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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 September 30, 2017March 31, 2021
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 1-6780ryn-20210331_g1.jpg
RAYONIER INC.
Incorporated(Exact name of registrant as specified in the its charter)
North Carolina1-678013-2607329
(State or other Jurisdiction of incorporation or organization)(Commission File Number)(I.R.S. Employer Identification Number)
Rayonier, L.P.
(Exact name of North Carolinaregistrant as specified in its charter)
I.R.S. Employer Identification No. 13-2607329
Delaware333-23724691-1313292
(State or other Jurisdiction of incorporation or organization)(Commission File Number)(I.R.S. Employer Identification Number)
1 RAYONIER WAY
YULEE,WILDLIGHT, FL 32097
(Principal Executive Office)
Telephone Number: (904) 357-9100

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each classTrading SymbolExchange
Common Shares, no par value, of Rayonier Inc.RYNNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES x        NO  oRayonier Inc.    Yes ☒No☐    Rayonier, L.P.    Yes ☒No☐
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  oRayonier Inc.    Yes ☒No☐    Rayonier, L.P.    Yes ☒No☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Rayonier Inc.
Large accelerated filer  xAccelerated Filer
☒
Accelerated Filer
Accelerated filer  o
☐		Non-accelerated Filer
Non-accelerated filer  o
☐		Smaller Reporting Company
Smaller reporting company o
☐		Emerging Growth Company
Emerging growth company o
☐

Rayonier, L.P.
Large Accelerated Filer☐Accelerated Filer☐Non-accelerated Filer
☒
Smaller Reporting Company☐Emerging Growth Company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o

Rayonier Inc.☐Rayonier, L.P.☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES o        NO  xRayonier Inc.    Yes ☐No☒    Rayonier, L.P.    Yes ☐No☒    

As of October 27, 2017, there were outstanding 128,931,674 CommonApril 30, 2021, Rayonier Inc. had 139,029,941 Common Shares outstanding. As of April 30, 2021, Rayonier, L.P. had 4,278,766 Units outstanding.


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EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarterly period ended March 31, 2021 of Rayonier Inc., a North Carolina corporation, and Rayonier, L.P., a Delaware limited partnership. Unless stated otherwise or the context otherwise requires, references to “Rayonier” or “the Company” mean Rayonier Inc. and references to the “Operating Partnership” mean Rayonier, L.P. References to “we,” “us,” and “our” mean collectively Rayonier Inc., the Operating Partnership and entities/subsidiaries owned or controlled by Rayonier Inc. and/or the Operating Partnership.

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



As of March 31, 2021, the Company owned a 97.0% interest in the Operating Partnership, with the remaining 3.0% interest owned by limited partners of the Operating Partnership. As the sole general partner of the Operating Partnership, Rayonier Inc. has exclusive control of the day-to-day management of the Operating Partnership.



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



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



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

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

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


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


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

•Separate Consolidated Financial Statements for Rayonier Inc. and Rayonier, L.P.;
•A combined set of Notes to the Consolidated Financial Statements with separate discussions of per share and per unit information, noncontrolling interests and shareholders’ equity and partners’ capital, as applicable;
•A combined Management’s Discussion and Analysis of Financial Condition and Results of Operations which includes specific information related to each reporting entity;

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•A separate Part 1, Item 4. Controls and Procedures related to each reporting entity;
•A separate Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds section related to each reporting entity; and
•Separate Exhibit 31 and 32 certifications for each reporting entity within Part II, Item 6.

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TABLE OF CONTENTS
 
Item PageItemPage
 PART I - FINANCIAL INFORMATION PART I - FINANCIAL INFORMATION
1. 
Financial Statements (unaudited)
1
1.
1
Consolidated Statements of Income and Comprehensive Income for the Three Months Ended March 31, 2021 and 2020
1
Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020
2
Consolidated Statements of Changes in Shareholders’ Equity for the Quarters Ended March 31, 2021 and 2020
3
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020
4
 
Consolidated Statements of Income and Comprehensive Income for the Three and Nine Months Ended September 30, 2017 and 2016
1
Consolidated Statements of Income and Comprehensive Income for the Three Months Ended March 31, 2021 and 2020
5
 
Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016
2
Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020
6
 
Consolidated Statements of Shareholders’ Equity as of December 31, 2015 and 2016 and September 30, 2017
3
Consolidated Statements of Changes in Capital for the Quarters Ended March 31, 2021 and 2020
7
 
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016
4
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020
8
 
Notes to Consolidated Financial Statements
5
9
2. 
Management's Discussion and Analysis of Financial Condition and Results of Operations
31
2.
41
3. 
Quantitative and Qualitative Disclosures about Market Risk
51
3.
65
4. 
Controls and Procedures
51
4.
67
 PART II - OTHER INFORMATION PART II - OTHER INFORMATION
1. 
Legal Proceedings
52
1.
68
2. 
Unregistered Sales of Equity Securities and Use of Proceeds
52
2.
69
6. 
Exhibits
53
6.
70
 
Signature
54
71
 

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PART I.        FINANCIAL INFORMATION


Item 1.         Financial Statements


RAYONIER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(Unaudited)
(Dollars in thousands, except per share amounts)

 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
SALES
$177,946
 
$171,421
 
$559,178
 
$567,814
Costs and Expenses       
Cost of sales136,583
 116,624
 416,683
 362,790
Selling and general expenses9,936
 10,607
 29,771
 31,638
Other operating income, net (Note 14)(7,844) (5,499) (22,702) (20,867)

138,675
 121,732
 423,752
 373,561
OPERATING INCOME39,271
 49,689
 135,426
 194,253
Interest expense(8,553) (8,544) (25,600) (23,603)
Interest income and miscellaneous income (expense), net1,128
 258
 1,650
 (1,115)
INCOME BEFORE INCOME TAXES31,846
 41,403
 111,476
 169,535
Income tax expense (Note 7)(3,043) (779) (16,817) (2,274)
NET INCOME28,803
 40,624
 94,659
 167,261
Less: Net income attributable to noncontrolling interest4,115
 1,269
 9,968
 3,613
NET INCOME ATTRIBUTABLE TO RAYONIER INC.24,688
 39,355
 84,691
 163,648
OTHER COMPREHENSIVE (LOSS) INCOME       
Foreign currency translation adjustment, net of income tax expense of $0, $0, $0 and $0(7,317) 12,022
 16,599
 28,046
Cash flow hedges, net of income tax (expense) benefit of ($614), $229, $534 and $1,293(2,162) 4,195
 (1,597) (22,055)
Amortization of pension and postretirement plans, net of income tax expense of $0, $0, $0 and $0116
 632
 349
 1,881
Total other comprehensive (loss) income(9,363) 16,849
 15,351
 7,872
COMPREHENSIVE INCOME19,440
 57,473
 110,010
 175,133
Less: Comprehensive income attributable to noncontrolling interest2,289
 3,649
 13,537
 11,808
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.
$17,151
 
$53,824
 
$96,473
 
$163,325
EARNINGS PER COMMON SHARE (Note 10)       
Basic earnings per share attributable to Rayonier Inc.
$0.19
 
$0.32
 
$0.67
 
$1.34
Diluted earnings per share attributable to Rayonier Inc.
$0.19
 
$0.32
 
$0.67
 
$1.33
        
Dividends declared per share
$0.25
 
$0.25
 
$0.75
 
$0.75
Three Months Ended
March 31,
 20212020
SALES (NOTE 4)
$191,447 $259,130 
Costs and Expenses
Cost of sales(151,378)(209,499)
Selling and general expenses(14,032)(9,968)
Other operating income (expense), net (Note 18)
2,448 (1,111)
(162,962)(220,578)
OPERATING INCOME28,485 38,552 
Interest expense(10,028)(8,216)
Interest and other miscellaneous expense, net(4)(209)
INCOME BEFORE INCOME TAXES18,453 30,127 
Income tax expense (Note 20)
(3,421)(3,706)
NET INCOME15,032 26,421 
Less: Net income attributable to noncontrolling interests in the Operating Partnership(341)0 
Less: Net income attributable to noncontrolling interests in consolidated affiliates(3,843)(567)
NET INCOME ATTRIBUTABLE TO RAYONIER INC.10,848 25,854 
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment, net of income tax effect of $0, and $0(14,288)(44,023)
Cash flow hedges, net of income tax effect of $1,059 and $1,85761,001 (83,475)
Amortization of pension and postretirement plans, net of income tax expense of $0 and $0294 217 
Total other comprehensive income (loss)47,007 (127,281)
COMPREHENSIVE INCOME (LOSS)62,039 (100,860)
Less: Comprehensive income attributable to noncontrolling interests in the Operating Partnership(1,872)0 
Less: Comprehensive (income) loss attributable to noncontrolling interests in consolidated affiliates(580)10,661 
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO RAYONIER INC.$59,587 ($90,199)
EARNINGS PER COMMON SHARE (NOTE 8)
Basic earnings per share attributable to Rayonier Inc.$0.08 $0.20 
Diluted earnings per share attributable to Rayonier Inc.$0.08 $0.20 


See Notes to Consolidated Financial Statements.


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RAYONIER INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
September 30, 2017 December 31, 2016 March 31, 2021December 31, 2020
ASSETSASSETSASSETS
CURRENT ASSETS   CURRENT ASSETS
Cash and cash equivalents
$104,062
 
$85,909
Accounts receivable, less allowance for doubtful accounts of $23 and $3339,408
 20,664
Insurance settlement receivable (Note 8)73,000
 —
Inventory (Note 15)24,497
 21,379
Cash and cash equivalents, excluding Timber FundsCash and cash equivalents, excluding Timber Funds$77,946 $80,454 
Cash and cash equivalents, Timber FundsCash and cash equivalents, Timber Funds4,674 4,053 
Total cash and cash equivalentsTotal cash and cash equivalents82,620 84,507 
Accounts receivable, less allowance for doubtful accounts of $45 and $25Accounts receivable, less allowance for doubtful accounts of $45 and $2551,902 49,082 
Inventory (Note 17)
Inventory (Note 17)
24,993 10,594 
Prepaid expenses16,656
 11,807
Prepaid expenses18,280 16,168 
Assets held for sale (Note 17)—
 23,171
Assets held for sale (Note 23)
Assets held for sale (Note 23)
7,930 3,449 
Other current assets3,322
 1,874
Other current assets4,355 6,765 
Total current assets260,945
 164,804
Total current assets190,080 170,565 
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION2,492,049
 2,291,015
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION3,245,122 3,262,126 
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT
INVESTMENTS (NOTE 5)
79,223
 70,374
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT
INVESTMENTS (NOTE 16)
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT
INVESTMENTS (NOTE 16)
111,315 108,518 
PROPERTY, PLANT AND EQUIPMENT   PROPERTY, PLANT AND EQUIPMENT
Land3,043
 2,279
Land6,569 6,548 
Buildings24,105
 7,990
Buildings30,979 31,024 
Machinery and equipment4,449
 4,658
Machinery and equipment4,395 4,615 
Construction in progress1,127
 8,170
Construction in progress471 452 
Total property, plant and equipment, gross32,724
 23,097
Total property, plant and equipment, gross42,414 42,639 
Less — accumulated depreciation(9,398) (9,063)Less — accumulated depreciation(12,700)(12,238)
Total property, plant and equipment, net23,326
 14,034
Total property, plant and equipment, net29,714 30,401 
RESTRICTED CASH (NOTE 16)10,631
 71,708
RESTRICTED CASH (NOTE 22)
RESTRICTED CASH (NOTE 22)
475 2,975 
RIGHT-OF-USE ASSETSRIGHT-OF-USE ASSETS105,146 108,992 
OTHER ASSETS45,545
 73,825
OTHER ASSETS67,732 45,156 
TOTAL ASSETS
$2,911,719
 
$2,685,760
TOTAL ASSETS$3,749,584 $3,728,733 
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES, NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND SHAREHOLDERS’ EQUITYLIABILITIES, NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES   CURRENT LIABILITIES
Accounts payable
$27,692
 
$22,337
Accounts payable$35,083 $24,790 
Insurance settlement payable (Note 8)73,000
 —
Current maturities of long-term debt (Note 4)—
 31,676
Accrued taxes7,562
 2,657
Accrued taxes8,317 7,347 
Accrued payroll and benefits7,331
 9,277
Accrued payroll and benefits6,094 12,327 
Accrued interest8,032
 5,340
Accrued interest9,627 6,325 
Deferred revenueDeferred revenue8,137 11,112 
Other current liabilities26,799
 20,679
Other current liabilities33,587 29,234 
Total current liabilities150,416
 91,966
Total current liabilities100,845 91,135 
LONG-TERM DEBT, NET OF DEFERRED FINANCING COSTS (NOTE 4)1,030,269
 1,030,205
PENSION AND OTHER POSTRETIREMENT BENEFITS (NOTE 13)31,431
 31,856
LONG-TERM DEBT, NET OF DEFERRED FINANCING COSTS, EXCLUDING TIMBER FUNDS (NOTE 9)
LONG-TERM DEBT, NET OF DEFERRED FINANCING COSTS, EXCLUDING TIMBER FUNDS (NOTE 9)
1,299,433 1,300,336 
LONG-TERM DEBT, NET OF DEFERRED FINANCING COSTS, TIMBER FUNDS (NOTE 9)
LONG-TERM DEBT, NET OF DEFERRED FINANCING COSTS, TIMBER FUNDS (NOTE 9)
59,967 60,179 
PENSION AND OTHER POSTRETIREMENT BENEFITS (NOTE 19)
PENSION AND OTHER POSTRETIREMENT BENEFITS (NOTE 19)
22,958 23,344 
LONG-TERM LEASE LIABILITYLONG-TERM LEASE LIABILITY96,872 100,251 
OTHER NON-CURRENT LIABILITIES42,369
 34,981
OTHER NON-CURRENT LIABILITIES121,598 160,722 
COMMITMENTS AND CONTINGENCIES (NOTES 6 and 8)
 
COMMITMENTS AND CONTINGENCIES (NOTES 12 and 13)
COMMITMENTS AND CONTINGENCIES (NOTES 12 and 13)
00
NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP (NOTE 6)
NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP (NOTE 6)
137,990 130,121 
SHAREHOLDERS’ EQUITY   SHAREHOLDERS’ EQUITY
Common Shares, 480,000,000 shares authorized, 128,916,631 and 122,904,368 shares issued and outstanding870,006
 709,867
Common Shares, 480,000,000 shares authorized,138,970,890 and 137,678,822 shares issued and outstandingCommon Shares, 480,000,000 shares authorized,138,970,890 and 137,678,822 shares issued and outstanding1,146,265 1,101,675 
Retained earnings675,911
 700,887
Retained earnings407,716 446,267 
Accumulated other comprehensive income (Note 18)12,638
 856
Accumulated other comprehensive loss (Note 21)
Accumulated other comprehensive loss (Note 21)
(25,146)(73,885)
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY1,558,555
 1,411,610
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY1,528,835 1,474,057 
Noncontrolling interest98,679
 85,142
Noncontrolling interests in consolidated affiliates (Note 6)
Noncontrolling interests in consolidated affiliates (Note 6)
381,086 388,588 
TOTAL SHAREHOLDERS’ EQUITY1,657,234
 1,496,752
TOTAL SHAREHOLDERS’ EQUITY1,909,921 1,862,645 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$2,911,719
 
$2,685,760
TOTAL LIABILITIES, NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND SHAREHOLDERS’ EQUITYTOTAL LIABILITIES, NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND SHAREHOLDERS’ EQUITY$3,749,584 $3,728,733 
See Notes to Consolidated Financial Statements.

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

 Common SharesRetained
Earnings		Accumulated
Other
Comprehensive Loss		Noncontrolling Interests in Consolidated AffiliatesShareholders’
Equity
 SharesAmount
Balance, January 1, 2021137,678,822 $1,101,675 $446,267 ($73,885)$388,588 $1,862,645 
Net income— — 11,189 — 3,843 15,032 
Net income attributable to noncontrolling interests in the Operating Partnership— — (341)— — (341)
Dividends ($0.27 per share) (a)— — (37,532)— — (37,532)
Issuance of shares under the “at-the-market” equity offering, net of commissions and offering costs of $1971,107,814 36,708 — — — 36,708 
Issuance of shares under incentive stock plans39,140 1,166 — — — 1,166 
Stock-based compensation— 2,156 — — — 2,156 
Repurchase of common shares(5,020)(155)— — — (155)
Measurement period adjustment of noncontrolling interests in consolidated affiliates— — — — 655 655 
Adjustment of noncontrolling interests in the Operating Partnership— — (11,867)— — (11,867)
Conversion of units into common shares150,134 4,715 — — — 4,715 
Amortization of pension and postretirement plan liabilities— — — 294 — 294 
Foreign currency translation adjustment— — — (11,652)(2,636)(14,288)
Cash flow hedges— — — 61,628 (627)61,001 
Allocation of other comprehensive income to noncontrolling interests in the Operating Partnership— — — (1,531)— (1,531)
Distributions to noncontrolling interests in consolidated affiliates— — — — (8,737)(8,737)
Balance, March 31, 2021138,970,890 $1,146,265 $407,716 ($25,146)$381,086 $1,909,921 


 Common SharesRetained
Earnings		Accumulated
Other
Comprehensive
Loss		Noncontrolling Interests in Consolidated AffiliatesShareholders’
Equity
 SharesAmount
Balance, January 1, 2020129,331,069 $888,177 $583,006 ($31,202)$97,661 $1,537,642 
Net income— — 25,854 — 567 26,421 
Dividends ($0.27 per share)— — (34,813)— — (34,813)
Issuance of shares under incentive stock plans2,407 66 — — — 66 
Stock-based compensation— 1,510 — — — 1,510 
Repurchase of common shares(152,237)— (3,152)— — (3,152)
Amortization of pension and postretirement plan liabilities— — — 217 — 217 
Foreign currency translation adjustment— — — (33,894)(10,129)(44,023)
Cash flow hedges— — — (82,376)(1,099)(83,475)
Distributions to noncontrolling interests in consolidated affiliates— — — — (725)(725)
Balance, March 31, 2020129,181,239 $889,753 $570,895 ($147,255)$86,275 $1,399,668 
 Common Shares 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income/(Loss)
 Non-controlling Interest 
Shareholders’
Equity
 Shares Amount 
Balance, December 31, 2015122,770,217
 
$708,827
 
$612,760
 
($33,503) 
$73,656
 
$1,361,740
Net income—
 —
 211,972
 —
 5,798
 217,770
Dividends ($1.00 per share)—
 —
 (123,155) —
 —
 (123,155)
Issuance of shares under incentive stock plans179,743
 1,576
 —
 —
 —
 1,576
Stock-based compensation—
 5,136
 —
 —
 —
 5,136
Repurchase of common shares(45,592) (178) (690) —
 —
 (868)
Actuarial change and amortization of pension and postretirement plan liabilities—
 —
 —
 5,533
 —
 5,533
Foreign currency translation adjustment—
 —
 —
 2,780
 3,542
 6,322
Cash flow hedges—
 —
 —
 22,608
 214
 22,822
Recapitalization of New Zealand Joint Venture—
 (5,398) —
 3,438
 1,960
 —
Recapitalization costs—
 (96) —
 —
 (28) (124)
Balance, December 31, 2016122,904,368
 
$709,867
 
$700,887
 
$856
 
$85,142
 
$1,496,752
Cumulative-effect adjustment due to adoption of ASU No. 2016-16—
 —
 (14,365) —
 —
 (14,365)
Net income—
 —
 84,691
 —
 9,968
 94,659
Dividends ($0.75 per share)—
 —
 (95,302) —
 —
 (95,302)
Issuance of shares under incentive stock plans262,561
 3,665
 —
 —
 —
 3,665
Stock-based compensation—
 4,084
 —
 —
 —
 4,084
Repurchase of common shares(298) —
 —
 —
 —
 —
Amortization of pension and postretirement plan liabilities—
 —
 —
 349
 —
 349
Foreign currency translation adjustment—
 —
 —
 13,335
 3,264
 16,599
Cash flow hedges—
 —
 —
 (1,902) 305
 (1,597)
Issuance of shares under equity offering, net of costs5,750,000
 152,390
 —
 —
 —
 152,390
Balance, September 30, 2017128,916,631
 
$870,006
 
$675,911
 
$12,638
 
$98,679
 
$1,657,234


(a)For information regarding distributions to noncontrolling interests in the Operating Partnership, see the Rayonier Inc. Consolidated Statements of Cash Flows and Note 6 — Noncontrolling Interests.



See Notes to Consolidated Financial Statements.















3

Table of Contents

RAYONIER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
Nine Months Ended September 30,Three Months Ended March 31,
2017 2016 20212020
OPERATING ACTIVITIES   OPERATING ACTIVITIES
Net income
$94,659
 
$167,261
Net income$15,032 $26,421 
Adjustments to reconcile net income to cash provided by operating activities:   Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion and amortization96,602
 83,685
Depreciation, depletion and amortization45,213 34,329 
Non-cash cost of land and improved development8,631
 10,111
Non-cash cost of land and improved development1,813 412 
Stock-based incentive compensation expense4,084
 3,894
Stock-based incentive compensation expense2,156 1,510 
Deferred income taxes16,714
 4,472
Deferred income taxes(1,128)3,361 
Amortization of losses from pension and postretirement plans349
 1,881
Amortization of losses from pension and postretirement plans294 217 
Gain on sale of large disposition of timberlands(28,183) (101,325)Gain on sale of large disposition of timberlands0 (28,655)
Other29
 (251)Other(3,681)568 
Changes in operating assets and liabilities:   Changes in operating assets and liabilities:
Receivables(18,639) (3,897)Receivables(3,697)(5,316)
Inventories(617) (4,591)Inventories(3,512)(3,618)
Accounts payable5,018
 583
Accounts payable6,684 3,353 
Income tax receivable/payable(126) (47)
All other operating activities8,352
 2,132
All other operating activities(5,306)(3,403)
CASH PROVIDED BY OPERATING ACTIVITIES186,873
 163,908
CASH PROVIDED BY OPERATING ACTIVITIES53,868 29,179 
INVESTING ACTIVITIES   INVESTING ACTIVITIES
Capital expenditures(45,731) (40,246)Capital expenditures(15,831)(17,176)
Real estate development investments(11,780) (4,815)Real estate development investments(3,011)(1,727)
Purchase of timberlands(239,052) (353,828)Purchase of timberlands(29,938)(24,122)
Assets purchased in business acquisition—
 (1,113)
Net proceeds from large disposition of timberlands42,029
 126,965
Net proceeds from large disposition of timberlands0 115,666 
Rayonier office building under construction(5,979) (3,933)
Change in restricted cash61,078
 22,430
Other383
 444
Other4,356 2,070 
CASH USED FOR INVESTING ACTIVITIES(199,052) (254,096)
CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIESCASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES(44,424)74,711 
FINANCING ACTIVITIES   FINANCING ACTIVITIES
Issuance of debt63,389
 694,096
Issuance of debt0 20,000 
Repayment of debt(95,216) (454,419)Repayment of debt0 (20,000)
Dividends paid(95,008) (92,095)
Dividends paid on common stockDividends paid on common stock(37,490)(34,907)
Distributions to noncontrolling interests in the Operating PartnershipDistributions to noncontrolling interests in the Operating Partnership(1,155)0 
Proceeds from the issuance of common shares under incentive stock plan3,665
 889
Proceeds from the issuance of common shares under incentive stock plan1,166 66 
Proceeds from the issuance of common shares from equity offering, net of costs152,390
 —
Repurchase of common shares made under share repurchase program—
 (690)
Debt issuance costs—
 (818)
Other—
 (139)
CASH PROVIDED BY FINANCING ACTIVITIES29,220
 146,824
Proceeds from the issuance of common shares under the “at-the-market” (ATM) equity offering program, net of commissions and offering costsProceeds from the issuance of common shares under the “at-the-market” (ATM) equity offering program, net of commissions and offering costs32,545 0 
Repurchase of common sharesRepurchase of common shares(155)0 
Repurchase of common shares made under repurchase programRepurchase of common shares made under repurchase program0 (3,152)
Distributions to noncontrolling interests in consolidated affiliatesDistributions to noncontrolling interests in consolidated affiliates(8,737)(725)
CASH USED FOR FINANCING ACTIVITIESCASH USED FOR FINANCING ACTIVITIES(13,826)(38,718)
EFFECT OF EXCHANGE RATE CHANGES ON CASH1,112
 1,626
EFFECT OF EXCHANGE RATE CHANGES ON CASH(5)(2,303)
CASH AND CASH EQUIVALENTS   
Change in cash and cash equivalents18,153
 58,262
CASH, CASH EQUIVALENTS AND RESTRICTED CASHCASH, CASH EQUIVALENTS AND RESTRICTED CASH
Change in cash, cash equivalents and restricted cashChange in cash, cash equivalents and restricted cash(4,387)62,869 
Balance, beginning of year85,909
 51,777
Balance, beginning of year87,482 69,968 
Balance, end of period
$104,062
 
$110,039
Balance, end of period$83,095 $132,837 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION   SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period:   Cash paid during the period:
Interest (a)
$23,485
 
$23,540
Interest (a)$2,945 $2,595 
Income taxes513
 495
Income taxes4,838 185 
Non-cash investing activity:   Non-cash investing activity:
Capital assets purchased on account4,575
 4,376
Capital assets purchased on account4,814 4,215 

(a)Interest paid is presented net of patronage payments received of $3.0 million and $0.4 million for the nine months ended September 30, 2017 and September 30, 2016, respectively. For additional information on patronage payments, see Note 5 — Debt in the 2016 Form 10-K.

(a)Interest paid is presented net of patronage payments received of $6.2 million and $4.3 million for the three months ended March 31, 2021 and March 31, 2020, respectively. For additional information on patronage payments, see Note 8 — Debt in the 2020 Form 10-K.





See Notes to Consolidated Financial Statements.

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Table of Contents

RAYONIER, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(Unaudited)
(Dollars in thousands, except per unit amounts)

Three Months Ended
March 31,
 20212020
SALES (NOTE 4)
$191,447 $259,130 
Costs and Expenses
Cost of sales(151,378)(209,499)
Selling and general expenses(14,032)(9,968)
Other operating income (expense), net (Note 18)
2,448 (1,111)
(162,962)(220,578)
OPERATING INCOME28,485 38,552 
Interest expense(10,028)(8,216)
Interest and other miscellaneous expense, net(4)(209)
 INCOME BEFORE INCOME TAXES18,453 30,127 
Income tax expense (Note 20)
(3,421)(3,706)
NET INCOME15,032 26,421 
Less: Net income attributable to noncontrolling interests in consolidated affiliates(3,843)(567)
NET INCOME ATTRIBUTABLE TO RAYONIER, L.P. UNITHOLDERS11,189 25,854 
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment, net of income tax effect of $0, and $0(14,288)(44,023)
Cash flow hedges, net of income tax effect of $1,059 and $1,85761,001 (83,475)
Amortization of pension and postretirement plans, net of income tax expense of $0 and $0294 217 
Total other comprehensive income (loss)47,007 (127,281)
COMPREHENSIVE INCOME (LOSS)62,039 (100,860)
Less: Comprehensive (income) loss attributable to noncontrolling interests in consolidated affiliates(580)10,661 
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO RAYONIER, L.P. UNITHOLDERS$61,459 ($90,199)
EARNINGS PER UNIT (NOTE 8)
Basic earnings per unit attributable to Rayonier, L.P.$0.08 $0.20 
Diluted earnings per unit attributable to Rayonier, L.P.$0.08 $0.20 

See Notes to Consolidated Financial Statements.

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Table of Contents
RAYONIER, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
 March 31, 2021December 31, 2020
ASSETS
CURRENT ASSETS
Cash and cash equivalents, excluding Timber Funds$77,946 $80,454 
Cash and cash equivalents, Timber Funds4,674 4,053 
Total cash and cash equivalents82,620 84,507 
Accounts receivable, less allowance for doubtful accounts of $45 and $2551,902 49,082 
Inventory (Note 17)
24,993 10,594 
Prepaid expenses18,280 16,168 
Assets held for sale (Note 23)
7,930 3,449 
Other current assets4,355 6,765 
Total current assets190,080 170,565 
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION3,245,122 3,262,126 
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT
     INVESTMENTS (NOTE 16)
111,315 108,518 
PROPERTY, PLANT AND EQUIPMENT
Land6,569 6,548 
Buildings30,979 31,024 
Machinery and equipment4,395 4,615 
Construction in progress471 452 
Total property, plant and equipment, gross42,414 42,639 
Less — accumulated depreciation(12,700)(12,238)
Total property, plant and equipment, net29,714 30,401 
RESTRICTED CASH (NOTE 22)
475 2,975 
RIGHT-OF-USE ASSETS105,146 108,992 
OTHER ASSETS67,732 45,156 
TOTAL ASSETS$3,749,584 $3,728,733 
       LIABILITIES, REDEEMABLE OPERATING PARTNERSHIP UNITS AND CAPITAL
CURRENT LIABILITIES
Accounts payable$35,083 $24,790 
Accrued taxes8,317 7,347 
Accrued payroll and benefits6,094 12,327 
Accrued interest9,627 6,325 
Deferred revenue8,137 11,112 
Other current liabilities33,587 29,234 
Total current liabilities100,845 91,135 
LONG-TERM DEBT, NET OF DEFERRED FINANCING COSTS, EXCLUDING TIMBER FUNDS (NOTE 9)
1,299,433 1,300,336 
LONG-TERM DEBT, NET OF DEFERRED FINANCING COSTS, TIMBER FUNDS (NOTE 9)
59,967 60,179 
PENSION AND OTHER POSTRETIREMENT BENEFITS (NOTE 19)
22,958 23,344 
LONG-TERM LEASE LIABILITY96,872 100,251 
OTHER NON-CURRENT LIABILITIES121,598 160,722 
COMMITMENTS AND CONTINGENCIES (NOTES 12 and 13)
REDEEMABLE OPERATING PARTNERSHIP UNITS (NOTE 6) 4,278,766 and 4,428,900 Units outstanding, respectively
137,990 130,121 
CAPITAL
General partners’ capital15,499 15,454 
Limited partners’ capital1,534,411 1,529,948 
Accumulated other comprehensive loss (Note 21)
(21,075)(71,345)
TOTAL CONTROLLING INTEREST CAPITAL1,528,835 1,474,057 
Noncontrolling interests in consolidated affiliates (Note 6)
381,086 388,588 
TOTAL CAPITAL1,909,921 1,862,645 
TOTAL LIABILITIES, REDEEMABLE OPERATING PARTNERSHIP UNITS AND CAPITAL$3,749,584 $3,728,733 
See Notes to Consolidated Financial Statements.
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Table of Contents
RAYONIER, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL
(Unaudited)
(Dollars in thousands, except share data)

UnitsAccumulated
Other
Comprehensive Loss		Noncontrolling Interests in Consolidated AffiliatesTotal Capital
 General Partners’ CapitalLimited Partners’ Capital
Balance, January 1, 2021$15,454 $1,529,948 ($71,345)$388,588 $1,862,645 
Net income112 11,077 — 3,843 15,032 
Distributions on units ($0.27 per unit)(387)(38,300)— — (38,687)
Issuance of units under the “at-the-market” equity offering, net of commissions and offering costs of $197367 36,341 — — 36,708 
Issuance of units under incentive stock plans12 1,154 — — 1,166 
Stock-based compensation22 2,134 — — 2,156 
Repurchase of units(2)(153)— — (155)
Adjustment of Redeemable Operating Partnership Units(126)(12,458)— — (12,584)
Conversion of units into common shares47 4,668 — — 4,715 
Measurement period adjustment of noncontrolling interests in consolidated affiliates— — — 655 655 
Amortization of pension and postretirement plan liabilities— — 294 — 294 
Foreign currency translation adjustment— — (11,652)(2,636)(14,288)
Cash flow hedges— — 61,628 (627)61,001 
Distributions to noncontrolling interests in consolidated affiliates— — — (8,737)(8,737)
Balance, March 31, 2021$15,499 $1,534,411 ($21,075)$381,086 $1,909,921 

 UnitsAccumulated
Other
Comprehensive
Loss		Noncontrolling Interests in Consolidated AffiliatesTotal Capital
 General Partners’ CapitalLimited Partners’ Capital
Balance, January 1, 2020$14,712 $1,456,471 ($31,202)$97,661 $1,537,642 
Net income259 25,595 — 567 26,421 
Distributions on units ($0.27 per unit)(349)(34,464)— — (34,813)
Issuance of units under incentive stock plans1 65 — — 66 
Stock-based compensation15 1,495 — — 1,510 
Repurchase of units(32)(3,120)— — (3,152)
Amortization of pension and postretirement plan liabilities— — 217 — 217 
Foreign currency translation adjustment— — (33,894)(10,129)(44,023)
Cash flow hedges— — (82,376)(1,099)(83,475)
Distributions to noncontrolling interests in consolidated affiliates— — — (725)(725)
Balance, March 31, 2020$14,606 $1,446,042 ($147,255)$86,275 $1,399,668 












See Notes to Consolidated Financial Statements.
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RAYONIER, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
Three Months Ended March 31,
 20212020
OPERATING ACTIVITIES
Net income$15,032 $26,421 
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion and amortization45,213 34,329 
Non-cash cost of land and improved development1,813 412 
Stock-based incentive compensation expense2,156 1,510 
Deferred income taxes(1,128)3,361 
Amortization of losses from pension and postretirement plans294 217 
Gain on sale of large disposition of timberlands0 (28,655)
Other(3,681)568 
Changes in operating assets and liabilities:
Receivables(3,697)(5,316)
Inventories(3,512)(3,618)
Accounts payable6,684 3,353 
All other operating activities(5,306)(3,403)
CASH PROVIDED BY OPERATING ACTIVITIES53,868 29,179 
INVESTING ACTIVITIES
Capital expenditures(15,831)(17,176)
Real estate development investments(3,011)(1,727)
Purchase of timberlands(29,938)(24,122)
Net proceeds from large disposition of timberlands0 115,666 
Other4,356 2,070 
CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES(44,424)74,711 
FINANCING ACTIVITIES
Issuance of debt0 20,000 
Repayment of debt0 (20,000)
Distributions on units(38,645)(34,907)
Proceeds from the issuance of units under incentive stock plan1,166 66 
Proceeds from the issuance of units under the “at-the-market” (ATM) equity offering program, net of commissions and offering costs32,545 0 
Repurchase of units(155)0 
Repurchase of units made under repurchase program0 (3,152)
Distributions to noncontrolling interests in consolidated affiliates(8,737)(725)
CASH USED FOR FINANCING ACTIVITIES(13,826)(38,718)
EFFECT OF EXCHANGE RATE CHANGES ON CASH(5)(2,303)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Change in cash, cash equivalents and restricted cash(4,387)62,869 
Balance, beginning of year87,482 69,968 
Balance, end of period$83,095 $132,837 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period:
Interest (a)$2,945 $2,595 
Income taxes4,838 185 
Non-cash investing activity:
Capital assets purchased on account4,814 4,215 

(a)Interest paid is presented net of patronage payments received of $6.2 million and $4.3 million for the three months ended March 31, 2021 and March 31, 2020, respectively. For additional information on patronage payments, see Note 8 — Debt in the 2020 Form 10-K.



See Notes to Consolidated Financial Statements.
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Table of Contents
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)






1.BASIS OF PRESENTATION


1.BASIS OF PRESENTATION
The unaudited consolidated financial statements and notes thereto of Rayonier Inc. and its subsidiaries (“Rayonier” or the “Company”)and Rayonier, L.P. have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”).
The Rayonier Inc. and Rayonier, L.P. year-end balance sheet information was derived from audited financial statements not included herein. In the opinion of management, these financial statements and notes reflect allany 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’sour Annual Report on Form 10-K for the year ended December 31, 2016,2020, as filed with the SEC (the “2016“2020 Form 10-K”).
On May 7, 2020, Rayonier Inc. contributed its 100% ownership interest in Rayonier Operating Company LLC (the “Contribution”) to Rayonier, L.P. As a result of the Contribution, Rayonier, L.P. expressly assumed all the obligations of Rayonier Inc. with respect to the outstanding 2022 Notes and Rayonier Inc. agreed to irrevocably, fully and unconditionally guarantee jointly and severally, the obligations of Rayonier, L.P. under the Indenture, including the 2022 Notes.
On May 8, 2020, Rayonier, L.P. acquired Pope Resources and became the general partner of Pope Resources. As of March 31, 2021, the Company owned a 97.0% interest in the Operating Partnership, with the remaining 3.0% interest owned by limited partners of the Operating Partnership. As the sole general partner of the Operating Partnership, Rayonier Inc. has exclusive control of the day-to-day management of the Operating Partnership. Please see Note 2 - Merger with Pope Resources and Note 24 - Charges for Integration and Restructuring for further information pertaining to the merger.
Pursuant to ASC 250, the Contribution was accounted for as a change in reporting entity between entities under common control and applied retrospectively for all periods as if the Contribution had been in effect since inception of common control. As a result, the effect of the change in reporting entity on Rayonier L.P.’s operating income, net income attributable to Rayonier, L.P. and per unit amounts for the three months ended March 31, 2020, assuming the change in reporting entity occurred on January 1, 2020 are presented below (in thousands, except per unit amounts):

Three Months Ended
March 31,
2020
Operating income0 
Net income attributable to Rayonier, L.P. (a)($3,596)
Basic earnings per unit attributable to Rayonier, L.P.($0.03)
Diluted earnings per unit attributable to Rayonier, L.P.($0.03)

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

SUMMARY OF UPDATES TO SIGNIFICANT ACCOUNTING POLICIES
For a full description of our other significant accounting policies, see Note 1 — Summary of Significant Accounting Policies in our 2020 Form 10-K.
Investment in Real Estate
The Company capitalizes costs directly and indirectly associated with development of identified real estate projects. Direct costs include land and common development costs (such as roads, utilities and amenities), and capitalized property taxes. Indirect costs include administration, legal fees, capitalized interest, and project administration to the extent that such costs are related to a specific project. Interest is capitalized based on the amount of underlying expenditures of real estate projects under development.
Revenue Recognition for Real Estate Sales
The Company generally recognizes revenue on sales of real estate using the full accrual method at closing, when cash has been received, title and risk of loss have passed to the buyer and there is no continuing involvement with the property. Revenue is recognized using the percentage-of-completion method on sales of real estate containing future performance obligations. Cost of sales associated with real estate sold includes the cost of the land, the cost of any timber on the property that was conveyed to the buyer, any real estate development costs and any closing costs including sales commissions that may be borne by the Company.
When developed residential or commercial land is sold, the cost of sales includes actual costs incurred and estimates of future development costs benefiting the property sold through completion. When developed land is sold, costs are allocated to each sold unit or lot based upon the relative sales value. For purposes of allocating development costs, estimates of future revenues and development costs are re-evaluated periodically throughout the year, with adjustments being allocated prospectively to the remaining units available for sale.
Recently Adopted Standards
In October 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory, stating entities should recognize income tax consequences of intra-entity transfers of assets other than inventory in the period in which they occur. As such, the Company is required to apply the changes on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. ASU No. 2016-16 is effective for annual periods beginning after December 15, 2017 with early adoption permitted at the beginning of an annual period for which financial statements have not been issued. Rayonier early adopted ASU No. 2016-16 during the first quarter ended March 31, 2017. See Note 7 — Income Taxes for additional information.
In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This update simplifies the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU No. 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Rayonier adopted ASU No. 2016-09 during the first quarter ended March 31, 2017. Upon adoption, additional excess tax benefits and tax deficiencies are recorded to “Income tax expense” in the Consolidated Statements of Income and Comprehensive Income, forfeitures are accounted for when they occur and cash paid by Rayonier when directly withholding shares for tax withholding purposes are classified as a financing activity within the Consolidated Statements of Cash Flows. The adoption of this standard did not have a material impact on the consolidated financial statements.


5
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Table of Contents
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)



New


NEW ACCOUNTING STANDARDS
In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-04, Reference Rate Reform (Topic 848), which provides optional guidance to ease the potential burden in accounting due to reference rate reform. ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During Q2 2020, we elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. We continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.
In March 2017,August 2020, the FASB issued ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715)2020-06, Debt–Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging–Contracts in Entity's Own Equity (Subtopic 815-40): Improving the Presentation of Net Periodic Pension CostAccounting for Convertible Instruments and Net Periodic Postretirement Benefit CostContracts in an Entity's Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires that an employer report the service cost component of net periodic benefit costentities to account for beneficial conversion features and cash conversion features in the Consolidated Statements of Income in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. Additionally, the other components of net periodic benefit cost (interest cost, expected return on plan assets and amortization of losses or gains) are required to be presented in the income statementequity, separately from the service cost componenthost convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and outside a subtotalembedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of income from operations. If a separate line item is used to present the other components of net benefit cost, that line item mustcalculating diluted EPS when an instrument may be appropriately described. If a separate line item is not used, the line item usedsettled in the income statement to present the other components of net benefit cost must be disclosed. ASU No. 2017-07cash or shares. The pronouncement is effective for annualfiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017, including interim periods within those annual periods. ASU No. 2017-07 is required to be applied retrospectively to all periods presented beginning2021, with early adoption permitted. We are currently in the periodprocess of adoption. Rayonier intends to adopt ASU No. 2017-07 inevaluating the Company’s first quarter 2018 Form 10-Q. Interest cost, expected return on plan assets and amortization of losses or gains are currently recorded in “Selling and general expenses” and “Cost of sales” in the Consolidated Statements of Income and “Timber and timberlands, net of depletion and amortization” in the Consolidated Balance Sheets. Upon adoption, these components of net period benefit cost will be recorded in “Interest income and miscellaneous income (expense), net.” As the Company froze benefits for all employees participating in the pension plan effective December 31, 2016, the service cost component of net period benefit is no longer recognized by Rayonier. Based on current actuarial estimates and management assumptions, Rayonier anticipates that the adoption of this standard will not have a significant impact on the Company’s consolidated financial statements. See Note 13 — Employee Benefit Plans for the components of net periodic benefit cost.
In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the Consolidated Statements of Cash Flows. ASU No. 2016-18 is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. ASU No. 2016-18 is required to be applied retrospectively to all periods presented beginning in the period of adoption. Rayonier intends to adopt ASU No. 2016-18 in the Company’s first quarter 2018 Form 10-Q. The Company currently records changes in restricted cash within the investing sectioneffects of the Consolidated Statementsprovisions of Cash Flows. Upon adoption, restricted cash will be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shownASU 2020-06 on the Consolidated Statements of Cash Flows and therefore changes in restricted cash will not be reported as cash flow activities. Rayonier will continue to disclose the nature of restrictions on the Company’s cash, cash equivalents, and restricted cash. See Note 16 — Restricted Cash for additional information.
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses the diversity in practice in how certain cash receipts and cash payments are presented and classified in the Consolidated Statements of Cash Flows under Topic 230, Statement of Cash Flows, and other Topics. This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. ASU No. 2016-15 is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. ASU No. 2016-15 is required to be applied retrospectively to all periods presented beginning in the period of adoption. Early adoption is permitted. The Company anticipates the adoption of this standard will not have a significant impact on the Company’s consolidatedour financial statements.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which currently requires lessees to recognize most leases on their balance sheets related to the rights and obligations created by those leases. ASU No. 2016-02 also requires additional qualitative and quantitative disclosures related to the nature, timing and uncertainty of cash flows arising from leases. ASU No. 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. ASU No. 2016-02 is required to be applied on a modified retrospective basis beginning at the earliest period presented. Early adoption is permitted. The Company is currently evaluating the impact of adopting this new guidance on the consolidated financial statements.SUBSEQUENT EVENTS

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)

In May 2014, the FASB and International Accounting Standards Board (“IASB”) jointly issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), a comprehensive new revenue recognition standard that will supersede current revenue recognition guidance. 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 August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date. ASU No. 2015-14 provides 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. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers - Identifying Performance Obligations and Licensing. The update clarifies the guidance for identifying performance obligations. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The update clarifies the guidance for assessing collectibility, presenting sales taxes and other similar taxes collected from customers, non-cash consideration, contract modifications at transition, completed contracts at transition and disclosing the accounting change in the period of adoption. In February 2017, the FASB issued ASU No. 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. The update clarifies that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. 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 expects to adopt using the cumulative-effect method.
As of September 30, 2017, and subject to the Company’s ongoing evaluation of new transactions and contracts, Rayonier has substantially completed its evaluation of the expected impact of adopting Topic 606 and anticipates that the adoption of this standard will notWe have a significant impact on the Company’s consolidated financial statements aside from adding expanded disclosures. Rayonier is also currently identifying and implementing appropriate changes to its business processes, systems and controls to support revenue recognition and disclosures under Topic 606. A material change in controls over financial reporting is not anticipated.
Subsequent Events
The Company has evaluated events occurring from September 30, 2017March 31, 2021 to the date of issuance of these Consolidated Financial Statements for potential recognition or disclosure in the consolidated financial statements. No events were identified that warranted recognition. See recognition or disclosure.

2.    MERGER WITH POPE RESOURCES
On May 8, 2020, Rayonier Inc. and Rayonier, L.P. acquired Pope Resources and became the general partner of Pope Resources. Pope Resources was a master limited partnership that primarily owned and managed timberlands in the U.S. Pacific Northwest. Pope Resources also managed and co-invested in 3 private equity timber funds and developed and sold real estate properties. For additional information about the merger, see Note 8 — Contingencies for events that warranted disclosure.    2 - Merger with Pope Resources in the 2020 Form 10-K.

The total purchase price was as follows (in millions):

2.Cash considerationJOINT VENTURE INVESTMENT$247,318 
Equity consideration172,640 
Redeemable Operating Partnership Unit consideration106,752 
Fair value of Pope Resources units held by us (a)11,211 
Total purchase price$537,921
Matariki Forestry Group
The Company maintains a controlling financial interest in Matariki Forestry Group (the “New Zealand JV”), a joint venture that owns or leases approximately 0.4 million legal acres
(a)Based on the closing price of New Zealand timberland. Accordingly,Pope Resources units on the Company consolidates the New Zealand JV’s balance sheet and results of operations. The portions of the consolidated financial position and results of operations attributable to the New Zealand JV’s 23% noncontrolling interest are shown separately within the Consolidated Statements of Income and Comprehensive Income and Consolidated Statements of Shareholders’ Equity. Rayonier New Zealand Limited (“RNZ”), a wholly-owned subsidiary of Rayonier Inc., serves as the manager of the New Zealand JV.


NASDAQ on May 7, 2020.
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(Unaudited)
(Dollar amounts in thousands unless otherwise stated)






We recognized approximately $2.5 million of merger-related costs that were expensed during first quarter of 2020. See Note 24 — Charges for Integration and Restructuring for descriptions of the components of merger-related costs.
The acquisition of Pope Resources has been accounted for as a business combination under ASC 805, Business Combinations, (“ASC 805”). Under ASC 805, assets acquired and liabilities assumed in a business combination must be recorded at their fair value as of the acquisition date. Recorded fair valuation of assets acquired and liabilities assumed related to the acquisition of Pope Resources is preliminary and will be completed as soon as practicable, but no later than one year after the consummation of the transaction. Pursuant to ASC 805, the financial statements will not be retrospectively adjusted for any provisional amount changes that occur in subsequent periods. Rather, we will recognize any provisional amount adjustments during the reporting period in which the adjustments are determined. We will also be required to record, in the same period's financial statements, the effect on earnings of changes in depletion, depreciation, amortization, or other income effects, if any, as a result of any change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date.
As a result of refinements to the preliminary purchase price allocation, higher and better use timberlands increased by approximately $8.2 million. This includes development properties in the town of Port Gamble, Washington, development projects in Gig Harbor, Kingston, and Bremerton, Washington and various other assets.
The preliminary estimate of fair value required the use of significant assumptions and estimates. Critical estimates included, but were not limited to, future expected cash flows, including projected revenues and expenses, and the applicable discount rates. These estimates were based on assumptions that we believe to be reasonable; however, actual results may differ from these estimates. The assessment of fair value is preliminary and is based on information that was available to management at the time the consolidated financial statements were prepared. Those estimates and assumptions are subject to change as we obtain additional information related to those estimates during the applicable measurement periods (up to one year from the acquisition date). The most significant open items necessary to complete are related to timberlands, property, plant and equipment, higher and better use timberlands and real estate development investments, long-term debt instruments, environmental liabilities, intangible assets and tax related matters.

The preliminary fair value estimates were generally based on significant inputs that are not observable in the market and thus represent Level 3 measurements as defined in ASC 820, Fair Value Measurement, (“ASC 820”) with the exception of certain long-term debt instruments assumed in the merger that can be valued using observable market inputs and are therefore Level 2 measurements. See Note 11 — Fair Value Measurements for further information on the fair value hierarchy.

The following summarizes the fair value methodology utilized in our preliminary fair value estimates for significant assets and liabilities:
Income Approach— Estimates fair value for an asset based on the present value of cash flow projected to be generated by the asset. Projected cash flows are discounted at rates of return that reflect the relative risk of achieving the cash flows and the time value of money. This approach was primarily used to value acquired timber in both our Pacific Northwest and Timber Funds segment.
Cost Approach— Estimates value by determining the current cost of replacing an asset with another of equivalent economic utility. This approach was primarily used for property and equipment.
Market Approach— Estimates fair value for an asset based on values of recent comparable transactions. This approach was primarily used to value timberlands, higher and better use timberlands and real estate developments investments, certain land and building assets and long-term debt instruments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)





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

Core TimberlandsTimber FundsTotal
Timberland and Real Estate Business
Cash$7,380 $8,870 $16,250 
Accounts receivable2,459 1,787 4,246 
Other current assets703 260 963 
Timber and Timberlands507,526 432,500 940,026 
Higher and Better Use Timberlands and Real Estate Development Investments34,748 0 34,748 
Property, plant and equipment11,616 0 11,616 
Other assets3,736 269 4,005 
Total identifiable assets acquired$568,168 $443,686 $1,011,854 
Accounts payable274 293 567 
Current maturities of long-term debt0 25,084 25,084 
Accrued interest244 275 519 
Other current liabilities9,038 2,080 11,118 
Long-term debt53,502 35,759 89,261 
Long-term environmental liabilities10,748 0 10,748 
Other non-current liabilities (a)2,616 0 2,616 
Total liabilities assumed$76,422 $63,491 $139,913 
Net identifiable assets$491,746 $380,195 $871,941 
Less: noncontrolling interests(3,816)(330,204)(334,020)
Total net assets acquired$487,930 $49,991 $537,921 

3.SEGMENT AND GEOGRAPHICAL INFORMATION
(a)Other non-current liabilities includes a $2.6 million deferred income tax liability resulting from the preliminary fair value adjustment to Pope Resources’ assets and liabilities.
These estimated fair values are preliminary in nature and subject to adjustments, which could be material. We have not identified any material unrecorded pre-merger contingencies where the related asset, liability or impairment is probable and the amount can be reasonably estimated. Our valuations will be finalized when certain information arranged to be obtained has been received and our review of that information has been completed. Prior to the finalization of the purchase price allocation, if information becomes available that would indicate it is probable that such events had occurred and the amounts can be reasonably estimated, such items will be included in the final purchase price allocation.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)





Pursuant to ASC 805, unaudited supplemental pro forma results of operations for the three months ended March 31, 2020, assuming the acquisition had occurred as of January 1, 2020, are presented below (in thousands, except per share and unit amounts):

Three Months Ended
March 31, 2020
Sales$283,500 
Net income attributable to Rayonier Inc.$18,398 
Basic earnings per share attributable to Rayonier Inc.$0.13 
Diluted earnings per share attributable to Rayonier Inc.$0.13 
Net income attributable to Rayonier, L.P.$18,998 
Basic earnings per unit attributable to Rayonier, L.P.$0.13 
Diluted earnings per unit attributable to Rayonier, L.P.$0.13 
The unaudited pro forma results include certain pro forma adjustments to net earnings that were directly attributable to the acquisition, assuming the acquisition had occurred on January 1, 2020, including the following:

•additional depletion expense that would have been recognized relating to the basis increase in the acquired Timber and Timberlands;
•adjustment to interest expense to reflect the removal of Pope Resources debt and the additional borrowings we incurred in conjunction with the acquisition; and
•a reduction in expenses for the three months ended March 31, 2020 of $7.7 million for acquisition-related transaction costs.
Pro forma data may not be indicative of the results that would have been obtained had these events occurred at the beginning of the periods presented, nor is it intended to be a projection of future results.

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





3.    SEGMENT AND GEOGRAPHICAL INFORMATION
Sales between operating segments are made based on estimated fair market value, and intercompany sales, purchases and profits (losses) are eliminated in consolidation. The Company evaluatesWe evaluate financial performance based on segment operating income (loss) and Adjusted EBITDA.Earnings before Interest, Taxes, Depreciation, Depletion and Amortization (“Adjusted EBITDA”). Asset information is not reported by segment, as the Company doeswe do not produce asset information by segment internally.
Operating income as presented in the Consolidated Statements of Income and Comprehensive Income is equal to segment income. Certain income (loss) items in the Consolidated Statements of Income and Comprehensive Income are not allocated to segments. These items, which include gains (losses) from certain asset dispositions, interest income (expense), miscellaneous income (expense) and income tax (expense) benefit,expense, are not considered by management to be part of segment operations and are included under “Corporate and other” or “unallocated interest expense and other.”
The following tables summarize the segment information for the three and nine months ended September 30, 2017March 31, 2021 and 2016:2020:
 Three Months Ended March 31,
SALES20212020
Southern Timber$51,677 $52,982 
Pacific Northwest Timber41,522 31,075 
New Zealand Timber57,579 37,538 
Timber Funds (a)14,939 0 
Real Estate (b)10,504 118,564 
Trading16,665 18,984 
Intersegment Eliminations (c)(1,439)(13)
Total$191,447 $259,130 
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
SALES2017 2016 2017 2016
Southern Timber
$31,897
 
$27,826
 
$95,390
 
$102,205
Pacific Northwest Timber18,644
 16,139
 62,887
 52,316
New Zealand Timber69,913
 42,179
 187,817
 125,951
Real Estate (a)17,240
 60,626
 97,149
 211,296
Trading40,252
 24,651
 115,935
 76,046
Total
$177,946
 
$171,421
 
$559,178
 
$567,814

(a)The nine months ended September 30, 2017 and September 30, 2016 include Large Dispositions of $42.0 million and $129.5 million, respectively.
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
OPERATING INCOME (LOSS)2017 2016 2017 2016
Southern Timber
$11,436
 
$8,183
 
$35,031
 
$34,976
Pacific Northwest Timber1,134
 (3,293) (1,278) (874)
New Zealand Timber19,280
 6,613
 56,327
 21,385
Real Estate (a)11,437
 43,078
 57,235
 152,997
Trading1,142
 481
 3,380
 1,456
Corporate and other(5,158) (5,373) (15,269) (15,687)
Total Operating Income39,271
 49,689
 135,426
 194,253
Unallocated interest expense and other(7,425) (8,286) (23,950) (24,718)
Total Income before Income Taxes
$31,846
 
$41,403
 
$111,476
 
$169,535
(a)The three months ended March 31, 2021 includes $11.9 million of sales attributable to noncontrolling interests in Timber Funds.
(b)The three months ended March 31, 2020 includes $116.0 million from a Large Disposition. Large Dispositions are defined as transactions involving the sale of timberland that exceed $20 million in size and do not have a demonstrable premium relative to timberland value.
(c)Primarily consists of the elimination of timberland investment management fees paid to us by the timber funds which are initially recognized as sales and cost of sales within the Timber Funds segment, as well as log marketing fees paid to our Trading segment from our Southern Timber and Pacific Northwest Timber segments for marketing log export sales.
(a)The nine months ended September 30, 2017 and September 30, 2016 include Large Dispositions of $28.2 million and $101.3 million, respectively.













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RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)




 Three Months Ended
September 30,		 Nine Months Ended
September 30,
DEPRECIATION, DEPLETION AND AMORTIZATION2017 2016 2017 2016
Southern Timber
$12,736
 
$9,988
 
$37,092
 
$37,102
Pacific Northwest Timber6,481
 6,668
 23,766
 14,978
New Zealand Timber (a)8,478
 5,956
 29,341
 17,252
Real Estate (b)735
 9,260
 14,038
 35,988
Trading—
 —
 —
 —
Corporate and other277
 106
 469
 298
Total
$28,707
 
$31,978
 
$104,706
 
$105,618


Three Months Ended March 31,
OPERATING INCOME (LOSS)20212020
Southern Timber$17,347 $15,070 
Pacific Northwest Timber1,350 (948)
New Zealand Timber13,944 5,448 
Timber Funds (a)1,501 0 
Real Estate (b)1,687 26,774 
Trading244 (19)
Corporate and Other(7,588)(7,773)
Total Operating Income28,485 38,552 
Unallocated interest expense and other(10,032)(8,425)
Total Income before Income Taxes$18,453 $30,127 

(a)The three months ended March 31, 2021 includes $1.1 million of operating income attributable to noncontrolling interests in Timber Funds.
(b)The three months ended March 31, 2020 includes $28.7 million from a Large Disposition.

 Three Months Ended March 31,
DEPRECIATION, DEPLETION AND AMORTIZATION20212020
Southern Timber$14,359 $18,182 
Pacific Northwest Timber16,284 10,702 
New Zealand Timber7,250 4,774 
Timber Funds (a)5,500 0 
Real Estate (b)1,557 35,745 
Corporate and Other263 297 
Total$45,213 $69,700 

(a)The nine months ended September 30, 2017 includes $8.9 million of timber cost basis expensed in conjunction with a timberland sale.
(b)The nine months ended September 30, 2017 and September 30, 2016 include Large Dispositions of $8.1 million and $21.9 million, respectively.    
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
NON-CASH COST OF LAND AND IMPROVED DEVELOPMENT2017 2016 2017 2016
Southern Timber—
 —
 —
 —
Pacific Northwest Timber—
 —
 —
 —
New Zealand Timber—
 —
 128
 1,824
Real Estate (a)1,272
 4,336
 14,246
 10,092
Trading—
 —
 —
 —
Total
$1,272
 
$4,336
 
$14,374
 
$11,916
(a)The three months ended March 31, 2021 includes $4.9 million of depreciation, depletion and amortization attributable to noncontrolling interests in Timber Funds.
(b)The three months ended March 31, 2020 includes $35.4 million from a Large Disposition.

Three Months Ended March 31,
NON-CASH COST OF LAND AND IMPROVED DEVELOPMENT20212020
Real Estate (a)$1,813 $52,051 
Total$1,813 $52,051 

(a)The nine months ended September 30, 2017 and September 30, 2016 include Large Dispositions of $5.7 million and $1.8 million, respectively.

(a)    The three months ended March 31, 2020 includes $51.6 million from a Large Disposition.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)






4.    REVENUE
PERFORMANCE OBLIGATIONS
We recognize revenue when control of promised goods or services (“performance obligations”) is transferred to customers, in an amount that reflects the consideration expected in exchange for those goods or services (“transaction price”). We generally satisfy performance obligations within a year of entering into a contract and therefore have applied the disclosure exemption found under ASC 606-10-50-14. Unsatisfied performance obligations as of March 31, 2021 are primarily due to advances on stumpage contracts and unearned license revenue. These performance obligations are expected to be satisfied within the next twelve months. We generally collect payment within a year of satisfying performance obligations and therefore have elected not to adjust revenues for a financing component. 
CONTRACT BALANCES
The timing of revenue recognition, invoicing and cash collections results in accounts receivable and deferred revenue (contract liabilities) on the Consolidated Balance Sheets. Accounts receivable are recorded when we have an unconditional right to consideration for completed performance under the contract. Contract liabilities relate to payments received in advance of performance under the contract. Contract liabilities are recognized as revenue as (or when) we perform under the contract.
The following table summarizes revenue recognized during the three months ended March 31, 2021 and 2020 that was included in the contract liability balance at the beginning of each year:
 Three Months Ended March 31,
20212020
Revenue recognized from contract liability balance at the beginning of the year (a)$5,920 $6,425 

(a)    Revenue recognized was primarily from hunting licenses and the use of advances on pay-as-cut timber sales.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)





The following tables present our revenue from contracts with customers disaggregated by product type for the three months ended March 31, 2021 and 2020:

Three Months EndedSouthern TimberPacific Northwest TimberNew Zealand TimberTimber FundsReal EstateTradingElim.Total
March 31, 2021
Pulpwood$21,856 $2,495 $9,542 $260 — $1,835 — $35,988 
Sawtimber21,963 37,758 47,792 13,308 — 14,389 — 135,210 
Hardwood405 0 0 0 — 0 — 405 
Total Timber Sales44,224 40,253 57,334 13,568 — 16,224 — 171,603 
License Revenue, Primarily From Hunting4,417 91 58 3 — 0 — 4,569 
Other Non-Timber/Carbon Revenue3,036 1,178 187 14 — 0 — 4,415 
Agency Fee Income0 0 0 0 — 356 — 356 
Total Non-Timber Sales7,453 1,269 245 17 — 356 — 9,340 
Improved Development— — — — 252 — — 252 
Rural— — — — 9,765 — — 9,765 
Deferred Revenue/Other (a)— — — — 255 — — 255 
Total Real Estate Sales— — — — 10,272 — — 10,272 
Revenue from Contracts with Customers51,677 41,522 57,579 13,585 10,272 16,580 — 191,215 
Lease Revenue— — — — 232 — — 232 
Intersegment— — — 1,354 — 85 (1,439)— 
Total Revenue$51,677 $41,522 $57,579 $14,939 $10,504 $16,665 ($1,439)$191,447 
Three Months EndedSouthern TimberPacific Northwest TimberNew Zealand TimberTimber FundsReal EstateTradingElim.Total
March 31, 2020
Pulpwood$27,493 $3,127 $4,847 0 — $2,530 — $37,997 
Sawtimber19,509 27,445 30,788 0 — 16,112 — 93,854 
Hardwood481 0 0 0 — 0 — 481 
Total Timber Sales47,483 30,572 35,635 0 — 18,642 — 132,332 
License Revenue, Primarily from Hunting4,589 97 57 0 — 0 — 4,743 
Other Non-Timber/Carbon Revenue910 406 1,846 0 — 0 — 3,162 
Agency Fee Income0 0 0 0 — 329 — 329 
Total Non-Timber Sales5,499 503 1,903 0 — 329 — 8,234 
Rural— — — — 2,397 — — 2,397 
Deferred Revenue/Other (a)— — — — 140 — — 140 
Large Dispositions— — — 116,027 — 116,027 
Total Real Estate Sales— — — — 118,564 — — 118,564 
Revenue from Contracts with Customers52,982 31,075 37,538 0 118,564 18,971 — 259,130 
Intersegment— — — — — 13 (13)— 
Total Revenue$52,982 $31,075 $37,538 0 $118,564 $18,984 ($13)$259,130 

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

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The following tables present our timber sales disaggregated by contract type for the three months ended March 31, 2021 and 2020:

Three Months EndedSouthern TimberPacific Northwest TimberNew Zealand TimberTimber FundsTradingTotal
March 31, 2021
Stumpage Pay-as-Cut$21,257 0 0 0 0 $21,257 
Stumpage Lump Sum3 6,131 0 0 0 6,134 
Total Stumpage21,260 6,131 0 0 0 27,391 
Delivered Wood (Domestic)18,059 34,122 17,106 13,568 1,091 83,946 
Delivered Wood (Export)4,905 0 40,228 0 15,133 60,266 
Total Delivered22,964 34,122 57,334 13,568 16,224 144,212 
Total Timber Sales$44,224 $40,253 $57,334 $13,568 $16,224 $171,603 
March 31, 2020
Stumpage Pay-as-Cut$25,407 0 0 0 0 $25,407 
Stumpage Lump Sum388 5,131 0 0 0 5,519 
Total Stumpage25,795 5,131 0 0 0 30,926 
Delivered Wood (Domestic)21,060 25,441 13,691 0 472 60,664 
Delivered Wood (Export)628 0 21,944 0 18,170 40,742 
Total Delivered21,688 25,441 35,635 0 18,642 101,406 
Total Timber Sales$47,483 $30,572 $35,635 0 $18,642 $132,332 

5.    LEASES
We lease commercial and residential properties primarily located in Port Gamble, Washington. Our leases are operating leases and mostly range between one and five years, and may be extended on a case by case basis. Income associated with commercial and residential property leases generally includes scheduled rent increases, but do not include variable payments based on indexes.
The following table details our lease income for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31,
Lease Income Components20212020
Operating lease income$232 0 
Total lease income$232 0 


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6.    NONCONTROLLING INTERESTS
NONCONTROLLING INTERESTS IN CONSOLIDATED AFFILIATES
Matariki Forestry Group
We maintain a 77% controlling financial interest in Matariki Forestry Group (the “New Zealand subsidiary”), a joint venture that owns or leases approximately 417,000 legal acres of New Zealand timberland. Accordingly, we consolidate the New Zealand subsidiary’s balance sheet and results of operations. The portions of the consolidated financial position and results of operations attributable to the New Zealand subsidiary’s 23% noncontrolling interests are reflected as an adjustment to income in our Consolidated Statements of Income and Comprehensive Income under the caption “Net income attributable to noncontrolling interests in consolidated affiliates.” Rayonier New Zealand Limited (“RNZ”), a wholly-owned subsidiary, serves as the manager of the New Zealand subsidiary.

The following table sets forth the income attributable to the New Zealand subsidiary’s noncontrolling interests:
 Three Months Ended
March 31,
20212020
Net income attributable to noncontrolling interests in the New Zealand subsidiary$2,638 $567 
ORM Timber Fund II, Inc. (Fund II), ORM Timber Fund III LLC (Fund III), and ORM Timber Fund IV LLC. (Fund IV) (Collectively, the “Funds”)
We are the manager of 3 private equity timber funds, Fund II, Fund III, and Fund IV, and maintain ownership interests in the Funds of 20%, 5%, and 15%, respectively. Based upon an analysis under the variable interest entity guidance, we have the power to direct the activities that most significantly impact the Funds’ economic success. Therefore, we are considered the primary beneficiary and are required under ASC 810 — Consolidation to consolidate the Funds. Income attributed to third-party investors is reflected as an adjustment to income in our Consolidated Statements of Income and Comprehensive Income under the caption “Net income attributable to noncontrolling interests in consolidated affiliates.”
The following table sets forth the income attributable to the Funds’ noncontrolling interests:
 Three Months Ended
March 31,
20212020
Net income attributable to noncontrolling interests in the Funds$1,076 0 
Prior to the merger with Pope Resources, the Funds were formed by ORM LLC for the purpose of generating a return on investment through the acquisition, management, value enhancement and sale of timberland properties. Each Fund is organized to operate for a specified term from the end of its respective investment period: 10 years for each of Fund II and Fund III, and 15 years for Fund IV. Fund II is scheduled to terminate in March 2023, Fund III is scheduled to terminate in December 2025 and Fund IV is scheduled to terminate in January 2035. The obligations of each of the Funds do not have any recourse to the Company or the Operating Partnership.
Ferncliff Investors
We maintain an ownership interest in Ferncliff Investors, a real estate joint venture entity. In 2017, Ferncliff Management and Ferncliff Investors were formed for the purpose of raising capital from third parties to invest in an unconsolidated real estate joint venture entity, Bainbridge Landing LLC, which is developing a 5-acre parcel on Bainbridge Island, Washington into a multi-family community containing apartments and townhomes. Ferncliff Management is the manager and 33.33% owner of Ferncliff Investors, with the remaining ownership interest in Ferncliff Investors held by third-party investors. Ferncliff Investors holds a 50% interest in Bainbridge Landing LLC, the joint venture entity that owns and is developing the property.

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Based upon an analysis under the variable interest entity guidance, we have the power to direct the activities that most significantly impact the joint venture’s economic success. Therefore, we are considered the primary beneficiary and are required under ASC 810 — Consolidation to consolidate Ferncliff Investors. The obligations of Ferncliff Investors do not have any recourse to the Company or the Operating Partnership.
Bainbridge Landing LLC is considered a voting interests entity. Ferncliff Investors accounts for its interest in the joint venture entity under the equity method because neither it nor the other member can exercise control over Bainbridge Landing LLC.
The Ferncliff Investors joint venture agreement provides for liquidation rights and distribution priorities that are disproportionate to member’s ownership interest. Due to the complex nature of cash distributions to members, net income of the joint venture is allocated to members, including us, using the Hypothetical Liquidation at Book Value (HLBV) method. Under the HLBV method, Ferncliff Investors income or loss is allocated to the members based on the period change in each member’s claim on the book value of net assets, excluding capital contributions and distributions made during the period.

The following table sets forth the income attributable to Ferncliff Investors’ noncontrolling interests:
 Three Months Ended
March 31,
20212020
Net income attributable to noncontrolling interests in Ferncliff Investors$129 0 

NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP
Noncontrolling interests in the Operating Partnership relate to the third-party ownership of Redeemable Operating Partnership Units. Net income attributable to the noncontrolling interests in the Operating Partnership is computed by applying the weighted average Redeemable Operating Partnership Units outstanding during the period as a percentage of the weighted average total units outstanding to the Operating Partnership’s net income for the period. If a noncontrolling unitholder redeems a unit for a registered common share of Rayonier or cash, the noncontrolling interests in the Operating Partnership will be reduced and the Company’s share in the Operating Partnership will be increased by the fair value of each security at the time of redemption.
The following table sets forth the Company’s noncontrolling interests in the Operating Partnership:

Three Months Ended
March 31, 2021
Beginning noncontrolling interests in the Operating Partnership$130,121 
Adjustment of noncontrolling interests in the Operating Partnership11,867 
Conversions of Redeemable Operating Partnership Units to Common Shares(4,715)
Net Income attributable to noncontrolling interests in the Operating Partnership341 
Other Comprehensive Income attributable to noncontrolling interests in the Operating Partnership1,531 
Distributions to noncontrolling interests in the Operating Partnership(1,155)
Total noncontrolling interests in the Operating Partnership$137,990 

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7.    VARIABLE INTEREST ENTITIES
ORM Timber Fund II, Inc. (Fund II), ORM Timber Fund III LLC (Fund III), and ORM Timber Fund IV LLC. (Fund IV) (Collectively, the “Funds”)
We are the manager of 3 private equity timber funds, Fund II, Fund III, and Fund IV, and maintain ownership interests in the Funds of 20%, 5%, and 15%, respectively. We determined, based upon an analysis under the variable interest entity guidance, that we have the power to direct the activities that most significantly impact the Funds’ economic success. Therefore, we are considered the primary beneficiary and are required under ASC 810 — Consolidation to consolidate the Funds. For further information on the Funds, see Note 6 — Noncontrolling Interests.
The assets, liabilities and equity of the Funds as of March 31, 2021, were as follows:
Timber FundsMarch 31, 2021
Assets:
Cash and cash equivalents$4,674 
Accounts receivable3,099 
Prepaid expenses9 
Other current assets237 
Total current assets8,019 
Timber and timberlands, net of depletion and amortization408,338 
Other assets74 
Total assets$416,431 
Liabilities and Equity:
Accounts payable$2,064 
Intercompany payable (a)698 
4.Accrued taxesDEBT174 
Accrued interest505 
Deferred revenue323 
Other current liabilities514 
Total current liabilities4,278 
Long-term debt, net of deferred financing costs59,967 
Funds’ equity352,186 
Total liabilities and equity$416,431 
Rayonier’s
(a)Includes management fees and other expenses payable to the Operating Partnership. These amounts are eliminated in the Consolidated Balance Sheets.







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Ferncliff Investors
We maintain an ownership interest in Ferncliff Investors, a real estate joint venture entity. Based upon an analysis under the variable interest entity guidance, we have the power to direct the activities that most significantly impact the joint venture’s economic success. Therefore, we are considered the primary beneficiary and are required under ASC 810 — Consolidation to consolidate Ferncliff Investors. For further information on Ferncliff Investors, see Note 6 — Noncontrolling Interests.
The assets, liabilities and equity of Ferncliff Investors as of March 31, 2021, were as follows:
Ferncliff InvestorsMarch 31, 2021
Assets:
Cash and cash equivalents$139 
Intercompany receivable61 
Total current assets200 
Advances to real estate joint venture entity1,000 
Total assets$1,200 
Liabilities and equity:
Total liabilities$1,892 
Ferncliff Investors’ equity(692)
Total liabilities and equity$1,200 



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8.    EARNINGS PER SHARE AND PER UNIT
The following table provides details of the calculations of basic and diluted earnings per common share of the Company:
Three Months Ended March 31,
 20212020
Earnings per common share - basic
Numerator:
Net Income$15,032 $26,421 
Less: Net income attributable to noncontrolling interests in the Operating Partnership(341)0 
Less: Net income attributable to noncontrolling interests in consolidated affiliates(3,843)(567)
Net income attributable to Rayonier Inc.$10,848 $25,854 
Denominator:
Denominator for basic earnings per common share - weighted average shares137,870,821 129,137,494 
Basic earnings per common share attributable to Rayonier Inc.:$0.08 $0.20 
Earnings per common share - diluted
Numerator:
Net Income$15,032 $26,421 
Less: Net income attributable to noncontrolling interests in consolidated affiliates(3,843)(567)
Net income attributable to Rayonier Inc., before net income attributable to noncontrolling interests in the Operating Partnership$11,189 $25,854 
Denominator:
Denominator for basic earnings per common share - weighted average shares137,870,821 129,137,494 
Add: Dilutive effect of:
Stock options4,051 1,075 
Performance shares, restricted shares and restricted stock units353,131 209,481 
Noncontrolling interests in Operating Partnership units4,330,794 0 
Denominator for diluted earnings per common share - adjusted weighted average shares142,558,797 129,348,050 
Diluted earnings per common share attributable to Rayonier Inc.:$0.08 $0.20 

Three Months Ended March 31,
20212020
Anti-dilutive shares excluded from the computations of diluted earnings per common share:
Stock options, performance shares, restricted shares and restricted stock units194,256 406,326 
Total194,256 406,326 

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The following table provides details of the calculations of basic and diluted earnings per unit of the Operating Partnership:
Three Months Ended March 31,
 20212020
Earnings per unit - basic
Numerator:
Net Income$15,032 $26,421 
Less: Net income attributable to noncontrolling interests in consolidated affiliates(3,843)(567)
Net income available to unitholders$11,189 $25,854 
Denominator:
Denominator for basic earnings per unit - weighted average units142,201,615 129,137,494 
Basic earnings per unit attributable to Rayonier, L.P.:$0.08 $0.20 
Earnings per unit - diluted
Numerator:
Net Income$15,032 $26,421 
Less: Net income attributable to noncontrolling interests in consolidated affiliates(3,843)(567)
Net income available to unitholders$11,189 $25,854 
Denominator:
Denominator for basic earnings per unit - weighted average units142,201,615 129,137,494 
Add: Dilutive effect of unit equivalents:
Stock options4,051 1,075 
Performance shares, restricted shares and restricted stock units353,131 209,481 
Denominator for diluted earnings per unit - adjusted weighted average units142,558,797 129,348,050 
Diluted earnings per unit attributable to Rayonier, L.P.:$0.08 $0.20 

Three Months Ended March 31,
20212020
Anti-dilutive unit equivalents excluded from the computations of diluted earnings per unit:
Stock options, performance shares, restricted shares and restricted stock units194,256 406,326 
Total194,256 406,326 

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9.    DEBT
Our debt consisted of the following at September 30, 2017:
March 31, 2021:
September 30, 2017March 31, 2021
Debt, excluding Timber Funds:
Term Credit Agreement borrowings due 20242028 at a variable interest rate of 2.9%1.7% at September 30, 2017March 31, 2021 (a)
$350,000 		$350,000
Senior Notes due 2022 at a fixed interest rate of 3.75%325,000
Incremental Term Loan Agreement borrowings due 2026 at a variable interest rate of 3.1%2.0% at September 30, 2017March 31, 2021 (b)300,000
Revolving Credit2020 Incremental Term Loan Facility borrowings due 20202025 at an averagea variable interest rate of 2.5%2.0% at September 30, 2017March 31, 2021 (c)50,000250,000 
New Zealand JVsubsidiary noncontrolling interestinterests shareholder loan due 2025 at 0%a fixed interest rate of 2.95%8,40624,074 
Total debtNorthwest Farm Credit Services Credit Facility with quarterly interest-only payments, collateralized by Core Timberlands, with the following tranches1,033,406
Due 2025 at a fixed interest rate of 6.1%11,512 
Due 2028 at a fixed interest rate of 4.1%11,984 
Due 2033 at a fixed interest rate of 5.3%19,363 
Due 2036 at a fixed interest rate of 5.4%9,838 
Total debt, excluding Timber Funds1,301,771 
Less: Deferred financing costs, excluding Timber Funds(3,137(2,338))
Long-term debt, net of deferred financing costs, excluding Timber Funds
1,299,433 		$1,030,269

Debt, Timber Funds:
Fund II Mortgages Payable, collateralized by Fund II timberlands with quarterly interest
payments, as follows: (d)
Due 2022 at a variable interest rate of 2.0% at March 31, 202111,000 
Due 2022 at a variable interest rate of 2.0% at March 31, 202114,000 
Fund III Mortgages Payable, collateralized by Fund III timberlands with quarterly interest
payments, as follows: (e)
Due 2023 at a fixed interest rate of 5.1%19,431 
Due 2024 at a fixed interest rate of 4.5%15,544 
Total debt, Timber Funds59,975 
Less: Deferred financing costs, Timber Funds(8)
Long-term debt, net of deferred financing costs, Timber Funds59,967 
Long-term debt, net of deferred financing costs$1,359,400 

(a)As of September 30, 2017, the periodic interest rate on the term loan facility was LIBOR plus 1.625%. The Company estimates the effective fixed interest rate on the term loan facility to be approximately 3.3% after consideration of interest rate swaps and estimated patronage refunds.
(b)As of September 30, 2017, the periodic interest rate on the incremental term loan was LIBOR plus 1.900%. The Company estimates the effective fixed interest rate on the incremental term loan facility to be approximately 2.8% after consideration of interest rate swaps and estimated patronage refunds.
(a)    As of March 31, 2021, the periodic interest rate on the term credit agreement (the “Term Credit Agreement”) was LIBOR plus 1.600%. We estimate the effective fixed interest rate on the term loan facility to be approximately 3.2% after consideration of interest rate swaps and estimated patronage refunds.
(b)    As of March 31, 2021, the periodic interest rate on the incremental term loan (the “Incremental Term Loan Agreement”) was LIBOR plus 1.900%. We estimate the effective fixed interest rate on the incremental term loan facility to be approximately 2.8% after consideration of interest rate swaps and estimated patronage refunds.
(c)    As of March 31, 2021, the periodic interest rate on the 2020 incremental term loan (the “2020 Incremental Term Loan Facility”) was LIBOR plus 1.850%. We estimate the effective fixed interest rate on the incremental term loan facility to be approximately 2.3% after consideration of interest rate swaps and estimated patronage refunds.
(d)    As of March 31, 2021, the periodic interest rate on the Fund II Mortgages Payable was 3-month LIBOR plus 1.700%.
(e)    As of March 31, 2021, we estimate the effective fixed interest rate on the Fund III Mortgages Payable due 2023 and 2024 to be approximately 3.9% and 3.2%, respectively, after consideration of estimated patronage refunds.
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Principal payments due during the next five years and thereafter are as follows:
Excluding Timber FundsTimber FundsTotal
20210 0 0 
2022325,000 25,000 350,000 
20230 17,980 17,980 
20240 14,400 14,400 
2025284,074 0 284,074 
Thereafter685,000 0 685,000 
Total Debt$1,294,074 $57,380 $1,351,454 
2017—
2018—
2019—
202050,000
2021—
Thereafter983,406
Total Debt
$1,033,406
2021 DEBT ACTIVITY
2017U.S. Debt Activity— Excluding Timber Funds
During the ninethree months ended September 30, 2017, the CompanyMarch 31, 2021, we made additional0 borrowings of $25.0 millionor repayments on theour Revolving Credit Facility. A draw of $15.0 million during the first quarter was used to repay the $15.0 million solid waste bonds that were due in 2020 and an additional draw of $10.0 million made in the second quarter was used to partially fund the acquisition of 91,000 acres in coastal Florida, Georgia and South Carolina. In the third quarter, the Company used available cash to repay $31.5 million of mortgage notes which were due in August 2017. As of September 30, 2017, the CompanyFacility. At March 31, 2021, we had available borrowings of $139.6$299.1 million under the Revolving Credit Facility, net of $10.4$0.9 million to secure itsour outstanding letters of credit.
In addition,U.S. Debt — Timber Funds
On January 1, 2021, both Fund II Mortgages Payable transitioned from a fixed interest rate of 2.0% to a variable rate of 3-month LIBOR plus 1.700%.
New Zealand
During the three months ended March 31, 2021, the New Zealand JVsubsidiary made 0 borrowings andor repayments of $38.4 million on its working capital facility. AsAt March 31, 2021, the New Zealand subsidiary had NZ$20.0 million of September 30, 2017, draws totaling NZ$40.0 million remain available on theborrowings under its working capital facility. The
As of March 31, 2021, the outstanding balance on the shareholder loan is $24.1 million. Except for changes in the New Zealand JV also repaid $10.9 millionforeign exchange rate, there have been no adjustments to the carrying value of itsthe shareholder loan held bysince its inception. See Note 6 — Noncontrolling Interests for more information regarding the non-controlling interest party during the nine months ended September 30, 2017. Changes in exchange rates increased debt on a U.S. dollar basis for its shareholder loan by $0.5 million during the nine months ended September 30, 2017.New Zealand subsidiary.

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Debt CovenantsDEBT COVENANTS — EXCLUDING TIMBER FUNDS
In connection with the Company’sour $350 million term credit agreement (the “TermTerm Credit Agreement”),Agreement, $300 million incremental term loan agreement (the “IncrementalIncremental Term Loan Agreement”)Agreement, $250 million 2020 Incremental Term Loan Agreement and $200$300 million revolving credit facility (the “RevolvingRevolving Credit Facility”),Facility, customary covenants must be met, the most significant of which include interest coverage and leverage ratios.
The covenants listed below, which are the most significant financial covenants in effect as of March 31, 2021, are calculated on a trailing 12-month basis:
Covenant RequirementActual RatioFavorable
Covenant EBITDA to consolidated interest expense should not be less than2.5 to 16.7 to 14.2
Covenant debt to covenant net worth plus covenant debt shall not exceed65 %47 %18 %



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In connection with our $45 million NWFCS Credit Facility, customary covenants must be met, the most significant of which include interest coverage and debt-to-capitalization ratios.
The covenants listed below, which are the most significant financial covenants in effect as of March 31, 2021, are calculated on a trailing 12-month basis:
Covenant RequirementActual RatioFavorable
Covenant loan-to-appraised value shall not exceed50%12%38 %
Covenant EBITDA to consolidated interest expense should not be less than2.5 to 16.7 to 14.2
Covenant debt to covenant net worth plus covenant debt shall not exceed65 %47 %18 %
In addition to these financial covenants listed above, the Senior2022 Notes, Term Credit Agreement, Incremental Term Loan Agreement, 2020 Incremental Term Loan Facility, Revolving Credit Facility, and RevolvingNWFCS Credit Facility include customary covenants that limit the incurrence of debt and the disposition of assets, among others. At September 30, 2017, the Company wasMarch 31, 2021, we were in compliance with all applicable covenants.

DEBT COVENANTS — TIMBER FUNDS

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

Rayonier continuously assesses potential alternative usesThe Fund II Mortgages Payable to MetLife contain a requirement to maintain a loan-to-value ratio of its timberlands,less than 50%, with the denominator defined 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 real estate investment trust (“REIT”) entities to taxable REIT subsidiaries (“TRS”), higher and better use (“HBU”) timberlands to enable land-use entitlement, development or marketing activities. 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-termfair market value of such properties. For selected development properties, Rayonier also invests in targeted infrastructure improvements, suchthe timberland pledged 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 investments from December 31, 2016 to September 30, 2017 is shown below:
 Higher and Better Use Timberlands and Real Estate Development Investments
 Land and Timber Development Investments Total
Non-current portion at December 31, 2016
$59,956
 
$10,418
 
$70,374
Plus: Current portion (a)5,096
 11,963
 17,059
Total Balance at December 31, 201665,052
 22,381
 87,433
Non-cash cost of land and improved development(1,579) (604) (2,183)
Timber depletion from harvesting activities and basis of timber sold in real estate sales(1,979) —
 (1,979)
Capitalized real estate development investments (b)—
 11,780
 11,780
Capital expenditures (silviculture)195
 —
 195
Intersegment transfers4,142
 (762) 3,380
Total Balance at September 30, 201765,831
 32,795
 98,626
Less: Current portion (a)(6,024) (13,379) (19,403)
Non-current portion at September 30, 2017
$59,807
 
$19,416
 
$79,223
(a)
The current portion of Higher and Better Use Timberlands and Real Estate Development Investments is recorded in Inventory. See Note 15 — Inventory for additional information.
(b)Capitalized real estate development investments includes $0.3 million of capitalized interest.


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6.COMMITMENTS
The Company leases certain buildings, machinery, and equipment under various operating leases. The Company also has long-term lease agreements on certain timberlands in the Southern U.S. and New Zealand. U.S. leases typically have initial terms of approximately 30 to 65 years, with renewal provisions in some cases. New Zealand timberland lease terms range between 30 and 99 years. Such leases are generally non-cancellable and require minimum annual rental payments.
At September 30, 2017, the future minimum payments under non-cancellable operating leases, timberland leases and other commitments were as follows:
 
Operating
Leases
 
Timberland
Leases (a)
 Commitments (b) Total
Remaining 2017
$312
 
$3,533
 
$4,813
 
$8,658
20181,130
 9,271
 6,901
 17,302
2019907
 8,796
 5,589
 15,292
2020724
 8,391
 5,510
 14,625
2021625
 8,450
 4,905
 13,980
Thereafter (c)1,230
 153,753
 12,737
 167,720
 
$4,928
 
$192,194
 
$40,455
 
$237,577
(a)The majority of timberland leases are subject to increases or decreases based on either the Consumer Price Index, Producer Price Index or market rates.
(b)Commitments include payments expected to be made on derivative financial instruments (foreign exchange contracts and interest rate swaps) and construction of the Company’s office building and Wildlight development project.
(c)Includes 20 years of future minimum payments for perpetual Crown Forest Licenses (“CFL”). A CFL consists of a license to use public or government owned land to operate a commercial forest. The CFL's extend indefinitely and may only be terminated upon a 35-year termination notice from the government. If no termination notice is given, the CFLs renew automatically each year for a one-year term. As of September 30, 2017, the New Zealand JV has four CFL’s under termination notice that are currently being relinquished as harvest activities are concluding, as well as two fixed term CFL’s expiring in 2062. The annual license fee is determined based on current market rental value, with triennial rent reviews.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)

7.INCOME TAXES
The operations conducted by the Company’s REIT entities are generally not subject to U.S. federal and state income tax. The New Zealand JV is subject to corporate level tax in New Zealand. Non-REIT qualifying operations are conducted by the Company’s TRS. The primary businesses performed in Rayonier’s TRS include log trading and certain real estate activities, such as the sale and entitlement of development HBU properties. For the three and nine months ended September 30, 2017, the Company recorded income tax expense of $3.0 million and $16.8 million, respectively. For the three and nine months ended September 30, 2016, the Company recorded income tax expense of $0.8 million and $2.3 million, respectively.

Provision for Income Taxescollateral.
The Company’s effective tax rate is belowFund III Mortgages Payable to NWFCS contain a requirement to maintain a minimum interest coverage ratio of 1.5:1, minimum working capital of $500,000, and a loan-to-value ratio of less than 50%, with the 35.0% U.S. statutory rate due to tax benefits associateddenominator defined as fair market value.
Both Timber Funds are in compliance with being a REIT. The Company’s annualized effective tax rate (“AETR”)their respective debt covenants as of September 30, 2017 and September 30, 2016 was 15.1% and 1.3%, respectively. The increase in income tax expense and the corresponding AETR for the three and nine months ended September 30, 2017 is principally related to the New Zealand JV.
In accordance with GAAP, the Company recognizes the impact of a tax position if a position is “more-likely-than-not” to prevail. For the three and nine months ended September 30, 2017, there were no material changes in uncertain tax positions.
Prepaid Taxes
In the first quarter 2017, the Company early adopted ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory. ASU No. 2016-16 requires income tax consequences of intra-entity transfers of assets other than inventory be recognized in the period in which they occur. See Note 1 — Basis of Presentation. As a result, a cumulative-effect adjustment to retained earnings was recorded for the long-term prepaid federal income tax of $14.4 million related to recognized built-in gains on 2006, 2008 and 2010 intercompany sales of timberlands between the REIT and the TRS. Taxes for the transactions were paid at the time of sale, but the gain and income tax expense were deferred. See the Consolidated Statement of Shareholders’ Equity for the cumulative-effect adjustment to retained earnings due to the adoption of this standard.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)

8.CONTINGENCIES

In re Rayonier Inc. Securities Litigation

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:2021.

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;
10.    DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

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.
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 “Consolidated Complaint”). In the Consolidated Complaint, plaintiffs added allegations as to and added as a defendant N. Lynn Wilson, a former officer of Rayonier. With the filing of the Consolidated Complaint, David L. Nunes and H. Edwin Kiker were dropped from the case as defendants. Defendants timely filed Motions to Dismiss the Consolidated Complaint on May 15, 2015.After oral argument on Defendants' motions on August 25, 2015, the Court dismissed the Consolidated Complaint without prejudice, allowing plaintiffs leave to refile. Plaintiffs filed the Amended Consolidated Class Action Complaint (the “Amended Complaint”) on September 25, 2015, which continued to assert claims against the Company, as well as Ms. Wilson and Messrs. Boynton and Vanden Noort. Defendants timely filed Motions to Dismiss the Amended Complaint on October 26, 2015. The court denied those motions on May 20, 2016. On December 31, 2016, the case continued to be in the discovery phase and the Company could not determine whether there was a reasonable likelihood a material loss had been incurred nor could the range of any such loss be estimated. On March 13, 2017, the Company reached an agreement in principle to settle the case and all parties executed a term sheet memorializing such agreement. The parties executed and filed with the Court the Stipulation and Agreement of Settlement on April 12, 2017 (the “Settlement Agreement”), which Settlement Agreement included the material terms contained in the term sheet executed on March 13. Pursuant to the terms of the Settlement Agreement, which was subject to Court approval and requests for exclusion by members of the settlement class, the Company agreed to cause certain of its directors’ and officers’ liability insurance carriers to fund a settlement payment to the class of $73 million (the “Settlement Fund”). The insurance carriers fully funded the Settlement Fund by deposits in an escrow account as required by the Settlement Agreement. On September 19, 2017, the court held the final fairness hearing as to the settlement. The amounts agreed to on March 13, 2017, including the realized amount funded by the insurance carriers, were reflected in the Company’s Consolidated Financial Statements as of September 30, 2017. On October 5, 2017, the court entered orders approving the settlement and plan of distribution, dismissing the case against all defendants with prejudice and awarding Plaintiffs’ counsel certain fees and cost reimbursements to be paid from the Settlement Fund.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)

Derivative Claims

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 (“Derivative Claims”). Although these demands do not identify any claims against the Company, the Company has certain obligations to advance expenses and provide indemnification to certain current and former officers and directors of the Company. The Company has also incurred expenses as a result of 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. On October 13, 2017, counsel for all five shareholders involved in the Derivative Claims filed a complaint in the name of one of the shareholders from whom the Company received a request to investigate. That case is pending in the United States District Court for the Middle District of Florida and is styled Molloy v. Boynton, et al., Civil Action No. 3:17-cv-01157-TJC-MCR. The complaint alleges breaches of fiduciary duties and unjust enrichment and names as defendants, former officers Paul G. Boynton, Hans E. Vanden Noort and N. Lynn Wilson, and former directors C. David Brown, II, Mark E. Gaumond, James H. Miller, Thomas I. Morgan and Ronald Townsend.

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

9.GUARANTEES
The Company provides financial guarantees as required by creditors, insurance programs, and various governmental agencies.
As of September 30, 2017, the following financial guarantees were outstanding:
Financial Commitments 
Maximum Potential
Payment
 
Carrying Amount
of Associated Liability
Standby letters of credit (a) 
$10,353
 —
Guarantees (b) 2,254
 43
Surety bonds (c) 1,304
 —
Total financial commitments 
$13,911
 
$43
(a)Approximately $9.2 million of the standby letters of credit serve as credit support for infrastructure at the Company’s Wildlight development project. The remaining letters of credit support various insurance related agreements, primarily workers’ compensation. These letters of credit will expire at various dates during 2017 and 2018 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 September 30, 2017, 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 outstanding claims under the Company’s previous workers’ compensation self-insurance programs in Washington and Florida. Rayonier has also obtained performance bonds to secure the development activity at the Company’s Wildlight development project. These surety bonds expire at various dates during 2017 and 2018 and are expected to be renewed as required.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)

10.EARNINGS PER COMMON SHARE
The following table provides details of the calculations of basic and diluted earnings per common share:
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Net Income
$28,803
 
$40,624
 
$94,659
 
$167,261
Less: Net income attributable to noncontrolling interest4,115
 1,269
 9,968
 3,613
Net income attributable to Rayonier Inc.
$24,688
 
$39,355
 
$84,691
 
$163,648
        
Shares used for determining basic earnings per common share128,610,696
 122,597,927
 126,934,003
 122,574,094
Dilutive effect of:       
Stock options84,380
 113,849
 94,528
 88,594
Performance and restricted shares270,704
 170,857
 315,475
 120,212
Shares used for determining diluted earnings per common share128,965,780
 122,882,633
 127,344,006
 122,782,900
        
Basic earnings per common share attributable to Rayonier Inc.:
$0.19
 
$0.32
 
$0.67
 
$1.34
        
Diluted earnings per common share attributable to Rayonier Inc.:
$0.19
 
$0.32
 
$0.67
 
$1.33

 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Anti-dilutive shares excluded from the computations of diluted earnings per share:       
Stock options, performance and restricted shares621,447
 745,878
 600,039
 863,244
Total621,447
 745,878
 600,039
 863,244



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)

11.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 usesWe use derivative financial instruments to mitigate the financial impact of exposure to these risks.
Accounting for derivative financial instruments is governed by ASC Topic 815, Derivatives and Hedging, (“ASC 815”). In accordance with ASC 815, the Company records itswe record our derivative instruments at fair value as either assets or liabilities in the Consolidated Balance Sheets. Changes in the instruments’ fair value are accounted for based on their intended use. Gains and losses on derivatives that are designated and qualify for cash flow hedge accounting are recorded as a component of accumulated other comprehensive incomeloss (“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 its New Zealand operations is partially or completely liquidated. The ineffective portion of any hedge, 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 de minimis for all periods presented.
Foreign Currency Exchange and Option ContractsFOREIGN CURRENCY EXCHANGE AND OPTION CONTRACTS
The functional currency of Rayonier’s wholly owned subsidiary, Rayonier New Zealand Limited, and the New Zealand JVsubsidiary is the New Zealand dollar. The New Zealand JVsubsidiary is exposed to foreign currency risk on export sales and ocean freight payments which are mainly denominated in U.S. dollars. The New Zealand JVsubsidiary typically hedges 35%50% to 90% of its estimated foreign currency exposure with respect to the following threetwelve months forecasted sales and purchases, 25% to 75% of forecasted sales and purchases for the forward three to 12 monthsless distributions, and up to 50%75% of the forward 12 to 18 months. Additionally, the New Zealand subsidiary will occasionally hedge up to 50% of its estimated foreign currency exposure with respect to the following 18 to 48 months forecasted sales and purchases, less distributions, when the New Zealand dollar is at a cyclical low versus the U.S. dollar. Foreign currency exposure from the New Zealand JV’ssubsidiary’s trading operations is typically hedged based on the following three months forecasted sales and purchases. As of September 30, 2017,March 31, 2021, foreign currency exchange contracts and foreign currency option contracts had maturity dates through February 2019September 2022 and October 2018,August 2021, respectively.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(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 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.
The CompanyWe may de-designate these cash flow hedge relationships in advance or at the occurrence of the forecasted transaction. The portion of gains or losses on the derivative instrument previously accumulated in other comprehensive incomeloss for de-designated hedges remains in accumulated other comprehensive incomeloss until the forecasted transaction affects earnings. Changes in the value of derivative instruments after de-designation are recorded in earnings.
The New Zealand JV is exposed to foreign currency risk when making shareholder loan payments which
INTEREST RATE SWAPS
We are denominated in U.S. dollars. The New Zealand JV typically hedges 75% to 100% of its estimated foreign currency exposure with respect to the following three months forecasted distributions, up to 75% of forecasted distributions for the forward three to six months and up to 50% of the forward six to 12 months. For the three and nine months ended September 30, 2017, the change in fair value of the foreign exchange forward contracts of $0.6 million and $0.3 million, respectively, was recorded in “Interest income and miscellaneous income (expense), net” as the contracts did not qualify for hedge accounting treatment. As of September 30, 2017, foreign exchange forward contracts had maturity dates through March 2018.
For additional information on the shareholder loan see Note 4 — Debt.
Interest Rate Swaps
The Company is exposed to cash flow interest rate risk on itsour variable-rate Term Credit Agreement, and Incremental Term Loan Agreement (as discussed below), and uses2020 Incremental Term Loan Facility and use variable-to-fixed interest rate swaps to hedge this exposure. For these derivative instruments, the Company reportswe report the gains/losses from the fluctuations in the fair market value of the hedges in AOCI and reclassifiesreclassify them to earnings as interest expense in the same period in which the hedged interest payments affect earnings.
In August 2015,
The following table contains information on the Company entered into a nine-yearoutstanding interest rate swap agreement for a notional amountswaps as of $170 million. This swap agreement fixes the variable portion of theMarch 31, 2021:

Outstanding Interest Rate Swaps (a)
Date Entered IntoTermNotional AmountRelated Debt FacilityFixed Rate of Swap (b)Bank Margin on DebtTotal Effective Interest Rate (c)
August 20159 years$170,000 Term Credit Agreement2.20 %1.60 %3.80 %
August 20159 years180,000 Term Credit Agreement2.35 %1.60 %3.95 %
April 201610 years100,000 Incremental Term Loan1.60 %1.90 %3.50 %
April 201610 years100,000 Incremental Term Loan1.60 %1.90 %3.50 %
July 201610 years100,000 Incremental Term Loan1.26 %1.90 %3.16 %
June 202010 years250,000 2020 Incremental Term Loan1.10 %1.85 %2.95 %

(a)     All interest rate on the Term Credit Agreement borrowings due 2024 from LIBOR to an average rate of 2.20%. Together with the bank margin of 1.625%, this results in a rate of 3.83% before estimated patronage payments. This derivative instrument has been designated as an interest rate cash flow hedge and qualifies for hedge accounting.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)

Also, in August 2015, the Company entered into a nine-year forward interest rate swap agreement with a start date in April 2016 for a notional amount of $180 million. This swap agreement fixes the variable portion of the interest rate on the Term Credit Agreement borrowings due 2024 from LIBOR to an average rate of 2.35%. Together with the bank margin of 1.625%, this results in a rate of 3.97% before estimated patronage payments. This derivative instrument has been designated as an interest rate cash flow hedge and qualifies for hedge accounting.
In April 2016, the Company entered into two 10-year interest rate swap agreements, each for a notional amount of $100 million. These swap agreements fix the variable portion of the interest rate on the Incremental Term Loan borrowings due 2026 to an average rate of 1.60%. Together with the bank margin of 1.90%, this results in a rate of 3.50% before estimated patronage payments. These derivative instrumentsswaps have been designated as interest rate cash flow hedges and qualify for hedge accounting.
In July 2016, the Company entered into an(b)    The interest rate swap agreemententered in June 2020, was an off-market derivative, meaning it contained an embedded financing element, which the counterparties recovered through an incremental charge in the fixed rate over what would have been charged for an at-market swap.
(c)    Rate is before estimated patronage payments.
TREASURY LOCKS
During the first quarter of 2020, we entered into 3 treasury lock agreements, which were designated and qualified as cash flow hedges. Prior to expiration, we de-designated and settled the treasury locks by converting them into interest rate swap lock agreements (discussed below). To the extent we de-designate or terminate a notional amountcash flow hedging relationship and the associated hedged item continues to exist, any unrealized gain or loss of $100the cash flow hedge at the time of de-designation remains in accumulated other comprehensive loss and is amortized using the straight-line method through interest expense over the remaining life of the hedged item. As of March 31, 2021, there was $18.8 million recorded in accumulated other comprehensive loss in connection with the settled treasury locks which will be reclassified to earnings through May 2026. Thisinterest expense over the life of the anticipated issued debt. For additional information regarding the expired treasury lock agreements, see Note 16 - Derivative Instruments and Hedging Activities in our 2020 Form 10-K.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)





INTEREST RATE SWAP LOCKS
Upon de-designation, we converted the above treasury lock agreements to interest rate swap agreement fixes the variable portionlock agreements, which were designated and qualified as cash flow hedges. Prior to expiration, we de-designated and partially cash settled $11.1 million of the interest rate swap locks and converted them into interest rate swap agreements. To the extent we de-designate or terminate a cash flow hedging relationship and the associated hedged item continues to exist, any unrealized gain or loss of the cash flow hedge at the time of de-designation remains in accumulated other comprehensive loss and is amortized using the straight-line method through interest expense over the remaining life of the hedged item. As of March 31, 2021, there was $1.3 million recorded in accumulated other comprehensive loss in connection with settled interest rate swap locks which will be reclassified to earnings through interest expense over the life of the anticipated issued debt. For additional information regarding the expired interest rate swap lock agreements, see Note 16 - Derivative Instruments and Hedging Activities in our 2020 Form 10-K.
FORWARD-STARTING INTEREST RATE SWAPS
We are exposed to cash flow interest rate risk on anticipated debt issuances and use forward-starting interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates from the trade date through the anticipated issuance date. For these derivative instruments, we report the gains/losses from the fluctuations in the fair market value of the hedges in AOCI and reclassify them to earnings as interest expense in the same period in which the hedged interest payments affect earnings.
The following table contains information on the Incremental Term Loan borrowings due 2026 from LIBOR to an averageoutstanding forward-starting interest rate swaps as of 1.26%. Together with the bank margin of 1.90%, this results in aMarch 31, 2021:
Outstanding Forward-Starting Interest Rate Swaps (a)
Date Entered IntoTermNotional AmountFixed Rate of SwapRelated Debt FacilityForward DateMaximum Period Ending for Forecasted Issuance Date
February 202010 years$325,000 1.40 %Anticipated refinancing of Senior Notes due 2022April 2022April 2022
March 20204 years100,000 0.88 %Term Credit AgreementAugust 2024N/A
May 20204 years50,000 0.74 %Term Credit AgreementAugust 2024N/A

(a)     All forward-starting interest rate of 3.16% before estimated patronage payments. This derivative instrument hasswaps have been designated as an interest rate cash flow hedgehedges and qualifiesqualify for hedge accounting.

CARBON OPTIONS
The New Zealand subsidiary enters into carbon options from time to time to sell carbon assets at certain prices. Changes in fair value of the carbon option contracts are recorded in “Interest and other miscellaneous expense, net” as the contracts do not qualify for hedge accounting treatment. As of March 31, 2021, all existing carbon option contracts have expired.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)





The following tables demonstrate the impact, gross of the Company’stax, of our derivatives on the Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, 2017March 31, 2021 and 2016.2020:
   Three Months Ended
September 30,
 Income Statement Location 2017 2016
Derivatives designated as cash flow hedges:     
Foreign currency exchange contractsOther comprehensive (loss) income 
($1,579) 
$259
Foreign currency option contractsOther comprehensive (loss) income (716) 635
Interest rate swapsOther comprehensive (loss) income (533) 3,529
      
Derivatives not designated as hedging instruments:    
Foreign currency exchange contractsInterest income and miscellaneous income (expense), net 609
 —

Three Months Ended
March 31,
Income Statement Location20212020
Derivatives designated as cash flow hedges:
Foreign currency exchange contractsOther comprehensive income (loss)($2,852)($5,480)
Foreign currency option contractsOther comprehensive income (loss)(929)(1,149)
Interest rate swapsOther comprehensive income (loss)28,512 (39,450)
Interest expense3,438 452 
Treasury locksOther comprehensive income (loss)0 (20,846)
Interest expense521 0 
Interest rate swap locksOther comprehensive income (loss)0 854 
Interest expense35 0 
Forward-starting interest rate swapsOther comprehensive income (loss)31,219 (19,710)
Derivatives not designated as hedging instruments:
Carbon option contractsInterest and other miscellaneous income, net0 549 
   Nine Months Ended
September 30,
 Income Statement Location 2017 2016
Derivatives designated as cash flow hedges:     
Foreign currency exchange contractsOther comprehensive (loss) income 
$1,611
 
$2,075
Foreign currency option contractsOther comprehensive (loss) income 219
 2,564
Interest rate swapsOther comprehensive (loss) income (2,921) (25,459)
      
Derivatives designated as a net investment hedge:     
Foreign currency exchange contractOther comprehensive (loss) income —
 (4,606)
      
Derivatives not designated as hedging instruments:    
Foreign currency exchange contractsOther operating income, net —
 895
 Interest income and miscellaneous income (expense), net 283
 —
Foreign currency option contractsOther operating income, net —
 258
Interest rate swapsInterest income and miscellaneous income (expense), net —
 (1,219)
During the next 12 months, the amount of the September 30, 2017March 31, 2021 AOCI balance, net of tax, expected to be reclassified into earnings as a result of the maturation of the Company’sour derivative instruments is a gain of approximately $2.0$2.6 million.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)

The following table contains the notional amounts of the derivative financial instruments recorded in the Consolidated Balance Sheets:
Notional Amount
March 31, 2021December 31, 2020
Derivatives designated as cash flow hedges:
Foreign currency exchange contracts$64,000 $49,000 
Foreign currency option contracts16,000 28,000 
Interest rate swaps900,000 900,000 
Forward-starting interest rate swaps475,000 475,000 


30
 Notional Amount
 September 30, 2017 December 31, 2016
Derivatives designated as cash flow hedges:   
Foreign currency exchange contracts
$55,100
 
$44,800
Foreign currency option contracts58,000
 91,000
Interest rate swaps650,000
 650,000
    
Derivative not designated as a hedging instrument:   
Foreign currency exchange contracts18,020
 —
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)





The following table contains the fair values of the derivative financial instruments recorded in the Consolidated Balance Sheets:
Location on Balance SheetFair Value Assets / (Liabilities) (a)
March 31, 2021December 31, 2020
Derivatives designated as cash flow hedges:
Foreign currency exchange contractsOther current assets$3,477 $4,968 
Other assets160 1,050 
Other current liabilities(454)0 
Other non-current liabilities(17)0 
Foreign currency option contractsOther current assets592 1,526 
Other current liabilities(7)(11)
Interest rate swapsOther assets9,945 0 
Other non-current liabilities(29,301)(51,580)
Forward-starting interest rate swapsOther assets18,690 513 
Other non-current liabilities0 (13,042)
Total derivative contracts:
Other current assets$4,069 $6,494 
Other assets28,795 1,563 
Total derivative assets$32,864 $8,057 
Other current liabilities(461)(11)
Other non-current liabilities(29,318)(64,622)
Total derivative liabilities($29,779)($64,633)
 Location on Balance Sheet Fair Value Assets / (Liabilities) (a)
   September 30, 2017 December 31, 2016
Derivatives designated as cash flow hedges:    
Foreign currency exchange contractsOther current assets 
$2,145
 
$692
 Other assets 173
 33
 Other current liabilities (12) (261)
Foreign currency option contractsOther current assets 753
 1,064
 Other assets 56
 327
 Other current liabilities (173) (574)
 Other non-current liabilities (17) (426)
Interest rate swapsOther assets 14,606
 17,204
 Other non-current liabilities (6,302) (5,979)
      
Derivative not designated as a hedging instrument:    
Foreign currency exchange contractsOther current assets 269
 —
      
Total derivative contracts:     
Other current assets  
$3,167
 
$1,756
Other assets  14,835
 17,564
Total derivative assets  
$18,002
 
$19,320
      
Other current liabilities  (185) (835)
Other non-current liabilities  (6,319) (6,405)
Total derivative liabilities  
($6,504) 
($7,240)

(a)
See Note 12 — Fair Value Measurements for further information on the fair value of the Company’s derivatives including their classification within the fair value hierarchy.

(a)    See Note 11 — Fair Value Measurements for further information on the fair value of our derivatives including their classification within the fair value hierarchy.
Offsetting Derivatives
OFFSETTING DERIVATIVES
Derivative financial instruments are presented at their gross fair values in the Consolidated Balance Sheets. The Company’sOur derivative financial instruments are not subject to master netting arrangements, which would allow the right of offset.



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RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)



12.FAIR VALUE MEASUREMENTS
Fair Value of Financial Instruments


11.    FAIR VALUE MEASUREMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS
A three-level hierarchy that prioritizes the inputs used to measure fair value was established in the Accounting Standards Codification as follows:
Level 1— Quoted prices in active markets for identical assets or liabilities.
Level 2—Observable inputs other than quoted prices included in Level 1.
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. (a)
The following table presents the carrying amount and estimated fair values of our financial instruments held by the Company at September 30, 2017as of March 31, 2021 and December 31, 2016,2020, using market information and what the Company believeswe believe to be appropriate valuation methodologies under GAAP:

September 30, 2017 December 31, 2016 March 31, 2021December 31, 2020
Asset (Liability) (a)
Carrying
Amount
 Fair Value 
Carrying
Amount
 Fair ValueAsset (Liability) (a)Carrying
Amount		Fair ValueCarrying
Amount		Fair Value
Asset (Liability) (a)Level 1Level 2Level 1Level 2
Cash and cash equivalents, excluding Timber Funds$77,946 $77,946 0 $80,454 $80,454 0 
Cash and cash equivalents, Timber FundsCash and cash equivalents, Timber Funds4,674 4,674 0 4,053 4,053 0 
Restricted cash (b)Restricted cash (b)475 475 0 2,975 2,975 0 
  Level 1 Level 2   Level 1 Level 2
Cash and cash equivalents
$104,062
 
$104,062
 —
 
$85,909
 
$85,909
 —
Restricted cash (b)10,631
 10,631
 —
 71,708
 71,708
 —
Current maturities of long-term debt—
 —
 —
 (31,676) —
 (31,984)
Long-term debt (c)(1,030,269) —
 (1,042,766) (1,030,205) —
 (1,030,708)
Long-term debt, excluding Timber Funds (c)Long-term debt, excluding Timber Funds (c)(1,299,433)0 (1,304,371)(1,300,336)0 (1,313,631)
Long-term debt, Timber Funds (c)Long-term debt, Timber Funds (c)(59,967)0 (60,207)(60,179)0 (60,474)
Interest rate swaps (d)8,304
 —
 8,304
 11,225
 —
 11,225
Interest rate swaps (d)(19,356)0 (19,356)(51,580)0 (51,580)
Forward-starting interest rate swaps (d)Forward-starting interest rate swaps (d)18,690 0 18,690 (12,529)0 (12,529)
Foreign currency exchange contracts (d)2,575
 —
 2,575
 464
 —
 464
Foreign currency exchange contracts (d)3,166 0 3,166 6,018 0 6,018 
Foreign currency option contracts (d)619
 —
 619
 391
 —
 391
Foreign currency option contracts (d)585 0 585 1,515 0 1,515 
Noncontrolling Interests in the Operating Partnership (e)Noncontrolling Interests in the Operating Partnership (e)137,990 137,990 0 130,121 130,121 0 

(a)The Company did not have Level 3 assets or liabilities at September 30, 2017.
(b)
Restricted cash represents the proceeds from like-kind exchange sales deposited with a third-party intermediary and cash held in escrow for a real estate sale. See Note 16 — Restricted Cash for additional information.
(c)
(a)We did not have Level 3 assets or liabilities at March 31, 2021 and December 31, 2020.
(b)Restricted cash represents cash held in escrow. See Note 22 — Restricted Cash for additional information.
(c)The carrying amount of long-term debt is presented net of capitalized debt costs on non-revolving debt. See Note 9 — Debt for additional information.
(d)See Note 10 — Derivative Financial Instruments and Hedging Activities for information regarding the Consolidated Balance Sheets classification of our derivative financial instruments.
(e)Noncontrolling Interests in the Operating Partnership is neither an asset or liability and is classified as temporary equity in the Company’s Consolidated Balance Sheets. This relates to the ownership of long-term debt is presented net of capitalized debt costs on non-revolving debt.
(d)
See Note 11 — Derivative Financial Instruments and Hedging Activities for information regarding the Balance Sheet classification of the Company’s derivative financial instruments.
Rayonier, usesL.P. units by various individuals and entities other than the Company.

We use the following methods and assumptions in estimating the fair value of itsour 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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)





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

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


12.    COMMITMENTS
At March 31, 2021, the future minimum payments under non-cancellable commitments were as follows:
 Environmental Remediation (a)Development Projects (b)Commitments (c)Total
Remaining 2021$814 $17,440 $11,445 $29,699 
20222,097 3,182 17,901 23,180 
20231,853 267 18,512 20,632 
20241,853 267 15,671 17,791 
20252,338 267 10,625 13,230 
Thereafter2,575 3,899 29,987 36,461 
$11,530 $25,322 $104,141 $140,993 

(a)Environmental remediation represents our estimate of potential liability associated with environmental contamination and Natural Resource Damages (NRD) in Port Gamble, Washington. See Note 14 - Environmental and Natural Resource Damage Liabilities for additional information.
(b)Primarily consisting of payments expected to be made on our Wildlight and Richmond Hill development projects.
(c)Commitments include payments expected to be made on financial instruments (foreign exchange contracts, interest rate swaps and forward-starting interest rate swaps) and other purchase obligations.


13.    CONTINGENCIES

We have been named as a defendant in various lawsuits and claims arising in the normal course of business. While we have procured reasonable and customary insurance covering risks normally occurring in connection with our businesses, we have in certain cases retained some risk through the operation of large deductible insurance plans, primarily in the areas of executive risk, property, automobile and general liability. These pending lawsuits and claims, either individually or in the aggregate, are not expected to have a material adverse effect on our financial position, results of operations, or cash flow.


14.    ENVIRONMENTAL AND NATURAL RESOURCE DAMAGE LIABILITIES
Various federal and state environmental laws in the states in which we operate place cleanup or restoration liability on the current and former owners of affected real estate. These laws are often a source of “strict liability,” meaning that an owner or operator need not necessarily have caused, or even been aware of, the release of contaminated materials. Similarly, there are certain environmental laws that allow state, federal, and tribal trustees (collectively, the “Trustees”) to bring suit against property owners to recover damage for injuries to natural resources. Like the liability that attaches to current property owners in the cleanup context, liability for natural resource damages (“NRD”) can attach to a property simply because an injury to natural resources resulted from releases of contaminated materials on or from the owner’s property, regardless of culpability for the release. For additional information, see Note 13 - Environmental and Natural Resource Damage Liabilities in the 2020 Form 10-K.


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RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)






Changes in environmental and NRD liabilities from December 31, 2020 to March 31, 2021 are shown below:
Port Gamble, WA
13.EMPLOYEE BENEFIT PLANS
Non-current portion at December 31, 2020$10,615
Plus: Current portion1,026
Total Balance at December 31, 202011,641
Expenditures(111)
Total Balance at March 31, 202111,530
Less: Current portion(930)
Non-current portion at March 31, 2021$10,600

These estimates were based on assumptions that we believe to be reasonable; however, actual results may differ from these estimates. See Note 2 - Merger with Pope Resources for information regarding our preliminary estimates of fair value. It is expected that the upland mill site cleanup and NRD restoration will occur over the next two to three years, while the monitoring of Port Gamble Bay, mill site and landfills will continue for an additional 10 to 15 years. NRD costs are subject to change as the scope of the restoration projects become more clearly defined. It is reasonably possible that these components of the liability may increase as the project progresses. Management continues to monitor the Port Gamble cleanup process and will make adjustments as needed. Should any future circumstances result in a change to the estimated cost of the project, we will record an appropriate adjustment to the liability in the period it becomes known and when we can reasonably estimate the amount. For further information on the timing and amount of future payments related to our environmental remediation liabilities, see Note 12 - Commitments.

15.    GUARANTEES
We provide financial guarantees as required by creditors, insurance programs, and various governmental agencies.
As of March 31, 2021, the following financial guarantees were outstanding:
Financial Commitments (a)Maximum Potential
Payment
Standby letters of credit$885 
Surety bonds (b)9,340 
Total financial commitments$10,225 

(a)We have not recorded any liabilities for these financial commitments in our Consolidated Balance Sheets. The Company has oneguarantees are not subject to measurement, as the guarantees are dependent on our own performance.
(b)Surety bonds are issued primarily to secure performance obligations related to various operational activities, to provide collateral for our Wildlight development project in Nassau County, Florida and in connection with pending and completed sales from the Harbor Hill project in Gig Harbor, Washington. These surety bonds expire at various dates during 2021, 2022, 2023 and 2024 and are expected to be renewed as required.
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RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)





16.    HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS
We continuously assess potential alternative uses of our timberlands, as some properties may become more valuable for development, residential, recreation or other purposes. We periodically transfer, via a sale or contribution from the real estate investment trust (“REIT”) entities to taxable REIT subsidiaries (“TRS”), higher and better use (“HBU”) timberlands to enable land-use entitlement, development or marketing activities. We also acquire HBU properties in connection with timberland acquisitions. These properties are managed as timberlands until sold or developed. While the majority of HBU sales involve rural and recreational land, we also selectively pursue various land-use entitlements on certain properties for residential, commercial and industrial development in order to enhance the long-term value of such properties. For selected development properties, we also invest in targeted infrastructure improvements, such as roadways and utilities, to accelerate the marketability and improve the value of such properties.
Changes in higher and better use timberlands and real estate development investments from December 31, 2020 to March 31, 2021 are shown below:
Higher and Better Use Timberlands and Real Estate Development Investments
 Land and TimberDevelopment InvestmentsTotal
Non-current portion at December 31, 2020$79,901 $28,617 $108,518 
Plus: Current portion (a)212 6,544 6,756 
Total Balance at December 31, 202080,113 35,161 115,274 
Non-cash cost of land and improved development(549)(232)(781)
Amortization of parcel real estate development investments— (139)(139)
Timber depletion from harvesting activities and basis of timber sold in real estate sales(243)0 (243)
Capitalized real estate development investments (b)0 5,291 5,291 
Capital expenditures (silviculture)96 0 96 
Intersegment transfers1,082 0 1,082 
Purchase price allocation adjustment (c)8,238 0 8,238 
Total Balance at March 31, 202188,737 40,081 128,818 
Less: Current portion (a)(811)(16,692)(17,503)
Non-current portion at March 31, 2021$87,926 $23,389 $111,315 

(a)The current portion of Higher and Better Use Timberlands and Real Estate Development Investments is recorded in Inventory. See Note 17 — Inventory for additional information.
(b)Capitalized real estate development investments include $0.1 million of capitalized interest and $2.3 million of parcel real estate development investments. Parcel real estate development investments represent investments made for specific lots and/or commercial parcels that are currently under contract or expected to be ready for market within a year.
(c)Reflects measurement period adjustments on HBU properties acquired in the merger with Pope Resources. The estimated fair value of HBU properties acquired in the merger is approximately $34.7 million. This includes development properties in the town of Port Gamble, Washington, development projects in Gig Harbor, Kingston, and Bremerton, Washington and various other assets. See Note 2 - Merger with Pope Resources for additional information.
17.    INVENTORY
As of March 31, 2021 and December 31, 2020, our inventory consisted entirely of finished goods, as follows:
 March 31, 2021December 31, 2020
Finished goods inventory
Real estate inventory (a)$17,503 $6,756 
Log inventory7,490 3,838 
Total inventory$24,993 $10,594 

(a)Represents the cost of HBU real estate (including capitalized development investments) under contract to be sold. See Note 16 — Higher And Better Use Timberlands and Real Estate Development Investments for additional information.

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RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)





18.    OTHER OPERATING INCOME (EXPENSE), NET
Other operating income (expense), net consisted of the following:
Three Months Ended March 31,
20212020
Gain on foreign currency remeasurement, net of cash flow hedges$2,429 $1,433 
Gain on sale or disposal of property and equipment90 3 
Log trading marketing fees6 47 
Costs related to the merger with Pope Resources (a)0 (2,487)
Equity income related to Bainbridge Landing LLC joint venture (b)19 0 
Miscellaneous expense, net(96)(107)
Total$2,448 ($1,111)

(a)    Includes legal, accounting, due diligence, consulting and other costs related to the merger with Pope Resources. See Note 2 - Merger with Pope Resources and Note 24 - Charges for Integration and Restructuring for additional information.
(b)    See Note 6 - Noncontrolling Interests and Note 7 - Variable Interest Entities for additional information on Ferncliff Investors.

19.    EMPLOYEE BENEFIT PLANS
We have 1 qualified non-contributory defined benefit pension plan covering a portion of itsour employees and an unfunded plan that provides benefits in excess of amounts allowable under current tax law in the qualified plan. Both plans are closed to new participants. Effective December 31, 2016, the Companywe froze benefits for all employees participating in the pension plan. In lieu of the pension plan, the Company provideswe provide those employees with an enhanced 401(k) plan match. Employee benefit plan liabilities are calculated using actuarial estimates and management assumptions. These estimates are based on historical information, along with certain assumptions about future events. Changes in assumptions, as well as changes in actual experience, could cause the estimates to change.
We are not required to make mandatory 2021 pension contributions due to our plan’s improved funding status and have made 0 pension contribution payments during the three months ended March 31, 2021.
The net pension and postretirement benefit (credits) costs that have been recorded are shown in the following table:
 Pension Postretirement
 Three Months Ended
September 30,		 Three Months Ended
September 30,
 2017 2016 2017 2016
Components of Net Periodic Benefit Cost       
Service cost—
 
$327
 
$13
 
$2
Interest cost815
 869
 2
 12
Expected return on plan assets (a)(945) (1,008) —
 —
Amortization of losses116
 632
 —
 —
Net periodic benefit (gain) cost
($14) 
$820
 
$15
 
$14
        

Components of Net Periodic Benefit (Credit) CostIncome Statement LocationPensionPostretirement
Three Months Ended
March 31,		Three Months Ended
March 31,
2021202020212020
Service costSelling and general expenses0 0 $2 $2 
Interest costInterest and other miscellaneous expense, net557 677 11 13 
Expected return on plan assets (a)Interest and other miscellaneous expense, net(936)(876)0 0 
Amortization of lossesInterest and other miscellaneous expense, net288 215 5 2 
Net periodic benefit (credit) cost($91)$16 $18 $17 
 Pension Postretirement
 Nine Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Components of Net Periodic Benefit Cost       
Service cost—
 
$980
 
$39
 
$5
Interest cost2,444
 2,606
 5
 36
Expected return on plan assets (a)(2,836) (3,023) —
 —
Amortization of losses (gains)349
 1,893
 —
 (12)
Net periodic benefit (gain) cost
($43) 
$2,456
 
$44
 
$29
        

(a)The weighted-average expected long-term rate of return on plan assets used in computing 2021 net periodic benefit cost for pension benefits is 5.7%.




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RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)





20.    INCOME TAXES

Rayonier is a REIT under the Internal Revenue Code and therefore generally does not pay U.S. federal or state income tax. As of March 31, 2021, Rayonier owns a97.0% interest in the Operating Partnership and conducts substantially all of its timberland operations through the Operating Partnership. The taxable income or loss generated by the Operating Partnership is passed through and reported to its unit holders (including the Company) on a Schedule K-1 for inclusion in each unitholder’s income tax return. Certain operations, including log trading and certain real estate activities, such as the entitlement, development and sale of HBU properties, are conducted through our TRS. The TRS subsidiaries are subject to United States federal and state corporate income tax. The New Zealand timber operations are conducted by the New Zealand subsidiary, which is subject to corporate-level tax at 28% in New Zealand and is treated as a partnership for U.S. income tax purposes.
PROVISION FOR INCOME TAXES
The Company’s tax expense is principally related to corporate-level tax in New Zealand and non-resident withholding tax on repatriation of earnings from New Zealand. The following table contains the income tax expense recognized on the Consolidated Statements of Income and Comprehensive Income:
 Three Months Ended
March 31,
20212020
Income tax expense($3,421)($3,706)
ANNUAL EFFECTIVE TAX RATE
The Company’s effective tax rate after discrete items is below the 21.0% U.S. statutory rate due to tax benefits associated with being a REIT. The following table contains the Company’s annualized effective tax rate after discrete items:
 Three Months Ended
March 31,
20212020
Annualized effective tax rate after discrete items11.6 %12.1 %

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RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)





21.    ACCUMULATED OTHER COMPREHENSIVE LOSS
The following table summarizes the changes in AOCI by component for the three months ended March 31, 2021 and the year ended December 31, 2020. All amounts are presented net of tax and exclude portions attributable to noncontrolling interests.
Foreign currency translation (loss) gainsNet investment hedges of New Zealand subsidiaryCash flow hedgesEmployee benefit plansTotal Rayonier, L.P.Allocation to Operating PartnershipTotal Rayonier Inc.
Balance as of December 31, 2019($226)$1,321 ($8,910)($23,387)($31,202)0 ($31,202)
Other comprehensive income (loss) before reclassifications22,928 0 (71,644)(1,794)(50,510)0 (50,510)
Amounts reclassified from accumulated other comprehensive loss0 0 9,498 869 (b)10,367 (2,540)7,827 
Net other comprehensive income (loss)22,928 0 (62,146)(925)(40,143)(2,540)(42,683)
Balance as of December 31, 2020$22,702 $1,321 ($71,056)($24,312)($71,345)($2,540)($73,885)
Other comprehensive (loss) income before reclassifications(11,652)0 56,637 (a)0 44,985 0 44,985 
Amounts reclassified from accumulated other comprehensive loss0 0 4,991 294 (b)5,285 (1,531)3,754 
Net other comprehensive (loss) income(11,652)0 61,628 294 50,270 (1,531)48,739 
Balance as of
March 31, 2021		$11,050 $1,321 ($9,428)($24,018)($21,075)($4,071)($25,146)

(a)The weighted-average expected long-term rate of return on plan assets used in computing 2017 net periodic benefit cost for pension benefits is 7.2%.

14.OTHER OPERATING INCOME, NET
Other operating income, net comprised the following:
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Lease and license income, primarily from hunting
$4,331
 
$3,769
 
$12,419
 
$13,991
Other non-timber income1,312
 666
 5,485
 1,721
Foreign currency income165
 533
 15
 34
(Loss) gain on sale or disposal of property and equipment(63) 58
 (69) 81
Gain (loss) on foreign currency exchange and option contracts1,295
 (333) 2,476
 (1,406)
Deferred payment related to a prior land sale—
 —
 —
 4,000
Costs related to acquisition—
 (91) —
 (1,306)
Gain on foreign currency derivatives (a)—
 —
 —
 1,153
Log trading agency and marketing fees823
 637
 1,949
 1,568
Gain on sale of carbon credits—
 359
 —
 1,113
Miscellaneous (expense) income, net(19) (99) 427
 (82)
Total
$7,844
 
$5,499
 
$22,702
 
$20,867
(a)The Company used foreign exchange derivatives to mitigate the risk of fluctuations in foreign exchange rates while awaiting the capital contribution to the New Zealand JV.

(a)Includes $59.7 million of other comprehensive loss related to interest rate swaps, treasury locks, interest rate swap locks and forward-starting interest rate swaps. See Note 10 — Derivative Financial Instruments and Hedging Activities for additional information.
(b)This component of other comprehensive (loss) income is included in the computation of net periodic pension and post-retirement costs. See Note 19 — Employee Benefit Plansfor additional information.
15.INVENTORY
The following table presents details of the amounts reclassified in their entirety from AOCI to net income for the three months ended March 31, 2021 and March 31, 2020:
Details about accumulated other comprehensive income (loss) componentsAmount reclassified from accumulated other comprehensive income (loss)Affected line item in the income statement
March 31, 2021March 31, 2020
Realized loss on foreign currency exchange contracts$1,205 $18 Other operating expense, net
Realized loss on foreign currency option contracts594 9 Other operating expense, net
Noncontrolling interests(414)(6)Comprehensive (loss) income attributable to noncontrolling interests
Realized loss (gain) on interest rate contracts3,994 (452)Interest expense
Income tax expense from net gain on foreign currency contracts(388)(6)Income tax expense
Net loss (gain) from accumulated other comprehensive income$4,991 ($437)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)





22.    RESTRICTED CASH
Restricted cash includes cash balances held in escrow as collateral for certain contractual obligations related to our Richmond Hill development project as well as cash held in escrow for real estate sales. As of September 30, 2017March 31, 2021 and December 31, 2016, Rayonier’s inventory was solely comprised2020, we had $0.5 million and $3.0 million, respectively, of finished goods, as follows:
 September 30, 2017 December 31, 2016
Finished goods inventory   
Real estate inventory (a)
$19,403
 
$17,059
Log inventory5,094
 4,320
Total inventory
$24,497
 
$21,379
(a)Represents cost of HBU real estate (including capitalized development investments) expected to be sold within 12
months. See Note 5 — Higher And Better Use Timberlands And Real Estate Development Investments for additional information.

16.RESTRICTED CASH
restricted cash held in escrow. In addition, 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 Companyus after 180 days and reclassified as available cash. As of September 30, 2017March 31, 2021 and December 31, 2016, the Company2020, we had $10.6 million and $71.7 million, respectively, of0 proceeds from real estate sales classified as restricted cash which were deposited with an LKE intermediary as well asintermediary.
The following table contains the amounts of restricted cash heldrecorded in escrowthe Consolidated Balance Sheets and Consolidated Statements of Cash Flows for a real estate sale.the three months ended March 31, 2021:

17.ASSETS HELD FOR SALEMarch 31, 2021
Restricted cash held in escrow$475 
Total restricted cash shown in the Consolidated Balance Sheets475 
Cash and cash equivalents82,620 
Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows$83,095 

23.    ASSETS HELD FOR SALE
Assets held for sale areis composed of properties under contract and expected to be sold within the next 12 months andthat also meet the other relevant held-for sale criteria in accordance with ASC 360-10-45-9. As of September 30, 2017, there were no properties identified that met this classification. As ofMarch 31, 2021 and December 31, 2016,2020, the basis in properties meeting this classification was $23.2 million.$7.9 million and $3.4 million, respectively. Since the basis in these properties was less than the fair value, including costs to sell, no0 impairment was recognized.




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)






24.    CHARGES FOR INTEGRATION AND RESTRUCTURING

During 2020, we incurred and accrued for termination benefits (primarily severance) and accelerated share-based payment costs based upon actual and expected qualifying terminations of certain employees as a result of restructuring decisions made concurrent with and subsequent to the merger with Pope Resources. We also incurred non-recurring professional services costs for investment banking, legal, consulting, accounting and certain other fees directly attributable to the merger with Pope Resources.
A summary of the charges for integration and restructuring related to the merger with Pope Resources is presented below:
Three Months Ended
March 31,
20212020
Professional services0 $2,347 
Other integration and restructuring costs0 140 
Total integration and restructuring charges related to the merger with Pope Resources0 $2,487 

Changes in accrued severance related to restructuring during the three months ended March 31, 2021 were as follows:
18.ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)
The following table summarizes the changes in AOCI by component for the nine months ended September 30, 2017 and the year ended December 31, 2016. All amounts are presented net of tax and exclude portions attributable to noncontrolling interest.
 Foreign currency translation gains/ (losses) Net investment hedges of New Zealand JV Cash flow hedges Employee benefit plans Total
Balance as of December 31, 2015
($2,450) 
$6,271
 
($11,592) 
($25,732) 
($33,503)
Other comprehensive income before reclassifications7,387
 —
 22,024
 3,020
(b)32,431
Amounts reclassified from accumulated other comprehensive income—
 (4,606) 583
 2,513
(c)(1,510)
Net other comprehensive income/(loss)7,387
 (4,606) 22,607
 5,533
 30,921
Recapitalization of New Zealand JV3,622
 —
 (184) —
 3,438
Balance as of December 31, 2016
$8,559
 
$1,665
 
$10,831
 
($20,199) 
$856
Other comprehensive income before reclassifications13,335
 —
 202
(a)—
 13,537
Amounts reclassified from accumulated other comprehensive income—
 —
 (2,104) 349
(c)(1,755)
Net other comprehensive income/(loss)13,335
 —
 (1,902)
349

11,782
Balance as of September 30, 2017
$21,894
 
$1,665
 
$8,929
 
($19,850) 
$12,638
Three Months Ended
March 31, 2021
Accrued severance as of December 31, 2020$112 
(a)Payments
Includes $2.9 million
(53)
Accrued severance as of other comprehensive loss related to interest rate swaps. See Note 11 — Derivative Financial Instruments and Hedging Activities for additional information.March 31, 2021$59 
(b)
This accumulated other comprehensive income component is comprised of $2.4 million from the annual computation of pension liabilities and a $5.4 million curtailment gain. See Note 15 — Employee Benefit Plansof the 2016 Form 10-Kfor additional information.
(c)
This component of other comprehensive income is included in the computation of net periodic pension cost. See Note 13 — Employee Benefit Plansfor additional information.


Accrued severance is recorded within “Accrued Payroll and Benefits” in our Consolidated Balance Sheets. The following table presents detailsmajority of the amounts reclassified in their entirety from AOCIaccrued severance balance as of March 31, 2021 is expected to net income for the nine months ended September 30, 2017 and September 30, 2016:be paid within one year.
40
Details about accumulated other comprehensive income components Amount reclassified from accumulated other comprehensive income Affected line item in the income statement
  September 30, 2017 September 30, 2016  
Realized (gain) loss on foreign currency exchange contracts 
($2,928) 
$43
 Other operating income, net
Realized (gain) loss on foreign currency option contracts (867) 502
 Other operating income, net
Noncontrolling interest 873
 (235) Comprehensive income attributable to noncontrolling interest
Income tax expense (benefit) from (gain) loss on foreign currency contracts 818
 (87) Income tax expense
Net (gain) loss from accumulated other comprehensive income 
($2,104) 
$223
  

22

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RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)

19.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 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, Rayonier Operating Company LLCItem 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (“ROC”MD&A”) 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 INCOME
 AND COMPREHENSIVE INCOME
 For the Three Months Ended September 30, 2017
 
Rayonier Inc.
(Parent
Issuer)
 Subsidiary Guarantors 
Non-
guarantors
 
Consolidating
Adjustments
 
Total
Consolidated
SALES—
 —
 
$177,946
 —
 
$177,946
Costs and Expenses         
Cost of sales—
 —
 136,583
 —
 136,583
Selling and general expenses—
 4,096
 5,840
 —
 9,936
Other operating expense (income), net—
 81
 (7,925) —
 (7,844)
 —
 4,177
 134,498
 —
 138,675
OPERATING (LOSS) INCOME—
 (4,177) 43,448
 —
 39,271
Interest expense(3,139) (4,982) (432) —
 (8,553)
Interest and miscellaneous income (expense), net2,486
 704
 (2,062) —
 1,128
Equity in income from subsidiaries25,341
 33,929
 —
 (59,270) —
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES24,688
 25,474
 40,954
 (59,270) 31,846
Income tax expense—
 (133) (2,910) —
 (3,043)
NET INCOME24,688
 25,341
 38,044
 (59,270) 28,803
Less: Net income attributable to noncontrolling interest—
 —
 4,115
 —
 4,115
NET INCOME ATTRIBUTABLE TO RAYONIER INC.24,688
 25,341
 33,929
 (59,270) 24,688
OTHER COMPREHENSIVE LOSS      

  
Foreign currency translation adjustment, net of income tax(5,866) —
 (7,317) 5,866
 (7,317)
Cash flow hedges, net of income tax(1,787) (533) (1,629) 1,787
 (2,162)
Amortization of pension and postretirement plans, net of income tax116
 116
 —
 (116) 116
Total other comprehensive loss(7,537) (417) (8,946) 7,537
 (9,363)
COMPREHENSIVE INCOME17,151
 24,924
 29,098
 (51,733) 19,440
Less: Comprehensive income attributable to noncontrolling interest—
 —
 2,289
 —
 2,289
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.
$17,151
 
$24,924
 
$26,809
 
($51,733) 
$17,151
          

23

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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 September 30, 2016
 
Rayonier Inc.
(Parent
Issuer)
 Subsidiary Guarantors 
Non-
guarantors
 
Consolidating
Adjustments
 
Total
Consolidated
SALES—
 —
 
$171,421
 —
 
$171,421
Costs and Expenses      
  
Cost of sales—
 —
 116,624
 —
 116,624
Selling and general expenses—
 5,904
 4,703
 —
 10,607
Other operating expense (income), net—
 190
 (5,689) —
 (5,499)
 —
 6,094
 115,638
 —
 121,732
OPERATING (LOSS) INCOME—
 (6,094) 55,783
 —
 49,689
Interest expense(3,139) (5,150) (255) —
 (8,544)
Interest and miscellaneous income (expense), net2,199
 694
 (2,635) —
 258
Equity in income from subsidiaries40,295
 50,315
 —
 (90,610) —
INCOME BEFORE INCOME TAXES39,355
 39,765
 52,893
 (90,610) 41,403
Income tax benefit (expense)—
 530
 (1,309) —
 (779)
NET INCOME39,355
 40,295
 51,584
 (90,610) 40,624
Less: Net income attributable to noncontrolling interest—
 —
 1,269
 —
 1,269
NET INCOME ATTRIBUTABLE TO RAYONIER INC.39,355
 40,295
 50,315
 (90,610) 39,355
OTHER COMPREHENSIVE INCOME      

  
Foreign currency translation adjustment, net of income tax9,793
 —
 12,020
 (9,791) 12,022
Cash flow hedges, net of income tax4,044
 3,530
 665
 (4,044) 4,195
Amortization of pension and postretirement plans, net of income tax632
 632
 —
 (632) 632
Total other comprehensive income14,469
 4,162
 12,685
 (14,467) 16,849
COMPREHENSIVE INCOME53,824
 44,457
 64,269
 (105,077) 57,473
Less: Comprehensive income attributable to noncontrolling interest—
 —
 3,649
 —
 3,649
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.
$53,824
 
$44,457
 
$60,620
 
($105,077) 
$53,824
          

24

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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 Nine Months Ended September 30, 2017
 
Rayonier Inc.
(Parent
Issuer)
 Subsidiary Guarantors 
Non-
guarantors
 
Consolidating
Adjustments
 
Total
Consolidated
SALES—
 —
 
$559,178
 —
 
$559,178
Costs and Expenses         
Cost of sales—
 —
 416,683
 —
 416,683
Selling and general expenses—
 11,880
 17,891
 —
 29,771
Other operating expense (income), net—
 212
 (22,914) —
 (22,702)
 —
 12,092
 411,660
 —
 423,752
OPERATING (LOSS) INCOME—
 (12,092) 147,518
 —
 135,426
Interest expense(9,417) (14,723) (1,460) —
 (25,600)
Interest and miscellaneous income (expense), net7,033
 2,087
 (7,470) —
 1,650
Equity in income from subsidiaries87,075
 112,253
 —
 (199,328) —
INCOME BEFORE INCOME TAXES84,691
 87,525
 138,588
 (199,328) 111,476
Income tax expense—
 (450) (16,367) —
 (16,817)
NET INCOME84,691
 87,075
 122,221
 (199,328) 94,659
Less: Net income attributable to noncontrolling interest—
 —
 9,968
 —
 9,968
NET INCOME ATTRIBUTABLE TO RAYONIER INC.84,691
 87,075
 112,253
 (199,328) 84,691
OTHER COMPREHENSIVE INCOME (LOSS)  

      
Foreign currency translation adjustment, net of income tax13,335
 —
 16,599
 (13,335) 16,599
Cash flow hedges, net of income tax(1,902) (2,921) 1,324
 1,902
 (1,597)
Amortization of pension and postretirement plans, net of income tax349
 349
 —
 (349) 349
Total other comprehensive income (loss)11,782
 (2,572) 17,923
 (11,782) 15,351
COMPREHENSIVE INCOME96,473
 84,503
 140,144
 (211,110) 110,010
Less: Comprehensive income attributable to noncontrolling interest—
 —
 13,537
 —
 13,537
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.
$96,473
 
$84,503
 
$126,607
 
($211,110) 
$96,473
          




25

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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 Nine Months Ended September 30, 2016
 
Rayonier Inc.
(Parent
Issuer)
 Subsidiary Guarantors 
Non-
guarantors
 
Consolidating
Adjustments
 
Total
Consolidated
SALES—
 —
 
$567,814
 —
 
$567,814
Costs and Expenses         
Cost of sales—
 —
 362,790
 —
 362,790
Selling and general expenses—
 11,485
 20,153
 —
 31,638
Other operating expense (income), net—
 378
 (21,245) —
 (20,867)
 —
 11,863
 361,698
 —
 373,561
OPERATING (LOSS) INCOME—
 (11,863) 206,116
 —
 194,253
Interest expense(9,417) (11,678) (2,508) —
 (23,603)
Interest and miscellaneous income (expense), net6,346
 2,059
 (9,520) —
 (1,115)
Equity in income from subsidiaries166,719
 188,588
 —
 (355,307) —
INCOME BEFORE INCOME TAXES163,648
 167,106
 194,088
 (355,307) 169,535
Income tax expense—
 (387) (1,887) —
 (2,274)
NET INCOME163,648
 166,719
 192,201
 (355,307) 167,261
Less: Net income attributable to noncontrolling interest—
 —
 3,613
 —
 3,613
NET INCOME ATTRIBUTABLE TO RAYONIER INC.163,648
 166,719
 188,588
 (355,307) 163,648
OTHER COMPREHENSIVE (LOSS) INCOME         
Foreign currency translation adjustment, net of income tax20,529
 (4,607) 32,653
 (20,529) 28,046
Cash flow hedges, net of income tax(22,733) (25,458) 3,403
 22,733
 (22,055)
Amortization of pension and postretirement plans, net of income tax1,881
 1,881
 —
 (1,881) 1,881
Total other comprehensive (loss) income(323) (28,184) 36,056
 323
 7,872
COMPREHENSIVE INCOME163,325
 138,535
 228,257
 (354,984) 175,133
Less: Comprehensive income attributable to noncontrolling interest—
 —
 11,808
 —
 11,808
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.
$163,325
 
$138,535
 
$216,449
 
($354,984) 
$163,325
          


26

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RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)

 CONDENSED CONSOLIDATING BALANCE SHEETS
 As of September 30, 2017
 
Rayonier Inc.
(Parent
Issuer)
 Subsidiary Guarantors 
Non-
guarantors
 
Consolidating
Adjustments
 
Total
Consolidated
ASSETS         
CURRENT ASSETS         
Cash and cash equivalents
$63,219
 
$6,605
 
$34,238
 —
 
$104,062
Accounts receivable, less allowance for doubtful accounts—
 2,764
 36,644
 —
 39,408
Insurance settlement receivable73,000
 —
 —
 —
 73,000
Inventory—
 —
 24,497
 —
 24,497
Prepaid expenses—
 1,466
 15,190
 —
 16,656
Other current assets—
 15
 3,307
 —
 3,322
Total current assets136,219
 10,850
 113,876
 —
 260,945
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION—
 —
 2,492,049
 —
 2,492,049
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS—
 —
 79,223
 —
 79,223
NET PROPERTY, PLANT AND EQUIPMENT—
 (178) 23,504
 —
 23,326
RESTRICTED CASH—
 —
 10,631
 —
 10,631
INVESTMENT IN SUBSIDIARIES1,489,553
 2,797,221
 —
 (4,286,774) —
INTERCOMPANY RECEIVABLE35,502
 (625,541) 590,039
 —
 —
OTHER ASSETS2
 6,699
 38,844
 —
 45,545
TOTAL ASSETS
$1,661,276
 
$2,189,051
 
$3,348,166
 
($4,286,774) 
$2,911,719
LIABILITIES AND SHAREHOLDERS’ EQUITY      
  
CURRENT LIABILITIES      
  
Accounts payable—
 
$3,129
 
$24,563
 —
 
$27,692
Insurance settlement payable73,000
 —
 —
 —
 73,000
Current maturities of long-term debt—
 —
 —
 —
 —
Accrued taxes—
 (19) 7,581
 —
 7,562
Accrued payroll and benefits—
 3,616
 3,715
 —
 7,331
Accrued interest6,094
 1,932
 6
 —
 8,032
Other current liabilities—
 656
 26,143
 —
 26,799
Total current liabilities79,094
 9,314
 62,008
 —
 150,416
LONG-TERM DEBT, NET OF DEFERRED FINANCING COSTS323,342
 663,521
 43,406
 —
 1,030,269
PENSION AND OTHER POSTRETIREMENT BENEFITS—
 32,116
 (685) —
 31,431
OTHER NON-CURRENT LIABILITIES—
 13,508
 28,861
 —
 42,369
INTERCOMPANY PAYABLE(299,715) (18,961) 318,676
 —
 —
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY1,558,555
 1,489,553
 2,797,221
 (4,286,774) 1,558,555
Noncontrolling interest—
 —
 98,679
 —
 98,679
TOTAL SHAREHOLDERS’ EQUITY1,558,555
 1,489,553
 2,895,900
 (4,286,774) 1,657,234
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$1,661,276
 
$2,189,051
 
$3,348,166
 
($4,286,774) 
$2,911,719


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, 2016
 
Rayonier Inc.
(Parent
Issuer)
 Subsidiary Guarantors 
Non-
guarantors
 
Consolidating
Adjustments
 
Total
Consolidated
ASSETS         
CURRENT ASSETS         
Cash and cash equivalents
$21,453
 
$9,461
 
$54,995
 —
 
$85,909
Accounts receivable, less allowance for doubtful accounts—
 2,991
 17,673
 —
 20,664
Inventory—
 —
 21,379
 —
 21,379
Prepaid expenses—
 427
 11,380
 —
 11,807
Assets held for sale—
 —
 23,171
 —
 23,171
Other current assets—
 236
 1,638
 —
 1,874
Total current assets21,453
 13,115
 130,236
 —
 164,804
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION—
 —
 2,291,015
 —
 2,291,015
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS—
 —
 70,374
 —
 70,374
NET PROPERTY, PLANT AND EQUIPMENT—
 177
 13,857
 —
 14,034
RETRICTED CASH—
 —
 71,708
 —
 71,708
INVESTMENT IN SUBSIDIARIES1,422,081
 2,671,428
 —
 (4,093,509) —
INTERCOMPANY RECEIVABLE26,472
 (611,571) 585,099
 —
 —
OTHER ASSETS2
 46,846
 26,977
 —
 73,825
TOTAL ASSETS
$1,470,008
 
$2,119,995
 
$3,189,266
 
($4,093,509) 
$2,685,760
LIABILITIES AND SHAREHOLDERS’ EQUITY         
CURRENT LIABILITIES         
Accounts payable—
 
$1,194
 
$21,143
 —
 
$22,337
Current maturities of long-term debt31,676
 —
 —
 —
 31,676
Accrued taxes—
 (111) 2,768
 —
 2,657
Accrued payroll and benefits—
 5,013
 4,264
 —
 9,277
Accrued interest3,047
 2,040
 253
 —
 5,340
Other current liabilities—
 165
 20,514
 —
 20,679
Total current liabilities34,723
 8,301
 48,942
 —
 91,966
LONG-TERM DEBT, NET OF DEFERRED FINANCING COSTS291,390
 663,343
 75,472
 —
 1,030,205
PENSION AND OTHER POSTRETIREMENT BENEFITS—
 32,541
 (685) —
 31,856
OTHER NON-CURRENT LIABILITIES—
 12,690
 22,291
 —
 34,981
INTERCOMPANY PAYABLE(267,715) (18,961) 286,676
 —
 —
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY1,411,610
 1,422,081
 2,671,428
 (4,093,509) 1,411,610
Noncontrolling interest—
 —
 85,142
 —
 85,142
TOTAL SHAREHOLDERS’ EQUITY1,411,610
 1,422,081
 2,756,570
 (4,093,509) 1,496,752
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$1,470,008
 
$2,119,995
 
$3,189,266
 
($4,093,509) 
$2,685,760


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 Nine Months Ended September 30, 2017
 
Rayonier Inc.
(Parent
Issuer)
 Subsidiary Guarantors 
Non-
guarantors
 
Consolidating
Adjustments
 
Total
Consolidated
CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES
($40,090) 
$77,358
 
$149,824
 
($219) 
$186,873
INVESTING ACTIVITIES         
Capital expenditures—
 —
 (45,731) —
 (45,731)
Real estate development investments—
 —
 (11,780) —
 (11,780)
Purchase of timberlands—
 —
 (239,052) —
 (239,052)
Net proceeds from large disposition—
 —
 42,029
 —
 42,029
Rayonier office building under construction—
 —
 (5,979) —
 (5,979)
Change in restricted cash—
 —
 61,078
 —
 61,078
Investment in subsidiaries—
 12,307
 —
 (12,307) —
Other—
 —
 383
 —
 383
CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES—
 12,307
 (199,052) (12,307) (199,052)
FINANCING ACTIVITIES      
  
Issuance of debt—
 25,000
 38,389
 —
 63,389
Repayment of debt—
 (15,000) (80,216) —
 (95,216)
Dividends paid(95,008) —
 —
 —
 (95,008)
Proceeds from the issuance of common shares under incentive stock plan3,665
 —
 —
 —
 3,665
Proceeds from the issuance of common shares under equity offering152,390
 —
 —
 —
 152,390
Repurchase of common shares—
 —
 —
 —
 —
Issuance of intercompany notes(32,000) —
 32,000
 —
 —
Intercompany distributions52,809
 (102,521) 37,405
 12,307
 —
Other—
 —
 —
 —
 —
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES81,856
 (92,521) 27,578
 12,307
 29,220
EFFECT OF EXCHANGE RATE CHANGES ON CASH—
 —
 893
 219
 1,112
CASH AND CASH EQUIVALENTS      
  
Change in cash and cash equivalents41,766
 (2,856) (20,757) —
 18,153
Balance, beginning of year21,453
 9,461
 54,995
 —
 85,909
Balance, end of period
$63,219
 
$6,605
 
$34,238
 —
 
$104,062

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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 Nine Months Ended September 30, 2016
 
Rayonier Inc.
(Parent
Issuer)
 Subsidiary Guarantors 
Non-
guarantors
 
Consolidating
Adjustments
 
Total
Consolidated
CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES
($578) 
$26,589
 
$137,897
 —
 
$163,908
INVESTING ACTIVITIES         
Capital expenditures—
 —
 (40,246) —
 (40,246)
Real estate development investments—
 —
 (4,815) —
 (4,815)
Purchase of timberlands—
 —
 (353,828) —
 (353,828)
Assets purchased in business acquisition—
 —
 (1,113) —
 (1,113)
Net proceeds from large disposition—
 —
 126,965
 —
 126,965
Rayonier office building under construction—
 —
 (3,933) —
 (3,933)
Change in restricted cash—
 —
 22,430
 —
 22,430
Investment in subsidiaries—
 (285,937) —
 285,937
 —
Other—
 —
 444
 —
 444
CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES—
 (285,937) (254,096) 285,937
 (254,096)
FINANCING ACTIVITIES         
Issuance of debt—
 548,000
 146,096
 —
 694,096
Repayment of debt—
 (140,000) (314,419) —
 (454,419)
Dividends paid(92,095) —
 —
 —
 (92,095)
Proceeds from the issuance of common shares889
 —
 —
 —
 889
Repurchase of common shares(690) —
 —
 —
 (690)
Debt issuance costs—
 (818) —
 —
 (818)
Issuance of intercompany notes(12,000) —
 12,000
 —
 —
Intercompany distributions162,107
 (155,731) 279,561
 (285,937) —
Other(139) —
 —
 —
 (139)
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES58,072
 251,451
 123,238
 (285,937) 146,824
EFFECT OF EXCHANGE RATE CHANGES ON CASH—
 —
 1,626
 —
 1,626
CASH AND CASH EQUIVALENTS         
Change in cash and cash equivalents57,494
 (7,897) 8,665
 —
 58,262
Balance, beginning of year2,472
 13,217
 36,088
 —
 51,777
Balance, end of period
$59,966
 
$5,320
 
$44,753
 —
 
$110,039


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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
When we refer to “we,” “us,” “our,”“Rayonier” or “the Company,” or “Rayonier,”Company” we mean Rayonier Inc. and its consolidated subsidiaries. References to the “Operating Partnership” mean Rayonier, L.P. and its consolidated subsidiaries. References to “we,” “us,” or “our,” mean collectively Rayonier Inc., the Operating Partnership and entities/subsidiaries owned or controlled by Rayonier Inc. and/or the Operating Partnership.References herein to “Notes to Financial Statements” refer to the Notes to Consolidated Financial Statements of Rayonier Inc. and Rayonier, L.P. included in Item 1 of this report.
This MD&A is intended to provide a reader of our financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity, and certain other factors which may affect future results. Our MD&A should be read in conjunction with our Consolidated Financial Statements included in Item 1 of this report, our Annual Report on Form 10-K for the year ended December 31, 20162020 (the “2016“2020 Form 10-K”) and information contained in our subsequent reports filed with the Securities and Exchange Commission (the “SEC”).
Forward-Looking StatementsFORWARD-LOOKING STATEMENTS
Certain statements in this document regarding anticipated financial outcomes, including Rayonier’sour earnings guidance, if any, business and market conditions, outlook, expected dividend rate, Rayonier’sour business strategies, including the recent acquisition of Pope Resources, expected harvest schedules, timberland acquisitions sales of non-strategic timberlands,and dispositions, the anticipated benefits of Rayonier’sour business strategies, and other similar statements relating to Rayonier’sour 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 2016our 2020 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’sour 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 undertakeswe undertake no duty to update itsour forward-looking statements except as required by law. You are advised, however, to review any subsequent disclosures the Company makeswe make on related subjects in its subsequent reports filed with the SEC.
Non-GAAP MeasuresNON-GAAP MEASURES
To supplement Rayonier’sour financial statements presented in accordance with generally accepted accounting principles in the United States (“GAAP”), Rayonier useswe use certain non-GAAP measures, including “cash available“Cash Available for distribution,Distribution,” and “Adjusted EBITDA,” which are defined and further explained in Performance and Liquidity Indicators below. Reconciliation of such measures to the nearest GAAP measures can also be found in Performance and Liquidity Indicators below. Rayonier’sOur definitions of these non-GAAP measures may differ from similarly titled measures used by others. These non-GAAP measures should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP.



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OUR COMPANY
Our Company
We are a leading timberland real estate investment trust (“REIT”) with assets located in some of the most productive softwood timber growing regions in the United States and New Zealand. We invest in timberlands and actively manage them to provide current income and attractive long-term returns to our shareholders. We conduct our business through an umbrella partnership real estate investment trust (“UPREIT”) structure in which our assets are owned by our Operating Partnership and its subsidiaries. Rayonier manages the Operating Partnership as its sole general partner. Our revenues, operating income and cash flows are primarily derived from the following core business segments: Southern Timber, Pacific Northwest Timber, New Zealand Timber, Timber Funds, Real Estate, and Trading. As of September 30, 2017,March 31, 2021, we owned or leased under long-term agreements approximatelyagreements approximately 2.7 million acres of timberlands located in the U.S. South (1.9(1.75 million acres) and, U.S. Pacific Northwest (378,000(507,000 acres) and New Zealand (417,000 gross acres or 296,000 net plantable acres). We also haveact as the managing member in a 77%private equity timber fund business with three funds comprising approximately 141,000 acres. On a “look-through basis,” our ownership interest in Matariki Forestry Group, a joint venture (the “New Zealand JV”), that owns or leasesthe timber fund business equates to approximately 429,000 acres (294,000 net plantable acres) of timberlands in New Zealand.17,000 acres.
SEGMENT INFORMATION
The Southern Timber, Pacific Northwest Timber, and New Zealand Timber, and Timber Funds segments include all activities related to the harvesting of timber and other non-timber income activities, such as the licensing of properties for hunting, and the leasing of properties for mineral extraction and cell towers.towers, and carbon credit sales. Our New Zealand operations are conducted by Matariki Forestry Group, a joint venture (the “New Zealand subsidiary”), in which we maintain a 77% ownership interest. The Timber Funds segment operations are managed by ORM LLC, a subsidiary acquired in the merger with Pope Resources. We own approximately 20% of Fund II, 5% of Fund III and 15% of Fund IV. When referring to our proportionate ownership share of the Timber Funds segment, we will refer to the sums as “look-through” totals. See Note 6 - Noncontrolling Interests for additional information regarding our noncontrolling interests in the New Zealand Timber segment also reflects any land or leasehold sales that occur within our New Zealand portfolio.and Timber Funds segments.
The Real Estate segment includes all U.S. and New Zealand land or leasehold sales disaggregated into fivesix sales categories: Improved Development, Unimproved Development, Rural, Timberland & Non-Strategic, / TimberlandsConservation Easement and Large Dispositions. It also includes residential and commercial lease activity, primarily in the town of Port Gamble, Washington.
The Trading segment primarily reflects the log trading activities that supportin New Zealand and Australia conducted by our New Zealand operations.subsidiary. Our Trading segment activities include an export services joint venture with a third-party forest manager in which Matariki Forests Trading Ltd maintains a 50% ownership interest. The Trading segment complements the New Zealand Timber segment by addingproviding added market intelligence, increasing the scale of export operations and achieving cost savings that directly benefit the New Zealand Timber segment. Trading also generally contributes modestly to earnings without significant investment and providesThis additional market intelligence thatalso benefits our Southern and Pacific Northwest export log marketing.
ENVIRONMENTAL MATTERS
For a full description of our environmental matters, see Item 1 - “Business” in our Annual Report on Form 10-K for the timber business.year ended December 31, 2020 and comprehensive environmental and carbon reports located at our Responsible Stewardship webpage.
Industry and Market ConditionsINDUSTRY AND MARKET CONDITIONS
The demand for timber is directly related to the underlying demand for pulp, paper, packaging, lumber and other wood products. The significant majority of timber sold in our Southern Timber segment is consumed domestically. With a higher proportion of pulpwood, our Southern Timber segment relies heavily on downstream markets for pulp and paper, and to a lesser extent wood pellet markets. Our Pacific Northwest Timber segment reliesand Timber Funds segments rely primarily on domestic customers but also exportsexport a significant volume of timber, particularly to China. Both theThe Southern, and Pacific Northwest Timber and Timber Funds segments rely on the strength of U.S. lumber markets as well as underlying housing starts. Our New Zealand Timber segment sells timber to domestic New Zealand wood products mills and also exports a significant portion of its volume to markets in China, South 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 operating results of the segment in U.S. dollar terms.
The Company is
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As the current novel coronavirus (“COVID-19”) pandemic continues to evolve, the expected duration and the extent of economic disruption it may ultimately cause remain uncertain. Local, state and national governments continue to evaluate policies and restrictions in order to mitigate the spread of COVID-19. Government-mandated shutdowns or shelter-in-place orders in markets in which we operate could negatively impact our results. Further, prolonged periods of lower overall business activity as a result of COVID-19 could cause significant damage to the underlying economy, which would likely impact U.S. timber markets. We will continue to monitor COVID-19 and its impact on the markets in which we operate going forward.
    We are also subject to the risk of price fluctuations in itsour major cost components. The primary components of the Company'sour cost of sales are the cost basis of timber sold (depletion), the cost basis of real estate sold and logging and transportation costs (cut and haul). Depletion includes the amortization of capitalized costs (site preparation, planting and fertilization, real estate taxes, timberland lease payments and certain payroll costs). Other costs include amortization of capitalized costs related to road and bridge construction and software, depreciation of fixed assets and equipment, road maintenance, severance and excise taxes, fire prevention and real estate commissions and closing costs.
For additional information on market conditions impacting our business, see Results of Operations.Operations.


Critical Accounting Policies and Use of EstimatesCRITICAL 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 2016our 2020 Form 10-K.


Revenue Recognition for Real Estate Sales
When developed residential or commercial land is sold, the cost of sales includes actual costs incurred and estimates of future development costs benefiting the property sold through completion. When developed land is sold, costs are allocated to each sold unit or lot based upon the relative sales value. For purposes of allocating development costs, estimates of future revenues and development costs are re-evaluated periodically throughout the year, with adjustments being allocated prospectively to the remaining units available for sale.



Discussion of Timber Inventory and Sustainable Yield
43

DISCUSSION OF TIMBER INVENTORY AND SUSTAINABLE YIELD
See Item 1 — Business — Discussion of Timber Inventory and Sustainable Yield in the 2016our 2020 Form 10-K.

OUR TIMBERLANDS
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Our Timberlands
Our timber operations are comprised of our core timberland holdings, which are disaggregated into three geographically distinct reporting segments: Southern Timber, Pacific Northwest Timber and New Zealand Timber.Timber in addition to our timber fund holdings, which represents our ownership in Timber Funds II, III and IV. The following table providestables provide a breakdown of our timberland holdings as of September 30, 2017March 31, 2021 and December 31, 2016:2020:

Core Timberland HoldingsCore Timberland Holdings
(acres in 000s)As of September 30, 2017 As of December 31, 2016(acres in 000s)As of March 31, 2021As of December 31, 2020
Owned Leased Total Owned Leased TotalOwnedLeasedTotalOwnedLeasedTotal
Southern           Southern
Alabama254
 24
 278
 284
 24
 308
Alabama223 14 237 223 14 237 
Arkansas—
 13
 13
 —
 14
 14
Arkansas— 6 6 — 6 6 
Florida281
 101
 382
 281
 92
 373
Florida345 61 406 327 61 388 
Georgia618
 104
 722
 554
 107
 661
Georgia611 64 675 602 71 673 
Louisiana144
 1
 145
 145
 1
 146
Louisiana140 — 140 140 — 140 
Mississippi67
 —
 67
 67
 —
 67
Oklahoma92
 —
 92
 92
 —
 92
Oklahoma92 — 92 92 — 92 
South Carolina18
 —
 18
 —
 —
 —
South Carolina16 — 16 16 — 16 
Tennessee1
 —
 1
 1
 —
 1
Texas182
 —
 182
 187
 —
 187
Texas179 — 179 181 — 181 
1,657

243

1,900
 1,611
 238
 1,849
1,606 145 1,751 1,581 152 1,733 
           
Pacific Northwest           Pacific Northwest
Oregon61
 —
 61
 61
 —
 61
Oregon61 — 61 61 — 61 
Washington316
 1
 317
 316
 1
 317
Washington442 4 446 442 4 446 
377
 1
 378
 377
 1
 378
503 4 507 503 4 507 
           
New Zealand (a)179
 250
 429
 179
 254
 433
New Zealand (a)185 232 417 185 232 417 
Total2,213
 494
 2,707
 2,167
 493
 2,660
Total2,294 381 2,675 2,269 388 2,657 

(a)Represents legal acres owned and leased by the New Zealand JV, in which Rayonier owns a 77% interest. As of September 30, 2017, legal acres in New Zealand were comprised of 294,000 plantable acres and 135,000 non-productive acres.

(a)Represents legal acres owned and leased by the New Zealand subsidiary, in which we own a 77% interest. As of March 31, 2021, legal acres in New Zealand consisted of 296,000 plantable acres and 121,000 non-productive acres.

Timber Fund Holdings
(acres in 000s)As of March 31, 2021As of December 31, 2020
TotalLook-throughTotalLook-through
Timber Funds
Oregon51 7 51 7 
Washington71 9 71 9 
California19 1 19 1 
Total141 17 141 17 

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Total Timberland under Management
(acres in 000s)As of March 31, 2021As of December 31, 2020
TotalTotal
Southern1,751 1,733 
Pacific Northwest507 507 
New Zealand417 417 
Timber Funds141 141 
Total2,816 2,798 

The following tables detail activity for owned and leased acres in our core timberland holdings by state from December 31, 20162020 to September 30, 2017:March 31, 2021:
(acres in 000s)Acres Owned(acres in 000s)Acres Owned
December 31, 2016 Acquisitions Sales September 30, 2017December 31, 2020AcquisitionsSalesOtherMarch 31, 2021
Southern       Southern
Alabama284
 —
 (30) 254
Alabama223 — — — 223 
Florida281
 5
 (5) 281
Florida327 18 — — 345 
Georgia554
 64
 —
 618
Georgia602 9 — — 611 
Louisiana145
 —
 (1) 144
Louisiana140 — — — 140 
Mississippi67
 —
 —
 67
Oklahoma92
 —
 —
 92
Oklahoma92 — — — 92 
South Carolina—
 18
 —
 18
South Carolina16 — — — 16 
Tennessee1
 —
 —
 1
Texas187
 —
 (5) 182
Texas181 — (2)— 179 
1,611
 87
 (41) 1,657
1,581 27 (2)— 1,606 
       
Pacific Northwest       Pacific Northwest
Oregon61
 —
 —
 61
Oregon61 — — — 61 
Washington316
 —
 —
 316
Washington442 — — — 442 
377
 —
 —
 377
503 — — — 503 
       
New Zealand (a)179
 —
 —
 179
New Zealand (a)185 — — — 185 
Total2,167
 87
 (41) 2,213
Total2,269 27 (2)— 2,294 
(a)Represents legal acres owned by the New Zealand subsidiary, in which we have a 77% interest.
(acres in 000s)Acres Leased
December 31, 2020New LeasesSold/Expired Leases (a)Other (b)March 31, 2021
Southern
Alabama14 — — — 14 
Arkansas6 — — — 6 
Florida61 — — — 61 
Georgia71 — (1)(6)64 
152 — (1)(6)145 
Pacific Northwest
Washington (c)4 — — — 4 
New Zealand (d)232— — — 232 
Total388 — (1)(6)381 

(a)Represents legal acres owned by the New Zealand JV, in which Rayonier has a 77% interest.
(acres in 000s)Acres Leased
 December 31, 2016 New Leases 
Leases Sold/
Expired (a)
 September 30, 2017
Southern       
Alabama24
 —
 —
 24
Arkansas14
 —
 (1) 13
Florida92
 10
 (1) 101
Georgia107
 —
 (3) 104
Louisiana1
 —
 —
 1
 238
 10
 (5) 243
        
Pacific Northwest       
Washington1
 —
 —
 1
        
New Zealand (b)254
 8
 (12) 250
Total493
 18
 (17) 494
(a)Includes acres previously under lease that have been harvested or expired.
(b)Represents legal acres leased by the New Zealand JV, in which Rayonier has a 77% interest.

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

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

(c)Primarily timber reservations acquired in the merger with Pope Resources.
(d)Represents legal acres leased by the New Zealand subsidiary, in which we have a 77% interest.
34
45


The following table details activity in our timber fund holdings by state from December 31, 2020 to March 31, 2021:
(acres in 000s)Acres Owned
December 31, 2020AcquisitionsSalesOtherMarch 31, 2021
Fund II
Oregon18 — — — 18 
Washington13 — — — 13 
Total Fund II31 — — — 31 
Look-through share of Fund II6 — — — 6 
Fund III
Oregon13 — — — 13 
Washington25 — — — 25 
California19 — — — 19 
Total Fund III57 — — — 57 
Look-through share of Fund III3 — — — 3 
Fund IV
Oregon20 — — — 20 
Washington33 — — — 33 
Total Fund IV53 — — — 53 
Look-through share of Fund IV8 — — — 8 
Total Timber Funds141 — — — 141 
Look-through share of Funds17 — — — 17 


Table of Contents
46


Results of OperationsRESULTS OF OPERATIONS
Consolidated ResultsCONSOLIDATED RESULTS
The following table provides key financial information by segment and on a consolidated basis:
Three Months Ended
March 31,
Financial Information (in millions)20212020
Sales
Southern Timber$51.7 $53.0 
Pacific Northwest Timber41.5 31.1 
New Zealand Timber57.6 37.5 
Timber Funds14.9 — 
Real Estate
Improved Development0.3 — 
Rural9.8 2.4 
Deferred Revenue/Other (a)0.5 0.1 
Large Dispositions— 116.0 
Total Real Estate10.5 118.5 
Trading16.7 19.0 
Intersegment Eliminations(1.5)— 
Total Sales$191.4 $259.1 
Operating Income (Loss)
Southern Timber$17.3 $15.1 
Pacific Northwest Timber1.3 (0.9)
New Zealand Timber14.0 5.4 
Timber Funds1.5 — 
Real Estate (b)1.7 26.8 
Trading0.2 — 
Corporate and Other(7.6)(7.8)
Operating Income28.5 38.6 
Interest expense, interest income and other(10.0)(8.5)
Income tax expense(3.5)(3.7)
Net Income15.0 26.4 
Less: Net income attributable to noncontrolling interests in consolidated affiliates(3.8)(0.5)
Net Income Attributable to Rayonier, L.P.$11.2 $25.9 
Less: Net income attributable to noncontrolling interests in the Operating Partnership(0.4)— 
Net Income Attributable to Rayonier Inc.$10.8 $25.9 
Adjusted EBITDA (c)
Southern Timber$31.7 $33.3 
Pacific Northwest Timber17.6 9.8 
New Zealand Timber21.2 10.2 
Timber Funds1.0 — 
Real Estate5.1 (1.1)
Trading0.2 — 
Corporate and Other(7.3)(5.0)
Total Adjusted EBITDA$69.5 $47.1 
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
Financial Information (in millions)2017 2016 2017 2016
Sales       
Southern Timber
$31.9
 
$27.8
 
$95.4
 
$102.2
Pacific Northwest Timber18.6
 16.1
 62.9
 52.3
New Zealand Timber69.9
 42.2
 187.8
 126.0
Real Estate       
Improved Development0.1
 —
 0.2
 1.7
Unimproved Development13.9
 1.4
 16.4
 2.2
Rural3.1
 6.4
 15.3
 17.4
Non-Strategic / Timberlands0.2
 52.8
 23.3
 60.5
Large Dispositions—
 —
 42.0
 129.5
Total Real Estate17.3
 60.6
 97.2
 211.3
Trading40.2
 24.7
 115.9
 76.0
Total Sales
$177.9
 
$171.4
 
$559.2
 
$567.8
        
Operating Income (Loss)       
Southern Timber
$11.5
 
$8.2
 
$35.0
 
$35.0
Pacific Northwest Timber1.1
 (3.3) (1.3) (0.9)
New Zealand Timber19.3
 6.6
 56.3
 21.4
Real Estate (a)11.4
 43.1
 57.3
 153.0
Trading1.1
 0.5
 3.4
 1.5
Corporate and other(5.1)
(5.4)
(15.3)
(15.7)
Operating Income39.3
 49.7
 135.4
 194.3
Interest expense, interest income and other(7.5)
(8.3)
(23.9)
(24.8)
Income tax expense(3.0) (0.8) (16.8) (2.2)
Net Income28.8
 40.6
 94.7
 167.3
Less: Net income attributable to noncontrolling interest4.1
 1.2
 10.0
 3.7
Net Income Attributable to Rayonier Inc.
$24.7
 
$39.4
 
$84.7
 
$163.6
        
Adjusted EBITDA (b)       
Southern Timber
$24.2
 
$18.2
 
$72.1
 
$72.1
Pacific Northwest Timber7.6
 3.4
 22.5
 14.1
New Zealand Timber28.4
 12.6
 86.0
 40.5
Real Estate13.4
 56.6
 43.5
 74.0
Trading1.1
 0.5
 3.4
 1.5
Corporate and Other(4.8) (4.1) (14.1) (14.4)
Total Adjusted EBITDA
$69.9
 
$87.2
 
$213.4
 
$187.8

(a)Includes deferred revenue adjustments, revenue true-ups and marketing fees related to Improved Development sales in addition to residential and commercial lease revenue.
(b)The three months ended March 31, 2020 includes $28.7 million from a Large Disposition.
(c)Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators.
47


Three Months Ended
March 31,
Southern Timber Overview20212020
Sales Volume (in thousands of tons)
Pine Pulpwood843 1,133 
Pine Sawtimber638 680 
Total Pine Volume1,481 1,813 
Hardwood31 30 
Total Volume1,512 1,843 
Percentage Delivered Sales36 %32 %
Percentage Stumpage Sales64 %68 %
Net Stumpage Pricing (dollars per ton)
Pine Pulpwood$17.10 $16.05 
Pine Sawtimber27.51 26.67 
Weighted Average Pine$21.58 $20.03 
Hardwood10.51 12.74 
Weighted Average Total$21.35 $19.91 
Summary Financial Data (in millions of dollars)
Timber Sales$44.2 $47.5 
Less: Cut, Haul & Freight(11.9)(10.8)
Net Stumpage Sales$32.3 $36.7 
Non-Timber Sales7.5 5.5 
Total Sales$51.7 $53.0 
Operating Income$17.3 $15.1 
(+) Depreciation, depletion and amortization14.4 18.2 
Adjusted EBITDA (a)$31.7 $33.3 
Other Data
Period-End Acres (in thousands)1,751 1,780 

(a)The nine months ended September 30, 2017 and September 30, 2016 included Large Dispositions of $28.2 million and $101.3 million, respectively.
(b)
Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators.



35


 Three Months Ended
September 30,		 Nine Months Ended
September 30,
Southern Timber Overview2017 2016 2017 2016
Sales Volume (in thousands of tons)       
Pine Pulpwood818
 634
 2,405
 2,610
Pine Sawtimber469
 333
 1,494
 1,195
Total Pine Volume1,287
 967
 3,899
 3,805
Hardwood69
 123
 193
 227
Total Volume1,356
 1,090
 4,092
 4,032
        
Percentage Delivered Sales23% 32% 21% 27%
Percentage Stumpage Sales77% 68% 79% 73%
        
Net Stumpage Pricing (dollars per ton)
       
Pine Pulpwood$16.32
 
$17.36
 
$16.43
 
$18.34
Pine Sawtimber25.93
 26.17
 25.99
 26.74
Weighted Average Pine$19.83
 
$20.40
 
$20.10
 
$20.98
Hardwood15.98
 14.84
 13.02
 13.38
Weighted Average Total$19.63
 
$19.76
 
$19.76
 
$20.54
        
Summary Financial Data (in millions of dollars)       
Sales$31.9
 
$27.8
 
$95.4
 
$102.2
Less: Cut and Haul(5.3) (6.3) (14.6) (19.4)
Net Stumpage Sales$26.6
 
$21.5
 
$80.8
 
$82.8
        
Operating Income
$11.5
 
$8.2
 
$35.0
 
$35.0
(+) Depreciation, depletion and amortization12.7
 10.0
 37.1
 37.1
Adjusted EBITDA (a)
$24.2
 
$18.2
 
$72.1
 
$72.1
        
Other Data       
Non-Timber Income (in millions of dollars) (b)$5.1
 
$3.9
 
$15.2
 
$13.4
Period-End Acres (in thousands)1,900
 1,885
 1,900
 1,885
(a)Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators.







48


Three Months Ended
March 31,
Pacific Northwest Timber Overview20212020
Sales Volume (in thousands of tons)
Pulpwood79 82 
Sawtimber457 393 
Total Volume536 476 
Sales Volume (converted to MBF)
Pulpwood7,559 7,789 
Sawtimber57,905 50,406 
Total Volume65,464 58,194 
Percentage Delivered Sales78 %78 %
Percentage Sawtimber Sales85 %83 %
Delivered Log Pricing (in dollars per ton)
Pulpwood$29.36 $38.11 
Sawtimber90.98 75.40 
Weighted Average Log Price$81.64 $68.29 
Summary Financial Data (in millions of dollars)
Timber Sales$40.3 $30.6 
Less: Cut and Haul(16.0)(14.2)
Net Stumpage Sales$24.3 $16.4 
Non-Timber Sales1.3 0.5 
Total Sales$41.5 $31.1 
Operating Income (Loss)$1.3 ($0.9)
(+) Depreciation, depletion and amortization16.3 10.7 
Adjusted EBITDA (a)$17.6 $9.8 
Other Data
Period-End Acres (in thousands)507 384 
Sawtimber (in dollars per MBF)$730 $611 
Estimated Percentage of Export Volume10 %2 %

(a)
Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators.
(b)Non-Timber Income is presented net of direct charges and excludes allocated overhead.










36


 Three Months Ended
September 30,
Nine Months Ended
September 30,
Pacific Northwest Timber Overview2017 2016 2017 2016
Sales Volume (in thousands of tons)       
Pulpwood59
 64
 219
 231
Sawtimber193
 177
 707
 608
Total Volume252
 241
 926
 839
        
Sales Volume (converted to MBF)       
Pulpwood5,516
 6,016
 20,525
 21,920
Sawtimber25,380
 24,084
 91,596
 80,014
Total Volume30,896
 30,100
 112,121
 101,934
        
Percentage Delivered Sales76% 100% 85% 93%
Percentage Sawtimber Sales76% 74% 76% 72%
        
Delivered Log Pricing (in dollars per ton)       
Pulpwood
$41.43
 
$40.07
 
$39.65
 
$42.85
Sawtimber89.62
 76.69
 80.79
 72.80
Weighted Average Log Price
$76.47
 
$67.02
 
$70.29
 
$64.32
        
Summary Financial Data (in millions of dollars)       
Sales
$18.6
 
$16.1
 
$62.9
 
$52.3
Less: Cut and Haul(6.7) (7.8) (26.9) (24.6)
Net Stumpage Sales
$11.9
 
$8.3
 
$36.0
 
$27.7
        
Operating Income (Loss)
$1.1
 
($3.3) 
($1.3) 
($0.9)
(+) Depreciation, depletion and amortization6.5
 6.7
 23.8
 15.0
Adjusted EBITDA (a)
$7.6
 
$3.4
 
$22.5
 
$14.1
        
Other Data       
Non-Timber Income (in millions of dollars) (b)
$0.4
 
$0.5
 
$2.4
 
$2.1
Period-End Acres (in thousands)378
 379
 378
 379
Sawtimber (in dollars per MBF)
$681
 
$563
 
$624
 
$556
Estimated Percentage of Export Volume30% 20% 26% 25%
(a)Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators.
49


Three Months Ended
March 31,
New Zealand Timber Overview20212020
Sales Volume (in thousands of tons)
Domestic Pulpwood (Delivered)106 101 
Domestic Sawtimber (Delivered)159 147 
Export Pulpwood (Delivered)47 16 
Export Sawtimber (Delivered)287 216 
Total Volume599 481 
Delivered Log Pricing (in dollars per ton)
Domestic Pulpwood$40.15 $33.84 
Domestic Sawtimber80.95 69.97 
Export Sawtimber121.65 94.86 
Weighted Average Log Price$95.70 $74.16 
Summary Financial Data (in millions of dollars)
Timber Sales$57.3 $35.6 
Less: Cut and Haul(20.9)(15.2)
Less: Port and Freight Costs(12.0)(8.0)
Net Stumpage Sales$24.4 $12.4 
Non-Timber Sales / Carbon Credits0.2 1.9 
Total Sales$57.6 $37.5 
Operating Income$14.0 $5.4 
(+) Depreciation, depletion and amortization7.2 4.8 
Adjusted EBITDA (a)$21.2 $10.2 
Other Data
New Zealand Dollar to U.S. Dollar Exchange Rate (b)0.7217 0.6500 
Net Plantable Period-End Acres (in thousands)296 295 
Export Sawtimber (in dollars per JAS m3)
$141.45 $110.29 
Domestic Sawtimber (in $NZD per tonne)$123.39 $118.41 

(a)
Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators.
(b)Non-Timber Income is presented net of direct charges and excludes allocated overhead.


37


 Three Months Ended
September 30,		 Nine Months Ended
September 30,
New Zealand Timber Overview2017 2016 2017 2016
Sales Volume (in thousands of tons)       
Domestic Pulpwood (Delivered)131
 99
 336
 285
Domestic Sawtimber (Delivered)239
 220
 652
 630
Export Pulpwood (Delivered)28
 21
 83
 60
Export Sawtimber (Delivered)376
 213
 819
 675
Stumpage—
 —
 —
 10
Total Volume774
 552
 1,890
 1,658
        
Delivered Log Pricing (in dollars per ton)       
Domestic Pulpwood
$34.42
 
$32.55
 
$34.16
 
$31.30
Domestic Sawtimber
$83.61
 
$75.06
 
$80.54
 
$71.26
Export Sawtimber
$113.35
 
$97.44
 
$111.62
 
$96.04
        
Summary Financial Data (in millions of dollars)       
Sales
$69.9
 
$42.2
 
$163.5
 
$124.2
Less: Cut and Haul(24.8) (18.3) (60.3) (52.1)
Less: Port and Freight Costs(12.9) (6.6) (28.5) (19.3)
Net Stumpage Sales
$32.2
 
$17.3
 
$74.7
 
$52.8
        
Land Sales—
 —
 24.3
 1.8
Total Sales
$69.9
 
$42.2
 
$187.8
 
$126.0
        
Operating Income
$19.3
 
$6.6
 
$56.3
 
$21.4
(+) Non-operating income0.6
 —
 0.3
 —
(+) Depreciation, depletion and amortization (a)8.5
 6.0
 29.3
 17.3
(+) Non-cash cost of land sold—
 —
 0.1
 1.8
Adjusted EBITDA (b)
$28.4
 
$12.6
 
$86.0
 
$40.5
        
Other Data       
Non-timber Income / Carbon credits ($ in MMs)
$0.1
 
$0.5
 
$0.3
 
$1.4
New Zealand Dollar to U.S. Dollar Exchange Rate (c)0.7328
 0.7178
 0.7154
 0.6897
Net Plantable Period-End Acres (in thousands)294
 299
 294
 299
Export Sawtimber (in dollars per JAS m3)

$131.80
 
$113.25
 
$129.72
 
$111.63
Domestic Sawtimber (in $NZD per tonne)
$125.51
 
$115.03
 
$123.73
 
$113.38
(a)Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators.
(b)Represents the period-average rate.



50

Three Months Ended
March 31,
Timber Funds Overview20212020
Sales Volume (in thousands of tons)
Pulpwood9 — 
Sawtimber136 — 
Total Volume145 — 
Summary Financial Data (in millions of dollars)
Timber Sales$13.6 — 
Less: Cut and Haul(5.5)— 
Net Stumpage Sales$8.1 — 
Timberland Management Fees1.4 — 
Total Sales$14.9 — 
Operating Income$1.5 — 
Operating income attributable to NCI in Timber Funds(1.1)— 
(+) Depreciation, depletion and amortization (“Look-through”)0.6 — 
Adjusted EBITDA (a)$1.0 — 
Other Data
Period-End Acres (in thousands)141 — 
“Look-through” Period-End Acres (in thousands)17 — 


(a)The nine months ended September 30, 2017 includes $8.9 million of DD&A related to timberland sales.
(b)
Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators.
(c)Represents the average period rate.


38


 Three Months Ended
September 30,		 Nine Months Ended
September 30,
Real Estate Overview2017 2016 2017 2016
Sales (in millions of dollars)       
Improved Development (a)
$0.1

—


$0.2


$1.7
Unimproved Development13.9

1.4

16.4

2.2
Rural3.1

6.4

15.3

17.4
Non-Strategic / Timberlands0.2

52.8

23.3

60.5
Large Dispositions (b)—
 —
 42.0
 129.5
Total Sales
$17.3
 
$60.6
 
$97.2
 
$211.3
        
Acres Sold       
Improved Development (a)0.2
 —
 1.5
 46.6
Unimproved Development1,319
 73
 1,449
 121
Rural1,128
 2,069
 5,140
 6,180
Non-Strategic / Timberlands102
 21,459
 9,758
 27,842
Large Dispositions (b)—
 —
 24,954
 55,320
Total Acres Sold2,549
 23,601
 41,303
 89,510
        
Gross Price per Acre (dollars per acre)       
Improved Development (a)
$269,412
 —
 
$318,108
 
$37,353
Unimproved Development10,540
 18,500
 11,318
 18,302
Rural2,771
 3,082
 2,988
 2,797
Non-Strategic / Timberlands1,616
 2,465
 2,382
 2,174
Large Dispositions (b)—
 —
 1,681
 2,342
Weighted Average (Total) (c)
$6,764
 
$2,569
 
$3,393
 
$2,392
Weighted Average (Adjusted) (d)
$6,747
 
$2,569
 
$3,365
 
$2,344
        
Sales (Excluding Large Dispositions)
$17.3


$60.6
 
$55.2
 
$81.8
        
Operating Income
$11.4
 
$43.1
 
$57.3
 
$153.0
(+) Depreciation, depletion and amortization0.7
 9.2
 5.9
 14.0
(+) Non-cash cost of land and improved development1.3
 4.3
 8.5
 8.3
(–) Large Dispositions (b)—
 —
 (28.2) (101.3)
Adjusted EBITDA (e)
$13.4
 
$56.6
 
$43.5
 
$74.0
(a)Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators.

Three Months Ended
March 31,
Trading Overview20212020
Sales Volume (in thousands of tons)
NZ Trading - Domestic13 8 
NZ Trading - Export128 199 
Total Volume141 207 
Summary Financial Data (in millions of dollars)
Trading Sales$16.2 $18.6 
Non-Timber Sales0.4 0.3 
Total Sales$16.7 $19.0 
Operating Income$0.2 — 
Adjusted EBITDA (a)$0.2 — 

(a)Reflects land with capital invested in infrastructure improvements. Sales for the nine months ended September 30, 2017 are presented net of $0.3 million of deferred revenue adjustments due to remaining performance obligations. Price per acre is calculated on gross sales of $0.5 million for the nine months ended September 30, 2017.
(b)Large Dispositions are defined as transactions involving the sale of timberland that exceed $20 million in size and do not have a demonstrable premium relative to timberland value. In January 2017, the Company completed a disposition of approximately 25,000 acres located in Alabama for a sale price and gain of approximately $42.0 million and $28.2 million, respectively. In April 2016, the Company completed a disposition of approximately 55,000 acres in Washington for a sale price and gain of approximately $129.5 million and $101.3 million, respectively.
(c)Excludes Large Dispositions.
(d)Excludes Improved Development and Large Dispositions.
(e)
Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators below.



39


 Three Months Ended
September 30,		 Nine Months Ended
September 30,
Capital Expenditures By Segment (in millions of dollars)2017 2016 2017 2016
Timber Capital Expenditures       
Southern Timber       
Reforestation, silviculture and other capital expenditures
$5.6
 
$4.0
 
$11.4
 
$11.5
Property taxes1.6
 1.6
 6.1
 5.2
Lease payments0.5
 0.5
 3.0
 3.2
Allocated overhead0.9
 1.0
 2.6
 3.1
Subtotal Southern Timber
$8.6
 
$7.1
 
$23.1
 
$23.0
Pacific Northwest Timber       
Reforestation, silviculture and other capital expenditures1.5
 1.1
 5.3
 4.1
Property taxes0.2
 0.1
 0.7
 0.4
Allocated overhead0.5
 0.4
 1.5
 1.1
Subtotal Pacific Northwest Timber
$2.2
 
$1.6
 
$7.5
 
$5.6
New Zealand Timber       
Reforestation, silviculture and other capital expenditures2.7
 3.0
 6.6
 6.4
Property taxes0.2
 0.2
 0.5
 0.5
Lease payments0.4
 1.3
 2.5
 2.6
Allocated overhead0.7
 0.7
 2.2
 1.9
Subtotal New Zealand Timber
$4.0
 
$5.2
 
$11.8
 
$11.4
Total Timber Segments Capital Expenditures
$14.8
 
$13.9
 
$42.4
 
$40.0
Real Estate0.7
 0.1
 1.1
 0.2
Corporate0.4
 —
 2.2
 —
Total Capital Expenditures
$15.9
 
$14.0
 
$45.7
 
$40.2
        
Timberland Acquisitions       
Southern Timber
$1.9
 
$77.1
 
$216.2
 
$91.4
Pacific Northwest Timber—
 0.1
 1.5
 262.4
New Zealand Timber—
 —
 21.4
 —
Subtotal Timberland Acquisitions
$1.9
 
$77.2
 
$239.1
 
$353.8
        
Real Estate Development Investments
$6.2
 
$1.8
 
$11.8
 
$4.8
Rayonier Office Building
$0.4
 
$2.8
 
$6.0
 
$3.9


40



The following tables summarize sales, operating income and Adjusted EBITDA variances for September 30, 2017 versus September 30, 2016 (millions of dollars):
Sales Southern Timber Pacific Northwest Timber New Zealand Timber Real Estate Trading Total
Three Months Ended September 30, 2016 
$27.8
 
$16.1
 
$42.2
 
$60.6
 
$24.7
 
$171.4
Volume/Mix 5.3
 0.4
 19.0
 (54.0) 9.3
 (20.0)
Price (0.2) 3.3
 8.2
 10.7
 6.2
 28.2
Foreign exchange (a) —
 —
 0.5
 —
 —
 0.5
Other (1.0)(b)(1.2)(b)—
 —
 —
 (2.2)
Three Months Ended September 30, 2017 
$31.9
 
$18.6
 
$69.9
 
$17.3
 
$40.2
 
$177.9
(a)Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators.
51
(a)    Net of currency hedging impact.
(b)    Includes variance due to stumpage versus delivered sales.


Sales Southern Timber Pacific Northwest Timber New Zealand Timber Real Estate Trading Total
Nine Months Ended September 30, 2016 
$102.2
 
$52.3
 
$126.0
 
$211.3
 
$76.0
 
$567.8
Volume/Mix 1.2
 2.9
 18.4
 (42.7) 24.5
 4.3
Price (3.2) 5.4
 18.5
 16.4
 15.4
 52.5
Foreign exchange (a) —
 —
 2.5
 —
 —
 2.5
Other (4.8)(b)2.3
(b)22.4
(c)(87.8)(d)—
 (67.9)
Nine Months Ended September 30, 2017 
$95.4
 
$62.9
 
$187.8
 
$97.2
 
$115.9
 
$559.2

Three Months Ended
March 31,
Real Estate Overview20212020
Sales (in millions of dollars)
Improved Development$0.3 — 
Rural9.8 2.4 
Deferred Revenue/Other (a)0.5 0.1 
Large Dispositions (b)— 116.0 
Total Sales$10.5 $118.5 
Acres Sold
Improved Development0.6 — 
Rural2,394 624 
Large Dispositions (b)— 66,946 
Total Acres Sold2,395 67,570 
Gross Price per Acre (dollars per acre)
Improved Development$406,452 — 
Rural4,079 3,842 
Large Dispositions (b)— 1,733 
Weighted Average (Total) (c)$4,183 $3,842 
Weighted Average (Adjusted) (d)$4,079 $3,842 
Sales (Excluding Large Dispositions)$10.5 $2.5 
Operating Income$1.7 $26.8 
(+) Depreciation, depletion and amortization1.6 0.4 
(+) Non-cash cost of land and improved development1.8 0.4 
(–) Large Dispositions (b)— (28.7)
Adjusted EBITDA (e)$5.1 ($1.1)

(a)Includes deferred revenue adjustments, revenue true-ups and marketing fees related to Improved Development sales in addition to residential and commercial lease revenue.
(b)Large Dispositions are defined as transactions involving the sale of timberland that exceed $20 million in size and do not have a demonstrable premium relative to timberland value. In March 2020, we completed the disposition of approximately 67,000 acres located in Mississippi for a sales price and gain of approximately $116.0 million and $28.7 million, respectively.
(c)Excludes Large Dispositions.
(d)Excludes Improved Development and Large Dispositions.
(e)Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators.
52


Three Months Ended
March 31,
Capital Expenditures By Segment (in millions of dollars)20212020
Timber Capital Expenditures
Southern Timber
Reforestation, silviculture and other capital expenditures$3.3 $7.1 
Property taxes1.5 1.7 
Lease payments0.8 1.1 
Allocated overhead1.2 1.3 
Subtotal Southern Timber$6.7 $11.1 
Pacific Northwest Timber
Reforestation, silviculture and other capital expenditures2.7 2.3 
Property taxes0.3 0.2 
Allocated overhead1.2 0.8 
Subtotal Pacific Northwest Timber$4.1 $3.3 
New Zealand Timber
Reforestation, silviculture and other capital expenditures2.0 1.5 
Property taxes0.2 0.2 
Lease payments0.5 0.4 
Allocated overhead0.7 0.6 
Subtotal New Zealand Timber$3.4 $2.7 
Total Timber Segments Capital Expenditures$14.2 $17.1 
Timber Funds (“Look-through”) (a)0.2 — 
Real Estate0.1 0.1 
Total Capital Expenditures$14.5 $17.2 
Timberland Acquisitions
Southern Timber$29.9 $24.1 
Timberland Acquisitions$29.9 $24.1 
Real Estate Development Investments (b)$3.0 $1.7 

(a)The three months ended March 31, 2021 excludes $1.3 million of capital expenditures attributable to noncontrolling interests in Timber Funds.
(b)Represents investments in master infrastructure or entitlements in our real estate development projects. Real Estate Development Investments are amortized as the underlying properties are sold and included in Non-Cash Cost of Land and Improved Development.
53

    The following tables summarize sales, operating income (loss) and Adjusted EBITDA variances for March 31, 2021 versus March 31, 2020 (millions of dollars):

SalesSouthern TimberPacific Northwest TimberNew Zealand TimberTimber FundsReal EstateTradingIntersegment EliminationsTotal
Three Months Ended
March 31, 2020
$53.0 $31.1 $37.5 — $118.5 $19.0 — $259.1 
Volume(6.6)2.1 9.2 — 6.3 (5.9)— 5.1 
Price2.2 5.8 9.5 — 1.1 3.5 — 22.1 
Non-timber sales2.0 0.8 (1.9)— — 0.1 — 1.0 
Foreign exchange (a)— — 1.7 — — — — 1.7 
Other1.1 (b)1.7 (b)1.6 (c)14.9 (d)(115.4)(e)— (1.5)(f)(97.6)
Three Months Ended
March 31, 2021
$51.7 $41.5 $57.6 $14.9 $10.5 $16.7 ($1.5)$191.4 

(a)    Net of currency hedging impact.
(b)    Includes variance due to stumpage versus delivered sales.
(c)    New ZealandIncludes variance due to domestic versus export sales.
(d)    Timber includes $24.3Funds was a new segment in Q2 2020. Includes $11.9 million of sales attributable to noncontrolling interests in Timber Funds and $1.4 million of sales related to timberland sales in 2017, offsetinvestment management fees paid to us by $1.8 million of timberland sales in 2016.the timber funds.
(d)    Real Estate includes $42.0(e)    Includes $116.0 million of sales from a Large DispositionsDisposition in 2017,Q1 2020, partially offset by $129.5deferred revenue adjustments and marketing fees related to Improved Development sales, as well as residential and commercial lease revenue.
(f)    Includes $1.4 million of Intersegment eliminations related to timberland management fees paid to us by the timber funds and reported as sales from Large Dispositions in 2016.within the Timber Funds segment.

Operating Income Southern Timber Pacific Northwest Timber New Zealand Timber Real Estate Trading Corporate and Other Total
Three Months Ended September 30, 2016 
$8.2
 
($3.3) 
$6.6
 
$43.1
 
$0.5
 
($5.4) 
$49.7
Volume/Mix 2.7
 —
 3.2
 (41.8) —
 —
 (35.9)
Price (0.2) 3.3
 8.1
 10.7
 —
 —
 21.9
Cost (0.3) 0.7
 0.9
 (0.2) 0.6
 0.5
 2.2
Non-timber income 1.3
 (0.1) (0.4) —
 —
 —
 0.8
Foreign exchange (a) —
 —
 1.0
 —
 —
 —
 1.0
Depreciation, depletion & amortization (0.2) 0.5
 (0.1) 0.4
 —
 (0.2) 0.4
Non-cash cost of land and improved development —
 —
 —
 (0.8) —
 —
 (0.8)
Three Months Ended September 30, 2017 
$11.5
 
$1.1
 
$19.3
 
$11.4
 
$1.1
 
($5.1) 
$39.3

SalesSouthern TimberPacific Northwest TimberNew Zealand TimberTimber FundsReal EstateTradingIntersegment EliminationsTotal

Operating Income (Loss)Southern TimberPacific Northwest TimberNew Zealand TimberTimber FundsReal EstateTradingCorporate and OtherTotal
Three Months Ended
March 31, 2020
$15.1 ($0.9)$5.4 — $26.8 — ($7.8)$38.6 
Volume(3.4)0.3 1.8 — 4.5 — — 3.2 
Price2.2 5.8 9.5 — 1.1 — — 18.6 
Cost0.6 (0.4)0.2 — (1.5)0.5 0.2 (0.4)
Non-timber income2.2 0.8 (1.8)— — (0.3)— 0.9 
Foreign exchange (a)— — (0.4)— — — — (0.4)
Depreciation, depletion & amortization0.6 (4.3)(0.7)— (0.3)— — (4.7)
Non-cash cost of land and improved development— — — — (0.4)— — (0.4)
Other (b)— — — 1.5 (28.5)— — (27.0)
Three Months Ended
March 31, 2021
$17.3 $1.3 $14.0 $1.5 $1.7 $0.2 ($7.6)$28.5 

(a)    Net of currency hedging impact.

(b)    Timber Funds was a new segment in Q2 2020 and consists of $1.1 million of operating income attributable to noncontrolling interests in Timber Funds and $0.4 million of operating income attributable to Rayonier. Real Estate includes $28.7 million of operating income from a Large Disposition in Q1 2020, partially offset by deferred revenue adjustments and marketing fees related to Improved Development sales, as well as residential and commercial lease revenue.


Operating Income (Loss)Southern TimberPacific Northwest TimberNew Zealand TimberTimber FundsReal EstateTradingCorporate and OtherTotal




41
54


Adjusted EBITDA (a)Southern TimberPacific Northwest TimberNew Zealand TimberTimber FundsReal EstateTradingCorporate and OtherTotal
Three Months Ended
March 31, 2020
$33.3 $9.8 $10.2 — ($1.1)— ($5.0)$47.1 
Volume(6.6)1.6 2.9 — 6.3 — — 4.2 
Price2.2 5.8 9.5 — 1.1 — — 18.6 
Cost0.6 (0.4)0.2 — (1.5)0.5 (2.3)(2.9)
Non-timber income2.2 0.8 (1.8)— — (0.3)— 0.9 
Foreign exchange (b)— — 0.2 — — — — 0.2 
Other (c)— — — 1.0 0.3 — — 1.3 
Three Months Ended
March 31, 2021
$31.7 $17.6 $21.2 $1.0 $5.1 $0.2 ($7.3)$69.5 
Operating Income Southern Timber Pacific Northwest Timber New Zealand Timber Real Estate Trading Corporate and Other Total
Nine Months Ended September 30, 2016 
$35.0
 
($0.9) 
$21.4
 
$153.0
 
$1.5
 
($15.7) 
$194.3
Volume/Mix 0.6
 0.8
 2.5
 (30.6) —
 —
 (26.7)
Price (3.2) 5.4
 15.8
 16.4
 —
 —
 34.4
Cost 0.2
 0.4
 (0.1) (0.5) 1.9
 0.6
 2.5
Non-timber income 1.8
 0.3
 (1.1) —
 —
 —
 1.0
Foreign exchange (a) —
 —
 2.7
 —
 —
 —
 2.7
Depreciation, depletion & amortization 0.6
 (7.3) (0.3) 1.0
 —
 (0.2) (6.2)
Non-cash cost of land and improved development —
 —
 —
 (4.8) —
 —
 (4.8)
Other —
 —
 15.4
(b)(77.2)(c)—
 —
 (61.8)
Nine Months Ended September 30, 2017 
$35.0
 
($1.3) 
$56.3
 
$57.3
 
$3.4
 
($15.3) 
$135.4

(a)Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicatorsbelow.
(b)Net of currency hedging impact.
(b)    New Zealand (c)Timber Funds was a new segment in Q2 2020. Real Estate includes $14.8 million of income from timberlanddeferred revenue adjustments and marketing fees related to Improved Development sales, in 2017as well as residential and $0.4 million from a settlement received in 2017.commercial lease revenue.

(c)Adjusted EBITDA (a)Southern TimberPacific Northwest TimberNew Zealand TimberTimber FundsReal Estate includes $28.2 million of operating income from Large Dispositions, offset by $101.3 million of operating income from Large Dispositions in 2016TradingCorporate and the receipt of a $4.0 million deferred payment related to a prior land sale in 2016.OtherTotal

Adjusted EBITDA (a) Southern Timber Pacific Northwest Timber New Zealand Timber Real Estate Trading Corporate and Other Total
Three Months Ended September 30, 2016 
$18.2
 
$3.4
 
$12.6
 
$56.6
 
$0.5
 
($4.1) 
$87.2
Volume/Mix 5.2
 0.3
 5.4
 (53.7) —
 —
 (42.8)
Price (0.2) 3.3
 8.1
 10.7
 —
 —
 21.9
Cost (0.3) 0.7
 0.9
 (0.2) 0.6
 (0.7) 1.0
Non-timber income 1.3
 (0.1) (0.4) —
 —
 —
 0.8
Foreign exchange (b) —
 —
 1.8
 —
 —
 —
 1.8
Three Months Ended September 30, 2017 
$24.2
 
$7.6
 
$28.4
 
$13.4
 
$1.1
 
($4.8) 
$69.9
(a)
Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators below.
(b)Net of currency hedging impact.

Adjusted EBITDA (a) Southern Timber Pacific Northwest Timber New Zealand Timber Real Estate Trading Corporate and Other Total
Nine Months Ended September 30, 2016 
$72.1
 
$14.1
 
$40.5
 
$74.0
 
$1.5
 
($14.4) 
$187.8
Volume/Mix 1.2
 2.3
 4.8
 (42.0) —
 —
 (33.7)
Price (3.2) 5.4
 15.8
 16.4
 —
 —
 34.4
Cost 0.2
 0.4
 (0.1) (0.5) 1.9
 0.3
 2.2
Non-timber income 1.8
 0.3
 (1.1) —
 —
 —
 1.0
Foreign exchange (b) —
 —
 3.7
 —
 —
 —
 3.7
Other —
 —
 22.4
(c)(4.4)(d)—
 —
 18.0
Nine Months Ended September 30, 2017 
$72.1
 
$22.5
 
$86.0
 
$43.5
 
$3.4
 
($14.1) 
$213.4
(a)
Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators below.
(b)Net of currency hedging impact.
(c)New Zealand Timber includes $24.3 million of timberland sold in 2017 less cash costs of $0.5 million and $0.4 million of operating income from a settlement received in 2017, offset by $1.8 million of timberland sold in 2016.
(d)Real Estate includes the receipt of a $4.0 million deferred payment related to a prior land sale in 2016.


SOUTHERN TIMBER




42


Southern Timber
Third    First quarter sales of $31.9$51.7 million increased $4.1decreased $1.3 million, or 15%2%, versus the prior year period primarily due to lower harvest volumes, partially offset by higher average net stumpage prices and higher pipeline easement revenue. Harvest volumes decreased 18% to 1.51 million tons versus 1.84 million tons in the prior year period. The decline in volume was largely due to the timing of harvest operations as compared to the prior year, as well as operational disruptions attributable to wet ground conditions in Georgia and winter snowstorms in the Gulf region. Average pine sawtimber stumpage prices increased 3% to $27.51 per ton versus $26.67 per ton in the prior year period. Robust demand from sawmills and growing demand from the export market coupled with constricted supply due to weather conditions translated into favorable sawtimber pricing across our markets. Average pine pulpwood stumpage prices increased 7% to $17.10 per ton versus $16.05 per ton in the prior year period due to favorable geographic mix as well as tighter supply due to adverse weather conditions. Overall, weighted-average stumpage prices (including hardwood) increased 7% to $21.35 per ton versus $19.91 per ton in the prior year period. Operating income of $17.3 million increased $2.3 million versus the prior year period due to higher net stumpage prices ($2.2 million), higher non-timber income ($2.2 million), lower costs ($0.6 million) and lower depletion rates ($0.6 million), partially offset by lower volumes ($3.4 million).
    First quarter Adjusted EBITDA of $31.7 million was 5%, or $1.6 million, below the prior year period.
PACIFIC NORTHWEST TIMBER
    First quarter sales of $41.5 million increased $10.4 million, or 34%, versus the prior year period. Harvest volumes increased 24%13% to 1.36 million536,000 tons versus 1.09 million476,000 tons in the prior year period, primarily due to incremental volume from recent acquisitions and the prior year curtailment of harvest activity in certain eastern markets.Pope Resources acquisition. Average pinedelivered sawtimber stumpage prices decreased 1%increased 21% to $25.93$90.98 per ton versus $26.17$75.40 per ton in the prior year period, while average pineas exceptionally strong domestic lumber markets drove improved demand and pricing. Average delivered pulpwood stumpage prices decreased 6%23% to $16.32$29.36 per ton versus $17.36 per ton in the prior year period. The modest decrease in average sawtimber prices was primarily driven by geographic mix, as impacts from recent hurricanes limited operability in one of the Company’s higher-priced sawtimber regions. The decrease in average pulpwood prices was largely due to salvage volume from the West Mims fire as well as increased supply along the east coast. Overall, weighted-average stumpage prices (including hardwood) decreased 1% to $19.63 per ton versus $19.76 per ton in the prior year period. Operating income of $11.5 million increased $3.3 million versusthe prior year period due to higher volumes ($2.7 million), higher non-timber income ($1.3 million) and lower overhead expense ($0.3 million), which were partially offset by lower weighted-average stumpage prices ($0.2 million), higher leased land expenses ($0.2 million), higher depletion rates ($0.2 million) and higher severance and franchise taxes ($0.4 million). Third quarter Adjusted EBITDA of $24.2 million was $6.0 million above the prior year period.
Year-to-date sales of $95.4 million decreased $6.8 million, or 7%, versus the prior year period. Harvest volumes increased 2% to 4.09 million tons versus 4.03 million tons in the prior year period. Average pine sawtimber stumpage prices decreased 3% to $25.99 per ton versus $26.74$38.11 per ton in the prior year period, while average pine pulpwood stumpage prices decreased 10% to $16.43 per ton versus $18.34 per tonas higher lumber mill residuals resulted in the prior year period. The modest decrease in average sawtimber prices was driven by lower demand in the Gulf states as well as geographic mix due to recent hurricanes affecting the ability to harvest volume in one of the Company’s higher-priced sawtimber regions. The decrease in average pulpwood prices was due to salvage volume from the West Mims fire andan increased supply as a result of extended dry weather along the east coast during the first half of the year. Overall, weighted-average stumpage prices (including hardwood) decreased 4% to $19.76 per ton versus $20.54 per ton in the prior year period. competing wood chip residuals. Operating income of $35.0$1.3 million remained flatimproved $2.3 million versus the prior year period due to higher net stumpage prices ($5.8 million), higher non-timber income ($1.80.8 million) and volume/mix changes ($0.3 million), higher volumes ($0.6 million), lower depreciation and amortization ($0.6 million), and lower overhead expense ($1.5 million), which werepartially offset by lower weighted-average stumpage priceshigher depletion rates ($3.2 million), higher severance and franchise taxes ($0.94.3 million) and higher lease land expensesoverhead and other costs ($0.4 million). Year-to-date
    First quarter Adjusted EBITDA of $72.1$17.6 million remained the same aswas 81%, or $7.9 million, above the prior year period.
Pacific Northwest TimberNEW ZEALAND TIMBER
ThirdFirst quarter sales of $18.6$57.6 million increased $2.5$20.1 million, or 16%53%, versusthe prior year period. Harvest, as higher harvest volumes increased 5% to 252,000 tons versus 241,000 tons in the prior year period, primarily due to improved export market conditions, partially offset by fire restrictions in Oregon. Average delivered sawtimberand log prices increased 17% to $89.62 per ton versus $76.69 per ton in the prior year period, while average delivered pulpwood prices increased 3% to $41.43 per ton versus $40.07 per ton in the prior year period. The increase in average sawtimber and pulpwood prices was due to stronger domestic and export markets. Operating income of $1.1 million increased $4.4 million relative to an operating loss of $3.3 million in the prior year period due to higher prices ($3.3 million), lower depletion rates ($0.5 million), lower overhead expense ($0.4 million) and lower road maintenance expense ($0.3 million), which were partially offset by lower non-timber income ($0.1 million). Third quarter Adjusted EBITDA of $7.6 million was $4.2 million above the prior year period.
Year-to-date sales of $62.9 million increased $10.6 million, or 20%, versusthe prior year period. deferred carbon credit sales. Harvest volumes increased 10%25% to 926,000599,000 tons versus 839,000481,000 tons in the prior year period. The increase in harvest volumes was driven primarily by a normalized level of activity in the first quarter versus a prior year period constrained by COVID-19 disruptions. Average delivered prices for export sawtimber prices increased 11%28% to $80.79$121.65 per ton versus $72.80$94.86 per ton in the prior year period, while average delivered pulpwood prices decreased 7%for domestic sawtimber increased 16% to $39.65$80.95 per ton versus $42.85$69.97 per ton in the prior year period. The increase in averageexport sawtimber prices was due todriven primarily by stronger domestic and export sawtimber marketsdemand from China, as well as a more favorable species mix. The decrease in average pulpwood prices was due to an increase in volume from a lower-priced region and an increase in the availability of wood chip residuals from lumber mills, which in turn reduced the demand for pulpwood logs. Operating loss of $1.3 million versus operating loss of $0.9 million in the prior year period was primarily due to higher depletion rates resulting from our Menasha acquisition ($7.3 million) and higher road maintenance and other costs ($0.4 million), which were partially offsetsignificantly impacted by higher prices ($5.4 million), lower overhead expense ($0.8 million), higher volumes ($0.8 million) and higher non-timber income ($0.3 million). Year-to-date Adjusted EBITDA of $22.5 million was $8.4 million above the prior year period.

COVID-19 outbreak.
43
55


New Zealand Timber
Third quarter sales of $69.9 million increased $27.7 million, or 66%, versusthe prior year period. Harvest volumes increased 40% to 774,000 tons versus 552,000 tons in the prior year period, driven primarily by lower volumesImproved export pricing in the priorcurrent year quarter was also due in part to the timing of export shipments coupled with incremental volumerestriction on competing log imports to China from recent acquisitions. Average delivered prices for export sawtimber increased 16% to $113.35 per ton versus $97.44 per ton in the prior year period, while average delivered prices for domestic sawtimber increased 11% to $83.61 per ton versus $75.06 per ton in the prior year period. The increase in export sawtimber prices was primarily due to stronger demand from China.Australia. The increase in domestic sawtimber prices (in U.S. dollar terms) was driven primarily by strong local demand for construction materials and a modestthe rise in the NZ$/US$ exchange rate (US$0.730.72 per NZ$1.00 versus US$0.720.65 per NZ$1.00). Excluding the impact of foreign exchange rates, domestic sawtimber prices improved by a more modest 4% versus the prior year period due to improved demand. Operating income of $14.0 million increased 9% from$8.5 million versus the prior year period as a result of higher net stumpage prices ($9.5 million), higher volumes ($1.8 million) and lower costs ($0.2 million), partially offset by deferredcarbon credit sales ($1.8 million), higher depletion rates ($0.7 million) and unfavorable foreign exchange impacts ($0.4 million). First quarter Adjusted EBITDA of $21.2 million was 107%, or $11.0 million above the prior year period.
TIMBER FUNDS
The Timber Funds segment generated first quarter sales of $14.9 million on harvest volumes of 145,000 tons, resulting in operating income of $1.5 million. First quarter Adjusted EBITDA was $1.0 million.
REAL ESTATE
First quarter sales of $10.5 million decreased $108.0 million versus the prior year period, while operating income of $1.7 million decreased $25.1 million versus the prior year period. Operating income of $19.3 million increased $12.7 million versustheThe prior year period due to higher prices ($8.1 million), higher volumes ($3.2 million), favorable foreign exchange impacts ($1.0 million) and lower forest management and overhead costs ($0.9 million), which were partially offset by lower carbon sales ($0.4 million) and higher depletion rates ($0.1 million). Third quarter Adjusted EBITDA of $28.4 million was $15.8 million above the prior year period.
Year-to-date sales of $187.8 million increased $61.8 million, or 49%, versusthe prior year period. Harvest volumes increased 14% to 1.89 million tons versus 1.66 million tons in the prior year period due to incremental volume from recent acquisitions. Average delivered prices for export sawtimber increased 16% to $111.62 per ton versus $96.04 per ton in the prior year period, while average delivered prices for domestic sawtimber increased 13% to $80.54 per ton versus $71.26 in the prior year period. The increase in export sawtimber prices was primarily due to stronger demand from China, while the increase in domestic sawtimber prices (in U.S. dollar terms) was driven primarily by stronger local demand for construction materials and a modest rise in the NZ$/US$ exchange rate (US$0.72 per NZ versus US$0.69 per NZ$1.00). Excluding the impact of foreign exchange rates, domestic sawtimber prices increased 9% from the prior year period. Operating income of $56.3 million increased $34.9 million versus the prior year period due to higher prices ($15.8 million), higher income from land sales ($14.8 million), favorable foreign exchange impacts ($2.7 million), changes in mix ($2.5 million) and higher other income ($0.6 million), which were partially offset by lower carbon sales ($1.1 million), higher depreciation ($0.3 million) and higher forest management costs ($0.1 million). Year-to-date Adjusted EBITDA of $86.0 million was $45.5 million above the prior year period.
Real Estate
Thirdfirst quarter sales of $17.3 million decreased $43.3 million versusthe prior year period, whileand operating income of $11.4included $116.0 million decreased $31.7and $28.7 million, versusthe prior year period.respectively, from a Large Disposition. Sales and operating income decreased indeclined versus the third quarterprior year period due to a lower number of acres sold (2,549(2,395 acres sold versus 23,60167,570 acres sold in the prior year period), partially offset by an increase in weighted-average prices ($6,7644,183 per acre versus $2,569$1,753 per acre in the prior year period) due to.
Improved Development sales of $0.3 million included three residential lots in the mixWildlight development project north of properties sold. Third quarter Adjusted EBITDAJacksonville, Florida (an average of $13.4 million was $43.2 million below$84,000 per lot or $406,000 per acre). There were no Improved Development sales in the prior year period.
Improved Development sales included the first residential lot closing for a model home within the Company’s Wildlight development.There were no Unimproved Development sales of $13.9 million primarily consisted of a 1,300-acre tract in Nassau County, Florida for $10,000 per acre. This compares tothe first quarter or the prior year quarter sales of $1.4 million for a 73-acre tract in St. John’s County, Florida for approximately $18,500 per acre. period.
Rural sales of $3.1$9.8 million were comprisedconsisted of 1,1282,394 acres at an average price of $2,771 per acre, including 90 acres in Texas for $6,850$4,079 per acre. This compares to the prior year quarterperiod sales of $6.4$2.4 million, comprisedwhich consisted of 2,069624 acres at an average price of $3,082$3,842 per acre. Non-strategic /
There were no Timberland & Non-Strategic sales of $0.2 million were comprised of 102 acres at an average price of $1,616 per acre, including 85 acres of non-strategic property with limited productivity (i.e., 100% non-plantable). This compares toin the first quarter or the prior year period.
First quarter Adjusted EBITDA of $5.1 million was $6.2 million above the prior year period.
TRADING
    First quarter sales of $52.8 million, comprised of 21,459 acres at an average price of $2,465 per acre, including 17,772 acres in Georgia for $2,720 per acre.
Year-to-date sales of $97.2$16.7 million decreased $114.1$2.3 million versus the prior year period, while operating income of $57.3 million decreased $95.7 million versus the prior year period. Year-to-date sales and operating income include $42.0 million and $28.2 million, respectively, from Large Dispositions in 2017 and $129.5 million and $101.3 million in the prior year period. Sales and operating income decreased in the first nine months primarily due to lower volumes, (41,303 acres soldpartially offset by higher prices. Sales volumes decreased 32% to 141,000 tons versus 89,510 acres sold207,000 tons in the prior year period. The Trading segment generated operating income of $0.2 million versus breakeven results in the prior year period). Year-to-date operating income also decreased due to the receipt of a $4.0 million deferred payment in 2016 with respect to a prior land sale. Year-to-date Adjusted EBITDA of $43.5 million was $30.5 million below the prior year period.improved trading margins resulting from higher prices.

OTHER ITEMS
44CORPORATE AND OTHER EXPENSE / ELIMINATIONS


Trading
Third quarter sales of $40.2 million increased $15.5 million versusthe prior year period due to higher volumes and prices. Sales volumes increased 38% to 371,000 tons versus 269,000 tons in the prior year period due to increased volume from existing suppliers and stumpage blocks purchased from third-parties, coupled with improving export market demand. Average prices increased 18% to $108.58 per ton versus $91.80 per ton in the prior year period primarily due to stronger demand from China. Operating income and Adjusted EBITDA of $1.1 million increased $0.6 million versus the prior year period.
Year-to-date sales of $115.9 million increased $39.9 million versusthe prior year period due to higher volumes and prices. Sales volumes increased 32% to 1,079,000 tons versus 816,000 tons in the prior year period due to increased volume from existing suppliers and stumpage blocks purchased from third-parties, coupled with improving export market demand. Average prices increased 15% to $107.45 per ton versus $93.18 per ton in the prior year period primarily due to stronger demand from China. Operating income of $3.4 million increased $1.9 million versus the prior year period.
Other Items
Corporate and Other Expense/Eliminations
Third    First quarter corporate and other operating expenses of $5.1$7.6 million decreased $0.3 million versus the prior year period due to lower costs related to shareholder litigation ($1.2 million) and lower pension expense ($0.7 million), which were partially offset by higher depreciation expense ($0.2 million) and a reduction in overhead costs allocated to the segments ($1.4 million) as a result of pension and organizational changes made in the fourth quarter of 2016.
Year-to-date corporate and other operating expense of $15.3 million decreased $0.4$0.2 million versus the prior year period, due to lower costs related to shareholder litigation ($1.5 million), the prior year period transactionwhich included $2.5 million of costs related to the Menasha acquisition ($1.3 million), and lower pension costs ($2.5 million). These decreases were partiallyPope Resources merger. This positive variance was largely offset by higher depreciation expense ($0.2 million), the prior year gain on foreign currency derivatives ($1.2 million) and a reduction in overhead costs allocated to the segments ($3.5 million) as a result of pension and organizational changes made in the fourth quarter of 2016.expenses.
Costs related to shareholder litigation include expenses incurred as a result of the securities litigation and the shareholder derivative demands. See Note 8 — Contingencies. In addition, these costs include the costs associated with the Company’s response to a subpoena it received from the SEC in November 2014. In July 2016, the Division of Enforcement of the SEC notified the Company that it had concluded its investigation into the Company.INTEREST EXPENSE
Interest Expense
Third    First quarter interest expense of $8.6$10.0 million increased $0.1 million versusthe prior year period due to a higher periodic interest rate on the Company’s revolver, partially offset by lower average debt due to the repayment of $31.5 million of mortgage notes during the quarter. Year-to-date interest expense of $25.5 million increased $1.9$1.8 million versus the prior year period due to higher outstanding debt following the closing of the Pope Resources acquisition.
INTEREST AND OTHER MISCELLANEOUS EXPENSE, NET
There was negligible other miscellaneous expense in the first quarter versus $0.2 million of expense in the prior year period. The prior year period included unfavorable mark-to-market adjustments on marketable equity securities partially offset by favorable mark-to-market adjustments on carbon options and dividend income.
Income Tax Expense
Third
56

INCOME TAX EXPENSE
    First quarter income tax expense of $3.0$3.5 million increased $2.2 million versus the prior year period. Year-to date income tax expense of $16.8 million increased $14.6decreased $0.3 million versus the prior year period. The increase in third quarter and year-to-date income tax expense versus the prior year periods was due to improved results from the New Zealand JV, whichsubsidiary is the primary driver of income tax expense.
OutlookOUTLOOK
Based on our solid results for the first nine months, expectations of continued strength in New Zealand export and domestic markets and a strong pipeline of Real Estate closings in the fourth quarter, we expect to achieve full-year Adjusted EBITDA near the higher end of our prior guidance. In our Southern Timber segment, we anticipate that demand from lumber mills will remain strong and that select U.S. South markets will continue to benefit from improving export demand. Further, we continue to expect fourth quarter volumesa modest improvement in weighted average pricing relative to decrease slightly versus the third quarter due to wet ground conditions in certain areas resulting from the recent storms, and we expect product pricing to decrease modestly due toprior year, with quarterly fluctuations largely driven by geographic mix and an increase in thinning activity. mix.
In our Pacific Northwest Timber segment, we anticipate lower quarterly harvest volumes for the remainder of the year, as we pulled forward some volume in the first quarter to capture favorable demand and pricing. We further expect fourththat strong lumber demand will continue to hold pricing at or above first quarter volumes to increase versusaverage prices for the third quarter due tobalance of the lifting of fire restrictions, and we expect continued strength in sawtimber prices based on favorable domestic and export market conditions. year.
In our New Zealand Timber segment, we expect fourthcontinued strong export and domestic demand, and we further expect that the restriction on Australian log imports into China will constrain log supplies. We anticipate that this positive operating momentum will translate into log prices remaining near or above levels realized in the first quarter, volumes to decline modestly versus the third quarter, while we expect product pricingwhich will continue to reflect strong demand from China as well as domestic construction markets. be partially offset by elevated shipping costs.
In our Real Estate segment, we anticipate additional closingsexpect a significant pickup in transaction activity for the Wildlightbalance of the year based on our current pipeline of opportunities. In particular, we are increasingly optimistic about our sales outlook for residential and commercial properties within our real estate development in the fourth quarter as the project picks up momentum following significant progress on initial infrastructure development during the year.projects.



45LIQUIDITY AND CAPITAL RESOURCES


Liquidity and Capital Resources
Our principal source of cash is cash flow from operations, primarily the harvesting of timber and sales of real estate. As a REIT,an UPREIT, our main use of cash is dividends.dividends and unitholder distributions. We also use cash to maintain the productivity of our timberlands through replanting and silviculture. Our operations have generally produced consistent cash flow and required limited capital resources. Short-term borrowings have helped fund working capital needs while acquisitions of timberlands generally require funding from external sources or asset dispositions.Large Dispositions.
SummaryAT-THE-MARKET (“ATM”) EQUITY OFFERING PROGRAM
On September 10, 2020, we entered into a distribution agreement with a group of Liquidity and Financing Commitmentssales agents through which we may sell common shares, from time to time, having an aggregate sales price of up to $300 million. During the three months ended March 31, 2021, the Company sold 1.1 million shares under the ATM Program at an average price of $33.31 per share, generating aggregate gross proceeds of $36.9 million, excluding $0.4 million of commissions. As of March 31, 2021, $229.7 million remains available for issuance under the program.
The following table outlines the common stock issuance pursuant to our ATM program (dollars in millions):
Three Months Ended March 31,
20212020
Shares of common stock issued under the ATM program1,107,814 — 
Gross proceeds$36.9 — 

57

 September 30, December 31,
(millions of dollars)2017 2016
Cash and cash equivalents
$104.1
 
$85.9
Total debt (a)1,033.4
 1,065.5
Shareholders’ equity1,657.2
 1,496.9
Total capitalization (total debt plus equity)2,690.6
 2,562.4
Debt to capital ratio38% 42%
Net debt to enterprise value (b)20% 23%
SUMMARY OF LIQUIDITY AND FINANCING COMMITMENTS
March 31,December 31,
(millions of dollars)20212020
Cash and cash equivalents (excluding Timber Funds)$77.9 $80.5 
Total debt (excluding Timber Funds) (a)1,294.1 1,294.9 
Noncontrolling interests in the Operating Partnership138.0 130.1 
Shareholders’ equity1,909.9 1,862.6 
Total capitalization (total debt plus permanent and temporary equity)3,342.0 3,287.6 
Debt to capital ratio39 %39 %
Net debt to enterprise value (b)(c)21 %23 %

(a)Total debt as of September 30, 2017 includes $1,033.4 million of long-term borrowings, gross of $3.1 million of deferred financing costs.
(b)Enterprise value is calculated as the number of shares outstanding multiplied by the Company’s share price plus net debt as of September 30, 2017 and December 31, 2016.
Cash Flows(a)Total debt as of March 31, 2021 and December 31, 2020 reflects principal on long-term debt, net of fair value adjustments and gross of deferred financing costs.
(b)Net debt is calculated as total debt less cash and cash equivalents.
(c)Enterprise value based on market capitalization (including Rayonier, L.P. “OP” units) plus net debt based on Rayonier’s share price of $32.25 and $29.38 as of March 31, 2021 and December 31, 2020, respectively.

SUMMARY OF GUARANTOR FINANCIAL INFORMATION
In March 2012, Rayonier Inc. issued $325 million of 3.75% Senior Notes due 2022 (the “2022 Notes”). On May 7, 2020, Rayonier Inc. contributed its 100% ownership interest in Rayonier Operating Company LLC (the “Contribution”) to Rayonier, L.P. As a result of the Contribution, Rayonier, L.P. expressly assumed all the obligations of Rayonier Inc. with respect to the outstanding 2022 Notes and Rayonier Inc. agreed to irrevocably, fully and unconditionally guarantee jointly and severally, the obligations of Rayonier, L.P. under the Indenture, including the 2022 Notes. Rayonier L.P. is the current issuer of the 2022 Notes.
The subsidiary guarantor, Rayonier TRS Holdings Inc., and parent guarantor, Rayonier Inc., have guaranteed the notes fully and unconditionally on a joint and several basis. As a general partner of Rayonier, L.P., Rayonier Inc. consolidates Rayonier, L.P. and has no material assets or liabilities other than its interest in Rayonier, L.P. These notes are unsecured and unsubordinated and will rank equally with all other unsecured and unsubordinated indebtedness from time to time outstanding.
Rayonier, L.P. is a limited partnership, in which Rayonier Inc. is the general partner. The operating subsidiaries of Rayonier, L.P. conduct all of our operations. Rayonier, L.P.’s most significant assets are its interest in operating subsidiaries, which have been eliminated in the table below to eliminate intercompany transactions between the issuer and guarantors and to exclude investments in non-guarantors. As a result, our ability to make required payments on the notes depends on the performance of our operating subsidiaries and their ability to distribute funds to us. There are no material restrictions on dividends from the operating subsidiaries.
The summarized balance sheet information for the consolidated obligor group of debt issued by Rayonier, L.P. for the three months ended March 31, 2021 and year ended December 31, 2020 are provided in the table below:
(in millions)March 31, 2021December 31, 2020
Current assets$70.0 $69.7 
Non-current assets75.3 48.3 
Current liabilities24.2 21.0 
Non-current liabilities1,861.0 1,942.4 
Due to non-guarantors551.6 596.7 

58

The summarized results of operations information for the consolidated obligor group of debt issued by Rayonier, L.P. for the three months ended March 31, 2021 and year ended December 31, 2020 are provided in the table below:
(in millions)March 31, 2021December 31, 2020
Cost and expenses($6.7)($43.4)
Operating loss(6.7)(43.4)
Net loss(18.1)(81.3)
Revenue from non-guarantors191.4 859.2 
CASH FLOWS
The following table summarizes our cash flows from operating, investing and financing activities for the ninethree months ended September 30, 2017March 31, 2021 and 2016.2020:
(millions of dollars)20212020
Cash provided by (used for):
Operating activities$53.9 $29.2 
Investing activities(44.4)74.7 
Financing activities(13.8)(38.7)
(millions of dollars)2017 2016
Cash provided by (used for):   
Operating activities
$186.9
 
$163.9
Investing activities(199.1) (254.1)
Financing activities29.2
 146.8
CASH PROVIDED BY OPERATING ACTIVITIES
Cash Provided by Operating Activities
Cash provided by operating activities increased $23.0$24.7 million primarily due to higher operating results.Adjusted EBITDA.
Cash Used for Investing ActivitiesCASH USED FOR INVESTING ACTIVITIES
Cash used for investing activities decreased $55.0of $44.4 million comparedcompares to 2016cash provided by investing activities of $74.7 million in the prior year period. This variance is primarily due to proceeds from a decreaseLarge Disposition in the prior year period ($115.7 million), higher timberland acquisitions of $114.8 million, an increase in the use of restricted cash of $38.6 million,($5.8 million), and a decrease in assets purchased in business acquisition of $1.1 million. These amounts were partially offset by a decrease in net proceeds from Large Dispositions of $85.0 million, an increase inhigher real estate development investments of $7.0 million, an increase in($1.2 million), partially offset by other investing activities ($2.3 million) and lower capital expenditures of $5.5 million and an increase in spending on the construction of the Company’s office building of $2.0 million.($1.3 million).
CASH USED FOR FINANCING ACTIVITIES
Cash Provided by Financing Activities
Cash provided byused for financing activities decreased $117.6$24.9 million from the prior year period primarily due to a decreasenet proceeds from the issuance of common shares under the ATM equity offering program ($32.5 million), decreases in net debt issuancesshare repurchases ($3.2 million), and increases in proceeds from the issuance of $270.6 million and an increase in dividends paid of $2.9 million. These amounts werecommon shares under the Company’s incentive stock plan ($1.1 million), partially offset by an increaseincreased distributions to consolidated affiliates ($8.1 million), dividends paid on common stock ($2.6 million) and distributions to noncontrolling interests in equity issuances of $155.2 million and a decrease in common shares repurchases of $0.7 million.the Operating Partnership ($1.2 million).

46


Expected 2017 ExpendituresEXPECTED 2021 EXPENDITURES
Capital expenditures in 20172021 are expected to be between $66$73 million and $68$76 million, excluding capital expenditures relatedattributable to the office buildingTimber Funds and any strategic timberland acquisitions we may make. Capital expenditures are expected to be comprised primarily consist of seedling planting, fertilization and other silvicultural activities, property taxes, lease payments, allocated overhead and other capitalized costs. Aside from capital expenditures, we may also acquire timberland as we actively evaluate acquisition opportunities.
RealWe anticipate real estate development investments in 2017 are expected2021 to be between $15$16 million and $18 million.million, net of reimbursements from community development bonds. Expected real estate development investments are primarily related to Wildlight, our mixed-use community development project located north of Jacksonville, at the interchangeFlorida; Richmond Hill, our mixed-use development project located south of I-95 and State Road A1A.
Construction of our new headquarters building locatedSavannah, Georgia; development properties in the Wildlighttown of Port Gamble, Washington; and development project is substantially complete. The new office allowed usprojects in Gig Harbor, Kingston and Bremerton Washington.
Our 2021 dividend payments on Rayonier Inc. common shares and distributions to consolidate three existing leased offices in Jacksonville and Fernandina Beach, Florida into one location and has also served as a catalyst for the Wildlight project. Construction costs of this building incurred in 2017Rayonier, L.P. unitholders are expected to be approximately $6 million.
Our 2017 dividend payments are expected to be approximately $127$150.0 million and $4.6 million, respectively, assuming no change in the
59

quarterly dividend rate of $0.25$0.27 per share or partnership unit, or material changes in the number of shares or partnership units outstanding.
Future share repurchases, if any, will depend on the Company’s liquidity and cash flow, as well as general market conditions and other considerations including capital allocation priorities.
We have no mandatory pension contribution requirements in 2017 but may make discretionary contributions in the future. current year.
Cash income tax payments in 20172021 are expected to be minimal. approximately $17.0 million, primarily related to the New Zealand subsidiary.


Performance and Liquidity Indicators
60


PERFORMANCE AND LIQUIDITY INDICATORS
The discussion below is presented to enhance the reader’s understanding of our operating performance, liquidity, and ability to generate cash and satisfy rating agency and creditor requirements. This information includes two measures of financial results: Adjusted Earnings before Interest, Taxes, Depreciation, Depletion and Amortization (“Adjusted EBITDA”) and Cash Available for Distribution (“CAD”). These measures are not defined by Generally Accepted Accounting Principles (“GAAP”), and the discussion of Adjusted EBITDA and CAD is not intended to conflict with or change any of the GAAP disclosures described above.
Management uses CAD as a liquidity measure. CAD is a non-GAAP measure that management uses to measureof cash generated during a period that is available for dividend distribution,common stock dividends, distributions to Operating Partnership unitholders, distributions to noncontrolling interests, repurchase of the Company’s common shares, debt reduction, timberland acquisitions and strategic acquisitions. We definereal estate development investments. CAD is defined as cash provided by operating activities adjusted for capital spending (excluding timberland acquisitions and spending on the Company’s office building) andreal estate development investments), CAD attributable to noncontrolling interests in Timber Funds, working capital and other balance sheet changes. CAD is not necessarily indicative of the CAD that may be generated in future periods.
Management uses Adjusted EBITDA as a performance measure. Adjusted EBITDA is a non-GAAP measure that management uses to make strategic decisions about the business and that investors can use to evaluate the operational performance of the assets under management. It removes the impact of specific items that management believes do not directly reflect the core business operations on an ongoing basis.basis attributable to Rayonier. We define Adjusted EBITDA as earnings before interest, taxes, depreciation, depletion, amortization, the non-cash cost of land and improved development, non-operating income and expense, operating income (loss) attributable to noncontrolling interests in Timber Funds, costs related to shareholder litigation, the gain on foreign currency derivativesmerger with Pope Resources and Large Dispositions. Costs related to shareholder litigation include expenses incurred as a result of the securities litigation and the shareholder derivative demands. See Note 8 — Contingencies. In addition, these costs include the costs associated with the Company’s response to a subpoena it received from the SEC in November 2014. In July 2016, the Division of Enforcement of the SEC notified the Company that it had concluded its investigation into the Company.

47



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

Three Months Ended
September 30,		 Nine Months Ended
September 30,		Three Months Ended
March 31,
2017 2016 2017 2016 20212020
Net Income to Adjusted EBITDA Reconciliation       Net Income to Adjusted EBITDA Reconciliation
Net income
$28.8
 
$40.6
 
$94.7
 
$167.3
Net income$15.0 $26.4 
Interest, net8.1
 8.3
 24.2
 24.8
Income tax expense3.0
 0.8
 16.8
 2.2
Depreciation, depletion and amortization28.7
 32.0
 96.6
 83.7
Operating income attributable to NCI in Timber FundsOperating income attributable to NCI in Timber Funds(1.1)— 
Interest, net attributable to NCI in Timber FundsInterest, net attributable to NCI in Timber Funds0.1 — 
Net Income (Excluding NCI in Timber Funds)Net Income (Excluding NCI in Timber Funds)14.0 26.4 
Interest, net and miscellaneous income attributable to RayonierInterest, net and miscellaneous income attributable to Rayonier9.9 8.1 
Income tax expense attributable to RayonierIncome tax expense attributable to Rayonier3.5 3.7 
Depreciation, depletion and amortization attributable to RayonierDepreciation, depletion and amortization attributable to Rayonier40.3 34.3 
Non-cash cost of land and improved development1.3
 4.3
 8.6
 10.1
Non-cash cost of land and improved development1.8 0.4 
Costs related to shareholder litigation—
 1.2
 0.7
 2.2
Gain on foreign currency derivatives (a)—
 —
 —
 (1.2)
Non-operating expenseNon-operating expense— 0.3 
Costs related to the merger with Pope Resources (a)Costs related to the merger with Pope Resources (a)— 2.5 
Large Dispositions (b)—
 —
 (28.2) (101.3)Large Dispositions (b)— (28.7)
Adjusted EBITDA
$69.9
 
$87.2
 
$213.4
 
$187.8
Adjusted EBITDA$69.5 $47.1 

(a)
(a) Costs related to the merger with Pope Resources include legal, accounting, due diligence, consulting and other costs related to the merger with Pope Resources.
(b) Large Dispositions are defined as transactions involving the sale of timberland that exceed $20 million in size and do not have a demonstrable premium relative to timberland value. In March 2020, we completed the disposition of approximately 67,000 acres located in Mississippi for a sales price and gain of approximately $116.0 million and $28.7 million, respectively.


61

Gain on foreign currency derivativesis the gain resulting from the foreign exchange derivatives the Company used to mitigate the risk of fluctuations in foreign exchange rates while awaiting the capital contribution to the New Zealand JV.
(b)Large Dispositions are defined as transactions involving the sale of timberland that exceed $20 million in size and do not have a demonstrable premium relative to timberland value. In January 2017, the Company completed a disposition of approximately 25,000 acres located in Alabama for a sale price and gain of approximately $42.0 million and $28.2 million, respectively. In April 2016, a disposition of approximately 55,000 acres located in Washington was completed for a sales price and gain of approximately $129.5 million and $101.3 million, respectively.
The following tables provide a reconciliation of Operating Income (Loss) by segment to Adjusted EBITDA by segment for the respective periods (in millions of dollars):
Three Months EndedThree Months EndedSouthern TimberPacific Northwest TimberNew Zealand TimberTimber FundsReal EstateTradingCorporate
and
Other		Total
March 31, 2021March 31, 2021
Operating income (loss)Operating income (loss)$17.3 $1.3 $14.0 $1.5 $1.7 $0.2 ($7.6)$28.5 
Three Months EndedSouthern Timber Pacific Northwest Timber New Zealand Timber Real Estate Trading Corporate
and
other		 Total
September 30, 2017             
Operating income (loss)
$11.5
 
$1.1
 
$19.3
 
$11.4
 
$1.1
 
($5.1) 
$39.3
Non-operating income—
 —
 0.6
 —
 —
 —
 0.6
Operating income attributable to NCI in Timber FundsOperating income attributable to NCI in Timber Funds— — — (1.1)— — — (1.1)
Depreciation, depletion and amortization12.7
 6.5
 8.5
 0.7
 —
 0.3
 28.7
Depreciation, depletion and amortization14.4 16.3 7.2 0.6 1.6 — 0.3 40.3 
Non-cash cost of land and improved development—
 —
 —
 1.3
 —
 —
 1.3
Non-cash cost of land and improved development— — — — 1.8 — — 1.8 
Adjusted EBITDA
$24.2
 
$7.6
 
$28.4
 
$13.4
 
$1.1
 
($4.8) 
$69.9
Adjusted EBITDA$31.7 $17.6 $21.2 $1.0 $5.1 $0.2 ($7.3)$69.5 
             
September 30, 2016             
March 31, 2020March 31, 2020
Operating income (loss)
$8.2
 
($3.3) 
$6.6
 
$43.1
 
$0.5
 
($5.4) 
$49.7
Operating income (loss)$15.1 ($0.9)$5.4 — $26.8 — ($7.8)$38.6 
Depreciation, depletion and amortization10.0
 6.7
 6.0
 9.2
 —
 0.1
 32.0
Depreciation, depletion and amortization18.2 10.7 4.8 — 0.4 — 0.3 34.3 
Non-cash cost of land and improved development—
 —
 —
 4.3
 —
 —
 4.3
Non-cash cost of land and improved development— — — — 0.4 — — 0.4 
Costs related to shareholder litigation—
 —
 —
 —
 —
 1.2
 1.2
Costs related to the merger with Pope Resources (a)Costs related to the merger with Pope Resources (a)— — — — — — 2.5 2.5 
Large Dispositions (b)Large Dispositions (b)— — — — (28.7)— — (28.7)
Adjusted EBITDA
$18.2
 
$3.4
 
$12.6
 
$56.6
 
$0.5
 
($4.1) 
$87.2
Adjusted EBITDA$33.3 $9.8 $10.2 — ($1.1)— ($5.0)$47.1 


48


Nine Months EndedSouthern Timber Pacific Northwest Timber New Zealand Timber Real Estate Trading Corporate
and
other		 Total
September 30, 2017             
Operating income (loss)
$35.0
 
($1.3) 
$56.3
 
$57.3
 
$3.4
 
($15.3) 
$135.4
Non-operating income—
 —
 0.3
 —
 —
 —
 0.3
Depreciation, depletion and amortization37.1
 23.8
 29.3
 5.9
 —
 0.5
 96.6
Non-cash cost of land and improved development—
 —
 0.1
 8.5
 —
 —
 8.6
Costs related to shareholder litigation—
 —
 —
 —
 —
��0.7
 0.7
Large Dispositions (a)—
 —
 —
 (28.2) —
 —
 (28.2)
Adjusted EBITDA
$72.1
 
$22.5
 
$86.0
 
$43.5
 
$3.4
 
($14.1) 
$213.4
              
September 30, 2016             
Operating income (loss)
$35.0
 
($0.9) 
$21.4
 
$153.0
 
$1.5
 
($15.7) 
$194.3
Depreciation, depletion and amortization37.1
 15.0
 17.3
 14.0
 —
 0.3
 83.7
Non-cash cost of land and improved development—
 —
 1.8
 8.3
 —
 —
 10.1
Costs related to shareholder litigation—
 —
 —
 —
 —
 2.2
 2.2
Gain on foreign currency derivatives (b)—
 —
 —
 —
 —
 (1.2) (1.2)
Large Dispositions (a)—
 —
 —
 (101.3) —
 —
 (101.3)
Adjusted EBITDA
$72.1
 
$14.1
 
$40.5
 
$74.0
 
$1.5
 
($14.4) 
$187.8

(a) Costs related to the merger with Pope Resources include legal, accounting, due diligence, consulting and other costs related to the merger with Pope Resources.
(b) Large Dispositions are defined as transactions involving the sale of timberland that exceed $20 million in size and do not have a demonstrable premium relative to timberland value. In March 2020, we completed the disposition of approximately 67,000 acres located in Mississippi for a sales price and gain of approximately $116.0 million and $28.7 million, respectively.

(a)Nine Months Ended
Large Dispositions are defined as transactions involving the sale of timberland that exceed $20 million in size Southern Timber
Pacific Northwest TimberNew Zealand TimberTimber FundsReal EstateTradingCorporate
and do not have a demonstrable premium relative to timberland value. In January 2017, the Company completed a disposition of approximately 25,000 acres located in Alabama for a sale price and gain of approximately $42.0 million and $28.2 million, respectively. In April 2016, a disposition of approximately 55,000 acres located in Washington was completed for a sales price and gain of approximately $129.5 million and $101.3 million, respectively.
Other		Total
(b)
Gain on foreign currency derivativesis the gain resulting from the foreign exchange derivatives used by the Company to mitigate the risk of fluctuations in foreign exchange rates while awaiting the capital contribution to the New Zealand JV.

The following table provides a reconciliation of Cash Provided by Operating Activities to Adjusted CAD (in millions of dollars):
Three Months Ended March 31,
 20212020
Cash provided by operating activities$53.9 $29.2 
Capital expenditures (a)(15.8)(17.2)
CAD attributable to NCI in Timber Funds(4.6)— 
Working capital and other balance sheet changes13.8 15.2 
CAD47.3 27.2 
Mandatory debt repayments— — 
CAD after mandatory debt repayments47.3 27.2 
 Nine Months Ended September 30,
 2017 2016
Cash provided by operating activities
$186.9
 
$163.9
Capital expenditures (a)(45.7) (40.2)
Working capital and other balance sheet changes2.5
 (0.2)
CAD143.7
 123.5
Mandatory debt repayments—
 —
CAD after mandatory debt repayments
$143.7
 
$123.5

Cash (used for) provided by investing activities($44.4)$74.7 
Cash used for financing activities($13.8)($38.7)
Cash used for investing activities
($199.1) 
($254.1)
Cash provided by financing activities
$29.2
 
$146.8

(a)
(a)    Capital expenditures exclude timberland acquisitions of $239.1 million and $353.8 million and spending on the Rayonier officebuilding of $6.0 million and $3.9 million during the nine months ended September 30, 2017 and September 30, 2016, respectively.


49


Liquidity Facilities
2017 Debt Activity
During the nine months ended September 30, 2017, the Company made additional borrowings of $25.0$29.9 million on the Revolving Credit Facility. A draw of $15.0and $24.1 million during the first quarter was used to repay the $15.0 million solid waste bonds that were due in 2020 and an additional draw of $10.0 million made in the second quarter was used to partially fund the acquisition of 91,000 acres in coastal Florida, Georgia and South Carolina. In the third quarter, the Company used available cash to repay $31.5 million of mortgage notes which were due in August 2017. As of September 30, 2017, the Company had available borrowings of $139.6 million under the Revolving Credit Facility, net of $10.4 million to secure its outstanding letters of credit.
In addition, the New Zealand JV made borrowings and repayments of $38.4 million on its working capital facility. As of September 30, 2017, draws totaling NZ$40.0 million remain available on the working capital facility. The New Zealand JV also repaid $10.9 million of its shareholder loan held by the non-controlling interest party during the ninethree months ended September 30, 2017. Changes in exchange rates increased debt on a U.S. dollar basisMarch 31, 2021 and March 31, 2020, respectively.

62

The following table provides supplemental cash flow data (in millions):
Three Months Ended March 31,
 20212020
Purchase of timberlands($29.9)($24.1)
Real Estate Development Investments(3.0)(1.7)
Distributions to noncontrolling interests in consolidated affiliates(8.7)(0.7)


LIQUIDITY FACILITIES
2021 DEBT ACTIVITY
    See Note 9 — Debt for its shareholder loan by $0.5 million during the nine months ended September 30, 2017.additional information.


Off-Balance Sheet ArrangementsOFF-BALANCE SHEET ARRANGEMENTS
We utilize off-balance sheet arrangements to provide credit support for certain suppliers and vendors in case of their default on critical obligations, and collateral for outstanding claims under the Company’sour previous workers’ compensation self-insurance programs. These arrangements consist of standby letters of credit and surety bonds. As part of our ongoing operations, we also periodically issue guarantees to third parties. Off-balance sheet arrangements are not considered a source of liquidity or capital resources and do not expose us to material risks or material unfavorable financial impacts. See Note 915 — Guarantees for details on the letters of credit and surety bonds and guarantees as of September 30, 2017.March 31, 2021.


Contractual Financial Obligations
63

CONTRACTUAL FINANCIAL OBLIGATIONS
In addition to using cash flow from operations and proceeds from Large Dispositions, we finance our operations through the issuance of debt and by entering into leases. These financial obligations are recorded in accordance with accounting rules applicable to the underlying transaction, with the result that some are recorded as liabilities on the Consolidated Balance Sheets, while others are required to be disclosed in the Notes to Consolidated Financial Statements and Management’s Discussion and Analysis.
The following table aggregates our contractual financial obligations as of September 30, 2017March 31, 2021 and anticipated cash spending by period:

Contractual Financial Obligations (in millions)Total Payments Due by Period
Remaining 2017 2018-2019 2020-2021 Thereafter
Long-term debt (a)
$1,033
 —
 —
 
$50
 
$983
Interest payments on long-term debt (b)208
 8
 66
 64
 70
Operating leases — timberland193
 4
 18
 17
 154
Operating leases — PP&E, offices4
 —
 2
 1
 1
Commitments — derivatives (c)32
 1
 9
 9
 13
Commitments — other (d)10
 4
 4
 2
 —
Total contractual cash obligations
$1,480
 
$17
 
$99
 
$143
 
$1,221
Contractual Financial Obligations (in millions)TotalPayments Due by Period
Remaining 20212022-20232024-2025Thereafter
Long-term debt, excluding Timber Funds (a)$1,294.1 — $325.0 284.1 $685.0 
Long-term debt, Timber Funds (b)57.4 — 43.0 14.4 — 
Interest payments on long-term debt, excluding Timber Funds (c)136.8 27.2 46.0 35.7 27.9 
Interest payments on long-term debt, Timber Funds5.4 1.5 3.4 0.5 — 
Operating leases — timberland (d)189.1 6.3 15.7 14.5 152.6 
Operating leases — PP&E, offices (d)6.7 1.1 2.1 1.8 1.7 
Commitments — development projects (e)25.3 17.4 3.5 0.5 3.9 
Commitments — environmental remediation (f)11.5 0.8 3.9 4.2 2.6 
Commitments — other (g)104.1 11.4 36.4 26.3 30.0 
Total contractual cash obligations$1,830.4 $65.7 $479.0 $382.0 $903.7 

(a)The book value of long-term debt, net of deferred financing costs, is currently recorded at $1,030.3 million on the Company’s Consolidated Balance Sheet, but upon maturity the liability will be $1,033.4 million.
(b)Projected interest payments for variable rate debt were calculated based on outstanding principal amounts and interest rates as of September 30, 2017.
(c)
Commitments — derivatives represents payments expected to be made on derivative financial instruments (foreign exchange contracts and interest rate swaps). See Note 11 — Derivative Financial Instruments and Hedging Activities.
(d)Commitments — other includes payments expected to be made on the construction of the Company’s office building and Wildlight development project.

(a)The book value of long-term debt, excluding Timber Funds, net of deferred financing costs and fair market value adjustments, is currently recorded at $1,299.4 million on our Consolidated Balance Sheets, but upon maturity the liability will be $1,294.1 million. See Note 9 — Debt for additional information.
(b)The book value of long-term debt for the Timber Funds, net of fair market value adjustments, is currently recorded at $60.0 million on our Consolidated Balance Sheets, but upon maturity the liability will be $57.4 million. See Note 9 - Debt for additional information.
(c)Projected interest payments for variable rate debt were calculated based on outstanding principal amounts and interest rates as of March 31, 2021.
(d)Excludes anticipated renewal options.
(e)Commitments — developmental projects primarily consists of payments expected to be made on our Wildlight and Richmond Hill developmental projects
(f)Commitments — environmental remediation represents our estimate of potential liability associated with environmental contamination at Port Gamble. See Note 14 - Environmental Liabilities.
(g)Commitments — other includes payments expected to be made on financial instruments (foreign exchange contracts, interest rate swaps and forward-starting interest rate swaps) and other purchase obligations.

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Item 3.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 September 30, 2017, we had $700 million of U.S. long-term variable rate debt. Our primaryInterest Rate Risk
    We are exposed to interest rate exposure onrisk through our variable rate debt, results fromprimarily due to changes in LIBOR. However, we use interest rate swaps to manage our exposure to interest rate movements on our term credit agreementagreements by swapping existing and anticipated future borrowings from floating rates to fixed rates. As of March 31, 2021, excluding the Timber Funds, we had $900 million of U.S. variable rate debt outstanding on our term credit agreements. The Timber Funds had $25 million of U.S. variable rate debt outstanding on the Fund II Mortgages Payable.
The notional amount of outstanding interest rate swap contracts with respect to our term credit agreements at September 30, 2017March 31, 2021 was $650$900 million. The maturity date of the Term Credit Agreement was extended from August 2024 to April 2028, with the associated interest rate swaps maturing in August 2024. We have entered into forward starting interest rate swaps to cover $150 million of the Term Credit Agreement through the extended maturity date. The Incremental Term Loan Agreement and associated interest rate swaps mature in August 2024May 2026, and the 2020 Incremental Term Loan agreement andAgreement matures in April 2025 with the associated interest rate swaps maturematuring in May 2026.June 2030. At this borrowing level, a hypothetical one-percentage point increase/decrease in interest rates would result in a corresponding increase/decrease of approximately $0.5 million in interest payments and expense of approximately $0.3 million over a 12 month12-month period.
The fair market value of our U.S. long-term fixed interest rate debt is also subject to interest rate risk. The estimated fair value of our long-term fixed-ratefixed rate debt excluding the Timber Funds at September 30, 2017March 31, 2021 was $334.4$404 million compared to the $325$394 million principal amount. The estimated fair value of our Timber Funds’ long-term fixed rate debt at March 31, 2021 was $35.2 million compared to the $32.4 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 September 30, 2017March 31, 2021 would result in a corresponding decrease/increase in the fair value of our long-term fixed-ratefixed rate debt of approximately $14 million.$9 million and $10 million, respectively.
We estimate the periodic effective interest rate on our U.S. long-term fixed and variable rate debt, for the third quarter wasexcluding Timber Funds, to be approximately 3.3%3.1% after consideration of interest rate swaps and estimated patronage payments,refunds, excluding unused commitment fees on the revolving credit facility. We estimate the periodic effective interest rate on our Timber Funds’ long-term fixed and variable rate debt to be approximately 2.9% after consideration of estimated patronage refunds.
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    The following table summarizes our outstanding debt, interest rate swaps and average interest rates, by year of expected maturity and their fair values at March 31, 2021:

(Dollars in thousands)20212022202320242025ThereafterTotalFair Value
Variable rate debt:
Principal amounts— — — — $250,000 $650,000 $900,000 $900,000 
Average interest rate (a)(b)— — — — 1.96 %1.85 %1.88 %
Fixed rate debt, excluding Timber Funds:
Principal amounts— $325,000 — — $34,074 $35,000 $394,074 $404,371 
Average interest rate (b)— 3.75 %— — 3.86 %4.98 %3.87 %
Variable rate debt, Timber Funds:
Principal amounts— $25,000 — — — — $25,000 $25,055 
Average interest rate (b)— 1.95 %— — — — 1.95 %
Fixed rate debt, Timber Funds:
Principal amounts— — $17,980 $14,400 — — $32,380 $35,152 
Average interest rate (b)— — 5.10 %4.45 %— — 4.81 %
Interest rate swaps:
Notional amount— — — $350,000 — $550,000 $900,000 ($19,356)
Average pay rate (b)— — — 2.28 %— 1.31 %1.69 %
Average receive rate (b)— — — 0.10 %— 0.11 %0.11 %
Forward-starting interest rate swaps
Notional amount— — — — — $475,000 $475,000 $18,690 
Average pay rate (b)— — — — — 1.22 %1.22 %
Average receive rate (b)— — — — — 0.11 %0.11 %

(a)    Excludes estimated patronage refunds.
(b)    Interest rates as of March 31, 2021.


Foreign Currency Exchange Rate Risk
The functional currency of the Company’sour New Zealand-based operations and New Zealand JVsubsidiary is the New Zealand dollar. Through these operations and our ownership in the New Zealand JV,subsidiary, we are exposed to foreign currency risk on cash held in foreign currencies, shareholder loan paymentsdistributions which are denominatedpaid in U.S. dollars and on foreign export sales and ocean freight payments that are predominantly denominated in U.S. dollars. To mitigate these risks, the New Zealand JVsubsidiary routinely enters into foreign currency exchange contracts and foreign currency option contracts to hedge a portion of the New Zealand JV’ssubsidiary’s foreign exchange exposure.
Sales and Expense Exposure
    At September 30, 2017,March 31, 2021, the New Zealand JV had foreign currency exchange contracts representing 42% of forecast shareholder distribution payments over the next 12 months. At September 30, 2017, the New Zealand JV alsosubsidiary had foreign currency exchange contracts with a notional amount of $55$64 million and foreign currency option contracts with a notional amount of $58$16 million outstanding related to foreign export sales and ocean freight payments. The amount hedged represents 41%a portion of forecastforecasted U.S. dollar denominated harvestingexport timber and log trading sales proceeds over the next 18 months and 54% of log trading sales proceeds over the next 3 months. At September 30, 2017, the New Zealand JV also hadmonths, respectively.
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    The following table summarizes our outstanding foreign currency exchange rate risk contracts with a notional amount of $2 million outstanding on behalf of suppliers.at March 31, 2021:

(Dollars in thousands)0-1 months1-2 months2-3 months3-6 months6-12 months12-18 months18-24 monthsTotalFair Value
Foreign exchange contracts to sell U.S. dollar for New Zealand dollar
Notional amount$10,500$8,500$5,000$11,000$20,000$9,000—$64,000$3,166
Average contract rate1.43381.43381.43391.43431.43511.4369—1.4347
Foreign currency option contracts to sell U.S. dollar for New Zealand dollar
Notional amount$4,000$2,000$2,000$8,000———$16,000$585
Average strike price1.57001.55671.55671.6063———1.5848

Item 4.CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Item 4.    CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
Rayonier Inc.
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 ourthe Company’s disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q, our management, including the Chief Executive Officer and Chief Financial Officer, concluded the design and operation of the disclosure controls and procedures were effective as of September 30, 2017.March 31, 2021.
In the quarter ended September 30, 2017,March 31, 2021, based upon the evaluation required by paragraph (d) of SEC Rule 13a-15,13a-15(d) under the Exchange Act, there were no changes in our internal control over financial reporting that would materially affect or are reasonably likely to materially affect our internal control over financial reporting.


Rayonier, L.P.
The Operating Partnership is responsible for establishing and maintaining adequate disclosure controls and procedures. Disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Securities Exchange Act of 1934 (the “Exchange Act”), are designed with the objective of ensuring information required to be disclosed by Rayonier, L.P. in reports filed under the Exchange Act, such as this quarterly report on Form 10-Q, is (1) recorded, processed, summarized and reported or submitted within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including Rayonier’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Because of the inherent limitations in all control systems, no control evaluation can provide absolute assurance that all control exceptions and instances of fraud have been prevented or detected on a timely basis. Even systems determined to be effective can provide only reasonable assurance that their objectives are achieved.
Based on an evaluation of the Operating Partnership’s disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q, management, including Rayonier’s Chief Executive Officer and Chief Financial Officer, concluded the design and operation of the disclosure controls and procedures were effective as of March 31, 2021.
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In the quarter ended March 31, 2021, based upon the evaluation required by Rule 13a-15(d) under the Exchange Act, there were no changes in internal controls over financial reporting that would materially affect or are reasonably likely to materially affect internal controls over financial reporting.

PART II.    OTHER INFORMATION


Item 1.Legal Proceedings

Item 1.    LEGAL PROCEEDINGS

The information set forth in Note 8—13 — Contingencies in the “Notes to Consolidated Financial Statements” under Item 1 of Part I of this report is incorporated herein by reference. 


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Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases

Item 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Rayonier Inc.
REGISTERED SALES OF EQUITY SECURITIES

From time to time, the Company may issue shares of Equity Securitiescommon stock in exchange for units in the Operating Partnership. Such shares are issued based on an exchange ratio of one share for each unit in the Operating Partnership. During the quarter ended March 31, 2021, the Company issued 150,134 common shares in exchange for an equal number of units in the Operating Partnership pursuant to the agreement of the Operating Partnership.
ISSUER PURCHASES OF EQUITY SECURITIES

In February 2016, the Board of Directors approved the repurchase of up to $100 million of Rayonier’s common shares (the “share repurchase program”) to be made at management’s and the Board of Director’s discretion. The program has no time limit and may be suspended or discontinued at any time. There were no shares repurchased under this program in the thirdfirst quarter of 2017 and there was $99.3 million, or approximately 3,437,536 shares based2021. Based on the period endperiod-end closing stock price of $28.89, available for repurchase as of September 30, 2017.
In 1996, we began a Common Share repurchase program (the “1996 anti-dilutive program”) to minimize the dilutive effect of our employee incentive stock plans on earnings per share. This program limits the number of$32.25 at March 31, 2021, there was $87.7 million, or approximately 2,720,262 shares, that may be purchased each year to the greater of 1.5% 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. The 1996 anti-dilutive program does not have an expiration date. There were no shares purchasedremaining under this program in the third quarter of 2017 and there were 3,778,625 shares available for purchase at September 30, 2017.program.
The following table provides information regarding our purchases ofRayonier common stockshares during the quarter ended September 30, 2017:March 31, 2021:
PeriodTotal Number of Shares Purchased (a)Average Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b)Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (c)
January 1 to January 315,020 $30.74 — 2,852,958 
February 1 to February 28— — — 2,687,759 
March 1 to March 31— — — 2,720,262 
Total5,020 — 

PeriodTotal Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (a)
July 1 to July 31—
—
—
7,216,161
August 1 to August 31—
—
—
7,216,161
September 1 to September 30—
—
—
7,216,161
Total—
—


(a)Includes 5,020 shares of the Company’s common shares purchased in January from current and former employees in non-open market transactions. The shares were sold by current and former employees of the Company in exchange for cash that was used to pay withholding taxes associated with the vesting of share-based awards under the Company’s Incentive Stock Plan. The price per share surrendered is based on the closing price of the Company’s common shares on the respective vesting dates of the awards.
(b)Purchases made in open-market transactions under the $100 million share repurchase program announced on February 10, 2016.
(c)Maximum number of shares authorized to be purchased under the share repurchase program at the end of January, February and March are based on month-end closing stock prices of $30.75, $32.64 and $32.25, respectively.

Rayonier, L.P.
UNREGISTERED SALES OF EQUITY SECURITIES

There were no unregistered sales of equity securities made by the Operating Partnership during the quarter endedMarch 31, 2021.
ISSUER PURCHASES OF EQUITY SECURITIES

Pursuant to the Operating Partnership’s limited partnership agreement, limited partners have the right to redeem their units in the Operating Partnership for cash, or at our election, shares of Rayonier Common Stock on a one-for-one basis. During the quarter ended March 31, 2021, 150,134 units in the Operating Partnership held by limited partners were redeemed in exchange for shares of Rayonier Common Stock.

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Item 6.EXHIBITS
10.1 
Filed herewith
(a)22.1 Maximum number of shares authorized to be purchased as of September 30, 2017 include 3,778,625 under the 1996 anti-dilutive program and approximately 3,437,536 under the share repurchase program.


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Incorporated by reference to Exhibit 22.1 to the Registrant’s June 30, 2020 Form 10-Q
Item 6.Exhibits
31.1 
31.1
Filed herewith
31.2
Filed herewith
3231.3 
Filed herewith
31.4 Filed herewith
32.1 Furnished herewith
10132.2 
Furnished herewith
101 The following financial information from ourRayonier Inc. and Rayonier, L.P.’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2017,March 31, 2021, formatted in Extensible Business Reporting Language (“XBRL”), includes: (i) the Consolidated Statements of Income and Comprehensive Income for the Three and Nine Months Ended September 30, 2017March 31, 2021 and 2016;2020 of Rayonier Inc.; (ii) the Consolidated Balance Sheets as of September 30, 2017March 31, 2021 and December 31, 2016;2020 of Rayonier Inc.; (iii) the Consolidated Statements of Changes in Shareholders’ Equity for the NineThree Months Ended September 30, 2017March 31, 2021 and the Years Ended December 31, 2016 and 2015;2020 of Rayonier Inc.; (iv) the Consolidated Statements of Cash Flows for the NineThree Months Ended September 30, 2017March 31, 2021 and 2016;2020 of Rayonier Inc.; (v) the Consolidated Statements of Income and (v)Comprehensive Income for the Three Months Ended March 31, 2021 and 2020 of Rayonier, L.P.; (vi) the Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020 of Rayonier, L.P.; (vii) the Consolidated Statements of Changes in Capital for the Three Months Ended March 31, 2021 and 2020 of Rayonier, L.P.; (viii) the Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020 of Rayonier, L.P.; and (ix) the Notes to Consolidated Financial Statements of Rayonier Inc. and Rayonier, L.P.Filed herewith
104 The cover page from the Company’s Quarterly Report on Form 10-Q from the quarter ended March 31, 2021, formatted in Inline XBRL (included as Exhibit 101).
*Management contract or compensatory plan.

plan
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SIGNATURESIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each of the registrantregistrants has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
RAYONIER INC.
RAYONIER INC.
(Registrant)
By:/s/ APRIL TICE
April Tice
Director, Financial ServicesVice President and Corporate ControllerChief Accounting Officer
(Duly Authorized Officer, Principal Accounting Officer)
Date: November 3, 2017May 6, 2021





RAYONIER, L.P.
By: RAYONIER INC., its sole general partner
By:/s/ APRIL TICE
April Tice
Vice President and Chief Accounting Officer
(Duly Authorized Officer, Principal Accounting Officer)

Date: May 6, 2021






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