RAYONIER INC — Interim / Quarterly Report 2015

Aug 7, 2015

10-Q 1 rayonier201510q2q2015.htm 10-Q html PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd" Document created using Wdesk 1 Copyright 2015 Workiva Rayonier 2015 10Q 2Q2015

Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2015

OR

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

For the transition period from to

Commission File Number 1-6780

RAYONIER INC.

Incorporated in the State of North Carolina

I.R.S. Employer Identification No. 13-2607329

225 WATER STREET, SUITE 1400

JACKSONVILLE, FL 32202

(Principal Executive Office)

Telephone Number: (904) 357-9100

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.

YES x NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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).

YES x NO o

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

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

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

YES o NO x

As of July 31, 2015 , there were outstanding 125,941,960 Common Shares of the registrant.

Table of Contents

TABLE OF CONTENTS

Item		Page
	PART I - FINANCIAL INFORMATION
1.	Financial Statements (unaudited)	1
	Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income for the Three and Six Months Ended June 30, 2015 and 2014	1
	Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014	2
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2015 and 2014	3
	Notes to Consolidated Financial Statements	4
2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	39
3.	Quantitative and Qualitative Disclosures about Market Risk	63
4.	Controls and Procedures	64
	PART II - OTHER INFORMATION
1.	Legal Proceedings	65
2.	Unregistered Sales of Equity Securities and Use of Proceeds	65
6.	Exhibits	66
	Signature	67

i

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

RAYONIER INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF (LOSS) INCOME

AND COMPREHENSIVE (LOSS) INCOME

(Unaudited)

(Dollars in thousands, except per share amounts)

	Three Months Ended June 30, — 2015		2014		Six Months Ended June 30, — 2015		2014
SALES	$115,801		$163,145		$256,106		$306,332
Costs and Expenses
Cost of sales	103,689		123,096		210,923		238,995
Selling and general expenses	12,727		13,861		23,626		27,098
Other operating income, net (Note 17)	(7,138	)	(11,389	)	(12,713	)	(11,764	)
	109,278		125,568		221,836		254,329
OPERATING INCOME	6,523		37,577		34,270		52,003
Interest expense	(8,483	)	(15,612	)	(17,027	)	(26,286	)
Interest income and miscellaneous expense, net	(1,196	)	(4,385	)	(2,691	)	(5,397	)
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(3,156	)	17,580		14,552		20,320
Income tax benefit (expense)	296		(13,556	)	768		(5,961	)
(LOSS) INCOME FROM CONTINUING OPERATIONS	(2,860	)	4,024		15,320		14,359
DISCONTINUED OPERATIONS, NET (Note 2)
Income from discontinued operations, net of income tax expense of $0, $5,966, $0 and $21,231	—		12,084		—		43,092
NET (LOSS) INCOME	(2,860	)	16,108		15,320		57,451
Less: Net loss attributable to noncontrolling interest	(1,324	)	(245	)	(891	)	(328	)
NET (LOSS) INCOME ATTRIBUTABLE TO RAYONIER INC.	(1,536	)	16,353		16,211		57,779
OTHER COMPREHENSIVE (LOSS) INCOME
Foreign currency translation adjustment, net of income tax expense of $732, $0, $1,074 and $0	(25,395	)	3,517		(39,717	)	21,320
New Zealand joint venture cash flow hedges, net of income tax benefit (expense) of $1,133, $401, $1,501 and ($100)	(2,917	)	(920	)	(3,863	)	791
Amortization of pension and postretirement plans, net of income tax expense of $179, $35,944, $337 and $36,875	743		58,873		1,524		60,970
Total other comprehensive (loss) income	(27,569	)	61,470		(42,056	)	83,081
COMPREHENSIVE (LOSS) INCOME	(30,429	)	77,578		(26,736	)	140,532
Less: Comprehensive (loss) income attributable to noncontrolling interest	(9,731	)	297		(13,522	)	5,722
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO RAYONIER INC.	($20,698	)	$77,281		($13,214	)	$134,810
(LOSS) EARNINGS PER COMMON SHARE (Note 3)
BASIC (LOSS) EARNINGS PER SHARE ATTRIBUTABLE TO RAYONIER INC.
Continuing Operations	($0.01	)	$0.03		$0.13		$0.12
Discontinued Operations	—		0.10		—		0.34
Net (Loss) Income	($0.01	)	$0.13		$0.13		$0.46
DILUTED (LOSS) EARNINGS PER SHARE ATTRIBUTABLE TO RAYONIER INC.
Continuing Operations	($0.01	)	$0.03		$0.13		$0.11
Discontinued Operations	—		0.09		—		0.33
Net (Loss) Income	($0.01	)	$0.12		$0.13		$0.44
Dividends declared per share	$0.25		$0.49		$0.50		$0.98

See Notes to Consolidated Financial Statements.

1

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands)

	June 30, 2015		December 31, 2014
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$91,632		$161,558
Accounts receivable, less allowance for doubtful accounts of $42 and $42	19,444		24,018
Inventory (Note 14)	13,362		8,383
Prepaid and other current assets	21,222		19,745
Total current assets	145,660		213,704
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	2,086,729		2,088,501
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT COSTS (NOTE 5)	69,726		77,433
PROPERTY, PLANT AND EQUIPMENT
Land	1,833		1,833
Buildings	8,977		8,961
Machinery and equipment	3,388		3,503
Construction in progress	772		579
Total property, plant and equipment, gross	14,970		14,876
Less — accumulated depreciation	(8,536	)	(8,170	)
Total property, plant and equipment, net	6,434		6,706
OTHER ASSETS	57,772		66,771
TOTAL ASSETS	$2,366,321		$2,453,115
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$22,396		$20,211
Current maturities of long-term debt	30,000		129,706
Accrued taxes	15,811		11,405
Accrued payroll and benefits	4,596		6,390
Accrued interest	8,043		8,433
Other current liabilities	31,614		25,857
Total current liabilities	112,460		202,002
LONG-TERM DEBT	722,353		621,849
PENSION AND OTHER POSTRETIREMENT BENEFITS (Note 13)	33,396		33,477
OTHER NON-CURRENT LIABILITIES	20,840		20,636
COMMITMENTS AND CONTINGENCIES (Notes 11 and 12)
SHAREHOLDERS’ EQUITY
Common Shares, 480,000,000 shares authorized, 126,492,061 and 126,773,097 shares issued and outstanding	694,835		702,598
Retained earnings	743,528		790,697
Accumulated other comprehensive loss	(34,250	)	(4,825	)
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY	1,404,113		1,488,470
Noncontrolling interest	73,159		86,681
TOTAL SHAREHOLDERS’ EQUITY	1,477,272		1,575,151
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$2,366,321		$2,453,115

See Notes to Consolidated Financial Statements.

2

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

	Six Months Ended June 30, — 2015		2014
OPERATING ACTIVITIES
Net income	$15,320		$57,451
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion and amortization	53,826		56,316
Non-cash cost of land sold and real estate development costs recovered upon sale	4,938		5,398
Stock-based incentive compensation expense	2,588		5,980
Deferred income taxes	(1,322	)	10,103
Depreciation and amortization from discontinued operations	—		37,985
Amortization of losses from pension and postretirement plans	1,861		5,896
Other	944		(43	)
Changes in operating assets and liabilities:
Receivables	2,414		9,988
Inventories	(8,107	)	4,765
Accounts payable	3,874		27,299
Income tax receivable/payable	(321	)	5,217
All other operating activities	9,868		7,885
Expenditures for dispositions and discontinued operations	—		(5,096	)
CASH PROVIDED BY OPERATING ACTIVITIES	85,883		229,144
INVESTING ACTIVITIES
Capital expenditures	(26,130	)	(33,597	)
Capital expenditures from discontinued operations	—		(47,050	)
Real estate development costs	(578	)	(2,595	)
Purchase of timberlands	(88,414	)	(74,817	)
Change in restricted cash	4,160		63,128
Other	3,689		(478	)
CASH USED FOR INVESTING ACTIVITIES	(107,273	)	(95,409	)
FINANCING ACTIVITIES
Issuance of debt	59,100		1,238,389
Repayment of debt	(31,472	)	(1,107,062	)
Dividends paid	(63,421	)	(124,628	)
Proceeds from the issuance of common shares	718		3,347
Repurchase of common shares	(9,057	)	(1,834	)
Debt issuance costs	—		(12,380	)
Net cash disbursed upon spin-off of Performance Fibers business	—		(106,420	)
Other	—		(680	)
CASH USED FOR FINANCING ACTIVITIES	(44,132	)	(111,268	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	(4,404	)	(50	)
CASH AND CASH EQUIVALENTS
Change in cash and cash equivalents	(69,926	)	22,417
Balance, beginning of year	161,558		199,644
Balance, end of period	$91,632		$222,061
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period:
Interest (a)	$15,303		$26,980
Income taxes	270		10,417
Non-cash investing activity:
Capital assets purchased on account	2,396		11,547

(a) Interest paid is presented net of patronage refunds received of $1.3 million for the six months ended June 30, 2015 and $2.1 million for the six months ended June 30, 2014. For additional information on patronage refunds, see Note 13 — Debt in the 2014 Form 10-K.

See Notes to Consolidated Financial Statements.

3

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

1. BASIS OF PRESENTATION

Basis of Presentation

The unaudited consolidated financial statements and notes thereto of Rayonier Inc. and its subsidiaries (“Rayonier” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of management, these financial statements and notes reflect all adjustments (all of which are normal recurring adjustments) necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented. These statements and notes should be read in conjunction with the financial statements and supplementary data included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 , as filed with the SEC (the “2014 Form 10-K”).

Reclassifications

Certain 2014 amounts have been reclassified to conform to the current presentation, including changes in balance sheet presentation. During the first quarter of 2015, the Company reclassified seeds and seedlings from Inventory and Other Assets to Timber and Timberlands, Net to better reflect the intended use of the assets. Rayonier also reclassified long-term higher and better use (“HBU”) timberlands and real estate development costs from Other Assets to a separate balance sheet caption. These adjustments are reflected in the June 30, 2015 and December 31, 2014 Consolidated Balance Sheets. Corresponding changes have also been made to the Consolidated Statements of Cash Flows for both periods presented.

Certain 2014 amounts have also been adjusted for reclassification of discontinued operations. Rayonier completed the spin-off of its Performance Fibers business on June 27, 2014. Accordingly, the operating results of this business segment are reported as discontinued operations in the Company’s Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income for the prior-year period. Certain administrative and general costs historically allocated to the Performance Fibers business that remained with Rayonier are reported in continuing operations.

The Consolidated Statement of Cash Flow for the six months ended June 30, 2014 has not been restated to exclude Performance Fibers cash flows.

See Note 2 — Discontinued Operations for additional information regarding the spin-off of the Performance Fibers business.

New Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) and International Accounting Standards Board (“IASB”) jointly issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers , a comprehensive new revenue recognition standard that will supersede current revenue recognition guidance. The core principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to receive in exchange for those goods or services. The guidance provides a unified model to determine when and how revenue is recognized and will require enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. In July 2015, the FASB approved a one-year deferral of the effective date of the new standard, with an option for organizations to adopt early based on the original effective date. This standard will be effective for Rayonier beginning January 1, 2018 and can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company is currently evaluating the impact of adopting this new guidance on the consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, Interest — Imputation of Interest (Subtopic 835-30) — Simplifying the Presentation of Debt Issuance Costs. ASU No. 2015-03 requires that debt issuance costs be presented in the Balance Sheet as a direct deduction from the carrying amount of the debt liability. ASU No. 2015-03 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period, and is required to be applied on a retrospective basis. Early adoption is permitted. Rayonier intends to adopt ASU No. 2015-03 in the Company’s first quarter 2016 Form 10-Q filing and does not expect adoption to have a material impact on the consolidated financial statements.

4

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

In May 2015, the FASB issued ASU No. 2015–07, “ Fair Value Measurement (Topic 820) — Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent). ASU No. 2015–07 requires that investments for which the fair value is measured at NAV using the practical expedient (investments in funds measured at NAV) under “Fair Value Measurements and Disclosures” (Topic 820) be excluded from the fair value hierarchy. ASU No. 2015–07 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. ASU No. 2015–07 is required to be applied retrospectively to all periods presented beginning in the period of adoption. Early adoption is permitted. Rayonier intends to adopt ASU No. 2015–07 in the Company’s first quarter 2016 Form 10-Q filing and does not expect adoption to have a material impact on the consolidated financial statements.

Subsequent Events

Quarterly Dividend

On July 20, 2015, the Company announced a third quarter dividend of 25 cents per share payable September 30, 2015, to shareholders of record on September 16, 2015.

Debt Refinancing and Recapitalization of New Zealand JV

See Note 15 — Debt for discussion of debt refinancing and planned recapitalization of the Company’s New Zealand joint venture.

1. DISCONTINUED OPERATIONS

Spin-Off of the Performance Fibers Business

On June 27, 2014, Rayonier completed the tax-free spin-off of its Performance Fibers business and retained its timber, real estate and trading businesses. The spin-off resulted in two independent, publicly-traded companies, with the Performance Fibers business being spun-off to Rayonier shareholders as a newly formed public company named Rayonier Advanced Materials Inc. (“Rayonier Advanced Materials”). O n June 27, 2014, the shareholders of record received one share of Rayonier Advanced Materials common stock for every three common shares of Rayonier held as of the close of business on the record date of June 18, 2014.

In connection with the spin-off, Rayonier Advanced Materials distributed $ 906.2 million in cash to Rayonier from $ 550 million in Senior Notes issued by Rayonier A.M. Products (a wholly-owned subsidiary of Rayonier Advanced Materials), $ 325 million in term loans, and $ 75 million from a revolving credit facility Rayonier Advanced Materials entered into prior to the spin-off. Pursuant to the terms of the Internal Revenue Service spin-off ruling, $ 75 million of this cash was paid to Rayonier’s shareholders as dividends. Of this $ 75 million , $ 63.2 million was paid to shareholders as a special dividend in the third quarter of 2014.

In order to effect the spin-off and govern the Company’s relationship with Rayonier Advanced Materials after the spin-off, Rayonier and Rayonier Advanced Materials entered into a Separation and Distribution Agreement, an Intellectual Property Agreement, a Tax Sharing Agreement, an Employee Matters Agreement and a Transition Services Agreement. See Note 3 — Discontinued Operations in the 2014 Form 10-K for further details concerning these agreements.

Rayonier will not have significant continuing involvement in the operations of the Performance Fibers business going forward. Accordingly, the operating results of the Performance Fibers business, formerly disclosed as a separate reportable segment, are classified as discontinued operations in the Company's Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income for all periods presented. Certain administrative and general costs historically allocated to the Performance Fibers segment are reported in continuing operations, as required.

5

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

The following table summarizes the operating results of the Company's discontinued operations related to the Performance Fibers spin-off for the three and six months ended June 30, 2014 , as presented in "Income from discontinued operations, net" in the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income:

Sales	Three Months Ended June 30, 2014 — $212,680		Six Months Ended June 30, 2014 — $456,180
Cost of sales and other	(174,961	)	(368,868	)
Transaction expenses	(19,669	)	(22,989	)
Income from discontinued operations before income taxes	18,050		64,323
Income tax expense	(5,966	)	(21,231	)
Income from discontinued operations, net	$12,084		$43,092

In accordance with Accounting Standards Codification (“ASC”) 205-20-S99-3, Allocation of Interest to Discontinued Operations , the Company elected to allocate interest expense to discontinued operations where the debt is not directly attributed to the Performance Fibers business. Interest expense has been allocated based on a ratio of net assets to be discontinued to the sum of consolidated net assets plus consolidated debt (other than debt directly attributable to the Timber and Real Estate operations). The following table summarizes the interest expense allocated to discontinued operations for the three and six months ended June 30, 2014 :

Interest expense allocated to the Performance Fibers business	($1,910	)	($4,205	)

The following table summarizes the depreciation, amortization and capital expenditures of the Company's discontinued operations related to the Performance Fibers business:

	Three Months Ended June 30, 2014	Six Months Ended June 30, 2014
Depreciation and amortization	$17,336	$37,985
Capital expenditures	29,880	47,050

Pursuant to a Memorandum of Understanding agreement, Rayonier may provide Rayonier Advanced Materials with up to 120,000 tons of hardwood annually through July 30, 2017. Prior to the spin-off, hardwood purchases were intercompany transactions eliminated in consolidation as follows:

Hardwood purchases	$1,190	$3,935

6

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

1. (LOSS) EARNINGS PER COMMON SHARE

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

	Three Months Ended June 30, — 2015		2014		Six Months Ended June 30, — 2015		2014
(Loss) income from continuing operations	($2,860	)	$4,024		$15,320		$14,359
Less: Net (loss) from continuing operations attributable to noncontrolling interest	(1,324	)	(245	)	(891	)	(328	)
(Loss) income from continuing operations attributable to Rayonier Inc.	($1,536	)	$4,269		$16,211		$14,687
Income from discontinued operations, net, attributable to Rayonier Inc.	—		$12,084		—		43,092
Net (loss) income attributable to Rayonier Inc.	($1,536	)	$16,353		$16,211		$57,779
Shares used for determining basic (loss) earnings per common share	126,635,710		126,434,376		126,625,081		126,390,891
Dilutive effect of:
Stock options	—		293,213		146,754		296,768
Performance and restricted shares	—		201,956		30,515		194,995
Assumed conversion of Senior Exchangeable Notes (a)	—		2,631,514		702,301		2,579,402
Assumed conversion of warrants (a)	—		2,738,606		—		2,656,633
Shares used for determining diluted (loss) earnings per common share	126,635,710		132,299,665		127,504,651		132,118,689
Basic (loss) earnings per common share attributable to Rayonier Inc.:
Continuing operations	($0.01	)	$0.03		$0.13		$0.12
Discontinued operations	—		0.10		—		0.34
Net (loss) income	($0.01	)	$0.13		$0.13		$0.46
Diluted (loss) earnings per common share attributable to Rayonier Inc.:
Continuing operations	($0.01	)	$0.03		$0.13		$0.11
Discontinued operations	—		0.09		—		0.33
Net (loss) income	($0.01	)	$0.12		$0.13		$0.44

7

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

	Three Months Ended June 30, — 2015	2014	Six Months Ended June 30, — 2015	2014
Anti-dilutive shares excluded from the computations of diluted (loss) earnings per share:
Stock options, performance and restricted shares (b)	158,191	507,044	937,236	499,193
Assumed conversion of exchangeable note hedges (a)	—	2,631,514	702,301	2,579,402
Assumed conversion of Senior Exchangeable Notes due 2015 (b)	501,189	—	—	—
Total	659,380	3,138,558	1,639,537	3,078,595

(a) Rayonier will not issue additional shares upon future exchange or maturity of the Senior Exchangeable Notes due 2015 (the “2015 Notes”) due to offsetting hedges. ASC 260, Earnings Per Share requires the assumed conversion of the 2015 Notes to be included in dilutive shares if the average stock price for the period exceeds the strike price, while the assumed conversion of the hedges is excluded since they are anti-dilutive. The full dilutive effect of the 2015 Notes was included for all periods presented, except for second quarter 2015 due to the loss incurred in that period.

Rayonier will distribute additional shares upon maturity of the warrants sold in conjunction with the 2015 Notes if the stock price exceeds $28.11 per share. The exchange price on the warrants is lower than periods prior to second quarter 2014 as it has been adjusted to reflect the spin-off of the Performance Fibers business. The warrants were not dilutive for the three and six months ended June 30, 2015 as the average stock price for these periods did not exceed the strike price. For further information, see Note 13 — Debt in the 2014 Form 10-K and Note 15 — Debt of this Form 10-Q.

(b) For the three months ended June 30, 2015, the assumed conversion of the 2015 Notes, as well as incremental shares related to stock options, performance shares, and restricted shares, were not included in the computation of diluted loss per share as their inclusion would have an anti-dilutive effect.

4. INCOME TAXES

The operations conducted by the Company’s real estate investment trust (“REIT”) entities are generally not subject to U.S. federal and state income taxation. Non-REIT qualifying operations are conducted by the Company’s taxable REIT subsidiaries. Prior to the June 27, 2014 spin-off of Rayonier Advanced Materials, the Company’s taxable REIT subsidiaries (“TRS”) operations included the Performance Fibers business. As such, during 2014 and prior periods the income tax benefit from continuing operations was significantly impacted by the TRS businesses. Subsequent to the spin-off, the primary businesses performed in Rayonier’s taxable REIT subsidiaries include log trading and certain real estate activities, such as the sale and entitlement of development HBU properties.

Provision for Income Taxes from Continuing Operations

The Company’s effective tax rate is below the 35 percent U.S. statutory rate due to tax benefits associated with being a REIT. The income tax benefit for the three and six months ended June 30, 2015 is principally related to the Matariki Forestry Group joint venture (the “New Zealand JV”). The prior year period’s benefit was due to losses at Rayonier's taxable operations primarily from interest and general administrative expenses not allowed to be allocated to the discontinued operations of the Performance Fibers business and is not comparable to the current year.

8

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

The table below reconciles the U.S. statutory rate to the Company’s effective tax rate for each period presented:

	Three Months Ended June 30,
	2015				2014
Income tax (benefit) expense at federal statutory rate	($1,105	)	35.0	%	$6,153		35.0	%
REIT income and taxable losses	1,077		(34.1	)	(5,625	)	(32.0	)
Foreign operations	101		(3.2	)	(728	)	(4.1	)
Net operating loss valuation allowance	(216	)	6.9		—		—
Non-deductible real estate losses	—		—		590		3.4
Other	(153	)	4.8		119		0.6
Income tax (benefit) expense before discrete items	($296	)	9.4	%	$509		2.9	%
CBPC valuation allowance	—		—		15,574		88.7
Spin-off related costs	—		—		797		4.5
Deferred tax inventory valuations	—		—		(3,293	)	(18.7	)
Other	—		—		(31	)	(0.3	)
Income tax (benefit) expense as reported for continuing operations	($296	)	9.4	%	$13,556		77.1	%

	Six Months Ended June 30,
	2015				2014
Income tax expense at federal statutory rate	$5,093		35.0	%	$7,112		35.0	%
REIT income and taxable losses	(6,894	)	(47.4	)	(13,823	)	(69.3	)
Foreign operations	(645	)	(4.4	)	(841	)	(0.3	)
Net operating loss valuation allowance	1,386		9.5		—		—
Non-deductible real estate losses	—		—		681		1.2
Other	292		2.0		138		0.3
Income tax benefit before discrete items	($768	)	(5.3	)%	($6,733	)	(33.1	)%
CBPC valuation allowance	—		—		15,574		76.6
Spin-off related costs	—		—		797		3.9
Deferred tax inventory valuations	—		—		(3,293	)	(16.2	)
Other	—		—		(384	)	(1.9	)
Income tax (benefit) expense as reported for continuing operations	($768	)	(5.3	)%	$5,961		29.3	%

Provision for Income Taxes from Discontinued Operations

On June 27, 2014, Rayonier completed the spin-off of its Performance Fibers business. For the three and six months ended June 30, 2014 , income tax expense related to Performance Fibers discontinued operations was $6.0 million and $21.2 million , respectively. See Note 2 — Discontinued Operations for additional information on the spin-off of the Performance Fibers business.

9

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

5. HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT COSTS

Rayonier continuously assesses potential alternative uses of its timberlands, as some properties may become more valuable for development, residential, recreation or other purposes. The Company periodically transfers, via a sale or contribution from the REIT to TRS, HBU timberlands to enable land-use entitlement, development or marketing activities. The Company also acquires 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, the Company also selectively pursues 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, Rayonier also invests in targeted infrastructure improvements, such as roadways and utilities, to accelerate the marketability and improve the value of such properties.

An analysis of higher and better use timberlands and real estate development costs from December 31, 2014 to June 30, 2015 is shown below:

	Higher and Better Use Timberlands and Real Estate Development Costs — Land and Timber		Development Costs		Total
Non-current portion at December 31, 2014	$65,959		$11,474		$77,433
Plus: Current portion (a)	4,875		57		4,932
Total Balance at December 31, 2014	70,834		11,531		82,365
Non-cash cost of land sold and real estate development costs recovered upon sale	(4,205	)	(57	)	(4,262	)
Timber depletion from harvesting activities and basis of timber sold in real estate sales	(1,340	)	—		(1,340	)
Capitalized real estate development costs (b)	—		926		926
Capital expenditures (silviculture)	100		—		100
Acquisitions	—		—		—
Transfers	—		—		—
Other	—		(28	)	(28	)
Total Balance at June 30, 2015	65,389		12,372		77,761
Less: Current portion (a)	(7,488	)	(547	)	(8,035	)
Non-current portion at June 30, 2015	$57,901		$11,825		$69,726

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

(b) Capitalized real estate development costs for the six months ended June 30, 2015 of $926,000 consisted of $578,000 in cash outflows and a $348,000 change in accrued spending.

1. RESTRICTED DEPOSITS

In order to qualify for like-kind exchange (“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. As of June 30, 2015 and December 31, 2014 , the Company had $2.5 million and $6.7 million , respectively, of proceeds from real estate sales classified as restricted cash in Other Assets, which were deposited with an LKE intermediary.

10

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

1. SHAREHOLDERS’ EQUITY

An analysis of shareholders’ equity for the six months ended June 30, 2015 and the year ended December 31, 2014 is shown below (share amounts not in thousands):

	Rayonier Inc. Shareholders’ Equity
	Common Shares				Retained Earnings		Accumulated Other Comprehensive Income/(Loss)		Non-controlling Interest		Total Shareholders’ Equity
	Shares (a)		Amount
Balance, December 31, 2013	126,257,870		$692,100		$1,015,209		($46,139	)	$94,073		$1,755,243
Net income (loss)	—		—		99,337		—		(1,491	)	97,846
Dividends ($2.03 per share)	—		—		(256,861	)	—		—		(256,861	)
Contribution to Rayonier Advanced Materials	—		(301	)	(61,318	)	80,749		—		19,130
Adjustments to Rayonier Advanced Materials (b)	—		—		(5,670	)	(2,556	)	—		(8,226	)
Issuance of shares under incentive stock plans	561,701		5,579		—		—		—		5,579
Stock-based compensation	—		7,869		—		—		—		7,869
Tax deficiency on stock-based compensation	—		(791	)	—		—		—		(791	)
Repurchase of common shares	(46,474	)	(1,858	)	—		—		—		(1,858	)
Net loss from pension and postretirement plans	—		—		—		(24,147	)	—		(24,147	)
Noncontrolling interest redemption of shares	—		—		—		—		(931	)	(931	)
Foreign currency translation adjustment	—		—		—		(11,526	)	(4,321	)	(15,847	)
Joint venture cash flow hedges	—		—		—		(1,206	)	(649	)	(1,855	)
Balance, December 31, 2014	126,773,097		$702,598		$790,697		($4,825	)	$86,681		$1,575,151
Net income (loss)	—		—		16,211		—		(891	)	15,320
Dividends ($0.50 per share)	—		—		(63,380	)	—		—		(63,380	)
Issuance of shares under incentive stock plans	134,448		718		—		—		—		718
Stock-based compensation	—		2,588		—		—		—		2,588
Tax deficiency on stock-based compensation	—		(272	)	—		—		—		(272	)
Repurchase of common shares (c) (d)	(415,484	)	(10,797	)	—		—		—		(10,797	)
Net gain from pension and postretirement plans	—		—		—		1,524		—		1,524
Foreign currency translation adjustment	—		—		—		(28,438	)	(11,279	)	(39,717	)
Joint venture cash flow hedges	—		—		—		(2,511	)	(1,352	)	(3,863	)
Balance, June 30, 2015	126,492,061		$694,835		$743,528		($34,250	)	$73,159		$1,477,272

(a) The Company’s common shares are registered in North Carolina and have a $0.00 par value.

(b) Primarily relates to adjustments made to the Rayonier Advanced Materials contribution as income taxes and pension and postretirement plan assets and obligations were finalized.

(c) During the second quarter the Company repurchased approximately $10.7 million of common stock at an average price of $25.94 per share. As of June 30, 2015 , the Company had 126.5 million shares of common stock outstanding and $89.3 million remaining in its share repurchase authorization announced in June 2015.

(d) Includes shares of the Company’s common stock purchased from employees in non-open market transactions. The shares of stock 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 restricted stock awards under the Company’s stock incentive plan. The price per share surrendered is based on the closing price of the company’s stock on the respective vesting dates of the awards.

1. SEGMENT AND GEOGRAPHICAL INFORMATION

On June 27, 2014, the Company spun-off its Performance Fibers business and its operations are shown as discontinued operations for all periods presented. See Note 2 — Discontinued Operations for additional information. Effective with the fourth quarter of 2014, the Company realigned its segments considering the economic characteristics of each business unit and the way management internally evaluates business performance and makes capital allocation decisions. All prior period amounts have been reclassified to reflect the newly realigned segment structure. See Item 2 — Management’s Discussion and Analysis of Financial Condition — Our Company and Results of Operations for additional information.

Sales between operating segments are made based on estimated fair market value. Intercompany sales, purchases and profits (losses) are eliminated in consolidation. The Company evaluates financial performance based on segment operating income and Adjusted EBITDA. Asset information is not reported by segment, as the company does not produce asset information by segment internally.

Operating income as presented in the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income is equal to segment income. Certain income (loss) items in the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income are not allocated to segments. These items, which include gains (losses) from certain asset dispositions, interest income (expense), miscellaneous income (expense) and income tax (expense) benefit, are not considered by management to be part of segment operations.

Segment information for the three and six months ended June 30, 2015 and 2014 were as follows:

SALES	Three Months Ended June 30, — 2015	2014		Six Months Ended June 30, — 2015	2014
Southern Timber	$32,681	$31,525		$68,212	$65,402
Pacific Northwest Timber	17,102	25,053		36,256	58,090
New Zealand Timber	39,223	44,543		80,417	82,307
Real Estate	6,945	34,017		30,736	39,547
Trading	19,850	29,224		40,485	64,910
Intersegment Eliminations	—	(1,217	)	—	(3,924	)
Total	$115,801	$163,145		$256,106	$306,332

OPERATING INCOME	Three Months Ended June 30, — 2015		2014		Six Months Ended June 30, — 2015		2014
Southern Timber	$11,777		$8,886		$24,190		$19,379
Pacific Northwest Timber	1,687		8,785		4,275		21,427
New Zealand Timber	(945	)	2,249		4,749		4,660
Real Estate	1,421		27,764		14,003		28,489
Trading	(84	)	(132	)	186		(544	)
Corporate and other	(7,333	)	(9,975	)	(13,133	)	(21,408	)
Total Operating Income	$6,523		$37,577		34,270		52,003
Unallocated interest expense and other	(9,679	)	($19,997	)	(19,718	)	(31,683	)
Total (loss) income from continuing operations before income taxes	($3,156	)	$17,580		$14,552		$20,320

11

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

DEPRECIATION, DEPLETION AND AMORTIZATION	Three Months Ended June 30, — 2015	2014	Six Months Ended June 30, — 2015	2014
Southern Timber	$12,650	$10,709	$26,951	$22,705
Pacific Northwest Timber	2,941	5,194	6,731	11,492
New Zealand Timber	7,183	7,669	15,186	14,163
Real Estate	1,006	6,422	4,818	7,333
Trading	—	—	—	—
Corporate and other	70	341	140	623
Total	$23,850	$30,335	$53,826	$56,316

NON-CASH COST OF LAND SOLD AND REAL ESTATE COSTS RECOVERED UPON SALE	Three Months Ended June 30, — 2015	2014		Six Months Ended June 30, — 2015	2014
Southern Timber	—	—		—	—
Pacific Northwest Timber	—	—		—	—
New Zealand Timber	—	(2	)	—	2,096
Real Estate	1,191	2,324		4,938	3,302
Trading	—	—		—	—
Corporate and other	—	—		—	—
Total	$1,191	$2,322		$4,938	$5,398

1. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

The Company is exposed to market risk related to potential fluctuations in foreign currency exchange rates and interest rates. The Company’s New Zealand JV uses derivative financial instruments to mitigate the financial impact of exposure to these risks. The Company also uses derivative financial instruments to mitigate exposure to foreign currency risk due to the translation of the investment in Rayonier’s New Zealand-based operations from New Zealand dollars to U.S. dollars.

Accounting for derivative financial instruments is governed by Accounting Standards Codification Topic 815, Derivatives and Hedging , (“ASC 815”). In accordance with ASC 815, the Company records its 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 Company’s investment in New Zealand is partially or completely liquidated. The ineffective portion of any hedge as well as 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. The Company’s hedge ineffectiveness was immaterial for all periods presented.

Foreign Currency Exchange and Option Contracts

The functional currency of Rayonier’s wholly owned subsidiary, Rayonier New Zealand Limited (“RNZ”) and the New Zealand JV is the New Zealand dollar. The New Zealand JV is exposed to foreign currency risk on export sales and ocean freight payments which are mainly denominated in U.S. dollars. The timber operations of the New Zealand JV are typically hedged 50 percent to 90 percent of its estimated foreign currency exposure with respect to the following three months forecasted sales and purchases, 50 percent to 75 percent of forecasted sales and purchases for the forward three to 12 months and up to 50 percent of the forward 12 to 18 months. Foreign currency exposure from the New Zealand JV’s trading operations is typically hedged based on the following three months forecasted sales and purchases. As of June 30, 2015 , foreign currency exchange contracts and foreign currency option contracts had maturity dates through December 2016.

12

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

Foreign currency exchange and option contracts hedging foreign currency risk on export sales and ocean freight payments that were entered into subsequent to the Company’s acquisition of a majority interest in the New Zealand JV qualify for cash flow hedge accounting. 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. The fair value of foreign currency option contracts is based on a mark-to-market calculation using the Black-Scholes option pricing model.

In December 2014, the Company entered into a foreign currency exchange contract to mitigate the risk of fluctuations in foreign currency exchange rates when translating RNZ’s balance sheet to U.S. dollars. This contract hedges a portion of the Company’s net investment in New Zealand and qualifies as a net investment hedge. The fair value of the foreign currency exchange contract 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. The ineffectiveness of the foreign currency exchange contract is measured using the spot rate method, whereby the change in the fair value of the contract, other than the change attributable to movements in the spot rate, is excluded from the measure of hedge ineffectiveness and is reported directly in earnings. The Company does not expect any ineffectiveness or changes other than those attributable to movements in the spot rate as the critical risks of the forward contract and the net investment in RNZ coincide. This foreign currency exchange contract matures on December 21, 2015.

Interest Rate Swaps

The Company uses interest rate swaps to manage the New Zealand JV’s exposure to interest rate movements on its variable rate debt attributable to changes in the New Zealand Bank bill rate. By converting a portion of these borrowings from floating rates to fixed rates the Company has reduced the impact of interest rate changes on its expected future cash outflows. As of June 30, 2015 , the Company’s interest rate contracts hedged 81 percent of the New Zealand JV’s variable rate debt and had maturity dates through January 2020 .

See Note 15 — Debt for discussion of debt refinancing and planned recapitalization of the Company’s New Zealand joint venture subsequent to June 30, 2015 .

Fuel Hedge Contracts

The Company has historically used fuel hedge contracts to manage its New Zealand JV’s exposure to changes in New Zealand’s domestic diesel prices. Due to the low volume of diesel fuel purchases made by the New Zealand JV in 2013, the Company decided to no longer hedge its diesel fuel purchases effective November 2013. There were no contracts remaining as of December 31, 2014.

The following table demonstrates the impact of the Company’s derivatives on the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income for the six months ended June 30, 2015 and 2014 .

	Income Statement Location	Three Months Ended June 30, — 2015		2014
Derivatives designated as cash flow hedges:
Foreign currency exchange contracts	Other comprehensive (loss) income	($1,621	)	($818	)
Foreign currency option contracts	Other comprehensive (loss) income	(2,658	)	(504	)
Derivative designated as a net investment hedge:
Foreign currency exchange contract	Other comprehensive (loss) income	$2,173		—
Derivatives not designated as hedging instruments:
Foreign currency exchange contracts	Other operating (income) expense	—		—
Foreign currency option contracts	Other operating (income) expense	546		—
Interest rate swaps	Interest income and miscellaneous expense, net	(1,417	)	(729	)
Fuel hedge contracts	Cost of sales (benefit)	—		(92	)

13

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

	Income Statement Location	Six Months Ended June 30, — 2015		2014
Derivatives designated as cash flow hedges:
Foreign currency exchange contracts	Other comprehensive (loss) income	($2,308	)	$669
Foreign currency option contracts	Other comprehensive (loss) income	(3,339	)	221
Derivative designated as a net investment hedge:
Foreign currency exchange contract	Other comprehensive (loss) income	3,107		—
Derivatives not designated as hedging instruments:
Foreign currency exchange contracts	Other operating (income) expense	—		25
Foreign currency option contracts	Other operating (income) expense	546		7
Interest rate swaps	Interest and miscellaneous (expense) income, net	(3,273	)	(1,862	)
Fuel hedge contracts	Cost of sales (benefit)	—		225

During the next 12 months, the amount of the June 30, 2015 AOCI balance, net of tax, expected to be reclassified into earnings as a result of the maturation of the Company’s derivative instruments is a loss of approximately $4.1 million .

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

	Notional Amount — June 30, 2015	December 31, 2014
Derivatives designated as cash flow hedges:
Foreign currency exchange contracts	$28,200	$28,540
Foreign currency option contracts	135,700	79,400
Derivative designated as a net investment hedge:
Foreign currency exchange contract	23,828	27,419
Derivatives not designated as hedging instruments:
Interest rate swaps	129,352	161,968

14

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(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:

	Location on Balance Sheet	Fair Value Assets / (Liabilities) (a)
		June 30, 2015		December 31, 2014
Derivatives designated as cash flow hedges:
Foreign currency exchange contracts	Prepaid and other current assets	—		$132
	Other assets	—		59
	Other current liabilities	(2,197	)	(272	)
	Other non-current liabilities	(639	)	—
Foreign currency option contracts	Prepaid and other current assets	—		299
	Other assets	—		198
	Other current liabilities	(3,614	)	(1,439	)
	Other non-current liabilities	(653	)	(196	)
Derivative designated as a net investment hedge:
Foreign currency exchange contract	Prepaid and other current assets	2,884		—
	Other current liabilities	—		(223	)
Derivatives not designated as hedging instruments:
Interest rate swaps	Other non-current liabilities	(8,271	)	(7,247	)
Total derivative contracts:
Prepaid and other current assets		$2,884		$431
Other assets		—		257
Total derivative assets		2,884		688
Other current liabilities		(5,811	)	(1,934	)
Other non-current liabilities		(9,563	)	(7,443	)
Total derivative liabilities		($15,374	)	($9,377	)

(a) See Note 10 — Fair Value Measurements for further information on the fair value of the Company’s 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. The Company’s derivative financial instruments are not subject to master netting arrangements, which would allow the right of offset.

15

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

1. FAIR VALUE MEASUREMENTS

Fair Value of Financial Instruments

The Accounting Standards Codification established a three-level hierarchy that prioritizes the inputs used to measure fair value 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 financial instruments held by the Company at June 30, 2015 and December 31, 2014 , using market information and what the Company believes to be appropriate valuation methodologies under generally accepted accounting principles:

Asset (liability)	June 30, 2015 — Carrying Amount		Fair Value			December 31, 2014 — Carrying Amount		Fair Value
			Level 1	Level 2				Level 1	Level 2
Cash and cash equivalents	$91,632		$91,632	—		$161,558		$161,558	—
Restricted cash (a)	2,528		2,528	—		6,688		6,688	—
Current maturities of long-term debt	(30,000	)	—	(32,812	)	(129,706	)	—	(156,762	)
Long-term debt	(722,353	)	—	(725,543	)	(621,849	)	—	(628,476	)
Interest rate swaps (b)	(8,271	)	—	(8,271	)	(7,247	)	—	(7,247	)
Foreign currency exchange contracts (b)	48		—	48		(304	)	—	(304	)
Foreign currency option contracts (b)	(4,267	)	—	(4,267	)	(1,138	)	—	(1,138	)

(a) Restricted cash is recorded in “Other Assets” and represents the proceeds from LKE sales deposited with a third-party intermediary.

(b) See Note 9 — Derivative Financial Instruments and Hedging Activities for information regarding the Balance Sheet classification of the Company’s derivative financial instruments.

Rayonier uses the following methods and assumptions in estimating the fair value of its financial instruments:

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

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

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

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

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

16

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

1. GUARANTEES

The Company provides financial guarantees as required by creditors, insurance programs, and various governmental agencies. As of June 30, 2015 , the following financial guarantees were outstanding:

Financial Commitments	Maximum Potential Payment	Carrying Amount of Associated Liability
Standby letters of credit (a)	$16,685	$15,000
Guarantees (b)	2,254	43
Surety bonds (c)	776	—
Total financial commitments	$19,715	$15,043

(a) Approximately $15 million of the standby letters of credit serve as credit support for industrial revenue bonds. The remaining letters of credit support various insurance related agreements, primarily workers’ compensation. These letters of credit will expire at various dates during 2015 and will be renewed as required.

(b) In conjunction with a timberland sale and note monetization in 2004, the Company issued a make-whole agreement pursuant to which it guaranteed $2.3 million of obligations of a special-purpose entity that was established to complete the monetization. At June 30, 2015 , the Company has a de minimis liability to reflect the fair market value of its obligation to perform under the make-whole agreement.

(c) Rayonier issues surety bonds primarily to secure timber harvesting obligations in the State of Washington and to provide collateral for the Company’s workers’ compensation self-insurance program in that state. These surety bonds expire at various dates during 2015 and 2016 and are expected to be renewed as required.

1. CONTINGENCIES

Following the Company’s November 10, 2014 earnings release and filing of the restated interim financial statements for the quarterly periods ended March 31, 2014 and June 30, 2014 (the “November 2014 Announcement”), shareholders of the Company filed five putative class actions against the Company and Paul G. Boynton, Hans E. Vanden Noort, David L. Nunes, and H. Edwin Kiker arising from circumstances described in the November 2014 Announcement, entitled respectively:

• Sating v. Rayonier Inc. et al , Civil Action No. 3:14-cv-01395; filed November 12, 2014 in the United States District Court for the Middle District of Florida;

• Keasler v. Rayonier Inc. et al , Civil Action No. 3:14-cv-01398, filed November 13, 2014 in the United States District Court for the Middle District of Florida;

• Lake Worth Firefighters’ Pension Trust Fund v. Rayonier Inc. et al , Civil Action No. 3:14-cv-01403, filed November 13, 2014 in the United States District Court for the Middle District of Florida;

• Christie v. Rayonier Inc. et al , Civil Action No. 3:14-cv-01429, filed November 21, 2014 in the United States District Court for the Middle District of Florida; and

• Brown v. Rayonier Inc. et al , Civil Action No. 1:14-cv-08986, initially filed in the United States District Court for the Southern District of New York and later transferred to the United States District Court for the Middle District of Florida and assigned as Civil Action No. 3:14-cv-01474.

17

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

On January 9, 2015, the five securities actions were consolidated into one putative class action entitled In re Rayonier Inc. Securities Litigation , Case No. 3:14-cv-01395-TJC-JBT, in the United States District Court for the Middle District of Florida. The plaintiffs alleged that the defendants made false and/or misleading statements in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The plaintiffs sought unspecified monetary damages and attorneys’ fees and costs. Two shareholders, the Pension Trust Fund for Operating Engineers and the Lake Worth Firefighters’ Pension Trust Fund moved for appointment as lead plaintiff on January 12, 2015, which was granted on February 25, 2015. On April 7, 2015, the plaintiffs filed a Consolidated Class Action Complaint (the “Amended Complaint”). In the Amended Complaint, plaintiffs added allegations as to and added as a defendant N. Lynn Wilson, a former officer of Rayonier. With the filing of the Amended Complaint, David L. Nunes and H. Edwin Kiker were dropped from the case as defendants. Defendants timely filed Motions to Dismiss on May 15, 2015. The court has set a hearing on the motion for August 25, 2015. At this preliminary stage, the Company cannot determine whether there is a reasonable likelihood a material loss has been incurred nor can the range of any such loss be estimated.

On November 26, 2014, December 29, 2014, January 26, 2015, February 13, 2015, and May 12, 2015, the Company received separate letters from shareholders requesting that the Company investigate or pursue derivative claims against certain officers and directors related to the November 2014 Announcement. Although these demands do not identify any claims against the Company, the Company could potentially incur certain obligations to advance expenses and provide indemnification to certain current and former officers and directors of the Company. The Company may also incur expenses as a result of any costs arising from the investigation of the claims alleged in the various demands. At this preliminary stage, the ultimate outcome of these matters cannot be predicted, nor can the range of potential expenses the Company may incur as a result of the obligations identified above be estimated.

In November 2014, the Company received a subpoena from the SEC seeking documents related to the Company’s amended reports filed with the SEC on November 10, 2014. The Company is cooperating with the SEC and complying with the subpoena. The Company does not currently believe that the investigation will have a material impact on the Company’s financial condition, results of operations, or cash flow, but cannot predict the timing or outcome of the SEC investigation.

The Company has also been named as a defendant in various other lawsuits and claims arising in the normal course of business. While the Company has procured reasonable and customary insurance covering risks normally occurring in connection with its businesses, it has in certain cases retained some risk through the operation of self-insurance, primarily in the areas of workers’ compensation, property insurance and general liability. These pending lawsuits and claims, either individually or in the aggregate, are not expected to have a material adverse effect on the Company’s financial position, results of operations, or cash flow.

18

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

1. EMPLOYEE BENEFIT PLANS

The Company has one qualified non-contributory defined benefit pension plan covering a portion of its employees and an unfunded plan that provides benefits in excess of amounts allowable under current tax law in the qualified plan . Currently, the pension plans are closed to new participants. 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. In the first quarter of 2015, the Company lowered its return on asset assumption from 8.5 percent to 7.7 percent for 2015.

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

	Pension				Postretirement
	Three Months Ended June 30,				Three Months Ended June 30,
	2015		2014		2015	2014
Components of Net Periodic Benefit Cost
Service cost	$371		$1,544		$3	$147
Interest cost	830		4,452		13	199
Expected return on plan assets	(1,007	)	(6,330	)	—	—
Amortization of prior service cost	3		277		—	4
Amortization of losses	916		2,603		3	116
Amortization of negative plan amendment	—		—		—	(133	)
Net periodic benefit cost (a)	$1,113		$2,546		$19	$333

	Pension				Postretirement
	Six Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015	2014
Components of Net Periodic Benefit Cost
Service cost	$742		$3,168		$6	$326
Interest cost	1,659		9,135		26	405
Expected return on plan assets	(2,014	)	(12,988	)	—	—
Amortization of prior service cost	6		569		—	8
Amortization of losses	1,849		5,340		6	245
Amortization of negative plan amendment	—		—		—	(267	)
Net periodic benefit cost (a)	$2,242		$5,224		$38	$717

(a) Net periodic benefit cost for the three and six months ended June 30, 2014 includes $2.0 million and $4.0 million , respectively, recorded in “Income from discontinued operations, net” on the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income.

In 2015 , the Company has no mandatory pension contribution requirement.

19

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

1. INVENTORY

In the first quarter of 2015, Rayonier reclassified seeds and seedlings from Inventory and Other Assets to Timber and Timberlands, Net to better reflect the intended use of the assets, as discussed at Note 1 — Basis of Presentation . As of June 30, 2015 and December 31, 2014 , Rayonier’s inventory was solely comprised of finished goods, as follows:

	June 30, 2015	December 31, 2014
Finished goods inventory
Real estate inventory (a)	$8,035	$4,932
Log inventory	5,327	3,451
Total inventory	$13,362	$8,383

(a) Represents HBU real estate (including capitalized development costs) expected to be sold within 12 months.

1. DEBT

As of March 31, 2015 , the Senior Exchangeable Notes due 2015 were exchangeable at the option of the holders for the calendar quarter ended June 30, 2015. According to the indenture, the notes became exchangeable on May 15, 2015 through maturity. The notes mature in August of 2015 and the Company has both the ability and intent to refinance $100 million of these notes. Therefore, this amount is classified as long-term debt. Approximately $30 million of the exchangeable notes are expected to be paid with the Company’s available cash and, as such, are classified as current maturities of long-term debt as of June 30, 2015 .

Net draws of $ 27.0 million were made in the second quarter of 2015 on the revolving credit facility. At June 30, 2015 , the Company had available borrowings of $ 153.2 million under the revolving credit facility, net of $1.8 million to secure its outstanding letters of credit, and additional draws available of $ 100 million under the term credit agreement.

As of June 30, 2015 , the New Zealand JV had $160 million of long-term variable rate debt maturing in September 2016. This debt is subject to interest rate risk resulting from changes in the 90 -day New Zealand Bank bill rate (“BKBM”). However, the New Zealand JV uses interest rate swaps to manage its exposure to interest rate movements on its bank loan by swapping a portion of these borrowings from floating rates to fixed rates. The notional amount of the outstanding interest rate swap contracts at June 30, 2015 was $129.0 million , or 81 percent of the variable rate debt. The interest rate swap contracts have maturities extending through January 2020 . The periodic interest rate on New Zealand JV debt is BKBM plus 80 basis points with an additional 80 basis point credit line fee. The Company estimates the periodic effective interest rate on New Zealand JV debt for the second quarter was approximately 6.5% after consideration of interest rate swaps.

During the six months ended June 30, 2015 , the New Zealand JV had made additional borrowings and repayments of $2.1 million on its working capital facility. Additional draws totaling $16 million remain available on the working capital facility. In addition, the New Zealand JV paid $1.4 million of its shareholder loan held with the non-controlling interest party. Favorable changes in exchange rates through June 30, 2015 decreased debt on a U.S. dollar basis for the revolving facility and shareholder loan by $24.1 million and $3.5 million , respectively.

There were no other significant changes to the Company’s outstanding debt as reported in Note 13 — Debt in the 2014 Form 10-K.

20

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

Subsequent Event

On August 5, 2015, the Company announced the closing of a nine -year $ 350 million term loan facility and a five -year $ 200 million revolving credit facility (the “Credit Agreement”). In addition, the Company has entered into an interest rate swap transaction to fix the cost of the term loan facility over its nine -year term. Based on the swap rate, the company’s current leverage ratio and the pricing grid, the all-in fixed-rate cost of the term loan facility (net of estimated patronage payments) is expected to be approximately 3.3% and the floating-rate cost of the revolving credit facility will be LIBOR + 1.25% . The Company intends to use approximately $160 million of proceeds from the term loan facility to fund a capital infusion into the New Zealand JV, which the New Zealand JV will in turn use for repayment of all outstanding amounts under its existing NZ $235 million credit facility plus NZ $7 million of related fees and expenses (assuming an exchange rate of US$0.66 per NZ $1.00 ). The investment into the New Zealand JV is subject to certain closing conditions, including New Zealand Overseas Investment Office approval and the preparation of customary transaction documents. The remaining proceeds of the term loan facility will be used to fund repayment of the company’s 4.50% senior exchangeable notes maturing August 2015 (approximately $131 million ), to fund repayment of amounts outstanding under the Company’s existing revolving credit facility (approximately $45 million ), to pay transaction fees and expenses (approximately $2 million ), and for cash and general corporate purposes (approximately $12 million ). In order to provide timing flexibility with respect to the New Zealand JV recapitalization, the term loan facility provides that proceeds can be drawn in up to two advances for up to eight months post-closing. The Credit Agreement contains financial covenants related to leverage and interest coverage, as well as other affirmative and negative covenants relating to, among other things, dividends, liens, mergers, dispositions of timber and timberlands, subsidiary debt, sales and issuances of capital stock of subsidiaries, and affiliate transactions.

1. ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

The following table summarizes the changes in AOCI by component for the six months ended June 30, 2015 and the year ended December 31, 2014. All amounts are presented net of tax and exclude portions attributable to noncontrolling interest.

Balance as of December 31, 2013	Foreign currency translation gains/ (losses) — $36,914		Net investment hedge of New Zealand JV — —		New Zealand JV cash flow hedges — ($342	)	Unrecognized components of employee benefit plans — ($82,711	)	Total — ($46,139	)
Other comprehensive income/(loss) before reclassifications	(11,381	)	(145	)	510		47,938	(a)	36,922
Amounts reclassified from accumulated other comprehensive loss	—		—		(1,716	)	6,108	(b)	4,392
Net other comprehensive income/(loss)	(11,381	)	(145	)	(1,206	)	54,046		41,314
Balance as of December 31, 2014	$25,533		($145	)	($1,548	)	($28,665	)	($4,825	)
Other comprehensive income/(loss) before reclassifications	(30,456	)	2,019		(3,700	)	—		(32,137	)
Amounts reclassified from accumulated other comprehensive loss	—		—		1,188		1,524	(c)	2,712
Net other comprehensive income/(loss)	(30,456	)	2,019		(2,512	)	1,524		(29,425	)
Balance as of June 30, 2015	($4,923	)	$1,874		($4,060	)	($27,141	)	($34,250	)

(a) Reflects $ 78 million , net of taxes, of comprehensive income due to the transfer of losses to Rayonier Advanced Materials Pension Plans. This comprehensive income was offset by $ 30 million , net of taxes, of losses as a result of revaluations required due to the spin-off at December 31, 2014. See Note 22 — Employee Benefit Plans in the 2014 Form 10-K for additional information.

(b) This accumulated other comprehensive income component is comprised of $ 5 million from the computation of net periodic pension cost and the $1 million write-off of a deferred tax asset related to the revaluation and transfer of liabilities as a result of the spin-off.

(c) This component of other comprehensive income is included in the computation of net periodic pension cost. See Note 13 — Employee Benefit Plans for additional information.

21

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(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 six months ended June 30, 2015 and June 30, 2014:

Details about accumulated other comprehensive income components	Amount reclassified from accumulated other comprehensive income				Affected line item in the income statement
	June 30, 2015		June 30, 2014
Realized loss (gain) on foreign currency exchange contracts	$1,504		($2,542	)	Other operating income, net
Realized loss (gain) on foreign currency option contracts	1,035		(937	)	Other operating income, net
Noncontrolling interest	(889	)	1,218		Comprehensive (loss) income attributable to noncontrolling interest
Income tax (benefit) expense on loss from foreign currency contracts	(462	)	254		Income tax benefit
Net gain on cash flow hedges reclassified from accumulated other comprehensive income	1,188		(2,007	)
Income tax expense on pension plan contributed to Rayonier Advanced Materials	—		843		Income tax expense
Net loss (gain) from accumulated other comprehensive income	$1,188		($1,164	)

1. OTHER OPERATING INCOME, NET

Other operating income, net comprised the following:

	Three Months Ended June 30, — 2015		2014		Six Months Ended June 30, — 2015		2014
Lease income, primarily from hunting leases	$5,890		$3,966		$9,999		$7,003
Other non-timber income	688		440		2,052		993
Foreign currency income (loss)	108		1,232		215		(255	)
Gain (loss) on sale or disposal of property, plant & equipment	3		(20	)	3		(20	)
(Loss) gain on foreign currency exchange contracts	(645	)	—		(994	)	(32	)
Bankruptcy claim settlement	—		5,779		—		5,779
Gain (loss) on sale of carbon credits (a)	352		(307	)	352		(307	)
Miscellaneous income (expense), net	742		299		1,086		(1,397	)
Total	$7,138		$11,389		$12,713		$11,764

(a) Loss in 2014 reflects surrender of carbon credit units.

22

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

1. CONSOLIDATING FINANCIAL STATEMENTS

The condensed consolidating financial information below follows the same accounting policies as described in the consolidated financial statements, except for the use of the equity method of accounting to reflect ownership interests in wholly-owned subsidiaries, which are eliminated upon consolidation, and the allocation of certain expenses of Rayonier Inc. incurred for the benefit of its subsidiaries.

In August 2009 , Rayonier TRS Holdings Inc. issued $172.5 million of 4.50% Senior Exchangeable Notes due August 2015 . The notes are guaranteed by Rayonier Inc. as the Parent Guarantor and Rayonier Operating Company LLC (“ROC”) as the Subsidiary Guarantor. In connection with these exchangeable notes, the Company provides the following condensed consolidating financial information in accordance with SEC Regulation S-X Rule 3-10, Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered .

The subsidiary issuer and subsidiary guarantor are wholly-owned by the Parent Company, Rayonier Inc. The notes are fully and unconditionally guaranteed on a joint and several basis by the guarantor subsidiary and Rayonier Inc.

	CONDENSED CONSOLIDATING STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME
	For the Three Months Ended June 30, 2015
	Rayonier Inc. (Parent Guarantor)		ROC (Subsidiary Guarantor)		Rayonier TRS Holdings Inc. (Issuer)		Non- guarantors		Consolidating Adjustments		Total Consolidated
SALES	—		—		—		$115,801		—		$115,801
Costs and Expenses
Cost of sales	—		—		—		103,689		—		103,689
Selling and general expenses	—		6,330		—		6,397		—		12,727
Other operating expense (income), net	—		(461	)	—		(6,677	)	—		(7,138	)
	—		5,869		—		103,409		—		109,278
OPERATING (LOSS) INCOME	—		(5,869	)	—		12,392		—		6,523
Interest expense	(3,169	)	(131	)	(2,409	)	(2,774	)	—		(8,483	)
Interest and miscellaneous income (expense), net	1,871		817		(137	)	(3,747	)	—		(1,196	)
Equity in (loss) income from subsidiaries	(238	)	4,966		2,796		—		(7,524	)	—
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(1,536	)	(217	)	250		5,871		(7,524	)	(3,156	)
Income tax (expense) benefit	—		(21	)	948		(631	)	—		296
NET (LOSS) INCOME	(1,536	)	(238	)	1,198		5,240		(7,524	)	(2,860	)
Less: Net loss attributable to noncontrolling interest	—		—		—		(1,324	)	—		(1,324	)
NET (LOSS) INCOME ATTRIBUTABLE TO RAYONIER INC.	(1,536	)	(238	)	1,198		6,564		(7,524	)	(1,536	)
OTHER COMPREHENSIVE LOSS
Foreign currency translation adjustment	(18,008	)	(18,008	)	(74	)	(25,395	)	36,090		(25,395	)
New Zealand joint venture cash flow hedges	(1,896	)	(1,896	)	(1,896	)	(2,917	)	5,688		(2,917	)
Amortization of pension and postretirement plans, net of income tax	743		743		(5	)	(5	)	(733	)	743
Total other comprehensive loss	(19,161	)	(19,161	)	(1,975	)	(28,317	)	41,045		(27,569	)
COMPREHENSIVE LOSS	(20,697	)	(19,399	)	(777	)	(23,077	)	33,521		(30,429	)
Less: Comprehensive loss attributable to noncontrolling interest	—		—		—		(9,730	)	(1	)	(9,731	)
COMPREHENSIVE LOSS ATTRIBUTABLE TO RAYONIER INC.	($20,697	)	($19,399	)	($777	)	($13,347	)	$33,522		($20,698	)

23

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

	CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
	For the Three Months Ended June 30, 2014
	Rayonier Inc. (Parent Guarantor )		ROC (Subsidiary Guarantor)		Rayonier TRS Holdings Inc. (Issuer)		Non- guarantors		Consolidating Adjustments		Total Consolidated
SALES	—		—		—		$163,145		—		$163,145
Costs and Expenses
Cost of sales	—		—		—		123,096		—		123,096
Selling and general expenses	—		2,394		—		11,467		—		13,861
Other operating expense (income), net	—		1,573		—		(12,962	)	—		(11,389	)
	—		3,967		—		121,601		—		125,568
OPERATING (LOSS) INCOME	—		(3,967	)	—		41,544		—		37,577
Interest expense	(3,196	)	(225	)	(10,982	)	(1,209	)	—		(15,612	)
Interest and miscellaneous income (expense), net	2,733		(3,003	)	(1,098	)	(3,017	)	—		(4,385	)
Equity in income (loss) from subsidiaries	16,814		23,549		(54,081	)	—		13,718		—
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	16,351		16,354		(66,161	)	37,318		13,718		17,580
Income tax benefit (expense)	—		460		4,409		(18,425	)	—		(13,556	)
INCOME (LOSS) FROM CONTINUING OPERATIONS	16,351		16,814		(61,752	)	18,893		13,718		4,024
DISCONTINUED OPERATIONS, NET
Income from discontinued operations, net of income taxes	—		—		—		12,084		—		12,084
NET INCOME (LOSS)	16,351		16,814		(61,752	)	30,977		13,718		16,108
Less: Net loss attributable to noncontrolling interest	—		—		—		(245	)	—		(245	)
NET INCOME (LOSS) ATTRIBUTABLE TO RAYONIER INC.	16,351		16,814		(61,752	)	31,222		13,718		16,353
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment	2,653		2,653		513		3,517		(5,819	)	3,517
New Zealand joint venture cash flow hedges	(598	)	(598	)	(598	)	(920	)	1,794		(920	)
Amortization of pension and postretirement plans, net of income tax	58,873		58,873		92,714		92,714		(244,301	)	58,873
Total other comprehensive income	60,928		60,928		92,629		95,311		(248,326	)	61,470
COMPREHENSIVE INCOME	77,279		77,742		30,877		126,288		(234,608	)	77,578
Less: Comprehensive income attributable to noncontrolling interest	—		—		—		297		—		297
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.	$77,279		$77,742		$30,877		$125,991		($234,608	)	$77,281

24

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

	CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
	For the Six Months Ended June 30, 2015
	Rayonier Inc. (Parent Guarantor)		ROC (Subsidiary Guarantor)		Rayonier TRS Holdings Inc. (Issuer)		Non- guarantors		Consolidating Adjustments		Total Consolidated
SALES	—		—		—		$256,106		—		$256,106
Costs and Expenses
Cost of sales	—		—		—		210,923		—		210,923
Selling and general expenses	—		11,279		—		12,347		—		23,626
Other operating income, net	—		(461	)	—		(12,252	)	—		(12,713	)
	—		10,818		—		211,018		—		221,836
OPERATING (LOSS) INCOME	—		(10,818	)	—		45,088		—		34,270
Interest expense	(6,337	)	(223	)	(4,841	)	(5,626	)	—		(17,027	)
Interest and miscellaneous income (expense), net	3,807		1,654		(281	)	(7,871	)	—		(2,691	)
Equity in income from subsidiaries	18,741		28,149		4,223		—		(51,113	)	—
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	16,211		18,762		(899	)	31,591		(51,113	)	14,552
Income tax (expense) benefit	—		(21	)	1,908		(1,119	)	—		768
NET INCOME	16,211		18,741		1,009		30,472		(51,113	)	15,320
Less: Net loss attributable to noncontrolling interest	—		—		—		(891	)	—		(891	)
NET INCOME ATTRIBUTABLE TO RAYONIER INC.	16,211		18,741		1,009		31,363		(51,113	)	16,211
OTHER COMPREHENSIVE LOSS
Foreign currency translation adjustment	(28,438	)	(28,438	)	(926	)	(39,718	)	57,803		(39,717	)
New Zealand joint venture cash flow hedges	(2,511	)	(2,511	)	(2,511	)	(3,863	)	7,533		(3,863	)
Amortization of pension and postretirement plans, net of income tax	1,524		1,524		15		15		(1,554	)	1,524
Total other comprehensive loss	(29,425	)	(29,425	)	(3,422	)	(43,566	)	63,782		(42,056	)
COMPREHENSIVE LOSS	(13,214	)	(10,684	)	(2,413	)	(13,094	)	12,669		(26,736	)
Less: Comprehensive loss attributable to noncontrolling interest	—		—		—		(13,522	)	—		(13,522	)
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO RAYONIER INC.	($13,214	)	($10,684	)	($2,413	)	$428		$12,669		($13,214	)

25

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

	CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
	For the Six Months Ended June 30, 2014
	Rayonier Inc. (Parent Guarantor)		ROC (Subsidiary Guarantor)		Rayonier TRS Holdings Inc. (Issuer)		Non-guarantors		Consolidating Adjustments		Total Consolidated
SALES	—		—		—		$306,332		—		$306,332
Costs and Expenses
Cost of sales	—		—		—		238,995		—		238,995
Selling and general expenses	—		4,544		—		22,554		—		27,098
Other operating expense (income), net	—		3,948		—		(15,712	)	—		(11,764	)
	—		8,492		—		245,837		—		254,329
OPERATING (LOSS) INCOME	—		(8,492	)	—		60,495		—		52,003
Interest expense	(6,389	)	(468	)	(17,672	)	(1,757	)	—		(26,286	)
Interest and miscellaneous income (expense), net	5,431		(2,189	)	(2,145	)	(6,494	)	—		(5,397	)
Equity in income (loss) from subsidiaries	58,737		70,049		(22,951	)	—		(105,835	)	—
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	57,779		58,900		(42,768	)	52,244		(105,835	)	20,320
Income tax (expense) benefit	—		(163	)	7,233		(13,031	)	—		(5,961	)
INCOME (LOSS) FROM CONTINUING OPERATIONS	57,779		58,737		(35,535	)	39,213		(105,835	)	14,359
DISCONTINUED OPERATIONS, NET
Income from discontinued operations, net of income taxes	—		—		—		43,092		—		43,092
NET INCOME (LOSS)	57,779		58,737		(35,535	)	82,305		(105,835	)	57,451
Less: Net loss attributable to noncontrolling interest	—		—		—		(328	)	—		(328	)
NET INCOME (LOSS) ATTRIBUTABLE TO RAYONIER INC.	57,779		58,737		(35,535	)	82,633		(105,835	)	57,779
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment	15,547		15,547		1,279		21,312		(32,365	)	21,320
New Zealand joint venture cash flow hedges	514		514		514		791		(1,542	)	791
Amortization of pension and postretirement plans, net of income tax	60,970		60,970		94,334		94,334		(249,638	)	60,970
Total other comprehensive income	77,031		77,031		96,127		116,437		(283,545	)	83,081
COMPREHENSIVE INCOME	134,810		135,768		60,592		198,742		(389,380	)	140,532
Less: Comprehensive income attributable to noncontrolling interest	—		—		—		5,722		—		5,722
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.	$134,810		$135,768		$60,592		$193,020		($389,380	)	$134,810

26

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

	CONDENSED CONSOLIDATING BALANCE SHEETS
	As of June 30, 2015
	Rayonier Inc. (Parent Guarantor)	ROC (Subsidiary Guarantor)		Rayonier TRS Holdings Inc. (Issuer)	Non- guarantors		Consolidating Adjustments		Total Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$5,366	$94		$45,847	$40,325		—		$91,632
Accounts receivable, less allowance for doubtful accounts	—	—		91	19,353		—		19,444
Inventory	—	—		—	13,362		—		13,362
Prepaid and other current assets	—	1,855		3,008	16,359		—		21,222
Total current assets	5,366	1,949		48,946	89,399		—		145,660
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	—	—		—	2,086,729		—		2,086,729
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT COSTS	—	—		—	69,726		—		69,726
NET PROPERTY, PLANT AND EQUIPMENT	—	480		—	5,954		—		6,434
INVESTMENT IN SUBSIDIARIES	1,516,408	2,182,721		843,077	—		(4,542,206	)	—
INTERCOMPANY NOTES RECEIVABLE	252,815	—		21,928	—		(274,743	)	—
OTHER ASSETS	2,570	16,476		1,325	37,401		—		57,772
TOTAL ASSETS	$1,777,159	$2,201,626		$915,276	$2,289,209		($4,816,949	)	$2,366,321
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	—	$3,434		$83	$18,879		—		$22,396
Current maturities of long-term debt	—	—		30,000	—		—		30,000
Accrued taxes	—	14		—	15,797		—		15,811
Accrued payroll and benefits	—	2,476		—	2,120		—		4,596
Accrued interest	3,046	(12	)	2,505	35,499		(32,995	)	8,043
Other current liabilities	—	2,420		9,570	19,624		—		31,614
Total current liabilities	3,046	8,332		42,158	91,919		(32,995	)	112,460
LONG-TERM DEBT	370,000	—		115,972	236,381		—		722,353
PENSION AND OTHER POSTRETIREMENT BENEFITS	—	34,081		—	(685	)	—		33,396
OTHER NON-CURRENT LIABILITIES	—	6,615		—	14,225		—		20,840
INTERCOMPANY PAYABLE	—	636,190		—	(254,315	)	(381,875	)	—
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY	1,404,113	1,516,408		757,146	2,128,525		(4,402,079	)	1,404,113
Noncontrolling interest	—	—		—	73,159		—		73,159
TOTAL SHAREHOLDERS’ EQUITY	1,404,113	1,516,408		757,146	2,201,684		(4,402,079	)	1,477,272
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$1,777,159	$2,201,626		$915,276	$2,289,209		($4,816,949	)	$2,366,321

27

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

	CONDENSED CONSOLIDATING BALANCE SHEETS
	As of December 31, 2014
	Rayonier Inc. (Parent Guarantor)	ROC (Subsidiary Guarantor)		Rayonier TRS Holdings Inc. (Issuer)	Non- guarantors		Consolidating Adjustments		Total Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$102,218	$11		$8,094	$51,235		—		$161,558
Accounts receivable, less allowance for doubtful accounts	—	—		1,409	22,609		—		24,018
Inventory	—	—		—	8,383		—		8,383
Prepaid and other current assets	—	2,003		6	17,736		—		19,745
Total current assets	102,218	2,014		9,509	99,963		—		213,704
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	—	—		—	2,088,501		—		2,088,501
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT COSTS	—	—		—	77,433		—		77,433
NET PROPERTY, PLANT AND EQUIPMENT	—	433		—	6,273		—		6,706
INVESTMENT IN SUBSIDIARIES	1,463,303	1,923,185		640,678	—		(4,027,166	)	—
INTERCOMPANY NOTES RECEIVABLE	248,233	—		21,500	—		(269,733	)	—
OTHER ASSETS	2,763	16,610		1,759	45,639		—		66,771
TOTAL ASSETS	$1,816,517	$1,942,242		$673,446	$2,317,809		($4,296,899	)	$2,453,115
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	—	$2,687		$123	$17,401		—		$20,211
Current maturities of long-term debt	—	—		129,706	—		—		129,706
Accrued taxes	—	11		—	11,394		—		11,405
Accrued payroll and benefits	—	3,253		—	3,137		—		6,390
Accrued interest	3,047	(3	)	2,520	31,281		(28,412	)	8,433
Other current liabilities	—	928		145	24,784		—		25,857
Total current liabilities	3,047	6,876		132,494	87,997		(28,412	)	202,002
LONG-TERM DEBT	325,000	—		31,000	265,849		—		621,849
PENSION AND OTHER POSTRETIREMENT BENEFITS	—	34,161		—	(684	)	—		33,477
OTHER NON-CURRENT LIABILITIES	—	6,436		—	14,200		—		20,636
INTERCOMPANY PAYABLE	—	431,466		—	(153,754	)	(277,712	)	—
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY	1,488,470	1,463,303		509,952	2,017,520		(3,990,775	)	1,488,470
Noncontrolling interest	—	—		—	86,681		—		86,681
TOTAL SHAREHOLDERS’ EQUITY	1,488,470	1,463,303		509,952	2,104,201		(3,990,775	)	1,575,151
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$1,816,517	$1,942,242		$673,446	$2,317,809		($4,296,899	)	$2,453,115

28

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

	CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
	For the Six Months Ended June 30, 2015
	Rayonier Inc. (Parent Guarantor)		ROC (Subsidiary Guarantor)		Rayonier TRS Holdings Inc. (Issuer)		Non- guarantors		Consolidating Adjustments		Total Consolidated
CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES	($25,092	)	($13,561	)	—		$110,401		$14,135		$85,883
INVESTING ACTIVITIES
Capital expenditures	—		(134	)	—		(25,996	)	—		(26,130	)
Real estate development costs	—		—		—		(578	)	—		(578	)
Purchase of timberlands	—		—		—		(88,414	)	—		(88,414	)
Change in restricted cash	—		—		—		4,160		—		4,160
Investment in Subsidiaries	—		—		8,753		—		(8,753	)	—
Other	—		—		—		3,689		—		3,689
CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES	—		(134	)	8,753		(107,139	)	(8,753	)	(107,273	)
FINANCING ACTIVITIES
Issuance of debt	—		—		57,000		2,100		—		59,100
Repayment of debt	—		—		(28,000	)	(3,472	)	—		(31,472	)
Dividends paid	(63,421	)	—		—		—		—		(63,421	)
Proceeds from the issuance of common shares	718		—		—		—		—		718
Repurchase of common shares	(9,057	)	—		—		—		—		(9,057	)
Intercompany distributions	—		13,778		—		(8,396	)	(5,382	)	—
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES	(71,760	)	13,778		29,000		(9,768	)	(5,382	)	(44,132	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—		—		—		(4,404	)	—		(4,404	)
CASH AND CASH EQUIVALENTS
Change in cash and cash equivalents	(96,852	)	83		37,753		(10,910	)	—		(69,926	)
Balance, beginning of year	102,218		11		8,094		51,235		—		161,558
Balance, end of period	$5,366		$94		$45,847		$40,325		—		$91,632

29

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

	CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
	For the Six Months Ended June 30, 2014
	Rayonier Inc. (Parent Guarantor)		ROC (Subsidiary Guarantor)		Rayonier TRS Holdings Inc. (Issuer)		Non- guarantors		Consolidating Adjustments	Total Consolidated
CASH PROVIDED BY OPERATING ACTIVITIES	$138,535		$150,518		—		$87,098		($147,007	)	$229,144
INVESTING ACTIVITIES
Capital expenditures	—		(201	)	—		(33,396	)	—	(33,597	)
Capital expenditures from discontinued operations	—		—		—		(47,050	)	—	(47,050	)
Real estate development costs	—		—		—		(2,595	)	—	(2,595	)
Purchase of timberlands	—		—		—		(74,817	)	—	(74,817	)
Change in restricted cash	—		—		—		63,128		—	63,128
Investment in Subsidiaries	—		—		(62,800	)	—		62,800	—
Other	—		—		—		(478	)	—	(478	)
CASH USED FOR INVESTING ACTIVITIES	—		(201	)	(62,800	)	(95,208	)	62,800	(95,409	)
FINANCING ACTIVITIES
Issuance of debt	—		—		1,238,389		—		—	1,238,389
Repayment of debt	—		—		(1,107,062	)	—		—	(1,107,062	)
Dividends paid	(124,628	)	—		—		—		—	(124,628	)
Proceeds from the issuance of common shares	3,347		—		—		—		—	3,347
Repurchase of common shares	(1,834	)	—		—		—		—	(1,834	)
Debt issuance costs	—		—		(12,380	)	—		—	(12,380	)
Net cash disbursed upon spin-off of Performance Fibers business	(106,420	)	—		—		—		—	(106,420	)
Intercompany distributions	—		(149,525	)	—		65,318		84,207	—
Other	—		—		—		(680	)	—	(680	)
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES	(229,535	)	(149,525	)	118,947		64,638		84,207	(111,268	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—		—		—		(50	)	—	(50	)
CASH AND CASH EQUIVALENTS
Change in cash and cash equivalents	(91,000	)	792		56,147		56,478		—	22,417
Balance, beginning of year	130,181		304		10,719		58,440		—	199,644
Balance, end of period	$39,181		$1,096		$66,866		$114,918		—		$222,061

30

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

In March 2012 , Rayonier Inc. issued $325 million of 3.75% Senior Notes due 2022 . In connection with these notes, the Company provides the following condensed consolidating financial information in accordance with SEC Regulation S-X Rule 3-10, Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered .

The subsidiary guarantors, ROC and Rayonier TRS Holdings, Inc., are wholly-owned by the Parent Company, Rayonier Inc. The notes are fully and unconditionally guaranteed on a joint and several basis by the guarantor subsidiaries.

	CONDENSED CONSOLIDATING STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME
	For the Three Months Ended June 30, 2015
	Rayonier Inc. (Parent Issuer)		Subsidiary Guarantors		Non- guarantors		Consolidating Adjustments		Total Consolidated
SALES	—		—		$115,801		—		$115,801
Costs and Expenses
Cost of sales	—		—		103,689		—		103,689
Selling and general expenses	—		6,330		6,397		—		12,727
Other operating income, net	—		(461	)	(6,677	)	—		(7,138	)
	—		5,869		103,409		—		109,278
OPERATING (LOSS) INCOME	—		(5,869	)	12,392		—		6,523
Interest expense	(3,169	)	(2,540	)	(2,774	)	—		(8,483	)
Interest and miscellaneous income (expense), net	1,871		680		(3,747	)	—		(1,196	)
Equity in (loss) income from subsidiaries	(238	)	6,564		—		(6,326	)	—
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(1,536	)	(1,165	)	5,871		(6,326	)	(3,156	)
Income tax benefit (expense)	—		927		(631	)	—		296
NET (LOSS) INCOME	(1,536	)	(238	)	5,240		(6,326	)	(2,860	)
Less: Net loss attributable to noncontrolling interest	—		—		(1,324	)	—		(1,324	)
NET (LOSS) INCOME ATTRIBUTABLE TO RAYONIER INC.	(1,536	)	(238	)	6,564		(6,326	)	(1,536	)
OTHER COMPREHENSIVE LOSS
Foreign currency translation adjustment	(18,008	)	(18,008	)	(25,395	)	36,016		(25,395	)
New Zealand joint venture cash flow hedges	(1,896	)	(1,896	)	(2,917	)	3,792		(2,917	)
Amortization of pension and postretirement plans, net of income tax	743		743		(5	)	(738	)	743
Total other comprehensive loss	(19,161	)	(19,161	)	(28,317	)	39,070		(27,569	)
COMPREHENSIVE LOSS	(20,697	)	(19,399	)	(23,077	)	32,744		(30,429	)
Less: Comprehensive loss attributable to noncontrolling interest	—		—		(9,730	)	(1	)	(9,731	)
COMPREHENSIVE LOSS ATTRIBUTABLE TO RAYONIER INC.	($20,697	)	($19,399	)	($13,347	)	$32,745		($20,698	)

31

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

	CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
	For the Three Months Ended June 30, 2014
	Rayonier Inc. (Parent Issuer)		Subsidiary Guarantors		Non- guarantors		Consolidating Adjustments		Total Consolidated
SALES	—		—		$163,145		—		$163,145
Costs and Expenses
Cost of sales	—		—		123,096		—		123,096
Selling and general expenses	—		2,394		11,467		—		13,861
Other operating expense (income), net	—		1,573		(12,962	)	—		(11,389	)
	—		3,967		121,601		—		125,568
OPERATING (LOSS) INCOME	—		(3,967	)	41,544		—		37,577
Interest expense	(3,196	)	(11,207	)	(1,209	)	—		(15,612	)
Interest and miscellaneous income (expense), net	2,733		(4,101	)	(3,017	)	—		(4,385	)
Equity in income from subsidiaries	16,814		31,220		—		(48,034	)	—
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	16,351		11,945		37,318		(48,034	)	17,580
Income tax benefit (expense)	—		4,869		(18,425	)	—		(13,556	)
INCOME FROM CONTINUING OPERATIONS	16,351		16,814		18,893		(48,034	)	4,024
DISCONTINUED OPERATIONS, NET
Income from discontinued operations, net of income taxes	—		—		12,084		—		12,084
NET INCOME	16,351		16,814		30,977		(48,034	)	16,108
Less: Net loss attributable to noncontrolling interest	—		—		(245	)	—		(245	)
NET INCOME ATTRIBUTABLE TO RAYONIER INC.	16,351		16,814		31,222		(48,034	)	16,353
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment	2,653		2,655		3,517		(5,308	)	3,517
New Zealand joint venture cash flow hedges	(598	)	(598	)	(920	)	1,196		(920	)
Amortization of pension and postretirement plans, net of income tax	58,873		58,873		92,714		(151,587	)	58,873
Total other comprehensive income	60,928		60,930		95,311		(155,699	)	61,470
COMPREHENSIVE INCOME	77,279		77,744		126,288		(203,733	)	77,578
Less: Comprehensive income attributable to noncontrolling interest	—		—		297		—		297
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.	$77,279		$77,744		$125,991		($203,733	)	$77,281

32

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

	CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
	For the Six Months Ended June 30, 2015
	Rayonier Inc. (Parent Issuer)		Subsidiary Guarantors		Non- guarantors		Consolidating Adjustments		Total Consolidated
SALES	—		—		$256,106		—		$256,106
Costs and Expenses
Cost of sales	—		—		210,923		—		210,923
Selling and general expenses	—		11,279		12,347		—		23,626
Other operating income, net	—		(461	)	(12,252	)	—		(12,713	)
	—		10,818		211,018		—		221,836
OPERATING (LOSS) INCOME	—		(10,818	)	45,088		—		34,270
Interest expense	(6,337	)	(5,064	)	(5,626	)	—		(17,027	)
Interest and miscellaneous income (expense), net	3,807		1,373		(7,871	)	—		(2,691	)
Equity in income from subsidiaries	18,741		31,363		—		(50,104	)	—
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	16,211		16,854		31,591		(50,104	)	14,552
Income tax benefit (expense)	—		1,887		(1,119	)	—		768
NET INCOME	16,211		18,741		30,472		(50,104	)	15,320
Less: Net loss attributable to noncontrolling interest	—		—		(891	)	—		(891	)
NET INCOME ATTRIBUTABLE TO RAYONIER INC.	16,211		18,741		31,363		(50,104	)	16,211
OTHER COMPREHENSIVE LOSS
Foreign currency translation adjustment	(28,438	)	(28,438	)	(39,718	)	56,877		(39,717	)
New Zealand joint venture cash flow hedges	(2,511	)	(2,511	)	(3,863	)	5,022		(3,863	)
Amortization of pension and postretirement plans, net of income tax	1,524		1,524		15		(1,539	)	1,524
Total other comprehensive loss	(29,425	)	(29,425	)	(43,566	)	60,360		(42,056	)
COMPREHENSIVE LOSS	(13,214	)	(10,684	)	(13,094	)	10,256		(26,736	)
Less: Comprehensive loss attributable to noncontrolling interest	—		—		(13,522	)	—		(13,522	)
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO RAYONIER INC.	($13,214	)	($10,684	)	$428		$10,256		($13,214	)

33

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

	CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
	For the Six Months Ended June 30, 2014
	Rayonier Inc. (Parent Issuer)		Subsidiary Guarantors		Non- guarantors		Consolidating Adjustments		Total Consolidated
SALES	—		—		$306,332		—		$306,332
Costs and Expenses
Cost of sales	—		—		238,995		—		238,995
Selling and general expenses	—		4,544		22,554		—		27,098
Other operating expense (income), net	—		3,948		(15,712	)	—		(11,764	)
	—		8,492		245,837		—		254,329
OPERATING (LOSS) INCOME	—		(8,492	)	60,495		—		52,003
Interest expense	(6,389	)	(18,140	)	(1,757	)	—		(26,286	)
Interest and miscellaneous income (expense), net	5,431		(4,334	)	(6,494	)	—		(5,397	)
Equity in income from subsidiaries	58,737		82,633		—		(141,370	)	—
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	57,779		51,667		52,244		(141,370	)	20,320
Income tax benefit (expense)	—		7,070		(13,031	)	—		(5,961	)
INCOME FROM CONTINUING OPERATIONS	57,779		58,737		39,213		(141,370	)	14,359
DISCONTINUED OPERATIONS, NET
Income from discontinued operations, net of income tax	—		—		43,092		—		43,092
NET INCOME	57,779		58,737		82,305		(141,370	)	57,451
Less: Net loss attributable to noncontrolling interest	—		—		(328	)	—		(328	)
NET INCOME ATTRIBUTABLE TO RAYONIER INC.	57,779		58,737		82,633		(141,370	)	57,779
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment	15,547		15,547		21,312		(31,086	)	21,320
New Zealand joint venture cash flow hedges	514		514		791		(1,028	)	791
Amortization of pension and postretirement plans, net of income tax	60,970		60,970		94,334		(155,304	)	60,970
Total other comprehensive income	77,031		77,031		116,437		(187,418	)	83,081
COMPREHENSIVE INCOME	134,810		135,768		198,742		(328,788	)	140,532
Less: Comprehensive income attributable to noncontrolling interest	—		—		5,722		—		5,722
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.	$134,810		$135,768		$193,020		($328,788	)	$134,810

34

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

	CONDENSED CONSOLIDATING BALANCE SHEETS
	As of June 30, 2015
	Rayonier Inc. (Parent Issuer)	Subsidiary Guarantors	Non- guarantors		Consolidating Adjustments		Total Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$5,366	$45,941	$40,325		—		$91,632
Accounts receivable, less allowance for doubtful accounts	—	91	19,353		—		19,444
Inventory	—	—	13,362		—		13,362
Prepaid and other current assets	—	4,863	16,359		—		21,222
Total current assets	5,366	50,895	89,399		—		145,660
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	—	—	2,086,729		—		2,086,729
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT COSTS	—	—	69,726		—		69,726
NET PROPERTY, PLANT AND EQUIPMENT	—	480	5,954		—		6,434
INVESTMENT IN SUBSIDIARIES	1,516,408	2,268,652	—		(3,785,060	)	—
INTERCOMPANY NOTES RECEIVABLE	252,815	21,928	—		(274,743	)	—
OTHER ASSETS	2,570	17,801	37,401		—		57,772
TOTAL ASSETS	$1,777,159	$2,359,756	$2,289,209		($4,059,803	)	$2,366,321
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	—	$3,517	$18,879		—		$22,396
Current maturities of long-term debt	—	30,000	—		—		30,000
Accrued taxes	—	14	15,797		—		15,811
Accrued payroll and benefits	—	2,476	2,120		—		4,596
Accrued interest	3,046	2,493	35,499		(32,995	)	8,043
Other current liabilities	—	11,990	19,624		—		31,614
Total current liabilities	3,046	50,490	91,919		(32,995	)	112,460
LONG-TERM DEBT	370,000	115,972	236,381		—		722,353
PENSION AND OTHER POSTRETIREMENT BENEFITS	—	34,081	(685	)	—		33,396
OTHER NON-CURRENT LIABILITIES	—	6,615	14,225		—		20,840
INTERCOMPANY PAYABLE	—	636,190	(254,315	)	(381,875	)	—
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY	1,404,113	1,516,408	2,128,525		(3,644,933	)	1,404,113
Noncontrolling interest	—	—	73,159		—		73,159
TOTAL SHAREHOLDERS’ EQUITY	1,404,113	1,516,408	2,201,684		(3,644,933	)	1,477,272
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$1,777,159	$2,359,756	$2,289,209		($4,059,803	)	$2,366,321

35

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

	CONDENSED CONSOLIDATING BALANCE SHEETS
	As of December 31, 2014
	Rayonier Inc. (Parent Issuer)	Subsidiary Guarantors	Non- guarantors		Consolidating Adjustments		Total Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$102,218	$8,105	$51,235		—		$161,558
Accounts receivable, less allowance for doubtful accounts	—	1,409	22,609		—		24,018
Inventory	—	—	8,383		—		8,383
Prepaid and other current assets	—	2,009	17,736		—		19,745
Total current assets	102,218	11,523	99,963		—		213,704
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	—	—	2,088,501		—		2,088,501
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT COSTS	—	—	77,433		—		77,433
NET PROPERTY, PLANT AND EQUIPMENT	—	433	6,273		—		6,706
INVESTMENT IN SUBSIDIARIES	1,463,303	2,053,911	—		(3,517,214	)	—
INTERCOMPANY NOTES RECEIVABLE	248,233	21,500	—		(269,733	)	—
OTHER ASSETS	2,763	18,369	45,639		—		66,771
TOTAL ASSETS	$1,816,517	$2,105,736	$2,317,809		($3,786,947	)	$2,453,115
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	—	$2,810	$17,401		—		$20,211
Current maturities of long-term debt	—	129,706	—		—		129,706
Accrued taxes	—	11	11,394		—		11,405
Accrued payroll and benefits	—	3,253	3,137		—		6,390
Accrued interest	3,047	2,517	31,281		(28,412	)	8,433
Other current liabilities	—	1,073	24,784		—		25,857
Total current liabilities	3,047	139,370	87,997		(28,412	)	202,002
LONG-TERM DEBT	325,000	31,000	265,849		—		621,849
PENSION AND OTHER POSTRETIREMENT BENEFITS	—	34,161	(684	)	—		33,477
OTHER NON-CURRENT LIABILITIES	—	6,436	14,200		—		20,636
INTERCOMPANY PAYABLE	—	431,466	(153,754	)	(277,712	)	—
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY	1,488,470	1,463,303	2,017,520		(3,480,823	)	1,488,470
Noncontrolling interest	—	—	86,681		—		86,681
TOTAL SHAREHOLDERS’ EQUITY	1,488,470	1,463,303	2,104,201		(3,480,823	)	1,575,151
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$1,816,517	$2,105,736	$2,317,809		($3,786,947	)	$2,453,115

36

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

	CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
	For the Six Months Ended June 30, 2015
	Rayonier Inc. (Parent Issuer)		Subsidiary Guarantors		Non- guarantors		Consolidating Adjustments		Total Consolidated
CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES	($25,092	)	($13,561	)	$110,401		$14,135		$85,883
INVESTING ACTIVITIES
Capital expenditures	—		(134	)	(25,996	)	—		(26,130	)
Real estate development costs	—		—		(578	)	—		(578	)
Purchase of timberlands	—		—		(88,414	)	—		(88,414	)
Change in restricted cash	—		—		4,160		—		4,160
Investment in Subsidiaries	—		8,753		—		(8,753	)	—
Other	—		—		3,689		—		3,689
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES	—		8,619		(107,139	)	(8,753	)	(107,273	)
FINANCING ACTIVITIES
Issuance of debt	—		57,000		2,100		—		59,100
Repayment of debt	—		(28,000	)	(3,472	)	—		(31,472	)
Dividends paid	(63,421	)	—		—		—		(63,421	)
Proceeds from the issuance of common shares	718		—		—		—		718
Repurchase of common shares	(9,057	)	—		—		—		(9,057	)
Intercompany distributions	—		13,778		(8,396	)	(5,382	)	—
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES	(71,760	)	42,778		(9,768	)	(5,382	)	(44,132	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—		—		(4,404	)	—		(4,404	)
CASH AND CASH EQUIVALENTS
Change in cash and cash equivalents	(96,852	)	37,836		(10,910	)	—		(69,926	)
Balance, beginning of year	102,218		8,105		51,235		—		161,558
Balance, end of period	$5,366		$45,941		$40,325		—		$91,632

37

Table of Contents

RAYONIER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

	CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
	For the Six Months Ended June 30, 2014
	Rayonier Inc. (Parent Issuer)		Subsidiary Guarantors		Non- guarantors		Consolidating Adjustments	Total Consolidated
CASH PROVIDED BY OPERATING ACTIVITIES	$138,535		$150,518		$87,098		($147,007	)	$229,144
INVESTING ACTIVITIES
Capital expenditures	—		(201	)	(33,396	)	—	(33,597	)
Capital expenditures from discontinued operations	—		—		(47,050	)	—	(47,050	)
Real estate development costs	—		—		(2,595	)	—	(2,595	)
Purchase of timberlands	—		—		(74,817	)	—	(74,817	)
Change in restricted cash	—		—		63,128		—	63,128
Investment in Subsidiaries	—		(62,800	)	—		62,800	—
Other	—		—		(478	)	—	(478	)
CASH USED FOR INVESTING ACTIVITIES	—		(63,001	)	(95,208	)	62,800	(95,409	)
FINANCING ACTIVITIES
Issuance of debt	—		1,238,389		—		—	1,238,389
Repayment of debt	—		(1,107,062	)	—		—	(1,107,062	)
Dividends paid	(124,628	)	—		—		—	(124,628	)
Proceeds from the issuance of common shares	3,347		—		—		—	3,347
Repurchase of common shares	(1,834	)	—		—		—	(1,834	)
Debt issuance costs	—		(12,380	)	—		—	(12,380	)
Net cash disbursed upon spin-off of Performance Fibers business	(106,420	)	—		—		—	(106,420	)
Intercompany distributions	—		(149,525	)	65,318		84,207	—
Other	—		—		(680	)	—	(680	)
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES	(229,535	)	(30,578	)	64,638		84,207	(111,268	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—		—		(50	)	—	(50	)
CASH AND CASH EQUIVALENTS
Change in cash and cash equivalents	(91,000	)	56,939		56,478		—	22,417
Balance, beginning of year	130,181		11,023		58,440		—	199,644
Balance, end of period	$39,181		$67,962		$114,918		—		$222,061

38

Table of Contents

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

When we refer to “we,” “us,” “our,” “the Company,” or “Rayonier,” we mean Rayonier Inc. and its consolidated subsidiaries. References herein to “Notes to Financial Statements” refer to the Notes to the Consolidated Financial Statements of Rayonier Inc. 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, 2014 (the “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 Rayonier’s earnings guidance, if any, business and market conditions, and outlook, expected dividend rate, expected harvest schedules, timberland acquisitions, sales of non-strategic timberlands, the anticipated benefits of Rayonier’s business strategy, expected availability and access to borrowings, and other similar statements relating to Rayonier’s future events, developments, or financial or operational performance or results, are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are identified by the use of words such as “may,” “will,” “should,” “expect,” “estimate,” “believe,” “intend,” “project,” “anticipate” and other similar language. However, the absence of these or similar words or expressions does not mean that a statement is not forward-looking. While management believes that these forward-looking statements are reasonable when made, forward-looking statements are not guarantees of future performance or events and undue reliance should not be placed on these statements. The risk factors contained in Item 1A — Risk Factors in the Form 10-K 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 the Company’s 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 the Company undertakes no duty to update its forward- looking statements except as required by law. You are advised, however, to review any subsequent disclosures the Company makes on related subjects in its subsequent reports filed with the SEC.

Our Company

We are a leading timberland real estate investment trust (“REIT”) with assets located in some of the most productive timber growing regions in the U.S. and New Zealand. 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 June 30, 2015 we owned or leased under long-term agreements approximately 2.3 million acres of timberlands located in the U.S. South (1.9 million acres) and U.S. Pacific Northwest (373,000 acres). We also have a 65 percent ownership interest in Matariki Forestry Group, a joint venture (“New Zealand JV”), that owns or leases approximately 444,000 acres (303,000 net plantable acres) of timberlands in New Zealand.

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 leasing of properties for hunting, mineral extraction and cell towers. The New Zealand Timber segment also reflects any land sales that occur within our New Zealand portfolio.

The Real Estate segment includes all U.S. land sales disaggregated into four sales categories: Improved Development, Unimproved Development, Rural, and Non-Strategic / Timberlands.

The Trading segment includes log trading in New Zealand, conducted by the New Zealand JV in two core areas of business — managed export services on behalf of third parties and procured logs for export sale by the New Zealand JV.

39

Table of Contents

Industry and Market Conditions

The demand for timber is directly related to the underlying demand for pulp, paper, 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 segment relies primarily on domestic customers but also exports a significant volume of timber, particularly to China. Both the Southern and Pacific Northwest 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 markets in China, Korea, and India. In addition to market dynamics in the Pacific Rim, the New Zealand Timber segment is subject to foreign exchange fluctuations, which can impact the competitiveness of its products.

In the second quarter of 2015 in our Southern Timber segment, we continued to see strong pulpwood demand and steady demand for sawtimber. In our Pacific Northwest Timber and New Zealand Timber segments, prices generally declined primarily due to lower demand from China, which also put pressure on domestic pricing in both regions.

For additional information on market conditions impacting our business, see Results of Operations.

Critical Accounting Policies and Use of Estimates

The preparation of financial statements requires us to make estimates, assumptions and judgments that affect our assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. We base these estimates and assumptions on historical data and trends, current fact patterns, expectations and other sources of information we believe are reasonable. Actual results may differ from these estimates. For a full description of our critical accounting policies, see Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2014 Form 10-K.

Discussion of Timber Inventory and Sustainable Yield

See Item 1 — Business — Discussion of Timber Inventory and Sustainable Yield of our 2014 Form 10-K.

40

Table of Contents

Our Timberlands

Our timber operations are disaggregated into three geographically distinct segments: Southern Timber, Pacific Northwest Timber and New Zealand Timber. The following table provides a breakdown of our timberland holdings as of June 30, 2015 and December 31, 2014:

(acres in 000s)	As of June 30, 2015 — Owned	Leased	Total	As of December 31, 2014 — Owned	Leased	Total
Southern
Alabama	308	24	332	309	24	333
Arkansas	—	18	18	—	18	18
Florida	284	94	378	281	105	386
Georgia	573	123	696	575	125	700
Louisiana	149	1	150	126	1	127
Mississippi	91	—	91	91	—	91
Oklahoma	92	—	92	92	—	92
Tennessee	1	—	1	1	—	1
Texas	157	—	157	158	—	158
	1,655	260	1,915	1,633	273	1,906
Pacific Northwest
Oregon	6	—	6	—	—	—
Washington	366	1	367	371	1	372
	372	1	373	371	1	372
New Zealand (a)	185	259	444	185	266	451
Total	2,212	520	2,732	2,189	540	2,729

(a) Represents legal acres owned and leased by the New Zealand JV, in which Rayonier owns a 65 percent interest. As of June 30, 2015 , legal acres in New Zealand were comprised of 303,000 plantable acres and 142,000 non-productive acres.

41

Table of Contents

The following tables detail activity for owned and leased acres in our timberland holdings by state from December 31, 2014 to June 30, 2015:

(acres in 000s)	Acres Owned — December 31, 2014	Acquisitions	Sales		Other	June 30, 2015
Southern
Alabama	309	—	(1	)	—	308
Florida	281	3	—		—	284
Georgia	575	1	(3	)	—	573
Louisiana	126	24	(1	)	—	149
Mississippi	91	—	—		—	91
Oklahoma	92	—	—		—	92
Tennessee	1	—	—		—	1
Texas	158	—	(1	)	—	157
	1,633	28	(6	)	—	1,655
Pacific Northwest
Oregon	—	6	—		—	6
Washington	371	—	(5	)	—	366
	371	6	(5	)	—	372
New Zealand (a)	185	—	—		—	185
Total	2,189	34	(11	)	—	2,212

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

(acres in 000s)	Acres Leased — December 31, 2014	Expired Leases (a)		Other (b)		June 30, 2015
Southern
Alabama	24	—		—		24
Arkansas	18	—		—		18
Florida	105	(11	)	—		94
Georgia	125	(2	)	—		123
Louisiana	1	—		—		1
	273	(13	)	—		260
Pacific Northwest
Washington	1	—		—		1
New Zealand (c)	266	(1	)	(6	)	259
Total	540	(14	)	(6	)	520

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

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

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

42

Results of Operations

Consolidated Results

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

Financial Information (in millions)	Three Months Ended June 30, — 2015		2014		Six Months Ended June 30, — 2015		2014
Sales
Southern Timber	$32.7		$31.5		$68.2		$65.4
Pacific Northwest Timber	17.1		25.1		36.3		58.1
New Zealand Timber	39.2		44.4		80.4		82.3
Real Estate
Improved Development	0.8		—		0.8		—
Unimproved Development	0.8		1.4		5.6		1.6
Rural	3.3		5.4		10.1		10.5
Non-Strategic / Timberlands	2.0		27.2		14.2		27.4
Total Real Estate	6.9		34.0		30.7		39.5
Trading	19.8		29.2		40.5		64.9
Intersegment Eliminations	0.1		($1.1	)	—		(3.9	)
Total Sales	$115.8		$163.1		$256.1		$306.3
Operating Income
Southern Timber	$11.8		$8.9		$24.2		$19.4
Pacific Northwest Timber	1.7		8.8		4.3		21.4
New Zealand Timber	(0.9	)	2.2		4.8		4.6
Real Estate	1.4		27.8		14.0		28.5
Trading	(0.1	)	(0.1	)	0.2		(0.5	)
Corporate and other	(7.4	)	(10.0	)	(13.2	)	(21.4	)
Operating Income	6.5		37.6		34.3		52.0
Interest Expense, Interest Income and Other	(9.7	)	(20.0	)	(19.7	)	(31.7	)
Income Tax Benefit (Expense)	0.3		(13.6	)	0.7		(5.9	)
(Loss) Income from Continuing Operations	(2.9	)	4.0		15.3		14.4
Discontinued Operations, Net	—		12.1		—		43.1
Net (Loss) Income	(2.9	)	16.1		15.3		57.5
Less: Net (loss) income attributable to noncontrolling interest	(1.4	)	(0.3	)	(0.9	)	(0.3	)
Net (Loss) Income Attributable to Rayonier Inc.	($1.5	)	$16.4		$16.2		$57.8
Adjusted EBITDA (a)
Southern Timber	$24.4		$19.6		$51.2		$42.1
Pacific Northwest Timber	4.6		14.0		11.0		32.9
New Zealand Timber	6.2		9.9		19.9		20.9
Real Estate	3.6		36.5		23.8		39.1
Trading	(0.1	)	(0.1	)	0.2		(0.5	)
Corporate and Other	(5.6	)	(9.7	)	(11.5	)	(20.8	)
Total Adjusted EBITDA (a)	$33.1		$70.2		$94.6		$113.7

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

43

Table of Contents

Southern Timber

Second quarter sales of $32.7 million increased $1.2 million versus the prior year period due to higher harvest volumes and improved pricing. Harvest volumes increased 13% to 1.3 million tons versus 1.1 million tons in the prior year period . Average sawtimber stumpage prices increased 4% to $27.33 per ton versus $26.16 per ton in the prior year period , while pulpwood stumpage prices increased 1% to $19.10 per ton versus $18.94 per ton in the prior year period . The increase in average sawtimber prices was driven by restricted supply as a result of wet weather, partially offset by increased harvest activity in lower-price sawtimber regions. The increase in average pulpwood prices was driven primarily by strong demand in the Company’s core pulpwood markets. Overall, weighted average stumpage prices (including hardwood) increased 2% to $21.03 per ton versus $20.71 per ton in the prior year period . Operating income of $11.8 million increased $2.9 million versus the prior year period due to higher volumes ( $1.9 million ), higher pricing ( $0.1 million ), and higher non-timber income ( $1.9 million ), which were partially offset by higher depletion rates ( $0.6 million ) and higher costs ( $0.5 million ). Second quarter Adjusted EBITDA of $24.4 million was $4.8 million above the prior year period .

Year-to-date sales of $68.2 million increased $2.8 million versus the prior year period due to higher harvest volumes and improved pricing. Harvest volumes increased 10% to 2.7 million tons versus 2.4 million tons in the prior year period . Average sawtimber stumpage prices increased 6% to $28.13 per ton versus $26.63 per ton in the prior year period , while pulpwood stumpage prices increased 1% to $18.96 per ton versus $18.74 per ton in the prior year period . The increase in average sawtimber prices was driven by restricted supply as a result of wet weather, partially offset by increased harvest activity in lower-price sawtimber regions. The increase in average pulpwood prices was driven primarily by strong demand in the Company’s core pulpwood markets. Overall, weighted average stumpage prices (including hardwood) increased 3% to $21.37 per ton versus $20.71 per ton in the prior year period . Operating income of $24.2 million increased $4.8 million versus the prior year period due to higher volumes ( $3.2 million ), higher pricing ( $0.9 million ), and higher non-timber income ( $3.4 million ), which were partially offset by higher depletion rates ( $1.7 million ) and costs ( $1.0 million ). Year-to-date Adjusted EBITDA of $51.2 million was $9.1 million above the prior year period .

44

Table of Contents

The following table provides key operating statistics and financial information for the Southern Timber segment:

Southern Timber Overview	Three Months Ended June 30, — 2015		2014		Six Months Ended June 30, — 2015		2014
Sales Volume (in thousands of tons)
Pine Pulpwood	845		707		1,750		1,483
Pine Sawtimber	375		363		793		750
Total Pine Volume	1,220		1,070		2,543		2,233
Hardwood	74		79		121		190
Total Volume	1,294		1,149		2,664		2,423
Percentage Delivered Sales	25	%	36	%	25	%	33	%
Percentage Stumpage Sales	75	%	64	%	75	%	67	%
Net Stumpage Pricing (dollars per ton)
Pine Pulpwood	$19.10		$18.94		$18.96		$18.74
Pine Sawtimber	27.33		26.16		28.13		26.63
Weighted Average Pine	$21.63		$21.39		$21.94		$21.55
Hardwood	11.33		11.58		11.79		12.91
Weighted Average Total	$21.03		$20.71		$21.37		$20.71
Summary Financial Data (in millions of dollars)
Sales	$32.7		$31.5		$68.2		$65.40
Less: Cut and Haul	(5.5	)	(7.7	)	(11.3	)	(15.2	)
Net Stumpage Sales	$27.2		$23.8		$56.9		$50.2
Operating Income	$11.8		$8.9		$24.2		$19.4
Adjusted EBITDA (a)	$24.4		$19.6		$51.2		$42.1
Other Data
Non-Timber Income (in millions of dollars)	$4.4		$2.4		$8.0		$4.5
Period-End Acres (in thousands)	1,915		1,901		1,915		1,901

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

45

Table of Contents

The following tables provide variance analyses for sales, operating income and Adjusted EBITDA for the Southern Timber segment:

Sales (in millions of dollars)	Three Months Ended		Six Months Ended
June 30, 2014	$31.5		$65.4
Changes Attributable to:
Volume/Mix	1.3		2.3
Price	(0.1	)	0.5
June 30, 2015	$32.7		$68.2

Operating Income (in millions of dollars) — June 30, 2014	Three Months Ended — $8.9		Six Months Ended — $19.4
Changes Attributable to:
Volume/Mix	1.9		3.2
Price	0.1		0.9
Cost	(0.5	)	(1.0	)
Non-timber income	1.9		3.4
Depreciation, depletion and amortization	(0.6	)	(1.7	)
Other	0.1		—
June 30, 2015	$11.8		$24.2

Adjusted EBITDA (in millions of dollars) (a) — June 30, 2014	Three Months Ended — $19.6		Six Months Ended — $42.1
Changes Attributable to:
Volume/Mix	3.3		5.8
Price	0.1		0.9
Cost	(0.5	)	(1.0	)
Non-timber income	1.9		3.4
Other	—		—
June 30, 2015	$24.4		$51.2

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

46

Table of Contents

Pacific Northwest Timber

Second quarter sales of $17.1 million decreased $8.0 million versus the prior year period due to the planned reduction of harvest volumes and, to a lesser extent, lower sawtimber prices. Harvest volumes declined 44% to 0.25 million tons versus 0.45 million tons in the prior year period . Average delivered sawtimber prices decreased 9% to $76.80 per ton versus $84.46 per ton in the prior year period , while delivered pulpwood prices increased 17% to $43.37 per ton versus $37.10 per ton in the prior year period . Weaker demand from China contributed to sawtimber price declines in the region, while strong local demand for pulpwood proximate to our properties resulted in lower haul costs and higher net stumpage prices. Operating income of $1.7 million decreased $7.1 million versus the prior year period due to lower volumes ( $5.5 million ) and lower prices ( $2.0 million ), which were partially offset by higher non-timber income ( $0.5 million ) primarily as a result of a strong cedar market. Second quarter Adjusted EBITDA of $4.6 million was $9.4 million below the prior year period.

Year-to-date sales of $36.3 million decreased $21.8 million versus the prior year period due to the planned reduction of harvest volumes and, to a lesser extent, lower sawtimber prices. Harvest volumes declined 42% to 0.58 million tons versus 1.0 million tons in the prior year period . Average delivered sawtimber prices decreased 11% to $73.98 per ton versus $83.05 per ton in the prior year period , while delivered pulpwood prices increased 15% to $43.29 per ton versus $37.55 per ton in the prior year period . Weaker demand from China resulted in a lower export mix of 22% versus 24% in the prior year period and contributed to sawtimber price declines in the region. Operating income of $4.3 million decreased $17.1 million versus the prior year period due to lower volumes ( $13.0 million ), lower prices ( $4.6 million ) and higher costs ( $0.4 million ), which were partially offset by higher non-timber income ( $1.0 million ). Year-to-date Adjusted EBITDA of $11.0 million was $21.9 million below the prior year period.

47

Table of Contents

The following table provides key operating statistics and financial information for the Pacific Northwest Timber segment:

Pacific Northwest Timber Overview	Three Months Ended June 30, — 2015		2014		Six Months Ended June 30, — 2015		2014
Sales Volume (in thousands of tons)
Pulpwood	63		73		118		158
Sawtimber	187		375		457		833
Total Volume	250		448		575		991
Sales Volume (converted to MBF)
Pulpwood	5,985		6,860		11,125		14,971
Sawtimber	25,180		49,093		58,635		103,663
Total Volume	31,165		55,953		69,760		118,634
Percentage Delivered Sales	100	%	41	%	88	%	44	%
Percentage Stumpage Sales	—		59	%	12	%	56	%
Delivered Log Pricing (in dollars per ton)
Pulpwood	$43.37		$37.10		$43.29		$37.55
Sawtimber	76.80		84.46		73.98		83.05
Weighted Average Log Price	$68.36		$74.51		$67.63		$74.21
Summary Financial Data (in millions of dollars)
Sales	$17.1		$25.1		$36.3		$58.1
Less: Cut and Haul	(8.6	)	(5.9	)	(16.7	)	(14.2	)
Net Stumpage Sales	$8.5		$19.2		$19.6		$43.9
Operating Income	$1.7		$8.8		$4.3		$21.4
Adjusted EBITDA (a)	$4.6		$14.0		$11.0		$32.9
Other Data
Non-Timber Income (in millions of dollars)	$1.0		$0.5		$1.7		$0.7
Period-End Acres (in thousands)	373		372		373		372
Sawtimber (in dollars per MBF)	$571		$629		$590		$659
Estimated Percentage of Export Volume	26	%	21	%	22	%	24	%

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

48

Table of Contents

The following tables provide variance analyses for sales, operating income and Adjusted EBITDA for the Pacific Northwest Timber segment:

Sales (in millions of dollars) — June 30, 2014	Three Months Ended — $25.1		Six Months Ended — $58.1
Changes Attributable to:
Volume/Mix	(6.4	)	(17.4	)
Price	(1.5	)	(4.5	)
Other	(0.1	)	0.1
June 30, 2015	$17.1		$36.3

Operating Income (in millions of dollars) — June 30, 2014	Three Months Ended — $8.8		Six Months Ended — $21.4
Changes Attributable to:
Volume/Mix	(5.5	)	(13.0	)
Price	(2.0	)	(4.6	)
Cost	—		(0.4	)
Non-timber income	0.5		1.0
Other	(0.1	)	(0.1	)
June 30, 2015	$1.7		$4.3

Adjusted EBITDA (in millions of dollars) (a) — June 30, 2014	Three Months Ended — $14.0		Six Months Ended — $32.9
Changes Attributable to:
Volume/Mix	(7.7	)	(17.8	)
Price	(2.0	)	(4.6	)
Cost	—		(0.4	)
Non-timber income	0.5		1.0
Other	(0.2	)	(0.1	)
June 30, 2015	$4.6		$11.0

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

49

Table of Contents

New Zealand Timber

Second quarter sales of $39.2 million decreased $5.2 million versus the prior year period due to lower domestic and export product prices, which were partially offset by higher domestic pulpwood and export sawtimber volumes. Harvest volumes increased 11% to 0.58 million tons versus 0.52 million tons in the prior year period . Average delivered prices for export sawtimber declined 28% to $85.31 per ton versus $118.12 per ton in the prior year period , while average delivered prices for domestic sawtimber declined 21% to $66.96 per ton versus $84.64 per ton in the prior year period . The decline in export sawtimber prices was primarily due to weaker demand from China, while the decline in domestic sawtimber prices (in U.S. dollar terms) was driven primarily by the fall in the NZ$/US$ exchange rate (US $.74 per NZ $1.00 versus US $.86 per NZ $1.00 ). Operating loss of ($0.9) million versus operating income of $2.2 million in the prior year period was primarily due to the decrease in prices ( $3.9 million ) and foreign exchange losses ( $2.0 million ), which were partially offset by lower depletion rates ( $1.7 million ) and lower costs ( $1.4 million ). Second quarter Adjusted EBITDA of $6.2 million was $3.7 million below the prior year period .

Year-to-date sales of $80.4 million decreased $1.9 million versus the prior year period due to lower domestic and export product prices, which were partially offset by higher domestic pulpwood and export sawtimber volumes. Harvest volumes increased 14% to 1.1 million tons versus 1.0 million tons in the prior year period . Average delivered prices for export sawtimber declined 22% to $93.21 per ton versus $119.15 per ton in the prior year period , while average delivered prices for domestic sawtimber declined 17% to $68.76 per ton versus $82.53 per ton in the prior year period . The decline in export sawtimber prices was primarily due to weaker demand from China, while the decline in domestic sawtimber prices (in U.S. dollar terms) was driven primarily by the fall in the NZ$/US$ exchange rate (US $.75 per NZ $1.00 versus US $.84 per NZ $1.00 ) . Operating income of $4.8 million was comparable to the prior year period , as the decrease in prices ( $4.8 million ) and foreign exchange losses ( $2.0 million ) were largely offset by lower depletion rates ( $2.9 million ) and costs ( $2.2 million ). Year-to-date Adjusted EBITDA of $19.9 million was $1.0 million below the prior year period .

50

Table of Contents

The following table provides key operating statistics and financial information for the New Zealand Timber segment:

New Zealand Timber Overview	Three Months Ended June 30, — 2015		2014		Six Months Ended June 30, — 2015		2014
Sales Volume (in thousands of tons)
Domestic Sawtimber (Delivered)	169		170		319		314
Domestic Pulpwood (Delivered)	110		77		210		150
Export Sawtimber (Delivered)	248		193		449		335
Export Pulpwood (Delivered)	21		16		32		25
Stumpage	35		67		111		158
Total Volume	583		523		1,121		982
Percentage Delivered Sales	94	%	87	%	90	%	84	%
Percentage Stumpage Sales	6	%	13	%	10	%	16	%
Delivered Log Pricing (in dollars per ton)
Domestic Sawtimber	$66.96		$84.64		$68.76		$82.53
Domestic Pulpwood	$33.59		$39.52		$34.45		$38.94
Export Sawtimber	$85.31		$118.12		$93.21		$119.15
Summary Financial Data (in millions of dollars)
Sales	$38.4		$44.1		$76.2		$79.9
Less: Cut and Haul	(19.2	)	(20.3	)	(35.2	)	(36.2	)
Less: Port and Freight Costs	(8.1	)	(9.0	)	(14.7	)	(14.6	)
Net Stumpage Sales	$11.1		$14.8		$26.3		$29.1
Land Sales	0.8		0.3		4.2		2.4
Total Sales	$39.2		$44.4		$80.4		$82.3
Operating (Loss) Income	($0.9	)	$2.2		$4.8		$4.6
Adjusted EBITDA (a)	$6.2		$9.9		$19.9		$20.9
Other Data
New Zealand Dollar to U.S. Dollar Exchange Rate (b)	0.7398		0.8575		0.7477		0.8414
Net Plantable Period-End Acres (in thousands)	303		313		303		313
Export Sawtimber (in dollars per JAS m 3 )	$99.84		$137.05		$108.90		$138.27

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

(b) Represents the average period rate.

51

Table of Contents

The following tables provide variance analyses for sales, operating income and Adjusted EBITDA for the New Zealand Timber segment:

Sales (in millions of dollars) — June 30, 2014	Three Months Ended — $44.4		Six Months Ended — $82.3
Changes Attributable to:
Volume/Mix	5.2		12.1
Price	(10.4	)	(14.8	)
Other	—		0.8
June 30, 2015	$39.2		$80.4

Operating (Loss) Income (in millions of dollars) — June 30, 2014	Three Months Ended — $2.2		Six Months Ended — $4.6
Changes Attributable to:
Volume/Mix	(0.4	)	0.6
Price	(3.9	)	(4.8	)
Cost	1.4		2.2
Non-timber income (a)	1.1		2.6
Foreign exchange	(2.0	)	(2.0	)
Depreciation, depletion and amortization	1.7		2.9
Non-cash cost of land and real estate development costs recovered upon sale	—		2.1
Other (b)	(1.0	)	(3.4	)
June 30, 2015	($0.9)		$4.8

(a) Three and six months include $0.4 million and $1.8 million , respectively, primarily related to timber sold in conjunction with the relinquishment of a forestry right and $0.6 million related to the sale of carbon credits.

(b) Three and six months include $0.6 million and $2.4 million , respectively, of cost basis of timber sold in conjunction with the relinquishment of a forestry right .

Adjusted EBITDA (in millions of dollars) (a) — June 30, 2014	Three Months Ended — $9.9		Six Months Ended — $20.9
Changes Attributable to:
Volume/Mix	0.2		2.1
Price	(3.9	)	(4.8	)
Cost	1.4		2.2
Non-timber income	1.1		2.6
Foreign exchange	(2.0	)	(2.0	)
Other	(0.5	)	(1.1	)
June 30, 2015	$6.2		$19.9

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

52

Table of Contents

The following table provides additional information on depreciation, depletion and amortization and capital expenditures for the timber segments:

Timber Segments Selected Operating Information	Three Months Ended June 30, — 2015	2014	Six Months Ended June 30, — 2015	2014
Depreciation, Depletion and Amortization (in millions of dollars)
Southern Timber	$12.6	$10.7	$27.0	$22.7
Pacific Northwest Timber	2.9	5.2	6.7	11.5
New Zealand Timber	7.1	7.7	15.1	14.2
Total	$22.6	$23.6	$48.8	$48.4
Timber Capital Expenditures (in millions of dollars)
U.S. Timber
Reforestation, silvicultural and other capital expenditures	4.8	5.5	9.5	11.0
Property taxes	1.9	1.6	3.8	3.7
Lease payments	0.8	0.9	3.1	3.5
Allocated overhead	1.3	1.6	2.7	3.2
Timberland acquisitions	65.3	62.0	88.4	72.7
Subtotal U.S. Timber	$74.1	$71.6	$107.5	$94.1
New Zealand Timber
Reforestation, silvicultural and other capital expenditures	1.6	2.9	3.1	4.7
Property taxes	0.1	0.2	0.3	0.4
Lease payments	1.0	1.6	1.5	1.9
Allocated overhead	0.5	0.8	1.2	1.6
Timberland acquisitions	—	—	—	2.1
Subtotal New Zealand Timber	$3.2	$5.5	$6.1	$10.7
Total Timber Segments Capital Expenditures	$77.3	$77.1	$113.6	$104.8

53

Table of Contents

Real Estate

Second quarter sales of $6.9 million decreased $27.1 million versus the prior year period , and operating income of $1.4 million decreased $26.4 million versus the prior year period . Sales and operating income decreased in the second quarter due to lower volumes ( 2,337 acres sold versus 25,283 acres in the prior year period ) partially offset by higher weighted average prices ( $2,971 per acre versus $1,345 per acre in the prior year period ).

Year-to-date sales of $30.7 million decreased $8.8 million versus the prior year period , and operating income of $14.0 million decreased $14.5 million versus the prior year period . Sales and operating income decreased due to lower volumes ( 9,734 acres sold versus 27,405 acres in the prior year period ) partially offset by higher weighted average prices ( $3,157 per acre versus $1,443 per acre in the prior year period ).

Second quarter and year-to-date operating income also decreased as the prior year periods included $5.8 million in proceeds from a bankruptcy settlement with respect to a former land sale customer.

Improved Development second quarter and year-to-date sales of $0.8 million were comprised of 19 acres in the Belfast Commerce Centre near Savannah, Georgia for $42,281 per acre.

Unimproved Development second quarter sales of $0.8 million decreased $0.6 million versus the prior year period . The prior year period included a six-acre sale to the Florida Department of Transportation for $173,574 per acre. Year-to-date sales of $5.6 million increased $4.1 million versus the prior year period and included 217 acres in St. Johns County, Florida for $17,000 per acre, 76 acres in Bryan County, Georgia for $8,305 per acre and 20 acres in Baker County, Florida for $10,000 per acre.

Rural second quarter and year-to-date sales of $3.3 million and $10.1 million decreased $2.1 million and $0.4 million , respectively, versus the prior year period s due to a decrease in average prices. The prior year period included a 656-acre sale in Nassau County, Florida for $2,750 per acre and a higher proportion of sales in higher-price regions.

Non-strategic/Timberland second quarter and year-to-date sales of $2.0 million and $14.2 million decreased $25.2 million and $13.3 million , respectively, versus the prior year period . The prior year period included 19,556 acres of non-strategic timberlands in Gilchrist County, Florida at $1,125 per acre and 3,629 acres sold to the Alabama Department of Conservation for $1,435 per acre.

Second quarter and year-to-date Adjusted EBITDA of $3.6 million and $23.8 million were $32.9 million and $15.3 million , respectively, below the prior year period .

54

Table of Contents

The following table provides key operating statistics and financial information for the Real Estate segment:

Real Estate Overview	Three Months Ended June 31, — 2015	2014	Six Months Ended June 30, — 2015	2014
Sales (in millions of dollars)
Improved Development (a)	0.8	—	0.8	—
Unimproved Development	0.8	1.4	5.6	1.6
Rural (b)	3.3	5.4	10.1	10.5
Non-Strategic / Timberlands (b)	2.0	27.2	14.2	27.4
Total Sales	$6.9	$34.0	$30.7	$39.5
Sales (Development and Rural Only) (c)	$4.1	$6.8	$15.7	$12.1
Acres Sold
Improved Development (a)	19	—	19	—
Unimproved Development	86	68	495	95
Rural (b)	1,393	2,030	4,270	3,763
Non-Strategic / Timberlands (b)	839	23,185	4,950	23,547
Total Acres Sold	2,337	25,283	9,734	27,405
Acre Sold (Development and Rural Only) (c)	1,479	2,098	4,765	3,858
Percentage of U.S. South acreage sold (d)	0.1 %	0.1 %	0.3 %	0.2 %
Price per Acre (dollars per acre)
Improved Development (a)	$42,281	—	$42,281	—
Unimproved Development	8,908	20,897	11,282	16,450
Rural (b)	2,377	2,654	2,371	2,794
Non-Strategic / Timberlands (b)	2,440	1,174	2,870	1,167
Weighted Average (Total)	$2,971	$1,345	$3,157	$1,443
Weighted Average (Development and Rural) (c)	$2,757	$3,245	$3,297	$3,136

(a) Reflects land with capital invested in infrastructure improvements.

(b) Conservation sales previously reported as Rural are now reported with Non-Strategic / Timberlands.

(c) Excludes Improved Development.

(d) Calculated as Southern development and rural acres sold over U.S. South acres owned.

55

Table of Contents

The following tables provide variance analyses for sales, operating income and Adjusted EBITDA for the Real Estate segment:

Sales (in millions of dollars) — June 30, 2014	Three Months Ended — $34.0		Six Months Ended — $39.5
Changes Attributable to:
Volume/Mix	(30.9	)	(25.5	)
Price	3.8		16.7
June 30, 2015	$6.9		$30.7

Operating Income (in millions of dollars) — June 30, 2014	Three Months Ended — $27.8		Six Months Ended — $28.5
Changes Attributable to:
Volume/Mix	(22.3	)	(18.0	)
Price	3.8		16.7
Cost	(0.8	)	(1.5	)
Depreciation, depletion and amortization	(0.3	)	(2.1	)
Non-cash cost of land and real estate development costs recovered upon sale	(1.0	)	(3.8	)
Other (a)	(5.8	)	(5.8	)
June 30, 2015	$1.4		$14.0

(a) Three and six month prior year periods include $5.8 million in proceeds from a bankruptcy settlement related to a former land sale customer.

Adjusted EBITDA (in millions of dollars) (a) — June 30, 2014	Three Months Ended — $36.5		Six Months Ended — $39.1
Changes Attributable to:
Volume/Mix	(30.1	)	(24.7	)
Price	3.8		16.7
Cost	(0.8	)	(1.5	)
Other (b)	($5.8	)	($5.8	)
June 30, 2015	$3.6		$23.8

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

(b) Three and six month prior year periods include $5.8 million in proceeds from a bankruptcy settlement related to a former land sale customer.

56

Table of Contents

Trading

The Trading segment complements the New Zealand Timber segment by adding scale and achieving cost savings that directly benefit the New Zealand Timber segment. Trading also generally contributes modestly to earnings without significant investment and provides market intelligence that benefits the timber business.

Second quarter sales of $19.8 million decreased $9.4 million versus the prior year period due to lower volumes and prices primarily as a result of continued weak demand in China. Sales volumes decreased 1.3% to 234,000 tons versus 237,000 tons in the prior year period . Average prices decreased 29.4% to $84.16 per ton versus $119.28 per ton in the prior year period . Operating loss of $0.1 million was comparable to the prior year period .

Year-to-date sales of $40.5 million decreased $24.4 million versus the prior year period due to lower volumes and prices as a result of unfavorable China market conditions. Sales volumes decreased 12.7% to 448,000 tons versus 513,000 tons in the prior year period . Average prices decreased 27.8% to $88.58 per ton versus $122.67 per ton in the prior year period . Operating income increased $0.7 million versus the prior year period , as the reductions in price and volume were more than offset by favorable costs and NZ$/US$ exchange gains ( $1.3 million ).

The following tables provide variance analyses for sales, operating income and Adjusted EBITDA for the Trading segment:

Sales (in millions of dollars) — June 30, 2014	Three Months Ended — $29.2		Six Months Ended — $64.9
Changes Attributable to:
Volume/Other	(0.4	)	(8.0	)
Price	(8.2	)	(15.3	)
Other	(0.8	)	(1.2	)
June 30, 2015	$19.8		$40.5

Operating (Loss) Income (in millions of dollars) — June 30, 2014	Three Months Ended — ($0.1)		Six Months Ended — ($0.5	)
Changes Attributable to:
Foreign exchange	0.2		1.3
Other	(0.2	)	(0.6	)
June 30, 2015	($0.1)		$0.2

Adjusted EBITDA (in millions of dollars) (a) — June 30, 2014	Three Months Ended — ($0.1)		Six Months Ended — ($0.5	)
Changes Attributable to:
Foreign exchange	0.2		1.3
Other	(0.2	)	(0.6	)
June 30, 2015	($0.1)		$0.2

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

57

Table of Contents

Other Items

Corporate and Other Expense/Eliminations

Second quarter and year-to-date corporate and other operating expenses of $7.3 million and $13.2 million decreased $2.6 million and $8.2 million , respectively, versus the prior year period s primarily due to lower selling, general and administrative expenses as a result of the spin-off of the Performance Fibers business. Second quarter and year-to-date corporate and other operating expenses include $1.5 million and $1.6 million , respectively, of costs related to the shareholder litigation (“costs related to shareholder litigation”). Costs related to shareholder litigation include expenses incurred as a result of the securities litigation, the shareholder derivative demands and the Securities and Exchange Commission investigation. See Note 12— Contingencies.

Interest Expense

Second quarter and year-to-date interest expense of $8.5 million and $17.0 million decreased $7.1 million and $9.3 million , respectively, versus the prior year period s primarily due to lower outstanding debt and $5.0 million of interest expense related to an early repayment of debt in the prior year period s.

Other Non-Operating Expense

Second quarter and year-to-date other non-operating expenses of $1.2 million and $2.7 million decreased $3.2 million and $2.7 million , respectively, primarily due to $3.8 million of costs related to the spin-off in the prior year period , partially offset by unfavorable mark-to-market adjustments on New Zealand joint venture interest rate swaps.

Income Tax Benefit (Expense)

The second quarter and year-to-date income tax benefit from continuing operations was $0.3 million and $0.7 million versus an income tax expense of $13.6 million and $5.9 million , respectively, in the prior year period s. The current quarter and year-to-date tax benefit is principally related to the New Zealand joint venture. The expense in the prior year periods was primarily related to the Performance Fibers business.

Share Repurchases

During the second quarter the Company repurchased approximately $10.7 million of common stock at an average price of $25.94 per share. As of June 30, 2015, the Company had 126.5 million shares of common stock outstanding and $89.3 million remaining in its current share repurchase authorization.

Outlook

In our Southern Timber segment, we anticipate continued strong pulpwood demand and prices in our key market areas. We continue to expect that the gradual improvement in U.S. housing demand will drive increases in Southern sawtimber prices over the long term; however, we expect limited upside to current prices through the remainder of 2015. In our Pacific Northwest and New Zealand segments, we anticipate near-term weakness in the China export market will weigh on prices but that export demand will gradually improve, although likely at a slower pace than we expected earlier in the year. In our Real Estate segment, we continue to see steady demand for rural properties and increasing interest in selected development properties as we execute on our strategy and develop catalysts for demand.

58

Table of Contents

Liquidity and Capital Resources

Our principal source of cash is cash flow from operations, primarily the harvesting of timber and sales of real estate. Our main use of cash is dividends due to the REIT distribution requirements. 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.

Summary of Liquidity and Financing Commitments

	June 30,	December 31,
(millions of dollars)	2015	2014
Cash and cash equivalents	$91.6	$161.6
Total debt	752.4	751.5
Shareholders’ equity	1,477.3	1,575.2
Total capitalization (total debt plus equity)	2,229.7	2,326.7
Debt to capital ratio	34 %	32 %
Net debt to enterprise value (a)	17 %	14 %

(a) Enterprise value is calculated as the number of shares outstanding multiplied by the Company’s share price plus net debt as of June 30, 2015 and December 31, 2014.

Cash Flows

The following table summarizes our cash flows from operating, investing and financing activities for the six months ended June 30 . The Consolidated Statements of Cash Flows for 2014 has not been restated to exclude discontinued operations.

(millions of dollars)	2015		2014
Cash provided by (used for):
Operating activities	$85.9		$229.1
Investing activities	(107.3	)	(95.4	)
Financing activities	(44.1	)	(111.3	)

Cash Provided by Operating Activities

The decline in cash provided by operating activities in 2015 was primarily attributable to the inclusion of the results of the Performance Fibers business in the prior year period before the June 27, 2014 spin-off. Year-to-date 2015 also benefited from lower working capital requirements.

Cash Used for Investing Activities

Cash used for investing activities increased $11.9 million in the first half of 2015 compared to 2014 primarily due to the lower change in restricted cash ($58.9 million) and higher timberland acquisitions ( $13.6 million ) in the current period. Partially offsetting these increases was a $7.5 million and $47.1 million decrease in capital expenditures from continuing and discontinued operations, respectively, and a $2.0 million decrease in real estate development costs compared to the prior year period.

Cash Used for Financing Activities

Cash used for financing activities declined $67.1 million from the prior year period. Of the decrease, $106.4 million is due to the net cash disbursed upon spin-off of the Performance Fibers business. Additionally, dividend payments decreased $61.2 million compared to prior year due to the change in the dividend rate from $0.49 per share to $0.25 per share on a post-spin basis. These decreases were partially offset by net debt issuances of $27.7 million in first half of 2015 versus $118.9 million in first half of 2014. Repurchases of common stock increased $7.2 million and included $9.0 million of shares repurchased in connection with the Board of Directors’ approval to repurchase up to $100 million of the Company’s common shares.

59

Table of Contents

Expected 2015 Expenditures

Capital expenditures in 2015 are expected to be approximately $65 million, excluding any strategic timberland acquisitions we may make. Capital expenditures are expected to be primarily comprised of seedling planting, fertilization and other silvicultural activities, and other capitalized costs. Aside from capital expenditures, we may also make strategic timberland acquisitions as we actively evaluate acquisition opportunities. We also expect to invest approximately $7 million in 2015 for land use entitlements and infrastructure improvements to increase the value and marketability of selected real estate properties.

Our 2015 dividend payments are expected to be approximately $127 million assuming no change in the quarterly dividend rate of $0.25 per share.

Future share repurchases, if any, will depend on the Company’s liquidity and cash flow, as well as general market conditions and other considerations.

We have no mandatory pension contributions in 2015 but may make discretionary contributions in the future. On an ongoing basis, cash income tax payments are expected to be minimal. During 2015, we may repatriate approximately $27 million of proceeds received from the sale of our forestry assets to the New Zealand JV when it was formed in 2005. If this occurs, we anticipate that cash payments for income taxes in 2015 will be approximately $3 million.

Performance and Liquidity Indicators

The discussion below is presented to enhance the reader’s understanding of our operating performance, liquidity, 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 considers these measures to be important to estimate the enterprise and shareholder values of the Company as a whole and of its core segments, and for allocating capital resources. In addition, analysts, investors and creditors use these measures when analyzing our operating performance, financial condition and cash generating ability. Management uses Adjusted EBITDA as a performance measure and CAD as a liquidity measure. Adjusted EBITDA and CAD as defined may not be comparable to similarly titled measures reported by other companies.

We define Adjusted EBITDA as earnings before interest, taxes, depreciation, depletion, amortization, the non-cash cost of land sold and real estate development costs recovered upon sale, costs related to shareholder litigation, and in 2014 costs related to the spin-off of the Performance Fibers business, discontinued operations, and internal review and restatement costs. Costs related to shareholder litigation include expenses incurred as a result of the securities litigation, the shareholder’s derivative demands and the Securities and Exchange Commission investigation. See Note 12— Contingencies.

We reconcile Adjusted EBITDA to Net Income for the consolidated Company and to Operating Income for the Segments, as those are the nearest GAAP measures for each. Below is a reconciliation of Net Income to Adjusted EBITDA for the respective periods (in millions of dollars):

	Three Months Ended June 30, — 2015		2014		Six Months Ended June 30, — 2015		2014
Net (Loss) Income to Adjusted EBITDA Reconciliation
Net (loss) income	($2.9	)	$16.1		$15.3		$57.5
Interest, net, continuing operations	9.7		16.2		19.7		27.9
Income tax (benefit) expense, continuing operations	(0.3	)	13.6		(0.7	)	5.9
Depreciation, depletion and amortization	23.9		30.3		53.8		56.3
Non-cash cost of land sold and real estate development costs recovered upon sale	1.2		2.3		4.9		5.4
Costs related to shareholder litigation (a)	1.5		—		1.6		—
Cost related to spin-off of the Performance Fibers business	—		3.8		—		3.8
Discontinued operations	—		(12.1	)	—		(43.1	)
Adjusted EBITDA	$33.1		$70.2		$94.6		$113.7

(a) Costs related to shareholder litigation include expenses incurred as a result of the securities litigation, the shareholder’s derivative demands and the Securities and Exchange Commission investigation. See Note 12— Contingencies .

60

Table of Contents

The following tables reconcile Operating Income by segment to Adjusted EBITDA by segment (millions of dollars):

Three Months Ended	Southern Timber	Pacific Northwest Timber	New Zealand Timber
June 30, 2015
Operating income (loss)	$11.8	$1.7	($0.9	)	$1.4	($0.1	)	($7.4	)	$6.5
Depreciation, depletion and amortization	12.6	2.9	7.1	1.0	—		0.3		23.9
Non-cash cost of land sold and real estate development costs recovered upon sale	—	—	—	1.2	—		—		1.2
Costs related to shareholder litigation (a)	—	—	—	—	—		1.5		1.5
Adjusted EBITDA	$24.4	$4.6	$6.2		$3.6	($0.1	)	($5.6	)	$33.1
June 30, 2014
Operating income (loss)	$8.9	$8.8	$2.2		$27.8	($0.1	)	($10.0	)	$37.6
Depreciation, depletion and amortization	10.7	5.2	7.7	6.4	—		0.3		30.3
Non-cash cost of land sold and real estate development costs recovered upon sale	—	—	—	2.3	—		—		2.3
Adjusted EBITDA	$19.6	$14.0	$9.9		$36.5	($0.1	)	($9.7	)	$70.2

(a) Costs related to shareholder litigation include expenses incurred as a result of the securities litigation, the shareholder’s derivative demands and the Securities and Exchange Commission investigation. See Note 12— Contingencies .

Six Months Ended	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Real Estate	Trading
June 30, 2015
Operating income (loss)	$24.2	$4.3	$4.8	$14.0	$0.2		($13.2	)	$34.3
Depreciation, depletion and amortization	27.0	6.7	15.1	4.9	—	0.1		53.8
Non-cash cost of land sold and real estate development costs recovered upon sale	—	—	—	4.9	—	—		4.9
Costs related to shareholder litigation (a)	—	—	—	—	—	1.6		1.6
Adjusted EBITDA	$51.2	$11.0	$19.9	$23.8	$0.2		($11.5	)	$94.6
June 30, 2014
Operating income (loss)	$19.4	$21.4	$4.6	$28.5	($0.5	)	($21.4	)	$52.0
Depreciation, depletion and amortization	22.7	11.5	14.2	7.3	—	0.6		56.3
Non-cash cost of land sold and real estate development costs recovered upon sale	—	—	2.1	3.3	—	—		5.4
Adjusted EBITDA	$42.1	$32.9	$20.9	$39.1	($0.5	)	($20.8	)	$113.7

(a) Costs related to shareholder litigation include expenses incurred as a result of the securities litigation, the shareholder’s derivative demands and the Securities and Exchange Commission investigation. See Note 12— Contingencies .

CAD is a non-GAAP measure of cash generated during a period which is available for dividend distribution, repurchase of the Company’s common shares, debt reduction and strategic acquisitions. We define CAD as Cash Provided by Operating Activities adjusted for capital spending (excluding strategic acquisitions), real estate development costs, cash provided by discontinued operations and working capital and other balance sheet changes. In compliance with SEC requirements for non-GAAP measures, we reduce CAD by mandatory debt repayments which results in the measure entitled “Adjusted CAD.”

61

Table of Contents

Below is a reconciliation of Cash Provided by Operating Activities to Adjusted CAD (in millions of dollars):

	Six Months Ended June 30, — 2015		2014
Cash provided by operating activities	$85.9		$229.1
Capital expenditures from continuing operations (a)	(26.1	)	(33.6	)
Real estate development costs	(0.6	)	(2.6	)
Cash flow from discontinued operations	—		(64.0	)
Working capital and other balance sheet changes	(6.9	)	(88.8	)
CAD	52.3		40.1
Mandatory debt repayments	—		—
Adjusted CAD	$52.3		$40.1

Cash used for investing activities	($107.3	)	($95.4	)
Cash used for financing activities	($44.1	)	($111.3	)

(a) Capital expenditures exclude timberland acquisitions of $88.4 million and $74.8 million during the six months ended June 30, 2015 and June 30, 2014 , respectively.

Adjusted CAD increased in the current year as lower operating results from continuing operations was more than offset by lower interest, lower tax payments and lower capital expenditures from continuing operations and real estate development costs. Adjusted CAD generated in any period is not necessarily indicative of the amounts that may be generated in future periods.

Liquidity Facilities

Net draws of $29.0 million were made in the first half on the revolving credit facility for general corporate purposes. At June 30, 2015 , the Company had available borrowings of $153.2 million, net of $1.8 million to secure its outstanding letters of credit, under the revolving credit facility and additional draws available of $100.0 million under the term credit agreement.

During the six months ended June 30, 2015 , the New Zealand JV made additional borrowings and repayments of $2.1 million on its working capital facility. Additional draws totaling $17.0 million remain available on the working capital facility. In addition, the New Zealand JV paid $1.4 million of its shareholder loan held with the non-controlling interest party. Favorable changes in exchange rates through June 30, 2015 decreased debt on a U.S. dollar basis for the revolving facility and shareholder loan by $24.1 million and $3.5 million, respectively.

In connection with our term credit agreement and credit facility, covenants must be met, including ratios based on the covenant definition of EBITDA, ratios based on consolidated funded debt compared to consolidated net worth, and ratios of subsidiary debt to consolidated net tangible assets. Covenants must also be met in connection with the New Zealand JV’s credit facility, including ratios of debt to forestry and land valuations and ratios of operating cash flows to financing costs. As of June 30, 2015 , we were in compliance with all applicable financial covenants. In addition to these financial covenants, the mortgage note, term credit agreement and revolving credit facility include customary covenants that limit the incurrence of debt and the disposition of assets, among others.

See Note 15 — Debt for discussion of debt refinancing and planned recapitalization of the Company’s New Zealand joint venture subsequent to June 30, 2015 .

Contractual Financial Obligations and Off-Balance Sheet Arrangements

We have no material changes to the Contractual Obligations table as presented in Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2014 Form 10-K. See Note 11 — Guarantees for details on the letters of credit, surety bonds and guarantees as of June 30, 2015 . For information on our outstanding debt and derivative purchase obligations as of June 30, 2015 see Note 15 — Debt and Note 9 — Derivative Financial Instruments and Hedging Activities , respectively.

62

Table of Contents

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market and Other Economic Risks

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.

As of June 30, 2015 we had $60 million of U.S. long-term variable rate debt which is subject to interest rate risk. At this borrowing level, a hypothetical one-percentage point increase/decrease in interest rates would result in a corresponding increase/decrease of approximately $0.6 million in interest payments and expense over a 12 month period. Our primary interest rate exposure on variable rate debt results from changes in LIBOR.

As of June 30, 2015 , our New Zealand JV had $160 million of long-term variable rate debt. This debt is subject to interest rate risk resulting from changes in the 90 day New Zealand Bank bill rate (“BKBM”). However, the New Zealand JV uses interest rate swaps to manage its exposure to interest rate movements on its bank loan by swapping a portion of these borrowings from floating rates to fixed rates. The notional amount of the outstanding interest rate swap contracts at June 30, 2015 was $129 million, or 81 percent of the variable rate debt. The interest rate swap contracts have maturities extending through January 2020 . The periodic interest rate on New Zealand JV debt is BKBM plus 80 basis points with an additional 80 basis point credit line fee. We estimate the periodic effective interest rate on New Zealand JV debt for the second quarter was approximately 6.5% after consideration of interest rate swaps.

The fair market value of our long-term fixed interest rate debt is also subject to interest rate risk. The estimated fair value of our long-term fixed-rate debt at June 30, 2015 was $482 million compared to the $478 million principal amount. We use interest rates of debt with similar terms and maturities to estimate the fair value of our debt. Generally, the fair market value of fixed-rate debt will increase as interest rates fall and decrease as interest rates rise. A hypothetical one-percentage point increase/decrease in prevailing interest rates at June 30, 2015 would result in a corresponding decrease/increase in the fair value of our long-term fixed-rate debt of approximately $20 million.

The functional currency of the Company’s New Zealand-based operations and New Zealand JV is the New Zealand dollar. Through these operations and our ownership in the New Zealand JV, we are exposed to foreign currency risk on cash held in foreign currencies and on foreign export sales and ocean freight payments that are predominantly denominated in U.S. dollars. To mitigate these risks, the New Zealand JV routinely enters into foreign currency exchange contracts and foreign currency option contracts to hedge a portion of the New Zealand JV’s foreign exchange exposure. At June 30, 2015 , the New Zealand JV had foreign currency exchange contracts with a notional amount of $28 million and foreign currency option contracts with a notional amount of $136 million outstanding. The amount hedged represents 67 percent of forecast U.S. dollar denominated harvesting sales proceeds over the next 18 months and 31 percent of log trading sales proceeds over the next 3 months. In December 2014, we entered into a foreign currency exchange contract with a notional amount of $24 million. The foreign currency contract is designated as a net investment hedge of our New Zealand based-operations to mitigate our risk to fluctuations in foreign currency exchange rates. For additional information regarding our derivative balances and activity, see Note 9 — Derivative Financial Instruments and Hedging Activities .

See Note 15 — Debt for discussion of debt refinancing and planned recapitalization of the Company’s New Zealand joint venture subsequent to June 30, 2015 .

63

Table of Contents

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Rayonier 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 our disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q, our management, including the Chief Executive Officer and Chief Financial Officer, concluded the design and operation of the disclosure controls and procedures were effective as of June 30, 2015.

In the quarter ended June 30, 2015, based upon the evaluation required by paragraph (d) of SEC Rule 13a-15, 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.

64

Table of Contents

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

The information set forth in Note 12 — Contingencies in the “Notes to the Consolidated Financial Statements” under Item 1 of Part I of this Report is incorporated herein by reference.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

In 1996, we began a Common Share repurchase program (the “anti-dilutive program”) to minimize the dilutive effect of our employee incentive stock plans on earnings per share. This program limits the number of shares that may be purchased each year to the greater of 1.5 percent of outstanding shares at the beginning of the year or the number of incentive shares issued to employees during the year. In October 2000, July 2003 and October 2011, our board of directors authorized the purchase of additional shares in the program totaling 2.1 million shares. None of these shares have expiration dates. There were no shares purchased under this program in the second quarter of 2015 and there were 3,836,655 shares available for purchase at June 30, 2015 .

In June 2015, 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 412,500 shares repurchased under this program in the second quarter of 2015 and there was $89.3 million, or approximately 3,495,027 shares based on the period end closing stock price of $25.55, available for repurchase as of June 30, 2015 .

The following table provides information regarding our purchases of Rayonier common stock during the quarter ended June 30, 2015 :

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 (a)	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (b)
April 1 to April 30	—	—	—	3,836,655
May 1 to May 31	—	—	—	3,836,655
June 1 to June 30	412,500	$25.94	412,500	7,331,682
Total	412,500		412,500	7,331,682

(a) Purchases made in open-market transactions under the $100 million share repurchase program announced on June 16, 2015.

(b) Maximum number of shares yet to be purchased as of June 30, 2015 include 3,836,655 under the 1996 anti-dilutive program and approximately 3,495,027 under the share repurchase program.

65

Table of Contents

ITEM 6. Exhibits

10.1	Credit Agreement dated August 5, 2015 among Rayonier Inc., Rayonier TRS Holdings Inc. and Rayonier Operating Company LLC, as Borrowers, COBANK, ACB, as Administrative Agent, Swing Line Lender and Issuing Bank, JPMORGAN CHASE BANK, N.A. And FARM CREDIT OF FLORIDA, ACA, as Co-Syndication Agents CREDIT SUISSE AG and SUNTRUST BANK, as Co-Documentation Agents and COBANK, ACB, as Sole Lead Arranger and Sole Bookrunner	Incorporated by reference to Exhibit 10.1 to the Registrant’s August 5, 2015 Form 8-K
31.1	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	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	Certification of Periodic Financial Reports Under Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith
101	The following financial information from our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2015, formatted in Extensible Business Reporting Language (“XBRL”), includes: (i) the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income for the Three and Six Months Ended June 30, 2015 and 2014; (ii) the Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014; (iii) the Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2015 and 2014; and (iv) the Notes to Consolidated Financial Statements	Filed herewith

66

Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	RAYONIER INC.
	(Registrant)
By:	/s/ H. EDWIN KIKER
	H. Edwin Kiker Chief Accounting Officer (Duly Authorized Officer, Principal Accounting Officer)

Date: August 7, 2015

67