|
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
98-0526415
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. employer identification number)
|
111 Robert-Bourassa Boulevard
|
Suite 5000
|
Montreal
|
Quebec
|
Canada
|
H3C 2M1
|
(Address of principal executive offices) (Zip Code)
|
(Registrant’s telephone number, including area code)
|
|
(Former name, former address and former fiscal year, if changed since last report)
|
Common Stock, par value $0.001 per share
|
RFP
|
New York Stock Exchange
|
Toronto Stock Exchange
|
||
(Title of class)
|
(Trading Symbol)
|
(Name of exchange on which registered)
|
Large Accelerated Filer
|
☐
|
|
Accelerated Filer
|
☒
|
|
Non-accelerated Filer
|
☐
|
|
Smaller Reporting Company
|
☐
|
|
Emerging Growth Company
|
☐
|
|
|
Page
Number
|
|
PART I. FINANCIAL INFORMATION
|
|
|
|
|
|
Item 1. Financial Statements:
|
|
|
|
|
|
|
||
|
|
|
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||
|
|
|
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||
|
|
|
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||
|
|
|
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||
|
|
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||
|
|
|
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||
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|
|
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||
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|
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||
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PART II. OTHER INFORMATION
|
|
|
|
|
|
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||
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||
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||
|
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|
PART I.
|
FINANCIAL INFORMATION
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
|
2019
|
|
|
2018
|
|
|
|
2019
|
|
|
2018
|
|
|
||||
Sales
|
$
|
705
|
|
|
$
|
974
|
|
|
|
$
|
2,255
|
|
|
$
|
2,824
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of sales, excluding depreciation, amortization and distribution costs
|
|
558
|
|
|
|
628
|
|
|
|
|
1,648
|
|
|
|
1,881
|
|
|
Depreciation and amortization
|
|
42
|
|
|
|
54
|
|
|
|
|
124
|
|
|
|
161
|
|
|
Distribution costs
|
|
94
|
|
|
|
117
|
|
|
|
|
295
|
|
|
|
356
|
|
|
Selling, general and administrative expenses
|
|
30
|
|
|
|
40
|
|
|
|
|
103
|
|
|
|
125
|
|
|
Closure costs, impairment and other related charges
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
1
|
|
|
Net gain on disposition of assets
|
|
(1
|
)
|
|
|
—
|
|
|
|
|
(1
|
)
|
|
|
(4
|
)
|
|
Operating (loss) income
|
|
(18
|
)
|
|
|
135
|
|
|
|
|
86
|
|
|
|
304
|
|
|
Interest expense
|
|
(8
|
)
|
|
|
(12
|
)
|
|
|
|
(24
|
)
|
|
|
(36
|
)
|
|
Non-operating pension and other postretirement benefit credits
|
|
12
|
|
|
|
13
|
|
|
|
|
36
|
|
|
|
38
|
|
|
Other (expense) income, net
|
|
(17
|
)
|
|
|
14
|
|
|
|
|
(22
|
)
|
|
|
4
|
|
|
(Loss) income before income taxes
|
|
(31
|
)
|
|
|
150
|
|
|
|
|
76
|
|
|
|
310
|
|
|
Income tax provision
|
|
(12
|
)
|
|
|
(33
|
)
|
|
|
|
(52
|
)
|
|
|
(111
|
)
|
|
Net (loss) income including noncontrolling interests
|
|
(43
|
)
|
|
|
117
|
|
|
|
|
24
|
|
|
|
199
|
|
|
Net income attributable to noncontrolling interests
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Net (loss) income attributable to Resolute Forest Products Inc.
|
$
|
(43
|
)
|
|
$
|
117
|
|
|
|
$
|
24
|
|
|
$
|
199
|
|
|
Net (loss) income per share attributable to Resolute Forest Products Inc. common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
(0.47
|
)
|
|
$
|
1.28
|
|
|
|
$
|
0.26
|
|
|
$
|
2.18
|
|
|
Diluted
|
|
(0.47
|
)
|
|
|
1.25
|
|
|
|
|
0.26
|
|
|
|
2.14
|
|
|
Weighted-average number of Resolute Forest Products Inc. common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
|
90.9
|
|
|
|
91.3
|
|
|
|
|
91.9
|
|
|
|
91.3
|
|
|
Diluted
|
|
90.9
|
|
|
|
93.4
|
|
|
|
|
93.0
|
|
|
|
93.2
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
|
2019
|
|
|
2018
|
|
|
|
2019
|
|
|
2018
|
|
|
||||
Net (loss) income including noncontrolling interests
|
$
|
(43
|
)
|
|
$
|
117
|
|
|
|
$
|
24
|
|
|
$
|
199
|
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unamortized prior service credits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Change in unamortized prior service credits
|
|
(2
|
)
|
|
|
(9
|
)
|
|
|
|
(9
|
)
|
|
|
(17
|
)
|
|
Income tax provision
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Change in unamortized prior service credits, net of tax
|
|
(2
|
)
|
|
|
(9
|
)
|
|
|
|
(9
|
)
|
|
|
(17
|
)
|
|
Unamortized actuarial losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Change in unamortized actuarial losses
|
|
6
|
|
|
|
11
|
|
|
|
|
17
|
|
|
|
29
|
|
|
Income tax provision
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
|
(4
|
)
|
|
|
(6
|
)
|
|
Change in unamortized actuarial losses, net of tax
|
|
4
|
|
|
|
9
|
|
|
|
|
13
|
|
|
|
23
|
|
|
Other comprehensive income, net of tax
|
|
2
|
|
|
|
—
|
|
|
|
|
4
|
|
|
|
6
|
|
|
Comprehensive (loss) income including noncontrolling interests
|
|
(41
|
)
|
|
|
117
|
|
|
|
|
28
|
|
|
|
205
|
|
|
Comprehensive income attributable to noncontrolling interests
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Comprehensive (loss) income attributable to Resolute Forest Products Inc.
|
$
|
(41
|
)
|
|
$
|
117
|
|
|
|
$
|
28
|
|
|
$
|
205
|
|
|
|
September 30,
2019 |
December 31,
2018 |
||||||
Assets
|
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
69
|
|
|
$
|
304
|
|
|
Accounts receivable, net:
|
|
|
|
|
|
|
||
Trade
|
|
314
|
|
|
|
347
|
|
|
Other
|
|
63
|
|
|
|
102
|
|
|
Inventories, net
|
|
522
|
|
|
|
508
|
|
|
Other current assets
|
|
40
|
|
|
|
43
|
|
|
Total current assets
|
|
1,008
|
|
|
|
1,304
|
|
|
Fixed assets, less accumulated depreciation of $1,611 and $1,498 as of September 30, 2019 and December 31, 2018, respectively
|
|
1,477
|
|
|
|
1,515
|
|
|
Amortizable intangible assets, less accumulated amortization of $26 and $24 as of September 30, 2019 and December 31, 2018, respectively
|
|
49
|
|
|
|
50
|
|
|
Deferred income tax assets
|
|
846
|
|
|
|
876
|
|
|
Operating lease right-of-use assets
|
|
63
|
|
|
|
—
|
|
|
Other assets
|
|
228
|
|
|
|
190
|
|
|
Total assets
|
$
|
3,671
|
|
|
$
|
3,935
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
|
||
Accounts payable and accrued liabilities
|
$
|
396
|
|
|
$
|
427
|
|
|
Current portion of long-term debt
|
|
1
|
|
|
|
223
|
|
|
Current portion of operating lease liabilities
|
|
8
|
|
|
|
—
|
|
|
Total current liabilities
|
|
405
|
|
|
|
650
|
|
|
Long-term debt, net of current portion
|
|
423
|
|
|
|
422
|
|
|
Pension and other postretirement benefit obligations
|
|
1,179
|
|
|
|
1,257
|
|
|
Operating lease liabilities, net of current portion
|
|
58
|
|
|
|
—
|
|
|
Other liabilities
|
|
54
|
|
|
|
71
|
|
|
Total liabilities
|
|
2,119
|
|
|
|
2,400
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
||
Equity:
|
|
|
|
|
|
|
||
Resolute Forest Products Inc. shareholders’ equity:
|
|
|
|
|
|
|
||
Common stock, $0.001 par value. 119.1 shares issued and 89.3 shares outstanding as of September 30, 2019; 118.8 shares issued and 90.8 shares outstanding as of December 31, 2018
|
|
—
|
|
|
|
—
|
|
|
Additional paid-in capital
|
|
3,803
|
|
|
|
3,802
|
|
|
Deficit
|
|
(1,174
|
)
|
|
|
(1,198
|
)
|
|
Accumulated other comprehensive loss
|
|
(946
|
)
|
|
|
(950
|
)
|
|
Treasury stock at cost, 29.8 shares and 28.0 shares as of September 30, 2019 and December 31, 2018, respectively
|
|
(132
|
)
|
|
|
(120
|
)
|
|
Total Resolute Forest Products Inc. shareholders’ equity
|
|
1,551
|
|
|
|
1,534
|
|
|
Noncontrolling interests
|
|
1
|
|
|
|
1
|
|
|
Total equity
|
|
1,552
|
|
|
|
1,535
|
|
|
Total liabilities and equity
|
$
|
3,671
|
|
|
$
|
3,935
|
|
|
|
Three Months Ended September 30, 2019
|
|||||||||||||||||||||||||||
|
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 June 30, 2019
|
$
|
—
|
|
|
$
|
3,803
|
|
|
$
|
(1,131
|
)
|
|
$
|
(948
|
)
|
|
$
|
(125
|
)
|
|
$
|
1
|
|
|
$
|
1,600
|
|
|
Net loss
|
|
—
|
|
|
|
—
|
|
|
|
(43
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(43
|
)
|
|
Purchases of treasury stock (1.1 shares) (Note 11)
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(7
|
)
|
|
|
—
|
|
|
|
(7
|
)
|
|
Other comprehensive income, net of tax
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
|
Balance as of September 30, 2019
|
$
|
—
|
|
|
$
|
3,803
|
|
|
$
|
(1,174
|
)
|
|
$
|
(946
|
)
|
|
$
|
(132
|
)
|
|
$
|
1
|
|
|
$
|
1,552
|
|
|
|
Nine Months Ended September 30, 2019
|
|||||||||||||||||||||||||||
|
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, 2018
|
$
|
—
|
|
|
$
|
3,802
|
|
|
$
|
(1,198
|
)
|
|
$
|
(950
|
)
|
|
$
|
(120
|
)
|
|
$
|
1
|
|
|
$
|
1,535
|
|
|
Share-based compensation, net of withholding taxes
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
Net income
|
|
—
|
|
|
|
—
|
|
|
|
24
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
24
|
|
|
Purchases of treasury stock (1.8 shares) (Note 11)
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(12
|
)
|
|
|
—
|
|
|
|
(12
|
)
|
|
Stock unit awards vested (0.3 shares), net of shares forfeited for employee withholding taxes
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Other comprehensive income, net of tax
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
Balance as of September 30, 2019
|
$
|
—
|
|
|
$
|
3,803
|
|
|
$
|
(1,174
|
)
|
|
$
|
(946
|
)
|
|
$
|
(132
|
)
|
|
$
|
1
|
|
|
$
|
1,552
|
|
|
|
Three Months Ended September 30, 2018
|
|||||||||||||||||||||||||||
|
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 June 30, 2018
|
$
|
—
|
|
|
$
|
3,797
|
|
|
$
|
(1,212
|
)
|
|
$
|
(774
|
)
|
|
$
|
(120
|
)
|
|
$
|
1
|
|
|
$
|
1,692
|
|
|
Share-based compensation, net of withholding taxes
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
Net income
|
|
—
|
|
|
|
—
|
|
|
|
117
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
117
|
|
|
Other comprehensive income, net of tax
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Balance as of September 30, 2018
|
$
|
—
|
|
|
$
|
3,798
|
|
|
$
|
(1,095
|
)
|
|
$
|
(774
|
)
|
|
$
|
(120
|
)
|
|
$
|
1
|
|
|
$
|
1,810
|
|
|
|
Nine Months Ended September 30, 2018
|
|||||||||||||||||||||||||||
|
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, 2017
|
$
|
—
|
|
|
$
|
3,793
|
|
|
$
|
(1,294
|
)
|
|
$
|
(780
|
)
|
|
$
|
(120
|
)
|
|
$
|
1
|
|
|
$
|
1,600
|
|
|
Share-based compensation, net of withholding taxes
|
|
—
|
|
|
|
5
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5
|
|
|
Net income
|
|
—
|
|
|
|
—
|
|
|
|
199
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
199
|
|
|
Stock unit awards vested (0.1 shares), net of shares forfeited for employee withholding taxes
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Other comprehensive income, net of tax
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6
|
|
|
Balance as of September 30, 2018
|
$
|
—
|
|
|
$
|
3,798
|
|
|
$
|
(1,095
|
)
|
|
$
|
(774
|
)
|
|
$
|
(120
|
)
|
|
$
|
1
|
|
|
$
|
1,810
|
|
|
|
Nine Months Ended
September 30, |
|||||||
|
2019
|
|
|
2018
|
|
|
||
Cash flows from operating activities:
|
|
|
|
|
|
|
||
Net income including noncontrolling interests
|
$
|
24
|
|
|
$
|
199
|
|
|
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities:
|
|
|
|
|
|
|
||
Share-based compensation
|
|
4
|
|
|
|
6
|
|
|
Depreciation and amortization
|
|
124
|
|
|
|
161
|
|
|
Reversal of inventory write-downs related to closures
|
|
—
|
|
|
|
(1
|
)
|
|
Deferred income taxes
|
|
52
|
|
|
|
106
|
|
|
Net pension contributions and other postretirement benefit payments
|
|
(96
|
)
|
|
|
(112
|
)
|
|
Net gain on disposition of assets
|
|
(1
|
)
|
|
|
(4
|
)
|
|
(Gain) loss on translation of foreign currency denominated deferred income taxes
|
|
(26
|
)
|
|
|
28
|
|
|
Loss (gain) on translation of foreign currency denominated pension and other postretirement benefit obligations
|
|
27
|
|
|
|
(23
|
)
|
|
Net planned major maintenance amortization (payments)
|
|
16
|
|
|
|
(7
|
)
|
|
Changes in working capital:
|
|
|
|
|
|
|
||
Accounts receivable
|
|
60
|
|
|
|
(6
|
)
|
|
Inventories
|
|
(14
|
)
|
|
|
(53
|
)
|
|
Other current assets
|
|
(11
|
)
|
|
|
(13
|
)
|
|
Accounts payable and accrued liabilities
|
|
(41
|
)
|
|
|
61
|
|
|
Other, net
|
|
2
|
|
|
|
9
|
|
|
Net cash provided by operating activities
|
|
120
|
|
|
|
351
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
||
Cash invested in fixed assets
|
|
(82
|
)
|
|
|
(94
|
)
|
|
Disposition of assets
|
|
2
|
|
|
|
2
|
|
|
Decrease in countervailing duty cash deposits on supercalendered paper, net
|
|
1
|
|
|
|
13
|
|
|
Increase in countervailing and anti-dumping duty cash deposits on softwood lumber
|
|
(46
|
)
|
|
|
(62
|
)
|
|
Decrease (increase) in countervailing duty cash deposits on uncoated groundwood paper
|
|
6
|
|
|
|
(6
|
)
|
|
Net cash used in investing activities
|
|
(119
|
)
|
|
|
(147
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
||
Net repayments under revolving credit facilities
|
|
—
|
|
|
|
(144
|
)
|
|
Payments of debt
|
|
(225
|
)
|
|
|
—
|
|
|
Purchases of treasury stock
|
|
(12
|
)
|
|
|
—
|
|
|
Payments of financing and credit facility fees
|
|
(2
|
)
|
|
|
(1
|
)
|
|
Cash used in financing activities
|
|
(239
|
)
|
|
|
(145
|
)
|
|
Effect of exchange rate changes on cash and cash equivalents, and restricted cash
|
|
1
|
|
|
|
(1
|
)
|
|
Net (decrease) increase in cash and cash equivalents, and restricted cash
|
|
(237
|
)
|
|
|
58
|
|
|
Cash and cash equivalents, and restricted cash:
|
|
|
|
|
|
|
||
Beginning of period
|
|
345
|
|
|
|
49
|
|
|
End of period
|
$
|
108
|
|
|
$
|
107
|
|
|
Cash and cash equivalents, and restricted cash at period end:
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
69
|
|
|
$
|
72
|
|
|
Restricted cash (included in “Other current assets” and “Other assets”)
|
|
39
|
|
|
|
35
|
|
|
(Unaudited, in millions)
|
Before ASU
|
Effect of Change
|
As Adjusted
|
|||||||||
Amortizable intangible assets, net
|
$
|
50
|
|
|
$
|
1
|
|
|
$
|
51
|
|
|
Operating lease right-of-use assets
|
|
—
|
|
|
|
65
|
|
|
|
65
|
|
|
Current portion of operating lease liabilities
|
|
—
|
|
|
|
7
|
|
|
|
7
|
|
|
Operating lease liabilities, net of current portion
|
|
—
|
|
|
|
60
|
|
|
|
60
|
|
|
Other liabilities
|
|
71
|
|
|
|
(1
|
)
|
|
|
70
|
|
|
(Unaudited, in millions)
|
Unamortized Prior Service Credits
|
Unamortized Actuarial Losses
|
Foreign
Currency
Translation
|
Total
|
||||||||||||
Balance as of December 31, 2018
|
$
|
28
|
|
|
$
|
(971
|
)
|
|
$
|
(7
|
)
|
|
$
|
(950
|
)
|
|
Other comprehensive loss before reclassifications
|
|
—
|
|
|
|
(3
|
)
|
|
|
—
|
|
|
|
(3
|
)
|
|
Amounts reclassified from accumulated other comprehensive loss (1)
|
|
(9
|
)
|
|
|
16
|
|
|
|
—
|
|
|
|
7
|
|
|
Net current period other comprehensive (loss) income
|
|
(9
|
)
|
|
|
13
|
|
|
|
—
|
|
|
|
4
|
|
|
Balance as of September 30, 2019
|
$
|
19
|
|
|
$
|
(958
|
)
|
|
$
|
(7
|
)
|
|
$
|
(946
|
)
|
|
(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
|
$
|
(8
|
)
|
|
Non-operating pension and other postretirement benefit credits (1)
|
Curtailment gain
|
|
(1
|
)
|
|
Non-operating pension and other postretirement benefit credits (1)
|
|
|
—
|
|
|
Income tax provision
|
|
$
|
(9
|
)
|
|
Net of tax
|
Unamortized Actuarial Losses
|
|
|
|
|
|
Amortization of actuarial losses
|
$
|
21
|
|
|
Non-operating pension and other postretirement benefit credits (1)
|
|
|
(5
|
)
|
|
Income tax provision
|
|
$
|
16
|
|
|
Net of tax
|
Total Reclassifications
|
$
|
7
|
|
|
Net of tax
|
(1)
|
These items are included in the computation of net periodic benefit credit related to our pension and other postretirement benefit (or “OPEB”) plans summarized in Note 8, “Employee Benefit Plans.”
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions, except per share amounts)
|
2019
|
|
|
2018
|
|
|
|
2019
|
|
|
2018
|
|
|
||||
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net (loss) income attributable to Resolute Forest Products Inc.
|
$
|
(43
|
)
|
|
$
|
117
|
|
|
|
$
|
24
|
|
|
$
|
199
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic weighted-average number of Resolute Forest Products Inc. common shares outstanding
|
|
90.9
|
|
|
|
91.3
|
|
|
|
|
91.9
|
|
|
|
91.3
|
|
|
Dilutive impact of nonvested stock unit awards
|
|
—
|
|
|
|
2.1
|
|
|
|
|
1.1
|
|
|
|
1.9
|
|
|
Diluted weighted-average number of Resolute Forest Products Inc. common shares outstanding
|
|
90.9
|
|
|
|
93.4
|
|
|
|
|
93.0
|
|
|
|
93.2
|
|
|
Net (loss) income per share attributable to Resolute Forest Products Inc. common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
(0.47
|
)
|
|
$
|
1.28
|
|
|
|
$
|
0.26
|
|
|
$
|
2.18
|
|
|
Diluted
|
|
(0.47
|
)
|
|
|
1.25
|
|
|
|
|
0.26
|
|
|
|
2.14
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||
(Unaudited, in millions)
|
2019
|
|
|
2018
|
|
|
|
2019
|
|
|
2018
|
|
|
Stock options
|
1.0
|
|
|
0.9
|
|
|
|
1.0
|
|
|
1.3
|
|
|
Stock unit awards
|
2.1
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
(Unaudited, in millions)
|
September 30,
2019 |
December 31,
2018 |
||||||
Raw materials
|
$
|
117
|
|
|
$
|
106
|
|
|
Work in process
|
|
39
|
|
|
|
39
|
|
|
Finished goods
|
|
170
|
|
|
|
180
|
|
|
Mill stores and other supplies
|
|
196
|
|
|
|
183
|
|
|
|
$
|
522
|
|
|
$
|
508
|
|
|
(Unaudited, in millions)
|
Three Months Ended
September 30, 2019 |
|
Nine Months Ended
September 30, 2019 |
||||||
Operating lease cost
|
$
|
3
|
|
|
|
$
|
9
|
|
|
Variable lease cost (1)
|
|
5
|
|
|
|
|
15
|
|
|
(1)
|
Variable lease cost is determined by the consumption of the underlying asset.
|
(Unaudited)
|
September 30,
2019 |
|||
Weighted-average remaining operating lease term (in years)
|
|
11.2
|
|
|
Weighted-average operating lease discount rate
|
|
4.7
|
%
|
|
(Unaudited, in millions)
|
Nine Months Ended
September 30, 2019 |
|||
Operating cash flow payments for operating lease liabilities
|
$
|
8
|
|
|
Operating lease right-of-use assets obtained in exchange for operating lease liabilities
|
|
4
|
|
|
(Unaudited, in millions)
|
Operating Leases
|
|||
Years ending December 31,
|
|
|
|
|
2019
|
$
|
3
|
|
|
2020
|
|
11
|
|
|
2021
|
|
10
|
|
|
2022
|
|
9
|
|
|
2023
|
|
7
|
|
|
2024 and thereafter
|
|
45
|
|
|
Total lease payments
|
|
85
|
|
|
Less: imputed interest
|
|
(19
|
)
|
|
Total operating lease liabilities
|
$
|
66
|
|
|
(Unaudited, in millions)
|
September 30,
2019 |
December 31,
2018 |
||||||
Trade accounts payable
|
$
|
269
|
|
|
$
|
299
|
|
|
Accrued compensation
|
|
49
|
|
|
|
66
|
|
|
Accrued interest
|
|
9
|
|
|
|
5
|
|
|
Pension and other postretirement benefit obligations
|
|
17
|
|
|
|
17
|
|
|
Accrued provision related to Fibrek Inc. dissenting shareholder litigation (Note 10)
|
|
33
|
|
|
|
—
|
|
|
Income and other taxes payable
|
|
3
|
|
|
|
4
|
|
|
Deposits
|
|
4
|
|
|
|
20
|
|
|
Other
|
|
12
|
|
|
|
16
|
|
|
|
$
|
396
|
|
|
$
|
427
|
|
|
(Unaudited, in millions)
|
September 30,
2019 |
December 31,
2018 |
||||||
5.875% senior unsecured notes due 2023:
|
|
|
|
|
|
|
||
Principal amount
|
$
|
375
|
|
|
$
|
600
|
|
|
Deferred financing costs
|
|
(3
|
)
|
|
|
(5
|
)
|
|
Unamortized discount
|
|
(1
|
)
|
|
|
(3
|
)
|
|
Total 5.875% senior unsecured notes due 2023
|
|
371
|
|
|
|
592
|
|
|
Term loan due 2025
|
|
46
|
|
|
|
46
|
|
|
Finance lease obligation
|
|
7
|
|
|
|
7
|
|
|
Total debt
|
|
424
|
|
|
|
645
|
|
|
Less: Current portion of 5.875% senior unsecured notes due 2023
|
|
—
|
|
|
|
(222
|
)
|
|
Less: Current portion of finance lease obligation
|
|
(1
|
)
|
|
|
(1
|
)
|
|
Long-term debt, net of current portion
|
$
|
423
|
|
|
$
|
422
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions)
|
2019
|
|
|
2018
|
|
|
|
2019
|
|
|
2018
|
|
|
||||
Interest cost
|
$
|
45
|
|
|
$
|
46
|
|
|
|
$
|
135
|
|
|
$
|
142
|
|
|
Expected return on plan assets
|
|
(63
|
)
|
|
|
(65
|
)
|
|
|
|
(187
|
)
|
|
|
(199
|
)
|
|
Amortization of actuarial losses
|
|
8
|
|
|
|
9
|
|
|
|
|
26
|
|
|
|
29
|
|
|
Amortization of prior service credits
|
|
1
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
Non-operating pension credits
|
|
(9
|
)
|
|
|
(10
|
)
|
|
|
|
(26
|
)
|
|
|
(29
|
)
|
|
Service cost
|
|
4
|
|
|
|
5
|
|
|
|
|
11
|
|
|
|
14
|
|
|
Net periodic benefit credits before special events
|
|
(5
|
)
|
|
|
(5
|
)
|
|
|
|
(15
|
)
|
|
|
(15
|
)
|
|
Curtailment and settlement (gain) loss
|
|
—
|
|
|
|
—
|
|
|
|
|
(1
|
)
|
|
|
1
|
|
|
|
$
|
(5
|
)
|
|
$
|
(5
|
)
|
|
|
$
|
(16
|
)
|
|
$
|
(14
|
)
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions)
|
2019
|
|
|
2018
|
|
|
|
2019
|
|
|
2018
|
|
|
||||
Interest cost
|
$
|
2
|
|
|
$
|
1
|
|
|
|
$
|
4
|
|
|
$
|
4
|
|
|
Amortization of actuarial gains
|
|
(2
|
)
|
|
|
—
|
|
|
|
|
(5
|
)
|
|
|
(3
|
)
|
|
Amortization of prior service credits
|
|
(3
|
)
|
|
|
(4
|
)
|
|
|
|
(8
|
)
|
|
|
(11
|
)
|
|
Non-operating other postretirement benefit credits
|
|
(3
|
)
|
|
|
(3
|
)
|
|
|
|
(9
|
)
|
|
|
(10
|
)
|
|
Service cost
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
1
|
|
|
|
$
|
(3
|
)
|
|
$
|
(3
|
)
|
|
|
$
|
(9
|
)
|
|
$
|
(9
|
)
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions)
|
2019
|
|
|
2018
|
|
|
|
2019
|
|
|
2018
|
|
|
||||
(Loss) income before income taxes
|
$
|
(31
|
)
|
|
$
|
150
|
|
|
|
$
|
76
|
|
|
$
|
310
|
|
|
Income tax provision:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expected income tax benefit (provision)
|
|
6
|
|
|
|
(31
|
)
|
|
|
|
(16
|
)
|
|
|
(65
|
)
|
|
Changes resulting from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Valuation allowance (1)
|
|
(7
|
)
|
|
|
32
|
|
|
|
|
(18
|
)
|
|
|
40
|
|
|
Foreign exchange
|
|
(3
|
)
|
|
|
2
|
|
|
|
|
1
|
|
|
|
(12
|
)
|
|
U.S. tax on non-U.S. earnings (2)
|
|
(6
|
)
|
|
|
(28
|
)
|
|
|
|
(11
|
)
|
|
|
(53
|
)
|
|
State income taxes, net of federal income tax benefit
|
|
3
|
|
|
|
(1
|
)
|
|
|
|
5
|
|
|
|
1
|
|
|
Foreign tax rate differences
|
|
(1
|
)
|
|
|
(7
|
)
|
|
|
|
(10
|
)
|
|
|
(19
|
)
|
|
Other, net
|
|
(4
|
)
|
|
|
—
|
|
|
|
|
(3
|
)
|
|
|
(3
|
)
|
|
|
$
|
(12
|
)
|
|
$
|
(33
|
)
|
|
|
$
|
(52
|
)
|
|
$
|
(111
|
)
|
|
(1)
|
Relates to our U.S. operations where we recognize a valuation allowance against virtually all of our net deferred income tax assets.
|
(2)
|
Reduces income tax benefits on U.S. losses for the three and nine months ended September 30, 2019 and 2018.
|
(Unaudited,
in millions)
|
Market Pulp (1)
|
Tissue (2)
|
Wood Products (3)
|
Newsprint
|
Specialty
Papers
|
Segment
Total
|
Corporate
and Other
|
Total
|
||||||||||||||||||||||||
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Third quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2019
|
$
|
201
|
|
|
$
|
43
|
|
|
$
|
146
|
|
|
$
|
180
|
|
|
$
|
135
|
|
|
$
|
705
|
|
|
$
|
—
|
|
|
$
|
705
|
|
|
2018
|
|
288
|
|
|
|
38
|
|
|
|
203
|
|
|
|
232
|
|
|
|
213
|
|
|
|
974
|
|
|
|
—
|
|
|
|
974
|
|
|
First nine months
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2019
|
|
621
|
|
|
|
125
|
|
|
|
475
|
|
|
|
601
|
|
|
|
433
|
|
|
|
2,255
|
|
|
|
—
|
|
|
|
2,255
|
|
|
2018
|
|
809
|
|
|
|
95
|
|
|
|
666
|
|
|
|
660
|
|
|
|
594
|
|
|
|
2,824
|
|
|
|
—
|
|
|
|
2,824
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Third quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2019
|
$
|
7
|
|
|
$
|
4
|
|
|
$
|
8
|
|
|
$
|
7
|
|
|
$
|
11
|
|
|
$
|
37
|
|
|
$
|
5
|
|
|
$
|
42
|
|
|
2018
|
|
7
|
|
|
|
5
|
|
|
|
8
|
|
|
|
16
|
|
|
|
12
|
|
|
|
48
|
|
|
|
6
|
|
|
|
54
|
|
|
First nine months
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
2019
|
|
17
|
|
|
|
13
|
|
|
|
25
|
|
|
|
22
|
|
|
|
32
|
|
|
|
109
|
|
|
|
15
|
|
|
|
124
|
|
|
2018
|
|
22
|
|
|
|
11
|
|
|
|
23
|
|
|
|
49
|
|
|
|
36
|
|
|
|
141
|
|
|
|
20
|
|
|
|
161
|
|
|
Operating (loss) income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Third quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2019
|
$
|
(12
|
)
|
|
$
|
(3
|
)
|
|
$
|
(4
|
)
|
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
(11
|
)
|
|
$
|
(7
|
)
|
|
$
|
(18
|
)
|
|
2018
|
|
57
|
|
|
|
(10
|
)
|
|
|
45
|
|
|
|
32
|
|
|
|
26
|
|
|
|
150
|
|
|
|
(15
|
)
|
|
|
135
|
|
|
First nine months
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2019
|
|
57
|
|
|
|
(15
|
)
|
|
|
(1
|
)
|
|
|
49
|
|
|
|
34
|
|
|
|
124
|
|
|
|
(38
|
)
|
|
|
86
|
|
|
2018
|
|
131
|
|
|
|
(21
|
)
|
|
|
177
|
|
|
|
46
|
|
|
|
23
|
|
|
|
356
|
|
|
|
(52
|
)
|
|
|
304
|
|
|
(1)
|
Inter-segment sales of $8 million and $10 million for the three months ended September 30, 2019 and 2018, respectively, and $30 million and $29 million for the nine months ended September 30, 2019 and 2018, were excluded from market pulp sales. Effective July 1, 2019, these sales were transacted either at the lowest market price of the previous month or cost. Previously these sales were transacted at cost. This change has no material impact on the segment presentation.
|
(2)
|
The operating results of our Calhoun tissue operations, previously recorded under “corporate and other,” have been recorded in our tissue segment since April 1, 2018.
|
(3)
|
Wood products sales to our joint ventures, which are transacted at arm’s length negotiated prices, were $6 million and $7 million for the three months ended September 30, 2019 and 2018, respectively, and $17 million and $23 million for the nine months ended September 30, 2019 and 2018, respectively.
|
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
|
||||||||||||||||||||
For the Three Months Ended September 30, 2019
|
||||||||||||||||||||
(Unaudited, in millions)
|
Parent
|
Guarantor
Subsidiaries
|
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||||
Sales
|
$
|
—
|
|
|
$
|
556
|
|
|
$
|
526
|
|
|
$
|
(377
|
)
|
|
$
|
705
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of sales, excluding depreciation, amortization and distribution costs
|
|
—
|
|
|
|
562
|
|
|
|
378
|
|
|
|
(382
|
)
|
|
|
558
|
|
|
Depreciation and amortization
|
|
—
|
|
|
|
10
|
|
|
|
32
|
|
|
|
—
|
|
|
|
42
|
|
|
Distribution costs
|
|
—
|
|
|
|
23
|
|
|
|
69
|
|
|
|
2
|
|
|
|
94
|
|
|
Selling, general and administrative expenses
|
|
2
|
|
|
|
10
|
|
|
|
18
|
|
|
|
—
|
|
|
|
30
|
|
|
Net gain on disposition of assets
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
(1
|
)
|
|
Operating (loss) income
|
|
(2
|
)
|
|
|
(49
|
)
|
|
|
30
|
|
|
|
3
|
|
|
|
(18
|
)
|
|
Interest expense
|
|
(15
|
)
|
|
|
(1
|
)
|
|
|
(3
|
)
|
|
|
11
|
|
|
|
(8
|
)
|
|
Non-operating pension and other postretirement benefit credits
|
|
—
|
|
|
|
4
|
|
|
|
8
|
|
|
|
—
|
|
|
|
12
|
|
|
Other income (expense), net
|
|
—
|
|
|
|
10
|
|
|
|
(16
|
)
|
|
|
(11
|
)
|
|
|
(17
|
)
|
|
Equity in loss of subsidiaries
|
|
(26
|
)
|
|
|
(14
|
)
|
|
|
—
|
|
|
|
40
|
|
|
|
—
|
|
|
(Loss) income before income taxes
|
|
(43
|
)
|
|
|
(50
|
)
|
|
|
19
|
|
|
|
43
|
|
|
|
(31
|
)
|
|
Income tax provision
|
|
—
|
|
|
|
—
|
|
|
|
(11
|
)
|
|
|
(1
|
)
|
|
|
(12
|
)
|
|
Net (loss) income including noncontrolling interests
|
|
(43
|
)
|
|
|
(50
|
)
|
|
|
8
|
|
|
|
42
|
|
|
|
(43
|
)
|
|
Net income attributable to noncontrolling interests
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Net (loss) income attributable to Resolute Forest Products Inc.
|
$
|
(43
|
)
|
|
$
|
(50
|
)
|
|
$
|
8
|
|
|
$
|
42
|
|
|
$
|
(43
|
)
|
|
Comprehensive (loss) income attributable to Resolute Forest Products Inc.
|
$
|
(41
|
)
|
|
$
|
(53
|
)
|
|
$
|
13
|
|
|
$
|
40
|
|
|
$
|
(41
|
)
|
|
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
|
||||||||||||||||||||
For the Nine Months Ended September 30, 2019
|
||||||||||||||||||||
(Unaudited, in millions)
|
Parent
|
Guarantor
Subsidiaries
|
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||||
Sales
|
$
|
—
|
|
|
$
|
1,841
|
|
|
$
|
1,692
|
|
|
$
|
(1,278
|
)
|
|
$
|
2,255
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of sales, excluding depreciation, amortization and distribution costs
|
|
—
|
|
|
|
1,809
|
|
|
|
1,120
|
|
|
|
(1,281
|
)
|
|
|
1,648
|
|
|
Depreciation and amortization
|
|
—
|
|
|
|
29
|
|
|
|
95
|
|
|
|
—
|
|
|
|
124
|
|
|
Distribution costs
|
|
—
|
|
|
|
72
|
|
|
|
224
|
|
|
|
(1
|
)
|
|
|
295
|
|
|
Selling, general and administrative expenses
|
|
12
|
|
|
|
34
|
|
|
|
57
|
|
|
|
—
|
|
|
|
103
|
|
|
Net gain on disposition of assets
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
(1
|
)
|
|
Operating (loss) income
|
|
(12
|
)
|
|
|
(103
|
)
|
|
|
197
|
|
|
|
4
|
|
|
|
86
|
|
|
Interest expense
|
|
(49
|
)
|
|
|
(3
|
)
|
|
|
(9
|
)
|
|
|
37
|
|
|
|
(24
|
)
|
|
Non-operating pension and other postretirement benefit credits
|
|
—
|
|
|
|
9
|
|
|
|
27
|
|
|
|
—
|
|
|
|
36
|
|
|
Other (expense) income, net
|
|
(3
|
)
|
|
|
42
|
|
|
|
(24
|
)
|
|
|
(37
|
)
|
|
|
(22
|
)
|
|
Equity in income of subsidiaries
|
|
88
|
|
|
|
4
|
|
|
|
—
|
|
|
|
(92
|
)
|
|
|
—
|
|
|
Income (loss) before income taxes
|
|
24
|
|
|
|
(51
|
)
|
|
|
191
|
|
|
|
(88
|
)
|
|
|
76
|
|
|
Income tax provision
|
|
—
|
|
|
|
—
|
|
|
|
(51
|
)
|
|
|
(1
|
)
|
|
|
(52
|
)
|
|
Net income (loss) including noncontrolling interests
|
|
24
|
|
|
|
(51
|
)
|
|
|
140
|
|
|
|
(89
|
)
|
|
|
24
|
|
|
Net income attributable to noncontrolling interests
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Net income (loss) attributable to Resolute Forest Products Inc.
|
$
|
24
|
|
|
$
|
(51
|
)
|
|
$
|
140
|
|
|
$
|
(89
|
)
|
|
$
|
24
|
|
|
Comprehensive income (loss) attributable to Resolute Forest Products Inc.
|
$
|
28
|
|
|
$
|
(59
|
)
|
|
$
|
152
|
|
|
$
|
(93
|
)
|
|
$
|
28
|
|
|
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
|
||||||||||||||||||||
For the Three Months Ended September 30, 2018
|
||||||||||||||||||||
(Unaudited, in millions)
|
Parent
|
Guarantor
Subsidiaries
|
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||||
Sales
|
$
|
—
|
|
|
$
|
808
|
|
|
$
|
609
|
|
|
$
|
(443
|
)
|
|
$
|
974
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of sales, excluding depreciation, amortization and distribution costs
|
|
—
|
|
|
|
708
|
|
|
|
366
|
|
|
|
(446
|
)
|
|
|
628
|
|
|
Depreciation and amortization
|
|
—
|
|
|
|
20
|
|
|
|
34
|
|
|
|
—
|
|
|
|
54
|
|
|
Distribution costs
|
|
—
|
|
|
|
42
|
|
|
|
75
|
|
|
|
—
|
|
|
|
117
|
|
|
Selling, general and administrative expenses
|
|
6
|
|
|
|
17
|
|
|
|
17
|
|
|
|
—
|
|
|
|
40
|
|
|
Operating (loss) income
|
|
(6
|
)
|
|
|
21
|
|
|
|
117
|
|
|
|
3
|
|
|
|
135
|
|
|
Interest expense
|
|
(20
|
)
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
13
|
|
|
|
(12
|
)
|
|
Non-operating pension and other postretirement benefit credits
|
|
—
|
|
|
|
4
|
|
|
|
9
|
|
|
|
—
|
|
|
|
13
|
|
|
Other income, net
|
|
—
|
|
|
|
14
|
|
|
|
13
|
|
|
|
(13
|
)
|
|
|
14
|
|
|
Equity in income of subsidiaries
|
|
143
|
|
|
|
7
|
|
|
|
—
|
|
|
|
(150
|
)
|
|
|
—
|
|
|
Income before income taxes
|
|
117
|
|
|
|
44
|
|
|
|
136
|
|
|
|
(147
|
)
|
|
|
150
|
|
|
Income tax provision
|
|
—
|
|
|
|
—
|
|
|
|
(32
|
)
|
|
|
(1
|
)
|
|
|
(33
|
)
|
|
Net income including noncontrolling interests
|
|
117
|
|
|
|
44
|
|
|
|
104
|
|
|
|
(148
|
)
|
|
|
117
|
|
|
Net income attributable to noncontrolling interests
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Net income attributable to Resolute Forest Products Inc.
|
$
|
117
|
|
|
$
|
44
|
|
|
$
|
104
|
|
|
$
|
(148
|
)
|
|
$
|
117
|
|
|
Comprehensive income attributable to Resolute Forest Products Inc.
|
$
|
117
|
|
|
$
|
38
|
|
|
$
|
110
|
|
|
$
|
(148
|
)
|
|
$
|
117
|
|
|
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
|
||||||||||||||||||||
For the Nine Months Ended September 30, 2018
|
||||||||||||||||||||
(Unaudited, in millions)
|
Parent
|
Guarantor
Subsidiaries
|
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||||
Sales
|
$
|
—
|
|
|
$
|
2,348
|
|
|
$
|
1,875
|
|
|
$
|
(1,399
|
)
|
|
$
|
2,824
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of sales, excluding depreciation, amortization and distribution costs
|
|
—
|
|
|
|
2,145
|
|
|
|
1,128
|
|
|
|
(1,392
|
)
|
|
|
1,881
|
|
|
Depreciation and amortization
|
|
—
|
|
|
|
61
|
|
|
|
100
|
|
|
|
—
|
|
|
|
161
|
|
|
Distribution costs
|
|
—
|
|
|
|
119
|
|
|
|
239
|
|
|
|
(2
|
)
|
|
|
356
|
|
|
Selling, general and administrative expenses
|
|
18
|
|
|
|
48
|
|
|
|
59
|
|
|
|
—
|
|
|
|
125
|
|
|
Closure costs, impairment and other related charges
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
Net gain on disposition of assets
|
|
—
|
|
|
|
—
|
|
|
|
(4
|
)
|
|
|
—
|
|
|
|
(4
|
)
|
|
Operating (loss) income
|
|
(18
|
)
|
|
|
(25
|
)
|
|
|
352
|
|
|
|
(5
|
)
|
|
|
304
|
|
|
Interest expense
|
|
(67
|
)
|
|
|
(6
|
)
|
|
|
(9
|
)
|
|
|
46
|
|
|
|
(36
|
)
|
|
Non-operating pension and other postretirement benefit credits
|
|
—
|
|
|
|
11
|
|
|
|
27
|
|
|
|
—
|
|
|
|
38
|
|
|
Other income, net
|
|
—
|
|
|
|
47
|
|
|
|
3
|
|
|
|
(46
|
)
|
|
|
4
|
|
|
Equity in income of subsidiaries
|
|
284
|
|
|
|
56
|
|
|
|
—
|
|
|
|
(340
|
)
|
|
|
—
|
|
|
Income before income taxes
|
|
199
|
|
|
|
83
|
|
|
|
373
|
|
|
|
(345
|
)
|
|
|
310
|
|
|
Income tax provision
|
|
—
|
|
|
|
—
|
|
|
|
(112
|
)
|
|
|
1
|
|
|
|
(111
|
)
|
|
Net income including noncontrolling interests
|
|
199
|
|
|
|
83
|
|
|
|
261
|
|
|
|
(344
|
)
|
|
|
199
|
|
|
Net income attributable to noncontrolling interests
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Net income attributable to Resolute Forest Products Inc.
|
$
|
199
|
|
|
$
|
83
|
|
|
$
|
261
|
|
|
$
|
(344
|
)
|
|
$
|
199
|
|
|
Comprehensive income attributable to Resolute Forest Products Inc.
|
$
|
205
|
|
|
$
|
72
|
|
|
$
|
278
|
|
|
$
|
(350
|
)
|
|
$
|
205
|
|
|
CONDENSED CONSOLIDATING BALANCE SHEET
|
||||||||||||||||||||
As of September 30, 2019
|
||||||||||||||||||||
(Unaudited, in millions)
|
Parent
|
Guarantor
Subsidiaries
|
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
64
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
69
|
|
|
Accounts receivable, net
|
|
1
|
|
|
|
243
|
|
|
|
133
|
|
|
|
—
|
|
|
|
377
|
|
|
Accounts receivable from affiliates
|
|
—
|
|
|
|
256
|
|
|
|
757
|
|
|
|
(1,013
|
)
|
|
|
—
|
|
|
Inventories, net
|
|
—
|
|
|
|
192
|
|
|
|
339
|
|
|
|
(9
|
)
|
|
|
522
|
|
|
Advance and interest receivable from parent
|
|
—
|
|
|
|
67
|
|
|
|
—
|
|
|
|
(67
|
)
|
|
|
—
|
|
|
Interest receivable from affiliate
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
Other current assets
|
|
—
|
|
|
|
20
|
|
|
|
20
|
|
|
|
—
|
|
|
|
40
|
|
|
Total current assets
|
|
1
|
|
|
|
843
|
|
|
|
1,254
|
|
|
|
(1,090
|
)
|
|
|
1,008
|
|
|
Fixed assets, net
|
|
—
|
|
|
|
523
|
|
|
|
954
|
|
|
|
—
|
|
|
|
1,477
|
|
|
Amortizable intangible assets, net
|
|
—
|
|
|
|
3
|
|
|
|
46
|
|
|
|
—
|
|
|
|
49
|
|
|
Deferred income tax assets
|
|
—
|
|
|
|
1
|
|
|
|
843
|
|
|
|
2
|
|
|
|
846
|
|
|
Operating lease right-of-use assets
|
|
—
|
|
|
|
28
|
|
|
|
35
|
|
|
|
—
|
|
|
|
63
|
|
|
Notes receivable from parent
|
|
—
|
|
|
|
1,280
|
|
|
|
—
|
|
|
|
(1,280
|
)
|
|
|
—
|
|
|
Note receivable from affiliate
|
|
—
|
|
|
|
110
|
|
|
|
—
|
|
|
|
(110
|
)
|
|
|
—
|
|
|
Investments in consolidated subsidiaries and affiliates
|
|
3,851
|
|
|
|
2,069
|
|
|
|
—
|
|
|
|
(5,920
|
)
|
|
|
—
|
|
|
Other assets
|
|
—
|
|
|
|
172
|
|
|
|
56
|
|
|
|
—
|
|
|
|
228
|
|
|
Total assets
|
$
|
3,852
|
|
|
$
|
5,029
|
|
|
$
|
3,188
|
|
|
$
|
(8,398
|
)
|
|
$
|
3,671
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Accounts payable and accrued liabilities
|
$
|
13
|
|
|
$
|
119
|
|
|
$
|
264
|
|
|
$
|
—
|
|
|
$
|
396
|
|
|
Current portion of long-term debt
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
Current portion of operating lease liabilities
|
|
—
|
|
|
|
4
|
|
|
|
4
|
|
|
|
—
|
|
|
|
8
|
|
|
Accounts payable to affiliates
|
|
261
|
|
|
|
797
|
|
|
|
—
|
|
|
|
(1,058
|
)
|
|
|
—
|
|
|
Advance and interest payable to subsidiaries
|
|
67
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(67
|
)
|
|
|
—
|
|
|
Interest payable to affiliate
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
Total current liabilities
|
|
341
|
|
|
|
921
|
|
|
|
269
|
|
|
|
(1,126
|
)
|
|
|
405
|
|
|
Long-term debt, net of current portion
|
|
371
|
|
|
|
52
|
|
|
|
—
|
|
|
|
—
|
|
|
|
423
|
|
|
Notes payable to subsidiaries
|
|
1,280
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,280
|
)
|
|
|
—
|
|
|
Note payable to affiliate
|
|
—
|
|
|
|
—
|
|
|
|
110
|
|
|
|
(110
|
)
|
|
|
—
|
|
|
Pension and other postretirement benefit obligations
|
|
—
|
|
|
|
318
|
|
|
|
861
|
|
|
|
—
|
|
|
|
1,179
|
|
|
Operating lease liabilities, net of current portion
|
|
—
|
|
|
|
26
|
|
|
|
32
|
|
|
|
—
|
|
|
|
58
|
|
|
Other liabilities
|
|
—
|
|
|
|
23
|
|
|
|
31
|
|
|
|
—
|
|
|
|
54
|
|
|
Total liabilities
|
|
1,992
|
|
|
|
1,340
|
|
|
|
1,303
|
|
|
|
(2,516
|
)
|
|
|
2,119
|
|
|
Total equity
|
|
1,860
|
|
|
|
3,689
|
|
|
|
1,885
|
|
|
|
(5,882
|
)
|
|
|
1,552
|
|
|
Total liabilities and equity
|
$
|
3,852
|
|
|
$
|
5,029
|
|
|
$
|
3,188
|
|
|
$
|
(8,398
|
)
|
|
$
|
3,671
|
|
|
CONDENSED CONSOLIDATING BALANCE SHEET
|
||||||||||||||||||||
As of December 31, 2018
|
||||||||||||||||||||
(Unaudited, in millions)
|
Parent
|
Guarantor
Subsidiaries
|
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
301
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
304
|
|
|
Accounts receivable, net
|
|
—
|
|
|
|
301
|
|
|
|
148
|
|
|
|
—
|
|
|
|
449
|
|
|
Accounts receivable from affiliates
|
|
—
|
|
|
|
588
|
|
|
|
1,071
|
|
|
|
(1,659
|
)
|
|
|
—
|
|
|
Inventories, net
|
|
—
|
|
|
|
194
|
|
|
|
327
|
|
|
|
(13
|
)
|
|
|
508
|
|
|
Note, advance and interest receivable from parent
|
|
—
|
|
|
|
422
|
|
|
|
—
|
|
|
|
(422
|
)
|
|
|
—
|
|
|
Interest receivable from affiliate
|
|
—
|
|
|
|
4
|
|
|
|
—
|
|
|
|
(4
|
)
|
|
|
—
|
|
|
Other current assets
|
|
—
|
|
|
|
15
|
|
|
|
28
|
|
|
|
—
|
|
|
|
43
|
|
|
Total current assets
|
|
—
|
|
|
|
1,825
|
|
|
|
1,577
|
|
|
|
(2,098
|
)
|
|
|
1,304
|
|
|
Fixed assets, net
|
|
—
|
|
|
|
523
|
|
|
|
992
|
|
|
|
—
|
|
|
|
1,515
|
|
|
Amortizable intangible assets, net
|
|
—
|
|
|
|
2
|
|
|
|
48
|
|
|
|
—
|
|
|
|
50
|
|
|
Deferred income tax assets
|
|
—
|
|
|
|
1
|
|
|
|
872
|
|
|
|
3
|
|
|
|
876
|
|
|
Notes receivable from parent
|
|
—
|
|
|
|
657
|
|
|
|
—
|
|
|
|
(657
|
)
|
|
|
—
|
|
|
Note receivable from affiliate
|
|
—
|
|
|
|
107
|
|
|
|
—
|
|
|
|
(107
|
)
|
|
|
—
|
|
|
Investments in consolidated subsidiaries and affiliates
|
|
4,119
|
|
|
|
2,205
|
|
|
|
—
|
|
|
|
(6,324
|
)
|
|
|
—
|
|
|
Other assets
|
|
—
|
|
|
|
126
|
|
|
|
64
|
|
|
|
—
|
|
|
|
190
|
|
|
Total assets
|
$
|
4,119
|
|
|
$
|
5,446
|
|
|
$
|
3,553
|
|
|
$
|
(9,183
|
)
|
|
$
|
3,935
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Accounts payable and accrued liabilities
|
$
|
7
|
|
|
$
|
170
|
|
|
$
|
250
|
|
|
$
|
—
|
|
|
$
|
427
|
|
|
Current portion of long-term debt
|
|
222
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
223
|
|
|
Accounts payable to affiliates
|
|
592
|
|
|
|
1,112
|
|
|
|
—
|
|
|
|
(1,704
|
)
|
|
|
—
|
|
|
Note, advance and interest payable to subsidiaries
|
|
422
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(422
|
)
|
|
|
—
|
|
|
Interest payable to affiliate
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
|
(4
|
)
|
|
|
—
|
|
|
Total current liabilities
|
|
1,243
|
|
|
|
1,283
|
|
|
|
254
|
|
|
|
(2,130
|
)
|
|
|
650
|
|
|
Long-term debt, net of current portion
|
|
370
|
|
|
|
52
|
|
|
|
—
|
|
|
|
—
|
|
|
|
422
|
|
|
Notes payable to subsidiaries
|
|
657
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(657
|
)
|
|
|
—
|
|
|
Note payable to affiliate
|
|
—
|
|
|
|
—
|
|
|
|
107
|
|
|
|
(107
|
)
|
|
|
—
|
|
|
Pension and other postretirement benefit obligations
|
|
—
|
|
|
|
342
|
|
|
|
915
|
|
|
|
—
|
|
|
|
1,257
|
|
|
Other liabilities
|
|
6
|
|
|
|
21
|
|
|
|
44
|
|
|
|
—
|
|
|
|
71
|
|
|
Total liabilities
|
|
2,276
|
|
|
|
1,698
|
|
|
|
1,320
|
|
|
|
(2,894
|
)
|
|
|
2,400
|
|
|
Total equity
|
|
1,843
|
|
|
|
3,748
|
|
|
|
2,233
|
|
|
|
(6,289
|
)
|
|
|
1,535
|
|
|
Total liabilities and equity
|
$
|
4,119
|
|
|
$
|
5,446
|
|
|
$
|
3,553
|
|
|
$
|
(9,183
|
)
|
|
$
|
3,935
|
|
|
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
|
||||||||||||||||||||
For the Nine Months Ended September 30, 2019
|
||||||||||||||||||||
(Unaudited, in millions)
|
Parent
|
Guarantor
Subsidiaries
|
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||||
Net cash provided by operating activities
|
$
|
—
|
|
|
$
|
64
|
|
|
$
|
56
|
|
|
$
|
—
|
|
|
$
|
120
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash invested in fixed assets
|
|
—
|
|
|
|
(26
|
)
|
|
|
(56
|
)
|
|
|
—
|
|
|
|
(82
|
)
|
|
Disposition of assets
|
|
—
|
|
|
|
2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
|
Decrease in countervailing duty cash deposits on supercalendered paper
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
Increase in countervailing and anti-dumping duty cash deposits on softwood lumber
|
|
—
|
|
|
|
(46
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(46
|
)
|
|
Decrease in countervailing duty cash deposits on uncoated groundwood paper
|
|
—
|
|
|
|
6
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6
|
|
|
Increase in notes receivable from parent
|
|
—
|
|
|
|
(237
|
)
|
|
|
—
|
|
|
|
237
|
|
|
|
—
|
|
|
Net cash used in investing activities
|
|
—
|
|
|
|
(300
|
)
|
|
|
(56
|
)
|
|
|
237
|
|
|
|
(119
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Payments of debt
|
|
(225
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(225
|
)
|
|
Purchases of treasury stock
|
|
(12
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(12
|
)
|
|
Payments of financing and credit facility fees
|
|
—
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
(2
|
)
|
|
Increase in notes payable to subsidiary
|
|
237
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(237
|
)
|
|
|
—
|
|
|
Net cash used in financing activities
|
|
—
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(237
|
)
|
|
|
(239
|
)
|
|
Effect of exchange rate changes on cash and cash equivalents, and restricted cash
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
Net decrease in cash and cash equivalents, and restricted cash
|
|
—
|
|
|
|
(237
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(237
|
)
|
|
Cash and cash equivalents, and restricted cash:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Beginning of period
|
|
—
|
|
|
|
306
|
|
|
|
39
|
|
|
|
—
|
|
|
|
345
|
|
|
End of period
|
$
|
—
|
|
|
$
|
69
|
|
|
$
|
39
|
|
|
$
|
—
|
|
|
$
|
108
|
|
|
Cash and cash equivalents, and restricted cash at period end:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
64
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
69
|
|
|
Restricted cash
|
|
—
|
|
|
|
5
|
|
|
|
34
|
|
|
|
—
|
|
|
|
39
|
|
|
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
|
||||||||||||||||||||
For the Nine Months Ended September 30, 2018
|
||||||||||||||||||||
(Unaudited, in millions)
|
Parent
|
Guarantor
Subsidiaries
|
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||||
Net cash provided by operating activities
|
$
|
—
|
|
|
$
|
291
|
|
|
$
|
60
|
|
|
$
|
—
|
|
|
$
|
351
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash invested in fixed assets
|
|
—
|
|
|
|
(31
|
)
|
|
|
(63
|
)
|
|
|
—
|
|
|
|
(94
|
)
|
|
Disposition of assets
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
|
|
—
|
|
|
|
2
|
|
|
Decrease in countervailing duty cash deposits on supercalendered paper, net
|
|
—
|
|
|
|
13
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13
|
|
|
Increase in countervailing and anti-dumping duty cash deposits on softwood lumber
|
|
—
|
|
|
|
(62
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(62
|
)
|
|
Increase in countervailing duty cash deposits on uncoated groundwood paper
|
|
—
|
|
|
|
(6
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(6
|
)
|
|
Advance to parent
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
Decrease in notes receivable from affiliate
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
Net cash used in investing activities
|
|
—
|
|
|
|
(86
|
)
|
|
|
(61
|
)
|
|
|
—
|
|
|
|
(147
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net repayments under revolving credit facilities
|
|
—
|
|
|
|
(144
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(144
|
)
|
|
Payments of financing and credit facility fees
|
|
(1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
Advance from subsidiary
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
Decrease in notes payable to affiliate
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
1
|
|
|
|
—
|
|
|
Net cash used in financing activities
|
|
—
|
|
|
|
(144
|
)
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
(145
|
)
|
|
Effect of exchange rate changes on cash and cash equivalents, and restricted cash
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
(1
|
)
|
|
Net increase (decrease) in cash and cash equivalents, and restricted cash
|
|
—
|
|
|
|
61
|
|
|
|
(3
|
)
|
|
|
—
|
|
|
|
58
|
|
|
Cash and cash equivalents, and restricted cash:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Beginning of period
|
|
—
|
|
|
|
3
|
|
|
|
46
|
|
|
|
—
|
|
|
|
49
|
|
|
End of period
|
$
|
—
|
|
|
$
|
64
|
|
|
$
|
43
|
|
|
$
|
—
|
|
|
$
|
107
|
|
|
Cash and cash equivalents, and restricted cash at period end:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
64
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
72
|
|
|
Restricted cash
|
|
—
|
|
|
|
—
|
|
|
|
35
|
|
|
|
—
|
|
|
|
35
|
|
|
•
|
On October 28, 2019, we entered into an amended and restated Senior Secured Credit Facility for up $360 million, replacing our existing $185 million senior secured credit facility, as further discussed in Note 7. Long-Term Debt – Senior Secured Credit Facility.
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Competitive cost structure combined with diversified and integrated asset base
|
–
|
large-scale and cost-effective operations, including significant internal energy production from cogeneration and hydroelectric facilities, which support our value proposition;
|
–
|
control over fiber transformation chain from stump to end product for the majority of our offering;
|
–
|
nearly 100% of our products sourced from high-quality virgin fiber;
|
–
|
harvesting rights for the majority of fiber needs in Canada; and
|
–
|
sophisticated logistics capabilities to meet demanding customer expectations.
|
•
|
Strong balance sheet – our low debt, which has favorable pricing and flexibility, combined with strong liquidity levels, provide us with the ability to execute our strategy, particularly the continued transformation to a more profitable and sustainable company for the long term. We have significant tax assets to defer cash income taxes and provide synergies to execute this strategy. Customers benefit from a financially stable and reliable business partner in a challenging industry.
|
•
|
Seasoned management team
|
–
|
deep industry expertise, with influential leaders in forestry, operations, environmental risk management and public policy;
|
–
|
culture of accountability, encouraging transparency and straightforwardness; and
|
–
|
core identity tied to renewable resources we harvest in a truly sustainable manner.
|
Three Months Ended September 30, 2019
|
Operating Loss
|
Net Loss
|
EPS
|
|
|
|||||||
(Unaudited, in millions, except per share amounts)
|
||||||||||||
GAAP, as reported
|
$
|
(18
|
)
|
|
$
|
(43
|
)
|
|
$
|
(0.47
|
)
|
|
Adjustments for special items:
|
|
|
|
|
|
|
|
|
|
|||
Foreign exchange gain
|
|
—
|
|
|
|
(1
|
)
|
|
|
(0.01
|
)
|
|
Net gain on disposition of assets
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(0.01
|
)
|
|
Non-operating pension and other postretirement benefit credits
|
|
—
|
|
|
|
(12
|
)
|
|
|
(0.13
|
)
|
|
Other expense, net (1)
|
|
—
|
|
|
|
18
|
|
|
|
0.20
|
|
|
Income tax effect of special items
|
|
—
|
|
|
|
5
|
|
|
|
0.05
|
|
|
Adjusted for special items (2)
|
$
|
(19
|
)
|
|
$
|
(34
|
)
|
|
$
|
(0.37
|
)
|
|
Three Months Ended September 30, 2018
|
Operating Income
|
Net Income
|
EPS
|
|
|
|||||||
(Unaudited, in millions, except per share amounts)
|
||||||||||||
GAAP, as reported
|
$
|
135
|
|
|
$
|
117
|
|
|
$
|
1.25
|
|
|
Adjustments for special items:
|
|
|
|
|
|
|
|
|
|
|||
Non-operating pension and other postretirement benefit credits
|
|
—
|
|
|
|
(13
|
)
|
|
|
(0.14
|
)
|
|
Other income, net (1)
|
|
—
|
|
|
|
(14
|
)
|
|
|
(0.15
|
)
|
|
Income tax effect of special items
|
|
—
|
|
|
|
6
|
|
|
|
0.07
|
|
|
Adjusted for special items (2)
|
$
|
135
|
|
|
$
|
96
|
|
|
$
|
1.03
|
|
|
(1)
|
Excludes foreign exchange gains and losses.
|
(2)
|
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 U.S. 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, and other charges or credits
|
Nine Months Ended September 30, 2019
|
Operating Income
|
Net Income
|
EPS
|
|
|
|||||||
(Unaudited, in millions, except per share amounts)
|
||||||||||||
GAAP, as reported
|
$
|
86
|
|
|
$
|
24
|
|
|
$
|
0.26
|
|
|
Adjustments for special items:
|
|
|
|
|
|
|
|
|
|
|||
Foreign exchange loss
|
|
—
|
|
|
|
9
|
|
|
|
0.10
|
|
|
Net gain on disposition of assets
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(0.01
|
)
|
|
Non-operating pension and other postretirement benefit credits
|
|
—
|
|
|
|
(36
|
)
|
|
|
(0.39
|
)
|
|
Other expense, net (1)
|
|
—
|
|
|
|
13
|
|
|
|
0.14
|
|
|
Income tax effect of special items
|
|
—
|
|
|
|
(2
|
)
|
|
|
(0.02
|
)
|
|
Adjusted for special items (2)
|
$
|
85
|
|
|
$
|
7
|
|
|
$
|
0.08
|
|
|
Nine Months Ended September 30, 2018
|
Operating Income
|
Net Income
|
EPS
|
|
|
|||||||
(Unaudited, in millions, except per share amounts)
|
||||||||||||
GAAP, as reported
|
$
|
304
|
|
|
$
|
199
|
|
|
$
|
2.14
|
|
|
Adjustments for special items:
|
|
|
|
|
|
|
|
|
|
|||
Foreign exchange loss
|
|
—
|
|
|
|
2
|
|
|
|
0.02
|
|
|
Closure costs, impairment and other related charges
|
|
1
|
|
|
|
1
|
|
|
|
0.01
|
|
|
Reversal of inventory write-downs related to closures
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(0.01
|
)
|
|
Start-up costs
|
|
8
|
|
|
|
8
|
|
|
|
0.09
|
|
|
Net gain on disposition of assets
|
|
(4
|
)
|
|
|
(4
|
)
|
|
|
(0.04
|
)
|
|
Non-operating pension and other postretirement benefit credits
|
|
—
|
|
|
|
(38
|
)
|
|
|
(0.41
|
)
|
|
Other income, net (1)
|
|
—
|
|
|
|
(6
|
)
|
|
|
(0.07
|
)
|
|
Income tax effect of special items
|
|
—
|
|
|
|
18
|
|
|
|
0.19
|
|
|
Adjusted for special items (2)
|
$
|
308
|
|
|
$
|
179
|
|
|
$
|
1.92
|
|
|
(1)
|
Excludes foreign exchange gains and losses.
|
(2)
|
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 2 under “Overview – Third Quarter Overview” above.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions, except per share amounts)
|
2019
|
2018
|
|
2019
|
2018
|
||||||||||||
Sales
|
$
|
705
|
|
|
$
|
974
|
|
|
|
$
|
2,255
|
|
|
$
|
2,824
|
|
|
Operating (loss) income per segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Market pulp
|
|
(12
|
)
|
|
|
57
|
|
|
|
|
57
|
|
|
|
131
|
|
|
Tissue
|
|
(3
|
)
|
|
|
(10
|
)
|
|
|
|
(15
|
)
|
|
|
(21
|
)
|
|
Wood products
|
|
(4
|
)
|
|
|
45
|
|
|
|
|
(1
|
)
|
|
|
177
|
|
|
Newsprint
|
|
4
|
|
|
|
32
|
|
|
|
|
49
|
|
|
|
46
|
|
|
Specialty papers
|
|
4
|
|
|
|
26
|
|
|
|
|
34
|
|
|
|
23
|
|
|
Segment total
|
|
(11
|
)
|
|
|
150
|
|
|
|
|
124
|
|
|
|
356
|
|
|
Corporate and other
|
|
(7
|
)
|
|
|
(15
|
)
|
|
|
|
(38
|
)
|
|
|
(52
|
)
|
|
Operating (loss) income
|
|
(18
|
)
|
|
|
135
|
|
|
|
|
86
|
|
|
|
304
|
|
|
Net (loss) income attributable to Resolute Forest Products Inc.
|
|
(43
|
)
|
|
|
117
|
|
|
|
|
24
|
|
|
|
199
|
|
|
Net (loss) income per common share attributable to Resolute Forest Products Inc. common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
(0.47
|
)
|
|
$
|
1.28
|
|
|
|
$
|
0.26
|
|
|
$
|
2.18
|
|
|
Diluted
|
|
(0.47
|
)
|
|
|
1.25
|
|
|
|
|
0.26
|
|
|
|
2.14
|
|
|
Adjusted EBITDA (1)
|
$
|
23
|
|
|
$
|
189
|
|
|
|
$
|
209
|
|
|
$
|
469
|
|
|
(Unaudited, in millions)
|
September 30,
2019 |
December 31,
2018 |
||||||
Cash and cash equivalents
|
$
|
69
|
|
|
$
|
304
|
|
|
Total assets
|
|
3,671
|
|
|
|
3,935
|
|
|
(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)
|
2019
|
|
|
2018
|
|
|
|
2019
|
|
|
2018
|
|
|
||||
Net (loss) income including noncontrolling interests
|
$
|
(43
|
)
|
|
$
|
117
|
|
|
|
$
|
24
|
|
|
$
|
199
|
|
|
Interest expense
|
|
8
|
|
|
|
12
|
|
|
|
|
24
|
|
|
|
36
|
|
|
Income tax provision
|
|
12
|
|
|
|
33
|
|
|
|
|
52
|
|
|
|
111
|
|
|
Depreciation and amortization
|
|
42
|
|
|
|
54
|
|
|
|
|
124
|
|
|
|
161
|
|
|
EBITDA
|
$
|
19
|
|
|
$
|
216
|
|
|
|
$
|
224
|
|
|
$
|
507
|
|
|
Foreign exchange (gain) loss
|
|
(1
|
)
|
|
|
—
|
|
|
|
|
9
|
|
|
|
2
|
|
|
Closure costs, impairment and other related charges
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
1
|
|
|
Reversal of inventory write-downs related to closures
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
Start-up costs
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
8
|
|
|
Net gain on disposition of assets
|
|
(1
|
)
|
|
|
—
|
|
|
|
|
(1
|
)
|
|
|
(4
|
)
|
|
Non-operating pension and other postretirement benefit credits
|
|
(12
|
)
|
|
|
(13
|
)
|
|
|
|
(36
|
)
|
|
|
(38
|
)
|
|
Other expense (income), net (1)
|
|
18
|
|
|
|
(14
|
)
|
|
|
|
13
|
|
|
|
(6
|
)
|
|
Adjusted EBITDA
|
$
|
23
|
|
|
$
|
189
|
|
|
|
$
|
209
|
|
|
$
|
469
|
|
|
(1)
|
Excludes foreign exchange gains and losses.
|
•
|
unfavorable maintenance costs ($24 million), mainly related to scheduled outages;
|
•
|
higher wood fiber costs ($13 million), mostly due to wood shortages;
|
•
|
an increase in labor costs ($7 million);
|
•
|
higher chemical costs ($5 million); and
|
•
|
lower contribution from our hydroelectric facilities ($3 million), due to scheduled maintenance;
|
•
|
higher wood fiber costs ($51 million), mainly due to wood shortages;
|
•
|
unfavorable maintenance costs ($39 million), largely associated with scheduled outages;
|
•
|
higher labor expense ($17 million);
|
•
|
lower contribution from our hydroelectric facilities ($5 million) and our cogeneration assets that sell power externally ($3 million), largely due to scheduled maintenance;
|
•
|
higher chemical costs ($8 million); and
|
•
|
a rise in recycled fiber prices ($3 million);
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions, except where otherwise stated)
|
2019
|
|
|
2018
|
|
|
|
2019
|
|
|
2018
|
|
|
||||
Sales
|
$
|
201
|
|
|
$
|
288
|
|
|
|
$
|
621
|
|
|
$
|
809
|
|
|
Operating (loss) income (1)
|
|
(12
|
)
|
|
|
57
|
|
|
|
|
57
|
|
|
|
131
|
|
|
EBITDA (2)
|
|
(5
|
)
|
|
|
64
|
|
|
|
|
74
|
|
|
|
153
|
|
|
(In thousands of metric tons)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shipments
|
|
320
|
|
|
|
367
|
|
|
|
|
863
|
|
|
|
1,082
|
|
|
Downtime
|
|
16
|
|
|
|
26
|
|
|
|
|
39
|
|
|
|
54
|
|
|
|
September 30,
|
|||||||
(Unaudited, in thousands of metric tons)
|
2019
|
2018
|
||||||
Finished goods inventory
|
|
74
|
|
|
|
116
|
|
|
(1)
|
Net (loss) income including noncontrolling interests is equal to operating (loss) 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)
|
2019
|
|
|
2018
|
|
|
|
2019
|
|
|
2018
|
|
|
||||
Net (loss) income including noncontrolling interests
|
$
|
(12
|
)
|
|
$
|
57
|
|
|
|
$
|
57
|
|
|
$
|
131
|
|
|
Depreciation and amortization
|
|
7
|
|
|
|
7
|
|
|
|
|
17
|
|
|
|
22
|
|
|
EBITDA
|
|
(5
|
)
|
|
|
64
|
|
|
|
|
74
|
|
|
|
153
|
|
|
•
|
unfavorable maintenance costs ($13 million), mainly related to scheduled outages;
|
•
|
higher wood fiber costs ($8 million) due to wood shortages; and
|
•
|
higher chemical costs ($4 million);
|
•
|
favorable recycled fiber prices ($5 million); and
|
•
|
higher contribution from our cogeneration assets in Saint-Félicien (Quebec) that sell power externally ($3 million), due to the extended outage in the year-ago period.
|
•
|
higher wood fiber costs ($24 million), mostly due to wood shortages;
|
•
|
unfavorable maintenance costs ($19 million), largely associated with scheduled outages;
|
•
|
higher chemical costs ($5 million); and
|
•
|
a rise in recycled fiber prices ($3 million);
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions, except where otherwise stated)
|
2019
|
|
|
2018
|
|
|
|
2019
|
|
|
2018
|
|
|
||||
Sales
|
$
|
43
|
|
|
$
|
38
|
|
|
|
$
|
125
|
|
|
$
|
95
|
|
|
Operating loss (1)
|
|
(3
|
)
|
|
|
(10
|
)
|
|
|
|
(15
|
)
|
|
|
(21
|
)
|
|
EBITDA (2)
|
|
1
|
|
|
|
(5
|
)
|
|
|
|
(2
|
)
|
|
|
(10
|
)
|
|
(In thousands of short tons)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shipments (3)
|
|
25
|
|
|
|
23
|
|
|
|
|
74
|
|
|
|
61
|
|
|
Downtime
|
|
1
|
|
|
|
—
|
|
|
|
|
2
|
|
|
|
1
|
|
|
|
September 30,
|
|||||||
(Unaudited, in thousands of short tons)
|
2019
|
2018
|
||||||
Finished goods inventory (3)
|
|
6
|
|
|
|
7
|
|
|
(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.
|
(3)
|
Tissue converted products, which are measured in cases, are converted to short tons.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions)
|
2019
|
|
|
2018
|
|
|
|
2019
|
|
|
2018
|
|
|
||||
Net loss including noncontrolling interests
|
$
|
(3
|
)
|
|
$
|
(10
|
)
|
|
|
$
|
(15
|
)
|
|
$
|
(21
|
)
|
|
Depreciation and amortization
|
|
4
|
|
|
|
5
|
|
|
|
|
13
|
|
|
|
11
|
|
|
EBITDA
|
|
1
|
|
|
|
(5
|
)
|
|
|
|
(2
|
)
|
|
|
(10
|
)
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions, except where otherwise stated)
|
2019
|
|
|
2018
|
|
|
|
2019
|
|
|
2018
|
|
|
||||
Sales
|
$
|
146
|
|
|
$
|
203
|
|
|
|
$
|
475
|
|
|
$
|
666
|
|
|
Operating (loss) income (1)
|
|
(4
|
)
|
|
|
45
|
|
|
|
|
(1
|
)
|
|
|
177
|
|
|
EBITDA (2)
|
|
4
|
|
|
|
53
|
|
|
|
|
24
|
|
|
|
200
|
|
|
(In millions board feet)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shipments (3)
|
|
429
|
|
|
|
445
|
|
|
|
|
1,341
|
|
|
|
1,394
|
|
|
Downtime
|
|
74
|
|
|
|
44
|
|
|
|
|
168
|
|
|
|
93
|
|
|
|
September 30,
|
|||||||
(Unaudited, in millions board feet)
|
2019
|
2018
|
||||||
Finished goods inventory (3)
|
|
122
|
|
|
|
162
|
|
|
(1)
|
Net (loss) income including noncontrolling interests is equal to operating (loss) 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)
|
2019
|
|
|
2018
|
|
|
|
2019
|
|
|
2018
|
|
|
||||
Net (loss) income including noncontrolling interests
|
$
|
(4
|
)
|
|
$
|
45
|
|
|
|
$
|
(1
|
)
|
|
$
|
177
|
|
|
Depreciation and amortization
|
|
8
|
|
|
|
8
|
|
|
|
|
25
|
|
|
|
23
|
|
|
EBITDA
|
|
4
|
|
|
|
53
|
|
|
|
|
24
|
|
|
|
200
|
|
|
•
|
higher wood fiber costs ($12 million);
|
•
|
an increase in labor costs ($6 million); and
|
•
|
unfavorable maintenance costs ($5 million).
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions, except where otherwise stated)
|
2019
|
|
|
2018
|
|
|
|
2019
|
|
|
2018
|
|
|
||||
Sales
|
$
|
180
|
|
|
$
|
232
|
|
|
|
$
|
601
|
|
|
$
|
660
|
|
|
Operating income (1)
|
|
4
|
|
|
|
32
|
|
|
|
|
49
|
|
|
|
46
|
|
|
EBITDA (2)
|
|
11
|
|
|
|
48
|
|
|
|
|
71
|
|
|
|
95
|
|
|
(In thousands of metric tons)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shipments
|
|
314
|
|
|
|
371
|
|
|
|
|
999
|
|
|
|
1,119
|
|
|
Downtime
|
|
71
|
|
|
|
4
|
|
|
|
|
124
|
|
|
|
18
|
|
|
|
September 30,
|
|||||||
(Unaudited, in thousands of metric tons)
|
2019
|
2018
|
||||||
Finished goods inventory
|
|
104
|
|
|
|
96
|
|
|
(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)
|
2019
|
|
|
2018
|
|
|
|
2019
|
|
|
2018
|
|
|
||||
Net income including noncontrolling interests
|
$
|
4
|
|
|
$
|
32
|
|
|
|
$
|
49
|
|
|
$
|
46
|
|
|
Depreciation and amortization
|
|
7
|
|
|
|
16
|
|
|
|
|
22
|
|
|
|
49
|
|
|
EBITDA
|
|
11
|
|
|
|
48
|
|
|
|
|
71
|
|
|
|
95
|
|
|
•
|
unfavorable maintenance costs ($2 million) and steam usage ($2 million), due to planned outages;
|
•
|
an increase in wood fiber costs ($3 million), due to wood shortages; and
|
•
|
a rise in labor costs ($3 million).
|
•
|
an increase in wood fiber costs ($8 million), due to wood shortages;
|
•
|
unfavorable maintenance costs ($7 million), largely planned;
|
•
|
unfavorable labor costs ($6 million);
|
•
|
higher power and steam costs ($4 million); and
|
•
|
lower contribution from our cogeneration assets that sell power externally ($4 million), largely due to scheduled maintenance.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions, except where otherwise stated)
|
2019
|
|
|
2018
|
|
|
|
2019
|
|
|
2018
|
|
|
||||
Sales
|
$
|
135
|
|
|
$
|
213
|
|
|
|
$
|
433
|
|
|
$
|
594
|
|
|
Operating income (1)
|
|
4
|
|
|
|
26
|
|
|
|
|
34
|
|
|
|
23
|
|
|
EBITDA (2)
|
|
15
|
|
|
|
38
|
|
|
|
|
66
|
|
|
|
59
|
|
|
(In thousands of short tons)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shipments
|
|
185
|
|
|
|
289
|
|
|
|
|
577
|
|
|
|
843
|
|
|
Downtime
|
|
17
|
|
|
|
1
|
|
|
|
|
43
|
|
|
|
16
|
|
|
|
September 30,
|
|||||||
(Unaudited, in thousands of short tons)
|
2019
|
2018
|
||||||
Finished goods inventory
|
|
49
|
|
|
|
78
|
|
|
(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)
|
2019
|
|
|
2018
|
|
|
|
2019
|
|
|
2018
|
|
|
||||
Net income including noncontrolling interests
|
$
|
4
|
|
|
$
|
26
|
|
|
|
$
|
34
|
|
|
$
|
23
|
|
|
Depreciation and amortization
|
|
11
|
|
|
|
12
|
|
|
|
|
32
|
|
|
|
36
|
|
|
EBITDA
|
|
15
|
|
|
|
38
|
|
|
|
|
66
|
|
|
|
59
|
|
|
•
|
higher maintenance costs ($6 million) and lower contribution from our hydroelectric facilities ($3 million) and our cogeneration assets that sell power externally ($2 million), largely due to scheduled outages; and
|
•
|
higher wood fiber costs ($3 million), mostly as a result of wood shortages.
|
•
|
higher maintenance costs ($10 million), in part due to planned outages;
|
•
|
higher wood fiber costs ($7 million), mostly due to wood shortages;
|
•
|
lower contribution from our hydroelectric facilities ($5 million) and our cogeneration assets that sell power externally ($2 million), largely due to scheduled maintenance;
|
•
|
an increase in labor costs ($4 million); and
|
•
|
higher chemical costs ($3 million).
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions)
|
2019
|
|
|
2018
|
|
|
|
2019
|
|
|
2018
|
|
|
||||
Cost of sales, excluding depreciation, amortization and distribution costs
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
|
$
|
(7
|
)
|
|
$
|
(10
|
)
|
|
Depreciation and amortization
|
|
(5
|
)
|
|
|
(6
|
)
|
|
|
|
(15
|
)
|
|
|
(20
|
)
|
|
Selling, general and administrative expenses
|
|
(3
|
)
|
|
|
(8
|
)
|
|
|
|
(17
|
)
|
|
|
(25
|
)
|
|
Closure costs, impairment and other related charges
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
Net gain on disposition of assets
|
|
1
|
|
|
|
—
|
|
|
|
|
1
|
|
|
|
4
|
|
|
Operating loss
|
$
|
(7
|
)
|
|
$
|
(15
|
)
|
|
|
$
|
(38
|
)
|
|
$
|
(52
|
)
|
|
Interest expense
|
|
(8
|
)
|
|
|
(12
|
)
|
|
|
|
(24
|
)
|
|
|
(36
|
)
|
|
Non-operating pension and other postretirement benefit credits
|
|
12
|
|
|
|
13
|
|
|
|
|
36
|
|
|
|
38
|
|
|
Other (expense) income, net
|
|
(17
|
)
|
|
|
14
|
|
|
|
|
(22
|
)
|
|
|
4
|
|
|
Income tax provision
|
|
(12
|
)
|
|
|
(33
|
)
|
|
|
|
(52
|
)
|
|
|
(111
|
)
|
|
Net loss including noncontrolling interests
|
$
|
(32
|
)
|
|
$
|
(33
|
)
|
|
|
$
|
(100
|
)
|
|
$
|
(157
|
)
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
(Unaudited, in millions)
|
2019
|
|
|
2018
|
|
|
|
2019
|
|
|
2018
|
|
|
||||
Net loss including noncontrolling interests
|
$
|
(32
|
)
|
|
$
|
(33
|
)
|
|
|
$
|
(100
|
)
|
|
$
|
(157
|
)
|
|
Interest expense
|
|
8
|
|
|
|
12
|
|
|
|
|
24
|
|
|
|
36
|
|
|
Income tax provision
|
|
12
|
|
|
|
33
|
|
|
|
|
52
|
|
|
|
111
|
|
|
Depreciation and amortization
|
|
5
|
|
|
|
6
|
|
|
|
|
15
|
|
|
|
20
|
|
|
EBITDA
|
$
|
(7
|
)
|
|
$
|
18
|
|
|
|
$
|
(9
|
)
|
|
$
|
10
|
|
|
Foreign exchange (gain) loss
|
|
(1
|
)
|
|
|
—
|
|
|
|
|
9
|
|
|
|
2
|
|
|
Closure costs, impairment and other related charges
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
1
|
|
|
Reversal of inventory write-downs related to closures
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
Start-up costs
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
8
|
|
|
Net gain on disposition of assets
|
|
(1
|
)
|
|
|
—
|
|
|
|
|
(1
|
)
|
|
|
(4
|
)
|
|
Non-operating pension and other postretirement benefit credits
|
|
(12
|
)
|
|
|
(13
|
)
|
|
|
|
(36
|
)
|
|
|
(38
|
)
|
|
Other expense (income), net (1)
|
|
18
|
|
|
|
(14
|
)
|
|
|
|
13
|
|
|
|
(6
|
)
|
|
Adjusted EBITDA
|
$
|
(3
|
)
|
|
$
|
(9
|
)
|
|
|
$
|
(24
|
)
|
|
$
|
(28
|
)
|
|
(1)
|
Excludes foreign exchange gains and losses.
|
|
Nine Months Ended
September 30, |
|||||||
(Unaudited, in millions)
|
2019
|
|
|
2018
|
|
|
||
Net cash provided by operating activities
|
$
|
120
|
|
|
$
|
351
|
|
|
Net cash used in investing activities
|
|
(119
|
)
|
|
|
(147
|
)
|
|
Cash used in financing activities
|
|
(239
|
)
|
|
|
(145
|
)
|
|
Effect of exchange rate changes on cash and cash equivalents, and restricted cash
|
|
1
|
|
|
|
(1
|
)
|
|
Net (decrease) increase in cash and cash equivalents, and restricted cash
|
$
|
(237
|
)
|
|
$
|
58
|
|
|
•
|
$82 million in capital expenditures; and
|
•
|
$46 million of countervailing and anti-dumping duty cash deposits on softwood lumber;
|
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 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Period
|
Total Number of Shares Purchased
|
Average Price Paid per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1)
|
||||||||||||
July 1 to July 31
|
|
1,106,120
|
|
|
$
|
6.79
|
|
|
|
1,106,120
|
|
|
$
|
11,987,575
|
|
|
August 1 to August 31
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
11,987,575
|
|
|
September 1 to September 30
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
11,987,575
|
|
|
Total
|
|
1,106,120
|
|
|
$
|
6.79
|
|
|
|
1,106,120
|
|
|
$
|
11,987,575
|
|
|
(1)
|
$150 million share repurchase program launched in 2012.
|
ITEM 6.
|
EXHIBITS
|
Exhibit No.
|
|
Description
|
|
|
|
|
Amended and Restated Credit Agreement, dated as of October 28, 2019, among Resolute Forest Products Inc., certain U.S. subsidiaries of Resolute Forest Products Inc. as borrowers and guarantors, various lenders, and American AgCredit, FLCA, as administrative agent and collateral agent (incorporated by reference from Exhibit 10.1 to Resolute Forest Products Inc.’s Current Report on Form 8-K filed October 30, 2019, SEC file No. 001-33776).
|
|
|
|
|
|
Form of Resolute Forest Products 2019 Equity Incentive Plan Cash Settled Restricted Stock Unit Agreement.
|
|
|
|
|
|
Form of Resolute Forest Products 2019 Equity Incentive Plan Stock Settled Performance Stock Unit Agreement.
|
|
|
|
|
|
Form of Resolute Forest Products 2019 Equity Incentive Plan Stock Settled Restricted Stock Unit Agreement.
|
|
|
|
|
|
Certification of President and Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
Certification of Senior Vice President and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
Certification of President and Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
Certification of Senior Vice President and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
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.
|
†
|
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 (Loss) Income, (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. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document.
|
RESOLUTE FOREST PRODUCTS INC.
|
||
|
|
|
By
|
|
/s/ Remi G. Lalonde
|
|
|
Remi G. Lalonde
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
By
|
|
/s/ Hugues Dorban
|
|
|
Hugues Dorban
|
|
|
Vice President and Chief Accounting Officer
|
Vesting Date
|
Percentage of RSU Vested
|
December 1 of first calendar year following the calendar year that includes the
Date of Grant |
33 1/3% (rounded to the nearest whole)
|
First anniversary of the first Vesting Date
|
33 1/3% (rounded to the nearest whole)
|
Second anniversary of the first Vesting Date
|
Remaining 33 1/3% (rounded to the nearest whole)
|
Performance Measure
|
Weighting
|
Strategic Objective
|
20%
|
Total Shareholder Return
|
50%
|
Return on Capital
|
30%
|
EBITDA target for tissue business (Calhoun), to be achieved in 2021
|
$29.5M
|
$44.3M
|
$59M
|
$73.8M
|
$88.5M
|
Payout
|
0%
|
50%
|
100%
|
150%
|
200%
|
TSR vs. Peers During the Performance Period
|
20 percentage points below median
|
10 percentage points below median
|
Median
|
10 percentage points above median
|
20 percentage points above median
|
Payout
|
0%
|
50%
|
100%
|
150%
|
200%
|
Original internal rate of return (“IRR”) vs. Actual IRR
|
< 80% of original IRR
|
90% of original IRR
|
100% of original IRR
|
110% of original IRR
|
> 120% of original IRR
|
Payout
|
0%
|
50%
|
100%
|
150%
|
200%
|
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, 2019 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 12, 2019
|
|
/s/ Yves Laflamme
|
Yves Laflamme
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the quarterly period ended September 30, 2019 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;
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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 12, 2019
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/s/ Remi G. Lalonde
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Remi G. Lalonde
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Senior Vice President and Chief Financial Officer
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Date: November 12, 2019
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/s/ Yves Laflamme
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Name: Yves Laflamme
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Title: President and Chief Executive Officer
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Date: November 12, 2019
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/s/ Remi G. Lalonde
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Name: Remi G. Lalonde
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Title: Senior Vice President and Chief Financial Officer
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