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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 20202021
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM    TO
COMMISSION FILE NUMBER: 001-33776
RESOLUTE FOREST PRODUCTS INC.
(Exact name of registrant as specified in its charter)
Delaware98-0526415
(State or other jurisdiction of incorporation or organization)(I.R.S. employer identification number)
111 Robert-Bourassa BoulevardSuite 5000MontrealQuebecCanadaH3C 2M1
(Address of principal executive offices) (Zip Code)

(514) 875-2160
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of classTrading SymbolName of exchange on which registered
Common Stock, par value $0.001 per shareRFPNew York Stock Exchange
Toronto Stock Exchange
(Title of class)(Trading Symbol)(Name of exchange on which registered)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
    Yes ☒    No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
    Yes ☒    No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated FilerNon-accelerated FilerSmaller Reporting CompanyEmerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
    Yes ☐    No ☒
As of October 30, 2020,29, 2021, there were 81,533,73177,662,976 shares of Resolute Forest Products Inc. common stock, $0.001 par value, outstanding.


Table of Contents

RESOLUTE FOREST PRODUCTS INC.
TABLE OF CONTENTS
 
 Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
PART II. OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds


Table of Contents

PART I.    FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS
RESOLUTE FOREST PRODUCTS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in millions of U.S. dollars, except per share amounts)
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended
September 30,
Nine Months Ended
September 30,
20202019202020192021202020212020
SalesSales$730 $705 $2,031 $2,255 Sales$817 $730 $2,830 $2,031 
Costs and expenses:Costs and expenses:Costs and expenses:
Cost of sales, excluding depreciation, amortization and distribution costsCost of sales, excluding depreciation, amortization and distribution costs475 558 1,463 1,648 Cost of sales, excluding depreciation, amortization and distribution costs554 475 1,642 1,463 
Depreciation and amortizationDepreciation and amortization43 42 125 124 Depreciation and amortization42 43 123 125 
Distribution costsDistribution costs80 94 258 295 Distribution costs87 80 264 258 
Selling, general and administrative expensesSelling, general and administrative expenses35 30 101 103 Selling, general and administrative expenses32 35 114 101 
Closure costs, impairment and other related chargesClosure costs, impairment and other related charges0 (2)Closure costs, impairment and other related charges — 2 (2)
Net gain on disposition of assetsNet gain on disposition of assets0 (1)(9)(1)Net gain on disposition of assets —  (9)
Operating income (loss)97 (18)95 86 
Operating incomeOperating income102 97 685 95 
Interest expenseInterest expense(8)(8)(26)(24)Interest expense(5)(8)(16)(26)
Non-operating pension and other postretirement benefit creditsNon-operating pension and other postretirement benefit credits5 12 24 36 Non-operating pension and other postretirement benefit credits3 8 24 
Other (expense) income, net(14)(17)24 (22)
Income (loss) before income taxes80 (31)117 76 
Other income (expense), netOther income (expense), net20 (14)(74)24 
Income before income taxesIncome before income taxes120 80 603 117 
Income tax provisionIncome tax provision(23)(12)(55)(52)Income tax provision(40)(23)(167)(55)
Net income (loss) including noncontrolling interest57 (43)62 24 
Net income including noncontrolling interestNet income including noncontrolling interest80 57 436 62 
Net income attributable to noncontrolling interestNet income attributable to noncontrolling interest0 0 Net income attributable to noncontrolling interest — (1)— 
Net income (loss) attributable to Resolute Forest Products Inc.$57 $(43)$62 $24 
Net income (loss) per share attributable to Resolute Forest Products Inc. common shareholders:
Net income attributable to Resolute Forest Products Inc.Net income attributable to Resolute Forest Products Inc.$80 $57 $435 $62 
Net income per share attributable to Resolute Forest Products Inc. common shareholders:Net income per share attributable to Resolute Forest Products Inc. common shareholders:
BasicBasic$0.66 $(0.47)$0.71 $0.26 Basic$1.00 $0.66 $5.44 $0.71 
DilutedDiluted$0.66 $(0.47)$0.71 $0.26 Diluted$0.99 $0.66 $5.39 $0.71 
Weighted-average number of Resolute Forest Products Inc. common shares outstanding:Weighted-average number of Resolute Forest Products Inc. common shares outstanding:Weighted-average number of Resolute Forest Products Inc. common shares outstanding:
BasicBasic86.0 90.9 87.4 91.9 Basic79.4 86.0 80.0 87.4 
DilutedDiluted86.2 90.9 87.6 93.0 Diluted80.1 86.2 80.8 87.6 
See accompanying notes to unaudited interim Consolidated Financial Statements.
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RESOLUTE FOREST PRODUCTS INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited, in millions of U.S. dollars)
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended
September 30,
Nine Months Ended
September 30,
20202019202020192021202020212020
Net income (loss) including noncontrolling interest$57 $(43)$62 $24 
Net income including noncontrolling interestNet income including noncontrolling interest$80 $57 $436 $62 
Other comprehensive income:Other comprehensive income:Other comprehensive income:
Unamortized prior service costs
Change in unamortized prior service costs(1)(2)(17)(9)
Unamortized prior service costs or creditsUnamortized prior service costs or credits
Change in unamortized prior service costs or creditsChange in unamortized prior service costs or credits (1)(3)(17)
Income tax provisionIncome tax provision0 0 Income tax provision —  — 
Change in unamortized prior service costs, net of tax(1)(2)(17)(9)
Change in unamortized prior service costs or credits, net of taxChange in unamortized prior service costs or credits, net of tax (1)(3)(17)
Unamortized actuarial lossesUnamortized actuarial lossesUnamortized actuarial losses
Change in unamortized actuarial lossesChange in unamortized actuarial losses14 46 17 Change in unamortized actuarial losses16 14 84 46 
Income tax provisionIncome tax provision(3)(2)(10)(4)Income tax provision(4)(3)(20)(10)
Change in unamortized actuarial losses, net of taxChange in unamortized actuarial losses, net of tax11 36 13 Change in unamortized actuarial losses, net of tax12 11 64 36 
Foreign currency translationForeign currency translation1 0 Foreign currency translation  — 
Other comprehensive income, net of taxOther comprehensive income, net of tax11 19 Other comprehensive income, net of tax12 11 61 19 
Comprehensive income (loss) including noncontrolling interest68 (41)81 28 
Comprehensive income including noncontrolling interestComprehensive income including noncontrolling interest92 68 497 81 
Comprehensive income attributable to noncontrolling interestComprehensive income attributable to noncontrolling interest0 0 Comprehensive income attributable to noncontrolling interest — (1)— 
Comprehensive income (loss) attributable to Resolute Forest Products Inc.$68 $(41)$81 $28 
Comprehensive income attributable to Resolute Forest Products Inc.Comprehensive income attributable to Resolute Forest Products Inc.$92 $68 $496 $81 
See accompanying notes to unaudited interim Consolidated Financial Statements.
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RESOLUTE FOREST PRODUCTS INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in millions of U.S. dollars, except per share amount)
September 30,
2020
December 31,
2019
September 30,
2021
December 31,
2020
AssetsAssetsAssets
Current assets:Current assets:Current assets:
Cash and cash equivalentsCash and cash equivalents$20 $Cash and cash equivalents$119 $113 
Accounts receivable, net:Accounts receivable, net:Accounts receivable, net:
TradeTrade273 273 Trade279 230 
OtherOther46 76 Other48 48 
Inventories, netInventories, net511 522 Inventories, net509 462 
Other current assetsOther current assets58 33 Other current assets68 47 
Total current assetsTotal current assets908 907 Total current assets1,023 900 
Fixed assets, less accumulated depreciation of $1,543 and $1,658 as of September 30, 2020 and December 31, 2019, respectively1,503 1,459 
Amortizable intangible assets, less accumulated amortization of $31 and $27 as of September 30, 2020 and December 31, 2019, respectively65 48 
Fixed assets, less accumulated depreciation of $1,720 and $1,604 as of September 30, 2021 and December 31, 2020, respectivelyFixed assets, less accumulated depreciation of $1,720 and $1,604 as of September 30, 2021 and December 31, 2020, respectively1,406 1,441 
Amortizable intangible assets, less accumulated amortization of $37 and $33 as of September 30, 2021 and December 31, 2020, respectivelyAmortizable intangible assets, less accumulated amortization of $37 and $33 as of September 30, 2021 and December 31, 2020, respectively59 63 
GoodwillGoodwill31 Goodwill31 31 
Deferred income tax assetsDeferred income tax assets825 915 Deferred income tax assets735 915 
Operating lease right-of-use assetsOperating lease right-of-use assets56 61 Operating lease right-of-use assets58 60 
Other assetsOther assets290 236 Other assets455 320 
Total assetsTotal assets$3,678 $3,626 Total assets$3,767 $3,730 
Liabilities and equityLiabilities and equityLiabilities and equity
Current liabilities:Current liabilities:Current liabilities:
Accounts payable and accrued liabilities$339 $342 
Accounts payable and otherAccounts payable and other$437 $369 
Current portion of long-term debtCurrent portion of long-term debt2 Current portion of long-term debt3 
Current portion of operating lease liabilitiesCurrent portion of operating lease liabilities8 Current portion of operating lease liabilities7 
Total current liabilitiesTotal current liabilities349 351 Total current liabilities447 380 
Long-term debt, net of current portionLong-term debt, net of current portion559 448 Long-term debt, net of current portion300 559 
Pension and other postretirement benefit obligationsPension and other postretirement benefit obligations1,337 1,460 Pension and other postretirement benefit obligations1,415 1,562 
Operating lease liabilities, net of current portionOperating lease liabilities, net of current portion51 57 Operating lease liabilities, net of current portion55 55 
Other liabilitiesOther liabilities82 75 Other liabilities85 92 
Total liabilitiesTotal liabilities2,378 2,391 Total liabilities2,302 2,648 
Commitments and contingenciesCommitments and contingenciesCommitments and contingencies00
Equity:Equity:Equity:
Resolute Forest Products Inc. shareholders’ equity:Resolute Forest Products Inc. shareholders’ equity:Resolute Forest Products Inc. shareholders’ equity:
Common stock, $0.001 par value. 120.2 million shares issued and 82.6 million shares outstanding as of September 30, 2020; 119.5 million shares issued and 86.7 million shares outstanding as of December 31, 20190 
Common stock, $0.001 par value. 121.0 million shares issued and 77.9 million shares outstanding as of September 30, 2021; 120.6 million shares issued and 80.8 million shares outstanding as of December 31, 2020Common stock, $0.001 par value. 121.0 million shares issued and 77.9 million shares outstanding as of September 30, 2021; 120.6 million shares issued and 80.8 million shares outstanding as of December 31, 2020 — 
Additional paid-in capitalAdditional paid-in capital3,805 3,802 Additional paid-in capital3,805 3,804 
DeficitDeficit(1,183)(1,245)Deficit(881)(1,235)
Accumulated other comprehensive lossAccumulated other comprehensive loss(1,160)(1,179)Accumulated other comprehensive loss(1,253)(1,314)
Treasury stock at cost, 37.6 million shares and 32.8 million shares as of September 30, 2020 and December 31, 2019, respectively(163)(144)
Treasury stock at cost, 43.1 million shares and 39.8 million shares as of September 30, 2021 and December 31, 2020, respectivelyTreasury stock at cost, 43.1 million shares and 39.8 million shares as of September 30, 2021 and December 31, 2020, respectively(208)(174)
Total Resolute Forest Products Inc. shareholders’ equityTotal Resolute Forest Products Inc. shareholders’ equity1,299 1,234 Total Resolute Forest Products Inc. shareholders’ equity1,463 1,081 
Noncontrolling interestNoncontrolling interest1 Noncontrolling interest2 
Total equityTotal equity1,300 1,235 Total equity1,465 1,082 
Total liabilities and equityTotal liabilities and equity$3,678 $3,626 Total liabilities and equity$3,767 $3,730 
See accompanying notes to unaudited interim Consolidated Financial Statements.
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RESOLUTE FOREST PRODUCTS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited, in millions of U.S. dollars)
Three Months Ended September 30, 2020
 Resolute Forest Products Inc. Shareholders’ Equity  
Common
Stock
Additional
Paid-In
Capital
DeficitAccumulated Other Comprehensive LossTreasury
Stock
Non-controlling
Interest
Total Equity
Balance as of June 30, 2020$$3,805 $(1,240)$(1,171)$(145)$$1,250 
Share-based compensation, net of withholding taxes— — — — — 
Net income— — 57 — — 57 
Purchases of treasury stock (4.5 million shares) (Note 12)— — — — (18)— (18)
Other comprehensive income, net of tax— — — 11 — 11 
Balance as of September 30, 2020$0 $3,805 $(1,183)$(1,160)$(163)$1 $1,300 
Nine Months Ended September 30, 2020
 Resolute Forest Products Inc. Shareholders’ Equity  
Common
Stock
Additional
Paid-In
Capital
DeficitAccumulated Other Comprehensive LossTreasury
Stock
Non-controlling
Interest
Total Equity
Balance as of December 31, 2019$$3,802 $(1,245)$(1,179)$(144)$$1,235 
Share-based compensation, net of withholding taxes— — — — — 
Net income— — 62 — — 62 
Purchases of treasury stock (4.8 million shares) (Note 12)— — — — (19)— (19)
Stock unit awards vested (0.7 million shares), net of shares forfeited for employee withholding taxes— — — — — — 
Other comprehensive income, net of tax— — — 19 — 19 
Balance as of September 30, 2020$0 $3,805 $(1,183)$(1,160)$(163)$1 $1,300 
Three Months Ended September 30, 2021
 Resolute Forest Products Inc. Shareholders’ Equity  
Common
Stock
Additional
Paid-In
Capital
DeficitAccumulated Other Comprehensive LossTreasury
Stock
Non-controlling
Interest
Total Equity
Balance as of June 30, 2021$— $3,805 $(961)$(1,265)$(194)$$1,387 
Share-based compensation, net of withholding taxes— — — — — — — 
Net income— — 80 — — — 80 
Purchases of treasury stock (1.2 million shares) (Note 12)— — — — (14)— (14)
Other comprehensive income, net of tax— — — 12 — — 12 
Balance as of September 30, 2021$ $3,805 $(881)$(1,253)$(208)$2 $1,465 
Nine Months Ended September 30, 2021
Resolute Forest Products Inc. Shareholders’ Equity
Common
Stock
Additional
Paid-In
Capital
DeficitAccumulated Other Comprehensive LossTreasury
Stock
Non-controlling
Interest
Total Equity
Balance as of December 31, 2020$— $3,804 $(1,235)$(1,314)$(174)$$1,082 
Share-based compensation, net of withholding taxes— (1)— — — — (1)
Net income— — 435 — — 436 
Purchases of treasury stock (3.3 million shares) (Note 12)— — — — (34)— (34)
Special dividend— (81)— — — (79)
Stock unit awards vested and stock options exercised (0.4 million shares), net of shares forfeited for employee withholding taxes— — — — — — — 
Other comprehensive income, net of tax— — — 61 — — 61 
Balance as of September 30, 2021$ $3,805 $(881)$(1,253)$(208)$2 $1,465 
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RESOLUTE FOREST PRODUCTS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited, in millions of U.S. dollars)
Three Months Ended September 30, 2019
 Resolute Forest Products Inc. Shareholders’ Equity  
Common
Stock
Additional
Paid-In
Capital
DeficitAccumulated Other Comprehensive LossTreasury
Stock
Non-
controlling
Interest
Total Equity
Balance as of June 30, 2019$$3,803 $(1,131)$(948)$(125)$$1,600 
Net loss— — (43)— — (43)
Purchases of treasury stock (1.1 million shares) (Note 12)— — — — (7)— (7)
Other comprehensive income, net of tax— — — — 
Balance as of September 30, 2019$0 $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
DeficitAccumulated Other Comprehensive LossTreasury
Stock
Non-
controlling
Interest
Total Equity
Balance as of December 31, 2018$$3,802 $(1,198)$(950)$(120)$$1,535 
Share-based compensation, net of withholding taxes— — — — — 
Net income— — 24 — — 24 
Purchases of treasury stock (1.8 million shares) (Note 12)— — — — (12)— (12)
Stock unit awards vested (0.3 million shares), net of shares forfeited for employee withholding taxes— — — — — — 
Other comprehensive income, net of tax— — — — 
Balance as of September 30, 2019$0 $3,803 $(1,174)$(946)$(132)$1 $1,552 
Three Months Ended September 30, 2020
 Resolute Forest Products Inc. Shareholders’ Equity  
Common
Stock
Additional
Paid-In
Capital
DeficitAccumulated Other Comprehensive LossTreasury
Stock
Non-
controlling
Interest
Total Equity
Balance as of June 30, 2020$— $3,805 $(1,240)$(1,171)$(145)$$1,250 
Share-based compensation, net of withholding taxes— — — — — — — 
Net income— — 57 — — — 57 
Purchases of treasury stock (4.5 million shares) (Note 12)— — — — (18)— (18)
Other comprehensive income, net of tax— — — 11 — — 11 
Balance as of September 30, 2020$ $3,805 $(1,183)$(1,160)$(163)$1 $1,300 
Nine Months Ended September 30, 2020
Resolute Forest Products Inc. Shareholders’ Equity
Common
Stock
Additional
Paid-In
Capital
DeficitAccumulated Other Comprehensive LossTreasury
Stock
Non-
controlling
Interest
Total Equity
Balance as of December 31, 2019$— $3,802 $(1,245)$(1,179)$(144)$$1,235 
Share-based compensation, net of withholding taxes— — — — — 
Net income— — 62 — — — 62 
Purchases of treasury stock (4.8 million shares) (Note 12)— — — — (19)— (19)
Stock unit awards vested (0.7 million shares), net of shares forfeited for employee withholding taxes— — — — — — — 
Other comprehensive income, net of tax— — — 19 — — 19 
Balance as of September 30, 2020$ $3,805 $(1,183)$(1,160)$(163)$1 $1,300 
See accompanying notes to unaudited interim Consolidated Financial Statements.
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RESOLUTE FOREST PRODUCTS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in millions of U.S. dollars)
Nine Months Ended September 30,Nine Months Ended
September 30,
2020201920212020
Cash flows from operating activities:Cash flows from operating activities:Cash flows from operating activities:
Net income including noncontrolling interestNet income including noncontrolling interest$62 $24 Net income including noncontrolling interest$436 $62 
Adjustments to reconcile net income including noncontrolling interest to net cash provided by operating activities:Adjustments to reconcile net income including noncontrolling interest to net cash provided by operating activities:Adjustments to reconcile net income including noncontrolling interest to net cash provided by operating activities:
Share-based compensationShare-based compensation4 Share-based compensation3 
Depreciation and amortizationDepreciation and amortization125 124 Depreciation and amortization123 125 
Deferred income taxesDeferred income taxes55 52 Deferred income taxes167 55 
Net pension contributions and other postretirement benefit paymentsNet pension contributions and other postretirement benefit payments(66)(96)Net pension contributions and other postretirement benefit payments(71)(66)
Net gain on disposition of assetsNet gain on disposition of assets(9)(1)Net gain on disposition of assets (9)
Loss (gain) on translation of foreign currency denominated deferred income taxes23 (26)
(Gain) loss on translation of foreign currency denominated pension and other postretirement benefit obligations(28)27 
(Gain) loss on translation of foreign currency denominated deferred income taxes(Gain) loss on translation of foreign currency denominated deferred income taxes(7)23 
Loss (gain) on translation of foreign currency denominated pension and other postretirement benefit obligationsLoss (gain) on translation of foreign currency denominated pension and other postretirement benefit obligations6 (28)
Net planned major maintenance (payments) amortization(2)16 
Net planned major maintenance paymentsNet planned major maintenance payments(15)(2)
Changes in working capital:Changes in working capital:Changes in working capital:
Accounts receivableAccounts receivable20 60 Accounts receivable(45)20 
InventoriesInventories21 (14)Inventories(48)21 
Other current assetsOther current assets(21)(11)Other current assets(11)(21)
Accounts payable and accrued liabilities(14)(41)
Accounts payable and otherAccounts payable and other34 (14)
Other, netOther, net6 Other, net8 
Net cash provided by operating activitiesNet cash provided by operating activities176 120 Net cash provided by operating activities580 176 
Cash flows from investing activities:Cash flows from investing activities:Cash flows from investing activities:
Cash invested in fixed assetsCash invested in fixed assets(53)(82)Cash invested in fixed assets(79)(53)
Acquisition of business, net of cash acquiredAcquisition of business, net of cash acquired(172)Acquisition of business, net of cash acquired (172)
Disposition of assetsDisposition of assets9 Disposition of assets 
Decrease in countervailing duty cash deposits on supercalendered paper0 
Increase in countervailing and anti-dumping duty cash deposits on softwood lumberIncrease in countervailing and anti-dumping duty cash deposits on softwood lumber(52)(46)Increase in countervailing and anti-dumping duty cash deposits on softwood lumber(128)(52)
Decrease in countervailing duty cash deposits on uncoated groundwood paper0 
Proceeds from insurance settlementProceeds from insurance settlement15 Proceeds from insurance settlement 15 
Other investing activities, netOther investing activities, net5 Other investing activities, net3 
Net cash used in investing activitiesNet cash used in investing activities(248)(119)Net cash used in investing activities(204)(248)
Cash flows from financing activities:Cash flows from financing activities:Cash flows from financing activities:
Net repayments under revolving credit facilitiesNet repayments under revolving credit facilities(71)Net repayments under revolving credit facilities (71)
Issuance of long-term debtIssuance of long-term debt300 — 
Payment of special dividendPayment of special dividend(79)— 
Proceeds from long-term debtProceeds from long-term debt180 Proceeds from long-term debt 180 
Repayments of debtRepayments of debt(1)(225)Repayments of debt(557)(1)
Purchases of treasury stockPurchases of treasury stock(19)(12)Purchases of treasury stock(34)(19)
Payments of financing and credit facility fees0 (2)
Net cash provided by (used in) financing activities89 (239)
Payments of financing feesPayments of financing fees(7)— 
Other financing activities, netOther financing activities, net2 — 
Net cash (used in) provided by financing activitiesNet cash (used in) provided by financing activities(375)89 
Effect of exchange rate changes on cash and cash equivalents, and restricted cashEffect of exchange rate changes on cash and cash equivalents, and restricted cash0 Effect of exchange rate changes on cash and cash equivalents, and restricted cash(1)— 
Net increase (decrease) in cash and cash equivalents, and restricted cash$17 $(237)
Net increase in cash and cash equivalents, and restricted cashNet increase in cash and cash equivalents, and restricted cash$ $17 
Cash and cash equivalents, and restricted cash:Cash and cash equivalents, and restricted cash:Cash and cash equivalents, and restricted cash:
Beginning of periodBeginning of period$42 $345 Beginning of period$159 $42 
End of periodEnd of period$59 $108 End of period$159 $59 
Cash and cash equivalents, and restricted cash at end of period:Cash and cash equivalents, and restricted cash at end of period:Cash and cash equivalents, and restricted cash at end of period:
Cash and cash equivalentsCash and cash equivalents$20 $69 Cash and cash equivalents$119 $20 
Restricted cash (included in “Other assets”)Restricted cash (included in “Other assets”)$39 $39 Restricted cash (included in “Other assets”)$40 $39 
See accompanying notes to unaudited interim Consolidated Financial Statements.
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
Note 1. Organization and Basis of Presentation
Nature of operations
Resolute Forest Products Inc. (with its subsidiaries, either individually or collectively, unless otherwise indicated, referred to as “Resolute Forest Products,” “we,” “our,” “us,” “Parent,” or the “Company”) is incorporated in Delaware. We are a global leader in the forest products industry with a diverse range of products, including market pulp, tissue, wood products, and paper, which are marketed in close to 70over 50 countries. We own or operate some 40 facilities as well as power generation assets, in the U.S. and Canada.
Financial statements
Our unaudited interim consolidated financial statements and accompanying notes (or, the “Consolidated Financial Statements”) are unaudited and have been prepared in accordance with the requirements of the U.S. Securities and Exchange Commission (or, the “SEC”) for interim reporting. Under those rules, certain footnotes and other financial information that are normally required by U.S. generally accepted accounting principles (or, “GAAP”) may be condensed or omitted. In our opinion, all adjustments (consisting of normal recurring adjustments) necessary for the fair statement of the unaudited interim Consolidated Financial Statements have been made. All amounts are expressed in U.S. dollars, unless otherwise indicated. The results for the interim period ended September 30, 2020,2021, are not necessarily indicative of the results to be expected for the full year. These unaudited interim Consolidated Financial Statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2019,2020, filed with the SEC on March 2, 2020.1, 2021. Certain prior period amounts in the notes to our Consolidated Financial Statements have been reclassified to conform to the 20202021 presentation.
Use of estimates
The uncertainties around the novel coronavirus (or, “COVID-19”) pandemic required the use of judgments and estimates that resulted in no significant impacts to our Consolidated Financial Statements as of and for the three and nine months ended September 30, 2020. The future impact of the COVID-19 pandemic could generate, in future reporting periods, a significant risk of material adjustment to the carrying amounts of deferred income tax assets and long-lived assets.
New accounting pronouncementspronouncement adopted in 20202021
ASU 2016-13 “Measurement of Credit Losses on Financial Instruments”2019-12 “Simplifying the Accounting for Income Taxes”
Effective January 1, 2020,2021, we adopted on a modified retrospective basisASU 2019-12, “Simplifying the Accounting Standards Update (or, “ASU”) 2016-13, “Measurement of Credit Losses on Financial Instruments,for Income Taxes,” issued by the Financial Accounting Standards Board (or, the FASB”) in 20162019, which removes the specific exceptions to the general principles in ASC 740, “Income Taxes,” and amended in 2018 by ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses,” which introduces the current expected credit losses model in the estimation of credit losses on financial instruments. The adoption of this new accounting guidance did not impact the opening deficit balance as of January 1, 2020. As a resultclarifies certain aspects of the adoption of ASU 2016-13, our accounts receivable accounting policy was updated as follows:
Accounts receivable are recorded at cost, net of an allowance for expected credit losses that is based on expected collectability, and such carrying value approximates fair value.
Accounts receivable are subject to impairment review that is based on the aging method. Impairment is calculated based on how long a receivable has been outstanding. We established an impairment loss allowance by considering historical credit loss experience (based on days past due), current conditions, and forward-looking factors specific to the customers and the economic environment.
We also consider if we are no longer doing business with the customer, and any other factors that may affect collectability from customers with significant outstanding balances. A receivable is written off when there is no reasonable expectation of recovering the contractual cash flows. Usually, the allowance for doubtful accounts fully covers the receivable.
ASU 2018-13 “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement”
Effective January 1, 2020, we adopted ASU 2018-13 “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement” issued by the FASB in 2018.existing guidance. The adoption of this accounting guidance did not impact our Consolidated Financial Statements and disclosures.
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
ASU 2018-15 “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract”
Effective January 1, 2020, we adopted ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” issued by the FASB in 2018, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The adoption of this accounting guidance did not materially impact our results of operations or financial position.
Accounting pronouncement not yet adopted as of September 30, 20202021
ASU 2020-04 “Reference Rate Reform”
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform,” amended in January by ASU 2021-01, “Reference Rate Reform - Scope,” which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. This update provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (or, the “LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. This update is effective as of March 12, 2020, through December 31, 2022. We are currently evaluating this accounting guidance and have not elected an adoption date. We do not expect this accounting guidance to materially impact our results of operations or financial position.
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
Note 2. Business Acquisition
On February 1, 2020 (or, the “Acquisition Date”), we acquired from Conifex Timber Inc. all of the equity securities and membership interests in certain of its subsidiaries, the business of which consists mainly in the operation of three sawmills and related assets in Cross City (Florida) and in Glenwood and El Dorado (Arkansas) (or, the “U.S. Sawmill Business”). The U.S. Sawmill Business acquired produces construction-grade dimensional lumber and decking products from locally sourced southern yellow pine for distribution within the U.S. This acquisition will diversify our lumber production, and increase our operating capacity in the U.S. South.
The fair value of the consideration, paid in cash, for the U.S. Sawmill Business acquired is $173 million. We intend to structure the acquisition as an asset purchase for tax purposes.
We account for business combinations using the acquisition method as of the date control is transferred to us. Under this approach, identifiable assets acquired and liabilities assumed are recorded at their respective fair values at the date of acquisition. Any amount of the purchase price paid that is in excess of the estimated fair values of net identifiable assets acquired is recorded in “Goodwill” in our Consolidated Balance Sheets. Transaction costs are expensed as incurred in our Consolidated Statements of Operations.
The following table summarizes our preliminary allocation of the purchase price to the fair values of assets acquired and liabilities assumed at the Acquisition Date:
(Unaudited, in millions)
Current assets (1)
$19
Fixed assets114
Amortizable intangible assets (2)
21
Operating lease right-of-use assets2
Goodwill (3)
31
Total assets acquired and goodwill$187
Current liabilities$11
Long-term debt, net of current portion2
Operating lease liabilities, net of current portion1
Total liabilities assumed$14
Net assets acquired$173
Fair value of consideration transferred$173
(1)Includes cash and cash equivalents of $1 million.
(2)These intangible assets are being amortized over a weighted-average useful life of 10 years. The fair value of the customer relationships was determined using the income approach through an excess earnings analysis discounted at a rate of 12.6%.
(3)The goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized and is mostly attributable to the U.S. Sawmill Business’s assembled workforce and synergies expected from combining our operations with the U.S. Sawmill Business. Goodwill has been assigned to the wood products reportable segment for the purposes of impairment testing. The total amount of goodwill is deductible for tax purposes.
The allocation of the purchase price to assets acquired and liabilities assumed was based upon a preliminary valuation for all items and may be subject to adjustment during the 12-month measurement period following the Acquisition Date since we are finalizing the assumptions in regards to the fair values of these assets and liabilities.
The allocation of the purchase price was based on management’s estimate of the fair values of the acquired identifiable assets and assumed liabilities using valuation techniques including income, cost and market approaches. We utilized both the cost and market approaches to value fixed assets, and both the income and cost approaches to value intangible assets (Level 3).
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
From the Acquisition Date to the nine months period ended September 30, 2020, our consolidated financial results included sales of $98 million and net income of $32 million attributable to the U.S. Sawmill Business. In connection with the acquisition of the U.S. Sawmill Business, we also recognized transaction costs of $3 million in “Other (expense) income, net” in our Consolidated Statements of Operations for the nine months ended September 30, 2020.
The following unaudited pro forma information for the three and nine months ended September 30, 2020 and 2019, represents our results of operations as if the acquisition of the U.S. Sawmill Business had occurred on January 1, 2019, excluding the results of operations of the El Dorado sawmill that has been idled since October 2019. This pro forma information does not purport to be indicative of the results that would have occurred for the periods presented or that may be expected in the future.
Three Months Ended September 30,Nine Months Ended September 30,
(Unaudited, in millions)2020201920202019
Sales$730 $729 $2,039 $2,328 
Net income (loss) attributable to Resolute Forest Products Inc.$57 $(48)$65 $
Note 3. Other Income (Expense) Income,, Net
Other income (expense) income,, net for the three and nine months ended September 30, 20202021 and 2019,2020, was comprised of the following:
Three Months Ended September 30,Nine Months Ended September 30,
(Unaudited, in millions)2020201920202019
Foreign exchange (loss) gain$(5)$$9 $(9)
Insurance recovery (1)
0 15 
Provision related to a litigation (2)
0 (23)0 (23)
Miscellaneous (expense) income(9)0 10 
 $(14)$(17)$24 $(22)
Three Months Ended
September 30,
Nine Months Ended
September 30,
(Unaudited, in millions)2021202020212020
Foreign exchange gain (loss)$12 $(5)$1 $
Gain (loss) on commodity contracts (1)
1 (11)(85)(7)
Insurance recovery (2)
 —  15 
Miscellaneous income7 10 
 $20 $(14)$(74)$24 
(1)Principally related to lumber futures contracts; none of these contracts were outstanding as of September 30, 2021.
(2)    We recorded $15 million as other income for the nine months ended September 30, 2020, from the settlement of an insurance claim in connection with our acquisition of Atlas Paper Holdings, Inc. (or, “Atlas”) in 2015.
(2)We accrued C$30 million of legal indemnity and interest costs for the three and nine months ended September 30, 2019, in connection with the Quebec Superior Court decision of the fair value of the shares of former dissenting shareholders of Fibrek Inc. (or, “Fibrek”) upon acquisition in 2012. See Note 11, “Commitments and Contingencies – Fibrek acquisition,” for more information.





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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
Note 4.3. Accumulated Other Comprehensive Loss
The change in our accumulated other comprehensive loss by component (net of tax) for the three and nine months ended September 30, 20202021 and 2019,2020, was as follows:
(Unaudited, in millions)(Unaudited, in millions)Unamortized Prior Service CostsUnamortized Actuarial LossesForeign
Currency
Translation
Total(Unaudited, in millions)Unamortized Prior Service CostsUnamortized Actuarial LossesForeign
Currency
Translation
Total
Balance as of June 30, 2020$$(1,164)$(7)$(1,171)
Other comprehensive income before reclassifications— — 
Balance as of June 30, 2021Balance as of June 30, 2021$(4)$(1,255)$(6)$(1,265)
Amounts reclassified from accumulated other comprehensive lossAmounts reclassified from accumulated other comprehensive loss— 12 — 12 
Net current period other comprehensive incomeNet current period other comprehensive income— 12 — 12 
Balance as of September 30, 2021Balance as of September 30, 2021$(4)$(1,243)$(6)$(1,253)
(Unaudited, in millions)(Unaudited, in millions)Unamortized Prior Service CostsUnamortized Actuarial LossesForeign
Currency
Translation
Total
Balance as of December 31, 2020Balance as of December 31, 2020$(1)$(1,307)$(6)$(1,314)
Other comprehensive income before reclassifications (1)
Other comprehensive income before reclassifications (1)
— 22 — 22 
Amounts reclassified from accumulated other comprehensive lossAmounts reclassified from accumulated other comprehensive loss(1)11 10 Amounts reclassified from accumulated other comprehensive loss(3)42 — 39 
Net current period other comprehensive (loss) incomeNet current period other comprehensive (loss) income(1)11 11 Net current period other comprehensive (loss) income(3)64 — 61 
Balance as of September 30, 2020$(1)$(1,153)$(6)$(1,160)
Balance as of September 30, 2021Balance as of September 30, 2021$(4)$(1,243)$(6)$(1,253)
(Unaudited, in millions)Unamortized Prior Service Credits (Costs)Unamortized Actuarial LossesForeign
Currency
Translation
Total
Balance as of December 31, 2019$16 $(1,189)$(6)$(1,179)
Amounts reclassified from accumulated other comprehensive loss(17)36 19 
Balance as of September 30, 2020$(1)$(1,153)$(6)$(1,160)
(Unaudited, in millions)Unamortized Prior Service CreditsUnamortized Actuarial LossesForeign
Currency
Translation
Total
Balance as of June 30, 2019$21 $(962)$(7)$(948)
Amounts reclassified from accumulated other comprehensive loss(2)
Balance as of September 30, 2019$19 $(958)$(7)$(946)
(Unaudited, in millions)Unamortized Prior Service CreditsUnamortized Actuarial LossesForeign
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(9)16 
Net current period other comprehensive (loss) income(9)13 
Balance as of September 30, 2019$19 $(958)$(7)$(946)
(1)    The indefinite idling of the Amos and Baie-Comeau (Quebec) mills triggered curtailment and remeasurement of the pension and other postretirement benefit (or, “OPEB”) obligations related to their plans as of March 31, 2021, resulting in a curtailment gain of $8 million and an actuarial gain of $22 million, totaling $30 million ($22 million net of tax).
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
(Unaudited, in millions)Unamortized Prior Service CostsUnamortized Actuarial LossesForeign
Currency
Translation
Total
Balance as of June 30, 2020$— $(1,164)$(7)$(1,171)
Other comprehensive income before reclassifications— — 
Amounts reclassified from accumulated other comprehensive loss(1)11 — 10 
Net current period other comprehensive (loss) income(1)11 11 
Balance as of September 30, 2020$(1)$(1,153)$(6)$(1,160)
(Unaudited, in millions)Unamortized Prior Service Credits (Costs)Unamortized Actuarial LossesForeign
Currency
Translation
Total
Balance as of December 31, 2019$16 $(1,189)$(6)$(1,179)
Amounts reclassified from accumulated other comprehensive loss(17)36 — 19 
Net current period other comprehensive (loss) income(17)36 — 19 
Balance as of September 30, 2020$(1)$(1,153)$(6)$(1,160)
The reclassifications out of accumulated other comprehensive loss for the three and nine months ended September 30, 20202021 and 2019,2020, were comprised of the following:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended
September 30,
(Unaudited, in millions)(Unaudited, in millions)2020201920202019Affected Line in the Consolidated Statements of Operations(Unaudited, in millions)2021202020212020Affected Line in the Consolidated Statements of Operations
Unamortized Prior Service Credits (Costs)
Amortization of prior service credits (costs)$(1)$(2)$(3)$(8)
Non-operating pension and other postretirement benefit credits (1)
Other items0 (14)(1)
0 0 Income tax provision
Unamortized Prior Service Costs or CreditsUnamortized Prior Service Costs or Credits
Amortization of prior service costs or creditsAmortization of prior service costs or credits$ $(1)$(2)$(3)
Non-operating pension and other postretirement benefit credits (1)
Curtailment gainCurtailment gain — (1)(14)
Non-operating pension and other postretirement benefit credits (1)
Income tax effect of the aboveIncome tax effect of the above —  — Income tax provision
Net of taxNet of tax(1)(2)(17)(9)Net of tax (1)(3)(17)
Unamortized Actuarial LossesUnamortized Actuarial LossesUnamortized Actuarial Losses
Amortization of actuarial lossesAmortization of actuarial losses14 43 21 
Non-operating pension and other postretirement benefit credits (1)
Amortization of actuarial losses16 14 54 43 
Non-operating pension and other postretirement benefit credits (1)
Other itemsOther items0 3 Other items —  
Non-operating pension and other postretirement benefit credits (1)
(3)(2)(10)(5)Income tax provision
Income tax effect of the aboveIncome tax effect of the above(4)(3)(12)(10)Income tax provision
Net of taxNet of tax11 36 16 Net of tax12 11 42 36 
Total ReclassificationsTotal Reclassifications$10 $$19 $Total Reclassifications$12 $10 $39 $19 
(1)These items are included in the computation of net periodic benefit cost (credit) related to our pension and other postretirement benefit (or, “OPEB”) plans summarized in Note 9, “Employee Benefit Plans.”
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
Note 5.4. Net Income (Loss) Per Share
The reconciliation of the basic and diluted net income (loss) per share for the three and nine months ended September 30, 20202021 and 2019,2020, was as follows:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended
September 30,
Nine Months Ended
September 30,
(Unaudited, in millions, except per share amounts)(Unaudited, in millions, except per share amounts)2020201920202019(Unaudited, in millions, except per share amounts)2021202020212020
Numerator:Numerator:Numerator:
Net income (loss) attributable to Resolute Forest Products Inc.$57 $(43)$62 $24 
Net income attributable to Resolute Forest Products Inc.Net income attributable to Resolute Forest Products Inc.$80 $57 $435 $62 
Denominator:Denominator:Denominator:
Weighted-average number of Resolute Forest Products Inc. common shares outstandingWeighted-average number of Resolute Forest Products Inc. common shares outstanding86.0 90.9 87.4 91.9 Weighted-average number of Resolute Forest Products Inc. common shares outstanding79.4 86.0 80.0 87.4 
Dilutive impact of nonvested stock unit awards0.2 0.2 1.1 
Dilutive impact of nonvested stock unit awards and stock optionsDilutive impact of nonvested stock unit awards and stock options0.7 0.2 0.8 0.2 
Diluted weighted-average number of Resolute Forest Products Inc. common shares outstandingDiluted weighted-average number of Resolute Forest Products Inc. common shares outstanding86.2 90.9 87.6 93.0 Diluted weighted-average number of Resolute Forest Products Inc. common shares outstanding80.1 86.2 80.8 87.6 
Net income (loss) per share attributable to Resolute Forest Products Inc. common shareholders:
Net income per share attributable to Resolute Forest Products Inc. common shareholders:
Net income per share attributable to Resolute Forest Products Inc. common shareholders:
BasicBasic$0.66 $(0.47)$0.71 $0.26 Basic$1.00 $0.66 $5.44 $0.71 
DilutedDiluted$0.66 $(0.47)$0.71 $0.26 Diluted$0.99 $0.66 $5.39 $0.71 
The weighted-average number of outstanding stock options and nonvested equity-classified restricted stock units, deferred stock units and performance stock units (collectively, “stock unit awards”) that were excluded from the calculation of diluted net income (loss) per share, as their impact would have been antidilutive, for the three and nine months ended September 30, 20202021 and 2019,2020, was as follows:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended
September 30,
Nine Months Ended
September 30,
(Unaudited, in millions)(Unaudited, in millions)2020201920202019(Unaudited, in millions)2021202020212020
Stock optionsStock options0.9 1.0 0.9 1.0 Stock options0.4 0.9 0.5 0.9 
Stock unit awardsStock unit awards0.6 2.1 0.7 Stock unit awards 0.6  0.7 
Note 6.5. Inventories, Net
Inventories, net as of September 30, 20202021 and December 31, 2019,2020, were comprised of the following:
(Unaudited, in millions)(Unaudited, in millions)September 30,
2020
December 31,
2019
(Unaudited, in millions)September 30,
2021
December 31,
2020
Raw materialsRaw materials$130 $128 Raw materials$145 $132 
Work in processWork in process44 46 Work in process60 46 
Finished goodsFinished goods146 164 Finished goods133 120 
Mill stores and other suppliesMill stores and other supplies191 184 Mill stores and other supplies171 164 
$511 $522  $509 $462 
Note 6. Other Assets
Other assets include countervailing and anti-dumping duty cash deposits on softwood lumber of $315 million and $56 million, respectively, as of September 30, 2021, and of $194 million and $49 million, respectively, as of December 31, 2020. See Note 11, “Commitments and Contingencies” for more information.
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
Note 7. Accounts Payable and Accrued LiabilitiesOther
Accounts payable and accrued liabilitiesother as of September 30, 20202021 and December 31, 2019,2020, were comprised of the following:
(Unaudited, in millions)(Unaudited, in millions)September 30,
2020
December 31,
2019
(Unaudited, in millions)September 30,
2021
December 31,
2020
Trade accounts payableTrade accounts payable$249 $255 Trade accounts payable$296 $251 
Accrued compensationAccrued compensation51 52 Accrued compensation73 76 
Accrued interestAccrued interest9 Accrued interest2 
Pension and other postretirement benefit obligationsPension and other postretirement benefit obligations14 15 Pension and other postretirement benefit obligations15 14 
Accrued provision related to Fibrek Inc. litigation (Note 11)Accrued provision related to Fibrek Inc. litigation (Note 11)21 — 
Income and other taxes payableIncome and other taxes payable5 Income and other taxes payable4 
OtherOther11 13 Other26 19 
$339 $342 $437 $369 
Note 8. Long-Term Debt
Overview
Long-term debt, including current portion, as of September 30, 20202021 and December 31, 2019,2020, was comprised of the following:
(Unaudited, in millions)(Unaudited, in millions)September 30,
2020
December 31,
2019
(Unaudited, in millions)September 30,
2021
December 31,
2020
4.875% senior unsecured notes due 2026:4.875% senior unsecured notes due 2026:
Principal amountPrincipal amount$300 $— 
Deferred financing costsDeferred financing costs(6)— 
Total 4.875% senior unsecured notes due 2026Total 4.875% senior unsecured notes due 2026294 — 
5.875% senior unsecured notes due 2023:5.875% senior unsecured notes due 2023:5.875% senior unsecured notes due 2023:
Principal amountPrincipal amount$375 $375 Principal amount 375 
Deferred financing costsDeferred financing costs(2)(3)Deferred financing costs (2)
Unamortized discountUnamortized discount(1)(1)Unamortized discount (1)
Total 5.875% senior unsecured notes due 2023Total 5.875% senior unsecured notes due 2023372 371 Total 5.875% senior unsecured notes due 2023 372 
Term loans due 2030180 
Borrowings under revolving credit facilities0 71 
Senior secured credit facility - Term loans due 2030Senior secured credit facility - Term loans due 2030 180 
Finance lease obligationsFinance lease obligations9 Finance lease obligations7 
Other debtOther debt2 — 
Total debtTotal debt561 449 Total debt303 561 
Less: Current portion of finance lease obligations(2)(1)
Less: Current portion of finance lease obligations and other debtLess: Current portion of finance lease obligations and other debt(3)(2)
Long-term debt, net of current portionLong-term debt, net of current portion$559 $448 Long-term debt, net of current portion$300 $559 
Senior Unsecured Notes
2026 Notes
On February 2, 2021, we issued $300 million aggregate principal amount of 4.875% senior unsecured notes due 2026 (or, the “2026 Notes”) at an issue price of 100%, pursuant to an indenture as of that date (or, the “Indenture”). Upon their issuance, the 2026 Notes were recorded at their fair value of $300 million. Interest on the 2026 Notes is payable semi-annually on March 1 and September 1 of each year, beginning on September 1, 2021, until their maturity date of March 1, 2026. In connection with the issuance of the 2026 Notes, we incurred financing costs of $6 million, which were deferred and recorded as a reduction of the principal. Deferred financing costs are amortized to “Interest expense” in our Consolidated Statements of Operations using the interest method over the term of the notes.
The 2026 Notes are guaranteed by current and future wholly-owned U.S. subsidiaries that guarantee the ABL Credit Facility and the Senior Secured Credit Facility (each, as defined and discussed below). The notes are unsecured and effectively junior to indebtedness under each of the ABL Credit Facility, the Senior Secured Credit Facility, the Loan Facility and future secured
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
indebtedness to the extent of the value of the collateral that secures such indebtedness. In addition, the notes are structurally subordinated to all existing and future indebtedness (including the Loan Facility) and other liabilities of our subsidiaries that do not guarantee the notes, including all our non-U.S. subsidiaries.

The terms of the Indenture impose certain restrictions, subject to a number of exceptions and qualifications, including limits on our ability to: incur additional indebtedness or issue certain preferred shares; make dividend payments on or make other distributions in respect of our capital stock or make other restricted payments; make certain investments; sell certain assets; create liens on assets; consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and enter into certain transactions with our affiliates.

In the event of specified change of control triggering events, we shall be required to offer to repurchase the 2026 Notes at 101% of the principal amount, plus accrued and unpaid interest.
On or after March 1, 2023, we may redeem the notes at our option, in whole at any time or in part from time to time, at redemption prices equal to a percentage of the principal amount plus accrued and unpaid interest, as follows:
Year (beginning March 1)Redemption Price
2023102.438 %
2024101.219 %
2025 and thereafter100.000 %
The fair value of the 2026 Notes (Level 1) was $308 million as of September 30, 2021.
2023 Notes
We issued $600 million in aggregate principal amount of 5.875% senior unsecured notes due 2023 (or, the “2023 Notes”) on May 8, 2013. Upon their issuance, the 2023 Notes were recorded at their fair value of $594 million, which reflected a discount of $6 million that iswas being amortized to “Interest expense” in our Consolidated Statements of Operations using the interest method over the term of the 2023 Notes, resulting in an effective interest rate of 6%. Interest on the 2023 Notes iswas payable semi-annually beginning November 15, 2013, until their maturity date of May 15, 2023.2013. In connection with the issuance of the 2023 Notes, we incurred financing costs of $9 million, which were deferred and recorded as a reduction of the 2023 Notes. Deferred financing costs arewere amortized to “Interest expense” in our Consolidated Statements of Operations using the interest method over the term of the 2023 Notes.
On January 3, 2019, we repurchased $225 million in aggregate principal amount of the 2023 Notes, pursuant to a notes purchase agreement entered into on December 21, 2018, with certain noteholders, at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest.
On February 2, 2021, we placed the net proceeds from the issuance of the 2026 Notes together with additional cash, into trust for the benefit of the holders of the 2023 Notes to redeem all of the $375 million aggregate principal amount of the 2023 Notes (or, the “Redemption”) at a price of 100% of the aggregate principal amount thereof, plus accrued and unpaid interest to, but not including, the redemption date. The Redemption occurred on February 18, 2021. As a result of the repurchase, we recorded a net loss on extinguishment of debt of $3 million in “Other income (expense) income,, net” in our Consolidated Statement of Operations for the nine months ended September 30, 2019.2021.
The fair value of the 2023 Notes (Level 1) was $369 million and $380$375 million as of September 30, 2020 and December 31, 2019, respectively.
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
2020.
Senior Secured Credit Facility
On September 7, 2016,October 28, 2019, we entered into aan amended and restated senior secured credit facility for up to $185 million. This senior secured credit facility$360 million, which provided a term loan facility of $46up to $180 million with a maturity date of September 7, 2025, and a revolving credit facility of up to $139$180 million with a maturity date of September 7, 2022. On October 28, 2019,2025, for the latter. In March 2020, we borrowed $180 million in term loans for ten years, maturing in March 2030.
On April 19, 2021 (or, the “Effective Date”), we entered into ana first amendment to the amended and restated senior secured credit facility (or, the “Senior Secured Credit Facility”). The amount available under the Senior Secured Credit Facility remains unchanged for up to $360 million replacing our existing $185 million senior secured credit facility. The Senior Secured Credit Facility providesand is comprised of a term loan facility of up to $180 million with a delayed draw period of up to three years and the choice of maturities of six to 10ten years from the date of drawing (or, the “Term Loan Facility”),; and a six-year revolving credit facility of up to $180 million with a maturity date of October 28, 2025 (or, the “Revolving Credit Facility”). On the Effective Date, we repaid our $180 million term loans under the amended and restated senior secured credit facility with a combination of proceeds of
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
borrowings under the Revolving Credit Facility and cash on hand. The amendment then reinstated the full amount of the Term Loan Facility. There is also an uncommitted option to increase the Senior Secured Credit Facility by up to an additional $360 million, subject to certain terms and conditions. On October 28, 2019, we repaid our $46 million term loan by borrowing
The obligations under the RevolvingSenior Secured Credit Facility.
Facility continue to be guaranteed by certain material U.S. subsidiaries of the Company and remain secured by first priority liens on assets of our Calhoun (Tennessee) facility. Interest rates under the Senior Secured Credit Facility are based, at the Company’s election, on either a floating rate based on the LIBOR, or a base rate, in each case plus a spread over the index. In March 2020, we borrowedaddition, loans under the Term Loan Facility $180 million in termcan bear interest at a fixed rate plus a spread. For loans maturing in 2030. under the Term Loan Facility, the applicable spread ranges from 0.5% to 1.4% for base rate loans, from 1.5% to 2.4% for LIBOR rate loans, and from 1.7% to 2.1% for fixed rate loans. For the Revolving Credit Facility, the applicable spread ranges from 0.5% to 1.0% for base rate loans, and from 1.5% to 2.0% for LIBOR rate loans. The amended credit agreement contains customary covenants, representations and warranties, and events of default.
As of September 30, 2020,2021, we had $180 million of availability under the Term Loan Facility and $180 million of availability under the Revolving Credit Facility, which waswere undrawn. The fair values of the Term Loan Facilityterm loans (Level 2) and Revolving Credit Facility (Level 2) approximated their carrying values and were bearing interest at LIBOR plus a spread of 2.13% as of both September 30, 2020 and December 31, 2019.2020.
ABL Credit Facility
On May 14, 2019, we entered into an amended senior secured asset-based revolving credit facility (or, the “ABL Credit Facility”) with an aggregate lender commitment of up to $500 million at any time outstanding, subject to borrowing base availability based on specified advance rates, eligibility criteria and customary reserves. The amended credit agreement provides for an extension of the maturity date to May 14, 2024.
Effective January 21, 2021, we reduced the commitment under the Canadian tranche of our senior secured asset-based revolving credit facility by $50 million, to $250 million, resulting in an aggregate commitment of $450 million, subject to borrowing base limitations. The obligations under the ABL Credit Facility are guaranteed by certain of our material subsidiaries.
As of September 30, 2020,2021, we had $277$278 million of borrowing base availability under the ABL Credit Facility, which was undrawn except for $57$74 million of ordinary course letters of credit outstanding. The fair value of the ABL Credit Facility (Level 2) approximated its carrying value as of both September 30, 2020 and December 31, 2019.
Secured Term Loan Facility
On November 4, 2020, weour Canadian subsidiary, Resolute FP Canada Inc., entered into a 10-year secured delayed draw term loan facility (or, the “Loan Facility”) with Investissement Québec. For more information, see Note 14, “Subsequent Event,”bec as lender for up to our Consolidated Financial Statements.C$220 million ($173 million as of September 30, 2021), subject to borrowing base availability based on 75% of the countervailing and anti-dumping duty deposits imposed by the U.S. Department of Commerce and collected by Customs and Border Protection Agency on U.S. imports of applicable softwood lumber products produced at sawmills of the Borrower and its affiliates located in the province of Quebec, Canada from April 28, 2017 to December 31, 2022. The Loan Facility will bear interest at a floating rate equal to 1.45% above the one month Canadian banker’s acceptance rate. The principal shall be repayable in monthly installments over a period of eight years after an interest only period of two years from the date of the first draw. The Loan Facility is subject to prepayment requirements under certain conditions and may be repaid earlier without premium or penalty, but subject to prepayment of accrued and unpaid interest. The Loan Facility provides for a maximum of 10 draws and the fulfillment of certain conditions upon each draw. Borrowings are subject to certain restrictions.

As of September 30, 2021, we had C$220 million ($173 million) of borrowing base availability under the Loan Facility
, which was undrawn.
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
Note 9. Employee Benefit Plans
Pension and other postretirement benefit plans
The components of net periodic benefit cost (credit)costs (credits) relating to our pension and OPEB plans for the three and nine months ended September 30, 20202021 and 2019,2020, were as follows:
Pension Plans:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended
September 30,
Nine Months Ended
September 30,
(Unaudited, in millions)(Unaudited, in millions)2020201920202019(Unaudited, in millions)2021202020212020
Interest costInterest cost$38 $45 $112 $135 Interest cost$33 $38 $100 $112 
Expected return on plan assetsExpected return on plan assets(57)(63)(168)(187)Expected return on plan assets(53)(57)(162)(168)
Amortization of actuarial lossesAmortization of actuarial losses15 47 26 Amortization of actuarial losses18 15 59 47 
Amortization of prior service credits0 0 
Amortization of prior service costsAmortization of prior service costs1 — 1 — 
Non-operating pension creditsNon-operating pension credits(4)(9)(9)(26)Non-operating pension credits(1)(4)(2)(9)
Service costService cost4 11 11 Service cost4 12 11 
Net periodic benefit (credits) costs before special events0 (5)2 (15)
Other (gains) losses0 3 (1)
Net periodic benefit costs before special eventsNet periodic benefit costs before special events3 — 10 
Other (gain) lossOther (gain) loss — (1)
$0 $(5)$5 $(16) $3 $— $9 $
OPEB Plans:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended
September 30,
Nine Months Ended
September 30,
(Unaudited, in millions)(Unaudited, in millions)2020201920202019(Unaudited, in millions)2021202020212020
Interest costInterest cost$1 $$3 $Interest cost$1 $$3 $
Amortization of actuarial gainsAmortization of actuarial gains(1)(2)(4)(5)Amortization of actuarial gains(2)(1)(5)(4)
Amortization of prior service creditsAmortization of prior service credits(1)(3)(3)(8)Amortization of prior service credits(1)(1)(3)(3)
Non-operating other postretirement benefit creditsNon-operating other postretirement benefit credits(1)(3)(4)(9)Non-operating other postretirement benefit credits(2)(1)(5)(4)
Service costService cost(1)0 Service cost1 (1)1 — 
Net periodic benefit credits before special eventsNet periodic benefit credits before special events(2)(3)(4)(9)Net periodic benefit credits before special events(1)(2)(4)(4)
Curtailment gainCurtailment gain0 (14)Curtailment gain —  (14)
$(2)$(3)$(18)$(9)$(1)$(2)$(4)$(18)
Defined contribution plans
Our expense for the defined contribution plans totaled $4$5 million and $5$4 million for the three months ended September 30, 20202021 and 2019,2020, respectively, and $12$14 million and $14$12 million for the nine months ended September 30, 20202021 and 2019,2020, respectively.
U.S. pension funding
The American Rescue Plan Act of 2021 includes provisions that allow for interest rate smoothing of pension funding deficits to minimize the impact of lower interest rates on liabilities. It also extends the amortization period for funding shortfalls from seven years to 15 years. We continue to estimate that the impact of the Act on our previously disclosed estimated contributions for 2021 will be a reduction of $13 million.
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
Note 10. Income Taxes
The income tax provision attributable to income (loss) before income taxes differs from the amounts computed by applying the U.S. federal statutory income tax rate of 21% for the three and nine months ended September 30, 20202021 and 2019,2020, as a result of the following:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended
September 30,
Nine Months Ended
September 30,
(Unaudited, in millions)(Unaudited, in millions)2020201920202019(Unaudited, in millions)2021202020212020
Income (loss) before income taxes$80 $(31)$117 $76 
Income before income taxesIncome before income taxes$120 $80 $603 $117 
Income tax provision:Income tax provision:Income tax provision:
Expected income tax (provision) benefit(17)(25)(16)
Expected income tax provisionExpected income tax provision(26)(17)(127)(25)
Changes resulting from:Changes resulting from:Changes resulting from:
Valuation allowance (1)
(5)(7)(21)(18)
Valuation allowance on our U.S. operationsValuation allowance on our U.S. operations11 (5)89 (21)
Foreign exchangeForeign exchange2 (3)(8)Foreign exchange(5)(2)(8)
U.S. tax on non-U.S. earnings (2)
U.S. tax on non-U.S. earnings (2)
(1)(6)(1)(11)
U.S. tax on non-U.S. earnings (2)
(13)(1)(96)(1)
State income taxes, net of federal income tax benefitState income taxes, net of federal income tax benefit1 3 State income taxes, net of federal income tax benefit(1)1 
Foreign tax rate differencesForeign tax rate differences(5)(1)(10)(10)Foreign tax rate differences(6)(5)(33)(10)
Other, net (3)(1)
Other, net (3)(1)
2 (4)7 (3)
Other, net (3)(1)
 1 
$(23)$(12)$(55)$(52) $(40)$(23)$(167)$(55)
(1)Relates to our U.S. operations.
(2)Reduces income tax benefits on U.S. losses for the three and nine months ended September 30, 2020 and 2019.
(3)Includes $4 million for the nine months ended September 30, 2020, related to the settlement of an insurance claim in connection with our acquisition of Atlas.
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During the three and nine months ended September 30, 2021, we used $11 million and $89 million, respectively, of deferred income tax assets that were fully reserved to offset the tax implications relating to the global intangible low-taxed income inclusion, which is based on the U.S. system of taxation for non-U.S. earnings, whereby foreign earnings less a qualified deduction for foreign assets are included in U.S. taxable income.

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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
Note 11. Commitments and Contingencies
Legal matters
We become involved in various legal proceedings, claims and governmental inquiries, investigations, and other disputes in the normal course of business, including matters related to contracts, commercial and trade disputes, taxes, environmental issues, activist damages, employment and workers’ compensation claims, grievances, human rights complaints, pension and benefit plans and obligations, health and safety, product safety and liability, asbestos exposure, financial reporting and disclosure obligations, corporate governance, First NationsIndigenous peoples’ claims, antitrust, governmental regulations, and other matters. Although the final outcome is subject to many variables and cannot be predicted with any degree of certainty, we regularly assess the status of the matters and establish provisions (including legal costs expected to be incurred) when we believe an adverse outcome is probable, and the amount can be reasonably estimated. Any recovery from litigation or settlement of claims that is a gain contingency is recognized if, and when, realized or realizable. Except as described below and for claims that cannot be assessed due to their preliminary nature, we believe that the ultimate disposition of these matters outstanding or pending as of September 30, 2020,2021, will not have a material adverse effect on our Consolidated Financial Statements.
Asbestos-related lawsuits
We are involved in a number of asbestos-related lawsuits filed primarily in U.S. state courts, including certain cases involving multiple defendants. These lawsuits principally allege direct or indirect personal injury or death resulting from exposure to asbestos-containing premises. While we dispute the plaintiffs’ allegations and intend to vigorously defend these claims, the ultimate resolution of these matters cannot be determined at this time. These lawsuits frequently involve claims for unspecified compensatory and punitive damages, and we are unable to reasonably estimate a range of possible losses. However, unfavorable rulings, judgments or settlement terms could materially impact our Consolidated Financial Statements. Hearings for certain of these matters are scheduled to occur in the next twelve12 months.
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
Countervailing duty and anti-dumping investigations on softwood lumber
On November 25, 2016, countervailing duty and anti-dumping petitions were filed with the U.S. Department of Commerce (or, “Commerce”) and the U.S. International Trade Commission (or, “ITC”) by certain U.S. softwood lumber products producers and forest landowners, requesting that the U.S. government impose countervailing and anti-dumping duties on Canadian-origin softwood lumber products exported to the U.S. One of our subsidiaries was identified in the petitions as being a Canadian exporting producer of softwood lumber products to the U.S. and was selected as a mandatory respondent to be investigated by Commerce in both the countervailing duty and anti-dumping investigations.
Countervailing DutiesOn April 24, 2017, Commerce announced its preliminary determination in the countervailing duty investigation and,investigation; as a result, afterfrom April 28, 2017 to August 25, 2017, we were required to pay cash deposits to the U.S. Customs and Border Protection agency (or, “U.S. Customs”) at a rate of 12.82% for estimated countervailing duties on the vast majority of our U.S. imports of Canadian-produced softwood lumber products produced at our Canadian sawmills. The preliminary rate remained in effect until August 26, 2017. Commerce changed the rate in its final affirmative determination onlumber. On November 2, 2017, butCommerce issued its final determination in the new rate did not take effect untilcountervailing investigation; as a result, from December 28, 2017 following the ITC’s final affirmative determination and the publication by Commerce of a countervailing duty order. Since that date,to November 30, 2020, we have beenwere required to resume payingpay cash deposits to U.S. Customs at a new rate of 14.70% for our U.S. imports of Canadian-produced softwood lumber products. This rate will apply until. On November 23, 2020, Commerce sets a duty rateissued its final determination in anthe first administrative review or a new rate may be set through a remand determination by a North American Free Trade Agreement binational panel (or, “Panel”) on appeal. Through September 30, 2020, our cash deposits totaled $170 million and, based on the 14.70% rate and our current operating parameters, could be as high as $50 million per year. Commerce issued on January 31, 2020, its preliminary results inof the countervailing duties administrative review, and on May 15,investigation; as a result, since December 1, 2020, and July 10, 2020, issued its post-preliminary results establishing our new preliminary rates at 17.57% for the period of review from April 28, 2017,we have been required to December 31, 2017, and at 17.11% for the period of review from January 1, 2018, to December 31, 2018, which are not yet effective. The new rate to be established in the final results for the period of review from January 1, 2018, to December 31, 2018, will be used as the basis forpay cash deposits to U.S. Customs fromat new rate of 19.10%. Commerce is expected to issue its final determination in the publicationsecond administrative review of the countervailing investigation in November 2021, following which a new rate will take effect for Resolute; this new rate was estimated at 18.17% in a non-binding, preliminary determination issued on May 21, 2021, but is subject to modification in the upcoming final results.determination. During the nine months ended September 30, 2021, we made additional cash deposits of $121 million, bringing our total to $315 million.
Antidumping DutiesOn June 26, 2017, Commerce announced its preliminary determination in the anti-dumping investigation and,investigation; as a result, afterfrom June 30, 2017 to November 7, 2017, we were required to pay cash deposits to U.S. Customs at a rate of 4.59% for estimated anti-dumping duties on the vast majority of our U.S. imports of Canadian-produced softwood lumber products produced at our Canadian sawmills.lumber. On November 2, 2017, Commerce announcedissued its final affirmative determination in the anti-dumping investigation and,investigation; as a result, from November 8, 2017 to November 29, 2020, we were required to pay cash deposits to U.S. Customs at a new rate of 3.20%. On November 23, 2020, Commerce issued its final determination in the first administrative review of the anti-dumping investigation; as a result, since November 8, 2017,30, 2020, we have been required to pay cash deposits to U.S. Customs at a new rate of 3.20% for our U.S. imports of Canadian-produced softwood lumber products. This rate will apply until1.15%. Commerce sets a duty rateis expected to issue its final determination in anthe second administrative review orof the anti-dumping investigation in November 2021, following which a new rate may be set throughwill take effect for Resolute; this new rate was estimated at 12.05% in a remandnon-binding, preliminary determination by a Panelissued on appeal. ThroughMay 21, 2021, but is subject to modification in the upcoming final determination. During the nine months ended September 30, 2020, our2021, we made additional cash deposits totaled
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Table of Contents$7 million, bringing our total to $56 million.

Ongoing Administrative Reviews
RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
$44 million Following Commerce’s completion of the Canadian softwood lumber investigation and based on the 3.20% rate and our current operating parameters, could be as high as $10 million per year. On January 31, 2020, Commerce issued its preliminary results in the anti-dumpingfirst administrative review, and established our new preliminary rate at 1.18%, which will not be effective until the issuance of the final results.
On April 1, 2019, Commerce published a notice initiating thetwo further administrative reviews of the countervailing duty and anti-dumping orders on softwood lumber products from Canada. We were selected as a mandatory respondent in these administrative reviews and we are in the process of responding to Commerce with the information requested.remain pending. On March 10, 2020, Commerce published a notice initiating the second administrative review of the countervailing duty and anti-dumping orders on softwood lumber products from Canada. We were selected as a mandatory respondent for the second administrative review of the countervailing duty order and we are acting ashave completed our answers to Commerce with the information requested. On March 4, 2021, Commerce published a voluntary respondent fornotice initiating the secondthird administrative review of the countervailing duty and anti-dumping order.orders on softwood lumber products from Canada. We were selected as a mandatory respondent for the third administrative review of the countervailing duty order and we have responded to Commerce with the information requested to date.
Ongoing Appellate Reviews – On December 14, 2017 and January 4, 2018, we filed complaints supporting appellate reviews of the final results of Commerce’s countervailing and antidumping investigations on softwood lumber from Canada, respectively, before a binational panel formed pursuant to the North American Free Trade Agreement or United States-Mexico-Canada Agreement, as the case may be (or, “Panel”). Briefing for these appeals has been completed, and the constitution of the Panel reviewing countervailing duties was announced on August 24, 2021; the hearing in this matter is scheduled to occur in March 2022. Further, on January 6, 2021 and January 19, 2021, we filed our complaints supporting appellate Panel reviews of the final results in the countervailing and antidumping first administrative reviews. Briefing for these appeals has also been completed; we are awaiting the constitution of the Panel in both instances.
ITC Injury Determination – In parallel, on December 28, 2017, the ITC published its affirmative final injury determinations in the antidumping and countervailing investigations on softwood lumber from Canada. On September 4, 2019, a Panel issued an interim decision upholding the affirmative final injury determinations of the ITC in both investigations of softwood lumber products from Canada. The Panel remanded the ITC to reconsider several findings and ordered the ITC to submit its redetermination on remand within 90 days from the date of the Panel interim decision. On December 19, 2019, the ITC issued
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
its redetermination on remand that maintained the affirmative final injury determinations, and on May 22, 2020, the Panel issued its final decision and affirmed in its entirety the ITC’s injury determination on remand.
WTO Appeal – In addition, on August 24, 2020, the World Trade Organization’s (or, “WTO”) dispute panel issued a report (or, the “Panel Report”) in the case brought by the government of Canada in “United States — Countervailing Measures on Softwood Lumber from Canada” (DS533), concluding, among other things, that Commerce acted inconsistently with the Agreement on Subsidies and Countervailing Measures on most of the matters. On September 28, 2020, the United States notified the WTO’s dispute settlement body of its decision to appeal the Panel Report.
We are not presently able to determine the ultimate resolution of these matters, but we believe it is not probable that we will ultimately be assessed with significant duties, if any, on our U.S. imports of Canadian-produced softwood lumber products. Accordingly, 0no contingent loss was recorded in respect of these petitions in our Consolidated Statements of Operations, and our cash deposits wereare recorded in “Other assets” in our Consolidated Balance Sheets. Cash deposits for the countervailing duty and anti-dumping investigations through December 31, 2019, totaled $128 million and $34 million, respectively.
Fibrek acquisition
Effective July 31, 2012, we completed the final step of the transaction pursuant to which we acquired the remaining 25.4%25.40% of the outstanding Fibrek Inc. shares, following the approval of Fibrek’s shareholders on July 23, 2012, and the issuance of a final order by the Quebec Superior Court in Canada (or, theQuebec Superior Court”) approving the arrangement on July 27, 2012. Certain former shareholders of Fibrek exercised rights of dissent in respect of the transaction, asking for a judicial determination of the fair value of their claim under the Canada Business Corporations Act. On September 26, 2019, the Quebec Superior Court rendered a decision fixing the fair value of the shares of the dissenting shareholders at C$1.99 per share, or C$31 million in aggregate, plus interest and an additional indemnity, for a total then estimated at C$44 million payable in cash. AsWe had previously reported, we had accrued C$14 million for the payment of the dissenting shareholders’ claims andclaims. Following the court decision, we accrued an additional C$30 million following the court decision. ($23 million). Of the total amount of C$44 million, C$19 million ($14 million) was payable immediately and paid on October 2, 2019, bringing the2019. The remaining balance toof C$2527 million ($19 million21 million) as of September 30, 20202021 and C$26 million ($20 million) as of December 31, 2019),2020, which wasincludes accrued interest, is recorded in “Accounts payable and other” as of September 30, 2021, and in “Other liabilities” as of December 31, 2020, in our Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019.Sheets. We are appealing the decision, therefore the payment of any additional consideration and its timing will depend on the outcome of the appeal. On November 13, 2019, a legal hypothec in the amount of C$30 million was registered on our Saint-Félicien (Quebec) immovable and movable property to secure the payment of any additional amounts following the outcome of the appeal. The hearing in this matter is expected to occur in the next 12 months.
Partial wind-ups of pension plans
On June 12, 2012, we filed a motion for directives with the Quebec Superior Court, the court with jurisdiction in the creditor protection proceedings under the Companies’ Creditors Arrangement Act (Canada) (or, the “CCAA Creditor Protection Proceedings”), seeking an order to prevent pension regulators in each of Quebec, New Brunswick, and Newfoundland and Labrador from declaring partial wind-ups of pension plans relating to employees of former operations in New Brunswick, and Newfoundland and Labrador, or a declaration that any claim for accelerated reimbursements of deficits arising from a partial wind-up is a barred claim under the CCAA Creditor Protection Proceedings. We contend, among other things, that any such declaration, if issued, would be inconsistent with the Quebec Superior Court’s sanction order confirming the CCAA debtors’
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Notes to Unaudited Interim Consolidated Financial Statements
CCAA Plan of Reorganization and Compromise, as amended, and the terms of our emergence from the CCAA Creditor Protection Proceedings. A partial wind-up would likely shorten the period in which any deficit within those plans, which could reach up to C$150 million ($113118 million), would have to be funded if we do not obtain the relief sought. The hearing in this matter has not yet been scheduled but could occur in the next twelve12 months.
Environmental matters
We are subject to a number of federal or national, state, provincial, and local environmental laws, regulations, and orders in various jurisdictions. We believe our operations are in material compliance with current applicable environmental laws and regulations. Environmental regulations promulgated and orders issued in the future could require substantial additional expenditures for compliance and could have a material impact on us, in particular, and the industry in general.
We may be a “potentially responsible party” with respect to a hazardous waste site that is being addressed pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (commonly known as Superfund). We believe we will not be liable for any significant amounts at this site.
We have environmental liabilities of $8$13 million and $15 million recorded as of both September 30, 20202021 and December 31, 2019,2020, respectively, primarily related to environmental remediation, assessment, monitoring and management related to closed or idled sites. The amount of these liabilities represents management’s estimate of the ultimate settlement based on an assessment of
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
relevant factors and assumptions and could be affected by changes in facts or assumptions not currently known to management for which the outcome cannot be reasonably estimated at this time. These liabilities are included in “Accounts payable and accrued liabilities” and “Other liabilities” in our Consolidated Balance Sheets.
We also have asset retirement obligations of $26$36 million and $25 million recorded as of both September 30, 20202021 and December 31, 2019,2020, respectively, primarily consisting of liabilities associated with landfills, sludge basins and the dismantling of retired assets.
These liabilities are included in “Accounts payable and accrued liabilities”other” and “Other liabilities” in our Consolidated Balance Sheets.
Note 12. Share Capital
Treasury stock
On March 2, 2020, our board of directors authorized a share repurchase program of up to 15% of our common stock, for an aggregate consideration of up to $100 million. During the three and nine months ended September 30, 2020,2021, we repurchased 4.51.2 million shares at an average price of $10.95 for a total of $14 million and 4.83.3 million shares respectively, at an average price of $10.22 for a costtotal of $18 million and $19$34 million, respectively. During the three and nine months ended September 30, 2019,2020, we repurchased 1.14.5 million shares at an average price of $4.12 for a total of $18 million and 1.84.8 million shares respectively, at an average price of $4.01 for a costtotal of $7$19 million, respectively.
Dividends
We declared a special dividend of $1.00 per share ($79 million) on our common stock during the nine months ended September 30, 2021. The special dividend was paid to shareholders on July 7, 2021. We did not declare or pay any dividends on our common stock during the nine months ended September 30, 2020.
Under some of our compensation plans, participants are credited additional units when a dividend is declared. The impact of the special dividend was as follows: for the nine months ended September 30, 2021, $3 million was recognized as a compensation expense, and $12$2 million under our $150as an increase in deficit and in additional paid-in capital; and $3 million share repurchase program, which was completedas an increase in 2019.
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
Note 13. Segment Information
We manage our business based on the products we manufacture. Accordingly, our reportable segments correspond to our principal product lines: market pulp, tissue, wood products, and paper. As of the second quarter of 2020, the results from our newsprint and specialty papers operations have been combined to form the paper reportable segment. This better reflects management’s internal analysis, given the diminishing percentage newsprint and specialty papers represent in our product portfolio. Comparative year information has been modified to conform to this revised segment presentation.
None of the income or loss items following “Operating income (loss)”income” in our Consolidated Statements of Operations are allocated to our segments, since those items are reviewed separately by management. For the same reason, closure costs, impairment and other related charges, gains and losses on disposition of assets, as well as other discretionary charges or credits are not allocated to our segments. We allocate depreciation and amortization expense to our segments, although the related fixed assets and amortizable intangible assets are not allocated to segment assets. Additionally, all selling, general and administrative expenses are allocated to our segments, with the exception of certain discretionary charges and credits, which we present under “corporate and other.”
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
Information about certain segment data for the three and nine months ended September 30, 20202021 and 2019,2020, was as follows:
(Unaudited,
in millions)
(Unaudited,
in millions)
Market Pulp (1)
Tissue
Wood Products (2)
PaperSegment
Total
Corporate
and Other
Total(Unaudited, in millions)
Market Pulp (1)
Tissue
Wood Products (2)
PaperSegment
Total
Corporate
and Other
Total
SalesSalesSales
Third quarterThird quarterThird quarter
20212021$234 $38 $293 $252 $817 $ $817 
20202020$161 $39 $322 $208 $730 $0 $730 2020$161 $39 $322 $208 $730 $— $730 
2019$201 $43 $146 $315 $705 $$705 
First nine monthsFirst nine monthsFirst nine months
20212021$609 $115 $1,387 $719 $2,830 $ $2,830 
20202020$499 $132 $695 $705 $2,031 $0 $2,031 2020$499 $132 $695 $705 $2,031 $— $2,031 
2019$621 $125 $475 $1,034 $2,255 $$2,255 
Depreciation and amortizationDepreciation and amortizationDepreciation and amortization
Third quarterThird quarterThird quarter
20212021$6 $5 $11 $15 $37 $5 $42 
20202020$6 $4 $11 $18 $39 $4 $43 2020$$$11 $18 $39 $$43 
2019$$$$18 $37 $$42 
First nine monthsFirst nine monthsFirst nine months
20212021$18 $14 $32 $46 $110 $13 $123 
20202020$18 $13 $32 $51 $114 $11 $125 2020$18 $13 $32 $51 $114 $11 $125 
2019$17 $13 $25 $54 $109 $15 $124 
Operating income (loss)Operating income (loss)Operating income (loss)
Third quarterThird quarterThird quarter
20212021$46 $(9)$64 $16 $117 $(15)$102 
20202020$(4)$2 $128 $(12)$114 $(17)$97 2020$(4)$$128 $(12)$114 $(17)$97 
2019$(12)$(3)$(4)$$(11)$(7)$(18)
First nine monthsFirst nine monthsFirst nine months
20212021$80 $(18)$690 $(15)$737 $(52)$685 
20202020$3 $2 $148 $(27)$126 $(31)$95 2020$$$148 $(27)$126 $(31)$95 
2019$57 $(15)$(1)$83 $124 $(38)$86 
(1)Inter-segment sales ofwere $7 million and $8 million for the three months ended September 30, 20202021 and 2019,2020, respectively, and $22 million and $30 million for the nine months ended September 30, 20202021 and 2019,2020. These inter-segment sales, which were transacted at either at the lowest market price of the previous month or 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 $7$22 million and $6$7 million for the three months ended September 30, 2021 and 2020, respectively, and 2019, respectively,$55 million and $17 million for the nine months ended September 30, 2021 and 2020, and 2019.


respectively.
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
Note 14. Subsequent Event
The following significant event occurred subsequent to September 30, 2020:
On November 4, 2020 (or, the “closing date”), we entered into a 10-year secured delayed draw term loan facility (or, the “Loan Facility”) with Investissement Québec as lender, for up to C$220 million ($167 million as of the closing date), with an initial availability of C$149 million ($114 million as of the closing date), subject to certain conditions. The Loan Facility will bear interest at a floating rate equal to 1.45% above the one month Canadian banker’s acceptance rate. The principal shall be repayable in monthly installments over a period of eight years after an interest only period of two years from the date of the first draw. The Loan Facility is subject to prepayment requirements under certain conditions and may be repaid earlier without premium or penalty, but subject to prepayment of accrued and unpaid interest. The Loan Facility provides for a maximum of 10 draws and the fulfillment of certain conditions upon each draw. Borrowings under the Loan Facility are subject to certain restrictions.
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ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following management’s discussion and analysis is intended to help the reader understand Resolute Forest Products, our results of operations, cash flows and financial condition. The discussion is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes (or, the “Consolidated Financial Statements”) contained in Item 1, “Financial Statements,” of this Quarterly Report on Form 10-Q (or, “Form 10-Q”).
When we refer to “Resolute Forest Products,” “Resolute,” “we,” “our,” “us” or the “Company,” we mean Resolute Forest Products Inc. with its subsidiaries, either individually or collectively, unless otherwise indicated.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION AND USE OF THIRD-PARTY DATA
Statements in this Form 10-Q that are not reported financial results or other historical information of Resolute Forest Products are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. They include, for example, statements relating to the impact of the novel coronavirus (or, “COVID-19”) pandemic and resulting economic conditions on our business, results of operations and market price of our securities, and to our: efforts and initiatives to reduce costs, increase revenues, and improve profitability; business and operating outlook; future pension obligations; assessment of market conditions; growth strategies and prospects, and the growth potential of the Company and the industry in which we operate; liquidity; future cash flows, including as a result of the changes to our pension funding obligations; estimated capital expenditures; and strategies for achieving our goals generally. Forward-looking statements may be identified by the use of forward-looking terminology such as the words “should,” “would,” “could,” “will,” “may,” “expect,” “believe,” “see,” “anticipate,” “continue,” “attempt,” “project,” “progress,” “build,” “pursue,” “plan,” “grow”“grow,” “allow,” “look,” “enhance” and other terms with similar meaning indicating possible future events or potential impact on our business or Resolute Forest Products’ shareholders.
The reader is cautioned not to place undue reliance on these forward-looking statements, which are not guarantees of future performance. These statements are based on management’s current assumptions, beliefs, and expectations, all of which involve a number of business risks and uncertainties that could cause actual results to differ materially. The potential risks and uncertainties that could cause our actual future financial condition, results of operations, and performance to differ materially from those expressed or implied in this Form 10-Q include, but are not limited to, the impact of: the COVID-19 pandemic on our business and resulting economic conditions; developments in non-print media, including changes in consumer habits, and the effectiveness of our responses to these developments; intense competition in the forest products industry; any inability to offer products certified to globally recognized forestry management and chain of custody standards; any inability to successfully implement our strategies to increase our earnings power; the possible failure to successfully integrate acquired businesses with ours or to realize the anticipated benefits of acquisitions, such as our entry into wood manufacturing in the U.S., and tissue production and sales, or divestitures or other strategic transactions or projects, including loss of synergies following business divestitures; uncertainty or changes in political or economic conditions in the U.S., Canada or other countries in which we sell our products, including the effects of pandemics; global economic conditions; the highly cyclical nature of the forest products industry; any difficulties in obtaining timber or wood fiber at favorable prices, or at all; impacts of inflation on the price of goods and services, including changes in the cost of purchased energy and other raw materials; physical, financial and financialregulatory risks associated with global, regional, and local weather conditions, and climate change; any disruption in operations or increased labor costs due to labor disputes or occupational health and safety issues; difficulties in our employee relations or in employee attraction or retention; disruptions to our supply chain, operations, or the delivery of our products, including due to public health epidemics; disruptions to our information technology systems including cybersecurity and privacy incidents; risks related to the operation and transition of legacy system applications; negative publicity, even if unjustified; currency fluctuations; any increase in the level of required contributions to our pension plans, including as a result of any increase in the amount by which they are underfunded; our ability to maintain adequate capital resources to provide for all of our substantial capital requirements; the terms of our outstanding indebtedness, which could restrict our current and future operations; changes relating to the London Interbank Offered Rate (or, the “LIBOR”), which could impact our borrowings under our credit facilities; losses that are not covered by insurance; any shutdown of machines or facilities, restructuring of operations or sale of assets resulting in any additional closure costs and long-lived asset or goodwill impairment or accelerated depreciation charges; any need to record additional valuation allowances against our recorded deferred income tax assets; our exports from one country to another country becoming or remaining subject to duties, cash deposit requirements, border taxes, quotas, or other trade remedies or restrictions; countervailing and anti-dumping duties on imports to the U.S. of the vast majority of our softwood lumber products produced at our Canadian sawmills; any failure to comply with laws or regulations generally; any additional environmental or health and safety liabilities; any violation of trade laws, export controls, or other laws relating to our international sales and operations; adverse outcomes of legal proceedings, claims and governmental inquiries, investigations, and other disputes in which we are involved; the actions of holders of a significant percentage of our common stock; and the
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potential risks and uncertainties set forth under Part I, Item 1A, “Risk Factors,” of our annual report on Form 10-K for the year ended December 31, 2019,2020, filed with the U.S. Securities and Exchange Commission (or, the “SEC”) on March 2, 20201, 2021 (or, the “2019 2020Annual Report”), which
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have been heightened by the COVID-19 pandemic, including related governmental responses and economic impacts, market disruptions and resulting changes in consumer habits, and which should be read in conjunction with the COVID-19 pandemic risk factor update further set forth in Part II, Item 1A, “Risk Factors,” in this Form 10-Q.habits.
All forward-looking statements in this Form 10-Q are expressly qualified by the cautionary statements contained or referred to in this section and in our other filings with the SEC and the Canadian securities regulatory authorities. We disclaim any obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.
Market and industry data
The information on industry and general economic conditions in this Form 10-Q was derived from third-party sources and trade publications we believe to be widely accepted and accurate. We have not independently verified the information and cannot assure you of its accuracy.
OVERVIEW
Resolute Forest Products is a global leader in the forest products industry with a diverse range of products, including market pulp, tissue, wood products, and paper, which are marketed in close to 70over 50 countries. The Company owns or operates some 40 facilities, as well as power generation assets, in the U.S. and Canada. We produce lumber in the U.S. and Canada, and we are the largest producer of wood products east of the Canadian Rockies, the largest producer of uncoated mechanical papers in North America, and a competitive pulp producer in North America. We are also a leading global producer of newsprint and an emerging tissue producer. Resolute has third-party certified 100% of its managed woodlands to internationally recognized sustainable forest management standards.
We report our activities in four business segments: market pulp, tissue, wood products, and paper. We believe an integrated approach across these segments maximizes value creation for our Company and stakeholders.
We are guided by our vision and values, focusing on safety, sustainability, profitability, accountability, and teamwork. We believe we can be distinguished by the following competitive strengths:
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 standing timber 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.
Solid balance sheet
favorable pricing and flexibility under borrowing agreements together with our liquidity levels support our ability to weather challenging market cycles and to execute our transformation strategy;
significant tax assets to defer cash income taxes and provide synergies to execute this strategy; and
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.
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Our Business
For information relating to our products, strategy and highlights, sustainable development and performance, and power generation assets, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview – Our Business” in our 20192020 Annual Report.
Third Quarter Overview
Impact of the COVID-19 pandemic
We have sustained operations across all of our business segments through the COVID-19 pandemic, but we had to take certain measures in the face of the dramatic reduction in economic activity, particularly for marketing-dependent products like newspapers, inserts, flyers and commercial paper. In particular, we continue to focus on key short-term priorities, including: operating under rigorous protocols aroundMarch 2021, the health Company announced the indefinite idling of its Amos and safetyBaie-Comeau (Quebec) paper mills, which had been temporarily idled since spring 2020, as a result of our employees, contractorsmarket conditions and suppliers; reducing our paper production consistent with the dramatic decrease in economic activity affecting demand; maintaining disciplined liquidity management; monitoring customer credit risk; and controlling spending around selling, general and administrative (or, “SG&A”) expenses and capital expenditures.
Specifically, asimpacts of the end ofpandemic, reducing the third quarter, we reduced our operational footprint run-rate newsprint capacity by temporarily idling paper machines representing in aggregate 28% of our run-rate capacity25% (equivalent to 48,000 metric43,000 metric tons per month). This decision led
In addition, our operations were negatively affected by workforce availability and logistic constraints related to workforce reductions and spending limitations or deferrals.the pandemic, as well as by energy cost inflation related to the economic recovery.
Business acquisitionDividends
On February 1, 2020, we acquired from Conifex Timber Inc. allWe declared a special dividend of the equity securities and membership interests in certain of its subsidiaries, the business of which consists mainly$1.00 per share ($79 million) on our common stock in the operation of three sawmillsprevious quarter, which was recorded in “Accounts payable and related assetsother” in Cross City (Florida) and in Glenwood and El Dorado (Arkansas) (or, the “U.S. Sawmill Business”). The U.S. Sawmill Business acquired produces construction-grade dimensional lumber and decking products from locally-sourced southern yellow pine for distribution within the U.S.
The fair value of the consideration, paid in cash, for the U.S. Sawmill Business acquired was $173 million. For more information, see Note 2, “Business Acquisition,” to our Consolidated Financial Statements.Balance Sheet as of June 30, 2021. The special dividend was paid to shareholders on July 7, 2021.
Three months ended September 30, 20202021 vs. September 30, 20192020
Our operating income was $97$102 million in the quarter, compared to an operating lossincome of $18$97 million in the third quarter of 2019.2020. Excluding special items, we incurredour operating income was $102 million, compared to an operating income of $97 million compared to an operating loss of $19 million in the year-ago period. Special items are described below.
Our net income in the quarter was $57$80 million, or $0.66$0.99 per diluted share, compared to a net lossincome of $43$57 million, or $0.47$0.66 per diluted share, in the year-ago period. Our net income in the quarter, excluding special items, was $62$67 million, or $0.72$0.84 per diluted share, compared to a net lossincome of $34$62 million, or $0.37$0.72 per share, in the year-ago period. Special items are described below.
Three Months Ended September 30, 2021Operating IncomeNet IncomeEPS
(Unaudited, in millions, except per share amounts)
GAAP, as reported$102 $80 $0.99 
Adjustments for special items:
Non-operating pension and other postretirement benefit credits— (3)(0.04)
Other income, net— (20)(0.24)
Income tax effect of special items— 10 0.13 
Adjusted for special items (1)
$102 $67 $0.84 
Three Months Ended September 30, 2020Operating IncomeNet IncomeEPS
(Unaudited, in millions, except per share amounts)
GAAP, as reported$97 $57 $0.66 
Adjustments for special items:
Non-operating pension and other postretirement benefit credits— (5)(0.06)
Other expense, net— 14 0.17 
Income tax effect of special items— (4)(0.05)
Adjusted for special items (1)
$97 $62 $0.72 
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Three Months Ended September 30, 2019Operating LossNet LossEPS
(Unaudited, in millions, except per share amounts)
GAAP, as reported$(18)$(43)$(0.47)
Adjustments for special items:
Net gain on disposition of assets(1)(1)(0.01)
Non-operating pension and other postretirement benefit credits— (12)(0.13)
Other expense, net�� 17 0.19 
Income tax effect of special items— 0.05 
Adjusted for special items (1)
$(19)$(34)$(0.37)
(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 U.S. generally accepted accounting principles (or, “GAAP”). We calculate operating income (loss), as adjusted for special items, as operating income (loss) from our
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Consolidated Statements of Operations, adjusted for items such as closure costs, impairment, and other related charges, and gains and losses on disposition of assets 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 non-operating pension and other postretirement benefit (or, “OPEB”) costs and credits, other income and 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 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, 20202021 vs. September 30, 20192020
Our operating income was $95$685 million in the first nine months of the year, compared to operating income of $86$95 million in the year-ago period. Excluding special items, we incurredour operating income of $84was $687 million, compared to operating income of $85$84 million in the year-ago period. Special items are described below.
Our net income in the first nine months of the year was $62$435 million, or $0.71$5.39 per diluted share, compared to net income of $24$62 million, or $0.26$0.71 per diluted share, in the year-ago period. Our net income in the period, excluding special items, was $11$486 million, or $0.13$6.01 per diluted share, compared to net income of $7$11 million, or $0.08$0.13 per diluted share, in the year-ago period.
Nine Months Ended September 30, 2020Operating IncomeNet IncomeEPS
Nine Months Ended September 30, 2021Nine Months Ended September 30, 2021Operating IncomeNet IncomeEPS
(Unaudited, in millions, except per share amounts)(Unaudited, in millions, except per share amounts)Operating IncomeNet IncomeEPS(Unaudited, in millions, except per share amounts)
GAAP, as reportedGAAP, as reportedGAAP, as reported$685 $435 $5.39 
Adjustments for special items:Adjustments for special items:Adjustments for special items:
Closure costs, impairment and other related chargesClosure costs, impairment and other related charges(2)(2)(0.02)Closure costs, impairment and other related charges0.02 
Net gain on disposition of assets(9)(9)(0.10)
Non-operating pension and other postretirement benefit creditsNon-operating pension and other postretirement benefit credits— (24)(0.27)Non-operating pension and other postretirement benefit credits— (8)(0.10)
Other income, net— (24)(0.27)
Other expense, netOther expense, net— 74 0.92 
Income tax effect of special itemsIncome tax effect of special items— 0.08 Income tax effect of special items— (17)(0.22)
Adjusted for special items (1)
Adjusted for special items (1)
$84 $11 $0.13 
Adjusted for special items (1)
$687 $486 $6.01 
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Nine Months Ended September 30, 2019Operating IncomeNet IncomeEPS
Nine Months Ended September 30, 2020Nine Months Ended September 30, 2020Operating IncomeNet IncomeEPS
(Unaudited, in millions, except per share amounts)(Unaudited, in millions, except per share amounts)Operating IncomeNet IncomeEPS(Unaudited, in millions, except per share amounts)
GAAP, as reportedGAAP, as reportedGAAP, as reported$95 $62 $0.71 
Adjustments for special items:Adjustments for special items:Adjustments for special items:
Closure costs, impairment and other related chargesClosure costs, impairment and other related charges(2)(2)(0.02)
Net gain on disposition of assetsNet gain on disposition of assets(1)(1)(0.01)Net gain on disposition of assets(9)(9)(0.10)
Non-operating pension and other postretirement benefit creditsNon-operating pension and other postretirement benefit credits— (36)(0.39)Non-operating pension and other postretirement benefit credits— (24)(0.27)
Other expense, net— 22 0.24 
Other income, netOther income, net— (24)(0.27)
Income tax effect of special itemsIncome tax effect of special items— (2)(0.02)Income tax effect of special items— 0.08 
Adjusted for special items (1)
Adjusted for special items (1)
$85 $7 $0.08 
Adjusted for special items (1)
$84 $11 $0.13 
(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 Overviewabove.

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RESULTS OF OPERATIONS
Consolidated Results
Selected financial information
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended
September 30,
Nine Months Ended
September 30,
(Unaudited, in millions, except per share amounts)(Unaudited, in millions, except per share amounts)2020201920202019(Unaudited, in millions, except per share amounts)2021202020212020
SalesSales$730 $705 $2,031 $2,255 Sales$817 $730 $2,830 $2,031 
Operating income (loss) per segment:Operating income (loss) per segment:Operating income (loss) per segment:
Market pulpMarket pulp$(4)$(12)$3 $57 Market pulp$46 $(4)$80 $
TissueTissue2 (3)2 (15)Tissue(9)(18)
Wood productsWood products128 (4)148 (1)Wood products64 128 690 148 
PaperPaper(12)(27)83 Paper16 (12)(15)(27)
Segment totalSegment total114 (11)126 124 Segment total117 114 737 126 
Corporate and otherCorporate and other(17)(7)(31)(38)Corporate and other(15)(17)(52)(31)
Operating income (loss)$97 $(18)$95 $86 
Net income (loss) attributable to Resolute Forest Products Inc.$57 $(43)$62 $24 
Net income (loss) per common share attributable to Resolute Forest Products Inc. common shareholders:
Operating incomeOperating income$102 $97 $685 $95 
Net income attributable to Resolute Forest Products Inc.Net income attributable to Resolute Forest Products Inc.$80 $57 $435 $62 
Net income per common share attributable to Resolute Forest Products Inc. common shareholders:Net income per common share attributable to Resolute Forest Products Inc. common shareholders:
BasicBasic$0.66 $(0.47)$0.71 $0.26 Basic$1.00 $0.66 $5.44 $0.71 
DilutedDiluted$0.66 $(0.47)$0.71 $0.26 Diluted$0.99 $0.66 $5.39 $0.71 
Adjusted EBITDA (1)
Adjusted EBITDA (1)
$140 $23 $209 $209 
Adjusted EBITDA (1)
$144 $140 $810 $209 
(Unaudited, in millions)(Unaudited, in millions)September 30, 2020December 31, 2019(Unaudited, in millions)
September 30,
2021
December 31, 2020
Cash and cash equivalentsCash and cash equivalents$20 $Cash and cash equivalents$119 $113 
Total assetsTotal assets$3,678 $3,626 Total assets$3,767 $3,730 
(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 interest 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 closure costs, impairment and other related charges, gains and losses on disposition of assets, non-operating pension and OPEB costs and credits, and other income and expense, net. 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 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.
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Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended
September 30,
Nine Months Ended
September 30,
(Unaudited, in millions)(Unaudited, in millions)2020201920202019(Unaudited, in millions)2021202020212020
Net income (loss) including noncontrolling interest$57 $(43)$62 $24 
Net income including noncontrolling interestNet income including noncontrolling interest$80 $57 $436 $62 
Interest expenseInterest expense8 26 24 Interest expense5 16 26 
Income tax provisionIncome tax provision23 12 55 52 Income tax provision40 23 167 55 
Depreciation and amortizationDepreciation and amortization43 42 125 124 Depreciation and amortization42 43 123 125 
EBITDAEBITDA$131 $19 $268 $224 EBITDA$167 $131 $742 $268 
Closure costs, impairment and other related chargesClosure costs, impairment and other related charges — (2)— Closure costs, impairment and other related charges — 2 (2)
Net gain on disposition of assetsNet gain on disposition of assets (1)(9)(1)Net gain on disposition of assets —  (9)
Non-operating pension and other postretirement benefit creditsNon-operating pension and other postretirement benefit credits(5)(12)(24)(36)Non-operating pension and other postretirement benefit credits(3)(5)(8)(24)
Other expense (income), net14 17 (24)22 
Other (income) expense, netOther (income) expense, net(20)14 74 (24)
Adjusted EBITDAAdjusted EBITDA$140 $23 $209 $209 Adjusted EBITDA$144 $140 $810 $209 
Three months ended September 30, 20202021 vs. September 30, 20192020
Operating income (loss) variance analysis
rfp-20200930_g1.jpgrfp-20210930_g1.jpg
Sales
Sales increased by $25$87 million compared to the year-ago period, to $730$817 million. After removing the sales related to the acquisition of the U.S. Sawmill Business in the first quarter of 2020, sales declined by $29 million. Lower volume reduced sales by $110 million, mainly reflecting lower shipments of market pulp and paper, partly offset by higher shipments of wood products. Pricing had a favorable impact of $82 million, mainly as a result of an increase in the average transaction price for wood productsmarket pulp and tissue,paper, up by 76%39%, and 9%,16% respectively, partly offset by lower average transaction price for tissue and wood products, down by 9% and 5%, respectively. Higher volume increased sales by $4 million, mainly reflecting higher shipments of paper, market pulp and paper, downtissue, partly offset by 5% and 9%, respectively.lower shipments of wood products.
Cost of sales, excluding depreciation, amortization and distribution costs
Cost of sales, excluding depreciation, amortization and distribution costs (or, “COS”) decreasedincreased by $83$79 million incompared to the quarter.year-ago period. After removing the COS related to the acquisition of the U.S. Sawmill Business, and the effects of lowerhigher volume and the weakerstronger Canadian dollar, COS decreasedincreased by $31$55 million, largely reflecting:
favorablehigher fiber costs ($27 million), mainly reflecting an increase in stumpage costs related to higher lumber sale prices, and in harvesting costs for the wood products segment;
higher energy prices ($13 million) due to inflation; and
unfavorable maintenance costs ($228 million), as a result of reduced spending, the timing of scheduled outages and the scope of maintenance work, partly offset by the indefinite idling of our Augusta (Georgia) mill in November 2019;the Amos and Baie-Comeau paper mills.
a decrease in energy prices ($3 million) and chemical costs ($2 million);
partly offset by an increase in fiber costs ($2 million).
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Distribution costs
After removing the effect of the stronger Canadian dollar, distribution costs increased by $6 million, mainly due to higher freight rates.
Selling, general and administrative expenses
Selling, general and administrative (or, “SG&A”) expenses increaseddecreased by $5$3 million in the quarter compared to the same period last year, mainly due to higher incentive plan expense, which is based on company performance, and higherlower stock-based compensation expense, partly offset by lower headcount.expense.
Net gain on disposition of assets
See the corresponding variance analysis under Corporate“Corporate and OtherOther” below.
Net income (loss) variance analysis
Non-operating pension and other postretirement benefit credits
We recorded non-operating pension and OPEB credits of $5$3 million in the quarter, compared to $12$5 million in the year-ago period. The difference mainly reflects: lower interest costexpected return on plan asset ($84 million); partly offset by in the current period and higher amortization of actuarial losses ($72 million) and; partly offset by lower expected return on plan assetsinterest cost ($65 million). in the current period.
Other expense,income (expense), net
We recorded other expense,income, net of $14$20 million in the quarter, compared to other expense, net of $17$14 million in the year-ago period. The difference mainly reflects a provisionforeign exchange gain of $23$12 million in the current period, compared to a loss on commodity contracts of $11 million, principally related to lumber futures contracts, and a litigation in connection with the dissenting shareholders related to our 2012 acquisitionforeign exchange loss of Fibrek Inc. (or, “Fibrek”) recorded$5 million in the thirdyear-ago period. There were no lumber futures contracts outstanding as of September 30, 2021.
Interest expense
Interest expense was $3 million lower in the quarter compared to the year-ago period, as a result of 2019, offset by other items. For more information, see Note 3, “Other (Expense) Income, Net,” to our Consolidated Financial Statements.the refinancing of the 2023 Notes at a lower interest rate and debt level.
Income taxes
We recorded an income tax provision of $23$40 million in the quarter on income before income taxes of $120 million, compared to an expected income tax provision of $26 million based on the U.S. federal statutory income tax rate of 21%. The difference mainly reflects: U.S. tax on non-U.S. earnings ($13 million); foreign tax rate differences ($6 million) and foreign exchange items ($5 million); partly offset by a decrease in our valuation allowance related to our U.S. operations ($11 million) where we recognize a full valuation allowance against our net deferred income tax assets.
The $11 million decrease in our valuation allowance for the three months ended September 30, 2021, is to offset the tax implications relating to the global intangible low-taxed income (or, “GILTI”) inclusion, which is based on the U.S. system of taxation for non-U.S. earnings, whereby foreign earnings less a qualified deduction for foreign assets are included in U.S. taxable income.
In the third quarter of 2020, we recorded an income tax provision of $23 million, on income before income taxes of $80 million, compared to an expected income tax provision of $17 million, based on the U.S. federal statutory income tax rate of 21%. The difference mainly reflectsreflects: an increase to our valuation allowance related to our U.S. operations ($5 million), where we recognize a full valuation allowance against our net deferred income tax assets, and foreign tax rate differences ($5 million),; partly offset by foreign exchange items ($2 million).
In the third quarter of 2019, we recorded an income tax provision of $12 million on loss before income taxes of $31 million, compared to an expected income tax benefit of $6 million based on the U.S. federal statutory income tax rate of 21%. The difference mainly reflects a valuation allowance related to our U.S. operations ($7 million), where we recognize a valuation allowance against virtually all of our net deferred income tax assets, U.S. tax on non-U.S. earnings ($6 million), and foreign exchange items ($3 million).
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Nine months ended September 30, 20202021 vs. September 30, 20192020
Operating income variance analysis
rfp-20200930_g2.jpgrfp-20210930_g2.jpg
Sales
Sales decreasedincreased by $224$799 million compared to the year-ago period, to $2,031$2,830 million. After removing the sales related to the acquisition of the U.S. Sawmill Business, sales declined by $322 million. Lower volume reduced sales by $249 million, reflecting lower shipments of paper and market pulp. Pricing had an unfavorablea favorable impact of $71$835 million, mainly as a result of a dropan increase in the average transaction price for wood products, market pulp, and paper downup by 17%90%, 26% and 13%7% respectively. Lower volume reduced sales by $41 million, mainly reflecting lower shipments in paper ($35 million), respectively,market pulp ($15 million) and tissue ($15 million), partly offset by an increase in pricing forhigher shipments of wood products and tissue, up 31% and 7%, respectively.($24 million).
Cost of sales, excluding depreciation, amortization and distribution costs
COS decreasedincreased by $185$179 million in the period.period to $1,642 million. After removing the COS related to the acquisition of the U.S. Sawmill Business, and the effects of lower volume and the weakerstronger Canadian dollar, COS improvedincreased by $85$144 million, largely reflecting:
favorablehigher fiber costs ($67 million), mainly reflecting an increase in stumpage costs related to higher lumber sale prices, and in harvesting costs for the wood products segment, partly offset by lower chip costs in the market pulp and paper segment;
unfavorable maintenance costs ($4923 million), as a result of reduced spending, the timing of scheduled outages and the scope of maintenance work, partly offset by the indefinite idling of our Augusta mill;the Amos and Baie-Comeau paper mills;
a decrease inhigher energy prices ($1325 million); due to inflation;
favorable fiber costshigher expenses related to a process improvement project ($1012 million); and
lowerhigher labor and overhead costsexpense ($57 million), primarilymainly due to higher compensation expense, partly offset by the indefinite idling of our Augusta mill, partly offsetthe Amos and Baie-Comeau paper mills.
Distribution costs
After removing the effect of lower volume and the stronger Canadian dollar, distribution costs increased by the temporary idling of the Baie-Comeau (Quebec) and Amos (Quebec) paper mills, and compensation expense increase.$6 million, mainly due to higher freight rates.
Selling, general and administrative expenses
SG&A expenses decreasedincreased by $2$13 million in the first nine months of 20202021, compared to the same period last year, mainly due to lower headcount, partly offset by higher incentive plan expense, which is based on company performance, and higher stock-based compensation expense.expense, partly offset by lower corporate expenses.
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Closure costs, impairment and other related charges
In the first nine months of 2021, we recorded closure costs, impairment and other related charges of $2 million, related to the
indefinite idling of our Amos and Baie-Comeau paper mills. This compares to the reversal of $2 million of closure costs, impairment and other related charges in the year-ago period, related to the indefinite idling of our paper mill at Augusta (Georgia).
Net gain on disposition of assets
See the corresponding variance analysis under “Corporate and Other” below.
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Net income variance analysis
Non-operating pension and other postretirement benefit credits
We recorded non-operating pension and OPEB credits of $24$8 million in the first nine months of 2020,2021, compared to $36$24 million in the year-ago period. The difference mainly reflects: lower interest cost ($24 million); and an OPEB curtailment credit related to the indefinite idling of our Augusta mill in the prior period ($14 million); partly offset by: higher amortization of actuarial losses ($2111 million) and lower amortization of prior service credits ($5 million); lower expected return on plan assets ($196 million); in the current period; partly offset by lower interest cost ($12 million) and a pension special termination benefit cost related to the indefinite idling of our Augusta mill in the prior period ($3 million).
Interest expense
Interest expense was $10 million lower in the first nine months compared to the year-ago period, as a result of the refinancing of the 2023 Notes at a lower interest rate and debt level.
Other income (expense), net
We recorded other expense, net of $74 million in the first nine months of 2021, compared to other income, net of $24 million in the first nine months of 2020, compared to other expense, net of $22 million in the year-ago period. The difference mostlymainly reflects a loss on commodity contracts of $85 million principally related to lumber futures contracts, compared to a favorable insurance claim settlement of $15 million related to our acquisition of Atlas in 2015, compared to a provisionforeign exchange gain of $23$9 million, related toand a litigationloss on commodity contracts of $7 million in connection with the dissenting shareholders related to our 2012 acquisitionyear-ago period. There were no lumber futures contracts outstanding as of Fibrek. For more information, see Note 3, “Other (Expense) Income, Net,” to our Consolidated Financial Statements.September 30, 2021.
Income taxes
We recorded an income tax provision of $55$167 million in the period, on income before income taxes of $603 million, compared to an expected income tax provision of $127 million based on the U.S. federal statutory income tax rate of 21%. The difference mainly reflects: U.S. tax on non-U.S. earnings ($96 million); and foreign tax rate differences ($33 million); partly offset by a net decrease in our valuation allowance related to our U.S. operations ($89 million) where we recognize a full valuation allowance against our net deferred income tax assets.
The $89 million net decrease in our valuation allowance for the nine months ended September 30, 2021, is to offset the tax implications relating to the GILTI inclusion, which is based on the U.S. system of taxation for non-U.S. earnings, whereby foreign earnings less a qualified deduction for foreign assets are included in U.S. taxable income.
In the first nine months of 2020, we recorded an income tax provision of $55 million, on income before income taxes of $117 million, compared to an expected income tax provision of $25 million based on the U.S. federal statutory income tax rate of 21%. The difference mainly reflectsreflects: an increase to our valuation allowance related to our U.S. operations ($21 million), where we recognize a full valuation allowance against virtually all of our net deferred income tax assets,assets; foreign exchange items ($8 million),; and state and foreign tax rate differences ($7 million), partly; partially offset by other netitems ($7 million), mainly related to the settlement of an insurance claim in connection with our acquisition of Atlas.
In the first nine months of 2019, we recorded an income tax provision of $52 million on income before income taxes of $76 million, compared to an expected income tax provision of $16 million based on the U.S. federal statutory income tax rate of 21%. The difference reflects an increase to our valuation allowance related to our U.S. operations ($18 million), where we recognize a valuation allowance against virtually all of our net deferred income tax assets, U.S. tax on non-U.S. earnings ($11 million), and state and foreign tax rate differences ($5 million).
Segment Earnings
We manage our business based on the products we manufacture. Our reportable segments correspond to our principal product lines: market pulp, tissue, wood products, and paper. As
28

Table of the second quarter of 2020, the results from our newsprint and specialty papers operations have been combined to form the paper reportable segment. This better reflects management’s internal analysis, given the diminishing percentage newsprint and specialty papers represent in our product portfolio. Comparative information has been modified to conform to this revised segment presentation.Contents

We do not allocate any of the income or loss items following “operating income (loss)”income” in our Consolidated Statements of Operations to our segments because those items are reviewed separately by management. Similarly, we do not allocate to the segments: closure costs, impairment and other related charges; gains and losses on disposition of assets; as well as other discretionary charges or credits.
We allocate depreciation and amortization expense to our segments, although the related fixed assets and amortizable intangible assets are not allocated to segment assets. Additionally, all SG&A expenses are allocated to our segments, with the exception of certain discretionary charges and credits, which we present under “corporate and other.”
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MARKET PULP
Highlights
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended
September 30,
Nine Months Ended
September 30,
(Unaudited, in millions, except where otherwise stated)(Unaudited, in millions, except where otherwise stated)2020201920202019(Unaudited, in millions, except where otherwise stated)2021202020212020
SalesSales$161 $201 $499 $621 Sales$234 $161 $609 $499 
Operating (loss) income (1)
$(4)$(12)$3 $57 
Operating income (loss) (1)
Operating income (loss) (1)
$46 $(4)$80 $
EBITDA (2)
EBITDA (2)
$2 $(5)$21 $74 
EBITDA (2)
$52 $$98 $21 
(In thousands of metric tons)(In thousands of metric tons)(In thousands of metric tons)
ShipmentsShipments273 320 834 863 Shipments283 273 808 834 
DowntimeDowntime42 16 75 39 Downtime28 42 76 75 
September 30,September 30,
(Unaudited, in thousands of metric tons)(Unaudited, in thousands of metric tons)20202019(Unaudited, in thousands of metric tons)20212020
Finished goods inventoryFinished goods inventory71 74 Finished goods inventory52 71 
(1)Net income (loss) income including noncontrolling interest is equal to operating income (loss) income in this segment.
(2)EBITDA, a non-GAAP financial measure, is reconciled below. For more information on the calculation and reasons we include this measure, see note 1 under “Results of Operations – Consolidated Results – Selected financial information” above.
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended
September 30,
Nine Months Ended
September 30,
(Unaudited, in millions)(Unaudited, in millions)2020201920202019(Unaudited, in millions)2021202020212020
Net (loss) income including noncontrolling interest$(4)$(12)$3 $57 
Net income (loss) including noncontrolling interestNet income (loss) including noncontrolling interest$46 $(4)$80 $
Depreciation and amortizationDepreciation and amortization6 18 17 Depreciation and amortization6 18 18 
EBITDAEBITDA$2 $(5)$21 $74 EBITDA$52 $$98 $21 
Industry trends
rfp-20200930_g3.jpgrfp-20210930_g3.jpg
World demand for chemical pulp grewdecreased by 5.0%2.8% in the first eight months of 20202021 compared to the year-ago period, reflecting an increasea decrease in China of 10.2% and of 3.9% in North America of 6.5% and 0.8%, respectively, while Western Europe decreasedincreased by 4.4%3.2%. World capacity remained unchangeddecreased by 0.3% compared to lastthe year-ago period.
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World demand for softwood pulp fell by 2.6%3.0% in the first eight months of 2020, reflecting2021, with a decrease of 9.2%4.4% and 6.0%3.1% in Western EuropeNorth America and China, respectively, while North AmericaWestern Europe increased by 6.0%1.7%. The operating rateshipment-to-capacity ratio was 91%88%.
In the same period, world demand for hardwood pulp rosefell by 10.6%4.5%, with shipments to China down by 10.2%, while shipments to Western Europe and North America were up by 20.2%3.6% and 1.6%1.7%, respectively, while Western Europerespectively. The shipment-to-capacity ratio was down by 1.2%. The operating rate was 94%89%.
Three months ended September 30, 20202021 vs. September 30, 20192020
Operating lossincome (loss) variance analysis
rfp-20200930_g4.jpgrfp-20210930_g4.jpg
Sales
Sales were $40$73 million lower,higher, or 20%45%, to $161 million in the quarter. Sales volume was $35quarter to $234 million. Pricing contributed to a $66 million lower, and pricing reducedincrease in sales, by $5 million, reflecting a declinean increase in the average transaction price of $32$233 per metric ton, mostly in virgin pulp gradesor 39%, due to softer market conditions.a price increase across all pulp grades. Higher volume increased sales by $7 million, mainly due to an increase in shipments of 10,000 metric tons, or 4%, mainly reflecting recovery from the lower demand levels since the onset of the pandemic.
Cost of sales, excluding depreciation, amortization and distribution costs
COS increased by $19 million compared to the year-ago period. After removing the effects of higher volume and the stronger Canadian dollar, COS increased by $9 million, largely reflecting higher energy prices due to inflation ($5 million) and unfavorable maintenance costs ($2 million) as a result of the timing of scheduled outages.
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Nine months ended September 30, 2021 vs. September 30, 2020
Operating income variance analysis
rfp-20210930_g5.jpg
Sales
Sales were $110 million higher, or 22%, to $609 million in the first nine months of the year. Pricing had a favorable impact of $125 million, reflecting an increase in the average transaction price of $155 per metric ton, or 26%, due to a price increase across all pulp grades. Lower volume reduced sales by $15 million, mainly reflecting lower shipments of 26,000 metric tons, or 3%, due to production inconsistencies.
Cost of sales, excluding depreciation, amortization and distribution costs
After adjusting for the effects of lower volume and the weakerstronger Canadian dollar, manufacturing costs improvedincreased by $17$19 million, reflecting:
favorablehigher energy prices ($13 million) due to inflation;
unfavorable maintenance costs ($116 million), mainly due to as a result of the timing of scheduled outages and reduced spending;the scope of maintenance work; and
favorable fiberhigher expenses related to a process improvement project ($5 million);
partly offset by lower chip costs ($37 million).

Distribution costs
34

TableAfter removing the effect of Contentslower volume and the stronger Canadian dollar, distribution costs increased by $3 million mainly due to higher freight rates.

Selling, general and administrative expenses
Nine months ended September 30, 2020 vs. September 30, 2019
Operating income variance analysis
rfp-20200930_g5.jpg
Sales
Sales were $122 million lower, or 20%, to $499SG&A expenses increased by $4 million in the first nine months of 2021, compared to the year. Sales volume was $19 million lower. Pricing reduced sales by $103 million, reflecting a decline in the average transaction price of $122 per metric ton due to a significant drop in all pulp grades.
Cost of sales, excluding depreciation, amortization and distribution costs
After adjusting for the effects of lower volume and the weaker Canadian dollar, manufacturing costs improved by $44 million, reflecting:
favorable maintenance costs ($20 million),same period last year, mainly due to the timing of scheduled outages;
a decrease in fiber cost ($14 million);higher incentive plan expense, which is based on company performance, and
higher stock-based compensation expense, partly offset by lower energy prices ($6 million).corporate expenses.
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TISSUE
Highlights
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended
September 30,
Nine Months Ended
September 30,
(Unaudited, in millions, except where otherwise stated)(Unaudited, in millions, except where otherwise stated)2020201920202019(Unaudited, in millions, except where otherwise stated)2021202020212020
SalesSales$39 $43 $132 $125 Sales$38 $39 $115 $132 
Operating income (loss) (1)
$2 $(3)$2 $(15)
Operating (loss) income (1)
Operating (loss) income (1)
$(9)$$(18)$
EBITDA (2)
EBITDA (2)
$6 $$15 $(2)
EBITDA (2)
$(4)$$(4)$15 
(In thousands of short tons)(In thousands of short tons)(In thousands of short tons)
Shipments (3)
Shipments (3)
21 25 73 74 
Shipments (3)
23 21 65 73 
DowntimeDowntime2 4 Downtime3 10 
September 30,September 30,
(Unaudited, in thousands of short tons)(Unaudited, in thousands of short tons)20202019(Unaudited, in thousands of short tons)20212020
Finished goods inventory (3)
Finished goods inventory (3)
6 
Finished goods inventory (3)
6 
(1)Net (loss) income (loss) including noncontrolling interest is equal to operating (loss) income (loss) in this segment.
(2)EBITDA, a non-GAAP financial measure, is reconciled below. For more information on the calculation and reasons we include this measure, see note 1 under “Results of Operations – Consolidated Results – Selected financial information” above.
(3)Tissue converted products, which are measured in cases, are converted to short tons.
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended
September 30,
Nine Months Ended
September 30,
(Unaudited, in millions)(Unaudited, in millions)2020201920202019(Unaudited, in millions)2021202020212020
Net income (loss) including noncontrolling interest$2 $(3)$2 $(15)
Net (loss) income including noncontrolling interestNet (loss) income including noncontrolling interest$(9)$$(18)$
Depreciation and amortizationDepreciation and amortization4 13 13 Depreciation and amortization5 14 13 
EBITDAEBITDA$6 $$15 $(2)EBITDA$(4)$$(4)$15 
Industry trends
rfp-20200930_g6.jpgrfp-20210930_g6.jpg
Total U.S. tissue consumption grewfell by 8.7%8.5% in the first nine months of 20202021, compared to the year-ago period. Converted product shipments increaseddecreased by 7.8%5.7%, led bywhere at-home shipments up by 15.9%, while away-from-home shipments decreased by 8.6%9.7%, and away-from-home shipments increased by 4.5%.
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U.S. parent roll production rosefell by 6.5%6.4% in the first nine months contributing to a 97%of 2021, and the average industry production-to-capacity ratio updecreased to 91%, down from 93%97% in the year-ago period.
Three months ended September 30, 20202021 vs. September 30, 20192020
Operating (loss) income (loss) variance analysis
rfp-20200930_g7.jpgrfp-20210930_g7.jpg
Sales
Sales were $4$1 million lower, or 9%3%, to $39$38 million in the quarter. The average transaction price was $153quarter, mainly due to a decrease in pricing of $172 per short ton, higher,or 9%, due to favorablean unfavorable product mix, and price increases. Shipments decreasedpartly offset by 4,000an increase in shipments by 2,000 short tons, or 10%.
Cost of sales, excluding depreciation, amortization and distribution costs
After removing the effect of higher volume, our manufacturing costs increased by $7 million compared to the year-ago period, mainly related to:
reduced workforce availability and logistic constraints, which challenged our ability to scale production and resulted in higher manufacturing overhead ($3 million), especially for the ramp-up of our Hagerstown (Maryland) converting facility acquired in the fourth quarter of 2020; and
higher fiber costs ($2 million).
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Nine months ended September 30, 2021 vs. September 30, 2020
Operating (loss) income variance analysis
rfp-20210930_g8.jpg
Sales
Sales were $17 million lower, or 13%, to $115 million in the first nine months of the year, mainly due to a decrease in shipments of 8,000 short tons, principally in away-from-home products due to the ongoing pandemic.pandemic, and an unfavorable product mix.
Cost of sales, excluding depreciation, amortization and distribution costs
After removing the effect of lower volume, our manufacturing costs improvedincreased by $4$13 million compared to the year-ago period, mainly duerelated to:
reduced workforce availability and logistic constraints, which challenged our ability to lowerscale production and resulted in higher manufacturing overhead ($7 million), especially for the ramp-up of our Hagerstown converting facility acquired in the fourth quarter of 2020; and
higher fiber costs.

costs ($3 million).
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Nine months ended September 30, 2020 vs. September 30, 2019
Operating income (loss) variance analysis
rfp-20200930_g8.jpg
Sales
Sales were $7 million higher, or 6%, to $132 million in the first nine months of the year. The average transaction price was $117 per short ton higher, due to favorable product mix and price increases.
Cost of sales, excluding depreciation, amortization and distribution costs
Our manufacturing costs improved by $6 million compared to the year-ago period, mainly due to favorable fiber costs.


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WOOD PRODUCTS
Highlights
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended
September 30,
Nine Months Ended
September 30,
(Unaudited, in millions, except where otherwise stated)(Unaudited, in millions, except where otherwise stated)2020201920202019(Unaudited, in millions, except where otherwise stated)2021202020212020
SalesSales$322 $146 $695 $475 Sales$293 $322 $1,387 $695 
Operating income (loss) (1)
$128 $(4)$148 $(1)
Operating income (1)
Operating income (1)
$64 $128 $690 $148 
EBITDA (2)
EBITDA (2)
$139 $$180 $24 
EBITDA (2)
$75 $139 $722 $180 
(In millions board feet)(In millions board feet)    (In millions board feet)    
Shipments (3)
Shipments (3)
537 429 1,501 1,341 
Shipments (3)
511 537 1,578 1,501 
DowntimeDowntime56 74 224 168 Downtime47 56 112 224 
September 30,September 30,
(Unaudited, in millions board feet)(Unaudited, in millions board feet)20202019(Unaudited, in millions board feet)20212020
Finished goods inventory (3)
Finished goods inventory (3)
121 122 
Finished goods inventory (3)
129 121 
(1)Net income (loss) including noncontrolling interest is equal to operating income (loss) in this segment.
(2)EBITDA, a non-GAAP financial measure, is reconciled below. For more information on the calculation and reasons we include this measure, see note 1 under “Results of Operations – Consolidated Results – Selected financial information” above.
(3)Includes wood pellets measured by mass, converted to board feet using a density-based conversion ratio.
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended
September 30,
Nine Months Ended
September 30,
(Unaudited, in millions)(Unaudited, in millions)2020201920202019(Unaudited, in millions)2021202020212020
Net income (loss) including noncontrolling interest$128 $(4)$148 $(1)
Net income including noncontrolling interestNet income including noncontrolling interest$64 $128 $690 $148 
Depreciation and amortizationDepreciation and amortization11 32 25 Depreciation and amortization11 11 32 32 
EBITDAEBITDA$139 $$180 $24 EBITDA$75 $139 $722 $180 
Industry trends
rfp-20200930_g9.jpgrfp-20210930_g9.jpg
U.S. housing starts were 1.31.6 million on a seasonally-adjustedseasonally adjusted basis in the first nine months of 2020,2021, up 6.5%18.5% from the same period last year, which reflects a 6.4%19.9% increase in single-family starts and an increase of 6.9%15.6% in multi-family starts.
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2x4 – Random Length (or “RL”) #1-2 Kiln Dried Great Lakes (or “KD GL”) price rose by 36.0%75.5% in the first nine months of 20202021 compared to the year ago period, and the 2x4x8 Stud KD GL price rose by 62.6%75.0%. The 2x4 – RL #2 KD Southern Pine (Eastside) price increased by 32.0%64.4%, and the 2x4 – RL #2 KD Southern Pine (Westside) price was up by 33.2%77.1%.
Three months ended September 30, 20202021 vs. September 30, 20192020
Operating income (loss) variance analysis
rfp-20200930_g10.jpgrfp-20210930_g10.jpg
Sales
Sales were $176$29 million higher,lower, or 121%9%, to $322$293 million in the quarter, asreflecting softer lumber market conditions. Volume decreased sales by $15 million due to a decrease in shipments of 26 million board feet, or 5%. Pricing contributed to a $14 million decrease in sales, reflecting a decrease of the average transaction price rose by $259of $27 per thousand board feet, or 76%, and shipments increased by 108 million board feet, or 25%, reflecting new volume related to the acquisition of the U.S. Sawmill Business, the increase in market demand for home repairs and remodeling, and stronger U.S. market housing starts. After removing the sales related to the acquisition of the U.S. Sawmill Business, sales were $122 million higher. Pricing contributed to a $104 million increase, reflecting a rise in average transaction price, and sales volume was $18 million higher.5%.
Cost of sales, excluding depreciation, amortization and distribution costs
After removing the COS related to the acquisition of the U.S. Sawmill Business, and the effects of higherlower volume and the weakereffect of the Canadian dollar, manufacturing costs increased by $2$37 million, mainly reflecting reflecting:
higher log costs ($29 million) primarily due to an increase in stumpage costs related to current wood prices.higher lumber sale prices, and in harvesting costs; and
Distributionunfavorable maintenance costs
After removing ($6 million) as a result of the effectscope of lower volume, distribution costs increased by $6 million mainly due to higher freight rates and unfavorable destination mix.maintenance work.
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Nine months ended September 30, 20202021 vs. September 30, 20192020
Operating income (loss) variance analysis
rfp-20200930_g11.jpgrfp-20210930_g11.jpg
Sales
Sales were $220$692 million higher, or 46%100%, to $695$1,387 million in the first nine months of the year, asdue to stronger market conditions. Pricing contributed to a $668 million increase in sales, reflecting a rise in the average transaction price rose by $109of $416 per thousand board feet, or 31%90%, and volume increased sales by $24 million due to an increase in shipments increased by 160of 77 million board feet, or 12%5%, reflecting the new volume related tofrom the acquisitionrestart in the first quarter of 2021 of the U.S. Sawmill Business, the increase in market demand for home repairsEl Dorado (Arkansas) and remodeling, and stronger U.S. market housing starts. After removing the sales related to the acquisition of the U.S. Sawmill Business, sales were $122 million higher, reflecting the rise in the average transaction price.Ignace (Ontario) sawmills.
Cost of sales, excluding depreciation, amortization and distribution costs
After removing the COS related to the acquisition of the U.S. Sawmill Business andadjusting for the effect of higher volume and the weakerstronger Canadian dollar, manufacturing costs increased by $5$103 million, mainlyreflecting:
higher log costs ($83 million), primarily reflecting an increase in stumpage costs related to higher wood fiber costs.lumber sale prices, and in harvesting costs;
Depreciation and amortization
Depreciation and amortization increased by $7 million compared to the year-ago period, primarily due to the acquisitionunfavorable maintenance costs ($13 million) as a result of the U.S. Sawmill Business.scope of maintenance work; and
Distribution costs
Distribution costs increased by $8 millionhigher labor expense ($5 million), mainly due to higher freight ratescompensation expense.
Selling, general and unfavorable destination mix.administrative expenses
SG&A expenses increased by $4 million in the first nine months of 2021, compared to the same period last year, mainly due to higher incentive plan expense, which is based on company performance, and higher stock-based compensation expense, partly offset by lower corporate expenses.
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PAPER
Highlights
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended
September 30,
Nine Months Ended
September 30,
(Unaudited, in millions, except where otherwise stated)(Unaudited, in millions, except where otherwise stated)2020201920202019(Unaudited, in millions, except where otherwise stated)2021202020212020
SalesSales$208 $315 $705 $1,034 Sales$252 $208 $719 $705 
Operating (loss) income (1)
$(12)$$(27)$83 
Operating income (loss) (1)
Operating income (loss) (1)
$16 $(12)$(15)$(27)
EBITDA (2)
EBITDA (2)
$6 $26 $24 $137 
EBITDA (2)
$31 $$31 $24 
(In thousands of metric tons)(In thousands of metric tons)(In thousands of metric tons)
ShipmentsShipments351 482 1,183 1,522 Shipments364 351 1,124 1,183 
DowntimeDowntime171 86 371 163 Downtime36 171 229 371 
September 30,September 30,
(Unaudited, in thousands of metric tons)(Unaudited, in thousands of metric tons)20202019(Unaudited, in thousands of metric tons)20212020
Finished goods inventoryFinished goods inventory124 148 Finished goods inventory72 124 
(1)Net income (loss) income including noncontrolling interest is equal to operating income (loss) income in this segment.
(2)EBITDA, a non-GAAP financial measure, is reconciled below. For more information on the calculation and reasons we include this measure, see note 1 under “Results of Operations – Consolidated Results – Selected financial information” above.
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended
September 30,
Nine Months Ended
September 30,
(Unaudited, in millions)(Unaudited, in millions)2020201920202019(Unaudited, in millions)2021202020212020
Net (loss) income including noncontrolling interest$(12)$$(27)$83 
Net income (loss) including noncontrolling interestNet income (loss) including noncontrolling interest$16 $(12)$(15)$(27)
Depreciation and amortizationDepreciation and amortization18 18 51 54 Depreciation and amortization15 18 46 51 
EBITDAEBITDA$6 $26 $24 $137 EBITDA$31 $$31 $24 
Industry trends
rfp-20200930_g12.jpgrfp-20210930_g12.jpg
North American newsprint demand fell by 27.0%5.2% in the first nine months of the year compared to the same period last year. Demand from newspaper publishers fell by 30.0%11.5%, while demand from commercial printers declinedincreased by 23.0%4.6%. The North American shipment-to-capacity ratio was 75%94%, compared to 83%82% in the year-ago-period.
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Global demand for newsprint fell by 22.4%6.5% in the first nine months of 2020,2021, with North America down by 27.0%5.2%, Western Europe down by 23.0%2.4%, and Asia down by 19.3%10.1%. Accordingly, the global operating rate decreasedThe shipment-to-capacity ratio increased to 71%87%, downup from 83%76% in the year-ago period.
rfp-20200930_g13.jpgrfp-20210930_g13.jpg
North American demand for uncoated mechanical papers was downrose by 24.3%3.6% in the first nine months of 20202021, compared to the year-ago period, reflecting a 29.9% decline1.2% increase in supercalendered grades, and a 18.7% decrease5.7% increase in standard grades. Accordingly, theThe shipment-to-capacity ratio for all uncoated mechanical papers decreasedincreased to 73%88%, compared to 83%73% in the year-ago period.
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Three months ended September 30, 20202021 vs. September 30, 20192020
Operating income (loss) income variance analysis
rfp-20200930_g14.jpgrfp-20210930_g14.jpg
Sales
Sales fellincreased by $107$44 million, or 34%21%, to $208$252 million in the quarter. Shipments decreasedPricing contributed to a $33 million increase in sales, reflecting a rise in the average transaction price of $95 per metric ton, or 16%, due to a price increase across all paper grades. Higher volume increased sales by 131,000$10 million, mainly due to an increase in shipments of 13,000 metric tons, largelyor 4%, principally reflecting mucha recovery from lower demand levels since the onset of the pandemic and our resulting capacity adjustments. The average transaction price declined by $61 per metric ton due to weaker market fundamentals.pandemic.
Cost of sales, excluding depreciation, amortization and distribution costs
After adjusting for the effects of lowerhigher volume and the weakerstronger Canadian dollar, manufacturing costs improvedincreased by $13$2 million, reflecting:
favorable maintenance costsreflecting higher energy prices ($98 million), due to reduced spending as well as to the indefinite idling of our Augusta mill; and
a decrease in energyinflation, partly offset by lower chip costs ($34 million).
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Nine months ended September 30, 20202021 vs. September 30, 20192020
Operating (loss) incomeloss variance analysis
rfp-20200930_g15.jpgrfp-20210930_g15.jpg
Sales
Sales fellincreased by $329$14 million, or 32%2%, to $705$719 million in the first nine months of the year. ShipmentsPricing contributed to a $44 million increase in sales, reflecting a rise in the average transaction price of $44 per metric ton, or 7%, and supported by a favorable product mix. Lower volume decreased sales by 339,000$35 million, due to a decrease in shipments of 59,000 metric tons, largelyor 5%, mainly reflecting much lower demand levels since the onset of the pandemic and our resulting capacity adjustments. The average transaction price declined by $85 per metric ton due to weaker market fundamentals.
Cost of sales, excluding depreciation, amortization and distribution costs
Manufacturing costs improvedincreased by $37$11 million after adjusting for the effect of the weaker Canadian dollar, as a significant portion of our production capacity is based in Canada, and the effecteffects of lower volume and the stronger Canadian dollar, reflecting:
favorablehigher energy prices ($12 million) due to inflation;
higher expenses related to a process improvement project ($5 million);
unfavorable maintenance costs ($283 million), due to as a result of the timing of scheduled outages and the scope of maintenance work, partly offset by the indefinite idling of our Augusta mill, as well as reduced spending;
lower laborthe Amos and overhead costs ($8 million), primarily due to the indefinite idling of our Augusta mill, partly offset by the temporary idling of the Baie-Comeau and Amos paper mills, and compensation expense increase; and
lower energy prices ($7 million);mills;
partly offset by an increase in fiberlower chip costs ($612 million).
Selling, generalDepreciation and administrative expensesamortization
SG&A expenses decreased by $8Depreciation and amortization was $5 million lower in the first nine months of the year, comparedreflecting the accelerated depreciation charges taken in the fourth quarter of 2020 due to the same period last year, due to lower headcount.


temporary idling of the Amos and Baie-Comeau paper mills. The mills were indefinitely idled in March 2021.
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Corporate and Other
Highlights
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended
September 30,
Nine Months Ended
September 30,
(Unaudited, in millions)(Unaudited, in millions)2020201920202019(Unaudited, in millions)2021202020212020
Cost of sales, excluding depreciation, amortization and distribution costsCost of sales, excluding depreciation, amortization and distribution costs$(2)$— $(6)$(7)Cost of sales, excluding depreciation, amortization and distribution costs$(3)$(2)$(5)$(6)
Depreciation and amortizationDepreciation and amortization(4)(5)(11)(15)Depreciation and amortization(5)(4)(13)(11)
Selling, general and administrative expensesSelling, general and administrative expenses(11)(3)(25)(17)Selling, general and administrative expenses(7)(11)(32)(25)
Closure costs, impairment and other related chargesClosure costs, impairment and other related charges — 2 — Closure costs, impairment and other related charges — (2)
Net gain on disposition of assetsNet gain on disposition of assets 9 Net gain on disposition of assets —  
Operating lossOperating loss(17)(7)(31)(38)Operating loss(15)(17)(52)(31)
Interest expenseInterest expense(8)(8)(26)(24)Interest expense(5)(8)(16)(26)
Non-operating pension and other postretirement benefit creditsNon-operating pension and other postretirement benefit credits5 12 24 36 Non-operating pension and other postretirement benefit credits3 8 24 
Other (expense) income, net(14)(17)24 (22)
Other income (expense), netOther income (expense), net20 (14)(74)24 
Income tax provisionIncome tax provision(23)(12)(55)(52)Income tax provision(40)(23)(167)(55)
Net loss including noncontrolling interestNet loss including noncontrolling interest$(57)$(32)$(64)$(100)Net loss including noncontrolling interest$(37)$(57)$(301)$(64)
The table below shows the reconciliation of net loss including noncontrolling interest to EBITDA and adjusted EBITDA, which are non-GAAP financial measures. For more information on the calculation and reasons we include these measures, see note 1 under “Results of Operations – Consolidated Results – Selected financial information” above.
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended
September 30,
Nine Months Ended
September 30,
(Unaudited, in millions)(Unaudited, in millions)2020201920202019(Unaudited, in millions)2021202020212020
Net loss including noncontrolling interestNet loss including noncontrolling interest$(57)$(32)$(64)$(100)Net loss including noncontrolling interest$(37)$(57)$(301)$(64)
Interest expenseInterest expense8 26 24 Interest expense5 16 26 
Income tax provisionIncome tax provision23 12 55 52 Income tax provision40 23 167 55 
Depreciation and amortizationDepreciation and amortization4 11 15 Depreciation and amortization5 13 11 
EBITDAEBITDA(22)(7)28 (9)EBITDA13 (22)(105)28 
Closure costs, impairment and other related chargesClosure costs, impairment and other related charges — (2)— Closure costs, impairment and other related charges — 2 (2)
Net gain on disposition of assetsNet gain on disposition of assets (1)(9)(1)Net gain on disposition of assets —  (9)
Non-operating pension and other postretirement benefit creditsNon-operating pension and other postretirement benefit credits(5)(12)(24)(36)Non-operating pension and other postretirement benefit credits(3)(5)(8)(24)
Other expense (income), net14 17 (24)22 
Other (income) expense, netOther (income) expense, net(20)14 74 (24)
Adjusted EBITDAAdjusted EBITDA$(13)$(3)$(31)$(24)Adjusted EBITDA$(10)$(13)$(37)$(31)
Three and nine months ended September 30, 20202021 vs. September 30, 20192020
Net gain on disposition of assets
We recorded a net gain of $9 million on the disposition of the Augusta mill in the nine months ended September 30, 2020. The mill was indefinitely idled in November 2019.

year-ago period.
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LIQUIDITY AND CAPITAL RESOURCES
Capital Resources
We rely on cash and cash equivalents, cash flows provided by operations, and our credit facilities toto: fund our operations,operations; make pension contributions,contributions; and to finance our working capital, capital expenditures, and duty cash deposits.deposits and opportunities for our growth and transformation strategy. In addition, from time to time we may use available cash to reduce debt and to return capital to shareholders, including through share repurchases or special dividends. As of September 30, 2020,2021, we had cash and cash equivalents of $20$119 million and availability of $457$811 million under our credit facilities.
Based on our current projections, we expect to have sufficient financial resources available to finance our business plan, make pension contributions, meet working capital and duty cash deposit requirements, and maintain an appropriate level of capital spending.
Based on market conditions, we may seek to repay or refinance our outstanding indebtedness, including under the 5.875% senior unsecured notes due 2023 (or, the “2023 Notes”) and credit facilities as weto optimize our capital structure and enhance our flexibility to continue to focus on reducing costs and enhancing our flexibility.
Secured Term Loan Facility
On November 4, 2020, we entered into a 10-year secured delayed term loan facility with Investissement Québec for up to C$220 million ($167 million), with an initial availability of C$149 million ($114 million), subject to certain conditions. For more information, see Note 14, “Subsequent Event,” to our Consolidated Financial Statements.
Credit rating risk
On March 18, 2020, Standard & Poor’s revised:
our senior unsecured debt rating from B+ to B;
our long-term corporate credit rating from BB- to B+; and
our outlook from stable to negative.
On April 20, 2020, Moody’s Investors Service revised:
our senior unsecured debt rating from B1 to B2;
our corporate family rating from Ba3 to B1;
our outlook from stable to negative; and
our liquidity rating from SGL-1 to SGL-2.
Although our debt agreements do not include any provision that would require material changes in payment schedules or terminations as a result of a credit rating downgrade, we believe our access to capital markets at a reasonable cost is determined in part by credit quality. A credit rating downgrade could impact our ability to access capital markets at a reasonable cost. These ratings reflect the views of the rating agencies only. An explanation of the significance of these ratings can be obtained from each rating agency. The ratings are not a recommendation to buy, sell or hold securities. Any rating can be revised upward or downward or withdrawn at any time by a rating agency.

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transformation.
Flow of Funds
Summary of cash flows
A summary of cash flows for the nine months ended September 30, 20202021 and 2019,2020, was as follows:
Nine Months Ended September 30,Nine Months Ended
September 30,
(Unaudited, in millions)(Unaudited, in millions)20202019(Unaudited, in millions)20212020
Net cash provided by operating activitiesNet cash provided by operating activities$176 $120 Net cash provided by operating activities$580 $176 
Net cash used in investing activitiesNet cash used in investing activities(248)(119)Net cash used in investing activities(204)(248)
Net cash provided by (used in) financing activities89 (239)
Net cash (used in) provided by financing activitiesNet cash (used in) provided by financing activities(375)89 
Effect of exchange rate changes on cash and cash equivalents, and restricted cashEffect of exchange rate changes on cash and cash equivalents, and restricted cash Effect of exchange rate changes on cash and cash equivalents, and restricted cash(1)— 
Net increase (decrease) in cash and cash equivalents, and restricted cash$17 $(237)
Net increase in cash and cash equivalents, and restricted cashNet increase in cash and cash equivalents, and restricted cash$ $17 
Nine months ended September 30, 20202021 vs. September 30, 20192020
Net cash provided by operating activities
We generated $176$580 million of cash from operating activities in the first nine months of 2020,2021, compared to $120$176 million of cash generated in the year-ago period. The increase is primarily driven by higher profitability, a favorablepartly offset by an unfavorable working capital variance and higher major maintenance payments in the current period, and lower pension contributions.period.
Net cash used in investing activities
We used $248$204 million of cash in investing activities in the current period, compared to $119$248 million in the year-ago period. The difference reflects:
mostly reflects the acquisition of the U.S. Sawmill Business, net of cash acquired, in the currentyear-ago period ($172 million); and
partly offset by higher net countervailing and anti-dumping duty cash deposits ($1376 million);
partly offset by:
lower capital expenditures ($29 million), and higher disposition ofcash invested in fixed assets ($726 million); and
in the current period, as well as proceeds from an insurance recovery related to our acquisition of Atlas in 2015 ($15 million), in the currentprior period.
Net cash (used in) provided by (used in) financing activities
Net cash provided byused in financing activities was $89$375 million in the first nine months of 2020,2021, compared to cash used inprovided by financing activities of $239$89 million in the year-ago period. The difference reflects:
proceeds from long term debtmostly reflects the repayment of the 2023 Notes of $375 million partly offset by the issuance of the 2026 Notes of $300 million, as well as the repayment of $180 million in 10-year term loans under our existing senior secured credit facility (or,in the Senior Secured Credit Facility”)current period; compared to drawing of $180 million in term loans used to finance the acquisition of the U.S. Sawmill Business, whereas in the year-ago period we repurchased $225 million in aggregate principal amount of our 2023 Notes;
partly offset by the net repayments under revolving credit facilitiesrepayment of $71 million in revolving credit facilities in the year-ago period. In the current period, we also paid a special dividend of $1 per share, or $79 million, and repurchased $34 million of shares compared to $19 million in the year-ago period.
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2021 outlook
To support the company’s continued growth, in the second quarter, we increased our expected capital expenditures for 2021 from $95 million to $125 million. Due to supply chain delays and limited contractor availability, we now expect our capex investments to reach approximately $110 million.
Employee Benefit Plans
Newly enacted U.S. legislation in 2020,The American Rescue Plan Act of 2021 includes provisions that allow for interest rate smoothing of pension funding deficits to minimize the Coronavirus Aid, Relief and Economic Securityimpact of lower interest rates on liabilities. It also extends the amortization period for funding shortfalls from seven years to 15 years. We continue to estimate that the impact of the Act allows plan sponsors to delayon our previously disclosed estimated contributions due during 2020 until January 1, 2021. We postponed our contributions to U.S. pension plans that were due during the second and third quarter for 2021 will be a totalreduction of $26$13 million. On October 30, 2020, we made the postponed contributions.
Share Repurchase Program
On March 2, 2020, our board of directors authorized a share repurchase program of up to 15% of our common stock, for an aggregate consideration of up to $100 million. During the three and nine months ended September 30, 2021, we repurchased 1.2 million shares at an average price of $10.95 for a total of $14 million and 3.3 million shares at an average price of $10.22 for a total of $34 million, respectively. Since the beginning of this share repurchase program, we have repurchased 10 million shares for a total cost of $64 million, representing 12% of our common stock. During the three and nine months ended September 30, 2020, we repurchased 4.5 million shares at an average price of $4.12 for a total of $18 million and 4.8 million shares at an average price of $4.01 for a costtotal of $19 million.million, respectively.
Dividends
On July 7, 2021, we paid a special dividend of $1.00 per share ($79 million) on our common stock, which was declared on June 10, 2021, for holders of record at the close of business on June 28, 2021.
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SUPPLEMENTAL OBLIGOR GROUP INFORMATION
The following information is presented in accordance with Rule 13-01 of Regulation S-X adopted in 2020, and the public information requirements of Rule 144 promulgated pursuant to the Securities Act of 1933, as amended, in connection to the 2023 Notes issued by Resolute Forest Products Inc. (or, the “Issuer”) and fully guaranteed, on a joint and several basis, by all of our existing and subsequently acquired or organized direct or indirect wholly-owned U.S. subsidiaries that guarantee the ABL Credit Facility as further defined below (or, the “Guarantor Subsidiaries”) (together, the “Obligor Group”). The 2023 Notes are not guaranteed by our foreign subsidiaries (or, the “Non-Guarantor Subsidiaries”).
The following summarized financial information of the Obligor Group is presented on a combined basis, with all intercompany transactions between the Issuer and the Guarantor Subsidiaries eliminated and excluding any earnings from and investments in the Non-Guarantor Subsidiaries. Financial information of the Non-Guarantor Subsidiaries is not included.
Summarized financial information for the nine months ended September 30, 2020 and year ended December 31, 2019, was as follows:
(Unaudited, in millions)Nine Months Ended September 30, 2020Year Ended December 31, 2019
Sales (1)
$1,653 $2,379 
Operating loss$(74)$(203)
Net loss$(75)$(207)
(1)Includes $31 million and $76 million of sales to the Non-Guarantor Subsidiaries for the nine months ended September 30, 2020 and year ended December 31, 2019, respectively.
Summarized financial information as of September 30, 2020 and December 31, 2019, was as follows:
(Unaudited, in millions)September 30, 2020December 31, 2019
Total current assets (1)
$414 $414 
Total long-term assets (2)
$920 $833 
Total current liabilities (3)
$641 $913 
Total long-term liabilities$972 $872 
(1)Includes $4 million of interest receivable from the Non-Guarantor Subsidiaries as of December 31, 2019.
(2)Includes a note receivable of $112 million from the Non-Guarantor Subsidiaries as of December 31, 2019.
(3)Includes accounts payable to the Non-Guarantor Subsidiaries of $516 million and $794 million as of September 30, 2020 and December 31, 2019, respectively.
The 2023 Notes are unsecured and effectively junior to indebtedness under both the senior secured asset-based revolving credit facility (or, “ABL Credit Facility”) and the Senior Secured Credit Facility, and to future secured indebtedness. In addition, the 2023 Notes are structurally subordinated to all existing and future liabilities of our Non-Guarantor Subsidiaries.
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ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information relating to quantitative and qualitative disclosures about market risk is disclosed in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our 20192020 Annual Report. There have been no material changes inWe are supplementing our exposure to market risk as previously disclosed in our 20192020 Annual Report except that our exposure towith the additional information on market risk has been heightened by the COVID-19 pandemic, including related governmental responses and economic impacts,set forth below. This supplemental market disruptions and changes in consumer habits, and such prior disclosurerisk information should be read in conjunction with the COVID-19 pandemic risk factor update furtherother market risks described in Part II, Item 1A, “Risk Factors,our 2020 Annual Report.
Prices, sales volume and margins for our products have historically been cyclical and subject to changes as a result of economic and market shifts, fluctuations in capacity, and movements in foreign currency exchange rates. In order to mitigate these risks and to protect the Company’s earnings and cash flows from adverse fluctuations of market risks, from time to time, we enter into derivative financial transactions, in compliance with our financial risk management policy, which forbids speculative purposes.
For more information on loss related to lumber futures contracts recorded during the nine month period ended September 30, 2021, please see Note 2, “Other Income (Expense), Net,in this Form 10-Q.to our Consolidated Financial Statements.
ITEM 4.    CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures:
We have evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a–15(e) and 15d–15(e) of the Securities Exchange Act of 1934, as of September 30, 2020.2021. Based on that evaluation, the President and Chief Executive Officer and the Senior Vice President and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of such date in recording, processing, summarizing and timely reporting information required to be disclosed in our reports to the SEC.
(b) Changes in Internal Control over Financial Reporting:
In connection with the evaluation of internal control over financial reporting, there were no changes during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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RESOLUTE FOREST PRODUCTS INC.
PART II.    OTHER INFORMATION
ITEM 1.    LEGAL PROCEEDINGS
In addition to the legal proceedings presented under Part I, Item 3, “Legal Proceedings,” in our 20192020 Annual Report, see the description of our material pending legal proceedings in Note 11, “Commitments and Contingencies – Legal matters,” to our Consolidated Financial Statements, which is incorporated in this “Item 1 – Legal Proceedings” by reference.
ITEM 1A.    RISK FACTORS
We are supplementingIn addition to the other information set forth in this Form 10-Q, you should carefully consider the risk factors describedset forth under Part I, Item 1A, “Risk Factors” in our 2019 Annual Report and Part II, Item 1A, “Risk Factors” of our Quarterly Report on Form 10-Q for the period ended March 31, 2020 with the additional risk factor set forth below. This supplemental risk factor should be read in conjunction with the other risk factors described in our 2019 Annual Report, which have been heightened by this additional risk factor.
We face various risks related to the COVID-19 pandemic
The outbreak of the pandemic caused by COVID-19 has had, and could continue to have a negative impact on financial markets, economic conditions and portions of our business. While we are unable to predict the extent, nature and duration of these impacts at this time, the global COVID-19 pandemic could negativelymaterially affect our business, and results of operations, as well as the market price of our securities, in a number of ways, including the following:
While we expect to continue to operate in all of our business segments in Canada and the U.S., wefinancial condition or future results. There have reduced our operational footprint to levels consistent with essential needs for the duration of the crisis, including by the temporary idling of certain machines or facilities and implementing temporary layoffs. Further adjustments to our operational footprint, temporary or permanent, could be made as the COVID-19 pandemic situation develops.
The COVID-19 pandemic has already accelerated the secular demand decline for paper products like those we manufacture as widespread confinement alters consumer habits, and which could also impact the demand for pulp. The decline in demand and altered habits could become permanent.
Any construction slowdown in North America may result in a decline in demand for wood products. If the demand for wood products falls and we reduce harvesting and sawmill activity as a result, we could have greater difficulty obtaining the supply of timber and wood fiber required for our operations at favorable prices, or at all.
There is increased risk that we may not obtain raw materials, chemicals and other required supplies or services in timely fashion and at favorable prices duebeen no material changes to the impact of the reduced economic activity as a result of the COVID-19 pandemic on our suppliers, which could affect our production output.
Additional trade restrictions or barriers could also affect negatively our supply chain as well as the sales or distribution of our products.
The impact of the reduced economic activity as a result of the COVID-19 pandemic on our customers could increase our risk of credit exposure.
Although the forest products industry has generally been recognized as critical or essential in locations where we operate, the current health restrictions, including social distancing measures, are having an impact on how our workers can fulfill their duties, and limit the number of employees we can havefactors previously disclosed in our operations, which in turn could impact our production output and costs.
It could be difficult or costly to restart certain of our temporarily idled operations, and we could face personnel shortages if employees are no longer available or amenable to return to work.
Further, should any key employees become ill from COVID-19 or unable to work, the attention of our management team could be diverted.
The reduced operations and staffing in our facilities, remote working conditions and increased risk in not obtaining supplies or services could increase the risk of non-compliance and incidents.
If necessary, to preserve liquidity, we could suspend or defer capital projects, as well as other strategic initiatives. Strategies to increase earnings power or generate additional cash flow, including acquisitions, divestitures and other transactions could be
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RESOLUTE FOREST PRODUCTS INC.
delayed or not materialize given the current economic uncertainty. In response to the COVID-19 pandemic, we could decide to permanently shut down machines or facilities and be required to record significant closure costs, long-lived asset impairment or accelerated depreciation charges.
The economic uncertainty resulting from the COVID-19 pandemic and the ensuing decline in financial market returns and low-interest rate environment could result in an increase in the amount by which our pension plans are underfunded by the next measurement date at year-end. This could result in a significant increase in the amount of our required future pension contributions, which could have an adverse effect on our financial condition.
If we don’t generate enough cash to fund our short-term or long-term obligations, we may have to draw further on our credit facilities to meet our obligations or seek additional sources of liquidity. The economic uncertainty resulting from the COVID-19 pandemic and recent downgrades of our credit ratings could lead to greater difficulty in obtaining additional financing on favorable terms.
The COVID-19 pandemic, including related governmental responses and economic impacts, market disruptions and changes in consumer habits, has heightened the risks related to the other risk factors described in our 20192020 Annual Report, and should be read in conjunction therewith.Report.
ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table sets forth information about our stock repurchases for the three months ended September 30, 2020:2021:
PeriodPeriodTotal Number of Shares PurchasedAverage Price Paid per ShareTotal 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)
PeriodTotal Number of Shares PurchasedAverage Price Paid per ShareTotal 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 31July 1 to July 311,035,249 $2.47 1,035,249 $96,914,787 July 1 to July 31— $— — $50,000,192 
August 1 to August 31August 1 to August 311,215,250 4.07 1,215,250 91,968,947 August 1 to August 31— — — 50,000,192 
September 1 to September 30September 1 to September 302,263,588 4.90 2,263,588 80,888,339 September 1 to September 301,248,251 10.95 1,248,251 36,329,747 
TotalTotal4,514,087 $4.12 4,514,087 $80,888,339 Total1,248,251 $10.95 1,248,251 $36,329,747 
(1)$100 million share repurchase program launched in 2020. For more information, see Note 12, “Share Capital,” to our Consolidated Financial Statements.
As of October 30, 2020,29, 2021, we repurchased 1,066,988197,037 additional shares at an average price per share of $4.71$11.94 for a total cost of $5$2 million.
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ITEM 6.    EXHIBITS
Exhibit No. Description
Form ofLetter Agreement between Jacques P. Vachon and Resolute Forest Products 2019 Equity Incentive Plan Stock Settled Performance Stock Unit Agreement.Inc. dated November 4, 2021.
 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 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. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document.
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RESOLUTE FOREST PRODUCTS INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
RESOLUTE FOREST PRODUCTS INC.
By /s/ Remi G. LalondeSylvain A. Girard
 Remi G. LalondeSylvain A. Girard
 Senior Vice President and Chief Financial Officer
By  /s/ Hugues DorbanDaniel Viboux
 Hugues DorbanDaniel Viboux
 Vice President and Chief Accounting Officer
Date: November 9, 2020

2021
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