Rayonier Rayonier Has 2.2 Million Acres of Prime Timberland and Real Estate in the U.S
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Building Value 2004 Annual Report Rayonier Rayonier has 2.2 million acres of prime timberland and real estate in the U.S. and New Shareholder Information Zealand and is the worldÕs leading producer of high-performance specialty cellulose fibers. Approximately 40 percent of the companyÕs sales are outside the U.S. to customers in more than 50 countries. Corporate Headquarters Transfer Agent and Registrar Rayonier For essential services such as change of address, lost certificates 50 North Laura Street or dividend checks, or change in registered ownership, write or call Jacksonville, FL 32202 The Bank of New York, Shareholder Relations Department, 904-357-9100 PO Box 11258, Church Street Station, New York, NY 10286-1258. www.rayonier.com Telephone, 800-659-0158. Outside the U.S., call collect, 610-382-7833. About Your Shares Rayonier common shares are listed on the NewYork Stock Exchange Please include your name, address, account number and telephone under the ticker symbol RYN. number with all correspondence. Shareholders of Record Send certificates for transfer and address changes to The Bank of New Rayonier had 12,625 shareholders of record as of March 1, 2005. York, Receive and Deliver Department, PO Box 11002, Church Street Station, New York, NY 10286-1002. Common Stock Activity Financial Highlights Composite Regular Investor Relations Program Millions, except per share amounts 2004 2003 % change High Low Volume 000s Dividend For questions concerning your common shares other than those noted Sales and Earnings Sales $ 1,207 $ 1,101 10% 2004 above, write or call the Investor Relations Department, Rayonier, Operating income 170 103 65% Fourth Quarter 49.68 44.91 16681 $.56 50 North Laura Street, Jacksonville, FL 32202. Net income* 157 50 214% Third Quarter 47.53 43.29 16624 .56 Telephone, 904-357-9100. You may also e-mail us at Second Quarter 44.57 37.51 21783 .56 [email protected]. Financial Condition Total assets $ 1,934 $ 1,840 5% First Quarter 44.93 39.31 22603 .56 Total debt 659 618 7% Additional copies of this Annual Report and copies of RayonierÕs Book value 796 711 12% 2003* Form 10-K (without exhibits) are available, at no charge, upon request Fourth Quarter 41.75 33.95 19070 $.27 Cash Flow Cash provided by operating activities $ 295 $ 208 42% from the Investor Relations Department at the above address. You may Capital expenditures 90 86 5% Third Quarter 34.84 27.35 32512 .27 also request these materials by calling toll free, 800-RYN-7611. Adjusted EBITDA 335 268 25% Second Quarter 30.32 24.35 13920 .27 Cash available for distribution 168 113 49% First Quarter 26.35 22.55 11989 .24 ** In order to reduce costs and expedite the delivery of information to Dividends** 111 105 6% * Prices and volumes have been restated to reflect the June 12, 2003 three-for-two shareholders, Rayonier does not automatically mail quarterly reports to shareholders. You can listen to a recording of our most recent Outstanding Shares of Common Stock 50.0 49.0 2% stock split and the December 19, 2003 special E&P dividend. **Restated to reflect the June 12, 2003 three-for-two stock split. financial results and request a copy by fax or mail, by calling Per Share Net income* $ 3.08 $ 1.16 166% 800-RYN-7611. Quarterly results are available the same day they are Book value 15.93 14.51 10% Dividend Reinvestment announced. The Rayonier Inc. Automatic Dividend Reinvestment and Cash Performance Ratios Operating income to sales 14% 9% Web Sites Return on equity*** 14% 7% Payment Plan is available to all registered shareholders. For Return on assets*** 6% 3% information on how to participate, contact The Bank of New York, Visit us online at www.rayonier.com for more information about our **** Debt to capital 45% 47% 800-659-0158. Outside the U.S., call collect, 610-382-7833. businesses, products and services, and governance practices as well as Debt to market capital**** 21% 22% to access our 2004 Annual Report, press releases, earnings and dividend news, SEC filings, and information on upcoming events. * 2004 includes reversal of deferred taxes not required after REIT conversion of $77.9 million, or $1.53 per share and additional taxes for repatriation of foreign earnings of ($28.2) million, or ($0.55) per share, for a net effect of $49.7 million, or $0.98 For information on transfer agent-related services, including per share. frequently asked questions, visit The Bank of New YorkÕs Web site at ** 2003 includes regular dividends of $44 million and the cash component of the special earnings and profit dividend of $61 www.stockbny.com. million. *** 2004 excludes reversal of deferred taxes not required after REIT conversion of $77.9 million, or $1.53 per share and additional Annual Meeting taxes for repatriation of foreign earnings of ($28.2) million, or ($0.55) per share, for a net effect of $49.7 million, or $0.98 The Annual Meeting of Rayonier Shareholders will be held at 4 p.m., per share. Thursday, May 19, 2005, at the Omni Hotel, 245 Water Street, **** As of December 31. Jacksonville, FL. Table of Contents: 16 Board of Directors and 2 Letter to Shareholders Officers 6 Timber 18 Eleven-Year Summary 8 Real Estate 19 Reconciliation of Non- 10 Performance Fibers GAAP Measures 12 Our REIT Advantage 20 Selected Financial and 14 Rayonier At A Glance Operating Data 21 Form 10-K Inside Back Cover: Shareholder Information Design: Inergy Group Wilton, CT Rayonier’s strategic focus on two core businesses and structure as a Real Estate Investment Trust (REIT) provide distinct advantages. Our Timber and Real Estate business, coupled with our Performance Fibers group, generate strong earnings and cash flow over the economic cycle. With our conversion to a REIT on January 1, 2004, we now are able to capture tax benefits relative to timber harvesting and have dramatically increased cash distributions to shareholders. Our regular dividend payments in 2004 were 150 percent higher than the previous year, with an effective tax rate of approximately 10 percent for most shareholders. The REIT structure lowers our cost of capital and greatly enhances our ability to finance growth and further increase shareholder returns. Distinguishing Characteristics: Our extensive timber holdings in the Many of our properties have U.S. and New Zealand consistently higher value for development, provide quality earnings and strong conservation or recreation cash flow. than for growing timber. We are the world’s premier The REIT structure enhances our supplier of high-value specialty ability to finance growth and cellulose fibers with customers provides attractive tax-efficient in more than 50 countries. distributions to shareholders. 1 To Our Shareholders: Last year was one of the most important and far-reaching in our nearly 80-year history, not only because of the significant returns to our shareholders, but also for the steps we took to position Rayonier for the future. We have long prided ourselves on being a financially driven company first, and a forest products company second, and our actions in 2004 demonstrated the focus we have on maximizing returns to investors. On January 1, 2004, we converted to a Real Estate Investment Trust (REIT), becoming one of just two publicly traded forest product companies to have done so. We did it because we were convinced the new structure would not only unlock meaningful value and provide significantly increased tax-efficient distributions to shareholders, but would also facilitate growth through more attractive equity financing. Operating Income Earnings per Share from (dollars in millions) Continuing Operations* Strong demand and higher prices (dollars) improved results in all of EPS increased 81 percent in our our business segments in 2004. first year as a REIT. *2004 excludes reversal of deferred taxes of $1.53 per share resulting from REIT conversion and additional taxes for repatriation of foreign earnings of $0.55 per share, for a net effect of $0.98 per share. $189 $2.10 $170 $1.88 $149 $130 $1.39 $1.28 $103 $1.16 00 01 02 03 04 00 01 02 03 04 2 We think you will agree that the results have been impressive: We are committed to providing attractive returns and will base future dividends on cash flow projections over the business • Since announcing our REIT conversion plans in August 2003 cycle. While we were understandably conservative in setting and through the end of 2004, market capitalization increased our initial dividend level as a REIT, the increase we announced approximately 60 percent to $2.4 billion and the liquidity of our in February 2005 is a reflection of our financial performance stock improved significantly. and the confidence we have in our businesses and their capacity • In 2004, our regular dividend payout increased approximately to generate strong cash flow. 150 percent over 2003 to an annualized rate of $2.24 per share. We are also committed to growing our company and are • We acquired 83,000 acres of high-quality timberland. aggressively pursuing opportunities with the goal of further increasing valuations and shareholder returns. Our capital • On February 18, 2005, we announced an additional boost in structure as a REIT facilitates those efforts. the quarterly dividend of six cents per share, or 10.7 percent, to an annualized rate of $2.48 per share. Operations For the year, we saw continuing improvement in all of our As a REIT with large timber holdings, our dividend is especially business segments. Sales were up $100 million, or nearly 10 attractive. Unlike the dividends of most REITs, which are taxed percent; net income increased $50 million to $107 million, at rates up to 35 percent, income from sales of timber is or $2.10 per share (excluding a one-time tax benefit of 98 cents considered a long-term capital gain with a maximum tax rate of per share); and return on equity was 14.2 percent.