Rayonier Inc. REIT (RYN)

Liquidity and Capital Resources

Historically, our operations have generally produced consistent cash flows and required limited capital resources. Short-term borrowings have helped fund cyclicality and seasonality in working capital needs and long-term debt has been used to fund major acquisitions. While we have no major debt coming due until December 31, 2009 when $122 million in installment notes will mature, the current turmoil in the financial markets may impact our ability to obtain, and may increase the costs of, short-term and long-term borrowings. We anticipate refinancing these notes by accessing the corporate debt markets, or by borrowing under our revolving bank facility which has $144 million of capacity. See Item 1A – Risk Factors for more information.

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Summary of Liquidity and Financing Commitments (in millions of dollars)

Cash and cash equivalents consisted primarily of marketable securities with maturities at date of acquisition of 90 days or less.

Liquidity and Capital Resources

Historically, our operations have generally produced consistent cash flows and required limited capital resources. Short-term borrowings have helped fund cyclicality and seasonality in working capital needs and long-term debt has been used to fund major acquisitions. While we have no major debt coming due until December 31, 2009 when $122 million in installment notes will mature, the current turmoil in the financial markets may impact our ability to obtain, and may increase the costs of, short-term and long-term borrowings. We anticipate refinancing these notes by accessing the corporate debt markets, or by borrowing under our revolving bank facility which has $145 million of capacity as of March 31, 2009.

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Summary of Liquidity and Financing Commitments (in millions of dollars)

Cash Provided by Operating Activities (in millions of dollars)

Cash provided by operating activities decreased $35 million primarily from lower earnings and higher working capital requirements due to higher inventory levels, increased inventory costs and the timing of payments.

Cash Used for Investing Activities (in millions of dollars)

Cash used for investing activities decreased primarily due to the absence of any timberland acquisitions in 2009 compared to the purchase of $20 million of timberlands in 2008, partially offset by changes in restricted cash during the comparable quarters.

Cash Used for Financing Activities (in millions of dollars)

Cash used for financing activities primarily decreased due to the repayment of $55 million in outstanding debt in 2008 compared to net repayments of $0 in 2009.

Liquidity and Capital Resources

Historically, our operations have generally produced consistent cash flows and required limited capital resources. Short-term borrowings have helped fund cyclicality and seasonality in working capital needs and long-term debt has been used to fund major acquisitions. While we have no major debt coming due until December 31, 2009 when $122 million in installment notes will mature, the current turmoil in the financial markets may impact our ability to obtain, and may increase the costs of, short-term and long-term borrowings. We anticipate refinancing these notes by accessing the corporate debt markets, or by borrowing under our revolving bank facility which has $144 million of capacity. See Item 1A — Risk Factors for more information.

Summary of Liquidity and Financing Commitments (in millions of dollars)

Cash and cash equivalents consisted primarily of marketable securities with maturities at date of acquisition of 90 days or less.

Liquidity and Capital Resources

Historically, our operations have generally produced consistent cash flows and required limited capital resources. Short-term borrowings help fund cyclicality and seasonality in working capital needs. Long-term debt has been used to fund major acquisitions. The current turmoil in the financial markets may impact our ability to obtain, and may increase the costs of, future short-term and long-term borrowings. However, on October 1, 2008 we paid $23 million of debt that had matured and we have no other major debt coming due until December 31, 2009 when $122 million in installment notes will mature. See Part II, Item 1a – Risk Factors for more information.

Summary of Liquidity and Financing Commitments (in millions of dollars)

Cash and cash equivalents consisted primarily of marketable securities with maturities at date of acquisition of 90 days or less.

Cash Provided by Operating Activities (in millions of dollars)

Cash provided by operating activities decreased $16 million primarily from lower earnings partially offset by reduced working capital requirements due to the timing of interest and tax payments.

Cash Used for Investing Activities (in millions of dollars)

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Cash used for investing activities increased $224 million primarily due to the purchase of $229 million of timberlands in 2008 versus $12 million of timberlands and wood chipping facilities purchased in 2007.

Cash Used for Financing Activities (in millions of dollars)

Cash used for financing activities decreased $64 million primarily due to a $45 million increase in outstanding debt in 2008 to fund timberland acquisitions compared to a $37 million reduction in 2007, partially offset by a decrease in cash proceeds on stock options exercised and an increase in dividend payments.

Liquidity and Capital Resources

Historically our operations have generally produced consistent cash flows and required limited capital resources. Short-term borrowings help fund cyclicality and seasonality in working capital needs. Long-term debt has been used to fund major acquisitions.

Summary of Liquidity and Financing Commitments (in millions of dollars)

Cash and cash equivalents consisted primarily of marketable securities with maturities at date of acquisition of 90 days or less.

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Cash Provided by Operating Activities (in millions of dollars)

Cash provided by operating activities increased $23 million primarily from lower working capital requirements due to the timing of interest, tax and accounts payable payments, offset by the timing of accounts receivable receipts.

Cash Used for Investing Activities (in millions of dollars)

Cash used for investing activities increased $178 million primarily due to the purchase of $229 million of timberlands in 2008 versus $12 million of timberlands and wood chipping facilities purchases in 2007, partially offset by a $50 million decrease in restricted cash deposits.

Cash Used for Financing Activities (in millions of dollars)

Cash used for financing activities decreased $19 million primarily due to a $45 million increase in outstanding debt in 2008 to fund timberland acquisitions compared to an increase of $7 million in 2007, partially offset by a decrease in cash proceeds on stock options exercised and an increase in dividend payments.

Liquidity and Capital Resources

Historically our operations have generally produced consistent cash flows and required limited capital resources. Short-term borrowings help fund cyclicality and seasonality in working capital needs. Long-term debt has been used to fund major acquisitions.

Summary of Liquidity and Financing Commitments (in millions of dollars)

Cash and cash equivalents consisted primarily of marketable securities with maturities at date of acquisition of 90 days or less.

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Cash Provided by Operating Activities (in millions of dollars)

Cash provided by operating activities increased $48 million mainly from decreased working capital requirements due to the timing of interest, tax and accounts payable payments, and the timing of Jesup’s annual planned maintenance shutdown. In 2008, Jesup’s maintenance shutdown is scheduled for the second quarter versus the first quarter of 2007.

Cash Used for Investing Activities (in millions of dollars)

Cash used for investing activities decreased $9 million due to a $24 million decrease in restricted cash deposits partially offset by $20 million of timberland purchases in the first quarter of 2008 versus $9 million of wood chipping facility purchases in the first quarter of 2007.

Cash Used for Financing Activities (in millions of dollars)

Cash used for financing activities increased $79 million mainly due to higher dividend payments and debt repayment of $55 million in 2008 compared to a net borrowing of $12 million in 2007.

Liquidity and Capital Resources

Cash Flow

Historically, our operations have generally produced consistent cash flows and required limited capital resources. Short-term borrowings help fund cyclicality and seasonality in working capital needs. Long-term debt has historically been used to fund major acquisitions.

Liquidity and Capital Resources

Cash Flow

SIZE="2">Historically, our operations have generally produced consistent cash flows and required limited capital resources. Short-term borrowings help fund cyclicality and seasonality in working capital needs. Long-term debt has historically been
used to fund major acquisitions.