CONSOLIDATING FINANCIAL STATEMENTS

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

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

The subsidiary guarantors, Rayonier Operating Company LLC (“ROC”) and Rayonier TRS Holdings Inc., are wholly-owned by the parent company, Rayonier Inc. The notes are fully and unconditionally guaranteed on a joint and several basis by the guarantor subsidiaries.



	CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the Year Ended December 31, 2016
	Rayonier Inc.(Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments			Total Consolidated
SALES	—			—				$788,278		—				$788,278
Costs and Expenses
Cost of sales	—			—			524,707			—			524,707
Selling and general expenses	—			15,253			27,532			—			42,785
Other operating income, net	—			448			(35,439		)	—			(34,991		)
	—			15,701			516,800			—			532,501
OPERATING (LOSS) INCOME	—			(15,701		)	271,478			—			255,777
Interest expense	(12,555		)	(16,775		)	(2,915		)	—			(32,245		)
Interest and miscellaneous income (expense), net	8,613			2,750			(12,061		)	—			(698		)
Equity in income from subsidiaries	215,914			246,193			—			(462,107		)	—
INCOME BEFORE INCOME TAXES	211,972			216,467			256,502			(462,107		)	222,834
Income tax benefit (expense)	—			(553		)	(4,511		)	—			(5,064		)
NET INCOME	211,972			215,914			251,991			(462,107		)	217,770
Less: Net income attributable to noncontrolling interest	—			—			5,798			—			5,798
NET INCOME ATTRIBUTABLE TO RAYONIER INC.	211,972			215,914			246,193			(462,107		)	211,972
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment	2,780			(4,606		)	10,930			(2,782		)	6,322
New Zealand joint venture cash flow hedges	22,607			21,422			1,401			(22,608		)	22,822
Actuarial change and amortization of pension and postretirement plan liabilities	5,533			5,533			—			(5,533		)	5,533
Total other comprehensive income	30,920			22,349			12,331			(30,923		)	34,677
COMPREHENSIVE INCOME	242,892			238,263			264,322			(493,030		)	252,447
Less: Comprehensive income attributable to noncontrolling interest	—			—			9,555			—			9,555
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.		$242,892			$238,263			$254,767			($493,030	)		$242,892



	CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the Year Ended December 31, 2015
	Rayonier Inc.(Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments			Total Consolidated
SALES	—			—				$544,874		—				$544,874
Costs and Expenses
Cost of sales	—			—			441,099			—			441,099
Selling and general expenses	—			20,468			25,282			—			45,750
Other operating expense (income), net	—			(404		)	(19,355		)	—			(19,759		)
	—			20,064			447,026			—			467,090
OPERATING (LOSS) INCOME	—			(20,064		)	97,848			—			77,784
Interest expense	(12,703		)	(9,135		)	(9,861		)	—			(31,699		)
Interest and miscellaneous income (expense), net	7,789			2,612			(13,404		)	—			(3,003		)
Equity in income from subsidiaries	51,079			75,532			—			(126,611		)	—
INCOME BEFORE INCOME TAXES	46,165			48,945			74,583			(126,611		)	43,082
Income tax benefit (expense)	—			2,134			(1,275		)	—			859
NET INCOME	46,165			51,079			73,308			(126,611		)	43,941
Less: Net loss attributable to noncontrolling interest	—			—			(2,224		)	—			(2,224		)
NET INCOME ATTRIBUTABLE TO RAYONIER INC.	46,165			51,079			75,532			(126,611		)	46,165
OTHER COMPREHENSIVE (LOSS) INCOME
Foreign currency translation adjustment	(21,567		)	7,922			(40,373		)	21,567			(32,451		)
New Zealand joint venture cash flow hedges	(10,042		)	(10,195		)	234			10,042			(9,961		)
Actuarial change and amortization of pension and postretirement plan liabilities	2,933			2,933			—			(2,933		)	2,933
Total other comprehensive (loss) income	(28,676		)	660			(40,139		)	28,676			(39,479		)
COMPREHENSIVE INCOME	17,489			51,739			33,169			(97,935		)	4,462
Less: Comprehensive loss attributable to noncontrolling interest	—			—			(13,027		)	—			(13,027		)
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.		$17,489			$51,739			$46,196			($97,935	)		$17,489



	CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the Year Ended December 31, 2014
	Rayonier Inc.(Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments			Total Consolidated
SALES	—			—				$603,521		—				$603,521
Costs and Expenses
Cost of sales	—			—			483,860			—			483,860
Selling and general expenses	—			14,578			33,305			—			47,883
Other operating (income) expense, net	—			3,275			(29,786		)	—			(26,511		)
	—			17,853			487,379			—			505,232
OPERATING INCOME (LOSS)	—			(17,853		)	116,142			—			98,289
Interest expense	(13,247		)	(23,571		)	(7,430		)	—			(44,248		)
Interest and miscellaneous income (expense), net	9,186			(3,100		)	(15,285		)	—			(9,199		)
Equity in income from subsidiaries	103,398			138,719			—			(242,117		)	—
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	99,337			94,195			93,427			(242,117		)	44,842
Income tax benefit	—			9,203			398			—			9,601
INCOME FROM CONTINUING OPERATIONS	99,337			103,398			93,825			(242,117		)	54,443
DISCONTINUED OPERATIONS, NET
Income from discontinued operations, net of income tax	—			—			43,403			—			43,403
NET INCOME	99,337			103,398			137,228			(242,117		)	97,846
Less: Net loss attributable to noncontrolling interest	—			—			(1,491		)	—			(1,491		)
NET INCOME ATTRIBUTABLE TO RAYONIER INC.	99,337			103,398			138,719			(242,117		)	99,337
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment	(11,525		)	(11,527		)	(15,847		)	23,052			(15,847		)
New Zealand joint venture cash flow hedges	(1,206		)	(1,206		)	(1,855		)	2,412			(1,855		)
Actuarial change and amortization of pension and postretirement plan liabilities	54,046			54,046			88,174			(142,220		)	54,046
Total other comprehensive income	41,315			41,313			70,472			(116,756		)	36,344
COMPREHENSIVE INCOME	140,652			144,711			207,700			(358,873		)	134,190
Less: Comprehensive loss attributable to noncontrolling interest	—			—			(6,462		)	—			(6,462		)
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC.		$140,652			$144,711			$214,162			($358,873	)		$140,652



	CONDENSED CONSOLIDATING BALANCE SHEETS As of December 31, 2016
	Rayonier Inc.(Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments			Total Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$21,453			$9,461			$54,995		—				$85,909
Accounts receivable, less allowance for doubtful accounts	—			2,991			17,673			—			20,664
Inventory	—			—			21,379			—			21,379
Prepaid logging roads	—			—			10,228			—			10,228
Prepaid expenses	—			427			1,152			—			1,579
Assets held for sale	—			—			23,171			—			23,171
Other current assets	—			236			1,638			—			1,874
Total current assets	21,453			13,115			130,236			—			164,804
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	—			—			2,291,015			—			2,291,015
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT COSTS	—			—			70,374			—			70,374
NET PROPERTY, PLANT AND EQUIPMENT	—			177			13,857			—			14,034
RESTRICTED DEPOSITS	—			—			71,708			—			71,708
INVESTMENT IN SUBSIDIARIES	1,422,081			2,671,428			—			(4,093,509		)	—
INTERCOMPANY RECEIVABLE	26,472			(611,571		)	585,099			—			—
OTHER ASSETS	2			46,846			26,977			—			73,825
TOTAL ASSETS		$1,470,008			$2,119,995			$3,189,266			($4,093,509	)		$2,685,760
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	—				$1,194			$21,143		—				$22,337
Current maturities of long-term debt	31,676			—			—			—			31,676
Accrued taxes	—			(111		)	2,768			—			2,657
Accrued payroll and benefits	—			5,013			4,264			—			9,277
Accrued interest	3,047			2,040			253			—			5,340
Other current liabilities	—			165			20,514			—			20,679
Total current liabilities	34,723			8,301			48,942			—			91,966
LONG-TERM DEBT	291,390			663,343			75,472			—			1,030,205
PENSION AND OTHER POSTRETIREMENT BENEFITS	—			32,541			(685		)	—			31,856
OTHER NON-CURRENT LIABILITIES	—			12,690			22,291			—			34,981
INTERCOMPANY PAYABLE	(267,715		)	(18,961		)	286,676			—			—
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY	1,411,610			1,422,081			2,671,428			(4,093,509		)	1,411,610
Noncontrolling interest	—			—			85,142			—			85,142
TOTAL SHAREHOLDERS’ EQUITY	1,411,610			1,422,081			2,756,570			(4,093,509		)	1,496,752
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$1,470,008			$2,119,995			$3,189,266			($4,093,509	)		$2,685,760



	CONDENSED CONSOLIDATING BALANCE SHEETS As of December 31, 2015
	Rayonier Inc.(Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments			Total Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$2,472			$13,217			$36,088		—				$51,777
Accounts receivable, less allowance for doubtful accounts	—			1,870			18,352			—			20,222
Inventory	—			—			15,351			—			15,351
Prepaid logging roads	—			—			10,563			—			10,563
Prepaid expenses	—			443			1,648			—			2,091
Other current assets	—			4,876			805			—			5,681
Total current assets	2,472			20,406			82,807			—			105,685
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION	—			—			2,066,780			—			2,066,780
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT COSTS	—			—			65,450			—			65,450
NET PROPERTY, PLANT AND EQUIPMENT	—			330			6,412			—			6,742
RESTRICTED DEPOSITS	—			—			23,525			—			23,525
INVESTMENT IN SUBSIDIARIES	1,321,681			2,212,405			—			(3,534,086		)	—
INTERCOMPANY RECEIVABLES	34,567			(610,450		)	575,883			—			—
OTHER ASSETS	3			18,718			29,036			(1		)	47,756
TOTAL ASSETS		$1,358,723			$1,641,409			$2,849,892			($3,534,086	)		$2,315,938
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	609				$1,463			$19,407		—				$21,479
Current maturities of long-term debt	—			—			—			—			—
Accrued taxes	—			(10		)	3,695			—			3,685
Accrued payroll and benefits	—			3,594			3,443			—			7,037
Accrued interest	3,047			666			2,440			—			6,153
Other current liabilities	—			262			20,841			—			21,103
Total current liabilities	3,656			5,975			49,826			—			59,457
LONG-TERM DEBT	322,697			280,977			226,879			1			830,554
PENSION AND OTHER POSTRETIREMENT BENEFITS	—			34,822			(685		)	—			34,137
OTHER NON-CURRENT LIABILITIES	—			16,914			13,136			—			30,050
INTERCOMPANY PAYABLE	(255,715		)	(18,960		)	274,675			—			—
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY	1,288,084			1,321,681			2,212,405			(3,534,086		)	1,288,084
Noncontrolling interest	—			—			73,656			—			73,656
TOTAL SHAREHOLDERS’ EQUITY	1,288,084			1,321,681			2,286,061			(3,534,086		)	1,361,740
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$1,358,723			$1,641,409			$2,849,892			($3,534,086	)		$2,315,938



	CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS For the Year Ended December 31, 2016
	Rayonier Inc.(Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments		Total Consolidated
CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES		($7,480	)		$113,775			$97,506		—			$203,801
INVESTING ACTIVITIES
Capital expenditures	—			—			(58,723		)	—		(58,723		)
Real estate development investments	—			—			(8,746		)	—		(8,746		)
Purchase of timberlands	—			—			(366,481		)	—		(366,481		)
Assets purchased in business acquisition	—			—			(887		)	—		(887		)
Net proceeds from Large Dispositions	—			—			203,862			—		203,862
Rayonier office building under construction	—			—			(6,307		)	—		(6,307		)
Change in restricted cash	—			—			(48,184		)	—		(48,184		)
Investment in subsidiaries	—			(293,820		)	—			293,820		—
Other	—			—			2,311			—		2,311
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES	—			(293,820		)	(283,155		)	293,820		(283,155		)
FINANCING ACTIVITIES
Issuance of debt	—			548,000			147,916			—		695,916
Repayment of debt	—			(140,000		)	(318,415		)	—		(458,415		)
Dividends paid	(122,845		)	—			—			—		(122,845		)
Proceeds from the issuance of common shares	1,576			—			—			—		1,576
Proceeds from repurchase of common shares	(690		)	—			—			—		(690		)
Debt issuance costs	—			(818		)	—			—		(818		)
Issuance of intercompany notes	(12,000		)	—			12,000			—		—
Intercompany distributions	160,597			(230,893		)	364,116			(293,820	)	—
Other	(177		)	—			(124		)	—		(301		)
CASH USED FOR FINANCING ACTIVITIES	26,461			176,289			205,493			(293,820	)	114,423
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			(937		)	—		(937		)
CASH AND CASH EQUIVALENTS
Change in cash and cash equivalents	18,981			(3,756		)	18,907			—		34,132
Balance, beginning of year	2,472			13,217			36,088			—		51,777
Balance, end of year		$21,453			$9,461			$54,995		—			$85,909



	CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS For the Year Ended December 31, 2015
	Rayonier Inc.(Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments		Total Consolidated
CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES		($4,890	)		($21,421	)		$203,475		—			$177,164
INVESTING ACTIVITIES
Capital expenditures	—			(78		)	(57,215		)	—		(57,293		)
Real estate development investments	—			—			(2,676		)	—		(2,676		)
Purchase of timberlands	—			—			(98,409		)	—		(98,409		)
Proceeds from settlement of foreign currency derivative	—			—			2,804			—		2,804
Rayonier office building under construction	—			—			(908		)	—		(908		)
Change in restricted cash	—			—			(16,836		)	—		(16,836		)
Investment in subsidiaries	—			126,242			—			(126,242	)	—
Other	—			—			7,010			(1	)	7,009
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES	—			126,164			(166,230		)	(126,243	)	(166,309		)
FINANCING ACTIVITIES
Issuance of debt	61,000			353,000			58,558			—		472,558
Repayment of debt	(61,000		)	(232,973		)	(70,429		)	—		(364,402		)
Dividends paid	(124,936		)	—			—			—		(124,936		)
Proceeds from the issuance of common shares	2,117			—			—			—		2,117
Proceeds from repurchase of common shares	(100,000		)	—			—			—		(100,000		)
Debt issuance costs	—			(1,678		)	—			—		(1,678		)
Issuance of intercompany notes	(35,500		)	—			35,500			—		—
Intercompany distributions	163,585			(217,980		)	(71,847		)	126,242		—
Other	(122		)	—			—			—		(122		)
CASH USED FOR FINANCING ACTIVITIES	(94,856		)	(99,631		)	(48,218		)	126,242		(116,463		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			(4,173		)	—		(4,173		)
CASH AND CASH EQUIVALENTS
Change in cash and cash equivalents	(99,746		)	5,112			(15,147		)	—		(109,781		)
Balance, beginning of year	102,218			8,105			51,235			—		161,558
Balance, end of year		$2,472			$13,217			$36,088		—			$51,777



	CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS For the Year Ended December 31, 2014
	Rayonier Inc.(Parent Issuer)			Subsidiary Guarantors			Non- guarantors			Consolidating Adjustments			Total Consolidated
CASH PROVIDED BY OPERATING ACTIVITIES		$269,653			$293,193			$47,727			($290,157	)		$320,416
INVESTING ACTIVITIES
Capital expenditures	—			(400		)	(63,313		)	—			(63,713		)
Capital expenditures from discontinued operations	—			—			(60,955		)	—			(60,955		)
Real estate development investments	—			—			(3,674		)	—			(3,674		)
Purchase of timberlands	—			—			(130,896		)	—			(130,896		)
Change in restricted cash	—			—			62,256			—			62,256
Investment in subsidiaries	—			798,875			—			(798,875		)	—
Other	—			—			306			—			306
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES	—			798,475			(196,276		)	(798,875		)	(196,676		)
FINANCING ACTIVITIES
Issuance of debt	—			201,000			1,225,464			—			1,426,464
Repayment of debt	—			(1,002,500		)	(287,137		)	—			(1,289,637		)
Dividends paid	(257,517		)	—			—			—			(257,517		)
Proceeds from the issuance of common shares	5,579			—			—			—			5,579
Proceeds from repurchase of common shares	(1,858		)	—			—			—			(1,858		)
Debt issuance costs	—			—			(12,380		)	—			(12,380		)
Net cash disbursed upon spin-off of Performance Fibers business	(31,420		)	—			—			—			(31,420		)
Issuance of intercompany notes	(12,400		)	—			12,400			—			—
Intercompany distributions	—			(293,086		)	(795,946		)	1,089,032			—
Other	—			—			(680		)	—			(680		)
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES	(297,616		)	(1,094,586		)	141,721			1,089,032			(161,449		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			(377		)	—			(377		)
CASH AND CASH EQUIVALENTS
Change in cash and cash equivalents	(27,963		)	(2,918		)	(7,205		)	—			(38,086		)
Balance, beginning of year	130,181			11,023			58,440			—			199,644
Balance, end of year		$102,218			$8,105			$51,235		—				$161,558