|
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þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
|
98-0526415
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. employer identification number)
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111 Duke Street, Suite 5000; Montréal, Quebec; Canada H3C 2M1
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(Address of principal executive offices) (Zip Code)
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(514) 875-2160
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(Registrant’s telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since last report)
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Large accelerated filer
¨
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Accelerated filer
þ
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Non-accelerated filer
¨
(Do not check if a smaller reporting company)
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Smaller reporting company
¨
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Emerging growth company
¨
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Page
Number
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PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements:
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PART II. OTHER INFORMATION
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PART I.
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FINANCIAL INFORMATION
|
ITEM 1.
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FINANCIAL STATEMENTS
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
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2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
|
|
||||
Sales
|
$
|
885
|
|
|
$
|
888
|
|
|
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$
|
2,615
|
|
|
$
|
2,656
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of sales, excluding depreciation, amortization and distribution costs
|
|
624
|
|
|
|
681
|
|
|
|
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1,936
|
|
|
|
2,026
|
|
|
Depreciation and amortization
|
|
52
|
|
|
|
51
|
|
|
|
|
153
|
|
|
|
157
|
|
|
Distribution costs
|
|
110
|
|
|
|
109
|
|
|
|
|
328
|
|
|
|
331
|
|
|
Selling, general and administrative expenses
|
|
43
|
|
|
|
37
|
|
|
|
|
123
|
|
|
|
115
|
|
|
Closure costs, impairment and other related charges
|
|
10
|
|
|
|
—
|
|
|
|
|
82
|
|
|
|
37
|
|
|
Net gain on disposition of assets
|
|
(2
|
)
|
|
|
—
|
|
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
Operating income (loss)
|
|
48
|
|
|
|
10
|
|
|
|
|
(5
|
)
|
|
|
(8
|
)
|
|
Interest expense
|
|
(13
|
)
|
|
|
(10
|
)
|
|
|
|
(36
|
)
|
|
|
(29
|
)
|
|
Other income, net
|
|
6
|
|
|
|
1
|
|
|
|
|
11
|
|
|
|
14
|
|
|
Income (loss) before income taxes
|
|
41
|
|
|
|
1
|
|
|
|
|
(30
|
)
|
|
|
(23
|
)
|
|
Income tax (provision) benefit
|
|
(15
|
)
|
|
|
14
|
|
|
|
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(63
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)
|
|
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(9
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)
|
|
Net income (loss) including noncontrolling interests
|
|
26
|
|
|
|
15
|
|
|
|
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(93
|
)
|
|
|
(32
|
)
|
|
Net income attributable to noncontrolling interests
|
|
(2
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)
|
|
|
(1
|
)
|
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
Net income (loss) attributable to Resolute Forest Products Inc.
|
$
|
24
|
|
|
$
|
14
|
|
|
|
$
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(97
|
)
|
|
$
|
(36
|
)
|
|
Net income (loss) per share attributable to Resolute Forest Products Inc. common shareholders:
|
|
|
|
|
|
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|
|
|
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||||
Basic
|
$
|
0.27
|
|
|
$
|
0.16
|
|
|
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$
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(1.07
|
)
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$
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(0.40
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)
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Diluted
|
|
0.26
|
|
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0.15
|
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(1.07
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)
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(0.40
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)
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Weighted-average number of Resolute Forest Products Inc. common shares outstanding:
|
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Basic
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90.5
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89.9
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90.4
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89.8
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Diluted
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91.6
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90.4
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90.4
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89.8
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
||||||||||||||
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2017
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2016
|
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2017
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2016
|
|
|
||||
Net income (loss) including noncontrolling interests
|
$
|
26
|
|
|
$
|
15
|
|
|
|
$
|
(93
|
)
|
|
$
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(32
|
)
|
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Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
|
|
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|
||||
Unamortized prior service credits
|
|
|
|
|
|
|
|
|
|
|
|
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|
||||
Change in unamortized prior service credits
|
|
(5
|
)
|
|
|
(4
|
)
|
|
|
|
(12
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)
|
|
|
(12
|
)
|
|
Income tax provision
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
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Change in unamortized prior service credits, net of tax
|
|
(5
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)
|
|
|
(4
|
)
|
|
|
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(12
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)
|
|
|
(12
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)
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Unamortized actuarial losses
|
|
|
|
|
|
|
|
|
|
|
|
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|
||||
Change in unamortized actuarial losses
|
|
(2
|
)
|
|
|
12
|
|
|
|
|
25
|
|
|
|
36
|
|
|
Income tax provision
|
|
(3
|
)
|
|
|
(3
|
)
|
|
|
|
(8
|
)
|
|
|
(9
|
)
|
|
Change in unamortized actuarial losses, net of tax
|
|
(5
|
)
|
|
|
9
|
|
|
|
|
17
|
|
|
|
27
|
|
|
Foreign currency translation
|
|
1
|
|
|
|
(1
|
)
|
|
|
|
1
|
|
|
|
—
|
|
|
Other comprehensive (loss) income, net of tax
|
|
(9
|
)
|
|
|
4
|
|
|
|
|
6
|
|
|
|
15
|
|
|
Comprehensive income (loss) including noncontrolling interests
|
|
17
|
|
|
|
19
|
|
|
|
|
(87
|
)
|
|
|
(17
|
)
|
|
Comprehensive income attributable to noncontrolling interests
|
|
(2
|
)
|
|
|
(1
|
)
|
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
Comprehensive income (loss) attributable to Resolute Forest Products Inc.
|
$
|
15
|
|
|
$
|
18
|
|
|
|
$
|
(91
|
)
|
|
$
|
(21
|
)
|
|
|
September 30,
2017 |
December 31,
2016 |
||||||
Assets
|
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
38
|
|
|
$
|
35
|
|
|
Accounts receivable, net:
|
|
|
|
|
|
|
||
Trade
|
|
377
|
|
|
|
358
|
|
|
Other
|
|
72
|
|
|
|
83
|
|
|
Inventories, net
|
|
555
|
|
|
|
570
|
|
|
Other current assets
|
|
53
|
|
|
|
35
|
|
|
Total current assets
|
|
1,095
|
|
|
|
1,081
|
|
|
Fixed assets, less accumulated depreciation of $1,568 and $1,415 as of September 30, 2017 and December 31, 2016, respectively
|
|
1,737
|
|
|
|
1,842
|
|
|
Amortizable intangible assets, less accumulated amortization of $20 and $16 as of September 30, 2017 and December 31, 2016, respectively
|
|
66
|
|
|
|
70
|
|
|
Goodwill
|
|
81
|
|
|
|
81
|
|
|
Deferred income tax assets
|
|
1,090
|
|
|
|
1,039
|
|
|
Other assets
|
|
163
|
|
|
|
164
|
|
|
Total assets
|
$
|
4,232
|
|
|
$
|
4,277
|
|
|
|
|
|
|
|
|
|
||
Liabilities and equity
|
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
|
||
Accounts payable and accrued liabilities
|
$
|
449
|
|
|
$
|
466
|
|
|
Current portion of long-term debt
|
|
—
|
|
|
|
1
|
|
|
Total current liabilities
|
|
449
|
|
|
|
467
|
|
|
Long-term debt, net of current portion
|
|
832
|
|
|
|
761
|
|
|
Pension and other postretirement benefit obligations
|
|
1,249
|
|
|
|
1,281
|
|
|
Deferred income tax liabilities
|
|
9
|
|
|
|
2
|
|
|
Other liabilities
|
|
64
|
|
|
|
55
|
|
|
Total liabilities
|
|
2,603
|
|
|
|
2,566
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
||
Equity:
|
|
|
|
|
|
|
||
Resolute Forest Products Inc. shareholders’ equity:
|
|
|
|
|
|
|
||
Common stock, $0.001 par value. 117.8 shares issued and 89.8 shares outstanding as of September 30, 2017 and December 31, 2016
|
|
—
|
|
|
|
—
|
|
|
Additional paid-in capital
|
|
3,783
|
|
|
|
3,775
|
|
|
Deficit
|
|
(1,307
|
)
|
|
|
(1,207
|
)
|
|
Accumulated other comprehensive loss
|
|
(749
|
)
|
|
|
(755
|
)
|
|
Treasury stock at cost, 28.0 shares as of September 30, 2017 and December 31, 2016
|
|
(120
|
)
|
|
|
(120
|
)
|
|
Total Resolute Forest Products Inc. shareholders’ equity
|
|
1,607
|
|
|
|
1,693
|
|
|
Noncontrolling interests
|
|
22
|
|
|
|
18
|
|
|
Total equity
|
|
1,629
|
|
|
|
1,711
|
|
|
Total liabilities and equity
|
$
|
4,232
|
|
|
$
|
4,277
|
|
|
|
Nine Months Ended September 30, 2017
|
|||||||||||||||||||||||||||
|
Resolute Forest Products Inc. Shareholders’ Equity
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Common
Stock
|
Additional
Paid-In
Capital
|
Deficit
|
Accumulated Other Comprehensive Loss
|
Treasury
Stock
|
Non-controlling
Interests
|
Total Equity
|
|||||||||||||||||||||
Balance as of December 31, 2016
|
$
|
—
|
|
|
$
|
3,775
|
|
|
$
|
(1,207
|
)
|
|
$
|
(755
|
)
|
|
$
|
(120
|
)
|
|
$
|
18
|
|
|
$
|
1,711
|
|
|
Share-based compensation costs for equity-classified awards
|
|
—
|
|
|
|
8
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8
|
|
|
Net (loss) income
|
|
—
|
|
|
|
—
|
|
|
|
(97
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
|
(93
|
)
|
|
Cumulative-effect adjustment upon deferred tax charge elimination (Note 10)
|
|
—
|
|
|
|
—
|
|
|
|
(3
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3
|
)
|
|
Other comprehensive income, net of tax
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6
|
|
|
Balance as of September 30, 2017
|
$
|
—
|
|
|
$
|
3,783
|
|
|
$
|
(1,307
|
)
|
|
$
|
(749
|
)
|
|
$
|
(120
|
)
|
|
$
|
22
|
|
|
$
|
1,629
|
|
|
|
Nine Months Ended September 30, 2016
|
|||||||||||||||||||||||||||
|
Resolute Forest Products Inc. Shareholders’ Equity
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Common
Stock
|
Additional
Paid-In
Capital
|
Deficit
|
Accumulated Other Comprehensive Loss
|
Treasury
Stock
|
Non-
controlling
Interests
|
Total Equity
|
|||||||||||||||||||||
Balance as of December 31, 2015
|
$
|
—
|
|
|
$
|
3,765
|
|
|
$
|
(1,126
|
)
|
|
$
|
(587
|
)
|
|
$
|
(120
|
)
|
|
$
|
13
|
|
|
$
|
1,945
|
|
|
Share-based compensation costs for equity-classified awards
|
|
—
|
|
|
|
8
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8
|
|
|
Net (loss) income
|
|
—
|
|
|
|
—
|
|
|
|
(36
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
|
(32
|
)
|
|
Other comprehensive income, net of tax
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15
|
|
|
Balance as of September 30, 2016
|
$
|
—
|
|
|
$
|
3,773
|
|
|
$
|
(1,162
|
)
|
|
$
|
(572
|
)
|
|
$
|
(120
|
)
|
|
$
|
17
|
|
|
$
|
1,936
|
|
|
|
Nine Months Ended
September 30, |
|||||||
|
2017
|
|
|
2016
|
|
|
||
Cash flows from operating activities:
|
|
|
|
|
|
|
||
Net loss including noncontrolling interests
|
$
|
(93
|
)
|
|
$
|
(32
|
)
|
|
Adjustments to reconcile net loss including noncontrolling interests to net cash provided by operating activities:
|
|
|
|
|
|
|
||
Share-based compensation
|
|
8
|
|
|
|
8
|
|
|
Depreciation and amortization
|
|
153
|
|
|
|
157
|
|
|
Closure costs, impairment and other related charges
|
|
68
|
|
|
|
36
|
|
|
Inventory write-downs related to closures
|
|
24
|
|
|
|
5
|
|
|
Deferred income taxes
|
|
60
|
|
|
|
5
|
|
|
Net pension contributions and other postretirement benefit payments
|
|
(94
|
)
|
|
|
(102
|
)
|
|
Net gain on disposition of assets
|
|
(2
|
)
|
|
|
(2
|
)
|
|
Gain on translation of foreign currency denominated deferred income taxes
|
|
(80
|
)
|
|
|
(53
|
)
|
|
Loss on translation of foreign currency denominated pension and other postretirement benefit obligations
|
|
65
|
|
|
|
44
|
|
|
Gain on disposition of equity method investment
|
|
—
|
|
|
|
(5
|
)
|
|
Net planned major maintenance payments
|
|
(6
|
)
|
|
|
(6
|
)
|
|
Changes in working capital:
|
|
|
|
|
|
|
||
Accounts receivable
|
|
(6
|
)
|
|
|
21
|
|
|
Inventories
|
|
(6
|
)
|
|
|
(27
|
)
|
|
Other current assets
|
|
(8
|
)
|
|
|
(3
|
)
|
|
Accounts payable and accrued liabilities
|
|
12
|
|
|
|
7
|
|
|
Other, net
|
|
4
|
|
|
|
(2
|
)
|
|
Net cash provided by operating activities
|
|
99
|
|
|
|
51
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
||
Cash invested in fixed assets
|
|
(136
|
)
|
|
|
(177
|
)
|
|
Disposition of assets
|
|
3
|
|
|
|
5
|
|
|
Increase in countervailing duty cash deposits on supercalendered paper
|
|
(17
|
)
|
|
|
(17
|
)
|
|
Increase in countervailing and anti-dumping duty cash deposits on softwood lumber
|
|
(18
|
)
|
|
|
—
|
|
|
Increase in restricted cash, net
|
|
(2
|
)
|
|
|
—
|
|
|
Decrease in deposit requirements for letters of credit, net
|
|
2
|
|
|
|
—
|
|
|
Net cash used in investing activities
|
|
(168
|
)
|
|
|
(189
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
||
Net borrowings under revolving credit facilities
|
|
70
|
|
|
|
90
|
|
|
Issuance of long-term debt
|
|
—
|
|
|
|
46
|
|
|
Payments of debt
|
|
(1
|
)
|
|
|
(1
|
)
|
|
Payments of financing and credit facility fees
|
|
—
|
|
|
|
(1
|
)
|
|
Net cash provided by financing activities
|
|
69
|
|
|
|
134
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
3
|
|
|
|
1
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
3
|
|
|
|
(3
|
)
|
|
Cash and cash equivalents:
|
|
|
|
|
|
|
||
Beginning of period
|
|
35
|
|
|
|
58
|
|
|
End of period
|
$
|
38
|
|
|
$
|
55
|
|
|
•
|
The majority of our revenue arises from contracts with customers in which the sale of goods is generally expected to be the main performance obligation. Accordingly, we expect to recognize revenue for most of our revenue streams at a point in time when control of the asset is transferred to the customer, generally upon delivery of the goods, consistent with our current practice. However, we continue to review our current contracts with customers for the identification of any additional performance obligations, which could be treated differently and affect our preliminary assessment.
|
•
|
Certain of our contracts with customers provide incentive offerings, including special pricing agreements, and other volume-based incentives. Currently, we recognize revenue from the sale of goods measured at the fair value of the consideration received or receivable, net of provisions for customer incentives. If revenue cannot be reliably measured, revenue recognition is deferred until the uncertainty is resolved. Such contract provisions give rise to variable consideration under ASU 2014-09, and will be required to be estimated at contract inception. ASU 2014-09 requires the estimated variable consideration to be constrained to prevent the over-recognition of revenue. We continue to assess individual contracts to determine the estimated variable consideration and related constraint.
|
•
|
ASU 2014-09 provides presentation and disclosure requirements, which are more detailed than under current GAAP. We are therefore in the process of developing procedures to collect the required information to comply with the additional required financial statement disclosures.
|
(Unaudited, in millions)
|
Impairment
of Assets
|
Accelerated
Depreciation
|
Pension and OPEB Plan Curtailments and Other
|
Severance
and Other
Costs
|
Total
|
|||||||||||||||
Pulp mill in Coosa Pines, Alabama
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Third quarter
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
First nine months
|
|
55
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
55
|
|
|
Permanent closures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Paper machine in Catawba, South Carolina
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Third quarter
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
|
|
—
|
|
|
|
2
|
|
|
First nine months
|
|
5
|
|
|
|
—
|
|
|
|
2
|
|
|
|
4
|
|
|
|
11
|
|
|
Paper machines in Calhoun, Tennessee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Third quarter
|
|
—
|
|
|
|
6
|
|
|
|
—
|
|
|
|
2
|
|
|
|
8
|
|
|
First nine months
|
|
—
|
|
|
|
6
|
|
|
|
—
|
|
|
|
2
|
|
|
|
8
|
|
|
Paper mill in Mokpo, South Korea
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Third quarter
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
First nine months
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7
|
|
|
|
7
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Third quarter
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
First nine months
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
|
1
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Third quarter
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
10
|
|
|
First nine months
|
|
60
|
|
|
|
6
|
|
|
|
2
|
|
|
|
14
|
|
|
|
82
|
|
|
(1)
|
As a result of the continued deterioration of actual and projected cash flows, we recorded long-lived asset impairment charges of $55 million for the nine months ended September 30, 2017, to reduce the carrying value of the assets to their estimated fair value, which was determined using the market approach, by reference to market transaction prices for similar assets. The fair value measurement is considered a Level 3 measurement due to the significance of its unobservable inputs.
|
(Unaudited, in millions)
|
Accelerated
Depreciation
|
Severance
and Other
Costs
|
Total
|
|||||||||
Permanent closure
|
|
|
|
|
|
|
|
|
|
|||
Paper machine in Augusta, Georgia
|
|
|
|
|
|
|
|
|
|
|
|
|
Third quarter
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
First nine months
|
|
32
|
|
|
|
4
|
|
|
|
36
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|||
Third quarter
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
First nine months
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|||
Third quarter
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
First nine months
|
|
33
|
|
|
|
4
|
|
|
|
37
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions)
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
|
|
||||
Foreign exchange gain
|
$
|
7
|
|
|
$
|
—
|
|
|
|
$
|
10
|
|
|
$
|
3
|
|
|
Gain on disposition of equity method investment
(1)
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
5
|
|
|
Miscellaneous (expense) income
|
|
(1
|
)
|
|
|
1
|
|
|
|
|
1
|
|
|
|
6
|
|
|
|
$
|
6
|
|
|
$
|
1
|
|
|
|
$
|
11
|
|
|
$
|
14
|
|
|
(1)
|
On February 1, 2016, we sold for total consideration of
$5 million
our interest in Produits Forestiers Petit-Paris Inc., an unconsolidated entity located in Saint-Ludger-de-Milot, Quebec, in which we had a
50%
interest, resulting in a gain on disposition of
$5 million
.
|
(Unaudited, in millions)
|
Unamortized Prior Service Credits
|
Unamortized Actuarial Losses
|
Foreign
Currency
Translation
|
Total
|
||||||||||||
Balance as of December 31, 2016
|
$
|
67
|
|
|
$
|
(819
|
)
|
|
$
|
(3
|
)
|
|
$
|
(755
|
)
|
|
Other comprehensive (loss) income before reclassifications
|
|
—
|
|
|
|
(15
|
)
|
|
|
1
|
|
|
|
(14
|
)
|
|
Amounts reclassified from accumulated other comprehensive loss
(1)
|
|
(12
|
)
|
|
|
32
|
|
|
|
—
|
|
|
|
20
|
|
|
Net current period other comprehensive (loss) income
|
|
(12
|
)
|
|
|
17
|
|
|
|
1
|
|
|
|
6
|
|
|
Balance as of September 30, 2017
|
$
|
55
|
|
|
$
|
(802
|
)
|
|
$
|
(2
|
)
|
|
$
|
(749
|
)
|
|
(1)
|
See the table below for details about these reclassifications.
|
(Unaudited, in millions)
|
Amounts Reclassified From Accumulated Other Comprehensive Loss
|
Affected Line in the Consolidated Statements of Operations
|
|||
Unamortized Prior Service Credits
|
|
|
|
|
|
Amortization of prior service credits
|
$
|
(11
|
)
|
|
Cost of sales, excluding depreciation, amortization and distribution costs
(1)
|
Curtailment gain
|
|
(1
|
)
|
|
Closure costs, impairment and other related charges
(1)
|
|
|
—
|
|
|
Income tax (provision) benefit
|
|
$
|
(12
|
)
|
|
Net of tax
|
Unamortized Actuarial Losses
|
|
|
|
|
|
Amortization of actuarial losses
|
$
|
38
|
|
|
Cost of sales, excluding depreciation, amortization and distribution costs
(1)
|
Curtailment loss
|
|
1
|
|
|
Closure costs, impairment and other related charges
(1)
|
Settlement loss
|
|
1
|
|
|
Cost of sales, excluding depreciation, amortization and distribution costs
(1)
|
|
|
(8
|
)
|
|
Income tax (provision) benefit
|
|
$
|
32
|
|
|
Net of tax
|
Total Reclassifications
|
$
|
20
|
|
|
Net of tax
|
(1)
|
These items are included in the computation of net periodic benefit cost related to our pension and other postretirement benefit (“OPEB”) plans summarized in
Note 9, “Employee Benefit Plans
.”
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions, except per share amounts)
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
|
|
||||
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) attributable to Resolute Forest Products Inc.
|
$
|
24
|
|
|
$
|
14
|
|
|
|
$
|
(97
|
)
|
|
$
|
(36
|
)
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic weighted-average number of Resolute Forest Products Inc. common shares outstanding
|
|
90.5
|
|
|
|
89.9
|
|
|
|
|
90.4
|
|
|
|
89.8
|
|
|
Dilutive impact of nonvested stock unit awards
|
|
1.1
|
|
|
|
0.5
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Diluted weighted-average number of Resolute Forest Products Inc. common shares outstanding
|
|
91.6
|
|
|
|
90.4
|
|
|
|
|
90.4
|
|
|
|
89.8
|
|
|
Net income (loss) per share attributable to Resolute Forest Products Inc. common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
0.27
|
|
|
$
|
0.16
|
|
|
|
$
|
(1.07
|
)
|
|
$
|
(0.40
|
)
|
|
Diluted
|
$
|
0.26
|
|
|
$
|
0.15
|
|
|
|
$
|
(1.07
|
)
|
|
$
|
(0.40
|
)
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||
(Unaudited, in millions)
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
|
|
Stock options
|
1.4
|
|
|
1.5
|
|
|
|
1.4
|
|
|
1.5
|
|
|
Stock unit awards
|
—
|
|
|
—
|
|
|
|
4.3
|
|
|
2.2
|
|
|
(Unaudited, in millions)
|
September 30,
2017 |
December 31,
2016 |
||||||
Raw materials
|
$
|
111
|
|
|
$
|
126
|
|
|
Work in process
|
|
36
|
|
|
|
45
|
|
|
Finished goods
|
|
205
|
|
|
|
183
|
|
|
Mill stores and other supplies
|
|
203
|
|
|
|
216
|
|
|
|
$
|
555
|
|
|
$
|
570
|
|
|
(Unaudited, in millions)
|
September 30,
2017 |
December 31,
2016 |
||||||
Trade accounts payable
|
$
|
325
|
|
|
$
|
346
|
|
|
Payroll, bonuses and severance payable
|
|
56
|
|
|
|
51
|
|
|
Accrued interest
|
|
14
|
|
|
|
5
|
|
|
Pension and other postretirement benefit obligations
|
|
18
|
|
|
|
17
|
|
|
Book overdrafts
|
|
—
|
|
|
|
13
|
|
|
Income and other taxes payable
|
|
9
|
|
|
|
7
|
|
|
Environmental liabilities
|
|
2
|
|
|
|
5
|
|
|
Other
|
|
25
|
|
|
|
22
|
|
|
|
$
|
449
|
|
|
$
|
466
|
|
|
(Unaudited, in millions)
|
September 30,
2017 |
December 31,
2016 |
||||||
5.875% senior notes due 2023:
|
|
|
|
|
|
|
||
Principal amount
|
$
|
600
|
|
|
$
|
600
|
|
|
Deferred financing costs
|
|
(5
|
)
|
|
|
(6
|
)
|
|
Unamortized discount
|
|
(4
|
)
|
|
|
(4
|
)
|
|
Total senior notes due 2023
|
|
591
|
|
|
|
590
|
|
|
Term loan due 2025
|
|
46
|
|
|
|
46
|
|
|
Borrowings under revolving credit facilities
|
|
195
|
|
|
|
125
|
|
|
Capital lease obligation
|
|
—
|
|
|
|
1
|
|
|
Total debt
|
|
832
|
|
|
|
762
|
|
|
Less: Current portion of long-term debt
|
|
—
|
|
|
|
(1
|
)
|
|
Long-term debt, net of current portion
|
$
|
832
|
|
|
$
|
761
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions)
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
|
|
||||
Service cost
|
$
|
6
|
|
|
$
|
5
|
|
|
|
$
|
15
|
|
|
$
|
15
|
|
|
Interest cost
|
|
51
|
|
|
|
54
|
|
|
|
|
149
|
|
|
|
161
|
|
|
Expected return on plan assets
|
|
(66
|
)
|
|
|
(62
|
)
|
|
|
|
(190
|
)
|
|
|
(185
|
)
|
|
Amortization of actuarial losses
|
|
14
|
|
|
|
13
|
|
|
|
|
42
|
|
|
|
40
|
|
|
Amortization of prior service credits
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
Net periodic benefit cost before special events
|
|
5
|
|
|
|
10
|
|
|
|
|
16
|
|
|
|
30
|
|
|
Curtailment, settlement and other losses
|
|
3
|
|
|
|
—
|
|
|
|
|
4
|
|
|
|
—
|
|
|
|
$
|
8
|
|
|
$
|
10
|
|
|
|
$
|
20
|
|
|
$
|
30
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions)
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
|
|
||||
Service cost
|
$
|
—
|
|
|
$
|
1
|
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
Interest cost
|
|
2
|
|
|
|
2
|
|
|
|
|
5
|
|
|
|
6
|
|
|
Amortization of actuarial gains
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
Amortization of prior service credits
|
|
(4
|
)
|
|
|
(4
|
)
|
|
|
|
(11
|
)
|
|
|
(11
|
)
|
|
Net periodic benefit cost before special events
|
|
(3
|
)
|
|
|
(2
|
)
|
|
|
|
(9
|
)
|
|
|
(8
|
)
|
|
Curtailment gain
|
|
(1
|
)
|
|
|
—
|
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
$
|
(4
|
)
|
|
$
|
(2
|
)
|
|
|
$
|
(10
|
)
|
|
$
|
(8
|
)
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions)
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
|
|
||||
Income (loss) before income taxes
|
$
|
41
|
|
|
$
|
1
|
|
|
|
$
|
(30
|
)
|
|
$
|
(23
|
)
|
|
Income tax (provision) benefit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expected income tax (provision) benefit
|
|
(14
|
)
|
|
|
—
|
|
|
|
|
11
|
|
|
|
8
|
|
|
Changes resulting from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Valuation allowance
(1)
|
|
(19
|
)
|
|
|
(20
|
)
|
|
|
|
(94
|
)
|
|
|
(65
|
)
|
|
Enactment of change in foreign tax rate
|
|
—
|
|
|
|
—
|
|
|
|
|
(12
|
)
|
|
|
—
|
|
|
Adjustments for unrecognized tax benefits
|
|
—
|
|
|
|
37
|
|
|
|
|
—
|
|
|
|
37
|
|
|
Foreign exchange
|
|
8
|
|
|
|
(5
|
)
|
|
|
|
9
|
|
|
|
(2
|
)
|
|
State income taxes, net of federal income tax benefit
|
|
1
|
|
|
|
2
|
|
|
|
|
7
|
|
|
|
5
|
|
|
Foreign tax rate differences
|
|
7
|
|
|
|
4
|
|
|
|
|
15
|
|
|
|
11
|
|
|
Research and development tax incentives
|
|
1
|
|
|
|
—
|
|
|
|
|
1
|
|
|
|
—
|
|
|
Other, net
|
|
1
|
|
|
|
(4
|
)
|
|
|
|
—
|
|
|
|
(3
|
)
|
|
|
$
|
(15
|
)
|
|
$
|
14
|
|
|
|
$
|
(63
|
)
|
|
$
|
(9
|
)
|
|
(1)
|
We recorded a valuation allowance of $19 million and $20 million for the three months ended September 30, 2017 and 2016, respectively, and $94 million and $65 million for the nine months ended September 30, 2017 and 2016, respectively, primarily related to our U.S. operations where we recognize a full valuation allowance against our net deferred income tax assets.
|
(Unaudited,
in millions)
|
Market Pulp
(1)
|
Tissue
|
Wood Products
(2)
|
Newsprint
|
Specialty
Papers
|
Segment
Total
|
Corporate
and Other
|
Total
|
||||||||||||||||||||||||
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Third quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2017
|
$
|
227
|
|
|
$
|
21
|
|
|
$
|
219
|
|
|
$
|
199
|
|
|
$
|
219
|
|
|
$
|
885
|
|
|
$
|
—
|
|
|
$
|
885
|
|
|
2016
|
|
198
|
|
|
|
23
|
|
|
|
168
|
|
|
|
242
|
|
|
|
257
|
|
|
|
888
|
|
|
|
—
|
|
|
|
888
|
|
|
First nine months
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2017
|
|
649
|
|
|
|
61
|
|
|
|
593
|
|
|
|
626
|
|
|
|
686
|
|
|
|
2,615
|
|
|
|
—
|
|
|
|
2,615
|
|
|
2016
|
|
619
|
|
|
|
70
|
|
|
|
432
|
|
|
|
756
|
|
|
|
779
|
|
|
|
2,656
|
|
|
|
—
|
|
|
|
2,656
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Third quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2017
|
$
|
8
|
|
|
$
|
2
|
|
|
$
|
9
|
|
|
$
|
16
|
|
|
$
|
11
|
|
|
$
|
46
|
|
|
$
|
6
|
|
|
$
|
52
|
|
|
2016
|
|
10
|
|
|
|
2
|
|
|
|
7
|
|
|
|
17
|
|
|
|
11
|
|
|
|
47
|
|
|
|
4
|
|
|
|
51
|
|
|
First nine months
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
2017
|
|
24
|
|
|
|
4
|
|
|
|
25
|
|
|
|
49
|
|
|
|
34
|
|
|
|
136
|
|
|
|
17
|
|
|
|
153
|
|
|
2016
|
|
28
|
|
|
|
6
|
|
|
|
23
|
|
|
|
56
|
|
|
|
34
|
|
|
|
147
|
|
|
|
10
|
|
|
|
157
|
|
|
Operating income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Third quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2017
|
$
|
19
|
|
|
$
|
(3
|
)
|
|
$
|
64
|
|
|
$
|
(6
|
)
|
|
$
|
7
|
|
|
$
|
81
|
|
|
$
|
(33
|
)
|
|
$
|
48
|
|
|
2016
|
|
4
|
|
|
|
(5
|
)
|
|
|
36
|
|
|
|
(8
|
)
|
|
|
(4
|
)
|
|
|
23
|
|
|
|
(13
|
)
|
|
|
10
|
|
|
First nine months
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2017
|
|
42
|
|
|
|
(4
|
)
|
|
|
129
|
|
|
|
(17
|
)
|
|
|
4
|
|
|
|
154
|
|
|
|
(159
|
)
|
|
|
(5
|
)
|
|
2016
|
|
33
|
|
|
|
(11
|
)
|
|
|
52
|
|
|
|
(17
|
)
|
|
|
16
|
|
|
|
73
|
|
|
|
(81
|
)
|
|
|
(8
|
)
|
|
(1)
|
Inter-segment sales of $9 million and $11 million for the three months ended September 30, 2017 and 2016, respectively, and $28 million and $26 million for the nine months ended September 30, 2017 and 2016, respectively, which are transacted at cost, were excluded from market pulp sales.
|
(2)
|
Wood products sales to our joint ventures, which are transacted at arm’s length negotiated prices, were $6 million and $4 million f
or the three months ended September 30, 2017 and 2016, respectively, and
$16 million
and
$14 million
for the nine months ended September 30, 2017 and 2016, respectively.
|
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
|
||||||||||||||||||||
For the Three Months Ended September 30, 2017
|
||||||||||||||||||||
(Unaudited, in millions)
|
Parent
|
Guarantor
Subsidiaries
|
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||||
Sales
|
$
|
—
|
|
|
$
|
716
|
|
|
$
|
570
|
|
|
$
|
(401
|
)
|
|
$
|
885
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of sales, excluding depreciation, amortization and distribution costs
|
|
—
|
|
|
|
669
|
|
|
|
357
|
|
|
|
(402
|
)
|
|
|
624
|
|
|
Depreciation and amortization
|
|
—
|
|
|
|
18
|
|
|
|
34
|
|
|
|
—
|
|
|
|
52
|
|
|
Distribution costs
|
|
—
|
|
|
|
39
|
|
|
|
71
|
|
|
|
—
|
|
|
|
110
|
|
|
Selling, general and administrative expenses
|
|
4
|
|
|
|
19
|
|
|
|
20
|
|
|
|
—
|
|
|
|
43
|
|
|
Closure costs, impairment and other related charges
|
|
—
|
|
|
|
10
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10
|
|
|
Net gain on disposition of assets
|
|
—
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
—
|
|
|
|
(2
|
)
|
|
Operating (loss) income
|
|
(4
|
)
|
|
|
(39
|
)
|
|
|
90
|
|
|
|
1
|
|
|
|
48
|
|
|
Interest expense
|
|
(23
|
)
|
|
|
(3
|
)
|
|
|
(3
|
)
|
|
|
16
|
|
|
|
(13
|
)
|
|
Other income, net
|
|
—
|
|
|
|
20
|
|
|
|
2
|
|
|
|
(16
|
)
|
|
|
6
|
|
|
Equity in income (loss) of subsidiaries
|
|
51
|
|
|
|
(3
|
)
|
|
|
—
|
|
|
|
(48
|
)
|
|
|
—
|
|
|
Income (loss) before income taxes
|
|
24
|
|
|
|
(25
|
)
|
|
|
89
|
|
|
|
(47
|
)
|
|
|
41
|
|
|
Income tax provision
|
|
—
|
|
|
|
—
|
|
|
|
(15
|
)
|
|
|
—
|
|
|
|
(15
|
)
|
|
Net income (loss) including noncontrolling interests
|
|
24
|
|
|
|
(25
|
)
|
|
|
74
|
|
|
|
(47
|
)
|
|
|
26
|
|
|
Net income attributable to noncontrolling interests
|
|
—
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
—
|
|
|
|
(2
|
)
|
|
Net income (loss) attributable to Resolute Forest Products Inc.
|
$
|
24
|
|
|
$
|
(25
|
)
|
|
$
|
72
|
|
|
$
|
(47
|
)
|
|
$
|
24
|
|
|
Comprehensive income (loss) attributable to Resolute Forest Products Inc.
|
$
|
15
|
|
|
$
|
(41
|
)
|
|
$
|
79
|
|
|
$
|
(38
|
)
|
|
$
|
15
|
|
|
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
|
||||||||||||||||||||
For the Nine Months Ended September 30, 2017
|
||||||||||||||||||||
(Unaudited, in millions)
|
Parent
|
Guarantor
Subsidiaries
|
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||||
Sales
|
$
|
—
|
|
|
$
|
2,131
|
|
|
$
|
1,660
|
|
|
$
|
(1,176
|
)
|
|
$
|
2,615
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of sales, excluding depreciation, amortization and distribution costs
|
|
—
|
|
|
|
2,028
|
|
|
|
1,084
|
|
|
|
(1,176
|
)
|
|
|
1,936
|
|
|
Depreciation and amortization
|
|
—
|
|
|
|
55
|
|
|
|
98
|
|
|
|
—
|
|
|
|
153
|
|
|
Distribution costs
|
|
—
|
|
|
|
119
|
|
|
|
210
|
|
|
|
(1
|
)
|
|
|
328
|
|
|
Selling, general and administrative expenses
|
|
18
|
|
|
|
53
|
|
|
|
52
|
|
|
|
—
|
|
|
|
123
|
|
|
Closure costs, impairment and other related charges
|
|
—
|
|
|
|
74
|
|
|
|
8
|
|
|
|
—
|
|
|
|
82
|
|
|
Net gain on disposition of assets
|
|
—
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
—
|
|
|
|
(2
|
)
|
|
Operating (loss) income
|
|
(18
|
)
|
|
|
(198
|
)
|
|
|
210
|
|
|
|
1
|
|
|
|
(5
|
)
|
|
Interest expense
|
|
(65
|
)
|
|
|
(7
|
)
|
|
|
(9
|
)
|
|
|
45
|
|
|
|
(36
|
)
|
|
Other income, net
|
|
—
|
|
|
|
53
|
|
|
|
3
|
|
|
|
(45
|
)
|
|
|
11
|
|
|
Equity in loss of subsidiaries
|
|
(14
|
)
|
|
|
(2
|
)
|
|
|
—
|
|
|
|
16
|
|
|
|
—
|
|
|
(Loss) income before income taxes
|
|
(97
|
)
|
|
|
(154
|
)
|
|
|
204
|
|
|
|
17
|
|
|
|
(30
|
)
|
|
Income tax provision
|
|
—
|
|
|
|
(1
|
)
|
|
|
(62
|
)
|
|
|
—
|
|
|
|
(63
|
)
|
|
Net (loss) income including noncontrolling interests
|
|
(97
|
)
|
|
|
(155
|
)
|
|
|
142
|
|
|
|
17
|
|
|
|
(93
|
)
|
|
Net income attributable to noncontrolling interests
|
|
—
|
|
|
|
—
|
|
|
|
(4
|
)
|
|
|
—
|
|
|
|
(4
|
)
|
|
Net (loss) income attributable to Resolute Forest Products Inc.
|
$
|
(97
|
)
|
|
$
|
(155
|
)
|
|
$
|
138
|
|
|
$
|
17
|
|
|
$
|
(97
|
)
|
|
Comprehensive (loss) income attributable to Resolute Forest Products Inc.
|
$
|
(91
|
)
|
|
$
|
(173
|
)
|
|
$
|
162
|
|
|
$
|
11
|
|
|
$
|
(91
|
)
|
|
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
|
||||||||||||||||||||
For the Three Months Ended September 30, 2016
|
||||||||||||||||||||
(Unaudited, in millions)
|
Parent
|
Guarantor
Subsidiaries
|
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||||
Sales
|
$
|
—
|
|
|
$
|
722
|
|
|
$
|
538
|
|
|
$
|
(372
|
)
|
|
$
|
888
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of sales, excluding depreciation, amortization and distribution costs
|
|
—
|
|
|
|
684
|
|
|
|
366
|
|
|
|
(369
|
)
|
|
|
681
|
|
|
Depreciation and amortization
|
|
—
|
|
|
|
19
|
|
|
|
32
|
|
|
|
—
|
|
|
|
51
|
|
|
Distribution costs
|
|
—
|
|
|
|
43
|
|
|
|
66
|
|
|
|
—
|
|
|
|
109
|
|
|
Selling, general and administrative expenses
|
|
5
|
|
|
|
14
|
|
|
|
18
|
|
|
|
—
|
|
|
|
37
|
|
|
Operating (loss) income
|
|
(5
|
)
|
|
|
(38
|
)
|
|
|
56
|
|
|
|
(3
|
)
|
|
|
10
|
|
|
Interest expense
|
|
(20
|
)
|
|
|
—
|
|
|
|
(3
|
)
|
|
|
13
|
|
|
|
(10
|
)
|
|
Other income, net
|
|
—
|
|
|
|
11
|
|
|
|
3
|
|
|
|
(13
|
)
|
|
|
1
|
|
|
Equity in income of subsidiaries
|
|
39
|
|
|
|
11
|
|
|
|
—
|
|
|
|
(50
|
)
|
|
|
—
|
|
|
Income (loss) before income taxes
|
|
14
|
|
|
|
(16
|
)
|
|
|
56
|
|
|
|
(53
|
)
|
|
|
1
|
|
|
Income tax benefit
|
|
—
|
|
|
|
—
|
|
|
|
13
|
|
|
|
1
|
|
|
|
14
|
|
|
Net income (loss) including noncontrolling interests
|
|
14
|
|
|
|
(16
|
)
|
|
|
69
|
|
|
|
(52
|
)
|
|
|
15
|
|
|
Net income attributable to noncontrolling interests
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
(1
|
)
|
|
Net income (loss) attributable to Resolute Forest Products Inc.
|
$
|
14
|
|
|
$
|
(16
|
)
|
|
$
|
68
|
|
|
$
|
(52
|
)
|
|
$
|
14
|
|
|
Comprehensive income (loss) attributable to Resolute Forest Products Inc.
|
$
|
18
|
|
|
$
|
(19
|
)
|
|
$
|
75
|
|
|
$
|
(56
|
)
|
|
$
|
18
|
|
|
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
|
||||||||||||||||||||
For the Nine Months Ended September 30, 2016
|
||||||||||||||||||||
(Unaudited, in millions)
|
Parent
|
Guarantor
Subsidiaries
|
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||||
Sales
|
$
|
—
|
|
|
$
|
2,193
|
|
|
$
|
1,591
|
|
|
$
|
(1,128
|
)
|
|
$
|
2,656
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of sales, excluding depreciation, amortization and distribution costs
|
|
—
|
|
|
|
2,067
|
|
|
|
1,084
|
|
|
|
(1,125
|
)
|
|
|
2,026
|
|
|
Depreciation and amortization
|
|
—
|
|
|
|
62
|
|
|
|
95
|
|
|
|
—
|
|
|
|
157
|
|
|
Distribution costs
|
|
—
|
|
|
|
126
|
|
|
|
205
|
|
|
|
—
|
|
|
|
331
|
|
|
Selling, general and administrative expenses
|
|
15
|
|
|
|
46
|
|
|
|
54
|
|
|
|
—
|
|
|
|
115
|
|
|
Closure costs, impairment and other related charges
|
|
—
|
|
|
|
37
|
|
|
|
—
|
|
|
|
—
|
|
|
|
37
|
|
|
Net gain on disposition of assets
|
|
—
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
—
|
|
|
|
(2
|
)
|
|
Operating (loss) income
|
|
(15
|
)
|
|
|
(145
|
)
|
|
|
155
|
|
|
|
(3
|
)
|
|
|
(8
|
)
|
|
Interest expense
|
|
(59
|
)
|
|
|
—
|
|
|
|
(9
|
)
|
|
|
39
|
|
|
|
(29
|
)
|
|
Other income, net
|
|
—
|
|
|
|
46
|
|
|
|
7
|
|
|
|
(39
|
)
|
|
|
14
|
|
|
Equity in income (loss) of subsidiaries
|
|
38
|
|
|
|
(11
|
)
|
|
|
—
|
|
|
|
(27
|
)
|
|
|
—
|
|
|
(Loss) income before income taxes
|
|
(36
|
)
|
|
|
(110
|
)
|
|
|
153
|
|
|
|
(30
|
)
|
|
|
(23
|
)
|
|
Income tax provision
|
|
—
|
|
|
|
(1
|
)
|
|
|
(9
|
)
|
|
|
1
|
|
|
|
(9
|
)
|
|
Net (loss) income including noncontrolling interests
|
|
(36
|
)
|
|
|
(111
|
)
|
|
|
144
|
|
|
|
(29
|
)
|
|
|
(32
|
)
|
|
Net income attributable to noncontrolling interests
|
|
—
|
|
|
|
—
|
|
|
|
(4
|
)
|
|
|
—
|
|
|
|
(4
|
)
|
|
Net (loss) income attributable to Resolute Forest Products Inc.
|
$
|
(36
|
)
|
|
$
|
(111
|
)
|
|
$
|
140
|
|
|
$
|
(29
|
)
|
|
$
|
(36
|
)
|
|
Comprehensive (loss) income attributable to Resolute Forest Products Inc.
|
$
|
(21
|
)
|
|
$
|
(120
|
)
|
|
$
|
164
|
|
|
$
|
(44
|
)
|
|
$
|
(21
|
)
|
|
CONDENSED CONSOLIDATING BALANCE SHEET
|
||||||||||||||||||||
As of September 30, 2017
|
||||||||||||||||||||
(Unaudited, in millions)
|
Parent
|
Guarantor
Subsidiaries
|
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
34
|
|
|
$
|
—
|
|
|
$
|
38
|
|
|
Accounts receivable, net
|
|
—
|
|
|
|
301
|
|
|
|
148
|
|
|
|
—
|
|
|
|
449
|
|
|
Accounts receivable from affiliates
|
|
1
|
|
|
|
505
|
|
|
|
632
|
|
|
|
(1,138
|
)
|
|
|
—
|
|
|
Inventories, net
|
|
—
|
|
|
|
260
|
|
|
|
306
|
|
|
|
(11
|
)
|
|
|
555
|
|
|
Note, advance and interest receivable from parent
|
|
—
|
|
|
|
536
|
|
|
|
—
|
|
|
|
(536
|
)
|
|
|
—
|
|
|
Notes and interest receivable from affiliates
|
|
—
|
|
|
|
47
|
|
|
|
—
|
|
|
|
(47
|
)
|
|
|
—
|
|
|
Other current assets
|
|
—
|
|
|
|
23
|
|
|
|
30
|
|
|
|
—
|
|
|
|
53
|
|
|
Total current assets
|
|
1
|
|
|
|
1,676
|
|
|
|
1,150
|
|
|
|
(1,732
|
)
|
|
|
1,095
|
|
|
Fixed assets, net
|
|
—
|
|
|
|
698
|
|
|
|
1,039
|
|
|
|
—
|
|
|
|
1,737
|
|
|
Amortizable intangible assets, net
|
|
—
|
|
|
|
13
|
|
|
|
53
|
|
|
|
—
|
|
|
|
66
|
|
|
Goodwill
|
|
—
|
|
|
|
81
|
|
|
|
—
|
|
|
|
—
|
|
|
|
81
|
|
|
Deferred income tax assets
|
|
—
|
|
|
|
—
|
|
|
|
1,087
|
|
|
|
3
|
|
|
|
1,090
|
|
|
Note receivable from parent
|
|
—
|
|
|
|
318
|
|
|
|
—
|
|
|
|
(318
|
)
|
|
|
—
|
|
|
Note receivable from affiliate
|
|
—
|
|
|
|
117
|
|
|
|
—
|
|
|
|
(117
|
)
|
|
|
—
|
|
|
Investments in consolidated subsidiaries and affiliates
|
|
3,907
|
|
|
|
2,066
|
|
|
|
—
|
|
|
|
(5,973
|
)
|
|
|
—
|
|
|
Other assets
|
|
—
|
|
|
|
89
|
|
|
|
74
|
|
|
|
—
|
|
|
|
163
|
|
|
Total assets
|
$
|
3,908
|
|
|
$
|
5,058
|
|
|
$
|
3,403
|
|
|
$
|
(8,137
|
)
|
|
$
|
4,232
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Accounts payable and accrued liabilities
|
$
|
14
|
|
|
$
|
186
|
|
|
$
|
249
|
|
|
$
|
—
|
|
|
$
|
449
|
|
|
Accounts payable to affiliates
|
|
505
|
|
|
|
632
|
|
|
|
1
|
|
|
|
(1,138
|
)
|
|
|
—
|
|
|
Note, advance and interest payable to subsidiaries
|
|
536
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(536
|
)
|
|
|
—
|
|
|
Notes and interest payable to affiliate
|
|
—
|
|
|
|
—
|
|
|
|
47
|
|
|
|
(47
|
)
|
|
|
—
|
|
|
Total current liabilities
|
|
1,055
|
|
|
|
818
|
|
|
|
297
|
|
|
|
(1,721
|
)
|
|
|
449
|
|
|
Long-term debt, net of current portion
|
|
591
|
|
|
|
241
|
|
|
|
—
|
|
|
|
—
|
|
|
|
832
|
|
|
Note payable to subsidiary
|
|
318
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(318
|
)
|
|
|
—
|
|
|
Note payable to affiliate
|
|
—
|
|
|
|
—
|
|
|
|
117
|
|
|
|
(117
|
)
|
|
|
—
|
|
|
Pension and other postretirement benefit obligations
|
|
—
|
|
|
|
381
|
|
|
|
868
|
|
|
|
—
|
|
|
|
1,249
|
|
|
Deferred income tax liabilities
|
|
—
|
|
|
|
2
|
|
|
|
7
|
|
|
|
—
|
|
|
|
9
|
|
|
Other liabilities
|
|
2
|
|
|
|
24
|
|
|
|
38
|
|
|
|
—
|
|
|
|
64
|
|
|
Total liabilities
|
|
1,966
|
|
|
|
1,466
|
|
|
|
1,327
|
|
|
|
(2,156
|
)
|
|
|
2,603
|
|
|
Total equity
|
|
1,942
|
|
|
|
3,592
|
|
|
|
2,076
|
|
|
|
(5,981
|
)
|
|
|
1,629
|
|
|
Total liabilities and equity
|
$
|
3,908
|
|
|
$
|
5,058
|
|
|
$
|
3,403
|
|
|
$
|
(8,137
|
)
|
|
$
|
4,232
|
|
|
CONDENSED CONSOLIDATING BALANCE SHEET
|
||||||||||||||||||||
As of December 31, 2016
|
||||||||||||||||||||
(Unaudited, in millions)
|
Parent
|
Guarantor
Subsidiaries
|
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
33
|
|
|
$
|
—
|
|
|
$
|
35
|
|
|
Accounts receivable, net
|
|
—
|
|
|
|
283
|
|
|
|
158
|
|
|
|
—
|
|
|
|
441
|
|
|
Accounts receivable from affiliates
|
|
—
|
|
|
|
479
|
|
|
|
395
|
|
|
|
(874
|
)
|
|
|
—
|
|
|
Inventories, net
|
|
—
|
|
|
|
259
|
|
|
|
323
|
|
|
|
(12
|
)
|
|
|
570
|
|
|
Note, advance and interest receivable from parent
|
|
—
|
|
|
|
373
|
|
|
|
—
|
|
|
|
(373
|
)
|
|
|
—
|
|
|
Notes and interest receivable from affiliates
|
|
—
|
|
|
|
54
|
|
|
|
—
|
|
|
|
(54
|
)
|
|
|
—
|
|
|
Other current assets
|
|
—
|
|
|
|
16
|
|
|
|
19
|
|
|
|
—
|
|
|
|
35
|
|
|
Total current assets
|
|
—
|
|
|
|
1,466
|
|
|
|
928
|
|
|
|
(1,313
|
)
|
|
|
1,081
|
|
|
Fixed assets, net
|
|
—
|
|
|
|
733
|
|
|
|
1,109
|
|
|
|
—
|
|
|
|
1,842
|
|
|
Amortizable intangible assets, net
|
|
—
|
|
|
|
14
|
|
|
|
56
|
|
|
|
—
|
|
|
|
70
|
|
|
Goodwill
|
|
—
|
|
|
|
81
|
|
|
|
—
|
|
|
|
—
|
|
|
|
81
|
|
|
Deferred income tax assets
|
|
—
|
|
|
|
—
|
|
|
|
1,036
|
|
|
|
3
|
|
|
|
1,039
|
|
|
Note receivable from parent
|
|
—
|
|
|
|
443
|
|
|
|
—
|
|
|
|
(443
|
)
|
|
|
—
|
|
|
Note receivable from affiliate
|
|
—
|
|
|
|
109
|
|
|
|
—
|
|
|
|
(109
|
)
|
|
|
—
|
|
|
Investments in consolidated subsidiaries and affiliates
|
|
3,918
|
|
|
|
2,068
|
|
|
|
—
|
|
|
|
(5,986
|
)
|
|
|
—
|
|
|
Other assets
|
|
—
|
|
|
|
62
|
|
|
|
102
|
|
|
|
—
|
|
|
|
164
|
|
|
Total assets
|
$
|
3,918
|
|
|
$
|
4,976
|
|
|
$
|
3,231
|
|
|
$
|
(7,848
|
)
|
|
$
|
4,277
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Accounts payable and accrued liabilities
|
$
|
5
|
|
|
$
|
222
|
|
|
$
|
239
|
|
|
$
|
—
|
|
|
$
|
466
|
|
|
Current portion of long-term debt
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
Accounts payable to affiliates
|
|
479
|
|
|
|
395
|
|
|
|
—
|
|
|
|
(874
|
)
|
|
|
—
|
|
|
Note, advance and interest payable to subsidiaries
|
|
373
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(373
|
)
|
|
|
—
|
|
|
Notes and interest payable to affiliate
|
|
—
|
|
|
|
—
|
|
|
|
54
|
|
|
|
(54
|
)
|
|
|
—
|
|
|
Total current liabilities
|
|
857
|
|
|
|
618
|
|
|
|
293
|
|
|
|
(1,301
|
)
|
|
|
467
|
|
|
Long-term debt, net of current portion
|
|
590
|
|
|
|
171
|
|
|
|
—
|
|
|
|
—
|
|
|
|
761
|
|
|
Note payable to subsidiary
|
|
443
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(443
|
)
|
|
|
—
|
|
|
Note payable to affiliate
|
|
—
|
|
|
|
—
|
|
|
|
109
|
|
|
|
(109
|
)
|
|
|
—
|
|
|
Pension and other postretirement benefit obligations
|
|
—
|
|
|
|
397
|
|
|
|
884
|
|
|
|
—
|
|
|
|
1,281
|
|
|
Deferred income tax liabilities
|
|
—
|
|
|
|
1
|
|
|
|
1
|
|
|
|
—
|
|
|
|
2
|
|
|
Other liabilities
|
|
—
|
|
|
|
24
|
|
|
|
31
|
|
|
|
—
|
|
|
|
55
|
|
|
Total liabilities
|
|
1,890
|
|
|
|
1,211
|
|
|
|
1,318
|
|
|
|
(1,853
|
)
|
|
|
2,566
|
|
|
Total equity
|
|
2,028
|
|
|
|
3,765
|
|
|
|
1,913
|
|
|
|
(5,995
|
)
|
|
|
1,711
|
|
|
Total liabilities and equity
|
$
|
3,918
|
|
|
$
|
4,976
|
|
|
$
|
3,231
|
|
|
$
|
(7,848
|
)
|
|
$
|
4,277
|
|
|
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
|
||||||||||||||||||||
For the Nine Months Ended September 30, 2017
|
||||||||||||||||||||
(Unaudited, in millions)
|
Parent
|
Guarantor
Subsidiaries
|
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||||
Net cash provided by operating activities
|
$
|
—
|
|
|
$
|
69
|
|
|
$
|
30
|
|
|
$
|
—
|
|
|
$
|
99
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash invested in fixed assets
|
|
—
|
|
|
|
(106
|
)
|
|
|
(30
|
)
|
|
|
—
|
|
|
|
(136
|
)
|
|
Disposition of assets
|
|
—
|
|
|
|
—
|
|
|
|
3
|
|
|
|
—
|
|
|
|
3
|
|
|
Increase in countervailing duty cash deposits on supercalendered paper
|
|
—
|
|
|
|
(17
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(17
|
)
|
|
Increase in countervailing and anti-dumping duty cash deposits on softwood lumber
|
|
—
|
|
|
|
(18
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(18
|
)
|
|
Increase in restricted cash, net
|
|
—
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
—
|
|
|
|
(2
|
)
|
|
Decrease in deposit requirements for letters of credit, net
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
|
|
—
|
|
|
|
2
|
|
|
Decrease in notes receivable from affiliate
|
|
—
|
|
|
|
5
|
|
|
|
—
|
|
|
|
(5
|
)
|
|
|
—
|
|
|
Net cash used in investing activities
|
|
—
|
|
|
|
(136
|
)
|
|
|
(27
|
)
|
|
|
(5
|
)
|
|
|
(168
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net borrowings under revolving credit facilities
|
|
—
|
|
|
|
70
|
|
|
|
—
|
|
|
|
—
|
|
|
|
70
|
|
|
Payments of debt
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
Decrease in notes payable to affiliate
|
|
—
|
|
|
|
—
|
|
|
|
(5
|
)
|
|
|
5
|
|
|
|
—
|
|
|
Net cash provided by (used in) financing activities
|
|
—
|
|
|
|
69
|
|
|
|
(5
|
)
|
|
|
5
|
|
|
|
69
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
—
|
|
|
|
—
|
|
|
|
3
|
|
|
|
—
|
|
|
|
3
|
|
|
Net increase in cash and cash equivalents
|
|
—
|
|
|
|
2
|
|
|
|
1
|
|
|
|
—
|
|
|
|
3
|
|
|
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Beginning of period
|
|
—
|
|
|
|
2
|
|
|
|
33
|
|
|
|
—
|
|
|
|
35
|
|
|
End of period
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
34
|
|
|
$
|
—
|
|
|
$
|
38
|
|
|
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
|
||||||||||||||||||||
For the Nine Months Ended September 30, 2016
|
||||||||||||||||||||
(Unaudited, in millions)
|
Parent
|
Guarantor
Subsidiaries
|
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||||
Net cash provided by operating activities
|
$
|
—
|
|
|
$
|
21
|
|
|
$
|
30
|
|
|
$
|
—
|
|
|
$
|
51
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash invested in fixed assets
|
|
—
|
|
|
|
(126
|
)
|
|
|
(51
|
)
|
|
|
—
|
|
|
|
(177
|
)
|
|
Disposition of assets
|
|
—
|
|
|
|
—
|
|
|
|
5
|
|
|
|
—
|
|
|
|
5
|
|
|
Increase in countervailing duty cash deposits on supercalendered paper
|
|
—
|
|
|
|
(17
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(17
|
)
|
|
Increase in notes receivable from affiliate
|
|
—
|
|
|
|
(4
|
)
|
|
|
—
|
|
|
|
4
|
|
|
|
—
|
|
|
Net cash used in investing activities
|
|
—
|
|
|
|
(147
|
)
|
|
|
(46
|
)
|
|
|
4
|
|
|
|
(189
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net borrowings under revolving credit facilities
|
|
—
|
|
|
|
90
|
|
|
|
—
|
|
|
|
—
|
|
|
|
90
|
|
|
Issuance of long-term debt
|
|
—
|
|
|
|
46
|
|
|
|
—
|
|
|
|
—
|
|
|
|
46
|
|
|
Payments of debt
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
Payments of financing and credit facility fees
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
Increase in notes payable to affiliate
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
|
(4
|
)
|
|
|
—
|
|
|
Net cash provided by financing activities
|
|
—
|
|
|
|
134
|
|
|
|
4
|
|
|
|
(4
|
)
|
|
|
134
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
—
|
|
|
|
8
|
|
|
|
(11
|
)
|
|
|
—
|
|
|
|
(3
|
)
|
|
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Beginning of period
|
|
—
|
|
|
|
13
|
|
|
|
45
|
|
|
|
—
|
|
|
|
58
|
|
|
End of period
|
$
|
—
|
|
|
$
|
21
|
|
|
$
|
34
|
|
|
$
|
—
|
|
|
$
|
55
|
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Competitive cost structure and diversified asset base
- Through our large-scale, efficient and integrated operations, competitive sources of energy and fiber, strategically located mills, and cost-effective management structure, we believe we are well positioned to compete in the global marketplace. We maintain a rigorous focus on reducing costs, optimizing production across our network, adjusting to market dynamics, as well as capitalizing on our access to international markets.
|
•
|
Conservative capital structure
- Our low debt and solid liquidity levels are key to our continued transformation to a more sustainable company. In order to maintain financial strength and flexibility, we continue to spend our capital in a disciplined, strategic and focused manner, concentrating on our most successful sites.
|
•
|
Strategic perspectives
- We pursue initiatives that improve our cost position, advance diversification, provide synergies or position us to expand into future growth markets. All are key to our long-term success. To that end, we take an opportunistic approach that aligns with our strategic plan and that we believe positions us favorably for the long-term evolution of the paper and forest products industry.
|
Three Months Ended September 30, 2017
|
Operating
Income
(Loss)
|
Net
Income
(Loss)
|
EPS
|
|
|
|||||||
(Unaudited, in millions, except per share amounts)
|
||||||||||||
GAAP, as reported
|
$
|
48
|
|
|
$
|
24
|
|
|
$
|
0.26
|
|
|
Adjustments for special items:
|
|
|
|
|
|
|
|
|
|
|||
Foreign exchange gain
|
|
—
|
|
|
|
(7
|
)
|
|
|
(0.08
|
)
|
|
Closure costs, impairment and other related charges
|
|
10
|
|
|
|
10
|
|
|
|
0.11
|
|
|
Inventory write-downs related to closures
|
|
11
|
|
|
|
11
|
|
|
|
0.12
|
|
|
Start-up costs
|
|
3
|
|
|
|
3
|
|
|
|
0.03
|
|
|
Net gain on disposition of assets
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
(0.02
|
)
|
|
Non-operating pension and OPEB credits
|
|
(4
|
)
|
|
|
(4
|
)
|
|
|
(0.04
|
)
|
|
Other expense, net
|
|
—
|
|
|
|
1
|
|
|
|
0.01
|
|
|
Income tax effect of special items
|
|
—
|
|
|
|
(5
|
)
|
|
|
(0.05
|
)
|
|
Adjusted for special items
(1)
|
$
|
66
|
|
|
$
|
31
|
|
|
$
|
0.34
|
|
|
Three Months Ended September 30, 2016
|
Operating
Income
(Loss)
|
Net
Income
(Loss)
|
EPS
|
|
|
|||||||
(Unaudited, in millions, except per share amounts)
|
||||||||||||
GAAP, as reported
|
$
|
10
|
|
|
$
|
14
|
|
|
$
|
0.15
|
|
|
Adjustments for special items:
|
|
|
|
|
|
|
|
|
|
|||
Start-up costs
|
|
1
|
|
|
|
1
|
|
|
|
0.01
|
|
|
Non-operating pension and OPEB costs
|
|
2
|
|
|
|
2
|
|
|
|
0.03
|
|
|
Other income, net
|
|
—
|
|
|
|
(1
|
)
|
|
|
(0.01
|
)
|
|
Income tax effect of special items
|
|
—
|
|
|
|
(1
|
)
|
|
|
(0.01
|
)
|
|
Adjusted for special items
(1)
|
$
|
13
|
|
|
$
|
15
|
|
|
$
|
0.17
|
|
|
(1)
|
Operating income (loss), net income (loss) and net income (loss) per share (or “
EPS
”), in each case as adjusted for special items, are not financial measures recognized under generally accepted accounting principles (or “
GAAP
”). We calculate operating income (loss), as adjusted for special items, as operating income (loss) from our Consolidated Statements of Operations, adjusted for items such as closure costs, impairment and other related charges, inventory write-downs related to closures, start-up costs, gains and losses on disposition of assets, non-operating pension and OPEB costs and credits, and other charges or credits that are excluded from our segment’s performance from GAAP operating income (loss). We calculate net income (loss), as adjusted for special items, as net income (loss) from our Consolidated Statements of Operations, adjusted for the same special items applied to operating income (loss), in addition to foreign exchange gains and losses, other income (expense), net, and the income tax effect of the special items. EPS, as adjusted for special items, is calculated as net income (loss), as adjusted for special items, per diluted share. We believe that using these non-GAAP measures is useful because they are consistent with the indicators management uses internally to measure the Company’s performance, and it allows the reader to more easily compare our operations and financial performance from period to period. Operating income (loss), net income (loss) and EPS, in each case as adjusted for special items, are internal measures, and therefore may not be comparable to those of other companies. These non-GAAP measures should not be viewed as substitutes to financial measures determined under GAAP.
|
Nine Months Ended September 30, 2017
|
Operating
Income
(Loss)
|
Net
Income
(Loss)
|
EPS
|
|
|
|||||||
(Unaudited, in millions, except per share amounts)
|
||||||||||||
GAAP, as reported
|
$
|
(5
|
)
|
|
$
|
(97
|
)
|
|
$
|
(1.07
|
)
|
|
Adjustments for special items:
|
|
|
|
|
|
|
|
|
|
|||
Foreign exchange gain
|
|
—
|
|
|
|
(10
|
)
|
|
|
(0.11
|
)
|
|
Closure costs, impairment and other related charges
|
|
82
|
|
|
|
82
|
|
|
|
0.91
|
|
|
Inventory write-downs related to closures
|
|
24
|
|
|
|
24
|
|
|
|
0.26
|
|
|
Start-up costs
|
|
18
|
|
|
|
18
|
|
|
|
0.20
|
|
|
Net gain on disposition of assets
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
(0.02
|
)
|
|
Non-operating pension and OPEB credits
|
|
(8
|
)
|
|
|
(8
|
)
|
|
|
(0.09
|
)
|
|
Other income, net
|
|
—
|
|
|
|
(1
|
)
|
|
|
(0.01
|
)
|
|
Income tax effect of special items
|
|
—
|
|
|
|
(8
|
)
|
|
|
(0.09
|
)
|
|
Adjusted for special items
(1)
|
$
|
109
|
|
|
$
|
(2
|
)
|
|
$
|
(0.02
|
)
|
|
Nine Months Ended September 30, 2016
|
Operating
Income
(Loss)
|
Net
Income
(Loss)
|
EPS
|
|
|
|||||||
(Unaudited, in millions, except per share amounts)
|
||||||||||||
GAAP, as reported
|
$
|
(8
|
)
|
|
$
|
(36
|
)
|
|
$
|
(0.40
|
)
|
|
Adjustments for special items:
|
|
|
|
|
|
|
|
|
|
|||
Foreign exchange gain
|
|
—
|
|
|
|
(3
|
)
|
|
|
(0.04
|
)
|
|
Closure costs, impairment and other related charges
|
|
37
|
|
|
|
37
|
|
|
|
0.41
|
|
|
Inventory write-downs related to closures
|
|
5
|
|
|
|
5
|
|
|
|
0.06
|
|
|
Start-up costs
|
|
5
|
|
|
|
5
|
|
|
|
0.06
|
|
|
Net gain on disposition of assets
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
(0.02
|
)
|
|
Non-operating pension and OPEB costs
|
|
6
|
|
|
|
6
|
|
|
|
0.07
|
|
|
Other income, net
|
|
—
|
|
|
|
(11
|
)
|
|
|
(0.13
|
)
|
|
Income tax effect of special items
|
|
—
|
|
|
|
(6
|
)
|
|
|
(0.07
|
)
|
|
Adjusted for special items
(1)
|
$
|
43
|
|
|
$
|
(5
|
)
|
|
$
|
(0.06
|
)
|
|
(1)
|
Operating income (loss), net income (loss) and EPS, in each case as adjusted for special items, are non-GAAP financial measures. For more information on the calculation and reasons we include these measures, see note 1 under “
Overview –
Third Quarter
Overview
”
above.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions, except per share amounts)
|
2017
|
2016
|
|
2017
|
2016
|
||||||||||||
Sales
|
$
|
885
|
|
|
$
|
888
|
|
|
|
$
|
2,615
|
|
|
$
|
2,656
|
|
|
Operating income (loss) per segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Market pulp
|
|
19
|
|
|
|
4
|
|
|
|
|
42
|
|
|
|
33
|
|
|
Tissue
|
|
(3
|
)
|
|
|
(5
|
)
|
|
|
|
(4
|
)
|
|
|
(11
|
)
|
|
Wood products
|
|
64
|
|
|
|
36
|
|
|
|
|
129
|
|
|
|
52
|
|
|
Newsprint
|
|
(6
|
)
|
|
|
(8
|
)
|
|
|
|
(17
|
)
|
|
|
(17
|
)
|
|
Specialty papers
|
|
7
|
|
|
|
(4
|
)
|
|
|
|
4
|
|
|
|
16
|
|
|
Segment total
|
|
81
|
|
|
|
23
|
|
|
|
|
154
|
|
|
|
73
|
|
|
Corporate and other
|
|
(33
|
)
|
|
|
(13
|
)
|
|
|
|
(159
|
)
|
|
|
(81
|
)
|
|
Operating income (loss)
|
|
48
|
|
|
|
10
|
|
|
|
|
(5
|
)
|
|
|
(8
|
)
|
|
Net income (loss) attributable to Resolute Forest Products Inc.
|
|
24
|
|
|
|
14
|
|
|
|
|
(97
|
)
|
|
|
(36
|
)
|
|
Net income (loss) per common share attributable to Resolute Forest Products Inc. common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
0.27
|
|
|
$
|
0.16
|
|
|
|
$
|
(1.07
|
)
|
|
$
|
(0.40
|
)
|
|
Diluted
|
|
0.26
|
|
|
|
0.15
|
|
|
|
|
(1.07
|
)
|
|
|
(0.40
|
)
|
|
Adjusted EBITDA
(1)
|
$
|
118
|
|
|
$
|
64
|
|
|
|
$
|
262
|
|
|
$
|
200
|
|
|
(Unaudited, in millions)
|
September 30,
2017 |
December 31,
2016 |
||||||
Cash and cash equivalents
|
$
|
38
|
|
|
$
|
35
|
|
|
Total assets
|
|
4,232
|
|
|
|
4,277
|
|
|
(1)
|
Earnings before interest expense, income taxes, and depreciation and amortization, or “
EBITDA
” and adjusted EBITDA are not financial measures recognized under GAAP. EBITDA is calculated as net income (loss) including noncontrolling interests from the Consolidated Statements of Operations, adjusted for interest expense, income taxes, and depreciation and amortization. Adjusted EBITDA means EBITDA, excluding special items, such as foreign exchange gains and losses, closure costs, impairment and other related charges, inventory write-downs related to closures, start-up costs, gains and losses on disposition of assets, non-operating pension and OPEB costs and credits, and other charges or credits. We believe that using non-GAAP measures such as EBITDA and adjusted EBITDA is useful because they are consistent with the indicators management uses internally to measure the Company’s performance and it allows the reader to more easily compare our operations and financial performance from period to period. EBITDA and adjusted EBITDA are internal measures, and therefore may not be comparable to those of other companies. These non-GAAP measures should not be viewed as substitutes to financial measures determined under GAAP.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions)
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
|
|
||||
Net income (loss) including noncontrolling interests
|
$
|
26
|
|
|
$
|
15
|
|
|
|
$
|
(93
|
)
|
|
$
|
(32
|
)
|
|
Interest expense
|
|
13
|
|
|
|
10
|
|
|
|
|
36
|
|
|
|
29
|
|
|
Income tax provision (benefit)
|
|
15
|
|
|
|
(14
|
)
|
|
|
|
63
|
|
|
|
9
|
|
|
Depreciation and amortization
|
|
52
|
|
|
|
51
|
|
|
|
|
153
|
|
|
|
157
|
|
|
EBITDA
|
$
|
106
|
|
|
$
|
62
|
|
|
|
$
|
159
|
|
|
$
|
163
|
|
|
Foreign exchange gain
|
|
(7
|
)
|
|
|
—
|
|
|
|
|
(10
|
)
|
|
|
(3
|
)
|
|
Closure costs, impairment and other related charges
|
|
10
|
|
|
|
—
|
|
|
|
|
82
|
|
|
|
37
|
|
|
Inventory write-downs related to closures
|
|
11
|
|
|
|
—
|
|
|
|
|
24
|
|
|
|
5
|
|
|
Start-up costs
|
|
3
|
|
|
|
1
|
|
|
|
|
18
|
|
|
|
5
|
|
|
Net gain on disposition of assets
|
|
(2
|
)
|
|
|
—
|
|
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
Non-operating pension and OPEB (credits) costs
|
|
(4
|
)
|
|
|
2
|
|
|
|
|
(8
|
)
|
|
|
6
|
|
|
Other expense (income), net
|
|
1
|
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
|
|
(11
|
)
|
|
Adjusted EBITDA
|
$
|
118
|
|
|
$
|
64
|
|
|
|
$
|
262
|
|
|
$
|
200
|
|
|
•
|
the effect of capacity closures and restructuring initiatives ($23 million), including the permanent closure of a paper machine in Catawba, the permanent closure of our Mokpo paper mill, and the indefinite idling of our Thorold paper mill;
|
•
|
favorable chemical costs ($8 million), mostly as a result of grade mix following the permanent closure of a paper machine in Catawba; and
|
•
|
lower defined benefit pension and OPEB plans costs ($5 million), mostly due to lower interest costs, as a result of the lower discount rates;
|
•
|
write-downs of mill stores and other supplies ($11 million), primarily as a result of the permanent closure of two paper machines in Calhoun at the end of the third quarter of 2017; and
|
•
|
unfavorable fiber costs ($8 million), including higher stumpage fees in the province of Quebec.
|
•
|
write-downs of mill stores and other supplies ($24 million), primarily as a result of the permanent closures of two paper machines in Calhoun, a paper machine in Catawba, and our Mokpo paper mill, compared to write-downs of mill stores and other supplies recorded in the year-ago period ($5 million), primarily as a result of the permanent closure of a newsprint machine at our Augusta mill;
|
•
|
unfavorable fiber costs ($14 million), mostly due to higher recycled fiber prices and log costs, partly offset by favorable wood prices at U.S. mills and better usage;
|
•
|
lower contribution from our cogeneration assets that sell power externally ($6 million), in part due to the timing of outages, and our hydroelectric facilities ($5 million), due to capital programs on certain water wheels;
|
•
|
higher natural gas prices ($10 million);
|
•
|
start-up costs related to the Calhoun tissue manufacturing and converting facility ($14 million), compared to start-up costs incurred in the year-ago period ($4 million) for the continuous pulp digester project and tissue manufacturing and converting facility in Calhoun;
|
•
|
higher asset preservation costs ($5 million), primarily related to the indefinite idling of our Thorold paper mill; and
|
•
|
higher maintenance costs ($3 million);
|
•
|
the favorable effect of capacity closures and restructuring initiatives ($42 million), including the permanent closure of a paper machine in Catawba, the permanent closure of our Mokpo paper mill, the indefinite idling of our Thorold paper mill, and the permanent closure of a newsprint machine at our Augusta mill;
|
•
|
lower defined benefit pension and OPEB plans costs ($13 million), mostly due to lower interest costs, as a result of the lower discount rates; and
|
•
|
favorable chemical costs ($12 million), mostly as a result of grade mix following the permanent closure of a paper machine in Catawba.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions, except where otherwise stated)
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
|
|
||||
Sales
|
$
|
227
|
|
|
$
|
198
|
|
|
|
$
|
649
|
|
|
$
|
619
|
|
|
Operating income
(1)
|
|
19
|
|
|
|
4
|
|
|
|
|
42
|
|
|
|
33
|
|
|
EBITDA
(2)
|
|
27
|
|
|
|
14
|
|
|
|
|
66
|
|
|
|
61
|
|
|
(In thousands of metric tons)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shipments
|
|
348
|
|
|
|
323
|
|
|
|
|
1,037
|
|
|
|
1,020
|
|
|
Downtime
|
|
20
|
|
|
|
10
|
|
|
|
|
67
|
|
|
|
47
|
|
|
|
September 30,
|
|||||||
(Unaudited, in thousands of metric tons)
|
2017
|
2016
|
||||||
Finished goods inventory
|
|
100
|
|
|
|
100
|
|
|
(1)
|
Net income including noncontrolling interests
is equal to
operating income
in this segment.
|
(2)
|
EBITDA, a non-GAAP financial measure, is reconciled below. For more information on the calculation and reasons we include this measure, see note 1 under “
Results of Operations – Consolidated Results – Selected Financial Information
” above.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions)
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
|
|
||||
Net income including noncontrolling interests
|
$
|
19
|
|
|
$
|
4
|
|
|
|
$
|
42
|
|
|
$
|
33
|
|
|
Depreciation and amortization
|
|
8
|
|
|
|
10
|
|
|
|
|
24
|
|
|
|
28
|
|
|
EBITDA
|
|
27
|
|
|
|
14
|
|
|
|
|
66
|
|
|
|
61
|
|
|
•
|
higher fiber costs ($8 million), mostly related to higher recycled fiber prices;
|
•
|
higher natural gas prices ($4 million); and
|
•
|
lower contribution from our cogeneration assets in Saint-Félicien that sell power externally ($4 million) as a result of the annual maintenance outage in 2017, which had been deferred to October in 2016;
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions, except where otherwise stated)
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
|
|
||||
Sales
|
$
|
21
|
|
|
$
|
23
|
|
|
|
$
|
61
|
|
|
$
|
70
|
|
|
Operating loss
(1)
|
|
(3
|
)
|
|
|
(5
|
)
|
|
|
|
(4
|
)
|
|
|
(11
|
)
|
|
EBITDA
(2)
|
|
(1
|
)
|
|
|
(3
|
)
|
|
|
|
—
|
|
|
|
(5
|
)
|
|
(In thousands of short tons)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shipments
|
|
15
|
|
|
|
15
|
|
|
|
|
44
|
|
|
|
46
|
|
|
Downtime
|
|
1
|
|
|
|
—
|
|
|
|
|
1
|
|
|
|
—
|
|
|
|
September 30,
|
|||||||
(Unaudited, in thousands of short tons)
|
2017
|
2016
|
||||||
Finished goods inventory
|
|
10
|
|
|
|
4
|
|
|
(1)
|
Net loss including noncontrolling interests
is equal to
operating loss
in this segment.
|
(2)
|
EBITDA, a non-GAAP financial measure, is reconciled below. For more information on the calculation and reasons we include this measure, see note 1 under “
Results of Operations – Consolidated Results – Selected Financial Information
” above.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions)
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
|
|
||||
Net loss including noncontrolling interests
|
$
|
(3
|
)
|
|
$
|
(5
|
)
|
|
|
$
|
(4
|
)
|
|
$
|
(11
|
)
|
|
Depreciation and amortization
|
|
2
|
|
|
|
2
|
|
|
|
|
4
|
|
|
|
6
|
|
|
EBITDA
|
|
(1
|
)
|
|
|
(3
|
)
|
|
|
|
—
|
|
|
|
(5
|
)
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions, except where otherwise stated)
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
|
|
||||
Sales
|
$
|
219
|
|
|
$
|
168
|
|
|
|
$
|
593
|
|
|
$
|
432
|
|
|
Operating income
(1)
|
|
64
|
|
|
|
36
|
|
|
|
|
129
|
|
|
|
52
|
|
|
EBITDA
(2)
|
|
73
|
|
|
|
43
|
|
|
|
|
154
|
|
|
|
75
|
|
|
(In millions of board feet)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shipments
(3)
|
|
531
|
|
|
|
506
|
|
|
|
|
1,545
|
|
|
|
1,341
|
|
|
Downtime
|
|
32
|
|
|
|
28
|
|
|
|
|
112
|
|
|
|
172
|
|
|
|
September 30,
|
|||||||
(Unaudited, in millions of board feet)
|
2017
|
2016
|
||||||
Finished goods inventory
(3)
|
|
122
|
|
|
|
121
|
|
|
(1)
|
Net income including noncontrolling interests
is equal to
operating income
in this segment.
|
(2)
|
EBITDA, a non-GAAP financial measure, is reconciled below. For more information on the calculation and reasons we include this measure, see note 1 under “
Results of Operations – Consolidated Results – Selected Financial Information
” above.
|
(3)
|
Includes wood pellets measured by mass, converted to board feet using a density-based conversion ratio.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions)
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
|
|
||||
Net income including noncontrolling interests
|
$
|
64
|
|
|
$
|
36
|
|
|
|
$
|
129
|
|
|
$
|
52
|
|
|
Depreciation and amortization
|
|
9
|
|
|
|
7
|
|
|
|
|
25
|
|
|
|
23
|
|
|
EBITDA
|
|
73
|
|
|
|
43
|
|
|
|
|
154
|
|
|
|
75
|
|
|
•
|
higher fiber costs ($11 million), including higher stumpage fees in the province of Quebec and higher transportation costs;
|
•
|
higher maintenance, labor, as well as log yard and other related costs ($8 million); and
|
•
|
the recognition of tax credits in the year-ago period, in connection with infrastructure investments ($3 million).
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions, except where otherwise stated)
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
|
|
||||
Sales
|
$
|
199
|
|
|
$
|
242
|
|
|
|
$
|
626
|
|
|
$
|
756
|
|
|
Operating loss
(1)
|
|
(6
|
)
|
|
|
(8
|
)
|
|
|
|
(17
|
)
|
|
|
(17
|
)
|
|
EBITDA
(2)
|
|
10
|
|
|
|
9
|
|
|
|
|
32
|
|
|
|
39
|
|
|
(In thousands of metric tons)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shipments
|
|
388
|
|
|
|
470
|
|
|
|
|
1,228
|
|
|
|
1,499
|
|
|
Downtime
|
|
35
|
|
|
|
23
|
|
|
|
|
52
|
|
|
|
58
|
|
|
|
September 30,
|
|||||||
(Unaudited, in thousands of metric tons)
|
2017
|
2016
|
||||||
Finished goods inventory
|
|
98
|
|
|
|
105
|
|
|
(1)
|
Net loss including noncontrolling interests
is equal to
operating loss
in this segment.
|
(2)
|
EBITDA, a non-GAAP financial measure, is reconciled below. For more information on the calculation and reasons we include this measure, see note 1 under “
Results of Operations – Consolidated Results – Selected Financial Information
” above.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions)
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
|
|
||||
Net loss including noncontrolling interests
|
$
|
(6
|
)
|
|
$
|
(8
|
)
|
|
|
$
|
(17
|
)
|
|
$
|
(17
|
)
|
|
Depreciation and amortization
|
|
16
|
|
|
|
17
|
|
|
|
|
49
|
|
|
|
56
|
|
|
EBITDA
|
|
10
|
|
|
|
9
|
|
|
|
|
32
|
|
|
|
39
|
|
|
•
|
the favorable effect of capacity closures ($29 million), including the permanent closure of our Mokpo paper mill, the indefinite idling of our Thorold paper mill, and the permanent closure of a newsprint machine at our Augusta mill; and
|
•
|
lower fiber costs ($3 million);
|
•
|
higher power costs ($5 million);
|
•
|
unfavorable steam costs ($3 million), mostly due to higher natural gas prices; and
|
•
|
lower contribution from our cogeneration facility at Thunder Bay ($3 million), due to a more extensive planned maintenance outage in 2017.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions, except where otherwise stated)
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
|
|
||||
Sales
|
$
|
219
|
|
|
$
|
257
|
|
|
|
$
|
686
|
|
|
$
|
779
|
|
|
Operating income (loss)
(1)
|
|
7
|
|
|
|
(4
|
)
|
|
|
|
4
|
|
|
|
16
|
|
|
EBITDA
(2)
|
|
18
|
|
|
|
7
|
|
|
|
|
38
|
|
|
|
50
|
|
|
(In thousands of short tons)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shipments
|
|
333
|
|
|
|
384
|
|
|
|
|
1,046
|
|
|
|
1,159
|
|
|
Downtime
|
|
5
|
|
|
|
13
|
|
|
|
|
28
|
|
|
|
19
|
|
|
|
September 30,
|
|||||||
(Unaudited, in thousands of short tons)
|
2017
|
2016
|
||||||
Finished goods inventory
|
|
86
|
|
|
|
75
|
|
|
(1)
|
Net income (loss) including noncontrolling interests
is equal to
operating income (loss)
in this segment.
|
(2)
|
EBITDA, a non-GAAP financial measure, is reconciled below. For more information on the calculation and reasons we include this measure, see note 1 under “
Results of Operations – Consolidated Results – Selected Financial Information
” above.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions)
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
|
|
||||
Net income (loss) including noncontrolling interests
|
$
|
7
|
|
|
$
|
(4
|
)
|
|
|
$
|
4
|
|
|
$
|
16
|
|
|
Depreciation and amortization
|
|
11
|
|
|
|
11
|
|
|
|
|
34
|
|
|
|
34
|
|
|
EBITDA
|
|
18
|
|
|
|
7
|
|
|
|
|
38
|
|
|
|
50
|
|
|
•
|
the effect of restructuring initiatives in connection with the permanent closure of a paper machine in Catawba ($14 million);
|
•
|
favorable chemical costs ($6 million), mostly as a result of grade mix following the permanent closure of a paper machine in Catawba; and
|
•
|
lower maintenance costs ($2 million).
|
•
|
the positive impact of restructuring initiatives in connection with the permanent closure of a paper machine in Catawba ($14 million);
|
•
|
favorable chemical costs ($9 million), mostly as a result of grade mix following the permanent closure of a paper machine in Catawba;
|
•
|
lower power costs ($5 million), mostly price-related; and
|
•
|
favorable maintenance and fiber costs ($4 million);
|
•
|
lower internal hydroelectric generation ($5 million), due to capital programs on certain water wheels; and
|
•
|
higher natural gas prices ($4 million).
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions)
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
|
|
||||
Cost of sales, excluding depreciation, amortization and distribution costs
|
$
|
(11
|
)
|
|
$
|
(5
|
)
|
|
|
$
|
(37
|
)
|
|
$
|
(17
|
)
|
|
Depreciation and amortization
|
|
(6
|
)
|
|
|
(4
|
)
|
|
|
|
(17
|
)
|
|
|
(10
|
)
|
|
Selling, general and administrative expenses
|
|
(8
|
)
|
|
|
(4
|
)
|
|
|
|
(25
|
)
|
|
|
(19
|
)
|
|
Closure costs, impairment and other related charges
|
|
(10
|
)
|
|
|
—
|
|
|
|
|
(82
|
)
|
|
|
(37
|
)
|
|
Net gain on disposition of assets
|
|
2
|
|
|
|
—
|
|
|
|
|
2
|
|
|
|
2
|
|
|
Operating loss
|
$
|
(33
|
)
|
|
$
|
(13
|
)
|
|
|
$
|
(159
|
)
|
|
$
|
(81
|
)
|
|
Interest expense
|
|
(13
|
)
|
|
|
(10
|
)
|
|
|
|
(36
|
)
|
|
|
(29
|
)
|
|
Other income, net
|
|
6
|
|
|
|
1
|
|
|
|
|
11
|
|
|
|
14
|
|
|
Income tax (provision) benefit
|
|
(15
|
)
|
|
|
14
|
|
|
|
|
(63
|
)
|
|
|
(9
|
)
|
|
Net loss including noncontrolling interests
|
$
|
(55
|
)
|
|
$
|
(8
|
)
|
|
|
$
|
(247
|
)
|
|
$
|
(105
|
)
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions)
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
|
|
||||
Net loss including noncontrolling interests
|
$
|
(55
|
)
|
|
$
|
(8
|
)
|
|
|
$
|
(247
|
)
|
|
$
|
(105
|
)
|
|
Interest expense
|
|
13
|
|
|
|
10
|
|
|
|
|
36
|
|
|
|
29
|
|
|
Income tax provision (benefit)
|
|
15
|
|
|
|
(14
|
)
|
|
|
|
63
|
|
|
|
9
|
|
|
Depreciation and amortization
|
|
6
|
|
|
|
4
|
|
|
|
|
17
|
|
|
|
10
|
|
|
EBITDA
|
$
|
(21
|
)
|
|
$
|
(8
|
)
|
|
|
$
|
(131
|
)
|
|
$
|
(57
|
)
|
|
Foreign exchange gain
|
|
(7
|
)
|
|
|
—
|
|
|
|
|
(10
|
)
|
|
|
(3
|
)
|
|
Closure costs, impairment and other related charges
|
|
10
|
|
|
|
—
|
|
|
|
|
82
|
|
|
|
37
|
|
|
Inventory write-downs related to closures
|
|
11
|
|
|
|
—
|
|
|
|
|
24
|
|
|
|
5
|
|
|
Start-up costs
|
|
3
|
|
|
|
1
|
|
|
|
|
18
|
|
|
|
5
|
|
|
Net gain on disposition of assets
|
|
(2
|
)
|
|
|
—
|
|
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
Non-operating pension and OPEB (credits) costs
|
|
(4
|
)
|
|
|
2
|
|
|
|
|
(8
|
)
|
|
|
6
|
|
|
Other expense (income), net
|
|
1
|
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
|
|
(11
|
)
|
|
Adjusted EBITDA
|
$
|
(9
|
)
|
|
$
|
(6
|
)
|
|
|
$
|
(28
|
)
|
|
$
|
(20
|
)
|
|
•
|
write-downs of mill stores and other supplies ($11 million), primarily related to the permanent closure of two paper machines in Calhoun at the end of the third quarter of 2017;
|
•
|
start-up costs ($2 million) for the Calhoun tissue manufacturing and converting facility; and
|
•
|
asset preservation costs ($2 million), primarily related to the indefinite idling of our Thorold paper mill in the first quarter of 2017;
|
•
|
asset preservation costs ($2 million), primarily for the permanently closed Fort Frances, Ontario, mill;
|
•
|
non-operating pension and OPEB costs ($1 million); and
|
•
|
start-up costs ($1 million) for the tissue manufacturing and converting facility in Calhoun.
|
•
|
write-downs of mill stores and other supplies ($24 million), primarily related to the permanent closures of two paper machines in Calhoun, of a paper machine at our Catawba paper mill at the end of the second quarter of 2017, and of our Mokpo paper mill in the first quarter of 2017;
|
•
|
start-up costs ($14 million) for the Calhoun tissue manufacturing and converting facility; and
|
•
|
asset preservation costs ($8 million), primarily related to the indefinite idling of our Thorold paper mill and our permanently closed Fort Frances mill;
|
•
|
write-downs of mill stores and other supplies ($5 million), mostly as a result of the permanent closure of a newsprint machine at our Augusta mill in the second quarter of 2016;
|
•
|
non-operating pension and OPEB costs ($4 million);
|
•
|
start-up costs ($4 million) for the continuous pulp digester project and tissue manufacturing and converting facility, both located in Calhoun; and
|
•
|
asset preservation costs ($3 million), primarily for the permanently closed Fort Frances mill.
|
•
|
a long-lived asset impairment charge related to our Coosa Pines pulp mill ($55 million);
|
•
|
a long-lived asset impairment charge ($5 million) and severance and other closure-related costs ($6 million) in connection with the permanent closure of a paper machine at our Catawba paper mill;
|
•
|
accelerated depreciation ($6 million) and severance and other closure-related costs ($2 million) associated with the permanent closure of two paper machines in Calhoun; and
|
•
|
severance and other costs related to the permanent closure of our paper mill in Mokpo ($7 million).
|
|
Nine Months Ended
September 30, |
|||||||
(Unaudited, in millions)
|
2017
|
|
|
2016
|
|
|
||
Net cash provided by operating activities
|
$
|
99
|
|
|
$
|
51
|
|
|
Net cash used in investing activities
|
|
(168
|
)
|
|
|
(189
|
)
|
|
Net cash provided by financing activities
|
|
69
|
|
|
|
134
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
3
|
|
|
|
1
|
|
|
Net increase (decrease) in cash and cash equivalents
|
$
|
3
|
|
|
$
|
(3
|
)
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
PART II.
|
OTHER INFORMATION
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 6.
|
EXHIBITS
|
Exhibit No.
|
|
Description
|
|
|
|
†10.1*
|
|
|
|
|
|
†10.2*
|
|
|
|
|
|
†10.3*
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1*
|
|
|
|
|
|
32.2*
|
|
|
|
|
|
101.INS**
|
|
XBRL Instance Document.
|
|
|
|
101.SCH**
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
101.CAL**
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
101.LAB**
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
101.PRE**
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
101.DEF**
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
*
|
Filed with this Form 10-Q.
|
†
|
This is a management contract or compensatory plan or arrangement.
|
**
|
Interactive data files furnished with this Form 10-Q, which represent the following materials from this Form 10-Q formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Operations, (ii) the Consolidated Statements of Comprehensive Income (Loss), (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Changes in Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Unaudited Interim Consolidated Financial Statements.
|
RESOLUTE FOREST PRODUCTS INC.
|
||
|
|
|
By
|
|
/s/ Jo-Ann Longworth
|
|
|
Jo-Ann Longworth
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
By
|
|
/s/ Hugues Dorban
|
|
|
Hugues Dorban
|
|
|
Vice President and Chief Accounting Officer
|
Exhibit No.
|
|
Description
|
|
|
|
†10.1*
|
|
|
|
|
|
†10.2*
|
|
|
|
|
|
†10.3*
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1*
|
|
|
|
|
|
32.2*
|
|
|
|
|
|
101.INS**
|
|
XBRL Instance Document.
|
|
|
|
101.SCH**
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
101.CAL**
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
101.LAB**
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
101.PRE**
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
101.DEF**
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
*
|
Filed with this Form 10-Q.
|
†
|
This is a management contract or compensatory plan or arrangement.
|
**
|
Interactive data files furnished with this Form 10-Q, which represent the following materials from this Form 10-Q formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Operations, (ii) the Consolidated Statements of Comprehensive Income (Loss), (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Changes in Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Unaudited Interim Consolidated Financial Statements.
|
Vesting Date
|
Percentage of RSU Vested
|
December 1 of first calendar year following the calendar year that includes the
Date of Grant |
25% (rounded to the nearest whole)
|
First anniversary of the first Vesting Date
|
25% (rounded to the nearest whole)
|
Second anniversary of the first Vesting Date
|
25% (rounded to the nearest whole)
|
Third anniversary of the first Vesting Date
|
Remaining 25%
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the quarterly period ended
September 30, 2017
of RESOLUTE FOREST PRODUCTS INC.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report; |
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and |
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and |
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: November 9, 2017
|
|
/s/ Richard Garneau
|
Richard Garneau
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the quarterly period ended
September 30, 2017
of RESOLUTE FOREST PRODUCTS INC.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report; |
3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and |
d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and |
5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: November 9, 2017
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/s/ Jo-Ann Longworth
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Jo-Ann Longworth
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Senior Vice President and Chief Financial Officer
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Date: November 9, 2017
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/s/ Richard Garneau
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Name: Richard Garneau
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Title: President and Chief Executive Officer
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Date: November 9, 2017
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/s/ Jo-Ann Longworth
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Name: Jo-Ann Longworth
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Title: Senior Vice President and Chief Financial Officer
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