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Earnings, Distributions And Other News
Rayonier Timberlands, L.P. Announces Full Year 1996 Results
STAMFORD, CONNECTICUT, January 27, 1997 - Rayonier Forest Resources Company, the managing general partner of Rayonier Timberlands, L.P. (NYSE:LOG), today reported full year 1996 Partnership income of $99.5 million, or $5.43 per Class A Unit, $13.9 million, or 48 cents per Class A Unit, lower than 1995 results. Operating cash flow allocable to each Class A Unit was $5.69, or 48 cents per Class A Unit lower than last year. Sales for 1996 were $147.9 million, a decline of $12.4 million from the prior year.For the fourth quarter, Partnership income was $21.8 million, $1.22 per Class A Unit, but $12.7 million, or 53 cents per Class A Unit, lower than 1995. Operating cash flow allocable to each Class A Unit was $1.29, or 53 cents below prior year. In the Northwest region, fourth quarter harvest volume was 26 percent lower than the prior year when unfavorable market conditions caused many customers to defer harvesting until late 1995 when their contracts expired. Realized prices in the Northwest declined 17 percent from prior year levels reflecting the effect of weak export and domestic log markets 12-18 months ago when the related stumpage contracts were initiated. Pine prices in the Southeast declined 12 percent reflecting the weak demand in pulp and paper markets that has been prevalent the past year. As a result, fourth quarter sales were $35.1 million, $13.7 million below last year.
Full year stumpage and delivered log volume in the Northwest was 10 percent higher than the prior year. Unfavorable market conditions throughout 1995 had caused many customers to defer harvesting until late 1995 and into 1996, and the release of previously restricted environmentally sensitive tracts temporarily allowed more volume to come to market. The volume increase was offset by a 13 percent decline in prices from prior year levels due to soft export markets. As a result, sales for the Northwest region decreased $3.5 million from 1995 to $91.7 million and operating income declined $5.3 million to $68.1 million.
Full year sales in the Southeast region decreased $8.9 million from 1995 to $56.2 million and operating income declined $6.8 million to $44.8 million. Realized pine prices declined 12 percent from the prior year due to weak demand in pulp and paper markets. Overall harvest volume was relatively flat and in line with harvesting targets, as higher pine volume was offset by lower hardwood volume. Timberland sales decreased $3.7 million.
At year-end approximately 36 percent of the 1997 expected Northwest stumpage harvest was under contract at prices 16 percent below those realized overall in 1996. Harvest patterns in 1997 are expected to return to normal with volume lower than the prior year and realized prices continuing their declining trend before flattening out later in the year. In the Southeast, 31 percent of the targeted pine harvest is under contract, with pricing approximating the 1996 average. Harvest patterns in the region should remain stable with pricing slightly favorable due to the continuation of a strong lumber market. At this point, however, the anticipated Northwest results will likely cause overall Partnership income in 1997 to be less than in 1996.
Rayonier Forest Resources continues to caution unitholders that when the Initial Term of the Partnership ends on December 31, 2000, the Primary Account of the Partnership will be closed but the unitholders will not be entitled to have their Partnership capital accounts redeemed until the Partnership formally ends in the year 2035. After December 31, 2000, the interest of Class A unitholders in the Partnership's future revenues, expenses and cash flows will decrease from 95 percent to 4 percent. On a pro forma basis, using 1996 results as an example, cash allocable per Class A Unit would decline from $5.69 to approximately 24 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 exceed $350 million, more than three times 1996'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 be decreasing substantially as December 31, 2000 approaches.
Rayonier Timberlands, L.P. grows and sells timber in the U.S. on 778,000 acres in the Southeast and on 369,000 acres in the Northwest. Rayonier Inc., the Special General Partner, owns 74.7 percent of the 20 million outstanding Class A Units of Rayonier Timberlands, L.P. The balance is publicly traded on the NYSE. For further information, visit the Partnership web site at www.rayoniertimberlandslp.com.
Editor's Note: Earnings for Rayonier Inc. (NYSE:RYN), the parent company of Rayonier Timberlands, L.P., were released earlier today.
RAYONIER TIMBERLANDS, L.P. FINANCIAL HIGHLIGHTS DECEMBER 31, 1996 (unaudited) (thousands of dollars, except per unit information) | ||||||||
Three Months | Year Ended | |||||||
Ended December 31, | December 31, | |||||||
1996 | 1995 | 1996 | 1995 | |||||
Sales | $ 35,133 | $ 48,819 | $ 147,906 | $ 160,268 | ||||
Partnership income | $ 21,807 | $ 34,475 | $ 99,549 | $ 113,462 | ||||
Income per Class A Unit | $ 1.22 | $ 1.75 | $ 5.43 | $ 5.91 | ||||
Operating cash flow allocable | ||||||||
to a Class A Unit | $ 1.29 | $ 1.82 | $ 5.69 | $ 6.17 | ||||
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RAYONIER TIMBERLANDS, L.P. BUSINESS SEGMENT INFORMATION DECEMBER 31, 1996 (unaudited) (thousands of dollars, except per unit information) | ||||||||
Three Months | Year Ended | |||||||
Ended December 31, | December 31, | |||||||
1996 | 1995 | 1996 | 1995 | |||||
Timber and timberland sales | ||||||||
Northwest | $ 19,220 | $ 31,099 | $ 91,691 | $ 95,168 | ||||
Southeast | 15,913 | 17,720 | 56,215 | 65,100 | ||||
Total | $ 35,133 | $ 48,819 | $ 147,906 | $ 160,268 | ||||
Operating income | ||||||||
Northwest | $ 12,798 | $ 24,208 | $ 68,083 | $ 73,393 | ||||
Southeast | 12,305 | 13,520 | 44,849 | 51,693 | ||||
Corporate and other | (244) | (396) | (1,715) | (1,778) | ||||
Total | $ 24,859 | $ 37,332 | $ 111,217 | $ 123,308 | ||||
Partnership income | $ 21,807 | $ 34,475 | $ 99,549 | $ 113,462 | ||||
Income per Class A Unit | $ 1.22 | $ 1.75 | $ 5.43 | $ 5.91 | ||||
Operating cash flow allocable | ||||||||
to a Class A Unit | $ 1.29 | $ 1.82 | $ 5.69 | $ 6.17 | ||||
Northwest harvest volumes | ||||||||
Stumpage, in millions of board feet | 27.2 | 38.1 | 123.8 | 117.1 | ||||
Delivered logs, in millions of board feet | 16.7 | 21.0 | 67.7 | 56.9 | ||||
Total | 43.9 | 59.1 | 191.5 | 174.0 | ||||
Southeast harvest volumes | ||||||||
Pine, in thousands of short green tons | 532.5 | 475.0 | 1,857.7 | 1,779.5 | ||||
Hardwoods, in thousands of short green | ||||||||
tons | 67.4 | 103.9 | 233.8 | 267.7 | ||||
Total | 599.9 | 578.9 | 2,091.5 | 2,047.2 | ||||