~~Table of Contents~~

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

See Notes to Consolidated Financial Statements.

RAYONIER, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)


	Three Months Ended March 31,
	2023	2022
OPERATING ACTIVITIES
Net income	$7,437	$30,998
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion and amortization	37,599	47,419
Non-cash cost of land and improved development	4,208	5,359
Stock-based incentive compensation expense	2,499	2,797
Deferred income taxes	(1,155)	(8,014)
Amortization of losses from pension and postretirement plans	1	188
Timber write-offs due to casualty events	2,302	—





Other	578	(2,244)
Changes in operating assets and liabilities:
Receivables	3,730	(27,837)
Inventories	(4,098)	(4,875)
Accounts payable	8,913	7,376

All other operating activities	1,937	(1,500)
CASH PROVIDED BY OPERATING ACTIVITIES	63,951	49,667
INVESTING ACTIVITIES
Capital expenditures	(18,746)	(15,597)

Real estate development investments	(7,753)	(3,137)

Purchase of timberlands	(8,729)	(2,830)






Other	3,029	2,619
CASH USED FOR INVESTING ACTIVITIES	(32,199)	(18,945)
FINANCING ACTIVITIES
Issuance of debt	—	404,018
Repayment of debt	—	(526,948)
Distributions on units	(43,010)	(40,339)
Proceeds from the issuance of units under incentive stock plan	—	579
Proceeds from the issuance of units under the “at-the-market” (ATM) equity offering program, net of commissions and offering costs	(10)	30,918


Repurchase of units to pay withholding taxes on vested incentive stock awards	(41)	(214)





Distributions to noncontrolling interests in consolidated affiliates	—	(2,684)


CASH USED FOR FINANCING ACTIVITIES	(43,061)	(134,670)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	(362)	620
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Change in cash, cash equivalents and restricted cash	(11,671)	(103,328)
Balance, beginning of year	115,407	369,139
Balance, end of period	$103,736	$265,811

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


	Three Months Ended March 31,
	2023	2022
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period:
Interest (a)	$3,802	$3,935
Income taxes (b)	2,203	14,042
Non-cash investing activity:
Capital assets purchased on account	5,689	4,511

(a)Interest paid is presented net of patronage payments received of ~~$4.3~~$6.1 million and ~~$4.0~~$5.5 million for the ~~six~~three months ended ~~June 30, 2020~~March 31, 2023 and ~~June 30, 2019,~~March 31, 2022, respectively. For additional information on patronage payments, see Note 67 — Debt in the ~~2019~~2022 Form 10-K.

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

See Notes to Consolidated Financial Statements.

109

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

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

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

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

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

On May 8, 2020, Rayonier, L.P. acquired Pope Resources and became the general partner of Pope Resources. The acquisition occurred pursuant to a series of mergers (the “Mergers”) provided for in Agreement and Plan of Merger, dated as of January 14, 2020, as amended by Amendment No. 1, dated as of April 1, 2020 (as amended, the “Merger Agreement”), by and among Rayonier Inc., Rayonier, L.P., Rayonier Operating Company LLC, Rayonier Operating Company Holdings, LLC, Pacific GP Merger Sub I, LLC, Pacific GP Merger Sub II, LLC, Pacific LP Merger Sub III, LLC, Pope Resources, Pope EGP, Inc. and Pope MGP, Inc. As of ~~June 30, 2020,~~March 31, 2023, the Company owned a ~~96.8%~~ 98.4% interest in the Operating Partnership, with the remaining ~~3.2%~~1.6% interest owned by limited partners of the Operating Partnership. As the sole general partner of the Operating Partnership, Rayonier Inc. has exclusive control of the day-to-day management of the Operating Partnership.

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

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

~~Table of Contents~~

~~RAYONIER INC. AND SUBSIDIARIES~~

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

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

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

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

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

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

SUMMARY OF UPDATES TO SIGNIFICANT ACCOUNTING POLICIES

~~REDEEMABLE COMMON UNITS~~

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

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

REVENUE RECOGNITION

NON-TIMBER SALES

Carbon Capture and Storage Sales

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

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

~~MERGER WITH POPE RESOURCES~~

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

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

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

~~RECENTLY ADOPTED STANDARDS~~

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

NEW ACCOUNTING STANDARDS

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

~~Table of Contents~~

~~RAYONIER INC. AND SUBSIDIARIES~~

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

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

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

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

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

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

SUBSEQUENT EVENTS

We have evaluated events occurring from ~~June 30, 2020~~March 31, 2023 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 or disclosure.

~~2. MERGER WITH POPE RESOURCES~~

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

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

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

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

~~• $125.00 in cash~~

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

~~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)~~

Upon consummation of the merger, all outstanding Pope Resources restricted units were converted into equivalent equity awards with respect to Rayonier Inc. common shares. Pope Resources directors and some executive employees of Pope Resources held restricted Pope Resources units that were subject to accelerated vesting in connection with the merger. Since a portion of these Pope Resources units relate to services rendered to Pope Resources prior to the merger, a portion of the replacement Rayonier Inc. restricted stock awards’ fair value is included in the consideration transferred. See additional details about the replacement restricted stock awards in ~~Note 18 — Incentive Stock Plans~~.

~~The following table summarizes the total consideration transferred by Rayonier in the merger (dollars in thousands, except per share and per unit data):~~



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

~~Equity consideration:~~






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

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






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

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

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

~~(b)See~~ ~~Note 18 — Incentive Stock Plans~~ ~~for additional details.~~

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

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

~~Table of Contents~~

~~RAYONIER INC. AND SUBSIDIARIES~~

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

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

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

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


			~~June 30, 2020~~

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

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

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

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

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

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

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

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

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

~~Table of Contents~~

~~RAYONIER INC. AND SUBSIDIARIES~~

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

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

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

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

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

~~(a)Other non-current liabilities includes a $4.0 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.

The amount of revenue of Pope Resources included in our Consolidated Statements of Income and Comprehensive Income from the date of the merger to June 30, 2020 is approximately $11.1 million. The net income effect resulting from the merger with Pope Resources for the three and six months ended June 30, 2020 is impracticable to determine, as we immediately integrated Pope Resources into our ongoing operations.

~~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)~~

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

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

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

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

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

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

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

~~3. REVENUE~~2. SEGMENT AND GEOGRAPHICAL INFORMATION

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

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

The following tables summarize the segment information for the three months ended March 31, 2023 and 2022:


	Three Months Ended March 31,
SALES		2023	2022
Southern Timber		$71,842	$76,763
Pacific Northwest Timber		34,419	46,281
New Zealand Timber		44,105	51,389

Real Estate		16,276	34,195
Trading		12,569	13,461

Intersegment Eliminations (a)		(129)	(48)
Total		$179,082	$222,041

(a)Primarily consists of log marketing fees paid to our Trading segment from our Southern Timber and Pacific Northwest Timber segments for marketing log export sales.

~~Effective April 1, 2020, we changed~~


	Three Months Ended March 31,
OPERATING INCOME		2023	2022
Southern Timber		$22,223	$30,342
Pacific Northwest Timber		(3,543)	6,606
New Zealand Timber (a)		(663)	5,392

Real Estate		883	10,181
Trading		341	351

Corporate and Other		(8,619)	(7,554)
Total Operating Income		10,622	45,318
Unallocated interest expense and other (b)		(2,146)	(8,805)
Total Income before Income Taxes		$8,476	$36,513

(a)The three months ended March 31, 2023 includes a $2.3 million timber write-off resulting from a casualty event. Timber write-offs resulting from a casualty event are recorded within the ~~composition~~Consolidated Statements of ~~our Rural~~Income and ~~Timberland & Non-Strategic Real Estate sales categories to better align~~Comprehensive Income under the caption “Cost of Sales”.

(b)The three months ended March 31, 2023 includes a $9.1 million net recovery associated with ~~the way management internally evaluates real estate sales. The Rural category now includes all real estate sales (excluding development sales) representing~~ a demonstrable premium above timberland value. The Timberland & Non-Strategic category now includes all real estate sales representing little to no premium to timberland value. This category consists primarilylegal settlement.

Table of sales of property that management views as non-strategic to our long-term portfolio as well as sales of property for capital allocation purposes that do not fit the definition of a Large Disposition. All prior periodContents

RAYONIER INC. AND SUBSIDIARIES

RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts have been reclassified to reflect the new composition of these two sales categories. The Improved Development, Unimproved Development and Large Disposition categories remain unchanged, and this reclassification had no impact on overall segment results.in thousands unless otherwise stated)


	Three Months Ended March 31,
DEPRECIATION, DEPLETION AND AMORTIZATION		2023	2022
Southern Timber		$20,610	$18,059
Pacific Northwest Timber		10,650	14,916
New Zealand Timber		4,455	4,989

Real Estate		1,503	9,145


Corporate and Other		381	310
Total		$37,599	$47,419


	Three Months Ended March 31,
NON-CASH COST OF LAND AND IMPROVED DEVELOPMENT		2023	2022




Real Estate		$4,208	$5,359


Total		$4,208	$5,359

3. REVENUE

PERFORMANCE OBLIGATIONS

We recognize revenue when control of promised goods or services (“performance obligations”) is transferred to customers, in an amount that reflects the consideration expected in exchange for those goods or services (“transaction price”). We generally satisfy performance obligations within a year of entering into a contract and therefore have applied the disclosure exemption found under ASC 606-10-50-14. Unsatisfied performance obligations as of ~~June 30, 2020~~March 31, 2023 are primarily due to advances on stumpage contracts, unearned license revenue, unearned carbon capture and storage revenue and post-closing obligations on real estate sales. These performance obligations are expected to be satisfied within the next twelve months. We generally collect payment within a year of satisfying performance obligations and therefore have elected not to adjust revenues for a financing component.

CONTRACT BALANCES

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

The following table summarizes revenue recognized during the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2023 and ~~2019~~2022 that was included in the contract liability balance at the beginning of each year:

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


	Three Months Ended March 31,
		2023	2022
Revenue recognized from contract liability balance at the beginning of the year (a)		$11,400	$7,533

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

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RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

The following tables present our revenue from contracts with customers disaggregated by product type for the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2023 and ~~2019:~~2022:

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


Three Months Ended	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Real Estate	Trading	Elim.	Total
March 31, 2023
Pulpwood	$26,783	$3,715	$6,081	—	$1,439	—	$38,018
Sawtimber	34,543	29,781	37,683	—	10,667	—	112,674
Hardwood	1,120	—	—	—	—	—	1,120
Total Timber Sales	62,446	33,496	43,764	—	12,106	—	151,812
License Revenue, Primarily from Hunting	5,268	136	55	—	—	—	5,459
Other Non-Timber/Carbon Revenue (a)	4,128	787	286	—	—	—	5,201
Agency Fee Income	—	—	—	—	334	—	334

Total Non-Timber Sales	9,396	923	341	—	334	—	10,994
Improved Development	—	—	—	4,802	—	—	4,802

Rural	—	—	—	6,499	—	—	6,499
Timberland & Non-Strategic	—	—	—	1,637	—	—	1,637

Deferred Revenue/Other (b)	—	—	—	3,093	—	—	3,093

Total Real Estate Sales	—	—	—	16,031	—	—	16,031

Revenue from Contracts with Customers	71,842	34,419	44,105	16,031	12,440	—	178,837
Lease Revenue	—	—	—	245	—	—	245
Intersegment	—	—	—	—	129	(129)	—
Total Revenue	$71,842	$34,419	$44,105	$16,276	$12,569	($129)	$179,082

Three Months Ended	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Real Estate	Trading	Elim.	Total
March 31, 2022
Pulpwood	$37,611	$2,918	$7,595	—	$1,525	—	$49,649
Sawtimber	27,516	42,215	42,100	—	11,538	—	123,369
Hardwood	5,849	—	—	—	—	—	5,849
Total Timber Sales	70,976	45,133	49,695	—	13,063	—	178,867
License Revenue, Primarily from Hunting	4,688	116	62	—	—	—	4,866
Other Non-Timber/Carbon Revenue	1,099	1,032	1,632	—	—	—	3,763
Agency Fee Income	—	—	—	—	350	—	350

Total Non-Timber Sales	5,787	1,148	1,694	—	350	—	8,979
Improved Development	—	—	—	4,966	—	—	4,966

Rural	—	—	—	16,950	—	—	16,950
Timberland & Non-Strategic	—	—	—	11,400	—	—	11,400

Deferred Revenue/Other (b)	—	—	—	636	—	—	636

Total Real Estate Sales	—	—	—	33,952	—	—	33,952

Revenue from Contracts with Customers	76,763	46,281	51,389	33,952	13,413	—	221,798
Lease Revenue	—	—	—	243	—	—	243
Intersegment	—	—	—	—	48	(48)	—
Total Revenue	$76,763	$46,281	$51,389	$34,195	$13,461	($48)	$222,041

(a) ~~The three months ended June 30, 2019 reflects the reclassification~~Includes $0.6 million of ~~certain real estate sales between the Rural and Timberlands & Non-Strategic sales categories to better align with the way management internally evaluates real estate sales.~~CCS revenue.

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

~~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)~~

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

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

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

2013

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RAYONIER INC. AND SUBSIDIARIES

RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

The following tables present our timber sales disaggregated by contract type for the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2023 and ~~2019:~~2022:

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


Three Months Ended	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Trading	Total
March 31, 2023
Stumpage Pay-as-Cut	$30,477	—	—	—	$30,477
Stumpage Lump Sum	105	624	—	—	729

Total Stumpage	30,582	624	—	—	31,206

Delivered Wood (Domestic)	29,413	29,168	11,595	403	70,579
Delivered Wood (Export)	2,451	3,704	32,169	11,703	50,027
Total Delivered	31,864	32,872	43,764	12,106	120,606

Total Timber Sales	$62,446	$33,496	$43,764	$12,106	$151,812

March 31, 2022
Stumpage Pay-as-Cut	$36,206	—	—	—	$36,206
Stumpage Lump Sum	—	5,388	—	—	5,388

Total Stumpage	36,206	5,388	—	—	41,594

Delivered Wood (Domestic)	32,128	39,446	13,481	625	85,680
Delivered Wood (Export)	2,642	299	36,214	12,438	51,593
Total Delivered	34,770	39,745	49,695	13,063	137,273

Total Timber Sales	$70,976	$45,133	$49,695	$13,063	$178,867

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RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

Six Months Ended Southern Timber Pacific Northwest Timber New Zealand Timber Timber Funds Trading Total
June 30, 2020
Stumpage Pay-as-Cut $41,623 — — 531 — $42,154
Stumpage Lump Sum 1,251 5,457 — — — 6,708
Total Stumpage 42,874 5,457 — 531 — 48,862
Delivered Wood (Domestic) 42,498 50,574 25,817 6,102 934 125,925
Delivered Wood (Export) 3,667 — 50,542 — 41,977 96,186
Total Delivered 46,165 50,574 76,359 6,102 42,911 222,111
Total Timber Sales $89,039 $56,031 $76,359 $6,633 $42,911 $270,973
June 30, 2019
Stumpage Pay-as-Cut $43,180 — — — — $43,180
Stumpage Lump Sum 2,675 — — — — $2,675
Total Stumpage 45,855 — — — — 45,855
Delivered Wood (Domestic) 36,379 37,771 42,439 — 4,793 121,382
Delivered Wood (Export) 5,789 — 73,200 — 62,249 141,238
Total Delivered 42,168 37,771 115,639 — 67,042 262,620
Total Timber Sales $88,023 $37,771 $115,639 — $67,042 $308,475

4. ~~LEASES~~

~~TIMBERLAND LEASES~~

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

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

~~OTHER NON-TIMBERLAND LEASES~~

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

~~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)~~

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

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

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

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

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

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

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

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

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

~~Lessor lease information~~

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

~~Table of Contents~~

~~RAYONIER INC. AND SUBSIDIARIES~~

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

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

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

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

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

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

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

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


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

5. NONCONTROLLING INTERESTS

NONCONTROLLING INTERESTS IN CONSOLIDATED AFFILIATES

Matariki Forestry Group

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

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

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

~~Table of Contents~~

~~RAYONIER INC. AND SUBSIDIARIES~~

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

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

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

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

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

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

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

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

~~Ferncliff Investors~~

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

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

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

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

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

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~~RAYONIER INC. AND SUBSIDIARIES~~

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

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

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

NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP

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

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


	Three Months Ended March 31,
		2023	2022
Beginning noncontrolling interests in the operating partnership		$105,763	$133,823

Adjustment of noncontrolling interests in the operating partnership		2,376	2,645
Conversions of Redeemable Operating Partnership Units to Common Shares		(23,881)	(104)
Net Income attributable to noncontrolling interests in the operating partnership		174	669
Other Comprehensive (Loss) Income attributable to noncontrolling interests in the operating partnership		(1,110)	101
Distributions to noncontrolling interests in the operating partnership		(861)	(895)
Total noncontrolling interests in the operating partnership		$82,461	$136,239

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

~~6. SEGMENT AND GEOGRAPHICAL INFORMATION~~

~~As a result~~

5. EARNINGS PER SHARE AND PER UNIT

The following table provides details of the ~~merger with Pope Resources, we have revised our reportable business segments, adding 1 additional segment, Timber Funds. The Timber Funds segment represents operations~~calculations of basic and diluted earnings per common share of the 3 private equity timber funds included in the transaction – Fund II, Fund III and Fund IV (collectively, the “Funds”). Rayonier owns 20% of Fund II, 5% of Fund III, and 15% of Fund IV and is also the managing member of the Funds. As discussed in ~~Note 5 - Noncontrolling Interests~~, the Funds are consolidated into our financial statements. The Timber Funds segment also includes fee revenue paid to us for managing the Funds, which consists of both fixed components based on invested capital and acres under management as well as variable components related to the harvest volumes of the Funds. These fees, which also represent an expense in the Timber Funds segment, are eliminated in consolidation.Company:

~~We now operate in 6 reportable segments: Southern Timber, Pacific Northwest Timber, New Zealand Timber, Timber Funds, Real Estate, and Trading.~~


	Three Months Ended March 31,
		2023	2022
Earnings per common share - basic
Numerator:
Net Income		$7,437	$30,998
Less: Net income attributable to noncontrolling interests in the operating partnership		(174)	(669)
Less: Net loss (income) attributable to noncontrolling interests in consolidated affiliates		1,037	(1,012)
Net income attributable to Rayonier Inc.		$8,300	$29,317
Denominator:
Denominator for basic earnings per common share - weighted average shares		147,377,448	145,430,171
Basic earnings per common share attributable to Rayonier Inc.:		$0.06	$0.20
Earnings per common share - diluted
Numerator:
Net Income		$7,437	$30,998
Less: Net loss (income) attributable to noncontrolling interests in consolidated affiliates		1,037	(1,012)

Net income attributable to Rayonier Inc., before net income attributable to noncontrolling interests in the operating partnership		$8,474	$29,986
Denominator:
Denominator for basic earnings per common share - weighted average shares		147,377,448	145,430,171
Add: Dilutive effect of:
Stock options		1,886	7,229
Performance shares, restricted shares and restricted stock units		612,412	794,892
Noncontrolling interests in operating partnership units		3,087,383	3,314,784
Denominator for diluted earnings per common share - adjusted weighted average shares		151,079,129	149,547,076
Diluted earnings per common share attributable to Rayonier Inc.:		$0.06	$0.20

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

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


	Three Months Ended March 31,
		2023	2022
Anti-dilutive shares excluded from the computations of diluted earnings per common share:
Stock options, performance shares, restricted shares and restricted stock units		64,667	254


Total		64,667	254

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

The following ~~tables summarize the segment information for the three and six months ended June 30, 2020 and 2019:~~

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

~~(a)The three and six months ended June 30, 2020 includes $5.8 million of sales attributable to noncontrolling interests in the Timber Funds.~~

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

~~(c)Primarily consists~~table provides details of the ~~elimination~~calculations of ~~timberland investment management fees paid to us by~~basic and diluted earnings per unit of the timber funds which are initially recognized as sales and cost of sales within the Timber Funds segment, as well as log marketing fees paid to our New Zealand Timber segment from our Southern Timber and Pacific Northwest Timber segments for marketing log export sales.Operating Partnership:


	Three Months Ended March 31,
		2023	2022
Earnings per unit - basic
Numerator:
Net Income		$7,437	$30,998
Less: Net loss (income) attributable to noncontrolling interests in consolidated affiliates		1,037	(1,012)
Net income available to unitholders		$8,474	$29,986
Denominator:
Denominator for basic earnings per unit - weighted average units		150,464,831	148,744,955
Basic earnings per unit attributable to Rayonier, L.P.:		$0.06	$0.20
Earnings per unit - diluted
Numerator:
Net Income		$7,437	$30,998
Less: Net loss (income) attributable to noncontrolling interests in consolidated affiliates		1,037	(1,012)
Net income available to unitholders		$8,474	$29,986
Denominator:
Denominator for basic earnings per unit - weighted average units		150,464,831	148,744,955
Add: Dilutive effect of unit equivalents:
Stock options		1,886	7,229
Performance shares, restricted shares and restricted stock units		612,412	794,892
Denominator for diluted earnings per unit - adjusted weighted average units		151,079,129	149,547,076
Diluted earnings per unit attributable to Rayonier, L.P.:		$0.06	$0.20

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

~~(a)The three and six months ended June 30, 2020 includes $2.0 million of operating loss attributable to noncontrolling interests in the Timber Funds.~~

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

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

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~~RAYONIER INC. AND SUBSIDIARIES~~

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

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

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

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

~~(a)The three and six months ended June 30, 2020 includes $3.5 million of depreciation, depletion and amortization related to noncontrolling interests in the Timber Funds.~~

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

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

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


	Three Months Ended March 31,
		2023	2022
Anti-dilutive unit equivalents excluded from the computations of diluted earnings per unit:
Stock options, performance shares, restricted shares and restricted stock units		64,667	254


Total		64,667	254

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

7.6. DEBT

Our debt consisted of the following at ~~June 30, 2020:~~March 31, 2023:


			~~June 30, 2020~~March 31, 2023
Debt ~~excluding Timber Funds:~~


Senior Notes due 2031 at a fixed interest rate of 2.75%			$450,000
2015 Term ~~Credit Agreement~~Loan borrowings due 2028 at a variable interest rate of ~~1.8%~~6.34% at ~~June 30, 2020 (a)~~March 31, 2023			$350,000
~~Senior Notes~~2022 Incremental Term Loan borrowings due ~~2022~~2027 at a ~~fixed~~variable interest rate of ~~3.75%~~6.34% at March 31, 2023			~~325,000~~250,000
2016 Incremental Term Loan ~~Agreement~~ borrowings due 2026 at a variable interest rate of ~~2.1%~~6.39% at ~~June 30, 2020 (b)~~March 31, 2023			~~300,000~~200,000
~~2020~~

2021 Incremental Term Loan ~~Facility~~ borrowings due ~~2025~~2029 at a variable interest rate of ~~2.0%~~6.29% at ~~June 30, 2020 (c)~~March 31, 2023			~~250,000~~200,000
~~Revolving Credit Facility borrowings~~
New Zealand subsidiary noncontrolling interests shareholder loan due ~~2025~~2026 at ~~an average variable~~a fixed interest rate of ~~1.7% at June 30, 2020~~3.64% (a)			~~35,000~~
~~Northwest Farm Credit Services Credit Facility with quarterly interest-only payments, collateralized by Core Timberlands, with the following tranches (d)~~25,280
~~Due~~New Zealand subsidiary noncontrolling interests shareholder loan due 2027 at a fixed interest rate of 6.48% (a)			25,280
New Zealand subsidiary noncontrolling interests shareholder loan due 2025 at a fixed interest rate of ~~6.1%~~2.95% (a)			~~11,779~~21,669
~~Due 2028 at a fixed interest rate of 4.1%~~			~~12,085~~
~~Due 2033 at a fixed interest rate of 5.3%~~			~~19,564~~
~~Due 2036 at a fixed interest rate of 5.4%~~			~~9,927~~
~~Total debt, excluding Timber Funds~~			~~1,313,355~~


~~Debt, Timber Funds:~~Total principal debt			1,522,229

Fund II Mortgages Payable, collateralized by Fund II timberlands with quarterly interest payments, as follows: (d)Less: Unamortized discounts			(3,022)
~~Due 2020 at a fixed interest rate of 4.9%~~			~~11,030~~
~~Due 2020 at a fixed interest rate of 3.8%~~			~~14,012~~
Fund III Mortgages Payable, collateralized by Fund III timberlands with quarterly interest payments, as follows (d):
~~Due 2023 at a fixed interest rate of 5.1%~~			~~19,827~~
~~Due 2024 at a fixed interest rate of 4.5%~~			~~15,790~~
~~Total debt, Timber Funds~~			~~60,659~~
~~Total debt~~			~~1,374,014~~
~~Less: Current maturities of long-term debt, Timber Funds~~			~~(25,042)~~
Less: Deferred financing costs			~~(2,849)~~(5,080)

















~~Long-term~~Total long-term debt ~~net of deferred financing costs~~			$~~1,346,123~~1,514,127

(a) AsExcept for changes in the New Zealand foreign exchange rate, there have been no adjustments to the carrying value of ~~June 30, 2020,~~ the ~~periodic~~shareholder loans since inception.

The following table contains information on the outstanding variable rate debt as of March 31, 2023:


Debt	Periodic Interest Rate (a)	Effective Fixed Interest Rate (b)
2015 Term Loan	Daily Simple SOFR + 1.70%	3.03	%
2022 Incremental Term Loan	Daily Simple SOFR + 1.70%	5.13	%
2016 Incremental Term Loan	Daily Simple SOFR + 1.75%	2.40	%
2021 Incremental Term Loan	Daily Simple SOFR + 1.65%	1.46	%

(a) Includes credit spread adjustment of 0.1%.

(b) Effective interest rate ~~on the term loan facility was LIBOR plus 1.600%. We estimate the effective fixed interest rate on the term loan facility to be approximately 3.2%~~is after consideration of interest rate swaps and estimated patronage refunds.

~~(b) As of June 30, 2020,~~Principal payments due during the periodic interest rate on the incremental term loan was LIBOR plus 1.900%. We estimate the effective fixed interest rate on the incremental term loan facility to be approximately 2.8% after consideration of interest rate swapsnext five years and ~~estimated patronage refunds.~~thereafter are as follows:

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

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


									Total
2023									—
2024									—
2025									21,669
2026									225,280
2027									275,280
Thereafter									1,000,000
Total Debt									$1,522,229

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

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

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

~~2020~~2023 DEBT ACTIVITY

~~On April 1, 2020,~~U.S. Debt

During the three months ended March 31, 2023, we ~~entered into a Second Amendment to Credit Agreement to increase the limit~~made no borrowings or repayments on our Revolving Credit Facility from $200 million to $250 million and extend its maturity date from August 5, 2020 to April 1, 2025. Additionally, the maturity date of the Term Credit Agreement was extended from August 5, 2024 to April 1, 2028.

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

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

~~During the six months ended June 30, 2020, we made borrowings of $70.0 million and repayments of $117.0 million on our Revolving Credit Facility~~. Facility. At ~~June 30, 2020,~~March 31, 2023, we had available borrowings of ~~$264.0~~$296.2 million under the Revolving Credit Facility, net of ~~$1.0~~$3.8 million to secure our outstanding letters of credit.

~~In June 2020, the~~ New Zealand ~~subsidiary renewed its NZ$20 million working capital facility for an additional 12-month term.~~ Debt

During the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2023, the New Zealand subsidiary made 0no borrowings orand repayments on its working capital ~~facility.~~facility (the “New Zealand Working Capital Facility”). At ~~June 30, 2020,~~March 31, 2023, the New Zealand subsidiary had NZ$20.0 million of available borrowings under its working capital facility.

~~LONG-TERM~~

DEBT ~~ASSUMED IN THE POPE RESOURCES MERGER~~COVENANTS

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

The covenants listed below, which are the most significant financial covenants in effect as of March 31, 2023, are calculated on a trailing 12-month basis:


	Covenant Requirement		Actual Ratio		Favorable
Covenant EBITDA to consolidated interest expense should not be less than	2.5 to 1		8.1 to 1		5.6
Covenant debt to covenant net worth plus covenant debt shall not exceed	65	%	45	%	20	%

In addition to these financial covenants listed above, the Senior Notes due 2031, 2015 Term Loan Facility, 2016 Incremental Term Loan Facility, 2021 Incremental Term Loan Facility, 2022 Incremental Term Loan Facility, and Revolving Credit Facility include customary covenants that limit the incurrence of debt and the disposition of assets, among others. At March 31, 2023, we were in compliance with ~~Pope Resources, we assumed long-term debt instruments consisting of:~~all applicable covenants.

•

7. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

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

Accounting for derivative financial instruments is governed by ASC Topic 815, ~~5 tranches of a credit facility payable to Northwest Farm Credit Services~~Derivatives and Hedging, (“~~NWFCS”~~ASC 815”) ~~(defined and described below) totaling $45.0 million, collateralized by the portion of Pacific Northwest Core Timberlands acquired~~. In accordance with ASC 815, we record our derivative instruments at fair value as either assets or liabilities in the ~~merger with Pope Resources;~~Consolidated Balance Sheets. Changes in the instruments’ fair value are accounted for based on their intended use. Gains and losses on derivatives that are designated and qualify for cash flow hedge accounting are recorded as a component of accumulated other comprehensive income (“AOCI”) and reclassified into earnings when the hedged transaction materializes. Gains and losses on derivatives that are designated and qualify for net investment hedge accounting are recorded as a component of AOCI and will not be reclassified into earnings until the investment is partially or completely liquidated. The changes in the fair value of derivatives not designated as hedging instruments and those which are no longer effective as hedging instruments, are recognized immediately in earnings.

•2FOREIGN CURRENCY EXCHANGE AND OPTION CONTRACTS

Our New Zealand subsidiary’s domestic sales and operating expenses are predominately denominated in New Zealand dollars, while its export sales, shareholder distributions and ocean freight payments are predominately denominated in U.S. dollars. To the extent New Zealand dollar costs exceed New Zealand dollar revenues (the “foreign exchange exposure”), the New Zealand subsidiary manages the foreign exchange exposure through the use of ~~Fund II's Mortgages Payable to MetLife (defined and described below) totaling $25.0 million, collateralized by~~derivative financial instruments. It typically hedges a portion of ~~Fund II timberlands;~~export sales receipts to cover 50% to 90% of the projected foreign exchange exposure for the following 12 months, up to 75% for the forward 12 to 18 months and up to 50% for the forward 18 to 24 months. Additionally, it will occasionally hedge export sales receipts to cover

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(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

•

up to 50% of ~~Fund III's Mortgages Payable~~the foreign exchange exposure for the forward 24 to ~~NWFCS (defined and described below) totaling $32.4 million, collateralized by~~48 months when the New Zealand dollar is at a cyclical low versus the U.S. dollar. The New Zealand subsidiary’s trading operations typically hedge a portion of ~~Fund III timberlands.~~export sales receipts to cover the projected foreign exchange exposure for the following three months. As of March 31, 2023, foreign currency exchange contracts and foreign currency option contracts had maturity dates through February 2026 and October 2025, respectively.

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

INTEREST RATE PRODUCTS

We ~~assumed 5 tranches~~are exposed to cash flow interest rate risk on our variable-rate debt and on anticipated debt issuances. We use variable-to-fixed interest rate swaps and forward-starting interest rate swap agreements to hedge this exposure. For these derivative instruments, we report the gains/losses from the fluctuations in the fair market value of the hedges in AOCI and reclassify them to earnings as interest expense in the same period in which the hedged interest payments affect earnings.

To the extent we de-designate or terminate a ~~credit facility payable~~cash flow hedging relationship and the associated hedged item continues to ~~NWFCS (the “NWFCS Credit Facility”) totaling $45.0 million. Quarterly payments~~exist, any unrealized gain or loss of the cash flow hedge at the time of de-designation remains in AOCI and is amortized using the straight-line method through interest ~~only are due~~expense over the remaining life of the hedged item. To the extent the associated hedged item is no longer effective, the gain or loss is reclassified out of AOCI to earnings immediately.

INTEREST RATE SWAPS

The following table contains information on the ~~NWFCS~~outstanding interest rate swaps as of March 31, 2023:


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

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

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

(c)Rate is before estimated patronage payments.

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RAYONIER INC. AND SUBSIDIARIES

RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

FORWARD-STARTING INTEREST RATE SWAPS

In March 2023, we modified our benchmark rates from LIBOR to Daily Simple SOFR for our forward-starting interest rates swaps, resulting in slightly favorable fixed rates.

The following table contains information on the ~~respective maturity~~outstanding forward-starting interest rate swaps as of ~~each tranche.~~ March 31, 2023:

Outstanding Forward-Starting Interest Rate Swaps (a)

Date Entered Into

Term

Notional Amount

Fixed Rate of Swap

Related Debt Facility

Forward Date

Maximum Period Ending for Forecasted Issuance Date

April 2020

4 years

$100,000

0.78

Term Credit Agreement

August 2024

N/A

May 2020

4 years

50,000

0.64

Term Credit Agreement

August 2024

N/A

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

The ~~NWFCS Credit Facility is collateralized by a portion~~following tables demonstrate the impact, gross of tax, of our derivatives on the Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2023 and 2022:


		Three Months Ended March 31,
	Income Statement Location	2023	2022
Derivatives designated as cash flow hedges:
Foreign currency exchange contracts	Other comprehensive (loss) income	$3,813	$3,417
	Other operating expense, net	(2,429)	97
Foreign currency option contracts	Other comprehensive (loss) income	(270)	136

Interest rate products	Other comprehensive (loss) income	(9,660)	35,129
	Interest expense, net	(3,463)	2,670

During the next 12 months, the amount of the ~~Pacific Northwest timberlands acquired~~March 31, 2023 AOCI balance, net of tax, expected to be reclassified into earnings is a gain of approximately $19.3 million. The following table contains details of the expected reclassified amounts into earnings:


			Amount expected to be reclassified into earnings in next 12 months

Derivatives designated as cash flow hedges:
Foreign currency exchange contracts			($2,930)
Foreign currency option contracts			(257)
Interest rate products (a)			22,498
Total estimated gain on derivatives contracts			$19,311

(a) These reclassified amounts are expected to fully offset variable interest rate payments made to debt holders, resulting in ~~the merger with Pope Resources. The NWFCS Credit Facility allows us to receive annual patronage payments, which are profit distributions made by a cooperative to its member-users based~~no net impact on ~~the quantity~~our earnings or ~~value of business done with the member-user.~~cash flows.

3021

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RAYONIER INC. AND SUBSIDIARIES

RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

The ~~pertinent details of each tranche~~following table contains the notional amounts of the ~~NWFCS Credit Facility we assumed~~derivative financial instruments recorded in the Consolidated Balance Sheets:


	Notional Amount
	March 31, 2023	December 31, 2022
Derivatives designated as cash flow hedges:
Foreign currency exchange contracts	$128,750	$138,250
Foreign currency option contracts	78,000	78,000
Interest rate swaps	850,000	850,000

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

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

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


	Location on Balance Sheet	Fair Value Assets / (Liabilities) (a)
		March 31, 2023	December 31, 2022
Derivatives designated as cash flow hedges:
Foreign currency exchange contracts	Other current assets	$63	$25
	Other assets	1,063	1,303
	Other current liabilities	(4,133)	(5,457)
	Other non-current liabilities	(146)	(410)
Foreign currency option contracts	Other current assets	83	66
	Other assets	1,734	2,131
	Other current liabilities	(440)	(347)
	Other non-current liabilities	(1,079)	(1,281)
Interest rate swaps	Other assets	50,525	60,843
	Other non-current liabilities	(1,549)	(51)






Forward-starting interest rate swaps	Other assets	10,456	11,939








Total derivative contracts:
Other current assets		$146	$91
Other assets		63,778	76,216
Total derivative assets		$63,924	$76,307

Other current liabilities		(4,573)	(5,804)
Other non-current liabilities		(2,774)	(1,742)
Total derivative liabilities		($7,347)	($7,546)

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

~~(b)~~Note 8 — Fair Value Measurements~~The fair market value premium will be amortized as a benefit to interest expense over the maturity term of each tranche.~~

~~FUND II MORTGAGES PAYABLE~~

~~We assumed Fund II's 2 mortgages payable (the “Fund II Mortgages Payable”) to MetLife totaling $25.0 million. Quarterly payments of interest only are due~~ for further information on the ~~Fund II Mortgages Payable through~~fair value of our derivatives including their ~~respective maturities. The Fund II Mortgages Payable are collateralized by Fund II Timberlands and do not have any recourse to~~classification within the ~~Company or the Operating Partnership.~~

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

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

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

~~FUND III MORTGAGES PAYABLE~~

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

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

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

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

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

OFFSETTING DERIVATIVES

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

~~Table of Contents~~

~~RAYONIER INC. AND SUBSIDIARIES~~

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

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

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

~~DEBT COVENANTS — EXCLUDING TIMBER FUNDS~~

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

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

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

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

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

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

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

~~DEBT COVENANTS — TIMBER FUNDS~~

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

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

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

3222

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RAYONIER INC. AND SUBSIDIARIES

RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

8. FAIR VALUE MEASUREMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

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

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

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

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

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


	March 31, 2023			December 31, 2022
Asset (Liability) (a)	Carrying Amount	Fair Value		Carrying Amount	Fair Value
		Level 1	Level 2		Level 1	Level 2
Cash and cash equivalents	$98,774	$98,774	—	$114,255	$114,255	—


Restricted cash (b)	4,962	4,962	—	1,152	1,152	—



Long-term debt (c)	(1,514,127)	—	(1,441,247)	(1,514,721)	—	(1,438,736)

Interest rate swaps (d)	48,976	—	48,976	60,792	—	60,792

Forward-starting interest rate swaps (d)	10,456	—	10,456	11,939	—	11,939
Foreign currency exchange contracts (d)	(3,153)	—	(3,153)	(4,539)	—	(4,539)
Foreign currency option contracts (d)	298	—	298	569	—	569


Noncontrolling interests in the operating partnership (e)	82,461	—	82,461	105,763	—	105,763

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

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

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

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

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

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

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

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

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

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

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

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

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RAYONIER INC. AND SUBSIDIARIES

RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

9. CONTINGENCIES

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

10. ENVIRONMENTAL AND NATURAL RESOURCE DAMAGE LIABILITIES

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

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


			Port Gamble, WA






Non-current portion at December 31, 2022			$14,418
Plus: Current portion			1,175
Total Balance at December 31, 2022			15,593
Expenditures charged to liabilities			(110)

Total Balance at March 31, 2023			15,483
Less: Current portion			(1,175)
Non-current portion at March 31, 2023			$14,308

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

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

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)

11. GUARANTEES

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

As of March 31, 2023, the following financial guarantees were outstanding:

Financial Commitments (a)

Maximum Potential
Payment

Standby letters of credit (b)

$3,779

Surety bonds (c)

23,204

Total financial commitments

$26,983

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

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

(c)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 our Heartwood development project in Richmond Hill, Georgia. These surety bonds expire at various dates during 2023, 2024 and 2025 and are expected to be renewed as required.

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

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

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

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

RAYONIER INC. AND SUBSIDIARIES

RAYONIER, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

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


		Higher and Better Use Timberlands and Real Estate Development Investments						Higher and Better Use Timberlands and Real Estate Development Investments
		Land and Timber	Development Investments	Total		Land and Timber	Development Investments	Total
Non-current portion at December 31, 2019		$58,091	$23,700	$81,791
Non-current portion at December 31, 2022					Non-current portion at December 31, 2022	$91,374	$23,723	$115,097
Plus: Current portion (a)	Plus: Current portion (a)	274	12,389	12,663	Plus: Current portion (a)	408	17,501	17,909
Total Balance at December 31, 2019		58,365	36,089	94,454
Total Balance at December 31, 2022					Total Balance at December 31, 2022	91,782	41,224	133,006
Non-cash cost of land and improved development	Non-cash cost of land and improved development	(280)	(3,523)	(3,803)	Non-cash cost of land and improved development	(457)	(2,943)	(3,400)
Amortization of parcel real estate development investments					Amortization of parcel real estate development investments	—	(2,127)	(2,127)
Timber depletion from harvesting activities and basis of timber sold in real estate sales	Timber depletion from harvesting activities and basis of timber sold in real estate sales	(351)	—	(351)	Timber depletion from harvesting activities and basis of timber sold in real estate sales	(345)	—	(345)
Capitalized real estate development investments (b)	Capitalized real estate development investments (b)	—	3,587	3,587	Capitalized real estate development investments (b)	—	10,913	10,913
HBU properties acquired in merger with Pope Resources (c)		27,722	—	27,722
Capital expenditures (silviculture)	Capital expenditures (silviculture)	180	—	180	Capital expenditures (silviculture)	89	—	89

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

Total Balance at June 30, 2020		81,657	36,153	117,810

Total Balance at March 31, 2023					Total Balance at March 31, 2023	91,069	47,067	138,136
Less: Current portion (a)	Less: Current portion (a)	(361)	(3,529)	(3,890)	Less: Current portion (a)	(579)	(17,856)	(18,435)
Non-current portion at June 30, 2020		$81,296	$32,624	$113,920
Non-current portion at March 31, 2023					Non-current portion at March 31, 2023	$90,490	$29,211	$119,701


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


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


Item		Page
	PART I - FINANCIAL INFORMATION
1.	Financial Statements (unaudited)	1
	Rayonier Inc.:
	Consolidated Statements of Income and Comprehensive Income for the Three Months Ended March 31, 2023 and 2022	1
	Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022	2
	Consolidated Statements of Changes in Shareholders’ Equity for the Quarters Ended March 31, 2023 and 2022	3
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022	5
	Rayonier, L.P.:
	Consolidated Statements of Income and Comprehensive Income for the Three Months Ended March 31, 2023 and 2022	6
	Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022	7
	Consolidated Statements of Changes in Capital for the Quarters Ended March 31, 2023 and 2022	8
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022	9
	Notes to Consolidated Financial Statements	10
2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	31
3.	Quantitative and Qualitative Disclosures about Market Risk	51
4.	Controls and Procedures	53
	PART II - OTHER INFORMATION
1.	Legal Proceedings	53

2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
6.	Exhibits	55
	Signatures	56


	Three Months Ended June 30,			Six Months Ended June 30,
	2020	2019	2020	2019
SALES (NOTE 3)	$195,630	$184,800	$454,760	$376,346
Costs and Expenses
Cost of sales	(154,891)	(140,454)	(364,390)	(283,705)
Selling and general expenses	(12,570)	(10,984)	(22,538)	(20,794)
Other operating expense, net (Note 19)	(16,483)	(1,969)	(17,594)	(1,934)
	(183,944)	(153,407)	(404,522)	(306,433)
OPERATING INCOME	11,686	31,393	50,238	69,913
Interest expense	(9,820)	(7,922)	(18,036)	(15,632)
Interest and other miscellaneous income, net	1,579	1,057	1,370	2,390
INCOME BEFORE INCOME TAXES	3,445	24,528	33,572	56,671
Income tax expense (Note 10)	(2,990)	(3,608)	(6,696)	(7,958)
NET INCOME	455	20,920	26,876	48,713
Less: Net income attributable to noncontrolling interest in the Operating Partnership	(219)	—	(219)	—
Less: Net loss (income) attributable to noncontrolling interests in consolidated affiliates	1,499	(2,168)	931	(5,167)
NET INCOME ATTRIBUTABLE TO RAYONIER INC.	1,735	18,752	27,588	43,546
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment, net of income tax effect of $0, $0, $0, and $0	23,258	(5,604)	(20,765)	429
Cash flow hedges, net of income tax effect of $1,741, $91, $116 and $244	(7,276)	(19,519)	(90,751)	(30,205)
Amortization of pension and postretirement plans, net of income tax expense of $0, $0, $0 and $0	217	112	434	224
Total other comprehensive income (loss)	16,199	(25,011)	(111,082)	(29,552)
COMPREHENSIVE INCOME (LOSS)	16,654	(4,091)	(84,206)	19,161
Less: Comprehensive income attributable to noncontrolling interests in the Operating Partnership	(676)	—	(676)	—
Less: Comprehensive (income) loss attributable to noncontrolling interests in consolidated affiliates	(4,917)	(815)	5,743	(5,366)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO RAYONIER INC.	$11,061	($4,906)	($79,139)	$13,795
EARNINGS PER COMMON SHARE (NOTE 14)
Basic earnings per share attributable to Rayonier Inc.	$0.01	$0.14	$0.21	$0.34
Diluted earnings per share attributable to Rayonier Inc.	$0.01	$0.14	$0.21	$0.34


	Three Months Ended March 31,
		2023	2022
SALES (NOTE 3)		$179,082	$222,041
Costs and Expenses
Cost of sales		(149,166)	(160,979)
Selling and general expenses		(16,778)	(14,760)
Other operating expense, net (Note 14)		(2,516)	(984)
		(168,460)	(176,723)
OPERATING INCOME		10,622	45,318
Interest expense		(11,700)	(8,337)
Interest and other miscellaneous income (expense), net		9,554	(468)
INCOME BEFORE INCOME TAXES		8,476	36,513
Income tax expense (Note 16)		(1,039)	(5,515)
NET INCOME		7,437	30,998
Less: Net income attributable to noncontrolling interests in the operating partnership		(174)	(669)
Less: Net loss (income) attributable to noncontrolling interests in consolidated affiliates		1,037	(1,012)
NET INCOME ATTRIBUTABLE TO RAYONIER INC.		8,300	29,317
OTHER COMPREHENSIVE (LOSS) INCOME
Foreign currency translation adjustment, net of income tax effect of $0 and $0		(3,733)	6,458
Cash flow hedges, net of income tax effect of $312 and $1,022		(12,319)	40,427
Amortization of pension and postretirement plans, net of income tax expense of $0 and $0		1	188
Total other comprehensive (loss) income		(16,051)	47,073
COMPREHENSIVE (LOSS) INCOME		(8,614)	78,071
Less: Comprehensive loss (income) attributable to noncontrolling interests in the operating partnership		156	(1,686)
Less: Comprehensive loss (income) attributable to noncontrolling interests in consolidated affiliates		1,032	(2,408)
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO RAYONIER INC.		($7,426)	$73,977
EARNINGS PER COMMON SHARE (NOTE 5)
Basic earnings per share attributable to Rayonier Inc.		$0.06	$0.20
Diluted earnings per share attributable to Rayonier Inc.		$0.06	$0.20


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


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


	March 31, 2023	December 31, 2022
ASSETS
CURRENT ASSETS



Cash and cash equivalents	$98,774	$114,255

Accounts receivable, less allowance for doubtful accounts of $73 and $74	35,430	42,538

Inventory (Note 13)	30,297	23,729

Prepaid expenses	20,856	20,573
Assets held for sale (Note 19)	1,154	713
Other current assets	837	573
Total current assets	187,348	202,381
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	3,209,988	3,230,904
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS (NOTE 12)	119,701	115,097
PROPERTY, PLANT AND EQUIPMENT
Land	6,453	6,453
Buildings	30,805	31,020
Machinery and equipment	6,565	6,568
Construction in progress	881	653
Total property, plant and equipment, gross	44,704	44,694
Less — accumulated depreciation	(17,981)	(17,505)
Total property, plant and equipment, net	26,723	27,189
RESTRICTED CASH (NOTE 18)	4,962	1,152
RIGHT-OF-USE ASSETS	98,301	97,167
OTHER ASSETS	100,150	115,481
TOTAL ASSETS	$3,747,173	$3,789,371
LIABILITIES, NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$32,172	$22,100



Accrued taxes	4,899	3,734

Accrued payroll and benefits	6,430	12,564
Accrued interest	10,175	5,920
Deferred revenue	19,095	22,762

Other current liabilities	23,988	28,247
Total current liabilities	96,759	95,327
LONG-TERM DEBT, NET (NOTE 6)	1,514,127	1,514,721

PENSION AND OTHER POSTRETIREMENT BENEFITS (NOTE 15)	8,460	8,510
LONG-TERM LEASE LIABILITY	89,911	88,756
LONG-TERM DEFERRED REVENUE	11,337	6,895
OTHER NON-CURRENT LIABILITIES	89,303	88,687
CONTINGENCIES (NOTE 9)
NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP (NOTE 4)	82,461	105,763
SHAREHOLDERS’ EQUITY
Common Shares, 480,000,000 shares authorized, 148,012,979 and 147,282,631 shares issued and outstanding	1,489,274	1,462,945
Retained earnings	330,389	366,637
Accumulated other comprehensive income (Note 17)	20,868	35,813
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY	1,840,531	1,865,395
Noncontrolling interests in consolidated affiliates (Note 4)	14,284	15,317
TOTAL SHAREHOLDERS’ EQUITY	1,854,815	1,880,712
TOTAL LIABILITIES, NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND SHAREHOLDERS’ EQUITY	$3,747,173	$3,789,371


	June 30, 2020	December 31, 2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents, excluding Timber Funds	$87,813	$68,735
Cash and cash equivalents, Timber Funds	6,973	—
Total cash and cash equivalents	94,786	68,735
Accounts receivable, less allowance for doubtful accounts of $25 and $24	36,811	27,127

Inventory (Note 21)	10,365	14,518

Prepaid expenses	18,133	14,728

Other current assets	1,135	867
Total current assets	161,230	125,975
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	3,332,067	2,482,047
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS (NOTE 8)	113,920	81,791
PROPERTY, PLANT AND EQUIPMENT
Land	5,566	4,131
Buildings	29,153	23,095
Machinery and equipment	4,753	4,339
Construction in progress	382	348
Total property, plant and equipment, gross	39,854	31,913
Less — accumulated depreciation	(10,444)	(9,662)
Total property, plant and equipment, net	29,410	22,251
RESTRICTED CASH (NOTE 22)	475	1,233
RIGHT-OF-USE ASSETS (NOTE 4)	96,710	99,942
OTHER ASSETS	35,455	47,757
TOTAL ASSETS	$3,769,267	$2,860,996
LIABILITIES, NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$21,836	$18,160

Current maturities of long-term debt, excluding Timber Funds (Note 7)	—	82,000
Current maturities of long-term debt, Timber Funds (Note 7)	25,042	—
Accrued taxes	6,444	3,032

Accrued payroll and benefits	6,628	8,869
Accrued interest	6,500	5,205
Deferred revenue	18,434	11,440
Other current liabilities	24,405	22,480
Total current liabilities	109,289	151,186
LONG-TERM DEBT, NET OF DEFERRED FINANCING COSTS, EXCLUDING TIMBER FUNDS (NOTE 7)	1,310,506	973,129
LONG-TERM DEBT, TIMBER FUNDS (NOTE 7)	35,617	—
PENSION AND OTHER POSTRETIREMENT BENEFITS (NOTE 17)	23,767	25,311
LONG-TERM LEASE LIABILITY (NOTE 4)	87,774	90,481
OTHER NON-CURRENT LIABILITIES	178,136	83,247
COMMITMENTS AND CONTINGENCIES (NOTES 9 and 11)
NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP (NOTE 5)	110,220	—
SHAREHOLDERS’ EQUITY
Common Shares, 480,000,000 shares authorized,136,512,112 and 129,331,069 shares issued and outstanding	1,063,489	888,177
Retained earnings	531,681	583,006
Accumulated other comprehensive loss (Note 23)	(137,929)	(31,202)
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY	1,457,241	1,439,981
Noncontrolling interests in consolidated affiliates (Note 5)	456,717	97,661
TOTAL SHAREHOLDERS’ EQUITY	1,913,958	1,537,642
TOTAL LIABILITIES, NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND SHAREHOLDERS’ EQUITY	$3,769,267	$2,860,996


	Common Shares			Retained Earnings	Accumulated Other Comprehensive Loss	Noncontrolling Interests in Consolidated Affiliates	Shareholders’ Equity
	Shares	Amount
Balance, January 1, 2020	129,331,069	$888,177	$583,006	($31,202)	$97,661	$1,537,642
Net income	—	—	25,854	—	567	26,421
Dividends ($0.27 per share)	—	—	(34,813)	—	—	(34,813)
Issuance of shares under incentive stock plans	2,407	66	—	—	—	66
Stock-based compensation	—	1,510	—	—	—	1,510
Repurchase of common shares made under repurchase program	(152,237)	—	(3,152)	—	—	(3,152)
Amortization of pension and postretirement plan liabilities	—	—	—	217	—	217
Foreign currency translation adjustment	—	—	—	(33,894)	(10,129)	(44,023)
Cash flow hedges	—	—	—	(82,376)	(1,099)	(83,475)
Distributions to noncontrolling interests in consolidated affiliates	—	—	—	—	(725)	(725)
Balance, March 31, 2020	129,181,239	$889,753	$570,895	($147,255)	$86,275	$1,399,668
Issuances of shares associated with the merger with Pope Resources	7,181,071	172,418	—	—	—	172,418

Net income (loss)	—	—	1,954	—	(1,499)	455
Net income attributable to noncontrolling interest in the Operating Partnership	—	—	(219)	—	—	(219)
Dividends ($0.27 per share) (a)	—	—	(36,957)	—	—	(36,957)
Issuance of shares under incentive stock plans	215,970	222	—	—	—	222
Stock-based compensation	—	2,668	—	—	—	2,668
Repurchase of common shares	(66,168)	(1,572)	—	—	—	(1,572)
Acquisition of noncontrolling interests in consolidated affiliates	—	—	—	—	372,381	372,381
Adjustment of noncontrolling interest in the Operating Partnership	—	—	(3,992)	—	—	(3,992)
Amortization of pension and postretirement plan liabilities	—	—	—	217	—	217
Foreign currency translation adjustment	—	—	—	17,872	5,386	23,258
Cash flow hedges	—	—	—	(8,306)	1,030	(7,276)
Allocation of other comprehensive income to noncontrolling interests in the Operating Partnership	—	—	—	(457)	—	(457)
Distributions to noncontrolling interests in consolidated affiliates	—	—	—	—	(6,856)	(6,856)
Balance, June 30, 2020	136,512,112	$1,063,489	$531,681	($137,929)	$456,717	$1,913,958


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

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

Balance, March 31, 2023	148,012,979	$1,489,274	$330,389	$20,868	$14,284	$1,854,815


	Common Shares			Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Noncontrolling Interests in Consolidated Affiliates	Shareholders’ Equity
	Shares	Amount
Balance, January 1, 2019	129,488,675	$884,263	$672,371	$239	$97,677	$1,654,550

Net income	—	—	24,794	—	2,999	27,793
Dividends ($0.27 per share)	—	—	(35,049)	—	—	(35,049)
Issuance of shares under incentive stock plans	26,031	597	—	—	—	597
Stock-based compensation	—	1,477	—	—	—	1,477
Repurchase of common shares	(1,140)	(33)	—	—	—	(33)
Amortization of pension and postretirement plan liabilities	—	—	—	112	—	112
Foreign currency translation adjustment	—	—	—	4,680	1,353	6,033
Cash flow hedges	—	—	—	(10,884)	198	(10,686)

Distributions to noncontrolling interests in consolidated affiliates	—	—	—	—	(3,594)	(3,594)
Balance, March 31, 2019	129,513,566	$886,304	$662,116	($5,853)	$98,633	$1,641,200
Net income	—	—	18,752	—	2,168	20,920
Dividends ($0.27 per share)	—	—	(35,125)	—	—	(35,125)
Issuance of shares under incentive stock plans	250,344	177	—	—	—	177
Stock-based compensation	—	2,344	—	—	—	2,344
Repurchase of common shares	(134,194)	(4,207)	—	—	—	(4,207)
Amortization of pension and postretirement plan liabilities	—	—	—	112	—	112
Foreign currency translation adjustment	—	—	—	(4,305)	(1,299)	(5,604)
Cash flow hedges	—	—	—	(19,465)	(54)	(19,519)
Balance, June 30, 2019	129,629,716	$884,618	$645,743	($29,511)	$99,448	$1,600,298


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

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

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

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


	Six Months Ended June 30,
	2020	2019
OPERATING ACTIVITIES
Net income	$26,876	$48,713
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion and amortization	76,195	64,093
Non-cash cost of land and improved development	13,441	5,647
Stock-based incentive compensation expense	4,178	3,821
Deferred income taxes	9,225	7,257
Amortization of losses from pension and postretirement plans	435	224
Gain on sale of large disposition of timberlands	(28,655)	—
Other	(10,632)	987
Changes in operating assets and liabilities, net of effects of merger with Pope Resources:
Receivables	(7,604)	(21,031)
Inventories	(3,714)	(994)
Accounts payable	4,895	5,558

All other operating activities	(2,040)	2,679
CASH PROVIDED BY OPERATING ACTIVITIES	82,600	116,954
INVESTING ACTIVITIES
Capital expenditures	(29,440)	(29,505)

Real estate development investments	(3,587)	(999)
Purchase of timberlands	(24,238)	(26,396)

Net proceeds from large disposition of timberlands	115,666	—

Net cash consideration for merger with Pope Resources	(231,068)	—
Other	1,880	(3,888)
CASH USED FOR INVESTING ACTIVITIES	(170,787)	(60,788)
FINANCING ACTIVITIES
Issuance of debt	320,000	—
Repayment of debt	(117,000)	—
Dividends paid on common stock	(72,204)	(71,107)
Distributions to noncontrolling interests in the Operating Partnership	(1,200)	—

Proceeds from the issuance of common shares under incentive stock plan	66	774


Repurchase of common shares	(1,572)	(4,241)
Debt issuance costs	(2,427)	—



Repurchase of common shares made under repurchase program	(3,152)	—

Distributions to noncontrolling interest in consolidated affiliates	(7,581)	(3,594)
Other	—	133
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES	114,930	(78,035)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	(1,450)	125
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Change in cash, cash equivalents and restricted cash	25,293	(21,744)
Balance, beginning of year	69,968	156,454
Balance, end of period	$95,261	$134,710
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period:
Interest (a)	$16,134	$14,377
Income taxes	1,083	705
Non-cash investing activity:
Capital assets purchased on account	2,217	3,407
Non-cash financing activity:
Equity consideration for merger with Pope Resources	$172,640	—
Redeemable Common Unit consideration for merger with Pope Resources	106,752	—



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

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

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

Balance, March 31, 2023		$18,163	$1,798,174	$24,194	$14,284	$1,854,815


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

Balance, June 30, 2019	$15,304	$1,515,057	($29,511)	$99,448	$1,600,298


	Three Months Ended June 30,			Six Months Ended June 30,
	2020	2019	2020	2019

Operating income	—	—	—	—
Net income attributable to Rayonier, L.P. (a)	($3,596)	($3,596)	($7,192)	($7,192)
Basic earnings per unit attributable to Rayonier, L.P.	($0.03)	($0.03)	($0.05)	($0.06)
Diluted earnings per unit attributable to Rayonier, L.P.	($0.03)	($0.03)	($0.05)	($0.06)


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

Net identifiable assets	$489,766	$420,536	$910,302
Less: noncontrolling interest	(3,307)	(369,074)	(372,381)
Total net assets acquired	$486,459	$51,462	$537,921


Six Months Ended	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Timber Funds	Real Estate	Trading	Elim.	Total
June 30, 2020
Pulpwood	$52,178	$6,290	$10,613	$328	—	$4,993	—	$74,402
Sawtimber	35,868	49,741	65,746	6,305	—	37,918	—	195,578
Hardwood	993	—	—	—	—	—	—	993
Total Timber Sales	89,039	56,031	76,359	6,633	—	42,911	—	270,973
License Revenue, Primarily From Hunting	8,926	192	140	10	—	—	—	9,268
Other Non-Timber/Carbon Revenue	1,784	1,022	2,809	4	—	—	—	5,619
Agency Fee Income	—	—	—	—	—	327	—	327
Total Non-Timber Sales	10,710	1,214	2,949	14	—	327	—	15,214
Improved Development	—	—	—	—	6,427	—	—	6,427
Unimproved Development	—	—	—	—	8,426	—	—	8,426
Rural	—	—	—	—	29,631	—	—	29,631
Timberlands & Non-Strategic	—	—	—	—	9,606	—	—	9,606
Deferred Revenue/Other (b)	—	—	—	—	(1,616)	—	—	(1,616)
Large Dispositions	—	—	—	—	116,027	—	—	116,027
Total Real Estate Sales	—	—	—	—	168,501	—	—	168,501

Revenue from Contracts with Customers	99,749	57,245	79,308	6,647	168,501	43,238	—	454,688
Lease Revenue	—	—	—	—	72	—	—	72
Intersegment	—	—	—	877	—	66	(943)	—
Total Revenue	$99,749	$57,245	$79,308	$7,524	$168,573	$43,304	($943)	$454,760

Six Months Ended	Southern Timber	Pacific Northwest Timber	New Zealand Timber	Timber Funds	Real Estate	Trading	Elim.	Total
June 30, 2019
Pulpwood	$46,109	$5,087	$17,349	—	—	$8,152	—	$76,697
Sawtimber	39,437	32,684	98,290	—	—	58,890	—	229,301
Hardwood	2,477	—	—	—	—	—	—	2,477
Total Timber Sales	88,023	37,771	115,639	—	—	67,042	—	308,475
License Revenue, Primarily from Hunting	8,420	205	195	—	—	—	—	8,820
Other Non-Timber/Carbon Revenue	10,600	1,115	3,423	—	—	—	—	15,138
Agency Fee Income	—	—	—	—	—	381	—	381
Total Non-Timber Sales	19,020	1,320	3,618	—	—	381	—	24,339
Improved Development	—	—	—	—	514	—	—	514
Unimproved Development	—	—	—	—	15,430	—	—	15,430
Rural (a)	—	—	—	—	26,313	—	—	26,313
Timberlands & Non-Strategic (a)	—	—	—	—	1,207	—	—	1,207
Deferred Revenue/Other (b)	—	—	—	—	68	—	—	68

Total Real Estate Sales	—	—	—	—	43,532	—	—	43,532

Revenue from Contracts with Customers	107,043	39,091	119,257	—	43,532	67,423	—	376,346
Intersegment	—	—	—	—	—	103	(103)	—
Total Revenue	$107,043	$39,091	$119,257	—	$43,532	$67,526	($103)	$376,346


		Year of Expiration
Lease obligations	Total	Remaining 2020	2021	2022	2023	2024	Thereafter
Operating lease liabilities	$178,880	$5,675	$9,003	$8,119	$8,051	$7,946	$140,086

Total Undiscounted Cash Flows	$178,880	$5,675	$9,003	$8,119	$8,051	$7,946	$140,086
Imputed interest	(82,154)
Balance at June 30, 2020	96,726
Less: Current portion	(8,952)
Non-current portion at June 30, 2020	$87,774


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


	Six Months Ended June 30,
Supplemental cash flow information related to leases:	2020		2019

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases	$1,138		$1,493
Investing cash flows from operating leases	2,301		3,340
Total cash flows from operating leases	$3,439		$4,833




Weighted-average remaining lease term in years - operating leases	28		28

Weighted-average discount rate - operating leases	5	%	5	%


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

Total lease income	$72	$72


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


	Three Months Ended June 30,			Six Months Ended June 30,
OPERATING INCOME (LOSS)	2020	2019	2020	2019
Southern Timber	$11,208	$14,741	$26,278	$36,261
Pacific Northwest Timber	(6,681)	(3,815)	(7,629)	(7,556)
New Zealand Timber	4,973	12,797	10,422	28,517
Timber Funds (a)	(1,892)	—	(1,892)	—
Real Estate (b)	24,848	15,468	51,622	25,495
Trading	102	(171)	83	309

Corporate and Other (c)	(20,872)	(7,627)	(28,646)	(13,113)
Total Operating Income	11,686	31,393	50,238	69,913
Unallocated interest expense and other	(8,241)	(6,865)	(16,666)	(13,242)
Total Income before Income Taxes	$3,445	$24,528	$33,572	$56,671


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


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


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


	March 31, 2023	December 31, 2022
Finished goods inventory
Real estate inventory (a)	$18,435	$17,909
Log inventory	11,394	5,347
Carbon unit inventory (b)	468	473
Total inventory	$30,297	$23,729


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


Components of Net Periodic Benefit (Credit) Cost	Income Statement Location	Pension		Postretirement
		Three Months Ended March 31,		Three Months Ended March 31,
		2023	2022	2023	2022
Service cost	Selling and general expenses	—	—	$1	$2
Interest cost	Interest and other miscellaneous income (expense), net	844	609	17	13
Expected return on plan assets (a)	Interest and other miscellaneous income (expense), net	(887)	(872)	—	—

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

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


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


Components of Net Periodic Benefit Cost (Credit)		Income Statement Location	Pension			Postretirement
				Three Months Ended June 30,					Three Months Ended June 30,
				2020	2019	2020			2019
Components of Net Periodic Benefit (Credit) Cost							Components of Net Periodic Benefit (Credit) Cost	Income Statement Location		Pension		Postretirement
										Three Months Ended March 31,		Three Months Ended March 31,
										2023	2022	2023	2022
Service cost	Service cost	Selling and general expenses	—	—	$2	$1	Service cost	Selling and general expenses		—	—	$1	$2
Interest cost	Interest cost	Interest and other miscellaneous income, net	677	799	13	13	Interest cost	Interest and other miscellaneous income (expense), net		844	609	17	13
Expected return on plan assets (a)	Expected return on plan assets (a)	Interest and other miscellaneous income, net	(876)	(777)	—	—	Expected return on plan assets (a)	Interest and other miscellaneous income (expense), net		(887)	(872)	—	—

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

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


	Foreign currency translation (loss) gains	Net investment hedges of New Zealand subsidiary	Cash flow hedges		Employee benefit plans		Total Rayonier, L.P.	Allocation to Operating Partnership	Total Rayonier Inc.
Balance as of December 31, 2021	$4,215	$1,321	($9,163)		($11,836)		($15,463)	($4,141)	($19,604)
Other comprehensive income (loss) before reclassifications	(22,282)	—	78,166	(a)	874		56,758	(1,323)	55,435
Amounts reclassified from accumulated other comprehensive income (loss)	—	—	(1,799)		753	(b)	(1,046)	1,028	(18)
Net other comprehensive income (loss)	(22,282)	—	76,367		1,627		55,712	(295)	55,417
Balance as of December 31, 2022	($18,067)	$1,321	$67,204		($10,209)		$40,249	($4,436)	$35,813
Other comprehensive (loss) income before reclassifications	(3,552)	—	(7,696)	(a)	—		(11,248)	231	(11,017)
Amounts reclassified from accumulated other comprehensive income	—	—	(4,808)		1	(b)	(4,807)	879	(3,928)
Net other comprehensive income (loss)	(3,552)	—	(12,504)		1		(16,055)	1,110	(14,945)
Balance as of March 31, 2023	($21,619)	$1,321	$54,700		($10,208)		$24,194	($3,326)	$20,868


Details about accumulated other comprehensive income (loss) components	Amount reclassified from accumulated other comprehensive income (loss)		Affected line item in the Income Statement
	March 31, 2023	March 31, 2022
Realized (gain) loss on foreign currency exchange contracts	($2,429)	$9	Other operating expense, net

Noncontrolling interests	559	(2)	Comprehensive loss (income) attributable to noncontrolling interests
Realized (gain) loss on interest rate contracts	(3,463)	2,670	Interest expense
Income tax effect from net gain (loss) on foreign currency contracts	525	(2)	Income tax expense


Net (gain) loss on cash flow hedges reclassified from accumulated other comprehensive income	($4,808)	$2,675