UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C FORM 8-K

Transcription

1 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) June 11, 2014 RAYONIER INC. COMMISSION FILE NUMBER Incorporated in the State of North Carolina I.R.S. Employer Identification Number Riverplace Boulevard, Jacksonville, Florida (Principal Executive Office) Telephone Number: (904) Check the appropriate box below if the form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions: o Written communications pursuant to Rule 425 under the Securities Act (17 CFR ) o o o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR a-12) Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR d-2(b)) Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR e-4(c))

2 Table of Contents RAYONIER INC. TABLE OF CONTENTS PAGE Item Regulation FD Disclosure 1 Item Financial Statements and Exhibits 1 Signature 2 Exhibit Index 3

3 Table of Contents ITEM Regulation FD Disclosure Beginning on June 11, 2014, and at certain other times thereafter, Rayonier Inc. ( Rayonier ) and Rayonier Advanced Materials Inc. ( Rayonier Advanced Materials ) intend to use or otherwise provide the presentation materials attached to this Current Report on Form 8-K as Exhibit 99.1 and Exhibit 99.2, respectively, which exhibits are incorporated herein by reference, in connection with webcasts, presentations or other communications with various investors or securities market professionals. The information in Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.1 and Exhibit 99.2, is being furnished and shall not be deemed filed for purposes of Section 18 of the U.S. Securities Exchange Act of 1934, as amended (the Exchange Act ), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any registration statement or other document filed under the U.S. Securities Exchange Act of 1933, as amended, or the Exchange Act, except as otherwise expressly dated in such filing. Certain statements in the presentations attached to this Current Report on Form 8-K as Exhibit 99.1 and Exhibit 99.2 and incorporated herein by reference regarding anticipated financial, legal or other outcomes including business and market conditions, outlook and other similar statements relating to Rayonier's and Rayonier Advanced Materials future events, developments or financial or operational performance or results, are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward looking statements are identified by the use of words such as "may," "will," "should," "expect," "estimate," "believe," "intend, "anticipate" and other similar language. However, the absence of these or similar words or expressions does not mean that a statement is not forward-looking. While management believes that these forward-looking statements are reasonable when made, forward-looking statements are not guarantees of future performance or events and undue reliance should not be placed on these statements. Although Rayonier believes that the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that these expectations will be attained and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. Such risks and uncertainties include, but are not limited to: uncertainties as to the timing of the spinoff of Rayonier Advanced Materials and whether it will be completed, the possibility that various closing conditions for the spin-off may not be satisfied or waived, the expected tax treatment of the spin-off, the impact of the spin-off on the businesses of Rayonier and Rayonier Advanced Materials, the ability of both companies to meet debt service requirements, the availability and terms of financing and expectations of credit rating. Other important factors are described in Rayonier s most recent Form 10-K and 10-Q reports on file with the Securities and Exchange Commission and in Rayonier Advanced Materials Registration Statement on Form 10 that could cause actual results or events to differ materially from those expressed in forward-looking statements that may have been made in this document. Neither Rayonier nor Rayonier Advanced Materials assumes any obligation to update these statements except as required by law. ITEM Financial Statements and Exhibits. (d) Exhibits. The following is filed as an Exhibit to this Report. Exhibit No. Exhibit Description 99.1 Presentation, dated June 11, Presentation, dated June 11,

4 Table of Contents SIGNATURE Pursuant to the requirements of the Securities Exchange Act of l934, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. RAYONIER INC. (Registrant) BY: /s/ MICHAEL R. HERMAN Michael R. Herman Senior Vice President and General Counsel June 11,

5 Table of Contents EXHIBIT INDEX EXHIBIT NO. DESCRIPTION LOCATION 99.1 Presentation, dated June 11, Furnished herewith Presentation, dated June 11, Furnished herewith. 3

6 In v e s to rp re s e n ta tio n J u n e

7 S a fe H a rb o rs ta te m e n t2 C e rta in s ta te m e n ts in th is d o c u m e n tre g a rd in g a n tic ip a te d fin a n c ia l o u tc o m e s in c lu d in g e a rn in g s g u id a n c e,ifa n y,b u s in e s s a n d m a rk e tc o n d itio n s,o u tlo o k a n d o th e rs im ila rs ta te m e n ts re la tin g to R a y o n ie r s fu tu re e v e n ts,d e v e lo p m e n ts o rfin a n c ia l o ro p e ra tio n a l p e rfo rm a n c e o re s u lts,a re fo rw a rd -lo o k in g s ta te m e n ts m a d e p u rs u a n to th e s a fe h a rb o rp ro v is io n s o fth e P riv a te S e c u ritie s L itig a tio n R e fo rm A c to f a n d o th e rfe d e ra l s e c u ritie s la w s.t h e s e fo rw a rd -lo o k in g s ta te m e n ts a re id e n tifie d b y th e u s e o fw o rd s s u c h a s m a y, w il, s h o u ld, e x p e c t, e s tim a te, b e lie v e, in te n d, a n tic ip a te a n d o th e rs im ila rla n g u a g e.h o w e v e r,th e a b s e n c e o fth e s e o rs im ila rw o rd s o re x p re s s io n s d o e s n o tm e a n th a ta s ta te m e n tis n o tfo rw a rd -lo o k in g.wh ile m a n a g e m e n tb e lie v e s th a th e s e fo rw a rd -lo o k in g s ta te m e n ts a re re a s o n a b le w h e n m a d e,fo rw a rd -lo o k in g s ta te m e n ts a re n o tg u a ra n te e s o fu tu re p e rfo rm a n c e o re v e n ts a n d u n d u e re lia n c e s h o u ld n o tb e p la c e d o n th e s e s ta te m e n ts.t h e fo lo w in g im p o rta n tfa c to rs,a m o n g o th e rs,c o u ld c a u s e a c tu a l re s u lts o re v e n ts to d ife rm a te ria ly fro m th o s e e x p re s s e d in fo rw a rd -lo o k in g s ta te m e n ts th a tm a y h a v e b e e n m a d e in th is d o c u m e n t:th e c y c lic a l a n d c o m p e titiv e n a tu re o fth e in d u s trie s in w h ic h w e o p e ra te ;flu c tu a tio n s in d e m a n d fo r,o rs u p p ly o f,o u rfo re s tp ro d u c ts a n d re a l e s ta te o fe rin g s ;e n try o fn e w c o m p e tito rs in to o u rm a rk e ts ;c h a n g e s in g lo b a l e c o n o m ic c o n d itio n s a n d w o rld e v e n ts, in c lu d in g p o litic a l c h a n g e s in p a rtic u la re g io n s o rc o u n trie s ;flu c tu a tio n s in d e m a n d fo ro u rp ro d u c ts in A s ia,a n d e s p e c ia ly C h in a ;th e u n c e rta in tie s o fp o te n tia l im p a c ts o fc lim a te -re la te d in itia tiv e s ;c h a n g e s in e n e rg y a n d ra w m a te ria l p ric e s,p a rtic u la rly fo ro u rp e rfo rm a n c e F ib e rs b u s in e s s ;im p a c ts o fth e ris in g c o s to fu e l,in c lu d in g th e c o s ta n d a v a ila b ility o ftra n s p o rta tio n fo ro u rp ro d u c ts,b o th d o m e s tic a ly a n d in te rn a tio n a ly,a n d th e c o s ta n d a v a ila b ility o fth ird p a rty lo g g in g a n d tru c k in g s e rv ic e s ;u n a n tic ip a te d e q u ip m e n tm a in te n a n c e a n d re p a ire q u ire m e n ts a to u rm a n u fa c tu rin g fa c ilitie s ;th e g e o g ra p h ic c o n c e n tra tio n o fa s ig n ific a n tp o rtio n o fo u rtim b e rla n d ;o u ra b ility to id e n tify,fin a n c e a n d c o m p le te tim b e rla n d a c q u is itio n s ;c h a n g e s in e n v iro n m e n ta la w s a n d re g u la tio n s,in c lu d in g la w s re g a rd in g a ire m is s io n s a n d w a te rd is c h a rg e s,re m e d ia tio n o fc o n ta m in a te d s ite s,tim b e rh a rv e s tin g,d e lin e a tio n o fw e tla n d s,a n d e n d a n g e re d s p e c ie s,th a tm a y re s tric to ra d v e rs e ly im p a c to u ra b ility to c o n d u c to u rb u s in e s s,o rin c re a s e th e c o s to fd o in g s o ;a d v e rs e w e a th e rc o n d itio n s,n a tu ra l d is a s te rs a n d o th e rc a ta s tro p h ic e v e n ts s u c h a s h u ric a n e s,w in d s to rm s a n d w ild fire s,w h ic h c a n a d v e rs e ly a fe c to u rtim b e rla n d s a n d th e p ro d u c tio n,d is trib u tio n a n d a v a ila b ility o fo u rp ro d u c ts a n d ra w m a te ria ls s u c h a s w o o d,e n e rg y a n d c h e m ic a ls ;in te re s tra te a n d c u re n c y m o v e m e n ts ;o u rc a p a c ity to in c u ra d d itio n a l d e b t,a n d a n y d e c is io n w e m a y m a k e to d o s o ; c h a n g e s in ta rifs,ta x e s o rtre a tie s re la tin g to th e im p o rta n d e x p o rto fo u rp ro d u c ts o rth o s e o fo u rc o m p e tito rs ;th e a b ility to c o m p le te lik e -k in d e x c h a n g e s o fp ro p e rty ;c h a n g e s in k e y m a n a g e m e n ta n d p e rs o n n e l;o u ra b ility to m e e ta l n e c e s s a ry le g a l re q u ire m e n ts to c o n tin u e to q u a lify a s a re a l e s ta te in v e s tm e n tru s t( R E IT )a n d to fu n d d is trib u tio n s u s in g c a s h g e n e ra te d th ro u g h o u rta x a b le R E IT s u b s id ia rie s,a n d c h a n g e s in ta x la w s th a tc o u ld a d v e rs e ly a fe c ta x tre a tm e n to fo u rs p e c ific b u s in e s s e s o re d u c e th e b e n e fits a s s o c ia te d w ith R E IT s ta tu s.in a d d itio n,s p e c ific a ly w ith re s p e c to o u rr e a l E s ta te b u s in e s s,th e fo lo w in g im p o rta n tfa c to rs,a m o n g o th e rs,c o u ld c a u s e a c tu a l re s u lts to d ife rm a te ria ly fro m th o s e e x p re s s e d in fo rw a rd -lo o k in g s ta te m e n ts th a tm a y h a v e b e e n m a d e in th is d o c u m e n t:th e c y c lic a l n a tu re o fth e re a l e s ta te b u s in e s s g e n e ra ly,in c lu d in g flu c tu a tio n s in d e m a n d fo rb o th e n title d a n d u n e n title d p ro p e rty ;a d e la y e d o rw e a k re c o v e ry in th e h o u s in g m a rk e t;th e le n g th y,u n c e rta in a n d c o s tly p ro c e s s a s s o c ia te d w ith th e o w n e rs h ip,e n title m e n ta n d d e v e lo p m e n to fre a l e s ta te,e s p e c ia ly in F lo rid a,w h ic h a ls o m a y b e a fe c te d b y c h a n g e s in la w,p o lic y a n d p o litic a l fa c to rs b e y o n d o u rc o n tro l;th e p o te n tia l fo rle g a l c h a le n g e s to e n title m e n ts a n d p e rm its in c o n n e c tio n w ith o u rp ro p e rtie s ;u n e x p e c te d d e la y s in th e e n try in to o rc lo s in g o fre a l e s ta te tra n s a c tio n s ;th e e x is te n c e o fc o m p e tin g d e v e lo p e rs a n d c o m m u n itie s in th e m a rk e ts in w h ic h w e o w n p ro p e rty ;th e p a c e o fd e v e lo p m e n ta n d th e ra te a n d tim in g o fa b s o rp tio n o fe x is tin g e n title d p ro p e rty in th e m a rk e ts in w h ic h w e o w n p ro p e rty ;c h a n g e s in th e d e m o g ra p h ic s a fe c tin g p ro je c te d p o p u la tio n g ro w th a n d m ig ra tio n to th e S o u th e a s te rn U.S.;c h a n g e s in e n v iro n m e n ta la w s a n d re g u la tio n s,in c lu d in g la w s re g a rd in g w a te rw ith d ra w a l a n d m a n a g e m e n ta n d d e lin e a tio n o fw e tla n d s,th a tm a y re s tric to ra d v e rs e ly im p a c to u ra b ility to s e l o rd e v e lo p p ro p e rtie s ;th e c o s to fth e d e v e lo p m e n to fp ro p e rty g e n e ra ly,in c lu d in g th e c o s to fp ro p e rty ta x e s,la b o ra n d c o n s tru c tio n m a te ria ls ;th e tim in g o fc o n s tru c tio n a n d a v a ila b ility o fp u b lic in fra s tru c tu re ;a n d th e a v a ila b ility o fin a n c in g fo re a l e s ta te d e v e lo p m e n ta n d m o rtg a g e lo a n s.in a d d itio n,s p e c ific a ly w ith re s p e c to th e s e p a ra tio n o fr a y o n ie ra d v a n c e d M a te ria ls fro m R a y o n ie r,th e fo lo w in g im p o rta n tfa c to rs,a m o n g o th e rs,c o u ld c a u s e a c tu a l re s u lts to d ife rm a te ria ly fro m th o s e e x p re s s e d in fo rw a rd -lo o k in g s ta te m e n ts th a tm a y h a v e b e e n m a d e in th is d o c u m e n t:u n c e rta in tie s a s to th e tim in g o fth e s e p a ra tio n a n d w h e th e ritw il b e c o m p le te d,th e p o s s ib ility th a tv a rio u s c lo s in g c o n d itio n s fo rth e s e p a ra tio n m a y n o tb e s a tis fie d o rw a iv e d,th e e x p e c te d ta x tre a tm e n to fth e s e p a ra tio n,th e im p a c to fth e s e p a ra tio n o n th e b u s in e s s e s o fr a y o n ie ra n d R a y o n ie ra d v a n c e d M a te ria ls,th e a b ility o fb o th c o m p a n ie s to m e e td e b ts e rv ic e re q u ire m e n ts,th e a v a ila b ility a n d te rm s o fa d d itio n a l fin a n c in g re q u ire d b y R a y o n ie ra d v a n c e d M a te ria ls,a n d e x p e c ta tio n s o fc re d itra tin g.a d d itio n a l fa c to rs a re d e s c rib e d in R a y o n ie r s m o s tre c e n tf o rm 1 0 -K a n d 1 0 -Q,R a y o n ie ra d v a n c e d M a te ria ls,f o rm 1 0,a n d o th e re p o rts o fr a y o n ie ra n d R a y o n ie ra d v a n c e d M a te ria ls o n file w ith th e S e c u ritie s a n d E x c h a n g e C o m m is s io n.f o rw a rd -lo o k in g s ta te m e n ts a re o n ly a s o fth e d a te th e y a re m a d e,a n d R a y o n ie ra s s u m e s n o o b lig a tio n to u p d a te th e s e s ta te m e n ts e x c e p ta s is re q u ire d b y la w.

8 T a b le o fc o n te n ts T h e S e p a ra tio n 5 B u s in e s s O v e rv ie w 9 F o re s tr e s o u rc e s 1 5 R e a l E s ta te 2 7 V a lu e P ro p o s itio n 3 7 F in a n c ia l R e v ie w 4 0 A p p e n d ix 4 4 3

9 T h e S e p a ra tio n

10 S tra te g ic R a tio n a le fo rth e S e p a ra tio n 5 S e p a ra tio n w il c re a te tw o in d e p e n d e n t,in d u s try -le a d in g p u b lic c o m p a n ie s D ife re n tm a rk e ts,d riv e rs a n d V a lu e C re a tio n S tra te g ie s M o re E fic ie n ta lo c a tio n o fc a p ita l D is tin c tin v e s tm e n tid e n titie s E n h a n c e d S tra te g ic a n d M a n a g e m e n tf o c u s P o s itio n s e a c h b e s t-in -c la s s e n tity to c o n tin u e to g ro w a n d d e liv e ru n iq u e v a lu e c re a tio n s tra te g ie s R a y o n ie r Im p ro v in g h o u s in g m a rk e ta n d e c o n o m y,a n d s tro n g e x p o rtm a rk e ts fu e l g ro w th A d v a n c e d M a te ria ls C o m p le te th e ra m p -u p o fh ig h -v a lu e s p e c ia lty p ro d u c ts a le s v o lu m e s C o n c e n tra tio n o fe a c h c o m p a n y s fin a n c ia l re s o u rc e s s o le ly o n its o p e ra tio n s C a p ita l s tru c tu re a lo w s e a c h c o m p a n y fin a n c ia fle x ib ility E a c h c o m p a n y c a n a lo c a te c a p ita l in a m o re e fic ie n tm a n n e rb e s ts u ite d to its d is tin c tp rio ritie s a n d s tra te g ie s E n a b le s m a n a g e m e n to fb o th c o m p a n ie s to fo c u s o n u n iq u e o p p o rtu n itie s fo rlo n g -te rm g ro w th a n d p ro fita b ility Im p ro v e s a lig n m e n to fm a n a g e m e n ta n d e m p lo y e e in c e n tiv e s w ith p ro fita b ility a n d g ro w th o b je c tiv e s T w o u n iq u e in v e s tm e n th e s e s : L e a d in g p u re -p la y tim b e rla n d R E IT s w ith b e s t-in -c la s s a s s e ts,p re m iu m la n d p o rtfo lio a n d a tra c tiv e d iv id e n d H ig h -v a lu e,p u re -p la y s p e c ia lty c e lu lo s e p ro d u c e rw ith le a d in g m a rg in s a n d s ig n ific a n tfre e c a s h flo w g e n e ra tio n

11 6 C o m p le tio n o fte c h n ic a ly d e m a n d in g C S E A d d itio n a l K to n s o fc e lu lo s e s p e c ia ltie s c a p a c ity H ig h q u a lity o fc e lu lo s e s p e c ia ltie s p ro d u c e d o n c o n v e rte d lin e ;a c h ie v e d a h e a d o fs c h e d u le E x c e le n tp ro g re s s in q u a lify in g n e w p ro d u c tio n w ith c u s to m e rs A c q u ire d a d d itio n a l in te re s tin N e w Z e a la n d J V S o ld n o n -c o re a s s e ts Wo o d P ro d u c ts b u s in e s s N e w Y o rk tim b e rla n d s C e lu lo s e S p e c ia ltie s E x p a n s io n (C S E )p ro je c tc o n s tru c tio n A c q u ire d $ M o fh ig h -q u a lity tim b e rla n d s O b ta in e d la n d -u s e e n title m e n ts o n 3 9 K a c re s o fc o a s ta l F L /G A H ig h e ra n d B e te ru s e (H B U )p ro p e rtie s A d d itio n a l c e lu lo s e s p e c ia ltie s (C S )s a le s v o lu m e a s C S E ra m p -u p b e g in s S tre n g th e n in g h o u s in g m a rk e tw ith p o s itiv e im p a c to n tim b e rd e m a n d a n d p ric e s G ro w in g in te re s tin d e v e lo p m e n th B U p ro p e rtie s S e p a ra te P e rfo rm a n c e F ib e rs b u s in e s s fro m R a y o n ie r C S E ra m p -u p c o n tin u e s th ro u g h w h e n C S c a p a c ity is fu ly p la c e d in th e m a rk e t Im p ro v e m e n to fh o u s in g m a rk e to tre n d le v e l o f~ 1.5 m ilio n s ta rts p e ry e a r H ig h e rs a w lo g p ric e s Im p ro v e d m ix A d d itio n a l U S h a rv e s tv o lu m e (a p p ro x.1 5 %)fro m re c e n ta c q u is itio n s E B IT D A g ro w th in F o re s tr e s o u rc e s b u s in e s s Im p ro v in g h o u s in g m a rk e ta n d e c o n o m y in c re a s e d e m a n d fo rd e v e lo p m e n th B U E x p e c ta tio n s b e y o n d O p tim a l tim in g fo rth e s e p a ra tio n O p tim a l tim in g a s b o th c o m p a n ie s h a v e s tro n g g ro w th p ro s p e c ts in y e a rs a h e a d

12 T w o C o m p a n ie s w ith S tro n g F in a n c ia l P ro file s 7 S a le s R e v e n u e b y s e g m e n ts e g m e n te B IT D A *(% M a rg in )C a p E x N e td e b t$ 1.7 B $ 0.7 B $ 1.0 B F o re s tr e s o u rc e s 2 2 % P e rf.f ib e rs 6 1 % R e a l E s ta te 9 % T ra d in g & O th e r8 % $ M (3 8 %)$ M ~ $ 1.5 B F o re s tr e s o u rc e s 5 7 % R e a l E s ta te 2 2 % T ra d in g & O th e r2 1 % C e lu lo s e s p e c ia ltie s ~ 8 9 % $ M (3 8 %)$ M (3 7 %)$ 6 3 M $ 9 6 M ~ $ 0.5 B (e x p e c te d )~ $.9 5 B R a y o n ie rp rio rto s e p a ra tio n R a y o n ie rp o s ts e p a ra tio n R a y o n ie ra d v a n c e d M a te ria ls C o m m o d ity g ra d e s ~ 1 1 % E x p e c te d c re d itra tin g B B B /B a a 2 B B + /B a 2 S a le s v o lu m e :7 6 % C S /2 4 % c o m m o d ity g ra d e *N o n -G A A P m e a s u re (s e e A p p e n d ix fo rd e fin itio n a n d re c o n c ilia tio n )*A s s u m e s n o rm a liz e d c o rp o ra te e x p e n s e s o f$ 2 0 M fo rr a y o n ie ra n d $ 2 5 M fo rr a y o n ie ra d v a n c e d M a te ria ls R e v e n u e b y s e g m e n tn e td e b t/l T M E B IT D A ~ 1.7 x *~ 3.0 x *P ro fo rm a a ts p i n

13 A n in te rn a tio n a l re a l e s ta te in v e s tm e n tru s t(r E IT )c o m m ite d to c re a tin g v a lu e th ro u g h e x c e le n c e in o u rc o re b u s in e s s e s : F o re s tre s o u rc e s R e a l e s ta te A re s p o n s ib le s te w a rd o fth e la n d,m a n a g in g e v e ry a c re to w a rd s its h ig h e s ta n d b e s tu s e to a c h ie v e o p tim a l v a lu e B u s in e s s O v e rv ie w

14 R a y o n ie r:b e s t-in -c la s s la n d re s o u rc e s R E IT 9 T h ird -la rg e s tim b e rr E IT w ith 2.6 m ilio n a c re s o fh ig h -q u a lity tim b e rla n d A d v a n ta g e o u s R E IT s tru c tu re G e o g ra p h ic d iv e rs ity -U.S.S o u th e a s ta n d G u lfs ta te s,p a c ific N o rth w e s t,n e w Z e a la n d $ m ilio n in v e s te d in h ig h -q u a lity tim b e rla n d s s in c e e a rly In c re m e n ta l 1 m ilio n to n s o fh a rv e s tv o lu m e in G u lfr e g io n b e g in n in g in fro m re c e n ta c q u is itio n s a s y o u n g tim b e re a c h e s m a tu rity P ro fita b ly g ro w tim b e rla n d b a s e th ro u g h d is c ip lin e d a c q u is itio n p ro c e s s B e s t-in -c la s s g e n e tic s e le c tio n o fs e e d lin g s y ie ld s lo n g -te rm v o lu m e g ro w th E x c e le n th B U p la tfo rm w ith a p p ro x im a te ly 2 0 0,0 0 0 a c re s a lo n g th e F lo rid a + G e o rg ia C o a s ta l C o rid o r O v e r3 9,0 0 0 a c re s w ith la n d -u s e e n title m e n ts w e l p o s itio n e d fo rh ig h e rs a le s v a lu e s p e ra c re a s e c o n o m y s tre n g th e n s C o n s is te n tru ra l H B U s a le s C o n s e rv a tiv e le v e ra g e F a v o ra b le fin a n c in g fa c ilitie s /c o m m itm e n ts F le x ib ility to in v e s tin s tra te g ic p rio ritie s L e a d in g p u re -p la y la n d re s o u rc e s c o m p a n y G ro w in g tim b e rla n d b a s e A tra c tiv e R e a l E s ta te S tro n g C a p ita l S tru c tu re

15 H ig h ly p ro d u c tiv e,g e o g ra p h ic a ly d iv e rs ifie d la n d re s o u rc e s 1 0 F lo rid a /G e o rg ia C o a s ta l C o rid o rwa s h in g to n ,0 0 0 a c re s,a c c e s s to s tro n g e x p o rtm a rk e ts ~ 8 0 0,0 0 0 a c re s,s a w lo g a n d p u lp w o o d ~ 1.1 m ilio n a c re s,s a w lo g a n d p u lp w o o d ;F lo rid a + G e o rg ia C o a s ta l C o rid o rh B U 3 1 3,0 0 0 a c re s,m a n a g e a n d o w n 6 5 % o fjo in tv e n tu re ;s tro n g e x p o rtm a rk e ts ~ K a c re s T o ta l R a y o n ie r= 2,5 8 3,0 0 0 a c re s (1 )(1 )A c re s o w n e d o rm a n a g e d a s o fm a rc h 3 1,

16 P re m iu m p o rtfo lio g e n e ra te s s tro n g c a s h flo w 1 1 T im b e rla n d s d iv e rs ifie d a c ro s s s ig n ific a n tn u m b e ro fm ic ro m a rk e ts E n d -m a rk e to p tio n a lity in a l g e o g ra p h ic re g io n s E B IT D A g ro w th d riv e n b y s e v e ra l fa c to rs In c re a s e d p ric e s a n d im p ro v e d s a w lo g /p u lp w o o d m ix fro m h o u s in g im p ro v e m e n t In c re a s e d U.S.h a rv e s td u e to $ m ilio n o fa c q u is itio n s s in c e e a rly In c re m e n ta l 1 M to n s b e g in n in g in In c re a s e d y ie ld fro m a d v a n c e d s ilv ic u ltu re p ra c tic e s We l-p o s itio n e d,h ig h -q u a lity H B U a lo n g F lo rid a + G e o rg ia c o a s ta l c o rid o r L T M 3 /3 1 /1 4 S e g m e n te B IT D A (1 )($ in m ilio n s ) (2 )(1 )E B IT D A is a n o n -G A A P m e a s u re d e fin e d a n d re c o n c ile d in th e A p p e n d ix (2 ) in c lu d e d $ 3 fro m th e c o n s o lid a tio n o fth e N Z J V N o te :E x c lu d e s lo g tra d in g a c tiv itie s F o re s tr e s o u rc e s R e a l E s ta te

17 R a y o n ie rle a d e rs h ip,p o s t-s e p a ra tio n 1 2 R ic h a rd D.K in c a id *,C h a irm a n J o h n A.B lu m b e rg G o v e rn o rj o h n E lis (J e b )B u s h * D o d A.F ra s e r S c o tr.j o n e s S e n a to rb la n c h e L.L in c o ln V.L a rk in M a rtin * D a v id L.N u n e s,c E O D a v id W.O s k in * D a v e N u n e s C h ie fe x e c u tiv e O fic e r L y n n Wils o n E V P,F o re s tr e s o u rc e s C h ris C o r S V P,R e a l E s ta te E d K ik e r S V P & C h ie ff in a n c ia l O fic e rb o a rd o fd ire c to rs M a n a g e m e n t*c u re n tr a y o n ie rb o a rd m e m b e rs

18 S tra te g y le v e ra g e s b e s t-in -c la s s a s s e ts F o re s tr e s o u rc e s : O p tim iz e h ig h ly p ro d u c tiv e tim b e rla n d s w ith p ro v e n d is c ip lin e d a p p ro a c h,le v e ra g in g m ic ro -m a rk e ts u p p ly /d e m a n d d y n a m ic s G ro w c o re tim b e rla n d o w n e rs h ip o v e rtim e In c re a s e tim b e ry ie ld s th ro u g h a d v a n c e d s ilv ic u ltu ra l p ra c tic e s a n d in d u s try -le a d in g s e e d lin g g e n e tic s P u rs u e o th e rv a lu e -a d d e d o p p o rtu n itie s,in c lu d in g m in e ra ls a n d re c re a tio n a le a s e s R e a l E s ta te : Id e n tify la n d w ith h ig h e rv a lu e p o te n tia l u s in g p ro p rie ta ry c la s s ific a tio n s y s te m R e a liz e ru ra l H B U v a lu e th ro u g h c o n s e rv a tio n a n d re c re a tio n a l s a le s C re a te c a ta ly s ts fo rv a lu e a p p re c ia tio n S e l d ire c tly,o rth ro u g h v e n tu re s,e n title d a n d o th e rc o a s ta l c o rid o rd e v e lo p m e n tla n d fo rin d u s tria l,c o m m e rc ia l a n d re s id e n tia l u s e s P ro v id e a n a tra c tiv e,g ro w in g d iv id e n d in a ta x -e fe c tiv e R E IT s tru c tu re F u n d fro m c o re,re c u rin g c a s h flo w s 1 3

19 F o re s tr e s o u rc e s

20 E B IT D A g ro w th d riv e rs fo rf o re s tr e s o u rc e s 1 5 Im p ro v in g h o u s in g m a rk e td riv in g in c re a s in g U.S.lu m b e rp ro d u c tio n a n d s a w lo g p ric in g N o rth A m e ric a n s u p p ly d y n a m ic s a ls o d riv e h ig h e rs a w lo g d e m a n d in U.S.S o u th S tro n g A s ia n e x p o rtd e m a n d M o u n ta in p in e b e e tle im p a c tre d u c e s B ritis h C o lu m b ia lo g a n d lu m b e rp ro d u c tio n lo n g te rm In c re a s in g b io m a s s /w o o d p e le td e m a n d C o m p le te d a c q u is itio n s in c re a s e p in e h a rv e s tv o lu m e b y 1 m ilio n to n s b e g in n in g in In v e s tm e n tin in te n s iv e fo re s tm a n a g e m e n tin c re a s e s v o lu m e a n d s a w lo g g ra d e s F a v o ra b le lo c a l d y n a m ic s in m a n y o fr a y o n ie r s S o u th e a s te rn tim b e rla n d m a rk e ts Im p ro v e d S o u th e a s ts a w lo g v s.p u lp w o o d h a rv e s tm ix A c q u ire tim b e rla n d s th a tm e e trig o ro u s o p e ra tin g a n d fin a n c ia l c rite ria D e m a n d /P ric e V o lu m e M ix T im b e rla n d A c q u is itio n s

21 S a w lo g M a rk e ts P u lp M a rk e ts L u m b e rp a p e ra n d p a c k a g in g P ly w o o d A b s o rb a n tm a te ria ls B io m a s s E n d -m a rk e to p tio n a lity p ro v id e s re lia b le c a s h flo w Im p ro v in g h o u s in g o u tlo o k d riv e s re tu rn to h is to ric a l s a w lo g /p u lp w o o d m ix o f5 0 /5 0 P a c ific N o rth w e s ta n d N e w Z e a la n d tim b e rla n d s lo c a te d n e a rp o rts to s u p p ly b o th d o m e s tic a n d e x p o rtm a rk e ts P u lp w o o d v o lu m e G ra d e v o lu m e U.S.S o u th P a c ific N o rth w e s ta n d N e w Z e a la n d 1 6

22 D e m a n d e x p e c te d to d riv e s a w lo g p ric e s h ig h e r1 7 $ /to n H o u s in g s ta rts m ilio n s H is to ric U.S.h o u s in g s ta rts B a n k o fa m e ric a /M e ril L y n c h P in e s a w lo g s tu m p a g e p ric e (T M S )R a y o n ie rp in e s a w lo g s tu m p a g e p ric e fo re c a s t P in e s a w lo g p ric e s a n d U.S.h o u s in g s ta rts A $ 1 0 /to n s a w lo g p ric e liftw o u ld in c re a s e E B IT D A $ 2 0 m ilio n

23 U rb a n h o u s e h o ld s H o u s in g s to c k s,u n its M M S h o rta g e o f M C h in a s u rb a n h o u s in g d e m a n d o u ts trip s s u p p ly H o u s in g c o n s u m e s 8 0 % o fs o ftw o o d lo g s a n d lu m b e r U rb a n h o u s in g s h o rta g e e s tim a te d to b e M u n its in U rb a n h o u s e h o ld s p ro je c te d to g ro w 5 M p e ry e a rfo r2 0 + y e a rs E n s u rin g a v a ila b ility a n d a fo rd a b ility o fa d e q u a te h o u s in g is a to p p o lic y p rio rity O fic ia l s ta tis tic s s h o w th a tc h in a is o n tra c k w ith its g o a l to s ta rt3 6 m ilio n a fo rd a b le h o u s in g u n its b y th e e n d o fth e fiv e -y e a rp la n ( )E s tim a te d s to c k o fu rb a n h o u s in g a n d u rb a n p o p u la tio n S o u rc e :G a v e K a l D ra g o n o m ic s U rb a n g ro w th fu e lin g d e m a n d fo rlo g s

24 O th e ra u s tra lia C a n a d a U S A N Z R u s s ia D e m a n d D o m e s tic S u p p ly Im p o rts (G a p )m i l i o n s o fm 3 S o u rc e :R IS Im i l i o n s o fm 3 C h in a s o ftw o o d lo g d e fic ite x p e c te d to g ro w U.S.a n d N e w Z e a la n d lo g e x p o rts to C h in a e x p e c te d to in c re a s e C h in a re ly in g o n im p o rts to m e e td e m a n d U S,N e w Z e a la n d a n d C a n a d a lo g e x p o rts g ro w in g a s R u s s ia s s h a re d im in is h e s C h in a S o ftw o o d L o g Im p o rts

25 S tru c tu ra l d e c lin e in C a n a d ia n s u p p ly 2 0 B ritis h C o lu m b ia (B C )tim b e ra n d lu m b e rs u p p ly p ro je c te d to d e c lin e s ig n ific a n tly d u e to m o u n ta in p in e b e e tle e p id e m ic O v e r4 3 m ilio n a c re s d e a d o rd y in g tim b e rla n d E s tim a te d 5 3 % o fm e rc h a n ta b le p in e v o lu m e in B C h a s b e e n k ile d E x p e c t~ 5 8 % o fm e rc h a n ta b le p in e v o lu m e in in te rio rb C w il b e d e a d b y E s tim a te d s h e lflife o f8 to 1 0 y e a rs 6 0 -y e a rim p a c to n fu tu re h a rv e s tle v e ls E a s te rn C a n a d a h a rv e s tre d u c tio n s o f1 0 % to 2 0 % im p le m e n te d C o m b in e d p ro je c te d im p a c to f7 % to 1 5 % re d u c tio n in N o rth A m e ric a n lu m b e rs u p p ly d e p e n d in g o n lu m b e rp ric e le v e l S o u rc e :B C M in is try o ff o re s ts a n d R a n g e,s ta tis tic s C a n a d a a n d F o re s te c o n o m ic A d v is o rs B e n e fits U.S.tim b e rla n d s a s C a n a d ia n c a p a c ity s h ifts to U S S o u th

26 U.S.s a w m il c a p a c ity in c re a s in g d u e to h ig h e rlu m b e rd e m a n d a n d re d u c e d C a n a d ia n s u p p ly U.S.lu m b e rp ro d u c tio n N e w C a p a c ity In v e s tm e n ts U S S o u th -> 2.2 B B F U S We s t-> 0.9 B B F D is m a n tle d 5.1 l u m b e rp ro d u c ti o n B B F S o u rc e :F E A,R a y o n ie re s e a rc h P ro d u c tio n R a te P ro d u c tio n R a te P ro d u c tio n R a te N e w C a p a c ity In v e s tm e n ts P rd u c tio n R a te In c re a s e d rd u c tio n R a te R e s ta rts N e w C a p c ity In v e s tm e n ts P ro d u c tio n R a te

27 2 2 T h ro u g h a ro ta tio n,h a rv e s tv o lu m e s h o u ld in c re a s e 2 0 %,3 3 to n s /a c re,w ith re v e n u e in c re a s e o f$ /a c re a t p ric e s S ite M a n a g e m e n t0 % 1 0 % 2 0 % 3 0 % 4 0 % 5 0 % 6 0 % 7 0 % G e n e tic s In d u s try le a d e rin c o n tro l m a s s p o lin a tio n p la n tin g s F u tu re S o u th e a s tp la n tin g s w il b e a p p ro x im a te ly 7 0 % L o b lo ly P e rc e n ta g e o fl o b lo ly S e e d lin g s fro m C o n tro l M a s s P o lin a tio n S ite In d e x 6 8 P u lp w o o d = 4 2 % G ra d e *= 5 8 % S ite In d e x 7 3 P u lp w o o d = 3 0 % G ra d e *= 7 0 % S ta n d e s ta b lis h m e n t F e rtiliz a tio n C o m p e titio n c o n tro l S o u th e rn P in e A d v a n c e d s ilv ic u ltu ra l p ra c tic e s in c re a s e h a rv e s ty ie ld *S a w lo g s a n d C h ip N S a w

28 L o c a l m a rk e ts u p p ly /d e m a n d d y n a m ic s d e te rm in e p ric e L o g s ty p ic a ly tra v e le s s th a n m ile s S u p p ly /d e m a n d c o n d itio n s v a ry w id e ly a c ro s s th e re g io n S a w lo g p ric e in c re a s e s e x p e c te d to e x c e e d 3 0 % in k e y m a rk e ts o v e rn e x t7 to 1 0 y e a rs *S o u rc e :U S D A F IA ;R a y o n ie re s e a rc h *M o s tc u re n tf IA c y c le d a ta b y s ta te (v in ta g e y e a rs v a ry b y s ta te )F a v o ra b le s u p p ly /d e m a n d d y n a m ic s in m a n y R a y o n ie rtim b e rla n d m ic ro -m a rk e ts 2 3

29 3 *R e p re s e n ts tim b e rla n d o w n e d,le a s e d o rm a n a g e d b y R a y o n ie ra n d re a l e s ta te p ro p e rtie s *In c lu d e s a c q u is itio n o f2 3 7 K a c re s b y th e N e w Z e a la n d J V,w h ic h R a y o n ie rm a n a g e s a n d (a s o fa p ril )h o ld s a 6 5 % o w n e rs h ip in te re s t*in c lu d e s te rm in a tio n o fm a n a g e m e n ta g re e m e n tin A u s tra lia in a n d e x p ira tio n o fle a s e s in * a c q u is itio n s e x c lu d e 1 5,0 0 0 a c re s p re v io u s ly re p o rte d u n d e ra le a s e a g re e m e n t*r e fle c ts s a le o f1 2 8 K a c re s in N e w Y o rk A c q u ire tim b e rla n d s th a tm e e ts tra te g ic a n d fin a n c ia l c rite ria O p tim iz e tim b e rla n d p o rtfo lio M o n e tiz e n o n -s tra te g ic tim b e rla n d s M a x im iz e v a lu e th ro u g h in te n s iv e s ilv ic u ltu ra l p ra c tic e s A d v a n c e H B U in itia tiv e s G e n e ra te n o n -tim b e re v e n u e fro m m in e ra ls a n d re c re a tio n a le a s e s D is c ip lin e d a p p ro a c h to p o rtfo lio v a lu e o p tim iz a tio n S tra te g y to s te a d ily g ro w a n d u p g ra d e tim b e rla n d h o ld in g s,in c re a s e h a rv e s ts a n d e n h a n c e H B U in v e n to ry 2 4 *

30 H a w k e s B a y B a y o fp le n ty K a c re s o fp la n ta tio n s 5 R e g io n s,6 7 F o re s ts K a c re s fe e la n d R e m a in d e rc ro w n lic e n s e In R a y o n ie ra c q u ire d a d d itio n a l in te re s tin M a ta rik i J V fo r$ M,in c re a s in g o w n e rs h ip fro m 2 6 % to 6 5 % R e v e n u e o f~ U S $ m ilio n (in c l.lo g tra d in g )e x p e c te d in H a rv e s t2.0 m ilio n m 3 /y e a r 8 5 % P in e ;8 % D o u g la s F ir 3 8 % e x p o rt 6 2 % d o m e s tic We l-e s ta b lis h e d e x p o rta n d lo g tra d in g b u s in e s s L o g tra d in g e x p e rtis e c a p ita liz e s o n A s ia n m a rk e td e m a n d N o rth la n d C a n te rb u ry S o u th la n d F o re s tlo c a tio n s O fic e lo c a tio n s E x p o rtp o rts S o u th e rn N o rth Is la n d N e w Z e a la n d jo in tv e n tu re 2 5 P o s itio n e d to c a p ita liz e o n lo n g -te rm n e tw o o d fib e rd e fic itin A s ia P a c ific

31 R e a l E s ta te

32 2 7 O p tim iz e o u rp o rtfo lio w ith a d is c ip lin e d la n d c la s s ific a tio n s y s te m th a tm a n a g e s e v e ry a c re to w a rd its u ltim a te h ig h e s ta n d b e s tu s e (H B U ) M o n e tiz e n o n -s tra te g ic tim b e rla n d s a tb e s tp o s s ib le v a lu e C o la b o ra te w ith c o n s e rv a tio n o rg a n iz a tio n s to id e n tify la n d s w ith e c o lo g ic a l,h is to ric a l,o rh a b ita ts ig n ific a n c e ;1 4 5, a c re s c o n s e rv e d P ro a c tiv e la n d e n h a n c e m e n ta n d p ro d u c td e v e lo p m e n ts tra te g ie s to m a rk e tru ra l re s id e n tia l a n d re c re a tio n la n d s a le s L e a d in itia tiv e s to b rin g to m a rk e tla n d w ith re s id e n tia l a n d c o m m e rc ia l d e v e lo p m e n tp o te n tia l;e x e c u te s a le s,v e n tu re s,a n d s tra te g ic p a rtn e rs h ip s w h e n th e m a rk e tis re a d y G e n e ra te d $ m ilio n in re v e n u e a n d $ 5 4 m ilio n in E B IT D A *fo rth e 1 2 m o n th s e n d e d M a rc h 3 1, o n s a le s o f1 7 2 K a c re s (in c lu d e s s a le o f~ K a c re s o fn Y tim b e rla n d s fo r$ 5 7 m ilio n )R e a l E s ta te s tra te g y *E B IT D A is a n o n -G A A P m e a s u re d e fin e d a n d re c o n c ile d in th e A p p e n d ix A l s tra te g ie s to c re a te v a lu e s ta rtw ith la n d c la s s ific a tio n

33 O u ra p p ro a c h :m a rk e tre c re a tio n /re s id e n tia l p ro p e rtie s 2 8 L a n d C h a ra c te ris tic s E v a lu a tio n M a rk e ta s s e s s m e n tc o n c e p tu a l P ro g ra m C o n c e p tu a l S ite P la n n in g S ite S p e c ific P la n n in g L a n d U s e E n title m e n ts R e g u la to ry P e rm itin g E n a b lin g In fra s tru c tu re L a n d E n h a n c e m e n t& A m e n itie s M a rk e tin g & S a le s S ite D e v e lo p m e n ts e rv ic e s

34 R u ra la n d p ro d u c ts c re a te v a lu e 2 9 L a n d c la s s ifie d a s ru ra l h a s in trin s ic a trib u te s th a tp o s itio n th e p ro p e rty to g e n e ra te a p re m iu m o v e rits v a lu e fo rtim b e rp ro d u c tio n a n d n o n -tim b e rin c o m e A trib u te s R u ra l R e s id e n tia l R u ra l R e c re a tio n C o n s e rv a tio n F ro n ta g e o n a m a in ta in e d ro a d o ra c c e s s c o n v e n ie n tfo re v e ry d a y u s e N a tu ra l fe a tu re s s u c h a s la k e s,riv e rs,s tre a m s,s w a m p s,m a rs h e s,to p o g ra p h y a n d m o re D iv e rs ity o fo re s ty p e s,a e s th e tic la n d s c a p e,p la n ts,tre e s,h a b ita ta n d m o re P ro x im ity to p o p u la tio n c e n te rs a n d a m e n itie s S u p p o rts s u b d iv is io n

35 R u ra la n d p ro d u c ts 3 0 L o c a tio n E s c a m b ia,a L Irw in,g A M a rio n,f L P o lk,t X C la s s ific a tio n N o n -s tra te g ic R u ra l re c C o re tim b e rla n d C o n s e rv a tio n R u ra l re c R u ra l re s P a rc e l s iz e 3, , , In te n d e d u s e In v e s tm e n ta g c o n v e rs io n H u n tin g R e s id e n c e T im b e r4 2 % n o n -p la n ta b le M e rc h p in e re s e rv e d P a rtia l h a rv e s tb y R Y N N a tu ra l p in e & h a rd w o o d M in e ra ls R e s e rv e d b y R a y o n ie rr e s e rv e d b y R a y o n ie rs o ld to b u y e rr o y a lty re s e rv a tio n P ric e p e ra c re $ 1,2 7 5 $ 1,3 7 5 $ 2,8 2 5 $ 5,3 0 0 R u ra la n d p ro d u c ts a re v a ria b le a n d c a n d ife rb y m a rk e t M a rk e tin g a n d p ro d u c tc re a tio n a tra c tc u s to m e rs a n d a c h ie v e p re m iu m s o v e rtim b e rla n d R e c e n te x a m p le s :

36 S ig n ific a n th B U a c re s in F lo rid a + G e o rg ia C o a s ta l C o rid o r M IL E S + /-2 0 0,0 0 0 a c re s ;la rg e s tla n d o w n e rin th e re g io n A p p ro x im a te ly 4 0 m ile s o fw a te rfro n ta g e A p p ro x im a te ly m ile s o fro a d a n d h ig h w a y fro n ta g e L a n d h o ld in g s a tfiv e in te rc h a n g e s o n I-9 5 a n d tw o p la n n e d fu tu re in te rc h a n g e s L a n d u s e e n title m e n ts in h a n d fo rm o re th a n 2 6,4 0 0 re s id e n tia l u n its a n d 3 9 m ilio n s q u a re fe e to fc o m m e rc ia l u s e s K e y ra il s e rv e d s ite s,m e g a -s ite c e rtifie d fo rin d u s tria l u s e s P ro x im ity a n d c o n n e c tio n to in te rn a tio n a l a irp o rts a n d s e a p o rts 2 5 p la n n in g a re a s a c ro s s th e c o rid o r= R a y o n ie rla n d h o ld in g s

37 T h e S o u th e a s tis p o is e d to g ro w 3 2 P o p u lo u s re g io n (6 0 m ilio n )a n d is d e v e lo p in g a s th e c o u n try s s e c o n d in d u s tria l h u b,a fte rth e G re a tl a k e s S in c e ,p o p u la tio n g ro w th h a s b e e n m o re th a n 2 X th e N o rth e a s t,a tre n d p ro je c te d to c o n tin u e in th e n e x td e c a d e L o w c o s to fliv in g m a k e s th e S o u th e a s ta n a p p e a lin g p rim a ry,s e c o n d a ry,a n d re tire m e n th o m e d e s tin a tio n C o s to fliv in g a d v a n ta g e M h o u s e h o ld s a d d e d s in c e ,5 0 % in th e S o u th

38 O u ra p p ro a c h :p o s itio n d e v e lo p m e n th B U fo rs a le s /v e n tu re s 3 3 L a n d C la s s ific a tio n L a n d M a n a g e m e n tr e g io n a l M a rk e ta s s e s s m e n tc o n c e p tu a l P ro g ra m & S tra te g y P ro je c tm a rk e ta s s e s s m e n tp ro g ra m D e v e lo p m e n tl a n d U s e E n title m e n ts C o n c e p tu a l M a s te rp la n n in g M a rk e tin g S a le s V e n tu re s P ro je c ts p e c ific P la n n in g E n a b lin g In fra s tru c tu re R e g u la to ry P e rm itin g C iv ic In fra s tru c tu re

39 M u ltip le a p p ro a c h e s to H B U d e v e lo p m e n t3 4 U n d e v e lo p e d /U n e n title d U n d e v e lo p e d /E n title d H o riz o n ta l D e v e lo p m e n t/e n title d V e rtic a l D e v e lo p m e n tl o w e rh ig h e rt im e /R is k H ig h e rl o w e rv a lu e S a le s V e n tu re s

40 3 5 P ro je c tb e lfa s tc o m m e rc e C e n tre S t.j o h n s N o rth E a s tn a s s a u M a rk e ts tre e tl o c a tio n B ry a n C o,g A S t.j o h n s C o,f L N a s s a u C o,f L M a rk e tc h a ra c te ris tic s P o rto fs a v a n n a h 's g ro w th d riv in g in d u s tria l s e c to rs tro n g m a rk e td riv in g 5 0 % o fn e w h o m e s a le s o fj a c k s o n v ile M S A E m e rg in g m a rk e tm a rk e ts e g m e n tin d u s tria l R e s id e n tia l M ix e d u s e R a y o n ie ra p p ro a c h H o riz o n ta l d e v e lo p m e n t/e n title d U n d e v e lo p e d /e n title d T o b e d e te rm in e d S ta tu s In fra s tru c tu re d e v e lo p m e n ta n d m a rk e tin g u n d e rw a y,4 5 a c re s s o ld 1,9 0 0 a c re s u n d e rc o n tra c t,9 0 a c re s re m a in in g S ite p la n n in g u n d e rw a y D is c ip lin e d a p p ro a c h w ith fo c u s o n ris k /re w a rd L im ite d c a p ita l a lo c a te d to d e v e lo p m e n tp ro je c ts

41 V a lu e P ro p o s itio n

42 C o m p e titiv e d iv id e n d fu n d e d b y c o re,re c u rin g c a s h flo w 3 7 (1 )E B IT D A re fle c ts n o rm a liz e d c o rp o ra te e x p e n s e s o f~ $ 2 0 m ilio n,w h ic h e x c lu d e s s p in -re la te d e x p e n s e s.e B IT D A is a n o n -c a s h m e a s u re d e fin e d a n d re c o n c ile d in th e A p p e n d ix. A tra c tiv e,s u s ta in a b le a n d g ro w in g d iv id e n d is a s tra te g ic p rio rity E x p e c te d E B IT D A (1 )g ro w th in c o m in g y e a rs a lo w s d iv id e n d in c re a s e s D iv id e n d s b a s e d o n re c u rin g c a s h flo w s fro m tim b e rla n d o p e ra tio n s a n d c o re re a l e s ta te s a le s P ro c e e d s fro m s a le s o fn o n -s tra te g ic tim b e rla n d s g e n e ra ly re -in v e s te d in th e b u s in e s s In itia l q u a rte rly d iv id e n d o f$.3 0 /s h a re,o r$ /s h a re a n n u a liz e d S p e c ia l d iv id e n d o f$ /s h a re p la n n e d fo r3 Q F u n d e d fro m a p o rtio n o fp ro c e e d s fro m R a y o n ie ra d v a n c e d M a te ria ls in c o n n e c tio n w ith s p in -o f

43 S h a re h o ld e rv a lu e c re a tio n fro m a tra c tiv e d iv id e n d,g ro w in g c a s h flo w a n d la n d a p p re c ia tio n 3 8 P re m iu m p o rtfo lio g e n e ra te s s ig n ific a n ta n d re lia b le c a s h flo w O u tlo o k fo rin c re a s e d E B IT D A fro m v o lu m e in c re a s e s a n d h o u s in g m a rk e tre c o v e ry A tra c tiv e a s s e tc la s s w ith tra c k re c o rd o fs te a d y a p p re c ia tio n R e a l e s ta te s tra te g ie s p o s itio n in g H B U fo rh ig h e rv a lu e u s e s S tra te g ic c a p ita l fo c u s e d o n d is c ip lin e d a s s e tg ro w th A tra c tiv e,g ro w in g d iv id e n d S tro n g b a la n c e s h e e t,lo w d e b tle v e ls a n d s ig n ific a n tliq u id ity T a x -e fic ie n tr E IT s tru c tu re

44 F in a n c ia l R e v ie w

45 H is to ric a l R Y N s u p e rio rp e rfo rm a n c e (in c lu d e s P e rfo rm a n c e F ib e rs b u s in e s s ) L T M $ m ilio n s L T M $ m ilio n s L T M $ P ro F o rm a $ P ro fo rm a O p e ra tin g In c o m e *P ro fo rm a E B IT D A *P ro fo rm a E a rn in g s P e rs h a re *D iv id e n d P e rs h a re *P ro fo rm a re s u lts a re n o n -G A A P m e a s u re s d e fin e d a n d re c o n c ile d in th e A p p e n d ix.in th e firs tq u a rte r ,th e Wo o d P ro d u c ts s e g m e n tw a s s o ld.r e s u lts h a v e b e e n re s ta te d fo ra l p e rio d s to e x c lu d e Wo o d P ro d u c ts.s p e c ia l d iv id e n d R e g u la rp o s t-s p in d iv id e n d R e g u la rp re -s p in d iv id e n d

46 F in a n c ia l G u id a n c e ($ m ilio n s ) S a le s % O p e ra tin g In c o m e (1 )F o re s tr e s o u rc e s % R e a l E s ta te 5 6 C o m p a ra b le E B IT D A (1 )(2 )F o re s tr e s o u rc e s % R e a l E s ta te 7 3 C o m p a ra b le C a p E x 6 3 D D & A G u id a n c e (1 )E x c lu d e s c o rp o ra te e x p e n s e s.a fte rth e s e p a ra tio n,n o rm a liz e d c o rp o ra te e x p e n s e s a re e x p e c te d to b e $ 2 0 M fo rr a y o n ie r.(2 )E B IT D A is a n o n -G A A P m e a s u re d e fin e d a n d re c o n c ile d in th e A p p e n d ix.n o te : g u id a n c e p e rc e n ta g e ra n g e s e x c lu d e th e im p a c to fth e s a le o fn e w Y o rk tim b e rla n d s (s a le s $ 5 7 m ilio n,o p e ra tin g in c o m e $ 3 m ilio n )

47 L o n g e r-te rm O u tlo o k 4 2 F o re s tr e s o u rc e s V o lu m e C o m p le te d tim b e rla n d a c q u is itio n s a d d h a rv e s tv o lu m e a s a g e p ro file m a tu re s A d v a n c e d s ilv ic u ltu re p ra c tic e s S u s ta in e d s tro n g d e m a n d in C h in a fo rlo g s fro m P a c ific N o rth w e s ta n d N e w Z e a la n d M ix Im p ro v e d S o u th e a s ts a w lo g v s.p u lp w o o d h a rv e s tm ix P ric e A s ia n d e m a n d H o u s in g re c o v e ry B ritis h C o lu m b ia m o u n ta in p in e b e e tle im p a c t R e a l E s ta te C o n tin u e d s o lid d e m a n d fo ru ra l H B U p ro p e rtie s S u s ta in e d U S S o u th h o u s e h o ld g ro w th R e s id e n tia l d e v e lo p e rin te re s tim p ro v in g a s e x is tin g lo ts a re a b s o rb e d We l-p o s itio n e d p ro p e rtie s w ith in d u s tria l a n d c o m m e rc ia l s ite s

48 A p p e n d ix

49 G u lfs ta te s a n d A tla n tic R e g io n s 1.9 m ilio n a c re s in e ig h ts ta te s D iv e rs e m a n a g e m e n tre g im e s a n d s p e c ie s m ix in c re a s e h a rv e s tfle x ib ility S la s h p in e 4 3 % L o b lo ly p in e 5 3 % H a rd w o o d 4 % A d ju s te d h a rv e s tm ix to m e e ts tro n g p u lp w o o d d e m a n d T y p ic a l C u re n t P u lp /O S B 5 0 % 6 7 % S a w m ils 5 0 % 3 3 % N o n -tim b e rin c o m e $ 2 0 m ilio n fo rth e 1 2 m o n th s e n d e d M a rc h 3 1,

50 N o rth e rn R e g io n K a c re s in c o a s ta l Wa s h in g to n H e m lo c k 5 1 % D o u g la s -fir3 6 % V a lu a b le m in o rs p e c ie s 1 3 % P ro x im ity to fiv e p o rts H a rv e s tm ix D o m e s tic p u lp w o o d 1 5 % D o m e s tic s a w lo g s 5 5 % E x p o rt(c h in a a n d K o re a )3 0 % V a lu e -a d d e d in c o m e $ 3 m ilio n fo rth e 1 2 m o n th s e n d e d M a rc h 3 1,

51 4 6 C u re n tm P B e p id e m ic e x p e c te d to k il 5 8 % o fb C L o d g e p o le P in e A n n u a l a lo w a b le c u tp ro je c te d to d e c lin e % to m m ³ H a rv e s tle v e ls w il d e c lin e a fte rd a m a g e d tim b e rs a lv a g e d S ig n ific a n tin v e s tm e n tb y C a n a d ia n lu m b e rp ro d u c e rs in th e S o u th e a s tin M o u n ta in P in e B e e tle (M P B )e p id e m ic w il re d u c e B C lo g a n d lu m b e rp ro d u c tio n L o w e rc a n a d ia n h a rv e s ts in B C a n d th e E a s te rn p ro v in c e s re d u c e N o rth A m e ric a n lu m b e rs u p p ly b y 7 to 1 5 %,th e e q u iv a le n to f4 0 0,0 0 0 h o u s in g s ta rts

52 B io m a s s m a rk e t4 7 Wo o d p e le td e m a n d in c re a s e d riv e n b y E u ro p e a n e n e rg y p o lic y K e y re c e n ts ta rt-u p s G e rm a n P e le ts T e x a s,l L C (T X ) We s te rv e ltr e n e w a b le E n e rg y (A L ) A m e ric a n R e n e w a b le s L L C (F L ) K e y re c e n ta n n o u n c e m e n ts -G re e n C irc le (M S ) R a y o n ie rh o ld in g s o f1.9 m ilio n a c re s in th e U S S o u th a re s tra te g ic a ly lo c a te d to b e n e fitfro m in c re a s e d d e m a n d fo rw o o d fib e rs o u rc e :F o re s te c o n o m ic A d v is o rs Q u a rte rly Wo o d B io m a s s F o re c a s tin g S e rv ic e s,a u g u s t S o u rc e :F o ris k C o n s u ltin g N o te :E x p e c te d d e m a n d re p re s e n ts a s u b s e to fa n n o u n c e d p ro je c ts.c H P is c o m b in e d h e a ta n d p o w e r,o rc o g e n e ra tio n.

53 R E IT T e c h n ic a l /O th e rc o n s id e ra tio n s 4 8 K e y R E IT D e fin itio n s /P a ra m e te rs R E IT T a x a b le In c o m e R E IT s a re re q u ire d to d is trib u te 9 0 % o fth e irta x a b le in c o m e (e x c lu d in g c a p ita l g a in s a n d c e rta in o th e rin c o m e )in o rd e rto m a in ta in R E IT s ta tu s ;a n y a m o u n tn o td is trib u te d b y th e R E IT is ta x e d a tc o rp o ra te ra te s 7 5 % In c o m e T e s t A tle a s t7 5 % o fr E IT g ro s s in c o m e m u s tb e d e riv e d fro m re a l p ro p e rty s o u rc e s (in c lu d in g th e s a le o ftim b e r) N o m o re th a n 2 5 % o fg ro s s in c o m e c a n b e d e riv e d fro m o th e rs o u rc e s,in c lu d in g d iv id e n d s fro m a T R S a n d /o ra n y o th e rd iv id e n d s a n d in te re s t 7 5 % A s s e tt e s t A th e c lo s e o fe a c h q u a rte r,a tle a s t7 5 % o fth e v a lu e o fth e R E IT s g ro s s a s s e ts m u s tb e c o m p ris e d o fre a l e s ta te a s s e ts (in c lu d in g tim b e rla n d s ),c a s h ite m s a n d g o v e rn m e n ts e c u ritie s 2 5 % A s s e t/s e c u ritie s L im ita tio n A th e c lo s e o fe a c h q u a rte r,n o m o re th a n 2 5 % o fth e R E IT s g ro s s a s s e ts c a n b e s e c u ritie s ;n o m o re th a n 5 % o fth e R E IT s a s s e ts c a n b e s e c u ritie s o fa s in g le is s u e r(o th e rth a n a T R S );a n d th e R E IT c a n o w n n o m o re th a n a 1 0 % in te re s to fa s in g le is s u e r(o th e rth a n a T R S ) T R S L im ita tio n T h e fa irm a rk e tv a lu e o fth e s e c u ritie s o fa T R S o w n e d b y a R E IT c a n n o te x c e e d 2 5 % o fth e fa irm a rk e tv a lu e o fth e R E IT s g ro s s a s s e ts

54 D e fin itio n s o fn o n -G A A P M e a s u re s 4 9 E B IT D A is d e fin e d a s e a rn in g s b e fo re in te re s t,ta x e s,d e p re c ia tio n,d e p le tio n a n d a m o rtiz a tio n.e B IT D A is a n o n -G A A P m e a s u re u s e d b y o u rc h ie fo p e ra tin g D e c is io n M a k e r,e x is tin g s h a re h o ld e rs a n d p o te n tia l s h a re h o ld e rs to m e a s u re h o w th e C o m p a n y is p e rfo rm in g re la tiv e to th e a s s e ts u n d e rm a n a g e m e n t. P ro fo rm a E B IT D A is d e fin e d a s E B IT D A (a s d e fin e d a b o v e )e x c lu d in g d is c o n tin u e d o p e ra tio n s,in c o m e re la te d to th e A F M C,in c re a s e s in d is p o s itio n re s e rv e s,s e p a ra tio n c o s ts a n d g a in s re la te d to th e s a le o rc o n s o lid a tio n o fth e N e w Z e a la n d jo in tv e n tu re.p ro fo rm a E B IT D A is a n o n -G A A P m e a s u re u s e d b y o u rc h ie fo p e ra tin g D e c is io n M a k e r,e x is tin g s h a re h o ld e rs a n d p o te n tia l s h a re h o ld e rs to m e a s u re h o w th e C o m p a n y is p e rfo rm in g re la tiv e to th e a s s e ts u n d e rm a n a g e m e n t. P ro fo rm a O p e ra tin g In c o m e is d e fin e d a s o p e ra tin g in c o m e e x c lu d in g d is c o n tin u e d o p e ra tio n s,in c o m e re la te d to th e A F M C,in c re a s e s in d is p o s itio n re s e rv e s,s e p a ra tio n c o s ts a n d g a in s re la te d to th e s a le o rc o n s o lid a tio n o fth e N e w Z e a la n d jo in tv e n tu re. P ro fo rm a E P S is d e fin e d a s d ilu te d e a rn in g s p e rs h a re a trib u ta b le to R a y o n ie rin c.e x c lu d in g d is c o n tin u e d o p e ra tio n s,in c o m e re la te d to th e A F M C o rc B P C,in c re a s e s in d is p o s itio n re s e rv e s,s e p a ra tio n c o s ts a n d g a in s re la te d th e s a le o rc o n s o lid a tio n o fth e N e w Z e a la n d jo in tv e n tu re.

55 R e c o n c ilia tio n o fn o n -G A A P M e a s u re s 5 0 ($ in m ilio n s )F o re s tr e s o u rc e s R e a l E s ta te P e rfo rm a n c e F ib e rs O th e rc o rp o ra te & E lim in a tio n s T o ta l O p e ra tin g in c o m e $ 7 $ 5 6 $ ($ 3 )$ $ D e p re c ia tio n,d e p le tio n a n d a m o rtiz a tio n L o s s fro m d is c o n tin u e d o p e ra tio n s (1 ) (9 )(9 )E B IT D A $ 7 7 $ 8 0 $ ($ 3 )$ $ L o s s fro m d is c o n tin u e d o p e ra tio n s (1 ) 9 9 D e p re c ia tio n,d e p le tio n,a n d a m o rtiz a tio n,d is c o n tin u e d o p e ra tio n s (5 )(5 )In c o m e re la te d to th e A F M C (2 0 5 )(2 0 5 )P ro fo rm a E B IT D A $ 7 7 $ 8 0 $ ($ 3 )($ 2 9 )$ O p e ra tin g in c o m e $ 3 3 $ 5 3 $ $ 1 ($ 2 2 )$ D e p re c ia tio n,d e p le tio n a n d a m o rtiz a tio n In c o m e fro m d is c o n tin u e d o p e ra tio n s (1 ) 3 3 E B IT D A $ 9 2 $ 7 5 $ $ 1 ($ 1 5 )$ In c o m e fro m d is c o n tin u e d o p e ra tio n s (1 ) (3 )(3 )D e p re c ia tio n,d e p le tio n,a n d a m o rtiz a tio n,d is c o n tin u e d o p e ra tio n s (4 )(4 )G a in o n s a le o fa p o rtio n o fn Z J V in te re s t (1 2 )(1 2 )P ro fo rm a E B IT D A $ 9 2 $ 7 5 $ $ 1 ($ 3 4 )$ (1 )In firs tq u a rte r ,th e Wo o d P ro d u c ts s e g m e n tw a s s o ld.a s a re s u lt,o p e ra tin g in c o m e h a s b e e n re s ta te d to re fle c th e Wo o d P ro d u c ts o p e ra tio n s a s d is c o n tin u e d.

56 R e c o n c ilia tio n o fn o n -G A A P M e a s u re s (c o n t d.)5 1 ($ in m ilio n s )F o re s tr e s o u rc e s R e a l E s ta te P e rfo rm a n c e F ib e rs O th e rc o rp o ra te & E lim in a tio n s T o ta l O p e ra tin g in c o m e $ 4 7 $ 4 7 $ $ 1 ($ 3 6 )$ D e p re c ia tio n,d e p le tio n a n d a m o rtiz a tio n L o s s fro m d is c o n tin u e d o p e ra tio n s (1 ) (1 )(1 )E B IT D A $ $ 5 9 $ $ 1 ($ 3 2 )$ L o s s fro m d is c o n tin u e d o p e ra tio n s (1 ) 1 1 D e p re c ia tio n,d e p le tio n,a n d a m o rtiz a tio n,d is c o n tin u e d o p e ra tio n s (3 )(3 )In c o m e re la te d to th e A F M C 7 7 P ro fo rm a E B IT D A $ $ 5 9 $ $ 1 ($ 2 7 )$ O p e ra tin g in c o m e $ 4 6 $ 3 2 $ $ ($ 3 6 )$ D e p re c ia tio n,d e p le tio n a n d a m o rtiz a tio n In c o m e fro m d is c o n tin u e d o p e ra tio n s (1 ) E B IT D A $ $ 4 0 $ $ ($ 2 1 )$ In c o m e fro m d is c o n tin u e d o p e ra tio n s (1 ) (1 1 )(1 1 )D e p re c ia tio n,d e p le tio n,a n d a m o rtiz a tio n,d is c o n tin u e d o p e ra tio n s (2 )(2 )P ro fo rm a E B IT D A $ $ 4 0 $ $ $ (3 4 )$ (1 )In firs tq u a rte r ,th e Wo o d P ro d u c ts s e g m e n tw a s s o ld.a s a re s u lt,o p e ra tin g in c o m e h a s b e e n re s ta te d to re fle c th e Wo o d P ro d u c ts o p e ra tio n s a s d is c o n tin u e d.

57 R e c o n c ilia tio n o fn o n -G A A P M e a s u re s (c o n t d.)5 2 ($ in m ilio n s )F o re s tr e s o u rc e s R e a l E s ta te P e rfo rm a n c e F ib e rs O th e rc o rp o ra te & E lim in a tio n s T o ta l O p e ra tin g in c o m e $ 8 1 $ 5 6 $ $ 2 ($ 2 7 )$ D e p re c ia tio n,d e p le tio n a n d a m o rtiz a tio n L o s s fro m d is c o n tin u e d o p e ra tio n s (1 ) E B IT D A $ $ 7 3 $ $ 2 $ 3 7 $ G a in re la te d to c o n s o lid a tio n o fn e w Z e a la n d J V (1 6 )(1 6 )In c o m e fro m d is c o n tin u e d o p e ra tio n s (1 ) (6 3 )(6 3 )S e p a ra tio n C o s ts 3 3 D e p re c ia tio n,d e p le tio n,a n d a m o rtiz a tio n,d is c o n tin u e d o p e ra tio n s (1 )(1 )P ro fo rm a E B IT D A $ $ 7 3 $ $ 2 ($ 4 0 )$ L a s tt w e lv e M o n th s M a rc h 3 1, O p e ra tin g in c o m e $ 9 6 $ 4 0 $ $ 2 ($ 3 3 )$ D e p re c ia tio n,d e p le tio n a n d a m o rtiz a tio n In c o m e fro m d is c o n tin u e d o p e ra tio n s (1 ) (4 )(4 )E B IT D A $ $ 5 4 $ $ 2 ($ 3 7 )$ G a in re la te d to c o n s o lid a tio n o fn e w Z e a la n d J V (1 6 )(1 6 )In c o m e fro m d is c o n tin u e d o p e ra tio n s (1 ) 6 6 In c o m e fro m d is c o n tin u e d o p e ra tio n s (1 ) 4 4 D e p re c ia tio n,d e p le tio n,a n d a m o rtiz a tio n,d is c o n tin u e d o p e ra tio n s P ro fo rm a E B IT D A $ $ 5 4 $ $ 2 ($ 4 3 )$ (1 )In firs tq u a rte r ,th e Wo o d P ro d u c ts s e g m e n tw a s s o ld.a s a re s u lt,o p e ra tin g in c o m e h a s b e e n re s ta te d to re fle c th e Wo o d P ro d u c ts o p e ra tio n s a s d is c o n tin u e d.

58 R e c o n c ilia tio n o fn o n -G A A P M e a s u re s (c o n t d.)5 3 L T M O p e ra tin g In c o m e (1 )3 7 3 $ $ $ $ $ $ G a in re la te d to c o n s o lid a tio n o fn e w Z e a la n d J V (1 6 )(1 6 )-G a in o n s a le o fp o rtio n o fn e w Z e a la n d J V in te re s t-(1 2 )-S e p a ra tio n c o s ts 6 3 -In c re a s e in d is p o s itio n re s e rv e -7 -A F M C -(2 0 5 )P ro fo rm a O p e ra tin g In c o m e $ $ $ $ $ $ $ E P S $ E P S $ E P S $ E P S $ E P S $ E P S N e tin c o m e A trib u ta b le to R a y o n ie r2 6 8 $ $ $ $ $ $ $ $ $ $ $ $ G a in re la te d to c o n s o lid a tio n o fn e w Z e a la n d J V (1 6 )(0.1 3 )(1 6 )(0.1 3 )-G a in o n s a le o fp o rtio n o fn e w Z e a la n d J V in te re s t-(1 2 )(0.0 9 )-D is c o n tin u e d o p e ra tio n s (4 2 )(0.3 2 )(7 )(0.0 6 ) (2 )(0.0 2 ) In c re a s e in d is p o s itio n re s e rv e S e p a ra tio n c o s ts R e v e rs a l o fre s e rv e re la te d to th e ta x a b ility o fth e A F M C -(1 6 )(0.1 3 )-C B P C -(2 4 )(0.2 0 )-A F M C,n e to f$ 1 6 M ta x re s e rv e -(1 9 3 )(1.6 0 )P ro fo rm a N e tin c o m e $ $ $ $ $ $ $ $ $ $ $ $ L T M ($ in m ilio n s,e x c e p tp e rs h a re d a ta )(1 )In firs tq u a rte r ,th e Wo o d P ro d u c ts s e g m e n tw a s s o ld.a s a re s u lt,o p e ra tin g in c o m e h a s b e e n re s ta te d to re fle c th e Wo o d P ro d u c ts o p e ra tio n s a s d is c o n tin u e d.

59

60

61 S a fe H a rb o rc e rta in s ta te m e n ts in th is d o c u m e n tre g a rd in g a n tic ip a te d fin a n c ia l o u tc o m e s in c lu d in g e a rn in g s g u id a n c e,ifa n y,b u s in e s s a n d m a rk e tc o n d itio n s,o u tlo o k a n d o th e rs im ila rs ta te m e n ts re la tin g to fu tu re e v e n ts,d e v e lo p m e n ts o rfin a n c ia l o ro p e ra tio n a l p e rfo rm a n c e o re s u lts o fr a y o n ie ra d v a n c e d M a te ria ls In c.( R Y A M ),a re "fo rw a rd -lo o k in g s ta te m e n ts "m a d e p u rs u a n to th e s a fe h a rb o rp ro v is io n s o fth e P riv a te S e c u ritie s L itig a tio n R e fo rm A c to f a n d o th e rfe d e ra l s e c u ritie s la w s.t h e s e fo rw a rd -lo o k in g s ta te m e n ts a re id e n tifie d b y th e u s e o fw o rd s s u c h a s "m a y,"w il,"s h o u ld,"e x p e c t,"e s tim a te,"b e lie v e,"in te n d,"p ro je c t,"a n tic ip a te "a n d o th e rs im ila rla n g u a g e.h o w e v e r,th e a b s e n c e o fth e s e o rs im ila rw o rd s o re x p re s s io n s d o e s n o tm e a n th a ta s ta te m e n tis n o tfo rw a rd -lo o k in g.wh ile m a n a g e m e n tb e lie v e s th a th e s e fo rw a rd -lo o k in g s ta te m e n ts a re re a s o n a b le w h e n m a d e,fo rw a rd -lo o k in g s ta te m e n ts a re n o tg u a ra n te e s o fu tu re p e rfo rm a n c e o re v e n ts a n d u n d u e re lia n c e s h o u ld n o tb e p la c e d o n th e s e s ta te m e n ts.t h e fo lo w in g im p o rta n tfa c to rs,a m o n g o th e rs,c o u ld c a u s e a c tu a l re s u lts o re v e n ts to d ife rm a te ria ly fro m th o s e e x p re s s e d in fo rw a rd -lo o k in g s ta te m e n ts th a tm a y h a v e b e e n m a d e in th is d o c u m e n t:c o m p e titiv e p re s s u re s in th e m a rk e ts in w h ic h R Y A M o p e ra te s ;ris k s a s s o c ia te d w ith c u s to m e rc o n c e n tra tio n,ra w m a te ria l a n d e n e rg y p ric e s ;ris k s a s s o c ia te d w ith in te rn a tio n a l o p e ra tio n s ;c h a n g e s in g lo b a l e c o n o m ic c o n d itio n s ; th e C h in e s e d u m p in g d u tie s im p o s e d o n c o m m o d ity v is c o s e ;litig a tio n w ith th e A lta h a m a R iv e rk e e p e r;th e e fe c to fc u re n ta n d fu tu re e n v iro n m e n ta la w s a n d re g u la tio n s ;p o te n tia l im p a c to fu tu re to b a c c o -re la te d re s tric tio n s ;p o te n tia l fo ra d d itio n a l p e n s io n c o n trib u tio n s ;la b o re la tio n s ;th e e fe c to fw e a th e ra n d o th e rn a tu ra l c o n d itio n s ;tra n s p o rta tio n c o s ta n d a v a ila b ility ;th e fa ilu re to a tra c ta n d re ta in k e y p e rs o n n e l;th e fa ilu re to d e v e lo p n e w id e a s a n d p ro te c tr Y A M s in te le c tu a l p ro p e rty ;u n c e rta in tie s re la te d to th e a v a ila b ility o fa d d itio n a l fin a n c in g to R Y A M in th e fu tu re a n d th e te rm s o fs u c h fin a n c in g ;ris k s a s s o c ia te d w ith p ro d u c tlia b ility c la im s ;th e in a b ility to m a k e o re fe c tiv e ly in te g ra te fu tu re a c q u is itio n s ;R Y A M s in a b ility to e n g a g e in c e rta in c o rp o ra te tra n s a c tio n s fo lo w in g its s e p a ra tio n fro m R a y o n ie rin c.( R a y o n ie r );a n y fa ilu re to re a liz e e x p e c te d b e n e fits fro m s u c h s e p a ra tio n ;ris k s a s s o c ia te d w ith R Y A M s d e b to b lig a tio n s fo lo w in g s u c h s e p a ra tio n ;a n d u n c e rta in tie s re la tin g to g e n e ra l e c o n o m ic,p o litic a l,b u s in e s s,in d u s try,re g u la to ry a n d m a rk e tc o n d itio n s.in a d d itio n,s p e c ific a ly w ith re s p e c to th e s e p a ra tio n o fr Y A M fro m R a y o n ie r,th e fo lo w in g im p o rta n tfa c to rs,a m o n g o th e rs,c o u ld c a u s e a c tu a l re s u lts to d ife rm a te ria ly fro m th o s e e x p re s s e d in fo rw a rd -lo o k in g s ta te m e n ts th a tm a y h a v e b e e n m a d e in th is d o c u m e n t:u n c e rta in tie s a s to th e tim in g o fth e s e p a ra tio n a n d w h e th e ritw il b e c o m p le te d,th e p o s s ib ility th a tv a rio u s c lo s in g c o n d itio n s fo rth e s e p a ra tio n m a y n o tb e s a tis fie d o rw a iv e d,th e e x p e c te d ta x tre a tm e n to fth e s e p a ra tio n,th e im p a c to fth e s e p a ra tio n o n th e b u s in e s s e s o fr a y o n ie ra n d R Y A M,th e a b ility o fb o th c o m p a n ie s to m e e td e b ts e rv ic e re q u ire m e n ts,th e a v a ila b ility a n d te rm s o fa d d itio n a l fin a n c in g re q u ire d b y R Y A M,a n d e x p e c ta tio n s o fc re d itra tin g.a d d itio n a l fa c to rs a re d e s c rib e d in R a y o n ie r s m o s tre c e n tf o rm 1 0 -K a n d 1 0 -Q,R Y A M s F o rm 1 0,a n d o th e re p o rts o fr a y o n ie ra n d R Y A M o n file w ith th e S e c u ritie s a n d E x c h a n g e C o m m is s io n.n e ith e rr Y A M n o rr a y o n ie ra s s u m e s a n y o b lig a tio n to u p d a te th e s e s ta te m e n ts e x c e p ta s is re q u ire d b y la w.2

62 T a b le o fc o n te n ts T h e S e p a ra tio n 4 B u s in e s s O v e rv ie w 8 S tra te g y 2 1 F in a n c ia l R e v ie w 2 5 V a lu e P ro p o s itio n 3 1 A p p e n d ix 3 3 3

63 T h e S e p a ra tio n 4

64 S tra te g ic R a tio n a le fo rth e S e p a ra tio n S e p a ra tio n w il c re a te tw o in d e p e n d e n t,in d u s try -le a d in g p u b lic c o m p a n ie s D ife re n tm a rk e ts,d riv e rs a n d V a lu e C re a tio n S tra te g ie s M o re E fic ie n ta lo c a tio n o fc a p ita l D is tin c tin v e s tm e n tid e n titie s E n h a n c e d S tra te g ic a n d M a n a g e m e n tf o c u s P o s itio n s e a c h b e s t-in -c la s s e n tity to c o n tin u e to g ro w a n d d e liv e ru n iq u e v a lu e c re a tio n s tra te g ie s R a y o n ie r Im p ro v in g h o u s in g m a rk e ta n d e c o n o m y,a n d s tro n g e x p o rtm a rk e ts fu e l g ro w th A d v a n c e d M a te ria ls C o m p le te th e ra m p -u p o fh ig h -v a lu e s p e c ia lty p ro d u c ts a le s v o lu m e s C o n c e n tra tio n o fe a c h c o m p a n y s fin a n c ia l re s o u rc e s s o le ly o n its o p e ra tio n s C a p ita l s tru c tu re a lo w s e a c h c o m p a n y fin a n c ia fle x ib ility E a c h c o m p a n y c a n a lo c a te c a p ita l in a m o re e fic ie n tm a n n e rb e s ts u ite d to its d is tin c tp rio ritie s a n d s tra te g ie s E n a b le s m a n a g e m e n to fb o th c o m p a n ie s to fo c u s o n u n iq u e o p p o rtu n itie s fo rlo n g -te rm g ro w th a n d p ro fita b ility Im p ro v e s a lig n m e n to fm a n a g e m e n ta n d e m p lo y e e in c e n tiv e s w ith p ro fita b ility a n d g ro w th o b je c tiv e s T w o u n iq u e in v e s tm e n th e s e s : L e a d in g p u re -p la y tim b e rla n d R E IT s w ith b e s t-in -c la s s a s s e ts,p re m iu m la n d p o rtfo lio a n d a tra c tiv e d iv id e n d H ig h -v a lu e,p u re -p la y s p e c ia lty c e lu lo s e p ro d u c e rw ith le a d in g m a rg in s a n d s ig n ific a n tfre e c a s h flo w g e n e ra tio n 5

65 O p tim a l T im in g fo rth e S e p a ra tio n O p tim a l tim in g a s b o th c o m p a n ie s h a v e s tro n g g ro w th p ro s p e c ts in y e a rs a h e a d E x p e c ta tio n s b e y o n d C o m p le tio n o fte c h n ic a ly d e m a n d in g C S E A d d itio n a l K to n s o fc e lu lo s e s p e c ia ltie s c a p a c ity H ig h q u a lity o fc e lu lo s e s p e c ia ltie s p ro d u c e d o n c o n v e rte d lin e ;a c h ie v e d a h e a d o fs c h e d u le E x c e le n tp ro g re s s in q u a lify in g n e w p ro d u c tio n w ith c u s to m e rs A c q u ire d a d d itio n a l in te re s tin N e w Z e a la n d J V S o ld n o n -c o re a s s e ts Wo o d P ro d u c ts b u s in e s s N e w Y o rk tim b e rla n d s C e lu lo s e S p e c ia ltie s E x p a n s io n (C S E )p ro je c tc o n s tru c tio n A c q u ire d $ M o fh ig h -q u a lity tim b e rla n d s O b ta in e d la n d -u s e e n title m e n ts o n 3 9 K a c re s o fc o a s ta l F L /G A H B U p ro p e rtie s A d d itio n a l c e lu lo s e s p e c ia ltie s (C S )s a le s v o lu m e a s C S E ra m p -u p b e g in s S tre n g th e n in g h o u s in g m a rk e tw ith p o s itiv e im p a c to n tim b e rd e m a n d a n d p ric e s G ro w in g in te re s tin d e v e lo p m e n th B U p ro p e rtie s S e p a ra te P e rfo rm a n c e F ib e rs b u s in e s s fro m R a y o n ie r C S E ra m p -u p c o n tin u e s th ro u g h w h e n C S c a p a c ity is fu ly p la c e d in th e m a rk e t Im p ro v e m e n to fh o u s in g m a rk e to tre n d le v e l o f~ 1.5 m ilio n s ta rts p e ry e a r H ig h e rs a w lo g p ric e s Im p ro v e d m ix A d d itio n a l U S h a rv e s tv o lu m e (a p p ro x.1 5 %)fro m re c e n ta c q u is itio n s E B IT D A g ro w th in F o re s tr e s o u rc e s b u s in e s s Im p ro v in g h o u s in g m a rk e ta n d e c o n o m y in c re a s e d e m a n d fo rd e v e lo p m e n th B U

66 S a le s R e v e n u e b y s e g m e n ts e g m e n te B IT D A *(% M a rg in )C a p E x N e td e b t$ 1.7 B $ 0.7 B $ 1.0 B F o re s tr e s o u rc e s 2 2 % P e rf.f ib e rs 6 1 % R e a l E s ta te 9 % T ra d in g & O th e r8 % $ M (3 8 %)$ M ~ $ 1.4 B F o re s tr e s o u rc e s 5 7 % R e a l E s ta te 2 2 % T ra d in g & O th e r2 1 % C e lu lo s e s p e c ia ltie s ~ 8 9 % $ M (3 8 %)$ M (3 7 %)$ 6 3 M $ 9 6 M ~ $ 0.5 B (e x p e c te d )~ $ 1.0 B R a y o n ie rp rio rto s e p a ra tio n R a y o n ie rp o s ts e p a ra tio n R a y o n ie ra d v a n c e d M a te ria ls C o m m o d ity g ra d e s ~ 1 1 % E x p e c te d c re d itra tin g S tro n g B B B /B a a 2 B B + /B a 2 S a le s v o lu m e :7 6 % C S /2 4 % c o m m o d ity g ra d e R e v e n u e b y s e g m e n tn e td e b t/l T M E B IT D A ~ 1.7 X *~ 3.0 X *P ro fo rm a a ts p in T w o C o m p a n ie s w ith S tro n g F in a n c ia l P ro file s *N o n -G A A P m e a s u re (s e e A p p e n d ix fo rd e fin itio n a n d re c o n c ilia tio n )*A s s u m e s c o rp o ra te e x p e n s e fo rr a y o n ie ro f$ 2 0 M a n d R a y o n ie ra d v a n c e d M a te ria ls,$ 2 5 M 7

67 B u s in e s s O v e rv ie w 8

68 A L e a d e rin S p e c ia lty C h e m ic a ls G lo b a le a d e ra c ro s s c e lu lo s e s p e c ia ltie s ( C S )p ro d u c tp o rtfo lio G re a te rth a n 2 x s a le s v o lu m e v e rs u s c o m p e titio n :# 1 in a c e ta te /s tro n g p o s itio n in e th e rs a n d h ig h -s tre n g th v is c o s e /s p e c ia lty H ig h p u rity p ro d u c tfo rte c h n ic a ly d e m a n d in g e n d u s e s E x te n s iv e R & D c a p a b ility,p ro c e s s k n o w le d g e a n d c u s to m e rs u p p o rt C u s to m iz e d p ro d u c ts w ith d e m a n d in g,le n g th y c u s to m e rq u a lific a tio n p ro c e s s e s In te rm e d ia te s p e c ia lty c h e m ic a l p ro d u c e rp rim a rily s e rv in g g lo b a l c h e m ic a l c o m p a n ie s L o n g -te rm c u s to m e re la tio n s h ip s C o n s is te n ta n d s e c u re s u p p ly o fr Y A M c e lu lo s e s p e c ia ltie s is c ritic a l to c u s to m e rs O p e ra te tw o fle x ib le,a d v a n c e d m a n u fa c tu rin g fa c ilitie s in S o u th e a s tu S F a c ilitie s in J e s u p,g A (5 2 0 K to n s )a n d F e rn a n d in a B e a c h,f L (1 5 5 K to n s ) R e c e n tc S E e x p a n s io n c o n tin u e s in d u s try le a d e rs h ip In d u s try le a d in g m a rg in s a n d c a s h flo w s O v e r$ 1 b ilio n re v e n u e b u s in e s s A tra c tiv e ~ 3 0 % E B IT D A *m a rg in s C a s h F lo w F ro m O p e ra tio n s in e x c e s s o f$ m ilio n a n n u a ly o v e rth e p a s th re e y e a rs 9 *R e p re s e n ts M a n a g e m e n ta d ju s te d E B IT D A,a n o n -G A A P m e a s u re,s e e A p p e n d ix fo rd e fin itio n a n d re c o n c ilia tio n

69 C e lu lo s e S p e c ia ltie s is a H ig h -V a lu e P ro d u c td is s o lv in g P u lp C o m m o d ity V is c o s e F lu f5.3 M M T C o m m o d ity M a rk e tp u lp 5 2 M M T C e lu lo s e S p e c ia ltie s 4.4 M M T T o ta l:1.6 M M T T o ta l:6 3 M M T C e lu lo s e S p e c ia ltie s s e g m e n tm a rk e tp u lp in d u s try (1 )In c re a s in g S p e c ia liz a tio n *In c lu d e s s o m e lo w e rp u rity,le s s d e m a n d in g g ra d e s A c e ta te ~ 7 1 0,0 0 0 M T E th e rs ~ 5 0 3,0 0 0 M T *H ig h S tre n g th V is c o s e a n d S p e c ia lty H ig h V a lu e ~ 3 5 5,0 0 0 M T (1 )R e p re s e n ts c h e m ic a l (K ra fta n d S u lfite )p u lp m a rk e t1 0

70 P ro d u c tio n F o c u s o n H ig h E n d C e lu lo s e S p e c ia ltie s C e lu lo s e S p e c ia ltie s :4 8 6,0 0 0 M T s A d v a n c e d M a te ria ls :6 4 3,0 0 0 M T s C e lu lo s e S p e c ia ltie s 7 6 % C o m m o d ity P ro d u c ts 2 4 % A c e ta te 8 1 % H ig h v a lu e e th e rs 6 % O th e rc e lu lo s e S p e c ia ltie s 1 3 % P ro d u c tio n V o lu m e s 1 1

71 P a rtic ip a te in D iv e rs e,g ro w in g E n d -M a rk e ts Ilu s tra tiv e E n d P ro d u c ts 1 2 H ig h V a lu e E th e rs H ig h S tre n g th V is c o s e O th e rc e lu lo s e S p e c ia ltie s S p e c ia lty H ig h V a lu e A c e ta te

72 E n d U s e B re a k d o w n E s tim a te d S e g m e n ts iz e ~ 5 0 3,0 0 0 M T (p u lp ) 4 6 % g ro w th p.a.e n d U s e B re a k d o w n E s tim a te d S e g m e n ts iz e ~ 3 5 5,0 0 0 M T (p u lp ) 2 3 % g ro w th p.a.e n d U s e B re a k d o w n E s tim a te d S e g m e n ts iz e ~ 7 1 0,0 0 0 M T (p u lp ) 1 2 % g ro w th p.a.t e x tile s 4 % A c e ta te H ig h V a lu e E th e rs (3 )O th e rc e lu lo s e S p e c ia ltie s S o u rc e :H a w k in s Wrig h t,p C IF ib re s,m a rk e ts a n d M a rk e ts,a n d c o m p a n y e s tim a te s (1 )D a ta fro m (2 )S e g m e n ts iz e s in c lu d e a p p ro x im a te ly 1 3 0,0 0 0 to 1 6 0,0 0 0 M T o fc o to n L in te rp u lp s (3 )S e g m e n ts iz e in c lu d e s 1 0 0,0 0 0 M T o fm ic ro c ry s ta lin e c e lu lo s e C o a tin g s,p la s tic s & F ilm 7 % C ig a re te F ilte rs 8 2 % L C D F ilm 7 % C o n s tru c tio n,c o a tin g s & P a in ts 1 1 % P h a rm a c e u tic a l 2 9 % In d u s tria l 3 5 % F o o d P ro d u c ts 2 5 % E n g in e F ilte r1 6 % T ire C o rd 1 5 % C a s in g s 2 1 % E x p lo s iv e s,in k s & L a c q u e rs 4 8 % G lo b a l L e a d e ra c ro s s C e lu lo s e S p e c ia ltie s G lo b a l C e lu lo s e S p e c ia ltie s E n d U s e B re a k d o w n (1 )(2 )1 3 G lo b a l M a rk e td e m a n d G ro w in g 3 %,4 5 K -5 0 K M T /Y e a re s tim a te d R a y o n ie ra M P o s itio n N u m b e r1 E s tim a te d R a y o n ie ra M P o s itio n T o p 4 T o p 2 E s tim a te d R a y o n ie ra M P o s itio n

73 R a y o n ie ra d v a n c e d M a te ria ls :T h e C e lu lo s e S p e c ia ltie s S ta n d a rd B e a re rs o u rc e :P u b lic in fo rm a tio n a n d p riv a te ly c o m m is s io n e d s tu d ie s 1 4 E s tim a te d S a le s A n n o u n c e d A d d itio n a l C a p a c ity /P o te n tia l A d d itio n a l V o lu m e R a y o n ie ra M K M T B u c k e y e 4 2 K M T S a te ri u p p e rlim itu n d e te rm in e d

74 T e c h n ic a l L e a d e rs h ip in C e lu lo s e S p e c ia ltie s P ro c e s s K n o w le d g e P ro c e s s F le x ib ility J u v e n ile,e x te rio rfib e r,c e n te rfib e r,re g io n h a rd n e s s C a u s tic (h ig h p h )A m m o n ia (lo w p h )P ro c e s s s e q u e n c e,b le a c h s e q u e n c e :C l2,c l0 2,p e ro x id e,c o n c e n tra tio n s,te m p e ra tu re,w a s h ty p e /s e q u e n c e,c o ld c a u s tic e x tra c tio n C u s to m i z e d fo re a c h c u s to m e ra p p lic a tio n F ilte rp la s tic L C D /F ilm T ire C o rd C a s in g s A c e ta te E th e rs /M C C S p e c ia lty H ig h V a lu e H ig h S tre n g th V is c o s e C u s to m e rm a rk e ts F in is h in g P u lp in g H a rd w o o d S o ftw o o d K ra fts u lfite B le a c h in g F o o d P h a rm a c e u tic a ls T h e R a y o n ie ra d v a n c e d M a te ria l R e c ip e 1 5

75 T u rn in g Wo o d in to a H ig h -E n d S p e c ia lty P o ly m e rb la c k L iq u o ro rg a n ic s -E n e rg y In o rg a n ic s -R e c o v e ry E x tra c tiv e s 1-5 % Wa te rc e lu lo s e % H e m ic e lu lo s e % 1 7 to n s C S o r2 0 to n s V is c o s e o r2 5 to n s F lu fin o rg a n ic s /O rg a n ic s Wa s te T re a tm e n tl ig n in % B le a c h in g P ro c e s s G re e n to n s w o o d In p u to u tp u tc o o k in g P ro c e s s P u rity 1 6 A N a tu ra l P la s tic

76 P u rity is C ritic a l to C u s to m e rs P o te n tia l fo rm o le c u la rb u ild u p o fim p u ritie s C ig a re te F ilte rs p in e re te A c e ta te F ila m e n th a irs p in e re te H o le (s m a le rth a n a h u m a n h a ir)a c e ta te T o w (F ilte r)m a n u fa c tu rin g P ro c e s s 1 7

77 L o w C o s t,f le x ib le M a n u fa c tu rin g F a c ilitie s J e s u p,g A K ra ftm il T h re e p ro d u c tio n lin e s 5 2 0,0 0 0 M T o fc a p a c ity A b ility to b e d e d ic a te d C S p ro d u c e r;p ro d u c e s a c e ta te,e th e rs a n d h ig h -s tre n g th v is c o s e P u rc h a s e s 1.8 m ilio n to n s o fh a rd w o o d c h ip s a n d 1.4 m ilio n to n s o fs o ftw o o d c h ip s a n n u a ly P ro d u c e s g re a te rth a n 9 0 p e rc e n to fe n e rg y re q u ire d b y m il F e rn a n d in a B e a c h,f L S u lfite m il O n e p ro d u c tio n lin e 1 5 5,0 0 0 M T o fc a p a c ity D e d ic a te d C S p ro d u c e r;a c e ta te,e th e rs a n d h ig h -s tre n g th v is c o s e P u rc h a s e s 9 0 0,0 0 0 to n s o fs o ftw o o d c h ip s a n n u a ly P ro d u c e s p e rc e n to fe n e rg y re q u ire d b y m il a n d s e ls e x c e s s p o w e rin to th e g rid C o m b in e d,th e s e fa c ilitie s p ro d u c e m o re th a n 2 5 d ife re n tg ra d e s o fc e lu lo s e s p e c ia ltie s 1 8

78 Wo rld C la s s,c u s to m e rf o c u s e d R & D E fo rt S tro n g te c h n ic a l p a rtn e rs h ip s w ith o u rc u s to m e rs a n d th e irc u s to m e rs C u s to m e r-d riv e n re s e a rc h E x p e rie n c e d s c ie n tis ts a n d e n g in e e rs w ith le a d in g e x p e rtis e in c e lu lo s e c h e m is try C o m p re h e n s iv e u n d e rs ta n d in g o fo u rc u s to m e rs ' p ro c e s s e s -M a jo rity o fre la tio n s h ip s s p a n s e v e ra l d e c a d e s S u p e rio ra n a ly tic a l c a p a b ility a n d e n d -u s e te s tin g c a p a b ility T ru s tin o u rc o n fid e n tia lity A b ility to c u s to m iz e e a c h p ro d u c tg ra d e to m e e th e e x a c tin g re q u ire m e n ts o fa s p e c ific e n d u s e P ilo tp la n tlin e s th a ts im u la te J e s u p a n d F e rn a n d in a m il p u lp in g a n d b le a c h in g p ro c e s s e s 1 9

79 L e a d e rs h ip 2 0 M a n a g e m e n tb o a rd o fd ire c to rs *C u re n tr a y o n ie rb o a rd m e m b e rs P a u l G.B o y n to n *-C h a irm a n C.D a v id B ro w n,i*-l e a d D ire c to r D e L y le W.B lo o m q u is t M a rk E.G a u m o n d * J a m e s F.K irs c h L is a P a lu m b o J a m e s H.M ile r* T h o m a s I.M o rg a n * R o n a ld T o w n s e n d * P a u l G.B o y n to n C h a irm a n,p re s id e n t& C E O J a c k K rie s e l -S V P,P e rfo rm a n c e F ib e rs B e n s o n Wo o S V P,C h ie ff in a n c ia l O fic e r F ra n k R u p e rto -S V P,C o rp o ra te D e v e lo p m e n t& S tra te g y B e th J o h n s o n V P,In v e s to rr e la tio n s & P la n n in g

80 S tra te g y 2 1

81 R a y o n ie ra d v a n c e d M a te ria ls S tra te g y S tre n g th e n g lo b a le a d e rs h ip p o s itio n in c e lu lo s e s p e c ia ltie s C u re n tly p o s s e s s 2 x th e c a p a c ity a n d s a le s o fn e x tla rg e s tc o m p e tito r D ife re n tia te th ro u g h p u rity,c o n s is te n c y a n d te c h n ic a l e x p e rtis e E n h a n c e s tro n g re la tio n s h ip s w ith k e y c u s to m e rb a s e F o c u s o n m e e tin g c u s to m e rd e m a n d n e e d s D e liv e rp ro d u c ts c u s to m iz e d p re c is e ly fo rd e m a n d in g c h e m ic a l a p p lic a tio n s D riv e g ro w th a n d d iv e rs ific a tio n E x p a n d re a c h in to a d ja c e n tm a rk e ts D iv e rs ify p o rtfo lio th ro u g h v a lu e -e n h a n c in g a c q u is itio n s F o c u s o n o p e ra tio n a l e x c e le n c e to im p ro v e c o s tp o s itio n Id e n tify a n d d riv e c o s ts a v in g s o p p o rtu n itie s In c re a s e p ro d u c tio n e fic ie n c ie s to e n h a n c e s u p p ly re lia b ility 2 2

82 M a rg i n T e c h n ic a l E x p e rtis e R e q u ire d P u rity (a lp h a )8 5 F lu fv is c o s e C S 9 8 R a y o n ie ra d v a n c e d M a te ria ls C S S tra te g y F o c u s e d o n H ig h e s te n d o fth e V a lu e C h a in H ig h L o w L o w H ig h 2 3

83 *D o e s n o tin c lu d e s a le s o fo f-g ra d e p ro d u c ta b s o rb e n tm a te ria ls C e lu lo s e S p e c ia ltie s w ith o u tc o s ts u rc h a rg e P ro d u c tm ix $ /M T C S E c o m p le tio n J u n e C e lu lo s e S p e c ia ltie s C o m m a n d P re m iu m P ric e $ m ilio n to c o n v e rtc o m m o d ity c a p a c ity to C S in J e s u p c o m p le te d J u n e C u s to m e r-d riv e n p ro je c to s u p p o rth e irg ro w th 2 6 0,0 0 0 M T a b s o rb e n tm a te ria ls c o n v e rte d to 1 9 0,0 0 0 M T C S S tra te g ic a ly a tra c tiv e to A d v a n c e d M a te ria ls S tre n g th e n s o u rin d u s try le a d e rs h ip E n a b le s fu tu re C S g ro w th T ra n s itio n to C S a s c u s to m e ra n d m a rk e tg ro w th a lo w s In c re m e n ta l 1 9 0,0 0 0 to n s o fc S p ro d u c tio n e x p e c te d to in c re a s e E B IT D A *b y $ M b a s e d u p o n s a le s p ric e s a n d c o s ts,w h e n fu ly s o ld ( ta rg e t)c S E E x p a n s io n F o c u s e d o n S tra te g ic G ro w th 2 4 *N o n -G A A P m e a s u re (s e e A p p e n d ix fo rd e fin itio n )

84 F in a n c ia l R e v ie w 2 5

85 Q 1 F in a n c ia l H ig h lig h ts S h o rte rm p ric in g s o ftn e s s d u e to tra n s itio n a l m a rk e ts fu e le d b y c a p a c ity a d d itio n s,m o s tly fro m R Y A M C S E R e v e n u e D riv e rs P ric in g d o w n 3 % re la tiv e to th e firs tq u a rte ro f o r6 % re la tiv e to y e a re n d N e w C S c a p a c ity o u tp a c in g c o n s is te n tly g ro w in g d e m a n d in s h o rte rm P la n n e d e x te n d e d m a in te n a n c e fo rs h u td o w n a th e J e s u p m il fo rb o ile rs m o v e d fo rw a rd fro m h a d n e g a tiv e e fe c ts o n s h ip m e n ts a n d v o lu m e s C o s td riv e rs We tw e a th e ra fe c tin g w o o d c o s ts C o ld w e a th e ra fe c tin g fu e l c o s ts ($ in m ilio n s,e x c e p tv o lu m e s )Q Q C S p ric e ($ p e rm T )$ 1,8 2 3 $ 1,8 7 4 C S s a le s v o lu m e (0 0 0 s o fm T ) C e lu lo s e S p e c ia ltie s A b s o rb e n tm a te ria ls C o m m o d ity V is c o s e & O th e r2 7 1 T o ta l S a le s $ $ % G ro w th (1 5 %)N A P e rfo rm a n c e F ib e rs S e g m e n te B IT D A *$ 7 0 $ % M a rg in 2 9 % 3 7 % M a n a g e m e n ta d ju s te d E B IT D A *$ 6 4 $ % M a rg in 2 6 % 3 5 % 2 6 *N o n -G A A P m e a s u re (s e e A p p e n d ix fo rd e fin itio n a n d re c o n c ilia tio n )

86 ($ in M ilio n s )F in a n c ia l P e rfo rm a n c e H ig h lig h ts N o te :M a n a g e m e n ta d ju s te d E B IT D A a n d A d ju s te d F re e C a s h F lo w a re n o n -G A A P fig u re s.s e e A p p e n d ix fo re c o n c ilia tio n s *In c lu d e s a d ju s tm e n tfo r$ 2 5 M o v e rh e a d *L T M v o lu m e lo w e rd u e to tim in g o fe x te n d e d s h u td o w n in Q *2 7 *

87 A tra c tiv e C a p ita l S tru c tu re w ith L o w -C o s t,l o n g -T e rm D e b t(1 )1 m o n th L IB O R p lu s % (2 )$ m ilio n c a p a c ity (u n d ra w n a tc lo s in g )(3 )N e to f6 7 b p s o fp a tro n a g e (4 )N o n -G A A P m e a s u re (s e e A p p e n d ix fo rd e fin itio n a n d re c o n c ilia tio n s )C o rp o ra te R a tin g s o fb B + a n d B a 2 In te re s tc u m u la tiv e D e b tr a te (1 )A m o u n tl e v e ra g e T e rm R e v o lv in g C re d itf a c ility (2 )1.6 5 % $ -0.0 x 5 y e a rs T e rm L o a n A % x 5 y e a rs F a rm C re d itt e rm L o a n % x 7 y e a rs S e n io rn o te s 5.5 % x 1 0 y e a rs T o ta l D e b t$ x Q 1 L T M M a n a g e m e n ta d j.e B IT D A (4 )$ T o ta l D e b t/e B IT D A ($ in m ilio n s )(3 )

88 K e y F in a n c ia l M e tric s 2 9 Y e a re n d e d D e c e m b e r3 1,($ in m ilio n s ) T o n s s o ld (0 0 0 s o fm T )C e lu lo s e s p e c ia ltie s C o m m o d ity v is c o s e /a b s o rb e n tm a te ria ls S a le s C e lu lo s e s p e c ia ltie s $ $ $ C o m m o d ity v is c o s e /a b s o rb e n tm a te ria ls /o th e r G ro s s m a rg in $ $ $ G ro s s m a rg in p e rc e n ta g e 3 2 % 3 5 % 3 2 % O p e ra tin g in c o m e $ $ $ O p e ra tin g in c o m e m a rg in 2 8 % 3 1 % 2 8 % M a n a g e m e n ta d ju s te d E B IT D A *$ $ $ M a n a g e m e n ta d ju s te d E B IT D A m a rg in 3 2 % 3 6 % 3 5 % C a p ita l e x p e n d itu re s $ 9 7 $ $ 9 6 A d ju s te d fre e c a s h flo w * *N o n -G A A P m e a s u re (s e e A p p e n d ix fo rd e fin itio n a n d re c o n c ilia tio n )

89 F in a n c ia l G u id a n c e (2 )E x c lu d e s c o rp o ra te e x p e n s e s.a fte rth e s e p a ra tio n,n o rm a liz e d c o rp o ra te e x p e n s e s a re e x p e c te d to b e $ 2 5 M fo rr a y o n ie ra d v a n c e d M a te ria ls G u id a n c e S a le s 1,0 4 2 C o m p a ra b le C S V o lu m e s (0 0 0 s o fm T )(1 )4 8 6 ~ 3 0 O p e ra tin g In c o m e (2 )3 1 1 ~ 2 5 % S e g m e n te B IT D A (2 )(3 )3 8 6 ~ 1 5 % C a p E x (4 ) D D & A D iv id e n d s (5 )$.0 7 /Q tr,o r$.2 8 /a n n u a liz e d R Y N P e rfo rm a n c e F ib e rs S e g m e n t3 0 ($ in m ilio n s )(3 )N o n -G A A P m e a s u re (s e e A p p e n d ix fo rd e fin itio n a n d re c o n c ilia tio n s )(4 )A d d itio n a l c a p ita l s p e n d in g in a n d fo rin d u s tria l b o ile ra ire m is s io n s c o m p lia n c e (5 )E a c h R a y o n ie rs h a re h o ld e rw il re c e iv e o n e s h a re o fr a y o n ie ra d v a n c e d M a te ria ls c o m m o n s to c k fo re v e ry th re e c o m m o n s h a re s o fr a y o n ie r. (1 )Ifta rg e te d v o lu m e s a re n o tre a liz e d, s a le s,o p e ra tin g in c o m e a n d E B IT D A w il b e b e lo w g u id a n c e.c u re n tly,in c re m e n ta l c e lu lo s e s p e c ia ltie s v o lu m e is n o tu n d e rc o n tra c t.

90 V a lu e P ro p o s itio n 3 1

91 A tra c tiv e S h a re h o ld e rv a lu e P ro p o s itio n B e s t-in -c la s s m a rg in s a n d c a s h flo w s w ith m a te ria l u p s id e a s n e w c a p a c ity is a b s o rb e d a n d o p e ra tio n a l e fic ie n c y im p ro v e s C o m p le te d in v e s tm e n tin c e lu lo s e s p e c ia ltie s e x p a n s io n p ro v id e s ru n w a y fo rs ig n ific a n tfu tu re g ro w th A tra c tiv e c a s h flo w s a lo w fo ra p id d e -le v e ra g in g a n d in c re a s e d fin a n c ia fle x ib ility Wo rld -c la s s a s s e ts a n d s tro n g fin a n c ia l p o s itio n p ro v id e a b ility to p u rs u e n e w g ro w th o p p o rtu n itie s M o d e s td iv id e n d w ith fo c u s to e n h a n c e lo n g -te rm a b ility to p ru d e n tly re tu rn c a p ita l 3 2

92 A p p e n d ix 3 3

93 G lo b a l C o n s u m p tio n G ro w in g 1 % 1.5 % P e ry e a rb ili o n s o fc i g a re te s C ig a re te V o lu m e b y R e g io n T h e A s ia P a c ific re g io n (in c lu d in g C h in a )c o n ta in s s e v e n o fth e w o rld s la rg e s tm a rk e ts a n d s ix o fth e fa s te s t-g ro w in g 5, , , S o u rc e :E u ro m o n ito r