Date: Thu, 20 Nov 1997 21:26:05 GMT Server: Apache/1.1.1 Content-type: text/html Set-Cookie: Apache=heart25632880061165488; path=/ Content-length: 6842 Last-modified: Wed, 05 Feb 1997 21:43:13 GMT
The following is a representative sample of questions asked by investors. Unitholders should also read the Description of Partnership in the Form 10-K (which may be obtained through EDGAR) for additional information.
What happens on December 31, 2000, the end of the Initial Term?
On December 31, 2000, the Primary Account, which is used to
account for revenues, expenses and cash flow for the first 15 years of
the Partnership, will be closed, any Primary Account debt will be paid,
working capital will be liquidated and any cash remaining will be distributed
to the partners. Class A unitholders will receive approximately 95 percent
of these distributions, which are not expected to be significant. That
percentage is the same as their interest in the Partnership through the
year 2000. After that date, Class A unitholder interest in the Partnership
cash flow will decline to 4 percent. Class B unitholder interest, in turn,
will increase to 95 percent.
When the Initial Term ends on December 31, 2000, are the partners entitled to have their capital accounts redeemed?
No. Partners maintain their accounts throughout the life of
the Partnership (to the year 2035). Only their respective interests in
the Partnership activity change beginning January 1, 2001. The partners are not entitled to any return of their capital investment when the Initial Term
ends.
What will Class A Units be worth in the year 2000? Will the market
price of Class A Units be affected by the expiration of the Initial Term?
After the year 2000, it is expected that Class A Units will not retain any significant value. After December 31, 2000, the interest of Class A unitholders in the Partnership's future revenues, expenses and cash flows will decrease from 95 percent to 4 percent. On a pro forma basis, using 1996 results as an example, cash allocable per Class A Unit would decline from $5.69 to approximately 24 cents. In addition, there will be substantial Secondary Account debt that will mature on January 1, 2001. This debt (incurred to fund long-term investment in such areas as reforestation and silvicultural activities including accrued interest) is expected to exceed $350 million, more than three times 1996's net operating cash flow. In accordance with the Partnership Agreement, all Secondary Account debt must be repaid before any distribution of Partnership cash flow resumes. As a result, it is expected that the market price of Class A Units should be decreasing substantially as December 31, 2000 approaches.
Where can I find daily information about the price of Class A
Units? What does "yield" mean in stock listings?
Class A Units are traded on the New York Stock Exchange under
the symbol LOG and are listed by newspapers such as The New York
Times and The Wall Street Journal under the name RayTmbLP. In addition
to market price, the listings include information on "yield,"
which is defined for corporations as the dividends paid by a company on
its securities, expressed as a percent of the current price. In the case
of the Partnership, the amount published under "yield" is the
annual distribution per Class A Unit, expressed as a percentage of the
market price of each unit.
Is this listed "yield" relevant to the Partnership?
Not really. Partnership quarterly distributions are not dividends,
but primarily a return of capital. Since there is not expected to be any
material value to Class A Units held to December 31, 2000, and the partners'
capital accounts will not be liquidated at that time, dividing the annual
cash distribution by the unit's market price may be misleading when computing
the unitholder's true investment return.
How are distributions between now and December 31, 2000 being
determined?
The Board of Directors of the Managing General Partner determines
the amount of quarterly distributions that are made to Class A unitholders
from cash available from operations after provision for working capital,
capital expenditures, asset acquisitions and other reserves. As the Initial
Term approaches its expiration date of December 31, 2000, the Managing
General Partner has determined that such cash needs are expected to be
less. Therefore, distributions are intended to approximate actual Partnership
results each year. This will be accomplished by keeping the distribution
relatively constant in the second, third and fourth quarters and by making
an adjustment in the first quarter of the following year to bring the cumulative
distribution in line with Partnership results. Since actual Partnership
results vary each year, the level of total distributions in each year will
also vary.
Is the quarterly distribution taxable?
The cash distribution is not reported as taxable income. As
long as a unitholder has basis in the units, the distribution is considered
return of capital and serves to reduce such basis. However, a unitholder
does have to report his or her share of income and deductions of the Partnership.
A custom tax package with this data is provided to each unitholder in early
March.
Can Class A Units be called in?
Rayonier Inc., the Special General Partner, has the option
to call in Class A Units. According to the Partnership Agreement, the unit
purchase price would be 125 percent of the then-current market price for
Class A Units.
Since December 31, 2000 is such an important date, what are the
harvest plans before and after the year 2000?
Harvest plans are based on well-established, long-term biological
growth patterns, environmental issues and other factors. They have been
and will continue to be developed on a long-term sustained yield basis.
The Conflicts Committee of the Managing General Partner's Board of Directors
reviews the policies and practices of the Partnership with regard to harvest
plans and timber sales to ensure equitable treatment for all unitholders.