What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-02-24 compared with 2022-02-25 · 524 added, 840 removed, 1982 unchanged (41% of the section changed)

15 unchanged sentences

Note 1 - Summary of Significant Accounting Policies

Note 2 - Merger with Pope Resources

Note 2 - Segment and Geographical Information

1 unchanged sentence

Note 4 - Timberland Acquisitions

Note 6 - Leases

Note 5 - Noncontrolling Interests

Note 8 - Variable Interest Entities

Note 6 - Earnings Per Share and Per Unit

8 unchanged sentences

Note 15 - Inventory

Note 16 - Leases

Note 17 - Other Operating Income (Expense), Net

2 unchanged sentences

Note 20 - Income Taxes

Note 23 - Accumulated Other Comprehensive Loss

Note 21 - Restricted Cash

Note 25 - Other Assets

Note 22 - Assets Held for Sale

Note 27 - Charges for Integration and Restructuring

Note 23 - Other Assets

Note 24 - Accumulated Other Comprehensive Loss

Note 25 - Related Party

13 unchanged sentences

RAYONIER INC.

President and Chief Executive Officer

Chief Executive Officer

(Principal Executive Officer)

1 unchanged sentence

/s/ MARK MCHUGH

Senior Vice President and Chief Financial Officer

President and Chief Financial Officer

(Principal Financial Officer)

18 unchanged sentences

RAYONIER, INC., its sole general partner

President and Chief Executive Officer

Chief Executive Officer

(Principal Executive Officer)

1 unchanged sentence

/s/ MARK MCHUGH

Senior Vice President and Chief Financial Officer

President and Chief Financial Officer

(Principal Financial Officer)

76 unchanged sentences

We have audited the accompanying consolidated balance sheets of Rayonier, L.P.

and subsidiaries (the Operating Partnership) as of December 31, 2021 and 2020, the related consolidated statements of income and comprehensive income, capital and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

and subsidiaries (the Operating Partnership) as of December 31, 2022 and 2021, the related consolidated statements of income and comprehensive income, changes in capital and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Operating Partnership at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S.

121 unchanged sentences

Accounts payable $ 22,100 $ 23,447

Current maturities of long-term debt, excluding Timber Funds (Note 10)

Current maturities of long-term debt, net (Note 7)

Accrued taxes 3,734 12,446

2 unchanged sentences

Deferred revenue 22,762 17,802

Distributions payable, Timber Funds 6,341 —

Distribution payable, Timber Funds — 6,341

Other current liabilities 28,247 25,863

Total current liabilities 95,327 231,721

LONG-TERM DEBT, NET, EXCLUDING TIMBER FUNDS (NOTE 10)

LONG-TERM DEBT, NET (NOTE 7)

1,514,721 1,242,819

LONG-TERM DEBT, NET, TIMBER FUNDS (NOTE 10)

PENSION AND OTHER POSTRETIREMENT BENEFITS (NOTE 18)

10,478 23,344

LONG-TERM LEASE LIABILITY (NOTE 16)

8 unchanged sentences

Retained earnings 366,637 402,307

Accumulated other comprehensive loss (Note 23)

Accumulated other comprehensive income (loss) (Note 24)

35,813 ( 19,604 )

16 unchanged sentences

Balance, December 31, 2019 129,331,069 $ 888,177 $ 583,006 ($ 31,202 ) $ 97,661 $ 1,537,642

Net income — — 59,105 — 8,573 67,678

Issuances of shares associated with the merger with Pope Resources 7,181,071 172,418 — — — 172,418

Net income (loss) — — 37,612 — ( 7,828 ) 29,784

Net income attributable to noncontrolling interests in the operating partnership — — ( 528 ) — — ( 528 )

Dividends ($ 1.08 per share)

— — ( 146,278 ) — — ( 146,278 )

Issuance of shares under the “at-the-market” equity offering, net of commissions and offering costs of $ 799

1,103,012 32,574 — — — 32,574

Issuance of shares under incentive stock plans 266,036 1,589 — — — 1,589

Stock-based compensation — 6,904 — — — 6,904

Stock-based incentive compensation — 8,026 — — — 8,026

Repurchase of common shares ( 219,619 ) ( 1,605 ) ( 3,152 ) — — ( 4,757 )

Acquisition of noncontrolling interests in consolidated affiliates — — — — 333,366 333,366

Adjustment of noncontrolling interests in the operating partnership — — ( 24,393 ) — — ( 24,393 )

Conversion of units into common shares 17,253 496 — — — 496

Actuarial change and amortization of pension and postretirement plan liabilities — — — ( 925 ) — ( 925 )

1 unchanged sentence

Cash flow hedges — — — ( 62,146 ) 1,091 ( 61,055 )

Allocation of other comprehensive income to noncontrolling interests in the operating partnership — — — ( 2,540 ) — ( 2,540 )

Distributions to noncontrolling interests in consolidated affiliates — — — — ( 12,643 ) ( 12,643 )

Noncontrolling interests in consolidated affiliates redemption of shares — — — — ( 28,403 ) ( 28,403 )

Balance, December 31, 2020 137,678,822 $ 1,101,675 $ 446,267 ($ 73,885 ) $ 388,588 $ 1,862,645

Issuances of shares associated with the merger with Pope Resources 7,181,071 172,418 — — — 172,418

Net income (loss) — — 37,612 — ( 7,828 ) 29,784

Net income — — 157,066 — 53,421 210,487

Net income attributable to noncontrolling interests in the operating partnership — — ( 4,516 ) — — ( 4,516 )

1 unchanged sentence

— — ( 153,980 ) — — ( 153,980 )

Issuance of shares under the “at-the-market” equity offering, net of commissions and offering costs of $ 799

Issuance of shares under the “at-the-market” equity offering, net of commissions and offering costs of $ 2.5 million

6,357,972 233,033 — — — 233,033

Issuance of shares under incentive stock plans 270,713 6,029 — — — 6,029

Stock-based compensation — 8,026 — — — 8,026

Stock-based incentive compensation — 9,277 — — — 9,277

Repurchase of common shares ( 47,705 ) ( 1,617 ) — — — ( 1,617 )

Acquisition of noncontrolling interests in consolidated affiliates — — — — 333,366 333,366

Fund II carried interest incentive fee — — — — ( 3,807 ) ( 3,807 )

Disposition of noncontrolling interests in consolidated affiliates — — — — ( 255,486 ) ( 255,486 )

Measurement period adjustment of noncontrolling interests in consolidated affiliates — — — — 9,690 9,690

Adjustment of noncontrolling interests in the operating partnership — — ( 42,530 ) — — ( 42,530 )

24 unchanged sentences

Issuance of shares under incentive stock plans 321,337 2,466 — — — 2,466

Stock-based compensation — 9,277 — — — 9,277

Stock-based incentive compensation — 12,356 — — — 12,356

Repurchase of common shares ( 97,809 ) ( 4,225 ) — — — ( 4,225 )

Fund II carried interest incentive fee — — — — ( 3,807 ) ( 3,807 )

Disposition of noncontrolling interests in consolidated affiliates — — — — ( 255,486 ) ( 255,486 )

Measurement period adjustment of noncontrolling interests in consolidated affiliates — — — — 9,690 9,690

Adjustment of noncontrolling interests in the operating partnership — — 23,155 — — 23,155

56 unchanged sentences

Debt issuance costs ( 740 ) ( 4,846 ) ( 2,483 )

Proceeds from shareholder distribution hedge — — 135

Noncontrolling interests in consolidated affiliates redemption of shares — — ( 5,113 )

26 unchanged sentences

For additional information on patronage payments, see Note 7 - Debt .

(b) In 2021, the New Zealand subsidiary made a capital distribution in order to redeem certain equity interests, resulting in the recording of a loan payable by the New Zealand subsidiary in the amount of $ 28.1 million.

(b) T he New Zealand subsidiary made a capital distribution in order to redeem certain equity interests, resulting in the recording of a loan payable by the New Zealand subsidiary in the amount of $ 27.9 million and $ 28.1 million for the year ended 2022 and 2021, respectively.

In 2020, the New Zealand subsidiary made a capital distribution in order to redeem certain equity interests, resulting in the recording of a noncontrolling interest share redemption of $ 5.1 million and a loan payable by the New Zealand subsidiary in the amount of $ 23.3 million.

26 unchanged sentences

UNITHOLDERS 109,470 157,066 37,612

NET INCOME ATTRIBUTABLE TO UNITHOLDERS ATTRIBUTABLE TO:

Limited Partners 108,375 155,495 37,236

General Partners 1,095 1,571 376

Net income attributable to unitholders 109,470 157,066 37,612

OTHER COMPREHENSIVE INCOME (LOSS)

56 unchanged sentences

Accounts payable $ 22,100 $ 23,447

Current maturities of long-term debt, excluding Timber Funds ( Note 10 )

Current maturities of long-term debt, net ( Note 7 )

Accrued taxes 3,734 12,446

5 unchanged sentences

Total current liabilities 95,327 231,721

LONG-TERM DEBT, NET, EXCLUDING TIMBER FUNDS ( NOTE 10 )

LONG-TERM DEBT, NET ( NOTE 7 )

1,514,721 1,242,819

LONG-TERM DEBT, NET, TIMBER FUNDS ( NOTE 10 )

PENSION AND OTHER POSTRETIREMENT BENEFITS ( NOTE 18 )

10,478 23,344

LONG-TERM LEASE LIABILITY ( NOTE 16 )

6 unchanged sentences

Limited partners’ capital 1,806,895 1,769,367

Accumulated other comprehensive loss ( Note 23 )

Accumulated other comprehensive income (loss) ( Note 24 )

40,249 ( 15,463 )

12 unchanged sentences

Balance, December 31, 2019 $ 14,712 $ 1,456,471 ($ 31,202 ) $ 97,661 $ 1,537,642

Net income 591 58,514 — 8,573 67,678

Issuance of units associated with the merger with Pope Resources 1,724 170,694 — — 172,418

Net income (loss) 376 37,236 — ( 7,828 ) 29,784

Distributions on units ($ 1.08 per unit)

( 1,500 ) ( 148,375 ) — — ( 149,875 )

Issuance of units under the “at-the-market” equity offering, net of commissions and offering costs of $ 799

326 32,248 — — 32,574

Issuance of units under incentive stock plans 16 1,573 — — 1,589

Stock-based compensation 69 6,835 — — 6,904

Stock-based incentive compensation 81 7,945 — — 8,026

Repurchase of units ( 47 ) ( 4,710 ) — — ( 4,757 )

Adjustment of Redeemable Operating Partnership Units ( 239 ) ( 23,625 ) — — ( 23,864 )

Acquisition of noncontrolling interests in consolidated affiliates — — — 333,366 333,366

Conversion of units to common shares 5 491 — — 496

Actuarial change and amortization of pension and postretirement plan liabilities — — ( 925 ) — ( 925 )

2 unchanged sentences

Distributions to noncontrolling interests in consolidated affiliates — — — ( 12,643 ) ( 12,643 )

Noncontrolling interests in consolidated affiliates redemption of unit equivalents — — — ( 28,403 ) ( 28,403 )

Balance, December 31, 2020 $ 15,454 $ 1,529,948 ($ 71,345 ) $ 388,588 $ 1,862,645

Issuance of units associated with the merger with Pope Resources 1,724 170,694 — — 172,418

Net income (loss) 376 37,236 — ( 7,828 ) 29,784

Net income 1,571 155,495 — 53,421 210,487

Distributions on units ($ 1.08 per unit)

( 1,583 ) ( 156,666 ) — — ( 158,249 )

Issuance of units under the “at-the-market” equity offering, net of commissions and offering costs of $ 799

Issuance of units under the “at-the-market” equity offering, net of commissions and offering costs of $ 2.5 million

2,330 230,703 — — 233,033

Issuance of units under incentive stock plans 60 5,969 — — 6,029

Stock-based compensation 81 7,945 — — 8,026

Stock-based incentive compensation 93 9,184 — — 9,277

Repurchase of units ( 16 ) ( 1,601 ) — — ( 1,617 )

Adjustment of Redeemable Operating Partnership Units ( 444 ) ( 43,934 ) ( 44,378 )

Acquisition of noncontrolling interests in consolidated affiliates — — — 333,366 333,366

Conversion of units to common shares 407 40,269 — — 40,676

Measurement period adjustment of noncontrolling interests in consolidated affiliates — — — 9,690 9,690

Fund II carried interest incentive fee — — — ( 3,807 ) ( 3,807 )

Disposition of noncontrolling interests in consolidated affiliates — — — ( 255,486 ) ( 255,486 )

Actuarial change and amortization of pension and postretirement plan liabilities — — 12,476 — 12,476

17 unchanged sentences

Issuance of units under incentive stock plans 25 2,441 — — 2,466

Stock-based compensation 93 9,184 — — 9,277

Stock-based incentive compensation 124 12,232 — — 12,356

Repurchase of units ( 42 ) ( 4,183 ) — — ( 4,225 )

1 unchanged sentence

Conversion of units to common shares 39 3,886 — — 3,925

Measurement period adjustment of noncontrolling interests in consolidated affiliates — — — 9,690 9,690

Fund II carried interest incentive fee — — — ( 3,807 ) ( 3,807 )

Disposition of noncontrolling interests in consolidated affiliates — — — ( 255,486 ) ( 255,486 )

Actuarial change and amortization of pension and postretirement plan liabilities — — 1,627 — 1,627

50 unchanged sentences

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

Proceeds from shareholder distribution hedge — — 135

Noncontrolling interests in consolidated affiliates redemption of shares — — ( 5,113 )

24 unchanged sentences

Noncontrolling interests in consolidated affiliates redemption of shares (b) 27,860 28,119 23,290

(a) Interest paid is presented net of patronage paymen ts received of $ 6.8 million, $ 4.7 million and $ 4.0 million for the years ended December 31, 2021, 2020 and 2019, respectively.

(a) Interest paid is presented net of patronage payments received of $ 6.0 million, $ 6.8 million and $ 4.7 million for the years ended December 31, 2022, 2021 and 2020, respectively.

For additional information on patronage payments, see Note 7 — Debt .

(b) The New Zealand subsidiary made a capital distribution in order to redeem certain equity interests, resulting in the recording of a loan payable by the New Zealand subsidiary in the amount of $ 27.9 million and $ 28.1 million for the year ended 2022 and 2021, respectively.

17 unchanged sentences

has exclusive control of the day-to-day m anagement of the Operating Partnership.

DISPOSITION OF TIMBER FUNDS

Upon completion of the Pope Resources merger in May 2020, we became the manager of three private equity timber funds, Fund II, Fund III, and Fund IV, consisting of 141,000 acres in the Pacific Northwest, and obtained ownership interests in the Funds of 20 %, 5 %, and 15 %, respectively.

On July 21, 2021, we sold the rights to manage Fund III and IV, as well as our ownership interests in both funds to BTG Pactual’s Timberland Investment Group (TIG) for an aggregate sales price of $ 35.9 million.

Due to the sale of our rights to manage Fund III and Fund IV, we determined that we no longer have the power to direct the activities that most significantly impact the success of Fund III and Fund IV.

As a result, Timber Fund III and IV balance sheets and results of operations are only included in our consolidated financial statements through the date of the sale.

For additional information on Fund III and IV, see Note 7 - Noncontrolling Interests .

As of December 31, 2021, we continue to manage and maintain a 20 % ownership interest in Fund II, which is scheduled to terminate in March 2023.

Prior to the termination of Fund II, the remaining capital will be distributed to Fund II investors.

For additional information regarding Fund II, see Note 7 - Noncontrolling Interests , Note 8 - Variable Interest Entities and Note 24 - Restricted Cash .

RECLASSIFICATIONS

Effective for year ended December 31, 2021, we have updated our presentation for the employee benefit pension plan to include a separate line item “Expenses paid,” which was previously reported as part of “Actuarial loss (gain).” “Actuarial loss (gain)” now solely represents changes resulting from adjustments to actuarial assumptions and estimates.

The other categories of the pension plan remain unchanged, and this reclassification had no impact on the total projected benefit obligation.

See Note 20 - Employee Benefit Plans .

USE OF ESTIMATES

4 unchanged sentences

Cash and cash equivalents consist of cash on hand and other highly liquid investments with original maturities of three months or less.

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

ACCOUNTS RECEIVABLE

4 unchanged sentences

Log inventory is recorded at the lower of cost or net realizable value and expensed to cost of sales when sold to third-party buyers.

Inventory also includes carbon unit inventory.

Carbon unit inventory represents the basis in New Zealand carbon units intended to be sold in the next 12 months.

See Note 15 — Inventory for additional information.

PREPAID LOGGING ROADS

Costs for roads built in the Pacific Northwest and New Zealand to access particular tracts to be harvested in the upcoming 24 months to 60 months are recorded as prepaid logging roads.

In the Pacific Northwest and New Zealand, costs for roads built to access particular tracts to be harvested in the upcoming 24 months to 60 months are recorded as prepaid logging roads.

We charge such costs to expense as timber is harvested using an amortization rate determined annually as the total cost of prepaid roads divided by the estimated tons of timber to be accessed by those roads.

1 unchanged sentence

See Note 23 — Other Assets for additional information.

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

PATRONAGE DIVIDENDS

2 unchanged sentences

CoBank equity purchases continue annually until a balance equal to 8 % of our 10 -year historical average loan balance at CoBank is obtained.

Initially, a minimal equity purchase was made in cash upon receiving the loan proceeds.

Initially, a minimal equity purchase was made in cash upon the receipt of loan proceeds.

Subsequently, equity purchases are made annually through patronage dividends, of which approximately 90 % is cash and 10 % is equity.

11 unchanged sentences

Software costs are capitalized and amortized over a period not exceeding five years using the straight-line method.

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

See Note 23 — Other Assets for additional information.

TIMBER AND TIMBERLANDS

2 unchanged sentences

A portion of timberland lease payments are capitalized based on the proportion of acres with merchantable timber volume remaining to be harvested under the lease term and the residual portion of the lease payments are expensed as incurred.

Payroll costs are capitalized for time spent on timber growing activities, while interest or any other intangible costs are not capitalized.

Payroll costs are capitalized for time spent on timber growing activities, while interest and other intangible costs are not capitalized.

An annual depletion rate is established for each particular region by dividing merchantable inventory cost by standing merchantable inventory volume, which is estimated annually.

2 unchanged sentences

This determination is based on the geographic location of the new timber, the customers/markets that will be served and the species mix.

If the acquisition is similar, the cost of the acquired timber is combined into an existing depletion pool and a new depletion rate is calculated for the pool.

If the acquisition is similar to an existing depletion pool, the cost of the acquired timber is combined and a new depletion rate is calculated for the pool.

This determination and depletion rate adjustment normally occurs in the quarter following the acquisition.

5 unchanged sentences

See Note 14 — Higher and Better Use Timberlands and Real Estate Development Investments for additional information.

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

REAL ESTATE DEVELOPMENT INVESTMENTS

Real estate development investments include capitalized costs for targeted infrastructure improvements, such as roadways and utilities.

The capitalization period relating to real estate development investments is the period in which activities necessary to ready a property for its intended use are in progress.

The period begins when such activities commence, typically when we begin the site work for land already owned, and ends when the improvement is substantially complete and ready for its intended use.

Real estate development investments include capitalized costs associated with the development and construction of identified real estate projects, such as infrastructure, roadways, utilities, amenities and/or other improvements designed to enhance marketability and create parcels, pads and/or lots for sale.

We capitalize interest on real estate projects under development based on the amount of underlying expenditures during the capitalization period.

The period begins when activities necessary to ready a property for its intended use commence, typically when we begin the site work for land already owned, and ends when the improvement is substantially complete and ready for its intended use.

Determination of when construction of a project is substantially complete and ready for its intended use is subjective and requires business judgement.

As such, we determine when the capitalization period begins and ends through communication with project and other managers responsible for the tracking and oversight of individual projects.

We capitalize costs directly associated with development and construction of identified real estate projects, such as infrastructure, roadways, utilities, amenities and/or other improvements designed to enhance marketability and create parcels, pads and/or lots for sale.

We capitalize interest based on the amount of underlying expenditures on real estate projects under development.

As such, we determine when the capitalization period begins and ends through communication with project managers and others responsible for the tracking and oversight of individual projects.

IMPAIRMENT OF HBU TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS

4 unchanged sentences

Subjective factors such as the expected timing of property development and sales, optimal development density and sales strategy impact the timing and amount of expected future cash flows and fair value.

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

An impairment loss is recognized if the carrying amount of an asset is not recoverable and exceeds its fair value.

10 unchanged sentences

Assets to be disposed of are reported at the lower of the carrying amount or fair value less cost to sell.

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

At inception, we determine if an arrangement is a lease and whether that lease meets the classification criteria of a finance or operating lease.

12 unchanged sentences

A discounted cash flow approach using market participant assumptions of the expected cash flows and discount rate are used to estimate the fair value of the asset group.

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

FAIR VALUE MEASUREMENTS

6 unchanged sentences

ENVIRONMENTAL REMEDIATION LIABILITIES

Environmental remediation liabilities have been evaluated using a combination of methods.

The liability is estimated based on amounts included in construction contracts and estimates for construction contingencies, project management, and other professional fees.

We estimate future costs for known environmental remediation requirements and accrue for them on an undiscounted basis when it is probable that a liability has been incurred and the related costs can be reasonably estimated.

We consider various factors when estimating our environmental liabilities, including construction contracts, proposed statements of work, project management, and other professional fees.

We evaluate the adequacy of these liabilities on a quarterly basis.

We make adjustments to the liabilities when additional information becomes available that affects the estimated costs to study or remediate any environmental matter.

Legal investigation and defense costs incurred in connection with environmental contingencies are expensed as incurred.

Recoveries of environmental remediation costs from other parties are recorded as assets when their receipt is deemed probable and does not exceed the amount of losses previously recorded.

See Note 12 - Environmental and Natural Resource Damages Liabilities for more information.

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

Goodwill represents the excess of the acquisition cost of the New Zealand Timber segment over the fair value of the net assets acquired.

19 unchanged sentences

Limited partners holding Redeemable Operating Partnership Units have the right to put any and all of the 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 Operating Partnership Units are classified outside of permanent partners’ capital in the Operating Partnership's accompanying balance sheets and the related

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

noncontrolling interest is classified outside of permanent equity in the accompanying balance sheets of Rayonier.

Consequently, these Redeemable Operating Partnership Units are classified outside of permanent partners’ capital in the Operating Partnership's accompanying balance sheets and the related noncontrolling interest is classified outside of permanent equity in the accompanying balance sheets of Rayonier.

The recorded value of the Redeemable Operating Partnership 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 common stock on the balance sheet date multiplied by the total number of Redeemable Operating Partnership Units outstanding.

6 unchanged sentences

See Note 25 – Related Party.

BUSINESS COMBINATION

We account for business combinations using the acquisition method of accounting, under which all assets acquired and liabilities assumed, including amounts attributable to noncontrolling interest, are recorded at their respective fair values as of the acquisition date.

The excess of the purchase price over the fair value of identifiable assets and liabilities is recorded as goodwill.

The allocation of purchase price in a business combination uses significant assumptions and estimates.

Critical estimates include, but are not limited to, future expected cash flows, including revenues and expenses, and applicable discount rates.

While we believe our estimates and assumptions to be reasonable, they 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).

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, we are required to record preliminary values in the financial statements for the items for which the accounting is incomplete.

Adjustments to the preliminary recorded values, which are identified during the measurement period, are recognized in the reporting period in which the adjustments are determined.

This includes any effect on earnings of changes in depletion, depreciation or amortization, or other income effects as a result of the change to the recorded values, calculated as if the accounting had been completed at the acquisition date.

During the measurement period, we are also required to recognize additional assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets and liabilities as of that date.

The measurement period ends the sooner of one year from the acquisition date or when we receive the information we were seeking about facts and circumstances that existed as of the acquisition date or learn that more information is not obtainable.

In 2021, we finalized the purchase price allocation related to the Pope Resources merger.

S ee Note 2 – Merger with Pope Resources for more information.

REVENUE RECOGNITION

We recognize revenues 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 December 31, 2021 are primarily due to advances on stumpage contracts, unearned license 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.

RAYONIER INC.

4 unchanged sentences

(Dollar amounts in thousands unless otherwise stated)

REVENUE RECOGNITION

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 December 31, 2022 are primarily due to advances on stumpage contracts, unearned license 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.

Revenue from the sale of timber is recognized when control passes to the buyer.

12 unchanged sentences

For domestic log sales, control is considered passed to the buyer as the logs are delivered to the customer’s facility.

For export log sales (primarily in New Zealand), control is considered passed to the buyer upon delivery onto the export vessel.

For export log sales, control is considered passed to the buyer upon delivery onto the export vessel.

The following table summarizes revenue recognition and general payment terms for timber sales:

20 unchanged sentences

collection generally within 30 days of delivery

NON-TIMBER SALES

Non-timber sales are primarily comprised of hunting and recreational licenses, carbon credits and other auxiliary income.

Hunting and recreational license sales and any related costs are recognized ratably over the term of the agreement and included in “Sales” and “Cost of sales,” respectively.

Payment is generally due upon contract execution.

The New Zealand Emissions Trading Scheme (“NZ ETS”) incentivizes the lowering of greenhouse gas emissions by providing carbon credits to certain organizations that lower carbon emissions.

Our New Zealand segment regularly sells carbon credits and recognizes income as they are sold to other carbon emitting entities.

RAYONIER INC.

4 unchanged sentences

(Dollar amounts in thousands unless otherwise stated)

NON-TIMBER SALES

Non-timber sales are primarily comprised of hunting and recreational licenses, carbon credits and other auxiliary income.

Hunting and recreational license sales and any related costs are recognized ratably over the term of the agreement and included in “Sales” and “Cost of sales,” respectively.

Payment is generally due upon contract execution.

The New Zealand Emissions Trading Scheme (“NZ ETS”) incentivizes the lowering of greenhouse gas emissions by providing carbon credits to certain organizations that lower carbon emissions.

Our New Zealand segment regularly sells carbon credits and recognizes income as they are sold to other carbon emitting entities.

Log trading revenue is generally recognized when procured logs are delivered to the buyer and control has passed.

10 unchanged sentences

Depletion includes the amortization of capitalized costs (site preparation, planting and fertilization, real estate taxes, timberland lease payments and certain payroll costs).

Other costs include amortization of capitalized costs related to road and bridge construction and software, depreciation of fixed assets and equipment, road maintenance, severance and excise taxes and fire prevention.

Cost of sales associated with real estate sold includes the cost of the land, the cost of any timber on the property that was conveyed to the buyer, any real estate development costs and any closing costs including sales commissions that may be borne by us.

7 unchanged sentences

See Note 18 — Employee Benefit Plans for assumptions used to determine benefit obligations, and the net periodic benefit cost for the year ended December 31, 2022.

Periodic pension and other postretirement expense is included in “Cost of sales,” “Selling and general expenses” and “Interest and other miscellaneous income, net” in the Consolidated Statements of Income and Comprehensive Income.

The service cost component of net periodic benefit cost is included in “Cost of sales” and “Selling and general expenses” while the other components of net periodic benefit cost (interest cost, expected return on plan assets and amortization of losses or gains) are presented outside of income from operations in “Interest and other miscellaneous income, net.” At December 31, 2021 and 2020, our pension plans were in a net liability position (underfunded) of $ 8.7 million and $ 21.6 million, respectively.

The estimated amount to be paid in the next 12 months is recorded in “Accrued payroll and benefits” on the Consolidated Balance Sheets, with the remainder recorded as a long-term liability in “Pension and Other Postretirement Benefits.” Changes in the funded status of our plans are recorded through other comprehensive (loss) income in the year in which the changes occur.

We measure plan assets and benefit obligations as of the fiscal year-end.

See Note 20 — Employee Benefit Plans for additional information.

RAYONIER INC.

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(Dollar amounts in thousands unless otherwise stated)

The service cost component of net periodic benefit cost is included in “Cost of sales” and “Selling and general expenses” while the other components of net periodic benefit cost (interest cost, expected return on plan assets and amortization of losses or gains) are presented outside of income from operations in “Interest and other miscellaneous income, net.” At December 31, 2022 and 2021, our pension plans were in a net liability position (underfunded) of $ 7.2 million and $ 8.7 million, respectively.

We measure plan assets and benefit obligations as of the fiscal year-end.

See Note 18 — Employee Benefit Plans for additional information.

We use the asset and liability method of accounting for income taxes.

Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases, operating loss carryforwards and tax credit carryforwards.

Deferred tax assets and liabilities are measured pursuant to tax laws using rates expected to apply to taxable income in the years in which the temporary differences are expected to be recovered or settled.

Under this method, deferred tax assets and liabilities are recognized for the estimated future tax benefits or consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases, operating loss carryforwards and tax credit carryforwards.

Deferred tax assets and liabilities are measured pursuant to tax laws using the enacted tax rate that is expected to apply to taxable income in the years in which the temporary differences are expected to be recovered or settled.

We recognize the effect of a change in income tax rates on deferred tax assets and liabilities in the Consolidated Statements of Income and Comprehensive Income in the period that includes the enactment date of the rate change.

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federal, state and foreign taxing authorities.

In evaluating the tax benefits associated with various tax filing positions, we record a tax benefit for an uncertain tax position if it is more-likely-than-not to be realized upon ultimate settlement of the issue.

We record a liability for an uncertain tax position that does not meet this criterion.

Interest and penalties for an uncertain tax position are recognized in income tax expense.

We adjust our liabilities for uncertain tax benefits in the period in which it is determined the issue is settled with the taxing authorities, the statute of limitations expires for the relevant taxing authority to examine the tax position or when new facts or information become available.

See Note 20 — Income Taxes for additional information.

NEW ACCOUNTING PRONOUNCEMENTS

ACCOUNTING PRONOUNCEMENTS

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2020-04, Reference Rate Reform (Topic 848) , which provides optional guidance to ease the potential burden in accounting due to reference rate reform.

ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts.

The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur.

During Q2 2020, we elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives.

2020-04, Reference Rate Reform (Topic 848) , which provides temporary optional expedients and exceptions to the guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”).

Entities can elect not to apply certain modification accounting requirements to contracts affected by reference rate reform, if certain criteria are met.

We have previously elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives.

Application of these expedients preserves the presentation of derivatives consistent with past presentation.

We continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

In August 2020, the FASB issued ASU 2020-06, Debt–Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging–Contracts in Entity's Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity's Own Equity , which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity.

This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt:

Debt with Conversion and Other Options , that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock;

(2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification;

and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method.

In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares.

The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted.

The pronouncement eliminates the requirement that contracts legally permitting settlement in registered shares be classified as temporary equity.

As a result, Redeemable Operating Partnership Units may be classified as permanent partners’ capital in the Operating partnership’s accompanying balance sheets and the related noncontrolling interest as permanent equity in the accompanying balance sheets of Rayonier, Inc.

However, the corresponding SEC guidance on equity classification

See Note 7 — Deb t and Note 8 — Derivative Financial Instruments and Hedging Activities for more information on our current year transition to SOFR.

RAYONIER INC.

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(Dollar amounts in thousands unless otherwise stated)

has remained unchanged.

We will continue to monitor any developments in this area and will adopt this pronouncement upon agreement in guidance.

In June 2022, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2022-03, Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities to Contractual Sale Restrictions , which clarifies how the fair value of equity securities subject to contractual sale restrictions is determined, and amends ASC 820 to clarify that a contractual sale restriction should not be considered in measuring fair value.

It also requires entities with investments in equity securities subject to contractual sale restrictions to disclose certain qualitative and quantitative information about such securities.

The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2024, with early adoption permitted.

We are currently evaluating the impact of adopting this new guidance on the consolidated financial statements.

SUBSEQUENT EVENTS

On January 3, 2022, we drew $ 200.0 million on our Revolving Credit Facility.

On January 4, 2022, we repaid the $ 325.0 million Senior Notes due 2022 with $ 125.0 million of cash and the $ 200.0 million previously drawn on the Revolving Credit Facility.

We then made a $ 200.0 million draw on our 2021 Incremental Term Loan Facility and simultaneously repaid the outstanding principal on our Revolving Credit Facility.

The periodic interest rate on the 2021 Incremental Term Loan agreement is subject to a pricing grid based on our leverage ratio, as defined in the credit agreement.

As of February 25, 2022, the periodic interest rate on the the 2021 Incremental Term Loan is LIBOR plus 1.55 %.

Monthly payments of interest only are due on this loan through maturity.

See Note 10 - Debt for additional information.

On February 1, 2022, our $ 200.0 million notional forward-starting interest rate swap matured into an active interest rate swap.

This interest rate swap will fix the cost of the 2021 Incremental Term Loan Facility over its seven-year term.

We estimate the effective interest rate on the 2021 Incremental Term Loan Facility to be approximately 1.5 % after consideration of interest rate swaps and estimated patronage refunds.

MERGER WITH POPE RESOURCES

On May 8, 2020, Rayonier Inc.

and Rayonier, L.P.

acquired Pope Resources and became the general partner of 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 three private equity timber funds and developed and sold real estate properties.

The total purchase price was as follows:

Cash consideration $ 247,318

Equity consideration 172,640

Redeemable Operating Partnership Unit consideration 106,752

Fair value of Pope Resources units held by us (a) 11,211

Total purchase price $ 537,921

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

We recognized approximately $ 17.2 million of merger-related costs that were expensed during the year ended December 31, 2020.

See Note 27 — Charges for Integration and Restructuring for descriptions of the components of merger-related costs.

The acquisition of Pope Resources was accounted for as a business combination under ASC 805, Business Combinations , (“ASC 805”).

Pursuant to ASC 805, we recorded an allocation of the assets acquired and liabilities assumed in the merger with Pope Resources based on their fair values as of May 8, 2020.

We completed our assessment of the fair value of the assets acquired and liabilities assumed within the one-year period from the date of acquisition.

We recorded measurement period adjustments due to additional information received primarily related to higher and better use timberlands and real estate development investments, as well as timber and timberlands.

As a result of refinements to the purchase price allocation, higher and better use timberlands increased by approximately $ 8.2 million.

This includes development properties in the town of Port Gamble, Washington, development projects in Gig Harbor, Kingston, and Bremerton, Washington and various other assets.

Additionally, refinements to the purchase price allocation resulted in an overall increase of $ 1.1 million to timber and timberlands, with the valuation of core timberlands decreasing by $ 15.5 million and Timber Funds timber and timberlands increasing by $ 16.6 million from the preliminary purchase price allocation reported in Note 2 - Merger with Pope Resources in our 2020 Form 10-K.

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

As a result of refinements to timberlands preliminarily recorded values, we recognized the following decreases in depletion expense during the year ended December 31, 2021:

Year ended December 31, 2021

Pacific Northwest Timber Timber Funds Total

Depletion (a) ($ 182 ) ($ 1,202 ) ($ 1,384 )

Total ($ 182 ) ($ 1,202 ) ($ 1,384 )

(a) Pacific Northwest Timber includes an immaterial increase in depletion expense related to the year ended December 31, 2020.

Timber Funds includes an increase in depletion expense of approximately $ 0.1 million related to the year ended December 31, 2020.

The fair values of the assets acquired and liabilities assumed were determined using the income, cost or market approaches.

The fair value measurements 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 12 — Fair Value Measurements for further information on the fair value hierarchy.

The final allocation of purchase price to the identifiable assets acquired and liabilities assumed is as follows:

Core Timberlands Timber Funds Total

Timberland and Real Estate Business

Cash $ 7,380 $ 8,870 $ 16,250

Accounts receivable 2,459 1,787 4,246

Other current assets 703 260 963

Timber and Timberlands 498,630 449,073 947,703

Higher and Better Use Timberlands and Real Estate Development Investments 34,748 — 34,748

Property, plant and equipment 11,616 — 11,616

Other assets (a) 3,737 2,194 5,931

Total identifiable assets acquired $ 559,273 $ 462,184 $ 1,021,457

Accounts payable 274 293 567

Current maturities of long-term debt — 25,084 25,084

Accrued interest 244 275 519

Other current liabilities 9,038 2,080 11,118

Long-term debt 53,502 35,759 89,261

Long-term environmental liabilities 10,748 — 10,748

Other non-current liabilities (b) 2,724 461 3,185

Total liabilities assumed $ 76,530 $ 63,952 $ 140,482

Net identifiable assets $ 482,743 $ 398,232 $ 880,975

noncontrolling interests ( 3,816 ) ( 339,238 ) ( 343,054 )

Total net assets acquired $ 478,927 $ 58,994 $ 537,921

(a) Other assets includes a $ 1.9 million intangible asset in connection with the Timberland Investment Management business.

(b) Other non-current liabilities includes a $ 3.2 million deferred income tax liability resulting from the fair value adjustment to Pope Resources’ assets and liabilities.

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

Pursuant to ASC 805, unaudited supplemental pro forma results of operations for the years ended December 31, 2020 and 2019, assuming the acquisition had occurred as of January 1, 2019, are presented below (in thousands, except per share and unit amounts):

Sales $ 890,400 $ 821,500

Net income attributable to Rayonier Inc.

$ 38,411 $ 28,640

Basic earnings per share attributable to Rayonier Inc.

$ 0.28 $ 0.21

Diluted earnings per share attributable to Rayonier Inc.

$ 0.28 $ 0.21

Net income attributable to Rayonier, L.P.

$ 39,658 $ 29,574

Basic earnings per unit attributable to Rayonier, L.P.

$ 0.28 $ 0.21

Diluted earnings per unit attributable to Rayonier, L.P.

$ 0.28 $ 0.21

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;

• a reduction in expenses for year ended December 31, 2020 of $ 32.3 million 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.

On February 13, 2023, Cyclone Gabrielle came across the northeast coast of the North Island in New Zealand.

As of the date of filing, we have begun assessing our exposure but are unable to reasonably quantify the extent of loss, which includes damages to roading infrastructure and timber in certain areas.

RAYONIER INC.

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SEGMENT AND GEOGRAPHICAL INFORMATION

Rayonier operates in six reportable segments:

Southern Timber, Pacific Northwest Timber, New Zealand Timber, Timber Funds, Real Estate, and Trading.

As of December 31, 2022 Rayonier operated in five reportable segments:

Southern Timber, Pacific Northwest Timber, New Zealand Timber, Real Estate, and Trading.

The previously reported Timber Funds segment was liquidated in 2021 with all proceeds being distributed to noncontrolling interests at the end of 2022.

As a result, disclosure of Timber Funds segment results is not presented for 2022 while prior year results are presented for historical purposes.

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.

We evaluate financial performance based on segment operating income (loss) 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.

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The year ended December 31, 2021 also includes $ 31.4 million from Fund II Timberland Dispositions attributable to Rayonier.

(b) Primarily consists of the elimination of timberland investment management fees paid to us by 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 Trading segment from our Southern Timber and Pacific Northwest Timber segments for marketing log export sales.

(b) The years ended December 31, 2022, 2021 and 2020 include log marketing fees paid to our Trading segment from our Southern Timber and Pacific Northwest Timber segments for marketing log export sales.

The years ended December 31, 2021 and December 31, 2020 include the elimination of timberland investment management fees paid to us by the timber funds which were initially recognized as sales and cost of sales within the Timber Funds segment.

RAYONIER INC.

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Southern Timber (a) $ 96,616 $ 66,111 $ 41,247

Pacific Northwest Timber 6,827 ( 9,979 ) ( 12,427 )

Pacific Northwest Timber (b) 15,192 6,827 ( 9,979 )

New Zealand Timber 30,621 51,513 29,984

Timber Funds (b) 63,219 ( 13,195 ) —

Real Estate (c) 112,540 71,951 38,665

Timber Funds (c) — 63,219 ( 13,195 )

Real Estate (d) 58,495 112,540 71,951

Trading 382 144 ( 462 )

Corporate and other (d) ( 30,579 ) ( 45,158 ) ( 25,058 )

Corporate and other (e) ( 35,484 ) ( 30,579 ) ( 45,158 )

Total Operating Income 165,822 269,775 74,388

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Timber write-offs resulting from casualty events are recorded within the Consolidated Statements of Income and Comprehensive Income under the caption “Cost of sales.”

(b) The year ended December 31, 2021 includes $ 45.6 million of operating income attributable to noncontrolling interests in Timber Funds.

(b) The year ended December 31, 2022 includes $ 0.7 million of timber write-offs resulting from casualty events.

Timber write-offs resulting from casualty events are recorded within the Consolidated Statements of Income and Comprehensive Income under the caption “Cost of sales.”

(c) The year ended December 31, 2021 includes $ 45.6 million of operating income attributable to noncontrolling interests in Timber Funds.

Included in operating income attributable to noncontrolling interests in Timber Funds for the year ended December 31, 2021 is $ 41.2 million of income from Fund II Timberland Dispositions.

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Timber write-offs resulting from casualty events are recorded within the Consolidated Statements of Income and Comprehensive Income under the caption “Cost of sales.”

(c) The years ended December 31, 2021 and December 31, 2020 include $ 44.8 million and $ 28.7 million, respectively, from Large Dispositions.

(d) The year ended December 31, 2020 includes $ 17.2 million of integration and restructuring costs related to the merger with Pope Resources.

See Note 27 — Charges for Integration and Restructuring for additional details.

(d) The year ended December 31, 2022 includes an $ 11.5 million gain associated with the multi-family apartment complex sale attributable to noncontrolling interests.

The gain associated with the multi-family apartment complex sale attributable to noncontrolling interests was recorded within the Consolidated Statements of Income and Comprehensive Income under the caption “Other operating income, net”.

The years ended December 31, 2022, 2021 and 2020 include $ 16.6 million, $ 44.8 million and $ 28.7 million, respectively, from Large Dispositions.

(e) The year ended December 31, 2020 includes $ 17.2 million of integration and restructuring costs related to the merger with Pope Resources.

RAYONIER INC.

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For additional information, see Note 2 - Merger with Pope Resources .

Depreciation,

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The year ended December 31, 2020 includes $ 10.3 million of depreciation, depletion and amortization attributable to noncontrolling interests in Timber Funds.

(b) The years ended December 31, 2021 and December 31, 2020 include $ 9.8 million and $ 35.4 million, respectively, from Large Dispositions.

(b) The years ended December 31, 2022, 2021 and 2020 include $ 8.3 million, $ 9.8 million and $ 35.4 million, respectively, from Large Dispositions.

RAYONIER INC.

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(a) The year ended December 31, 2021 includes $ 20.2 million of non-cash cost of land and improved development from Fund II Timberland Dispositions, of which $ 16.2 million was attributable to noncontrolling interests in Timber Funds and $ 4.0 million was attributable to Rayonier.

(b) The years ended December 31, 2021 and December 31, 2020 include $ 0.1 million and $ 51.6 million, respectively, from Large Dispositions.

(b) The years ended December 31, 2022, 2021 and 2020 include $ 4.6 million, $ 0.1 million and $ 51.6 million, respectively, from Large Dispositions.

Geographical Operating Information

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Revenue recognized from contract liability balance at the beginning of the year (a) $ 16,148 $ 10,809

(a) Revenue recognized was primarily from hunting licenses and the use of advances on pay-as-cut timber sales.

(a) Revenue recognized was primarily from hunting licenses, the use of advances on pay-as-cut timber sales, and performance obligations from development sales.

RAYONIER INC.

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Agency Fee Income — — — — — 1,256 — 1,256

Fund II Timberland Dispositions — — — 156,752 — — — 156,752

Total Non-Timber Sales 27,589 5,602 20,967 — — 1,256 — 55,414

Improved Development — — — — 35,413 — — 35,413

Unimproved Development — — — — 37,500 — — 37,500

Rural — — — — 59,485 — — 59,485

Timberland & Non-Strategic — — — — 11,400 — — 11,400

Conservation Easements — — — — 3,855 — — 3,855

Deferred Revenue/Other (a) — — — — ( 38 ) — — ( 38 )

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Agency Fee Income — — — — — 1,399 — 1,399

Fund II Timberland Dispositions — — — 156,752 — — — 156,752

Total Non-Timber Sales 24,621 5,917 1,060 157,231 — 1,399 — 190,228

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Timberland & Non-Strategic — — — — 19,255 — — 19,255

Conservation Easements — — — — 3,099 — — 3,099

Deferred Revenue/Other (a) — — — — 283 — — 283

Large Dispositions — — — — 116,027 — — 116,027

Total Real Estate Sales — — — — 228,740 — — 228,740

Revenue from Contracts with Customers 191,831 120,809 202,315 26,120 228,740 88,734 — 858,549

Lease Revenue — — — — 605 — — 605

Intersegment — — — 3,437 — 239 ( 3,676 ) —

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TIMBERLAND ACQUISITIONS

In 2021, we acquired approximately 100,000 acres of U.S.

timberland located in Florida, Georgia, and Texas through seven transactions for an aggregate value of $ 168.2 million, which were funded from operating cash flow, proceeds from the sale of the Timber Funds business and use of the Company’s at-the-market equity offering program.

Additionally, during 2021, we acquired approximately 3,000 acres of timberland (including approximately 1,000 acres of leased land) in New Zealand for approximately $ 10.9 million.

In December 2022, we completed the acquisitions of approximately 138,000 acres of high-quality commercial timberlands located in Texas, Georgia, Alabama, and Louisiana from Manulife Investment Management for approximately $ 454.5 million in the aggregate.

We funded the acquisitions with incremental borrowings, cash on hand, and like-kind exchange proceeds.

Additionally, in five transactions during 2022, we acquired approximately 2,000 acres of U.S.

timberland located in Alabama, Florida, Georgia and Washington for an aggregate value of $ 3.3 million, which were primarily funded from operating cash flow.

During 2022, we also acquired approximately 1,000 acres of timberland (including approximately 400 acres of leased land) in New Zealand for approximately $ 0.7 million.

These acquisitions were funded from operating cash flow.

In 2021, we acquired approximately 100,000 acres of U.S.

timberland located in Alabama, Georgia, and Louisiana through three transactions for an aggregate value of $ 24.2 million.

Approximately $ 24.1 million of these acquisitions were acquired using like-kind exchange proceeds while the remaining $ 0.1 million were funded from operating cash flow.

timberland located in Florida, Georgia and Texas through seven transactions for an aggregate value of $ 168.2 million, which were funded from operating cash flow, proceeds from the sale of the Timber Funds business and use of the Company’s 2020 ATM Program.

Additionally, during 2021, we acquired approximately 3,000 acres of timberland (including approximately 1,000 acres of leased land) in New Zealand for approximately $ 10.9 million.

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The following table summarizes the timberland acquisitions for the years ended December 31, 2022 and 2021:

2021 2020 (a)

Cost Acres Cost Acres

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Texas 178,200 65,226 98,507 51,568

Washington 26 20 — —

New Zealand 734 1,409 10,927 2,676

Total Acquisitions $ 458,530 141,015 $ 179,115 103,173

(a) Excludes acres and costs related to the Pope Resources merger.

For more information on assets and liabilities acquired see Note 2 - Merger with Pope Resources .

TIMBERLAND LEASES

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 lands 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, we 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 December 31, 2021, the New Zealand subsidiary has three CFLs comprising 11,000 gross acres or 9,000 net plantable acres under termination notice that are being relinquished as harvest activities are concluded, as well as two fixed-term CFLs comprising 3,000 gross acres or 2,000 net plantable acres expiring in 2062.

Additionally, the New Zealand subsidiary has two forestry rights comprising 32,000 gross acres or 6,000 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 lease 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.

LEASE MATURITIES, LEASE COST AND OTHER LEASE INFORMATION

The following table details our undiscounted lease obligations as of December 31, 2021 by type of lease and year of expiration:

Year of Expiration

Lease obligations Total 2022 2023 2024 2025 2026 Thereafter

Operating lease liabilities $ 188,388 $ 9,038 $ 8,864 $ 8,604 $ 7,889 $ 7,176 $ 146,817

Total Undiscounted Cash Flows $ 188,388 $ 9,038 $ 8,864 $ 8,604 $ 7,889 $ 7,176 $ 146,817

Imputed interest ( 86,540 )

Balance at December 31, 2021

Current portion ( 8,432 )

Non-current portion at December 31, 2021

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

The following table details components of our lease cost for the years ended December 31, 2021, 2020, and 2019:

Year Ended December 31,

Lease Cost Components 2021 2020 2019

Operating lease cost $ 10,166 $ 9,647 $ 10,870

Variable lease cost (a) 196 230 235

Total lease cost (b) $ 10,362 $ 9,877 $ 11,105

(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 year ended December 31, 2021.

The following table details components of our lease cost for the years ended December 31, 2021, 2020 and 2019:

Year Ended December 31,

Supplemental Cash Flow Information Related to Leases:

2021 2020 2019

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

Operating cash flows from operating leases $ 2,389 $ 2,127 $ 2,567

Investing cash flows from operating leases 7,777 7,520 8,303

Total cash flows from operating leases $ 10,166 $ 9,647 $ 10,870

Weighted-average remaining lease term in years - operating leases 29 29 28

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

Lessor Lease Information

In the Pope Resources merger, we acquired commercial and residential properties primarily concentrated in Port Gamble, Washington, which generate lease income under operating leases.

As of December 31, 2021, properties subject to operating leases had an aggregate cost basis and accumulated depreciation of $ 3.5 million and $ 0.5 million, respectively.

These leases typically range a few years with the option to extend on a case by case basis.

Commercial and residential leases have non-lease components of taxes, insurance and common area maintenance, which we have elected not to separate under the ASC 842 practical expedient.

The following table details our lease income for the years ended December 31, 2021, 2020 and 2019:

Year Ended December 31,

Lease Income Components 2021 2020 2019

Operating lease income $ 1,152 $ 605 —

Total lease income $ 1,152 $ 605 —

Future lease income as of December 31, 2021 , based on payments due by period under the lease contracts, are presented in the following table:

Year of Expiration

Lease assets Total 2022 2023 2024 2025 2026 Thereafter

Operating lease Income $ 638 $ 379 $ 173 $ 82 $ 2 $ 2 —

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

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 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.

NONCONTROLLING INTERESTS

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Net income attributable to noncontrolling interests in the New Zealand subsidiary $ 2,966 $ 7,696 $ 4,920

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 Pope Resources merger, we became the manager of three private equity timber funds, Fund II, Fund III, and Fund IV, consisting of 141,000 acres in the Pacific Northwest, and obtained ownership interests in the Funds of 20 %, 5 %, and 15 %, respectively.

Prior to the 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.

Based upon an analysis under the variable interest entity guidance, we determined that we had the power to direct the activities that most significantly impacted the Funds’ economic success.

Therefore, we were considered the primary beneficiary and were required under ASC 810 — Consolidation to consolidate the Funds.

Income 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 (income) loss attributable to noncontrolling interests in consolidated affiliates.”

On July 21, 2021, we sold the rights to manage Fund III and Fund IV, as well as our ownership interests in both funds to BTG Pactual’s Timberland Investment Group (TIG) for an aggregate sales price of $ 35.9 million and recognized in our Consolidated Statements of Income and Comprehensive Income a gain on the sale of $ 3.7 million under the caption of other operating income (expense), net.

As a result, Timber Fund III and IV balance sheets and results of operations are only included in our consolidated financial statements through the date of the sale.

In addition, we completed the liquidation of Fund II timberland assets through three separate transactions during the third and fourth quarters of 2021 for an aggregate sales price of $ 156.8 million and recognized in our Consolidated Statements of Income and Comprehensive Income an aggregate gain on the sales of $ 51.5 million, of which $ 10.3 million was attributable to Rayonier.

This consisted of a 13,000 acre sale in Washington on September 30, 2021 for a sales price and gai n of $ 87.1 million and $ 35.9 million, respectively, a 5,000 acre sale in Oregon on October 5, 2021 for a sales price and gain of $ 37.2 million and $ 11.0 million, respectively, and a 13,000 acre sale in Oregon on November 1, 2021 for a sales price and gain of $ 32.5 million and $ 4.6 million, respectively.

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

As of December 31, 2021, we continue to manage and maintain a 20 % ownership interest in Fund II, which is scheduled to terminate in March 2023.

Prior to the termination of Fund II, the remaining capital will be distributed to Fund II investors.

We continue to have the power to direct the activities that most significantly impact Fund II’s economic success.

Therefore, we are considered the primary beneficiary and consolidate Fund II under ASC 810 — Consolidation .

The obligations of Fund II do not have any recourse to the Company or the Operating Partnership and the assets of Fund II are not available to satisfy the Company or the Operating Partnership’s liabilities.

Due to Timber Fund II distribution requirements, we classified the portion of proceeds from Fund II Timberland Dispositions attributable to noncontrolling interests as a current asset under the caption “Restricted Cash, Timber Funds” on our Consolidated Balance Sheets.

Additionally, we recognized a current liability under the caption “Distribution payable, Timber Funds” and a corresponding decrease in “Noncontrolling Interests in Consolidated Affiliates” on our Consolidated Balance Sheets.

See Note 1 — Summary of Significant Accounting Policies , Note 8 — Variable Interest Entities and Note 2 4 — Restricted Cash for additional information.

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

2021 2020 2019

Net income (loss) attributable to noncontrolling interests in the Funds:

$ 45,124 ($ 12,221 ) —

Timber Fund II Carried Interest Incentive Fees

As a performance incentive to us as the manager and general partner of Timber Fund II, the Fund agreement provides for a “carried interest,” permitting us to receive a greater allocable share of the Fund’s earnings from investments relative to our capital contributions and correspondingly reducing the noncontrolling interests’ share of those earnings.

After distributions sufficient for the Fund to pay each stockholder a return of 8 % on its average investment and reduce its invested capital balance to zero , we are entitled to receive a 20 % carried interest of any further distributions.

Carried interest is earned to the extent that cumulative investment returns are positive and preferred dividend payment thresholds have been met.

Carried interest is recognized in our Consolidated Statements of Income and Comprehensive Income based on the contractual conditions set forth in the agreements governing the Fund as if the Fund were terminated and liquidated at the reporting date.

In the year ended December 31, 2021, we recognized a gain on Fund II carried interest incentive fees of $ 3.8 million in our Consolidated Statements of Income and Comprehensive Income under the caption of other operating income (expense), net.

Ferncliff Investors

We maintain an ownership interest in Ferncliff Investors, 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 five -acre parcel on Bainbridge Island, Washington into a multi-family community containing apartments and townhomes.

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, for the development of a multi-family community containing apartments and townhouses on a five -acre parcel in Bainbridge Island, Washington.

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.

Based upon an analysis under the variable interest entity guidance, we have the power to direct the activities that most significantly impact Ferncliff Investor’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.

The Ferncliff Investors joint venture agreement provides for liquidation rights and distribution priorities that are disproportionate to each member’s ownership interest.

Due to the complex nature of cash distributions to members, net income of the joint venture is allocated to members, including us, using the Hypothetical Liquidation at Book Value (HLBV) method.

Under the HLBV method, Ferncliff Investors income or loss is allocated to the members based on the period change in each member’s claim on the book value of net assets, excluding capital contributions and distributions made during the period.

In 2022, Bainbridge Landing, LLC completed the planned sale of its multi-family apartment complex in Bainbridge Island, Washington for a purchase price of $ 65.5 million.

The equity income related to the apartment complex sale was $ 16.0 million, of which $ 4.5 million was attributable to Rayonier.

We recognized the gain on the sale in our Consolidated Statements of Income and Comprehensive Income under the caption “Other operating income, net.”

RAYONIER INC.

4 unchanged sentences

(Dollar amounts in thousands unless otherwise stated)

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

2021 2020 2019

Net income (loss) attributable to noncontrolling interests in Ferncliff Investors:

$ 601 ($ 526 ) —

NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP

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Beginning noncontrolling interests in the operating partnership $ 133,823 $ 130,121

Issuances of redeemable operating partnership units

Adjustment of noncontrolling interests in the operating partnership ( 23,155 ) 42,530

11 unchanged sentences

(Dollar amounts in thousands unless otherwise stated)

VARIABLE INTEREST ENTITIES

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”)

As mentioned in Note 1 — Summary of Significa nt Accounting Policies and Note 7 — Noncontrolling Interests , we sold the rights to manage Fund III and Fund IV, as well as our ownership interests in both funds in July 2021.

As a result, Timber Fund III and IV balance sheets and results of operations are only included in our consolidated financial statements through the date of the sale.

In addition, we completed the liquidation of Fund II timberland assets through three separate transactions during the third and fourth quarters of 2021.

As of December 31, 2021, we continue to maintain a 20 % ownership interest in Fund II, which is scheduled to terminate in March 2023.

Prior to the termination of Fund II, the remaining capital will be distributed to Fund II investors.

We continue to have the power to direct the activities that most significantly impact Fund II’s economic success.

Therefore, we are considered the primary beneficiary and consolidate Fund II under ASC 810 — Consolidation .

For further information on the Funds, see Note 7 — Noncontrolling Interests .

The assets, liabilities and equity of Fund II as of December 31, 2021, were as follows:

Timber Funds 2021

Cash and cash equivalents $ 3,493

Restricted cash, Timber Funds ( Note 24 )

Accounts receivable 9

Intercompany receivable (a) 41

Other current assets 26

Total current assets 9,910

Total assets $ 9,910

Liabilities and Equity:

Accounts payable $ 22

Accrued taxes 32

Distributions payable, Timber Funds (b) 6,341

Other current liabilities (c) 3,546

Total current liabilities 9,941

Funds’ equity ( 31 )

Total liabilities and equity $ 9,910

(a) Includes amounts due from other consolidated entities.

These amounts are eliminated in the Consolidated Balance Sheets.

(b) Represents the portion of proceeds from Fund II Timberland Dispositions required to be distributed to noncontrolling interests.

(c) Includes $ 3.5 million of proceeds from Fund II Timberland Dispositions required to be distributed to other consolidated entities.

These amounts are eliminated in the Consolidated Balance Sheets.

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

Ferncliff Investors

We maintain an ownership interest in Ferncliff Investors, a real estate joint venture entity.

Based upon an analysis under the variable interest entity guidance, 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.

For further information on Ferncliff Investors, see Note 7 — Noncontrolling Interests .

The assets, liabilities and equity of Ferncliff Investors as of December 31, 2021, were as follows:

Ferncliff Investors 2021

Cash and cash equivalents $ 1,508

Total current assets 1,508

Total assets $ 1,508

Liabilities and equity:

Total current liabilities $ 472

Total non-current liabilities 2,170

Total liabilities $ 2,642

Ferncliff Investors’ equity ( 1,134 )

Total liabilities and equity $ 1,508

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

EARNINGS PER SHARE AND PER UNIT

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Our debt consisted of the following at December 31, 2022 and 2021:

Debt, excluding Timber Funds:

Term Credit Agreement borrowings due 2028 at a variable interest rate of 1.7 % at December 31, 2021

$ 350,000 $ 350,000

Senior Notes due 2031 at a fixed interest rate of 2.75 %

$ 450,000 $ 450,000

Senior Notes due 2031 at a fixed interest rate of 2.75 %

Incremental Term Loan Agreement borrowings due 2026 at a variable interest rate of 1.75 % at December 31, 2021

2015 Term Loan Facility borrowings due 2028 at a variable interest rate of 5.4 % at December 31, 2022

350,000 350,000

2022 Incremental Term Loan Facility borrowings due 2027 at a variable interest rate of 5.21 % at December 31, 2022

2016 Incremental Term Loan Facility borrowings due 2026 at a variable interest rate of 5.54 % at December 31, 2022

200,000 200,000

2021 Incremental Term Loan Facility borrowings due 2029 at a variable interest rate of 5.35 % at December 31, 2022

New Zealand subsidiary noncontrolling interest shareholder loan due 2026 at a fixed interest rate of 3.64 %

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New Zealand subsidiary noncontrolling interest shareholder loan due 2027 at a fixed interest rate of 6.48 %

Northwest Farm Credit Services Credit Facility with quarterly interest-only payments, collateralized by Core Timberlands, with the following tranches:

Due 2025 at a fixed interest rate of 6.1 %

Due 2028 at a fixed interest rate of 4.1 %

Due 2033 at a fixed interest rate of 5.3 %

Due 2036 at a fixed interest rate of 5.4 %

Total principal debt, excluding Timber Funds 1,376,107 1,294,903

Fair value adjustments, excluding Timber Funds — 7,917

Unamortized discounts, excluding Timber Funds ( 3,426 ) —

Current maturities of long-term debt, excluding Timber Funds ( 124,965 ) —

Deferred financing costs, excluding Timber Funds ( 4,897 ) ( 2,484 )

Total long-term debt, excluding Timber Funds 1,242,819 1,300,336

Debt, Timber Funds:

Fund II Mortgages Payable, collateralized by Fund II timberlands with quarterly interest

payments, as follows:

Due 2022 at a fixed interest rate of 2.0 %

Fund III Mortgages Payable, collateralized by Fund III timberlands with quarterly interest

payments, as follows:

Due 2023 at a fixed interest rate of 5.1 %

Due 2024 at a fixed interest rate of 4.5 %

Total principal debt, Timber Funds — 57,380

Fair value adjustments, Timber Funds — 2,809

Deferred financing costs, Timber Funds — ( 10 )

Total long-term debt, Timber Funds — 60,179

New Zealand subsidiary noncontrolling interest shareholder loan due 2025 at a fixed interest rate of 2.95 %

21,931 23,588

Senior Notes due 2022 at a fixed interest rate of 3.75 %

Total principal debt 1,523,103 1,376,107

Unamortized discounts ( 3,104 ) ( 3,426 )

Current maturities of long-term debt — ( 124,965 )

Deferred financing costs ( 5,278 ) ( 4,897 )

Total long-term debt $ 1,514,721 $ 1,242,819

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

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

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

2022 $ 325,000

Thereafter 1,000,000

Total debt $ 1,523,103

TERM CREDIT AGREEMENT

In August 2015, we entered into a credit agreement with CoBank, ACB, as administrative agent, and a syndicate of Farm Credit institutions and other commercial banks to provide $ 550 million of new credit facilities, including a nine-year $ 350 million term loan facility.

In April 2020, the maturity date of the Term Credit Agreement was extended from August 5, 2024 to April 1, 2028.

In connection therewith, we recorded deferred financing costs in the amount of $ 0.5 million, which are being amortized over the term of the Term Credit Agreement.

The periodic interest rate on the term loan facility is subject to a pricing grid based on our leverage ratio, as defined in the credit agreement.

As of December 31, 2021, the periodic interest rate on the term loan facility was LIBOR plus 1.600 %.

Monthly payments of interest only are due on this loan through maturity.

Following the closing of the term loan, we entered into several interest rate swap transactions to fix the cost of the term loan facility over its nine-year term.

The term credit agreement allows us to receive annual patronage payments, which are profit distributions made by a cooperative to its member-users based on the quantity or value of business done with the member-user.

We estimate the effective interest rate on the term loan facility to be approximately 3.0 % after consideration of the interest rate swaps and estimated patronage refunds.

For additional information on our interest rate swaps see Note 11 — Derivative Financial Instruments and Hedging Activities .

3.75 % SENIOR NOTES ISSUED MARCH 2012

In March 2012, Rayonier Inc.

issued $ 325 million of 3.75 % Senior Notes due 2022, guaranteed by certain subsidiaries.

Semi-annual payments of interest only are due on these notes through maturity.

See the subsequent events section of Note 1 - Summary of Significant Accounting Policies for information about the repayment of our Senior Notes due 2022.

2.75 % SENIOR NOTES ISSUED MAY 2021

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Our net proceeds after deducting approximately $ 3.9 million of underwriting discounts and expenses, were approximately $ 442.5 million.

The discount and debt issuance costs will be amortized to interest expense over the term of the notes using the effective interest method.

A portion of the proceeds were used to repay $ 250 million outstanding under our 2020 Incremental Term Loan Agreement.

The discount and debt issuance costs are being amortized to interest expense over the term of the notes using the effective interest method.

TERM CREDIT AGREEMENTS

We have entered into several credit agreements with CoBank, ACB, as administrative agent, and a syndicate of Farm Credit Institutions.

Our various term credit facilities issued through the Farm Credit System provide for annual patronage payments, which are profit distributions made by the cooperative to its member-users based on the quantity or value of business done with the member-user.

RAYONIER INC.

4 unchanged sentences

(Dollar amounts in thousands unless otherwise stated)

INCREMENTAL TERM LOAN AGREEMENT

In April 2016, we entered into an incremental term loan agreement with CoBank, ACB, as administrative agent, and a syndicate of Farm Credit institutions to provide a 10 -year, $ 300 million incremental term loan.

The periodic interest rate on the incremental term loan agreement is subject to a pricing grid based on our leverage ratio, as defined in the credit agreement.

In June 2021, we entered into a Fourth Amendment to the Credit Agreement which decreased the applicable margin from LIBOR plus 1.900 % to LIBOR plus 1.6500 %.

As a result of the debt modification, approximately $ 0.3 million in third-party expenses have been recognized in the Consolidated Statements of Income and Comprehensive Income under the caption “Interest and other miscellaneous income, net.” In June 2021, we prepaid $ 100 million on the $ 300 million Incremental Term Loan Agreement.

In connection with the partial prepayment, we recognized a loss on early extinguishment of debt of $ 0.1 million, representing the write-off of one-third of the unamortized deferred financing costs.

The loss on early extinguishment of debt has been recorded in the Consolidated Statements of Income and Comprehensive Income under the caption “Interest and other miscellaneous income, net.” As of December 31, 2021, the periodic interest rate on the incremental term loan was LIBOR plus 1.650 %.

In December 2022, we amended all of our term credit agreements to convert the interest rate benchmark from LIBOR to Daily Simple SOFR plus a credit spread adjustment.

While all of our term credit facilities provide for variable interest rates based on a spread over Daily Simple SOFR, we have entered into multiple interest rate swap agreements to fix portions of our variable rate exposure.

For each credit facility described below, we provide our estimated effective interest rate after consideration of estimated patronage payments and interest rate swaps.

2015 TERM LOAN AGREEMENT

In August 2015, we entered into a credit agreement with CoBank, ACB, as administrative agent, and a syndicate of Farm Credit institutions and other commercial banks to provide $ 550 million of credit facilities, including a nine-year $ 350 million term loan facility (“2015 Term Loan Facility”).

The periodic interest rate on the 2015 Term Loan Facility is subject to a pricing grid based on our leverage ratio, as defined in the Term Credit Agreement.

As of December 31, 2022, the periodic interest rate on the 2015 Term Loan Facility was Daily Simple SOFR plus 1.6 % plus a credit spread adjustment of 0.1 %.

Monthly payments of interest only are due on this loan through maturity.

Following the closing of the incremental term loan, we entered into several interest rate swap transactions to fix the cost of the facility over its 10 -year term.

We estimate the effective interest rate on the incremental term loan facility to be approximately 2.4 % after consideration of the interest rate swaps and estimated patronage payments.

We estimate the effective interest rate on this term loan facility to be approximately 3.0 % after consideration of the interest rate swaps and estimated patronage refunds.

For additional information on our interest rate swaps, see Note 8 — Derivative Financial Instruments and Hedging Activities .

2022 INCREMENTAL TERM LOAN AGREEMENT

In April 2020, we entered into an Incremental Term Loan Agreement, which provided for the advancement of a five-year $ 250 million senior unsecured incremental term loan facility.

Proceeds from the 2020 Incremental Term Loan Facility were used to fund our acquisition of Pope Resources.

In May 2021, the Incremental Term Loan Agreement was fully repaid.

We recognized a loss on early extinguishment of debt of $ 0.6 million, representing the write-off of unamortized deferred financing costs.

The loss on early extinguishment of debt has been recognized in the Consolidated Statements of Income and Comprehensive Income under the caption “Interest and other miscellaneous income, net.”

In December 2022, we entered into an Incremental Term Loan Agreement to provide a five-year $ 250 million senior unsecured incremental term loan facility (“2022 Incremental Term Loan Facility”).

The proceeds from the 2022 Incremental Term Loan Facility were used to partially fund our acquisition of high-quality commercial timberlands located in Texas, Georgia, Alabama and Louisiana for an aggregate purchase price of approximately $ 454.5 million, after customary purchase price adjustments at closing.

The periodic interest rate on the 2022 Incremental Term Loan Facility is subject to a pricing grid based on our leverage ratio, as defined in the Incremental Term Loan Agreement.

As of December 31, 2022, the periodic interest rate on the 2022 Incremental Term Loan Facility was Daily Simple SOFR plus 1.6 % plus a credit spread adjustment of 0.1 %.

Monthly payments of interest only are due on this loan through maturity.

We estimate the effective interest rate on this term loan facility to be approximately 4.9 % after consideration of interest rate swaps and estimated patronage refunds.

For additional information on our interest rate swaps, see Note 8 — Derivative Financial Instruments and Hedging Activities .

2016 INCREMENTAL TERM LOAN AGREEMENT

In June 2021, we entered into an Incremental Term Loan Agreement, which provides us the ability to make an advance of $ 200 million on or before June 1, 2022.

As of December 31, 2021, no advance had been made under this facility.

We will use a future advance of $ 200 million under the 2021 Incremental Term Loan Facility to refinance a portion of the 3.750 % Senior Notes due 2022 on a long-term basis, and as such, have excluded $ 200 million of principal from current maturities of long-term debt, net, in our Consolidated Balance Sheets.

We deferred $ 0.3 million of commitment fees, which are being amortized to interest expense over the term of the access period, through June 1, 2022.

Additionally, we deferred $ 0.2 million in debt issuance costs, which will be amortized to interest expense over the term of the facility, once any future advance is made.

See the subsequent events section of Note 1 - S ummary of Signif icant Accounting Policies information about activity on the 2021 Incremental Term Loan subsequent to December 31, 2021.

REVOLVING CREDIT FACILITY

In June 2021, we amended our Revolving Credit Facility, originally entered into in 2015, with one amendment to the credit agreement:

the amendment decreased the applicable margin from LIBOR plus 1.500 % to LIBOR plus 1.2500 % and extended its maturity date from April 1, 2025 to June 1, 2026.

As a result of the revolver modification, approximately $ 0.3 million in lender fees have been deferred and are being amortized to interest expense over the remaining term of the revolver.

In April 2020, we previously amended our Revolving Credit Facility, with two amendments to the credit agreement:

the first amendment increased the limit on the Revolving Credit Facility from $ 200 million to $ 250 million and extended its maturity date from August 5, 2020 to April 1, 2025, and the second amendment further increased the limit to $ 300 million.

In connection therewith, we recorded deferred financing costs in the amount of $ 1.2 million, which are being amortized over the term of the Revolving Credit Facility.

See Note 25 - Other Assets for additional information about deferred financing costs related to revolving debt.

The periodic interest rate on the revolving credit facility is subject to a pricing grid based on our leverage ratio, as defined in the credit agreement.

As of December 31, 2021, the periodic interest rate on the revolving credit facility was LIBOR plus

In April 2016, we entered into an Incremental Term Loan Agreement to provide a 10 -year, $ 300 million term loan facility (“2016 Incremental Term Loan Facility”) of which $ 100 million was subsequently repaid.

The periodic interest rate on the 2016 Incremental Term Loan Facility is subject to a pricing grid based on our leverage ratio, as defined in the Incremental Term Loan Agreement.

As of December 31, 2022, the periodic interest rate on the $ 200 million 2016 Incremental Term Loan Facility was Daily Simple SOFR plus 1.65 % plus a credit spread adjustment of 0.1 %.

Monthly payments of interest only are due on this loan through maturity.

We estimate the effective interest rate on this term loan facility to be approximately 2.4 % after consideration of interest rate swaps and estimated patronage payments.

For additional information on our interest rate swaps, see Note 8 — Derivative Financial Instruments and Hedging Activities .

RAYONIER INC.

4 unchanged sentences

(Dollar amounts in thousands unless otherwise stated)

1.250 %, with an unused commitment fee of 0.175 %.

2021 INCREMENTAL TERM LOAN AGREEMENT

In June 2021, we entered into an Incremental Term Loan Agreement, which provided us the ability to make an advance of $ 200 million on or before June 1, 2022.

In January 2022, we made a $ 200 million draw on our 2021 Incremental Term Loan Facility.

Proceeds from the 2021 Incremental Term Loan Facility were used to repay the outstanding principal on our Revolving Credit Facility, which was used to fund the repayment of the Senior Notes due 2022.

The periodic interest rate on the 2021 Incremental Term Loan Facility is subject to a pricing grid based on our leverage ratio, as defined in the Incremental Term Loan Agreement.

As of December 31, 2022, the periodic interest rate on the 2021 Incremental Term Loan Facility was Daily Simple SOFR plus 1.55 % plus a credit spread adjustment of 0.1 %.

Monthly payments of interest only are due on this loan through maturity.

During the year ended December 31, 2021, we made no borrowings or repayments on our Revolving Credit Facility .

At December 31, 2021, we had available borrowings of $ 299.1 million under the Revolving Credit Facility, net of $ 0.9 million to secure our outstanding letters of credit.

We estimate the effective interest rate on this term loan facility to be approximately 1.5 % after consideration of interest rate swaps and estimated patronage refunds.

For additional information on our interest rate swaps, see Note 8 — Derivative Financial Instruments and Hedging Activities .

REVOLVING CREDIT FACILITY

In December 2022, we amended the $ 300 million Revolving Credit Facility to convert the interest rate benchmark from LIBOR to Daily Simple SOFR plus a credit spread adjustment.

The periodic interest rate on the Revolving Credit Facility is subject to a pricing grid based on our leverage ratio, as defined in the Term Credit Agreement.

As of December 31, 2022, the periodic interest rate on the Revolving Credit Facility was Daily Simple SOFR plus 1.25 % plus a credit spread adjustment of 0.1 %, with an unused commitment fee of 0.175 %.

Monthly payments of interest only are due on this loan through maturity.

See Note 23 — Other Assets for additional information about deferred financing costs related to revolving debt.

During the year ended December 31, 2022, we made borrowings and repayments of $ 200 million .

At December 31, 2022, we had available borrowings of $ 296.2 million, net of $ 3.8 million to secure our outstanding letters of credit.

3.75 % SENIOR NOTES ISSUED MARCH 2012

In March 2012, Rayonier Inc.

issued $ 325 million of 3.75 % Senior Notes due 2022.

In January 2022, we repaid the $ 325 million outstanding on the Senior Notes due 2022.

NEW ZEALAND SUBSIDIARY DEBT

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In June 2022, the New Zealand subsidiary renewed its NZ$ 20 million working capital facility for an additional 12 -month term.

The NZ$ 20 million working capital facility is available for short-term operating cash flow needs of the New Zealand subsidiary.

The facility is available for short-term operating cash flow needs of the New Zealand subsidiary.

This facility holds a variable interest rate indexed to the 90 -day New Zealand Bank Bill rate (“BKBM”).

The margins are set for the term of the facility.

During the year ended December 31, 2021, the New Zealand subsidiary made no borrowings or repayments on its working capital facility.

At December 31, 2021, there was no outstanding balance on the working capital facility.

SHAREHOLDER LOAN DUE 2025

In September 2020, the New Zealand subsidiary made a capital distribution to its partners on a pro rata basis in order to redeem certain equity interests.

A portion of this capital distribution was reinvested by the partners in shareholder loans to the New Zealand subsidiary.

Our capital distribution and portion of the shareholder loan are eliminated in consolidation.

The capital distribution to the minority shareholder and its reinvestment in the shareholder loan resulted in the recording of a noncontrolling interest share redemption of $ 5.1 million and a loan payable by the New Zealand subsidiary in the amount of $ 23.3 million due in 2025 at a fixed interest rate of 2.95 %.

As of December 31, 2021, the outstanding balance on the shareholder loan is $ 23.6 million.

Except for changes in the New Zealand foreign exchange rate, there have been no adjustments to the carrying value of the shareholder loan since its inception.

SHAREHOLDER LOAN DUE 2026

In July 2021, the New Zealand subsidiary made a capital distribution to its partners on a pro rata basis in order to redeem certain equity interests, which was reinvested by the partners in shareholder loans to the New Zealand subsidiary.

During the year ended December 31, 2022, the New Zealand subsidiary made borrowings and repayments of $ 7.1 million, net of changes in exchange rates, on its working capital facility.

At December 31, 2022, there was no outstanding balance on the facility.

SHAREHOLDER LOANS

The New Zealand subsidiary periodically makes capital distributions to its partners on a pro rata basis to redeem certain equity interests, which are reinvested by the partners into shareholder loans to the New Zealand subsidiary.

Our capital distribution and portion of the shareholder loan are eliminated in consolidation.

The capital distribution to the minority shareholder and its reinvestment in the shareholder loan resulted in the recording of a loan payable by the New Zealand subsidiary in the amount of $ 28.1 million due in 2026 at a fixed interest rate of 3.64 %.

As of December 31, 2021, the outstanding balance on the shareholder loan due 2026 is $ 27.5 million.

The capital distribution to the minority shareholder and its reinvestment in the shareholder loan results in the recording of a loan payable by the New Zealand subsidiary.

Except for changes in the New Zealand foreign exchange rate, there have been no adjustments to the carrying value of the shareholder loan since its inception.

See Note 5 — Noncontrolling Interests for more information regarding the New Zealand subsidiary.

LONG-TERM DEBT ASSUMED IN THE POPE RESOURCES MERGER

Northwest Farm Credit Services Credit Facility

We assumed five tranches of a credit facility payable to Northwest Farm Credit Services (the “NWFCS Credit Facility”) totaling $ 45.0 million.

In September 2021, we repaid the $ 45 million outstanding under our credit facility with Northwest Farm Credit Services (NWFCS).

We recognized a gain on early extinguishment of debt of $ 7.2 million, representing the net write-off of unamortized deferred financing costs and fair market value adjustments, partially offset by a $ 6.2 million loss related to a make-whole fee due to debt prepayment.

The net gain on early extinguishment of debt of approximately $ 0.9 million has been recognized in the Consolidated Statements of Income and Comprehensive Income under the caption “Interest and other miscellaneous income, net.”

SHAREHOLDER LOAN DUE 2026

In July 2021, the New Zealand subsidiary recorded of a loan payable in the amount of $ 28.1 million due in 2026 at a fixed interest rate of 3.64 %.

As of December 31, 2022, the outstanding balance is $ 25.6 million.

SHAREHOLDER LOAN DUE 2027

RAYONIER INC.

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(Dollar amounts in thousands unless otherwise stated)

Fund II Mortgages Payable

We assumed Fund II’s two mortgages payable (the “Fund II Mortgages Payable”) to MetLife totaling $ 25.0 million.

In September 2021, we repaid the $ 25.0 million outstanding under the Fund II Mortgages payable to MetLife.

We recognized a loss on early extinguishment of debt of $ 6 thousand, representing the write-off of unamortized deferred financing costs.

The loss on early extinguishment of debt has been recognized in the Consolidated Statements of Income and Comprehensive Income under the caption “Interest and other miscellaneous income, net.”

Fund III Mortgages Payable

We assumed Fund III’s two mortgages payable (the “Fund III Mortgages Payable”) to NWFCS totaling $ 32.4 million.

In July 2021, we sold the rights to manage Fund III and Fund IV, as well as our ownership interests in both funds.

Following the sale, Fund III’s two mortgages payable to NWFCS are no longer recognized in our Consolidated Balance Sheets as of December 31, 2021.

See Note 7 - Noncontrolling Interests for additional information.

DEBT COVENANTS — EXCLUDING TIMBER FUNDS

In connection with our $ 350 million Term Credit Agreement, $ 200 million Incremental Term Loan Agreement, $ 200 million 2021 Incremental Term Loan Agreement and $ 300 million Revolving Credit Facility, customary covenants must be met, the most significant of which include interest coverage and leverage ratios.

In April 2022, the New Zealand subsidiary recorded a loan payable in the amount of $ 27.9 million due in 2027 at a fixed interest rate of 6.48 %.

As of December 31, 2022, the outstanding balance is $ 25.6 million.

SHAREHOLDER LOAN DUE 2025

In September 2020, the New Zealand subsidiary recorded a loan payable in the amount of $ 23.3 million due in 2025 at a fixed interest rate of 2.95 %.

As of December 31, 2022, the outstanding balance is $ 21.9 million.

DEBT COVENANTS

In connection with our Term Credit Agreement, Incremental Term Loan Agreement, 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 December 31, 2022, are calculated on a trailing 12-month basis:

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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 2022, Senior Notes due 2031, Term Credit Agreement, Incremental Term Loan Agreement, 2021 Incremental Term Loan Facility, and Revolving Credit Facility include customary covenants that limit the incurrence of debt and the disposition of assets, among others.

In addition to these financial covenants listed above, the Senior Notes due 2031, Term Credit Agreement, Incremental Term Loan Agreement, 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 December 31, 2022, we were in compliance with all applicable covenants.

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We use derivative financial instruments to mitigate the financial impact of exposure to these risks.

We also use derivative financial instruments to mitigate exposure to foreign currency risk due to the translation of the investment in Rayonier’s New Zealand-based operations from New Zealand dollars to U.S.

Accounting for derivative financial instruments is governed by Accounting Standards Codification Topic 815, Derivatives and Hedging, (“ASC 815”).

Accounting for derivative financial instruments is governed by ASC Topic 815, Derivatives and Hedging , (“ASC 815”).

In accordance with ASC 815, we record our derivative instruments at fair value as either assets or liabilities in the 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 (loss) income (“AOCI”) and reclassified into earnings when the hedged transaction materializes.

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.

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FOREIGN CURRENCY EXCHANGE AND OPTION CONTRACTS

The New Zealand subsidiary’s export sales are predominantly denominated in U.S.

dollars, and therefore its cash flows are affected by fluctuations in the exchange rate between the New Zealand dollar and the U.S.

This exposure is partially managed by a natural currency hedge, as ocean freight payments and shareholder distributions are also paid in U.S.

We manage any excess foreign exchange exposure through the use of derivative financial instruments.

The New Zealand subsidiary typically hedges 50 % to 90 % of its estimated foreign currency exposure with respect to the following twelve months forecasted sales and purchases less distributions and up to 75 % of the forward 12 to 18 months.

Additionally, the New Zealand subsidiary will occasionally hedge up to 50 % of its estimated foreign currency exposure with respect to the following 18 to 48 months forecasted sales and purchases, less distributions, when the New Zealand dollar is at a cyclical low versus the U.S.

Foreign currency exposure from the New Zealand subsidiary’s trading operations is typically hedged based on the following three months forecasted sales and purchases.

As of December 31, 2021, foreign currency exchange contracts and foreign currency option contracts had maturity dates through December 2023.

Foreign currency exchange and option contracts hedging foreign currency risk on export sales and ocean freight payments qualify for cash flow hedge accounting.

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.

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 derivative financial instruments.

It typically hedges a portion of 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 up to 50 % of the foreign exchange exposure for the forward 24 to 48 months when the New Zealand dollar is at a cyclical low versus the U.S.

The New Zealand subsidiary’s trading operations typically hedge a portion of export sales receipts to cover the projected foreign exchange exposure for the following three months.

As of December 31, 2022, foreign currency exchange contracts and foreign currency option contracts had maturity dates through September 2025 and October 2025, respectively.

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 accumulated in other comprehensive (loss) income for de-designated hedges remains in AOCI until the forecasted transaction affects earnings.

The portion of gains or losses on the derivative instrument previously accumulated in other comprehensive income for de-designated hedges remains in accumulated other comprehensive income until the forecasted transaction affects earnings.

Changes in the value of derivative instruments after de-designation are recorded in earnings.

INTEREST RATE PRODUCTS

We are exposed to cash flow interest rate risk on our variable-rate debt and on anticipated debt issuances.

We are exposed to cash flow interest rate risk on our variable-rate debt.

We use variable-to-fixed interest rate swaps and forward-starting interest rate swap agreements to hedge this exposure.

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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

During the second quarter of 2021, we terminated and cash settled $ 250 million in notional value of our interest rate swaps, maturing in 2030, in connection with the repayment of $ 250 million outstanding under the 2020 Incremental Term Loan.

Upon termination of the swap, we received $ 6.8 million from our counterparty.

In November 2022, we entered into a new $ 100 million forward-starting interest rate swap agreement, benchmarked to the Secured Overnight Financing Rate (“SOFR”), in anticipation of the new $ 250 million incremental term loan, which closed in December 2022.

See Note 7 — Debt for additional information.

In December 2022, through a fifth amendment to the Incremental Term Loan Agreement with our primary lender, we converted all our outstanding London Inter-Bank Offered Rate (“LIBOR”) indexed term loans, in the aggregate principal amount of $ 750 million, to SOFR indexed rates.

In conjunction with amending our Term Loan Agreement, we also concurrently modified the benchmark rate from LIBOR to Daily Simple SOFR in our active interest rate swap agreements with a total notional amount of $ 750 million.

The conversion of these debt and interest rate swap instruments did not have a material impact on our financial position or operating results.

RAYONIER INC.

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(Dollar amounts in thousands unless otherwise stated)

December 31, 2021, there was a $ 15.9 million gain recorded in accumulated other comprehensive loss in connection with the terminated interest rate swap, which will be reclassified to earnings through interest expense over the remaining life of the hedged items, as the originally hedged cash flows remain probable.

During the second quarter of 2021, we terminated and cash settled $ 100 million in notional value of our interest rate swaps, maturing in 2026, in connection with the prepayment of $ 100 million on the 2026 Incremental Term Loan.

Upon termination of the swap, we paid $ 2.2 million to our counterparty that was recognized immediately into earnings as interest expense, as the forecasted cash flows will no longer occur.

See Note 10 — Debt for additional information.

As of December 31, 2022, our forward-starting interest rate swap agreements with a total notional amount of $ 150 million continue to use LIBOR as the interest rate benchmark.

INTEREST RATE SWAPS

The following table contains information on the outstanding interest rate swaps as of December 31, 2022:

Outstanding Interest Rate Swaps (a)

Date Entered Into Term Notional Amount Related Debt Facility Fixed Rate of Swap Bank Margin on Debt Total Effective Interest Rate (b)

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 %

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April 2016 10 years 100,000 Incremental Term Loan 1.51 % 1.75 % 3.26 %

May 2021 (d) 7 years 200,000 2021 Incremental Term Loan Facility

0.67 % 1.65 % 2.32 %

December 2022 (e) 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) Rate is before estimated patronage payments.

TREASURY LOCKS

During the first quarter of 2020, we entered into three treasury lock agreements, which were designated and qualified as cash flow hedges.

Prior to expiration, we de-designated and settled the treasury locks by converting them into interest rate swap lock agreements (discussed below).

As of December 31, 2021, there was a $ 17.3 million loss recorded in accumulated other comprehensive loss in connection with the settled treasury locks, which will be reclassified to earnings as interest expense over the life of the hedged item.

INTEREST RATE SWAP LOCKS

Upon de-designation, we converted the above treasury lock agreements to interest rate swap lock agreements, which were designated and qualified as cash flow hedges.

During the second quarter of 2020, we de-designated and partially cash settled $ 11.1 million of the interest rate swap locks and converted them into an interest rate swap agreement.

As of December 31, 2021, there was a $ 1.2 million loss recorded in accumulated other comprehensive loss in connection with settled interest rate swap locks, which will be reclassified to earnings as interest expense over the life of the hedged item.

(b) Includes the SOFR Credit Spread Adjustment component allotted to banks during the transition from LIBOR period.

(d) On February 1, 2022, our $ 200 million notional forward-starting interest rate swap matured into an active interest rate swap.

See Note 7 - Debt for additional information.

(e) On December 1, 2022 our $ 100 million notional forward-starting interest rate swap matured into an active interest rate swap.

See Note 7 - Debt for additional information.

FORWARD-STARTING INTEREST RATE SWAPS

During the second quarter of 2021, we de-designated and settled $ 325 million in notional value of our forward-starting interest rate swap, maturing in 2032, by converting it into a new forward-starting interest rate swap agreement.

As of December 31, 2021, there was a $ 9.7 million gain recorded in accumulated other comprehensive loss in connection with the converted forward-starting interest rate swap, which will be reclassified to earnings through interest expense over the remaining life of the hedged item.

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

The following table contains information on the outstanding forward-starting interest rate swaps as of December 31, 2022:

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May 2020 4 years 50,000 0.74 % Term Credit Agreement August 2024 N/A

May 2021 (b) 7 years 200,000 0.77 % Future Issuance February 2022 N/A

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

(b) The forward-starting interest rate swap entered into in May 2021 contained an embedded mark-to-market gain, which we recovered through a reduced charge in the fixed rate over what would have been charged for an at-market swap.

See the subsequent events section of Note 1 - Summary of Significant Accounting Policies for additional information regarding the maturation of this forward-starting interest rate swap.

CARBON OPTIONS

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As of December 31, 2022, all existing carbon option contracts have expired.

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

The following table demonstrates the impact, gross of tax, of our derivatives on the Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2022, 2021 and 2020.

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Foreign currency exchange contracts Other comprehensive income (loss) $ 5,093 ($ 10,939 ) $ 7,699

Other operating income, net ( 7,682 ) 2,974 ( 2,323 )

Foreign currency option contracts Other comprehensive income (loss) 610 ( 2,733 ) 1,181

Other operating income, net — 1,177 30

Interest rate products Other comprehensive income (loss) 75,006 52,478 ( 76,567 )

Interest rate products Interest Expense 14,694 10,769 ( 2,296 )

Interest expense, net 2,459 14,694 10,769

Derivatives not designated as hedging instruments:

Foreign currency exchange contracts Interest and other miscellaneous income, net — — $ 135

Carbon options Interest and other miscellaneous income, net — — $ 563

During the next 12 months, the amount of the December 31, 2021 AOCI balance, net of tax, expected to be reclassified into earnings is a loss of approximately $ 10.8 million.

The following table contains details of the expected reclassified amounts into earnings:

During the next 12 months, the amount of the AOCI balance, net of tax, expected to be reclassified into earnings is a gain of approximately $ 19.7 million.

The following table contains details of the amounts expected to be reclassified into earnings:

Amount expected to be reclassified into earnings in next 12 months

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Foreign currency exchange contracts ($ 3,909 )

Foreign currency option contracts ( 203 )

Interest rate products 23,810

Total estimated loss on derivatives contracts ($ 10,847 )

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

Total estimated gain on derivatives contracts $ 19,698

The following table contains the notional amounts of the derivative financial instruments recorded in the Consolidated Balance Sheets at December 31, 2022 and 2021:

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Forward-starting interest rate swaps 150,000 350,000

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

The following table contains the fair values of the derivative financial instruments recorded in the Consolidated Balance Sheets at December 31, 2022 and 2021.

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Other non-current liabilities ( 1,281 ) ( 270 )

Interest rate swaps Other non-current liabilities ( 15,582 ) ( 51,580 )

Forward-starting interest rate swaps Other assets 11,482 513

Interest rate swaps Other assets 60,843 —

Other non-current liabilities ( 51 ) ( 15,582 )

Forward-starting interest rate swaps Other assets 11,939 11,482

Total derivative contracts:

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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 at December 31, 2021 and 2020, using market information and what we believe to be appropriate valuation methodologies under generally accepted accounting principles:

The following table presents the carrying amount and estimated fair values of our financial instruments at December 31, 2022 and 2021, using market information and what we believe to be appropriate valuation methodologies under GAAP:

December 31, 2022 December 31, 2021

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Restricted cash, excluding Timber Funds (c) 1,152 1,152 — 625 625 —

Current maturities of long-term debt, excluding Timber Funds (d) ( 124,965 ) — ( 125,288 ) — — —

Long-term debt, excluding Timber Funds (d) ( 1,242,819 ) — ( 1,245,148 ) ( 1,300,336 ) — ( 1,313,631 )

Long-term debt, Timber Funds (d) — — — ( 60,179 ) — ( 60,474 )

Current maturities of long-term debt (d) — — — ( 124,965 ) — ( 125,288 )

Long-term debt (d) ( 1,514,721 ) — ( 1,438,736 ) ( 1,242,819 ) — ( 1,245,148 )

Interest rate swaps (e) 60,792 — 60,792 ( 15,582 ) — ( 15,582 )

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See Note 21 - Restricted Cash for additional information.

(c) Restricted cash, excluding Timber Funds represents proceeds from like-kind exchange sales deposited with a third-party intermediary and cash held in escrow.

See Note 21 - Restricted Cash for additional information.

(d) The carrying amount of long-term debt is presented net of deferred financing costs, unamortized discounts and fair value adjustments on non-revolving debt..

(d) The carrying amount of long-term debt is presented net of deferred financing costs and unamortized discounts on non-revolving debt.

See Note 7 — Debt for additional information.

(e) See Note 11 — Derivative Financial Instruments and Hedging Activities for information regarding the Balance Sheet classification of our derivative financial instruments.

(e) See Note 8 — Derivative Financial Instruments and Hedging Activities for information regarding the Consolidated Balance Sheets classification of our derivative financial instruments.

(f) 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.

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units by various individuals and entities other than the Company.

See Note 5 — Noncontrolling Interests for additional information.

RAYONIER INC.

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See Note 12 - Environmental and Natural Resource Damage Liabilities for additional information.

(b) Primarily consisting of payments expected to be made on our Wildlight and Richmond Hill development projects.

(c) Commitments include payments expected to be made on derivative financial instruments (foreign exchange contracts, interest rate swaps and forward-starting interest rate swaps) and other purchase obligations.

(b) Primarily consisting of payments expected to be made on our Wildlight and Heartwood development projects.

(c) Commitments include payments expected to be made on financial instruments (foreign exchange contracts) and other purchase obligations.

CONTINGENCIES

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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

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 the owner’s property, regardless of culpability for the release.

RAYONIER INC.

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(Dollar amounts in thousands unless otherwise stated)

resource damages (“NRD”) can attach to a property simply because an injury to natural resources resulted from releases of contaminated materials on the owner’s property, regardless of culpability for the release.

In connection to the merger with Pope Resources, we assumed ownership of certain real estate in Port Gamble, Washington, which requires environmental remediation under these laws.

An analysis of environmental and NRD liabilities from December 31, 2020 to December 31, 2021 is shown below:

Changes in environmental and NRD liabilities from December 31, 2021 to December 31, 2022 are shown below:

Port Gamble, WA

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Expenditures charged to liabilities ( 812 )

Increase in liabilities 105

Increase in liabilities (a) 5,600

Total Balance at December 31, 2022

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Non-current portion at December 31, 2022

These estimates were based on assumptions that we believe to be reasonable;

however, actual results may differ from these estimates.

See Note 2 - Merger with Pope Resources for information regarding the final allocation of fair value to environmental and NRD liabilities assumed in the merger with Pope Resources.

It is expected that the millsite cleanup and NRD restoration will occur over the nex t one to three years , while the monitoring of the Port Gamble Bay, millsite and landfills will continue for an additional 10 to 15 years.

NRD costs are subject to change as the scope of the restoration projects become more clearly defined.

(a) Increase in liabilities includes $ 4.9 million related to revised environmental and NRD cost estimates recorded in the fourth quarter of 2022.

We periodically examine whether the contingent liabilities related to the environmental matters described above are probable and reasonably estimable based on experience and ongoing developments in those matters, including continued study and analysis of ongoing remediation obligations.

During the three months ended December 31, 2022, with the assistance of independent environmental consultants and taking into consideration inflation, investigation and remediation actions previously completed, new information available during the period and ongoing discussions with the Trustees, we completed a comprehensive long-term analysis and cost assessment related to our ongoing environmental remediation and NRD obligations.

As a result of this analysis, we increased the accrual for environmental and NRD liabilities by $ 4.9 million, which are recorded on an undiscounted basis.

We expect to pay the amounts recorded over an estimated period of up to 20 years .

It is expected that the upland millsite cleanup and NRD restoration will occur over the next one to two years , while the monitoring of the Port Gamble Bay, mill site and landfills will continue for an additional 15 to 20 years.

NRD c osts 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.

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For further information on the timing and amount of future payments related to our environmental remediation liabilities, see Note 10 - Commitments .

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.

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

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

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Financial Commitments (a) Maximum Potential

Standby letters of credit $ 885

Surety bonds (b) 12,238

Standby letters of credit (b) $ 3,779

Surety bonds (c) 22,866

Total financial commitments $ 26,645

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The guarantees are not subject to measurement, as the guarantees are dependent on our own performance.

(b) 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 in connection with pending and completed sales from the Harbor Hill project in Gig Harbor, Washington.

(b) Approximately $ 2.9 million of the standby letters of credit serve as credit support for real estate construction at the Company’s 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.

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HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS

We continuously assess potential alternative uses of our timberlands, as some properties may become more valuable for development, residential, recreation or other purposes.

We 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.

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Intersegment transfers 5,801 — 5,801

Purchase price allocation adjustment (c) 8,238 — 8,238

Total Balance at December 31, 2022

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(b) Capitalized real estate development investments includes $ 0.8 million of capitalized interest and $ 8.7 million of parcel real estate development investments.

Parcel real estate development investments represent investments made for specific lots and/or commercial parcels that are currently under contract or expected to be ready for market within a year.

The final allocation of fair value to HBU properties acquired in the merger is approximately $ 34.7 million.

This includes development properties in the town of Port Gamble, Washington, development projects in Gig Harbor, Kingston, and Bremerton, Washington and various other assets.

See Note 2 - Merger with Pope Resources for additional information.

Parcel real estate development investments represent investments made for specific lots and/or commercial parcels that are currently under contract or expected to be ready for market within one year.

As of December 31, 2022 and 2021, our inventory consisted entirely of finished goods, as follows:

Finished goods inventory

Real estate inventory (a) $ 17,909 $ 24,740

Log inventory 5,347 3,783

Carbon unit inventory (b) 473 —

Total inventory $ 23,729 $ 28,523

(a) Represents the cost of HBU real estate (including capitalized development investments) under contract to be sold as well as the cost of HBU real estate deferred until post-closing obligations are satisfied.

See Note 14 — Higher and Better Use Timberlands and Real Estate Development Investments for additional information.

(b) Represents the basis in New Zealand carbon units intended to be sold in the next 12 months.

See Note 1 — Summary of Significant Accounting Policies and Note 23 — Other Assets for additional information on carbon credits.

RAYONIER INC.

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(Dollar amounts in thousands unless otherwise stated)

As of December 31, 2021 and 2020, our inventory was solely comprised of finished goods, as follows:

Real estate inventory (a) $ 24,740 $ 6,756

Log inventory 3,783 3,838

Total inventory $ 28,523 $ 10,594

(a) Represents the cost of HBU real estate (including capitalized development investments) under contract to be sold.

See Note 17 — Higher and Better Use Timberlands and Real Estate Development Investments for additional information.

TIMBERLAND LEASES

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 lands 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, we 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 December 31, 2022, the New Zealand subsidiary has three CFLs comprising 11,000 gross acres or 9,000 net plantable acres under termination notice that are being relinquished as harvest activities are concluded, as well as two fixed-term CFLs comprising 3,000 gross acres or 2,000 net plantable acres expiring in 2062.

Additionally, the New Zealand subsidiary has two forestry rights comprising 31,000 gross acres or 5,000 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 lease 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.

LEASE MATURITIES, LEASE COST AND OTHER LEASE INFORMATION

The following table details our undiscounted lease obligations as of December 31, 2022 by type of lease and year of expiration:

Year of Expiration

Lease obligations Total 2023 2024 2025 2026 2027 Thereafter

Operating lease liabilities $ 195,213 $ 9,234 $ 9,020 $ 8,144 $ 7,414 $ 7,317 $ 154,084

Total Undiscounted Cash Flows $ 195,213 $ 9,234 $ 9,020 $ 8,144 $ 7,414 $ 7,317 $ 154,084

Imputed interest ( 98,067 )

Balance at December 31, 2022

Current portion ( 8,390 )

Non-current portion at December 31, 2022

The following table details components of our lease cost for the years ended December 31, 2022, 2021, and 2020:

Year Ended December 31,

Lease Cost Components 2022 2021 2020

Operating lease cost $ 9,332 $ 10,166 $ 9,647

Variable lease cost (a) 757 196 230

Total lease cost (b) $ 10,089 $ 10,362 $ 9,877

(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 year ended December 31, 2022.

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

The following table details components of our lease cost for the years ended December 31, 2022, 2021 and 2020:

Year Ended December 31,

Supplemental Cash Flow Information Related to Leases:

2022 2021 2020

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

Operating cash flows from operating leases $ 2,571 $ 2,389 $ 2,127

Investing cash flows from operating leases 6,761 7,777 7,520

Total cash flows from operating leases $ 9,332 $ 10,166 $ 9,647

Weighted-average remaining lease term in years - operating leases 30 29 29

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

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

Practical Expedient Description

OTHER OPERATING INCOME (EXPENSE), NET

1 unchanged sentence

2022 2021 2020

Gain (loss) on foreign currency remeasurement, net of cash flow hedges $ 6,823 ($ 3,503 ) ($ 3,077 )

(Loss) gain on foreign currency remeasurement, net of cash flow hedges ($ 5,251 ) $ 6,823 ($ 3,503 )

Gain on sale or disposal of property plant & equipment 40 75 121

5 unchanged sentences

$ 9,704 $ 14,084 ($ 21,685 )

(a) See Note 7 - Noncontrolling Interests and Note 8 - Variable Interest Entities for additional information on Timber Funds.

(a) Gain on investment in Timber Funds represents the gain recognized on the sale of rights to manage two timber funds (Funds III and IV) previously managed by the Company’s Olympic Resources Management (ORM) subsidiary, as well as its co-investment stake in both funds.

(b) Includes legal, accounting, due diligence, consulting and other costs related to the merger with Pope Resources.

See Note 2 - Merger with Pope Resources and Note 27 - Charges for Integration and Restructuring for additional information.

(c) See Note 7 - Noncontrolling Interests and Note 8 - Variable Interest Entities for additional information on Ferncliff Investors.

(c) The year ended December 31, 2022 includes $ 16.0 million equity income from the sale of a multi-family apartment complex in Bainbridge Island, Washington.

As the equity investment was co-owned with outside investors, $ 4.5 million of the equity income was attributable to Rayonier.

See Note 5 - Noncontrolling Interests for additional information.

RAYONIER INC.

13 unchanged sentences

Changes in assumptions, as well as changes in actual experience, could cause the estimates to change.

In December 2022, the Rayonier Board of Directors approved the resolution to terminate the Defined Benefit Plan.

Impacted parties were notified on or before December 28, 2022 of the termination and alternative distribution options.

The plan is expected to be terminated in the first quarter of 2023.

In conjunction with the termination of the Defined Benefit Plan, we also plan to terminate the unfunded plan and distribute all benefits in accordance with Section 409A of the Code.

We expect to recognize pre-tax non-cash pension settlement charges related to the actuarial losses currently in AOCI, upon settlement of the obligations of the Defined Benefit Plan.

These charges are currently expected to occur in 2023, with the specific timing and final amounts dependent upon several factors.

The following tables set forth the change in the projected benefit obligation and plan assets and reconcile the funded status and the amounts recognized in the Consolidated Balance Sheets for the pension and postretirement benefit plans for the two years ended December 31:

5 unchanged sentences

Interest cost 2,434 2,228 51 45

Actuarial loss (gain) ( 5,112 ) 11,413 ( 35 ) 209

Actuarial gain ( 22,376 ) ( 5,112 ) ( 513 ) ( 35 )

Benefits paid ( 3,609 ) ( 3,519 ) ( 14 ) ( 14 )

28 unchanged sentences

Key components of the actuarial gains and losses contributing to the period change in the benefit obligation are as follows:

• Changes in participant demographics resulted in an actuarial gain of approximately $ 0.5 million, which is primarily due to high mortality among participants.

• Changes in mortality assumptions resulted in an actuarial loss of approximately $ 0.3 million.

• Changes in participant demographics resulted in an actuarial gain of approximately $ 0.6 million, which is primarily due to higher than expected mortality among participants.

• Changes in contingent survivor mortality resulted in an actuarial loss of approximately $ 0.5 million.

• Changes in the discount rate from 2.65 % to 4.96 % resulted in an actuarial gain of approximately $ 22.4 million.

• Changes in plan assets during the fiscal year ending December 31, 2022 resulted in an investment loss of $ 22.0 million, which is due to the difference between the 4.97 % expected return compared to the actual return of ( 22.26 %).

POSTRETIREMENT

Key components of the actuarial gains and losses contributing to the period change in the benefit obligation are as follows:

• Re-measurement of current census data resulted in a demographic loss of $ 0.1 million.

• Introduction of an expected salary increase rate of 3.50 % resulted in an actuarial loss of $ 0.1 million.

• Changes in the discount rate from 2.75 % to 5.01 % resulted in an actuarial gain of approximately $ 0.6 million.

14 unchanged sentences

(Dollar amounts in thousands unless otherwise stated)

ACCUMULATED OTHER COMPREHENSIVE INCOME (AOCI)

ACCUMULATED OTHER COMPREHENSIVE INCOME/LOSS (AOCI)

Net losses that have not yet been included in pension and postretirement expense for the two years ended December 31, but have been recognized as a component of AOCI are as follows:

1 unchanged sentence

2022 2021 2022 2021

Net losses ($ 12,627 ) ($ 25,043 ) ($ 431 ) ($ 491 )

Net (losses) income ($ 11,527 ) ($ 12,627 ) $ 96 ($ 431 )

Deferred income tax benefit 1,216 1,216 6 6

35 unchanged sentences

EXPECTED LONG-TERM RETURN ON PLAN ASSETS

In 2021, the expected return on plan assets remained at 5.7 %, which is based on historical returns on current asset allocations and expected returns using the Black-Litterman method.

In 2022, the expected return on plan assets was 5.0 %, which is based on historical returns on current asset allocations and expected returns using the Black-Litterman method.

INVESTMENT OF PLAN ASSETS

12 unchanged sentences

Domestic fixed income securities 50 % 51 %

International fixed income securities — 3 %

Real estate fund 2 % 2 %

27 unchanged sentences

2028-2032 23,730 390

We have no mandatory pension contribution requirements in 2022.

We expect to make cash contributions in 2023 of approximately $ 7.6 million in order to fund the Defined Benefit Plan on a plan termination basis.

The Defined Benefit Plan will be settled upon completion of lump sum distributions and purchase of annuity contracts.

The Excess Benefit Plan will be settled entirely with lump sum payments upon termination with expected cash contributions in 2023 of approximately $ 1.3 million.

Projected cash contributions are an estimate, as actual amounts will be dependent upon the nature and timing of participant settlements, interest rates, as well as prevailing market conditions.

DEFINED CONTRIBUTION PLANS

We provide a defined contribution plan to all of our eligible employees.

Upon completion of the merger with Pope Resources, former eligible Pope Resource employees were immediately eligible to participate in the Rayonier 401(k) plan.

Pope Resources employees’ year of service were credited to the 401(k) plan for vesting purposes.

Company match contributions charged to expense for these plans were $ 1.1 million, $ 1.1 million and $ 1.0 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Company contributions charged to expense for these plans were $ 2.5 million, $ 2.2 million and $ 2.1 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The defined contribution plan includes Rayonier common shares with a fair market value of $ 8.3 million and $ 11.0 million at December 31, 2022 and 2021, respectively.

2 unchanged sentences

Transfers out of the fund will continue to be permitted, but no new investments or transfers into the fund are allowed.

As discussed above, the defined benefit pension plan is currently frozen.

In lieu of the pension plan, employees are eligible to receive an enhanced match contribution.

Company enhanced match contributions charged to expense for the years ended December 31, 2021, 2020 and 2019 were $ 1.2 million, $ 1.0 million and $ 0.9 million, respectively.

RAYONIER INC.

9 unchanged sentences

We issue new shares of stock upon the exercise of stock options, the granting of restricted stock, and the vesting of performance shares and restricted stock units.

The Stock Plan allows for the cash settlement of the required withholding tax on share or unit awards.

A summary of our stock-based compensation cost is presented below:

8 unchanged sentences

(b) Represents expense associated with the acceleration of share-based compensation on Pope replacement awards related to qualifying terminations.

See Note 27 - Charges for Integration and Restructuring for additional details.

(c) A valuation allowance is recorded against the tax benefit recognized as we do not expect to be able to realize the benefit in the future.

FAIR VALUE CALCULATIONS BY AWARD

RESTRICTED STOCK

Restricted stock granted to employees under the Stock Plan generally vests in fourths on the first, second, third and fourth anniversary of the grant date.

Restricted stock granted to senior management generally vests in thirds on the third, fourth, and fifth anniversary of the grant date.

Periodically, other one-time restricted stock grants are issued to employees for special purposes, such as new hire, promotion or retention, and can vest ratably over, or upon completion of, a defined period of time.

Generally, holders of restricted stock receive dividend equivalent payments on outstanding restricted shares.

Restricted stock granted to members of the board of directors generally vests immediately upon issuance and is subject to certain holding requirements.

RESTRICTED STOCK & RESTRICTED STOCK UNITS

Restricted stock units granted to employees under the Stock Plan generally vest in fourths on the first, second, third and fourth anniversary of the grant date.

Periodically, other one-time restricted stock unit grants are issued to employees for special purposes, such as new hire, promotion or retention, and can vest ratably over, or upon completion of, a defined period of time.

Holders of unvested restricted stock and restricted stock unit awards receive dividend equivalent payments on outstanding awards.

Members of the board of directors are granted restricted stock, which vests immediately upon issuance and is subject to certain holding requirements.

The fair value of each share granted is equal to the share price of the Company’s stock on the date of grant.

2 unchanged sentences

Accordingly, unexpected forfeitures will lower stock-based compensation during the period in which they occur.

REPLACEMENT RESTRICTED STOCK AWARDS FROM THE MERGER WITH POPE RESOURCES

As a result of the merger with Pope Resources, Rayonier issued 69,176 shares of restricted stock awards (“replacement awards”) in connection with unvested Pope Resources restricted units.

Eligible outstanding Pope Resources restricted units were canceled and exchanged for replacement awards, pursuant to an exchange ratio in the merger agreement designed to maintain the intrinsic value of the awards immediately prior to the exchange.

The replacement awards issued have similar vesting provisions as the terms of existing Rayonier restricted stock.

Expense for the replacement awards that were not fully vested prior to the date of the merger is expected to be recognized over a weighted average remaining service period of approximately 16 months unless a qualifying termination occurs.

A qualifying termination of an awardee will result in the acceleration of vesting and expense recognition in the period that the qualifying termination occurs.

Qualifying terminations during the years ended December 31, 2021 and 2020 resulted in the accelerated vesting of 1,430 and 15,049 of the replacement awards and recognition of approximately $ 0.1 million and $ 0.3 million of expense, respectively.

As of December 31, 2022, there was $ 0.1 million of unrecognized compensation cost attributable to our restricted stock.

We expect to recognize this cost over a weighted average period of 5 months.

As of December 31, 2022, there was $ 7.1 million of unrecognized compensation cost attributable to our restricted stock units.

We expect to recognize this cost over a weighted average period of 2.1 years.

RAYONIER INC.

4 unchanged sentences

(Dollar amounts in thousands unless otherwise stated)

As of December 31, 2021, there was $ 0.7 million of unrecognized compensation cost attributable to our restricted stock.

We expect to recognize this cost over a weighted average period of 1 year.

A summary of our restricted stock is presented below:

16 unchanged sentences

(a) The year ended December 31, 2022 includes 3,718 replacement awards vested as a result of acceleration due to qualifying terminations.

RESTRICTED STOCK UNITS

In April 2019, we began granting restricted stock units instead of restricted stock to employees.

Most attributes of our restricted stock described herein, including dividend payments, fair value measurement and expense recognition, apply equally to restricted stock units granted under the Stock Plan.

However, beginning with the restricted stock units granted in 2021, there is no distinction between the vesting characteristics of restricted stock units granted to senior management and those granted to all other employees.

Restricted stock units generally vest in fourths on the first, second, third and fourth anniversary of the grant date.

As of December 31, 2021, there was $ 7.1 million of unrecognized compensation cost attributable to our restricted stock units.

We expect to recognize this cost over a weighted average period of 2.9 years.

A summary of our restricted stock units is presented below:

6 unchanged sentences

(a) Intrinsic value of restricted stock units outstanding is based on the market price of the Company’s stock at December 31, 2022.

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

Shares Weighted

6 unchanged sentences

Non-vested Restricted Stock Units at December 31, 419,484 $ 32.12

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

PERFORMANCE SHARE UNITS

5 unchanged sentences

As such, unexpected forfeitures will lower stock-based compensation during the period in which they occur.

The Stock Plan allows for the cash settlement of the required withholding tax on performance share unit awards.

As of December 31, 2022, there was $ 5.0 million of unrecognized compensation cost related to our performance share unit awards, which is attributable to awards granted in 2020, 2021 and 2022.

14 unchanged sentences

Units Distributed ( 115,167 ) 35.98

Other Cancellations/Adjustments ( 2,514 ) 39.23

Outstanding Performance Share units at December 31, 398,156 $ 35.78

3 unchanged sentences

The dividend yield was not used to calculate fair value as awards granted receive dividend equivalents.

Grants made to Vice Presidents and above are subject to a one-year post-vest holding period and include an additional discount for liquidity.

The following table provides an overview of the assumptions used in calculating the fair value of the awards granted for the three years ended December 31:

2 unchanged sentences

Risk-free rate 2.6 % 0.4 % 0.3 %

Liquidity discount applied to grants with a post-vesting holding restriction (a) 4.2 % 6.3 % n/a

(a) One-year post-vest holding requirement began in grant year 2021.

RAYONIER INC.

32 unchanged sentences

federal or state income tax.

As of December 31, 2021, Rayonier owns a 97.8 % interest in the Operating Partnership and conducts substantially all of its timberland operations through the Operating Partnership.

As of December 31, 2022, Rayonier owns a 97.9 % int erest in the Operating Partnership and conducts substantially all of its timberland operations through the Operating Partnership.

The taxable income or loss generated by the Operating Partnership is passed through and reported to its unitholders (including the Company) on a Schedule K-1 for inclusion in each unitholder’s income tax return.

28 unchanged sentences

Prepaid land sales — — — — ( 1,084 ) ( 2.9 )

Internal transfer of assets deferred — — — — ( 1,815 ) ( 2.3 )

Foreign income tax withholding ( 1,239 ) ( 0.9 ) ( 505 ) ( 0.2 ) ( 721 ) ( 2.0 )

Sale of Timber Funds — — ( 2,399 ) ( 1.1 ) — —

State Income Tax, Net of Federal Benefit 1,424 1.1 — — — —

Bainbridge Landing JV, NCI 2,496 1.8 — — — —

Other ( 2,551 ) ( 1.9 ) ( 2,762 ) ( 1.2 ) ( 772 ) ( 2.1 )

31 unchanged sentences

Federal NOL Carryforwards- Post TCJA (a) $ 20,538 None

U.S State NOL Carryforwards (b) 1,802 2033

U.S State NOL Carryforwards (b) 3,347 Various

Cellulosic Biofuel Producer Credit (c) 13,688 2024

Federal NOL Carryforwards- Pre TCJA (a) $ 2,363 2036

Federal NOL Carryforwards- Post TCJA (a) $ 10,687 None

U.S State NOL Carryforwards (b) 2,983 2031

U.S State NOL Carryforwards (b) 1,802 Various

Cellulosic Biofuel Producer Credit (c) 13,701 2023

3 unchanged sentences

state NOL is made up of several jurisdictions that expire in various future years.

As of December 31, 2021, no state NOL is set to expire before December 31, 2033.

As of December 31, 2020, no state NOL was set to expire before December 31, 2031.

The Further Consolidated Appropriations Act, 2020 included the Taxpayer Certainty and Disaster Relief Act of 2019 (Tax Extenders Act), which temporarily renewed approximately two dozen credits that previously expired or were set to expire at the end of 2019.

No state NOL is set to expire before December 31, 2033.

The Inflation Reduction Act of 2022 temporarily extended existing fuels tax credits that previously expired or were set to expire at the end of 2023.

The Cellulosic Biofuel Producer Credit was one of the credits extended under this act.

2 unchanged sentences

taxable REIT subsidiary's deferred tax assets, net of deferred tax liabilities.

During 2021, the net deferred tax assets decreased by $ 9.1 million.

During 2022, the net deferred tax assets increased by $ 4.0 million.

As a result, we recorded a change in the valuation allowance of $ 4.0 million related to the U.S.

17 unchanged sentences

Capital gain 100 % 100 % 100 %

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table summarizes the changes in AOCI by component for the years ended December 31, 2021 and 2020.

All amounts are presented net of tax effect and exclude portions attributable to noncontrolling interest.

Foreign currency translation gains/(losses) Net investment hedges of New Zealand subsidiary Cash flow hedges Employee benefit plans Total Rayonier, L.P.

Allocation of Operating Partnership Total Rayonier Inc.

Balance as of December 31, 2019 ($ 226 ) $ 1,321 ($ 8,910 ) ($ 23,387 ) ($ 31,202 ) — ($ 31,202 )

Other comprehensive (loss) income before reclassifications

22,928 — ( 71,644 ) ( 1,794 ) ( 50,510 ) — ( 50,510 )

Amounts reclassified from accumulated other comprehensive (loss) income

— — 9,498 869 (b) 10,367 ( 2,540 ) 7,827

Net other comprehensive (loss) income 22,928 — ( 62,146 ) ( 925 ) ( 40,143 ) ( 2,540 ) ( 42,683 )

Balance as of December 31, 2020 $ 22,702 $ 1,321 ($ 71,056 ) ($ 24,312 ) ($ 71,345 ) ($ 2,540 ) ($ 73,885 )

Other comprehensive (loss) income before reclassifications

( 18,487 ) — 44,899 (a) 11,302 37,714 — 37,714

Amounts reclassified from accumulated other comprehensive (loss) income

— — 16,994 1,174 (b) 18,168 ( 1,601 ) 16,567

Net other comprehensive (loss) income ( 18,487 ) — 61,893 12,476 55,882 ( 1,601 ) 54,281

Balance as of December 31, 2021 $ 4,215 $ 1,321 ($ 9,163 ) ($ 11,836 ) ($ 15,463 ) ($ 4,141 ) ($ 19,604 )

(a) Includes $ 52.5 million of other comprehensive gain related to interest rate swaps.

See Note 11 — Derivative Financial Instruments and Hedging Activities for additional information.

(b) This component of other comprehensive (loss) income is included in the computation of net periodic pension cost.

See Note 20 — Employee Benefit Plans for additional information.

The following table presents details of the amounts reclassified in their entirety from AOCI for the years ended December 31, 2021 and 2020:

Details about accumulated other comprehensive loss components Amount reclassified from accumulated other comprehensive loss Affected line item in the income statement

Realized loss (gain) on foreign currency exchange contracts $ 2,974 ($ 2,324 ) Other operating income (expense), net

Realized loss on foreign currency option contracts 1,177 30 Other operating income (expense), net

Noncontrolling interest ( 955 ) 528 Comprehensive (income) loss attributable to noncontrolling interests

Realized loss on interest rate contracts 14,694 10,769 Interest expense

Income tax (benefit) expense from foreign currency contracts ( 896 ) 495 Income tax expense (Note 22)

Net loss on cash flow hedges reclassified from accumulated other comprehensive income $ 16,994 $ 9,498

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

RESTRICTED CASH

Restricted cash, Timber Funds includes the portion of proceeds from Fund II Timberland Dispositions required to be distributed to noncontrolling interests.

Restricted cash, excluding Timber Funds includes cash balances held in escrow as collateral for certain contractual obligations related to our Richmond Hill development project as well as cash held in escrow for real estate sales.

As of December 31, 2022, all proceeds from Fund II Timberland Dispositions have been distributed to noncontrolling interests.

Restricted cash, excluding Timber Funds includes cash deposited with a like-kind exchange (“LKE”) intermediary.

In order to qualify for LKE treatment, the proceeds from real estate sales must be deposited with a third-party intermediary.

These proceeds are accounted for as restricted cash until a suitable replacement property is acquired.

In the event LKE purchases are not completed, the proceeds are returned to the Company after 180 days and reclassified as available cash.

Additionally, restricted cash, excluding Timber Funds, includes balances held in escrow as collateral for certain contractual obligations related to our Heartwood development project as well as cash held in escrow for real estate sales.

The following table provides a reconciliation of cash, cash equivalents and restricted cash in the Consolidated Balance Sheets that sum to the total of the same such amounts in the Consolidated Statements of Cash Flows for the years ended December 31:

Restricted cash, excluding Timber Funds:

Restricted cash deposited with LKE intermediary $ 527 —

Restricted cash held in escrow 625 625

Total restricted cash shown in the Consolidated Balance Sheets, excluding Timber Funds 1,152 625

Restricted cash shown in the Consolidated Balance Sheets, Timber Funds — 6,341

Cash and cash equivalents 114,255 362,173

Restricted cash, Timber Funds 6,341 —

Restricted cash, excluding Timber Funds (Held in escrow) 625 2,975

Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows $ 115,407 $ 369,139

ASSETS HELD FOR SALE

Assets held for sale is composed of properties not included in inventory which are under contract and expected to be sold within the next 12 months that also meet the other relevant held-for-sale criteria in accordance with ASC 360-10-45-9.

As of December 31, 2022 and December 31, 2021, the basis in properties meeting this classification was $ 0.7 million and $ 5.1 million, respectively.

Since the basis in these properties was less than the fair value, including costs to sell, no impairment was recognized.

RAYONIER INC.

4 unchanged sentences

(Dollar amounts in thousands unless otherwise stated)

Included in Other Assets are derivatives, long-term prepaid roads, goodwill in the New Zealand subsidiary, patronage equity, capitalized software costs, carbon credits, long-term prepaid stumpage and other deferred expenses including deferred financing costs related to revolving debt.

As of December 31, 2021 and 2020, our long-term derivative contracts follows:

Long-term derivative contracts $ 11,796 $ 1,563

See Note 1 — Summary of Significant Accounting Policies and Note 11 — Derivative Financial Instruments and Hedging Activities for further information on derivatives including their classification on the Consolidated Balance Sheets.

As of December 31, 2021 and 2020, our prepaid logging and secondary roads follows:

Long-term and prepaid and secondary roads

Pacific Northwest long-term prepaid roads $ 4,131 $ 4,087

New Zealand long-term secondary roads 6,730 5,767

Total long-term prepaid and secondary roads $ 10,861 $ 9,854

See Note 1 — Summary of Significant Accounting Policies for additional information on prepaid logging roads.

The following table provides the composition of Other assets for the two years ended December 31:

Long-term derivative contracts (a) $ 76,216 $ 11,796

Patronage equity (b) 7,872 7,322

Goodwill (b) 7,863 8,457

Pacific Northwest long-term prepaid roads (b) 5,857 4,131

New Zealand long-term secondary roads (b) 6,971 6,730

Capitalized software costs (b) 5,795 3,117

Carbon credits (c) 1,086 1,956

Rabbi trusts related to the Executive Severance Pay Plan (d) 1,869 1,844

Deferred financing costs related to revolving debt (b) 854 1,104

Long-term prepaid stumpage (b) 713 1,461

Long-term deposits 212 1,896

Other 173 1,152

Total $ 115,481 $ 50,966

(a) See Note 1 — Summary of Significant Accounting Policies and Note 8 — Derivative Financial Instruments and Hedging Activitie s for further information on derivatives including their classification on the Consolidated Balance Sheets.

(b) See Note 1 — Summary of Significant Accounting Policies for additional information.

(c) See Note 1 — Summary of Significant Accounting Policies and Note 15 — Inventory for additional information on carbon credits.

(d) The Executive Severance Pay Plan provides benefits to eligible executives in the event of a change in control of the Company.

Changes in goodwill for the years ended December 31, 2022 and 2021 were:

7 unchanged sentences

$ 7,863 $ 8,457

See Note 1 — Summary of Significant Accounting Policies for additional information on goodwill.

As of December 31, 2021 and 2020, Rayonier’s patronage equity follows:

Patronage Equity $ 7,322 $ 6,685

See Note 1 — Summary of Significant Accounting Policies for additional information on patronage equity.

As of December 31, 2021 and 2020, our capitalized software costs follows:

Capitalized software costs $ 3,117 $ 3,651

See Note 1 — Summary of Significant Accounting Policies for additional information on capitalized software costs.

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

Changes in the basis of carbon credits for the years ended December 31, 2022 and 2021 were:

3 unchanged sentences

Sales ( 309 ) —

Transfers to inventory ( 474 )

Foreign currency adjustment ( 87 ) ( 88 )

1 unchanged sentence

$ 1,086 $ 1,956

See Note 1 — Summary of Significant Accounting Policies for additional information on carbon credits.

As of December 31, 2021 and 2020, our prepaid stumpage follows:

Long-term prepaid stumpage $ 1,461 $ 3,137

See Note 1 — Summary of Significant Accounting Policies for additional information on prepaid stumpage.

As of December 31, 2021 and 2020, our deferred financing costs related to revolving debt follows:

Deferred financing costs related to revolving debt $ 1,104 $ 1,040

See Note 1 — Summary of Significant Accounting Policies for additional information on deferred financing costs related to revolving debt.

ASSETS HELD FOR SALE

As of December 31, 2021 and December 31, 2020, the basis in properties meeting this classification was $ 5.1 million and $ 3.4 million, respectively.

Since the basis in these properties was less than the fair value, including costs to sell, no impairment was recognized.

CHARGES FOR INTEGRATION AND RESTRUCTURING

During 2020, we incurred and accrued for termination benefits (primarily severance) and accelerated share-based payment costs based upon actual and expected qualifying terminations of certain employees as a result of restructuring decisions made concurrent with and subsequent to the merger with Pope Resources.

We also incurred non-recurring professional services costs for investment banking, legal, consulting, accounting and certain other fees directly attributable to the merger with Pope Resources.

A summary of the charges for integration and restructuring related to the merger with Pope Resources is presented below:

Termination benefits $ 625

Acceleration of share-based compensation related to qualifying terminations ( Note 21 )

Professional services 14,314

Other integration and restructuring costs 1,903

Total integration and restructuring charges related to the merger with Pope Resources $ 17,166

During the year ended December 31, 2020, we incurred $ 0.6 million in severance benefits related to restructuring associated with the Pope Resources merger.

As of December 31, 2020, there was $ 0.1 million of accrued severance recorded within “Accrued Payroll and Benefits” in our Consolidated Balance Sheets.

As of December 31, 2021, all severance associated with the merger with Pope Resources has been paid.

RAYONIER INC.

4 unchanged sentences

(Dollar amounts in thousands unless otherwise stated)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in AOCI by component for the years ended December 31, 2022 and 2021.

All amounts are presented net of tax and exclude portions attributable to noncontrolling interests.

Foreign currency translation gains/(losses) Net investment hedges of New Zealand subsidiary Cash flow hedges Employee benefit plans Total Rayonier, L.P.

Allocation of Operating Partnership Total Rayonier Inc.

Balance as of December 31, 2020 $ 22,702 $ 1,321 ($ 71,056 ) ($ 24,312 ) ($ 71,345 ) ($ 2,540 ) ($ 73,885 )

Other comprehensive (loss) income before reclassifications

( 18,487 ) — 44,899 (a) 11,302 37,714 — 37,714

Amounts reclassified from accumulated other comprehensive income (loss) — — 16,994 1,174 (b) 18,168 ( 1,601 ) 16,567

Net other comprehensive (loss) income ( 18,487 ) — 61,893 12,476 55,882 ( 1,601 ) 54,281

Balance as of December 31, 2021 $ 4,215 $ 1,321 ($ 9,163 ) ($ 11,836 ) ($ 15,463 ) ($ 4,141 ) ($ 19,604 )

Other comprehensive (loss) income before reclassifications

( 22,282 ) — 78,166 (a) 874 56,758 ( 1,323 ) 55,435

Amounts reclassified from accumulated other comprehensive (loss) income

— — ( 1,799 ) 753 (b) ( 1,046 ) 1,028 ( 18 )

Net other comprehensive (loss) income ( 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

(a) The years ended December 31, 2022 and December 31, 2021 include $ 75.0 million and $ 52.5 million, respectively, of other comprehensive income related to interest rate products.

See Note 8 — Derivative Financial Instruments and Hedging Activities for additional information.

(b) This component of other comprehensive income (loss) is included in the computation of net periodic pension and post-retirement costs.

See Note 18 — Employee Benefit Plans for additional information.

The following table presents details of the amounts reclassified in their entirety from AOCI to net income for the years ended December 31, 2022 and 2021:

Details about accumulated other comprehensive loss components Amount reclassified from accumulated other comprehensive loss Affected line item in the income statement

Realized (gain) loss on foreign currency exchange contracts ($ 7,682 ) $ 2,974 Other operating income (expense), net

Realized loss on foreign currency option contracts — 1,177 Other operating income (expense), net

Noncontrolling interest 1,768 ( 955 ) Comprehensive (income) loss attributable to noncontrolling interests

Realized loss on interest rate contracts 2,459 14,694 Interest expense

Income tax effect from net loss (gain) on foreign currency contracts 1,656 ( 896 ) Income tax expense

Net (gain) loss on cash flow hedges reclassified from accumulated other comprehensive income ($ 1,799 ) $ 16,994

RAYONIER INC.

AND SUBSIDIARIES

RAYONIER, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollar amounts in thousands unless otherwise stated)

RELATED PARTY

In January 2020, we entered into an agreement to sell developed lots to Mattamy Jacksonville LLC, a wholly owned subsidiary of Mattamy Homes, for an aggregate base purchase price of $ 4.45 million (subject to multiple takedowns over a 2 year period), plus additional consideration as to each lot to the extent the ultimate sales price of each finished home exceeds agreed price thresholds (the “Mattamy Contract”).

In May 2021, we entered into an amendment to the original agreement, which sells additional lots to Mattamy for an aggregate base purchase price of $ 1.0 million.

The Mattamy contract also includes marketing fee revenue based on a percentage of the sales price of each finished home.

In January 2020, we entered into an agreement to sell developed lots to Mattamy Jacksonville LLC, a wholly owned subsidiary of Mattamy Homes, for an aggregate base purchase price of $ 4.45 million (subject to multiple takedowns over a 2 year period), plus additional consideration as to each lot to the extent the ultimate sales price of each finished home exceeded agreed price thresholds (the “Mattamy Contract”).

In May 2021, we entered into an amendment to the original agreement, which sold additional lots to Mattamy for an aggregate base purchase price of $ 1.0 million.

The Mattamy contract also included marketing fee revenue based on a percentage of the sales price of each finished home.

In September 2020, Keith Bass, a member of our Board of Directors, was named the Chief Executive Officer of Mattamy Homes US.

4 unchanged sentences

(a) The years ended December 31, 2021 and December 31, 2020 exclude approximately $ 0.3 million and $ 0.1 million, respectively, of cash received from Mattamy Jacksonville LLC under this agreement for the reimbursement of local impact fees.

As of December 31, 2022, all lots under contract have been sold and all consideration has been received from Mattamy.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data