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 ~~March 31,~~June 30, 2022


☐			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. ☐ Rayonier, L.P. ☐

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 ~~April~~July 29, 2022, Rayonier Inc. had ~~146,292,726~~146,421,847 Common Shares outstanding. As of ~~April~~July 29, 2022, Rayonier, L.P. had ~~3,312,229~~3,212,229 Units outstanding.

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EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarterly period ended ~~March 31,~~June 30, 2022 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 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.

As of ~~March 31,~~June 30, 2022, the Company owned a 97.8% interest in the Operating Partnership, with the remaining 2.2% interest owned by limited partners of th~~the~~e 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.

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. 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 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 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	Item		Page	Item		Page
		PART I - FINANCIAL INFORMATION			PART I - FINANCIAL INFORMATION
1.	1.	Financial Statements (unaudited)	1	1.	Financial Statements (unaudited)	1
		Rayonier Inc.:			Rayonier Inc.:
		Consolidated Statements of Income and Comprehensive Income for the Three Months Ended March 31, 2022 and 2021	1		Consolidated Statements of Income and Comprehensive Income for the Three and Six Months Ended June 30, 2022 and 2021	1
		Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021	2		Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021	2
		Consolidated Statements of Changes in Shareholders’ Equity for the Quarters Ended March 31, 2022 and 2021	3		Consolidated Statements of Changes in Shareholders’ Equity for the Quarters and Six Months Ended June 30, 2022 and 2021	3
		Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021	5		Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021	5
		Rayonier, L.P.:			Rayonier, L.P.:
		Consolidated Statements of Income and Comprehensive Income for the Three Months Ended March 31, 2022 and 2021	6		Consolidated Statements of Income and Comprehensive Income for the Three and Six Months Ended June 30, 2022 and 2021	6
		Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021	7		Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021	7
		Consolidated Statements of Changes in Capital for the Quarters Ended March 31, 2022 and 2021	8		Consolidated Statements of Changes in Capital for the Quarters and Six Months Ended June 30, 2022 and 2021	8
		Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021	9		Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021	10
		Notes to Consolidated Financial Statements	10		Notes to Consolidated Financial Statements	11
2.	2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	33	2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	37
3.	3.	Quantitative and Qualitative Disclosures about Market Risk	54	3.	Quantitative and Qualitative Disclosures about Market Risk	63
4.	4.	Controls and Procedures	56	4.	Controls and Procedures	65
		PART II - OTHER INFORMATION			PART II - OTHER INFORMATION
1.	1.	Legal Proceedings	56	1.	Legal Proceedings	65
1A.	1A.	Risk Factors	56	1A.	Risk Factors	66
2.	2.	Unregistered Sales of Equity Securities and Use of Proceeds	58	2.	Unregistered Sales of Equity Securities and Use of Proceeds	67
6.	6.	Exhibits	59	6.	Exhibits	68
		Signatures	60		Signatures	69

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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
March 31,
2022 2021
SALES (NOTE 3)
$222,041 $191,447
Costs and Expenses
Cost of sales (160,979) (151,378)
Selling and general expenses (14,760) (14,032)
Other operating (expense) income, net (Note 15)
(984) 2,448
(176,723) (162,962)
OPERATING INCOME 45,318 28,485
Interest expense (8,337) (10,028)
Interest and other miscellaneous expense, net (468) (4)
INCOME BEFORE INCOME TAXES 36,513 18,453
Income tax expense (Note 17)
(5,515) (3,421)
NET INCOME 30,998 15,032
Less: Net income attributable to noncontrolling interests in the operating partnership (669) (341)
Less: Net income attributable to noncontrolling interests in consolidated affiliates (1,012) (3,843)
NET INCOME ATTRIBUTABLE TO RAYONIER INC. 29,317 10,848
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment, net of income tax effect of $0 and $0 6,458 (14,288)
Cash flow hedges, net of income tax effect of $1,022 and $1,059 40,427 61,001
Amortization of pension and postretirement plans, net of income tax expense of $0 and $0 188 294
Total other comprehensive income 47,073 47,007
COMPREHENSIVE INCOME 78,071 62,039
Less: Comprehensive income attributable to noncontrolling interests in the operating partnership (1,686) (1,872)
Less: Comprehensive income attributable to noncontrolling interests in consolidated affiliates (2,408) (580)
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC. $73,977 $59,587
EARNINGS PER COMMON SHARE (NOTE 5)
Basic earnings per share attributable to Rayonier Inc. $0.20 $0.08
Diluted earnings per share attributable to Rayonier Inc. $0.20 $0.08


	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
SALES (NOTE 3)	$246,346	$291,431	$468,387	$482,878
Costs and Expenses
Cost of sales	(194,323)	(194,250)	(355,303)	(345,628)
Selling and general expenses	(17,356)	(14,693)	(32,116)	(28,725)
Other operating income (expense), net (Note 15)	801	1,956	(182)	4,404
	(210,878)	(206,987)	(387,601)	(369,949)
OPERATING INCOME	35,468	84,444	80,786	112,929
Interest expense	(9,083)	(13,000)	(17,420)	(23,027)
Interest and other miscellaneous income (expense), net	206	(1,144)	(262)	(1,148)
INCOME BEFORE INCOME TAXES	26,591	70,300	63,104	88,754
Income tax expense (Note 17)	(1,304)	(6,880)	(6,818)	(10,302)
NET INCOME	25,287	63,420	56,286	78,452
Less: Net income attributable to noncontrolling interests in the operating partnership	(546)	(1,753)	(1,214)	(2,094)
Less: Net income attributable to noncontrolling interests in consolidated affiliates	(637)	(4,461)	(1,650)	(8,304)
NET INCOME ATTRIBUTABLE TO RAYONIER INC.	24,104	57,206	53,422	68,054
OTHER COMPREHENSIVE (LOSS) INCOME
Foreign currency translation adjustment, net of income tax effect of $0, $0, $0 and $0	(36,285)	1,239	(29,827)	(13,048)
Cash flow hedges, net of income tax effect of $4,211, $315, $3,189 and $1,374	5,755	(10,019)	46,182	50,982
Amortization of pension and postretirement plans, net of income tax expense of $0, $0, $0 and $0	188	294	376	587
Total other comprehensive (loss) income	(30,342)	(8,486)	16,731	38,521
COMPREHENSIVE (LOSS) INCOME	(5,055)	54,934	73,017	116,973
Less: Comprehensive loss (income) attributable to noncontrolling interests in the operating partnership	29	(1,499)	(1,657)	(3,371)
Less: Comprehensive loss (income) attributable to noncontrolling interests in consolidated affiliates	3,767	(4,490)	1,358	(5,070)
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO RAYONIER INC.	($1,259)	$48,945	$72,718	$108,532
EARNINGS PER COMMON SHARE (NOTE 5)
Basic earnings per share attributable to Rayonier Inc.	$0.16	$0.41	$0.37	$0.49
Diluted earnings per share attributable to Rayonier Inc.	$0.16	$0.41	$0.36	$0.49

See Notes to Consolidated Financial Statements.

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RAYONIER INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands)


		March 31, 2022	December 31, 2021		June 30, 2022	December 31, 2021
ASSETS	ASSETS			ASSETS
CURRENT ASSETS	CURRENT ASSETS			CURRENT ASSETS
Cash and cash equivalents, excluding Timber Funds	Cash and cash equivalents, excluding Timber Funds	$256,537	$358,680	Cash and cash equivalents, excluding Timber Funds	$279,331	$358,680
Cash and cash equivalents, Timber Funds	Cash and cash equivalents, Timber Funds	3,185	3,493	Cash and cash equivalents, Timber Funds	949	3,493
Total cash and cash equivalents	Total cash and cash equivalents	259,722	362,173	Total cash and cash equivalents	280,280	362,173
Restricted cash, Timber Funds (Note 19)	Restricted cash, Timber Funds (Note 19)	5,464	6,341	Restricted cash, Timber Funds (Note 19)	1,464	6,341
Accounts receivable, less allowance for doubtful accounts of $66 and $59		52,906	30,018
Accounts receivable, less allowance for doubtful accounts of $12 and $59				Accounts receivable, less allowance for doubtful accounts of $12 and $59	40,902	30,018

Inventory (Note 14)	Inventory (Note 14)	33,290	28,523	Inventory (Note 14)	25,330	28,523

Prepaid expenses	Prepaid expenses	20,088	18,528	Prepaid expenses	19,050	18,528
Assets held for sale (Note 20)	Assets held for sale (Note 20)	2,466	5,099	Assets held for sale (Note 20)	2,226	5,099
Other current assets	Other current assets	1,162	749	Other current assets	455	749
Total current assets	Total current assets	375,098	451,431	Total current assets	369,707	451,431
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	2,869,194	2,894,996	TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	2,799,507	2,894,996
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS (NOTE 13)	HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS (NOTE 13)	111,445	106,878	HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS (NOTE 13)	112,497	106,878
PROPERTY, PLANT AND EQUIPMENT	PROPERTY, PLANT AND EQUIPMENT			PROPERTY, PLANT AND EQUIPMENT
Land	Land	6,400	6,401	Land	6,453	6,401
Buildings	Buildings	31,198	31,168	Buildings	31,015	31,168
Machinery and equipment	Machinery and equipment	6,497	6,494	Machinery and equipment	6,564	6,494
Construction in progress	Construction in progress	510	460	Construction in progress	553	460
Total property, plant and equipment, gross	Total property, plant and equipment, gross	44,605	44,523	Total property, plant and equipment, gross	44,585	44,523
Less — accumulated depreciation	Less — accumulated depreciation	(15,699)	(14,900)	Less — accumulated depreciation	(16,212)	(14,900)
Total property, plant and equipment, net	Total property, plant and equipment, net	28,906	29,623	Total property, plant and equipment, net	28,373	29,623
RESTRICTED CASH, EXCLUDING TIMBER FUNDS (NOTE 19)	RESTRICTED CASH, EXCLUDING TIMBER FUNDS (NOTE 19)	625	625	RESTRICTED CASH, EXCLUDING TIMBER FUNDS (NOTE 19)	14,329	625
RIGHT-OF-USE ASSETS	RIGHT-OF-USE ASSETS	104,183	101,837	RIGHT-OF-USE ASSETS	102,262	101,837
OTHER ASSETS	OTHER ASSETS	70,413	50,966	OTHER ASSETS	84,266	50,966
TOTAL ASSETS	TOTAL ASSETS	$3,559,864	$3,636,356	TOTAL ASSETS	$3,510,941	$3,636,356
LIABILITIES, NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND SHAREHOLDERS’ EQUITY	LIABILITIES, NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND SHAREHOLDERS’ EQUITY			LIABILITIES, NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES	CURRENT LIABILITIES			CURRENT LIABILITIES
Accounts payable	Accounts payable	$31,131	$23,447	Accounts payable	$28,201	$23,447

Current maturities of long-term debt, net, (Note 6)		2,087	124,965
Current maturities of long-term debt, net (Note 6)				Current maturities of long-term debt, net (Note 6)	622	124,965

Accrued taxes	Accrued taxes	2,754	12,446	Accrued taxes	6,287	12,446

Accrued payroll and benefits	Accrued payroll and benefits	6,068	14,514	Accrued payroll and benefits	8,438	14,514
Accrued interest	Accrued interest	6,677	6,343	Accrued interest	3,585	6,343
Deferred revenue	Deferred revenue	13,699	17,802	Deferred revenue	28,579	17,802
Distribution payable, Timber Funds	Distribution payable, Timber Funds	5,464	6,341	Distribution payable, Timber Funds	1,576	6,341
Other current liabilities	Other current liabilities	24,782	25,863	Other current liabilities	31,157	25,863
Total current liabilities	Total current liabilities	92,662	231,721	Total current liabilities	108,445	231,721
LONG-TERM DEBT, NET, (NOTE 6)		1,243,673	1,242,819
LONG-TERM DEBT, NET (NOTE 6)				LONG-TERM DEBT, NET (NOTE 6)	1,263,394	1,242,819

PENSION AND OTHER POSTRETIREMENT BENEFITS (NOTE 16)	PENSION AND OTHER POSTRETIREMENT BENEFITS (NOTE 16)	10,201	10,478	PENSION AND OTHER POSTRETIREMENT BENEFITS (NOTE 16)	9,927	10,478
LONG-TERM LEASE LIABILITY	LONG-TERM LEASE LIABILITY	95,543	93,416	LONG-TERM LEASE LIABILITY	93,748	93,416
OTHER NON-CURRENT LIABILITIES	OTHER NON-CURRENT LIABILITIES	99,907	108,521	OTHER NON-CURRENT LIABILITIES	91,166	108,521
COMMITMENTS AND CONTINGENCIES (NOTES 9 and 10)	COMMITMENTS AND CONTINGENCIES (NOTES 9 and 10)	0	0	COMMITMENTS AND CONTINGENCIES (NOTES 9 and 10)	0	0
NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP (NOTE 4)	NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP (NOTE 4)	136,239	133,823	NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP (NOTE 4)	123,811	133,823
SHAREHOLDERS’ EQUITY	SHAREHOLDERS’ EQUITY			SHAREHOLDERS’ EQUITY
Common Shares, 480,000,000 shares authorized,146,107,688 and 145,372,961 shares issued and outstanding		1,421,946	1,389,073
Common Shares, 480,000,000 shares authorized, 146,321,732 and 145,372,961 shares issued and outstanding				Common Shares, 480,000,000 shares authorized, 146,321,732 and 145,372,961 shares issued and outstanding	1,424,329	1,389,073
Retained earnings	Retained earnings	389,077	402,307	Retained earnings	382,495	402,307
Accumulated other comprehensive income (loss) (Note 18)	Accumulated other comprehensive income (loss) (Note 18)	25,973	(19,604)	Accumulated other comprehensive income (loss) (Note 18)	610	(19,604)
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY	TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY	1,836,996	1,771,776	TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY	1,807,434	1,771,776
Noncontrolling interests in consolidated affiliates (Note 4)	Noncontrolling interests in consolidated affiliates (Note 4)	44,643	43,802	Noncontrolling interests in consolidated affiliates (Note 4)	13,016	43,802
TOTAL SHAREHOLDERS’ EQUITY	TOTAL SHAREHOLDERS’ EQUITY	1,881,639	1,815,578	TOTAL SHAREHOLDERS’ EQUITY	1,820,450	1,815,578
TOTAL LIABILITIES, NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND SHAREHOLDERS’ EQUITY	TOTAL LIABILITIES, NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND SHAREHOLDERS’ EQUITY	$3,559,864	$3,636,356	TOTAL LIABILITIES, NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND SHAREHOLDERS’ EQUITY	$3,510,941	$3,636,356

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 (Loss)	Noncontrolling Interests in Consolidated Affiliates	Shareholders’ Equity		Common Shares		Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Noncontrolling Interests in Consolidated Affiliates	Shareholders’ Equity
		Shares	Amount						Shares	Amount
Balance, January 1, 2022	Balance, January 1, 2022	145,372,961	$1,389,073	$402,307	($19,604)	$43,802	$1,815,578	Balance, January 1, 2022	145,372,961	$1,389,073	$402,307	($19,604)	$43,802	$1,815,578
Net income	Net income	—	—	29,986	—	1,012	30,998	Net income	—	—	29,986	—	1,012	30,998
Net income attributable to noncontrolling interests in the operating partnership	Net income attributable to noncontrolling interests in the operating partnership	—	—	(669)	—	—	(669)	Net income attributable to noncontrolling interests in the operating partnership	—	—	(669)	—	—	(669)
Dividends ($0.27 per share) (a)	Dividends ($0.27 per share) (a)	—	—	(39,902)	—	—	(39,902)	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	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 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	Issuance of shares under incentive stock plans	11,364	415	—	—	—	415	Issuance of shares under incentive stock plans	11,364	415	—	—	—	415
Stock-based compensation	Stock-based compensation	—	2,797	—	—	—	2,797	Stock-based compensation	—	2,797	—	—	—	2,797
Repurchase of common shares	Repurchase of common shares	(5,420)	(214)	—	—	—	(214)	Repurchase of common shares	(5,420)	(214)	—	—	—	(214)

Adjustment of noncontrolling interests in the operating partnership	Adjustment of noncontrolling interests in the operating partnership	—	—	(2,645)	—	—	(2,645)	Adjustment of noncontrolling interests in the operating partnership	—	—	(2,645)	—	—	(2,645)
Conversion of units into common shares	Conversion of units into common shares	2,535	104	—	—	—	104	Conversion of units into common shares	2,535	104	—	—	—	104
Amortization of pension and postretirement plan liabilities	Amortization of pension and postretirement plan liabilities	—	—	—	188	—	188	Amortization of pension and postretirement plan liabilities	—	—	—	188	—	188
Foreign currency translation adjustment	Foreign currency translation adjustment	—	—	—	5,668	790	6,458	Foreign currency translation adjustment	—	—	—	5,668	790	6,458
Cash flow hedges	Cash flow hedges	—	—	—	39,822	605	40,427	Cash flow hedges	—	—	—	39,822	605	40,427
Allocation of other comprehensive income to noncontrolling interests in the operating partnership	Allocation of other comprehensive income to noncontrolling interests in the operating partnership	—	—	—	(101)	—	(101)	Allocation of other comprehensive income to noncontrolling interests in the operating partnership	—	—	—	(101)	—	(101)
Distributions to noncontrolling interests in consolidated affiliates	Distributions to noncontrolling interests in consolidated affiliates	—	—	—	—	(1,566)	(1,566)	Distributions to noncontrolling interests in consolidated affiliates	—	—	—	—	(1,566)	(1,566)
Balance, March 31, 2022	Balance, March 31, 2022	146,107,688	$1,421,946	$389,077	$25,973	$44,643	$1,881,639	Balance, March 31, 2022	146,107,688	$1,421,946	$389,077	$25,973	$44,643	$1,881,639
Net income								Net income	—	—	24,650	—	637	25,287
Net income attributable to noncontrolling interests in the operating partnership								Net income attributable to noncontrolling interests in the operating partnership	—	—	(546)	—	—	(546)
Dividends ($0.285 per share) (a)								Dividends ($0.285 per share) (a)	—	—	(42,098)	—	—	(42,098)
Costs associated with the “at-the-market” (ATM) equity offering program								Costs associated with the “at-the-market” (ATM) equity offering program	—	(63)	—	—	—	(63)
Issuance of shares under incentive stock plans								Issuance of shares under incentive stock plans	304,887	1,983	—	—	—	1,983
Stock-based compensation								Stock-based compensation	—	4,412	—	—	—	4,412
Repurchase of common shares								Repurchase of common shares	(91,820)	(3,991)	—	—	—	(3,991)

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

Noncontrolling interests in consolidated affiliates redemption of shares								Noncontrolling interests in consolidated affiliates redemption of shares	—	—	—	—	(27,860)	(27,860)
Balance, June 30, 2022								Balance, June 30, 2022	146,321,732	$1,424,329	$382,495	$610	$13,016	$1,820,450

(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.

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		Common Shares		Retained Earnings	Accumulated Other Comprehensive Loss	Noncontrolling Interests in Consolidated Affiliates	Shareholders’ Equity
		Shares	Amount						Shares	Amount
Balance, January 1, 2021	Balance, January 1, 2021	137,678,822	$1,101,675	$446,267	($73,885)	$388,588	$1,862,645	Balance, January 1, 2021	137,678,822	$1,101,675	$446,267	($73,885)	$388,588	$1,862,645

Net income	Net income	—	—	11,189	—	3,843	15,032	Net income	—	—	11,189	—	3,843	15,032
Net income attributable to noncontrolling interests in the operating partnership	Net income attributable to noncontrolling interests in the operating partnership	—	—	(341)	—	—	(341)	Net income attributable to noncontrolling interests in the operating partnership	—	—	(341)	—	—	(341)
Dividends ($0.27 per share) (a)	Dividends ($0.27 per share) (a)	—	—	(37,532)	—	—	(37,532)	Dividends ($0.27 per share) (a)	—	—	(37,532)	—	—	(37,532)
Issuance of shares under the “at-the-market” equity offering, net of commissions and offering costs of $197	Issuance of shares under the “at-the-market” equity offering, net of commissions and offering costs of $197	1,107,814	36,708	—	—	—	36,708	Issuance of shares under the “at-the-market” equity offering, net of commissions and offering costs of $197	1,107,814	36,708	—	—	—	36,708
Issuance of shares under incentive stock plans	Issuance of shares under incentive stock plans	39,140	1,166	—	—	—	1,166	Issuance of shares under incentive stock plans	39,140	1,166	—	—	—	1,166
Stock-based compensation	Stock-based compensation	—	2,156	—	—	—	2,156	Stock-based compensation	—	2,156	—	—	—	2,156
Repurchase of common shares	Repurchase of common shares	(5,020)	(155)	—	—	—	(155)	Repurchase of common shares	(5,020)	(155)	—	—	—	(155)
Measurement period adjustment of noncontrolling interests in consolidated affiliates	Measurement period adjustment of noncontrolling interests in consolidated affiliates	—	—	—	—	655	655	Measurement period adjustment of noncontrolling interests in consolidated affiliates	—	—	—	—	655	655
Adjustment of noncontrolling interests in the operating partnership	Adjustment of noncontrolling interests in the operating partnership	—	—	(11,867)	—	—	(11,867)	Adjustment of noncontrolling interests in the operating partnership	—	—	(11,867)	—	—	(11,867)
Conversion of units into common shares	Conversion of units into common shares	150,134	4,715	—	—	—	4,715	Conversion of units into common shares	150,134	4,715	—	—	—	4,715
Amortization of pension and postretirement plan liabilities	Amortization of pension and postretirement plan liabilities	—	—	—	294	—	294	Amortization of pension and postretirement plan liabilities	—	—	—	294	—	294
Foreign currency translation adjustment	Foreign currency translation adjustment	—	—	—	(11,652)	(2,636)	(14,288)	Foreign currency translation adjustment	—	—	—	(11,652)	(2,636)	(14,288)
Cash flow hedges	Cash flow hedges	—	—	—	61,628	(627)	61,001	Cash flow hedges	—	—	—	61,628	(627)	61,001

Allocation of other comprehensive income to noncontrolling interests in the operating partnership	Allocation of other comprehensive income to noncontrolling interests in the operating partnership	—	—	—	(1,531)	—	(1,531)	Allocation of other comprehensive income to noncontrolling interests in the operating partnership	—	—	—	(1,531)	—	(1,531)
Distributions to noncontrolling interests in consolidated affiliates	Distributions to noncontrolling interests in consolidated affiliates	—	—	—	—	(8,737)	(8,737)	Distributions to noncontrolling interests in consolidated affiliates	—	—	—	—	(8,737)	(8,737)
Balance, March 31, 2021	Balance, March 31, 2021	138,970,890	$1,146,265	$407,716	($25,146)	$381,086	$1,909,921	Balance, March 31, 2021	138,970,890	$1,146,265	$407,716	($25,146)	$381,086	$1,909,921

Net income								Net income	—	—	58,959	—	4,461	63,420
Net income attributable to noncontrolling interests in the operating partnership								Net income attributable to noncontrolling interests in the operating partnership	—	—	(1,753)	—	—	(1,753)
Dividends ($0.27 per share) (a)								Dividends ($0.27 per share) (a)	—	—	(37,981)	—	—	(37,981)
Issuance of shares under the “at-the-market” equity offering, net of commissions and offering costs of $927								Issuance of shares under the “at-the-market” equity offering, net of commissions and offering costs of $927	2,199,459	79,994	—	—	—	79,994
Issuance of shares under incentive stock plans								Issuance of shares under incentive stock plans	185,544	3,325	—	—	—	3,325
Stock-based compensation								Stock-based compensation	—	2,852	—	—	—	2,852
Repurchase of common shares								Repurchase of common shares	(42,425)	(1,453)	—	—	—	(1,453)
Measurement period adjustment of noncontrolling interests in consolidated affiliates								Measurement period adjustment of noncontrolling interests in consolidated affiliates	—	—	—	—	9,034	9,034
Adjustment of noncontrolling interests in the operating partnership								Adjustment of noncontrolling interests in the operating partnership	—	—	(15,410)	—	—	(15,410)
Conversion of units into common shares								Conversion of units into common shares	6,439	241	—	—	—	241
Amortization of pension and postretirement plan liabilities								Amortization of pension and postretirement plan liabilities	—	—	—	294	—	294
Foreign currency translation adjustment								Foreign currency translation adjustment	—	—	—	1,025	214	1,239
Cash flow hedges								Cash flow hedges	—	—	—	(9,833)	(186)	(10,019)
Allocation of other comprehensive income to noncontrolling interests in the operating partnership								Allocation of other comprehensive income to noncontrolling interests in the operating partnership	—	—	—	253	—	253
Distributions to noncontrolling interests in consolidated affiliates								Distributions to noncontrolling interests in consolidated affiliates	—	—	—	—	(6,474)	(6,474)
Balance, June 30, 2021								Balance, June 30, 2021	141,319,907	$1,231,224	$411,531	($33,407)	$388,135	$1,997,483

See Notes to Consolidated Financial Statements.

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)


		Three Months Ended March 31,			Six Months Ended June 30,
		2022	2021		2022	2021
OPERATING ACTIVITIES	OPERATING ACTIVITIES			OPERATING ACTIVITIES
Net income	Net income	$30,998	$15,032	Net income	$56,286	$78,452
Adjustments to reconcile net income to cash provided by operating activities:	Adjustments to reconcile net income to cash provided by operating activities:			Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion and amortization	Depreciation, depletion and amortization	47,419	45,213	Depreciation, depletion and amortization	83,169	87,909
Non-cash cost of land and improved development	Non-cash cost of land and improved development	5,359	1,813	Non-cash cost of land and improved development	17,139	7,003
Stock-based incentive compensation expense	Stock-based incentive compensation expense	2,797	2,156	Stock-based incentive compensation expense	7,209	5,008
Deferred income taxes	Deferred income taxes	(8,014)	(1,128)	Deferred income taxes	(7,272)	7,315
Amortization of losses from pension and postretirement plans	Amortization of losses from pension and postretirement plans	188	294	Amortization of losses from pension and postretirement plans	376	587

Gain on sale of large disposition of timberlands				Gain on sale of large disposition of timberlands	—	(30,324)

Other	Other	(2,244)	(3,681)	Other	(4,206)	7,233
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:			Changes in operating assets and liabilities:
Receivables	Receivables	(27,837)	(3,697)	Receivables	(17,060)	(413)
Inventories	Inventories	(4,875)	(3,512)	Inventories	(2,398)	(1,637)
Accounts payable	Accounts payable	7,376	6,684	Accounts payable	6,959	4,213

All other operating activities	All other operating activities	(1,500)	(5,306)	All other operating activities	8,328	(764)
CASH PROVIDED BY OPERATING ACTIVITIES	CASH PROVIDED BY OPERATING ACTIVITIES	49,667	53,868	CASH PROVIDED BY OPERATING ACTIVITIES	148,530	164,582
INVESTING ACTIVITIES	INVESTING ACTIVITIES			INVESTING ACTIVITIES
Capital expenditures	Capital expenditures	(15,597)	(15,831)	Capital expenditures	(30,335)	(32,199)

Real estate development investments	Real estate development investments	(3,137)	(3,011)	Real estate development investments	(6,013)	(6,269)

Purchase of timberlands	Purchase of timberlands	(2,830)	(29,938)	Purchase of timberlands	(3,237)	(51,882)

Net proceeds from large disposition of timberlands				Net proceeds from large disposition of timberlands	—	35,219

Other	Other	2,619	4,356	Other	5,112	5,998
CASH USED FOR INVESTING ACTIVITIES	CASH USED FOR INVESTING ACTIVITIES	(18,945)	(44,424)	CASH USED FOR INVESTING ACTIVITIES	(34,473)	(49,133)
FINANCING ACTIVITIES	FINANCING ACTIVITIES			FINANCING ACTIVITIES
Issuance of debt	Issuance of debt	404,018	—	Issuance of debt	408,439	446,378
Repayment of debt	Repayment of debt	(526,948)	—	Repayment of debt	(533,298)	(350,000)
Dividends paid on common shares	Dividends paid on common shares	(39,444)	(37,490)	Dividends paid on common shares	(81,767)	(75,676)
Distributions to noncontrolling interests in the operating partnership	Distributions to noncontrolling interests in the operating partnership	(895)	(1,155)	Distributions to noncontrolling interests in the operating partnership	(1,839)	(2,309)

Proceeds from the issuance of common shares under incentive stock plan	Proceeds from the issuance of common shares under incentive stock plan	579	1,166	Proceeds from the issuance of common shares under incentive stock plan	2,561	4,490
Proceeds from the issuance of common shares under the “at-the-market” (ATM) equity offering program, net of commissions and offering costs	Proceeds from the issuance of common shares under the “at-the-market” (ATM) equity offering program, net of commissions and offering costs	30,918	32,545	Proceeds from the issuance of common shares under the “at-the-market” (ATM) equity offering program, net of commissions and offering costs	31,915	110,702

Repurchase of common shares to pay withholding taxes on vested incentive stock awards	Repurchase of common shares to pay withholding taxes on vested incentive stock awards	(214)	(155)	Repurchase of common shares to pay withholding taxes on vested incentive stock awards	(4,204)	(1,608)

Debt issuance costs				Debt issuance costs	—	(4,812)

Distributions to noncontrolling interests in consolidated affiliates	Distributions to noncontrolling interests in consolidated affiliates	(2,684)	(8,737)	Distributions to noncontrolling interests in consolidated affiliates	(6,684)	(15,212)

CASH USED FOR FINANCING ACTIVITIES		(134,670)	(13,826)
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES				CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES	(184,877)	111,953
EFFECT OF EXCHANGE RATE CHANGES ON CASH	EFFECT OF EXCHANGE RATE CHANGES ON CASH	620	(5)	EFFECT OF EXCHANGE RATE CHANGES ON CASH	(2,246)	126
CASH, CASH EQUIVALENTS AND RESTRICTED CASH	CASH, CASH EQUIVALENTS AND RESTRICTED CASH			CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Change in cash, cash equivalents and restricted cash	Change in cash, cash equivalents and restricted cash	(103,328)	(4,387)	Change in cash, cash equivalents and restricted cash	(73,066)	227,528
Balance, beginning of year	Balance, beginning of year	369,139	87,482	Balance, beginning of year	369,139	87,482
Balance, end of period	Balance, end of period	$265,811	$83,095	Balance, end of period	$296,073	$315,010

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION	SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION			SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period:	Cash paid during the period:			Cash paid during the period:
Interest (a)	Interest (a)	$3,935	$2,945	Interest (a)	$16,932	$17,677
Income taxes	Income taxes	14,042	4,838	Income taxes	14,330	7,132
Non-cash investing activity:	Non-cash investing activity:			Non-cash investing activity:
Capital assets purchased on account	Capital assets purchased on account	4,511	4,814	Capital assets purchased on account	4,882	4,155

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

(a)Interest paid is presented net of patronage payments ~~received~~received of ~~$5.5~~$6.0 million and ~~$6.2~~$6.8 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and ~~March 31,~~June 30, 2021, respectively. For additional information on patronage payments, see Note 10 — Debt in the 2021 Form 10-K.

(b)

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

Note 6 - De bt

for further information.

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
March 31,
2022 2021
SALES (NOTE 3)
$222,041 $191,447
Costs and Expenses
Cost of sales (160,979) (151,378)
Selling and general expenses (14,760) (14,032)
Other operating (expense) income, net (Note 15)
(984) 2,448
(176,723) (162,962)
OPERATING INCOME 45,318 28,485
Interest expense (8,337) (10,028)
Interest and other miscellaneous expense, net (468) (4)
INCOME BEFORE INCOME TAXES 36,513 18,453
Income tax expense (Note 17)
(5,515) (3,421)
NET INCOME 30,998 15,032
Less: Net income attributable to noncontrolling interests in consolidated affiliates (1,012) (3,843)
NET INCOME ATTRIBUTABLE TO RAYONIER, L.P. UNITHOLDERS 29,986 11,189
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment, net of income tax effect of $0 and $0 6,458 (14,288)
Cash flow hedges, net of income tax effect of $1,022 and $1,059 40,427 61,001
Amortization of pension and postretirement plans, net of income tax expense of $0 and $0 188 294
Total other comprehensive income 47,073 47,007
COMPREHENSIVE INCOME 78,071 62,039
Less: Comprehensive income attributable to noncontrolling interests in consolidated affiliates (2,408) (580)
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER, L.P. UNITHOLDERS $75,663 $61,459
EARNINGS PER UNIT (NOTE 5)
Basic earnings per unit attributable to Rayonier, L.P. $0.20 $0.08
Diluted earnings per unit attributable to Rayonier, L.P. $0.20 $0.08


	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
SALES (NOTE 3)	$246,346	$291,431	$468,387	$482,878
Costs and Expenses
Cost of sales	(194,323)	(194,250)	(355,303)	(345,628)
Selling and general expenses	(17,356)	(14,693)	(32,116)	(28,725)
Other operating income (expense), net (Note 15)	801	1,956	(182)	4,404
	(210,878)	(206,987)	(387,601)	(369,949)
OPERATING INCOME	35,468	84,444	80,786	112,929
Interest expense	(9,083)	(13,000)	(17,420)	(23,027)
Interest and other miscellaneous income (expense), net	206	(1,144)	(262)	(1,148)
INCOME BEFORE INCOME TAXES	26,591	70,300	63,104	88,754
Income tax expense (Note 17)	(1,304)	(6,880)	(6,818)	(10,302)
NET INCOME	25,287	63,420	56,286	78,452
Less: Net income attributable to noncontrolling interests in consolidated affiliates	(637)	(4,461)	(1,650)	(8,304)
NET INCOME ATTRIBUTABLE TO RAYONIER, L.P. UNITHOLDERS	24,650	58,959	54,636	70,148
OTHER COMPREHENSIVE (LOSS) INCOME
Foreign currency translation adjustment, net of income tax effect of $0, $0, $0 and $0	(36,285)	1,239	(29,827)	(13,048)
Cash flow hedges, net of income tax effect of $4,211, $315, $3,189 and $1,374	5,755	(10,019)	46,182	50,982
Amortization of pension and postretirement plans, net of income tax expense of $0, $0, $0 and $0	188	294	376	587
Total other comprehensive (loss) income	(30,342)	(8,486)	16,731	38,521
COMPREHENSIVE (LOSS) INCOME	(5,055)	54,934	73,017	116,973
Less: Comprehensive loss (income) attributable to noncontrolling interests in consolidated affiliates	3,767	(4,490)	1,358	(5,070)
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO RAYONIER, L.P. UNITHOLDERS	($1,288)	$50,444	$74,375	$111,903
EARNINGS PER UNIT (NOTE 5)
Basic earnings per unit attributable to Rayonier, L.P.	$0.16	$0.41	$0.37	$0.49
Diluted earnings per unit attributable to Rayonier, L.P.	$0.16	$0.41	$0.36	$0.49

See Notes to Consolidated Financial Statements.

Table of Contents

RAYONIER, L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands)


		March 31, 2022	December 31, 2021		June 30, 2022	December 31, 2021
ASSETS	ASSETS			ASSETS
CURRENT ASSETS	CURRENT ASSETS			CURRENT ASSETS
Cash and cash equivalents, excluding Timber Funds	Cash and cash equivalents, excluding Timber Funds	$256,537	$358,680	Cash and cash equivalents, excluding Timber Funds	$279,331	$358,680
Cash and cash equivalents, Timber Funds	Cash and cash equivalents, Timber Funds	3,185	3,493	Cash and cash equivalents, Timber Funds	949	3,493
Total cash and cash equivalents	Total cash and cash equivalents	259,722	362,173	Total cash and cash equivalents	280,280	362,173
Restricted cash, Timber Funds (Note 19)	Restricted cash, Timber Funds (Note 19)	5,464	6,341	Restricted cash, Timber Funds (Note 19)	1,464	6,341
Accounts receivable, less allowance for doubtful accounts of $66 and $59		52,906	30,018
Accounts receivable, less allowance for doubtful accounts of $12 and $59				Accounts receivable, less allowance for doubtful accounts of $12 and $59	40,902	30,018

Inventory (Note 14)	Inventory (Note 14)	33,290	28,523	Inventory (Note 14)	25,330	28,523

Prepaid expenses	Prepaid expenses	20,088	18,528	Prepaid expenses	19,050	18,528
Assets held for sale (Note 20)	Assets held for sale (Note 20)	2,466	5,099	Assets held for sale (Note 20)	2,226	5,099
Other current assets	Other current assets	1,162	749	Other current assets	455	749
Total current assets	Total current assets	375,098	451,431	Total current assets	369,707	451,431
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	2,869,194	2,894,996	TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	2,799,507	2,894,996
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS (NOTE 13)	HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS (NOTE 13)	111,445	106,878	HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS (NOTE 13)	112,497	106,878
PROPERTY, PLANT AND EQUIPMENT	PROPERTY, PLANT AND EQUIPMENT			PROPERTY, PLANT AND EQUIPMENT
Land	Land	6,400	6,401	Land	6,453	6,401
Buildings	Buildings	31,198	31,168	Buildings	31,015	31,168
Machinery and equipment	Machinery and equipment	6,497	6,494	Machinery and equipment	6,564	6,494
Construction in progress	Construction in progress	510	460	Construction in progress	553	460
Total property, plant and equipment, gross	Total property, plant and equipment, gross	44,605	44,523	Total property, plant and equipment, gross	44,585	44,523
Less — accumulated depreciation	Less — accumulated depreciation	(15,699)	(14,900)	Less — accumulated depreciation	(16,212)	(14,900)
Total property, plant and equipment, net	Total property, plant and equipment, net	28,906	29,623	Total property, plant and equipment, net	28,373	29,623
RESTRICTED CASH, EXCLUDING TIMBER FUNDS (NOTE 19)	RESTRICTED CASH, EXCLUDING TIMBER FUNDS (NOTE 19)	625	625	RESTRICTED CASH, EXCLUDING TIMBER FUNDS (NOTE 19)	14,329	625
RIGHT-OF-USE ASSETS	RIGHT-OF-USE ASSETS	104,183	101,837	RIGHT-OF-USE ASSETS	102,262	101,837
OTHER ASSETS	OTHER ASSETS	70,413	50,966	OTHER ASSETS	84,266	50,966
TOTAL ASSETS	TOTAL ASSETS	$3,559,864	$3,636,356	TOTAL ASSETS	$3,510,941	$3,636,356
LIABILITIES, REDEEMABLE OPERATING PARTNERSHIP UNITS AND CAPITAL	LIABILITIES, REDEEMABLE OPERATING PARTNERSHIP UNITS AND CAPITAL			LIABILITIES, REDEEMABLE OPERATING PARTNERSHIP UNITS AND CAPITAL
CURRENT LIABILITIES	CURRENT LIABILITIES			CURRENT LIABILITIES
Accounts payable	Accounts payable	$31,131	$23,447	Accounts payable	$28,201	$23,447

Current maturities of long-term debt, net, (Note 6)		2,087	124,965
Current maturities of long-term debt, net (Note 6)				Current maturities of long-term debt, net (Note 6)	622	124,965

Accrued taxes	Accrued taxes	2,754	12,446	Accrued taxes	6,287	12,446

Accrued payroll and benefits	Accrued payroll and benefits	6,068	14,514	Accrued payroll and benefits	8,438	14,514
Accrued interest	Accrued interest	6,677	6,343	Accrued interest	3,585	6,343
Deferred revenue	Deferred revenue	13,699	17,802	Deferred revenue	28,579	17,802
Distribution payable, Timber Funds	Distribution payable, Timber Funds	5,464	6,341	Distribution payable, Timber Funds	1,576	6,341
Other current liabilities	Other current liabilities	24,782	25,863	Other current liabilities	31,157	25,863
Total current liabilities	Total current liabilities	92,662	231,721	Total current liabilities	108,445	231,721
LONG-TERM DEBT, NET, (NOTE 6)		1,243,673	1,242,819
LONG-TERM DEBT, NET (NOTE 6)				LONG-TERM DEBT, NET (NOTE 6)	1,263,394	1,242,819

PENSION AND OTHER POSTRETIREMENT BENEFITS (NOTE 16)	PENSION AND OTHER POSTRETIREMENT BENEFITS (NOTE 16)	10,201	10,478	PENSION AND OTHER POSTRETIREMENT BENEFITS (NOTE 16)	9,927	10,478
LONG-TERM LEASE LIABILITY	LONG-TERM LEASE LIABILITY	95,543	93,416	LONG-TERM LEASE LIABILITY	93,748	93,416
OTHER NON-CURRENT LIABILITIES	OTHER NON-CURRENT LIABILITIES	99,907	108,521	OTHER NON-CURRENT LIABILITIES	91,166	108,521

COMMITMENTS AND CONTINGENCIES (NOTES 9 and 10)	COMMITMENTS AND CONTINGENCIES (NOTES 9 and 10)			COMMITMENTS AND CONTINGENCIES (NOTES 9 and 10)
REDEEMABLE OPERATING PARTNERSHIP UNITS (NOTE 4) 3,313,206 and 3,315,741 Units outstanding, respectively		136,239	133,823
REDEEMABLE OPERATING PARTNERSHIP UNITS (NOTE 4) 3,312,229 and 3,315,741 Units outstanding, respectively				REDEEMABLE OPERATING PARTNERSHIP UNITS (NOTE 4) 3,312,229 and 3,315,741 Units outstanding, respectively	123,811	133,823
CAPITAL	CAPITAL			CAPITAL
General partners’ capital	General partners’ capital	18,068	17,872	General partners’ capital	18,031	17,872
Limited partners’ capital	Limited partners’ capital	1,788,713	1,769,367	Limited partners’ capital	1,785,126	1,769,367
Accumulated other comprehensive income (loss) (Note 18)	Accumulated other comprehensive income (loss) (Note 18)	30,215	(15,463)	Accumulated other comprehensive income (loss) (Note 18)	4,277	(15,463)
TOTAL CONTROLLING INTEREST CAPITAL	TOTAL CONTROLLING INTEREST CAPITAL	1,836,996	1,771,776	TOTAL CONTROLLING INTEREST CAPITAL	1,807,434	1,771,776
Noncontrolling interests in consolidated affiliates (Note 4)	Noncontrolling interests in consolidated affiliates (Note 4)	44,643	43,802	Noncontrolling interests in consolidated affiliates (Note 4)	13,016	43,802
TOTAL CAPITAL	TOTAL CAPITAL	1,881,639	1,815,578	TOTAL CAPITAL	1,820,450	1,815,578
TOTAL LIABILITIES, REDEEMABLE OPERATING PARTNERSHIP UNITS AND CAPITAL	TOTAL LIABILITIES, REDEEMABLE OPERATING PARTNERSHIP UNITS AND CAPITAL	$3,559,864	$3,636,356	TOTAL LIABILITIES, REDEEMABLE OPERATING PARTNERSHIP UNITS AND CAPITAL	$3,510,941	$3,636,356

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)


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

Amortization of pension and postretirement plan liabilities	Amortization of pension and postretirement plan liabilities		—	—	188	—	188	Amortization of pension and postretirement plan liabilities		—	—	188	—	188
Foreign currency translation adjustment	Foreign currency translation adjustment		—	—	5,668	790	6,458	Foreign currency translation adjustment		—	—	5,668	790	6,458
Cash flow hedges	Cash flow hedges		—	—	39,822	605	40,427	Cash flow hedges		—	—	39,822	605	40,427
Distributions to noncontrolling interests in consolidated affiliates	Distributions to noncontrolling interests in consolidated affiliates		—	—	—	(1,566)	(1,566)	Distributions to noncontrolling interests in consolidated affiliates		—	—	—	(1,566)	(1,566)
Balance, March 31, 2022	Balance, March 31, 2022		$18,068	$1,788,713	$30,215	$44,643	$1,881,639	Balance, March 31, 2022		$18,068	$1,788,713	$30,215	$44,643	$1,881,639
Net income								Net income		246	24,404	—	637	25,287
Distributions on units ($0.285 per unit)								Distributions on units ($0.285 per unit)		(430)	(42,612)	—	—	(43,042)
Costs associated with the “at-the-market” (ATM) equity offering program								Costs associated with the “at-the-market” (ATM) equity offering program		(1)	(62)	—	—	(63)
Issuance of units under incentive stock plans								Issuance of units under incentive stock plans		20	1,963	—	—	1,983
Stock-based compensation								Stock-based compensation		44	4,368	—	—	4,412
Repurchase of units								Repurchase of units		(40)	(3,951)	—	—	(3,991)
Adjustment of Redeemable Operating Partnership Units								Adjustment of Redeemable Operating Partnership Units		124	12,261	—	—	12,385
Conversion of units into common shares								Conversion of units into common shares		—	42	—	—	42

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

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

Units Accumulated
Other
Comprehensive
Income (Loss) Noncontrolling Interests in Consolidated Affiliates Total Capital
General Partners’ Capital Limited Partners’ Capital
Balance, January 1, 2021 $15,454 $1,529,948 ($71,345) $388,588 $1,862,645
Net income 112 11,077 — 3,843 15,032
Distributions on units ($0.27 per unit) (387) (38,300) — — (38,687)
Issuance of shares under the “at-the-market” equity offering, net of commissions and offering costs of $197 367 36,341 — — 36,708
Issuance of units under incentive stock plans 12 1,154 — — 1,166
Stock-based compensation 22 2,134 — — 2,156
Repurchase of units (2) (153) — — (155)
Adjustment of Redeemable Operating Partnership Units (126) (12,458) — — (12,584)
Conversion of units into common shares 47 4,668 — — 4,715
Measurement period adjustment of noncontrolling interests in consolidated affiliates — — — 655 655
Amortization of pension and postretirement plan liabilities — — 294 — 294
Foreign currency translation adjustment — — (11,652) (2,636) (14,288)
Cash flow hedges — — 61,628 (627) 61,001
Distributions to noncontrolling interests in consolidated affiliates — — — (8,737) (8,737)
Balance, March 31, 2021 $15,499 $1,534,411 ($21,075) $381,086 $1,909,921

Table of Contents


	Units		Accumulated Other Comprehensive Loss	Noncontrolling Interests in Consolidated Affiliates	Total Capital
	General Partners’ Capital	Limited Partners’ Capital
Balance, January 1, 2021	$15,454	$1,529,948	($71,345)	$388,588	$1,862,645
Net income	112	11,077	—	3,843	15,032
Distributions on units ($0.27 per unit)	(387)	(38,300)	—	—	(38,687)
Issuance of units under the “at-the-market” equity offering, net of commissions and offering costs of $197	367	36,341	—	—	36,708
Issuance of units under incentive stock plans	12	1,154	—	—	1,166
Stock-based compensation	22	2,134	—	—	2,156
Repurchase of units	(2)	(153)	—	—	(155)
Adjustment of Redeemable Operating Partnership Units	(126)	(12,458)	—	—	(12,584)
Conversion of units into common shares	47	4,668	—	—	4,715
Measurement period adjustment of noncontrolling interests in consolidated affiliates	—	—	—	655	655
Amortization of pension and postretirement plan liabilities	—	—	294	—	294
Foreign currency translation adjustment	—	—	(11,652)	(2,636)	(14,288)
Cash flow hedges	—	—	61,628	(627)	61,001
Distributions to noncontrolling interests in consolidated affiliates	—	—	—	(8,737)	(8,737)
Balance, March 31, 2021	$15,499	$1,534,411	($21,075)	$381,086	$1,909,921

Net income	590	58,369	—	4,461	63,420
Distributions on units ($0.27 per unit)	(391)	(38,744)	—	—	(39,135)
Issuance of units under the “at-the-market” equity offering, net of commissions and offering costs of $927	800	79,194	—	—	79,994
Issuance of units under incentive stock plans	33	3,292	—	—	3,325
Stock-based compensation	29	2,823	—	—	2,852
Repurchase of units	(15)	(1,438)	—	—	(1,453)
Adjustment of Redeemable Operating Partnership Units	(158)	(15,598)	—	—	(15,756)
Conversion of units into common shares	2	239	—	—	241
Measurement period adjustment of noncontrolling interests in consolidated affiliates	—	—	—	9,034	9,034
Amortization of pension and postretirement plan liabilities	—	—	294	—	294
Foreign currency translation adjustment	—	—	1,025	214	1,239
Cash flow hedges	—	—	(9,833)	(186)	(10,019)
Distribution to noncontrolling interests in consolidated affiliates	—	—	—	(6,474)	(6,474)
Balance, June 30, 2021	$16,389	$1,622,548	($29,589)	$388,135	$1,997,483

See Notes to Consolidated Financial Statements.

Table of Contents

RAYONIER, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)


		Three Months Ended March 31,			Six Months Ended June 30,
		2022	2021		2022	2021
OPERATING ACTIVITIES	OPERATING ACTIVITIES			OPERATING ACTIVITIES
Net income	Net income	$30,998	$15,032	Net income	$56,286	$78,452
Adjustments to reconcile net income to cash provided by operating activities:	Adjustments to reconcile net income to cash provided by operating activities:			Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion and amortization	Depreciation, depletion and amortization	47,419	45,213	Depreciation, depletion and amortization	83,169	87,909
Non-cash cost of land and improved development	Non-cash cost of land and improved development	5,359	1,813	Non-cash cost of land and improved development	17,139	7,003
Stock-based incentive compensation expense	Stock-based incentive compensation expense	2,797	2,156	Stock-based incentive compensation expense	7,209	5,008
Deferred income taxes	Deferred income taxes	(8,014)	(1,128)	Deferred income taxes	(7,272)	7,315
Amortization of losses from pension and postretirement plans	Amortization of losses from pension and postretirement plans	188	294	Amortization of losses from pension and postretirement plans	376	587

Gain on sale of large disposition of timberlands				Gain on sale of large disposition of timberlands	—	(30,324)

Other	Other	(2,244)	(3,681)	Other	(4,206)	7,233
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:			Changes in operating assets and liabilities:
Receivables	Receivables	(27,837)	(3,697)	Receivables	(17,060)	(413)
Inventories	Inventories	(4,875)	(3,512)	Inventories	(2,398)	(1,637)
Accounts payable	Accounts payable	7,376	6,684	Accounts payable	6,959	4,213

All other operating activities	All other operating activities	(1,500)	(5,306)	All other operating activities	8,328	(764)
CASH PROVIDED BY OPERATING ACTIVITIES	CASH PROVIDED BY OPERATING ACTIVITIES	49,667	53,868	CASH PROVIDED BY OPERATING ACTIVITIES	148,530	164,582
INVESTING ACTIVITIES	INVESTING ACTIVITIES			INVESTING ACTIVITIES
Capital expenditures	Capital expenditures	(15,597)	(15,831)	Capital expenditures	(30,335)	(32,199)

Real estate development investments	Real estate development investments	(3,137)	(3,011)	Real estate development investments	(6,013)	(6,269)

Purchase of timberlands	Purchase of timberlands	(2,830)	(29,938)	Purchase of timberlands	(3,237)	(51,882)

Net proceeds from large disposition of timberlands				Net proceeds from large disposition of timberlands	—	35,219

Other	Other	2,619	4,356	Other	5,112	5,998
CASH USED FOR INVESTING ACTIVITIES	CASH USED FOR INVESTING ACTIVITIES	(18,945)	(44,424)	CASH USED FOR INVESTING ACTIVITIES	(34,473)	(49,133)
FINANCING ACTIVITIES	FINANCING ACTIVITIES			FINANCING ACTIVITIES
Issuance of debt	Issuance of debt	404,018	—	Issuance of debt	408,439	446,378
Repayment of debt	Repayment of debt	(526,948)	—	Repayment of debt	(533,298)	(350,000)
Distributions on units	Distributions on units	(40,339)	(38,645)	Distributions on units	(83,606)	(77,985)
Proceeds from the issuance of units under incentive stock plan	Proceeds from the issuance of units under incentive stock plan	579	1,166	Proceeds from the issuance of units under incentive stock plan	2,561	4,490
Proceeds from the issuance of units under the “at-the-market” (ATM) equity offering program, net of commissions and offering costs	Proceeds from the issuance of units under the “at-the-market” (ATM) equity offering program, net of commissions and offering costs	30,918	32,545	Proceeds from the issuance of units under the “at-the-market” (ATM) equity offering program, net of commissions and offering costs	31,915	110,702

Repurchase of units to pay withholding taxes on vested incentive stock awards	Repurchase of units to pay withholding taxes on vested incentive stock awards	(214)	(155)	Repurchase of units to pay withholding taxes on vested incentive stock awards	(4,204)	(1,608)

Debt issuance costs				Debt issuance costs	—	(4,812)

Distributions to noncontrolling interests in consolidated affiliates	Distributions to noncontrolling interests in consolidated affiliates	(2,684)	(8,737)	Distributions to noncontrolling interests in consolidated affiliates	(6,684)	(15,212)

CASH USED FOR FINANCING ACTIVITIES		(134,670)	(13,826)
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES				CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES	(184,877)	111,953
EFFECT OF EXCHANGE RATE CHANGES ON CASH	EFFECT OF EXCHANGE RATE CHANGES ON CASH	620	(5)	EFFECT OF EXCHANGE RATE CHANGES ON CASH	(2,246)	126
CASH, CASH EQUIVALENTS AND RESTRICTED CASH	CASH, CASH EQUIVALENTS AND RESTRICTED CASH			CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Change in cash, cash equivalents and restricted cash	Change in cash, cash equivalents and restricted cash	(103,328)	(4,387)	Change in cash, cash equivalents and restricted cash	(73,066)	227,528
Balance, beginning of year	Balance, beginning of year	369,139	87,482	Balance, beginning of year	369,139	87,482
Balance, end of period	Balance, end of period	$265,811	$83,095	Balance, end of period	$296,073	$315,010

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION	SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION			SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period:	Cash paid during the period:			Cash paid during the period:
Interest (a)	Interest (a)	$3,935	$2,945	Interest (a)	$16,932	$17,677
Income taxes	Income taxes	14,042	4,838	Income taxes	14,330	7,132
Non-cash investing activity:	Non-cash investing activity:			Non-cash investing activity:
Capital assets purchased on account	Capital assets purchased on account	4,511	4,814	Capital assets purchased on account	4,882	4,155
Non-cash financing activity:				Non-cash financing activity:
Noncontrolling interests in consolidated affiliates redemption of shares (b)				Noncontrolling interests in consolidated affiliates redemption of shares (b)	27,860	—

(a)Interest paid is presented net of patronage payments received of~~$5.5~~ $6.0 million and ~~$6.2~~$6.8 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and ~~March 31,~~June 30, 2021, respectively. For additional information on patronage payments, see Note 10 — Debt in the 2021 Form 10-K.

(b)

Note 6 - Debt

for further information.

See Notes to Consolidated Financial Statements.

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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 our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC (the “2021 Form 10-K”).

As of ~~March 31,~~June 30, 2022, the Company owned a 97.8% interest in the Operating Partnership, with the remaining 2.2% 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.

SUMMARY OF UPDATES TO SIGNIFICANT ACCOUNTING POLICIES

For a full description of our other significant accounting policies, see Note 1 — Summary of Significant Accounting Policies in our 2021 Form 10-K.

NEW ACCOUNTING STANDARDS

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-04, Reference Rate Reform (Topic 848), which provides optional guidance to ease the potential burden in accounting due to reference rate reform. ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. We have elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. We continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

In August 2020, the FASB issued ASU 2020-06, Debt–Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging–Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted. The pronouncement eliminates the requirement that contracts legally permitting settlement in registered shares be classified as temporary equity. As a result, Redeemable Operating Partnership Units may be classified as permanent partners’ capital in the Operating Partnership’s accompanying balance sheets and the related noncontrolling interest as permanent equity in the accompanying balance sheets of Rayonier, Inc. However, the corresponding SEC guidance on equity classification has remained unchanged. We will continue to monitor any developments in this area and may reclassify the temporary partners’ capital and noncontrolling interest to permanent upon agreement in guidance.

Recent accounting pronouncements adopted or pending adoption not discussed above are either not applicable or are not expected to have a material impact on our consolidated financial condition, results of operations, or cash flows.

SUBSEQUENT EVENTS

~~On April 1,~~We have evaluated events occurring from June 30, 2022 ~~the New Zealand subsidiary made a capital distribution to its partners on a pro rata basis in order to redeem certain equity interests, which was reinvested by the partners in shareholder loans~~ to the ~~New Zealand subsidiary. Our capital distribution and portion~~date of issuance of these Consolidated Financial Statements for potential recognition or disclosure in the ~~shareholder loan are eliminated in consolidation. The~~consolidated financial statements. No events were identified that warranted recognition or disclosure.

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RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

capital distribution to the minority shareholder and its reinvestment in the shareholder loan resulted in the recording of a loan payable by the New Zealand subsidiary in the amount of $27.9 million due in 2027 at a fixed rate of 6.48%.

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 income (expense), miscellaneous income (expense) and income tax expense, are not considered by management to be part of segment operations and are included under “unallocated interest expense and other.”

The following tables summarize the segment information for the three and six months ended ~~March 31,~~June 30, 2022 and 2021:


		Three Months Ended March 31,		Three Months Ended June 30,				Six Months Ended June 30,
SALES	SALES		2022		2021	SALES	2022	2021	2022	2021
Southern Timber	Southern Timber		$76,763		$51,677	Southern Timber	$66,271	$49,294	$143,035	$100,971
Pacific Northwest Timber	Pacific Northwest Timber		46,281		41,522	Pacific Northwest Timber	39,157	35,323	85,437	76,844
New Zealand Timber	New Zealand Timber		51,389		57,579	New Zealand Timber	78,882	80,559	130,271	138,138
Timber Funds (a)	Timber Funds (a)		—		14,939	Timber Funds (a)	—	18,646	—	33,585
Real Estate(b)	Real Estate(b)		34,195		10,504	Real Estate(b)	34,402	74,531	68,597	85,035
Trading	Trading		13,461		16,665	Trading	27,683	34,546	41,145	51,212

Intersegment Eliminations ~~(b)~~(c)	Intersegment Eliminations ~~(b)~~(c)		(48)		(1,439)	Intersegment Eliminations ~~(b)~~(c)	(49)	(1,468)	(98)	(2,907)
Total	Total		$222,041		$191,447	Total	$246,346	$291,431	$468,387	$482,878

(a)The three and six months ended ~~March 31,~~June 30, 2021 ~~includes $11.9~~include $14.7 million and $26.7 million of sales attributable to noncontrolling interests in Timber Funds.

(b)The three and six months ended June 30, 2021 includes $36.0 million from a Large Disposition. 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.

(c)Primarily consists of the elimination of timberland investment management fees paid to us by the timber funds, which were initially recognized as sales and cost of sales within the Timber Funds segment, as well as log marketing fees paid to our Trading segment from our Southern Timber and Pacific Northwest Timber segments for marketing log export sales.

Three Months Ended March 31,
OPERATING INCOME 2022 2021
Southern Timber $30,342 $17,347
Pacific Northwest Timber 6,606 1,350
New Zealand Timber 5,392 13,944
Timber Funds (a) — 1,501
Real Estate 10,181 1,687
Trading 351 244
Corporate and Other (7,554) (7,588)
Total Operating Income 45,318 28,485
Unallocated interest expense and other (8,805) (10,032)
Total Income before Income Taxes $36,513 $18,453

~~(a)The three months ended March 31, 2021 includes $1.1 million of operating income attributable to noncontrolling interests in Timber Funds.~~

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RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

Three Months Ended March 31,
DEPRECIATION, DEPLETION AND AMORTIZATION 2022 2021
Southern Timber $18,059 $14,359
Pacific Northwest Timber 14,916 16,284
New Zealand Timber 4,989 7,250
Timber Funds (a) — 5,500
Real Estate 9,145 1,557
Corporate and Other 310 263
Total $47,419 $45,213


	Three Months Ended June 30,		Six Months Ended June 30,
OPERATING INCOME	2022	2021	2022	2021
Southern Timber	$24,067	$16,980	$54,409	$34,327
Pacific Northwest Timber	2,943	1,872	9,550	3,222
New Zealand Timber	7,981	20,714	13,373	34,658
Timber Funds (a)	—	1,991	—	3,492
Real Estate (b)	11,023	50,511	21,204	52,199
Trading	(444)	418	(93)	662

Corporate and Other	(10,102)	(8,042)	(17,657)	(15,631)
Total Operating Income	35,468	84,444	80,786	112,929
Unallocated interest expense and other	(8,877)	(14,144)	(17,682)	(24,175)
Total Income before Income Taxes	$26,591	$70,300	$63,104	$88,754

(a)The three and six months ended ~~March 31,~~June 30, 2021 include $1.6 million and $2.7 million, respectively, of operating income attributable to noncontrolling interests in Timber Funds.

(b)The three and six months ended June 30, 2021 includes ~~$4.9~~$30.3 million from a Large Disposition.


	Three Months Ended June 30,		Six Months Ended June 30,
DEPRECIATION, DEPLETION AND AMORTIZATION	2022	2021	2022	2021
Southern Timber	$14,657	$13,576	$32,716	$27,935
Pacific Northwest Timber	11,316	12,031	26,232	28,316
New Zealand Timber	6,901	6,952	11,891	14,201
Timber Funds (a)	—	6,121	—	11,621
Real Estate (b)	2,564	8,535	11,709	10,092


Corporate and Other	313	313	621	576
Total	$35,751	$47,528	$83,169	$92,741

(a)The three and six months ended June 30, 2021 include $5.1 million and $10.1 million, respectively, of depreciation, depletion and amortization attributable to noncontrolling interests in Timber Funds.

(b)

Three Months Ended March 31,
NON-CASH COST OF LAND AND IMPROVED DEVELOPMENT 2022 2021
Real Estate $5,359 $1,813
Total $5,359 $1,813
The three and six months ended June 30, 2021 includes $4.8 million from a Large Dispositions.


	Three Months Ended June 30,		Six Months Ended June 30,
NON-CASH COST OF LAND AND IMPROVED DEVELOPMENT	2022	2021	2022	2021




Real Estate (a)	$11,780	$5,254	$17,139	$7,067


Total	$11,780	$5,254	$17,139	$7,067

(a)The three and six months ended June 30, 2021 includes $0.1 million from a Large Disposition.

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RAYONIER INC. AND SUBSIDIARIES

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

3. REVENUE

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 ~~March 31,~~June 30, 2022 are primarily due to advances on stumpage contracts, unearned license revenue and post-closing obligations on real estate sales. These performance obligations are expected to be satisfied within the next twelve months. 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 and deferred revenue (contract liabilities) on the Consolidated Balance Sheets. Accounts receivable 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 summarizes revenue recognized during the three and six months ended ~~March 31,~~June 30, 2022 and 2021 that was included in the contract liability balance at the beginning of each year:

Three Months Ended March 31,
2022 2021
Revenue recognized from contract liability balance at the beginning of the year (a) $7,533 $5,920


	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Revenue recognized from contract liability balance at the beginning of the year (a)	$4,968	$4,049	$12,501	$9,969

(a) Revenue recognized was primarily from hunting licenses and the use of advances on pay-as-cut timber sales.

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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 months ended ~~March 31,~~June 30, 2022 and 2021:



Three Months Ended	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Timber Funds	Real Estate	Trading	Elim.	Total
June 30, 2022
Pulpwood	$30,770	$3,572	$10,851	—	—	$2,999	—	$48,192
Sawtimber	21,744	34,310	64,247	—	—	24,319	—	144,620
Hardwood	5,706	—	—	—	—	—	—	5,706
Total Timber Sales	58,220	37,882	75,098	—	—	27,318	—	198,518
License Revenue, Primarily from Hunting	6,506	129	87	—	—	—	—	6,722
Other Non-Timber/Carbon Revenue	1,545	1,146	3,697	—	—	—	—	6,388
Agency Fee Income	—	—	—	—	—	316	—	316

Total Non-Timber Sales	8,051	1,275	3,784	—	—	316	—	13,426
Improved Development	—	—	—	—	11,566	—	—	11,566

Rural	—	—	—	—	23,420	—	—	23,420


Deferred Revenue/Other (a)	—	—	—	—	(907)	—	—	(907)

Total Real Estate Sales	—	—	—	—	34,079	—	—	34,079

Revenue from Contracts with Customers	66,271	39,157	78,882	—	34,079	27,634	—	246,023
Lease Revenue	—	—	—	—	323	—	—	323
Intersegment	—	—	—	—	—	49	(49)	—
Total Revenue	$66,271	$39,157	$78,882	—	$34,402	$27,683	($49)	$246,346


Three Months Ended	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Timber Funds	Real Estate	Trading	Elim.	Total
June 30, 2021
Pulpwood	$23,728	$2,078	$12,266	$395	—	$3,676	—	$42,143
Sawtimber	18,692	31,755	67,986	16,419	—	30,475	—	165,327
Hardwood	1,268	—	—	—	—	—	—	1,268
Total Timber Sales	43,688	33,833	80,252	16,814	—	34,151	—	208,738
License Revenue, Primarily from Hunting	4,493	117	81	26	—	—	—	4,717
Other Non-Timber/Carbon Revenue	1,113	1,373	226	399	—	—	—	3,111
Agency Fee Income	—	—	—	—	—	334	—	334
Total Non-Timber Sales	5,606	1,490	307	425	—	334	—	8,162
Improved Development	—	—	—	—	19,340	—	—	19,340

Rural	—	—	—	—	20,297	—	—	20,297

Conservation Easement	—	—	—	—	3,855	—	—	3,855
Deferred Revenue/Other (a)	—	—	—	—	(5,242)	—	—	(5,242)
Large Dispositions	—	—	—	—	36,000	—	—	36,000
Total Real Estate Sales	—	—	—	—	74,250	—	—	74,250

Revenue from Contracts with Customers	49,294	35,323	80,559	17,239	74,250	34,485	—	291,150
Lease Revenue	—	—	—	—	281	—	—	281
Intersegment	—	—	—	1,407	—	61	(1,468)	—
Total Revenue	$49,294	$35,323	$80,559	$18,646	$74,531	$34,546	($1,468)	$291,431

Three Months Ended Southern Timber Pacific Northwest Timber New Zealand Timber Timber Funds Real Estate Trading Elim. Total
March 31, 2022
Pulpwood $37,611 $2,918 $7,595 — — $1,525 — $49,649
Sawtimber 27,516 42,215 42,100 — — 11,538 — 123,369
Hardwood 5,849 — — — — — — 5,849
Total Timber Sales 70,976 45,133 49,695 — — 13,063 — 178,867
License Revenue, Primarily From Hunting 4,688 116 62 — — — — 4,866
Other Non-Timber/Carbon Revenue 1,099 1,032 1,632 — — — — 3,763
Agency Fee Income — — — — — 350 — 350
Total Non-Timber Sales 5,787 1,148 1,694 — — 350 — 8,979
Improved Development — — — — 4,966 — — 4,966
Rural — — — — 16,950 — — 16,950
Timberland & Non-Strategic — — — — 11,400 — — 11,400
Deferred Revenue/Other (a) — — — — 636 — — 636
Total Real Estate Sales — — — — 33,952 — — 33,952
Revenue from Contracts with Customers 76,763 46,281 51,389 — 33,952 13,413 — 221,798
Lease Revenue — — — — 243 — — 243
Intersegment — — — — — 48 (48) —
Total Revenue $76,763 $46,281 $51,389 — $34,195 $13,461 ($48) $222,041
Three Months Ended Southern Timber Pacific Northwest Timber New Zealand Timber Timber Funds Real Estate Trading Elim. Total
March 31, 2021
Pulpwood $21,856 $2,495 $9,542 $260 — $1,835 — $35,988
Sawtimber 21,963 37,758 47,792 13,308 — 14,389 — 135,210
Hardwood 405 — — — — — — 405
Total Timber Sales 44,224 40,253 57,334 13,568 — 16,224 — 171,603
License Revenue, Primarily from Hunting 4,417 91 58 3 — — — 4,569
Other Non-Timber/Carbon Revenue 3,036 1,178 187 14 — — — 4,415
Agency Fee Income — — — — — 356 — 356
Total Non-Timber Sales 7,453 1,269 245 17 — 356 — 9,340
Improved Development — — — — 252 — — 252
Rural — — — — 9,765 — — 9,765
Deferred Revenue/Other (a) — — — — 255 — — 255
Total Real Estate Sales — — — — 10,272 — — 10,272
Revenue from Contracts with Customers 51,677 41,522 57,579 13,585 10,272 16,580 — 191,215
Lease Revenue — — — — 232 — — 232
Intersegment — — — 1,354 — 85 (1,439) —
Total Revenue $51,677 $41,522 $57,579 $14,939 $10,504 $16,665 ($1,439) $191,447

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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)


Six Months Ended	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Timber Funds	Real Estate	Trading	Elim.	Total
June 30, 2022
Pulpwood	$68,381	$6,491	$18,446	—	—	$4,523	—	$97,841
Sawtimber	49,260	76,524	106,347	—	—	35,857	—	267,988
Hardwood	11,555	—	—	—	—	—	—	11,555
Total Timber Sales	129,196	83,015	124,793	—	—	40,380	—	377,384
License Revenue, Primarily From Hunting	11,182	245	148	—	—	—	—	11,575
Other Non-Timber/Carbon Revenue	2,657	2,177	5,330	—	—	—	—	10,164
Agency Fee Income	—	—	—	—	—	667	—	667

Total Non-Timber Sales	13,839	2,422	5,478	—	—	667	—	22,406
Improved Development	—	—	—	—	16,532	—	—	16,532

Rural	—	—	—	—	40,369	—	—	40,369
Timberland & Non-Strategic	—	—	—	—	11,400	—	—	11,400

Deferred Revenue/Other (a)	—	—	—	—	(271)	—	—	(271)

Total Real Estate Sales	—	—	—	—	68,030	—	—	68,030

Revenue from Contracts with Customers	143,035	85,437	130,271	—	68,030	41,047	—	467,820
Lease Revenue	—	—	—	—	567	—	—	567
Intersegment	—	—	—	—	—	98	(98)	—
Total Revenue	$143,035	$85,437	$130,271	—	$68,597	$41,145	($98)	$468,387

Six Months Ended	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Timber Funds	Real Estate	Trading	Elim.	Total
June 30, 2021
Pulpwood	$45,584	$4,573	$21,809	$655	—	$5,510	—	$78,131
Sawtimber	40,655	69,513	115,777	29,727	—	44,865	—	300,537
Hardwood	1,673	—	—	—	—	—	—	1,673
Total Timber Sales	87,912	74,086	137,586	30,382	—	50,375	—	380,341
License Revenue, Primarily from Hunting	8,913	207	139	29	—	—	—	9,288
Other Non-Timber/Carbon Revenue	4,146	2,551	413	413	—	—	—	7,523
Agency Fee Income	—	—	—	—	—	691	—	691
Total Non-Timber Sales	13,059	2,758	552	442	—	691	—	17,502
Improved Development	—	—	—	—	19,592	—	—	19,592

Rural	—	—	—	—	30,062	—	—	30,062

Conservation Easement	—	—	—	—	3,855	—	—	3,855
Deferred Revenue/Other (a)	—	—	—	—	(4,987)	—	—	(4,987)
Large Dispositions	—	—	—	—	36,000	—	—	36,000
Total Real Estate Sales	—	—	—	—	84,522	—	—	84,522

Revenue from Contracts with Customers	100,971	76,844	138,138	30,824	84,522	51,066	—	482,365
Lease Revenue	—	—	—	—	513	—	—	513
Intersegment	—	—	—	2,761	—	146	(2,907)	—
Total Revenue	$100,971	$76,844	$138,138	$33,585	$85,035	$51,212	($2,907)	$482,878

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

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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 timber sales disaggregated by contract type for the three and six months ended ~~March 31,~~June 30, 2022 and 2021:



Three Months Ended	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Timber Funds	Trading	Total
June 30, 2022
Stumpage Pay-as-Cut	$21,326	—	—	—	—	$21,326
Stumpage Lump Sum	90	85	—	—	—	175

Total Stumpage	21,416	85	—	—	—	21,501

Delivered Wood (Domestic)	33,248	33,956	18,051	—	1,104	86,359
Delivered Wood (Export)	3,556	3,841	57,047	—	26,214	90,658
Total Delivered	36,804	37,797	75,098	—	27,318	177,017

Total Timber Sales	$58,220	$37,882	$75,098	—	$27,318	$198,518

June 30, 2021
Stumpage Pay-as-Cut	$15,183	—	—	$197	—	$15,380
Stumpage Lump Sum	4,645	932	—	—	—	5,577

Total Stumpage	19,828	932	—	197	—	20,957

Delivered Wood (Domestic)	19,955	32,901	19,250	16,617	1,236	89,959
Delivered Wood (Export)	3,905	—	61,002	—	32,915	97,822
Total Delivered	23,860	32,901	80,252	16,617	34,151	187,781

Total Timber Sales	$43,688	$33,833	$80,252	$16,814	$34,151	$208,738

Three Months Ended Southern Timber Pacific Northwest Timber New Zealand Timber Timber Funds Trading Total
March 31, 2022
Stumpage Pay-as-Cut $36,206 — — — — $36,206
Stumpage Lump Sum — 5,388 — — — 5,388
Total Stumpage 36,206 5,388 — — — 41,594
Delivered Wood (Domestic) 32,128 39,446 13,481 — 625 85,680
Delivered Wood (Export) 2,642 299 36,214 — 12,438 51,593
Total Delivered 34,770 39,745 49,695 — 13,063 137,273
Total Timber Sales $70,976 $45,133 $49,695 — $13,063 $178,867
March 31, 2021
Stumpage Pay-as-Cut $21,257 — — — — $21,257
Stumpage Lump Sum 3 6,131 — — — 6,134
Total Stumpage 21,260 6,131 — — — 27,391
Delivered Wood (Domestic) 18,059 34,122 17,106 13,568 1,091 83,946
Delivered Wood (Export) 4,905 — 40,228 — 15,133 60,266
Total Delivered 22,964 34,122 57,334 13,568 16,224 144,212
Total Timber Sales $44,224 $40,253 $57,334 $13,568 $16,224 $171,603

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RAYONIER, L.P. AND SUBSIDIARIES

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, 2022
Stumpage Pay-as-Cut	$57,532	—	—	—	—	$57,532
Stumpage Lump Sum	90	5,473	—	—	—	5,563

Total Stumpage	57,622	5,473	—	—	—	63,095

Delivered Wood (Domestic)	65,376	73,402	31,532	—	1,729	172,039
Delivered Wood (Export)	6,198	4,140	93,261	—	38,651	142,250
Total Delivered	71,574	77,542	124,793	—	40,380	314,289

Total Timber Sales	$129,196	$83,015	$124,793	—	$40,380	$377,384

June 30, 2021
Stumpage Pay-as-Cut	$36,440	—	—	$197	—	$36,637
Stumpage Lump Sum	4,647	7,063	—	—	—	11,710

Total Stumpage	41,087	7,063	—	197	—	48,347

Delivered Wood (Domestic)	38,014	67,023	36,356	30,185	2,327	173,905
Delivered Wood (Export)	8,811	—	101,230	—	48,048	158,089
Total Delivered	46,825	67,023	137,586	30,185	50,375	331,994

Total Timber Sales	$87,912	$74,086	$137,586	$30,382	$50,375	$380,341

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

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 ~~419,000~~418,000 legal acres of New Zealand timberland. Accordingly, we consolidate the New Zealand subsidiary’s balance sheet and results of operations. Income attributable to the New Zealand subsidiary’s 23% noncontrolling interests is reflected as an adjustment to income in our Consolidated Statements of Income and Comprehensive Income under the caption “Net 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.

NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP

Noncontrolling interests in the operating partnership relate to the third-party ownership of Redeemable Operating Partnership Units. Net income attributable to the noncontrolling interests in the operating partnership is computed by applying the weighted average Redeemable Operating Partnership Units outstanding during the period as a percentage of the weighted average total units outstanding to the Operating Partnership’s net income for the period. If a noncontrolling unitholder redeems a unit for a registered common share of Rayonier or cash, the noncontrolling interests in the 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:


		Three Months Ended March 31,		Three Months Ended June 30,				Six Months Ended June 30,
			2022		2021		2022	2021	2022	2021
Beginning noncontrolling interests in the operating partnership	Beginning noncontrolling interests in the operating partnership		$133,823		$130,121	Beginning noncontrolling interests in the operating partnership	$136,239	$137,990	$133,823	$130,121

Adjustment of noncontrolling interests in the operating partnership	Adjustment of noncontrolling interests in the operating partnership		2,645		11,867	Adjustment of noncontrolling interests in the operating partnership	(11,412)	15,410	(8,767)	27,277
Conversions of Redeemable Operating Partnership Units to Common Shares	Conversions of Redeemable Operating Partnership Units to Common Shares		(104)		(4,715)	Conversions of Redeemable Operating Partnership Units to Common Shares	(42)	(241)	(146)	(4,956)
Net Income attributable to noncontrolling interests in the operating partnership	Net Income attributable to noncontrolling interests in the operating partnership		669		341	Net Income attributable to noncontrolling interests in the operating partnership	546	1,753	1,214	2,094
Other Comprehensive Income attributable to noncontrolling interests in the operating partnership			101		1,531
Other Comprehensive (Loss) Income attributable to noncontrolling interests in the operating partnership						Other Comprehensive (Loss) Income attributable to noncontrolling interests in the operating partnership	(575)	(253)	(474)	1,278
Distributions to noncontrolling interests in the operating partnership	Distributions to noncontrolling interests in the operating partnership		(895)		(1,155)	Distributions to noncontrolling interests in the operating partnership	(945)	(1,154)	(1,839)	(2,309)
Total noncontrolling interests in the operating partnership	Total noncontrolling interests in the operating partnership		$136,239		$137,990	Total noncontrolling interests in the operating partnership	$123,811	$153,505	$123,811	$153,505

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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 March 31,		Three Months Ended June 30,				Six Months Ended June 30,
			2022		2021		2022	2021	2022	2021
Earnings per common share - basic	Earnings per common share - basic					Earnings per common share - basic
Numerator:	Numerator:					Numerator:
Net Income	Net Income		$30,998		$15,032	Net Income	$25,287	$63,420	$56,286	$78,452
Less: Net income attributable to noncontrolling interests in the operating partnership	Less: Net income attributable to noncontrolling interests in the operating partnership		(669)		(341)	Less: Net income attributable to noncontrolling interests in the operating partnership	(546)	(1,753)	(1,214)	(2,094)
Less: Net income attributable to noncontrolling interests in consolidated affiliates	Less: Net income attributable to noncontrolling interests in consolidated affiliates		(1,012)		(3,843)	Less: Net income attributable to noncontrolling interests in consolidated affiliates	(637)	(4,461)	(1,650)	(8,304)
Net income attributable to Rayonier Inc.	Net income attributable to Rayonier Inc.		$29,317		$10,848	Net income attributable to Rayonier Inc.	$24,104	$57,206	$53,422	$68,054
Denominator:	Denominator:					Denominator:
Denominator for basic earnings per common share - weighted average shares	Denominator for basic earnings per common share - weighted average shares		145,430,171		137,870,821	Denominator for basic earnings per common share - weighted average shares	146,257,311	139,556,748	145,846,026	138,718,442
Basic earnings per common share attributable to Rayonier Inc.:	Basic earnings per common share attributable to Rayonier Inc.:		$0.20		$0.08	Basic earnings per common share attributable to Rayonier Inc.:	$0.16	$0.41	$0.37	$0.49
Earnings per common share - diluted	Earnings per common share - diluted					Earnings per common share - diluted
Numerator:	Numerator:					Numerator:
Net Income	Net Income		$30,998		$15,032	Net Income	$25,287	$63,420	$56,286	$78,452
Less: Net income attributable to noncontrolling interests in consolidated affiliates	Less: Net income attributable to noncontrolling interests in consolidated affiliates		(1,012)		(3,843)	Less: Net income attributable to noncontrolling interests in consolidated affiliates	(637)	(4,461)	(1,650)	(8,304)

Net income attributable to Rayonier Inc., before net income attributable to noncontrolling interests in the operating partnership	Net income attributable to Rayonier Inc., before net income attributable to noncontrolling interests in the operating partnership		$29,986		$11,189	Net income attributable to Rayonier Inc., before net income attributable to noncontrolling interests in the operating partnership	$24,650	$58,959	$54,636	$70,148
Denominator:	Denominator:					Denominator:
Denominator for basic earnings per common share - weighted average shares	Denominator for basic earnings per common share - weighted average shares		145,430,171		137,870,821	Denominator for basic earnings per common share - weighted average shares	146,257,311	139,556,748	145,846,026	138,718,442
Add: Dilutive effect of:	Add: Dilutive effect of:					Add: Dilutive effect of:
Stock options	Stock options		7,229		4,051	Stock options	8,100	12,646	7,664	8,348
Performance shares, restricted shares and restricted stock units	Performance shares, restricted shares and restricted stock units		794,892		353,131	Performance shares, restricted shares and restricted stock units	666,653	210,923	730,773	282,027
Noncontrolling interests in operating partnership units	Noncontrolling interests in operating partnership units		3,314,784		4,330,794	Noncontrolling interests in operating partnership units	3,312,315	4,275,912	3,313,543	4,303,201
Denominator for diluted earnings per common share - adjusted weighted average shares	Denominator for diluted earnings per common share - adjusted weighted average shares		149,547,076		142,558,797	Denominator for diluted earnings per common share - adjusted weighted average shares	150,244,379	144,056,229	149,898,006	143,312,018
Diluted earnings per common share attributable to Rayonier Inc.:	Diluted earnings per common share attributable to Rayonier Inc.:		$0.20		$0.08	Diluted earnings per common share attributable to Rayonier Inc.:	$0.16	$0.41	$0.36	$0.49


		Three Months Ended March 31,		Three Months Ended June 30,				Six Months Ended June 30,
			2022		2021		2022	2021	2022	2021
Anti-dilutive shares excluded from the computations of diluted earnings per common share:	Anti-dilutive shares excluded from the computations of diluted earnings per common share:					Anti-dilutive shares excluded from the computations of diluted earnings per common share:
Stock options, performance shares, restricted shares and restricted stock units	Stock options, performance shares, restricted shares and restricted stock units		254		194,256	Stock options, performance shares, restricted shares and restricted stock units	109,515	208,614	54,884	201,435

Total	Total		254		194,256	Total	109,515	208,614	54,884	201,435

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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 unit of the Operating Partnership:


		Three Months Ended March 31,		Three Months Ended June 30,				Six Months Ended June 30,
			2022		2021		2022	2021	2022	2021
Earnings per unit - basic	Earnings per unit - basic					Earnings per unit - basic
Numerator:	Numerator:					Numerator:
Net Income	Net Income		$30,998		$15,032	Net Income	$25,287	$63,420	$56,286	$78,452
Less: Net income attributable to noncontrolling interests in consolidated affiliates	Less: Net income attributable to noncontrolling interests in consolidated affiliates		(1,012)		(3,843)	Less: Net income attributable to noncontrolling interests in consolidated affiliates	(637)	(4,461)	(1,650)	(8,304)
Net income available to unitholders	Net income available to unitholders		$29,986		$11,189	Net income available to unitholders	$24,650	$58,959	$54,636	$70,148
Denominator:	Denominator:					Denominator:
Denominator for basic earnings per unit - weighted average units	Denominator for basic earnings per unit - weighted average units		148,744,955		142,201,615	Denominator for basic earnings per unit - weighted average units	149,569,626	143,832,660	149,159,569	143,021,643
Basic earnings per unit attributable to Rayonier, L.P.:	Basic earnings per unit attributable to Rayonier, L.P.:		$0.20		$0.08	Basic earnings per unit attributable to Rayonier, L.P.:	$0.16	$0.41	$0.37	$0.49
Earnings per unit - diluted	Earnings per unit - diluted					Earnings per unit - diluted
Numerator:	Numerator:					Numerator:
Net Income	Net Income		$30,998		$15,032	Net Income	$25,287	$63,420	$56,286	$78,452
Less: Net income attributable to noncontrolling interests in consolidated affiliates	Less: Net income attributable to noncontrolling interests in consolidated affiliates		(1,012)		(3,843)	Less: Net income attributable to noncontrolling interests in consolidated affiliates	(637)	(4,461)	(1,650)	(8,304)
Net income available to unitholders	Net income available to unitholders		$29,986		$11,189	Net income available to unitholders	$24,650	$58,959	$54,636	$70,148
Denominator:	Denominator:					Denominator:
Denominator for basic earnings per unit - weighted average units	Denominator for basic earnings per unit - weighted average units		148,744,955		142,201,615	Denominator for basic earnings per unit - weighted average units	149,569,626	143,832,660	149,159,569	143,021,643
Add: Dilutive effect of unit equivalents:	Add: Dilutive effect of unit equivalents:					Add: Dilutive effect of unit equivalents:
Stock options	Stock options		7,229		4,051	Stock options	8,100	12,646	7,664	8,348
Performance shares, restricted shares and restricted stock units	Performance shares, restricted shares and restricted stock units		794,892		353,131	Performance shares, restricted shares and restricted stock units	666,653	210,923	730,773	282,027
Denominator for diluted earnings per unit - adjusted weighted average units	Denominator for diluted earnings per unit - adjusted weighted average units		149,547,076		142,558,797	Denominator for diluted earnings per unit - adjusted weighted average units	150,244,379	144,056,229	149,898,006	143,312,018
Diluted earnings per unit attributable to Rayonier, L.P.:	Diluted earnings per unit attributable to Rayonier, L.P.:		$0.20		$0.08	Diluted earnings per unit attributable to Rayonier, L.P.:	$0.16	$0.41	$0.36	$0.49


		Three Months Ended March 31,		Three Months Ended June 30,				Six Months Ended June 30,
			2022		2021		2022	2021	2022	2021
Anti-dilutive unit equivalents excluded from the computations of diluted earnings per unit:	Anti-dilutive unit equivalents excluded from the computations of diluted earnings per unit:					Anti-dilutive unit equivalents excluded from the computations of diluted earnings per unit:
Stock options, performance shares, restricted shares and restricted stock units	Stock options, performance shares, restricted shares and restricted stock units		254		194,256	Stock options, performance shares, restricted shares and restricted stock units	109,515	208,614	54,884	201,435

Total	Total		254		194,256	Total	109,515	208,614	54,884	201,435

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

6. DEBT

Our debt consisted of the following at ~~March 31,~~June 30, 2022:


			~~March 31,~~June 30, 2022
Debt
Term Credit Agreement borrowings due 2028 at a variable interest rate of ~~1.9%~~2.7% at ~~March 31,~~June 30, 2022 (a)			$350,000

Senior Notes due 2031 at a fixed interest rate of 2.75%			450,000
Incremental Term Loan Agreement borrowings due 2026 at a variable interest rate of ~~1.9%~~2.7% at ~~March 31,~~June 30, 2022 (b)			200,000


2021 Incremental Term Loan Facility Borrowings due 2029 at a variable interest rate of ~~1.8%~~2.6% at ~~March 31,~~June 30, 2022 (c)			200,000
New Zealand subsidiary noncontrolling interests shareholder loan due 2025 at a fixed interest rate of 2.95% (d)			~~24,005~~21,451
New Zealand subsidiary noncontrolling interests shareholder loan due 2026 at a fixed interest rate of 3.64% (d)			~~28,006~~25,026
New Zealand subsidiary noncontrolling interests shareholder loan due 2027 at a fixed interest rate of 6.48% (d)			25,026
New Zealand Working Capital Facility due ~~2022~~2023 at a variable interest rate of ~~2.1%~~3.1% at ~~March 31,~~June 30, 2022			~~2,087~~622





Total principal debt			~~1,254,098~~1,272,125

Less: Unamortized discounts			~~(3,346)~~(3,266)
Less: Current maturities of long-term debt			~~(2,087)~~(622)
Less: Deferred financing costs			~~(4,992)~~(4,843)

















Total long-term debt			$~~1,243,673~~1,263,394

(a) As of ~~March 31,~~June 30, 2022, the periodic interest rate on the term credit agreement (the “Term Credit Agreement”) was LIBOR plus 1.600%. We estimate the effective fixed interest rate on the term loan facility to be approximately 3.0% after consideration of interest rate swaps and estimated patronage refunds.

(b) As of ~~March 31,~~June 30, 2022, the periodic interest rate on the incremental term loan (the “Incremental Term Loan Agreement”) was LIBOR plus 1.650%. We estimate the effective fixed interest rate on the incremental term loan facility to be approximately 2.4% after consideration of interest rate swaps and estimated patronage refunds.

(c) As of ~~March 31,~~June 30, 2022, the periodic interest rate on the 2021 incremental term loan (the “2021 Incremental Term Loan Facility”) was LIBOR plus 1.550%. We estimate the effective fixed interest rate on the incremental term loan facility to be approximately 1.5% after consideration of interest rate swaps and estimated patronage refunds.

(d) Except for changes in the New Zealand foreign exchange rate, there have been no adjustments to the carrying value of the shareholder loans since inception.

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


		Total		Total
2022	2022	$2,087	2022	—
2023	2023	—	2023	622
2024	2024	—	2024	—
2025	2025	24,005	2025	21,451
2026	2026	228,006	2026	225,026
Thereafter	Thereafter	1,000,000	Thereafter	1,025,026
Total Debt	Total Debt	$1,254,098	Total Debt	$1,272,125

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RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

2022 DEBT ACTIVITY

U.S. Debt

On January 3, 2022, we drew $200.0 million on our Revolving Credit Facility. On January 4, 2022, we repaid the $325.0 million Senior Notes due 2022 with $125.0 million of cash and the $200.0 million previously drawn on the Revolving Credit Facility. We then made a $200.0 million draw on our 2021 Incremental Term Loan Facility and simultaneously repaid the outstanding principal on our Revolving Credit Facility. The periodic interest rate on the 2021 Incremental Term Loan agreement is subject to a pricing grid based on our leverage ratio, as defined in the credit agreement. As of ~~March 31,~~June 30, 2022, the periodic interest rate on the 2021 Incremental Term Loan is LIBOR plus 1.55%. Monthly payments of interest only are due on this loan through maturity.

On February 1, 2022, our $200.0 million notional forward-starting interest rate swap matured into an active interest rate swap. This interest rate swap will fix the cost of the 2021 Incremental Term Loan Facility over its seven-year term. We estimate the effective interest rate on the 2021 Incremental Term Loan Facility to be approximately 1.5% after consideration of interest rate swaps and estimated patronage refunds.

At ~~March 31,~~June 30, 2022, we had available borrowings of $299.1 million under the Revolving Credit Facility, net of $0.9 million to secure our outstanding letters of credit.

New Zealand Debt

In June 2022, the New Zealand subsidiary renewed its NZ$20 million working capital facility for an additional 12-month term. During the ~~three~~six months ended ~~March 31,~~June 30, 2022, the New Zealand subsidiary made ~~$2.1~~US$0.6 million of borrowings, net of repayments and changes in exchange rates, on its working capital facility (the “New Zealand Working Capital Facility”). At ~~March 31,~~June 30, 2022, the New Zealand subsidiary had NZ$~~17.0~~19.0 million of available borrowings under its working capital facility.

~~Subsequent Event~~

In April 2022, the New Zealand subsidiary ~~recorded~~made a ~~noncontrolling interest share redemption~~capital distribution to its partners on a pro rata basis in order to redeem certain equity interests, which was reinvested by the partners in shareholder loans to the New Zealand subsidiary. Our capital distribution and portion of the shareholder loan are eliminated in consolidation. The capital distribution to the minority shareholder and its reinvestment in the shareholder loan resulted in the recording of a loan payable by the New Zealand subsidiary in the amount of $27.9 ~~million. The shareholder loan is~~million due in 2027 at a fixed interest rate of 6.48%. As of June 30, 2022, the outstanding balance on the shareholder loan due 2027 is $25.0 million. Except for changes in the New Zealand foreign exchange rate, there have been no adjustments to the carrying value of the shareholder loan since its inception. See Note 14 — ~~Basis of Presentation~~Noncontrolling Interests for more information regarding ~~subsequent events related to~~ the New Zealand subsidiary.

DEBT COVENANTS

In connection with our $350 million Term Credit Agreement, $200 million Incremental Term Loan Agreement, $200 million 2021 Incremental Term Loan Facility and $300 million 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 ~~March 31,~~June 30, 2022, are calculated on a trailing 12-month basis:


		Covenant Requirement		Actual Ratio		Favorable			Covenant Requirement		Actual Ratio		Favorable
Covenant EBITDA to consolidated interest expense should not be less than	Covenant EBITDA to consolidated interest expense should not be less than	2.5 to 1		13.6 to 1		11.1		Covenant EBITDA to consolidated interest expense should not be less than	2.5 to 1		13.6 to 1		11.1
Covenant debt to covenant net worth plus covenant debt shall not exceed	Covenant debt to covenant net worth plus covenant debt shall not exceed	65	%	40	%	25	%	Covenant debt to covenant net worth plus covenant debt shall not exceed	65	%	41	%	24	%

In addition to these financial covenants listed above, the Senior Notes due 2031, Term Credit Agreement, Incremental Term Loan Agreement, 2021 Incremental Term Loan Facility, and Revolving Credit Facility include customary covenants that limit the incurrence of debt and the disposition of assets, among others. At ~~March 31,~~June 30, 2022, we were in compliance with all applicable covenants.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

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 Consolidated Balance Sheets. Changes in the instruments’ fair value are accounted for based on their intended use. Gains and losses on derivatives that are designated and qualify for cash flow hedge accounting are recorded as 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 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

~~The~~Our New Zealand ~~subsidiary’s~~subsidiary is exposed to foreign currency risk, as its functional currency is the New Zealand dollar, but has certain cash flows denominated U.S. dollars. 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, and therefore its cash flows are affected by fluctuations in~~dollars. To the extent New Zealand dollar costs exceed New Zealand dollar revenues (the “foreign exchange ~~rate between~~exposure”), the New Zealand dollar and the U.S. dollar. This exposure is partially managed by a natural currency hedge, as ocean freight payments and shareholder distributions are also paid in U.S. dollars. We manage any excess foreign exchange exposuresubsidiary manages it through the use of derivative financial instruments. ~~The New Zealand subsidiary~~It typically hedges a portion of export sales 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 to~~for the ~~following 18~~forward 24 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~~hedges 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 ~~March 31,~~June 30, 2022, foreign currency exchange contracts and foreign currency option contracts had maturity dates through ~~February~~August 2024 and December ~~2023,~~2024, 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 income for de-designated hedges remains in accumulated other comprehensive income until the forecasted transaction affects earnings. Changes in the value of derivative instruments after de-designation are recorded in earnings.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

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 outstanding interest rate swaps as of ~~March 31,~~June 30, 2022:


Outstanding Interest Rate Swaps (a)	Outstanding Interest Rate Swaps (a)										Outstanding Interest Rate Swaps (a)
Date Entered Into	Date Entered Into	Term	Notional Amount	Related Debt Facility	Fixed Rate of Swap		Bank Margin on Debt		Total Effective Interest Rate (b)		Date Entered Into	Term	Notional Amount	Related Debt Facility	Fixed Rate of Swap		Bank Margin on Debt		Total Effective Interest Rate (b)
August 2015	August 2015	9 years	$170,000	Term Credit Agreement	2.20	%	1.60	%	3.80	%	August 2015	9 years	$170,000	Term Credit Agreement	2.20	%	1.60	%	3.80	%
August 2015	August 2015	9 years	180,000	Term Credit Agreement	2.35	%	1.60	%	3.95	%	August 2015	9 years	180,000	Term Credit Agreement	2.35	%	1.60	%	3.95	%
April 2016	April 2016	10 years	100,000	Incremental Term Loan	1.60	%	1.65	%	3.25	%	April 2016	10 years	100,000	Incremental Term Loan	1.60	%	1.65	%	3.25	%
April 2016	April 2016	10 years	100,000	Incremental Term Loan	1.60	%	1.65	%	3.25	%	April 2016	10 years	100,000	Incremental Term Loan	1.60	%	1.65	%	3.25	%
May 2021 ~~(d)~~(c)	May 2021 ~~(d)~~(c)	7 years	200,000	2021 Incremental Term Loan Facility	0.77	%	1.55	%	2.32	%	May 2021 ~~(d)~~(c)	7 years	200,000	2021 Incremental Term Loan Facility	0.77	%	1.55	%	2.32	%

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

(b)Rate is before estimated patronage payments.

(c)On February 1, 2022, our $200.0 million notional forward-starting interest rate swap matured into an active interest rate swap. See Note 6 - De btDebt for additional information.

~~(d)~~The $200.0 million notional interest rate swap contained an embedded mark-to-market gain, which we recovered through a reduced charge in the fixed rate over what would have been charged for an at-market swap.

FORWARD-STARTING INTEREST RATE SWAPS

The following table contains information on the outstanding forward-starting interest rate swaps as of ~~March 31,~~June 30, 2022:

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

0.88

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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

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 months ended ~~March 31,~~June 30, 2022 and 2021:


			Three Months Ended March 31,				Three Months Ended June 30,
		Income Statement Location	2022	2021		Income Statement Location	2022	2021
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 (loss) income	$3,514	($2,852)	Foreign currency exchange contracts	Other comprehensive (loss) income	($14,352)	($896)
Foreign currency option contracts	Foreign currency option contracts	Other comprehensive (loss) income	136	(929)	Foreign currency option contracts	Other comprehensive (loss) income	(686)	(230)
Interest rate products	Interest rate products	Other comprehensive (loss) income	35,129	59,731	Interest rate products	Other comprehensive (loss) income	14,636	(14,587)
		Interest expense	2,670	3,994		Interest expense	1,948	5,377

Three Months Ended
March 31,


		Six Months Ended June 30,
	Income Statement Location	2022	2021
Derivatives designated as cash flow hedges:
Foreign currency exchange contracts	Other comprehensive (loss) income	($10,839)	($3,747)
Foreign currency option contracts	Other comprehensive (loss) income	(550)	(1,158)
Interest rate products	Other comprehensive (loss) income	49,765	45,144
	Interest expense	4,618	9,371

During the next 12 months, the amount of the ~~March 31,~~June 30, 2022 AOCI balance, net of tax, expected to be reclassified into earnings is a gain of approximately ~~$0.3~~$3.1 million. The 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			~~$246~~ ($6,784)
Foreign currency option contracts			(51)
Interest rate products			569,908
Total estimated gain on derivatives contracts			$~~302~~3,073

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


		Notional Amount			Notional Amount
		March 31, 2022	December 31, 2021		June 30, 2022	December 31, 2021
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	$149,500	$149,250	Foreign currency exchange contracts	$160,500	$149,250
Foreign currency option contracts	Foreign currency option contracts	14,000	14,000	Foreign currency option contracts	32,000	14,000
Interest rate swaps	Interest rate swaps	750,000	550,000	Interest rate swaps	750,000	550,000

Forward-starting interest rate swaps	Forward-starting interest rate swaps	150,000	350,000	Forward-starting interest rate swaps	150,000	350,000

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

The following table contains the fair values of the derivative financial instruments recorded in the Consolidated Balance Sheets at ~~March 31,~~June 30, 2022 and December 31, 2021. 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)			Location on Balance Sheet	Fair Value Assets / (Liabilities) (a)
			March 31, 2022	December 31, 2021			June 30, 2022	December 31, 2021
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 current assets	$712	$721	Foreign currency exchange contracts	Other current assets	—	$721
		Other assets	1,241	86		Other assets	—	86
		Other current liabilities	(369)	(2,061)		Other current liabilities	(9,424)	(2,061)
		Other non-current liabilities	(18)	(694)		Other non-current liabilities	(3,364)	(694)

Foreign currency option contracts	Foreign currency option contracts	Other assets	318	228	Foreign currency option contracts	Other current assets	7	—
						Other assets	446	228
		Other non-current liabilities	(224)	(270)		Other current liabilities	(78)	—
						Other non-current liabilities	(967)	(270)
Interest rate swaps	Interest rate swaps	Other assets	26,912	—	Interest rate swaps	Other assets	40,909	—
Interest rate swaps		Other non-current liabilities	—	(15,582)
						Other non-current liabilities	—	(15,582)

Forward-starting interest rate swaps	Forward-starting interest rate swaps	Other assets	6,699	11,482	Forward-starting interest rate swaps	Other assets	9,106	11,482

Total derivative contracts:	Total derivative contracts:				Total derivative contracts:
Other current assets	Other current assets		$712	$721	Other current assets		$7	$721
Other assets	Other assets		35,170	11,796	Other assets		50,461	11,796
Total derivative assets	Total derivative assets		$35,882	$12,517	Total derivative assets		$50,468	$12,517

Other current liabilities	Other current liabilities		(369)	(2,061)	Other current liabilities		(9,502)	(2,061)
Other non-current liabilities	Other non-current liabilities		(242)	(16,546)	Other non-current liabilities		(4,331)	(16,546)
Total derivative liabilities	Total derivative liabilities		($611)	($18,607)	Total derivative liabilities		($13,833)	($18,607)

(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

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)

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 ~~March 31,~~June 30, 2022 and December 31, 2021, using market information and what we believe to be appropriate valuation methodologies under GAAP:


		March 31, 2022			December 31, 2021				June 30, 2022			December 31, 2021
Asset (Liability) (a)	Asset (Liability) (a)	Carrying Amount	Fair Value		Carrying Amount	Fair Value		Asset (Liability) (a)	Carrying Amount	Fair Value		Carrying Amount	Fair Value
			Level 1	Level 2		Level 1	Level 2			Level 1	Level 2		Level 1	Level 2
Cash and cash equivalents, excluding Timber Funds	Cash and cash equivalents, excluding Timber Funds	$256,537	$256,537	—	$358,680	$358,680	—	Cash and cash equivalents, excluding Timber Funds	$279,331	$279,331	—	$358,680	$358,680	—
Cash and cash equivalents, Timber Funds	Cash and cash equivalents, Timber Funds	3,185	3,185	—	3,493	3,493	—	Cash and cash equivalents, Timber Funds	949	949	—	3,493	3,493	—
Restricted cash, Timber Funds (b)	Restricted cash, Timber Funds (b)	5,464	5,464	—	6,341	6,341	—	Restricted cash, Timber Funds (b)	1,464	1,464	—	6,341	6,341	—
Restricted cash, excluding Timber Funds (c)	Restricted cash, excluding Timber Funds (c)	625	625	—	625	625	—	Restricted cash, excluding Timber Funds (c)	14,329	14,329	—	625	625	—
Current maturities of long-term debt (d)	Current maturities of long-term debt (d)	(2,087)	—	(2,087)	(124,965)	—	(125,288)	Current maturities of long-term debt (d)	(622)	—	(622)	(124,965)	—	(125,288)

Long-term debt (d)	Long-term debt (d)	(1,243,673)	—	(1,209,595)	(1,242,819)	—	(1,245,148)	Long-term debt (d)	(1,263,394)	—	(1,196,582)	(1,242,819)	—	(1,245,148)

Interest rate swaps (e)	Interest rate swaps (e)	26,912	—	26,912	(15,582)	—	(15,582)	Interest rate swaps (e)	40,909	—	40,909	(15,582)	—	(15,582)

Forward-starting interest rate swaps (e)	Forward-starting interest rate swaps (e)	6,699	—	6,699	11,482	—	11,482	Forward-starting interest rate swaps (e)	9,106	—	9,106	11,482	—	11,482
Foreign currency exchange contracts (e)	Foreign currency exchange contracts (e)	1,566	—	1,566	(1,948)	—	(1,948)	Foreign currency exchange contracts (e)	(12,788)	—	(12,788)	(1,948)	—	(1,948)
Foreign currency option contracts (e)	Foreign currency option contracts (e)	94	—	94	(42)	—	(42)	Foreign currency option contracts (e)	(592)	—	(592)	(42)	—	(42)

Noncontrolling interests in the operating partnership (f)	Noncontrolling interests in the operating partnership (f)	136,239	136,239	—	133,823	133,823	—	Noncontrolling interests in the operating partnership (f)	123,811	123,811	—	133,823	133,823	—

(a)We did not have Level 3 assets or liabilities at ~~March 31,~~June 30, 2022 and December 31, 2021.

(b)Restricted cash, Timber Funds represents the portion of proceeds from Fund II Timberland Dispositions required to be distributed to noncontrolling interests. See Note 19 — Restricted Cash for additional information.

(c)Restricted cash, excluding Timber Funds represents proceeds from like-kind exchange sales deposited with a third-party intermediary and cash held in escrow. See Note 19 — Restricted Cash for additional information.

(d)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.

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

(f)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 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

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 period-end closing price of Rayonier Inc. common shares.

9. COMMITMENTS

At ~~March 31,~~June 30, 2022, the future minimum payments under non-cancellable commitments were as follows:


		Environmental Remediation (a)	Development Projects (b)	Commitments (c)	Total		Environmental Remediation (a)	Development Projects (b)	Commitments (c)	Total
Remaining 2022	Remaining 2022	$740	$17,803	$9,002	$27,545	Remaining 2022	$726	$19,676	$8,480	$28,882
2023	2023	3,873	3,239	11,174	18,286	2023	3,874	3,239	12,024	19,137
2024	2024	3,840	267	8,233	12,340	2024	3,839	267	4,433	8,539
2025	2025	1,036	267	4,494	5,797	2025	1,010	267	1,192	2,469
2026	2026	460	267	2,558	3,285	2026	451	267	360	1,078
Thereafter	Thereafter	1,374	3,944	3,306	8,624	Thereafter	1,358	4,062	—	5,420
		$11,323	$25,787	$38,767	$75,877		$11,258	$27,778	$26,489	$65,525

(a)Environmental remediation represents our estimate of potential liability associated with environmental contamination and Natural Resource Damages (NRD) in Port Gamble, Washington. See Note 11 - Environmental and Natural Resource Damage Liabilities for additional information.

(b)Primarily consisting of payments expected to be made on our Wildlight and Heartwood development projects.

(c)Commitments include payments expected to be made on financial instruments (foreign exchange contracts ~~interest rate swaps~~ and ~~forward-starting~~ interest rate swaps) and other purchase obligations.

10. 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

11. 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, 2021 to ~~March 31,~~June 30, 2022 are shown below:


			Port Gamble, WA






Non-current portion at December 31, 2021			$10,110
Plus: Current portion			695
Total Balance at December 31, 2021			10,805
Expenditures charged to liabilities			~~(136)~~(245)
Increase to liabilities			~~654~~698
Total Balance at ~~March 31,~~June 30, 2022			~~11,323~~11,258
Less: Current portion			~~(774)~~(766)
Non-current portion at ~~March 31,~~June 30, 2022			$~~10,549~~10,492

It is expected that the upland mill site cleanup and NRD restoration will occur over the next ~~two~~one to ~~three~~two years, while the monitoring of Port Gamble Bay, mill site and landfills will continue for an additional 10 to 15 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 9 - Commitments.

12. GUARANTEES

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

As of ~~March 31,~~June 30, 2022, the following financial guarantees were outstanding:

Financial Commitments (a)

Maximum Potential
Payment

Standby letters of credit

$885

Surety bonds (b)

~~23,920~~23,194

Total financial commitments

$~~24,805~~24,079

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

13. 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.

Changes in higher and better use timberlands and real estate development investments from December 31, 2021 to ~~March 31,~~June 30, 2022 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, 2021	Non-current portion at December 31, 2021	$87,910	$18,968	$106,878	Non-current portion at December 31, 2021	$87,910	$18,968	$106,878
Plus: Current portion (a)	Plus: Current portion (a)	718	24,022	24,740	Plus: Current portion (a)	718	24,022	24,740
Total Balance at December 31, 2021	Total Balance at December 31, 2021	88,628	42,990	131,618	Total Balance at December 31, 2021	88,628	42,990	131,618
Non-cash cost of land and improved development	Non-cash cost of land and improved development	(378)	(2,308)	(2,686)	Non-cash cost of land and improved development	(579)	(9,617)	(10,196)
Amortization of parcel real estate development investments	Amortization of parcel real estate development investments	—	(1,964)	(1,964)	Amortization of parcel real estate development investments	—	(3,212)	(3,212)
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	(445)	—	(445)	Timber depletion from harvesting activities and basis of timber sold in real estate sales	(633)	—	(633)
Capitalized real estate development investments (b)	Capitalized real estate development investments (b)	—	4,435	4,435	Capitalized real estate development investments (b)	—	8,957	8,957
Capital expenditures (silviculture)	Capital expenditures (silviculture)	139	—	139	Capital expenditures (silviculture)	116	—	116

Intersegment transfers	Intersegment transfers	3,977	—	3,977	Intersegment transfers	4,345	—	4,345

Total Balance at March 31, 2022		91,921	43,153	135,074
Total Balance at June 30, 2022					Total Balance at June 30, 2022	91,877	39,118	130,995
Less: Current portion (a)	Less: Current portion (a)	(415)	(23,214)	(23,629)	Less: Current portion (a)	(1,058)	(17,440)	(18,498)
Non-current portion at March 31, 2022		$91,506	$19,939	$111,445
Non-current portion at June 30, 2022					Non-current portion at June 30, 2022	$90,819	$21,678	$112,497

(a)The current portion of Higher and Better Use Timberlands and Real Estate Development Investments is recorded in Inventory. See Note 14 — Inventory for additional information.

(b)Capitalized real estate development investments include ~~$0.2~~$0.4 million of capitalized interest and ~~$1.3~~$2.9 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.

14. INVENTORY

As of ~~March 31,~~June 30, 2022 and December 31, 2021, our inventory consisted entirely of finished goods, as follows:


		March 31, 2022	December 31, 2021		June 30, 2022	December 31, 2021
Finished goods inventory	Finished goods inventory			Finished goods inventory
Real estate inventory (a)	Real estate inventory (a)	$23,629	$24,740	Real estate inventory (a)	$18,498	$24,740
Log inventory	Log inventory	9,661	3,783	Log inventory	6,832	3,783
Total inventory	Total inventory	$33,290	$28,523	Total inventory	$25,330	$28,523

(a)Represents the cost of HBU real estate (including capitalized development investments) under contract to be ~~sold.~~sold as well as the cost of HBU real estate deferred until post-closing obligations are satisfied. See Note 13 — Higher And Better Use Timberlands and Real Estate Development Investments for additional information.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

15. OTHER OPERATING INCOME (EXPENSE) ~~INCOME,~~, NET

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


		Three Months Ended March 31,		Three Months Ended June 30,				Six Months Ended June 30,
			2022		2021		2022	2021	2022	2021
(Loss) gain on foreign currency remeasurement, net of cash flow hedges			($571)		$2,429
Gain on foreign currency remeasurement, net of cash flow hedges						Gain on foreign currency remeasurement, net of cash flow hedges	$1,249	$1,922	$677	$4,351
Gain on sale or disposal of property and equipment	Gain on sale or disposal of property and equipment		25		90	Gain on sale or disposal of property and equipment	6	3	31	93

Log trading marketing fees	Log trading marketing fees		—		6	Log trading marketing fees	—	—	—	6

Equity (loss) income related to Bainbridge Landing LLC joint venture	Equity (loss) income related to Bainbridge Landing LLC joint venture		(227)		19	Equity (loss) income related to Bainbridge Landing LLC joint venture	(145)	186	(370)	206
Miscellaneous expense, net	Miscellaneous expense, net		(211)		(96)	Miscellaneous expense, net	(309)	(155)	(520)	(252)
Total	Total		($984)		$2,448	Total	$801	$1,956	($182)	$4,404

16. EMPLOYEE BENEFIT PLANS

We have 1 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.

We are not required to make mandatory 2022 pension contributions due to our plan’s improved ~~funding~~funded status and have made no pension contribution payments during the ~~three~~six months ended ~~March 31,~~June 30, 2022.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

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	Components of Net Periodic Benefit (Credit) Cost	Income Statement Location	Pension		Postretirement		Components of Net Periodic Benefit (Credit) Cost	Income Statement Location	Pension		Postretirement
			Three Months Ended March 31,		Three Months Ended March 31,				Three Months Ended June 30,		Three Months Ended June 30,
			2022	2021	2022	2021			2022	2021	2022	2021
Service cost	Service cost	Selling and general expenses	—	—	$2	$2	Service cost	Selling and general expenses	—	—	$2	$2
Interest cost	Interest cost	Interest and other miscellaneous expense, net	609	557	13	11	Interest cost	Interest and other miscellaneous income (expense), net	609	557	13	11
Expected return on plan assets (a)	Expected return on plan assets (a)	Interest and other miscellaneous expense, net	(872)	(936)	—	—	Expected return on plan assets (a)	Interest and other miscellaneous income (expense), net	(872)	(936)	—	—

Amortization of losses	Amortization of losses	Interest and other miscellaneous expense, net	184	288	4	5	Amortization of losses	Interest and other miscellaneous income (expense), net	184	288	4	5

Net periodic benefit (credit) cost	Net periodic benefit (credit) cost		($79)	($91)	$19	$18	Net periodic benefit (credit) cost		($79)	($91)	$19	$18

~~Components of Net Periodic Benefit (Credit) Cost~~

~~Income Statement Location~~

~~Pension~~

~~Postretirement~~


Components of Net Periodic Benefit (Credit) Cost	Income Statement Location	Pension		Postretirement
		Six Months Ended June 30,		Six Months Ended June 30,
		2022	2021	2022	2021
Service cost	Selling and general expenses	—	—	$3	$4
Interest cost	Interest and other miscellaneous income (expense), net	1,217	1,114	26	23
Expected return on plan assets (a)	Interest and other miscellaneous income (expense), net	(1,743)	(1,873)	—	—

Amortization of losses	Interest and other miscellaneous income (expense), net	369	577	7	10

Net periodic benefit (credit) cost		($157)	($182)	$36	$37

(a)The weighted-average expected long-term rate of return on plan assets used in computing 2022 net periodic benefit cost for pension benefits is 5.0%.

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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)~~

17. 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 ~~March 31,~~June 30, 2022, Rayonier owns a 97.8% 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
March 31,
2022 2021
Income tax expense ($5,515) ($3,421)

~~ANNUAL EFFECTIVE TAX RATE~~

The Company’s 2022 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:

Three Months Ended
March 31,
2022 2021
Annualized effective tax rate after discrete items 10.5 % 11.6 %


	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Income tax expense	($1,304)	($6,880)	($6,818)	($10,302)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

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:


	Six Months Ended June 30,
		2022		2021
Annualized effective tax rate after discrete items		9.2	%	11.0	%

18. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in AOCI by component for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and the year ended December 31, 2021. 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.		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, 2020	Balance as of December 31, 2020	$22,702	$1,321	($71,056)		($24,312)		($71,345)	(2,540)	($73,885)	Balance as of December 31, 2020	$22,702	$1,321	($71,056)		($24,312)		($71,345)	($2,540)	($73,885)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(18,487)	—	44,899	(a)	11,302		37,714	(1,080)	36,634	Other comprehensive income (loss) before reclassifications	(18,487)	—	44,899	(a)	11,302		37,714	(1,080)	36,634
Amounts reclassified from accumulated other comprehensive income (loss)	Amounts reclassified from accumulated other comprehensive income (loss)	—	—	16,994		1,174	(b)	18,168	(521)	17,647	Amounts reclassified from accumulated other comprehensive income (loss)	—	—	16,994		1,174	(b)	18,168	(521)	17,647
Net other comprehensive income (loss)	Net other comprehensive income (loss)	(18,487)	—	61,893		12,476		55,882	(1,601)	54,281	Net other comprehensive income (loss)	(18,487)	—	61,893		12,476		55,882	(1,601)	54,281
Balance as of December 31, 2021	Balance as of December 31, 2021	$4,215	$1,321	($9,163)		($11,836)		($15,463)	($4,141)	($19,604)	Balance as of December 31, 2021	$4,215	$1,321	($9,163)		($11,836)		($15,463)	($4,141)	($19,604)
Other comprehensive (loss) income before reclassifications	Other comprehensive (loss) income before reclassifications	5,668	—	37,147	(a)	—		42,815	(954)	41,861	Other comprehensive (loss) income before reclassifications	(28,706)	—	43,413	(a)	—		14,707	(330)	14,377
Amounts reclassified from accumulated other comprehensive income (loss)		—	—	2,675		188	(b)	2,863	853	3,716
Amounts reclassified from accumulated other comprehensive income											Amounts reclassified from accumulated other comprehensive income	—	—	4,657		376	(b)	5,033	804	5,837
Net other comprehensive income (loss)	Net other comprehensive income (loss)	5,668	—	39,822		188		45,678	(101)	45,577	Net other comprehensive income (loss)	(28,706)	—	48,070		376		19,740	474	20,214
Balance as of March 31, 2022		$9,883	$1,321	$30,659		($11,648)		$30,215	($4,242)	$25,973
Balance as of June 30, 2022											Balance as of June 30, 2022	($24,491)	$1,321	$38,907		($11,460)		$4,277	($3,667)	$610

(a)The six months ended June 30, 2022 and the year ended December 31, 2021 ~~and the three months ended March 31, 2022~~ include ~~$52.5~~$49.8 million and ~~$35.1~~$52.5 million, respectively, 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 (loss) is included in the computation of net periodic pension and post-retirement costs. See Note 16 — Employee Benefit Plans for additional information.

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(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

The following table presents details of the amounts reclassified in their entirety from AOCI to net income for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and ~~March 31,~~June 30, 2021:

Details about accumulated other comprehensive income (loss) components Amount reclassified from accumulated other comprehensive income (loss) Affected line item in the income statement
March 31, 2022 March 31, 2021
Realized loss on foreign currency exchange contracts $9 $1,205 Other operating (expense) income, net
Realized loss on foreign currency option contracts — 594 Other operating (expense) income, net
Noncontrolling interests (2) (414) Comprehensive income attributable to noncontrolling interests
Realized loss on interest rate contracts 2,670 3,994 Interest expense
Income tax effect from net loss on foreign currency contracts (2) (388) Income tax expense
Net loss on cash flow hedges reclassified from accumulated other comprehensive income $2,675 $4,991

~~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)~~


Details about accumulated other comprehensive income (loss) components	Amount reclassified from accumulated other comprehensive income (loss)		Affected line item in the income statement
	June 30, 2022	June 30, 2021
Realized loss on foreign currency exchange contracts	$71	$1,725	Other operating (expense) income, net
Realized loss on foreign currency option contracts	—	827	Other operating (expense) income, net
Noncontrolling interests	(16)	(587)	Comprehensive income attributable to noncontrolling interests
Realized loss on interest rate contracts	4,617	9,541	Interest expense
Income tax effect from net loss on foreign currency contracts	(15)	(551)	Income tax expense


Net loss on cash flow hedges reclassified from accumulated other comprehensive income	$4,657	$10,955

19. RESTRICTED CASH

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

Restricted cash, excluding Timber Funds includes cash deposited with a like-kind exchange (“LKE”) intermediary. In order to qualify for 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 the Company after 180 days and reclassified as available cash. Additionally, restricted cash, 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 real estate sales.

The following table provides a reconciliation of cash, cash equivalents and restricted cash in the Consolidated Balance Sheets that sum to the total of the same such amounts in the Consolidated Statements of Cash Flows for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021:


		Three Months Ended March 31,			Six Months Ended June 30,
		2022	2021		2022	2021

Restricted cash, excluding Timber Funds:				Restricted cash, excluding Timber Funds:
Restricted cash deposited with LKE intermediary				Restricted cash deposited with LKE intermediary	$13,704	—
Restricted cash held in escrow				Restricted cash held in escrow	625	702
Total restricted cash shown in the Consolidated Balance Sheets, excluding Timber Funds				Total restricted cash shown in the Consolidated Balance Sheets, excluding Timber Funds	14,329	702
Restricted cash shown in the Consolidated Balance Sheets, Timber Funds				Restricted cash shown in the Consolidated Balance Sheets, Timber Funds	1,464	—

Cash and cash equivalents	Cash and cash equivalents	$259,722	$82,620	Cash and cash equivalents	280,280	314,308
Restricted cash, Timber Funds		5,464	—
Restricted cash, excluding Timber Funds (Held in escrow)		625	475

Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows	Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows	$265,811	$83,095	Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows	$296,073	$315,010

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)

20. ASSETS HELD FOR SALE

Assets held for sale is composed of properties under contract and expected to be sold within 12 months that also meet the other relevant held-for-sale criteria in accordance with ASC 360-10-45-9. As of ~~March 31,~~June 30, 2022 and December 31, 2021, the basis in properties meeting this classification was ~~$2.5~~$2.2 million and $5.1 million, respectively. Since the basis in these properties was less than the fair value, including costs to sell, no impairment was recognized.

21. RELATED PARTY

In January 2020, we entered into an agreement to sell developed lots to Mattamy Jacksonville LLC, a wholly owned subsidiary of Mattamy Homes, for an aggregate base purchase price of $4.45 million (subject to multiple takedowns over a 2 year period), plus additional consideration as to each lot to the extent the ultimate sales price of each finished home exceeds agreed price thresholds (the “Mattamy Contract”). In May 2021, we entered into an amendment to the original agreement for the sale of additional lots to Mattamy for an aggregate base purchase price of $1.0 million. The Mattamy contract also includes marketing fee revenue based on a percentage of the sales price of each finished home.

In September 2020, Keith Bass, a member of our Board of Directors, was named the Chief Executive Officer of Mattamy Homes US. Following this development, the Mattamy Contract and the ongoing obligations therein, were reviewed by the Nominating and Corporate Governance Committee in accordance with established policies and procedures regarding the authorization and approval of transactions with related parties.

The following table demonstrates the impact, gross of tax, of our related party transactions on the Consolidated Statements of Income and Comprehensive Income for the ~~three~~six months ended:


			Three Months Ended March 31,					Three Months Ended June 30,			Six Months Ended June 30,
Related Party Transaction	Related Party Transaction	Location on Statement of Income and Comprehensive Income		2022	2021	Related Party Transaction	Location on Statement of Income and Comprehensive Income		2022	2021		2022	2021
Mattamy Contract	Mattamy Contract	Sales (a)		$174	$42	Mattamy Contract	Sales (a)		$339	1,446		$513	1,488

(a)The three and six months ended ~~March 31,~~June 30, 2021 exclude approximately $0.1 million and $0.2 million, respectively, of cash received from Mattamy Jacksonville LLC under this agreement for the reimbursement of local impact fees.

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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, our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”) 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 potential effects of the ongoing global novel coronavirus (“COVID-19”) pandemic, 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 our 2021 Form 10-K, Part II, Item 1A — Risk Factors in this report 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 for 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 7, Management’s Discussion and Analysis (“MD&A”) highlights the critical areas for evaluating the Company’s 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, Real Estate, and Trading. As of ~~March 31,~~June 30, 2022, we owned or leased under long-term agreements approximately 2.7 million acres of timberlands located in the U.S. South ~~(1.80~~(1.79 million acres), U.S. Pacific Northwest (486,000 acres) and New Zealand ~~(419,000~~(418,000 gross acres or ~~297,000~~296,000 net plantable acres).

SEGMENT INFORMATION

The Southern Timber, Pacific Northwest Timber and New Zealand Timber segments include all activities related to the harvesting of timber and other non-timber income activities, such as the licensing of properties for hunting, 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. See Note 4 - Noncontrolling Interests for additional information regarding our noncontrolling interests in the New Zealand Timber segment.

The Real Estate segment includes all U.S. and New Zealand land or leasehold sales disaggregated into six sales categories: Improved Development, Unimproved Development, Rural, 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 log trading activities in New Zealand and Australia conducted by our New Zealand 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. This additional market intelligence also benefits our Southern and Pacific Northwest export log marketing.

ENVIRONMENTAL MATTERS

For a full description of our environmental matters, see Item 1 - “Business” in our Annual Report on Form 10-K for the year ended December 31, 2021 and our sustainability report located at our Responsible Stewardship webpage.

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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 segment relies primarily on domestic customers but also exports a significant volume of timber, particularly to China. The Southern Timber and Pacific Northwest Timber 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.

Global log and lumber markets were volatile during the first ~~quarter~~and second quarters as sanctions were placed on Russia in response to their invasion of Ukraine. While we do not expect our operations to be directly impacted by the conflict at this time, changes in global wood and commodity flows could impact the markets in which we operate.

As the current COVID-19 pandemic continues to evolve, the expected duration and the extent of economic disruption it may ultimately cause remain uncertain. Local, state and national governments continue to evaluate policies and restrictions in order to mitigate the spread of COVID-19. Government-mandated shutdowns or shelter-in-place orders in markets in which we operate could negatively impact our results. Further, 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 timber markets.

We are also subject to the risk of price fluctuations in certain of our cost 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. Depletion includes the amortization of capitalized site preparation, planting and fertilization, real estate taxes, timberland lease payments and certain payroll 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.

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 our 2021 Form 10-K.

3539

DISCUSSION OF TIMBER INVENTORY AND SUSTAINABLE YIELD

See Item 1 — Business — Discussion of Timber Inventory and Sustainable Yield in our 2021 Form 10-K.

OUR TIMBERLANDS

Our timber operations are disaggregated into three geographically distinct segments: Southern Timber, Pacific Northwest Timber and New Zealand Timber. The following tables provide a breakdown of our timberland holdings as of ~~March 31,~~June 30, 2022 and December 31, 2021:


(acres in 000s)	(acres in 000s)	As of March 31, 2022			As of December 31, 2021			(acres in 000s)	As of June 30, 2022			As of December 31, 2021
		Owned	Leased	Total	Owned	Leased	Total		Owned	Leased	Total	Owned	Leased	Total
Southern	Southern							Southern
Alabama	Alabama	224	14	238	223	14	237	Alabama	224	14	238	223	14	237
Arkansas	Arkansas	—	4	4	—	4	4	Arkansas	—	4	4	—	4	4
Florida	Florida	350	51	401	350	51	401	Florida	348	51	399	350	51	401
Georgia	Georgia	618	64	682	619	64	683	Georgia	618	64	682	619	64	683
Louisiana	Louisiana	140	—	140	140	—	140	Louisiana	140	—	140	140	—	140

Oklahoma	Oklahoma	92	—	92	92	—	92	Oklahoma	91	—	91	92	—	92
South Carolina	South Carolina	16	—	16	16	—	16	South Carolina	16	—	16	16	—	16

Texas	Texas	222	—	222	225	—	225	Texas	221	—	221	225	—	225
		1,662	133	1,795	1,665	133	1,798		1,658	133	1,791	1,665	133	1,798

Pacific Northwest	Pacific Northwest							Pacific Northwest
Oregon	Oregon	61	—	61	61	—	61	Oregon	61	—	61	61	—	61
Washington	Washington	421	4	425	425	4	429	Washington	421	4	425	425	4	429
		482	4	486	486	4	490		482	4	486	486	4	490

New Zealand (a)	New Zealand (a)	187	232	419	187	232	419	New Zealand (a)	187	231	418	187	232	419
Total	Total	2,331	369	2,700	2,338	369	2,707	Total	2,327	368	2,695	2,338	369	2,707

(a)Represents legal acres owned and leased by the New Zealand subsidiary, in which we own a 77% interest. As of ~~March 31,~~June 30, 2022, legal acres in New Zealand consisted of ~~297,000~~296,000 plantable acres and 122,000 non-productive acres.

3640

The following tables detail activity for owned and leased acres in our timberland holdings by state from December 31, 2021 to ~~March 31,~~June 30, 2022:


(acres in 000s)	(acres in 000s)	Acres Owned					(acres in 000s)	Acres Owned
		December 31, 2021	Acquisitions	Sales	Other	March 31, 2022		December 31, 2021	Acquisitions	Sales	Other	June 30, 2022
Southern	Southern						Southern
Alabama	Alabama	223	1	—	—	224	Alabama	223	1	—	—	224
Florida	Florida	350	1	(1)	—	350	Florida	350	1	(3)	—	348
Georgia	Georgia	619	—	(1)	—	618	Georgia	619	—	(1)	—	618
Louisiana	Louisiana	140	—	—	—	140	Louisiana	140	—	—	—	140

Oklahoma	Oklahoma	92	—	—	—	92	Oklahoma	92	—	(1)	—	91
South Carolina	South Carolina	16	—	—	—	16	South Carolina	16	—	—	—	16

Texas	Texas	225	—	(3)	—	222	Texas	225	—	(4)	—	221
		1,665	2	(5)	—	1,662		1,665	2	(9)	—	1,658

Pacific Northwest	Pacific Northwest						Pacific Northwest
Oregon	Oregon	61	—	—	—	61	Oregon	61	—	—	—	61
Washington	Washington	425	—	(4)	—	421	Washington	425	—	(4)	—	421
		486	—	(4)	—	482		486	—	(4)	—	482

New Zealand (a)	New Zealand (a)	187	—	—	—	187	New Zealand (a)	187	—	—	—	187
Total	Total	2,338	2	(9)	—	2,331	Total	2,338	2	(13)	—	2,327

(a)Represents legal acres owned by the New Zealand subsidiary, in which we have a 77% interest.


(acres in 000s)	(acres in 000s)	Acres Leased					(acres in 000s)	Acres Leased
		December 31, 2021	New Leases	Sold/Expired Leases (a)	Other (b)	March 31, 2022		December 31, 2021	New Leases	Sold/Expired Leases (a)	Other	June 30, 2022
Southern	Southern						Southern
Alabama	Alabama	14	—	—	—	14	Alabama	14	—	—	—	14
Arkansas	Arkansas	4	—	—	—	4	Arkansas	4	—	—	—	4
Florida	Florida	51	—	—	—	51	Florida	51	—	—	—	51
Georgia	Georgia	64	—	—	—	64	Georgia	64	—	—	—	64

		133	—	—	—	133		133	—	—	—	133

Pacific Northwest	Pacific Northwest						Pacific Northwest
Washington ~~(c)~~(b)	Washington ~~(c)~~(b)	4	—	—	—	4	Washington ~~(c)~~(b)	4	—	—	—	4

New Zealand ~~(d)~~(c)	New Zealand ~~(d)~~(c)	232	—	—	—	232	New Zealand ~~(d)~~(c)	232	—	(1)	—	231
Total	Total	369	—	—	—	369	Total	369	—	(1)	—	368

(a)Includes acres previously under lease that have been harvested and activity for the relinquishment of leased acres.

(b)~~Includes acres previously under lease that we have acquired as fee ownership.~~

~~(c)~~Primarily timber reservations acquired in the merger with Pope Resources.

~~(d)~~(c)Represents legal acres leased by the New Zealand subsidiary, in which we have a 77% interest.

3741

RESULTS OF OPERATIONS

CONSOLIDATED RESULTS

The following table provides key financial information by segment and on a consolidated basis:


		Three Months Ended March 31,		Three Months Ended June 30,				Six Months Ended June 30,
Financial Information (in millions)	Financial Information (in millions)		2022		2021	Financial Information (in millions)	2022	2021	2022	2021
Sales	Sales					Sales
Southern Timber	Southern Timber		$76.8		$51.7	Southern Timber	$66.3	$49.3	$143.0	$101.0
Pacific Northwest Timber	Pacific Northwest Timber		46.3		41.5	Pacific Northwest Timber	39.2	35.3	85.4	76.8
New Zealand Timber	New Zealand Timber		51.4		57.6	New Zealand Timber	78.9	80.6	130.3	138.1
Timber Funds	Timber Funds		—		14.9	Timber Funds	—	18.6	—	33.6
Real Estate	Real Estate					Real Estate
Improved Development	Improved Development		5.0		0.3	Improved Development	11.6	19.3	16.5	19.6

Rural	Rural		16.9		9.8	Rural	23.4	20.3	40.4	30.1
Timberland & Non-Strategic	Timberland & Non-Strategic		11.4		—	Timberland & Non-Strategic	—	—	11.4	—

Conservation Easement						Conservation Easement	—	3.9	—	3.9
Deferred Revenue/Other (a)	Deferred Revenue/Other (a)		0.9		0.5	Deferred Revenue/Other (a)	(0.6)	(5.0)	0.3	(4.5)

Large Dispositions						Large Dispositions	—	36.0	—	36.0
Total Real Estate	Total Real Estate		34.2		10.5	Total Real Estate	34.4	74.5	68.6	85.0
Trading	Trading		13.4		16.7	Trading	27.7	34.5	41.1	51.2
Intersegment Eliminations	Intersegment Eliminations		(0.1)		(1.5)	Intersegment Eliminations	(0.1)	(1.4)	(0.1)	(2.8)
Total Sales	Total Sales		$222.0		$191.4	Total Sales	$246.3	$291.4	$468.4	$482.9

Operating Income	Operating Income					Operating Income
Southern Timber	Southern Timber		$30.3		$17.3	Southern Timber	$24.1	$17.0	$54.4	$34.3
Pacific Northwest Timber	Pacific Northwest Timber		6.6		1.3	Pacific Northwest Timber	2.9	1.9	9.5	3.2
New Zealand Timber	New Zealand Timber		5.4		14.0	New Zealand Timber	8.0	20.7	13.4	34.7
Timber Funds	Timber Funds		—		1.5	Timber Funds	—	2.0	—	3.5
Real Estate(b)	Real Estate(b)		10.2		1.7	Real Estate(b)	11.0	50.5	21.2	52.2
Trading	Trading		0.4		0.2	Trading	(0.4)	0.4	(0.1)	0.7
Corporate and Other	Corporate and Other		(7.6)		(7.6)	Corporate and Other	(10.1)	(8.0)	(17.7)	(15.6)
Operating Income	Operating Income		45.3		28.5	Operating Income	35.5	84.4	80.8	112.9
Interest expense, interest income and other	Interest expense, interest income and other		(8.8)		(10.0)	Interest expense, interest income and other	(8.9)	(14.1)	(17.7)	(24.1)
Income tax expense	Income tax expense		(5.5)		(3.5)	Income tax expense	(1.3)	(6.9)	(6.8)	(10.3)
Net Income	Net Income		31.0		15.0	Net Income	25.3	63.4	56.3	78.5
Less: Net income attributable to noncontrolling interests in consolidated affiliates	Less: Net income attributable to noncontrolling interests in consolidated affiliates		(1.0)		(3.8)	Less: Net income attributable to noncontrolling interests in consolidated affiliates	(0.6)	(4.5)	(1.7)	(8.3)
Net Income Attributable to Rayonier, L.P.	Net Income Attributable to Rayonier, L.P.		$30.0		$11.2	Net Income Attributable to Rayonier, L.P.	$24.7	$58.9	$54.6	$70.2
Less: Net income attributable to noncontrolling interests in the operating partnership	Less: Net income attributable to noncontrolling interests in the operating partnership		(0.7)		(0.4)	Less: Net income attributable to noncontrolling interests in the operating partnership	(0.6)	(1.7)	(1.2)	(2.1)
Net Income Attributable to Rayonier Inc.	Net Income Attributable to Rayonier Inc.		$29.3		$10.8	Net Income Attributable to Rayonier Inc.	$24.1	$57.2	$53.4	$68.1

Adjusted EBITDA ~~(b)~~(c)	Adjusted EBITDA ~~(b)~~(c)					Adjusted EBITDA ~~(b)~~(c)
Southern Timber	Southern Timber		$48.4		$31.7	Southern Timber	$38.7	$30.6	$87.1	$62.3
Pacific Northwest Timber	Pacific Northwest Timber		21.5		17.6	Pacific Northwest Timber	14.3	13.9	35.8	31.5
New Zealand Timber	New Zealand Timber		10.4		21.2	New Zealand Timber	14.9	27.7	25.3	48.9
Timber Funds	Timber Funds		—		1.0	Timber Funds	—	1.4	—	2.3
Real Estate	Real Estate		24.7		5.1	Real Estate	25.4	29.1	50.1	34.1
Trading	Trading		0.4		0.2	Trading	(0.4)	0.4	(0.1)	0.7
Corporate and Other	Corporate and Other		(7.2)		(7.3)	Corporate and Other	(9.8)	(7.7)	(17.0)	(15.1)
Total Adjusted EBITDA	Total Adjusted EBITDA		$98.1		$69.5	Total Adjusted EBITDA	$83.0	$95.3	$181.1	$164.7

(a)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 six months ended June 30, 2021 includes $30.3 million from a Large Disposition.

(c)Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators.

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		Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
Southern Timber Overview	Southern Timber Overview	2022		2021			Southern Timber Overview	2022		2021		2022		2021
Sales Volume (in thousands of tons)	Sales Volume (in thousands of tons)						Sales Volume (in thousands of tons)
Pine Pulpwood	Pine Pulpwood	1,171		843			Pine Pulpwood	962		889		2,133		1,732
Pine Sawtimber	Pine Sawtimber	622		638			Pine Sawtimber	458		516		1,080		1,154
Total Pine Volume	Total Pine Volume	1,793		1,481			Total Pine Volume	1,420		1,405		3,213		2,886
Hardwood	Hardwood	103		31			Hardwood	103		63		206		95
Total Volume	Total Volume	1,896		1,512			Total Volume	1,523		1,468		3,419		2,980

% Delivered Volume (vs. Total Volume)	% Delivered Volume (vs. Total Volume)	35	%	36	%		% Delivered Volume (vs. Total Volume)	47	%	39	%	40	%	38	%
% Pine Sawtimber Volume (vs. Total Pine Volume)	% Pine Sawtimber Volume (vs. Total Pine Volume)	35	%	43	%		% Pine Sawtimber Volume (vs. Total Pine Volume)	32	%	37	%	34	%	40	%
% Export Volume (vs. Total Volume) (a)	% Export Volume (vs. Total Volume) (a)	1	%	5	%		% Export Volume (vs. Total Volume) (a)	3	%	4	%	2	%	4	%

Net Stumpage Pricing (dollars per ton)	Net Stumpage Pricing (dollars per ton)						Net Stumpage Pricing (dollars per ton)
Pine Pulpwood	Pine Pulpwood	$24.11		$17.10			Pine Pulpwood	$21.46		$18.22		$22.93		$17.69
Pine Sawtimber	Pine Sawtimber	35.46		27.51			Pine Sawtimber	34.09		27.96		34.86		27.69
Weighted Average Pine	Weighted Average Pine	$28.05		$21.58			Weighted Average Pine	$25.54		$21.80		$26.94		$21.69
Hardwood	Hardwood	26.06		10.51			Hardwood	25.70		17.49		25.88		15.20
Weighted Average Total	Weighted Average Total	$27.94		$21.35			Weighted Average Total	$25.55		$21.61		$26.87		$21.48

Summary Financial Data (in millions of dollars)	Summary Financial Data (in millions of dollars)						Summary Financial Data (in millions of dollars)
Timber Sales	Timber Sales	$71.0		$44.2			Timber Sales	$58.2		$43.7		$129.2		$87.9
Less: Cut and Haul	Less: Cut and Haul	(15.6)		(9.9)			Less: Cut and Haul	(17.6)		(10.3)		(33.2)		(20.2)
Less: Port and Freight	Less: Port and Freight	(2.4)		(2.0)			Less: Port and Freight	(1.8)		(1.6)		(4.1)		(3.6)
Net Stumpage Sales	Net Stumpage Sales	$53.0		$32.3			Net Stumpage Sales	$38.9		$31.7		$91.9		$64.0

Non-Timber Sales	Non-Timber Sales	5.8		7.5			Non-Timber Sales	8.1		5.6		13.8		13.1
Total Sales	Total Sales	$76.8		$51.7			Total Sales	$66.3		$49.3		$143.0		$101.0

Operating Income	Operating Income	$30.3		$17.3			Operating Income	$24.1		$17.0		$54.4		$34.3

(+) Depreciation, depletion and amortization	(+) Depreciation, depletion and amortization	18.1		14.4			(+) Depreciation, depletion and amortization	14.7		13.6		32.7		27.9
Adjusted EBITDA (b)	Adjusted EBITDA (b)	$48.4		$31.7			Adjusted EBITDA (b)	$38.7		$30.6		$87.1		$62.3

Other Data	Other Data						Other Data

Period-End Acres (in thousands)	Period-End Acres (in thousands)	1,795		1,751			Period-End Acres (in thousands)	1,791		1,743		1,791		1,743

(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.

3943


		Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
Pacific Northwest Timber Overview	Pacific Northwest Timber Overview	2022		2021			Pacific Northwest Timber Overview	2022		2021		2022		2021
Sales Volume (in thousands of tons)	Sales Volume (in thousands of tons)						Sales Volume (in thousands of tons)
Pulpwood	Pulpwood	76		79			Pulpwood	80		70		155		150
Sawtimber	Sawtimber	429		457			Sawtimber	296		330		725		786

Total Volume	Total Volume	505		536			Total Volume	376		400		881		936

% Delivered Volume (vs. Total Volume)	% Delivered Volume (vs. Total Volume)	82	%	78	%		% Delivered Volume (vs. Total Volume)	99	%	96	%	90	%	86	%
% Sawtimber Volume (vs. Total Volume)	% Sawtimber Volume (vs. Total Volume)	85	%	85	%		% Sawtimber Volume (vs. Total Volume)	79	%	82	%	82	%	84	%
% Export Volume (vs. Total Volume) (a)	% Export Volume (vs. Total Volume) (a)	5	%	10	%		% Export Volume (vs. Total Volume) (a)	16	%	19	%	9	%	15	%

Delivered Log Pricing (in dollars per ton)	Delivered Log Pricing (in dollars per ton)						Delivered Log Pricing (in dollars per ton)
Pulpwood	Pulpwood	$37.69		$29.36			Pulpwood	$45.17		$29.02		$41.83		$29.18
Sawtimber	Sawtimber	105.69		90.98			Sawtimber	116.60		97.80		110.66		94.20
Weighted Average Log Price	Weighted Average Log Price	$95.35		$81.64			Weighted Average Log Price	$101.62		$85.47		$98.32		$83.56

Summary Financial Data (in millions of dollars)	Summary Financial Data (in millions of dollars)						Summary Financial Data (in millions of dollars)
Timber Sales	Timber Sales	$45.1		$40.3			Timber Sales	$37.9		$33.8		$83.0		$74.1
Less: Cut and Haul	Less: Cut and Haul	(16.2)		(16.0)			Less: Cut and Haul	(16.5)		(14.5)		(32.8)		(30.4)
Less: Port and Freight	Less: Port and Freight	(0.1)		—			Less: Port and Freight	(0.4)		—		(0.4)		—
Net Stumpage Sales	Net Stumpage Sales	$28.8		$24.3			Net Stumpage Sales	$21.0		$19.3		$49.8		$43.7

Non-Timber Sales	Non-Timber Sales	1.1		1.3			Non-Timber Sales	1.3		1.5		2.4		2.8
Total Sales	Total Sales	$46.3		$41.5			Total Sales	$39.2		$35.3		$85.4		$76.8

Operating Income	Operating Income	$6.6		$1.3			Operating Income	$2.9		$1.9		$9.5		$3.2
(+) Depreciation, depletion and amortization	(+) Depreciation, depletion and amortization	14.9		16.3			(+) Depreciation, depletion and amortization	11.3		12.0		26.2		28.3
Adjusted EBITDA (b)	Adjusted EBITDA (b)	$21.5		$17.6			Adjusted EBITDA (b)	$14.3		$13.9		$35.8		$31.5

Other Data	Other Data						Other Data

Period-End Acres (in thousands)	Period-End Acres (in thousands)	486		507			Period-End Acres (in thousands)	486		499		486		499
Sawtimber (in dollars per MBF) (c)	Sawtimber (in dollars per MBF) (c)	$849		$730			Sawtimber (in dollars per MBF) (c)	$905		$750		$873		$740

(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.

(c)Delivered Sawtimber excluding chip-n-saw.

4044


		Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
New Zealand Timber Overview	New Zealand Timber Overview	2022		2021			New Zealand Timber Overview	2022		2021		2022		2021
Sales Volume (in thousands of tons)	Sales Volume (in thousands of tons)						Sales Volume (in thousands of tons)
Domestic Pulpwood (Delivered)	Domestic Pulpwood (Delivered)	94		106			Domestic Pulpwood (Delivered)	105		104		199		210
Domestic Sawtimber (Delivered)	Domestic Sawtimber (Delivered)	135		159			Domestic Sawtimber (Delivered)	188		174		323		333
Export Pulpwood (Delivered)	Export Pulpwood (Delivered)	36		47			Export Pulpwood (Delivered)	55		56		91		103
Export Sawtimber (Delivered)	Export Sawtimber (Delivered)	250		287			Export Sawtimber (Delivered)	355		359		604		646

Total Volume	Total Volume	515		599			Total Volume	703		692		1,217		1,291

% Delivered Volume (vs. Total Volume)	% Delivered Volume (vs. Total Volume)	100	%	100	%		% Delivered Volume (vs. Total Volume)	100	%	100	%	100	%	100	%
% Sawtimber Volume (vs. Total Volume)	% Sawtimber Volume (vs. Total Volume)	75	%	74	%		% Sawtimber Volume (vs. Total Volume)	77	%	77	%	76	%	76	%
% Export Volume (vs. Total Volume) (a)	% Export Volume (vs. Total Volume) (a)	56	%	56	%		% Export Volume (vs. Total Volume) (a)	58	%	60	%	57	%	58	%

Delivered Log Pricing (in dollars per ton)	Delivered Log Pricing (in dollars per ton)						Delivered Log Pricing (in dollars per ton)
Domestic Pulpwood	Domestic Pulpwood	$34.98		$40.15			Domestic Pulpwood	$34.56		$43.31		$34.76		$41.72
Domestic Sawtimber	Domestic Sawtimber	75.99		80.95			Domestic Sawtimber	76.82		85.09		76.48		83.11
Export Sawtimber	Export Sawtimber	127.59		121.65			Export Sawtimber	140.44		148.28		135.13		136.45
Weighted Average Log Price	Weighted Average Log Price	$96.59		$95.70			Weighted Average Log Price	$106.88		$115.92		$102.53		$106.54

Summary Financial Data (in millions of dollars)	Summary Financial Data (in millions of dollars)						Summary Financial Data (in millions of dollars)
Timber Sales	Timber Sales	$49.7		$57.3			Timber Sales	$75.1		$80.3		$124.8		$137.6
Less: Cut and Haul	Less: Cut and Haul	(19.1)		(20.9)			Less: Cut and Haul	(26.7)		(25.1)		(45.8)		(46.1)
Less: Port and Freight	Less: Port and Freight	(15.3)		(12.0)			Less: Port and Freight	(31.4)		(23.1)		(46.8)		(35.1)
Net Stumpage Sales	Net Stumpage Sales	$15.3		$24.4			Net Stumpage Sales	$16.9		$32.1		$32.2		$56.4

Non-Timber Sales / Carbon Credits	Non-Timber Sales / Carbon Credits	1.7		0.2			Non-Timber Sales / Carbon Credits	3.8		0.3		5.5		0.6
Total Sales	Total Sales	$51.4		$57.6			Total Sales	$78.9		$80.6		$130.3		$138.1

Operating Income	Operating Income	$5.4		$14.0			Operating Income	$8.0		$20.7		$13.4		$34.7

(+) Depreciation, depletion and amortization	(+) Depreciation, depletion and amortization	5.0		7.2			(+) Depreciation, depletion and amortization	6.9		7.0		11.9		14.2

Adjusted EBITDA (b)	Adjusted EBITDA (b)	$10.4		$21.2			Adjusted EBITDA (b)	$14.9		$27.7		$25.3		$48.9

Other Data	Other Data						Other Data
New Zealand Dollar to U.S. Dollar Exchange Rate (c)	New Zealand Dollar to U.S. Dollar Exchange Rate (c)	0.6680		0.7217			New Zealand Dollar to U.S. Dollar Exchange Rate (c)	0.6628		0.7164		0.6650		0.7189
Net Plantable Period-End Acres (in thousands)	Net Plantable Period-End Acres (in thousands)	297		296			Net Plantable Period-End Acres (in thousands)	296		296		296		296
Export Sawtimber (in dollars per JAS m3)	Export Sawtimber (in dollars per JAS m3)	$148.35		$141.45			Export Sawtimber (in dollars per JAS m3)	$163.29		$172.41		$157.11		$158.65
Domestic Sawtimber (in $NZD per tonne)	Domestic Sawtimber (in $NZD per tonne)	$125.13		$123.39			Domestic Sawtimber (in $NZD per tonne)	$127.50		$130.65		$126.51		$127.18

(a)Percentage of export volume includes direct exports through our log export program.

(b)Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators.

(c)Represents the period-average rate.

4145


		Three Months Ended March 31,		Three Months Ended June 30,				Six Months Ended June 30,
Real Estate Overview	Real Estate Overview		2022		2021	Real Estate Overview	2022	2021	2022	2021
Sales (in millions of dollars)	Sales (in millions of dollars)					Sales (in millions of dollars)
Improved Development	Improved Development		$5.0		$0.3	Improved Development	$11.6	$19.3	$16.5	$19.6

Rural	Rural		16.9		9.8	Rural	23.4	20.3	40.4	30.1
Timberland & Non-Strategic	Timberland & Non-Strategic		11.4		—	Timberland & Non-Strategic	—	—	11.4	—

Conservation Easement						Conservation Easement	—	3.9	—	3.9
Deferred Revenue/Other (a)	Deferred Revenue/Other (a)		0.9		0.5	Deferred Revenue/Other (a)	(0.6)	(5.0)	0.3	(4.5)

Large Dispositions (b)						Large Dispositions (b)	—	36.0	—	36.0
Total Sales	Total Sales		$34.2		$10.5	Total Sales	$34.4	$74.5	$68.6	$85.0

Acres Sold	Acres Sold					Acres Sold
Improved Development	Improved Development		16.1		0.6	Improved Development	60.8	289.2	77.0	289.9

Rural	Rural		4,751		2,394	Rural	4,633	7,725	9,385	10,119
Timberland & Non-Strategic	Timberland & Non-Strategic		3,966		—	Timberland & Non-Strategic	—	—	3,966	—

Large Dispositions (b)						Large Dispositions (b)	—	8,534	—	8,534
Total Acres Sold	Total Acres Sold		8,734		2,395	Total Acres Sold	4,694	16,548	13,428	18,943

Gross Price per Acre (dollars per acre)	Gross Price per Acre (dollars per acre)					Gross Price per Acre (dollars per acre)
Improved Development	Improved Development		$308,065		$406,452	Improved Development	$190,136	$66,864	$214,841	$67,590

Rural	Rural		3,567		4,079	Rural	5,054	2,627	4,302	2,971
Timberland & Non-Strategic	Timberland & Non-Strategic		2,874		—	Timberland & Non-Strategic	—	—	2,874	—

Large Dispositions (b)						Large Dispositions (b)	—	4,218	—	4,218
Weighted Average (Total)(c)	Weighted Average (Total)(c)		$3,815		$4,183	Weighted Average (Total)(c)	$7,453	$4,946	$5,087	$4,770
Weighted Average (Adjusted) ~~(b)~~(d)	Weighted Average (Adjusted) ~~(b)~~(d)		$3,252		$4,079	Weighted Average (Adjusted) ~~(b)~~(d)	$5,054	$2,627	$3,878	$2,971

Sales (Excluding Large Dispositions)						Sales (Excluding Large Dispositions)	$34.4	$38.5	$68.6	$49.0

Operating Income	Operating Income		$10.2		$1.7	Operating Income	$11.0	$50.5	$21.2	$52.2
(+) Depreciation, depletion and amortization	(+) Depreciation, depletion and amortization		9.1		1.6	(+) Depreciation, depletion and amortization	2.6	3.7	11.7	5.3

(+) Non-cash cost of land and improved development	(+) Non-cash cost of land and improved development		5.4		1.8	(+) Non-cash cost of land and improved development	11.8	5.2	17.1	7.0

(–) Large Dispositions (b)						(–) Large Dispositions (b)	—	(30.3)	—	(30.3)
Adjusted EBITDA ~~(c)~~(e)	Adjusted EBITDA ~~(c)~~(e)		$24.7		$5.1	Adjusted EBITDA ~~(c)~~(e)	$25.4	$29.1	$50.1	$34.1

(a)Includes deferred revenue adjustments, revenue true-ups and marketing fees related to Improved Development sales in addition to residential and commercial lease revenue.

(b)~~Excludes Improved Development.~~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 June 2021, we completed the disposition of approximately 9,000 acres located in Washington for a sales price and a gain of approximately $36.0 million and $30.3 million, respectively.

(c)Excludes Large Dispositions.

(d)Excludes Improved Development and Large Dispositions.

(e)Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators.

4246


		Three Months Ended March 31,		Three Months Ended June 30,			Six Months Ended June 30,
Trading Overview	Trading Overview	2022	2021		Trading Overview	2022	2021	2022	2021
Sales Volume (in thousands of tons)	Sales Volume (in thousands of tons)				Sales Volume (in thousands of tons)
U.S.	U.S.	17	—		U.S.	27	—	43	—
NZ	NZ	95	141		NZ	182	243	278	384

Total Volume	Total Volume	112	141		Total Volume	209	243	320	384

Summary Financial Data (in millions of dollars)	Summary Financial Data (in millions of dollars)				Summary Financial Data (in millions of dollars)
Trading Sales	Trading Sales	$13.1	$16.2		Trading Sales	$27.3	$34.2	$40.4	$50.4
Non-Timber Sales	Non-Timber Sales	0.4	0.4		Non-Timber Sales	0.4	0.4	0.8	0.8
Total Sales	Total Sales	$13.4	$16.7		Total Sales	$27.7	$34.5	$41.1	$51.2

Operating Income	Operating Income	$0.4	$0.2		Operating Income	($0.4)	$0.4	($0.1)	$0.7

Adjusted EBITDA (a)	Adjusted EBITDA (a)	$0.4	$0.2		Adjusted EBITDA (a)	($0.4)	$0.4	($0.1)	$0.7

(a)Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators.

4347


		Three Months Ended March 31,		Three Months Ended June 30,			Six Months Ended June 30,
Capital Expenditures By Segment (in millions of dollars)	Capital Expenditures By Segment (in millions of dollars)	2022	2021		Capital Expenditures By Segment (in millions of dollars)	2022	2021	2022	2021
Timber Capital Expenditures	Timber Capital Expenditures				Timber Capital Expenditures
Southern Timber	Southern Timber				Southern Timber

Reforestation, silviculture and other capital expenditures	Reforestation, silviculture and other capital expenditures	$2.5	$3.3		Reforestation, silviculture and other capital expenditures	$3.6	$4.3	$6.1	$7.6
Property taxes	Property taxes	1.9	1.5		Property taxes	1.9	1.8	3.7	3.3
Lease payments	Lease payments	0.7	0.8		Lease payments	0.2	0.2	0.9	1.0
Allocated overhead	Allocated overhead	1.3	1.2		Allocated overhead	1.1	1.0	2.4	2.2
Subtotal Southern Timber	Subtotal Southern Timber	$6.3	$6.7		Subtotal Southern Timber	$6.8	$7.2	$13.1	$14.0
Pacific Northwest Timber	Pacific Northwest Timber				Pacific Northwest Timber

Reforestation, silviculture and other capital expenditures	Reforestation, silviculture and other capital expenditures	3.6	2.7		Reforestation, silviculture and other capital expenditures	1.5	1.7	5.2	4.4
Property taxes	Property taxes	0.3	0.3		Property taxes	0.3	0.3	0.5	0.5

Allocated overhead	Allocated overhead	1.4	1.2		Allocated overhead	1.4	1.2	2.7	2.3
Subtotal Pacific Northwest Timber	Subtotal Pacific Northwest Timber	$5.2	$4.1		Subtotal Pacific Northwest Timber	$3.2	$3.1	$8.4	$7.3

New Zealand Timber	New Zealand Timber				New Zealand Timber
Reforestation, silviculture and other capital expenditures	Reforestation, silviculture and other capital expenditures	2.5	2.0		Reforestation, silviculture and other capital expenditures	3.0	3.1	5.5	5.0
Property taxes	Property taxes	0.2	0.2		Property taxes	0.2	0.2	0.4	0.4
Lease payments	Lease payments	0.5	0.5		Lease payments	0.9	0.7	1.4	1.2
Allocated overhead	Allocated overhead	0.7	0.7		Allocated overhead	0.7	0.8	1.4	1.5
Subtotal New Zealand Timber	Subtotal New Zealand Timber	$3.9	$3.4		Subtotal New Zealand Timber	$4.8	$4.7	$8.6	$8.1
Total Timber Segments Capital Expenditures	Total Timber Segments Capital Expenditures	$15.4	$14.2		Total Timber Segments Capital Expenditures	$14.7	$15.1	$30.2	$29.3
Timber Funds (“Look-through”) (a)	Timber Funds (“Look-through”) (a)	—	0.2		Timber Funds (“Look-through”) (a)	—	0.2	—	0.4
Real Estate	Real Estate	0.2	0.1		Real Estate	—	—	0.1	0.1

Total Capital Expenditures	Total Capital Expenditures	$15.6	$14.5		Total Capital Expenditures	$14.7	$15.2	$30.3	$29.7

Timberland Acquisitions	Timberland Acquisitions				Timberland Acquisitions
Southern Timber	Southern Timber	$2.8	$29.9		Southern Timber	$0.4	$11.0	$3.2	$41.0

New Zealand Timber					New Zealand Timber	—	10.9	—	10.9

Timberland Acquisitions	Timberland Acquisitions	$2.8	$29.9		Timberland Acquisitions	$0.4	$21.9	$3.2	$51.9

Real Estate Development Investments (b)	Real Estate Development Investments (b)	$3.1	$3.0		Real Estate Development Investments (b)	$2.9	$3.3	$6.0	$6.3

(a)The three and six months ended ~~March 31,~~June 30, 2021 ~~excludes $1.3~~exclude $1.2 million and $2.5 million, respectively, of capital expenditures attributable to noncontrolling interests in Timber Funds.

(b)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 included in Non-Cash Cost of Land and Improved Development.

4448

The following tables summarize sales, operating income (loss) and Adjusted EBITDA variances for ~~March 31,~~June 30, 2022 versus ~~March 31,~~June 30, 2021 (millions of dollars):


Sales	Sales	Southern Timber		Pacific Northwest Timber		New Zealand Timber		Timber Funds		Real Estate		Trading	Intersegment Eliminations		Total	Sales	Southern Timber		Pacific Northwest Timber		New Zealand Timber		Timber Funds		Real Estate		Trading	Intersegment Eliminations		Total
Three Months Ended March 31, 2021		$51.7		$41.5		$57.6		$14.9		$10.5		$16.7	($1.5)		$191.4
Three Months Ended June 30, 2021																Three Months Ended June 30, 2021	$49.3		$35.3		$80.6		$18.6		$74.5		$34.5	($1.4)		$291.4
Volume	Volume	8.2		(1.4)		(7.9)		—		25.3		(3.4)	—		20.8	Volume	1.2		(1.2)		1.2		—		(15.9)		(4.9)	—		(19.6)
Price	Price	12.5		5.8		(6.2)		—		(2.9)		0.2	—		9.4	Price	6.0		3.0		(16.5)		—		11.0		(2.0)	—		1.5
Non-timber sales	Non-timber sales	(1.7)		(0.1)		1.5		—		—		(0.1)	—		(0.4)	Non-timber sales	2.4		(0.2)		3.4		—		—		—	—		5.6
Foreign exchange (a)	Foreign exchange (a)	—		—		(1.3)		—		—		—	—		(1.3)	Foreign exchange (a)	—		—		(1.4)		—		—		—	—		(1.4)
Other	Other	6.1	(b)	0.5	(b)	7.7	(c)	(14.9)	(d)	1.3	(e)	—	1.4	(f)	2.1	Other	7.4	(b)	2.3	(b)	11.6	(c)	(18.6)	(d)	(35.2)	(e)	0.1	1.3	(f)	(31.1)
Three Months Ended March 31, 2022		$76.8		$46.3		$51.4		—		$34.2		$13.4	($0.1)		$222.0
Three Months Ended June 30, 2022																Three Months Ended June 30, 2022	$66.3		$39.2		$78.9		—		$34.4		$27.7	($0.1)		$246.3

(a) Net of currency hedging impact.

(b) Includes variance due to stumpage versus delivered sales.

(d) Timber Funds segment was liquidated in 2021.

(e) Includes $36.0 million of sales from a Large Disposition in addition to Conservation Easement sales in Q2 2021, residential and commercial lease income, revenue true-ups and marketing fees related to Improved Development sales, equity income from joint venture entities and deferred adjustments.

(f) Includes a decrease in Intersegment eliminations related to timberland management fees paid to us by the timber funds and reported as sales within the Timber Funds segment.


Sales	Southern Timber		Pacific Northwest Timber		New Zealand Timber		Timber Funds		Real Estate		Trading	Intersegment Eliminations		Total
Six Months Ended June 30, 2021	$101.0		$76.8		$138.1		$33.6		$85.0		$51.2	($2.8)		$482.9
Volume	9.4		(2.6)		(7.8)		—		13.9		(8.4)	—		4.5
Price	18.4		8.7		(22.4)		—		3.5		(1.6)	—		6.6
Non-timber sales	0.8		(0.3)		4.9		—		—		(0.1)	—		5.3
Foreign exchange (a)	—		—		(2.6)		—		—		—	—		(2.6)
Other	13.4	(b)	2.8	(b)	20.1	(c)	(33.6)	(d)	(33.8)	(e)	—	2.7	(f)	(28.3)
Six Months Ended June 30, 2022	$143.0		$85.4		$130.3		—		$68.6		$41.1	($0.1)		$468.4

(a) Net of currency hedging impact.

(b) Includes variance due to stumpage versus delivered sales.

(d) Timber Funds segment was liquidated in 2021.

(e) ~~Includes~~Includes $36.0 million of sales from a Large Disposition in addition to Conservation Easement sales in Q2 2021, residential and commercial lease income, revenue true-ups and marketing fees related to Improved Development sales, equity income from joint venture entities and r~~esidential and commercial lease revenue~~.deferred adjustments.

(f) Includes a decrease in 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)	Operating Income (Loss)	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Timber Funds	Real Estate	Trading	Corporate and Other	Total	Operating Income (Loss)	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Timber Funds	Real Estate	Trading	Corporate and Other	Total
Three Months Ended March 31, 2021		$17.3	$1.3	$14.0	$1.5	$1.7	$0.2	($7.6)	$28.5
Three Months Ended June 30, 2021										Three Months Ended June 30, 2021	$17.0	$1.9	$20.7	$2.0	$50.5	$0.4	($8.0)	$84.4
Volume	Volume	4.5	(0.3)	(2.6)	—	17.4	—	—	19.0	Volume	0.7	(0.4)	0.5	—	(11.3)	—	—	(10.5)
Price (a)	Price (a)	12.5	5.8	(6.2)	—	(2.9)	—	—	9.2	Price (a)	6.0	3.0	(16.5)	—	11.0	—	—	3.5
Cost	Cost	(2.1)	(0.5)	(0.6)	—	(2.8)	0.2	—	(5.8)	Cost	(1.4)	(1.4)	(0.9)	—	0.9	(0.8)	(2.1)	(5.7)
Non-timber income (b)	Non-timber income (b)	(1.8)	(0.1)	1.5	—	—	—	—	(0.4)	Non-timber income (b)	2.4	(0.2)	3.4	—	—	—	—	5.6
Foreign exchange (c)	Foreign exchange (c)	—	—	(1.5)	—	—	—	—	(1.5)	Foreign exchange (c)	—	—	1.1	—	—	—	—	1.1
Depreciation, depletion & amortization	Depreciation, depletion & amortization	(0.1)	0.4	0.8	—	(4.2)	—	—	(3.1)	Depreciation, depletion & amortization	(0.6)	—	(0.3)	—	(0.3)	—	—	(1.2)
Non-cash cost of land and improved development	Non-cash cost of land and improved development	—	—	—	—	1.0	—	—	1.0	Non-cash cost of land and improved development	—	—	—	—	(8.6)	—	—	(8.6)
Other (d)	Other (d)	—	—	—	(1.5)	—	—	—	(1.5)	Other (d)	—	—	—	(2.0)	(31.2)	—	—	(33.2)
Three Months Ended March 31, 2022		$30.3	$6.6	$5.4	—	$10.2	$0.4	($7.6)	$45.3
Three Months Ended June 30, 2022										Three Months Ended June 30, 2022	$24.1	$2.9	$8.0	—	$11.0	($0.4)	($10.1)	$35.5

(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.

(d)Timber Funds segment was liquidated in 2021. Real Estate includes $30.3 million of operating income from a Large Disposition in addition to Conservation Easement sales in Q2 2021, residential and commercial lease income, revenue true-ups and marketing fees related to Improved Development sales, equity income from joint venture entities and deferred adjustments.


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, 2021	$34.3	$3.2	$34.7	$3.5	$52.2	$0.7	($15.6)	$112.9
Volume	5.3	(0.6)	(2.6)	—	9.8	—	—	11.9
Price (a)	18.4	8.7	(22.4)	—	3.5	—	—	8.2
Cost	(3.6)	(1.9)	(1.4)	—	(1.8)	(0.8)	(2.1)	(11.6)
Non-timber income (b)	0.7	(0.3)	4.9	—	—	—	—	5.3
Foreign exchange (c)	—	—	(0.4)	—	—	—	—	(0.4)
Depreciation, depletion & amortization	(0.7)	0.4	0.6	—	(5.1)	—	—	(4.8)
Non-cash cost of land and improved development	—	—	—	—	(6.1)	—	—	(6.1)
Other (d)	—	—	—	(3.5)	(31.3)	—	—	(34.7)
Six Months Ended June 30, 2022	$54.4	$9.5	$13.4	—	$21.2	($0.1)	($17.7)	$80.8

(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.

4550


Adjusted EBITDA (a)	Adjusted EBITDA (a)	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Timber Funds	Real Estate	Trading	Corporate and Other	Total	Adjusted EBITDA (a)	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Timber Funds	Real Estate	Trading	Corporate and Other	Total
Three Months Ended March 31, 2021		$31.7	$17.6	$21.2	$1.0	$5.1	$0.2	($7.3)	$69.5
Three Months Ended June 30, 2021										Three Months Ended June 30, 2021	$30.6	$13.9	$27.7	$1.4	$29.1	$0.4	($7.7)	$95.3
Volume	Volume	8.1	(1.3)	(3.5)	—	25.3	—	—	28.6	Volume	1.1	(1.0)	0.6	—	(15.9)	—	—	(15.2)
Price (b)	Price (b)	12.5	5.8	(6.2)	—	(2.9)	—	—	9.2	Price (b)	6.0	3.0	(16.5)	—	11.0	—	—	3.5
Cost	Cost	(2.1)	(0.5)	(0.6)	—	(2.8)	0.2	0.1	(5.7)	Cost	(1.4)	(1.4)	(0.9)	—	0.9	(0.8)	(2.1)	(5.7)
Non-timber income (c)	Non-timber income (c)	(1.8)	(0.1)	1.5	—	—	—	—	(0.4)	Non-timber income (c)	2.4	(0.2)	3.4	—	—	—	—	5.6
Foreign exchange (d)	Foreign exchange (d)	—	—	(2.0)	—	—	—	—	(2.0)	Foreign exchange (d)	—	—	0.6	—	—	—	—	0.6
Other (e)	Other (e)	—	—	—	(1.0)	—	—	—	(1.1)	Other (e)	—	—	—	(1.4)	0.3	—	—	(1.1)
Three Months Ended March 31, 2022		$48.4	$21.5	$10.4	—	$24.7	$0.4	($7.2)	$98.1
Three Months Ended June 30, 2022										Three Months Ended June 30, 2022	$38.7	$14.3	$14.9	—	$25.4	($0.4)	($9.8)	$83.0

(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.

(e)Timber Funds segment was liquidated in 2021. Real Estate includes Conservation Easement sales in Q2 2021, residential and commercial lease income, revenue true-ups and marketing fees related to Improved Development sales, equity income from joint venture entities and deferred adjustments.


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, 2021	$62.3	$31.5	$48.9	$2.3	$34.1	$0.7	($15.1)	$164.7
Volume	9.3	(2.2)	(3.3)	—	13.9	—	—	17.7
Price (b)	18.4	8.7	(22.4)	—	3.5	—	—	8.2
Cost	(3.6)	(1.9)	(1.4)	—	(1.8)	(0.8)	(1.9)	(11.4)
Non-timber income (c)	0.7	(0.3)	4.9	—	—	—	—	5.3
Foreign exchange (d)	—	—	(1.4)	—	—	—	—	(1.4)
Other (e)	—	—	—	(2.3)	0.4	—	—	(1.9)
Six Months Ended June 30, 2022	$87.1	$35.8	$25.3	—	$50.1	($0.1)	($17.0)	$181.1

(a)Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicatorsbelow.

(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

~~First~~Second quarter sales of ~~$76.8~~$66.3 million increased ~~$25.1~~$17.0 million, or ~~49%~~34%, versus the prior year period. Harvest volumes increased ~~25%~~4% to ~~1.90~~1.52 million tons versus ~~1.51~~1.47 million tons in the prior year period, as ~~drier ground conditions enabled stumpage customers to ramp up production to meet~~demand remained strong ~~demand.~~across the region. Average pine sawtimber stumpage prices increased ~~29%~~22% to ~~$35.46~~$34.09 per ton versus ~~$27.51~~$27.96 per ton in the prior year period, ~~driven by~~due to strong domestic lumber demand ~~coupled with elevated~~as well as increased competition for chip-n-saw ~~pricing due to increased competition~~volume from pulp mills. Average pine pulpwood stumpage prices ~~increased 41%~~rose 18% to ~~$24.11~~$21.46 per ton versus ~~$17.10~~$18.22 per ton in the prior year period. Despite an unfavorable shift in our geographic mix of pulpwood sales versus the prior year period, ~~reflecting~~robust competition amid strong ~~competition across our wood baskets as customers looked~~end-market demand allowed us to ~~secure supply~~capture pulpwood price increases that more than offset the upward pressure on cut and ~~replenish low mill inventories.~~haul costs. Overall, weighted-average stumpage prices (including hardwood) increased ~~31%~~18% to ~~$27.94~~$25.55 per ton versus ~~$21.35~~$21.61 per ton in the prior year period. Operating income of ~~$30.3~~$24.1 million increased ~~$13.0~~$7.1 million versus the prior year period due to higher net stumpage realizations ($~~12.5~~6.0 million), higher non-timber income ($2.4 million) and higher volumes ($~~4.5~~0.7 million), partially offset by higher overhead costs ($~~2.1 million), lower non-timber income ($1.8~~1.4 million) and higher depletion rates ($~~0.1~~0.6 million). ~~First~~Second quarter Adjusted EBITDA of ~~$48.4~~$38.7 million was ~~53%~~27%, or ~~$16.7~~$8.1 million, above the prior year period.

Year-to-date sales of $143.0 million increased $42.1 million, or 42%, versus the prior year period. Harvest volumes increased 15% to 3.42 million tons versus 2.98 million in the prior year period, due to strong demand and favorable logging conditions. Average pine sawtimber stumpage prices increased 26% to $34.86 per ton versus $27.69 per ton in the prior year period, primarily due to robust demand from sawmills given the strength of the domestic lumber market, as well as competition for chip-n-saw volume from pulp mills. Average pine pulpwood stumpage prices increased 30% to $22.93 per ton versus $17.69 per ton in the prior year period, driven by strong demand due to low mill inventories at the start of the year and favorable end-market demand. Overall, weighted-average stumpage prices (including hardwood) increased 25% to $26.87 per ton versus $21.48 per ton in the prior year period. Operating income of $54.4 million increased $20.1 million versus the prior year period due to higher net stumpage realizations ($18.4 million), higher volumes ($5.3 million) and higher non-timber income ($0.7 million), partially offset by higher costs ($3.6 million) and higher depletion rates ($0.7 million).

PACIFIC NORTHWEST TIMBER

~~First~~Second quarter sales of ~~$46.3~~$39.2 million increased ~~$4.8~~$3.8 million, or 11%, versus the prior year period, notwithstanding a decline in harvest volumes of 6% to ~~505,000~~376,000 tons versus ~~536,000~~400,000 tons in the prior year period. Average delivered sawtimber prices increased ~~16%~~19% to ~~$105.69~~$116.60 per ton versus ~~$90.98~~$97.80 per ton in the prior year period, driven by continued strong demand from domestic lumber ~~demand.~~mills as well as a favorable species mix, as a higher proportion of Douglas-fir sawtimber was harvested in the current year quarter. Average delivered pulpwood prices increased ~~28%~~56% to ~~$37.69~~$45.17 per ton versus ~~$29.36~~$29.02 per ton in the prior year period, ~~primarily driven by improved~~reflecting strong end- market demand ~~due~~as well as the resumption of chip exports, which resulted in greater competition from pulp mills to ~~the restart of idled pulp mill capacity in the region~~. secure supply. Operating income of ~~$6.6~~$2.9 million improved ~~$5.3~~$1.1 million versus the prior year period due to higher net stumpage realizations ($~~5.8~~3.0 million), partially offset by higher overhead and other costs ($1.4 million), lower volumes ($0.4 million) and lower non-timber income ($0.2 million). Second quarter Adjusted EBITDA of $14.3 million was 3%, or $0.4 million, above the prior year period.

Year-to-date sales of $85.4 million increased $8.6 million, or 11%, versus the prior year period, notwithstanding a decline in harvest volumes of 6% to 881,000 tons versus 936,000 tons in the prior year period. Average delivered sawtimber prices increased 17% to $110.66 per ton versus $94.20 per ton in the prior year period due to strong domestic lumber demand and a favorable species mix in the current year period. Average delivered pulpwood prices increased 43% to $41.83 per ton versus $29.18 per ton in the prior year period, driven by strong end-market demand, the restart of previously idled pulp mill capacity, and the resumption of chip exports, which resulted in greater competition from pulp mills to secure supply. Operating income of $9.5 million improved $6.3 million versus the prior year period due to higher net stumpage realizations ($8.7 million) and lower depletion rates ($0.4 million), partially offset by higher costs ($~~0.5~~1.9 million), lower volumes ($~~0.3~~0.6 million) and lower non-timber income ($~~0.1~~0.3 million). ~~First quarter Adjusted EBITDA of $21.5 million was 22%, or $3.9 million, above the prior year period.~~

NEW ZEALAND TIMBER

~~First~~ Second quarter sales of ~~$51.4~~$78.9 million decreased ~~$6.2~~$1.7 million, or ~~11%~~2%, versus the prior year period. Harvest volumes increased 1% to 703,000 tons versus 692,000 tons in the prior year period, reflecting a pickup in activity to more normalized levels following a relatively light first quarter. Average delivered prices for export sawtimber decreased 5% to $140.44 per ton versus $148.28 per ton in the prior year period. The decrease in export sawtimber prices versus the prior year period was driven by reduced demand stemming from the COVID-19 lockdowns in China, which in turn contributed to persistently high port inventories. Net stumpage realizations for export sawtimber were further reduced by significantly higher port / freight costs, driven by elevated fuel prices as well as increased demurrage charges due to port congestion. Average delivered prices for domestic sawtimber decreased 10% to $76.82 per ton versus $85.09 per ton in the prior year period. The decrease in domestic sawtimber prices (in U.S. dollar terms) was primarily driven by the decline in the NZ$/US$ exchange rate (US$0.66 per NZ$1.00 versus US$0.72 per NZ$1.00). Excluding the impact of foreign exchange rates, domestic sawtimber prices decreased 2% versus the prior year period, reflecting additional supply that was diverted into domestic markets due to export market headwinds. Operating income of $8.0 million decreased $12.7 million versus the prior year period due to lower net stumpage realizations ($16.5 million), higher costs ($0.9 million) and higher depletion rates ($0.3 million), partially offset by higher carbon credit sales ($3.4 million), favorable foreign exchange impacts ($1.1 million) and higher volumes ($0.5 million). Second quarter Adjusted EBITDA of $14.9 million was 46%, or $12.8 million, below the prior year period.

Year-to-date sales of $130.3 million decreased $7.9 million, or 6%, versus the prior year period. Harvest volumes decreased ~~14%~~6% to ~~515,000~~1.2 million tons versus ~~599,000~~1.3 million tons in the prior year ~~period~~, ~~as production at the beginning of the year was deferred in response to port congestion and elevated log inventories in China.~~period. Average delivered prices

for export sawtimber ~~increased 5%~~decreased 1% to ~~$127.59~~$135.13 per ton versus ~~$121.65~~$136.45 per ton in the prior year period. The ~~increase~~decrease in export sawtimber prices versus the prior year period ~~reflected the ability of log exporters~~was primarily driven by reduced demand due to ~~partially pass on higher costs to customers, as well as the newly implemented restriction on competing log imports into China from Russia. However, favorable~~COVID-19 related disruptions in China. Net stumpage realizations for export ~~pricing was more than offset~~sawtimber were further pressured by higher shipping and demurrage costs due to ongoing supply chain and port congestion issues. Average delivered prices for domestic sawtimber decreased 6%8% to ~~$75.99~~$76.48 per ton versus ~~$80.95~~$83.11 per ton in the prior year period. The decrease in

domestic sawtimber prices (in U.S. ~~dollar~~dollars terms) was driven primarily by the decline in the NZ$/US$ exchange rate (US$0.67 per NZ$1.00 versus US$0.72 per NZ$1.00). Excluding the impact of foreign exchange rates, domestic sawtimber prices ~~improved~~decreased 1% versus the prior year ~~period~~.period. Operating income of ~~$5.4~~$13.4 million decreased ~~$8.6~~$21.3 million versus the prior year period ~~due to~~as a result of lower net stumpage realizations ($~~6.2~~22.4 million), lower volumes ($2.6 million), higher costs ~~($0.6~~(1.4 million) and unfavorable foreign exchange impacts ($~~1.5~~0.4 million), partially offset by higher carbon credit sales ~~($1.5~~(4.9 million) and lower depletion rates ($~~0.8~~0.6 million). ~~First quarter~~Year-to-date Adjusted EBITDA of ~~$10.4~~$25.3 million was ~~51%, or $10.8~~$23.6 million below the prior year period.

TIMBER FUNDS

During 2021, we sold the rights to manage Fund III and Fund IV, as well as our ownership interests in both funds, and we completed the liquidation of Fund II timberland assets. As such, we had no sales, operating income or Adjusted EBITDA in the current quarter or year-to-date period in the Timber Funds segment, as will be the case going forward.

~~In the prior year period the~~The Timber Funds segment generated ~~first~~prior year second quarter sales of ~~$14.9~~$18.6 million on harvest volumes of ~~145,000~~175,000 tons, resulting in operating income of ~~$1.5~~$2.0 million in the prior year period. ~~Adjusting for the portion of the Timber Funds segment attributable to noncontrolling interests, pro forma sales and pro forma operating income were~~ ~~$3.0 million~~ ~~and~~ ~~$0.4 million, respectively.~~ ~~First~~Second quarter Adjusted EBITDA was ~~$1.0~~$1.4 million in the prior year period.

The Timber Funds segment generated prior year year-to-date sales of $33.6 million on harvest volumes of 319,000 tons, resulting in operating income of $3.5 million in the prior year period. Year-to-date Adjusted EBITDA was $2.3 million in the prior year period.

REAL ESTATE

~~First~~Second quarter sales of ~~$34.2~~$34.4 million ~~increased $23.7~~decreased $40.1 million versus the prior year period, while operating income of ~~$10.2~~$11.0 million ~~increased $8.5~~decreased $39.5 million versus the prior year period. ~~Higher segment results in~~The prior year second quarter sales and operating income included $36.0 million and $30.3 million, respectively, from a Large Disposition. Sales and operating income declined versus the ~~current~~prior year period ~~were driven by~~due to a ~~significant increase in the~~lower number of acres sold ~~(8,734~~(4,694 acres sold versus ~~2,395~~16,548 acres sold in the prior year period), partially offset by ~~a decrease~~an increase in weighted-average prices ($~~3,815~~7,453 per acre versus ~~$4,183~~$4,571 per acre in the prior year period).

Improved Development sales of ~~$5.0~~$11.6 million included ~~$3.6~~$10.5 million from the Wildlight development project north of Jacksonville, Florida and ~~$1.4~~$1.1 million from the ~~Richmond Hill~~Heartwood development project ~~(which has now been branded as Heartwood)~~ south of Savannah, Georgia. Sales in Wildlight consisted of ~~52 residential lots, reflecting an average price of $70,000~~a 22-acre multifamily apartment site for $4.8 million ($222,000 per ~~lot or $339,000~~acre), a 31-acre single-family build-to-rent site for $4.4 million ($140,000 per ~~acre. Sales in Richmond Hill (Heartwood) included ten~~acre), and 19 residential lots for ~~$0.4~~$1.3 million ~~(an average price~~($70,000 per lot). Sales in Heartwood consisted of ~~$44,000~~26 residential lots for $1.1 million ($42,000 per ~~lot or $251,000 per acre) and a 4-acre commercial property for $0.9 million ($246,000 per acre)~~lot). This compares to prior year period Improved Development sales of ~~$0.3 million.~~$19.3 million, which reflected significant activity in both Wildlight and Heartwood / Belfast Commerce Park.

There were no Unimproved Development sales in the ~~first~~second quarter or the prior year period.

Rural sales of ~~$16.9~~$23.4 million consisted of ~~4,751~~4,633 acres at an average price of ~~$3,567~~$5,054 per ~~acre. This~~acre, which compares to prior year period sales of ~~$9.8~~$20.3 million, which consisted of ~~2,394~~7,725 acres at an average price of ~~$4,079~~$2,627 per acre.

~~Timberland & Non-Strategic sales of $11.4 million consisted of 3,966 acres at an average price of $2,874 per acre.~~ There were no Timberland & Non-Strategic sales in the second quarter or the prior year period.

~~First~~Second quarter Adjusted EBITDA of ~~$24.7~~$25.4 million was ~~$19.6~~$3.7 million ~~above~~below the prior year period.

Year-to-date sales of $68.6 million decreased $16.4 million versus the prior year period, while operating income of $21.2 million decreased $31.0 million versus the prior year period. There were no Large Dispositions in the current year period, compared with year-to-date sales and operating income of $36.0 million and $30.3 million, respectively from a Large Disposition in the prior year period. Sales decreased in the first six months primarily due to lower volumes (13,428 acres sold versus 18,943 acres sold in the prior year period), partially offset by higher weighted-average prices ($5,087 per acre versus $4,522 per acre in the prior year period). Year-to-date Adjusted EBITDA of $50.1 million increased $15.9 million versus the prior year period.

TRADING

~~First~~Second quarter sales of ~~$13.4~~$27.7 million decreased ~~$3.2~~$6.9 million versus the prior year period primarily due to lower volumes ~~partially offset by higher~~and prices. Sales volumes decreased ~~21%~~14% to ~~112,000~~209,000 tons versus ~~141,000~~243,000 tons in the prior year period, reflecting elevated log inventories in China and constrained export market demand. The Trading segment generated an operating loss of $0.4 million versus operating income of $0.4 million in the prior year period.

Year-to-date sales of $41.1 million decreased $10.1 million versus ~~$0.2~~the prior year period primarily due to lower volumes, as well as lower prices. Sales volumes decreased 17% to 320,000 tons versus 384,000 tons in the prior year period. The Trading segment generated an operating loss of $0.1 million versus operating income of $0.7 million in the prior year period.

OTHER ITEMS

CORPORATE AND OTHER EXPENSE / ELIMINATIONS

~~First~~Second quarter corporate and other operating expenses of ~~$7.6~~$10.1 million ~~were flat versus the prior year period.~~

~~INTEREST EXPENSE~~

~~First quarter interest expense of $8.3 million decreased $1.7~~increased $2.1 million versus the prior year period, primarily due to higher compensation and benefits expenses ($1.5 million), higher legal costs ($0.3 million) and higher insurance and travel expenses ($0.3 million).

Year-to-date corporate and other operating expenses of $17.7 million increased $2.0 million versus the prior year period, primarily due to higher compensation and benefits expenses ($1.2 million), higher legal costs ($0.4 million) and higher insurance and travel expenses ($0.4 million).

Compensation and benefits expenses were elevated in the current quarter and year-to-date period due to the accelerated realization of equity compensation expense for retirement-eligible employees.

INTEREST EXPENSE

Second quarter and year-to-date interest expense of $9.1 million and $17.4 million, respectively, decreased $3.9 million and $5.6 million versus the prior year period, as the prior year period included a $2.2 million loss from the termination of a cash flow hedge. Additionally, second quarter and year-to-date interest expense benefited from lower average outstanding debt and a lower ~~borrowing costs.~~average interest rate as compared to the prior year period.

INCOME TAX EXPENSE

~~First~~Second quarter and year-to-date income tax expense of ~~$5.5~~$1.3 million ~~increased $2.1~~and $6.8 million, respectively, decreased $5.6 million and $3.5 million versus the prior year period. The New Zealand subsidiary is ~~generally~~ the primary driver of income tax ~~expense, although the increase in the first quarter was attributable to the retirement of an installment note in the taxable REIT subsidiary.~~

expense.

OUTLOOK

In our Southern Timber segment, we ~~anticipate lower quarterly~~now expect full-year harvest volumes of 6.4 to 6.6 million tons, as strong customer demand and favorable weather conditions are allowing us to successfully execute our annual harvest plan. We are encouraged by the significant year-over-year pricing gains that have been realized across our operating areas. However, we expect modestly lower weighted-average net stumpage realizations during the second half of 2022 as compared to the first half, primarily due to higher cut and haul costs as a result of elevated diesel prices and a higher proportion of thinning volume.

In our Pacific Northwest Timber segment, we now expect full-year harvest volumes of 1.6 to 1.7 million tons, due in part to a modest adjustment in our harvest plan to reflect land sales, as well as reduced China export volume. We further expect that weighted-average delivered log prices will remain well above prior year levels for the ~~remainder~~balance of the year. However, we anticipate these pricing gains will be partially offset by higher cut and haul costs due to elevated diesel prices.

In our New Zealand Timber segment, we now expect full-year harvest volumes of 2.6 to 2.7 million tons. While domestic log demand was strong throughout the first half of the year, export market dynamics were negatively impacted by ongoing COVID-19 lockdowns in China. We expect export sawtimber prices to stabilize in the second half of the year in response to improved offtake from Chinese ports and a reduction in competing log supply. However, we expect that net stumpage realizations on export volume will continue to be constrained by elevated port and freight costs. In the domestic market, we anticipate continued strong log demand, although we expect that pricing will be modestly lower in the second half of the year as compared to the first ~~quarter, as we experienced above-average stumpage removals~~half of the year due to ~~start the year. Also, while~~added supply pressure resulting from reduced export volume. Partially offsetting these headwinds, we expect ~~net stumpage realizations to remain above prior year levels, we anticipate modestly lower weighted-average prices for~~a higher contribution from non-timber income (carbon credit sales) in the ~~remainder~~second half of the year as compared to the first ~~quarter due to higher mill inventories, a higher proportion of thinning volume, and a less favorable geographic mix.~~half.

In our Pacific Northwest Timber segment, we expect lower quarterly harvest volumes for the balance of the year following strong removals in the first quarter. We further expect that weighted-average log prices will remain near first quarter levels for the balance of the year, driven by continued strong sawtimber demand and improving pulpwood markets.

In our New Zealand Timber segment, we expect increased quarterly harvest volumes for the balance of the year. While a significant level of uncertainty remains around the ongoing COVID-19 related disruptions in China, we expect that once demand stabilizes, constrained log supplies will drive export sawtimber prices higher. We further expect that domestic sawtimber and pulpwood pricing will remain relatively flat for the remainder of the year.

In our Real Estate segment, following strong Real Estate results in the first half of the year, we anticipate lower quarterly results for the ~~remainder~~balance of the ~~year following a strong first quarter.~~year.

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


		March 31,		December 31,			June 30,		December 31,
(millions of dollars)	(millions of dollars)	2022		2021		(millions of dollars)	2022		2021
Cash and cash equivalents (excluding Timber Funds)	Cash and cash equivalents (excluding Timber Funds)	$256.5		$358.7		Cash and cash equivalents (excluding Timber Funds)	$279.3		$358.7

Total debt (a)	Total debt (a)	1,254.1		1,376.1		Total debt (a)	1,272.1		1,376.1
Noncontrolling interests in the operating partnership	Noncontrolling interests in the operating partnership	136.2		133.8		Noncontrolling interests in the operating partnership	123.8		133.8
Shareholders’ equity	Shareholders’ equity	1,881.6		1,815.6		Shareholders’ equity	1,820.4		1,815.6

Total capitalization (total debt plus permanent and temporary equity)	Total capitalization (total debt plus permanent and temporary equity)	3,271.9		3,325.5		Total capitalization (total debt plus permanent and temporary equity)	3,216.3		3,325.5
Debt to capital ratio	Debt to capital ratio	38	%	41	%	Debt to capital ratio	40	%	41	%
Net debt to enterprise value (b)(c)	Net debt to enterprise value (b)(c)	14	%	14	%	Net debt to enterprise value (b)(c)	15	%	14	%

(a)Total debt as of ~~March 31,~~June 30, 2022 and December 31, 2021 reflects principal on long-term debt, gross of deferred financing costs and unamortized discounts.

(b)Net debt is calculated as total debt less cash and cash equivalents.

(c)Enterprise value based on market capitalization (including Rayonier, L.P. “OP” units) plus net debt based on Rayonier’s share price of ~~$41.12~~$37.38 and $40.36 as of ~~March 31,~~June 30, 2022 and December 31, 2021, respectively.

AT-THE-MARKET (“ATM”) EQUITY OFFERING PROGRAM

On September 10, 2020, we entered into a 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. As of ~~March 31,~~June 30, 2022, $1.0 million 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 March 31,		Three Months Ended June 30,			Six Months Ended June 30,
		2022	2021			2022	2021	2022	2021
Shares of common stock issued under the ATM program	Shares of common stock issued under the ATM program	726,248	1,107,814		Shares of common stock issued under the ATM program	—	2,199,459	726,248	3,307,273
Average price per share sold under the ATM program	Average price per share sold under the ATM program	$41.46	$33.31		Average price per share sold under the ATM program	—	$36.79	$41.46	$35.63
Gross proceeds from common shares issued under the ATM program	Gross proceeds from common shares issued under the ATM program	$30.1	$36.9		Gross proceeds from common shares issued under the ATM program	—	$80.9	$30.1	$117.8

CASH FLOWS

The following table summarizes our cash flows from operating, investing and financing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021:


(millions of dollars)	(millions of dollars)	2022	2021	(millions of dollars)	2022	2021
Cash provided by (used for):	Cash provided by (used for):			Cash provided by (used for):
Operating activities	Operating activities	$49.7	$53.9	Operating activities	$148.5	$164.6
Investing activities	Investing activities	(18.9)	(44.4)	Investing activities	(34.5)	(49.1)
Financing activities	Financing activities	(134.7)	(13.8)	Financing activities	(184.9)	112.0

CASH PROVIDED BY OPERATING ACTIVITIES

Cash provided by operating activities decreased ~~$4.2~~$16.1 million from the prior year period primarily due to lower operating results and changes in working ~~capital, partially offset by higher operating results.~~capital.

CASH USED FOR INVESTING ACTIVITIES

Cash used for investing activities decreased ~~$25.5~~$14.6 million from the prior year period primarily due to lower timberland acquisitions ($~~27.1~~48.6 million), lower capital expenditures ($1.9 million) and lower ~~capital expenditures~~real estate development investments ($~~0.2~~0.3 million), partially offset by lower proceeds from Large Dispositions ($35.2 million) and other investing activities ($~~1.7 million) and higher real estate development investments ($0.1~~1.0 million).

CASH ~~USED FOR~~(USED FOR) PROVIDED BY FINANCING ACTIVITIES

Cash used for financing activities ~~increased $120.9~~of $184.9 million ~~from~~compares to cash provided by financing activities of $112.0 million in the prior year ~~period~~period. This is primarily due to lower net borrowings ($~~122.9~~221.2 million), lower net proceeds from the issuance of common shares under the ATM equity offering program ($~~1.6~~78.8 million), higher dividends paid on common shares ($~~2.0~~6.1 million), higher share repurchases ($2.6 million) and lower proceeds from the issuance of common shares under the Company’s incentive stock plan ($~~0.6 million) and higher share repurchases ($0.1~~1.9 million), partially offset by lower distributions to consolidated affiliates ($~~6.0~~8.5 million), lower debt issuance costs of ($4.8 million) and lower distributions to noncontrolling interests in the operating partnership ($~~0.3~~0.4 million).

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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 ~~and~~ to satisfy other commitments. During Q2 2022, the Company announced a 5.6% increase in its quarterly cash dividend from $0.27 to $0.285 per common share and Rayonier, LP unit.

Significant long-term uses of cash include the following (in millions):


Future uses of cash (in millions)	Future uses of cash (in millions)	Total	Payments Due by Period				Future uses of cash (in millions)	Total	Payments Due by Period
			2022	2023-2024	2025-2026	Thereafter			2022	2023-2024	2025-2026	Thereafter
Long-term debt (a)	Long-term debt (a)	$1,252.0	—	—	$252.0	$1,000.0	Long-term debt (a)	$1,271.5	—	—	$246.5	$1,025.0

Current maturities of long-term debt (b)	Current maturities of long-term debt (b)	2.1	2.1	—	—	—	Current maturities of long-term debt (b)	0.6	—	0.6	—	—

Interest payments on long-term debt (b)	Interest payments on long-term debt (b)	207.1	24.5	57.1	52.9	72.6	Interest payments on long-term debt (b)	238.4	18.1	72.5	67.2	80.6

Operating leases — timberland (c)	Operating leases — timberland (c)	188.6	7.3	15.0	14.4	151.9	Operating leases — timberland (c)	189.5	5.5	14.8	14.1	155.1
Operating leases — PP&E, offices (c)	Operating leases — PP&E, offices (c)	9.0	1.4	2.3	1.3	4.0	Operating leases — PP&E, offices (c)	7.9	0.9	2.2	1.2	3.6

Commitments — development projects (d)	Commitments — development projects (d)	25.8	17.8	3.5	0.6	3.9	Commitments — development projects (d)	27.8	19.7	3.5	0.5	4.1
Commitments — derivatives (e)	Commitments — derivatives (e)	37.6	8.5	18.9	6.9	3.3	Commitments — derivatives (e)	25.4	8.1	15.9	1.4	—
Commitments — environmental remediation (f)	Commitments — environmental remediation (f)	11.3	0.7	7.7	1.5	1.4	Commitments — environmental remediation (f)	11.3	0.7	7.7	1.5	1.4
Commitments — other (g)	Commitments — other (g)	1.2	0.6	0.5	0.1	—	Commitments — other (g)	1.1	0.4	0.6	0.1	—
Total	Total	$1,734.7	$62.9	$105.0	$329.7	$1,237.1	Total	$1,773.5	$53.4	$117.8	$332.5	$1,269.8

(a)The book value of long-term debt, net of deferred financing costs and unamortized discounts, is currently recorded at ~~$1,243.7~~$1,263.4 million on our Consolidated Balance Sheets, but upon maturity the liability will be ~~$1,252.0~~$1,271.5 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 ~~March 31,~~June 30, 2022.

(c)Excludes anticipated renewal options.

(d)Commitments — developmental projects primarily consists of payments expected to be made on our Wildlight and Heartwood projects.

(e)Commitments — derivatives represent payments expected to be made on derivative financial instruments (interest rate swaps and forward-starting interest rate swaps). See Note 7 — Derivative Financial Instruments and Hedging Activities for additional information.

(f)Commitments — environmental remediation represents our estimate of potential liability associated with environmental contamination and Natural Resource Damages in Port Gamble, Washington. See Note 11 - Environmental and Natural Resource Damage Liabilities for additional information.

(g)Commitments — other includes other purchase obligations.

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.

EXPECTED 2022 EXPENDITURES

Capital expenditures in 2022 are expected to be between ~~$81~~$80 million and ~~$84~~$82 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 2022 to be between $23 million and $25 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;~~Florida and Heartwood, our mixed-use development project located in Richmond Hill just south of Savannah, ~~Georgia; development properties in the town of Port Gamble, Washington; and development projects in Gig Harbor, Kingston and Bremerton, Washington.~~Georgia.

Our 2022 dividend payments on Rayonier Inc. common shares and distributions to Rayonier, L.P. unitholders are expected to be approximately ~~$158~~$164 million and ~~$3.6~~$3.7 million, respectively, assuming no change in the quarterly

dividend rate of ~~$0.27~~$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.

We have no mandatory pension contribution requirements in the current year.

Full-year 2022 cash tax payments are expected to be approximately $15.0 million, primarily related to the New Zealand subsidiary. First quarter cash tax payments were elevated due to the required timing of tax payments for our New Zealand subsidiary following the full utilization of its NOLs. ~~Full-year 2022 cash tax payments are expected to be~~ ~~approximately $17.0 million, primarily related to the New Zealand subsidiary.~~

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 12 — Guarantees for details on the letters of credit and surety bonds as of ~~March 31,~~June 30, 2022.

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 ~~Inc.~~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 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 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 ~~three~~six months ended ~~March 31,~~June 30, 2022 and year ended December 31, 2021 are provided in the table below:


(in millions)	(in millions)	March 31, 2022	December 31, 2021	(in millions)	June 30, 2022	December 31, 2021
Current assets	Current assets	$257.6	$335.8	Current assets	$272.0	$335.8
Non-current assets	Non-current assets	75.6	54.6	Non-current assets	100.9	54.6
Current liabilities	Current liabilities	20.1	146.0	Current liabilities	19.2	146.0
Non-current liabilities	Non-current liabilities	1,800.6	1,821.7	Non-current liabilities	1,800.6	1,821.7
Due to non-guarantors	Due to non-guarantors	565.6	570.4	Due to non-guarantors	566.3	570.4

The summarized results of operations information for the consolidated obligor group of debt issued by Rayonier, L.P. for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and year ended December 31, 2021 are provided in the table below:


(in millions)	(in millions)	March 31, 2022	December 31, 2021	(in millions)	June 30, 2022	December 31, 2021
Cost and expenses	Cost and expenses	($6.5)	($27.5)	Cost and expenses	($14.6)	($27.5)
Operating loss	Operating loss	(6.5)	(27.3)	Operating loss	(14.6)	(27.3)
Net loss	Net loss	(16.2)	(69.7)	Net loss	(30.0)	(69.7)
Revenue from non-guarantors	Revenue from non-guarantors	222.0	1,109.4	Revenue from non-guarantors	468.4	1,109.4

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.

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), CAD attributable to noncontrolling interests in Timber Funds, and working capital and other 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 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 improved development, non-operating income and expense, ~~and~~ operating income attributable to noncontrolling interests in Timber ~~Funds.~~Funds and Large Dispositions.

We reconcile Adjusted EBITDA to Net Income for the consolidated Company and to Operating Income for the segments, as those are the most comparable GAAP measures for each. The following table provides a reconciliation of Net Income to Adjusted EBITDA for the respective periods (in millions of dollars):


		Three Months Ended March 31,			Three Months Ended June 30,			Six Months Ended June 30,
			2022	2021			2022	2021	2022	2021
Net Income to Adjusted EBITDA Reconciliation	Net Income to Adjusted EBITDA Reconciliation					Net Income to Adjusted EBITDA Reconciliation
Net Income	Net Income		$31.0	$15.0		Net Income	$25.3	$63.4	$56.3	$78.5
Operating income attributable to NCI in Timber Funds	Operating income attributable to NCI in Timber Funds		—	(1.1)		Operating income attributable to NCI in Timber Funds	—	(1.6)	—	(2.7)
Interest, net attributable to NCI in Timber Funds	Interest, net attributable to NCI in Timber Funds		—	0.1		Interest, net attributable to NCI in Timber Funds	—	0.2	—	0.2

Net Income (Excluding NCI in Timber Funds)	Net Income (Excluding NCI in Timber Funds)		31.0	14.0		Net Income (Excluding NCI in Timber Funds)	25.3	62.0	56.3	76.0
Interest, net and miscellaneous income attributable to Rayonier	Interest, net and miscellaneous income attributable to Rayonier		8.2	9.9		Interest, net and miscellaneous income attributable to Rayonier	8.9	12.8	17.1	22.7
Income tax expense attributable to Rayonier	Income tax expense attributable to Rayonier		5.5	3.5		Income tax expense attributable to Rayonier	1.3	6.8	6.8	10.3
Depreciation, depletion and amortization attributable to Rayonier	Depreciation, depletion and amortization attributable to Rayonier		47.4	40.3		Depreciation, depletion and amortization attributable to Rayonier	35.8	37.6	83.2	77.9
Non-cash cost of land and improved development	Non-cash cost of land and improved development		5.4	1.8		Non-cash cost of land and improved development	11.8	5.2	17.1	7.0

Non-operating expense	Non-operating expense		0.6	—		Non-operating expense	—	1.2	0.6	1.2

Large Dispositions (a)						Large Dispositions (a)	—	(30.3)	—	(30.3)

Adjusted EBITDA	Adjusted EBITDA		$98.1	$69.5		Adjusted EBITDA	$83.0	$95.3	$181.1	$164.7

(a)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 June 2021, we completed the disposition of approximately 9,000 acres located in Washington for a sales price and gain of approximately $36.0 million and $30.3 million, respectively.

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The following tables provide a reconciliation of Operating Income by segment to Adjusted EBITDA by segment for the respective periods (in millions of dollars):


Three Months Ended	Three Months Ended	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Timber Funds	Real Estate	Trading	Corporate and Other	Total	Three Months Ended	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Timber Funds	Real Estate	Trading	Corporate and Other	Total
March 31, 2022
Operating income		$30.3	$6.6	$5.4	—	$10.2	$0.4	($7.6)	$45.3
June 30, 2022										June 30, 2022
Operating income (loss)										Operating income (loss)	$24.1	$2.9	$8.0	—	$11.0	($0.4)	($10.1)	$35.5

Depreciation, depletion and amortization	Depreciation, depletion and amortization	18.1	14.9	5.0	—	9.1	—	0.3	47.4	Depreciation, depletion and amortization	14.7	11.3	6.9	—	2.6	—	0.3	35.8
Non-cash cost of land and improved development	Non-cash cost of land and improved development	—	—	—	—	5.4	—	—	5.4	Non-cash cost of land and improved development	—	—	—	—	11.8	—	—	11.8

Adjusted EBITDA	Adjusted EBITDA	$48.4	$21.5	$10.4	—	$24.7	$0.4	($7.2)	$98.1	Adjusted EBITDA	$38.7	$14.3	$14.9	—	$25.4	($0.4)	($9.8)	$83.0

March 31, 2021
June 30, 2021										June 30, 2021
Operating income	Operating income	$17.3	$1.3	$14.0	$1.5	$1.7	$0.2	($7.6)	$28.5	Operating income	$17.0	$1.9	$20.7	$2.0	$50.5	$0.4	($8.0)	$84.4

Operating income attributable to NCI in Timber Funds	Operating income attributable to NCI in Timber Funds	—	—	—	(1.1)	—	—	—	(1.1)	Operating income attributable to NCI in Timber Funds	—	—	—	(1.6)	—	—	—	(1.6)

Depreciation, depletion and amortization	Depreciation, depletion and amortization	14.4	16.3	7.2	0.6	1.6	—	0.3	40.3	Depreciation, depletion and amortization	13.6	12.0	7.0	1.0	3.7	—	0.3	37.6
Non-cash cost of land and improved development	Non-cash cost of land and improved development	—	—	—	—	1.8	—	—	1.8	Non-cash cost of land and improved development	—	—	—	—	5.2	—	—	5.2

Large Dispositions (a)										Large Dispositions (a)	—	—	—	—	(30.3)	—	—	(30.3)
Adjusted EBITDA	Adjusted EBITDA	$31.7	$17.6	$21.2	$1.0	$5.1	$0.2	($7.3)	$69.5	Adjusted EBITDA	$30.6	$13.9	$27.7	$1.4	$29.1	$0.4	($7.7)	$95.3



Six Months Ended	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Timber Funds	Real Estate	Trading	Corporate and Other	Total
June 30, 2022
Operating income (loss)	$54.4	$9.5	$13.4	—	$21.2	($0.1)	($17.7)	$80.8






Depreciation, depletion and amortization	32.7	26.2	11.9	—	11.7	—	0.6	83.2
Non-cash cost of land and improved development	—	—	—	—	17.1	—	—	17.1





Adjusted EBITDA	$87.1	$35.8	$25.3	—	$50.1	($0.1)	($17.0)	$181.1

June 30, 2021
Operating income	$34.3	$3.2	$34.7	$3.5	$52.2	$0.7	($15.6)	$112.9

Operating income attributable to NCI in Timber Funds	—	—	—	(2.7)	—	—	—	(2.7)

Depreciation, depletion and amortization	27.9	28.3	14.2	1.6	5.3	—	0.6	77.9
Non-cash cost of land and improved development	—	—	—	—	7.0	—	—	7.0



Large Dispositions (a)	—	—	—	—	(30.3)	—	—	(30.3)
Adjusted EBITDA	$62.3	$31.5	$48.9	$2.3	$34.1	$0.7	($15.1)	$164.7

The following table provides a reconciliation of Cash Provided by Operating Activities to Adjusted CAD (in millions of dollars):


		Three Months Ended March 31,			Six Months Ended June 30,
		2022	2021		2022	2021
Cash provided by operating activities	Cash provided by operating activities	$49.7	$53.9	Cash provided by operating activities	$148.5	$164.6
Capital expenditures (a)	Capital expenditures (a)	(15.6)	(15.8)	Capital expenditures (a)	(30.3)	(32.2)

CAD attributable to NCI in Timber Funds	CAD attributable to NCI in Timber Funds	—	(4.6)	CAD attributable to NCI in Timber Funds	—	(9.7)
Working capital and other balance sheet changes	Working capital and other balance sheet changes	30.4	13.8	Working capital and other balance sheet changes	1.3	(11.9)
CAD	CAD	$64.5	$47.3	CAD	$119.5	$110.8
Mandatory debt repayments	Mandatory debt repayments	(2.1)	—	Mandatory debt repayments	(0.6)	(325.0)
CAD after mandatory debt repayments	CAD after mandatory debt repayments	$62.4	$47.3	CAD after mandatory debt repayments	$118.9	($214.2)


Cash used for investing activities	Cash used for investing activities	($18.9)	($44.4)	Cash used for investing activities	($34.5)	($49.1)
Cash used for financing activities		($134.7)	($13.8)
Cash (used for) provided by financing activities				Cash (used for) provided by financing activities	($184.9)	$112.0

(a) Capital expenditures exclude timberland acquisitions of ~~$2.8~~$3.2 million and ~~$29.9~~$51.9 million during the ~~three~~six months ended ~~March 31,~~June 30, 2022 and ~~March 31,~~June 30, 2021, respectively.

The following table provides supplemental cash flow data (in millions):


		Three Months Ended March 31,			Six Months Ended June 30,
		2022	2021		2022	2021
Purchase of timberlands	Purchase of timberlands	($2.8)	($29.9)	Purchase of timberlands	($3.2)	($51.9)
Real Estate Development Investments	Real Estate Development Investments	(3.1)	(3.0)	Real Estate Development Investments	(6.0)	(6.3)
Distributions to noncontrolling interests in consolidated affiliates	Distributions to noncontrolling interests in consolidated affiliates	(2.7)	(8.7)	Distributions to noncontrolling interests in consolidated affiliates	(6.7)	(15.2)

LIQUIDITY FACILITIES

2022 DEBT ACTIVITY

See Note 6 — Debt for additional information.

5362

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

We are exposed to interest rate risk through our variable rate debt, primarily due to changes in LIBOR. 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 ~~March 31,~~June 30, 2022, we had $750 million of U.S. variable rate debt outstanding on our term credit agreements.

The notional amount of outstanding interest rate swap contracts with respect to our term credit agreements at ~~March 31,~~June 30, 2022 was $750 million. The Term Credit Agreement 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 million of the Term Credit Agreement through the extended maturity date. The Incremental Term Loan Agreement and associated interest rate swaps mature in May 2026, and the 2021 Incremental Term Loan Facility and associated interest rate swaps mature in June 2029. At this borrowing level, a hypothetical one-percentage point increase/decrease in interest rates would result in no corresponding increase/decrease in interest payments and expense over a 12-month period.

The fair market value of our fixed interest rate debt is also subject to interest rate risk. The estimated fair value of our fixed rate debt at ~~March 31,~~June 30, 2022 was ~~$459.6~~$446.6 million compared to the ~~$502.0~~$521.5 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 ~~March 31,~~June 30, 2022 would result in a corresponding decrease/increase in the fair value of our fixed rate debt of approximately ~~$33~~$30 million and ~~$36~~$33 million, respectively.

We estimate the periodic effective interest rate on our U.S. long-term fixed and variable rate debt to be approximately 2.6% after consideration of interest rate swaps and estimated patronage refunds, excluding unused commitment fees on the revolving credit facility.

5463

The following table summarizes our outstanding debt, interest rate swaps and average interest rates, by year of expected maturity and their fair values at ~~March 31,~~June 30, 2022:


(Dollars in thousands)	(Dollars in thousands)	2022		2023	2024		2025		2026		Thereafter		Total		Fair Value	(Dollars in thousands)	2022	2023		2024		2025		2026		Thereafter		Total		Fair Value
Variable rate debt:	Variable rate debt:															Variable rate debt:
Principal amounts	Principal amounts	$2,087		—	—		—		$200,000		$550,000		$752,087		$752,087	Principal amounts	—	$622		—		—		$200,000		$550,000		$750,622		$750,622
Average interest rate (a)(b)	Average interest rate (a)(b)	2.06	%	—	—		—		1.88	%	1.85	%	1.86	%		Average interest rate (a)(b)	—	3.06	%	—		—		2.71	%	2.68	%	2.69	%
Fixed rate debt:	Fixed rate debt:															Fixed rate debt:
Principal amounts	Principal amounts	—		—	—		$24,005		$28,006		$450,000		$502,011		$459,595	Principal amounts	—	—		—		$21,451		$25,026		$475,026		$521,504		$446,582
Average interest rate (b)	Average interest rate (b)	—		—	—		2.95	%	3.64	%	2.75	%	2.81	%		Average interest rate (b)	—	—		—		2.95	%	3.64	%	2.95	%	2.98	%

Interest rate swaps:	Interest rate swaps:															Interest rate swaps:
Notional amount	Notional amount	—		—	$350,000		—		$200,000		$200,000		$750,000		$26,912	Notional amount	—	—		$350,000		—		$200,000		$200,000		$750,000		$40,909
Average pay rate (b)	Average pay rate (b)	—		—	2.28	%	—		1.60	%	0.77	%	1.69	%		Average pay rate (b)	—	—		2.28	%	—		1.60	%	0.77	%	1.69	%
Average receive rate (b)	Average receive rate (b)	—		—	0.29	%	—		0.23	%	0.23	%	0.26	%		Average receive rate (b)	—	—		1.12	%	—		1.06	%	1.06	%	1.09	%

Forward-starting interest rate swaps	Forward-starting interest rate swaps															Forward-starting interest rate swaps
Notional amount	Notional amount	—		—	—		—		—		$150,000		$150,000		$6,699	Notional amount	—	—		—		—		—		$150,000		$150,000		$9,106
Average pay rate (b)	Average pay rate (b)	—		—	—		—		—		0.83	%	0.83	%		Average pay rate (b)	—	—		—		—		—		0.83	%	0.83	%
Average receive rate (b)	Average receive rate (b)	—		—	—		—		—		0.45	%	0.45	%		Average receive rate (b)	—	—		—		—		—		1.79	%	1.79	%

(a) Excludes estimated patronage refunds.

(b) Interest rates as of ~~March 31,~~June 30, 2022.

Foreign Currency Exchange Rate Risk

The New Zealand subsidiary’s export sales are predominately denominated in U.S. dollars, and 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 and shareholder distributions are also paid in U.S. dollars. We manage any excess foreign exchange exposure through the use of derivative financial instruments.

~~Sales and Expense~~Foreign Exchange Exposure

At ~~March 31,~~June 30, 2022, the New Zealand subsidiary had foreign currency exchange contracts with a notional amount of ~~$149.5~~$160.5 million and foreign currency option contracts with a notional amount of ~~$14.0~~$32.0 million outstanding related to foreign export ~~sales and ocean freight payments.~~sales. The amount hedged represents a portion of forecasted U.S. dollar denominated export timber and log trading sales proceeds over the next 2436 months and next 2 months, respectively.

The following table summarizes our outstanding foreign currency exchange rate risk contracts at ~~March 31,~~June 30, 2022:


(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	$9,000	$9,500	$8,000	$26,000	$46,500	$38,500	$12,000	$149,500	$1,566	Notional amount	$10,500	$11,000	$9,000	$26,500	$45,000	$36,500	$20,000	$2,000	$160,500	($12,788)
Average contract rate	Average contract rate	1.4505	1.4397	1.4432	1.4378	1.4567	1.4848	1.5059	1.4624		Average contract rate	1.4678	1.4452	1.4560	1.4538	1.4709	1.5050	1.5588	1.6251	1.4859

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	—	—	—	—	—	$8,000	$6,000	$14,000	$94	Notional amount	—	—	—	—	$2,000	$12,000	$6,000	$12,000	$32,000	($592)
Average strike price	Average strike price	—	—	—	—	—	1.4808	1.5053	1.4913		Average strike price	—	—	—	—	1.4744	1.4941	1.5684	1.6391	1.5612

5564

Item 4. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

Rayonier Inc.

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 ~~March 31,~~June 30, 2022.

In the quarter ended ~~March 31,~~June 30, 2022, 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 ~~March 31,~~June 30, 2022.

In the quarter ended ~~March 31,~~June 30, 2022, 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 1. LEGAL PROCEEDINGS

The information set forth in Note 10 — Contingencies and in Note 11 – Environmental and Natural Resource Damage ~~Liabilities~~Liabilities in the “Notes to Consolidated Financial Statements” under Item 1 of Part I of this report is incorporated herein by reference.

5665

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 our 2021 Form 10-K.

Our business, financial condition and results of operations could be adversely affected by disruptions in the global economy caused by the ongoing conflict between Russia and Ukraine.

The global economy has been negatively impacted by the military conflict between Russia and Ukraine. The Russia-Ukraine conflict is fast-moving and uncertain. Global log and lumber markets have exhibited increased volatility as sanctions have been imposed on Russia by the United States, the United Kingdom and the European Union in response to Russia’s invasion of Ukraine. While we do not expect our operations to be directly impacted by the conflict at this time, changes in global wood and commodity flows could impact the markets in which we operate, which may in turn negatively impact our business, results of operations, supply chain and financial condition. In addition, the effects of the ongoing conflict could heighten certain of our known risks described in the section entitled “Risk Factors” in Part I, Item 1A, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 25, 2022.

5766

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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 ~~March 31,~~June 30, 2022, the Company issued ~~2,535~~977 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 ~~first~~second quarter of 2022. As of ~~March 31,~~June 30, 2022, there was $87.7 million, or approximately ~~2,133,474~~2,346,935 shares based on the period-end closing stock price of ~~$41.12,~~$37.38, remaining under this program.

The following table provides information regarding our purchases of Rayonier common shares during the quarter ended ~~March 31,~~June 30, 2022:

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)
January 1 to January 31 5,392 $39.44 — 2,400,888
February 1 to February 28 — — — 2,209,785
March 1 to March 31 28 33.59 — 2,133,474
Total 5,420 —


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	90,405	$43.51	—	2,030,751
May 1 to May 31	324	39.52	—	2,128,298
June 1 to June 30	1,091	40.96	—	2,346,935
Total	91,820		—

(a)Includes ~~5,420~~91,820 shares of the Company’s common shares purchased in ~~January, February~~April, May and ~~March~~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 used to pay withholding taxes associated with the vesting of share-based awards under the Company’s 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 ~~January, February~~April, May and ~~March~~June are based on month-end closing stock prices of ~~$36.54, $39.70~~$43.20, $41.22 and ~~$41.12,~~$37.38, respectively.

Rayonier, L.P.

UNREGISTERED SALES OF EQUITY SECURITIES

There were no unregistered sales of equity securities made by the Operating Partnership during the quarter ended ~~March 31,~~June 30, 2022.

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 Operating Partnership for cash, or at our election, shares of Rayonier Common Stock on a one-for-one basis. During the quarter ended ~~March 31,~~June 30, 2022, ~~2,535~~977 units in the Operating Partnership held by limited partners were redeemed in exchange for shares of Rayonier Common Stock.

5867

Item 6. EXHIBITS



~~10.1~~		Rayonier Investment and Savings Plan for Salaried Employees effective March 1, 1994, amended and restated effective March 1, 2022*	~~Filed herewith~~


22.1	List of Guarantor Subsidiaries	Filed herewith
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 Rayonier Inc. and Rayonier, L.P.’s Quarterly Report on Form 10-Q for the fiscal quarter ended ~~March 31,~~June 30, 2022, formatted in Extensible Business Reporting Language (“XBRL”), includes: (i) the Consolidated Statements of Income and Comprehensive Income for the Three and Six Months Ended ~~March 31,~~June 30, 2022 and 2021 of Rayonier Inc.; (ii) the Consolidated Balance Sheets as of ~~March 31,~~June 30, 2022 and December 31, 2021 of Rayonier Inc.; (iii) the Consolidated Statements of Changes in Shareholders’ Equity for the ~~Three~~Six Months Ended ~~March 31,~~June 30, 2022 and 2021 of Rayonier Inc.; (iv) the Consolidated Statements of Cash Flows for the ~~Three~~Six Months Ended ~~March 31,~~June 30, 2022 and 2021 of Rayonier Inc.; (v) the Consolidated Statements of Income and Comprehensive Income for the Three and Six Months Ended ~~March 31,~~June 30, 2022 and 2021 of Rayonier, L.P.; (vi) the Consolidated Balance Sheets as of ~~March 31,~~June 30, 2022 and December 31, 2021 of Rayonier, L.P.; (vii) the Consolidated Statements of Changes in Capital for the ~~Three~~Six Months Ended ~~March 31,~~June 30, 2022 and 2021 of Rayonier, L.P.; (viii) the Consolidated Statements of Cash Flows for the ~~Three~~Six Months Ended ~~March 31,~~June 30, 2022 and 2021 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 ~~March 31,~~June 30, 2022, formatted in Inline XBRL (included as Exhibit 101).

* Management contract or compensatory plan.

5968

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 and Chief Accounting Officer (Duly Authorized Officer, Principal Accounting Officer)

Date: ~~May 6,~~August 5, 2022


						RAYONIER, L.P.

						By: RAYONIER INC., its sole general partner

			By:			/s/ APRIL TICE
						April Tice Vice President and Chief Accounting Officer (Duly Authorized Officer, Principal Accounting Officer)

Date: ~~May 6,~~August 5, 2022

6069


	Units		Accumulated Other Comprehensive Income (Loss)	Noncontrolling Interests in Consolidated Affiliates	Total Capital
	General Partners’ Capital	Limited Partners’ Capital
Balance, January 1, 2021	$15,454	$1,529,948	($71,345)	$388,588	$1,862,645
Net income	112	11,077	—	3,843	15,032
Distributions on units ($0.27 per unit)	(387)	(38,300)	—	—	(38,687)
Issuance of shares under the “at-the-market” equity offering, net of commissions and offering costs of $197	367	36,341	—	—	36,708
Issuance of units under incentive stock plans	12	1,154	—	—	1,166
Stock-based compensation	22	2,134	—	—	2,156
Repurchase of units	(2)	(153)	—	—	(155)
Adjustment of Redeemable Operating Partnership Units	(126)	(12,458)	—	—	(12,584)
Conversion of units into common shares	47	4,668	—	—	4,715
Measurement period adjustment of noncontrolling interests in consolidated affiliates	—	—	—	655	655
Amortization of pension and postretirement plan liabilities	—	—	294	—	294
Foreign currency translation adjustment	—	—	(11,652)	(2,636)	(14,288)
Cash flow hedges	—	—	61,628	(627)	61,001
Distributions to noncontrolling interests in consolidated affiliates	—	—	—	(8,737)	(8,737)
Balance, March 31, 2021	$15,499	$1,534,411	($21,075)	$381,086	$1,909,921