-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TFQ5XGqUdTmT1/08fXoeYmaa7k5eUxl/JhK9j7pp9ZKOQTN0P0p3gZpllPKojEw0 wdUlsPwOoBfDzWyBeBjF7g== 0000950123-96-002324.txt : 19960515 0000950123-96-002324.hdr.sgml : 19960515 ACCESSION NUMBER: 0000950123-96-002324 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RAYONIER TIMBERLANDS LP CENTRAL INDEX KEY: 0000778439 STANDARD INDUSTRIAL CLASSIFICATION: FORESTRY [0800] IRS NUMBER: 061148227 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08997 FILM NUMBER: 96564154 BUSINESS ADDRESS: STREET 1: 1177 SUMMER ST CITY: STAMFORD STATE: CT ZIP: 06904 BUSINESS PHONE: 2033487000 MAIL ADDRESS: STREET 1: 1177 SUMMER STREET CITY: STAMFORD STATE: CT ZIP: 06904 10-Q 1 FORM 10-Q / RAYONIER TIMBERLANDS 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ........... to ............ Commission File Number 1-8997 RAYONIER TIMBERLANDS, L.P. A Delaware Limited Partnership I.R.S. Employer Identification No. 06-1148227 1177 SUMMER STREET, STAMFORD, CT 06905-5529 (Principal Executive Office) Telephone Number: (203) 348-7000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. YES (x) NO ( ) As of May 1, 1996, there were 20,000,000 Class A Depositary Units of the Partnership outstanding, of which 14,940,000 Class A Depositary Units were owned by Rayonier. 2 RAYONIER TIMBERLANDS, L.P. TABLE OF CONTENTS PAGE ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Statements of Income for the Three Months Ended March 31, 1996 and 1995 1 Balance Sheets as of March 31, 1996 and December 31, 1995 2 Statements of Cash Flows for the Three Months Ended March 31, 1996 and 1995 3 Notes to Financial Statements 4 - 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 - 10 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 11 Signature 11 Exhibit Index 12 i 3 PART I. FINANCIAL INFORMATION Item 1. Financial Statements The following unaudited financial statements reflect, in the opinion of Rayonier Forest Resources Company, the managing general partner of Rayonier Timberlands, L.P., all adjustments (which include only normal recurring adjustments) necessary for a fair presentation of the results of operations, the financial position and the cash flows for the periods presented. For a full description of accounting policies, see Notes to Financial Statements in the 1995 Annual Report on Form 10-K. RAYONIER TIMBERLANDS, L.P. STATEMENTS OF INCOME (unaudited) (Thousands of dollars, except per unit information)
Three Months Ended March 31, --------------- 1996 1995 ---------- -------- SALES Timber sales Unaffiliated parties $39,882 $36,842 Rayonier 5,615 9,242 ------- ------ 45,497 46,084 Timberland sales 1,345 2,471 ------- ------ 46,842 48,555 ------ ------ COSTS AND EXPENSES Cost of timber sold Unaffiliated parties 5,678 5,042 Rayonier 814 1,253 ------- ------ 6,492 6,295 Cost of timberland sold 398 639 Forest management, overhead and general and administrative expenses 2,883 2,740 ------- ------- 9,773 9,674 ------- ------ OTHER OPERATING INCOME 344 223 -------- ---- OPERATING INCOME 37,413 39,104 ------ ------ OTHER INCOME AND DEDUCTIONS Primary Account interest income from Rayonier 951 1,224 Secondary Account interest expense to Rayonier (3,503) (3,136) Minority interest of General Partners in RTOC (349) (372) -------- ----- (2,901) (2,284) ------- ------- PARTNERSHIP INCOME $34,512 $36,820 ====== ====== INCOME PER PUBLICLY TRADED CLASS A UNIT* $ 1.78 $ 1.84 ====== ====== INCOME PER RAYONIER OWNED CLASS A UNIT* $ 1.78 $ 1.84 ====== ======
* Refer to calculations on page 6. 1 4 RAYONIER TIMBERLANDS, L.P. BALANCE SHEETS (unaudited) (Thousands of dollars) ASSETS
March 31, December 31, 1996 1995 --------- ----------- CURRENT ASSETS Cash $ 678 $ 282 Receivables, net 10,751 10,739 Inventories 520 584 Prepaid logging roads 3,595 3,946 Primary Account short-term investment notes of Rayonier 44,500 33,300 Trade and intercompany receivables from Rayonier and affiliates 4,148 4,278 ------ ------ Total current assets 64,192 53,129 LONG-TERM RECEIVABLES 2,336 1,333 PRIMARY ACCOUNT LONG-TERM INVESTMENT NOTES OF RAYONIER 5,000 5,000 FIXED ASSETS, NET 911 924 TIMBER, TIMBERLANDS AND LOGGING ROADS, LESS DEPLETION AND AMORTIZATION 277,956 276,094 -------- -------- $350,395 $336,480 ======== ======== LIABILITIES AND PARTNERS' CAPITAL CURRENT LIABILITIES Advance deposits $ 9,740 $ 6,420 Accounts payable 1,820 2,887 Accrued liabilities Taxes 2,023 1,738 All other 501 569 Current timber obligations 171 159 Advances from Rayonier 105 75 ---- --- Total current liabilities 14,360 11,848 SECONDARY ACCOUNT LONG-TERM NOTES PAYABLE TO RAYONIER 173,500 166,400 LONG-TERM TIMBER OBLIGATIONS 337 486 MINORITY INTEREST OF GENERAL PARTNERS IN RTOC 5,080 5,035 PARTNERS' CAPITAL General Partners 5,033 4,989 Limited Partners (20,000,000 Class A Depositary Units and 20,000,000 Class B Depositary Units issued and outstanding) 152,085 147,722 ------- ------- $350,395 $336,480 ======= =======
2 5 RAYONIER TIMBERLANDS, L.P. STATEMENTS OF CASH FLOWS (unaudited) (Thousands of dollars)
Three Months Ended March 31, -------------------------------------- 1996 1995 ------ ----- OPERATING ACTIVITIES Partnership income $ 34,512 $ 36,820 Non-cash items included in income Depletion, depreciation and amortization 2,000 2,475 Minority interest of General Partners in RTOC 349 372 Increase in receivables (12) (315) Decrease in prepaid logging roads 351 349 Increase in advance deposits 3,320 4,282 (Decrease) increase in accounts payable and accrued liabilities (850) 320 Other changes 224 93 ----- --- Cash provided by operating activities 39,894 44,396 ------ ------ INVESTING ACTIVITIES Capital expenditures less sales and retirements of $320 and $573 in 1996 and 1995 (3,849) (3,028) Increase in Primary Account investment notes of Rayonier (44,500) (47,700) Settlement of Primary Account investment notes of Rayonier 33,300 42,700 Increase in long-term receivables (1,003) (600) ------- ------- Cash used for investing activities (16,052) (8,628) ------- ------- FINANCING ACTIVITIES Decrease in timber obligations (137) (126) Increase in Secondary Account long-term notes payable to Rayonier 7,100 4,650 Partnership distributions (30,105) (40,000) Distributions to General Partners of RTOC (304) (405) ----- ------- Cash used for financing activities (23,446) (35,881) ------- --------- CASH Net increase (decrease) in cash 396 (113) Balance, beginning of year 282 150 ----- ------ Balance, end of period $ 678 $ 37 ===== ====== Supplemental disclosures of cash flow information Cash received for interest - Primary Account $ 951 $ 1,224 ======= ======= Cash paid for interest - Secondary Account $ 3,550 $ 3,184 ======= =======
3 6 RAYONIER TIMBERLANDS, L.P. NOTES TO FINANCIAL STATEMENTS (unaudited) (Thousands of dollars, except per unit information) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Rayonier Timberlands, L.P. (RTLP), a Delaware limited partnership, began operations on November 20, 1985 succeeding to substantially all of the U.S. timberlands business (the Timberlands) of Rayonier Inc. (Rayonier). Rayonier Forest Resources Company (RFR), a wholly owned subsidiary of Rayonier, is the Managing General Partner of RTLP and Rayonier is the Special General Partner of RTLP. RTLP operates through Rayonier Timberlands Operating Company, L.P. (RTOC), a Delaware limited partnership, in which RTLP holds a 99 percent limited partner interest and RFR and Rayonier together hold a 1 percent general partner interest. RFR is the Managing General Partner of RTOC and Rayonier is the Special General Partner of RTOC. In addition to its General Partners' interests, Rayonier is also a Limited Partner and owns 74.7 percent of RTLP's issued and outstanding Class A Units and 100 percent of RTLP's issued and outstanding Class B Units. The officers, directors and employees of Rayonier and RFR perform all management and business activities for RTLP and RTOC. RTLP and RTOC have no officers, directors or employees. ALLOCATIONS OF PARTNERSHIP INTEREST RTLP records all of its activities in two accounts, the Primary Account and the Secondary Account. The Class A unitholders, the Class B unitholders and the General Partners all participate in both accounts, but in different percentages. The participation in the revenues and expenses of RTLP is as follows: Primary Secondary Account Account ------- --------- Class A unitholders 95% 4% Class B unitholders 4% 95% General Partners 1% 1% ----- ----- Total 100% 100% ==== ==== In accordance with RTLP's Partnership Agreement, the Primary Account will be closed at the end of the Initial Term on December 31, 2000. Subsequent to that date, the Class A unitholders will participate in 4 percent of the revenues and expenses of RTLP and 4 percent of its cash flow after all Secondary Account debt has been repaid. NATURE OF BUSINESS OPERATIONS The Partnership is engaged in the timberlands business, which includes forestry management, reforestation, timber thinning and the marketing and sale of standing timber and logs from the Timberlands. The Partnership will occasionally purchase, for short-term resale, standing timber from third parties. The Partnership's business plan is to operate the Timberlands for sustained long-range harvest and to satisfy the Partnership's need to generate regular cash flow to fund its cash distribution policy, as determined from time to time by the Managing General Partner's Board of Directors. The Partnership negotiates and contracts for the sale of standing timber (stumpage) at fixed prices with buyers who generally cut and pay for the trees during the contract period. Current contracts usually entail a 20-percent deposit and/or performance bond and generally have a 12- to 24- month life. The Partnership conducts, or contracts for third parties to conduct, harvesting operations and sells logs harvested if the Managing General Partner believes that the timber cannot be sold as profitably as stumpage or that the tract in question is particularly environmentally sensitive. In addition, the Partnership may sell or exchange portions of the Timberlands and acquire additional timber properties for cash, additional Units or other consideration. 4 7 RAYONIER TIMBERLANDS, L.P. NOTES TO FINANCIAL STATEMENTS (continued) (unaudited) (Thousands of dollars, except per unit information) INVESTING AND FINANCING ACTIVITIES The excess of operating cash flow generated by the Primary Account over amounts distributed to unitholders is invested with Rayonier in accordance with the Partnership Agreement and is repayable on demand. Interest is due quarterly and the stated interest rates are at least equivalent to the rate Rayonier would be charged by an outside party for equivalent borrowings. The Partnership has expenditures that relate primarily to timber that will be harvested after the Initial Term, such as costs of site preparation, planting, reforestation and pre-commercial thinning, all of which are allocated to the Secondary Account of the Partnership. Rayonier funds these expenditures on behalf of the Partnership and, in accordance with the Partnership Agreement, RTLP incurs obligations to Rayonier that mature on January l, 2001. Under the terms of the Partnership Agreement, cash credited to the Primary Account may not be loaned or otherwise used for the benefit of the Secondary Account. Accordingly, the Partnership is not permitted to use proceeds from the Primary Account Investment Notes of Rayonier to repay the Secondary Account Long-Term Notes Payable to Rayonier. PARTNERS' CAPITAL An analysis of the activity in the Partners' Capital accounts of RTLP for the three months ended March 31, 1996 and 1995 is as follows:
Limited Partners General Partners Total ---------------- ---------------- ------ Balance, January 1, 1996 $ 147,722 $ 4,989 $ 152,711 Partnership income 34,167 345 34,512 Partnership distributions (29,804) (301) (30,105) -------- ----- -------- Balance, March 31, 1996 $ 152,085 $ 5,033 $ 157,118 ======== ====== ======== Balance, January 1, 1995 $ 173,785 $ 5,253 $ 179,038 Partnership income 36,452 368 36,820 Partnership distributions (39,600) (400) (40,000) -------- ----- -------- Balance, March 31, 1995 $ 170,637 $ 5,221 $ 175,858 ======== ====== ========
In addition to the RTLP distributions, RTOC distributed $304 and $405 to its General Partners during the first three months of 1996 and 1995, respectively. 5 8 RAYONIER TIMBERLANDS, L.P. NOTES TO FINANCIAL STATEMENTS (continued) (unaudited) (Thousands of dollars, except per unit information) 2. COMPUTATION OF INCOME PER CLASS A UNIT The Partnership Agreement provides for the allocation of Partnership income among the General and Limited Partners. The following tables present the computation of income per Class A Unit for the three months ended March 31, 1996 and 1995:
1996 1995 ------------------------------- -------------------------------- Primary Secondary Primary Secondary Account Account Account Account Timber and timberland sales $ 45,468 $ 1,374 $ 46,084 $ 2,471 Interest and other income - net 1,011 (3,219) 1,271 (2,960) Costs and expenses (8,577) (1,196) (8,187) (1,487) Interest of General Partners in RTOC (379) 30 (392) 20 ----- --- ----- --- PARTNERSHIP INCOME $ 37,523 $ (3,011) $ 38,776 $ (1,956) ====== ====== ====== ====== Publicly Rayonier Publicly Rayonier Traded Owned Traded Owned A Units A Units A Units A Units ---------- -------- -------- --------- Income for Class A Units 95% of Primary Account $ 9,019 $26,628 $ 9,320 $ 27,517 4% of Secondary Account (30) (90) (20) (58) ------ ---- ---- ---- Total income for Class A Units $ 8,989 $26,538 $ 9,300 $ 27,459 ===== ====== ===== ====== Units outstanding 5,060,000 14,940,000 5,060,000 14,940,000 ========= ========== ========= ========== INCOME PER CLASS A UNIT $ 1.78 $ 1.78 $ 1.84 $ 1.84 ====== ======= ===== =====
6 9 RAYONIER TIMBERLANDS, L.P. NOTES TO FINANCIAL STATEMENTS (continued) (unaudited) (Thousands of dollars, except per unit information) 3. OPERATING CASH FLOW ALLOCABLE TO CLASS A UNITS Operating cash flow allocable to Class A Units is calculated in accordance with the Partnership agreement, should not be considered as contradictory to information provided in the Statements of Cash Flows and is not intended as an alternative to income per Class A Unit as an indication of performance. Operating cash flow allocable to a Class A Unit is calculated by multiplying 99 percent (Limited Partners' interest in RTLP) of operating cash flow allocated to the Primary and Secondary Accounts by the respective 95 percent and 4 percent Class A Unit interest in those accounts. In determining operating cash flow, Partnership results are adjusted for non-cash costs and expenses without the effects of changes in working capital. The following tables present the calculations of operating cash flow allocable to Class A Units for the three months ended March 31, 1996 and 1995:
1996 1995 ------------------------------- ------------------------------ Primary Secondary Primary Secondary Account Account Account Account ------- ------- ------- --------- Timber and timberland sales $ 45,468 $ 1,374 $ 46,084 $ 2,471 Interest and other income, net 1,011 (3,219) 1,271 (2,960) Costs and expenses - other than non-cash items and the General Partners' interest in RTOC (6,633) (821) (5,762) (867) Capital expenditures (565) (3,604) (565) (3,036) General Partners' interest in RTOC (393) 63 (410) 44 ----- --- ----- --- OPERATING CASH FLOW $ 38,888 $ (6,207) $ 40,618 $ (4,348) ======= ====== ====== ====== Publicly Rayonier Publicly Rayonier Traded Owned Traded Owned A Units A Units A Units A Units -------- ------- --------- --------- Cash allocable to Class A Units 95% of Primary Account $ 9,347 $ 27,597 $ 9,763 $ 28,824 4% of Secondary Account (63) (185) (44) (130) ---- ----- ---- ----- OPERATING CASH FLOW ALLOCABLE TO CLASS A UNITS $ 9,284 $ 27,412 $ 9,719 $ 28,694 ====== ======= ===== ======= Units outstanding 5,060,000 14,940,000 5,060,000 14,940,000 ========= ========== ========= ========== Primary Account cash flow per unit $ 1.84 $ 1.84 $ 1.93 $ 1.93 Secondary Account cash flow per unit (.01) (.01) (.01) (.01) ----- ----- ----- ----- OPERATING CASH FLOW PER CLASS A UNIT $ 1.83 $ 1.83 $ 1.92 $ 1.92 ===== ===== ===== =====
7 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Most of the timber harvested from Partnership lands in the Northwest is resold by the Partnership's customers into log export markets, primarily in Japan, Korea and China. The Partnership's contracts in this region generally provide for payment of a fixed price per unit of volume or weight, by species, with harvesting required to be completed within contract periods of up to 24 months. In the Southeast, pulpwood timber is sold by the Partnership's customers for the production of pulp and paper with sawlog timber sold to lumber and plywood manufacturers. The Partnership's contracts in this region generally provide for payment of a fixed price per unit of weight, with harvesting required to be completed within contract periods of up to 18 months. The following table summarizes the sales, operating income, partnership income and selected operating statistics of the Partnership, for the periods indicated, by United States geographic region (thousands):
Three Months Ended March 31, --------------- 1996 1995 ---- ---- TIMBER SALES Northwest $31,617 $25,685 Southeast 13,880 20,399 ------ ------ 45,497 46,084 ------ ------ TIMBERLAND SALES Northwest - - Southeast 1,345 2,471 ------- ------- 1,345 2,471 ------- ------- TOTAL SALES $46,842 $48,555 ====== ====== OPERATING INCOME Northwest $25,868 $21,249 Southeast 12,036 18,278 Corporate and other (491) (423) ------- ------- $37,413 $39,104 ====== ====== PARTNERSHIP INCOME $34,512 $36,820 ====== ====== SELECTED OPERATING STATISTICS Northwest harvest volumes Stumpage (thousands of MBF) 45.1 37.6 Delivered logs (thousands of MBF) 15.2 8.5 ----- ----- 60.3 46.1 ==== ==== Southeast harvest volumes Pine (thousands of tons) 456.6 590.3 Hardwood (thousands of tons) 56.0 41.0 ------ ----- 512.6 631.3 ===== =====
Sales for the first quarter of 1996 of $46.8 million were $1.7 million, 4 percent lower than last year's first quarter. Timber sales were $45.5 million, down $0.6 million primarily as a result of reduced prices caused by softening demand from the pulp and paper industry. Timberland sales of $1.3 million were down $1.1 million. Partnership income was $34.5 million or $1.78 per Class A Unit, down $2.3 million, or 6 cents per Class A Unit, from first quarter 1995 results. Operating cash flow allocable to each Class A Unit was $1.83, down 9 cents per Class A Unit. 8 11 In the Northwest region, unfavorable market conditions throughout 1995 caused many customers to defer harvesting until late 1995 and into 1996. The combined stumpage and delivered log volume was 31 percent above the 1995 first quarter harvest. However, this increase was partially offset by a 6 percent decline in prices from the prior year. As a result, sales increased $5.9 million, or 23 percent, from the first quarter of 1995 to $31.6 million and operating income increased $4.6 million, or 22 percent, to $25.9 million. In the Southeast region, first quarter sales declined $7.6 million, or 33 percent, from the first quarter of 1995 to $15.2 million and operating income declined $6.2 million, or 34 percent, to $12.0 million, reflecting lower volume and prices. Overall harvest volume declined 19 percent and prices declined 16 percent from the 1995 first quarter. The declines were due to softening demand from the pulp and paper industry as mills took market downtime. Interest income, earned mainly from the Primary Account's investment notes of Rayonier, decreased $0.3 million to $1.0 million in 1996 due to an overall lower average balance of investment notes of Rayonier and lower average interest rates. Interest expense, on increased loans and advances to the Secondary Account by Rayonier, rose $0.4 million to $3.5 million. FUTURE OPERATIONS For the first three months of 1996, the harvest levels in the Northwest and the Southeast represented approximately 36 percent and 25 percent, respectively, of the current projection of the 1996 harvests whereas in the first three months of 1995 the harvest levels in the Northwest and the Southeast were 26 percent and 31 percent, respectively, of the actual full year harvests. Contract terms allow customers to harvest their commitments over various time periods, and therefore, volume currently under contract may not be fully cut within this fiscal year. As of March 31, 1996, volume representing approximately 88 percent of the projected 1996 harvest of stumpage and pine in both regions had been cut or committed under contract. As of March 31, 1995, 93 percent of the final 1995 harvest in both regions had been cut or committed. In the Northwest and Southeast regions, average prices on outstanding contracts as of March 31, 1996 were approximately 16 percent and 12 percent, respectively, below average prices realized during 1995. Therefore, the Partnership does not expect full year 1996 earnings or cash flow from operations to be as strong as in the prior year. At March 31, 1996, Rayonier held contracts representing approximately 4 percent and 1 percent of the uncut volume under contract in the Northwest and Southeast regions, respectively. In addition, three customers under common ownership and one additional unrelated customer held contracts representing approximately 26 percent and 13 percent, respectively, of the uncut volume under contract in the Northwest. One unrelated customer held contracts representing approximately 12 percent of the uncut volume under contract in the Southeast. These five customers are not affiliated with the Partnership. LIQUIDITY AND CASH FLOW As of March 31, 1996, the Partnership was due trade and intercompany receivables from Rayonier and affiliates of $4.1 million. In addition, the Primary Account of the Partnership held $44.5 million of short-term investment notes of Rayonier and an additional $5.0 million of long-term investment notes of Rayonier resulting from the cumulative net cash flow, since inception, of the Primary Account after distributions to unitholders. The Partnership may redeem the investment notes at any time to fund Partnership working capital requirements, capital expenditures and reserves. The Secondary Account of the Partnership had total outstanding debt of $174.0 million at March 31, 1996, including long-term notes payable to Rayonier of $173.5 million that mainly represent the obligations incurred as a result of Secondary Account advances by Rayonier. Capital expenditures for the three months ended March 31, 1996 and 1995 representing reforestation, capitalized lease payments, property taxes and other improvements to the land and timber assets were $4.2 million and $3.6 million, respectively. Funding of future capital requirements is expected to continue from Rayonier. On March 31, 1996 and 1995, the Partnership made quarterly distributions of $28.6 million ($1.43 per Unit) and $38.0 million ($1.90 per Unit), respectively, to all outstanding Class A unitholders. Quarterly distributions of $1.5 million and $2.0 million were also made to Class B unitholders and to the General Partners in the first quarter of 1996 and 1995, respectively. 9 12 The Board of Directors of the Managing General Partner determines the amount of quarterly distributions that are made to Class A unitholders from cash available from operations after provision for working capital, capital expenditures, asset acquisitions and other reserves. The Board intends to have distributions approximate actual Partnership results each year by keeping the distribution relatively constant in the second, third and fourth quarters and by making an adjustment in the first quarter of the following year to bring the cumulative distribution in line with Partnership results. Since actual Partnership results vary each year, the level of total distributions in each year will also vary. Because the Partnership does not expect full year 1996 earnings or cash flow from operations to be as strong as in the prior year, distributions for the remainder of the year and the first quarter of 1997 are expected to total less than $6.17, which was the Partnership's cash flow per Class A Unit in 1995. WHEN THE INITIAL TERM ENDS ON DECEMBER 31, 2000, THE PRIMARY ACCOUNT OF THE PARTNERSHIP WILL BE CLOSED BUT THERE WILL NOT BE ANY REDEMPTION OF THE PARTNERS' CAPITAL ACCOUNTS. THE INTEREST OF CLASS A UNITHOLDERS IN THE PARTNERSHIP'S FUTURE REVENUES, EXPENSES AND CASH FLOWS WILL THEN DECREASE FROM 95 PERCENT TO 4 PERCENT. ON A PRO FORMA BASIS, USING 1995 RESULTS AS AN EXAMPLE, CASH FLOW ALLOCABLE PER CLASS A UNIT WOULD DECLINE FROM $6.17 TO APPROXIMATELY 22 CENTS. IN ADDITION, THERE WILL BE SUBSTANTIAL SECONDARY ACCOUNT DEBT THAT WILL MATURE ON JANUARY 1, 2001. THIS DEBT (INCURRED TO FUND LONG-TERM INVESTMENT IN SUCH AREAS AS REFORESTATION AND SILVICULTURAL ACTIVITIES INCLUDING ACCRUED INTEREST) IS EXPECTED TO AMOUNT TO OVER $350 MILLION, MORE THAN THREE TIMES 1995'S NET OPERATING CASH FLOW. IN ACCORDANCE WITH THE PARTNERSHIP AGREEMENT, ALL SECONDARY ACCOUNT DEBT MUST BE REPAID BEFORE ANY DISTRIBUTION OF PARTNERSHIP CASH FLOW RESUMES. AS A RESULT, IT IS EXPECTED THAT THE MARKET PRICE OF CLASS A UNITS SHOULD BEGIN TO DECLINE SUBSTANTIALLY SOMETIME PRIOR TO DECEMBER 31, 2000. 10 13 Part II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) See Exhibit Index (b) Rayonier Timberlands, L.P. did not file any Report on Form 8-K during the quarter covered by this report. SIGNATURE Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. RAYONIER TIMBERLANDS, L.P. (A Delaware Limited Partnership) By: RAYONIER FOREST RESOURCES COMPANY Managing General Partner By: KENNETH P. JANETTE ------------------------------ Kenneth P. Janette Vice President and Corporate Controller (Chief Accounting Officer) May 14, 1996 11 14 EXHIBIT INDEX 2 Plan of acquisition, reorganization, arrangement, None liquidation, or succession 3(a) Partnership Agreement of the Partnership No amendments 3(b) Forms of Class A Certificate of Limited Partnership No amendments and Class B Certificate of Limited Partnership of the Partnership 3(c) Partnership Agreement of Operating Partnership No amendments 3(d) Forms of Class A Certificate of Limited Partnership No amendments and Class B Certificate of Limited Partnership of the Operating Partnership 4 Instruments defining the rights of security holders, None including indentures 10 Material contracts None 11 Statement re computation of per share earnings Not applicable 15 Letter re unaudited interim financial information None 18 Letter re change in accounting principles Not applicable 19 Report furnished to security holders None 22 Published report regarding matters submitted None to vote of security holders 23 Consents of experts and counsel None 24 Power of attorney None 27 Financial data schedule Filed herewith 99 Additional exhibits None
12 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 678 0 10,751 0 520 64,192 1,855 944 350,395 14,360 173,500 0 0 0 157,118 350,395 46,842 46,842 6,890 6,890 2,888 0 2,552 34,512 0 34,512 0 0 0 34,512 1.78 1.78
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