~~The amount of revenue of Pope Resources included in our~~ Consolidated Statements of Income and Comprehensive Income ~~from~~under the ~~date~~caption “Cost of ~~the merger to June~~Sales.”

(b)The nine months ended September 30, ~~2020 is approximately $11.1 million. The net income effect~~2023 includes a $2.3 million timber write-off resulting from a casualty event. Timber write-offs resulting from casualty events are recorded within the ~~merger with Pope Resources for~~Consolidated Statements of Income and Comprehensive Income under the caption “Cost of Sales.”

(c)The three and ~~six~~nine months ended ~~June~~September 30, ~~2020 is impracticable~~2022 include an $11.5 million gain associated with the multi-family apartment complex sale attributable to ~~determine, as we immediately integrated Pope Resources into our ongoing operations.~~noncontrolling interests (“NCI”). The gain associated with the multi-family apartment complex sale attributable to noncontrolling interests are recorded within the Consolidated Statements of Income and Comprehensive Income under the caption “Other operating (expense) income, net.”

(d)The nine months ended September 30, 2023 includes $20.5 million of net recoveries associated with legal settlements.

~~Table of Contents~~


	Three Months Ended September 30,		Nine Months Ended September 30,
DEPRECIATION, DEPLETION AND AMORTIZATION	2023	2022	2023	2022
Southern Timber	$19,153	$14,116	$61,631	$46,832
Pacific Northwest Timber	8,330	9,356	28,221	35,587
New Zealand Timber	5,952	6,302	16,335	18,192

Real Estate	3,088	961	6,826	12,671


Corporate and Other	444	316	1,268	939
Total	$36,967	$31,051	$114,281	$114,221

~~RAYONIER INC. AND SUBSIDIARIES~~

~~RAYONIER, L.P. AND SUBSIDIARIES~~


	Three Months Ended September 30,		Nine Months Ended September 30,
NON-CASH COST OF LAND AND IMPROVED DEVELOPMENT	2023	2022	2023	2022




Real Estate	$6,586	$3,149	$20,189	$20,289


Total	$6,586	$3,149	$20,189	$20,289

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Dollar amounts in thousands unless otherwise stated)~~

Pursuant to ASC 805, unaudited supplemental pro forma results of operations for the three and six months ended June 30, 2020 and 2019, assuming the acquisition had occurred as of January 1, 2019, are presented below (in thousands, except per share and unit amounts):

Three Months Ended June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Sales $215,500 $212,800 $499,100 $429,300
Net income attributable to Rayonier Inc. $7,644 $13,016 $28,069 $32,959
Basic earnings per share attributable to Rayonier Inc. $0.06 $0.10 $0.20 $0.24
Diluted earnings per share attributable to Rayonier Inc. $0.06 $0.09 $0.20 $0.24
Net income attributable to Rayonier, L.P. $7,823 $13,414 $28,819 $34,028
Basic earnings per unit attributable to Rayonier, L.P. $0.06 $0.10 $0.20 $0.24
Diluted earnings per unit attributable to Rayonier, L.P. $0.06 $0.09 $0.20 $0.24

The unaudited pro forma results include certain pro forma adjustments to net earnings that were directly attributable to the acquisition, assuming the acquisition had occurred on January 1, 2019, including the following:

•~~additional depletion expense that would have been recognized relating to the basis increase in the acquired Timber and Timberlands;~~

•~~adjustment to interest expense to reflect the removal of Pope Resources debt and the additional borrowings we incurred in conjunction with the acquisition; and~~

•~~a reduction in expenses for the three and six months ended June 30, 2020 of $23.3 million and $31.2 million, respectively, for acquisition-related transaction costs.~~

Pro forma data may not be indicative of the results that would have been obtained had these events occurred at the beginning of the periods presented, nor is it intended to be a projection of future results.

~~Table of Contents~~

~~RAYONIER INC. AND SUBSIDIARIES~~

~~RAYONIER, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Dollar amounts in thousands unless otherwise stated)~~

3. REVENUE

~~RECLASSIFICATIONS~~

Effective April 1, 2020, we changed the composition of our Rural and Timberland & Non-Strategic Real Estate sales categories to better align with the way management internally evaluates real estate sales. The Rural category now includes all real estate sales (excluding development sales) representing a demonstrable premium above timberland value. The Timberland & Non-Strategic category now includes all real estate sales representing little to no premium to timberland value. This category consists primarily of sales of property that management views as non-strategic to our long-term portfolio as well as sales of property for capital allocation purposes that do not fit the definition of a Large Disposition. All prior period amounts have been reclassified to reflect the new composition of these two sales categories. The Improved Development, Unimproved Development and Large Disposition categories remain unchanged, and this reclassification had no impact on overall segment results.

PERFORMANCE OBLIGATIONS

We recognize revenue when control of promised goods or services (“performance obligations”) is transferred to customers, in an amount that reflects the consideration expected in exchange for those goods or services (“transaction price”). ~~We generally satisfy performance obligations within a year of entering into a contract and therefore have applied the disclosure exemption found under ASC 606-10-50-14.~~ Unsatisfied performance obligations as of ~~June~~September 30, ~~2020~~2023 are primarily due to advances on stumpage contracts, unearned license revenue, unearned carbon capture and storage revenue and post-closing obligations on real estate sales. ~~These~~Of these performance obligations, ~~are~~$23.8 million is expected to be ~~satisfied~~recognized within the next twelve ~~months.~~months, with the remaining $11.3 million expected to be recognized thereafter as we satisfy our

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RAYONIER INC. AND SUBSIDIARIES

RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

performance obligations. We generally collect payment within a year of satisfying performance obligations and therefore have elected not to adjust revenues for a financing component.

CONTRACT BALANCES

The timing of revenue recognition, invoicing and cash collections results in ~~accounts receivable~~trade receivables and deferred revenue (contract liabilities) on the Consolidated Balance Sheets. ~~Accounts receivable~~Trade receivables are recorded when we have an unconditional right to consideration for completed performance under the contract. Contract liabilities relate to payments received in advance of performance under the contract. Contract liabilities are recognized as revenue as (or when) we perform under the contract.

The following table contains contract balances recorded in the Consolidated Balance Sheets at September 30, 2023 and December 31, 2022:

September 30, 2023

December 31, 2022

Balance Sheet Location

Contract assets

Trade receivables, net (a)

$31,447

$27,837

Trade receivables

Contract liabilities

Deferred revenue, current (b)

23,835

22,762

Deferred revenue

Deferred revenue, non-current (c)

11,317

6,895

Long-term deferred revenue

(a)The increase in trade receivables was primarily driven by timing of sales in our timber segments.

(b)The increase in deferred revenue, current is driven by the timing of renewals of hunting contracts and the current portion of a carbon capture and storage contract entered into in the first quarter of 2023, partially offset by the satisfaction of post-closing obligations on real estate sales and stumpage contracts.

(c)The increase in deferred revenue, non-current is primarily driven by a carbon capture and storage contract entered into in the first quarter of 2023.

The following table summarizes revenue recognized during the three and ~~six~~nine months ended ~~June~~September 30, ~~2020~~2023 and ~~2019~~2022 that was included in the contract liability balance at the beginning of each year:

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Revenue recognized from contract liability balance at the beginning of the year (a) $3,661 $3,440 $10,086 $8,796


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Revenue recognized from contract liability balance at the beginning of the year (a)	$2,216	$1,957	$19,950	$14,458

(a) Revenue recognized was primarily from hunting licenses, ~~and~~ the use of advances on pay-as-cut timber sales and the satisfaction of post closing obligations on real estate sales.

1816

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RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

The following tables present our revenue from contracts with customers disaggregated by product type for the three and ~~six~~nine months ended ~~June~~September 30, ~~2020~~2023 and ~~2019:~~2022:

Three Months Ended Southern Timber Pacific Northwest Timber New Zealand Timber Timber Funds Real Estate Trading Elim. Total
June 30, 2020
Pulpwood $24,685 $3,163 $5,766 $328 — $2,463 — $36,405
Sawtimber 16,359 22,296 34,959 6,305 — 21,805 — 101,724
Hardwood 512 — — — — — — 512
Total Timber Sales 41,556 25,459 40,725 6,633 — 24,268 — 138,641
License Revenue, Primarily from Hunting 4,337 95 83 10 — — — 4,525
Other Non-Timber/Carbon Revenue 874 617 961 4 — — — 2,456
Agency Fee Income — — — — — (1) — (1)
Total Non-Timber Sales 5,211 712 1,044 14 — (1) — 6,980
Improved Development — — — — 6,427 — — 6,427
Unimproved Development — — — — 8,426 — — 8,426
Rural — — — — 27,234 — — 27,234
Timberlands & Non-Strategic — — — — 9,606 — — 9,606
Deferred Revenue/Other (b) — — — — (1,756) — — (1,756)
Total Real Estate Sales — — — — 49,937 — — 49,937
Revenue from Contracts with Customers 46,767 26,171 41,769 6,647 49,937 24,267 — 195,558
Lease Revenue — — — — 72 — — 72
Intersegment — — — 877 — 53 (930) —
Total Revenue $46,767 $26,171 $41,769 $7,524 $50,009 $24,320 ($930) $195,630
Three Months Ended Southern Timber Pacific Northwest Timber New Zealand Timber Timber Funds Real Estate Trading Elim. Total
June 30, 2019
Pulpwood $19,310 $2,267 $8,581 — — $3,826 — $33,984
Sawtimber 16,286 15,407 52,427 — — 31,377 — 115,497
Hardwood 1,391 — — — — — — 1,391
Total Timber Sales 36,987 17,674 61,008 — — 35,203 — 150,872
License Revenue, Primarily from Hunting 4,296 103 142 — — — — 4,541
Other Non-Timber/Carbon Revenue 4,914 779 977 — — — — 6,670
Agency Fee Income — — — — — 184 — 184
Total Non-Timber Sales 9,210 882 1,119 — — 184 — 11,395
Improved Development — — — — 172 — — 172
Unimproved Development — — — — 14,431 — — 14,431
Rural (a) — — — — 7,107 — — 7,107
Timberlands & Non-Strategic (a) — — — — 815 — — 815
Deferred Revenue/Other (b) — — — — 8 — — 8
Total Real Estate Sales — — — — 22,533 — — 22,533
Revenue from Contracts with Customers 46,197 18,556 62,127 — 22,533 35,387 — 184,800
Intersegment — — — — — 74 (74) —
Total Revenue $46,197 $18,556 $62,127 — $22,533 $35,461 ($74) $184,800



Three Months Ended	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Real Estate	Trading	Elim.	Total
September 30, 2023
Pulpwood	$25,514	$1,440	$6,507	—	$447	—	$33,908
Sawtimber	27,274	26,401	48,356	—	5,954	—	107,985
Hardwood	1,343	—	—	—	—	—	1,343
Total Timber Sales	54,131	27,841	54,863	—	6,401	—	143,236
License Revenue, Primarily from Hunting	7,178	439	90	—	—	—	7,707
Other Non-Timber/Carbon Revenue	2,664	1,045	15,482	—	—	—	19,191
Agency Fee Income	—	—	—	—	270	—	270

Total Non-Timber Sales	9,842	1,484	15,572	—	270	—	27,168
Improved Development	—	—	—	3,120	—	—	3,120
Unimproved Development	—	—	—	114	—	—	114
Rural	—	—	—	20,461	—	—	20,461
Timberland & Non-Strategic	—	—	—	1,055	—	—	1,055

Deferred Revenue/Other (a)	—	—	—	5,981	—	—	5,981

Total Real Estate Sales	—	—	—	30,731	—	—	30,731

Revenue from Contracts with Customers	63,973	29,325	70,435	30,731	6,671	—	201,135
Lease Revenue	—	—	—	444	—	—	444
Intersegment	—	—	—	—	111	(111)	—
Total Revenue	$63,973	$29,325	$70,435	$31,175	$6,782	($111)	$201,579


Three Months Ended	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Real Estate	Trading	Elim.	Total
September 30, 2022
Pulpwood	$32,564	$2,989	$7,645	—	$1,112	—	$44,310
Sawtimber	20,943	29,630	58,412	—	10,053	—	119,038
Hardwood	4,221	—	—	—	—	—	4,221
Total Timber Sales	57,728	32,619	66,057	—	11,165	—	167,569
License Revenue, Primarily from Hunting	5,141	326	118	—	—	—	5,585
Other Non-Timber/Carbon Revenue	1,680	1,452	6,277	—	—	—	9,409
Agency Fee Income	—	—	—	—	289	—	289

Total Non-Timber Sales	6,821	1,778	6,395	—	289	—	15,283
Improved Development	—	—	—	2,296	—	—	2,296

Rural	—	—	—	6,964	—	—	6,964


Deferred Revenue/Other (a)	—	—	—	2,769	—	—	2,769

Total Real Estate Sales	—	—	—	12,029	—	—	12,029

Revenue from Contracts with Customers	64,549	34,397	72,452	12,029	11,454	—	194,881
Lease Revenue	—	—	—	406	—	—	406
Intersegment	—	—	—	—	128	(128)	—
Total Revenue	$64,549	$34,397	$72,452	$12,435	$11,582	($128)	$195,287

(a) The three months ended June 30, 2019 reflects the reclassification of certain real estate sales between the Rural and Timberlands & Non-Strategic sales categories to better align with the way management internally evaluates real estate sales.

~~(b)~~ Includes deferred revenue adjustments, revenue true-ups and marketing fees related to Improved Development sales.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

Six Months Ended Southern Timber Pacific Northwest Timber New Zealand Timber Timber Funds Real Estate Trading Elim. Total
June 30, 2020
Pulpwood $52,178 $6,290 $10,613 $328 — $4,993 — $74,402
Sawtimber 35,868 49,741 65,746 6,305 — 37,918 — 195,578
Hardwood 993 — — — — — — 993
Total Timber Sales 89,039 56,031 76,359 6,633 — 42,911 — 270,973
License Revenue, Primarily From Hunting 8,926 192 140 10 — — — 9,268
Other Non-Timber/Carbon Revenue 1,784 1,022 2,809 4 — — — 5,619
Agency Fee Income — — — — — 327 — 327
Total Non-Timber Sales 10,710 1,214 2,949 14 — 327 — 15,214
Improved Development — — — — 6,427 — — 6,427
Unimproved Development — — — — 8,426 — — 8,426
Rural — — — — 29,631 — — 29,631
Timberlands & Non-Strategic — — — — 9,606 — — 9,606
Deferred Revenue/Other (b) — — — — (1,616) — — (1,616)
Large Dispositions — — — — 116,027 — — 116,027
Total Real Estate Sales — — — — 168,501 — — 168,501
Revenue from Contracts with Customers 99,749 57,245 79,308 6,647 168,501 43,238 — 454,688
Lease Revenue — — — — 72 — — 72
Intersegment — — — 877 — 66 (943) —
Total Revenue $99,749 $57,245 $79,308 $7,524 $168,573 $43,304 ($943) $454,760
Six Months Ended Southern Timber Pacific Northwest Timber New Zealand Timber Timber Funds Real Estate Trading Elim. Total
June 30, 2019
Pulpwood $46,109 $5,087 $17,349 — — $8,152 — $76,697
Sawtimber 39,437 32,684 98,290 — — 58,890 — 229,301
Hardwood 2,477 — — — — — — 2,477
Total Timber Sales 88,023 37,771 115,639 — — 67,042 — 308,475
License Revenue, Primarily from Hunting 8,420 205 195 — — — — 8,820
Other Non-Timber/Carbon Revenue 10,600 1,115 3,423 — — — — 15,138
Agency Fee Income — — — — — 381 — 381
Total Non-Timber Sales 19,020 1,320 3,618 — — 381 — 24,339
Improved Development — — — — 514 — — 514
Unimproved Development — — — — 15,430 — — 15,430
Rural (a) — — — — 26,313 — — 26,313
Timberlands & Non-Strategic (a) — — — — 1,207 — — 1,207
Deferred Revenue/Other (b) — — — — 68 — — 68
Total Real Estate Sales — — — — 43,532 — — 43,532
Revenue from Contracts with Customers 107,043 39,091 119,257 — 43,532 67,423 — 376,346
Intersegment — — — — — 103 (103) —
Total Revenue $107,043 $39,091 $119,257 — $43,532 $67,526 ($103) $376,346


Nine Months Ended	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Real Estate	Trading	Elim.	Total
September 30, 2023
Pulpwood	$76,152	$7,358	$20,953	—	$3,328	—	$107,791
Sawtimber	95,663	83,963	137,868	—	30,130	—	347,624
Hardwood	3,169	—	—	—	—	—	3,169
Total Timber Sales	174,984	91,321	158,821	—	33,458	—	458,584
License Revenue, Primarily From Hunting	17,632	780	212	—	—	—	18,624
Other Non-Timber/Carbon Revenue	11,509	3,960	16,405	—	—	—	31,874
Agency Fee Income	—	—	—	—	952	—	952

Total Non-Timber Sales	29,141	4,740	16,617	—	952	—	51,450
Improved Development	—	—	—	20,155	—	—	20,155
Unimproved Development	—	—	—	114	—	—	114
Rural	—	—	—	42,587	—	—	42,587
Timberland & Non-Strategic	—	—	—	2,947	—	—	2,947

Deferred Revenue/Other (a)	—	—	—	12,642	—	—	12,642

Total Real Estate Sales	—	—	—	78,445	—	—	78,445

Revenue from Contracts with Customers	204,125	96,061	175,438	78,445	34,410	—	588,479
Lease Revenue	—	—	—	1,047	—	—	1,047
Intersegment	—	—	—	—	357	(357)	—
Total Revenue	$204,125	$96,061	$175,438	$79,492	$34,767	($357)	$589,526

Nine Months Ended	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Real Estate	Trading	Elim.	Total
September 30, 2022
Pulpwood	$100,945	$9,478	$26,091	—	$5,636	—	$142,150
Sawtimber	70,203	106,155	164,759	—	45,910	—	387,027
Hardwood	15,776	—	—	—	—	—	15,776
Total Timber Sales	186,924	115,633	190,850	—	51,546	—	544,953
License Revenue, Primarily from Hunting	16,322	571	266	—	—	—	17,159
Other Non-Timber/Carbon Revenue	4,338	3,630	11,607	—	—	—	19,575
Agency Fee Income	—	—	—	—	955	—	955

Total Non-Timber Sales	20,660	4,201	11,873	—	955	—	37,689
Improved Development	—	—	—	18,828	—	—	18,828

Rural	—	—	—	47,333	—	—	47,333
Timberland & Non-Strategic	—	—	—	11,400	—	—	11,400

Deferred Revenue/Other (a)	—	—	—	2,498	—	—	2,498

Total Real Estate Sales	—	—	—	80,059	—	—	80,059

Revenue from Contracts with Customers	207,584	119,834	202,723	80,059	52,501	—	662,701
Lease Revenue	—	—	—	973	—	—	973
Intersegment	—	—	—	—	226	(226)	—
Total Revenue	$207,584	$119,834	$202,723	$81,032	$52,727	($226)	$663,674

(a) The six months ended June 30, 2019 reflects the reclassification of certain real estate sales between the Rural and Timberlands & Non-Strategic sales categories to better align with the way management internally evaluates real estate sales.

~~(b)~~ Includes deferred revenue adjustments, revenue true-ups and marketing fees related to Improved Development sales.

2018

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

The following tables present our timber sales disaggregated by contract type for the three and ~~six~~nine months ended ~~June~~September 30, ~~2020~~2023 and ~~2019:~~2022:

Three Months Ended Southern Timber Pacific Northwest Timber New Zealand Timber Timber Funds Trading Total
June 30, 2020
Stumpage Pay-as-Cut $16,216 — — 531 — $16,747
Stumpage Lump Sum 863 326 — — — 1,189
Total Stumpage 17,079 326 — 531 — 17,936
Delivered Wood (Domestic) 21,438 25,133 12,126 6,102 462 65,261
Delivered Wood (Export) 3,039 — 28,599 — 23,806 55,444
Total Delivered 24,477 25,133 40,725 6,102 24,268 120,705
Total Timber Sales $41,556 $25,459 $40,725 $6,633 $24,268 $138,641
June 30, 2019
Stumpage Pay-as-Cut $15,172 — — — — $15,172
Stumpage Lump Sum 581 — — — — 581
Total Stumpage 15,753 — — — — 15,753
Delivered Wood (Domestic) 17,041 17,674 21,739 — 2,669 59,123
Delivered Wood (Export) 4,193 — 39,269 — 32,534 75,996
Total Delivered 21,234 17,674 61,008 — 35,203 135,119
Total Timber Sales $36,987 $17,674 $61,008 — $35,203 $150,872



Three Months Ended	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Trading	Total
September 30, 2023
Stumpage Pay-as-Cut	$25,454	—	—	—	$25,454
Stumpage Lump Sum	—	969	—	—	969

Total Stumpage	25,454	969	—	—	26,423

Delivered Wood (Domestic)	26,907	24,085	15,265	10	66,267
Delivered Wood (Export)	1,770	2,787	39,598	6,391	50,546
Total Delivered	28,677	26,872	54,863	6,401	116,813

Total Timber Sales	$54,131	$27,841	$54,863	$6,401	$143,236

September 30, 2022
Stumpage Pay-as-Cut	$21,111	—	—	—	$21,111
Stumpage Lump Sum	288	121	—	—	409

Total Stumpage	21,399	121	—	—	21,520

Delivered Wood (Domestic)	33,010	30,837	18,825	260	82,932
Delivered Wood (Export)	3,319	1,661	47,232	10,905	63,117
Total Delivered	36,329	32,498	66,057	11,165	146,049

Total Timber Sales	$57,728	$32,619	$66,057	$11,165	$167,569

2119

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)


Six Months Ended		Southern Timber	Pacific Northwest Timber	New Zealand Timber	Timber Funds	Trading	Total
June 30, 2020
Nine Months Ended								Nine Months Ended	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Trading	Total
September 30, 2023								September 30, 2023
Stumpage Pay-as-Cut	Stumpage Pay-as-Cut	$41,623	—	—	531	—	$42,154	Stumpage Pay-as-Cut	$86,424	—	—	—	$86,424
Stumpage Lump Sum	Stumpage Lump Sum	1,251	5,457	—	—	—	6,708	Stumpage Lump Sum	387	1,592	—	—	1,979

Total Stumpage	Total Stumpage	42,874	5,457	—	531	—	48,862	Total Stumpage	86,811	1,592	—	—	88,403

Delivered Wood (Domestic)	Delivered Wood (Domestic)	42,498	50,574	25,817	6,102	934	125,925	Delivered Wood (Domestic)	81,757	80,249	39,419	501	201,926
Delivered Wood (Export)	Delivered Wood (Export)	3,667	—	50,542	—	41,977	96,186	Delivered Wood (Export)	6,416	9,480	119,402	32,957	168,255
Total Delivered	Total Delivered	46,165	50,574	76,359	6,102	42,911	222,111	Total Delivered	88,173	89,729	158,821	33,458	370,181

Total Timber Sales	Total Timber Sales	$89,039	$56,031	$76,359	$6,633	$42,911	$270,973	Total Timber Sales	$174,984	$91,321	$158,821	$33,458	$458,584

June 30, 2019
September 30, 2022								September 30, 2022
Stumpage Pay-as-Cut	Stumpage Pay-as-Cut	$43,180	—	—	—	—	$43,180	Stumpage Pay-as-Cut	$78,643	—	—	—	$78,643
Stumpage Lump Sum	Stumpage Lump Sum	2,675	—	—	—	—	$2,675	Stumpage Lump Sum	378	5,593	—	—	5,971

Total Stumpage	Total Stumpage	45,855	—	—	—	—	45,855	Total Stumpage	79,021	5,593	—	—	84,614

Delivered Wood (Domestic)	Delivered Wood (Domestic)	36,379	37,771	42,439	—	4,793	121,382	Delivered Wood (Domestic)	98,386	104,239	50,358	1,989	254,972
Delivered Wood (Export)	Delivered Wood (Export)	5,789	—	73,200	—	62,249	141,238	Delivered Wood (Export)	9,517	5,801	140,492	49,557	205,367
Total Delivered	Total Delivered	42,168	37,771	115,639	—	67,042	262,620	Total Delivered	107,903	110,040	190,850	51,546	460,339

Total Timber Sales	Total Timber Sales	$88,023	$37,771	$115,639	—	$67,042	$308,475	Total Timber Sales	$186,924	$115,633	$190,850	$51,546	$544,953

~~4. LEASES~~

~~TIMBERLAND LEASES~~

U.S. timberland leases typically have initial terms of approximately 30 to 65 years, with renewal provisions in some cases. New Zealand timberland lease terms typically range between 30 and 99 years. New Zealand lease arrangements generally consist of Crown Forest Licenses (“CFLs”), forestry rights and land leases. A CFL is a license arrangement to use government or privately owned land to operate a commercial forest. CFLs generally extend indefinitely and may only be terminated upon a 35-year termination notice. If no termination notice is given, the CFLs renew automatically each year for a one-year term. Alternatively, some CFLs extend for a specific term. Once a CFL is terminated, the Company may be able to obtain a forestry right from the subsequent owner. A forestry right is a license arrangement with a private entity to use their lands to operate a commercial forest. Forestry rights terminate either upon the issuance of a termination notice (which can last 35 to 45 years), completion of harvest, or a specified termination date.

As of June 30, 2020, the New Zealand subsidiary has 2 CFLs comprising 9,000 gross acres or 8,000 net plantable acres under termination notice that are being relinquished as harvest activities are concluded, as well as 2 fixed-term CFLs comprising 3,000 gross acres or 2,000 net plantable acres expiring in 2062. Additionally, the New Zealand subsidiary has 2 forestry rights comprising 32,000 gross acres or 8,000 net plantable acres under termination notice that are being relinquished as harvest activities are concluded.

~~OTHER NON-TIMBERLAND LEASES~~

In addition to timberland holdings, we have leased properties for certain office locations. Significant leased properties include a regional office in Lufkin, Texas; a Pacific Northwest Timber office in Hoquiam, Washington and a New Zealand Timber and Trading headquarters in Auckland, New Zealand.

2220

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

~~LEASE MATURITIES, LEASE COST AND OTHER LEASE INFORMATION~~

~~The following table details our undiscounted lease obligations as of June 30, 2020 by type of lease and year of expiration:~~

Year of Expiration
Lease obligations Total Remaining 2020 2021 2022 2023 2024 Thereafter
Operating lease liabilities $178,880 $5,675 $9,003 $8,119 $8,051 $7,946 $140,086
Total Undiscounted Cash Flows $178,880 $5,675 $9,003 $8,119 $8,051 $7,946 $140,086
Imputed interest (82,154)
Balance at June 30, 2020 96,726
Less: Current portion (8,952)
Non-current portion at June 30, 2020 $87,774

~~The following table details components of our lease cost for the three and six months ended June 30, 2020 and June 30, 2019:~~

Three Months Ended June 30, Six Months Ended June 30,
Lease Cost Components 2020 2019 2020 2019
Operating lease cost $1,341 $2,396 $3,439 $4,833
Variable lease cost (a) 136 81 214 157
Total lease cost (b) $1,477 $2,477 $3,653 $4,990

~~(a) The majority of timberland leases are subject to increases or decreases based on either the Consumer Price Index, Producer Price Index or market rates.~~

(b) Short-term leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense for these leases are expensed on a straight line basis over the lease term. Short-term lease expense was not material for the six months ended June 30, 2020.

~~The following table provides supplemental cash flow information related to our leases for the six months ended June 30, 2020 and June 30, 2019:~~

Six Months Ended June 30,
Supplemental cash flow information related to leases: 2020 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $1,138 $1,493
Investing cash flows from operating leases 2,301 3,340
Total cash flows from operating leases $3,439 $4,833
Weighted-average remaining lease term in years - operating leases 28 28
Weighted-average discount rate - operating leases 5 % 5 %

~~Lessor lease information~~

~~In the merger with Pope Resources, we acquired income generating commercial and residential leases primarily concentrated in Port Gamble, Washington. Each of these are classified as operating leases.~~

~~Table of Contents~~

~~RAYONIER INC. AND SUBSIDIARIES~~

~~RAYONIER, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Dollar amounts in thousands unless otherwise stated)~~

~~The following table details our lease income for the three and six months ended June 30, 2020:~~

Three Months Ended June 30, Six Months Ended June 30,
Lease Income Components 2020 2020
Operating lease income $72 $72
Total lease income $72 $72

~~Future lease income as of June 30, 2020, based on payments due by period under the lease contracts, are presented in the following table:~~

Year of Expiration
Lease assets Total Remaining 2020 2021 2022 2023 2024 Thereafter
Operating lease Income $708 $165 $176 $173 $137 $57 —

~~We apply the following practical expedients as allowed under ASC 842:~~


~~Practical Expedient~~						~~Description~~
~~Short-term leases~~						We do not record right-of-use assets or lease liabilities for short-term leases (a lease that at commencement date has a lease term of 12 months or less and does not contain a purchase option that is reasonably certain to be exercised).
~~Separation of lease and non-lease components~~						We do not separate non-lease components from the associated lease components if they have the same timing and pattern of transfer and, if accounted for separately, would both be classified as an operating lease.

5.4. NONCONTROLLING INTERESTS

NONCONTROLLING INTERESTS IN CONSOLIDATED AFFILIATES

Matariki Forestry Group

We maintain a 77% controlling financial interest in Matariki Forestry Group (the “New Zealand subsidiary”), a joint venture that owns or leases approximately ~~416,000~~419,000 legal acres of New Zealand timberland. Accordingly, we consolidate the New Zealand subsidiary’s balance sheet and results of operations. ~~The portions of the consolidated financial position and results of operations~~Income attributable to the New Zealand subsidiary’s 23% noncontrolling ~~interest are~~interests is reflected as an adjustment to income in our Consolidated Statements of Income and Comprehensive Income under the caption “Net ~~loss (income)~~income attributable to noncontrolling interests in consolidated affiliates.” Rayonier New Zealand Limited (“RNZ”), a wholly-owned subsidiary, serves as the manager of the New Zealand subsidiary.

~~The following table sets forth the income attributable to the New Zealand subsidiary’s noncontrolling interests:~~

Three Months Ended June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Net income attributable to noncontrolling interest in the New Zealand subsidiary $693 $2,168 $1,261 $5,167

~~Table of Contents~~

~~RAYONIER INC. AND SUBSIDIARIES~~

~~RAYONIER, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Dollar amounts in thousands unless otherwise stated)~~

~~ORM Timber Fund II, Inc. (Fund II), ORM Timber Fund III LLC (Fund III), and ORM Timber Fund IV LLC. (Fund IV) (Collectively, “The Funds”)~~

Upon completion of the merger with Pope Resources, we became manager of 3 private equity timber funds, Fund II, Fund III, and Fund IV, and obtained ownership interests in the funds of 20%, 5%, and 15%, respectively. We determined, based upon an analysis under the variable interest entity guidance, that we have the power to direct the activities that most significantly impact the Funds’ economic success. Therefore, we are considered the primary beneficiary and are required under ASC 810 — ~~Consolidation~~ to consolidate the Funds. Loss attributed to third-party investors is reflected as an adjustment to income in our Consolidated Statements of Income and Comprehensive Income under the caption “Net loss (income) attributable to noncontrolling interests in consolidated affiliates.”

~~The following table sets forth the (loss) attributable to the Funds’ noncontrolling interests:~~

Three Months Ended June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Net (loss) attributable to noncontrolling interest in the Funds: ($2,146) — ($2,146) —

Prior to our merger with Pope Resources, the Funds were formed by ORM LLC for the purpose of generating a return on investment through the acquisition, management, value enhancement and sale of timberland properties. Each Fund is organized to operate for a specified term from the end of its respective investment period: 10 years for each of Fund II and Fund III, and 15 years for Fund IV. Fund II is scheduled to terminate in March 2021, Fund III is scheduled to terminate in December 2025 and Fund IV is scheduled to terminate in December 2034. The obligations of each of the Funds do not have any recourse to the Company or the Operating Partnership.

~~Ferncliff Investors~~

We also acquired in the merger with Pope Resources an ownership interest in a real estate joint venture entity. In 2017, Ferncliff Management and Ferncliff Investors were formed for the purpose of raising capital from third parties to invest in an unconsolidated real estate joint venture entity, Bainbridge Landing LLC, which is developing a 5-acre parcel on Bainbridge Island, Washington into a multi-family community containing apartments and townhomes. Ferncliff Management is the manager and 33.33% owner of Ferncliff Investors, with the remaining ownership interest in Ferncliff Investors held by third-party investors. Ferncliff Investors holds a 50% interest in Bainbridge Landing LLC, the joint venture entity that owns and is developing the property.

We determined, based upon an analysis under the variable interest entity guidance, that we have the power to direct the activities that most significantly impact the joint venture’s economic success. Therefore, we are considered the primary beneficiary and are required under ASC 810 — ~~Consolidation~~ ~~to consolidate Ferncliff Investors. The obligations of Ferncliff Investors do not have any recourse to the Company or the Operating Partnership.~~

Bainbridge Landing LLC is considered a voting interests entity. Ferncliff Investors accounts for its interest in the joint venture entity under the equity method because neither it nor the other member can exercise control over Bainbridge Landing LLC. Under the equity method, Ferncliff Investors records its share of the net income or loss of Bainbridge Landing LLC. To date, this activity has been a loss and is included in Other operating expense, net in the Real Estate segment. The portion of Ferncliff Investors’ loss attributed to third-party investors is shown within the Consolidated Statements of Income and Comprehensive Income under the caption “Net loss (income) attributable to noncontrolling interests in consolidated affiliates.”

~~The following table sets forth the (loss) attributable to Ferncliff Investors’ noncontrolling interests:~~

Three Months Ended June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Net (loss) attributable to noncontrolling interest in the Ferncliff Investors: ($46) — ($46) —

~~Table of Contents~~

~~RAYONIER INC. AND SUBSIDIARIES~~

~~RAYONIER, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Dollar amounts in thousands unless otherwise stated)~~

NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP

Noncontrolling interests in the ~~Operating Partnership~~operating partnership relate to the third-party ownership of Redeemable ~~Common~~Operating Partnership Units. Net income attributable to the noncontrolling interests in the ~~Operating Partnership~~operating partnership is computed by applying the weighted average Redeemable ~~Common~~Operating Partnership Units outstanding during the period as a percentage of the weighted average total ~~common~~ units outstanding to the Operating Partnership’s net income for the period. If a noncontrolling unitholder redeems a ~~common~~ unit for a registered common share of Rayonier or cash, the noncontrolling interests in the ~~Operating Partnership~~operating partnership will be reduced and the Company’s share in the Operating Partnership will be increased by the fair value of each security at the time of redemption.

The following table sets forth the Company’s noncontrolling interests in the ~~Operating Partnership:~~operating partnership:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Beginning noncontrolling interests in the operating partnership	$77,532	$123,811	$105,763	$133,823

Adjustment of noncontrolling interests in the operating partnership	(6,890)	(23,363)	(8,810)	(32,131)
Conversions of Redeemable Operating Partnership Units to Common Shares	(479)	(3,696)	(24,663)	(3,842)
Net Income attributable to noncontrolling interests in the operating partnership	320	455	811	1,670
Other Comprehensive Income (Loss) attributable to noncontrolling interests in the operating partnership	36	(49)	(1,016)	(523)
Distributions to noncontrolling interests in the operating partnership	(699)	(915)	(2,265)	(2,754)
Total noncontrolling interests in the operating partnership	$69,820	$96,243	$69,820	$96,243

Three Months Ended June 30, Six Months Ended June 30,
2020 2020
Beginning noncontrolling interests in the Operating Partnership — —
Issuances of Redeemable Common Units 106,752 106,752
Adjustment of noncontrolling interests in the Operating Partnership 3,992 3,992
Net Income attributable to noncontrolling interests in the Operating Partnership 219 219
Other Comprehensive Income attributable to noncontrolling interests in the Operating Partnership 457 457
Distributions to noncontrolling interests in the Operating Partnership (1,200) (1,200)
Total noncontrolling interests in the Operating Partnership $110,220 $110,220

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RAYONIER INC. AND SUBSIDIARIES

RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

5. EARNINGS PER SHARE AND PER UNIT

The following table provides details of the calculations of basic and diluted earnings per common share of the Company:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Earnings per common share - basic
Numerator:
Net Income	$22,740	$31,861	$49,274	$88,147
Less: Net income attributable to noncontrolling interests in the operating partnership	(320)	(455)	(811)	(1,670)
Less: Net income attributable to noncontrolling interests in consolidated affiliates	(3,183)	(10,828)	(1,902)	(12,478)
Net income attributable to Rayonier Inc.	$19,237	$20,578	$46,561	$73,999
Denominator:
Denominator for basic earnings per common share - weighted average shares	148,274,209	146,370,340	147,959,983	146,022,718
Basic earnings per common share attributable to Rayonier Inc.:	$0.13	$0.14	$0.31	$0.51
Earnings per common share - diluted
Numerator:
Net Income	$22,740	$31,861	$49,274	$88,147
Less: Net income attributable to noncontrolling interests in consolidated affiliates	(3,183)	(10,828)	(1,902)	(12,478)

Net income attributable to Rayonier Inc., before net income attributable to noncontrolling interests in the operating partnership	$19,557	$21,033	$47,372	$75,669
Denominator:
Denominator for basic earnings per common share - weighted average shares	148,274,209	146,370,340	147,959,983	146,022,718
Add: Dilutive effect of:
Stock options	—	3,271	629	6,200
Performance shares, restricted shares and restricted stock units	299,613	620,316	394,006	693,954
Noncontrolling interests in operating partnership units	2,462,431	3,238,962	2,676,911	3,288,409
Denominator for diluted earnings per common share - adjusted weighted average shares	151,036,253	150,232,889	151,031,529	150,011,281
Diluted earnings per common share attributable to Rayonier Inc.:	$0.13	$0.14	$0.31	$0.50


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Anti-dilutive shares excluded from the computations of diluted earnings per common share:
Stock options, performance shares, restricted shares and restricted stock units	164,521	126,132	156,835	78,634


Total	164,521	126,132	156,835	78,634

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RAYONIER INC. AND SUBSIDIARIES

RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

The following table provides details of the calculations of basic and diluted earnings per unit of the Operating Partnership:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Earnings per unit - basic
Numerator:
Net Income	$22,740	$31,861	$49,274	$88,147
Less: Net income attributable to noncontrolling interests in consolidated affiliates	(3,183)	(10,828)	(1,902)	(12,478)
Net income available to unitholders	$19,557	$21,033	$47,372	$75,669
Denominator:
Denominator for basic earnings per unit - weighted average units	150,736,640	149,609,302	150,636,894	149,311,127
Basic earnings per unit attributable to Rayonier, L.P.:	$0.13	$0.14	$0.31	$0.51
Earnings per unit - diluted
Numerator:
Net Income	$22,740	$31,861	$49,274	$88,147
Less: Net income attributable to noncontrolling interests in consolidated affiliates	(3,183)	(10,828)	(1,902)	(12,478)
Net income available to unitholders	$19,557	$21,033	$47,372	$75,669
Denominator:
Denominator for basic earnings per unit - weighted average units	150,736,640	149,609,302	150,636,894	149,311,127
Add: Dilutive effect of unit equivalents:
Stock options	—	3,271	629	6,200
Performance shares, restricted shares and restricted stock units	299,613	620,316	394,006	693,954
Denominator for diluted earnings per unit - adjusted weighted average units	151,036,253	150,232,889	151,031,529	150,011,281
Diluted earnings per unit attributable to Rayonier, L.P.:	$0.13	$0.14	$0.31	$0.50


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Anti-dilutive unit equivalents excluded from the computations of diluted earnings per unit:
Stock options, performance shares, restricted shares and restricted stock units	164,521	126,132	156,835	78,634


Total	164,521	126,132	156,835	78,634

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RAYONIER INC. AND SUBSIDIARIES

RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

6. ~~SEGMENT AND GEOGRAPHICAL INFORMATION~~DEBT

~~As a result~~Our debt consisted of the ~~merger with Pope Resources, we~~following at September 30, 2023:


			September 30, 2023
Debt


Senior Notes due 2031 at a fixed interest rate of 2.75%			$450,000
2015 Term Loan borrowings due 2028 at a variable interest rate of 7.00%			350,000
2022 Incremental Term Loan borrowings due 2027 at a variable interest rate of 7.00%			250,000
2016 Incremental Term Loan borrowings due 2026 at a variable interest rate of 7.05%			200,000


2021 Incremental Term Loan borrowings due 2029 at a variable interest rate of 6.95%			200,000

New Zealand subsidiary noncontrolling interests shareholder loan due 2026 at a fixed interest rate of 3.64% (a)			24,161
New Zealand subsidiary noncontrolling interests shareholder loan due 2027 at a fixed interest rate of 6.48% (a)			24,161
New Zealand subsidiary noncontrolling interests shareholder loan due 2025 at a fixed interest rate of 2.95% (a)			20,709






Total principal debt			1,519,031

Less: Unamortized discounts			(2,857)

Less: Deferred financing costs			(4,704)

















Total long-term debt			$1,511,470

(a) Except for changes in the New Zealand foreign exchange rate, there have ~~revised our reportable business segments, adding 1 additional segment, Timber Funds. The Timber Funds segment represents operations~~been no adjustments to the carrying value of the ~~3 private equity timber funds included~~shareholder loans since inception.

The following table contains information on the outstanding variable rate debt as of September 30, 2023:


Debt	Periodic Interest Rate (a)	Effective Fixed Interest Rate (b)
2015 Term Loan	Daily Simple SOFR + 1.70%	3.03	%
2022 Incremental Term Loan	Daily Simple SOFR + 1.70%	5.53	%
2016 Incremental Term Loan	Daily Simple SOFR + 1.75%	2.40	%
2021 Incremental Term Loan	Daily Simple SOFR + 1.65%	1.46	%

(a) Includes credit spread adjustment of 0.1%.

(b) Effective interest rate is after consideration of interest rate swaps and estimated patronage refunds.

Principal payments due during the next five years and thereafter are as follows:


			Total
2023			—
2024			—
2025			20,709
2026			224,161
2027			274,161
Thereafter			1,000,000
Total Debt			$1,519,031

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RAYONIER INC. AND SUBSIDIARIES

RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

2023 DEBT ACTIVITY

U.S. Debt

During the ~~transaction – Fund II, Fund III and Fund IV (collectively,~~nine months ended September 30, 2023, we made no borrowings or repayments on our Revolving Credit Facility. At September 30, 2023, we had available borrowings of $296.2 million under the ~~“Funds”). Rayonier owns 20%~~Revolving Credit Facility, net of ~~Fund II, 5%~~$3.8 million to secure our outstanding letters of ~~Fund III, and 15% of Fund IV and is also the managing member of the Funds. As discussed in~~credit.

See Note 51 - ~~Noncontrolling Int~~Basis of Presentation ~~erests~~ for information regarding subsequent events related to our 2022 Incremental Term Loan borrowings.

New Zealand Debt

In July 2023, the New Zealand subsidiary renewed its NZ$20 million working capital facility, extending its maturity date to June 30, 2024. During the nine months ended September 30, 2023, the New Zealand subsidiary made no borrowings or repayments on its working capital facility (the “New Zealand Working Capital Facility”). At September 30, 2023, the New Zealand subsidiary had NZ$20.0 million of available borrowings under its working capital facility.

DEBT COVENANTS

In connection with our 2015 Term Loan Facility, 2016 Incremental Term Loan Facility, 2021 Incremental Term Loan Agreement, 2022 Incremental Term Loan Agreement and Revolving Credit Facility, customary covenants must be met, the most significant of which include interest coverage and leverage ratios.

The covenants listed below, which are the most significant financial covenants in effect as of September 30, 2023, are calculated on a trailing 12-month basis:


	Covenant Requirement		Actual Ratio		Favorable
Covenant EBITDA to consolidated interest expense should not be less than	2.5 to 1		6.9 to 1		4.4
Covenant debt to covenant net worth plus covenant debt shall not exceed	65	%	46	%	19	%

In addition to the financial covenants listed above, the Senior Notes due 2031, 2015 Term Loan Facility, 2016 Incremental Term Loan Facility, 2021 Incremental Term Loan Agreement, 2022 Incremental Term Loan Agreement, and Revolving Credit Facility include customary covenants that limit the incurrence of debt and the disposition of assets, among others. At September 30, 2023, we were in compliance with all applicable covenants.

7. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

We are exposed to market risk related to potential fluctuations in foreign currency exchange rates and interest rates. We use derivative financial instruments to mitigate the financial impact of exposure to these risks.

Accounting for derivative financial instruments is governed by ASC Topic 815, Derivatives and Hedging, (“ASC 815”). In accordance with ASC 815, we record our derivative instruments at fair value as either assets or liabilities in the ~~Funds~~Consolidated Balance Sheets. Changes in the instruments’ fair value are ~~consolidated into our financial statements. The Timber Funds segment also includes fee revenue paid to us~~accounted for ~~managing the Funds, which consists of both fixed components~~ based on ~~invested capital~~their intended use. Gains and ~~acres under management~~losses on derivatives that are designated and qualify for cash flow hedge accounting are recorded as ~~well~~a component of accumulated other comprehensive income (“AOCI”) and reclassified into earnings when the hedged transaction materializes. Gains and losses on derivatives that are designated and qualify for net investment hedge accounting are recorded as ~~variable components related~~a component of AOCI and will not be reclassified into earnings until the investment is partially or completely liquidated. The changes in the fair value of derivatives not designated as hedging instruments and those which are no longer effective as hedging instruments, are recognized immediately in earnings.

FOREIGN CURRENCY EXCHANGE AND OPTION CONTRACTS

Our New Zealand subsidiary’s domestic sales and operating expenses are predominately denominated in New Zealand dollars, while its export sales, shareholder distributions and ocean freight payments are predominately denominated in U.S. dollars. To the extent New Zealand dollar costs exceed New Zealand dollar revenues (the

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RAYONIER INC. AND SUBSIDIARIES

RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

“foreign exchange exposure”), the New Zealand subsidiary manages the foreign exchange exposure through the use of derivative financial instruments. It typically hedges a portion of export sales receipts to ~~the harvest volumes~~cover 50% to 90% of the ~~Funds. These fees, which also represent an~~projected foreign exchange exposure for the following 12 months, up to 75% for the forward 12 to 18 months and up to 50% for the forward 18 to 24 months. Additionally, it will occasionally hedge export sales receipts to cover up to 50% of the foreign exchange exposure for the forward 24 to 36 months and up to 25% of the foreign exchange exposure for the forward 36 to 48 months when the New Zealand dollar is at a cyclical low versus the U.S. dollar. The New Zealand subsidiary’s trading operations typically hedge a portion of export sales receipts to cover the projected foreign exchange exposure for the following three months. As of September 30, 2023, foreign currency exchange contracts and foreign currency option contracts had maturity dates through September 2026 and July 2026, respectively.

Foreign currency exchange and option contracts hedging foreign currency risk qualify for cash flow hedge accounting. We may de-designate these cash flow hedge relationships in advance or at the occurrence of the forecasted transaction. The portion of gains or losses on the derivative instrument previously in AOCI for de-designated hedges remains in AOCI until the forecasted transaction affects earnings. Changes in the value of derivative instruments after de-designation are recorded in earnings.

INTEREST RATE PRODUCTS

We are exposed to cash flow interest rate risk on our variable-rate debt and on anticipated debt issuances. We use variable-to-fixed interest rate swaps and forward-starting interest rate swap agreements to hedge this exposure. For these derivative instruments, we report the gains/losses from the fluctuations in the fair market value of the hedges in AOCI and reclassify them to earnings as interest expense in the ~~Timber Funds segment, are eliminated~~same period in ~~consolidation.~~which the hedged interest payments affect earnings.

~~We now operate~~To the extent we de-designate or terminate a cash flow hedging relationship and the associated hedged item continues to exist, any unrealized gain or loss of the cash flow hedge at the time of de-designation remains in ~~6 reportable segments: Southern Timber, Pacific Northwest Timber, New Zealand Timber, Timber Funds, Real Estate,~~AOCI and ~~Trading.~~

Sales between operating segments are made based on estimated fair market value, and intercompany sales, purchases and profits (losses) are eliminated in consolidation. We evaluate financial performance based on segment operating income (loss) and Adjusted EBITDA. Asset information is ~~not reported by segment, as we do not produce asset information by segment internally.~~

~~Operating income as presented in~~amortized using the Consolidated Statements of Income and Comprehensive Income is equal to segment income. Certain income (loss) items in the Consolidated Statements of Income and Comprehensive Income are not allocated to segments. These items, which include interest income (expense), miscellaneous income (expense) and income tax expense, are not considered by management to be part of segment operations and are included under “unallocatedstraight-line method through interest expense over the remaining life of the hedged item. To the extent the associated hedged item is no longer effective, the gain or loss is reclassified out of AOCI to earnings immediately.

INTEREST RATE SWAPS

The following table contains information on the outstanding interest rate swaps as of September 30, 2023:


Outstanding Interest Rate Swaps (a)
Date Entered Into	Term	Notional Amount	Related Debt Facility	Fixed Rate of Swap		Bank Margin on Debt (b)		Total Effective Interest Rate (c)
August 2015	9 years	$170,000	Term Credit Agreement	2.10	%	1.70	%	3.80	%
August 2015	9 years	180,000	Term Credit Agreement	2.26	%	1.70	%	3.96	%
April 2016	10 years	100,000	Incremental Term Loan	1.50	%	1.75	%	3.25	%
April 2016	10 years	100,000	Incremental Term Loan	1.51	%	1.75	%	3.26	%
May 2021	7 years	200,000	2021 Incremental Term Loan Facility	0.67	%	1.65	%	2.32	%
December 2022	5 years	100,000	2022 Incremental Term Loan Facility	3.72	%	1.70	%	5.42	%

(a)All interest rate swaps have been designated as interest rate cash flow hedges and ~~other.”~~qualify for hedge accounting.

(b)Includes the SOFR Credit Spread Adjustment component of 0.1%.

(c)Rate is before estimated patronage payments.

FORWARD-STARTING INTEREST RATE SWAPS

In March 2023, we modified our benchmark rates from LIBOR to Daily Simple SOFR for our forward-starting interest rates swaps, resulting in slightly favorable fixed rates. In May 2023, we entered into a new $50 million forward-starting interest rate swap, benchmarked to Daily Simple SOFR.

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RAYONIER INC. AND SUBSIDIARIES

RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

The following ~~tables summarize~~table contains information on the ~~segment information for the three and six months ended June~~outstanding forward-starting interest rate swaps as of September 30, ~~2020 and 2019:~~2023:

Three Months Ended June 30, Six Months Ended June 30,
SALES 2020 2019 2020 2019
Southern Timber $46,767 $46,197 $99,749 $107,043
Pacific Northwest Timber 26,171 18,556 57,245 39,091
New Zealand Timber 41,769 62,127 79,308 119,257
Timber Funds (a) 7,524 — 7,524 —
Real Estate (b) 50,009 22,533 168,573 43,532
Trading 24,320 35,461 43,304 67,526
Intersegment Eliminations (c) (930) (74) (943) (103)
Total $195,630 $184,800 $454,760 $376,346

Outstanding Forward-Starting Interest Rate Swaps (a)

Date Entered Into

Term

Notional Amount

Fixed Rate of Swap

Related Debt Facility

Forward Date

Maximum Period Ending for Forecasted Issuance Date

April 2020

4 years

$100,000

0.78

Term Credit Agreement

August 2024

N/A

May 2020

4 years

50,000

0.64

Term Credit Agreement

August 2024

N/A

May 2023

4 years

50,000

3.29

Term Credit Agreement

August 2024

N/A

(a)All forward-starting interest rate swaps have been designated as interest rate cash flow hedges and qualify for hedge accounting.

The following tables demonstrate the impact, gross of tax, of our derivatives on the Consolidated Statements of Income and Comprehensive Income for the three and ~~six~~nine months ended ~~June~~September 30, ~~2020 includes $5.8 million of sales attributable to noncontrolling interests in~~2023 and 2022:


		Three Months Ended September 30,
	Income Statement Location	2023	2022
Derivatives designated as cash flow hedges:
Foreign currency exchange contracts	Other comprehensive income (loss)	$1,752	($4,464)
	Other operating (expense) income, net	(1,796)	(2,669)
Foreign currency option contracts	Other comprehensive income (loss)	(26)	(1,754)
	Other operating (expense) income, net	(196)	—
Interest rate products	Other comprehensive income (loss)	12,381	26,607
	Interest expense, net	(4,810)	(62)



		Nine Months Ended September 30,
	Income Statement Location	2023	2022
Derivatives designated as cash flow hedges:
Foreign currency exchange contracts	Other comprehensive income (loss)	$5,753	($15,373)
	Other operating (expense) income, net	(5,801)	(2,598)
Foreign currency option contracts	Other comprehensive income (loss)	(858)	(2,304)
	Other operating (expense) income, net	(244)	—
Interest rate products	Other comprehensive income (loss)	20,416	76,372
	Interest expense, net	(12,587)	4,555

During the ~~Timber Funds.~~

~~(b)The six~~next 12 months, ~~ended June 30, 2020 includes $116.0 million from a Large Disposition.~~

~~(c)Primarily consists~~the amount of the ~~elimination~~September 30, 2023 AOCI balance, net of ~~timberland investment management fees paid~~tax, expected to ~~us by~~be reclassified into earnings is a gain of approximately $24.7 million. The following table contains details of the timber funds which are initially recognized as sales and cost of sales within the Timber Funds segment, as well as log marketing fees paid to our New Zealand Timber segment from our Southern Timber and Pacific Northwest Timber segments for marketing log export sales.expected reclassified amounts into earnings:

Three Months Ended June 30, Six Months Ended June 30,
OPERATING INCOME (LOSS) 2020 2019 2020 2019
Southern Timber $11,208 $14,741 $26,278 $36,261
Pacific Northwest Timber (6,681) (3,815) (7,629) (7,556)
New Zealand Timber 4,973 12,797 10,422 28,517
Timber Funds (a) (1,892) — (1,892) —
Real Estate (b) 24,848 15,468 51,622 25,495
Trading 102 (171) 83 309
Corporate and Other (c) (20,872) (7,627) (28,646) (13,113)
Total Operating Income 11,686 31,393 50,238 69,913
Unallocated interest expense and other (8,241) (6,865) (16,666) (13,242)
Total Income before Income Taxes $3,445 $24,528 $33,572 $56,671


			Amount expected to be reclassified into earnings in next 12 months

Derivatives designated as cash flow hedges:
Foreign currency exchange contracts			($2,763)
Foreign currency option contracts			(279)
Interest rate products (a)			27,734
Total estimated gain on derivatives contracts			$24,692

(a)~~The three and six months ended June 30, 2020 includes $2.0 million of operating loss attributable~~ These reclassified amounts are expected to ~~noncontrolling interests~~fully offset variable interest rate payments made to debt holders, resulting in ~~the Timber Funds.~~

~~(b)The six months ended June 30, 2020 includes $28.7 million from a Large Disposition.~~

~~(c)The three and six months ended June 30, 2020 include $13.5 million and $16.0 million, respectively, of integration and restructuring costs related to the merger with Pope Resources. See~~ ~~Note 20 — Charges for Integration and Restructuring~~ ~~for additional details.~~

no net impact on our earnings or cash flows.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

Three Months Ended June 30, Six Months Ended June 30,
DEPRECIATION, DEPLETION AND AMORTIZATION 2020 2019 2020 2019
Southern Timber $15,231 $12,880 $33,414 $32,608
Pacific Northwest Timber 10,606 6,045 21,308 12,871
New Zealand Timber 4,942 7,189 9,716 13,508
Timber Funds (a) 4,070 — 4,070 —
Real Estate (b) 6,678 1,199 42,422 4,534
Corporate and Other 340 288 637 572
Total $41,867 $27,601 $111,567 $64,093
The following table contains the notional amounts of the derivative financial instruments recorded in the Consolidated Balance Sheets:


	Notional Amount
	September 30, 2023	December 31, 2022
Derivatives designated as cash flow hedges:
Foreign currency exchange contracts	$127,200	$138,250
Foreign currency option contracts	86,000	78,000
Interest rate swaps	850,000	850,000

Forward-starting interest rate swaps	200,000	150,000

The following table contains the fair values of the derivative financial instruments recorded in the Consolidated Balance Sheets at September 30, 2023 and December 31, 2022. Changes in balances of derivative financial instruments are recorded as operating activities in the Consolidated Statements of Cash Flows:


	Location on Balance Sheet	Fair Value Assets / (Liabilities) (a)
		September 30, 2023	December 31, 2022
Derivatives designated as cash flow hedges:
Foreign currency exchange contracts	Other current assets	$63	$25
	Other assets	391	1,303
	Other current liabilities	(3,900)	(5,457)
	Other non-current liabilities	(1,139)	(410)
Foreign currency option contracts	Other current assets	77	66
	Other assets	1,032	2,131
	Other current liabilities	(464)	(347)
	Other non-current liabilities	(1,179)	(1,281)
Interest rate swaps	Other assets	62,520	60,843
	Other non-current liabilities	—	(51)






Forward-starting interest rate swaps	Other assets	17,501	11,939








Total derivative contracts:
Other current assets		$140	$91
Other assets		81,444	76,216
Total derivative assets		$81,584	$76,307

Other current liabilities		(4,364)	(5,804)
Other non-current liabilities		(2,318)	(1,742)
Total derivative liabilities		($6,682)	($7,546)

(a) See ~~The three and six months ended June 30, 2020 includes $3.5 million~~Note 8 — Fair Value Measurements for further information on the fair value of ~~depreciation, depletion and amortization related to noncontrolling interests in~~our derivatives including their classification within the ~~Timber Funds.~~

~~(b)The six months ended June 30, 2020 includes $35.4 million from a Large Disposition.~~fair value hierarchy.

Three Months Ended June 30, Six Months Ended June 30,
NON-CASH COST OF LAND AND IMPROVED DEVELOPMENT 2020 2019 2020 2019
Real Estate (a) $13,030 $1,617 $65,081 $5,647
Total $13,030 $1,617 $65,081 $5,647
OFFSETTING DERIVATIVES

~~(a) The six months ended June 30, 2020 includes $51.6 million from a Large Disposition.~~

Derivative financial instruments are presented at their gross fair values in the Consolidated Balance Sheets. Our derivative financial instruments are not subject to master netting arrangements, which would allow the right of offset.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

~~7. DEBT~~8. FAIR VALUE MEASUREMENTS

~~Our debt consisted~~FAIR VALUE OF FINANCIAL INSTRUMENTS

A three-level hierarchy that prioritizes the inputs used to measure fair value was established in the Accounting Standards Codification as follows:

Level 1— Quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs other than quoted prices included in Level 1.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the ~~following at June 30, 2020:~~


			~~June 30, 2020~~
~~Debt, excluding Timber Funds:~~
~~Term Credit Agreement borrowings due 2028 at a variable interest rate of 1.8% at June 30, 2020 (a)~~			~~$350,000~~
~~Senior Notes due 2022 at a fixed interest rate of 3.75%~~			~~325,000~~
~~Incremental Term Loan Agreement borrowings due 2026 at a variable interest rate of 2.1% at June 30, 2020 (b)~~			~~300,000~~
~~2020 Incremental Term Loan Facility borrowings due 2025 at a variable interest rate of 2.0% at June 30, 2020 (c)~~			~~250,000~~
~~Revolving Credit Facility borrowings due 2025 at an average variable interest rate of 1.7% at June 30, 2020~~			~~35,000~~
~~Northwest Farm Credit Services Credit Facility with quarterly interest-only payments, collateralized by Core Timberlands, with the following tranches (d)~~
~~Due 2025 at a fixed interest rate of 6.1%~~			~~11,779~~
~~Due 2028 at a fixed interest rate of 4.1%~~			~~12,085~~
~~Due 2033 at a fixed interest rate of 5.3%~~			~~19,564~~
~~Due 2036 at a fixed interest rate of 5.4%~~			~~9,927~~
~~Total debt, excluding Timber Funds~~			~~1,313,355~~


~~Debt, Timber Funds:~~
Fund II Mortgages Payable, collateralized by Fund II timberlands with quarterly interest payments, as follows: (d)
~~Due 2020 at a fixed interest rate of 4.9%~~			~~11,030~~
~~Due 2020 at a fixed interest rate of 3.8%~~			~~14,012~~
Fund III Mortgages Payable, collateralized by Fund III timberlands with quarterly interest payments, as follows (d):
~~Due 2023 at a fixed interest rate of 5.1%~~			~~19,827~~
~~Due 2024 at a fixed interest rate of 4.5%~~			~~15,790~~
~~Total debt, Timber Funds~~			~~60,659~~
~~Total debt~~			~~1,374,014~~
~~Less: Current maturities of long-term debt, Timber Funds~~			~~(25,042)~~
~~Less: Deferred financing costs~~			~~(2,849)~~
~~Long-term debt, net of deferred financing costs~~			~~$1,346,123~~

assets or liabilities.

~~(a) As~~The following table presents the carrying amount and estimated fair values of ~~June~~our financial instruments as of September 30, ~~2020, the periodic interest rate on the term loan facility was LIBOR plus 1.600%. We estimate the effective fixed interest rate on the term loan facility~~2023 and December 31, 2022, using market information and what we believe to be ~~approximately 3.2% after consideration of interest rate swaps and estimated patronage refunds.~~appropriate valuation methodologies under GAAP:

(b) As of June 30, 2020, the periodic interest rate on the incremental term loan was LIBOR plus 1.900%. We estimate the effective fixed interest rate on the incremental term loan facility to be approximately 2.8% after consideration of interest rate swaps and estimated patronage refunds.

(c) As of June 30, 2020, the periodic interest rate on the 2020 incremental term loan was LIBOR plus 1.850%. We estimate the effective fixed interest rate on the incremental term loan facility to be approximately 2.3% after consideration of interest rate swaps and estimated patronage refunds.

~~(d) See the section below labeled “Long-Term Debt Assumed in the Pope Resources Merger” for additional details.~~

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~~RAYONIER INC. AND SUBSIDIARIES~~

~~RAYONIER, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Dollar amounts in thousands unless otherwise stated)~~

~~Principal payments due during the next five years and thereafter are as follows:~~

Excluding Timber Funds Timber Funds Total
2020 — $25,000 $25,000
2021 — — —
2022 325,000 — 325,000
2023 — 17,980 17,980
2024 — 14,400 14,400
Thereafter 980,000 — 980,000
Total Debt $1,305,000 $57,380 $1,362,380

~~2020 DEBT ACTIVITY~~

On April 1, 2020, we entered into a Second Amendment to Credit Agreement to increase the limit on our Revolving Credit Facility from $200 million to $250 million and extend its maturity date from August 5, 2020 to April 1, 2025. Additionally, the maturity date of the Term Credit Agreement was extended from August 5, 2024 to April 1, 2028.

~~On April 13, 2020, we entered into an Accordion Increase Agreement to further increase the limit on the Revolving Credit Facility from $250 million to $300 million.~~

On April 16, 2020, we entered into a Third Amendment and Incremental Term Loan Agreement, which provided for the advancement of a five-year $250 million senior unsecured incremental term loan facility (the “2020 Incremental Term Loan Facility”). The proceeds from this facility were used to fund our acquisition of Pope Resources.

~~During the six months ended June 30, 2020, we made borrowings of $70.0 million and repayments of $117.0 million on our Revolving Credit Facility~~. ~~At June 30, 2020, we had available borrowings of $264.0 million under the Revolving Credit Facility, net of $1.0 million to secure our outstanding letters of credit.~~

In June 2020, the New Zealand subsidiary renewed its NZ$20 million working capital facility for an additional 12-month term. During the six months ended June 30, 2020, the New Zealand subsidiary made 0 borrowings or repayments on its working capital facility. At June 30, 2020, the New Zealand subsidiary had NZ$20.0 million of available borrowings under its working capital facility.

~~LONG-TERM DEBT ASSUMED IN THE POPE RESOURCES MERGER~~

~~Through our merger with Pope Resources, we assumed long-term debt instruments consisting of:~~

•5 tranches of a credit facility payable to Northwest Farm Credit Services (“NWFCS”) (defined and described below) totaling $45.0 million, collateralized by the portion of Pacific Northwest Core Timberlands acquired in the merger with Pope Resources; and

•~~2 of Fund II's Mortgages Payable to MetLife (defined and described below) totaling $25.0 million, collateralized by a portion of Fund II timberlands; and~~

•~~2 of Fund III's Mortgages Payable to NWFCS (defined and described below) totaling $32.4 million, collateralized by a portion of Fund III timberlands.~~

~~NWFCS CREDIT FACILITY~~

We assumed 5 tranches of a credit facility payable to NWFCS (the “NWFCS Credit Facility”) totaling $45.0 million. Quarterly payments of interest only are due on the NWFCS Credit Facility through the respective maturity of each tranche. The NWFCS Credit Facility is collateralized by a portion of the Pacific Northwest timberlands acquired in the merger with Pope Resources. The NWFCS Credit Facility allows us to receive annual patronage payments, which are profit distributions made by a cooperative to its member-users based on the quantity or value of business done with the member-user.

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~~RAYONIER INC. AND SUBSIDIARIES~~

~~RAYONIER, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Dollar amounts in thousands unless otherwise stated)~~

~~The pertinent details of each tranche of the NWFCS Credit Facility we assumed are as follows:~~

Tranche Stated Fixed Interest Rate Effective Fixed Interest Rate (a) Stated Principal Amount Est. Fair Value at Merger Date (b)
Tranche 2 (Due 2025) 6.1 % 4.8 % $10,000 $11,838
Tranche 4 (Due 2028) 4.1 % 3.1 % 11,000 12,108
Tranches 6 & 7 (Due 2033) 5.3 % 4.2 % 16,000 19,609
Tranche 8 (Due 2036) 5.4 % 4.3 % 8,000 9,947
Total NWFCS Credit Facility assumed $45,000 $53,502


	September 30, 2023			December 31, 2022
Asset (Liability) (a)	Carrying Amount	Fair Value		Carrying Amount	Fair Value
		Level 1	Level 2		Level 1	Level 2
Cash and cash equivalents	$107,784	$107,784	—	$114,255	$114,255	—


Restricted cash (b)	1,804	1,804	—	1,152	1,152	—



Long-term debt (c)	(1,511,470)	—	(1,422,224)	(1,514,721)	—	(1,438,736)

Interest rate swaps (d)	62,520	—	62,520	60,792	—	60,792

Forward-starting interest rate swaps (d)	17,501	—	17,501	11,939	—	11,939
Foreign currency exchange contracts (d)	(4,585)	—	(4,585)	(4,539)	—	(4,539)
Foreign currency option contracts (d)	(534)	—	(534)	569	—	569


Noncontrolling interests in the operating partnership (e)	69,820	—	69,820	105,763	—	105,763

(a)~~Estimated effective fixed interest rates as of June~~We did not have Level 3 assets or liabilities at September 30, ~~2020 after consideration of estimated patronage refunds.~~2023 and December 31, 2022.

(b)Restricted cash represents proceeds from like-kind exchange sales deposited with a third-party intermediary and cash held in escrow. See Note 18 — Restricted Cash for additional information.

(c)The carrying amount of long-term debt is presented net of deferred financing costs and unamortized discounts on non-revolving debt. See Note 6 — Debt for additional information.

(d)See Note 7 — Derivative Financial Instruments and Hedging Activities for information regarding the Consolidated Balance Sheets classification of our derivative financial instruments.

(e)Noncontrolling interests in the operating partnership is neither an asset nor liability and is classified as temporary equity in the Company’s Consolidated Balance Sheets. This relates to the ownership of Rayonier, L.P. units by various individuals and entities other than the Company. See Note 4 — Noncontrolling Interests for additional information.

We use the following methods and assumptions in estimating the fair value of our financial instruments:

Cash and cash equivalents and Restricted cash — The carrying amount is equal to fair market value.

Debt— The fair value of fixed rate debt is based upon quoted market prices for debt with similar terms and maturities. The variable rate debt adjusts with changes in the market rate, therefore the carrying value ~~premium will be amortized as a benefit to interest expense over the maturity term of each tranche.~~approximates fair value.

~~FUND II MORTGAGES PAYABLE~~

~~We assumed Fund II's 2 mortgages payable (the “Fund II Mortgages Payable”) to MetLife totaling $25.0 million. Quarterly payments~~Interest rate swap agreements— The fair value of interest ~~only are due~~rate contracts is determined by discounting the expected future cash flows, for each instrument, at prevailing interest rates.

Foreign currency exchange contracts— The fair value of foreign currency exchange contracts is determined by a mark-to-market valuation, which estimates fair value by discounting the difference between the contracted forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate.

Foreign currency option contracts— The fair value of foreign currency option contracts is based on a mark-to-market calculation using the Black-Scholes option pricing model.

Noncontrolling interests in the operating partnership— The fair value of noncontrolling interests in the operating partnership is determined based on the Fund II Mortgages Payable through their respective maturities. The Fund II Mortgages Payable are collateralized by Fund II Timberlands and do not have any recourse to the Company or the Operating Partnership.

~~The pertinent details~~period-end closing price of ~~the Fund II Mortgages Payable are as follows:~~

Maturity Date Stated Fixed Interest Rate Stated Principal Amount Est. Fair Value at Merger Date (a)
September 2020 4.9 % $11,000 $11,061
September 2020 3.8 % 14,000 14,023
$25,000 $25,084

~~(a)The fair market value premium will be amortized as a benefit to interest expense over the maturity term of each mortgage.~~

~~FUND III MORTGAGES PAYABLE~~

We assumed Fund III’s 2 mortgages payable (the “Fund III Mortgages Payable”) to NWFCS totaling $32.4 million. Quarterly payments of interest only are due on the Fund III Mortgages Payable through their respective maturities. The Fund III Mortgages Payable are collateralized by Fund III Timberlands and do not have any recourse to the Company or the Operating Partnership.

~~The pertinent details of the Fund III Mortgages Payable are as follows:~~

Maturity Date Stated Fixed Interest Rate Effective Fixed Interest Rate (a) Stated Principal Amount Est. Fair Value at Merger Date (b)
December 2023 5.1 % 3.9 % $17,980 $19,915
October 2024 4.5 % 3.2 % 14,400 15,844
$32,380 $35,759

~~(a)Estimated effective fixed interest rates as of June 30, 2020 after consideration of estimated patronage refunds.~~

~~(b)The fair market value premium will be amortized as a benefit to interest expense over the maturity term of each mortgage.~~

Rayonier Inc. common shares.

~~Table of Contents~~

~~RAYONIER INC. AND SUBSIDIARIES~~

~~RAYONIER, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Dollar amounts in thousands unless otherwise stated)~~

~~DEBT COVENANTS — EXCLUDING TIMBER FUNDS~~

In connection with our $350 million term credit agreement (the “Term Credit Agreement”), $300 million incremental term loan agreement (the “Incremental Term Loan Agreement”), $250 million incremental term loan agreement (“the “2020 Incremental Term Loan Agreement”) and $300 million revolving credit facility (the “Revolving Credit Facility”), customary covenants must be met, the most significant of which include interest coverage and leverage ratios.

~~The covenants listed below, which are the most significant financial covenants in effect as of June 30, 2020, are calculated on a trailing 12-month basis:~~

Covenant Requirement Actual Ratio Favorable
Covenant EBITDA to consolidated interest expense should not be less than 2.5 to 1 9.8 to 1 7.3
Covenant debt to covenant net worth plus covenant debt shall not exceed 65 % 47 % 18 %

~~In connection with our $45 million NWFCS Credit Facility, customary covenants must be met, the most significant of which include interest coverage and debt-to-capitalization ratios.~~

~~The covenants listed below, which are the most significant financial covenants in effect as of June 30, 2020, are calculated on a trailing 12-month basis:~~

Covenant Requirement Actual Ratio Favorable
Covenant loan-to-appraised value shall not exceed 50% 11% 39 %
Covenant EBITDA to consolidated interest expense should not be less than 2.5 to 1 9.8 to 1 7.3
Covenant debt to covenant net worth plus covenant debt shall not exceed 65 % 47 % 18 %

In addition to these financial covenants listed above, the Senior Notes, Term Credit Agreement, Incremental Term Loan Agreement, 2020 Incremental Term Loan Facility, Revolving Credit Facility, and NWFCS Credit Facility include customary covenants that limit the incurrence of debt and the disposition of assets, among others. At June 30, 2020, we were in compliance with all applicable covenants.

~~DEBT COVENANTS — TIMBER FUNDS~~

The Fund II Mortgages Payable to MetLife contains a requirement to maintain a loan-to-value ratio of less than 50%, with the denominator defined as fair market value of the timberland pledged as collateral.

The Fund III Mortgages Payable to NWFCS contain a requirement to maintain a minimum interest coverage ratio of 1.5:1, minimum working capital of $500,000, and a loan-to-value ratio of less than 50%, with the denominator defined as fair market value.

~~Both Timber Funds are in compliance with their respective debt covenants as of June 30, 2020.~~

3229

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(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

8.9. CONTINGENCIES

We have been named as a defendant in various lawsuits and claims arising 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 large deductible insurance plans, primarily in the areas of executive risk, property, automobile and general liability. These pending lawsuits and claims, either individually or in the aggregate, are not expected to have a material adverse effect on our financial position, results of operations, or cash flow.

10. ENVIRONMENTAL AND NATURAL RESOURCE DAMAGE LIABILITIES

Various federal and state environmental laws in the states in which we operate place cleanup or restoration liability on the current and former owners of affected real estate. These laws are often a source of “strict liability,” meaning that an owner or operator need not necessarily have caused, or even been aware of, the release of contaminated materials. Similarly, there are certain environmental laws that allow state, federal, and tribal trustees (collectively, the “Trustees”) to bring suit against property owners to recover damage for injuries to natural resources. Like the liability that attaches to current property owners in the cleanup context, liability for natural resource damages (“NRD”) can attach to a property simply because an injury to natural resources resulted from releases of contaminated materials on or from the owner’s property, regardless of culpability for the release.

Changes in environmental and NRD liabilities from December 31, 2022 to September 30, 2023 are shown below:


			Port Gamble, WA






Non-current portion at December 31, 2022			$14,418
Plus: Current portion			1,175
Total Balance at December 31, 2022			15,593
Expenditures charged to liabilities			(304)
Increase to liabilities (a)			411
Total Balance at September 30, 2023			15,700
Less: Current portion			(6,689)
Non-current portion at September 30, 2023			$9,011

(a)Reflects revised environmental and NRD cost estimates recorded during the nine months ended September 30, 2023.

It is expected that the upland mill site cleanup and NRD restoration will occur over the next one to two years, while the monitoring of Port Gamble Bay, mill site, and landfills will continue for an additional 15 to 20 years. NRD costs are subject to change as the scope of the restoration projects become more clearly defined. It is reasonably possible that these components of the liability may increase as the project progresses. Management continues to monitor the Port Gamble cleanup process and will make adjustments as needed. Should any future circumstances result in a change to the estimated cost of the project, we will record an appropriate adjustment to the liability in the period it becomes known and when we can reasonably estimate the amount. For further information on the timing and amount of future payments related to our environmental remediation liabilities, see Note 10 - Commitments in our 2022 Form 10-K.

We do not currently anticipate any material loss in excess of the amounts accrued; however, we are not able to estimate a possible loss or range of loss, if any, in excess of the established liabilities. Our future remediation expenses may be affected by a number of uncertainties including, but not limited to, the difficulty in estimating the extent and method of remediation, the evolving nature of environmental regulations, and the availability and application of technology. We do not expect the resolution of such uncertainties to have a material adverse effect on our consolidated financial position or liquidity.

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(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

11. GUARANTEES

We provide financial guarantees as required by creditors, insurance programs, and various governmental agencies.

As of September 30, 2023, the following financial guarantees were outstanding:

Financial Commitments (a)

Maximum Potential
Payment

Standby letters of credit (b)

$3,779

Surety bonds (c)

23,605

Total financial commitments

$27,384

(a)We have not recorded any liabilities for these financial commitments in our Consolidated Balance Sheets. The guarantees are not subject to measurement, as the guarantees are dependent on our own performance.

(b)Approximately $2.9 million of the standby letters of credit serve as credit support for real estate construction in our Wildlight development project. The remaining letters of credit support various insurance related agreements, primarily workers’ compensation. These letters of credit will expire at various dates during 2023 and 2024 and will be renewed as required.

(c)Surety bonds are issued primarily to secure performance obligations related to various operational activities and to provide collateral for our Wildlight development project in Nassau County, Florida and our Heartwood development project in Richmond Hill, Georgia. These surety bonds expire at various dates during 2023, 2024, and 2025 and are expected to be renewed as required.

12. HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS

We ~~continuously~~routinely assess potential alternative uses of our timberlands, as some properties may become more valuable for development, residential, recreation or other purposes. We periodically transfer, via a sale or contribution from the real estate investment trust (“REIT”) entities to taxable REIT subsidiaries (“TRS”), higher and better use (“HBU”) timberlands to enable land-use entitlement, development or marketing activities. We also acquire HBU properties in connection with timberland acquisitions. These properties are managed as timberlands until sold or developed. While the majority of 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 long-term value of such properties. For selected development properties, we also invest in targeted infrastructure improvements, such as roadways and utilities, to accelerate the marketability and improve the value of such properties.

~~In the merger with Pope Resources, we acquired HBU properties with an estimated fair value~~

Table of ~~$27.7 million. This includes development properties~~Contents

RAYONIER INC. AND SUBSIDIARIES

RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in ~~the town of Port Gamble, Washington, development projects in Gig Harbor, Kingston, and Bremerton, Washington and various other assets.~~thousands unless otherwise stated)

Changes in higher and better use timberlands and real estate development investments from December 31, ~~2019~~2022 to ~~June~~September 30, ~~2020~~2023 are shown below:


		Higher and Better Use Timberlands and Real Estate Development Investments						Higher and Better Use Timberlands and Real Estate Development Investments
		Land and Timber	Development Investments	Total		Land and Timber	Development Investments	Total
Non-current portion at December 31, 2019		$58,091	$23,700	$81,791
Non-current portion at December 31, 2022					Non-current portion at December 31, 2022	$91,374	$23,723	$115,097
Plus: Current portion (a)	Plus: Current portion (a)	274	12,389	12,663	Plus: Current portion (a)	408	17,501	17,909
Total Balance at December 31, 2019		58,365	36,089	94,454
Total Balance at December 31, 2022					Total Balance at December 31, 2022	91,782	41,224	133,006
Non-cash cost of land and improved development	Non-cash cost of land and improved development	(280)	(3,523)	(3,803)	Non-cash cost of land and improved development	(1,998)	(13,711)	(15,709)
Amortization of parcel real estate development investments					Amortization of parcel real estate development investments	—	(7,689)	(7,689)
Timber depletion from harvesting activities and basis of timber sold in real estate sales	Timber depletion from harvesting activities and basis of timber sold in real estate sales	(351)	—	(351)	Timber depletion from harvesting activities and basis of timber sold in real estate sales	(1,556)	—	(1,556)
Capitalized real estate development investments (b)	Capitalized real estate development investments (b)	—	3,587	3,587	Capitalized real estate development investments (b)	—	24,038	24,038
HBU properties acquired in merger with Pope Resources (c)		27,722	—	27,722
Capital expenditures (silviculture)	Capital expenditures (silviculture)	180	—	180	Capital expenditures (silviculture)	23	—	23

Intersegment transfers	Intersegment transfers	(3,979)	—	(3,979)	Intersegment transfers	554	—	554

Total Balance at June 30, 2020		81,657	36,153	117,810
Total Balance at September 30, 2023					Total Balance at September 30, 2023	88,805	43,862	132,667
Less: Current portion (a)	Less: Current portion (a)	(361)	(3,529)	(3,890)	Less: Current portion (a)	(1,601)	(24,409)	(26,010)
Non-current portion at June 30, 2020		$81,296	$32,624	$113,920
Non-current portion at September 30, 2023					Non-current portion at September 30, 2023	$87,204	$19,453	$106,657

(a)The current portion of Higher and Better Use Timberlands and Real Estate Development Investments is recorded in Inventory. See Note 2113 — Inventory for additional information.

(b)Capitalized real estate development investments include ~~$0.2~~$0.6 million of capitalized ~~interest.~~interest and $5.3 million of parcel real estate development investments. Parcel real estate development investments represent investments made for specific lots and/or commercial parcels that are currently under contract or expected to be ready for market within a year.

~~(c)~~

13. INVENTORY

As of September 30, 2023 and December 31, 2022, our inventory consisted entirely of finished goods, as follows:


	September 30, 2023	December 31, 2022
Finished goods inventory
Real estate inventory (a)	$26,010	$17,909
Log inventory	6,831	5,347
Carbon unit inventory (b)	298	473
Total inventory	$33,139	$23,729

(a)~~Based on preliminary estimates~~Represents the cost of ~~fair value~~HBU real estate (including capitalized development investments) under contract to be sold as well as the cost of ~~May 8, 2020.~~HBU real estate deferred until post-closing obligations are satisfied. See Note ~~2 -~~ ~~Merger~~ ~~with Pope Resources~~12 — Higher And Better Use Timberlands and Real Estate Development Investments for additional information.

(b)Represents the basis in New Zealand carbon units intended to be sold in the next 12 months.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

14. OTHER OPERATING (EXPENSE) INCOME, NET

Other operating (expense) income, net consisted of the following:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Loss on foreign currency remeasurement, net of cash flow hedges	($1,555)	($1,158)	($5,713)	($481)
Gain on sale or disposal of property and equipment	—	9	37	40





Equity income related to Bainbridge Landing LLC joint venture (a)	—	15,848	—	15,477
Miscellaneous (expense) income, net	(99)	(118)	105	(638)
Total	($1,654)	$14,581	($5,571)	$14,398

(a)The three and nine months ended September 30, 2022 include $16.0 million of equity income from the sale of a multi-family apartment complex in Bainbridge Island, Washington. As the equity investment was co-owned with outside investors, $4.5 million of the equity income was attributable to Rayonier.

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(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

~~9. COMMITMENTS~~15. EMPLOYEE BENEFIT PLANS

~~At June 30, 2020,~~We have one qualified non-contributory defined benefit pension plan covering a portion of our employees and an unfunded plan that provides benefits in excess of amounts allowable under current tax law in the qualified plans. We closed enrollment in the pension plans to salaried employees hired after December 31, 2005. Effective December 31, 2016, we froze benefits for all employees participating in the pension plan. In lieu of the pension plan, we provide those employees with an enhanced 401(k) plan match similar to what is currently provided to employees hired after December 31, 2005. Employee benefit plan liabilities are calculated using actuarial estimates and management assumptions. These estimates are based on historical information, along with certain assumptions about future ~~minimum payments under non-cancellable commitments were~~events. Changes in assumptions, as ~~follows:~~

Environmental Remediation (a) Development Projects (b) Pension Contributions (c) Commitments (d) Total
Remaining 2020 $710 $4,206 $2,476 $7,880 $15,272
2021 2,387 160 681 14,193 17,421
2022 2,023 220 — 16,992 19,235
2023 2,012 232 — 17,719 19,963
2024 2,012 232 — 14,987 17,231
Thereafter 2,784 2,770 — 39,877 45,431
$11,928 $7,820 $3,157 $111,648 $134,553
well as changes in actual experience, could cause the estimates to change.

In December 2022, the Rayonier Board of Directors approved the resolution to terminate the Defined Benefit Plan and notified impacted parties of the termination and alternative distribution options. The Defined Benefit Plan was terminated on February 28, 2023. On July 20, 2023, the Rayonier Board of Directors approved the resolution to terminate the unfunded plan and will distribute all benefits in accordance with Section 409A of the Internal Revenue Code. The unfunded plan was terminated on July 31, 2023. We expect to recognize pre-tax non-cash pension settlement charges related to the actuarial losses currently in AOCI upon settlement of the obligations of the Defined Benefit and Excess Benefit Plans. These charges are currently expected to occur in 2023 and 2024, with the specific timing and final amounts dependent upon several factors.

We expect to make cash contributions of approximately $7.6 million during the settlement process in order to fund the Defined Benefit Plan on a plan termination basis. The Defined Benefit Plan will be settled upon completion of lump sum distributions and purchase of annuity contracts. The settlement is expected to be completed by the end of Q2 2024. The Excess Benefit Plan will be settled entirely with lump sum payments with expected cash contributions in 2024 of approximately $1.3 million. Projected cash contributions are an estimate, as actual amounts will be dependent upon the nature and timing of participant settlements and interest rates, as well as prevailing market conditions. See Note 1 – Basis of Presentation for information regarding subsequent events related to the Defined Benefit Pension Plan.

The net pension and postretirement benefit (credits) costs that have been recorded are shown in the following table:


Components of Net Periodic Benefit (Credit) Cost	Income Statement Location	Pension		Postretirement
		Three Months Ended September 30,		Three Months Ended September 30,
		2023	2022	2023	2022
Service cost	Selling and general expenses	—	—	$1	$2
Interest cost	Interest and other miscellaneous income, net	844	609	17	13
Expected return on plan assets (a)	Interest and other miscellaneous income, net	(887)	(872)	—	—

Amortization of losses	Interest and other miscellaneous income, net	1	184	—	4

Net periodic benefit (credit) cost		($42)	($79)	$18	$19


Components of Net Periodic Benefit (Credit) Cost	Income Statement Location	Pension		Postretirement
		Nine Months Ended September 30,		Nine Months Ended September 30,
		2023	2022	2023	2022
Service cost	Selling and general expenses	—	—	$3	$5
Interest cost	Interest and other miscellaneous income, net	2,533	1,826	52	39
Expected return on plan assets (a)	Interest and other miscellaneous income, net	(2,663)	(2,615)	—	—

Amortization of losses	Interest and other miscellaneous income, net	4	553	—	11

Net periodic benefit (credit) cost		($126)	($236)	$55	$55

(a)~~Environmental remediation represents our estimate~~The weighted-average expected long-term rate of ~~potential liability associated with environmental contamination~~return on plan assets used in ~~Port Gamble, Washington.~~

~~(b)~~computing 2023 net periodic benefit cost for pension benefit~~Primarily consisting of payments expected to be made on our Wildlight and Richmond Hill development projects.~~

~~(c)~~s~~Pension contribution requirements are based on actuarially determined estimates and IRS minimum funding requirements.~~

~~(d)Commitments include payments expected to be made on foreign exchange contracts, timberland deeds and other purchase obligations.~~

is 5.0%.

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(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

~~10.~~16. INCOME TAXES

Rayonier ~~Inc.~~ is a ~~real estate investment trust (a “REIT”)~~REIT under the Internal Revenue Code and therefore generally does not pay U.S. federal or state income tax. ~~Through~~As of September 30, 2023, Rayonier owns a ~~series of transactions~~98.4% interest in ~~connection with~~ the ~~Mergers, the Company transferred all of its assets to the Operating Partnership on May 8, 2020. As a result of these transactions, the Company owns approximately 96.8% of the~~ Operating Partnership and conducts substantially all of its ~~business~~timberland operations through the Operating Partnership. The taxable income or loss generated by the Operating Partnership is passed through and reported to its unit holders (including the Company) on a Schedule K-1 for inclusion in each unitholder’s income tax return.

Certain operations, including log trading and certain real estate activities, such as the entitlement, development and sale of HBU properties, are conducted through ~~taxable REIT subsidiary (“TRS”) entities.~~our TRS. The TRS ~~entities~~subsidiaries are subject to United States federal and state corporate income tax. The New Zealand timber operations are conducted by the New Zealand subsidiary, which is subject to corporate-level tax at 28% in New Zealand and is treated as a partnership for USU.S. income tax purposes.

~~PROVISION FOR INCOME TAXES~~FOREIGN CURRENCY EXCHANGE AND OPTION CONTRACTS

Our ~~tax expense is principally related to~~ New Zealand ~~corporate-level tax on~~subsidiary’s domestic sales and operating expenses are predominately denominated in New Zealand dollars, while its export sales, shareholder distributions and ocean freight payments are predominately denominated in U.S. dollars. To the extent New Zealand dollar costs exceed New Zealand dollar revenues (the

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“foreign exchange exposure”), the New Zealand subsidiary ~~income.~~ manages the foreign exchange exposure through the use of derivative financial instruments. It typically hedges a portion of export sales receipts to cover 50% to 90% of the projected foreign exchange exposure for the following 12 months, up to 75% for the forward 12 to 18 months and up to 50% for the forward 18 to 24 months. Additionally, it will occasionally hedge export sales receipts to cover up to 50% of the foreign exchange exposure for the forward 24 to 36 months and up to 25% of the foreign exchange exposure for the forward 36 to 48 months when the New Zealand dollar is at a cyclical low versus the U.S. dollar. The New Zealand subsidiary’s trading operations typically hedge a portion of export sales receipts to cover the projected foreign exchange exposure for the following three months. As of September 30, 2023, foreign currency exchange contracts and foreign currency option contracts had maturity dates through September 2026 and July 2026, respectively.

INTEREST RATE PRODUCTS

We are exposed to cash flow interest rate risk on our variable-rate debt and on anticipated debt issuances. We use variable-to-fixed interest rate swaps and forward-starting interest rate swap agreements to hedge this exposure. For these derivative instruments, we report the gains/losses from the fluctuations in the fair market value of the hedges in AOCI and reclassify them to earnings as interest expense in the same period in which the hedged interest payments affect earnings.

To the extent we de-designate or terminate a cash flow hedging relationship and the associated hedged item continues to exist, any unrealized gain or loss of the cash flow hedge at the time of de-designation remains in AOCI and is amortized using the straight-line method through interest expense over the remaining life of the hedged item. To the extent the associated hedged item is no longer effective, the gain or loss is reclassified out of AOCI to earnings immediately.

INTEREST RATE SWAPS

The following table contains information on the ~~income~~outstanding interest rate swaps as of September 30, 2023:


Outstanding Interest Rate Swaps (a)
Date Entered Into	Term	Notional Amount	Related Debt Facility	Fixed Rate of Swap		Bank Margin on Debt (b)		Total Effective Interest Rate (c)
August 2015	9 years	$170,000	Term Credit Agreement	2.10	%	1.70	%	3.80	%
August 2015	9 years	180,000	Term Credit Agreement	2.26	%	1.70	%	3.96	%
April 2016	10 years	100,000	Incremental Term Loan	1.50	%	1.75	%	3.25	%
April 2016	10 years	100,000	Incremental Term Loan	1.51	%	1.75	%	3.26	%
May 2021	7 years	200,000	2021 Incremental Term Loan Facility	0.67	%	1.65	%	2.32	%
December 2022	5 years	100,000	2022 Incremental Term Loan Facility	3.72	%	1.70	%	5.42	%

(a)All interest rate swaps have been designated as interest rate cash flow hedges and qualify for hedge accounting.

(b)Includes the SOFR Credit Spread Adjustment component of 0.1%.

(c)Rate is before estimated patronage payments.

FORWARD-STARTING INTEREST RATE SWAPS

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(Unaudited)

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The following table contains information on the outstanding forward-starting interest rate swaps as of September 30, 2023:

Outstanding Forward-Starting Interest Rate Swaps (a)

Date Entered Into

Term

Notional Amount

Fixed Rate of Swap

Related Debt Facility

Forward Date

Maximum Period Ending for Forecasted Issuance Date

April 2020

4 years

$100,000

0.78

Term Credit Agreement

August 2024

N/A

May 2020

4 years

50,000

0.64

Term Credit Agreement

August 2024

N/A

May 2023

4 years

50,000

3.29

Term Credit Agreement

August 2024

N/A

(a)All forward-starting interest rate swaps have been designated as interest rate cash flow hedges and qualify for hedge accounting.

The following tables demonstrate the impact, gross of tax, ~~expense recognized in~~of our derivatives on the Consolidated Statements of Income and Comprehensive ~~Income:~~Income for the three and nine months ended September 30, 2023 and 2022:

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Income tax expense ($2,990) ($3,608) ($6,696) ($7,958)


		Three Months Ended September 30,
	Income Statement Location	2023	2022
Derivatives designated as cash flow hedges:
Foreign currency exchange contracts	Other comprehensive income (loss)	$1,752	($4,464)
	Other operating (expense) income, net	(1,796)	(2,669)
Foreign currency option contracts	Other comprehensive income (loss)	(26)	(1,754)
	Other operating (expense) income, net	(196)	—
Interest rate products	Other comprehensive income (loss)	12,381	26,607
	Interest expense, net	(4,810)	(62)

~~ANNUAL EFFECTIVE TAX RATE~~



		Nine Months Ended September 30,
	Income Statement Location	2023	2022
Derivatives designated as cash flow hedges:
Foreign currency exchange contracts	Other comprehensive income (loss)	$5,753	($15,373)
	Other operating (expense) income, net	(5,801)	(2,598)
Foreign currency option contracts	Other comprehensive income (loss)	(858)	(2,304)
	Other operating (expense) income, net	(244)	—
Interest rate products	Other comprehensive income (loss)	20,416	76,372
	Interest expense, net	(12,587)	4,555

During the next 12 months, the amount of the September 30, 2023 AOCI balance, net of tax, expected to be reclassified into earnings is a gain of approximately $24.7 million. The ~~Company’s effective tax~~following table contains details of the expected reclassified amounts into earnings:


			Amount expected to be reclassified into earnings in next 12 months

Derivatives designated as cash flow hedges:
Foreign currency exchange contracts			($2,763)
Foreign currency option contracts			(279)
Interest rate products (a)			27,734
Total estimated gain on derivatives contracts			$24,692

(a) These reclassified amounts are expected to fully offset variable interest rate ~~after discrete items is below the 21.0% U.S. statutory rate due~~payments made to ~~tax benefits associated with being a REIT.~~ debt holders, resulting in no net impact on our earnings or cash flows.

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(Dollar amounts in thousands unless otherwise stated)

The following table contains the ~~Company’s annualized effective tax rate after discrete items:~~notional amounts of the derivative financial instruments recorded in the Consolidated Balance Sheets:

Six Months Ended
June 30,
2020 2019
Annualized effective tax rate after discrete items 19.8 % 15.5 %


	Notional Amount
	September 30, 2023	December 31, 2022
Derivatives designated as cash flow hedges:
Foreign currency exchange contracts	$127,200	$138,250
Foreign currency option contracts	86,000	78,000
Interest rate swaps	850,000	850,000

Forward-starting interest rate swaps	200,000	150,000


	Location on Balance Sheet	Fair Value Assets / (Liabilities) (a)
		September 30, 2023	December 31, 2022
Derivatives designated as cash flow hedges:
Foreign currency exchange contracts	Other current assets	$63	$25
	Other assets	391	1,303
	Other current liabilities	(3,900)	(5,457)
	Other non-current liabilities	(1,139)	(410)
Foreign currency option contracts	Other current assets	77	66
	Other assets	1,032	2,131
	Other current liabilities	(464)	(347)
	Other non-current liabilities	(1,179)	(1,281)
Interest rate swaps	Other assets	62,520	60,843
	Other non-current liabilities	—	(51)






Forward-starting interest rate swaps	Other assets	17,501	11,939








Total derivative contracts:
Other current assets		$140	$91
Other assets		81,444	76,216
Total derivative assets		$81,584	$76,307

Other current liabilities		(4,364)	(5,804)
Other non-current liabilities		(2,318)	(1,742)
Total derivative liabilities		($6,682)	($7,546)

(a) See Note 8 — Fair Value Measurements for further information on the fair value of our derivatives including their classification within the fair value hierarchy.

OFFSETTING DERIVATIVES

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~~11. CONTINGENCIES~~8. FAIR VALUE MEASUREMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

A three-level hierarchy that prioritizes the inputs used to measure fair value was established in the Accounting Standards Codification as follows:

Level 1— Quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs other than quoted prices included in Level 1.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following table presents the carrying amount and estimated fair values of our financial instruments as of September 30, 2023 and December 31, 2022, using market information and what we believe to be appropriate valuation methodologies under GAAP:


	September 30, 2023			December 31, 2022
Asset (Liability) (a)	Carrying Amount	Fair Value		Carrying Amount	Fair Value
		Level 1	Level 2		Level 1	Level 2
Cash and cash equivalents	$107,784	$107,784	—	$114,255	$114,255	—


Restricted cash (b)	1,804	1,804	—	1,152	1,152	—



Long-term debt (c)	(1,511,470)	—	(1,422,224)	(1,514,721)	—	(1,438,736)

Interest rate swaps (d)	62,520	—	62,520	60,792	—	60,792

Forward-starting interest rate swaps (d)	17,501	—	17,501	11,939	—	11,939
Foreign currency exchange contracts (d)	(4,585)	—	(4,585)	(4,539)	—	(4,539)
Foreign currency option contracts (d)	(534)	—	(534)	569	—	569


Noncontrolling interests in the operating partnership (e)	69,820	—	69,820	105,763	—	105,763

(a)We did not have Level 3 assets or liabilities at September 30, 2023 and December 31, 2022.

(b)Restricted cash represents proceeds from like-kind exchange sales deposited with a third-party intermediary and cash held in escrow. See Note 18 — Restricted Cash for additional information.

(c)The carrying amount of long-term debt is presented net of deferred financing costs and unamortized discounts on non-revolving debt. See Note 6 — Debt for additional information.

(d)See Note 7 — Derivative Financial Instruments and Hedging Activities for information regarding the Consolidated Balance Sheets classification of our derivative financial instruments.

We use the following methods and assumptions in estimating the fair value of our financial instruments:

Cash and cash equivalents and Restricted cash — The carrying amount is equal to fair market value.

Interest rate swap agreements— The fair value of interest rate contracts is determined by discounting the expected future cash flows, for each instrument, at prevailing interest rates.

Foreign currency option contracts— The fair value of foreign currency option contracts is based on a mark-to-market calculation using the Black-Scholes option pricing model.

Noncontrolling interests in the operating partnership— The fair value of noncontrolling interests in the operating partnership is determined based on the period-end closing price of Rayonier Inc. common shares.

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9. CONTINGENCIES

~~12.~~10. ENVIRONMENTAL ~~REMEDIATION~~AND NATURAL RESOURCE DAMAGE LIABILITIES

Various federal and state environmental laws in the states in which we operate place cleanup or restoration liability ~~for environmental contamination~~ on the current and former owners of affected real ~~estate on which contamination is discovered.~~estate. These laws are often a source of “strict liability,” meaning that an owner or operator need not necessarily have caused, or even been aware of, the release of ~~hazardous substances.~~contaminated materials. Similarly, there are certain environmental laws that allow state, federal, and tribal trustees (collectively, the “Trustees”) to bring suit against property owners to recover damage for injuries to natural resources. Like the liability that attaches to current property owners in the cleanup context, liability for natural resource damages (“NRD”) can attach to a property simply because an injury to natural resources resulted from releases of ~~hazardous substances~~contaminated materials on or from the owner’s property, regardless of culpability for the release.

~~In connection~~

Changes in environmental and NRD liabilities from December 31, 2022 to the merger with Pope Resources, we assumed ownership of certain real estate in Port Gamble, Washington where hazardous substances had previously been discovered, requiring environmental remediation under these laws. Prior to the merger, Pope Resources had completed required remediation on the Port Gamble Bay, performed remedial investigation and drafted a cleanup action plan for the Port Gamble millsite, and started discussions relating to alleged natural resource damages.September 30, 2023 are shown below:


			Port Gamble, WA






Non-current portion at December 31, 2022			$14,418
Plus: Current portion			1,175
Total Balance at December 31, 2022			15,593
Expenditures charged to liabilities			(304)
Increase to liabilities (a)			411
Total Balance at September 30, 2023			15,700
Less: Current portion			(6,689)
Non-current portion at September 30, 2023			$9,011

~~As of June~~(a)Reflects revised environmental and NRD cost estimates recorded during the nine months ended September 30, ~~2020, we have accrued $11.9 million for environmental remediation, which represents our current estimate of the remaining cleanup cost and most likely outcome to various contingencies.~~ 2023.

It is expected that the ~~millsite~~upland mill site cleanup and ~~natural resource damages (NRD)~~NRD restoration will occur over the next ~~two~~one to ~~three~~two years, while the monitoring of ~~the~~ Port Gamble Bay, ~~millsite~~mill site, and landfills ~~containing dredged and excavated contaminated sediments~~ will continue for an additional 1015 to 1520 years. ~~The~~ NRD costs ~~might~~are subject to change as the scope of the restoration projects become more clearly defined. It is reasonably possible that these components of the liability may increase as the project progresses. Management continues to monitor the Port Gamble cleanup process and will make adjustments as needed. Should any future circumstances result in a change to the estimated cost of the project, we will record an appropriate adjustment to the liability in the period it becomes known and when we can reasonably estimate the amount. For further information on the timing and amount of future payments related to our environmental remediation liabilities, see Note 10 - ~~Note 9 -~~ Commitments. in our 2022 Form 10-K.

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(Dollar amounts in thousands unless otherwise stated)

~~13.~~11. GUARANTEES

We provide financial guarantees as required by creditors, insurance programs, and various governmental agencies.

As of ~~June~~September 30, ~~2020,~~2023, the following financial guarantees were outstanding:

Financial Commitments (a)

Maximum Potential
Payment

Standby letters of credit (b)

$~~985~~3,779

Surety bonds ~~(b)~~(c)

~~10,011~~23,605

Total financial commitments

$~~10,996~~

27,384

(a)We have not recorded any liabilities for these financial commitments in ~~the~~our Consolidated Balance Sheets. The guarantees are not subject to measurement, as the guarantees are dependent on our own performance.

(c)Surety bonds are issued primarily to secure performance obligations related to various operational activities and to provide collateral for our Wildlight development project in Nassau County, Florida and ~~in connection with pending and completed sales from the Harbor Hill~~our Heartwood development project in ~~Gig Harbor, Washington.~~Richmond Hill, Georgia. These surety bonds expire at various dates during ~~2020, 2021~~2023, 2024, and ~~2022~~2025 and are expected to be renewed as required.

12. HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS

We routinely assess potential alternative uses of our timberlands, as some properties may become more valuable for development, residential, recreation or other purposes. We periodically transfer, via a sale or contribution from the real estate investment trust (“REIT”) entities to taxable REIT subsidiaries (“TRS”), higher and better use (“HBU”) timberlands to enable land-use entitlement, development or marketing activities. We also acquire HBU properties in connection with timberland acquisitions. These properties are managed as timberlands until sold or developed. While the majority of 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 long-term value of such properties. For selected development properties, we also invest in targeted infrastructure improvements, such as roadways and utilities, to accelerate the marketability and improve the value of such properties.

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(Unaudited)

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Changes in higher and better use timberlands and real estate development investments from December 31, 2022 to September 30, 2023 are shown below:


	Higher and Better Use Timberlands and Real Estate Development Investments
	Land and Timber	Development Investments	Total
Non-current portion at December 31, 2022	$91,374	$23,723	$115,097
Plus: Current portion (a)	408	17,501	17,909
Total Balance at December 31, 2022	91,782	41,224	133,006
Non-cash cost of land and improved development	(1,998)	(13,711)	(15,709)
Amortization of parcel real estate development investments	—	(7,689)	(7,689)
Timber depletion from harvesting activities and basis of timber sold in real estate sales	(1,556)	—	(1,556)
Capitalized real estate development investments (b)	—	24,038	24,038
Capital expenditures (silviculture)	23	—	23

Intersegment transfers	554	—	554

Total Balance at September 30, 2023	88,805	43,862	132,667
Less: Current portion (a)	(1,601)	(24,409)	(26,010)
Non-current portion at September 30, 2023	$87,204	$19,453	$106,657

(a)The current portion of Higher and Better Use Timberlands and Real Estate Development Investments is recorded in Inventory. See Note 13 — Inventory for additional information.

(b)Capitalized real estate development investments include $0.6 million of capitalized interest and $5.3 million of parcel real estate development investments. Parcel real estate development investments represent investments made for specific lots and/or commercial parcels that are currently under contract or expected to be ready for market within a year.

13. INVENTORY

As of September 30, 2023 and December 31, 2022, our inventory consisted entirely of finished goods, as follows:


	September 30, 2023	December 31, 2022
Finished goods inventory
Real estate inventory (a)	$26,010	$17,909
Log inventory	6,831	5,347
Carbon unit inventory (b)	298	473
Total inventory	$33,139	$23,729

(a)Represents the cost of HBU real estate (including capitalized development investments) under contract to be sold as well as the cost of HBU real estate deferred until post-closing obligations are satisfied. See Note 12 — Higher And Better Use Timberlands and Real Estate Development Investments for additional information.

(b)Represents the basis in New Zealand carbon units intended to be sold in the next 12 months.

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14. OTHER OPERATING (EXPENSE) INCOME, NET

~~14. EARNINGS PER SHARE AND PER UNIT~~

~~The following table provides details~~Other operating (expense) income, net consisted of the ~~calculations~~following:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Loss on foreign currency remeasurement, net of cash flow hedges	($1,555)	($1,158)	($5,713)	($481)
Gain on sale or disposal of property and equipment	—	9	37	40





Equity income related to Bainbridge Landing LLC joint venture (a)	—	15,848	—	15,477
Miscellaneous (expense) income, net	(99)	(118)	105	(638)
Total	($1,654)	$14,581	($5,571)	$14,398

(a)The three and nine months ended September 30, 2022 include $16.0 million of ~~basic and diluted earnings per common share~~equity income from the sale of a multi-family apartment complex in Bainbridge Island, Washington. As the equity investment was co-owned with outside investors, $4.5 million of the ~~Company:~~

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Earnings per common share - basic
Numerator:
Net Income $455 $20,920 $26,876 $48,713
Less: Net income attributable to noncontrolling interest in the Operating Partnership (219) — (219) —
Less: Net loss (income) attributable to noncontrolling interests in consolidated affiliates 1,499 (2,168) 931 (5,167)
Net income attributable to Rayonier Inc. $1,735 $18,752 $27,588 $43,546
Denominator:
Denominator for basic earnings per common share - weighted average shares 133,318,209 129,380,282 131,227,852 129,277,490
Basic earnings per common share attributable
to Rayonier Inc.: $0.01 $0.14 $0.21 $0.34
Earnings per common share - diluted
Numerator:
Net Income $455 $20,920 $26,876 $48,713
Less: Net loss (income) attributable to noncontrolling interest in consolidated affiliates 1,499 (2,168) 931 (5,167)
Net income attributable to Rayonier Inc., before net income attributable to noncontrolling interests in the Operating Partnership $1,954 $18,752 $27,807 $43,546
Denominator:
Denominator for basic earnings per common
share - weighted average shares 133,318,209 129,380,282 131,227,852 129,277,490
Add: Dilutive effect of:
Stock options — 13,463 537 16,580
Performance shares, restricted shares and restricted stock units 49,299 250,170 129,390 403,915
Noncontrolling interests in common units 2,589,518 — 1,294,759 —
Denominator for diluted earnings per common share - adjusted weighted average shares 135,957,026 129,643,915 132,652,538 129,697,985
Diluted earnings per common share attributable to Rayonier Inc.: $0.01 $0.14 $0.21 $0.34

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Anti-dilutive shares excluded from the computations of diluted earnings per share:
Stock options, performance shares, restricted shares and restricted stock units 635,779 451,258 521,053 444,765
Total 635,779 451,258 521,053 444,765

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~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Dollar amounts in thousands unless otherwise stated)~~

~~The following table provides details of the calculations of basic and diluted earnings per common unit of the Operating Partnership:~~

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Earnings per common unit - basic
Numerator:
Net Income $455 $20,920 $26,876 $48,713
Less: Net loss (income) attributable to noncontrolling interests in consolidated affiliates 1,499 (2,168) 931 (5,167)
Net income available to unitholders $1,954 $18,752 $27,807 $43,546
Denominator:
Denominator for basic earnings per common unit - weighted average units 135,907,727 129,380,282 132,522,611 129,277,490
Basic earnings per common unit attributable
to Rayonier, L.P.: $0.01 $0.14 $0.21 $0.34
Earnings per common unit - diluted
Numerator:
Net Income $455 $20,920 $26,876 $48,713
Less: Net loss (income) attributable to noncontrolling interests in consolidated affiliates 1,499 (2,168) 931 (5,167)
Net income available to unitholders $1,954 $18,752 $27,807 $43,546
Denominator:
Denominator for basic earnings per common
share - weighted average units 135,907,727 129,380,282 132,522,611 129,277,490
Add: Dilutive effect of unit equivalents:
Stock options — 13,463 537 16,580
Performance shares, restricted shares and restricted stock units 49,299 250,170 129,390 403,915
Denominator for diluted earnings per common unit - adjusted weighted average units 135,957,026 129,643,915 132,652,538 129,697,985
Diluted earnings per common share attributable to Rayonier, L.P..: $0.01 $0.14 $0.21 $0.34

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Anti-dilutive unit equivalents excluded from the computations of diluted earnings per unit:
Stock options, performance shares, restricted shares and restricted stock units 635,779 451,258 521,053 444,765
Total 635,779 451,258 521,053 444,765

equity income was attributable to Rayonier.

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(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

15. ~~DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES~~EMPLOYEE BENEFIT PLANS

We have one qualified non-contributory defined benefit pension plan covering a portion of our employees and an unfunded plan that provides benefits in excess of amounts allowable under current tax law in the qualified plans. We closed enrollment in the pension plans to salaried employees hired after December 31, 2005. Effective December 31, 2016, we froze benefits for all employees participating in the pension plan. In lieu of the pension plan, we provide those employees with an enhanced 401(k) plan match similar to what is currently provided to employees hired after December 31, 2005. Employee benefit plan liabilities are ~~exposed~~calculated using actuarial estimates and management assumptions. These estimates are based on historical information, along with certain assumptions about future events. Changes in assumptions, as well as changes in actual experience, could cause the estimates to ~~market risk~~change.

In December 2022, the Rayonier Board of Directors approved the resolution to terminate the Defined Benefit Plan and notified impacted parties of the termination and alternative distribution options. The Defined Benefit Plan was terminated on February 28, 2023. On July 20, 2023, the Rayonier Board of Directors approved the resolution to terminate the unfunded plan and will distribute all benefits in accordance with Section 409A of the Internal Revenue Code. The unfunded plan was terminated on July 31, 2023. We expect to recognize pre-tax non-cash pension settlement charges related to ~~potential fluctuations~~the actuarial losses currently in ~~foreign currency exchange rates~~AOCI upon settlement of the obligations of the Defined Benefit and Excess Benefit Plans. These charges are currently expected to occur in 2023 and 2024, with the specific timing and final amounts dependent upon several factors.

We expect to make cash contributions of approximately $7.6 million during the settlement process in order to fund the Defined Benefit Plan on a plan termination basis. The Defined Benefit Plan will be settled upon completion of lump sum distributions and purchase of annuity contracts. The settlement is expected to be completed by the end of Q2 2024. The Excess Benefit Plan will be settled entirely with lump sum payments with expected cash contributions in 2024 of approximately $1.3 million. Projected cash contributions are an estimate, as actual amounts will be dependent upon the nature and timing of participant settlements and interest ~~rates. We use derivative financial instruments~~rates, as well as prevailing market conditions. See Note 1 – Basis of Presentation for information regarding subsequent events related to ~~mitigate~~ the ~~financial impact of exposure to these risks.~~Defined Benefit Pension Plan.

~~Accounting for derivative financial instruments is governed by ASC Topic 815,~~ ~~Derivatives~~The net pension and ~~Hedging, (“ASC 815”). In accordance with ASC 815, we record our derivative instruments at fair value as either assets or liabilities~~postretirement benefit (credits) costs that have been recorded are shown in the ~~Consolidated Balance Sheets. Changes~~following table:


Components of Net Periodic Benefit (Credit) Cost	Income Statement Location	Pension		Postretirement
		Three Months Ended September 30,		Three Months Ended September 30,
		2023	2022	2023	2022
Service cost	Selling and general expenses	—	—	$1	$2
Interest cost	Interest and other miscellaneous income, net	844	609	17	13
Expected return on plan assets (a)	Interest and other miscellaneous income, net	(887)	(872)	—	—

Amortization of losses	Interest and other miscellaneous income, net	1	184	—	4

Net periodic benefit (credit) cost		($42)	($79)	$18	$19


Components of Net Periodic Benefit (Credit) Cost	Income Statement Location	Pension		Postretirement
		Nine Months Ended September 30,		Nine Months Ended September 30,
		2023	2022	2023	2022
Service cost	Selling and general expenses	—	—	$3	$5
Interest cost	Interest and other miscellaneous income, net	2,533	1,826	52	39
Expected return on plan assets (a)	Interest and other miscellaneous income, net	(2,663)	(2,615)	—	—

Amortization of losses	Interest and other miscellaneous income, net	4	553	—	11

Net periodic benefit (credit) cost		($126)	($236)	$55	$55

(a)The weighted-average expected long-term rate of return on plan assets used in computing 2023 net periodic benefit cost for pension benefits is 5.0%.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

16. INCOME TAXES

Rayonier is a REIT under the Internal Revenue Code and therefore generally does not pay U.S. federal or state income tax. As of September 30, 2023, Rayonier owns a 98.4% interest in the ~~instruments’ fair value~~Operating Partnership and conducts substantially all of its timberland operations through the Operating Partnership. The taxable income or loss generated by the Operating Partnership is passed through and reported to its unit holders (including the Company) on a Schedule K-1 for inclusion in each unitholder’s income tax return.

Certain operations, including log trading and certain real estate activities, such as the entitlement, development and sale of HBU properties, are ~~accounted for based on their intended use. Gains~~conducted through our TRS. The TRS subsidiaries are subject to United States federal and ~~losses on derivatives that~~state corporate income tax. The New Zealand timber operations are ~~designated~~conducted by the New Zealand subsidiary, which is subject to corporate-level tax at 28% in New Zealand and ~~qualify for cash flow hedge accounting are recorded~~is treated as a ~~component of accumulated other comprehensive loss (“AOCI”) and reclassified into earnings when the hedged transaction materializes. Gains and losses on derivatives that are designated and qualify~~partnership for net investment hedge accounting are recorded as a component of AOCI and will not be reclassified into earnings until the investment is partially or completely liquidated. The changes in the fair value of derivatives not designated as hedging instruments and those which are no longer effective as hedging instruments, are recognized immediately in earnings.U.S. income tax purposes.

FOREIGN CURRENCY EXCHANGE AND OPTION CONTRACTS

~~The functional currency of Rayonier~~Our New Zealand ~~Limited,~~subsidiary’s domestic sales and operating expenses are predominately denominated in New Zealand dollars, while its export sales, shareholder distributions and ocean freight payments are predominately denominated in U.S. dollars. To the extent New Zealand dollar costs exceed New Zealand dollar revenues (the

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(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

“foreign exchange exposure”), the New Zealand subsidiary ismanages the ~~New Zealand dollar. The New Zealand subsidiary is exposed to~~ foreign ~~currency risk on~~exchange exposure through the use of derivative financial instruments. It typically hedges a portion of export sales ~~and ocean freight payments which are mainly denominated in U.S. dollars. The New Zealand subsidiary typically hedges~~receipts to cover 50% to 90% of ~~its estimated~~the projected foreign ~~currency~~exchange exposure ~~with respect to~~for the following ~~twelve~~12 months, ~~forecasted sales and purchases, less distributions, and~~ up to 75% offor the forward 12 to 18 months and up to 50% for the forward 18 to 24 months. Additionally, ~~the New Zealand subsidiary~~it will occasionally hedge export sales receipts to cover up to 50% of ~~its estimated~~the foreign ~~currency~~exchange exposure ~~with respect~~for the forward 24 to 36 months and up to 25% of the ~~following 18~~foreign exchange exposure for the forward 36 to 48 months ~~forecasted sales and purchases, less distributions,~~ when the New Zealand dollar is at a cyclical low versus the U.S. dollar. ~~Foreign currency exposure from the~~The New Zealand subsidiary’s trading operations is typically ~~hedged based on~~hedge a portion of export sales receipts to cover the projected foreign exchange exposure for the following three ~~months forecasted sales and purchases.~~months. As of ~~June~~September 30, ~~2020,~~2023, foreign currency exchange contracts and foreign currency option contracts had maturity dates through ~~April 2022~~September 2026 and ~~August 2021,~~July 2026, respectively.

Foreign currency exchange and option contracts hedging foreign currency risk ~~on export sales and ocean freight payments~~ qualify for cash flow hedge accounting. We may de-designate these cash flow hedge relationships in advance or at the occurrence of the forecasted transaction. The portion of gains or losses on the derivative instrument previously ~~accumulated~~ in ~~other comprehensive loss~~AOCI for de-designated hedges remains in ~~accumulated other comprehensive loss~~AOCI until the forecasted transaction affects earnings. Changes in the value of derivative instruments after de-designation are recorded in earnings.

INTEREST RATE ~~SWAPS~~PRODUCTS

We are exposed to cash flow interest rate risk on our variable-rate ~~Term Credit Agreement, Incremental Term Loan Agreement~~debt and ~~2020 Incremental Term Loan Facility and~~on anticipated debt issuances. We use variable-to-fixed interest rate swaps and forward-starting interest rate swap agreements to hedge this exposure. For these derivative instruments, we report the gains/losses from the fluctuations in the fair market value of the hedges in AOCI and reclassify them to earnings as interest expense in the same period in which the hedged interest payments affect earnings.

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~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Dollar amounts in thousands unless otherwise stated)~~

~~The following table contains information on the outstanding interest rate swaps as of June 30, 2020:~~

Outstanding Interest Rate Swaps (a)
Date Entered Into Term Notional Amount Related Debt Facility Fixed Rate of Swap (b) Bank Margin on Debt Total Effective Interest Rate (c)
August 2015 9 years $170,000 Term Credit Agreement 2.20 % 1.60 % 3.80 %
August 2015 9 years 180,000 Term Credit Agreement 2.35 % 1.60 % 3.95 %
April 2016 10 years 100,000 Incremental Term Loan 1.60 % 1.90 % 3.50 %
April 2016 10 years 100,000 Incremental Term Loan 1.60 % 1.90 % 3.50 %
July 2016 10 years 100,000 Incremental Term Loan 1.26 % 1.90 % 3.16 %
June 2020 10 years 250,000 2020 Incremental Term Loan 1.10 % 1.85 % 2.95 %

~~(a) All interest rate swaps have been designated as interest rate cash flow hedges and qualify for hedge accounting.~~

(b) The interest rate swap entered in June 2020, was an off-market derivative, meaning it contained an embedded financing element, which the counterparties recovered through an incremental charge in the fixed rate over what would have been charged for an at-market swap.

~~(c) Rate is before estimated patronage payments.~~

~~TREASURY LOCKS~~

During the first quarter, we entered into treasury lock agreements, which were designated and qualified as cash flow hedges. These derivative instruments hedged the impact of changes in the benchmark interest rate to future interest payments associated with anticipated debt issuances. Prior to expiration, we de-designated and settled the treasury locks by converting them into interest rate swap lock agreements (discussed below). To the extent we de-designate or terminate a cash flow hedging relationship and the associated hedged item continues to exist, any unrealized gain or loss of the cash flow hedge at the time of de-designation remains in ~~accumulated other comprehensive loss~~AOCI and is amortized using the straight-line method through interest expense over the remaining life of the hedged item. ~~Amounts recorded in accumulated other comprehensive~~To the extent the associated hedged item is no longer effective, the gain or loss ~~in connection with the settled treasury locks were ($20.8) million which will be~~is reclassified out of AOCI to earnings ~~through interest expense over the life of the anticipated issued debt.~~immediately.

INTEREST RATE SWAPS

The following table contains information on the ~~expired treasury lock agreements entered into during the six months ended June~~outstanding interest rate swaps as of September 30, ~~2020:~~2023:

Converted Treasury Rate Locks (a)
Date Entered Into Term Notional Amount Rate Related Debt Facility (b) Expiration Date
January 2020 10 years $100,000 1.53% 2020 Incremental Term Loan Facility March 30, 2020
January 2020 10 years 100,000 1.53% 2020 Incremental Term Loan Facility March 31, 2020
February 2020 10 years 50,000 1.35% 2020 Incremental Term Loan Facility March 31, 2020


Outstanding Interest Rate Swaps (a)
Date Entered Into	Term	Notional Amount	Related Debt Facility	Fixed Rate of Swap		Bank Margin on Debt (b)		Total Effective Interest Rate (c)
August 2015	9 years	$170,000	Term Credit Agreement	2.10	%	1.70	%	3.80	%
August 2015	9 years	180,000	Term Credit Agreement	2.26	%	1.70	%	3.96	%
April 2016	10 years	100,000	Incremental Term Loan	1.50	%	1.75	%	3.25	%
April 2016	10 years	100,000	Incremental Term Loan	1.51	%	1.75	%	3.26	%
May 2021	7 years	200,000	2021 Incremental Term Loan Facility	0.67	%	1.65	%	2.32	%
December 2022	5 years	100,000	2022 Incremental Term Loan Facility	3.72	%	1.70	%	5.42	%

(a) ~~At inception, all treasury locks were designated as interest rate cash flow hedges and qualified for hedge accounting.~~

(b) On April 16, 2020, we entered into a Third Amendment and Incremental Term Loan Agreement which provided for a five-year $250 million senior unsecured incremental term loan facility (the “2020 Incremental Term Loan Facility”). See ~~Note 7 — Debt~~ ~~for more information. We anticipate extending the term of the 2020 Incremental Term Loan facility for an additional five-year term upon maturity.~~

~~INTEREST RATE SWAP LOCKS~~

Upon de-designation, we converted the above treasury lock agreements to interest rate swap lock agreements to hedge the risk of changes in the interest payments attributable to changes in the benchmark LIBOR interest rate associated with anticipated issuances of debt. The interest rate swap locks were designated and qualified as cash flow hedges.

Prior to expiration, we de-designated and partially cash settled $11.1 million of the interest rate swap locks and converted them into interest rate swap agreements. To the extent we de-designate or terminate a cash flow hedging relationship and the associated hedged item continues to exist, any unrealized gain or loss of the cash flow hedge

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~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Dollar amounts in thousands unless otherwise stated)~~

at the time of de-designation remains in accumulated other comprehensive loss and is amortized using the straight-line method through interest expense over the remaining life of the hedged item. Incremental amounts recorded in accumulated other comprehensive loss in connection with the settled interest rate swap locks were ($1.4) million, which will be reclassified to earnings through interest expense over the life of the anticipated issued debt.

~~The following table contains information on the terminated interest rate swap lock agreements as of June 30, 2020:~~

Converted Interest Rate Swap Locks (a)
Date Entered Into Term Notional Amount Fixed Rate of Swap Lock (b) Related Debt Facility (c) Termination Date
March 2020 10 years $100,000 1.56% 2020 Incremental Term Loan Facility June 30, 2020
March 2020 10 years 100,000 1.59% 2020 Incremental Term Loan Facility June 30, 2020
March 2020 10 years 50,000 1.41% 2020 Incremental Term Loan Facility June 30, 2020

~~(a)~~ All interest rate ~~swap locks~~swaps have been designated as interest rate cash flow hedges and qualify for hedge accounting.

(b) ~~These interest rate swap locks were off-market derivatives, meaning they contained an embedded financing element, which~~Includes the ~~counterparties recovered through an incremental charge in the fixed rate over what would have been charged for an at-market swap lock.~~SOFR Credit Spread Adjustment component of 0.1%.

(c) On April 16, 2020, we entered into a Third Amendment and Incremental Term Loan Agreement which provided for a five-year $250 million senior unsecured incremental term loan facility (the “2020 Incremental Term Loan Facility”). See ~~Note 7 — Debt~~ ~~for information. We anticipate extending the term of the 2020 Incremental Term Loan facility for an additional five-year term upon maturity.~~Rate is before estimated patronage payments.

FORWARD-STARTING INTEREST RATE SWAPS

~~We are exposed~~In March 2023, we modified our benchmark rates from LIBOR to ~~cash flow~~Daily Simple SOFR for our forward-starting interest ~~rate risk on anticipated debt issuances and use~~rates swaps, resulting in slightly favorable fixed rates. In May 2023, we entered into a new $50 million forward-starting interest rate swap, ~~agreements~~benchmarked to hedge against changes in future cash flows resulting from changes in interest rates from the trade date through the anticipated issuance date. For these derivative instruments, we report the gains/losses from the fluctuations in the fair market value of the hedges in AOCI and reclassify them to earnings as interest expense in the same period in which the hedged interest payments affect earnings.

~~The following table contains information on the outstanding forward-starting interest rate swaps as of June 30, 2020:~~

Outstanding Forward-Starting Interest Rate Swaps (a)
Date Entered Into Term Notional Amount Fixed Rate of Swap Related Debt Facility Forward Date Maximum Period Ending for Forecasted Issuance Date
February 2020 10 years $325,000 1.40 % Anticipated refinancing of Senior Notes due 2022 April 2022 April 2022
March 2020 4 years 100,000 0.88 % Term Credit Agreement August 2024 N/A
May 2020 4 years 50,000 0.74 % Term Credit Agreement August 2024 N/A

~~(a) All forward-starting interest rate swaps have been designated as interest rate cash flow hedges and qualify for hedge accounting.~~

~~CARBON OPTIONS~~

The New Zealand subsidiary enters into carbon options from time to time to sell carbon assets at certain prices. Changes in fair value of the carbon option contracts are recorded in “Interest and other miscellaneous income, net” as the contracts do not qualify for hedge accounting treatment. As of June 30, 2020, all existing carbon option contracts have expired.

Daily Simple SOFR.

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(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

The following table contains information on the outstanding forward-starting interest rate swaps as of September 30, 2023:

Outstanding Forward-Starting Interest Rate Swaps (a)

Date Entered Into

Term

Notional Amount

Fixed Rate of Swap

Related Debt Facility

Forward Date

Maximum Period Ending for Forecasted Issuance Date

April 2020

4 years

$100,000

0.78

Term Credit Agreement

August 2024

N/A

May 2020

4 years

50,000

0.64

Term Credit Agreement

August 2024

N/A

May 2023

4 years

50,000

3.29

Term Credit Agreement

August 2024

N/A

(a)All forward-starting interest rate swaps have been designated as interest rate cash flow hedges and qualify for hedge accounting.

The following tables demonstrate the impact, gross of tax, of ~~the Company’s~~our derivatives on the Consolidated Statements of Income and Comprehensive Income for the three and ~~six~~nine months ended ~~June~~September 30, ~~2020~~2023 and ~~2019:~~2022:


			Three Months Ended June 30,					Three Months Ended September 30,
		Income Statement Location	2020	2019		Income Statement Location	2023	2022
Derivatives designated as cash flow hedges:	Derivatives designated as cash flow hedges:				Derivatives designated as cash flow hedges:
Foreign currency exchange contracts	Foreign currency exchange contracts	Other comprehensive income (loss)	$5,340	($219)	Foreign currency exchange contracts	Other comprehensive income (loss)	$1,752	($4,464)
						Other operating (expense) income, net	(1,796)	(2,669)
Foreign currency option contracts	Foreign currency option contracts	Other comprehensive income (loss)	877	(107)	Foreign currency option contracts	Other comprehensive income (loss)	(26)	(1,754)
						Other operating (expense) income, net	(196)	—
Interest rate products	Interest rate products	Other comprehensive income (loss)	(14,469)	(18,371)	Interest rate products	Other comprehensive income (loss)	12,381	26,607
		Interest Expense	2,716	(913)		Interest expense, net	(4,810)	(62)

Derivatives not designated as hedging instruments:

Foreign currency exchange contracts		Interest and other miscellaneous income, net	—	152
Carbon option contracts		Interest and other miscellaneous income, net	14	12


			Six Months Ended June 30,					Nine Months Ended September 30,
		Income Statement Location	2020	2019		Income Statement Location	2023	2022
Derivatives designated as cash flow hedges:	Derivatives designated as cash flow hedges:				Derivatives designated as cash flow hedges:
Foreign currency exchange contracts	Foreign currency exchange contracts	Other comprehensive income (loss)	($140)	$900	Foreign currency exchange contracts	Other comprehensive income (loss)	$5,753	($15,373)
						Other operating (expense) income, net	(5,801)	(2,598)
Foreign currency option contracts	Foreign currency option contracts	Other comprehensive income (loss)	(273)	(30)	Foreign currency option contracts	Other comprehensive income (loss)	(858)	(2,304)
						Other operating (expense) income, net	(244)	—
Interest rate products	Interest rate products	Other comprehensive income (loss)	(93,621)	(28,966)	Interest rate products	Other comprehensive income (loss)	20,416	76,372
		Interest Expense	3,168	(1,866)		Interest expense, net	(12,587)	4,555

Derivatives not designated as hedging instruments:

Foreign currency exchange contracts		Interest and other miscellaneous income, net	—	135
Carbon option contracts		Interest and other miscellaneous income, net	563	415

During the next 12 months, the amount of the ~~June~~September 30, ~~2020~~2023 AOCI balance, net of tax, expected to be reclassified into earnings ~~as a result of the maturation of the Company’s derivative instruments~~ is a ~~loss~~gain of ~~approximat~~approximate~~ely $0.5~~ly $24.7 million.

The following table contains ~~the notional amounts~~details of the ~~derivative financial instruments recorded in the Consolidated Balance Sheets:~~expected reclassified amounts into earnings:

Notional Amount
June 30, 2020 December 31, 2019
Derivatives designated as cash flow hedges:
Foreign currency exchange contracts $61,500 $56,350
Foreign currency option contracts 36,000 22,000
Interest rate swaps 900,000 650,000
Forward-starting interest rate swaps 475,000 —
Derivative not designated as a hedging instrument:
Carbon options (a) — 9,592


			Amount expected to be reclassified into earnings in next 12 months

Derivatives designated as cash flow hedges:
Foreign currency exchange contracts			($2,763)
Foreign currency option contracts			(279)
Interest rate products (a)			27,734
Total estimated gain on derivatives contracts			$24,692

(a) ~~Notional amount for carbon options is calculated as the number of units outstanding multiplied by the spot price as of June 30, 2020.~~These reclassified amounts are expected to fully offset variable interest rate payments made to debt holders, resulting in no net impact on our earnings or cash flows.

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(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

The following table contains the notional amounts of the derivative financial instruments recorded in the Consolidated Balance Sheets:


	Notional Amount
	September 30, 2023	December 31, 2022
Derivatives designated as cash flow hedges:
Foreign currency exchange contracts	$127,200	$138,250
Foreign currency option contracts	86,000	78,000
Interest rate swaps	850,000	850,000

Forward-starting interest rate swaps	200,000	150,000

The following table contains the fair values of the derivative financial instruments recorded in the Consolidated Balance ~~Sheets:~~Sheets at September 30, 2023 and December 31, 2022. Changes in balances of derivative financial instruments are recorded as operating activities in the Consolidated Statements of Cash Flows:

Location on Balance Sheet Fair Value Assets / (Liabilities) (a)
June 30, 2020 December 31, 2019
Derivatives designated as cash flow hedges:
Foreign currency exchange contracts Other current assets $310 $424
Other assets 1,177 390
Other current liabilities (968) (172)
Other non-current liabilities (17) —
Foreign currency option contracts Other current assets 275 151
Other assets 172 209
Other current liabilities (305) (27)
Other non-current liabilities (112) (30)
Interest rate swaps Other assets — 2,614
Other non-current liabilities (65,381) (11,068)
Forward-starting interest rate swaps Other non-current liabilities (22,832) —
Derivative not designated as a hedging instrument:
Carbon options Other current liabilities — (607)
Total derivative contracts:
Other current assets $585 $575
Other assets 1,349 3,213
Total derivative assets $1,934 $3,788
Other current liabilities (1,273) (806)
Other non-current liabilities (88,342) (11,098)
Total derivative liabilities ($89,615) ($11,904)


	Location on Balance Sheet	Fair Value Assets / (Liabilities) (a)
		September 30, 2023	December 31, 2022
Derivatives designated as cash flow hedges:
Foreign currency exchange contracts	Other current assets	$63	$25
	Other assets	391	1,303
	Other current liabilities	(3,900)	(5,457)
	Other non-current liabilities	(1,139)	(410)
Foreign currency option contracts	Other current assets	77	66
	Other assets	1,032	2,131
	Other current liabilities	(464)	(347)
	Other non-current liabilities	(1,179)	(1,281)
Interest rate swaps	Other assets	62,520	60,843
	Other non-current liabilities	—	(51)






Forward-starting interest rate swaps	Other assets	17,501	11,939








Total derivative contracts:
Other current assets		$140	$91
Other assets		81,444	76,216
Total derivative assets		$81,584	$76,307

Other current liabilities		(4,364)	(5,804)
Other non-current liabilities		(2,318)	(1,742)
Total derivative liabilities		($6,682)	($7,546)

(a) See Note 168 — Fair Value Measurements for further information on the fair value of our derivatives including their classification within the fair value hierarchy.

OFFSETTING DERIVATIVES

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(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

~~16.~~8. FAIR VALUE MEASUREMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

A three-level hierarchy that prioritizes the inputs used to measure fair value was established in the Accounting Standards Codification as follows:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than quoted prices included in Level 1.

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following table presents the carrying amount and estimated fair values of our financial instruments as of ~~June~~September 30, ~~2020~~2023 and December 31, ~~2019,~~2022, using market information and what we believe to be appropriate valuation methodologies under GAAP:

June 30, 2020 December 31, 2019
Asset (Liability) (a) Carrying
Amount Fair Value Carrying
Amount Fair Value
Level 1 Level 2 Level 1 Level 2
Cash and cash equivalents, excluding Timber Funds $87,813 $87,813 — $68,735 $68,735 —
Cash and cash equivalents, Timber Funds 6,973 6,973 — — — —
Restricted cash (b) 475 475 — 1,233 1,233 —
Current maturities of long-term debt, excluding Timber Funds — — — (82,000) — (82,000)
Current maturities of long-term debt, Timber Funds (25,042) — (25,083) — — —
Long-term debt, excluding Timber Funds (c) (1,310,506) — (1,297,698) (973,129) — (981,500)
Long-term debt, Timber Funds (c) (35,617) — (35,741) — — —
Interest rate swaps (d) (65,381) — (65,381) (8,454) — (8,454)
Forward-starting interest rate swaps (d) (22,832) — (22,832) — — —
Foreign currency exchange contracts (d) 502 — 502 642 — 642
Foreign currency option contracts (d) 30 — 30 303 — 303
Carbon option contracts (d) — — — (607) — (607)
Marketable equity securities (e) — — — 10,582 10,582 —
Noncontrolling Interests in the Operating Partnership (f) 110,220 110,220 — — — —


	September 30, 2023			December 31, 2022
Asset (Liability) (a)	Carrying Amount	Fair Value		Carrying Amount	Fair Value
		Level 1	Level 2		Level 1	Level 2
Cash and cash equivalents	$107,784	$107,784	—	$114,255	$114,255	—


Restricted cash (b)	1,804	1,804	—	1,152	1,152	—



Long-term debt (c)	(1,511,470)	—	(1,422,224)	(1,514,721)	—	(1,438,736)

Interest rate swaps (d)	62,520	—	62,520	60,792	—	60,792

Forward-starting interest rate swaps (d)	17,501	—	17,501	11,939	—	11,939
Foreign currency exchange contracts (d)	(4,585)	—	(4,585)	(4,539)	—	(4,539)
Foreign currency option contracts (d)	(534)	—	(534)	569	—	569


Noncontrolling interests in the operating partnership (e)	69,820	—	69,820	105,763	—	105,763

(a)We did not have Level 3 assets or liabilities at ~~June~~September 30, ~~2020~~2023 and December 31, ~~2019.~~2022.

(b)Restricted cash represents ~~the~~ proceeds from like-kind exchange sales deposited with a third-party intermediary and cash held in ~~escrow for a real estate sale.~~escrow. See Note 2218 — Restricted Cash for additional information.

(c)The carrying amount of long-term debt is presented net of ~~capitalized debt~~deferred financing costs and unamortized discounts on non-revolving debt. See Note 76 — Debt for additional information.

(d)See Note 157 — Derivative Financial Instruments and Hedging Activities for information regarding the Consolidated Balance Sheets classification of our derivative financial instruments.

(e)~~Investments in marketable securities are classified in “Other Assets” based on the nature of the securities and their availability for use in current operations.~~

~~(f)~~Noncontrolling ~~Interests~~interests in the ~~Operating Partnership~~operating partnership is neither an asset ornor liability and is classified as temporary equity in the Company’s Consolidated Balance Sheets. This relates to the ownership of Rayonier, L.P. ~~Common Units~~units by various individuals and entities other than the Company. See

~~Table of Contents~~Note 4 — Noncontrolling Interests

~~RAYONIER INC. AND SUBSIDIARIES~~

~~RAYONIER, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Dollar amounts in thousands unless otherwise stated)~~

for additional information.

We use the following methods and assumptions in estimating the fair value of our financial instruments:

Cash and cash equivalents and Restricted cash — The carrying amount is equal to fair market value.

Debt — The fair value of fixed rate debt is based upon quoted market prices for debt with similar terms and maturities. The variable rate debt adjusts with changes in the market rate, therefore the carrying value approximates fair value.

Interest rate swap agreements — The fair value of interest rate contracts is determined by discounting the expected future cash flows, for each instrument, at prevailing interest rates.

Foreign currency exchange contracts — The fair value of foreign currency exchange contracts is determined by a mark-to-market valuation, which estimates fair value by discounting the difference between the contracted forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate.

Foreign currency option contracts — The fair value of foreign currency option contracts is based on a mark-to-market calculation using the Black-Scholes option pricing model.

~~Carbon option contracts~~— The fair value of carbon option contracts is determined by a mark-to-market valuation using the Black-Scholes option pricing model, which estimates fair value by discounting the difference between the contracted forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate.

~~Marketable equity securities— The fair value of marketable equity securities is determined by quoted prices in their active market.~~

Noncontrolling ~~Interests~~interests in the ~~Operating Partnership~~operating partnership — The fair value of noncontrolling interests in the ~~Operating Partnership~~operating partnership is determined based on the period-end closing price of Rayonier Inc. common shares.

~~The following table presents marketable equity securities that~~

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RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

9. CONTINGENCIES

We have been named as a defendant in various lawsuits and claims arising 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 large deductible insurance plans, primarily in the areas of executive risk, property, automobile and general liability. These pending lawsuits and claims, either individually or in the aggregate, are not expected to have a ~~continuous unrealized gain~~material adverse effect on our financial position, ~~for less than 12 months and for more than 12 months~~results of operations, or ~~greater at June 30, 2020 and December 31, 2019:~~

June 30, 2020 December 31, 2019
Carrying Amount Less than 12 Months 12 Months or Greater Total Carrying Amount Less than 12 Months 12 Months or Greater Total
Fair value of marketable equity securities — — — — $10,582 10,582 — 10,582
Unrealized (losses) gains — — — — — 3,043 — 3,043
cash flow.

~~17. EMPLOYEE BENEFIT PLANS~~10. ENVIRONMENTAL AND NATURAL RESOURCE DAMAGE LIABILITIES

Changes in environmental and NRD liabilities from December 31, 2022 to September 30, 2023 are shown below:


			Port Gamble, WA






Non-current portion at December 31, 2022			$14,418
Plus: Current portion			1,175
Total Balance at December 31, 2022			15,593
Expenditures charged to liabilities			(304)
Increase to liabilities (a)			411
Total Balance at September 30, 2023			15,700
Less: Current portion			(6,689)
Non-current portion at September 30, 2023			$9,011

(a)Reflects revised environmental and NRD cost estimates recorded during the nine months ended September 30, 2023.

We ~~have 1 qualified non-contributory defined benefit pension plan covering a portion of our employees and an unfunded plan that provides benefits~~do not currently anticipate any material loss in excess of the amounts ~~allowable under current tax law~~accrued; however, we are not able to estimate a possible loss or range of loss, if any, in ~~the qualified plan. Both plans are closed to new participants. Effective December 31, 2016, we froze benefits for all employees participating in the pension plan. In lieu~~excess of the ~~pension plan, we~~established liabilities. Our future remediation expenses may be affected by a number of uncertainties including, but not limited to, the difficulty in estimating the extent and method of remediation, the evolving nature of environmental regulations, and the availability and application of technology. We do not expect the resolution of such uncertainties to have a material adverse effect on our consolidated financial position or liquidity.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

11. GUARANTEES

We provide ~~those employees with an enhanced 401(k) plan match. Employee benefit plan liabilities are calculated using actuarial estimates~~financial guarantees as required by creditors, insurance programs, and management assumptions. These estimates are based on historical information, along with certain assumptions about future events. Changes in assumptions, as well as changes in actual experience, could cause the estimates to change.various governmental agencies.

As of ~~June~~September 30, ~~2020, we~~2023, the following financial guarantees were outstanding:

Financial Commitments (a)

Maximum Potential
Payment

Standby letters of credit (b)

$3,779

Surety bonds (c)

23,605

Total financial commitments

$27,384

(a)We have ~~pai~~not recorded any liabilities for these financial commitments in our Consolidated Balance Sheets. The guarantees are not subject to measurement, as the guarantees are dependent on our own performance.

(b)~~d $1.1~~Approximately $2.9 million of the ~~approximately $3.6 million~~standby letters of credit serve as credit support for real estate construction in ~~current year mandatory pension~~our Wildlight development project. The remaining letters of credit support various insurance related agreements, primarily workers’ compensation. These letters of credit will expire at various dates during 2023 and 2024 and will be renewed as required.

12. HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS

We routinely assess potential alternative uses of our timberlands, as some properties may become more valuable for development, residential, recreation or other purposes. We periodically transfer, via a sale or contribution ~~requirements (based~~from the real estate investment trust (“REIT”) entities to taxable REIT subsidiaries (“TRS”), higher and better use (“HBU”) timberlands to enable land-use entitlement, development or marketing activities. We also acquire HBU properties in connection with timberland acquisitions. These properties are managed as timberlands until sold or developed. While the majority of HBU sales involve rural and recreational land, we also selectively pursue various land-use entitlements on ~~actuarial estimates~~certain properties for residential, commercial and ~~IRS minimum funding requirements).~~industrial development in order to enhance the long-term value of such properties. For selected development properties, we also invest in targeted infrastructure improvements, such as roadways and utilities, to accelerate the marketability and improve the value of such properties.

4631

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RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

Changes in higher and better use timberlands and real estate development investments from December 31, 2022 to September 30, 2023 are shown below:


	Higher and Better Use Timberlands and Real Estate Development Investments
	Land and Timber	Development Investments	Total
Non-current portion at December 31, 2022	$91,374	$23,723	$115,097
Plus: Current portion (a)	408	17,501	17,909
Total Balance at December 31, 2022	91,782	41,224	133,006
Non-cash cost of land and improved development	(1,998)	(13,711)	(15,709)
Amortization of parcel real estate development investments	—	(7,689)	(7,689)
Timber depletion from harvesting activities and basis of timber sold in real estate sales	(1,556)	—	(1,556)
Capitalized real estate development investments (b)	—	24,038	24,038
Capital expenditures (silviculture)	23	—	23

Intersegment transfers	554	—	554

Total Balance at September 30, 2023	88,805	43,862	132,667
Less: Current portion (a)	(1,601)	(24,409)	(26,010)
Non-current portion at September 30, 2023	$87,204	$19,453	$106,657

(a)The current portion of Higher and Better Use Timberlands and Real Estate Development Investments is recorded in Inventory. See Note 13 — Inventory for additional information.

13. INVENTORY

As of September 30, 2023 and December 31, 2022, our inventory consisted entirely of finished goods, as follows:


	September 30, 2023	December 31, 2022
Finished goods inventory
Real estate inventory (a)	$26,010	$17,909
Log inventory	6,831	5,347
Carbon unit inventory (b)	298	473
Total inventory	$33,139	$23,729

(b)Represents the basis in New Zealand carbon units intended to be sold in the next 12 months.

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RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

14. OTHER OPERATING (EXPENSE) INCOME, NET

Other operating (expense) income, net consisted of the following:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Loss on foreign currency remeasurement, net of cash flow hedges	($1,555)	($1,158)	($5,713)	($481)
Gain on sale or disposal of property and equipment	—	9	37	40





Equity income related to Bainbridge Landing LLC joint venture (a)	—	15,848	—	15,477
Miscellaneous (expense) income, net	(99)	(118)	105	(638)
Total	($1,654)	$14,581	($5,571)	$14,398

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RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

15. EMPLOYEE BENEFIT PLANS

We have one qualified non-contributory defined benefit pension plan covering a portion of our employees and an unfunded plan that provides benefits in excess of amounts allowable under current tax law in the qualified plans. We closed enrollment in the pension plans to salaried employees hired after December 31, 2005. Effective December 31, 2016, we froze benefits for all employees participating in the pension plan. In lieu of the pension plan, we provide those employees with an enhanced 401(k) plan match similar to what is currently provided to employees hired after December 31, 2005. Employee benefit plan liabilities are calculated using actuarial estimates and management assumptions. These estimates are based on historical information, along with certain assumptions about future events. Changes in assumptions, as well as changes in actual experience, could cause the estimates to change.

The net pension and postretirement benefit (credits) costs ~~(credits)~~ that have been recorded are shown in the following table:


Components of Net Periodic Benefit Cost (Credit)		Income Statement Location	Pension			Postretirement
				Three Months Ended June 30,					Three Months Ended June 30,
				2020	2019	2020			2019
Components of Net Periodic Benefit (Credit) Cost							Components of Net Periodic Benefit (Credit) Cost	Income Statement Location		Pension		Postretirement
										Three Months Ended September 30,		Three Months Ended September 30,
										2023	2022	2023	2022
Service cost	Service cost	Selling and general expenses	—	—	$2	$1	Service cost	Selling and general expenses		—	—	$1	$2
Interest cost	Interest cost	Interest and other miscellaneous income, net	677	799	13	13	Interest cost	Interest and other miscellaneous income, net		844	609	17	13
Expected return on plan assets (a)	Expected return on plan assets (a)	Interest and other miscellaneous income, net	(876)	(777)	—	—	Expected return on plan assets (a)	Interest and other miscellaneous income, net		(887)	(872)	—	—

Amortization of losses	Amortization of losses	Interest and other miscellaneous income, net	215	112	2	—	Amortization of losses	Interest and other miscellaneous income, net		1	184	—	4

Net periodic benefit cost			$16	$134	$17	$14
Net periodic benefit (credit) cost							Net periodic benefit (credit) cost			($42)	($79)	$18	$19

Components of Net Periodic Benefit Cost (Credit) Income Statement Location Pension Postretirement
Six Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Service cost Selling and general expenses — — $3 $3
Interest cost Interest and other miscellaneous income, net 1,353 1,599 26 27
Expected return on plan assets (a) Interest and other miscellaneous income, net (1,752) (1,554) — —
Amortization of losses Interest and other miscellaneous income, net 431 224 4 —
Net periodic benefit cost $32 $269 $33 $30


Components of Net Periodic Benefit (Credit) Cost	Income Statement Location	Pension		Postretirement
		Nine Months Ended September 30,		Nine Months Ended September 30,
		2023	2022	2023	2022
Service cost	Selling and general expenses	—	—	$3	$5
Interest cost	Interest and other miscellaneous income, net	2,533	1,826	52	39
Expected return on plan assets (a)	Interest and other miscellaneous income, net	(2,663)	(2,615)	—	—

Amortization of losses	Interest and other miscellaneous income, net	4	553	—	11

Net periodic benefit (credit) cost		($126)	($236)	$55	$55

(a)The weighted-average expected long-term rate of return on plan assets used in computing ~~2020~~2023 net periodic benefit cost for pension benefits is ~~5.7%~~5.0%.

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~~DEFINED CONTRIBUTION PLANS~~RAYONIER INC. AND SUBSIDIARIES

~~Upon completion of the merger with Pope Resources, former Pope Resources employees were immediately eligible to participate~~RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in the Rayonier 401(k) plan. Pope Resources employees’ years of service were credited to the 401(k) plan for vesting purposes. Former Pope Resources employees have the option to rollover their former 401(k) account balance into our 401(k) plan. As discussed above, the defined benefit pension plan is currently frozen. In lieu of the pension plan, employees are eligible to receive an enhanced match contribution.thousands unless otherwise stated)

16. INCOME TAXES

Rayonier is a REIT under the Internal Revenue Code and therefore generally does not pay U.S. federal or state income tax. As of September 30, 2023, Rayonier owns a 98.4% interest in the Operating Partnership and conducts substantially all of its timberland operations through the Operating Partnership. The taxable income or loss generated by the Operating Partnership is passed through and reported to its unit holders (including the Company) on a Schedule K-1 for inclusion in each unitholder’s income tax return.

Certain operations, including log trading and certain real estate activities, such as the entitlement, development and sale of HBU properties, are conducted through our TRS. The TRS subsidiaries are subject to United States federal and state corporate income tax. The New Zealand timber operations are conducted by the New Zealand subsidiary, which is subject to corporate-level tax at 28% in New Zealand and is treated as a partnership for U.S. income tax purposes.

PROVISION FOR INCOME TAXES

The Company’s tax expense is principally related to corporate-level tax in New Zealand and non-resident withholding tax on repatriation of earnings from New Zealand. The following table contains the income tax expense recognized on the Consolidated Statements of Income and Comprehensive Income:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Income tax expense	($547)	($1,238)	($1,777)	($8,056)

ANNUAL EFFECTIVE TAX RATE

The Company’s effective tax rate after discrete items is below the 21.0% U.S. statutory rate due to tax benefits associated with being a REIT. The following table contains the Company’s annualized effective tax rate after discrete items:


	Nine Months Ended September 30,
		2023		2022
Annualized effective tax rate after discrete items		3.1	%	7.9	%

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RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

17. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in AOCI by component for the nine months ended September 30, 2023 and the year ended December 31, 2022. All amounts are presented net of tax and exclude portions attributable to noncontrolling interests.


	Foreign currency translation (loss) gains	Net investment hedges of New Zealand subsidiary	Cash flow hedges		Employee benefit plans		Total Rayonier, L.P.	Allocation to Operating Partnership	Total Rayonier Inc.
Balance as of December 31, 2021	$4,215	$1,321	($9,163)		($11,836)		($15,463)	($4,141)	($19,604)
Other comprehensive income (loss) before reclassifications	(22,282)	—	78,166	(a)	874		56,758	(1,323)	55,435
Amounts reclassified from accumulated other comprehensive income (loss)	—	—	(1,799)		753	(b)	(1,046)	1,028	(18)
Net other comprehensive income (loss)	(22,282)	—	76,367		1,627		55,712	(295)	55,417
Balance as of December 31, 2022	($18,067)	$1,321	$67,204		($10,209)		$40,249	($4,436)	$35,813
Other comprehensive income (loss) before reclassifications	(16,522)	—	23,131	(a)	—		6,609	(62)	6,547
Amounts reclassified from accumulated other comprehensive income	—	—	(15,938)		4	(b)	(15,934)	1,078	(14,856)
Net other comprehensive income (loss)	(16,522)	—	7,193		4		(9,325)	1,016	(8,309)
Balance as of September 30, 2023	($34,589)	$1,321	$74,397		($10,205)		$30,924	($3,420)	$27,504

(a)The nine months ended September 30, 2023 includes $20.4 million of other comprehensive income related to interest rate products. The year ended December 31, 2022 included $75.0 million of other comprehensive income related to interest rate products. See Note 7 — Derivative Financial Instruments and Hedging Activities for additional information.

(b)This component of other comprehensive income is included in the computation of net periodic pension and post-retirement costs. See Note 15 — Employee Benefit Plansfor additional information.

The following table presents details of the amounts reclassified in their entirety from AOCI to net income for the nine months ended September 30, 2023 and September 30, 2022:


Details about accumulated other comprehensive income (loss) components	Amount reclassified from accumulated other comprehensive income (loss)		Affected line item in the Income Statement
	September 30, 2023	September 30, 2022
Realized gain on foreign currency exchange contracts	($5,801)	($2,598)	Other operating expense (income), net
Realized gain on foreign currency option contracts	(244)	—	Other operating expense (income), net
Noncontrolling interests	1,391	598	Comprehensive income attributable to noncontrolling interests
Realized (gain) loss on interest rate contracts	(12,587)	4,555	Interest expense, net
Income tax effect from net gain on foreign currency contracts	1,303	560	Income tax expense


Net (gain) loss on cash flow hedges reclassified from accumulated other comprehensive income	($15,938)	$3,115

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RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

18. ~~INCENTIVE STOCK PLANS~~RESTRICTED CASH

~~REPLACEMENT RESTRICTED STOCK AWARDS FROM THE MERGER WITH POPE RESOURCES~~

As a result of the merger with Pope Resources, Rayonier issued 69,176 shares of restricted stock awards (“replacement awards”) in connection with unvested Pope Resources restricted units. Eligible outstanding Pope Resources restricted units were canceled and exchanged for replacement awards, pursuant to an exchange ratio in the merger agreement designed to maintain the intrinsic value of the awards immediately prior to the exchange.

~~In accordance with ASC 805, these awards are considered to be replacement awards. Exchanges of share-based payment awards in conjunction~~Restricted cash, excluding Timber Funds includes cash deposited with a ~~business combination are modifications in accordance with ASC 718,~~ ~~Compensation — Stock Compensation~~like-kind exchange (“~~ASC 718”~~LKE”). As a result, the portion of the fair-value of replacement awards attributable to pre-merger services were included in measuring the consideration transferred in the business combination. The fair value of the replacement awards was estimated to be approximately $1.7 million of which $0.2 million was attributable to pre-merger services. See ~~Note 2 — Merger with Pope Resources~~ ~~for additional information.~~

~~REPLACEMENT AWARD EXPENSE~~

The replacement awards issued have similar vesting provisions as the terms of existing Rayonier Inc. restricted stock. Expense for the replacement awards that were not fully vested prior to the date of the merger will continue to be recognized over a weighted average remaining service period of approximately 21 months unless a qualifying termination occurs.

A qualifying termination of an awardee will result in the acceleration of vesting and expense recognition in the period that the qualifying termination occurs. Qualifying terminations during three months and six months ended June 30, 2020 resulted in the accelerated vesting of 11,076 of the replacement awards and recognition of approximately $0.2 million of expense. This accelerated vesting expense is included in merger-related integration costs as described in ~~Note 20 — Charges for Integration and Restructuring~~.

~~A summary of the replacement awards granted as a result of the merger with Pope Resources is presented below:~~

Three Months Ended June 30, Six Months Ended
June 30,
2020 2020
Replacement restricted shares granted 69,176 69,176
Weighted average price of replacement restricted shares granted $24.01 $24.01
Replacement restricted shares vested as a result of acceleration due to qualifying terminations 11,076 11,076
Grant date fair value of replacement restricted shares vested $24.01 $24.01
Intrinsic value of replacement restricted shares outstanding (a) $1,440 $1,440
Cash used to purchase common shares from employees with vested replacement shares to pay minimum withholding tax requirements 44 44

~~(a)Intrinsic value of restricted stock outstanding is based on the market price of the Company’s stock at June 30, 2020.~~

~~For additional information related to our incentive stock plans, see Note 17 — Incentive Stock Plans in the Company’s 2019 Form 10-K.~~

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~~RAYONIER INC. AND SUBSIDIARIES~~

~~RAYONIER, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Dollar amounts in thousands unless otherwise stated)~~

~~19. OTHER OPERATING EXPENSE, NET~~

~~Other operating expense, net consisted of the following:~~

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Loss on foreign currency remeasurement, net of cash flow hedges ($2,720) ($719) ($1,287) ($690)
Gain on sale or disposal of property and equipment 4 35 7 56
Log trading marketing fees 3 80 50 137
Costs related to the merger with Pope Resources (a) (13,498) — (15,985) —
Miscellaneous expense, net (272) (1,365) (379) (1,437)
Total ($16,483) ($1,969) ($17,594) ($1,934)

~~(a) Includes legal, accounting, due diligence, consulting and other costs related to the merger with Pope Resources. See~~ ~~Note 2 - Merger with Pope Resources~~ ~~and~~ ~~Note 20 - Charges for Integration and Restructuring~~ ~~for additional information.~~

~~20. CHARGES FOR INTEGRATION AND RESTRUCTURING~~

During 2020, we have incurred and accrued for termination benefits (primarily severance) and accelerated share-based payment costs based upon actual and expected qualifying terminations of certain employees as a result of restructuring decisions made concurrent with and subsequent to the Mergers. We have also incurred non-recurring professional services costs for investment banking, legal, consulting, accounting and certain other fees directly attributable to our merger with Pope Resources.

~~A summary of the charges for integration and restructuring related to our merger with Pope Resources is presented below:~~

Three Months Ended Six Months Ended
June 30, 2020 June 30, 2020
Termination benefits $581 $581
Acceleration of share-based compensation related to qualifying terminations (Note 18)
232 232
Professional services 10,967 13,314
Other integration and restructuring costs 1,718 1,858
Total integration and restructuring charges related to our merger with Pope Resources $13,498 $15,985

~~Changes in accrued severance related to restructuring during the three and six months ended June 30, 2020 were as follows:~~

Three Months Ended Six Months Ended
June 30, 2020 June 30, 2020
Accrued severance as of March 31, 2020 — —
Charges 581 581
Payments (334) (334)
Accrued severance as of June 30, 2020 $247 $247

Accrued severance is recorded within “Accrued Payroll and Benefits” in our Consolidated Balance Sheets. The majority of the accrued severance balance as of June 30, 2020 is expected to be paid within one year.

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~~RAYONIER INC. AND SUBSIDIARIES~~

~~RAYONIER, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Dollar amounts in thousands unless otherwise stated)~~

~~21. INVENTORY~~

~~As of June 30, 2020 and December 31, 2019, our inventory consisted entirely of finished goods, as follows:~~

June 30, 2020 December 31, 2019
Finished goods inventory
Real estate inventory (a) $3,890 $12,663
Log inventory 6,475 1,855
Total inventory $10,365 $14,518

~~(a) Represents the cost of HBU real estate (including capitalized development investments) under contract to be sold.~~

~~See~~ ~~Note 8 — Higher And Better Use Timberlands and Real Estate Development Investments~~ ~~for additional information.~~

~~22. RESTRICTED CASH~~

intermediary. In order to qualify for ~~like-kind exchange (“LKE”)~~LKE treatment, the proceeds from real estate sales must be deposited with a third-party intermediary. These proceeds are accounted for as restricted cash until a suitable replacement property is acquired. In the event LKE purchases are not completed, the proceeds are returned to usthe Company after 180 days and reclassified as available cash. ~~As of June 30, 2020 and December 31, 2019, we had $0.5 million and $1.2 million, respectively, of proceeds from real estate sales classified as~~Additionally, restricted cash, ~~which were deposited with an LKE intermediary~~excluding Timber Funds, includes cash balances held in escrow as collateral for certain contractual obligations related to our Heartwood development project as well as cash held in escrow for a real estate ~~sale.~~sales.

Restricted cash, Timber Funds includes the portion of proceeds from Fund II Timberland Dispositions required to be distributed to noncontrolling interests.

The following table ~~contains the amounts~~provides a reconciliation of cash, cash equivalents and restricted cash ~~recorded~~ in the Consolidated Balance Sheets ~~and~~that sum to the total of the same such amounts in the Consolidated Statements of Cash Flows for the ~~six~~nine months ended ~~June~~September 30, ~~2020:~~2023 and 2022:


			~~June 30, 2020~~

~~Restricted cash held in escrow~~			~~$475~~

~~Total restricted cash shown in the Consolidated Balance Sheets~~			~~475~~
~~Cash and cash equivalents~~			~~94,786~~
~~Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows~~			~~$95,261~~


	Nine Months Ended September 30,
	2023	2022

Restricted cash, excluding Timber Funds:
Restricted cash deposited with LKE intermediary	$2	$15,627
Restricted cash held in escrow	1,802	625
Total restricted cash, excluding Timber Funds	1,804	16,252
Restricted cash, Timber Funds	—	1,464

Cash and cash equivalents	107,784	261,804






Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows	$109,588	$279,520

19. ASSETS HELD FOR SALE

~~Table~~Assets held for sale is composed of ~~Contents~~

~~RAYONIER INC. AND SUBSIDIARIES~~

~~RAYONIER, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Dollar amounts~~properties under contract and expected to be sold within 12 months that also meet the other relevant held-for-sale criteria in ~~thousands unless otherwise stated)~~

~~23. ACCUMULATED OTHER COMPREHENSIVE LOSS~~

~~The following table summarizes the changes in AOCI by component for the six months ended June~~accordance with ASC 360-10-45-9. As of September 30, ~~2020~~2023 and ~~the year ended~~ December 31, ~~2019. All amounts are presented net of tax~~2022, the basis in properties meeting this classification was $18.3 million and ~~exclude portions attributable~~$0.7 million, respectively. Since the basis in these properties was less than the fair value, including costs to ~~noncontrolling interest.~~

Foreign currency translation (loss) gains Net investment hedges of New Zealand subsidiary Cash flow hedges Employee benefit plans Total Rayonier, L.P. Allocation to Operating Partnership Total Rayonier Inc.
Balance as of December 31, 2018 ($1,010) $1,321 $21,965 ($22,037) $239 — $239
Other comprehensive (loss) income before reclassifications 784 — (29,251) (1,799) (30,266) — (30,266)
Amounts reclassified from accumulated other comprehensive (loss) income — — (1,624) 449 (b) (1,175) — (1,175)
Net other comprehensive (loss) income 784 — (30,875) (1,350) (31,441) — (31,441)
Balance as of December 31, 2019 ($226) $1,321 ($8,910) ($23,387) ($31,202) — ($31,202)
Other comprehensive loss before reclassifications (16,022) — (92,806) (a) — (108,828) — (108,828)
Amounts reclassified from accumulated other comprehensive (loss) income — — 2,124 434 (b) 2,558 (457) 2,101
Net other comprehensive (loss) income (16,022) — (90,682) 434 (106,270) (457) (106,727)
Balance as of June 30, 2020 ($16,248) $1,321 ($99,592) ($22,953) ($137,472) ($457) ($137,929)

~~(a)Includes $90.5 million of other comprehensive loss related to interest rate swaps, treasury locks, interest rate swap locks and forward-starting interest rate swaps. See~~ ~~Note 15 — Derivative Financial Instruments and Hedging Activities~~ ~~for additional information.~~

~~(b)This component of other comprehensive (loss) income is included in the computation of net periodic pension and post-retirement costs. See~~ ~~Note 17 — Employee Benefit Plansfor additional information.~~

~~The following table presents details of the amounts reclassified in their entirety from AOCI to net income for the six months ended June 30, 2020 and June 30, 2019:~~

Details about accumulated other comprehensive (loss) income components Amount reclassified from accumulated other comprehensive (loss) income Affected line item in the income statement
June 30, 2020 June 30, 2019
Realized (gain) loss on foreign currency exchange contracts ($1,892) ($190) Other operating expense, net
Realized loss (gain) on foreign currency option contracts 8 (60) Other operating expense, net
Noncontrolling interest 434 58 Comprehensive (loss) income attributable to noncontrolling interest
Realized loss (gain) on interest rate contracts 3,168 (1,866) Interest expense
Income tax expense from net gain on foreign currency contracts 406 54 Income tax expense
Net gain from accumulated other comprehensive income $2,124 ($2,004)
sell, no impairment was recognized.

~~Table of Contents~~

~~RAYONIER INC. AND SUBSIDIARIES~~

~~RAYONIER, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Dollar amounts in thousands unless otherwise stated)~~

~~24. VARIABLE INTEREST ENTITIES~~

~~ORM Timber Fund II, Inc. (Fund II), ORM Timber Fund III LLC (Fund III), and ORM Timber Fund IV LLC. (Fund IV) (Collectively, “The Funds”)~~

In the May 8, 2020 merger with Pope Resources, we became manager of 3 private equity timber funds, Fund II, Fund III, and Fund IV, and obtained ownership interests in the funds of 20%, 5%, and 15%, respectively. We determined, based upon an analysis under the variable interest entity guidance, that we have the power to direct the activities that most significantly impact the Funds’ economic success. Therefore, we are considered the primary beneficiary and are required under ASC 810 — ~~Consolidation~~ ~~to consolidate the Funds. For further information on The Funds, see~~ ~~Note~~ 5 —~~Noncontrolling Interests~~.

~~The assets and liabilities of The Funds as of June 30, 2020, were as follows:~~


~~Timber Funds~~			~~June 30, 2020~~
~~Assets:~~
~~Cash and cash equivalents~~			~~$6,973~~
~~Accounts receivable~~			~~3,213~~
~~Prepaid expenses~~			81
~~Other current assets~~			~~361~~
~~Total current assets~~			~~10,628~~
~~Timber and timberlands, net of depletion and amortization~~			~~467,800~~
~~Other assets~~			3
~~Total assets~~			~~$478,431~~
~~Liabilities and Equity:~~
~~Accounts payable~~			~~$636~~
~~Intercompany payable (a)~~			~~3,837~~
~~Current maturities of long-term debt~~			~~25,042~~
~~Accrued taxes~~			~~251~~
~~Accrued interest~~			~~655~~
~~Deferred revenue~~			1
~~Other current liabilities~~			~~787~~
~~Total current liabilities~~			~~31,209~~
~~Long-term debt~~			~~35,617~~
~~Funds’ equity~~			~~411,605~~
~~Total liabilities and equity~~			~~$478,431~~

~~(a)Includes management fees and other expenses payable to the Operating Partnership. These amounts are eliminated in the Consolidated Balance Sheets.~~

~~Table of Contents~~

~~RAYONIER INC. AND SUBSIDIARIES~~

~~RAYONIER, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Dollar amounts in thousands unless otherwise stated)~~

~~Ferncliff Investors~~

We also acquired in the merger with Pope Resources an ownership interest in a real estate joint venture entity. We determined, based upon an analysis under the variable interest entity guidance, that we have the power to direct the activities that most significantly impact the joint venture’s economic success. Therefore, we are considered the primary beneficiary and are required under ASC 810 — ~~Consolidation~~ ~~to consolidate Ferncliff Investors. For further information on Ferncliff Investors, see~~ ~~Note 5 — Noncontrolling Interests~~.

~~The assets and liabilities of Ferncliff Investors as of June 30, 2020, were as follows:~~


~~Ferncliff Investors~~			~~June 30, 2020~~
~~Assets:~~
~~Cash and cash equivalents~~			~~$760~~


~~Total current assets~~			~~760~~
~~Investment in real estate joint venture entity~~			~~3,141~~
~~Advances to real estate joint venture entity~~			~~1,000~~
~~Total assets~~			~~$4,901~~
~~Liabilities and equity:~~

~~Intercompany payable (a)~~			~~$10~~




~~Total current liabilities~~			10

~~Ferncliff Investors’ equity~~			~~4,891~~
~~Total liabilities and equity~~			~~$4,901~~

~~(a)Includes miscellaneous expenses payable to the Operating Partnership. These amounts are eliminated in the Consolidated Balance Sheets.~~

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (“MD&A”)

When we refer to “Rayonier” or “the Company” we mean Rayonier Inc. and its consolidated subsidiaries. References to the “Operating Partnership” mean Rayonier, L.P. and its consolidated subsidiaries. References to “we,” “us,” or “our,” mean collectively Rayonier Inc., the Operating Partnership and entities/subsidiaries owned or controlled by Rayonier Inc. and/or the Operating Partnership. References herein to “Notes to Financial Statements” refer to the Notes to Consolidated Financial Statements of Rayonier Inc. and Rayonier, L.P. included in Item 1 of this report.

This MD&A is intended to provide a reader of our financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity, and certain other factors which may affect future results. Our MD&A should be read in conjunction with our Consolidated Financial Statements included in Item 1 of this report, ~~the Company’s~~our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2022 (the ~~“2019~~“2022 Form 10-K”), the audited consolidated financial statements of Rayonier Operating Company LLC as of and for the years ended December 31, 2019, 2018 and 2017 included in Exhibit 99.4 of the Operating Partnership’s Amendment No. 1 to the Current Report on Form 8-K filed with the SEC on July 17, 2020 and information contained in our subsequent reports filed with the Securities and Exchange Commission (the “SEC”).

FORWARD-LOOKING STATEMENTS

Certain statements in this document regarding anticipated financial outcomes, including our earnings guidance, if any, business and market conditions, outlook, expected dividend rate, our business strategies, ~~including the recent acquisition of Pope Resources,~~ expected harvest schedules, timberland acquisitions and dispositions, the anticipated benefits of our business strategies, and other similar statements relating to our future events, developments, or financial or operational performance or results, are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are identified by the use of words such as “may,” “will,” “should,” “expect,” “estimate,” “believe,” “intend,” “project,” “anticipate” and other similar language. However, the absence of these or similar words or expressions does not mean that a statement is not forward-looking. While management believes that these forward-looking statements are reasonable when made, forward-looking statements are not guarantees of future performance or events and undue reliance should not be placed on these statements. The risk factors contained in Item 1A — Risk Factors in ~~the Company’s 2019~~our 2022 Form 10-K, ~~in this Report on Form 10-Q~~ and similar discussions included in other reports that we subsequently file with the SEC, among others, could cause actual results or events to differ materially from our historical experience and those expressed in forward-looking statements made in this document.

Forward-looking statements are only as of the date they are made, and we undertake no duty to update our forward-looking statements except as required by law. You are advised, however, to review any subsequent disclosures we make on related subjects in subsequent reports filed with the SEC.

NON-GAAP MEASURES

To supplement our financial statements presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we use certain non-GAAP measures, including ~~“cash available~~“Cash Available for ~~distribution,~~Distribution,” and “Adjusted EBITDA,” which are defined and further explained in Performance and Liquidity Indicators below. Reconciliation of such measures to the nearest GAAP measures can also be found in Performance and Liquidity Indicators below. Our definitions of these non-GAAP measures may differ from similarly titled measures used by others. These non-GAAP measures should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP.

OBJECTIVE

The objective of the Management’s Discussion and Analysis is to detail material information, events, uncertainties and other factors impacting the Company and the Operating Partnership and to provide investors an understanding of “Management’s perspective.” Item 2, Management’s Discussion and Analysis highlights the critical areas for evaluating our performance which includes a discussion on the reportable segments, liquidity and capital, and critical accounting estimates. The MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and notes.

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OUR COMPANY

We are a leading timberland real estate investment trust (“REIT”) with assets located in some of the most productive softwood timber growing regions in the United States and New Zealand. We invest in timberlands and actively manage them to provide current income and attractive long-term returns to our shareholders. We conduct our business through an umbrella partnership real estate investment trust (“UPREIT”) structure in which our assets are owned by our Operating Partnership and its subsidiaries. Rayonier manages the Operating Partnership as its sole general partner. Our revenues, operating income and cash flows are primarily derived from the following core business segments: Southern Timber, Pacific Northwest Timber, New Zealand Timber, ~~Timber Funds,~~ Real Estate, and Trading. As of ~~June~~September 30, ~~2020,~~2023, we owned or leased under long-term ~~agreements~~agreements approximately ~~2.7~~2.8 million acres of timberlands located in the U.S. South ~~(1.8~~(1.90 million acres), U.S. Pacific Northwest (~~507,000~~(474,000 acres) and New Zealand (~~416,000~~ (419,000 gross acres o~~r 296,000~~or 298,000 net plantable acres). We also act as the managing member in a private equity timber fund business with three funds comprising approximately 141,000 acres. On a “look-through basis,” our ownership in the timber fund business equates to approximately 17,000 acres.

SEGMENT INFORMATION

The Southern Timber, Pacific Northwest Timber and New Zealand Timber ~~and Timber Funds~~ segments include all activities related to the harvesting of timber and other non-timber income activities, such as the licensing of properties for hunting, granting land access for carbon capture and storage, the leasing of properties for mineral extraction and cell towers, and carbon credit sales. Our New Zealand operations are conducted by Matariki Forestry Group, a joint venture (the “New Zealand subsidiary”), in which we maintain a 77% ownership interest. The Timber Funds segment operations are managed by ORM LLC, a subsidiary acquired in the merger with Pope Resources. We own approximately 20% of Fund II, 5% of Fund III and 15% of Fund IV. When referring to our proportionate ownership share of the Timber Funds segment, we will refer to the sums as “look-through” totals. See Note 54 - Noncontrolling Interests for additional information regarding our noncontrolling interests in the New Zealand Timber ~~and Timber Funds segments.~~segment.

The Real Estate segment includes all U.S. and New Zealand land or leasehold sales disaggregated into ~~five~~six sales categories: Improved Development, Unimproved Development, Rural, ~~Timberlands~~Timberland & Non-Strategic, Conservation Easements and Large Dispositions. It also includes residential and commercial lease activity, primarily in the town of Port Gamble, Washington.

The Trading segment primarily reflects ~~the~~ log trading activities ~~that support~~in New Zealand and Australia conducted by our New Zealand ~~operations.~~subsidiary. It also includes log trading activities conducted from the U.S. South and Pacific Northwest. Our Trading segment activities include an export services joint venture with a third-party forest manager in which Matariki Forests Trading Ltd maintains a 50% ownership interest. The 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. ~~It also provides~~This additional market intelligence ~~that~~also benefits our Southern and Pacific Northwest export log marketing.

ENVIRONMENTAL MATTERS

~~PORT GAMBLE ENVIRONMENTAL REMEDIATION~~

~~In the merger with Pope Resources, we acquired the town~~For a full description of ~~Port Gamble, Washington. Portions of this property require~~our environmental ~~remediation under federal and state environmental laws, and remediation activities are currently ongoing. As such, through the preliminary purchase price allocation~~matters, see Item 1 - “Business” in our Annual Report on Form 10-K for the ~~merger with Pope Resources, we recognized environmental liabilities for the estimated fair value of liabilities assumed. See~~ ~~Note 2 - Merger~~ ~~with Pope Resources~~ ~~for additional information on the preliminary allocation of purchase price. For additional information on our environmental liabilities see~~ ~~Note 9 - Commitments~~year ended December 31, 2022 and our sustainability report located at our Responsible Stewardship webpage.~~Note 12 - Environmental Liabilities~~.

~~The sections below provide a history of the environmental matters in Port Gamble, Washington:~~

~~Discovery and Initial Actions:~~

In Port Gamble, Washington, hazardous substances were previously discovered requiring environmental remediation under federal and state environmental laws. The real estate subject to environmental remediation requirements was the location of a sawmill operated by Pope & Talbot, Inc. (“P&T”) from 1853 to 1995. P&T continued to lease various portions of the site for its operations until 2002. During the time P&T operated in Port Gamble, it also conducted shipping, log storage, and log transfer operations in the tidal and subtidal waters of Port Gamble Bay, some of which were under a lease from the Washington State Department of Natural Resources (“DNR”) that lasted from 1974 to 2004. P&T’s operations resulted in the release of hazardous

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substances that impacted the upland and submerged portions of the site. These substances include various hydrocarbons, cadmium, and toxins associated with wood waste and the production of wood products.

Following the mill closure, the Washington State Department of Ecology (the “DOE”) began to examine the environmental conditions at Port Gamble. Under Washington law, both Pope Resources and P&T were considered by the DOE to be “potentially liable persons” (“PLPs”); Pope Resources because of its ownership of certain portions of the site, and P&T because of its historical ownership and operation of the site. P&T and Pope Resources entered into a settlement agreement in 2002 that allocated responsibility for environmental contamination at the townsite, millsite, a solid waste landfill, and adjacent water to Pope Resources, with P&T assuming responsibility for funding cleanup in the Port Gamble Bay and the other areas of the site that were impacted by its historical operations.

In 2005, both Pope Resources and P&T received Environmental Excellence Awards from DOE for their work in remediating the contamination that had existed at the Port Gamble townsite and landfill. DOE also issued letters to both parties in 2006 indicating that the agency expected to take no further action regarding conditions at those portions of the site. Pope Resources continued cleaning up the remaining contamination at the millsite. By late 2005, the millsite portion of the site had largely been cleaned and the remaining aspects of that project consisted of test well monitoring and modest additional remediation. The Port Gamble Bay area and related tidelands, for which P&T was responsible under the parties’ settlement agreement, had not yet been remediated. In 2007, P&T filed for bankruptcy protection and was eventually liquidated, leaving Pope Resources as the only remaining PLP. Because environmental liabilities are joint and several as between PLPs, the result of P&T’s bankruptcy was to leave the liability with Pope Resources as the only remaining solvent PLP.

~~In-water cleanup~~

Beginning in 2010, DOE began to reconsider its expectations regarding the level of cleanup that would be required for Port Gamble Bay, largely because of input from interested citizens and groups, one of the most prominent being the Port Gamble S’Klallam Tribe. In response to input from these groups, DOE adopted remediation levels that were far more stringent than either DOE or Pope Resources had contemplated previously. In December 2013, Pope Resources and DOE entered into a consent decree that included a cleanup action plan (“CAP”) requiring the removal of docks and pilings, excavation and backfilling of intertidal areas, subtidal dredging and monitoring, and other specific remediation steps. The construction phase of the cleanup of the Port Gamble Bay area and related tidelands began in September 2015 and the in-water portion of the cleanup was completed in January 2017.

~~Millsite Cleanup~~

With the in-water portion of the cleanup completed, there is expected to be relatively modest cleanup activity on the millsite and a monitoring period. In February 2018, Pope Resources and DOE entered into an agreed order with respect to the millsite under which Pope Resources performed a remedial investigation and feasibility study (“RI/FS”) which it submitted to DOE for review in January 2019. Following the finalization of the RI/FS, Pope Resources worked with DOE to develop a CAP. As with the in-water portion of the project, the CAP will define the scope of the remediation activity for the millsite. Once the CAP is approved by DOE, it will be codified in a consent decree.

~~Natural Resources Damages~~

In addition to the cleanup costs discussed previously, certain environmental laws allow state, federal, and tribal trustees (collectively, the “Trustees”) to bring suit against property owners to recover natural resource damages (“NRD”). Similar to cleanup responsibility, liability for NRD can attach to a property owner simply because an injury to natural resources resulted from releases of hazardous substances on the owner’s property, regardless of culpability for the release. Trustees have alleged that Pope Resources had NRD liability because of releases that occurred on its property. Prior to the merger with Rayonier, Pope Resources began negotiations with the Trustees for the purpose of identifying NRD restoration projects. Those negotiations are ongoing and will ultimately result in agreement as to requested mitigation activities.

~~Table of Contents~~

INDUSTRY AND MARKET CONDITIONS

The demand for timber is directly related to the underlying demand for pulp, paper, packaging, lumber and other wood products. The significant majority of timber sold in our Southern Timber segment is consumed domestically. With a higher proportion of pulpwood, our Southern Timber segment relies heavily on downstream markets for pulp and paper, and to a lesser extent wood pellet markets. Our Pacific Northwest Timber ~~and Timber Funds segments rely~~segment relies primarily on domestic customers but also ~~export~~exports a significant volume of timber, particularly to Japan and China. The Southern Timber and Pacific Northwest Timber ~~and Timber Funds~~ segments rely on the strength of U.S. lumber markets as well as underlying housing starts. Our New Zealand Timber segment sells timber to domestic New Zealand wood products mills and also exports a significant portion of its volume to Asian markets, particularly in China and South ~~Korea and India.~~Korea. In addition to market dynamics in the Pacific Rim, the New Zealand Timber segment is subject to foreign exchange fluctuations, which can impact the operating results of the segment in U.S. dollar terms.

AsDuring 2023, each of our timber segments have experienced challenging market conditions due to ongoing market headwinds and weaker end-market demand relative to the current novel coronavirus (“COVID-19”) pandemic continues to evolve, the expected duration and the extent of economic disruption it may ultimately cause remain uncertain. On March 19, 2020, the U.S. Department of Homeland Security issued a memorandum identifying the forest products industry as a “critical infrastructure industry,” which is expected to continue operating through the duration of the pandemic.prior year. In ~~New Zealand, production has returned to pre-COVID-19 levels after a government-mandated shutdown of roughly one month that adversely affected~~ our ~~second quarter results. During the second quarter, strong pulpwood demand in the~~ Southern Timber segment, ~~was primarily driven by a surge in~~weaker demand for ~~essential products such as toilet paper~~pulp and ~~packaging.~~lumber coupled with drier weather conditions has resulted in lower net stumpage prices. In ~~the~~our Pacific Northwest Timber segment, softer domestic lumber demand and decreased competition from export markets has negatively impacted sawtimber prices. In our New Zealand Timber ~~Funds segments,~~segment, weaker ~~export~~ demand in China has ~~contributed to~~driven lower export and domestic pricing. New Zealand Timber experienced a short-lived surge in export prices following the government-mandated shutdown but has since returned to pre-COVID-19 levels. Local, state and federal governments continue to evaluate policies and restrictions in order to reopen the economy while keeping COVID-19 cases minimized and future government mandated shutdowns or shelter-in-place orders in markets in which we operate would negatively affect our future results. Prolonged periods of lower overall business activity as a result of COVID-19 could cause significant damage to the underlying economy, which would likely impact the strength of U.S. timber markets. We will continue to monitor COVID-19 and its impact on the markets in which we operate going forward.sawtimber prices.

We are also subject to the risk of price fluctuations in certain of our ~~major~~ cost ~~components. The primary~~components, primarily logging and transportation (cut and haul), ocean freight and demurrage costs. Other major components of our cost of sales are the cost basis of timber sold (depletion), and the cost basis of real estate ~~sold and logging and transportation costs (cut and haul).~~sold. Depletion includes the amortization of capitalized ~~costs (site~~site preparation, planting and fertilization, real estate taxes, timberland lease payments and certain payroll ~~costs).~~costs. The cost basis of real estate sold includes the cost basis in land and costs directly associated with the development and construction of identified real estate projects, such as infrastructure, roadways, utilities, amenities and/or other improvements. Other costs include amortization of capitalized costs related to road and bridge construction and software, depreciation of fixed assets and equipment, road maintenance, severance and excise taxes, fire prevention and real estate commissions and closing costs.

Our Real Estate segment is exposed to changes in interest and mortgage rates as higher rates could negatively impact buyer demand for the properties we sell. However, current demand for our rural and development real estate properties has not yet been significantly impacted by the higher interest rate environment.

For additional information on market conditions impacting our business, see Results of Operations.

CRITICAL ACCOUNTING ~~POLICIES AND USE OF~~ ESTIMATES

The preparation of financial statements requires us to make estimates, assumptions and judgments that affect our assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. We base these estimates and assumptions on historical data and trends, current fact patterns, expectations and other sources of information we believe are reasonable. Actual results may differ from these estimates. For a full description of our critical accounting policies, see Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations in ~~the Company’s 2019~~our 2022 Form 10-K.

REVENUE RECOGNITION

See Note 1 – Basis of Presentation.

DISCUSSION OF TIMBER INVENTORY AND SUSTAINABLE YIELD

See Item 1 — Business — Discussion of Timber Inventory and Sustainable Yield in ~~the Company’s 2019~~our 2022 Form 10-K.

OUR TIMBERLANDS

Our timber operations are ~~comprised of our core timberland holdings, which are~~ disaggregated into three geographically distinct ~~reporting~~ segments: Southern Timber, Pacific Northwest Timber and New Zealand ~~Timber in addition to our timber fund holdings, which represents our ownership in Timber Funds II, III and IV.~~Timber. The following tables provide a breakdown of our timberland holdings as of ~~June~~September 30, ~~2020~~2023 and December 31, ~~2019:~~2022:

Core Timberland Holdings
(acres in 000s) As of June 30, 2020 As of December 31, 2019
Owned Leased Total Owned Leased Total
Southern
Alabama 226 14 240 226 14 240
Arkansas — 7 7 — 7 7
Florida 328 63 391 331 63 394
Georgia 616 75 691 628 77 705
Louisiana 140 — 140 128 — 128
Mississippi — — — 67 — 67
Oklahoma 92 — 92 92 — 92
South Carolina 18 — 18 18 — 18
Texas 184 — 184 184 — 184
1,604 159 1,763 1,674 161 1,835
Pacific Northwest
Oregon 61 — 61 61 — 61
Washington 442 4 446 318 — 318
503 4 507 379 — 379
New Zealand (a) 185 231 416 185 229 414
Total 2,292 394 2,686 2,238 390 2,628



(acres in 000s)	As of September 30, 2023			As of December 31, 2022
	Owned	Leased	Total	Owned	Leased	Total
Southern
Alabama	256	5	261	258	14	272
Arkansas	—	2	2	—	2	2
Florida	362	50	412	347	47	394
Georgia	623	65	688	647	64	711
Louisiana	147	—	147	148	—	148


Oklahoma	91	—	91	91	—	91
South Carolina	16	—	16	16	—	16

Texas	282	—	282	285	—	285
	1,777	122	1,899	1,792	127	1,919

Pacific Northwest
Oregon	61	—	61	61	—	61
Washington	410	3	413	410	3	413
	471	3	474	471	3	474

New Zealand (a)	188	231	419	188	229	417
Total	2,436	356	2,792	2,451	359	2,810

(a)Represents legal acres owned and leased by the New Zealand subsidiary, in which we own a 77% interest. As of ~~June~~September 30, ~~2020,~~2023, legal acres in New Zealand consisted of ~~296,000~~298,000 plantable acres and ~~120,000~~121,000 non-productive acres.

Timber Fund Holdings
(acres in 000s) As of June 30, 2020 As of December 31, 2019
Total Look-through Total Look-through
Timber Funds
Oregon 51 7 — —
Washington 71 9 — —
California 19 1 — —
Total 141 17 — —

5841

Total Timberland under Management
(acres in 000s) As of June 30, 2020 As of December 31, 2019
Total Total
Southern 1,763 1,835
Pacific Northwest 507 379
New Zealand 416 414
Timber Funds 141 —
Total 2,827 2,628

The following tables detail activity for owned and leased acres in our ~~core~~ timberland holdings by state from December 31, ~~2019~~2022 to ~~June~~September 30, ~~2020:~~2023:

(acres in 000s) Acres Owned
December 31, 2019 Acquisitions Sales Other June 30, 2020
Southern
Alabama 226 — — — 226
Florida 331 — (8) 5 328
Georgia 628 — (12) — 616
Louisiana 128 12 — — 140
Mississippi 67 — (67) — —
Oklahoma 92 — — — 92
South Carolina 18 — — — 18
Texas 184 — — — 184
1,674 12 (87) 5 1,604
Pacific Northwest
Oregon 61 — — — 61
Washington 318 120 — 4 442
379 120 — 4 503
New Zealand (a) 185 — — — 185
Total 2,238 132 (87) 9 2,292


(acres in 000s)	Acres Owned
	December 31, 2022	Acquisitions	Sales	Other (a)	September 30, 2023
Southern
Alabama	258	—	(1)	(1)	256
Florida	347	2	(2)	15	362
Georgia	647	—	(1)	(23)	623
Louisiana	148	—	(1)	—	147

Oklahoma	91	—	—	—	91
South Carolina	16	—	—	—	16

Texas	285	1	(5)	1	282
	1,792	3	(10)	(8)	1,777

Pacific Northwest
Oregon	61	—	—	—	61
Washington	410	—	—	—	410
	471	—	—	—	471

New Zealand (b)	188	—	—	—	188
Total	2,451	3	(10)	(8)	2,436

(a)Includes adjustments for land mapping reviews.

(b)Represents legal acres owned by the New Zealand subsidiary, in which we have a 77% interest.

(acres in 000s) Acres Leased
December 31, 2019 New Leases Sold/Expired Leases (a) Other June 30, 2020
Southern
Alabama 14 — — — 14
Arkansas 7 — — — 7
Florida 63 — — — 63
Georgia 77 — (2) — 75
161 — (2) — 159
Pacific Northwest
Washington (b) — 4 — — 4
New Zealand (c) 229 2 — — 231
Total 390 6 (2) — 394


(acres in 000s)	Acres Leased
	December 31, 2022	New Leases	Sold/Expired Leases (a)	Other (b)	September 30, 2023
Southern
Alabama	14	—	(9)	—	5
Arkansas	2	—	—	—	2
Florida	47	—	—	3	50
Georgia	64	—	—	1	65

	127	—	(9)	4	122

Pacific Northwest
Washington (c)	3	—	—	—	3

New Zealand (d)	229	—	—	2	231
Total	359	—	(9)	6	356

(a)Includes acres previously under lease that have been harvested and activity for the relinquishment of leased acres.

(b)Includes adjustments for land mapping reviews.

(c)Primarily timber reservations acquired in the merger with Pope Resources.

~~(c)~~(d)Represents legal acres leased by the New Zealand subsidiary, in which we have a 77% interest.

~~The following table details activity in our timber fund holdings by state from December 31, 2019 to June 30, 2020:~~

(acres in 000s) Acres Owned
December 31, 2019 Acquisitions Sales Other June 30, 2020
Fund II
Oregon — 18 — — 18
Washington — 13 — — 13
Total Fund II — 31 — — 31
Look-through share of Fund II — 6 — — 6
Fund III
Oregon — 13 — — 13
Washington — 25 — — 25
California — 19 — — 19
Total Fund III — 57 — — 57
Look-through share of Fund III — 3 — — 3
Fund IV
Oregon — 20 — — 20
Washington — 33 — — 33
Total Fund IV — 53 — — 53
Look-through share of Fund IV — 8 — — 8
Total Timber Funds — 141 — — 141
Look-through share of Funds — 17 — — 17

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RESULTS OF OPERATIONS

CONSOLIDATED RESULTS

The following table provides key financial information by segment and on a consolidated basis:

Three Months Ended
June 30, Six Months Ended
June 30,
Financial Information (in millions) 2020 2019 2020 2019
Sales
Southern Timber $46.8 $46.2 $99.7 $107.0
Pacific Northwest Timber 26.2 18.6 57.2 39.1
New Zealand Timber 41.8 62.1 79.3 119.3
Timber Funds 7.5 — 7.5 —
Real Estate
Improved Development 6.4 0.2 6.4 0.5
Unimproved Development 8.4 14.4 8.4 15.4
Rural (a) 27.2 7.1 29.6 26.3
Timberlands & Non-Strategic (a) 9.6 0.8 9.6 1.2
Deferred Revenue/Other (b) (1.7) — (1.5) 0.1
Large Dispositions — — 116.0 —
Total Real Estate 50.0 22.5 168.6 43.5
Trading 24.3 35.5 43.3 67.5
Intersegment Eliminations (1.0) (0.1) (0.9) (0.1)
Total Sales $195.6 $184.8 $454.8 $376.3
Operating Income (Loss)
Southern Timber $11.2 $14.7 $26.3 $36.3
Pacific Northwest Timber (6.7) (3.8) (7.6) (7.6)
New Zealand Timber 5.0 12.8 10.4 28.5
Timber Funds (1.9) — (1.9) —
Real Estate (b)(c) 24.8 15.5 51.6 25.5
Trading 0.1 (0.2) 0.1 0.3
Corporate and Other (20.9) (7.6) (28.6) (13.1)
Operating Income 11.7 31.4 50.2 69.9
Interest expense, interest income and other (8.3) (6.9) (16.6) (13.2)
Income tax expense (2.9) (3.6) (6.7) (8.0)
Net Income 0.5 20.9 26.9 48.7
Less: Net loss (income) attributable to noncontrolling interest in consolidated affiliates 1.4 (2.1) 0.9 (5.2)
Net Income Attributable to Rayonier, L.P. $1.9 $18.8 $27.8 $43.5
Less: Net income attributable to noncontrolling interest in the Operating Partnership (0.2) — (0.2) —
Net Income Attributable to Rayonier Inc. $1.7 $18.8 $27.6 $43.5
Adjusted EBITDA (d)
Southern Timber $26.4 $27.6 $59.7 $68.9
Pacific Northwest Timber 3.9 2.2 13.7 5.3
New Zealand Timber 9.9 20.0 20.1 42.0
Timber Funds 0.7 — 0.7 —
Real Estate 44.6 18.3 43.5 35.7
Trading 0.1 (0.2) 0.1 0.3
Corporate and Other (7.0) (7.3) (12.0) (12.5)
Total Adjusted EBITDA $78.6 $60.6 $125.7 $139.7


	Three Months Ended September 30,		Nine Months Ended September 30,
Financial Information (in millions)	2023	2022	2023	2022
Sales
Southern Timber	$64.0	$64.5	$204.1	$207.6
Pacific Northwest Timber	29.3	34.4	96.1	119.8
New Zealand Timber	70.4	72.5	175.4	202.7

Real Estate
Improved Development	3.1	2.3	20.2	18.8
Unimproved Development	0.1	—	0.1	—
Rural	20.5	7.0	42.6	47.3
Timberland & Non-Strategic	1.1	—	2.9	11.4

Deferred Revenue/Other (a)	6.4	3.2	13.7	3.5

Total Real Estate	31.2	12.4	79.5	81.0
Trading	6.8	11.6	34.8	52.7
Intersegment Eliminations	(0.1)	(0.1)	(0.4)	(0.2)
Total Sales	$201.6	$195.3	$589.5	$663.7

Operating Income (Loss)
Southern Timber	$18.6	$22.5	$62.6	$76.9
Pacific Northwest Timber (b)	(0.6)	2.2	(6.5)	11.7
New Zealand Timber (c)	17.6	9.3	19.3	22.7

Real Estate (a)(d)	9.2	15.7	18.7	37.0
Trading	(0.1)	0.2	0.4	0.1
Corporate and Other	(9.4)	(9.0)	(28.3)	(26.6)
Operating Income	35.4	40.9	66.1	121.7
Interest expense, interest income and other (e)	(12.1)	(7.8)	(15.0)	(25.5)
Income tax expense	(0.6)	(1.2)	(1.8)	(8.1)
Net Income	22.7	31.9	49.3	88.1
Less: Net income attributable to noncontrolling interests in consolidated affiliates	(3.2)	(10.8)	(1.9)	(12.4)
Net Income Attributable to Rayonier, L.P.	$19.5	$21.1	$47.4	$75.7
Less: Net income attributable to noncontrolling interests in the operating partnership	(0.3)	(0.5)	(0.8)	(1.7)
Net Income Attributable to Rayonier Inc.	$19.2	$20.6	$46.6	$74.0

Adjusted EBITDA (f)
Southern Timber	$37.8	$36.6	$124.2	$123.7
Pacific Northwest Timber	7.8	12.6	21.7	48.4
New Zealand Timber	23.5	15.6	37.9	40.8

Real Estate	18.9	8.4	45.8	58.4
Trading	(0.1)	0.2	0.4	0.1
Corporate and Other	(9.0)	(8.6)	(27.1)	(25.7)
Total Adjusted EBITDA	$78.9	$64.7	$202.9	$245.8

(a)The three and six months ended June 30, 2019 reflects the reclassification of certain real estate sales between the Rural and Timberlands & Non-Strategic sales categories to better align with the way management internally evaluates real estate sales. See ~~Note 3~~ —~~Revenue~~ ~~for additional information.~~

~~(b)~~Includes deferred revenue adjustments, revenue true-ups and marketing fees related to Improved Development sales in addition to residential and commercial lease revenue.

(b)The three and nine months ended September 30, 2022 includes a $1.1 million timber write-off resulting from a casualty event.

(c)The ~~six~~nine months ended ~~June~~September 30, ~~2020 include $28.7~~2023 includes a $2.3 million timber write-off resulting from a ~~Large Disposition.~~casualty event.

(d)The three and nine months ended September 30, 2022 includes $16.0 million of equity income related to the multi-family apartment complex sale in Bainbridge Island, Washington.

(e)The nine months ended September 30, 2023 includes $20.5 million of net recoveries associated with legal settlements.

(f)Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators.

6143

Three Months Ended
June 30, Six Months Ended
June 30,
Southern Timber Overview 2020 2019 2020 2019
Sales Volume (in thousands of tons)
Pine Pulpwood 1,003 755 2,136 1,877
Pine Sawtimber 497 462 1,177 1,206
Total Pine Volume 1,500 1,217 3,313 3,083
Hardwood 35 57 65 127
Total Volume 1,535 1,274 3,379 3,209
Percentage Delivered Sales 41 % 40 % 36 % 32 %
Percentage Stumpage Sales 59 % 60 % 64 % 68 %
Net Stumpage Pricing (dollars per ton)
Pine Pulpwood $15.94 $17.16 $16.00 $17.63
Pine Sawtimber 25.48 25.82 26.16 26.16
Weighted Average Pine $19.11 $20.45 $19.61 $20.97
Hardwood 10.80 16.86 11.68 15.17
Weighted Average Total $18.91 $20.29 $19.45 $20.74
Summary Financial Data (in millions of dollars)
Timber Sales $41.6 $37.0 $89.0 $88.0
Less: Cut, Haul & Freight (12.5) (11.1) (23.3) (21.5)
Net Stumpage Sales $29.0 $25.9 $65.7 $66.6
Non-Timber Sales 5.2 9.2 10.7 19.0
Total Sales $46.8 $46.2 $99.7 $107.0
Operating Income $11.2 $14.7 $26.3 $36.3
(+) Depreciation, depletion and amortization 15.2 12.9 33.4 32.6
Adjusted EBITDA (a) $26.4 $27.6 $59.7 $68.9
Other Data
Period-End Acres (in thousands) 1,763 1,808 1,763 1,808


	Three Months Ended September 30,				Nine Months Ended September 30,
Southern Timber Overview	2023		2022		2023		2022
Sales Volume (in thousands of tons)
Pine Pulpwood	995		965		3,010		3,098
Pine Sawtimber	745		449		2,563		1,529
Total Pine Volume	1,740		1,414		5,574		4,627
Hardwood	69		85		138		291
Total Volume	1,809		1,499		5,712		4,918

% Delivered Volume (vs. Total Volume)	35	%	47	%	34	%	43	%
% Pine Sawtimber Volume (vs. Total Pine Volume)	43	%	32	%	46	%	33	%
% Export Volume (vs. Total Volume) (a)	1	%	2	%	1	%	2	%

Net Stumpage Pricing (dollars per ton)
Pine Pulpwood	$16.54		$22.77		$16.53		$22.88
Pine Sawtimber	28.85		33.31		29.87		34.40
Weighted Average Pine	$21.81		$26.12		$22.67		$26.69
Hardwood	13.16		20.59		13.98		24.33
Weighted Average Total	$21.48		$25.80		$22.46		$26.55

Summary Financial Data (in millions of dollars)
Timber Sales	$54.1		$57.7		$175.0		$186.9
Less: Cut and Haul	(14.4)		(17.3)		(43.4)		(50.5)
Less: Port and Freight	(0.9)		(1.6)		(3.6)		(5.7)
Net Stumpage Sales	$38.8		$38.8		$128.0		$130.7

Non-Timber Sales	9.8		6.8		29.1		20.7
Total Sales	$64.0		$64.5		$204.1		$207.6

Operating Income	$18.6		$22.5		$62.6		$76.9

(+) Depreciation, depletion and amortization	19.2		14.1		61.6		46.8
Adjusted EBITDA (b)	$37.8		$36.6		$124.2		$123.7

Other Data

Period-End Acres (in thousands)	1,899		1,789		1,899		1,789

(a)Estimated percentage of export volume, which includes volumes sold to third-party exporters in addition to direct exports through our log export program.

(b)Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators.

6244


	Three Months Ended September 30,				Nine Months Ended September 30,
Pacific Northwest Timber Overview	2023		2022		2023		2022
Sales Volume (in thousands of tons)
Pulpwood	43		59		181		214
Domestic Sawtimber (a)	226		230		760		911
Export Sawtimber	21		18		65		63


Total Volume	290		307		1,006		1,188






% Delivered Volume (vs. Total Volume)	94	%	100	%	97	%	90	%
% Sawtimber Volume (vs. Total Volume)	85	%	81	%	82	%	82	%
% Export Volume (vs. Total Volume) (b)	11	%	12	%	11	%	10	%

Delivered Log Pricing (in dollars per ton)
Pulpwood	$33.09		$50.74		$40.67		$44.44
Domestic Sawtimber	108.20		120.08		98.89		114.20
Export Sawtimber (c)	131.15		90.23		146.58		92.15
Weighted Average Log Price	$98.79		$104.97		$91.44		$100.18

Summary Financial Data (in millions of dollars)
Timber Sales	$27.8		$32.6		$91.3		$115.6
Less: Cut and Haul	(12.1)		(13.9)		(44.8)		(46.7)
Less: Port and Freight	(1.1)		(0.2)		(3.8)		(0.7)
Net Stumpage Sales	$14.7		$18.5		$42.7		$68.3

Non-Timber Sales	1.5		1.8		4.7		4.2
Total Sales	$29.3		$34.4		$96.1		$119.8

Operating (Loss) Income	($0.6)		$2.2		($6.5)		$11.7
(+) Timber write-offs resulting from a casualty event (d)	—		1.1		—		1.1
(+) Depreciation, depletion and amortization	8.3		9.4		28.2		35.6
Adjusted EBITDA (e)	$7.8		$12.6		$21.7		$48.4

Other Data

Period-End Acres (in thousands)	474		486		474		486
Sawtimber (in dollars per MBF) (f)	$726		$860		$722		$866

(a)Includes volumes sold to third-party exporters.

(b)Estimated percentage of export volume, which includes volumes sold to third-party exporters in addition to direct exports through our log export program.

(c)Prior to Q4 2022, pricing reflects the transfer of logs on an FOB basis. Beginning in Q4 2022, pricing is reported on a CFR basis (i.e., inclusive of export costs and freight).

(d)Timber write-offs resulting from a casualty event include the write-off of merchantable and pre-merchantable timber volume damaged by casualty events which cannot be salvaged.

(e)Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators.

(f)Delivered Sawtimber excluding chip-n-saw.


	Three Months Ended September 30,				Nine Months Ended September 30,
New Zealand Timber Overview	2023		2022		2023		2022
Sales Volume (in thousands of tons)
Domestic Pulpwood (Delivered)	58		103		163		302
Domestic Sawtimber (Delivered)	211		221		502		544
Export Pulpwood (Delivered)	55		38		167		129
Export Sawtimber (Delivered)	367		349		1,012		954

Total Volume	690		712		1,844		1,929

% Delivered Volume (vs. Total Volume)	100	%	100	%	100	%	100	%
% Sawtimber Volume (vs. Total Volume)	84	%	80	%	82	%	78	%
% Export Volume (vs. Total Volume) (a)	61	%	54	%	64	%	56	%

Delivered Log Pricing (in dollars per ton)
Domestic Pulpwood	$32.92		$33.13		$34.60		$34.20
Domestic Sawtimber	63.45		69.69		67.46		73.72
Export Sawtimber	95.23		123.07		102.93		130.71
Weighted Average Log Price	$79.47		$92.76		$86.15		$98.92

Summary Financial Data (in millions of dollars)
Timber Sales	$54.9		$66.1		$158.8		$190.9
Less: Cut and Haul	(22.8)		(25.8)		(64.5)		(71.6)
Less: Port and Freight	(15.9)		(23.1)		(47.5)		(69.8)
Net Stumpage Sales	$16.2		$17.2		$46.8		$49.4


Non-Timber Sales / Carbon Credits	15.6		6.4		16.6		11.9
Total Sales	$70.4		$72.5		$175.4		$202.7

Operating Income	$17.6		$9.3		$19.3		$22.7
(+) Timber write-off resulting from a casualty event (b)	—		—		2.3		—

(+) Depreciation, depletion and amortization	6.0		6.3		16.3		18.2

Adjusted EBITDA (c)	$23.5		$15.6		$37.9		$40.8

Other Data
New Zealand Dollar to U.S. Dollar Exchange Rate (d)	0.6084		0.6223		0.6166		0.6479
Net Plantable Period-End Acres (in thousands)	298		297		298		297
Export Sawtimber (in dollars per JAS m3)	$110.72		$143.09		$119.68		$151.98
Domestic Sawtimber (in $NZD per tonne)	$114.72		$123.19		$120.34		$125.16

(a)Percentage of export volume reflects direct exports through our log export program.

(b)Timber write-off resulting from a casualty event includes the write-off of merchantable and pre-merchantable timber volume damaged by a casualty event which cannot be salvaged.

(c)Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators.

(d)Represents the period-average rate.

Three Months Ended
June 30, Six Months Ended
June 30,
Pacific Northwest Timber Overview 2020 2019 2020 2019
Sales Volume (in thousands of tons)
Pulpwood 86 54 168 116
Sawtimber 299 197 693 417
Total Volume 385 250 861 533
Sales Volume (converted to MBF)
Pulpwood 8,152 5,076 15,941 11,009
Sawtimber 39,847 26,603 90,253 55,548
Total Volume 47,999 31,679 106,193 66,557
Percentage Delivered Sales 98 % 100 % 87 % 100 %
Percentage Sawtimber Sales 78 % 79 % 81 % 78 %
Delivered Log Pricing (in dollars per ton)
Pulpwood $36.92 $42.26 $37.47 $43.81
Sawtimber 75.39 78.35 75.40 78.41
Weighted Average Log Price $66.74 $70.61 $67.51 $70.88
Summary Financial Data (in millions of dollars)
Timber Sales $25.5 $17.7 $56.0 $37.8
Less: Cut and Haul (14.5) (10.5) (28.6) (22.5)
Net Stumpage Sales $11.0 $7.2 $27.4 $15.3
Non-Timber Sales 0.7 0.9 1.2 1.3
Total Sales $26.2 $18.6 $57.2 $39.1
Operating Loss ($6.7) ($3.8) ($7.6) ($7.6)
(+) Depreciation, depletion and amortization 10.6 6.0 21.3 12.9
Adjusted EBITDA (a) $3.9 $2.2 $13.7 $5.3
Other Data
Period-End Acres (in thousands) 507 379 507 379
Sawtimber (in dollars per MBF) $579 $587 $594 $599
Estimated Percentage of Export Volume 20 % 26 % 11 % 21 %


	Three Months Ended September 30,		Nine Months Ended September 30,
Real Estate Overview	2023	2022	2023	2022
Sales (in millions of dollars)
Improved Development (a)	$3.1	$2.3	$20.2	$18.8
Unimproved Development	0.1	—	0.1	—
Rural	20.5	7.0	42.6	47.3
Timberland & Non-Strategic	1.1	—	2.9	11.4


Deferred Revenue/Other (b)	6.4	3.2	13.7	3.5

Total Sales	$31.2	$12.4	$79.5	$81.0


Acres Sold
Improved Development (a)	6.9	19.0	302.2	95.9
Unimproved Development	10	—	10	—
Rural	3,799	1,809	8,740	11,194
Timberland & Non-Strategic	466	—	1,070	3,966


Total Acres Sold	4,281	1,828	10,122	15,256


Gross Price per Acre (dollars per acre)
Improved Development (a)	$454,810	$121,106	$66,694	$196,311
Unimproved Development	11,250	—	11,250	—
Rural	5,386	3,848	4,872	4,228
Timberland & Non-Strategic	2,266	—	2,755	2,874


Weighted Average (Total)	$5,781	$5,064	$6,501	$5,084
Weighted Average (Adjusted) (c)	$5,060	$3,848	$4,648	$3,874
















Operating Income	$9.2	$15.7	$18.7	$37.0
(+) Depreciation, depletion and amortization	3.1	1.0	6.8	12.7

(+) Non-cash cost of land and improved development	6.6	3.1	20.2	20.3



(–) Gain associated with the multi-family apartment complex sale attributable to NCI (d)	—	(11.5)	—	(11.5)

Adjusted EBITDA (e)	$18.9	$8.4	$45.8	$58.4

(a)Reflects land with capital invested in infrastructure improvements.

(b)Includes deferred revenue adjustments, revenue true-ups and marketing fees related to Improved Development sales in addition to residential and commercial lease revenue.

(c)Excludes Improved Development.

(d)Gain associated with the multi-family apartment complex sale attributable to NCI represents the gain recognized in connection with the sale of property by the Bainbridge Landing joint venture attributable to noncontrolling interests.

(e)Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators.


	Three Months Ended September 30,		Nine Months Ended September 30,
Trading Overview	2023	2022	2023	2022
Sales Volume (in thousands of tons)
U.S.	19	11	49	54
NZ	42	84	252	361




Total Volume	61	95	301	415

Summary Financial Data (in millions of dollars)
Trading Sales	$6.4	$11.2	$33.5	$51.5
Non-Timber Sales	0.4	0.4	1.3	1.2
Total Sales	$6.8	$11.6	$34.8	$52.7

Operating (Loss) Income	($0.1)	$0.2	$0.4	$0.1

Adjusted EBITDA (a)	($0.1)	$0.2	$0.4	$0.1

(a)Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators.

6348

Three Months Ended
June 30, Six Months Ended
June 30,
New Zealand Timber Overview 2020 2019 2020 2019
Sales Volume (in thousands of tons)
Domestic Pulpwood (Delivered) 106 125 207 238
Domestic Sawtimber (Delivered) 130 204 277 400
Export Pulpwood (Delivered) 27 37 44 77
Export Sawtimber (Delivered) 266 318 482 573
Total Volume 529 684 1,010 1,288
Delivered Log Pricing (in dollars per ton)
Domestic Pulpwood $32.10 $39.10 $32.95 $39.16
Domestic Sawtimber 66.95 82.66 68.55 83.03
Export Sawtimber 98.75 111.81 97.00 113.78
Weighted Average Log Price $76.92 $89.16 $75.60 $89.78
Summary Financial Data (in millions of dollars)
Timber Sales $40.7 $61.0 $76.4 $115.6
Less: Cut and Haul (15.6) (22.9) (30.8) (43.1)
Less: Port and Freight Costs (8.4) (12.6) (16.5) (22.3)
Net Stumpage Sales $16.7 $25.5 $29.1 $50.2
Non-Timber Sales / Carbon Credits 1.0 1.1 2.9 3.6
Total Sales $41.8 $62.1 $79.3 $119.3
Operating Income $5.0 $12.8 $10.4 $28.5
(+) Depreciation, depletion and amortization 4.9 7.2 9.7 13.5
Adjusted EBITDA (a) $9.9 $20.0 $20.1 $42.0
Other Data
New Zealand Dollar to U.S. Dollar Exchange Rate (b) 0.6157 0.6659 0.6338 0.6745
Net Plantable Period-End Acres (in thousands) 296 292 296 292
Export Sawtimber (in dollars per JAS m³)
$114.82 $130.00 $112.79 $132.29
Domestic Sawtimber (in $NZD per tonne) $119.60 $136.55 $118.96 $135.47


	Three Months Ended September 30,		Nine Months Ended September 30,
Capital Expenditures By Segment (in millions of dollars)	2023	2022	2023	2022
Timber Capital Expenditures
Southern Timber



Reforestation, silviculture and other capital expenditures	$4.0	$5.4	$17.6	$11.5
Property taxes	2.0	1.9	6.0	5.6
Lease payments	0.1	0.1	0.7	1.0
Allocated overhead	1.5	1.2	4.2	3.6
Subtotal Southern Timber	$7.5	$8.6	$28.4	$21.7
Pacific Northwest Timber


Reforestation, silviculture and other capital expenditures	1.6	2.3	6.6	7.5
Property taxes	0.3	0.3	0.8	0.8

Allocated overhead	1.5	1.3	4.1	4.0
Subtotal Pacific Northwest Timber	$3.3	$3.9	$11.5	$12.3





New Zealand Timber
Reforestation, silviculture and other capital expenditures	3.1	3.2	7.6	8.7
Property taxes	0.2	0.2	0.6	0.6
Lease payments	1.3	1.4	2.6	2.8
Allocated overhead	0.6	0.6	2.0	2.0
Subtotal New Zealand Timber	$5.2	$5.4	$12.9	$14.0
Total Timber Segments Capital Expenditures	$16.1	$17.8	$52.8	$48.0

Real Estate	—	0.1	0.2	0.2
Corporate	0.2	—	0.2	—
Total Capital Expenditures	$16.3	$17.9	$53.1	$48.2

Timberland Acquisitions
Southern Timber	$4.7	—	$10.4	$3.2
Pacific Northwest Timber	—	—	3.6	—



Timberland Acquisitions	$4.7	—	$14.0	$3.2


Real Estate Development Investments (a)	$4.0	$4.9	$18.8	$10.9

(a)~~Adjusted EBITDA is a non-GAAP measure defined~~Represents investments in master infrastructure or entitlements in our real estate development projects. Real Estate Development Investments are amortized as the underlying properties are sold and ~~reconciled~~included in ~~Performance~~Non-Cash Cost of Land and ~~Liquidity Indicators~~.

~~(b)Represents the period-average rate.~~

Improved Development.

Three Months Ended
June 30, Six Months Ended
June 30,
Timber Funds Overview 2020 2019 2020 2019
Sales Volume (in thousands of tons)
Pulpwood 10 — 10 —
Sawtimber 80 — 80 —
Total Volume 90 — 90 —
Summary Financial Data (in millions of dollars)
Timber Sales $6.6 — $6.6 —
Less: Cut and Haul (2.9) — (2.9) —
Net Stumpage Sales $3.7 — $3.7 —
Timberland Management Fees 0.9 — 0.9 —
Total Sales $7.5 — $7.5 —
Operating Loss ($1.9) — ($1.9) —
Operating loss attributable to NCI in Timber Funds 2.0 — 2.0 —
(+) Depreciation, depletion and amortization (“Look-through”) 0.5 — 0.5 —
Adjusted EBITDA (a) $0.7 — $0.7 —
Other Data
Period-End Acres (in thousands) 141 — 141 —
“Look-through” Period-End Acres (in thousands) 17 — 17 —

~~(a)Adjusted EBITDA is a non-GAAP measure defined and reconciled in~~ ~~Performance and Liquidity Indicators~~.

Three Months Ended
June 30, Six Months Ended
June 30,
Trading Overview 2020 2019 2020 2019
Sales Volume (in thousands of tons)
NZ Trading - Domestic 7 33 15 58
NZ Trading - Export 259 292 458 548
Total Volume 266 325 473 606
Summary Financial Data (in millions of dollars)
Trading Sales $24.3 $35.2 $42.9 $67.0
Non-Timber Sales 0.1 0.3 0.4 0.5
Total Sales $24.3 $35.5 $43.3 $67.5
Operating Income (Loss) $0.1 ($0.2) $0.1 $0.3
(+) Depreciation, depletion and amortization — — — —
Adjusted EBITDA (a) $0.1 ($0.2) $0.1 $0.3

~~(a)Adjusted EBITDA is a non-GAAP measure defined and reconciled in~~ ~~Performance and Liquidity Indicators~~.

Three Months Ended
June 30, Six Months Ended
June 30,
Real Estate Overview 2020 2019 2020 2019
Sales (in millions of dollars)
Improved Development $6.4 $0.2 $6.4 $0.5
Unimproved Development 8.4 14.4 8.4 15.4
Rural (a) 27.2 7.1 29.6 26.3
Timberlands & Non-Strategic - U.S. (a) 9.6 0.8 9.6 1.2
Large Dispositions (b) — — 116.0 —
Deferred Revenue/Other (c) (1.7) — (1.5) 0.1
Total Sales $50.0 $22.5 $168.6 $43.5
Acres Sold
Improved Development 122.0 0.9 122.0 2.0
Unimproved Development 570 784 570 791
Rural (a) 7,710 1,886 8,334 7,386
Timberlands & Non-Strategic - U.S. (a) 11,907 594 11,907 765
Large Dispositions (b) — — 66,946 —
Total Acres Sold 20,310 3,265 87,879 8,944
Gross Price per Acre (dollars per acre)
Improved Development $52,672 $198,276 $52,672 $251,961
Unimproved Development 14,780 18,402 14,780 19,507
Rural (a) 3,532 3,768 3,555 3,563
Timberlands & Non-Strategic - U.S. (a) 807 1,373 807 1,578
Large Dispositions (b) — — 1,733 —
Weighted Average (Total) (d) $2,545 $6,899 $2,584 $4,860
Weighted Average (Adjusted) (e) $2,242 $6,848 $2,290 $4,803
Sales (Excluding Large Dispositions) $50.0 $22.5 $52.5 $43.5
Operating Income $24.8 $15.5 $51.6 $25.5
(+) Depreciation, depletion and amortization - U.S. 6.7 1.2 7.1 4.5
(+) Non-cash cost of land and improved development - U.S. 13.0 1.6 13.4 5.6
(–) Large Dispositions (b) — — (28.7) —
Adjusted EBITDA (f) $44.6 $18.3 $43.5 $35.7

~~(a)~~The three and six months ended June 30, 2019 reflects the reclassification of certain real estate sales between the Rural and Timberlands & Non-Strategic sales categories to better align with the way management internally evaluates real estate sales. See ~~Note 3 - Revenue~~ ~~for additional information.~~

~~(b)~~Large Dispositions are defined as transactions involving the sale of timberland that exceed $20 million in size and do not have a demonstrable premium relative to timberland value. In March 2020, we completed the disposition of approximately 67,~~000 acres~~ ~~located in Mississippi for a sales price and gain of approximately $116.0 million and $28.7 million,~~ ~~respectively.~~

~~(c)Includes deferred revenue adjustments and marketing fees related to Improved Development sales in addition to residential and commercial lease revenue.~~

~~(d)Excludes Large Dispositions.~~

~~(e)Excludes Improved Development and Large Dispositions.~~

~~(f)Adjusted EBITDA is a non-GAAP measure defined and reconciled in~~ ~~Performance and Liquidity Indicators~~.

Three Months Ended
June 30, Six Months Ended
June 30,
Capital Expenditures By Segment (in millions of dollars) 2020 2019 2020 2019
Timber Capital Expenditures
Southern Timber
Reforestation, silviculture and other capital expenditures $2.6 $5.7 $9.7 $8.5
Property taxes 1.7 1.8 3.4 3.6
Lease payments 0.2 0.3 1.3 1.9
Allocated overhead 1.0 0.9 2.2 2.2
Subtotal Southern Timber $5.5 $8.7 $16.7 $16.1
Pacific Northwest Timber
Reforestation, silviculture and other capital expenditures 0.9 0.8 3.3 3.6
Property taxes 0.2 0.2 0.4 0.4
Allocated overhead 1.0 0.8 1.8 1.6
Subtotal Pacific Northwest Timber $2.2 $1.8 $5.5 $5.6
New Zealand Timber
Reforestation, silviculture and other capital expenditures 2.0 2.3 3.5 4.0
Property taxes 0.1 0.1 0.3 0.3
Lease payments 0.9 1.7 1.3 2.1
Allocated overhead 0.6 0.7 1.3 1.3
Subtotal New Zealand Timber $3.7 $4.8 $6.3 $7.7
Total Timber Segments Capital Expenditures $11.4 $15.3 $28.5 $29.4
Timber Funds (“Look-through”) (a) 0.1 — 0.1 —
Real Estate 0.1 0.1 0.2 0.1
Total Capital Expenditures $11.6 $15.4 $28.8 $29.5
Timberland Acquisitions
Southern Timber $0.1 $14.0 $24.2 $15.9
Pacific Northwest Timber — — — 3.6
New Zealand Timber — — — 6.9
Timberland Acquisitions $0.1 $14.0 $24.2 $26.4
Real Estate Development Investments (b) $1.9 ($0.7) $3.6 $1.0

~~(a)Excludes $0.6 million in capital expenditures attributable to noncontrolling interests in Timber Funds.~~

~~(b)The three and six months ended June 30, 2019 includes $3.7 million of reimbursements from community development bonds.~~

6749

The following tables summarize sales, operating income (loss) and Adjusted EBITDA variances for ~~June~~September 30, ~~2020~~2023 versus ~~June~~September 30, ~~2019~~2022 (millions of dollars):

Sales Southern Timber Pacific Northwest Timber New Zealand Timber Timber Funds Real Estate Trading Intersegment Eliminations Total
Three Months Ended
June 30, 2019 $46.2 $18.6 $62.1 — $22.5 $35.5 ($0.1) $184.8
Volume 5.3 3.9 (13.4) — 117.6 (6.4) — 107.0
Price (2.1) (0.1) (3.4) — (88.4) (4.6) — (98.6)
Non-timber sales (4.0) (0.2) — — — (0.2) — (4.4)
Foreign exchange (a) — — (1.7) — — — — (1.7)
Other 1.4 (b) 4.0 (b) (1.8) (c) 7.5 (d) (1.7) (e) — (0.9) (f) 8.5
Three Months Ended
June 30, 2020 $46.8 $26.2 $41.8 $7.5 $50.0 $24.3 ($1.0) $195.6


Sales	Southern Timber		Pacific Northwest Timber		New Zealand Timber		Real Estate		Trading	Intersegment Eliminations	Total
Three Months Ended September 30, 2022	$64.5		$34.4		$72.5		$12.4		$11.6	($0.1)	$195.3
Volume	8.0		(1.0)		(2.0)		11.9		(3.9)	—	13.0
Price	(7.8)		(2.4)		(0.7)		3.1		(0.8)	—	(8.6)
Non-timber sales	3.0		(0.3)		9.3		—		—	—	12.0
Foreign exchange (a)	—		—		(0.6)		—		—	—	(0.6)
Other	(3.7)	(b)	(1.4)	(b)	(8.1)	(c)	3.8	(d)	(0.1)	—	(9.5)
Three Months Ended September 30, 2023	$64.0		$29.3		$70.4		$31.2		$6.8	($0.1)	$201.6

(a) Net of currency hedging impact.

(b) Includes variance due to stumpage versus delivered sales.

(d) ~~Timber Funds is a new segment in Q2 2020.~~ Includes ~~$5.8 million of sales attributable to noncontrolling interests in the Timber Funds.~~ ~~Also includes $0.9 million of sales related to timberland investment management fees paid to us by the timber funds.~~

~~(e) Includes $1.9 million of~~ deferred revenue adjustments, ~~partially offset by a $0.2 million increase in~~revenue true-ups and marketing ~~fees.~~

~~(f) Includes $0.9 million of Intersegment eliminations~~fees related to ~~timberland management fees paid~~Improved Development sales in addition to ~~us by the timber funds~~residential and ~~reported as sales within the Timber Funds segment.~~commercial lease revenue.

Sales Southern Timber Pacific Northwest Timber New Zealand Timber Timber Funds Real Estate Trading Intersegment Eliminations Total
Six Months Ended
June 30, 2019 $107.0 $39.1 $119.3 — $43.5 $67.5 ($0.1) $376.3
Volume 3.5 9.4 (24.4) — 58.3 (14.6) — 32.2
Price (4.3) 2.7 (10.7) — (47.6) (9.5) — (69.4)
Non-timber sales (8.3) — (0.5) — — (0.1) — (8.9)
Foreign exchange (a) — — (2.8) — — — — (2.8)
Other 1.8 (b) 6.0 (b) (1.6) (c) 7.5 (d) 114.4 (e) — (0.8) (f) 127.4
Six Months Ended
June 30, 2020 $99.7 $57.2 $79.3 $7.5 $168.6 $43.3 ($0.9) $454.8


Sales	Southern Timber		Pacific Northwest Timber		New Zealand Timber		Real Estate		Trading	Intersegment Eliminations	Total
Nine Months Ended September 30, 2022	$207.6		$119.8		$202.7		$81.0		$52.7	($0.2)	$663.7
Volume	21.1		(10.4)		(8.3)		(25.0)		(14.2)	—	(36.8)
Price	(23.4)		(15.3)		(2.2)		14.0		(3.9)	—	(30.8)
Non-timber sales	8.5		0.5		5.4		—		0.1	—	14.5
Foreign exchange (a)	—		—		(3.2)		—		—	—	(3.2)
Other	(9.7)	(b)	1.5	(b)	(19.0)	(c)	9.5	(d)	0.1	(0.2)	(17.8)
Nine Months Ended September 30, 2023	$204.1		$96.1		$175.4		$79.5		$34.8	($0.4)	$589.5

(a) Net of currency hedging impact.

(b) Includes variance due to stumpage versus delivered sales.

(d) ~~Timber Funds is a new segment in Q2 2020.~~ Includes ~~$5.8 million of sales attributable to noncontrolling interests in the Timber Funds.~~ ~~Also includes $0.9 million of sales~~deferred revenue adjustments, revenue true-ups and marketing fees related to ~~timberland investment management fees paid~~Improved Development sales in addition to ~~us by the timber funds.~~

~~(e) Real Estate includes $116.0 million in Large Dispositions~~residential and ~~a $0.1 million increase in marketing fees, partially offset by $1.7 million of deferred revenue adjustments.~~commercial lease revenue.

~~(f) Includes $0.9 million of Intersegment eliminations related to timberland management fees paid to us by the timber funds and reported as sales within the Timber Funds segment.~~

Operating Income (Loss) Southern Timber Pacific Northwest Timber New Zealand Timber Timber Funds Real Estate Trading Corporate and Other Total
Three Months Ended
June 30, 2019 $14.7 ($3.8) $12.8 — $15.5 ($0.2) ($7.6) $31.4
Volume 2.6 (0.2) (4.5) — 98.5 — — 96.4
Price (2.1) (0.1) (3.4) — (88.4) — — (94.0)
Cost (0.4) (1.1) 0.3 — 3.0 0.5 0.3 2.6
Non-timber income (3.9) (0.1) 0.1 — — (0.2) — (4.1)
Foreign exchange (a) — — (0.6) — — — — (0.6)
Depreciation, depletion & amortization 0.3 (1.4) 0.3 — 0.3 — (0.1) (0.6)
Non-cash cost of land and improved development — — — — (3.6) — — (3.6)
Other (b) — — — (1.9) (0.5) — (13.5) (15.9)
Three Months Ended
June 30, 2020 $11.2 ($6.7) $5.0 ($1.9) $24.8 $0.1 ($20.9) $11.7


Operating Income	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Real Estate	Trading	Corporate and Other	Total
Three Months Ended September 30, 2022	$22.5	$2.2	$9.3	$15.7	$0.2	($9.0)	$40.9
Volume	5.0	(0.4)	(0.3)	6.7	—	—	11.0
Price (a)	(7.8)	(2.4)	(0.7)	3.1	—	—	(7.8)
Cost	(1.7)	(1.2)	—	(2.6)	(0.3)	(0.4)	(6.2)
Non-timber income (b)	2.8	(0.3)	9.3	—	—	—	11.8

Depreciation, depletion & amortization	(2.2)	0.4	—	(1.0)	—	—	(2.8)
Non-cash cost of land and improved development	—	—	—	2.5	—	—	2.5
Other (c)	—	1.1	—	(15.2)	—	—	(14.1)
Three Months Ended September 30, 2023	$18.6	($0.6)	$17.6	$9.2	($0.1)	($9.4)	$35.4

(a) ~~Net~~For Timber segments, price reflects net stumpage realizations (i.e., net of ~~currency hedging impact.~~cut and haul and shipping costs). For Real Estate, price is presented net of cash closing costs.

(b)For the New Zealand Timber ~~Funds is a new~~ segment, ~~in Q2 2020 and~~includes carbon credit sales.

(c)Pacific Northwest Timber includes a ~~$2.0~~$1.1 million ~~operating loss attributable to noncontrolling interests~~timber write-off resulting from a casualty event in ~~Timber Funds.~~Q3 2022. Real Estate includes ~~$0.5 million of~~a gain associated with the multi-family apartment complex sale attributable to NCI in Q3 2022, deferred revenue adjustments, ~~for~~revenue true-ups and marketing fees related to Improved Development ~~sales. Corporate~~sales in addition to residential and ~~Other includes $13.5 million in costs related to the merger with Pope Resources.~~commercial lease revenue.

Operating Income (Loss) Southern Timber Pacific Northwest Timber New Zealand Timber Timber Funds Real Estate Trading Corporate and Other Total
Six Months Ended
June 30, 2019 $36.3 ($7.6) $28.5 — $25.5 $0.3 ($13.1) $69.9
Volume 1.7 (0.6) (8.4) — 42.6 — — 35.3
Price (4.3) 2.7 (10.7) — (47.6) — — (59.9)
Cost — (1.5) (0.4) — 0.7 (0.1) 0.5 (0.8)
Non-timber income (8.3) — (0.3) — — (0.1) — (8.7)
Foreign exchange (a) — — 1.3 — — — — 1.3
Depreciation, depletion & amortization 0.9 (0.6) 0.4 — 3.3 — — 4.0
Non-cash cost of land and improved development — — — — (1.1) — — (1.1)
Other (b) — — — (1.9) 28.2 — (16.0) 10.2
Six Months Ended
June 30, 2020 $26.3 ($7.6) $10.4 ($1.9) $51.6 $0.1 ($28.6) $50.2


Operating Income	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Real Estate	Trading	Corporate and Other	Total
Nine Months Ended September 30, 2022	$76.9	$11.7	$22.7	$37.0	$0.1	($26.6)	$121.7
Volume	13.3	(3.8)	(1.5)	(13.7)	—	—	(5.7)
Price (a)	(23.4)	(15.3)	(2.2)	14.0	—	—	(26.9)
Cost	(4.4)	(2.8)	(0.9)	(5.7)	0.3	(1.4)	(14.9)
Non-timber income (b)	7.5	0.5	5.3	—	—	—	13.3
Foreign exchange (c)	—	—	(2.0)	—	—	—	(2.0)
Depreciation, depletion & amortization	(7.3)	2.1	0.2	1.8	—	(0.3)	(3.5)
Non-cash cost of land and improved development	—	—	—	(3.5)	—	—	(3.5)
Other (d)	—	1.1	(2.3)	(11.2)	—	—	(12.5)
Nine Months Ended September 30, 2023	$62.6	($6.5)	$19.3	$18.7	$0.4	($28.3)	$66.1

(a)For Timber segments, price reflects net stumpage realizations (i.e., net of cut and haul and shipping costs). For Real Estate, price is presented net of cash closing costs.

(b)For the New Zealand Timber segment, includes carbon credit sales.

(c)Net of currency hedging impact.

~~(b)~~(d)Pacific Northwest Timber ~~Funds is a new segment in Q2 2020 and~~ includes a ~~$2.0~~$1.1 million ~~operating loss attributable to noncontrolling interests~~timber write-off resulting from a casualty event in Q3 2022. New Zealand Timber ~~Funds.~~includes a $2.3 million timber write-off resulting from a casualty event in Q1 2023. Real Estate includes ~~$28.7 million of operating income from~~ a ~~Large Disposition, offset by $0.5 million of~~gain associated with the multi-family apartment complex sale attributable to NCI in Q3 2022, deferred revenue adjustments, ~~for~~revenue true-ups and marketing fees related to Improved Development ~~sales. Corporate~~sales in addition to residential and ~~Other includes $16.0 million in costs related to the merger with Pope Resources.~~

Adjusted EBITDA (a) Southern Timber Pacific Northwest Timber New Zealand Timber Timber Funds Real Estate Trading Corporate and Other Total
Three Months Ended
June 30, 2019 $27.6 $2.2 $20.0 — $18.3 ($0.2) ($7.3) $60.6
Volume 5.2 3.0 (5.9) — 113.6 — — 115.9
Price (2.1) (0.1) (3.4) — (88.4) — — (94.0)
Cost (0.4) (1.1) 0.3 — 3.0 0.5 0.3 2.6
Non-timber income (3.9) (0.1) 0.1 — — (0.2) — (4.1)
Foreign exchange (b) — — (1.2) — — — — (1.2)
Other (c) — — — 0.7 (1.9) — (1.2)
Three Months Ended
June 30, 2020 $26.4 $3.9 $9.9 $0.7 $44.6 $0.1 ($7.0) $78.6
commercial lease revenue.


Adjusted EBITDA (a)	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Real Estate	Trading	Corporate and Other	Total
Three Months Ended September 30, 2022	$36.6	$12.6	$15.6	$8.4	$0.2	($8.6)	$64.7
Volume	7.9	(0.9)	(0.6)	11.9	—	—	18.3
Price (b)	(7.8)	(2.4)	(0.7)	3.1	—	—	(7.8)
Cost	(1.7)	(1.2)	—	(2.6)	(0.3)	(0.4)	(6.2)
Non-timber income (c)	2.8	(0.3)	9.3	—	—	—	11.8
Foreign exchange (d)	—	—	(0.1)	—	—	—	(0.1)
Other (e)	—	—	—	(1.9)	—	—	(1.9)
Three Months Ended September 30, 2023	$37.8	$7.8	$23.5	$18.9	($0.1)	($9.0)	$78.9

(a)Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators below.

(b)For Timber segments, price reflects net stumpage realizations (i.e., net of cut and haul and shipping costs). For Real Estate, price is presented net of cash closing costs.

(c)For the New Zealand Timber segment, includes carbon credit sales.

(d)Net of currency hedging impact.

~~(c)~~(e)~~Timber Funds is a new segment in Q2 2020.~~ Real Estate includes ~~$1.9 million of~~ deferred revenue ~~adjustments.~~adjustments, revenue true-ups and marketing fees related to Improved Development sales in addition to residential and commercial lease revenue. The prior year period included a $4.5 million gain associated with a multi-family apartment complex sale attributable to Rayonier.

6951

Adjusted EBITDA (a) Southern Timber Pacific Northwest Timber New Zealand Timber Timber Funds Real Estate Trading Corporate and Other Total
Six Months Ended
June 30, 2019 $68.9 $5.3 $42.0 — $35.7 $0.3 ($12.5) $139.7
Volume 3.4 7.2 (11.0) — 56.6 — — 56.2
Price (4.3) 2.7 (10.7) — (47.6) — — (59.9)
Cost — (1.5) (0.4) — 0.7 (0.1) 0.5 (0.8)
Non-timber income (8.3) — (0.3) — — (0.1) — (8.7)
Foreign exchange (b) — — 0.5 — — — — 0.5
Other (c) — — — 0.7 (1.9) — (1.2)
Six Months Ended
June 30, 2020 $59.7 $13.7 $20.1 $0.7 $43.5 $0.1 ($12.0) $125.7


Adjusted EBITDA (a)	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Real Estate	Trading	Corporate and Other	Total
Nine Months Ended September 30, 2022	$123.7	$48.4	$40.8	$58.4	$0.1	($25.7)	$245.8
Volume	20.8	(9.1)	(2.3)	(25.0)	—	—	(15.6)
Price (b)	(23.4)	(15.3)	(2.2)	14.0	—	—	(26.9)
Cost	(4.4)	(2.8)	(0.9)	(5.7)	0.3	(1.4)	(14.9)
Non-timber income (c)	7.5	0.5	5.3	—	—	—	13.3
Foreign exchange (d)	—	—	(2.8)	—	—	—	(2.8)
Other (e)	—	—	—	4.1	—	—	4.1
Nine Months Ended September 30, 2023	$124.2	$21.7	$37.9	$45.8	$0.4	($27.1)	$202.9

(a)Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators below.

(b)For Timber segments, price reflects net stumpage realizations (i.e., net of cut and haul and shipping costs). For Real Estate, price is presented net of cash closing costs.

(c)For the New Zealand Timber segment, includes carbon credit sales.

(d)Net of currency hedging impact.

SOUTHERN TIMBER

~~Second~~Third quarter sales of ~~$46.8~~$64.0 million ~~increased~~decreased $0.6 million, or 1%, versus the prior year period. Harvest volumes increased 21% to 1.81 million tons versus 1.50 million tons in the prior year period, primarily driven by additional volume from acquisitions completed in the fourth quarter of 2022. Average pine sawtimber stumpage realizations decreased 13% to $28.85 per ton versus $33.31 per ton in the prior year period, primarily due to drier weather conditions, softer demand from sawmills, and decreased competition from pulp mills for chip-n-saw volume. Average pine pulpwood stumpage realizations decreased 27% to $16.54 per ton versus $22.77 per ton in the prior year period due to weaker end-market demand and drier weather conditions. Overall, weighted-average stumpage realizations (including hardwood) decreased 17% to $21.48 per ton versus $25.80 per ton in the prior year period. Operating income of $18.6 million decreased $3.8 million versus the prior year period due to lower net stumpage realizations ($7.8 million), higher depletion rates ($2.2 million), and higher overhead and other costs ($1.7 million), partially offset by higher volumes ($5.0 million) and higher non-timber income ($2.8 million). Third quarter Adjusted EBITDA of $37.8 million was 3%, or $1.2 million, above the prior year period.

Year-to-date sales of $204.1 million decreased $3.5 million, or 2%, versus the prior year period. Harvest volumes increased 16% to 5.71 million tons versus 4.92 million tons in the prior year period, primarily driven by the additional volume contributions from acquisitions completed in the fourth quarter of 2022. Average pine sawtimber stumpage realizations decreased 13% to $29.87 per ton versus $34.40 per ton in the prior year period, primarily due to drier weather conditions, softer demand from sawmills, and decreased competition from pulp mills for chip-n-saw volume. Average pine pulpwood stumpage realizations decreased 28% to $16.53 per ton versus $22.88 per ton in the prior year period as weaker end-market demand, drier weather conditions, extended maintenance outages at pulp mills, and unfavorable geographical mix all contributed to softer market conditions. Overall, weighted-average stumpage realizations (including hardwood) decreased 15% to $22.46 per ton versus $26.55 per ton in the prior year period. Operating income of $62.6 million decreased $14.3 million versus the prior year period due to lower net stumpage realizations ($23.4 million), higher depletion rates ($7.3 million), and higher overhead and other costs ($4.4 million), partially offset by higher volumes ($13.3 million) and higher non-timber income ($7.5 million). Year-to-date Adjusted EBITDA of $124.2 million was $0.5 million above the prior year period.

PACIFIC NORTHWEST TIMBER

Third quarter sales of $29.3 million decreased $5.1 million, or 15%, versus the prior year period. Harvest volumes decreased 6% to 290,000 tons versus 307,000 tons in the prior year period, as some planned harvests were deferred in response to soft market conditions. Average delivered prices for domestic sawtimber decreased 10% to $108.20 per ton versus $120.08 per ton in the prior year period due to weaker domestic and export market demand. Average delivered pulpwood prices decreased 35% to $33.09 per ton versus $50.74 per ton in the prior year period, as the prior year period benefited from much stronger end-market demand. An operating loss of $0.6 million versus operating income of $2.2 million in the prior year period was driven by lower net stumpage

realizations ($2.4 million), higher costs ($1.2 million), lower volumes ($0.4 million) and lower non-timber income ($0.3 million), partially offset by lower ~~pipeline easement revenue.~~depletion rates ($0.4 million) and the prior year period write-off of timber basis due to a fire in Washington ($1.1 million). Third quarter Adjusted EBITDA of $7.8 million was 38%, or $4.8 million, below the prior year period.

Year-to-date sales of $96.1 million decreased $23.8 million, or 20%, versus the prior year period. Harvest volumes ~~increased 20%~~decreased 15% to ~~1.54~~1.01 million tons versus ~~1.27~~1.19 million tons in the prior year period ~~primarily due~~as some planned harvests have been deferred in response to ~~strong pulpwood demand.~~soft market conditions. Average ~~pine~~delivered prices for domestic sawtimber ~~stumpage prices~~ decreased 1%13% to ~~$25.48~~$98.89 per ton versus ~~$25.82~~$114.20 per ton in the prior year period due to weaker domestic and export market demand, as well as less competition from export markets. Average delivered pulpwood prices decreased 8% to $40.67 per ton versus $44.44 per ton in the prior year period as ~~lower chip-n-saw prices were partially offset by higher prices for larger diameter sawlogs due to~~ the ~~resurgence in southern yellow pine exports to China. Average pine pulpwood stumpage prices decreased 7% to $15.94 per ton versus $17.16 per ton in the~~ prior year period ~~primarily due to an increase in available log supply resulting~~benefited from drier ground conditions in the current quarter versus the prior year period. Overall, weighted-average stumpage prices (including hardwood) decreased 7% to $18.91 per ton versus $20.29 per ton in the prior year period, ~~primarily driven by lower pulpwood prices coupled with a 5% increase in the pulpwood mix.~~stronger end-market demand. Operating ~~income~~loss of ~~$11.2~~$6.5 million decreased ~~$3.5~~$18.2 million versus the prior year period asdue to lower ~~non-timber income~~net stumpage realizations ($~~3.9~~15.3 million), lower ~~net stumpage prices~~volumes ($~~2.1~~3.8 million), and higher ~~indirect and overhead expenses~~costs ($~~0.4~~2.8 million) ~~were~~, partially offset by ~~higher volumes ($2.6 million) and~~ lower depletion rates ($~~0.3~~2.1 million), the prior year period write-off of timber basis due to a fire in Washington ($1.1 million), and higher non-timber income ($0.5 million). ~~Second quarter~~Year-to-date Adjusted EBITDA of ~~$26.4~~$21.7 million was ~~$1.2~~55%, or $26.7 million, below the prior year period.

Year-to-date sales of $99.7 million decreased $7.3 million, or 7% versus the prior year period. Harvest volumes increased 5% to 3.38 million tons versus 3.21 million tons in the prior year period, primarily due to strong pulpwood demand. Average pine sawtimber stumpage prices were flat at $26.16 per ton. Average pine pulpwood stumpage prices decreased 9% to $16.00 per ton versus $17.63 per ton in the prior year period, primarily due to an increase in available log supply resulting from drier ground conditions versus the prior year period. Overall, weighted-average stumpage prices (including hardwood) decreased 6% to $19.45 per ton versus $20.74 per ton in the prior year period. Operating income of $26.3 million decreased $10.0 million versus the prior year period as a result of lower non-timber income ($8.3 million) and lower net stumpage prices ($4.3 million), partially offset by higher volumes ($1.7 million) and lower depletion rates ($0.9 million).

~~PACIFIC NORTHWEST TIMBER~~

Second quarter sales of $26.2 million increased $7.6 million, or 41%, versus the prior year period. Harvest volumes increased 54% to 385,000 tons versus 250,000 tons in the prior year period primarily due to comparatively light harvest activity in the prior year quarter coupled with 55,000 tons of incremental volume from the acquired Pope Resources timberlands. Average delivered sawtimber prices decreased 4% to $75.39 per ton versus $78.35 per ton in the prior year period due to a higher mix of chip-n-saw volume in the current quarter, partially offset by a higher percentage of Douglas-fir sawtimber. Average delivered pulpwood prices decreased 13% to $36.92 per ton versus $42.26 per ton in the prior year period due to ~~the deterioration of pulp export markets, which resulted in market related downtime at domestic pulp mills.~~ Operating loss of $6.7 million increased $2.9 million versus the prior year period due to higher depletion rates ($1.4 million), higher overhead and other costs ($1.1 million), lower net stumpage prices ($0.1 million), lower non-timber income ($0.1 million) and an increase in other variable costs ($0.2 million). Second quarter Adjusted EBITDA of $3.9 million was $1.7 million above the prior year period.

Year-to-date sales of $57.2 million increased $18.2 million, or 46%, versus the prior year period. Harvest volumes increased 61% to 861,000 tons versus 533,000 tons in the the prior year period primarily due to an increase in lump-sum stumpage sales, higher delivered volumes and 55,000 tons of incremental volume from the acquired Pope Resources timberlands. Average delivered sawtimber prices decreased 4% to $75.40 per ton versus $78.41 per ton in the prior year period, primarily due to a higher mix of chip-n-saw volume and reduced demand resulting from the COVID-19 pandemic, partially offset by a higher percentage of Douglas fir sawtimber. Average delivered pulpwood decreased 14% to $37.47 per ton versus $43.81 per ton in the prior year period, primarily due to excess supply resulting from a weaker pulp export market and downtime at domestic pulp mills. ~~Operating loss of~~ $7.6 million was flat versus the prior year period due to higher overhead and other costs ($1.5 million), higher depletion rates ($0.6 million) and higher other variable costs ($0.6 million), partially offset by higher net stumpage prices ($2.7 million).

NEW ZEALAND TIMBER

~~Second~~Third quarter sales of ~~$41.8~~$70.4 million decreased ~~$20.3~~$2.0 million, or ~~33%~~3%, versus the prior year ~~period.~~period. Harvest volumes decreased ~~23%~~3% to ~~529,000~~690,000 tons versus ~~684,000~~712,000 tons in the prior year period, ~~primarily due~~as some planned harvests were deferred in response to ~~the government-mandated shutdown of all non-essential activity in New Zealand (including the harvesting and transport of logs) from late-March through late-April.~~soft market conditions. Average delivered prices for export sawtimber decreased ~~12%~~23% to ~~$98.75~~$95.23 per ton versus ~~$111.81~~$123.07 per ton in the prior year period ~~while average~~, primarily due to weaker demand in China and increased supply from Cyclone Gabrielle salvage volume. Despite the significant decline in delivered pricing, export sawtimber net stumpage realizations were down only 4% due to significantly lower port and freight costs versus the prior year period. Average delivered prices for domestic sawtimber ~~decreased 19%~~declined 9% to ~~$66.95~~$63.45 per ton versus ~~$82.66~~$69.69 per ton in the prior year ~~period. The decrease in export sawtimber prices was driven primarily by lower demand and the buildup of log inventories in China as a result of COVID-19 lockdowns.~~period. The decrease in domestic sawtimber prices (in U.S. dollar terms) was driven in part by the ~~fall~~decline in the NZ$/US$ exchange rate (US$~~0.62~~0.61 per NZ$1.00 versus US$~~0.67~~0.62 per NZ$1.00). Excluding the impact of foreign exchange rates, domestic sawtimber prices decreased ~~12%~~7% versus the prior year period ~~generally following the negative trend in the~~, reflecting weaker domestic demand and decreased competition from export ~~market. Operating income of $5.0 million decreased $7.8~~markets. Third quarter non-timber / carbon credit sales totaled $15.6 million versus $6.4 million in the prior year period, as increased volumes were sold into the market following a ~~result~~significant uptick in NZU pricing. Operating income of ~~lower volumes~~$17.6 million increased $8.3 million versus the prior year period primarily due to higher carbon credit sales ($~~4.5 million), lower net stumpage prices ($3.4 million) and unfavorable foreign exchange impacts ($0.6~~9.3 million), partially offset by lower ~~depletion rates~~net stumpage realizations ($0.7 million) and lower volumes ($0.3 million)~~, lower roading costs ($0.2 million), lower overhead costs~~ ~~($0.1 million) and higher~~ ~~non-timber income ($0.1 million)~~. ~~Second~~Third quarter Adjusted EBITDA of ~~$9.9~~$23.5 million was ~~$10.1~~51%, or $7.9 million, ~~below~~ above the prior year ~~period.~~period.

Year-to-date sales of ~~$79.3~~$175.4 million decreased ~~$39.9~~$27.3 million, or ~~33%~~13%, versus the prior ~~year.~~year period. Harvest volumes decreased ~~22%~~4% to ~~1.01~~1.84 million tons versus ~~1.29~~1.93 million tons in the prior year period, primarily due to lost production days resulting from Cyclone Gabrielle in the ~~government-mandated shutdown~~first quarter and the deferral of ~~all non-essential activity (including the harvesting and transport of logs) from late-March through late-April.~~planned harvests in response to soft market conditions. Average delivered prices for export sawtimber decreased ~~15%~~21% to ~~$97.00~~$102.93 per ton versus ~~$113.78~~$130.71 per ton in the prior year period ~~while average~~, driven by increased salvage volume from Cyclone Gabrielle and weaker demand in China. Average delivered prices for domestic sawtimber decreased ~~17%~~8% to ~~$68.55~~$67.46 per ton versus ~~$83.03~~$73.72 per ton in the prior ~~year. The decrease in export sawtimber prices was driven primarily by lower demand resulting from the COVID-19 lockdown in China.~~year period. The decrease in domestic sawtimber prices (in ~~US dollars~~U.S. dollar terms) was partially driven ~~in part~~ by the ~~fall~~decline in the NZ$/US$ exchange rate (US$~~0.63~~0.62 per NZ$1.00 versus US$~~0.67~~0.65 per NZ$1.00). Excluding the impact of foreign exchange rates, domestic sawtimber prices decreased ~~12%~~4% versus the prior year period, reflecting weaker domestic demand and decreased competition from export markets. Operating income of $19.3 million decreased $3.4 million versus the prior year period due to a timber write-off resulting from a tropical cyclone casualty event ($2.3 million), lower net stumpage realizations ($2.2 million), unfavorable foreign exchange impacts ($2.0 million), lower volumes ($1.5 million), and higher costs ($0.9 million), partially offset by higher carbon credit sales ($5.3 million) and lower depletion rates ($0.2 million). Year-to-date Adjusted EBITDA of $37.9 million was 7% or $2.9 million, below the prior year period.

REAL ESTATE

Third quarter sales of $31.2 million increased $18.7 million versus the prior year period, while operating income of $9.2 million decreased $6.6 million versus the prior year period. Prior year third quarter operating income included an $11.5 million gain attributable to noncontrolling interests associated with the Bainbridge Island multi-family apartment complex sale. Sales increased versus the prior year period generally following the negative trend of the export market. Operating Income of $10.4 million decreased $18.1 million versus the prior year period as a result of lower net stumpage prices ($10.7 million), lower volumes ($8.4 million), higher costs ($0.4 million) and lower non-timber income ($0.3 million), partially offset by favorable foreign exchange impacts ($1.3 million) and lower depletion rates ($0.4 million). Year-to-date Adjusted EBITDA of $20.1 million was $21.9 million below the prior year period.

~~TIMBER FUNDS~~

The Timber Funds segment generated second quarter harvest volumes of 90,000 tons, sales of $7.5 million and operating loss of $1.9 million. Adjusting for the portion of the Timber Funds segment attributable to noncontrolling interests and fee revenue to Rayonier, pro forma sales and pro forma operating income were $1.7 million and $0.1 million, respectively. Second quarter Adjusted EBITDA was $0.7 million.

~~REAL ESTATE~~

~~Real Estate Sales Category Reclassification~~

Effective April 1, 2020, the Company changed the composition of its Rural and Timberland & Non-Strategic sales categories to better align with the way management internally evaluates real estate sales. The Rural category now includes all real estate sales (excluding development sales) representing a demonstrable premium above timberland value. The Timberland & Non-Strategic category now includes all real estate sales representing little to no premium to timberland value. This category consists primarily of sales of property that management views as non-strategic to our long-term portfolio as well as sales of property for capital allocation purposes that do not fit the definition of a Large Disposition. All prior period amounts have been reclassified to reflect the new composition of these two sales categories. The Improved Development, Unimproved Development and Large Disposition categories remain unchanged, and this reclassification had no impact on overall segment results.

~~Second quarter sales of $50.0 million increased $27.5 million versus the prior year period while operating income of $24.8 million increased $9.4 million versus the prior year period~~ due to a higher number of acres sold ~~(20,310~~(4,281 acres sold versus ~~3,265~~1,828 acres sold in the prior year period) and an increase in weighted-average prices ($5,781 per acre versus $5,064 per acre in the prior year period).

Improved Development sales of $3.1 million included $1.8 million from the Heartwood development project south of Savannah, Georgia and $1.4 million from the Wildlight development project north of Jacksonville, Florida. Sales in Heartwood consisted of 24 finished residential lots for $1.1 million ($45,000 per lot or $290,000 per acre) and a 1.3-acre commercial parcel to be used for a quick-service restaurant for $0.7 million ($531,000 per acre). Sales in Wildlight consisted of a 2-acre commercial parcel to be used for a convenience store for $1.4 million ($735,000 per acre). This compares to Improved Development sales of $2.3 million in the prior year period.

Unimproved Development sales of $0.1 million consisted of a 10-acre transaction for $11,250 per acre. There were no Unimproved Development sales in the prior year period.

Rural sales of $20.5 million consisted of 3,799 acres at an average price of $5,386 per acre. This compares to prior year period sales of $7.0 million, which consisted of 1,809 acres at an average price of $3,848 per acre.

Timberland & Non-Strategic sales of $1.1 million consisted of 466 acres at an average price of $2,266 per acre. There were no Timberland & Non-Strategic sales in the prior year period.

Third quarter Adjusted EBITDA of $18.9 million increased $10.5 million versus the prior year period.

Year-to-date sales of $79.5 million decreased $1.5 million versus the prior year period, while operating income of $18.7 million decreased $18.2 million versus the prior year period. Prior year period operating income included an $11.5 million gain attributable to noncontrolling interests associated with the Bainbridge Island multi-family apartment complex sale. Sales and operating income decreased in the first nine months primarily due to lower volumes (10,122 acres sold versus 15,256 acres sold in the prior year period), partially offset by ~~a decrease in~~higher weighted-average prices ($~~2,545~~6,501 per acre versus ~~$6,899~~$5,084 per acre in the prior year period).

Improved Development sales of $6.4 million included a $5.4 million sale in the Belfast Commerce Park development project south of Savannah, Georgia consisting of 119 acres at a price of $45,000 per acre in addition to $1.1 million of sales in the Wildlight development project north of Jacksonville, Florida consisting of 17 residential lots ($63,118 per lot or $367,466 per acre). This compares to prior year period sales of $0.2 million in the Wildlight development project, which consisted of six residential townhome lots ($28,750 per lot or $198,000 per acre).

Unimproved Development sales of $8.4 million consisted of a 570 acre sale in St. Johns County, Florida for $14,780 per acre. This compares to prior year period sales of $14.4 million, which consisted of a 784 acre sale in St. Johns County, Florida for $18,402 per acre.

Rural sales of $27.2 million consisted of 7,710 acres at an average price of $3,532 per acre. This compares to prior year period sales of $7.1 million, which consisted of 1,886 acres at an average price of $3,768 per acre.

Timberland and Non-Strategic sales of $9.6 million consisted of 11,907 acres at an average price of $807 per acre. This compares to prior year period sales of $0.8 million, which consisted of 594 acres at an average price of $1,373 per acre. Timberland and Non-Strategic sales in the quarter included several low-value, geographically-isolated parcels with limited plantability and long-term harvest potential.

~~Second quarter~~ Year-to-date Adjusted EBITDA of ~~$44.6~~$45.8 million ~~was $26.3 million above the prior year period.~~

~~Year-to-date sales of $168.6 million increased $125.0~~decreased $12.7 million versus the prior year ~~period, while operating income of $51.6 million increased $26.1 million versus the prior year~~ period. Year-to-date sales and operating income includes $116.0 million and $28.7 million, respectively, from Large Dispositions. Sales and operating income increased in the first six months primarily due to higher volumes (87,879 acres sold versus 8,944 acres sold in the prior year period), partially offset by lower weighted-average prices. Year-to-date Adjusted EBITDA of $43.5 million increased $7.8 million versus the prior year.

TRADING

~~Second~~ Third quarter sales of ~~$24.3~~$6.8 million decreased ~~$11.1~~$4.8 million versus the prior year period due to lower volumes and prices. Sales volumes decreased 35% to 61,000 tons versus 95,000 tons in the prior year period. The Trading segment generated an operating loss of $0.1 million versus operating income of $0.2 million in the prior year period.

Year-to-date sales of $34.8 million decreased $18.0 million versus the prior year period due to lower volumes and ~~prices resulting from the government-mandated shutdown in New Zealand and lower export demand as a result of the COVID-19 pandemic.~~prices. Sales volumes decreased ~~18%~~28% to ~~267,000~~301,000 tons versus ~~325,000~~415,000 tons in the prior year period. ~~The Trading segment generated~~Year-to-date operating income and Adjusted EBITDA of ~~$0.1~~$0.4 million ~~versus operating loss of $0.2 million in the prior year period.~~

~~Year-to-date sales of $43.3 million decreased $24.2~~increased $0.3 million versus the prior year ~~primarily due to lower volumes and prices resulting from the government-mandated shutdown in New Zealand and lower export demand~~period as a result of the COVID-19 pandemic. Sales volumes decreased 22% to 474,000 versus 606,000 tons in the prior year period. Operating income and Adjusted EBITDA of $0.1 million decreased $0.2 million versus the prior year.improved margins more than offset reduced trading volume.

OTHER ITEMS

CORPORATE AND OTHER EXPENSE / ELIMINATIONS

~~Second~~ Third quarter corporate and other operating expenses of ~~$20.9~~$9.4 million increased ~~$13.2~~$0.5 million versus the prior year period, primarily driven by higher compensation and benefits expenses.

Year-to-date corporate and other operating expenses of $28.3 million increased $1.7 million versus the prior year period, primarily due to higher compensation and benefits expenses.

INTEREST EXPENSE

Third quarter and year-to-date interest expense of $12.6 million and $36.7 million increased $3.5 million and $10.3 million, respectively, versus the prior year period, primarily due to ~~costs related to the Pope Resources merger ($13.5 million), partially offset by lower overhead costs ($0.3 million).~~

Year-to-date corporate and other operating expenses of $28.6 million increased $15.5 million versus the prior year period due to costs related to the Pope Resources merger ($16.0 million), partially offset by lower overhead costs ($0.5 million).

~~INTEREST EXPENSE~~

~~Second quarter and year-to-date interest expense of $9.8 million and $18.0 million, respectively, increased $1.9 million and $2.4 million, respectively, versus the prior year periods due to~~ higher average outstanding debt ~~following the closing of the Pope Resources merger.~~and a higher weighted-average interest rate.

INTEREST AND OTHER MISCELLANEOUS INCOME, NET

~~Second quarter and year-to date~~Year-to-date interest and other miscellaneous income includes $20.5 million of net ~~of $1.5 million and $1.4 million, respectively, includes favorable mark-to-market adjustments on marketable equity securities and carbon options.~~recoveries associated with legal settlements.

INCOME TAX EXPENSE

~~Second~~ Third quarter and year-to-date income tax expense of ~~$3.0 million and $6.7 milliondecreased~~ $0.6 million and ~~$1.3~~$1.8 million decreased $0.7 million and $6.3 million, respectively, versus the prior year ~~period as a result of lower taxable income.~~period. The New Zealand subsidiary is the primary driver of income tax expense.

~~COVID 19 RESPONSE & REVISED~~ OUTLOOK

As we continue to adapt to the impacts of the COVID-19 pandemic, our highest priority remains the health and safety of our employees and contractors, as well as their families and communities. Overall, we are very pleased with the level of productivity and engagement that our employees have sustained over the last several months as we’ve operated under a work-from-home model for office employees and under enhanced safety protocols for field employees. This allowed us to remain nimble and respond to ever evolving market conditions as the economy emerged from the shutdown. In the midst of the pandemic, we also had to focus our efforts on the critical task of closing the Pope Resources acquisition as well as integrating Pope Resources’ assets and people into Rayonier.

Overall, we have been encouraged by the resiliency of our business and industry amid this pandemic. Housing construction and repair and remodeling activity have rebounded sharply, driving record highs for wood products prices throughout the U.S. Longer-term, we expect that this will translate to improved log prices, which tend to lag wood products pricing trends.

In our Southern Timber segment, we continue to expect ~~increases in export volume and strong sawtimber demand. We further expect that average pricing in Southern Timber will be relatively flat,~~higher non-timber income for full-year 2023 as ~~improved sawtimber demand~~compared to full-year 2022, driven by ~~strong lumber pricing is generally expected to offset lower pulpwood pricing due to anticipated mill downtime, an increased supply of wood chip residuals and geographic mix.~~growth in our Land-Based Solutions businesses. In our Pacific Northwest Timber segment, we expect ~~higher full-year harvest volumes due to incremental volume from~~continued softness in end-market demand for the ~~acquired Pope Resources timberlands.~~ We further expect that Pacific Northwest sawtimber pricing will improve due to strengthening end markets and a higher-value species mix; however, we anticipate pulpwood pricing will be relatively flat and dependent onbalance of the ~~duration of domestic mill curtailments.~~year. In our New Zealand Timber segment, we expect ~~higher full-year harvest volumes primarily due~~to remain active in the carbon market following the uptick in NZU pricing during the third quarter; however, we anticipate a lower contribution from carbon sales relative to the shorter-than-anticipated shutdown of economic activity in New Zealand. We expect New Zealand pricing to remain relatively flat with higher seasonal demand offset by continued competition from alternative supply sources.third quarter. In our Real Estate segment, ~~we expect continued strong~~the demand for ~~rural~~HBU properties ~~as well as an improved demand outlook for development properties.~~and timberland assets has remained strong despite the higher interest rate environment. We expect a significant contribution from our Real Estate segment in the fourth quarter based on transaction volume expected to close.

LIQUIDITY AND CAPITAL RESOURCES

Our principal source of cash is cash flow from operations, primarily the harvesting of timber and sales of real estate. As an UPREIT, our main use of cash is dividends and unitholder distributions. We also use cash to maintain the productivity of our timberlands through replanting and silviculture. Our operations have generally produced consistent cash flow and required limited capital resources. Short-term borrowings have helped fund working capital needs, while acquisitions of timberlands generally require funding from external sources or Large Dispositions.

SUMMARY OF LIQUIDITY AND FINANCING COMMITMENTS

June 30, December 31,
(millions of dollars) 2020 2019
Cash and cash equivalents (excluding Timber Funds) $87.8 $68.7
Total debt (excluding Timber Funds) (a) 1,305.0 1,057.0
Noncontrolling interest in Operating Partnership 110.2 —
Shareholders’ equity 1,914.0 1,537.6
Total capitalization (total debt plus permanent and temporary equity) 3,329.2 2,594.6
Debt to capital ratio 39 % 41 %
Net debt to enterprise value (b)(c) 26 % 19 %


	September 30,		December 31,
(millions of dollars)	2023		2022
Cash and cash equivalents	$107.8		$114.3

Total debt (a)	1,519.0		1,523.1
Noncontrolling interests in the operating partnership	69.8		105.8
Shareholders’ equity	1,832.3		1,880.7

Total capitalization (total debt plus permanent and temporary equity)	3,421.1		3,509.6
Debt to capital ratio	44	%	43	%
Net debt to enterprise value (b)(c)	25	%	22	%

(a)Total debt as of ~~June~~September 30, ~~2020~~2023 and December 31, ~~2019~~2022 reflects principal on long-term debt, gross of deferred financing costs and ~~net of fair market value adjustments.~~unamortized discounts.

(b)Net debt is calculated as total debt less cash and cash equivalents.

(c)Enterprise value ~~is calculated as the number of shares outstanding multiplied by the Company’s share price~~based on market capitalization (including Rayonier, L.P. “OP” units) plus net debt based on Rayonier’s share price of $28.46 and $32.96 as of ~~June~~September 30, ~~2020~~2023 and December 31, ~~2019.~~2022, respectively.

AT-THE-MARKET (“ATM”) EQUITY OFFERING PROGRAM

On November 4, 2022 we entered into a new distribution agreement with a group of sales agents through which we may sell common shares, from time to time, having an aggregate sales price of up to $300 million (the “2022 ATM Program”). As of September 30, 2023,$269.7million remains available for issuance under the program.

The following table outlines common share issuances pursuant to our ATM program (dollars in millions):


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Shares of common stock issued under the ATM program	—	—	400	726,248
Average price per share sold under the ATM program	—	—	$34.03	$41.46
Gross proceeds from common shares issued under the ATM program	—	—	—	$30.1

7455

CASH FLOWS

The following table summarizes our cash flows from operating, investing and financing activities for the nine months ended September 30, 2023 and 2022:


(millions of dollars)	2023	2022
Cash provided by (used for):
Operating activities	$208.9	$209.9
Investing activities	(79.7)	(55.9)
Financing activities	(134.2)	(237.6)

CASH PROVIDED BY OPERATING ACTIVITIES

Cash provided by operating activities decreased $1.0 million from the prior year period primarily due to lower operating results and changes in working capital.

CASH USED FOR INVESTING ACTIVITIES

Cash used for investing activities increased $23.8 million from the prior year period due to higher timberland acquisitions ($10.7 million), higher real estate development investments ($7.8 million), higher capital expenditures ($4.9 million), and lower proceeds from other investing activities ($0.3 million).

CASH USED FOR FINANCING ACTIVITIES

Cash used for financing activities decreased $103.5 million from the prior year period. This is primarily due to lower net repayments ($125.0 million), lower distributions to consolidated affiliates ($16.5 million), and lower distributions to noncontrolling interests in the operating partnership ($0.5 million), partially offset by lower net proceeds from the issuance of common shares under the ATM equity offering program ($32.0 million), higher dividends paid on common shares ($4.0 million), and lower proceeds from the issuance of common shares under the Company’s incentive stock plan ($2.6 million).

FUTURE USES OF CASH

We expect future uses of cash to include working capital requirements, principal and interest payments on long-term debt, lease payments, capital expenditures, real estate development investments, timberland acquisitions, dividends on Rayonier Inc. common shares and distributions on Rayonier, L.P. units, distributions to noncontrolling interests, and repurchases of the Company’s common shares to satisfy other commitments.

Significant long-term uses of cash include the following (in millions):


Future uses of cash (in millions)	Total	Payments Due by Period
		2023	2024-2025	2026-2027	Thereafter





Long-term debt (a)	$1,519.0	—	$20.7	$498.3	$1,000.0
Interest payments on long-term debt (b)	408.7	24.6	171.8	143.2	69.1
Operating leases — timberland (c)	182.4	4.1	16.1	14.4	147.8
Operating leases — PP&E, offices (c)	6.0	0.4	2.0	0.9	2.7
Commitments — real estate projects	40.3	11.1	19.0	2.3	7.9
Commitments — derivatives (d)	5.1	1.6	3.0	0.5	—
Commitments — environmental remediation (e)	15.7	1.7	9.7	1.3	3.0
Commitments — other (f)	10.3	0.1	10.2	—	—
Total	$2,187.5	$43.6	$252.5	$660.9	$1,230.5

(a)The book value of long-term debt, net of deferred financing costs and unamortized discounts, is currently recorded at $1,511.5 million on our Consolidated Balance Sheets, but upon maturity the liability will be $1,519.0 million. See Note 6 - Debt for additional information.

(b)Projected interest payments for variable-rate debt were calculated based on outstanding principal amounts and interest rates as of September 30, 2023.

(c)Excludes anticipated renewal options.

(d)Commitments — derivatives represent payments expected to be made on derivative financial instruments (foreign exchange contracts). See Note 7 — Derivative Financial Instruments and Hedging Activities for additional information.

(e)Commitments — environmental remediation represents our estimate of potential liability associated with environmental contamination and Natural Resource Damages in Port Gamble, Washington. See Note 10 - Environmental and Natural Resource Damage Liabilities for additional information.

(f)Commitments — other includes $8.9 million related to pension plan termination. See Note 15 - Employee Benefit Plans for additional information.

We expect to fund future uses of cash with a combination of existing cash balances, cash generated by operating activities, the remaining issuances available under the Company’s ATM Program, Large Dispositions and the use of our revolving credit facilities. We believe we have sufficient sources of funding to meet our business requirements for the next 12 months and in the longer term.

EXPECTED 2023 EXPENDITURES

Capital expenditures in 2023 are expected to be between $83 million and $87 million, excluding any strategic timberland acquisitions we may make. Capital expenditures are expected to primarily consist of seedling planting, fertilization and other silvicultural activities, property taxes, lease payments, allocated overhead and other capitalized costs. Aside from capital expenditures, we may also acquire timberland as we actively evaluate acquisition opportunities.

We anticipate real estate development investments in 2023 to be between $20 million and $23 million, net of reimbursements from community development bonds. Expected real estate development investments are primarily related to Wildlight, our mixed-use community development project located north of Jacksonville, Florida and Heartwood, our mixed-use development project located in Richmond Hill just south of Savannah, Georgia.

Our 2023 dividend payments on Rayonier Inc. common shares and distributions to Rayonier, L.P. unitholders are expected to be approximately $170 million and $3 million, respectively, assuming no change in the quarterly dividend rate of $0.285 per share or partnership unit, or material changes in the number of shares or partnership units outstanding.

Future share repurchases, if any, will depend on the Company’s liquidity and cash flow, as well as general market conditions and other considerations including capital allocation priorities.

Full-year 2023 cash tax payments are expected to be between $5.0 million and $7.0 million, primarily related to the New Zealand subsidiary.

See Note 1 – Basis of Presentation for information regarding subsequent events that are expected to impact our future sources and uses of cash.

OFF-BALANCE SHEET ARRANGEMENTS

We utilize off-balance sheet arrangements to provide credit support for certain suppliers and vendors in case of their default on critical obligations, and collateral for outstanding claims under our previous workers’ compensation self-insurance programs. These arrangements consist of standby letters of credit and surety bonds. As part of our ongoing operations, we also periodically issue guarantees to third parties. Off-balance sheet arrangements are not considered a source of liquidity or capital resources and do not expose us to material risks or material unfavorable financial impacts. See Note 11 — Guarantees for details on the letters of credit and surety bonds as of September 30, 2023.

SUMMARY OF GUARANTOR FINANCIAL INFORMATION

In ~~March 2012,~~May 2021, Rayonier, ~~Inc.~~L.P. issued ~~$325~~$450 million of ~~3.75%~~2.75% Senior Notes due ~~2022~~2031 (the ~~“2022 Notes”~~“Senior Notes due 2031”). ~~On May 7, 2020,~~Rayonier TRS Holdings Inc., Rayonier Inc. ~~contributed its 100% ownership interest in~~, and Rayonier Operating Company, LLC (the “Contribution”) to Rayonier, L.P. As a result of the Contribution, Rayonier, L.P. expressly assumed all the obligations of Rayonier Inc. with respect to the outstanding 2022 Notes and Rayonier Inc. agreed to irrevocably, fully and unconditionally guarantee jointly and severally, the obligations of Rayonier, L.P. ~~under~~in regards to the ~~Indenture, including the 2020 Notes. Rayonier L.P. is the current issuer of the 2022 Notes.~~

~~The subsidiary guarantor, Rayonier TRS Holdings Inc., and parent guarantor, Rayonier Inc., have~~ ~~guaranteed the notes fully and unconditionally on~~Senior Notes due 2031. As a ~~joint and several basis. As~~ general partner of Rayonier, L.P., Rayonier Inc. consolidates Rayonier, L.P. and has no material assets or liabilities other than its interest in Rayonier, L.P. These notes are unsecured and unsubordinated and will rank equally with all other unsecured and unsubordinated indebtedness from time to time outstanding.

Rayonier, L.P. is a limited partnership, in which Rayonier Inc. is the general partner. The operating subsidiaries of Rayonier, L.P. conduct all of our operations. Rayonier, L.P.’s most significant assets are its interest in operating subsidiaries, which have been ~~eliminated~~excluded in the table below to eliminate intercompany transactions between the issuer and guarantors and to exclude investments in non-guarantors. As a result, our ability to make required payments on the notes depends on the performance of our operating subsidiaries and their ability to distribute funds to us. There are no material restrictions on dividends from the operating subsidiaries.

The summarized balance sheet information for the consolidated obligor group of debt issued by Rayonier, L.P. for ~~six~~the nine months ended ~~June~~September 30, ~~2020~~2023 and year ended December 31, ~~2019~~2022 are provided in the table below:


(in millions)	(in millions)	June 30, 2020	December 31, 2019	(in millions)	September 30, 2023	December 31, 2022
Current assets	Current assets	$68.4	$51.7	Current assets	$89.9	$112.2
Non-current assets	Non-current assets	47.2	48.8	Non-current assets	128.3	122.8
Current liabilities	Current liabilities	19.2	100.2	Current liabilities	21.7	19.8
Non-current liabilities	Non-current liabilities	2,057.4	1,632.7	Non-current liabilities	2,223.3	2,001.9
Due to non-guarantors	Due to non-guarantors	652.1	587.0	Due to non-guarantors	747.5	520.4

The summarized results of operations information for the consolidated obligor group of debt issued by Rayonier, L.P. for ~~six~~the nine months ended ~~June~~September 30, ~~2020~~2023 and year ended December 31, ~~2019~~2022 are provided in the table below:


(in millions)	(in millions)	June 30, 2020	December 31, 2019	(in millions)	September 30, 2023	December 31, 2022
Cost and expenses	Cost and expenses	($28.1)	($22.0)	Cost and expenses	($23.5)	($28.9)
Operating loss	Operating loss	(28.1)	(22.0)	Operating loss	(23.4)	(28.9)
Net loss	Net loss	(47.0)	(54.2)	Net loss	(50.9)	(54.3)
Revenue from non-guarantors	Revenue from non-guarantors	454.8	711.6	Revenue from non-guarantors	641.5	977.9

~~CASH FLOWS~~

~~The following table summarizes our cash flows from operating, investing and financing activities for the six months ended June 30, 2020 and 2019:~~

(millions of dollars) 2020 2019
Cash provided by (used for):
Operating activities $82.6 $117.0
Investing activities (170.8) (60.8)
Financing activities 114.9 (78.0)

~~CASH PROVIDED BY OPERATING ACTIVITIES~~

~~Cash provided by operating activities decreased $34.4 million primarily due to lower operating results.~~

~~CASH USED FOR INVESTING ACTIVITIES~~

Cash used for investing activities increased $110.0 million versus the prior year period primarily due to the net cash consideration transferred in our merger with Pope Resources ($231.1 million) and higher real estate development investments ($2.6 million), partially offset by proceeds from a Large Disposition ($115.7 million), a decrease in timberland acquisitions ($2.2 million), lower capital expenditures ($0.1 million) and other investing activities ($5.8 million).

~~CASH PROVIDED BY FINANCING ACTIVITIES~~

Cash provided by financing activities increased $192.9 million from the prior year period primarily due to an increase in net borrowings ($203.0 million), partially offset by increases in debt issuance costs ($2.5 million), share repurchases ($0.5 million), dividends paid on common stock ($1.1 million), distributions to consolidated affiliates ($4.0 million), distributions to noncontrolling interests in the Operating Partnership ($1.2 million) and decreases in proceeds from the issuance of common shares under the Company’s incentive stock plan ($0.8 million).

~~EXPECTED 2020 EXPENDITURES~~

~~Capital expenditures in 2020 are expected to be between~~ ~~$63 million and $66 million~~, excluding capital expenditures attributable to the Timber Funds and any strategic timberland acquisitions we may make. Capital expenditures are expected to primarily consist of seedling planting, fertilization and other silvicultural activities, property taxes, lease payments, allocated overhead and other capitalized costs. Aside from capital expenditures, we may also acquire timberland as we actively evaluate acquisition opportunities.

~~We anticipate real estate development investments in 2020 to be between $11 million~~ ~~and $13 million~~, net of reimbursements from community development bonds. Expected real estate development investments include approximately $3.6 million of committed spending primarily related to Wildlight, our mixed-use community development project located north of Jacksonville, Florida and our Richmond Hill mixed-use development project located south of Savannah, Georgia. Uncommitted real estate developments can be managed as market conditions change. We are continuing to monitor the impacts of the COVID-19 pandemic on our real estate development business and expect to periodically adjust our 2020 real estate development investments based on end market conditions and the anticipated timing of improved development sales.

~~Including shares issued in the merger with Pope Resources, the Company’s 2020 dividend payments are expected to be approximately~~ ~~$145 million~~ assuming no change in the quarterly dividend rate of $0.27 per share or material changes in the number of shares outstanding. Additionally, distributions to noncontrolling interests in the Operating Partnership are expected to be approximately $3.6 million assuming no material changes in the number of Redeemable Common Units outstanding.

~~Future share repurchases, if any, will depend on the Company’s liquidity and cash flow, as well as general market conditions and other considerations including capital allocation priorities.~~

~~We have paid $1.1 million of the approximately $3.6 million in current year mandatory pension contribution requirements.~~

~~Cash tax payments in 2020 are expected to be~~ ~~approximately $1.1 million,~~ ~~primarily related to the New Zealand subsidiary.~~

~~PERFORMANCE AND LIQUIDITY INDICATORS~~OFF-BALANCE SHEET ARRANGEMENTS

SUMMARY OF GUARANTOR FINANCIAL INFORMATION

In May 2021, Rayonier, L.P. issued $450 million of 2.75% Senior Notes due 2031 (the “Senior Notes due 2031”). Rayonier TRS Holdings Inc., Rayonier Inc., and Rayonier Operating Company, LLC agreed to irrevocably, fully and unconditionally guarantee jointly and severally, the obligations of Rayonier, L.P. in regards to the Senior Notes due 2031. As a general partner of Rayonier, L.P., Rayonier Inc. consolidates Rayonier, L.P. and has no material assets or liabilities other than its interest in Rayonier, L.P. These notes are unsecured and unsubordinated and will rank equally with all other unsecured and unsubordinated indebtedness from time to time outstanding.

Rayonier, L.P. is a limited partnership, in which Rayonier Inc. is the general partner. The ~~discussion~~operating subsidiaries of Rayonier, L.P. conduct all of our operations. Rayonier, L.P.’s most significant assets are its interest in operating subsidiaries, which have been excluded in the table below ~~is presented~~ to ~~enhance~~eliminate intercompany transactions between the ~~reader’s understanding~~issuer and guarantors and to exclude investments in non-guarantors. As a result, our ability to make required payments on the notes depends on the performance of our operating ~~performance, liquidity,~~subsidiaries and their ability to generate cash and satisfy rating agency and creditor requirements. This information includes two measures of financial results: Adjusted Earnings before Interest, Taxes, Depreciation, Depletion and Amortization (“Adjusted EBITDA”) and Cash Available for Distribution (“CAD”). These measuresdistribute funds to us. There are ~~not defined by Generally Accepted Accounting Principles (“GAAP”), and~~no material restrictions on dividends from the ~~discussion of Adjusted EBITDA and CAD is not intended to conflict with or change any of the GAAP disclosures described above.~~operating subsidiaries.

Management uses CAD as a liquidity measure. CAD is a non-GAAP measure of cash generated during a period that is available for common stock dividends, distributions to noncontrolling interests in the Operating Partnership, distributions to the New Zealand minority shareholder, repurchase of the Company’s common shares, debt reduction, timberland acquisitions and real estate development investments. CAD is defined as cash provided by operating activities adjusted for capital spending (excluding timberland acquisitions and real estate development investments), CAD attributable to noncontrolling interest in Timber Funds and working capital and otherThe summarized balance sheet ~~changes. CAD is not necessarily indicative of the CAD that may be generated in future periods.~~

Management uses Adjusted EBITDA as a performance measure. Adjusted EBITDA is a non-GAAP measure that management uses to make strategic decisions about the business and that investors can use to evaluate the operational performance of the assets under management. It removes the impact of specific items that management believes do not directly reflect the core business operations on an ongoing basis attributable to Rayonier. We define Adjusted EBITDA as earnings before interest, taxes, depreciation, depletion, amortization, the non-cash cost of land and improved development, non-operating income and expense, operating loss attributable to noncontrolling interest in Timber Funds, costs related to the merger with Pope Resources and Large Dispositions.

~~We reconcile Adjusted EBITDA to Net Income~~information for the consolidated ~~Company and to Operating Income (Loss)~~obligor group of debt issued by Rayonier, L.P. for the ~~segments, as those~~nine months ended September 30, 2023 and year ended December 31, 2022 are provided in the ~~most comparable GAAP measures for each.~~ table below:


(in millions)	September 30, 2023	December 31, 2022
Current assets	$89.9	$112.2
Non-current assets	128.3	122.8
Current liabilities	21.7	19.8
Non-current liabilities	2,223.3	2,001.9
Due to non-guarantors	747.5	520.4

The ~~following table provides a reconciliation~~summarized results of ~~Net Income to Adjusted EBITDA~~operations information for the ~~respective periods (in millions~~consolidated obligor group of ~~dollars):~~

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Net Income to Adjusted EBITDA Reconciliation
Net income $0.5 $20.9 $26.9 $48.7
Interest, net and miscellaneous income 9.7 7.1 17.8 13.8
Income tax expense 3.0 3.6 6.7 8.0
Depreciation, depletion and amortization 38.3 27.6 72.6 64.1
Non-cash cost of land and improved development 13.0 1.6 13.4 5.6
Operating loss attributable to NCI in Timber Funds 2.0 — 2.0 —
Non-operating income (1.5) (0.3) (1.1) (0.6)
Costs related to the merger with Pope Resources (a) 13.5 — 16.0 —
Large Dispositions (b) — — (28.7) —
Adjusted EBITDA $78.6 $60.6 $125.7 $139.7

~~(a) Costs related to the merger with Pope Resources include legal, accounting, due diligence, consulting and other costs related to the merger with Pope Resources.~~

(b) Large Dispositions are defined as transactions involving the sale of timberland that exceed $20 million in size and do not have a demonstrable premium relative to timberland value. In March 2020, we completed the disposition of approximately 67,~~000 acres~~ ~~located in Mississippi for a sales price and gain of approximately~~ ~~$116.0 million and $28.7 million, respectively.~~

~~The following tables provide a reconciliation of Operating Income (Loss)~~debt issued by ~~segment to Adjusted EBITDA by segment~~Rayonier, L.P. for the ~~respective periods (in millions of dollars):~~

Three Months Ended Southern Timber Pacific Northwest Timber New Zealand Timber Timber Funds Real Estate Trading Corporate
and
Other Total
June 30, 2020
Operating income (loss) $11.2 ($6.7) $5.0 ($1.9) $24.8 $0.1 ($20.9) $11.7
Operating loss attributable to NCI in Timber Funds — — — 2.0 — — — 2.0
Depreciation, depletion and amortization 15.2 10.6 4.9 0.5 6.7 — 0.3 38.3
Non-cash cost of land and improved development — — — — 13.0 — — 13.0
Costs related to the merger with Pope Resources (a) — — — — — — 13.5 13.5
Adjusted EBITDA $26.4 $3.9 $9.9 $0.7 $44.6 $0.1 ($7.0) $78.6
June 30, 2019
Operating income (loss) $14.7 ($3.8) $12.8 — $15.5 ($0.2) ($7.6) $31.4
Depreciation, depletion and amortization 12.9 6.0 7.2 — 1.2 — 0.3 27.6
Non-cash cost of land and improved development — — — — 1.6 — — 1.6
Adjusted EBITDA $27.6 $2.2 $20.0 — $18.3 ($0.2) ($7.3) $60.6

~~(a) Costs related to the merger with Pope Resources include legal, accounting, due diligence, consulting and other costs related to the merger with Pope Resources.~~

Six Months Ended Southern Timber Pacific Northwest Timber New Zealand Timber Timber Funds Real Estate Trading Corporate
and
Other Total
June 30, 2020
Operating income (loss) $26.3 ($7.6) $10.4 ($1.9) $51.6 $0.1 ($28.6) $50.2
Operating loss attributable to NCI in Timber Funds — — — 2.0 — — — 2.0
Depreciation, depletion and amortization 33.4 21.3 9.7 0.5 7.1 — 0.6 72.6
Non-cash cost of land and improved development — — — — 13.4 — — 13.4
Costs related to merger with Pope Resources (a) — — — — — — 16.0 16.0
Large Dispositions (b) — — — — (28.7) — — (28.7)
Adjusted EBITDA $59.7 $13.7 $20.1 $0.7 $43.5 $0.1 ($12.0) $125.7
June 30, 2019
Operating income (loss) $36.3 ($7.6) $28.5 — $25.5 $0.3 ($13.1) $69.9
Depreciation, depletion and amortization 32.6 12.9 13.5 — 4.5 — 0.6 64.1
Non-cash cost of land and improved development — — — — 5.6 — — 5.6
Adjusted EBITDA $68.9 $5.3 $42.0 — $35.7 $0.3 ($12.5) $139.7

~~(a) Costs related to the merger with Pope Resources include legal, accounting, due diligence, consulting and other costs related to the merger with Pope Resources.~~

(b) Large Dispositions are defined as transactions involving the sale of timberland that exceed $20 million in size and do not have a demonstrable premium relative to timberland value. In March 2020, we completed the disposition of approximatel~~y 67,000 acres~~ ~~located in Mississippi for a sales price and gain of approximately $116.0 million and $28.7 million, respectively.~~

~~The following table provides a reconciliation of Cash Provided by Operating Activities to Adjusted CAD (in millions of dollars):~~

Six Months Ended June 30,
2020 2019
Cash provided by operating activities $82.6 $117.0
Capital expenditures (a) (29.4) (29.5)
Costs related to the merger with Pope Resources (b) 16.0 —
CAD attributable to NCI in Timber Funds (0.9) —
Working capital and other balance sheet changes 11.4 7.6
CAD 79.7 95.1
Mandatory debt repayments (25.0) —
CAD after mandatory debt repayments 54.7 95.1

Cash used for investing activities ($170.8) ($60.8)
Cash provided by (used for) financing activities $114.9 ($78.0)

~~(a) Capital expenditures during the six~~nine months ended ~~June~~September 30, ~~2020 exclude timberland acquisitions. Excluding the Pope Resources acquisition, timberland acquisitions were $24.2 million~~2023 and ~~$26.4 million, respectively, during the six months~~year ended ~~June 30, 2020 and June 30, 2019.~~

~~(b) Costs related to the merger with Pope Resources include legal, accounting, due diligence, consulting and other costs related to the merger with Pope Resources.~~

~~The following table provides supplemental cash flow data (in millions):~~

Six Months Ended June 30,
2020 2019
Purchase of timberlands (a) ($24.2) ($26.4)
Real Estate Development Investments (3.6) (1.0)
Distributions to noncontrolling interest in consolidated affiliates (7.6) (3.6)

~~(a) The six months ended June 30, 2020 excludes timberland acquired~~December 31, 2022 are provided in the ~~merger with Pope Resources. See~~ ~~Note 2 - Merger with Pope Resources~~ ~~for additional information.~~table below:

~~LIQUIDITY FACILITIES~~

~~2020 DEBT ACTIVITY~~

~~See~~ ~~Note 7 — Debt~~ ~~for additional information.~~


(in millions)	September 30, 2023	December 31, 2022
Cost and expenses	($23.5)	($28.9)
Operating loss	(23.4)	(28.9)
Net loss	(50.9)	(54.3)
Revenue from non-guarantors	641.5	977.9

OFF-BALANCE SHEET ARRANGEMENTS

We utilize off-balance sheet arrangements to provide credit support for certain suppliers and vendors in case of their default on critical obligations, and collateral for outstanding claims under our previous workers’ compensation self-insurance programs. These arrangements consist of standby letters of credit and surety bonds. As part of our ongoing operations, we also periodically issue guarantees to third parties. Off-balance sheet arrangements are not considered a source of liquidity or capital resources and do not expose us to material risks or material unfavorable financial impacts. See Note 1311 — Guarantees for details on the letters of credit and surety bonds as of ~~June~~September 30, ~~2020.~~2023.

SUMMARY OF GUARANTOR FINANCIAL INFORMATION

Rayonier, L.P. is a limited partnership, in which Rayonier Inc. is the general partner. The operating subsidiaries of Rayonier, L.P. conduct all of our operations. Rayonier, L.P.’s most significant assets are its interest in operating subsidiaries, which have been excluded in the table below to eliminate intercompany transactions between the issuer and guarantors and to exclude investments in non-guarantors. As a result, our ability to make required payments on the notes depends on the performance of our operating subsidiaries and their ability to distribute funds to us. There are no material restrictions on dividends from the operating subsidiaries.

The summarized balance sheet information for the consolidated obligor group of debt issued by Rayonier, L.P. for the nine months ended September 30, 2023 and year ended December 31, 2022 are provided in the table below:


(in millions)	September 30, 2023	December 31, 2022
Current assets	$89.9	$112.2
Non-current assets	128.3	122.8
Current liabilities	21.7	19.8
Non-current liabilities	2,223.3	2,001.9
Due to non-guarantors	747.5	520.4

The summarized results of operations information for the consolidated obligor group of debt issued by Rayonier, L.P. for the nine months ended September 30, 2023 and year ended December 31, 2022 are provided in the table below:


(in millions)	September 30, 2023	December 31, 2022
Cost and expenses	($23.5)	($28.9)
Operating loss	(23.4)	(28.9)
Net loss	(50.9)	(54.3)
Revenue from non-guarantors	641.5	977.9

PERFORMANCE AND LIQUIDITY INDICATORS

The discussion below is presented to enhance the reader’s understanding of our operating performance, liquidity, and ability to generate cash and satisfy rating agency and creditor requirements. This information includes two measures of financial results: Adjusted Earnings before Interest, Taxes, Depreciation, Depletion and Amortization (“Adjusted EBITDA”) and Cash Available for Distribution (“CAD”). These measures are not defined by Generally Accepted Accounting Principles (“GAAP”), and the discussion of Adjusted EBITDA and CAD is not intended to conflict with or change any of the GAAP disclosures described above.

~~CONTRACTUAL FINANCIAL OBLIGATIONS~~Management uses CAD as a liquidity measure. CAD is a non-GAAP measure of cash generated during a period that is available for common share dividends, distributions to operating partnership unitholders, distributions to noncontrolling interests, repurchase of the Company’s common shares, debt reduction, timberland acquisitions and real estate development investments. CAD is defined as cash provided by operating activities adjusted for capital spending (excluding timberland acquisitions and real estate development investments) and working capital and other balance sheet changes. CAD is not necessarily indicative of the CAD that may be generated in future periods.

~~In addition~~Management uses Adjusted EBITDA as a performance measure. Adjusted EBITDA is a non-GAAP measure that management uses to ~~using cash flow from operations~~make strategic decisions about the business and ~~proceeds from Large Dispositions, we finance our operations through~~that investors can use to evaluate the ~~issuance~~operational performance of ~~debt~~the assets under management. It excludes specific items that management believes are not indicative of the Company’s ongoing operating results. We define Adjusted EBITDA as earnings before interest, taxes, depreciation, depletion, amortization, the non-cash cost of land and ~~by entering into leases. These financial obligations are recorded in accordance with accounting rules applicable to~~improved development, non-operating income and expense, the ~~underlying transaction,~~gain associated with the ~~result that some~~multi-family apartment complex sale attributable to noncontrolling interests, timber write-offs resulting from casualty events and Large Dispositions.

We reconcile Adjusted EBITDA to Net Income for the consolidated Company and to Operating Income for the segments, as those are ~~recorded as liabilities on~~ the ~~Consolidated Balance Sheets, while others are required to be disclosed in the Notes to Consolidated Financial Statements and Management’s Discussion and Analysis.~~

most comparable GAAP measures for each. The following table ~~aggregates our contractual financial obligations as~~provides a reconciliation of ~~June 30, 2020 and anticipated cash spending by period:~~Net Income to Adjusted EBITDA for the respective periods (in millions of dollars):

Contractual Financial Obligations (in millions) Total Payments Due by Period
Remaining 2020 2021-2022 2023-2024 Thereafter
Long-term debt, excluding Timber Funds (a) $1,305.0 — $325.0 — $980.0
Long-term debt, Timber Funds (b) 32.4 — — 32.4 —
Current maturities of long-term debt, Timber Funds 25.0 25.0 — — —
Interest payments on long-term debt, excluding Timber Funds (c) 159.2 16.2 58.5 40.2 44.3
Interest payments on long-term debt, Timber Funds 6.1 1.0 3.1 2.0 —
Operating leases — timberland (d) 170.2 5.0 15.3 13.8 136.1
Operating leases — PP&E, offices (d) 7.0 0.8 2.3 1.7 2.2
Commitments — derivatives (e) 110.5 7.7 30.3 32.6 39.9
Commitments — environmental remediation (f) 11.9 0.7 4.4 4.0 2.8
Commitments — other (g) 12.1 6.9 1.9 0.5 2.8
Total contractual cash obligations $1,839.4 $63.3 $440.8 $127.2 $1,208.1


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Net Income to Adjusted EBITDA Reconciliation
Net Income	$22.7	$31.9	$49.3	$88.1




Interest, net and miscellaneous income	12.0	7.9	35.5	25.0
Income tax expense	0.6	1.2	1.8	8.1
Depreciation, depletion and amortization	37.0	31.1	114.3	114.2
Non-cash cost of land and improved development	6.6	3.1	20.2	20.3
Gain associated with the multi-family apartment complex sale attributable to NCI (a)	—	(11.5)	—	(11.5)












Timber write-offs resulting from casualty events (b)	—	1.1	2.3	1.1
Non-operating expense (income) (c)	0.1	(0.1)	(20.5)	0.5
Adjusted EBITDA	$78.9	$64.7	$202.9	$245.8

(a)Gain associated with the multi-family apartment complex sale attributable to NCIrepresents the gain recognized in connection with the sale of property by the Bainbridge Landing joint venture attributable to noncontrolling interests.

(b)Timber write-offs resulting from casualty events includes the write-off of merchantable and pre-merchantable timber volume damaged by casualty events which cannot be salvaged.

(c)The ~~book value~~nine months ended September 30, 2023 includes $20.5 million of ~~long-term debt, excluding~~ net recoveries associated with legal settlements.

The following tables provide a reconciliation of Operating Income (Loss) by segment to Adjusted EBITDA by segment for the respective periods (in millions of dollars):


Three Months Ended	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Real Estate	Trading	Corporate and Other	Total
September 30, 2023
Operating income (loss)	$18.6	($0.6)	$17.6	$9.2	($0.1)	($9.4)	$35.4







Depreciation, depletion and amortization	19.2	8.3	6.0	3.1	—	0.4	37.0
Non-cash cost of land and improved development	—	—	—	6.6	—	—	6.6



Adjusted EBITDA	$37.8	$7.8	$23.5	$18.9	($0.1)	($9.0)	$78.9

September 30, 2022
Operating income	$22.5	$2.2	$9.3	$15.7	$0.2	($9.0)	$40.9


Gain associated with the multi-family apartment complex sale attributable to NCI (a)	—	—	—	(11.5)	—	—	(11.5)


Timber write-off resulting from a casualty event (b)	—	1.1	—	—	—	—	1.1
Depreciation, depletion and amortization	14.1	9.4	6.3	1.0	—	0.3	31.1
Non-cash cost of land and improved development	—	—	—	3.1	—	—	3.1



Adjusted EBITDA	$36.6	$12.6	$15.6	$8.4	$0.2	($8.6)	$64.7

(b)Timber ~~Funds, net~~write-off resulting from a casualty event includes the write-off of ~~deferred financing costs~~merchantable and ~~fair market value adjustments, is currently recorded at $1,310.5~~pre-merchantable timber volume damaged by a casualty event which cannot be salvaged.



Nine Months Ended	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Real Estate	Trading	Corporate and Other	Total
September 30, 2023
Operating income (loss)	$62.6	($6.5)	$19.3	$18.7	$0.4	($28.3)	$66.1






Timber write-off resulting from a casualty event (a)	—	—	2.3	—	—	—	2.3
Depreciation, depletion and amortization	61.6	28.2	16.3	6.8	—	1.3	114.3
Non-cash cost of land and improved development	—	—	—	20.2	—	—	20.2





Adjusted EBITDA	$124.2	$21.7	$37.9	$45.8	$0.4	($27.1)	$202.9

September 30, 2022
Operating income	$76.9	$11.7	$22.7	$37.0	$0.1	($26.6)	$121.7

Gain associated with the multi-family apartment complex sale attributable to NCI (b)	—	—	—	(11.5)	—	—	(11.5)



Timber write-off resulting from casualty event (a)	—	1.1	—	—	—	—	1.1
Depreciation, depletion and amortization	46.8	35.6	18.2	12.7	—	0.9	114.2
Non-cash cost of land and improved development	—	—	—	20.3	—	—	20.3




Adjusted EBITDA	$123.7	$48.4	$40.8	$58.4	$0.1	($25.7)	$245.8

(a)Timber write-off resulting from a casualty event includes the write-off of merchantable and pre-merchantable timber volume damaged by a casualty event which cannot be salvaged.

(b)Gain associated with the apartment complex sale attributable to NCI represents the gain recognized in connection with the sale of property by the Bainbridge Landing joint venture attributable to noncontrolling interests.

The following table provides a reconciliation of Cash Provided by Operating Activities to Adjusted CAD (in millions of dollars):


	Nine Months Ended September 30,
	2023	2022
Cash provided by operating activities	$208.9	$209.9
Capital expenditures (a)	(53.1)	(48.2)
Net recoveries on legal settlements	(20.5)	—

Working capital and other balance sheet changes	(21.8)	(2.9)
CAD	$113.5	$158.8
Mandatory debt repayments	—	—
CAD after mandatory debt repayments	$113.5	$158.8


Cash used for investing activities	($79.7)	($55.9)
Cash used for financing activities	($134.2)	($237.6)

(a) Capital expenditures exclude timberland acquisitions of $14.0 million ~~on our Consolidated Balance Sheet, but upon maturity~~and $3.2 million during the ~~liability will be $1,305.0 million.~~nine months ended September 30, 2023 and September 30, 2022, respectively.

The following table provides supplemental cash flow data (in millions of dollars):


	Nine Months Ended September 30,
	2023	2022
Purchase of timberlands	($14.0)	($3.2)
Real Estate Development Investments	(18.8)	(10.9)
Distributions to noncontrolling interests in consolidated affiliates	—	(16.5)

LIQUIDITY FACILITIES

2023 DEBT ACTIVITY

See Note 76 — Debt for additional information.

~~(b)~~The book value of long-term debt for the Timber Funds, net of fair market value adjustments, is currently recorded at $35.6 million on our Consolidated Balance Sheet, but upon maturity the liability will be $32.4 million. See ~~Note 7 - Debt~~ ~~for additional information~~

~~(c)Projected interest payments for variable rate debt were calculated based on outstanding principal amounts and interest rates as of June 30, 2020.~~

~~(d)Excludes anticipated renewal options.~~

~~(e)~~Commitments — derivatives represents payments expected to be made on derivative financial instruments (foreign exchange contracts, interest rate swaps, interest rate swap locks and forward-starting interest rate swaps). See ~~Note 15 — Derivative Financial Instruments and Hedging Activities~~.

~~(f)Commitments - environmental remediation represents our estimate of potential liability associated with environmental contamination at Port Gamble.~~ ~~See~~ ~~Note 12 - Environmental Liabilities~~.

~~(g)~~Commitments — other includes pension contribution requirements based on actuarially determined estimates and IRS minimum funding requirements, payments expected to be made on the Wildlight and Richmond Hill development projects, payments made on timberland deeds and other purchase obligations.

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various market risks, including changes in interest rates, commodity prices and foreign exchange rates. Our objective is to minimize the economic impact of these market risks. We use derivatives in accordance with policies and procedures approved by the Audit Committee of the Board of Directors. Derivatives are managed by a senior executive committee whose responsibilities include initiating, managing and monitoring resulting exposures. We do not enter into financial instruments for trading or speculative purposes.

Interest Rate Risk

Due to the discontinuation of LIBOR on June 30, 2023, we amended our outstanding variable rate debt agreements and active interest rate swaps to change the interest rate benchmark from LIBOR to Daily Simple SOFR in December 2022. In March 2023, we modified our benchmark rates from LIBOR to Daily Simple SOFR for our forward-starting interest rates swaps. We are exposed to interest rate risk through our variable rate debt ~~primarily~~ due to changes in ~~LIBOR.~~SOFR. However, we use interest rate swaps to manage our exposure to interest rate movements on our term credit agreements by swapping existing and anticipated future borrowings from floating rates to fixed rates. As of ~~June~~September 30, ~~2020,~~2023, we had ~~$935 million~~$1 billion of U.S. long-term variable rate debt ~~including $35 million outstanding on our revolving credit facility and $900 million~~ outstanding on our term credit agreements.

The notional amount of outstanding interest rate swap contracts with respect to our term credit agreements at ~~June~~September 30, ~~2020~~2023 was ~~$900~~$850 million. The ~~maturity date of the~~$350 million 2015 Term ~~Credit Agreement was extended from August 2024 to~~Loan Facility matures in April 2028, with the associated interest rate swaps maturing in August 2024. We have entered into forward starting interest rate swaps to cover ~~$150~~$200 million of the 2015 Term ~~Credit Agreement~~Loan Facility through the extended maturity date. The 2016 Incremental Term Loan ~~Agreement~~Facility and associated interest rate swaps mature in May 2026, and the ~~2020~~2021 Incremental Term Loan ~~Agreement matures in June 2025~~Facility and ~~the~~ associated interest rate swaps mature in June ~~2030.~~2029. We have entered into an interest rate swap agreement to cover $100 million of borrowings under the 2022 Incremental Term Loan Facility through the maturity date in December 2027. At this borrowing level, a hypothetical one-percentage point increase/decrease in interest rates would result in a corresponding increase/decrease in interest payments and expense of approximately ~~$0.4~~$1.5 million over a 12-month period.

The fair market value of our ~~long-term~~ fixed interest rate debt is also subject to interest rate risk. The estimated fair value of our ~~long-term~~ fixed rate debt ~~excluding the Timber Funds~~ at ~~June~~September 30, ~~2020~~2023 was ~~$363~~$422.2 million compared to the ~~$370 million principal amount. The estimated fair value of our Timber Funds’ long-term fixed rate debt at June 30, 2020 was $60.8 million compared to the $57.4~~$519.0 million principal amount. We use interest rates of debt with similar terms and maturities to estimate the fair value of our debt. Generally, the fair market value of fixed-rate debt will increase as interest rates fall and decrease as interest rates rise. A hypothetical one-percentage point increase/decrease in prevailing interest rates at ~~June~~September 30, ~~2020~~2023 would result in a corresponding decrease/increase in the fair value of our ~~long-term~~ fixed rate debt of approximately ~~$11 million.~~$24 million and $26 million, respectively.

We estimate the periodic effective interest rate on our ~~U.S.~~ long-term fixed and variable rate debt ~~excluding Timber Funds,~~ to be approximately 3.1% after consideration of interest rate swaps and estimated patronage refunds, excluding unused commitment fees on the revolving credit facility. ~~We estimate the periodic effective interest rate on our Timber Funds’ long-term fixed rate debt to be approximately 3.9% after consideration of estimated patronage refunds.~~

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The following table summarizes our outstanding debt, interest rate swaps and average interest rates, by year of expected maturity and their fair values at ~~June~~September 30, ~~2020:~~2023:

(Dollars in thousands) 2020 2021 2022 2023 2024 Thereafter Total Fair Value
Variable rate debt:
Principal amounts — — — — — $935,000 $935,000 $935,000
Average interest rate (a)(b) — — — — — 1.94 % 1.94 %
Fixed rate debt, excluding Timber Funds:
Principal amounts — — $325,000 — — $45,000 $370,000 $362,698
Average interest rate (b) — — 3.75 % — — 5.22 % 3.93 %
Fixed rate debt, Timber Funds:
Principal amounts $25,000 — — $17,980 $14,400 — $57,380 $60,824
Average interest rate (b) 4.28 % — — 5.10 % 4.45 % — 4.58 %
Interest rate swaps:
Notional amount — — — — $350,000 $550,000 $900,000 ($65,381)
Average pay rate (b) — — — — 2.28 % 1.31 % 1.69 %
Average receive rate (b) — — — — 0.17 % 0.17 % 0.17 %
Forward-starting interest rate swaps
Notional amount — — — — — $475,000 $475,000 ($22,832)
Average pay rate (b) — — — — — 1.22 % 1.22 %
Average receive rate (b) — — — — — 0.16 % 0.16 %


(Dollars in thousands)	2023	2024		2025		2026		2027		Thereafter		Total		Fair Value
Variable rate debt:
Principal amounts	—	—		—		$200,000		$250,000		$550,000		$1,000,000		$1,000,000
Average interest rate (a)(b)	—	—		—		7.05	%	7.00	%	6.99	%	7.00	%
Fixed rate debt:
Principal amounts	—	—		$20,709		$24,161		$24,161		$450,000		$519,030		$422,224
Average interest rate (b)	—	—		2.95	%	3.64	%	6.48	%	2.75	%	2.97	%






Interest rate swaps:
Notional amount	—	$350,000		—		$200,000		$100,000		$200,000		$850,000		$62,520
Average pay rate (b)	—	2.18	%	—		1.50	%	3.72	%	0.67	%	1.85	%
Average receive rate (b)	—	5.30	%	—		5.30	%	5.30	%	5.30	%	5.30	%




Forward-starting interest rate swaps
Notional amount	—	—		—		—		—		$200,000		$200,000		$17,501
Average pay rate (b)	—	—		—		—		—		1.37	%	1.37	%
Average receive rate (b)	—	—		—		—		—		5.30	%	5.30	%

(a) Excludes estimated patronage refunds.

(b) Interest rates as of ~~June~~September 30, ~~2020.~~

2023.

Foreign Currency Exchange Rate Risk

The ~~functional currency of our New Zealand-based operations and~~ New Zealand ~~subsidiary is the New Zealand dollar. Through these operations and our ownership in the New Zealand subsidiary, we~~subsidiary’s export sales are ~~exposed to foreign currency risk on cash held in foreign currencies, shareholder distributions which are paid~~predominately denominated in U.S. dollars, and ~~on foreign export sales~~therefore its cash flows are affected by fluctuations in the exchange rate between the New Zealand dollar and the U.S. dollar. This exposure is partially managed by a natural currency hedge, as ocean freight payments ~~that~~and shareholder distributions are ~~predominantly denominated~~also paid in U.S. dollars. ~~To mitigate these risks, the New Zealand subsidiary routinely enters into foreign currency exchange contracts and foreign currency option contracts to hedge a portion of the New Zealand subsidiary’s~~We manage any excess foreign exchange ~~exposure.~~exposure through the use of derivative financial instruments.

~~Sales and Expense~~Foreign Exchange Exposure

At ~~June~~September 30, ~~2020,~~2023, the New Zealand subsidiary had foreign currency exchange contracts with a notional amount of ~~$62~~$127.2 million andand foreign currency option contracts with a notional amount of ~~$36~~ $86.0 million outstanding related to foreign export ~~sales and ocean freight payments.~~sales. The amount hedged represents a portion of ~~forecasted~~forecasted U.S. dollar denominated export timber and log trading sales proceeds over the next 2436 months and next 32 months, respectively.

The following table summarizes our outstanding foreign currency exchange rate risk contracts at ~~June~~September 30, ~~2020:~~2023:


(Dollars in thousands)	(Dollars in thousands)	0-1 months	1-2 months	2-3 months	3-6 months	6-12 months	12-18 months	18-24 months	Total	Fair Value	(Dollars in thousands)	0-1 months	1-2 months	2-3 months	3-6 months	6-12 months	12-18 months		18-24 months	24-36 months	Total	Fair Value
Foreign exchange contracts to sell U.S. dollar for New Zealand dollar	Foreign exchange contracts to sell U.S. dollar for New Zealand dollar																	Foreign exchange contracts to sell U.S. dollar for New Zealand dollar
Notional amount	Notional amount	$8,500	$6,000	$4,000	$10,000	$15,000	$13,000	$5,000	$61,500	$502	Notional amount	$8,500	$6,200	$5,000	$15,000	$34,000	$14,500		$12,000	$32,000	$127,200	($4,585)
Average contract rate	Average contract rate	1.5619	1.5619	1.5620	1.5624	1.5635	1.5651	1.5663	1.5634		Average contract rate	1.5225	1.5312	1.5350	1.5403	1.6136	1.6836		1.6572	1.6521	1.6135

Foreign currency option contracts to sell U.S. dollar for New Zealand dollar	Foreign currency option contracts to sell U.S. dollar for New Zealand dollar																	Foreign currency option contracts to sell U.S. dollar for New Zealand dollar
Notional amount	Notional amount	—	$2,000	$2,000	$4,000	$20,000	$8,000	—	$36,000	$30	Notional amount	$2,000	$2,000	$2,000	$6,000	$12,000	$24,000		$24,000	$14,000	$86,000	($534)
Average strike price	Average strike price	—	1.5250	1.5243	1.5779	1.5726	1.6063	—	1.5753		Average strike price	1.4946	1.4969	1.5243	1.5684	1.6347	1.6446		1.7150	1.6680	1.6517

Item 4. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

Rayonier Inc.

~~Rayonier~~Rayonier’s management is responsible for establishing and maintaining adequate disclosure controls and procedures. Disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Securities Exchange Act of 1934 (the “Exchange Act”), are designed with the objective of ensuring information required to be disclosed by the Company in reports filed under the Exchange Act, such as this quarterly report on Form 10-Q, is (1) recorded, processed, summarized and reported or submitted within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Because of the inherent limitations in all control systems, no control evaluation can provide absolute assurance that all control exceptions and instances of fraud have been prevented or detected on a timely basis. Even systems determined to be effective can provide only reasonable assurance that their objectives are achieved.

Based on an evaluation of the Company’s disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q, our management, including the Chief Executive Officer and Chief Financial Officer, concluded the design and operation of the disclosure controls and procedures were effective as of ~~June~~September 30, ~~2020.~~2023.

In the quarter ended ~~June~~September 30, ~~2020,~~2023, based upon the evaluation required by Rule 13a-15(d) under the Exchange Act, there were no changes in our internal control over financial reporting that would materially affect or are reasonably likely to materially affect our internal control over financial reporting.

Rayonier, L.P.

The Operating Partnership is responsible for establishing and maintaining adequate disclosure controls and procedures. Disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Securities Exchange Act of 1934 (the “Exchange Act”), are designed with the objective of ensuring information required to be disclosed by Rayonier, L.P. in reports filed under the Exchange Act, such as this quarterly report on Form 10-Q, is (1) recorded, processed, summarized and reported or submitted within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including Rayonier’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Based on an evaluation of the Operating Partnership’s disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q, management, including Rayonier’s Chief Executive Officer and Chief Financial Officer, concluded the design and operation of the disclosure controls and procedures were effective as of ~~June~~September 30, ~~2020.~~2023.

In the quarter ended ~~June~~September 30, ~~2020,~~2023, based upon the evaluation required by Rule 13a-15(d) under the Exchange Act, there were no changes in internal controls over financial reporting that would materially affect or are reasonably likely to materially affect internal controls over financial reporting.

PART II. OTHER INFORMATION

~~Item 1A. RISK FACTORS~~

Our operations are subject to a number of risks. When considering an investment in our securities, you should carefully read and consider these risks, together with all other information in this Quarterly Report on Form 10-Q. 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. The information presented below updates the risk factors set forth in Part I, “Item 1A. Risk Factors,” of the Company’s 2019 Form 10-K.

~~Coronavirus (COVID-19) Pandemic~~

~~The recent novel coronavirus (COVID-19) outbreak could materially adversely affect our financial condition and results of operations.~~

Epidemics, pandemics or other such crises or public health concerns in regions of the world where we have operations or sell products, could result in the disruption of our business. Specifically, the ongoing COVID-19 outbreak has resulted in increased travel restrictions and extended shutdowns of certain businesses around the world, as well as a deterioration of general economic conditions. These or any governmental or other regulatory developments or health concerns in countries in which we operate or export to could result in operational restrictions or social and economic instability, or labor shortages. At this point in time, there is substantial uncertainty relating to the potential impact of COVID-19 on our business. Infections may continue to spread, which could limit our ability to timely harvest, sell and transport our timber, restrict our operations or cause supply chain disruptions for us and our customers. In addition, we also face risks and costs associated with implementation of business continuity plans and modified work conditions, including making required resources available to our workforce to enable them to continue essential work. Any of these developments could have a negative impact on our business, financial condition and operating results. In addition, the COVID-19 pandemic could continue to adversely affect the economies and markets of many countries, resulting in a further economic downturn that could impact the pricing or demand for timber, real estate, and especially housing, which could have an adverse effect on our business, operating results and financial condition, as well as market value of our securities. Further, our customers may be negatively impacted due to the general decline in business and operating conditions and constraints on their own liquidity and access to capital relating to COVID-19, which could increase our counterparty credit exposure. The continued spread of COVID-19 has also led to disruption and volatility in the global capital markets. This could lead to further volatility in interest and exchange rates, increase our cost of capital, and adversely impact our access to capital, credit ratings or overall liquidity.

~~Failure of Operating Partnership to maintain status as a partnership for U.S. federal income tax purposes~~

We believe our Operating Partnership qualifies as a partnership for U.S. federal income tax purposes. As a partnership, our Operating Partnership is not subject to U.S. federal income tax on its income. Instead, each of the partners is allocated its share of our Operating Partnership’s income. We cannot assure you, however, that the IRS will not challenge the status of our Operating Partnership as a partnership for U.S. federal income tax purposes. If the IRS were to successfully challenge the status of our Operating Partnership as a partnership, it would be taxable as a corporation. In such event, this would reduce the amount of distributions that our Operating Partnership could make, which could have further implications as to our ability to maintain our status as a REIT. This would substantially reduce our cash available to pay distributions and the return on a unitholder and/or shareholder’s investment.

Item 1. LEGAL PROCEEDINGS

The information set forth in Note 119 — Contingencies and in Note 10 – Environmental and Natural Resource Damage Liabilities in the “Notes to Consolidated Financial Statements” under Item 1 of Part I of this report is incorporated herein by reference.

8464

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES, ~~AND~~ USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

Rayonier Inc.

REGISTERED SALES OF EQUITY SECURITIES

From time to time, the Company may issue its common shares in exchange for units in the Operating Partnership. Such shares are issued based on an exchange ratio of one common share for each unit in the Operating Partnership. During the quarter ended September 30, 2023, the Company issued 15,904 common shares in exchange for an equal number of units in the Operating Partnership pursuant to the agreement of the Operating Partnership.

ISSUER PURCHASES OF EQUITY SECURITIES

In February 2016, the Board of Directors approved the repurchase of up to $100 million of Rayonier’s common shares (the “share repurchase program”) to be made at management’s discretion. The program has no time limit and may be suspended or discontinued at any time. There were no shares repurchased under this program in the ~~second~~third quarter of ~~2020. Based~~2023. As of September 30, 2023, there was $87.7 million, or approximately 3,082,518 shares based on the period-end closing stock price of ~~$24.79 at June 30, 2020, there was $87.7 million, or approximately 3,538,864 shares,~~$28.46, remaining under this program.

The following table provides information regarding our purchases of Rayonier common shares during the quarter ended ~~June~~September 30, ~~2020:~~2023:

Period Total Number of Shares Purchased (a) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (c)
April 1 to April 30 64,379 23.72 — 3,650,788
May 1 to May 31 1,769 25.15 — 3,693,829
June 1 to June 30 20 23.96 — 3,538,864
Total 66,168 —


Period	Total Number of Shares Purchased (a)	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b)	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (c)
July 1 to July 31	38	$31.40	—	2,648,806
August 1 to August 31	10	32.94	—	2,934,062
September 1 to September 30	920	30.11	—	3,082,518
Total	968		—

(a)Includes ~~66,168~~968 shares of the Company’s common shares purchased in April, May and June from current and former employees in non-open market transactions. The shares were sold by current and former employees of the Company in exchange for cash that was usedrepurchased to ~~pay~~satisfy tax withholding ~~taxes associated with~~requirements related to the vesting of ~~share-based awards~~shares under the ~~Company’s~~Rayonier Incentive Stock Plan. The price per share surrendered is based on the closing price of the Company’s common shares on the respective vesting dates of the awards.

(b)Purchases made in open-market transactions under the $100 million share repurchase program announced on February 10, 2016.

(c)Maximum number of shares authorized to be purchased under the share repurchase program at the end of ~~April, May~~July, August and ~~June~~September are based on month-end closing stock prices of ~~$24.03, $23.75~~$33.12, $29.90 and ~~$24.79,~~$28.46, respectively.

Rayonier, L.P.

UNREGISTERED SALES OF EQUITY SECURITIES

~~During the second quarter~~There were no unregistered sales of ~~2020,~~equity securities made by the Operating Partnership ~~issued an aggregate of 4,446,153 Common Units as partial consideration~~during the quarter endedSeptember 30, 2023.

ISSUER PURCHASES OF EQUITY SECURITIES

Pursuant to the Operating Partnership’s limited partnership agreement, limited partners have the right to redeem their units in the ~~merger with Pope Resources. The~~Operating Partnership for cash, or at our election, shares of Rayonier Common ~~Units~~Stock on a one-for-one basis. During the quarter ended September 30, 2023, 15,904 units in the Operating Partnership held by limited partners were ~~issued~~redeemed in ~~private offerings exempt from registration requirements pursuant to Section 4(a)(2)~~exchange for shares of Rayonier Common Stock.

Item 5. OTHER INFORMATION

Insider Trading Arrangements and Policies

None of the ~~Securities Act to accredited investors~~Company’s directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company’s fiscal quarter ended September 30, 2023, as such terms are defined under ~~Rule 501~~item 408(a) of ~~the Securities Act.~~Regulation S-K.

8566

Item 6. EXHIBITS


~~2.1~~		Amendment No. 1, dated as of April 1, 2020, to the Agreement and Plan of Merger, by and among Rayonier Inc., Rayonier, L.P., Rayonier Operating Company LLC, Rayonier Operating Holdings, LLC, Pacific GP Merger Sub I, LLC, Pacific GP Merger Sub II, LLC, Pacific LP Merger Sub III, LLC, Pope Resources, a Delaware limited partnership, Pope MGP, Inc. and Pope EGP, Inc.	~~Incorporated by reference to Exhibit 2.1 to the Registrant’s April 1, 2020 Form 8-K~~
~~3.1~~		~~Amended and Restated Agreement of Limited Partnership of Rayonier, L.P., dated as of May 8, 2020~~	~~Incorporated by reference to Exhibit 3.1 to the Registrant’s May 13, 2020 Form 8-K~~
~~4.1~~		Pope Resources 2005 Unit Incentive Plan*	~~Incorporated by reference to Exhibit 4.3 to the Registrant’s May 8, 2020 Form S-8~~
~~4.2~~		Third Supplemental Indenture relating to the 3.750% Senior Notes due 2022, dated as of May 7, 2020, by and among Rayonier Inc., the subsidiary guarantors party thereto, Rayonier, L.P. and The Bank of New York Mellon Trust Company, N.A., as trustee	~~Incorporated by reference to Exhibit 4.1 to the Registrant’s May 13, 2020 Form 8-K~~
~~10.1~~		2020 Performance Share Award Program*	~~Incorporated by reference to Exhibit 10.3 to the Registrant’s May 1, 2020 Form 10-Q~~
~~10.2~~		Second Amendment to Credit Agreement, dated as of April 1, 2020, by and among Rayonier Inc., Rayonier TRS Holdings Inc. and Rayonier Operating Company LLC, as borrowers, the several banks, financial institutions and other institutional lenders party thereto and CoBank, ACB as administrative agent, swing line lender and issuing bank	~~Incorporated by reference to Exhibit 10.4 to the Registrant’s May 1, 2020 Form 10-Q~~
~~10.3~~		~~Annex A to Second Amendment to Credit Agreement~~	~~Incorporated by reference to Exhibit 10.5 to the Registrant’s May 1, 2020 Form 10-Q~~
~~10.4~~	Accordion Increase Agreement, dated as of April 13, 2020, by and among Rayonier Inc., Rayonier TRS Holdings Inc., and Rayonier Operating Company LLC, as borrowers, the several banks, financial institutions and other institutional lenders party thereto and CoBank, ACB as administrative agent, swing line lender and issuing bank	~~Incorporated by reference to Exhibit 10.6 to the Registrant’s May 1, 2020 Form 10-Q~~
~~10.5~~	Third Amendment and Incremental Term Loan Agreement, dated as of April 16, 2020, by and among Rayonier Inc., Rayonier TRS Holdings Inc., and Rayonier Operating Company LLC, as borrowers, the several banks, financial institutions and other institutional lenders party thereto and CoBank, ACB as administrative agent	~~Incorporated by reference to Exhibit 10.7 to the Registrant’s May 1, 2020 Form 10-Q~~
~~10.6~~	~~Tax Protection Agreement, dated as of May 8, 2020, by and among Rayonier Inc., Rayonier, L.P. and Pope Resources, A Delaware Limited Partnership~~	~~Incorporated by reference to Exhibit 10.1 to the Registrant’s May 13, 2020 Form 8-K~~
~~10.7~~	Amendment to Rayonier Investment and Savings Plan for Salaried Employees effective as of April 1, 2020, executed March 23, 2020*	~~Filed herewith~~
~~10.8~~	Amendment to Rayonier Investment and Savings Plan for Salaried Employees effective as of May 8, 2020, executed May 4, 2020*	~~Filed herewith~~
~~10.9~~	Amendment to Rayonier Investment and Savings Plan for Salaried Employees effective as of May 8, 2020, executed May 8, 2020*	~~Filed herewith~~
22.1	List of Guarantor Subsidiaries	~~Filed herewith~~Incorporated by reference to Exhibit 22.1 to the Registrant’s June 30, 2022 Form 10-Q


31.1	Rayonier Inc. - Chief Executive Officer’s Certification Pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
31.2	Rayonier Inc. - Chief Financial Officer’s Certification Pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
31.3	Rayonier, L.P. - Chief Executive Officer’s Certification Pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
31.4	Rayonier, L.P. - Chief Financial Officer’s Certification Pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
32.1	Rayonier Inc. - Certification of Periodic Financial Reports Under Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith
32.2	Rayonier, L.P. - Certification of Periodic Financial Reports Under Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith
101	The following financial information from ~~our~~Rayonier Inc. and Rayonier, L.P.’s Quarterly Report on Form 10-Q for the fiscal quarter ended ~~June~~September 30, ~~2020,~~2023, formatted in Inline Extensible Business Reporting Language (“~~XBRL”~~iXBRL”), includes: (i) the Consolidated Statements of Income and Comprehensive Income for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, ~~2020~~2023 and ~~2019;~~2022 of Rayonier Inc.; (ii) the Consolidated Balance Sheets as of ~~June~~September 30, ~~2020~~2023 and December 31, ~~2019;~~2022 of Rayonier Inc.; (iii) the Consolidated Statements of Changes in Shareholders’ Equity for the ~~Six~~Nine Months Ended ~~June~~September 30, ~~2020~~2023 and ~~2019;~~2022 of Rayonier Inc.; (iv) the Consolidated Statements of Cash Flows for the ~~Six~~Nine Months Ended ~~June~~September 30, ~~2020~~2023 and ~~2019;~~2022 of Rayonier Inc.; (v) the Consolidated Statements of Income and ~~(v)~~Comprehensive Income for the Three and Nine Months Ended September 30, 2023 and 2022 of Rayonier, L.P.; (vi) the Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022 of Rayonier, L.P.; (vii) the Consolidated Statements of Changes in Capital for the Nine Months Ended September 30, 2023 and 2022 of Rayonier, L.P.; (viii) the Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 of Rayonier, L.P.; and (ix) the Notes to Consolidated Financial Statements of Rayonier Inc. and Rayonier, L.P.	Filed herewith
104	The cover page from the Company’s Quarterly Report on Form 10-Q from the quarter ended ~~June~~September 30, ~~2020,~~2023, formatted in Inline XBRL (included as Exhibit 101).	Filed herewith

*Management contract or compensatory plan

8767

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each of the registrants has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


						RAYONIER INC.


			By:			/s/ APRIL TICE
						April Tice Vice President ~~Financial Services~~ and ~~Corporate Controller~~Chief Accounting Officer (Duly Authorized Officer, Principal Accounting Officer)

Date: ~~August 10, 2020~~

November 3, 2023


						RAYONIER, L.P.

						By: RAYONIER INC., its sole general partner

			By:			/s/ APRIL TICE
						April Tice Vice President ~~Financial Services~~ and ~~Corporate Controller~~Chief Accounting Officer (Duly Authorized Officer, Principal Accounting Officer)

Date: ~~August 10, 2020~~November 3, 2023

8868


	Common Shares			Retained Earnings	Accumulated Other Comprehensive Loss	Noncontrolling Interests in Consolidated Affiliates	Shareholders’ Equity
	Shares	Amount
Balance, January 1, 2020	129,331,069	$888,177	$583,006	($31,202)	$97,661	$1,537,642
Net income	—	—	25,854	—	567	26,421
Dividends ($0.27 per share)	—	—	(34,813)	—	—	(34,813)
Issuance of shares under incentive stock plans	2,407	66	—	—	—	66
Stock-based compensation	—	1,510	—	—	—	1,510
Repurchase of common shares made under repurchase program	(152,237)	—	(3,152)	—	—	(3,152)
Amortization of pension and postretirement plan liabilities	—	—	—	217	—	217
Foreign currency translation adjustment	—	—	—	(33,894)	(10,129)	(44,023)
Cash flow hedges	—	—	—	(82,376)	(1,099)	(83,475)
Distributions to noncontrolling interests in consolidated affiliates	—	—	—	—	(725)	(725)
Balance, March 31, 2020	129,181,239	$889,753	$570,895	($147,255)	$86,275	$1,399,668
Issuances of shares associated with the merger with Pope Resources	7,181,071	172,418	—	—	—	172,418

Net income (loss)	—	—	1,954	—	(1,499)	455
Net income attributable to noncontrolling interest in the Operating Partnership	—	—	(219)	—	—	(219)
Dividends ($0.27 per share) (a)	—	—	(36,957)	—	—	(36,957)
Issuance of shares under incentive stock plans	215,970	222	—	—	—	222
Stock-based compensation	—	2,668	—	—	—	2,668
Repurchase of common shares	(66,168)	(1,572)	—	—	—	(1,572)
Acquisition of noncontrolling interests in consolidated affiliates	—	—	—	—	372,381	372,381
Adjustment of noncontrolling interest in the Operating Partnership	—	—	(3,992)	—	—	(3,992)
Amortization of pension and postretirement plan liabilities	—	—	—	217	—	217
Foreign currency translation adjustment	—	—	—	17,872	5,386	23,258
Cash flow hedges	—	—	—	(8,306)	1,030	(7,276)
Allocation of other comprehensive income to noncontrolling interests in the Operating Partnership	—	—	—	(457)	—	(457)
Distributions to noncontrolling interests in consolidated affiliates	—	—	—	—	(6,856)	(6,856)
Balance, June 30, 2020	136,512,112	$1,063,489	$531,681	($137,929)	$456,717	$1,913,958


	Six Months Ended June 30,
	2020	2019
OPERATING ACTIVITIES
Net income	$26,876	$48,713
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion and amortization	76,195	64,093
Non-cash cost of land and improved development	13,441	5,647
Stock-based incentive compensation expense	4,178	3,821
Deferred income taxes	9,225	7,257
Amortization of losses from pension and postretirement plans	435	224
Gain on sale of large disposition of timberlands	(28,655)	—
Other	(10,632)	987
Changes in operating assets and liabilities, net of effects of merger with Pope Resources:
Receivables	(7,604)	(21,031)
Inventories	(3,714)	(994)
Accounts payable	4,895	5,558

All other operating activities	(2,040)	2,679
CASH PROVIDED BY OPERATING ACTIVITIES	82,600	116,954
INVESTING ACTIVITIES
Capital expenditures	(29,440)	(29,505)

Real estate development investments	(3,587)	(999)
Purchase of timberlands	(24,238)	(26,396)

Net proceeds from large disposition of timberlands	115,666	—

Net cash consideration for merger with Pope Resources	(231,068)	—
Other	1,880	(3,888)
CASH USED FOR INVESTING ACTIVITIES	(170,787)	(60,788)
FINANCING ACTIVITIES
Issuance of debt	320,000	—
Repayment of debt	(117,000)	—
Dividends paid on common stock	(72,204)	(71,107)
Distributions to noncontrolling interests in the Operating Partnership	(1,200)	—

Proceeds from the issuance of common shares under incentive stock plan	66	774


Repurchase of common shares	(1,572)	(4,241)
Debt issuance costs	(2,427)	—



Repurchase of common shares made under repurchase program	(3,152)	—

Distributions to noncontrolling interest in consolidated affiliates	(7,581)	(3,594)
Other	—	133
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES	114,930	(78,035)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	(1,450)	125
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Change in cash, cash equivalents and restricted cash	25,293	(21,744)
Balance, beginning of year	69,968	156,454
Balance, end of period	$95,261	$134,710
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period:
Interest (a)	$16,134	$14,377
Income taxes	1,083	705
Non-cash investing activity:
Capital assets purchased on account	2,217	3,407
Non-cash financing activity:
Equity consideration for merger with Pope Resources	$172,640	—
Redeemable Common Unit consideration for merger with Pope Resources	106,752	—


	Common Units			Accumulated Other Comprehensive Income (Loss)	Noncontrolling Interests in Consolidated Affiliates	Total Capital
	General Partners’ Capital	Limited Partners’ Capital
Balance, January 1, 2019	$15,566	$1,541,068	$239	$97,677	$1,654,550
Distributions on common units ($0.27 per common unit)	(351)	(34,698)	—	—	(35,049)
Issuance of common units under incentive stock plans	6	591	—	—	597
Stock-based compensation	15	1,462	—	—	1,477
Repurchase of common units	—	(33)	—	—	(33)
Net income	248	24,546	—	2,999	27,793
Amortization of pension and postretirement plan liabilities	—	—	112	—	112
Foreign currency translation adjustment	—	—	4,680	1,353	6,033
Cash flow hedges	—	—	(10,884)	198	(10,686)
Distributions to noncontrolling interests in consolidated affiliates	—	—	—	(3,594)	(3,594)
Balance, March 31, 2019	$15,484	$1,532,936	($5,853)	$98,633	$1,641,200
Distributions on common units ($0.27 per common unit)	(351)	(34,774)	—	—	(35,125)
Issuance of common units under incentive stock plans	2	175	—	—	177
Stock-based compensation	23	2,321	—	—	2,344
Repurchase of common units	(42)	(4,165)	—	—	(4,207)
Net income	188	18,564	—	2,168	20,920
Amortization of pension and postretirement plan liabilities	—	—	112	—	112
Foreign currency translation adjustment	—	—	(4,305)	(1,299)	(5,604)
Cash flow hedges	—	—	(19,465)	(54)	(19,519)

Balance, June 30, 2019	$15,304	$1,515,057	($29,511)	$99,448	$1,600,298


	Three Months Ended June 30,			Six Months Ended June 30,
	2020	2019	2020	2019

Operating income	—	—	—	—
Net income attributable to Rayonier, L.P. (a)	($3,596)	($3,596)	($7,192)	($7,192)
Basic earnings per unit attributable to Rayonier, L.P.	($0.03)	($0.03)	($0.05)	($0.06)
Diluted earnings per unit attributable to Rayonier, L.P.	($0.03)	($0.03)	($0.05)	($0.06)


	Core Timberlands	Timber Funds	Total
Timberland and Real Estate Business
Cash	$7,380	$8,870	$16,250
Accounts receivable	2,280	1,794	4,074
Other current assets	651	499	1,150
Timber and Timberlands	515,519	471,900	987,419
Higher and Better Use Timberlands and Real Estate Development Investments	27,722	—	27,722
Property, plant and equipment	8,307	—	8,307
Other assets	4,297	—	4,297
Total identifiable assets acquired	$566,156	$483,063	$1,049,219
			—
Accounts payable	274	292	566
Current maturities of long-term debt	—	25,084	25,084
Accrued interest	244	275	519
Other current liabilities	7,233	1,117	8,350
Long-term debt	53,502	35,759	89,261
Long-term environmental liabilities	11,000	—	11,000
Other non-current liabilities (a)	4,137	—	4,137
Total liabilities assumed	$76,390	$62,527	$138,917

Net identifiable assets	$489,766	$420,536	$910,302
Less: noncontrolling interest	(3,307)	(369,074)	(372,381)
Total net assets acquired	$486,459	$51,462	$537,921


		Year of Expiration
Lease obligations	Total	Remaining 2020	2021	2022	2023	2024	Thereafter
Operating lease liabilities	$178,880	$5,675	$9,003	$8,119	$8,051	$7,946	$140,086

Total Undiscounted Cash Flows	$178,880	$5,675	$9,003	$8,119	$8,051	$7,946	$140,086
Imputed interest	(82,154)
Balance at June 30, 2020	96,726
Less: Current portion	(8,952)
Non-current portion at June 30, 2020	$87,774


	Three Months Ended June 30,			Six Months Ended June 30,
Lease Cost Components	2020	2019	2020	2019
Operating lease cost	$1,341	$2,396	$3,439	$4,833
Variable lease cost (a)	136	81	214	157
Total lease cost (b)	$1,477	$2,477	$3,653	$4,990


	Six Months Ended June 30,
Supplemental cash flow information related to leases:	2020		2019

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases	$1,138		$1,493
Investing cash flows from operating leases	2,301		3,340
Total cash flows from operating leases	$3,439		$4,833




Weighted-average remaining lease term in years - operating leases	28		28

Weighted-average discount rate - operating leases	5	%	5	%


	Three Months Ended June 30,	Six Months Ended June 30,
Lease Income Components	2020	2020
Operating lease income	$72	$72

Total lease income	$72	$72


		Year of Expiration
Lease assets	Total	Remaining 2020	2021	2022	2023	2024	Thereafter
Operating lease Income	$708	$165	$176	$173	$137	$57	—


	Excluding Timber Funds	Timber Funds	Total
2020	—	$25,000	$25,000
2021	—	—	—
2022	325,000	—	325,000
2023	—	17,980	17,980
2024	—	14,400	14,400
Thereafter	980,000	—	980,000
Total Debt	$1,305,000	$57,380	$1,362,380


Tranche	Stated Fixed Interest Rate		Effective Fixed Interest Rate (a)		Stated Principal Amount	Est. Fair Value at Merger Date (b)
Tranche 2 (Due 2025)	6.1	%	4.8	%	$10,000	$11,838
Tranche 4 (Due 2028)	4.1	%	3.1	%	11,000	12,108
Tranches 6 & 7 (Due 2033)	5.3	%	4.2	%	16,000	19,609
Tranche 8 (Due 2036)	5.4	%	4.3	%	8,000	9,947
Total NWFCS Credit Facility assumed					$45,000	$53,502


Maturity Date	Stated Fixed Interest Rate		Stated Principal Amount	Est. Fair Value at Merger Date (a)
September 2020	4.9	%	$11,000	$11,061
September 2020	3.8	%	14,000	14,023
			$25,000	$25,084


	Environmental Remediation (a)	Development Projects (b)	Pension Contributions (c)	Commitments (d)	Total
Remaining 2020	$710	$4,206	$2,476	$7,880	$15,272
2021	2,387	160	681	14,193	17,421
2022	2,023	220	—	16,992	19,235
2023	2,012	232	—	17,719	19,963
2024	2,012	232	—	14,987	17,231
Thereafter	2,784	2,770	—	39,877	45,431
	$11,928	$7,820	$3,157	$111,648	$134,553


	June 30, 2020							December 31, 2019
	Carrying Amount	Less than 12 Months	12 Months or Greater	Total	Carrying Amount	Less than 12 Months	12 Months or Greater	Total
Fair value of marketable equity securities	—	—	—	—	$10,582	10,582	—	10,582
Unrealized (losses) gains	—	—	—	—	—	3,043	—	3,043


Core Timberland Holdings
(acres in 000s)	As of June 30, 2020					As of December 31, 2019
	Owned	Leased	Total	Owned	Leased	Total
Southern
Alabama	226	14	240	226	14	240
Arkansas	—	7	7	—	7	7
Florida	328	63	391	331	63	394
Georgia	616	75	691	628	77	705
Louisiana	140	—	140	128	—	128

Mississippi	—	—	—	67	—	67
Oklahoma	92	—	92	92	—	92
South Carolina	18	—	18	18	—	18

Texas	184	—	184	184	—	184
	1,604	159	1,763	1,674	161	1,835

Pacific Northwest
Oregon	61	—	61	61	—	61
Washington	442	4	446	318	—	318
	503	4	507	379	—	379

New Zealand (a)	185	231	416	185	229	414
Total	2,292	394	2,686	2,238	390	2,628


Timber Fund Holdings
(acres in 000s)	As of June 30, 2020			As of December 31, 2019
	Total	Look-through	Total	Look-through
Timber Funds
Oregon	51	7	—	—
Washington	71	9	—	—
California	19	1	—	—
Total	141	17	—	—


Total Timberland under Management
(acres in 000s)	As of June 30, 2020		As of December 31, 2019
	Total	Total
Southern	1,763	1,835
Pacific Northwest	507	379
New Zealand	416	414
Timber Funds	141	—
Total	2,827	2,628


	Three Months Ended June 30,			Six Months Ended June 30,
Timber Funds Overview	2020	2019	2020	2019
Sales Volume (in thousands of tons)
Pulpwood	10	—	10	—
Sawtimber	80	—	80	—
Total Volume	90	—	90	—

Summary Financial Data (in millions of dollars)
Timber Sales	$6.6	—	$6.6	—
Less: Cut and Haul	(2.9)	—	(2.9)	—
Net Stumpage Sales	$3.7	—	$3.7	—


Timberland Management Fees	0.9	—	0.9	—
Total Sales	$7.5	—	$7.5	—

Operating Loss	($1.9)	—	($1.9)	—
Operating loss attributable to NCI in Timber Funds	2.0	—	2.0	—
(+) Depreciation, depletion and amortization (“Look-through”)	0.5	—	0.5	—
Adjusted EBITDA (a)	$0.7	—	$0.7	—

Other Data
Period-End Acres (in thousands)	141	—	141	—
“Look-through” Period-End Acres (in thousands)	17	—	17	—


	June 30,		December 31,
(millions of dollars)	2020		2019
Cash and cash equivalents (excluding Timber Funds)	$87.8		$68.7

Total debt (excluding Timber Funds) (a)	1,305.0		1,057.0
Noncontrolling interest in Operating Partnership	110.2		—
Shareholders’ equity	1,914.0		1,537.6

Total capitalization (total debt plus permanent and temporary equity)	3,329.2		2,594.6
Debt to capital ratio	39	%	41	%
Net debt to enterprise value (b)(c)	26	%	19	%


Cash used for investing activities	($170.8)	($60.8)
Cash provided by (used for) financing activities	$114.9	($78.0)