Date: Thu, 20 Nov 1997 21:26:24 GMT Server: Apache/1.1.1 Content-type: text/html Set-Cookie: Apache=heart25632880061184955; path=/ Content-length: 4356 Last-modified: Wed, 05 Feb 1997 21:43:16 GMT
Partnership income was $34.5 million or $1.78 per Class A Unit, down $2.3 million, or 6 cents per Class A Unit, from first quarter 1995 results. Operating cash flow allocable to each Class A Unit was $1.83, down 9 cents per Class A Unit. Sales were $46.8 million, down $1.7 million from last yearÆs first quarter.
In the Northwest U.S., unfavorable market conditions throughout 1995 caused many customers to defer harvesting until late 1995 and into 1996. The combined stumpage and delivered log volume was 31 percent above the 1995 harvest. However, this increase was partially offset by a 6 percent decline in prices from the prior year. As a result, sales increased $5.9 million from the first quarter of 1995 to $31.6 million and operating income increased $4.6 million to $25.9 million.
In the Southeast U.S., first quarter sales declined $7.6 million from the first quarter of 1995 to $15.2 million and operating income declined $6.2 million to $12.0 million, reflecting lower volume and prices. Overall harvest volume declined 19 percent and prices declined 16 percent from the 1995 first quarter. The declines were due to softening demand from the pulp and paper industry as mills took market downtime.
"We want to remind Unitholders of our statement in our annual report that we do not expect full year Partnership earnings or cash flow from operations to be as strong as in the prior year," said Ronald M. Gross, president. This is primarily because of continuing weakness in pulp and paper and Asian log export markets. Distributions for the remainder of the year and the first quarter of 1997 are expected to total less than $6.17, which was the PartnershipÆs cash flow per Class A Unit in 1995.
Rayonier Forest Resources continues to caution unitholders that when the Initial Term ends on December 31, 2000, the Primary Account of the Partnership will be closed but there will not be any redemption of the partnersÆ capital accounts. The interest of Class A unitholders in the PartnershipÆs future revenues, expenses and cash flows will then decrease from 95 percent to 4 percent. On a pro forma basis, using 1995 results as an example, cash allocable per Class A Unit would decline from $6.17 to approximately 22 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 amount to over $350 million, more than three times 1995Æs 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 begin to decline substantially sometime prior to December 31, 2000.
This debt (incurred to fund long-term investment in such areas as reforestation and silvicultural activities including accrued interest) is expected to amount to over $350 million, more than three times 1995'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 begin to decline substantially sometime prior to December 31, 2000.