XML 39 R21.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Derivative Financial Instruments and Hedging Activities | 12 Months Ended
--- | ---
Dec. 31, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments and Hedging Activities | DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES The Company is exposed to market risk related to potential fluctuations in foreign currency exchange rates and interest rates. The Company uses derivative financial instruments to mitigate the financial impact of exposure to these risks. The Company also uses derivative financial instruments to mitigate exposure to foreign currency risk due to the translation of the investment in Rayonier’s New Zealand-based operations from New Zealand dollars to U.S. dollars. Accounting for derivative financial instruments is governed by Accounting Standards Codification Topic 815, Derivatives and Hedging, (“ASC 815”). In accordance with ASC 815, the Company records its derivative instruments at fair value as either assets or liabilities in the Consolidated Balance Sheets. Changes in the instruments’ fair value are accounted for based on their intended use. Gains and losses on derivatives that are designated and qualify for cash flow hedge accounting are recorded as a component of accumulated other comprehensive income (“AOCI”) and reclassified into earnings when the hedged transaction materializes. Gains and losses on derivatives that are designated and qualify for net investment hedge accounting are recorded as a component of AOCI and will not be reclassified into earnings until the Company’s investment in its New Zealand operations is partially or completely liquidated. The ineffective portion of any hedge, changes in the fair value of derivatives not designated as hedging instruments and those which are no longer effective as hedging instruments, are recognized immediately in earnings. The Company's hedge ineffectiveness was de minimis for all periods presented. FOREIGN CURRENCY EXCHANGE AND OPTION CONTRACTS The functional currency of Rayonier’s wholly-owned subsidiary, Rayonier New Zealand Limited, and the New Zealand JV is the New Zealand dollar. The New Zealand JV is exposed to foreign currency risk on export sales and ocean freight payments which are mainly denominated in U.S. dollars. The New Zealand JV typically hedges 35% to 90% of its estimated foreign currency exposure with respect to the following three months forecasted sales and purchases, 25% to 75% of its forecasted sales and purchases for the forward three to 12 months and up to 50% of the forward 12 to 18 months. Foreign currency exposure from the New Zealand JV’s trading operations is typically hedged based on the following three months forecasted sales and purchases. As of December 31, 2017, foreign currency exchange contracts and foreign currency option contracts had maturity dates through May 2019 and March 2019, respectively. Foreign currency exchange and option contracts hedging foreign currency risk on export sales and ocean freight payments qualify for cash flow hedge accounting. The fair value of foreign currency exchange contracts is determined by a mark-to-market valuation which estimates fair value by discounting the difference between the contracted forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate. The fair value of foreign currency option contracts is based on a mark-to-market calculation using the Black-Scholes option pricing model. The Company may de-designate cash flow hedge relationships in advance or at the occurrence of the forecasted transaction. The portion of gains or losses on the derivative instrument previously accumulated in AOCI for de-designated hedges remains in AOCI until the forecasted transaction affects earnings. Changes in the value of derivative instruments after de-designation are recorded in earnings. De-designated cash flow hedges are included in “Derivatives not designated as hedging instruments” in the table below. Through our ownership in the New Zealand JV, the Company is exposed to foreign currency risk on shareholder loan payments which are denominated in N.Z. dollars. On behalf of the Company, the New Zealand JV typically hedges 60% to 100% of its estimated foreign currency exposure with respect to the following three months forecasted distributions, up to 75% of forecasted distributions for the forward three to six months and up to 50% of the forward six to 12 months. For the year ended December 31, 2017, the change in fair value of the foreign exchange forward contracts of $0.1 million was recorded in “Interest income and miscellaneous income (expense), net” as the contracts did not qualify for hedge accounting treatment. As of December 31, 2017, foreign exchange forward contracts had maturity dates through June 2018. INTEREST RATE SWAPS The Company is exposed to cash flow interest rate risk on its variable-rate Term Credit Agreement and Incremental Term Loan (as discussed below), and uses variable-to-fixed interest rate swaps to hedge this exposure. For these derivative instruments, the Company reports the gains/losses from the fluctuations in the fair market value of the hedges in AOCI and reclassifies them to earnings as interest expense in the same period in which the hedged interest payments affect earnings. For additional information on the Company’s interest rate swaps see Note 5 — Debt. The following table contains information on the outstanding interest rate swaps as of December 31, 2017:
Outstanding Interest Rate Swaps (a)
Date Entered Into | Term | Notional Amount | Related Debt Facility | Fixed Rate of Swap | Bank Margin on Debt | Total Effective Interest Rate (b)
August 2015 | 9 years |  | $170,000 |  | Term Credit Agreement | 2.20 | % | 1.63 | % | 3.83 | %
August 2015 | 9 years | 180,000 |  | Term Credit Agreement | 2.35 | % | 1.63 | % | 3.98 | %
April 2016 | 10 years | 100,000 |  | Incremental Term Loan | 1.60 | % | 1.90 | % | 3.50 | %
April 2016 | 10 years | 100,000 |  | Incremental Term Loan | 1.60 | % | 1.90 | % | 3.50 | %
July 2016 | 10 years | 100,000 |  | Incremental Term Loan | 1.26 | % | 1.90 | % | 3.16 | %
(a) | All interest rate swaps have been designated as interest rate cash flow hedges and qualify for hedge accounting.
(b) | Rate is before estimated patronage payments.
The following table demonstrates the impact of the Company’s derivatives on the Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2017, 2016 and 2015.
| Location on Statement of Income and Comprehensive Income |  | 2017 |  | 2016 |  | 2015
Derivatives designated as cash flow hedges: |  |  |  |  |  |  |
Foreign currency exchange contracts | Other comprehensive income (loss) |  |  | $2,100 |  |  |  | $867 |  |  |  | ($205 | )
Foreign currency option contracts | Other comprehensive income (loss) |  | (52 | ) |  | 1,035 |  |  | 370 |
Interest rate swaps | Other comprehensive income (loss) |  | 4,214 |  |  | 21,422 |  |  | (10,197 | )
Derivatives designated as a net investment hedge: |  |  |  |  |  |  |
Foreign currency exchange contract | Other comprehensive income (loss) |  | — |  |  | — |  |  | 2,875 |
Foreign currency option contracts | Other comprehensive income (loss) |  | — |  |  | (4,606 | ) |  | 4,606 |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |
Foreign currency exchange contracts | Other operating (income) expense, net |  | — |  |  | 895 |  |  | — |
| Interest income and miscellaneous income (expense), net |  | 47 |  |  | — |  |  | — |
Foreign currency option contracts | Other operating (income) expense, net |  | — |  |  | 258 |  |  | 1,394 |
Interest rate swaps | Interest income and miscellaneous income (expense), net |  | — |  |  | (1,219 | ) |  | (4,391 | )
During the next 12 months, the amount of the December 31, 2017 AOCI balance, net of tax, expected to be reclassified into earnings as a result of the maturation of the Company’s derivative instruments is a gain of approximately $1.8 million. The following table contains the notional amounts of the derivative financial instruments recorded in the Consolidated Balance Sheets at December 31, 2017 and 2016:
| Notional Amount
| 2017 |  | 2016
Derivatives designated as cash flow hedges: |  |  |
Foreign currency exchange contracts |  | $107,400 |  |  |  | $44,800 |
Foreign currency option contracts | 48,000 |  |  | 91,000 |
Interest rate swaps | 650,000 |  |  | 650,000 |
Derivatives not designated as hedging instruments: |  |  |
Foreign currency exchange contracts | 18,439 |  |  | — |
The following table contains the fair values of the derivative financial instruments recorded in the Consolidated Balance Sheets at December 31, 2017 and 2016. Changes in balances of derivative financial instruments are recorded as operating activities in the Consolidated Statements of Cash Flows.
|  |  | Fair Value Assets (Liabilities) (a)
| Location on Balance Sheet |  | 2017 |  | 2016
Derivatives designated as cash flow hedges: |  |  |  |  |
Foreign currency exchange contracts | Other current assets |  |  | $2,286 |  |  |  | $692 |
| Other assets |  | 538 |  |  | 33 |
| Other current liabilities |  | (37 | ) |  | (261 | )
Foreign currency option contracts | Other current assets |  | 389 |  |  | 1,064 |
| Other assets |  | 137 |  |  | 327 |
| Other current liabilities |  | (119 | ) |  | (574 | )
| Other non-current liabilities |  | (55 | ) |  | (426 | )
Interest rate swaps | Other assets |  | 17,473 |  |  | 17,204 |
| Other non-current liabilities |  | (2,033 | ) |  | (5,979 | )
Derivatives not designated as hedging instruments: |  |  |  |  |
Foreign currency exchange contracts | Other current assets |  | 209 |  |  | — |
| Other current liabilities |  | (189 | ) |  | — |
Total derivative contracts: |  |  |  |  |
Other current assets |  |  | $2,884 |  |  |  | $1,756 |
Other assets |  | 18,148 |  |  | 17,564 |
Total derivative assets |  |  | $21,032 |  |  |  | $19,320 |
Other current liabilities |  | (345 | ) |  | (835 | )
Other non-current liabilities |  | (2,088 | ) |  | (6,405 | )
Total derivative liabilities |  |  | ($2,433 | ) |  |  | ($7,240 | )
(a) | See Note 14 — Fair Value Measurements for further information on the fair value of our derivatives including their classification within the fair value hierarchy.
OFFSETTING DERIVATIVES Derivative financial instruments are presented at their gross fair values in the Consolidated Balance Sheets. The Company’s derivative financial instruments are not subject to master netting arrangements which would allow the right of offset.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration