Welcome and thank you for joining Rayonier’s fourth quarter analysts’ teleconference call. At this time, all participants are in the listen-only mode. (Operator instructions) Now I will turn the meeting over to Mr. Hans Vanden Noort, CFO. Sir, you may begin.

Thank you, and good afternoon. Welcome to Rayonier’s investor teleconference covering fourth quarter earnings. Our earning statements and supplemental materials were released this morning and are available on our Web site at rayonier.com. I would like to remind you that in these presentations we include forward-looking statements made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995 and other Federal Securities Laws. Our earnings release as well as our form 10-K filed at the SEC, lists some of the factors, which may cause actual results to differ materially from the forward-looking statements we may make. They’re also referenced on page two of our supplemental material. Please familiarize yourselves with them. Also, this conference is being webcast and can be accessed through our home page. With that, let’s start our teleconference with opening comments from Lee Thomas, Chairman, President, and CEO. Lee?

Thanks, Hans. First, I’ll make a few opening comments, and then Hans will take you through the financials. At that point, Tim Brannon, our Senior Vice President for Forest Resources; Charlie Margiotta, our Senior Vice President and Head of our Real Estate business; and, Paul Boynton, Senior Vice President for Performance Fibers and Wood Products will review those business segments. First, let me make a few comments on 2008. I think that despite the challenging economic conditions, our results were good. In our timber business, we limited our saw-timber harvest, took advantage of the strong demand in the pulpwood market. We also successfully executed our strategy to upgrade our portfolio by acquiring 110,000 acres of high value timberlands, while our real estate group was selling 50,000 acres of non-strategic properties. Lastly, our performance fibers business, with our strong cellulose specialty segment generated solid earnings in 2008 despite unprecedented cost increases. The results in 2008 leave us well positioned with ample liquidity, conservative debt levels, and a solid balance sheet. This gives us the ability to manage through the current recession and turmoil in the credit markets, continue our $2.00 per share dividend, and continue to execute our strategy. Now with that, let me let Hans take you through the financials.

Thanks, Lee. Let’s start on page three with the overall financial highlights. As we noted, we finished the year with a quarter that was largely in line with expectations. Sales totaled $354 million, resulting in operating income of $61 million and net income from continuing operations of $42 million or $0.53 per share, which was above the prior year and the prior quarter. On the bottom of page through, we provided an outline of cash resources and liquidity. Our 2008 cash flow was strong, with adjusted EBITDA of $406 million, and cash available for distribution of $210 million. Our debt and debt-to-capital ratio increased slightly from year-end 2007, reflecting additional debt proceeds to fund the portion of our $213 million Western Timberland acquisition that closed in the second quarter. We ended the year with approximately $62 million in cash. So on a net debt basis, closed at $709 million. Turn now to page four, where we prepared a sequential quarterly variant analysis. Starting with timber, we benefited from increased volume in our eastern region driven by favorable pulp market demand. Our other income, which is primarily recreational licenses, is largely recognized in the fourth quarter, but also reflected improved pricing. In real estate, the improvement was driven by the increase in non-strategic timberland acres sold. Moving to performance fibers, we see a price improvement due to the cost based surcharge that was implemented. However, this benefit was more than offset by increased input and transportation cost as well as a $4 million loss on fuel hedges. Finally, our taxes are unfavorable, as last quarter we recorded two discreet benefits, which totaled about $7 million. Let’s move now to page five and the year-over-year variances. I won’t go through both of these periods and variances in detail, but the following things…

Thanks, Hans. Timber markets remain very challenging. Housing starts are depressed. And in the fourth quarter, we began to see a slow down in the commodity pulp and paper industry resulting in lower demands for pulpwood. In the West, we have continued to restrain our sales of high value saw-timber, as shown on page nine. As you know, we acquired and additional 56,000 acres of high value timberland in Washington State in early 2008. But we had intentionally withheld harvest to volumes comparable to third quarter 2008 and fourth quarter 2007. Lingering impacts from the December 2007 storm event is still adversely impacting the Pacific Northwest sawlog market, which was already under pressure from the housing market crisis. Northwest commodity pulp and paper markets softened in the fourth quarter, which also reduced the demands for pulpwood. Prices in the fourth quarter remained depressed comparable to the third quarter. In the East, on page ten, pine volume was robust and up substantially over the third quarter of 2008 and fourth quarter 2007 as we continue to successfully sell more pulpwood thinning volume. Pulpwood demand was strong for much of the fourth quarter, as the availability of residual sawmill chips diminished and the threat of winter weather and poor logging conditions approached. However, by late in the fourth quarter, pulpwood inventories were replenished at area mills and the slowdown in the commodity pulp sector became evident. Prices in the fourth quarter remained relatively flat sequentially. The outlook for 2009 remains challenging. Demands from sawmills is depressed. So in all regions, we will continue to hold off the market, many of those timber stands, which have a high component of sawlogs. Although demands for commodity pulp is slowing throughout our eastern market areas, we will continue with our sales program of thinnings, which meets pulpwood market demand today and will improve the value of our timber stands tomorrow by growing more saw-timber in the years ahead. As we enter 2009, stumpage prices in the West are down by about 20% from fourth quarter. Volume for the year is expected to be down about 20% from 2008 harvest levels. And as the year progresses, we will determine whether or not to hold even more saw-timber off the market if demand softens further. In the East, pine stumpage prices are currently about flat to third and fourth quarter of 2008. Pine volume in the East for total year 2009 is expected to be down 6% to 8% from 2008. And we will monitor the commodity pulp industry closely this year, and may adjust our harvest volume depending upon pulpwood demand. With regards to the sale of the joint venture estate in New Zealand, we have received indicative offers and have now moved into phase two due diligence with several interested parties. With that, let me turn it over to Charlie Margiotta to review the real estate business.

Thank you, Tim. The real estate market remains challenging with little change expected in the near term. Demand for development properties today is primarily for specialized end-users, often commercial or industrial. Rural property sales interest is static, particularly in Alabama, Texas, and Georgia. We continue to be encouraged by the competitive response and interest in our non-strategic timberland sales offerings. On the entire (inaudible) front, we received approval for industrial use of 1,100 acres adjacent to Interstate 95 outside of Savannah. We now have approximately 8,000 in titled acres in the Savannah area. Page 11 shows in the fourth quarter, we have a relatively minor amount of development sales, which were located in Southern Georgia. We expect 2009 development sales to continue to be quite limited and similar to 2008. Rural sales of merely 1,100 acres in the fourth quarter were relatively low driven by contract closing dates. 2009 rural sales acres, at least as we look out today, should be on par with 2008. Page 12 detailed selling prices per acre. Development sales or of untitled property, and averaged nearly of $18,000 per acre. Rural prices improved from prior quarters due primarily to several sales in Florida at excellent per acre prices. We expect 2009 rural prices on average to be somewhat lower than 2008, due primarily to locations, that is we do not expect much acreage to sell in Florida, which traditionally generates higher per acre prices. Page 13 is our non-strategic timberland sales program. We are pleased with the fourth quarter sales results, nearly 30,000 acres in Georgia and Alabama at an average price of about $1440 per acre. We were particularly pleased with the level of competition in this bid process. Our expectation is that in 2009 sales will be comparable in acres to 2008, and depending on the market, could exceed last year. With that, let me turn you over to Paul to review performance fibers.

Thanks, Charlie. Performance fibers finished 2008 with a challenging fourth quarter. On page 14, you’ll see net selling prices for our two performance fibers product lines. We previously announced the implementation of a surcharge on our cellulose specialties volume effective September 1, 2008 for the balance of the year. As a result, fourth quarter prices were up 6% sequentially, and 15% above the same quarter of the prior year. The surcharges were a necessary action to help mitigate some, but certainly not all, of the unprecedented cost increases we’ve experienced in raw materials, chemicals, fuels, and transportation. Looking at absorbent materials, which consists principally of fluff pulp as noted here, prices held relatively stable despite pressures in the global economy. Prices were 2% below the prior quarter, but 5% above the same period the prior year. Moving on to page 15, in looking at volumes, you can see our fourth quarter cellulose specialties volume finished slightly down sequentially due to our need to build additional inventory as we prepare for our early 2009 maintenance period at our Fernandina facility. Volume was essentially flat for the same quarter prior year. In total, 2008 sales were 1 % above prior year as plant absorbent materials volume of 79,000 was significantly above prior quarter due the strong production and timing of customer orders. Total 2008 volume was 2% below prior year. Despite increased prices in comparable volume for our cellulose specialties, fourth quarter income declined from prior quarter, principally due to high raw material input cost. While we provided guidance that added costs that exceed incremental during our last call, we didn’t anticipate the precipitous decline in oil prices, which resulted in $4 million of fuel oil hedge losses. In summary, for the year, 2008 produced record operating income due to exceptionally high…

Thanks, Paul. Before I close, I would like to update some key statistics to assist you in refining your model for Rainier. I’ll only be touching on full year statistics and guidance. Given the uncertainty around the economic environment, the variability of our timber harvest volumes and the timing of our non-strategic timberland sales, we will not be providing any quarterly guidance. However, we will update our annual guidance each quarter. So for 2009, we expect depreciation, depletion, and amortization of $172 million and a non-cash cost base of lands sold of $11 million, or approximately $183 million in total. This would be a net $4 million increase from 2008 driven by increased depletion. Capital expenditures excluding acquisition are expected to range between $95 million to $98 million, which will be $7 million to $10 million below 2008, with the decrease primarily in performance fibers. We expect interest expense, net of interest income, of about $50 million versus $43 million in 2008. This increase primarily results from required accounting change from convertible debt, whereby additional interest expense is accrued to represent what interest expense would have been without a conversion feature. This $6 million increase will have about $0.05 per share negative impact on EPS, but no impact on CAD. Finally, our effective tax rate is expected to range between 10% and 11%, which will be comparable to the ’08 effective rate of 11.3%. The effective rate can vary significantly based on the mix of income between our REIT and TRS businesses and light current exchange benefits. When you put all these elements together, we continue to anticipate strong cash flow despite the adverse conditions facing our businesses. EBITDA is expected to be 10% to 15% below 2008, which will affect CAD by about the same proportion. Even so, we still expect CAD to be well above our current dividend of $2.00 per share. From a GAAP net income basis, we expect earnings per share to be well below 2008, with the decrease proportionally greater than the EBITDA in CAD decrease noted earlier. Some contributing factors include higher non-cash cost basis on our expected non-strategic timberland sales; the $6 million interest expense increase due to the accounting change for the convertible debt; and, pension expense of about $12 million, which is approximately $6 million above our expected cash contribution in 2009. Now, let me turn back to Lee for some summary comments.

As you just have heard from Hans and our business unit leaders, we anticipate that due to the recession, 2009 results will be below 2008. In timber, with a weak economy, we’ve planned significant reductions in our harvest volumes for 2009. And as Tim said, we may make further reductions if conditions don’t improve. Therefore, we can see volume changing quarter-to-quarter, which makes it challenging to give quarterly guidance. In real estate, we see continued interest in our non-strategic timberlands. Quarterly earnings will be impacted by the closing dates of real estate transactions. And in performance fibers, earnings are expected to be solid, although below 2008, as strong demand for cellulose specialty products is more than offset by weakening fluff prices and higher costs, especially chemicals. If the global recession deepens beyond our expectations, fluff prices could decline more than we projected. Cost control and capital preservation are two near term priorities for us. For example, we recently imposed the hiring and pay freeze for all salaried employees, and reduced 2009 capital expenditures by $10 million year-over-year. Despite these uncertain economic times, we expect our diverse mix of businesses to generate strong cash flows in 2009, well in excess of our $2.00 per share dividend. In addition, to our substantial timberland portfolio and HBU real estate properties, we remain the global leader in the sale of specialty products. With conservative debt levels, manageable debt maturities, and a solid balance sheet, we should have significant operating flexibility to continue to execute our strategy. I’d be remiss if I didn’t acknowledge the decline in our share price. It was a brutal year in the stock market. And although many companies in the forest products and REIT sectors suffered more severe share declines than us, we’re clearly not satisfied with our current share price. We believe that our shares are significantly undervalued. And we’ll remain focused on creating long term value for our shareholders. Now with that, I’d like to close the formal part of the presentation and turn the teleconference back to the conference operator for questions from the audience. Operator?

Thank you. (Operator instructions) The first question comes from Claudia Hueston, JPMorgan. Your line is open. Claudia Hueston – JPMorgan: Hi. Thanks very much. Good afternoon.

Hi, Claudia. Claudia Hueston – JPMorgan: Just a couple of questions, first, Lee, you mentioned where the stocks are trading and that you feel it’s undervalued. Has that changed the company’s priorities for cash? Any thoughts of the buyback in this situation?

It’s not changed our priorities, Claudia. I think, particularly, given where the economic conditions are, focus on debt, focus on dividends. Those are our priorities. I think at a point in time, when we look at excess cash, we clearly have to take a look at our stock. But the only thing I think that could potentially change that could be the results of the sale of our New Zealand properties. But let’s just wait and see how that closes. Claudia Hueston – JPMorgan: Okay. Thanks. And then just a couple of questions on the performance fibers business, in terms of the surcharges that were pushed through, obviously, some input cost have eased, but your caustic costs are up. So I mean, how do we think about pricing and those surcharges as we think about 2009 trends?

Yes. Claudia, this is Paul. Thanks for your question. Our cellulose specialty prices have all increased. But this year, at probably various levels more so than in prior years, ranging anywhere from single digits to above 22%, 23%. So I think I would estimate, on average, we would be in the neighborhood of about 15%. Claudia Hueston – JPMorgan: And that’s excluding any potential roll off of the surcharges or are the surcharges pretty much done now?

Yes. The surcharges ended at December 31st, 2008, so. Claudia Hueston – JPMorgan: Okay. That’s helpful. And then you mentioned that there were some hedges that hurt you in the quarter. Where are hedges now? Do you have any hedges in place going forward?

Claudia, it’s Hans. Well, we still have hedges in place for about 50% of our ’09 usage. And we’re slightly favorable now versus year-end. Claudia Hueston – JPMorgan: Okay. And then just finally, do you have your land bases in the quarter?

In the quarter? Our land base – yes, the land bases – let me try to look. Land bases for the quarter looks like about $3.5 million, and for the year it was about $11 million. Claudia Hueston – JPMorgan: Okay. Thank you very much, guys.

You’re welcome.

You’re next question comes from Hamzah Mazari of Credit Suisse. Your line is open. Hamzah Mazari – Credit Suisse: Thank you. Just a couple of questions, on your fluff business, how do you guys think about how exposed that is to commodity pricing? How does it lag the commodity pulp market?

Hamz, it’s Paul Boynton. It certainly does lag. I don’t know exactly the time period, but it could be up to a quarter behind. But typically, you see as the market goes down, while they follow and get pressured that way, it certainly doesn’t correspond directly one-for-one at all. So you won’t see us go to the levels that you’ll see commodity fluffs out there. So they’re de-linked, to some degree. Hamzah Mazari – Credit Suisse: Got you. And then, on your – you guys mentioned that pulpwood demand is holding up – was holding up pretty well in the beginning of the quarter, and then dropped off towards the end as inventories were replenished. How much of a drop off, I’m just curious, have you seen in pulpwood demand? And do you see in the month of January so far?

Tim, you want to take that one?

Yes. Well, pulpwood is certainly slacking as we’re going into 2009. Fortunately, as we’ve seen, our pricing has been recently steady at this point, but hopefully demand is coming down. I think it’s really being impacted more by this inventory flux that we’re seeing. In other words, the inventory that was built as we closed out the end of the year, and then some temporary shutdowns that took place over the holidays. So it’s a little bit difficult to say exactly how much is coming out. But definitely, we’ve seen a bit of a softening at this point. Hamzah Mazari – Credit Suisse: Okay. And just lastly, why – I’m just curious why you – are you guys thinking of leasing new hedges on fuel right now in performance fibers given where oil prices are?

Hey Hamz, it’s Hans. Well we’re pretty low set at least for the near term. But basically, we all try to guess the market one way or another. We’re just going through. We’d typically like to have anywhere from a third to a half of our next 12 months usage lock into place. And so, we’re on top of it now. But no, we’re not looking at doing anything at least imminent here. Hamzah Mazari – Credit Suisse: Oh okay. Got you. Thank you very much.

Your next question comes from the line of Ross Gilardi of Merrill Lynch. Your line is open. Ross Gilardi – Merrill Lynch: Yes. Good afternoon. Thanks, guys. I have a question for Paul Boynton. Paul, just on the performance fibers business. I mean certainly, cellulose specialties pricing has got to be one of really the only products in the entire forest products chain where – that’s still going up. And I’m just wondering, do your competitors – do you think have the financial capability to convert existing facilities and install new facilities to enter this market within any reasonable timeframe? What’s the earliest you might begin to see competitive pressure in the cellulose specialties area to the extent that it could unfavorably impact pricing?

Well Ross, let me take that – this is Lee. And then Paul can add to it. I think there are two things here. One is, it is a substantial capital investment. But beyond that, it’s capability beyond capital that’s required to get into the cellulose specialties business. The sad thing is, there is a very high switching cost as far as customers are concerned. This is a product that is engineered for each individual customer. And the customers are very demanding in terms of their product specifications and the consistency of meeting those specifications. So it is not a product like other products you maybe familiar with in the forest products’ industry, but somebody with capital can move into it. It’s just a very different product. And that’s why it’s called a specialty business. So I think that the – I think you’ve got two factors. You’ve got the capital and talent demands to actually get into the business. Then you got the reluctance of customers to switch to a new supplier from a tried and true supplier. Many of our customers, we’ve been their supplier for 70 and 80 years. Ross Gilardi – Merrill Lynch: Got you. Thank you. And then a question for Tim Brannon as well. You mentioned, Tim, I believe in your comments, that you’re going to continue with your program for pulpwood thinnings in 2009. And despite the fact, it sounds like, that pulpwood demand is easing. Are you worried that you might further exacerbate the pricing situation, which up until now has help up very, very well?

Ross, it’s Tim. No. It’s a situation where, as I said in my comments, we’re going to be watching this market very closely as we go into 2009. And as we do, we’ll judge as to whether or not we want to continue to be pushing our thinnings and pulpwood into that market. And if it does indeed soften, then we would pull back if need be. At this point, we think that this thinning strategy does two things for us. One is there still is a good demand for it, a good market for it. And then secondly, long term, it provides us with stands that will have more soft timber on them. So we’ll continue to sell into this market and use our thinnings. But as I said, we’ll watch it very closely. And if need be, we certainly would pull back. Ross Gilardi – Merrill Lynch: Sure. Thank you. And then, Lee, I’m sorry, just one more question. You mentioned several times in your formal remarks that CAD is still well above your dividend requirements. And it sounds like with the 10% to 15% decline, that could still be the case in 2009. It sounds like the dividend – do you feel it’s safe here? But how would you – would you actually consider raising the dividend in this environment?

Ross, our Board looks at the dividend on a periodic basis. It’s a very important – the return for our shareholders. So I think ensuring we maintain a strong dividend is very important. I do think, though, that consideration of increasing the dividend this year would certainly have to be balanced against where we are in the economic recession that we’re all facing. So we’ll be very cautious about doing that until we get through the kind of economic conditions we’re seeing around the world. Ross Gilardi – Merrill Lynch: Sure, sure. Makes a lot of sense. Okay. Thanks very much, guys. Good luck to you.

Thank you.

Your next question comes from Chip Dylan [ph] from Dylan Investment Research [ph]. Your line is open. Chip Dylan – Dylan Investment Research: Hi. Good afternoon, guys.

Hi, Chip. Chip Dylan – Dylan Investment Research: First question, to make sure I understood the caustic increase. What was that going to be year-over-year?

Chip, it’s Paul. It’s going to be over $80 million as we expect it right now. Chip Dylan – Dylan Investment Research: $80 million.

Eight, zero. Chip Dylan – Dylan Investment Research: Okay. So that would be roughly half of what you’re – I don’t have it right in front of me. So that’s a pretty big nut to overcome.

It’s a big number. Chip Dylan – Dylan Investment Research: Okay. And then also, could you talk a little bit about – I noticed you were mentioning that the basis for lands sold in ’08 was $11 million. And yet, on the release, it shows operating income with $80 million and EBITDA was $1.13, which would suggest there might be something else non-cash in there to get to that $32 million difference. Could you just refresh our memory of what that could be?

Well yes. Chip, it’s Hans. Certainly, on some of the non-strategic timberlands, we will have some timber basis on there, which will come through as depletion expense as well, as opposed to our typical, let’s say, where all HPU type of properties, which typically don’t – have very, very little timber value on them. Chip Dylan – Dylan Investment Research: Got you. So that might have been roughly $20 million, $22 million last year.

Yes. Last year was about $21 million. Chip Dylan – Dylan Investment Research: Okay. And as you look at 2009, you mentioned there’s still a lot of interest in your non-strategic timberlands. Could you just give us sort of an idea of how much could that come on one hand from individuals or small partnerships, and on the other hand, endowments and pension plans?

Charlie, why don’t you take that?

Sure. It’s hard to predict where the next sale is coming from. But in ’08, I think it would be fair to say, in the South where the majority of our timberland was sold, it was purchased exclusively by TIMOs. We had a very good competition, but mostly southern based TIMOs. And I’m not going to speculate on ’09, but the ’08 was almost exclusively TIMOs. Chip Dylan – Dylan Investment Research: And you notice guys, would you say most of the money behind was, again, pensions and endowments or more wealthy individuals? Which can you say?

I really can’t say. We don’t – as long as they in cash on the day of closing, we don’t really get too much into where they get their funds. But there were a number of TIMOs that purchased. So they might have different institutional partners. Chip Dylan – Dylan Investment Research: Got you. And last question, just getting back to performance fibers. I know, a couple of years ago, there was a big announcement about where a lot of the specially dissolving – I believe you guys sell those to China. And I just didn’t know how – have the shipments of that pulp been uninterrupted just given some of the incredible volatility we see with the volatility dry index and other factors in China? Are the shipments there going as planned?

Our business into China is very stable and strong. And we expect it to continue, so. Chip Dylan – Dylan Investment Research: Got you. Thanks very much.

Thank you.

Your next question comes from Christopher Chun, Deutsche Bank. Your line is open. Christopher Chun – Deutsche Bank: Thanks. Good afternoon, guys.

Hi, Chris. Christopher Chun – Deutsche Bank: Hey, it seems that there’s quite a bit of uncertainty nowadays about timberland valuation. And given the fact that we’ve really have not seen a large transaction announced in the last several months. I’m wondering if you guys can add any insight into what’s going on about markets today.

I think from everything we’ve seen as good competition out there for timberlands, even the latest ones we’ve seen come forward beyond their own, have all maintained, basically, the value we would have expected and consistent with the value we’ve seen last year. The latest one we saw was the Potlatch announcement, which was good valuation of what we would expect it. So I mean I don’t really have anything other than that to add. And everything we’ve seen is timberland values are holding up quite well. Christopher Chun – Deutsche Bank: Okay. That’s fair. Yes. I mean the Potlatch deal certainly was a positive data point, a relatively small one though. I was wondering if you might have had any insight into what sort of the depth in demand at the price points of last summer was in light of some turmoil in financial markets and–?

Oh I mean the – the experience we’ve had has been good, strong competition, a lot of interest in the properties we put on the markets. So I have an – and then all the conversations we’ve had with folks, there seem to be continued good, strong interest. As a matter of fact, I read a very nice article in the Wall Street Journal yesterday that seemed to confirm my suspicions that indeed timberland continues to be an investment of choice for a lot of people. Christopher Chun – Deutsche Bank: Okay. And then, I guess, I would ask the same question on the rural land side as well as the non-strategic land side. Have you seen any slowing or reduction in the demand there in light of the credit crisis?

Sure. This is Charlie. As I mentioned in my comments, somewhat mixed. No doubt in Florida it has slowed down. The world market has slowed down. But I think we’re in six or seven states with active programs. And Texas, Alabama, Georgia, to some extent even Washington, we’re seeing relatively steady demand. So it is mixed, but in some states certainly better than other states.

And we see that change over time.

Absolutely.

I mean, as we have over the last couple of years. But overall, I think your comments, Charlie, was pretty steady.

Right, that’s right. Christopher Chun – Deutsche Bank: Okay. Great. And then, Paul, just following up on the cost side. You talked about how much caustic was going to rise. But overall, it seems like some other type – other cost elements might be easing this year. So do you have an outlook as to what your overall costs are going to do in ’09 versus ’08?

Yes. Chris, unfortunately, we still see a dramatic slide in our overall cash cost position. We saw it 2007 to 2008 in the 16% range, which is, obviously, quite high. And we see at least that going into 2009 at this point, as we’re sitting here today. Christopher Chun – Deutsche Bank:

Well, in the West, of course, which is a sawlog market, as you know, just the tops, in that going primarily into the pulpwood market and the residual chips going into that market. But we’re probably, as we look into ’09, in those 60%, 70% kind of range in terms of what we might produce on a more normal basis, something like that; just to give you a sense as to how much we’re down, if you will, and how much we’re trying to protect that good high value soft timber that we’ve got. Christopher Chun – Deutsche Bank: All right. What about in the East?

In the East, again, we’re doing the same type of thing there. We’re looking at harvesting stands, which are heavy to pulpwood and probably not going to produce much more saw-timber if we were to let them grow longer. So we’re going ahead and taking those out. It would have a high percentage of pulpwood, probably in the 70% to 80% range. And then on the thinnings, of course, that product is coming out – is in the 90% to 95% pulpwood. Then again, trying to protect some of that saw-timber or grow more saw-timber in the years ahead.

Okay. Thanks for you help then.

The next question comes from Peter Ruschmeier, Barclays Capital. Your line is open. Peter Ruschmeier – Barclays Capital: Thanks, and good afternoon.

Hi, Peter.

Hello, Peter. Peter Ruschmeier – Barclays Capital: I have a couple of questions, maybe if I could start with Lee. I’m curious if you could share your thoughts on what the Obama administration may mean for the timber business, maybe how you think about it. In particular, some of the topics like biofuels and carbon credits. I’m curious if that’s died down at all in light of energy rolling over or if that’s still a hot topic, and how you might think about that.

Well Peter, I think it’s just the opposite of dying down. I think you’re going to see this administration – we’re already seeing move ahead with a number of things President Obama talked about during the campaign. So I think we’re going to see, in these stimulus bills, things related to energy. And in energy legislation, we’re going to see things related to energy, and specifically, climate change. And I think that a big part of that is going to be incentives to biomass. I think whether it’s going to be R&D and demonstration products for sale (inaudible), or whether it’s going to be a component of a renewable portfolio standard, I just think you’re going to have now an administration that, in fact, is going to move forward with that. I was just reading a memo that the new administrator of EPA sent to all employees. And she talked about climate change. She talked about what they were going to be doing as far as EPA is concerned. And I think we’re going to see now a much heightened interest, whether it’s legislation or regulation, and moving forward with it. I think it’s going to have a major effect down the road for demand for biomass. Peter Ruschmeier – Barclays Capital: Very good. That’s helpful. Maybe a question for Charlie, if I could. I’m curious on the transactions that we saw in the marketplace for timberland in 2008. Charlie, could you venture, I guess, as to how much leverage you think may have been used in those transactions, what the trends have been in terms of leverage and timber deals?

I mean I could certainly venture a guess. I don’t know how valued my guess would be. I think, no doubt, there’s less and less leverage, and more and more either equity or private individual net worth wealth that people still have in this economy. Three or four years ago, we were hearing and knew about highly – visibly highly leveraged transactions. And I just – again, this is just my view, I just don’t believe there’s much of that right now. Peter Ruschmeier – Barclays Capital: Okay. And then lastly, maybe also for Charlie. I’m curious if you could share any thoughts you may have on the spending projects that are coming for the Port of Savannah, the Port of Jacksonville. Does it impact Rayonier at all? Any thoughts you can share on how that may evolve over time.

Clearly, the expansion in the Port of Jacksonville is going to help us. The recently expanded port project for Matsui and the Hanjin project, both are new shippers to the port. It’s going to have some direct effect on us. Maybe container traffic’s down a bit now, but I think we’ll get a lot more industrial interest. And we’re very pleasantly surprised with what’s going on in Savannah and the growth, again, subject to this poor economy.

One other point in Jacksonville is the Navy just authorized the movement of a nuclear aircraft carrier on North off of Jacksonville. It’s going to result in significant increase in personnel in the Jacksonville area, particularly in the port area for the Navy. Peter Ruschmeier – Barclays Capital: Interesting. Okay. Thanks very much. I’ll turn it over.

Your next question comes from Mark Weintraub, Buckingham Research. Your line is open. Mark Weintraub – Buckingham Research: Thank you. First, I just want to follow up on the caustic. Is the new contract something that’s going to be in place for several years like it sounds like the prior contract was? Or is it something that’s going to go up and down more with the market?

Mark, this is Paul. The new contracts in place January 1, there’s more than one. There are several. There is both domestic and international suppliers. And they will move with the market as our other ones did as well. But the other ones hit a ceiling, and this will probably just move more freely. It’s still favorable. We’re a large user of caustic, one of the largest in North America. So we think we got good pricing. But unfortunately, the last contracts just expired. Mark Weintraub – Buckingham Research: Okay. And then, we’re not just thinking through that 15%, 16% increase in cash calls in the business. By my back of the envelope, that sounds – comes to roughly $80 million or so. Is that could largely be from just a caustic. When you looked at all the other expenses and net them out, were they – or are you expecting them to work against you or for you in the performance fibers business?

This additional cost in their overall that certainly caustic is a major component of that. Mark Weintraub – Buckingham Research: Okay. And then, switching gears. If you could just help us out on the New Zealand properties. Remind us, if you would, what they’re on the books for and when they were acquired.

Yes, Mark. It’s Hans. They were acquired just starting back in 1992. And then when we went into the venture, we actually sold the properties to the venture. And actually, we paid accretive some of the cash in 2005 from that particular move. As far as on the books, I’m just looking around here to see where my latest and greatest assets. We have about – net, about $50 million or so for that investment related to that. Mark Weintraub – Buckingham Research: And would have they been effectively mark-to-market in that 2005 transaction?

To the extent that we had cash proceeds coming back. There was a portion that was mark-to-market. But under the accounting rules, the remaining amount that could mark-to-market was still kept at historical. Mark Weintraub – Buckingham Research: And would the majority, therefore, have been mark-to-market or not?

Let me think about that. I think it was the minority of – not a majority. So I think it was about – I don’t think it was a majority. Mark Weintraub – Buckingham Research: Okay. And then, in terms of the non-strategic land sales, a comment was made that 50,000 acres or so were sold last year. And then there was a reference that it could exceed. And I wasn’t sure if that was referring to the amount of acreage or the values per acre.

Yes. It’s Charlie. The acres, the acres. Mark Weintraub – Buckingham Research: The number of acres, okay. And you talked about, on share repurchase, that one variable that would need to be monitored would be the New Zealand property. Presumably, also, what you might decide on the non-strategic timberland sales could be another variable that could influence what you chose to do or not to do vis-à-vis share repurchases. Is that fair?

Yes. I think that’s fair. I think we’re going to take – we will always take a look at cash proceeds coming in. And as I said, in ensuring that we’re in good position as far as our debt repayment is concerned, ensuring that we’re in good position with our dividend. Those are clear priorities. We’re still making good investments in our businesses. And then, I think we take a hard look at things like share repurchase. Mark Weintraub – Buckingham Research: And I guess I just want to take your temperature on – a competitor of yours has been selling timberland and using proceeds to buyback stocks. The share prices, of both that competitor and yours, have gone down subsequently. So then sure even if the price you receive on the timberlands wouldn’t necessarily be quite as high. It might still, using that line of reasoning, make a lot of sense and be very valuable accretive of the long term to be more aggressive on timberland sales and using those proceeds to buyback stock. How does that ring into you?

We clearly see your logic there. Mark Weintraub – Buckingham Research: Okay. And then I promise I’ll stop after this. So what would be the limiting factor on your desire to be more aggressive to sell more land and use those proceeds to buyback stock, which is quite depressed?

I think, really, the limiting factor for us is taking a look at the value of the timberlands we’ve got, the overall strategy we’ve had of how we upgrade our overall portfolio. So we’re looking at – when we talk about non-strategic timberlands, we’re looking at those that really we feel are not necessarily well fitted – suited for our portfolio, but may well be of more value to someone else. At this point, we haven’t felt like we wanted to go in the market beyond what we’ve been talking about to bring in additional cash. As I indicated though, if in fact – I mean we’re putting – we put our New Zealand venture on the market. And then, in fact, that New Zealand venture goes to close and we have that cash come in. Well, clearly we’re going to take a hard look at how we use that cash and what are the options we’ve got to share repurchase. And I’m sure our Board will take a hard look at it. Mark Weintraub – Buckingham Research: Okay. Thank you.

(Operator instructions) One moment please for you next question. Your next question comes from Steve Chercover, D.A. Davidson. Your line is open. Steve Chercover – D.A. Davidson: Thank you. Perhaps beating at that horse, but with respect to the caustic situation, which is a pretty remarkable number. And I think you said net we’re going to see 16% increase in costs. Can you just remind us, Paul, how much you think you might get in pricing versus the fourth quarter now that the surcharges rolled off?

Yes. Let me just clarify when I mentioned cash costs going. And I said in 2007 and 2008, you saw them go up 16%. And as of ’08 and ’09, we at least see that. So I didn’t say that was the number, but I gave you that as a guidance. So just as word. And I’m sorry, Steve, kindly ask me your question again on the pricing. Steve Chercover – D.A. Davidson: Well, and then we had the pricing increase in Q4, which was a – evidently, a surcharge or an add – or given the cost increases and I think that rolled off in December. But do we still see prices going up substantially on specialty fibers from $13.39.

Yes. We do. We still prices going up substantially. Steve Chercover – D.A. Davidson: And can you quantify that as a 10% increase or–?

Well, I indicated before that, in one of the questions I think from Claudia, the range is pretty significant, from single digits all the way above the 23%. But if we had to put a number, this is only on the specialty side, would be in the ballpark of 15%.

But that’s a year-over-year–

Average.

Average, not from a point in time there, Steve. Steve Chercover – D.A. Davidson: 15%, yes. Okay. Got it. And my only other question, it appeared to me that depreciation on a per unit basis in specialty fibers was also higher. Can you just explain that?

Which period are you comparing to? Steve Chercover – D.A. Davidson: In the fourth quarter.

In the fourth quarter, the only issue I could think of from the top of my head is we had about $1 million write off, if you will, for a particular asset that’s being taken out of service. But other than that, that’s shipped. Steve Chercover – D.A. Davidson: So there were no investments that are being amortized that would cause, what appear to me, to be a bump up in the per unit depreciation?

No.

Hans is right. We took some assets out at the end of the year. Steve Chercover – D.A. Davidson: Okay. Thank you.

At this time, there are no further questions.

All right. Well I’d like to thank everybody for joining us. And for follow-up questions, as usual, please contact Carl Kraus. Thank you.

This does conclude today’s conference. Thank you for attending. You may disconnect at this time.