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 June ~~27, 2020~~26, 2021


☐			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 001-36285

RAYONIER ADVANCED MATERIALS INC.

Incorporated in the State of Delaware

I.R.S. Employer Identification No. 46-4559529

1301 RIVERPLACE BOULEVARD, SUITE 2300

JACKSONVILLE, FL 32207

(Principal Executive Office)

Telephone Number: (904) 357-4600

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	RYAM	New York Stock Exchange

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 x No o

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 x No o

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 filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

☐

Emerging 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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

The registrant had ~~63,351,226~~63,737,353 shares of common stock, $.01 par value per share, outstanding as of August ~~4, 2020.~~2, 2021.

Table of Contents


Item	Item		Page	Item		Page
		Part I — Financial Information			Part I — Financial Information
1.	1.	Financial Statements (U naudited)		1.	Financial Statements (U naudited)
		Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the Three and Six Months Ended June 2 7 , 2020 and June 29 , 2019	1		Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the Three and Si x Months Ended June 26, 2021 and June 27 , 2020	1
		Consolidated Balance Sheets as of June 27 , 2020 and December 31, 2019	3		Consolidated Balance Sheets as of June 26, 2021 and December 31, 2020	3
		Consolidated Statements of Cash Flows for the Six Months Ended June 27 , 2020 and June 29 , 2019	4		Consolidated Statements of Cash Flows for the Six Months Ended June 26 , 2021 and June 27 , 2020	4
		Notes to Consolidated Financial Statements	5		Notes to Consolidated Financial Statements	5
2.	2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24	2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
3.	3.	Quantitative and Qualitative Disclosures about Market Risk	39	3.	Quantitative and Qualitative Disclosures about Market Risk	37
4.	4.	Controls and Procedures	40	4.	Controls and Procedures	38
		Part II — Other Information			Part II — Other Information
1.	1.	Legal Proceedings	41	1.	Legal Proceedings	39
1A.	1A.	Risk Factors	41	1A.	Risk Factors	39
2.	2.	Unregistered Sales of Equity Securities and Use of Proceeds	42	2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
6.	6.	Exhibits	43	6.	Exhibits	41
		Signature	44		Signature	42

Table of Contents


Part I.			Financial Information


Item 1.			Financial Statements

Rayonier Advanced Materials Inc.

Consolidated Statements of Income (Loss)

(Unaudited)

(Dollars in thousands, except per share amounts)


		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
		June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019			June 26, 2021		June 27, 2020		June 26, 2021		June 27, 2020
Net Sales	Net Sales	$	396,753	$	450,233	$	806,561	$	891,293	Net Sales	$	341,019	$	324,170	$	659,697	$	648,645
Cost of Sales	Cost of Sales	(376,539)		(432,254)		(775,885)		(865,695)		Cost of Sales	(318,740)		(301,632)		(616,994)		(617,827)
Gross Margin	Gross Margin	20,214		17,979		30,676		25,598		Gross Margin	22,279		22,538		42,703		30,818

Selling, general and administrative expenses	Selling, general and administrative expenses	(22,257)		(20,478)		(42,504)		(48,622)		Selling, general and administrative expenses	(18,235)		(20,491)		(34,075)		(39,068)
Duties		(5,668)		(7,004)		(12,119)		(11,520)

Foreign exchange gains (losses)	Foreign exchange gains (losses)	(4,085)		(2,018)		1,711		2,906		Foreign exchange gains (losses)	(2,127)		(4,591)		(2,733)		1,158
Other operating income (expense), net	Other operating income (expense), net	(3,624)		(3,798)		(5,191)		(11,281)		Other operating income (expense), net	(540)		(3,617)		(4,992)		(5,235)
Operating Income (Loss)	Operating Income (Loss)	(15,420)		(15,319)		(27,427)		(42,919)		Operating Income (Loss)	1,377		(6,161)		903		(12,327)
Interest expense	Interest expense	(15,761)		(14,415)		(30,986)		(28,018)		Interest expense	(16,470)		(13,651)		(31,819)		(26,815)
Interest income and other, net	Interest income and other, net	(1,085)		(750)		(663)		(99)		Interest income and other, net	(939)		(1,036)		(1,733)		(563)
Other components of pension and OPEB, excluding service costs	Other components of pension and OPEB, excluding service costs	397		1,089		750		2,468		Other components of pension and OPEB, excluding service costs	(66)		(257)		742		(607)

Income (Loss) from Continuing Operations Before Income Taxes	Income (Loss) from Continuing Operations Before Income Taxes	(31,869)		(29,395)		(58,326)		(68,568)		Income (Loss) from Continuing Operations Before Income Taxes	(16,098)		(21,105)		(31,907)		(40,312)
Income tax benefit (expense) (Note 16)		18,942		10,121		20,564		21,307
Income tax (expense) benefit (Note 16)										Income tax (expense) benefit (Note 16)	24,656		17,600		24,564		18,819
Equity in income (loss) of equity method investment										Equity in income (loss) of equity method investment	(261)		0		(570)		0
Income (Loss) from Continuing Operations	Income (Loss) from Continuing Operations	(12,927)		(19,274)		(37,762)		(47,261)		Income (Loss) from Continuing Operations	8,297		(3,505)		(7,913)		(21,493)
Income from discontinued operations, net of taxes (Note 2)		64		4,357		772		10,294
Net Income (Loss) Attributable to the Company		(12,863)		(14,917)		(36,990)		(36,967)
Mandatory convertible preferred stock dividends		—		(3,441)		—		(6,805)
Net Income (Loss) Available to Common Stockholders		$	(12,863)	$	(18,358)	$	(36,990)	$	(43,772)
Income (loss) from discontinued operations, net of taxes (Note 2)										Income (loss) from discontinued operations, net of taxes (Note 2)	113,931		(9,358)		103,114		(15,497)
Net Income (Loss)										Net Income (Loss)	$	122,228	$	(12,863)	$	95,201	$	(36,990)

Basic Earnings Per Common Share (Note 13)	Basic Earnings Per Common Share (Note 13)									Basic Earnings Per Common Share (Note 13)
Income (loss) from continuing operations	Income (loss) from continuing operations	$	(0.20)	$	(0.46)	$	(0.60)	$	(1.10)	Income (loss) from continuing operations	$	0.13	$	(0.05)	$	(0.12)	$	(0.34)
Income from discontinued operations		—		0.09		0.01		0.21
Income (loss) from discontinued operations										Income (loss) from discontinued operations	1.79		(0.15)		1.62		(0.25)
Net income (loss) per common share-basic	Net income (loss) per common share-basic	$	(0.20)	$	(0.37)	$	(0.59)	$	(0.89)	Net income (loss) per common share-basic	$	1.92	$	(0.20)	$	1.50	$	(0.59)
Diluted Earnings Per Common Share (Note 13)	Diluted Earnings Per Common Share (Note 13)									Diluted Earnings Per Common Share (Note 13)
Income (loss) from continuing operations	Income (loss) from continuing operations	$	(0.20)	$	(0.46)	$	(0.60)	$	(1.10)	Income (loss) from continuing operations	$	0.13	$	(0.05)	$	(0.12)	$	(0.34)
Income from discontinued operations		—		0.09		0.01		0.21
Income (loss) from discontinued operations										Income (loss) from discontinued operations	1.76		(0.15)		1.62		(0.25)
Net income (loss) per common share-diluted	Net income (loss) per common share-diluted	$	(0.20)	$	(0.37)	$	(0.59)	$	(0.89)	Net income (loss) per common share-diluted	$	1.89	$	(0.20)	$	1.50	$	(0.59)

See Notes to Consolidated Financial Statements.

Table of Contents

Rayonier Advanced Materials Inc.

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(Dollars in thousands)


		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
		June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019			June 26, 2021		June 27, 2020		June 26, 2021		June 27, 2020
Net Income (Loss)	Net Income (Loss)	$	(12,863)	$	(14,917)	$	(36,990)	$	(36,967)	Net Income (Loss)	$	122,228	$	(12,863)	$	95,201	$	(36,990)
Other Comprehensive Income (Loss), net of tax (Note 11):	Other Comprehensive Income (Loss), net of tax (Note 11):									Other Comprehensive Income (Loss), net of tax (Note 11):
Foreign currency translation adjustments	Foreign currency translation adjustments	5,888		3,658		(583)		(1,694)		Foreign currency translation adjustments	3,046		5,888		(6,221)		(583)
Unrealized gain (loss) on derivative instruments	Unrealized gain (loss) on derivative instruments	10,129		3,393		(10,530)		11,265		Unrealized gain (loss) on derivative instruments	(1,585)		10,129		(2,853)		(10,530)
Net gain from pension and postretirement plans	Net gain from pension and postretirement plans	2,741		1,865		9,313		3,756		Net gain from pension and postretirement plans	3,363		2,741		6,664		9,313
Total other comprehensive income (loss)	Total other comprehensive income (loss)	18,758		8,916		(1,800)		13,327		Total other comprehensive income (loss)	4,824		18,758		(2,410)		(1,800)
Comprehensive Income (Loss)	Comprehensive Income (Loss)	$	5,895	$	(6,001)	$	(38,790)	$	(23,640)	Comprehensive Income (Loss)	$	127,052	$	5,895	$	92,791	$	(38,790)

See Notes to Consolidated Financial Statements.

Table of Contents

Rayonier Advanced Materials Inc.

Consolidated Balance Sheets

(Unaudited)

(Dollars in ~~thousands)~~thousands, except per share amounts)


		June 27, 2020		December 31, 2019			June 26, 2021		December 31, 2020
Assets	Assets									Assets
Current Assets	Current Assets					Current Assets
Cash and cash equivalents	Cash and cash equivalents	$	48,739	$	64,025	Cash and cash equivalents	$	214,739	$	93,653
Accounts receivable, net (Note 3)	Accounts receivable, net (Note 3)	173,427		181,658		Accounts receivable, net (Note 3)	187,882		179,208
Inventory (Note 4)	Inventory (Note 4)	249,383		251,180		Inventory (Note 4)	195,171		170,647
Income tax receivable	Income tax receivable	53,670		16,118		Income tax receivable	48,663		58,657
Prepaid and other current assets	Prepaid and other current assets	69,954		60,846		Prepaid and other current assets	68,504		58,845

Assets of discontinued operations-held for sale (Note 2)						Assets of discontinued operations-held for sale (Note 2)	245,643		72,562
Total current assets	Total current assets	595,173		573,827		Total current assets	960,602		633,572

Property, Plant and Equipment (net of accumulated depreciation of $1,547,846 at June 27, 2020 and $1,482,261 at December 31, 2019)		1,267,288		1,316,055
Property, Plant and Equipment (net of accumulated depreciation of $1,623,146 at June 26, 2021 and $1,578,140 at December 31, 2020)						Property, Plant and Equipment (net of accumulated depreciation of $1,623,146 at June 26, 2021 and $1,578,140 at December 31, 2020)	1,161,012		1,177,791
Deferred Tax Assets	Deferred Tax Assets	380,146		384,513		Deferred Tax Assets	342,749		382,959
Intangible Assets, net	Intangible Assets, net	41,946		45,451		Intangible Assets, net	34,937		38,441
Other Assets	Other Assets	160,739		160,301		Other Assets	149,002		156,399

Assets of discontinued operations-held for sale (Note 2)						Assets of discontinued operations-held for sale (Note 2)	0		140,703
Total Assets	Total Assets	$	2,445,292	$	2,480,147	Total Assets	$	2,648,302	$	2,529,865

Liabilities and Stockholders’ Equity	Liabilities and Stockholders’ Equity									Liabilities and Stockholders’ Equity
Current Liabilities	Current Liabilities					Current Liabilities
Accounts payable	Accounts payable	$	157,656	$	153,181	Accounts payable	$	157,166	$	156,721
Accrued and other current liabilities (Note 6)	Accrued and other current liabilities (Note 6)	122,329		102,178		Accrued and other current liabilities (Note 6)	137,489		109,715
Current maturities of long-term debt (Note 7)		14,399		19,448
Debt due within one year (Note 7)						Debt due within one year (Note 7)	17,013		17,100
Current environmental liabilities (Note 8)	Current environmental liabilities (Note 8)	11,109		11,339		Current environmental liabilities (Note 8)	8,712		8,684

Liabilities of discontinued operations-held for sale (Note 2)						Liabilities of discontinued operations-held for sale (Note 2)	13,913		780
Total current liabilities	Total current liabilities	305,493		286,146		Total current liabilities	334,293		293,000

Long-Term Debt (Note 7)	Long-Term Debt (Note 7)	1,061,251		1,062,695		Long-Term Debt (Note 7)	1,063,739		1,066,837
Long-Term Environmental Liabilities (Note 8)	Long-Term Environmental Liabilities (Note 8)	159,190		160,037		Long-Term Environmental Liabilities (Note 8)	162,384		162,995
Pension and Other Postretirement Benefits	Pension and Other Postretirement Benefits	221,432		236,625		Pension and Other Postretirement Benefits	246,681		251,391
Deferred Tax Liabilities	Deferred Tax Liabilities	22,307		24,847		Deferred Tax Liabilities	23,822		24,462
Other Long-Term Liabilities	Other Long-Term Liabilities	26,893		26,999		Other Long-Term Liabilities	30,542		24,279

Liabilities of Discontinued Operations-Held for Sale (Note 2)						Liabilities of Discontinued Operations-Held for Sale (Note 2)	0		11,814
Commitments and Contingencies (Note 18)	Commitments and Contingencies (Note 18)					Commitments and Contingencies (Note 18)	0		0

Stockholders’ Equity	Stockholders’ Equity					Stockholders’ Equity

Common stock, 140,000,000 shares authorized at $0.01 par value, 63,347,326 and 63,136,129 issued and outstanding, as of June 27, 2020 and December 31, 2019, respectively		633		632
Common stock, 140,000,000 shares authorized at $0.01 par value, 63,737,356 and 63,359,839 issued and outstanding, as of June 26, 2021 and December 31, 2020, respectively						Common stock, 140,000,000 shares authorized at $0.01 par value, 63,737,356 and 63,359,839 issued and outstanding, as of June 26, 2021 and December 31, 2020, respectively	637		633
Additional paid-in capital	Additional paid-in capital	403,737		399,020		Additional paid-in capital	404,120		405,161
Retained earnings	Retained earnings	385,383		422,373		Retained earnings	518,129		422,928
Accumulated other comprehensive income (loss) (Note 11)	Accumulated other comprehensive income (loss) (Note 11)	(141,027)		(139,227)		Accumulated other comprehensive income (loss) (Note 11)	(136,045)		(133,635)
Total Stockholders’ Equity	Total Stockholders’ Equity	648,726		682,798		Total Stockholders’ Equity	786,841		695,087
Total Liabilities and Stockholders’ Equity	Total Liabilities and Stockholders’ Equity	$	2,445,292	$	2,480,147	Total Liabilities and Stockholders’ Equity	$	2,648,302	$	2,529,865

See Notes to Consolidated Financial Statements.

Table of Contents

Rayonier Advanced Materials Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(Dollars in thousands)

Six Months Ended
June 27, 2020 June 29, 2019
Operating Activities
Net income (loss) $ (36,990) $ (36,967)
Loss (income) from discontinued operations (772) (10,294)
Adjustments to reconcile income (loss) from continuing operations to cash provided by operating activities:
Depreciation and amortization 73,045 70,996
Stock-based incentive compensation expense 5,157 3,456
Deferred income tax expense (benefit) 2,207 (20,149)
Net periodic benefit cost of pension and other postretirement plans 5,175 3,496
Unrealized loss (gain) on derivative instruments 2,311 (4,014)
Unrealized loss (gain) from foreign currency (6,756) 5,586
Other 479 927
Changes in operating assets and liabilities:
Receivables 4,851 36,144
Inventories 1,668 19,690
Accounts payable 8,159 (7,903)
Accrued liabilities 11,871 (18,219)
All other operating activities (53,755) (33,978)
Contributions to pension and other postretirement plans (5,783) (4,552)
Cash Provided by (Used for) Operating Activities-continuing operations 10,867 4,219
Cash Provided by (Used for) Operating Activities-discontinued operations 204 14,077
Cash Provided by (Used for) Operating Activities 11,071 18,296
Investing Activities
Capital expenditures (22,597) (58,822)
Cash Used for Investing Activities-continuing operations (22,597) (58,822)
Cash Used for Investing Activities-discontinued operations — (1,075)
Cash Used for Investing Activities (22,597) (59,897)
Financing Activities
Borrowings on revolving credit and other facilities 10,561 86,000
Repayments of revolving credit and other facilities (8,000) (36,000)
Repayment of debt (2,359) (5,562)
Dividends paid on common stock — (8,569)
Dividends paid on preferred stock — (6,900)
Common stock repurchased (438) (5,825)
Debt issue costs (3,378) —
Cash Provided by (Used for) Financing Activities-continuing operations (3,614) 23,144
Cash Provided by (Used for) Financing Activities-discontinued operations — —
Cash Provided by (Used for) Financing Activities (3,614) 23,144
Cash and Cash Equivalents
Change in cash and cash equivalents (15,140) (18,457)
Net effect of foreign exchange on cash and cash equivalents (146) (405)
Balance, beginning of year 64,025 108,966
Balance, end of period $ 48,739 $ 90,104


	Six Months Ended
	June 26, 2021		June 27, 2020
Operating Activities
Net income (loss)	$	95,201	$	(36,990)
Loss (income) from discontinued operations	(103,114)		15,497
Adjustments to reconcile income (loss) from continuing operations to cash provided by operating activities:
Depreciation and amortization	65,728		67,235
Stock-based incentive compensation expense	317		5,074
Deferred income tax expense (benefit)	(23,290)		3,952



Net periodic benefit cost of pension and other postretirement plans	5,163		5,762

Unrealized loss (gain) on derivative instruments	(3,885)		2,311
Unrealized loss (gain) from foreign currency	5,236		(7,054)
Other	(145)		270
Changes in operating assets and liabilities:
Receivables	(13,283)		4,851
Inventories	(25,231)		1,335
Accounts payable	6,126		6,058
Accrued liabilities	27,555		12,001
All other operating activities	12,943		(51,925)
Contributions to pension and other postretirement plans	(3,535)		(5,783)

Cash Provided by Operating Activities-continuing operations	45,786		22,594
Cash Provided by (Used for) Operating Activities-discontinued operations	140,633		(11,523)
Cash Provided by Operating Activities	186,419		11,071

Investing Activities

Capital expenditures, net	(47,048)		(19,169)


Investment in equity method investment	(4,013)		0

Cash Used for Investing Activities-continuing operations	(51,061)		(19,169)
Cash Used for Investing Activities-discontinued operations	(5,758)		(3,428)
Cash Used for Investing Activities	(56,819)		(22,597)

Financing Activities

Revolving credit facility and other borrowings	0		10,561
Repayments of revolving credit and other facilities	0		(8,000)
Repayment of long-term debt	(4,651)		(2,359)
Short-term financing, net	(1,296)		0


Common stock repurchased	(1,423)		(438)
Debt issue costs	(449)		(3,378)



Cash Used for Financing Activities	(7,819)		(3,614)

Cash and Cash Equivalents
Change in cash and cash equivalents	121,781		(15,140)
Net effect of foreign exchange on cash and cash equivalents	(695)		(146)
Balance, beginning of year	93,653		64,025
Balance, end of period	$	214,739	$	48,739

See Notes to Consolidated Financial Statements.

Table of Contents

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

1. Basis of Presentation and New Accounting Pronouncements

Basis of Presentation

The unaudited consolidated financial statements and notes thereto of Rayonier Advanced Materials Inc. (the “Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, these consolidated financial statements and notes reflect all adjustments (all of which are normal recurring adjustments) necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented. These statements and notes should be read in conjunction with the consolidated financial statements and supplementary data included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, as filed with the SEC on March ~~2, 2020.~~1, 2021.

~~The~~On April 12, 2021, the Company announced the sale of its lumber and newsprint assets (the “Purchased Assets”) located in Ontario and Québec Canada to GreenFirst Forest Products, Inc. (“GreenFirst”). As a result of the announced sale of its lumber and newsprint assets, these operations have been presented as discontinued operations and the Company has reclassified certain prior year amounts to conform to ~~the current year’s presentation for discontinued operations to reflect the November 2019 sale of its Matane high-yield pulp operations.~~this presentation. Unless otherwise stated, information in these notes to consolidated financial statements relates to continuing operations. The Company presents businesses that represent components as discontinued operations when they meet the criteria for held for sale or are sold, and their disposal represents a strategic shift that has, or will have, a major effect on our operations and financial results. See Note 2 —Discontinued Operations for additional information.

~~The~~Coronavirus Pandemic

During 2020, the Company’s businesses ~~have been~~were significantly impacted by the ~~novel~~ coronavirus ("COVID-19") pandemic. ~~However, due to the role they play in producing critical raw materials~~While market demand and pricing for ~~pharmaceutical, food, cleaning and other products,~~certain of the Company’s ~~manufacturing~~products began to recover towards the end of the year and continued to improve throughout the first half of 2021, the Company's operations remain vulnerable to a reversal of these trends or other continuing negative effects caused by COVID-19.

In its operating facilities ~~in the U.S., Canada~~ and ~~France have been deemed “essential businesses” and have remained operating. In order to mitigate the impact of COVID-19 on its financial results and operations,~~work spaces, the Company ~~has taken the following decisive actions:~~

•~~To ensure the safety of our employees and the continuity of our operations, the Company has~~continues to maintain protocols previously implemented ~~exacting protocols~~ to reduce the potential spread of COVID-19 ~~in its operating facilities~~ and ~~work spaces.~~

•~~To control costs and minimize pandemic driven losses,~~ensure the ~~Company has curtailed operations to match production with market demand.~~

•~~To maximize cash flow and liquidity, the Company entered into an amendment~~safety of its ~~Senior Secured Credit Agreement under which, among other changes, the lenders have agreed to relax the financial covenants through 2022~~employees and ~~provide additional liquidity by reducing the minimum availability the Company is required to maintain.~~

~~Due to the financial impacts~~continuity of COVID-19, the Company is actively monitoring the recoverability of the carrying value of its long-term assets compared to the business’s future estimated undiscounted future cash flows. During the three and six months ended June 27, 2020, the Company did not recognize any impairment charges related to long-lived assets held for use. However, the Company’s estimates of undiscounted cash flows are highly subjective and actual results may vary from the estimates due to the current uncertain market conditions and their impact on the projection of long-term financial performance. The Company will continue to evaluate the recoverability of these and other assets as necessary.operations.

New or Recently Adopted Accounting Pronouncements

~~The Company~~There have been no new or recently adopted ~~Accounting Standards Update (“ASU”) 2016-13,~~ ~~Financial Instruments-Credit Losses on Financial Instruments (Topic 326),~~ on January 1, 2020. The updated guidance replaced the incurred loss impairment approach with a methodology to reflect expected credit losses by requiring consideration of a broader range of reasonable and supportable information to explain the credit loss estimates. The adoption of this standard did not have a material impact onaccounting pronouncements impacting the Company’s unaudited consolidated ~~financial statements.~~

~~In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04,~~ ~~Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting~~. The amendments provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in ASU 2020-04 apply only to contracts, hedging relationships, and other transactions that reference London interbank offered rate (“LIBOR”) or another reference rate expected to be discontinued because of the reference rate reform. In the second quarter of 2020, the Company adopted certain applicable practical

~~Rayonier Advanced Materials Inc.~~

~~Notes to Consolidated Financial Statements - (Unaudited) (Continued)~~

~~expedients to assist with the transition related to the phaseout of LIBOR. The adoption of these expedients did not have a material impact on the Company’s consolidated~~interim financial statements.

Subsequent Events

Events and transactions subsequent to the consolidated balance sheets date have been evaluated for potential recognition and disclosure through ~~August 6, 2020,~~ the date of issuance of these ~~consolidated financial statements were available to be issued.~~Consolidated Financial Statements. The following subsequent ~~events~~event warranting disclosure ~~were identified:~~was identified.

~~On July 28,~~As previously disclosed, in January 2021, the Company's Canadian subsidiaries applied for the Canada Emergency Wage Subsidy (“CEWS”) in the amount of CAD $25 million for periods between March 2020 ~~final regulations were issued related to United States Internal Revenue Code Section 163(j) (“Section 163(j)”). Section 163(j), which was modified by the 2017 Tax Reform Act~~ and the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), limits U.S. business interest expense deductions to the sum of business interest income and 30 percent, or 50 percent as applicable, of adjusted taxable income (“ATI”). Previously released proposed regulations contained a provision that required depreciation recorded in cost of goods sold to reduce ATI and thus reduced the allowable interest deduction for certain years. The final regulations amended this provision, allowing depreciation included in cost of goods sold to be excluded from ATI in years where it is permitted. As a result,August 2020. Through June 26, 2021, the Company ~~expects~~had received cash of CAD $6 million and subsequently has received the remaining CAD $19 million. All CEWS claims are subject to ~~reduce~~mandatory audit. The Company will recognize amounts from these claims in income at the ~~valuation allowance related~~time that there is sufficient evidence that it will not be required to its deferred tax assets and its liability related to uncertain tax positions, both on its consolidated balance sheet, and record a non-cash, tax benefit on its consolidated statement of income of approximately $10 million to $15 million in the third quarter of 2020.repay such amounts.

2. Discontinued Operations

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

On April 12, 2021, the Company announced the sale of its lumber and newsprint assets (the “Purchased Assets”) located in Ontario and Québec Canada to GreenFirst Forest Products, Inc. (“GreenFirst”), for approximately $214 million, including an assumed $74 million associated with finished goods, work-in-process and raw materials inventory value, which is subject to dollar-for-dollar fluctuation until closing. The purchase price will be paid 85 percent in cash and the remainder in common shares of GreenFirst, to be held for a minimum of six months. In addition, a credit note will be issued to the Company by GreenFirst in the amount of CDN$8 million, which may be offset against amounts owed to GreenFirst in the future for wood chip purchases, equally over the next 5 years. The closing of the transaction is expected to occur on August 28, 2021. The sale completes the strategic portfolio optimization plans for the Company.

The Purchased Assets include the Company’s 6 lumber facilities, newsprint facility, inventory and certain real property, machinery, permits, leases, licenses, pension assets and liabilities and other related assets associated with the successful operations of these businesses. Other assets and liabilities, including accounts receivable, accounts payable, certain retained inventory and rights and obligations to softwood lumber duties, generated or incurred through the closing date, are excluded. Since 2017, the Company has paid a total of $108 million in duties.

In ~~November 2019,~~connection with the transaction, the Company ~~sold its Matane, Quebec pulp mill~~will enter into a 20-year wood chip and residual fiber supply agreement with GreenFirst, securing supply for the Company’s operations at the Temiscaming plant. Additionally, the parties entered into a Transition Services Agreement ("TSA") whereby the Company will provide certain transitional services to ~~Sappi Limited, a global diversified wood fiber company,~~GreenFirst, for a ~~gross purchase price~~period of ~~approximately $175 million. Income from discontinued operations for~~time following the ~~three and six months ended June 27, 2020 represents an adjustment to the gain on sale~~closing of the ~~Matane mill~~transaction, not to exceed twelve months from ~~working capital adjustments that arose following~~such date. The TSA includes support related to information technology, accounting, treasury, human resources and payroll, tax, supply chain and procurement functions. Costs incurred by the ~~November 2019 closing.~~ Company associated with the TSA will be reimbursed by GreenFirst.

As of June 26, 2021, the carrying value of the net assets included in the transaction was $232 million, including the carrying value of inventory which was $93 million. The Company expects a cash tax impact in 2021 and 2022 totaling less than $5 million as a result of this transaction, although the full extent of tax impacts are still being evaluated.

Income (loss) from discontinued operations ~~for the three and six months ended June 27, 2020 and June 29, 2019~~ is comprised of the following:

Three Months Ended Six Months Ended
June 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019
Revenues $ — $ 37,584 $ — $ 79,304
Cost of sales — (30,133) — (62,295)
Gross margin — 7,451 — 17,009
Selling, general and administrative expenses and other — (426) — (854)
Operating income (loss) — 7,025 — 16,155
Interest expense (a) — (1,185) — (2,356)
Other non-operating income — 87 — 175
Income from discontinued operations, before income taxes — 5,927 — 13,974
Income tax expense — (1,570) — (3,680)
Income from discontinued operations, net of taxes $ — $ 4,357 $ — $ 10,294
Adjustment to gain from sale of discontinued operations — — 955 —
Income tax (expense) benefit on gain from sale
64 (183)
Income from Discontinued Operations $ 64 $ 4,357 772 $ 10,294


	Three Months Ended				Six Months Ended
	June 26, 2021		June 27, 2020		June 26, 2021		June 27, 2020
Net sales (a)	$	212,376	$	72,583	$	358,838	$	157,916
Cost of sales	(86,961)		(74,907)		(169,688)		(158,057)
Gross margin	125,415		(2,324)		189,150		(141)
Selling, general and administrative expenses and other	(10,428)		(6,935)		(18,894)		(14,958)
Operating income (loss)	114,987		(9,259)		170,256		(15,099)
Interest expense (b)	(2,703)		(2,110)		(5,317)		(4,172)
Other non-operating income	368		604		713		1,257
Income (loss) from discontinued operations before income taxes	112,652		(10,765)		165,652		(18,014)
Income tax benefit (expense)	1,279		1,343		(62,538)		1,745
Income (loss) from discontinued operations, net of taxes	$	113,931	$	(9,422)	$	103,114	$	(16,269)

Gain from sale of discontinued operation, pre-tax	0		0		0		955
Income tax benefit (expense) on gain	0		64		0		(183)
Gain from sale of discontinued operations, net of tax (c)	0		64		0		772

Income (Loss) from Discontinued Operations	$	113,931	$	(9,358)	$	103,114	$	(15,497)

(a) Net of intercompany sales of $10 million and $9 million for three months ended June 26, 2021 and June 27, 2020, respectively, and $22 million and $22 million for the six months ended June 26, 2021 and June 27, 2020, respectively.

(b) The Company ~~was required to pay $100 million of debt from proceeds received from the sale of the Matane mill in November 2019. As such,~~has allocated interest expense ~~has been allocated~~ to discontinued operations ~~using the weighted-average interest rates in effect for each period presented~~ based on the ~~proportionate amounts required~~portion of debt not attributable to ~~be repaid.~~

~~Other discontinued~~other operations ~~information is~~that it expects to repay as ~~follows:~~a result of the transaction.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

Three Months Ended Six Months Ended
June 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019
Depreciation and amortization $ — $ 725 $ — $ 1,360
Capital expenditures $ — $ 449 $ — $ 1,075

(c) Also included in income from discontinued operations for the three and six months ended June 27, 2020 is income of $64 thousand and $772 thousand, respectively, from working capital adjustments that arose following the closing of the November 2019 sale of the Company’s Matane, Quebec pulp mill.

Other discontinued operations information is as follows:


	Three Months Ended				Six Months Ended
	June 26, 2021		June 27, 2020		June 26, 2021		June 27, 2020
Depreciation and amortization	$	0	$	2,957	$	3,173	$	5,782
Capital expenditures	$	2,326	$	(187)	$	5,814	$	3,428

The following table presents the major classes of assets and liabilities of discontinued operations that are classified as held for sale:


	June 26, 2021		December 31, 2020

Inventory	$	92,624	$	62,837
Prepaid and other current assets	9,446		9,725
Total current assets	102,070		72,562
Property, plant and equipment, net	97,980		97,151

Other assets	45,593		43,552
Total assets	$	245,643	$	213,265


Accrued and other current liabilities	$	933	$	780
Total current liabilities	933		780
Pension and Other Postretirement Benefits	9,578		9,316
Other long-term liabilities	3,402		2,498
Total liabilities	$	13,913	$	12,594

As of June 26, 2021, the assets and liabilities are classified as current in the Company’s consolidated balance sheet as the transaction is expected to close within one year.

As of June 26, 2021, collective bargaining agreements covering approximately 400 unionized employees in Canada working in the lumber and newsprint operations had expired. In all cases, the parties have continued to work under the terms of the expired contracts while negotiations continue. While there can be no assurances, the Company expects to reach agreements with the unions, for the benefit of GreenFirst. However, a work stoppage could have a significant negative effect on these operations, including results of operations and financial condition.

3. Accounts Receivable, Net

The Company’s accounts receivable included the following:


		June 27, 2020		December 31, 2019			June 26, 2021		December 31, 2020
Accounts receivable, trade	Accounts receivable, trade	$	146,893	$	142,181	Accounts receivable, trade	$	154,417	$	140,036
Accounts receivable, other (a)	Accounts receivable, other (a)	27,223		40,082		Accounts receivable, other (a)	33,900		39,659

Allowance for doubtful accounts		(689)		(605)
Allowance for expected credit losses						Allowance for expected credit losses	(435)		(487)
Total accounts receivable, net	Total accounts receivable, net	$	173,427	$	181,658	Total accounts receivable, net	$	187,882	$	179,208

(a) Accounts receivable, other consists primarily of value added/consumption taxes, grants receivable and accrued billings due from government agencies.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

4. Inventory

The Company’s inventory included the following:


		June 27, 2020		December 31, 2019			June 26, 2021		December 31, 2020
Finished goods	Finished goods	$	148,622	$	150,259	Finished goods	$	141,586	$	119,549
Work-in-progress	Work-in-progress	13,967		17,065		Work-in-progress	4,968		2,242
Raw materials	Raw materials	76,791		73,385		Raw materials	44,654		43,697
Manufacturing and maintenance supplies	Manufacturing and maintenance supplies	10,003		10,471		Manufacturing and maintenance supplies	3,963		5,159
Total inventory	Total inventory	$	249,383	$	251,180	Total inventory	$	195,171	$	170,647

5. Leases

The Company’s operating and finance leases are primarily for corporate offices, warehouse space, rail cars and equipment. As of June ~~27, 2020,~~26, 2021, the Company’s leases have remaining lease terms of 1 year to 97.7 years with standard renewal and termination options available at the Company’s discretion. Certain equipment leases have purchase options at the end of the term of the lease, which are not included in the Right of Use (“ROU”) assets as it is not reasonably certain that the Company will exercise such options. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company uses its incremental borrowing rate in determining the present value of lease payments unless the lease provides an implicit or explicit interest rate. The weighted average discount rate used in determining the operating lease ROU assets and liabilities as of June ~~27, 2020~~26, 2021 and December 31, ~~2019~~2020 was 6.1 percent and ~~6.0~~6.1 percent, respectively. The weighted average discount rate used in determining the finance lease ROU assets and liabilities as of June ~~27, 2020~~26, 2021 and December 31, ~~2019~~2020 was 7.0 percent.

The Company’s operating and finance lease cost is as follows:


	Three Months Ended				Six Months Ended
	June 26, 2021		June 27, 2020		June 26, 2021		June 27, 2020
Operating Leases
Operating lease expense	$	1,423	$	1,499	$	2,838	$	2,991
Finance Leases
Amortization of ROU assets	87		81		173		161
Interest	42		47		85		96
Total	$	1,552	$	1,627	$	3,096	$	3,248

As of June 26, 2021, the weighted average remaining lease term is 3.1 years and 5.4 years for operating leases and financing leases, respectively. As of December 31, 2020, the weighted average remaining lease term is 3.5 years and 5.9 years for operating leases and finance leases, respectively. Cash provided by operating activities includes approximately $3 million and $3 million from operating lease payments made during the six months ended June 26, 2021 and June 27, 2020, respectively. Finance lease cash flows were immaterial during the six months ended June 26, 2021 and June 27, 2020.

As of June 26, 2021 and December 31, 2020, assets acquired under finance leases of $2 million and $2 million, respectively, are reflected in Property, Plant and Equipment, net. The Company’s finance leases are included as debt and the maturities for the remainder of 2021 and the next four years and thereafter are included in Note 7 — Debt and Finance Leases. The Company’s consolidated balance sheet includes the following operating lease assets and liabilities:

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

~~The Company’s operating and finance lease cost is as follows:~~

Three Months Ended Six Months Ended
June 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019
Operating Leases
   Operating lease expense $ 1,796 $ 1,141 $ 3,600 $ 2,606
Finance Leases
   Amortization of ROU assets 81 22 161 150
   Interest 47 53 96 107
Total $ 1,924 $ 1,216 $ 3,857 $ 2,863


	Balance Sheet Classification	June 26, 2021		December 31, 2020
Right-of-use assets	Other assets	$	14,084	$	15,847
Lease liabilities, current	Accrued and other current liabilities	$	5,301	$	4,886
Lease liabilities, non-current	Other long-term liabilities	$	9,922	$	11,974

As of June 27, 2020, the weighted average remaining lease term is 4.0 years and 6.4 years for operating leases and financing leases, respectively. As of December 31, 2019, the weighted average remaining lease term is 4.3 years and 6.9 years for operating leases and finance leases, respectively. Cash provided by operating activities includes approximately $4 million and $2 million from operating lease payments made during the six months ended June 27, 2020 and June 29, 2019, respectively. Finance lease cash flows were immaterial during the six months ended June 27, 2020 and June 29, 2019.

~~The Company’s finance leases are included as debt and the maturities for the remainder of 2020 and the next four years and thereafter are included in Note 7 —~~ ~~Long Term Debt and Finance Leases. The Company’s consolidated balance sheets includes the following operating lease assets and liabilities:~~

Balance Sheet Classification June 27, 2020 December 31, 2019
Right-of-use assets Other assets $ 20,011 $ 22,406
Lease liabilities, current Accrued and other current liabilities $ 5,699 $ 5,887
Lease liabilities, non-current Other long-term liabilities $ 14,769 $ 17,522

~~As of June 27, 2020,~~26, 2021, operating lease maturities for the remainder of ~~2020~~2021 through ~~2024~~2025 and thereafter are as follows:


		June 27, 2020			June 26, 2021
Remainder of 2020		$	3,471
2021		6,191
Remainder of 2021				Remainder of 2021	$	3,024
2022	2022	5,662		2022	5,978
2023	2023	4,679		2023	5,089
2024	2024	1,557		2024	1,498
2025				2025	657
Thereafter	Thereafter	1,528		Thereafter	476
Total minimum lease payments	Total minimum lease payments	$	23,088	Total minimum lease payments	$	16,722
Less: imputed interest	Less: imputed interest	(2,620)		Less: imputed interest	(1,499)
Present value of future minimum lease payments	Present value of future minimum lease payments	$	20,468	Present value of future minimum lease payments	$	15,223

~~Rayonier Advanced Materials Inc.~~

~~Notes to Consolidated Financial Statements - (Unaudited) (Continued)~~

6. Accrued and Other Current Liabilities

The Company’s accrued and other current liabilities included the following:


		June 27, 2020		December 31, 2019			June 26, 2021		December 31, 2020
Accrued customer incentives and prepayments	Accrued customer incentives and prepayments	$	26,167	$	31,696	Accrued customer incentives and prepayments	$	28,769	$	29,387
Accrued payroll and benefits	Accrued payroll and benefits	27,288		23,593		Accrued payroll and benefits	32,509		21,500
Accrued interest	Accrued interest	2,980		2,785		Accrued interest	22,073		3,230
Accrued income taxes	Accrued income taxes	17,615		3,616		Accrued income taxes	4,996		5,052
Derivative instruments		10,071		995
Accrued stumpage						Accrued stumpage	2,072		10,045
Accrued property and other taxes	Accrued property and other taxes	8,042		5,643		Accrued property and other taxes	7,941		3,995

Other current liabilities	Other current liabilities	30,166		33,850		Other current liabilities	39,129		36,506
Total accrued and other current liabilities	Total accrued and other current liabilities	$	122,329	$	102,178	Total accrued and other current liabilities	$	137,489	$	109,715

~~7. Long Term Debt and Finance Leases~~

~~The Company’s long term debt and finance leases included the following:~~

June 27, 2020 December 31, 2019
U.S. Revolver of $84 million maturing in November 2022, $38 million available, bearing interest at PRIME plus 2.75% or LIBOR plus 3.75% at June 27, 2020 $ — $ —
Multi-currency Revolver of $126 million maturing in November 2022, $60 million available, bearing interest at PRIME plus 2.75% or LIBOR plus 3.75% at June 27, 2020 — —
Term A-1 Loan Facility borrowings maturing through November 2022 bearing interest at LIBOR floor of 1% plus 3.75%, interest rate of 4.75% at June 27, 2020 133,283 133,283
Term A-2 Loan Facility borrowings maturing through November 2024 bearing interest at LIBOR floor of 1% plus 3.40% (after consideration of 0.60% patronage benefit), interest rate of 4.40% at June 27, 2020 365,592 365,592
Senior Notes due 2024 at a fixed interest rate of 5.5% 495,647 495,647
Canadian dollar, fixed interest rate term loans with rates ranging from 5.5% to 6.86% and maturity dates ranging from September 2020 through April 2028, secured by certain assets of the Temiscaming mill 76,989 83,122
Other loans 9,792 7,285
Finance lease obligation 2,656 2,818
Total debt principal payments due 1,083,959 1,087,747
Less: Debt premium, original issue discount and issuance costs, net (8,309) (5,604)
Total debt 1,075,650 1,082,143
Less: Current maturities of long-term debt (14,399) (19,448)
Long-term debt $ 1,061,251 $ 1,062,695

~~As of June 27, 2020, debt and finance lease payments due during the remainder of 2020 and the next four years and thereafter are as follows:~~

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

Finance Lease Payments Debt Principal Payments
2020 $ 258 $ 10,312
2021 515 9,361
2022 515 159,919
2023 515 8,115
2024 515 869,258
Thereafter 987 24,338
Total principal payments $ 3,305 $ 1,081,303
Less: Imputed interest 649
Present value minimum finance lease payments $ 2,656
7. Debt and Finance Leases

~~In March 2020, Investment Quebec (“IQ”), a holder~~The Company’s debt and finance leases included the following:


	June 26, 2021		December 31, 2020
ABL Credit Facility due 2025, $124 million available, bearing interest 0.25% LIBOR floor plus 2.75%, interest rate of 3.00% at June 26, 2021	0		0
Senior Secured Notes due 2026 at a fixed interest rate of 7.625%	$	500,000	$	500,000
Senior Notes due 2024 at a fixed interest rate of 5.5%	495,647		495,647
Canadian dollar, fixed interest rate term loans with rates ranging from 5.5% to 6.86% and maturity dates ranging from July 2022 through April 2028, secured by certain assets of the Temiscaming mill	72,983		73,791
Other loans (a)	16,605		18,193
Short-term factoring facility-France	3,730		5,089
Finance lease obligation	2,317		2,489
Total debt principal payments due	1,091,282		1,095,209
Less: Debt premium, original issue discount and issuance costs, net	(10,530)		(11,272)
Total debt	1,080,752		1,083,937
Less: Debt due within one year	(17,013)		(17,100)
Long-term debt	$	1,063,739	$	1,066,837
(a) Primarily loans for energy projects in France.

As of June 26, 2021, debt and finance lease payments due during the ~~Company’s Canadian dollar fixed rate term loans secured by certain assets~~remainder of 2021, the Temiscaming mill, agreed to defer required monthly principal payments totaling approximately $6 million. The sum of these deferred principal payments will be reallocated over the remaining monthly principal payments which resume in March 2021. The final maturity of the loan was not extended,next four years and ~~the Company continues to make the required monthly interest payments.~~thereafter are as follows:

In March 2020, IQ also granted all of its customers, including the Company, a 6-month deferral on principal payments, which resulted in the deferral of an additional $7 million of principal payment that was originally due to be paid in March 2020 to September 2020. Interest on this principal also continues to be paid by the Company.

In June 2020, the Company entered into an amendment of its Senior Secured Credit Agreement (the “Amendment”) under which, among other changes, the lenders have agreed to relax the financial covenants through 2022. In addition, the Amendment provides additional liquidity to the Company by reducing the minimum availability the Company is required to maintain under its revolving credit facility. The Amendment added a 1 percent LIBOR floor and lenders were paid a customary fee as consideration for their consent to the Amendment.


	Finance Lease Payments		Debt Principal Payments
Remainder of 2021	$	258	$	11,041
2022	515		31,082
2023	515		10,533
2024	515		506,100
2025	515		10,495
Thereafter	472		519,714
Total principal payments	$	2,790	$	1,088,965
Less: Imputed interest	473
Present value minimum finance lease payments	$	2,317

8. Environmental Liabilities

An analysis of liabilities for the six months ended June ~~27, 2020~~26, 2021 is as follows:



Balance, December 31, ~~2019~~2020	$	~~171,376~~171,679
Increase in liabilities	~~1,891~~1,168
Payments	~~(2,290)~~(2,165)
Foreign currency adjustments	~~(678)~~414
Balance, June ~~27, 2020~~26, 2021	~~170,299~~171,096
Less: Current portion	~~(11,109)~~(8,712)
Long-term environmental liabilities	$	~~159,190~~162,384

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

In addition to the estimated liabilities, the Company is subject to the risk of reasonably possible additional liabilities in excess of the established reserves due to potential changes in circumstances and future events, including, without limitation, changes to current laws and regulations; changes in governmental agency personnel, direction, philosophy and/or enforcement policies; developments in remediation technologies; increases in the cost of remediation, operation, maintenance and monitoring of its environmental liability sites; changes in the volume, nature or extent of contamination to be remediated or monitoring to be undertaken; the outcome of negotiations with governmental agencies and non-governmental parties; and changes in accounting rules or interpretations. Based on information available as of June ~~27, 2020,~~26, 2021, the Company estimates this exposure could range up to approximately ~~$77~~$78 million, although no assurances can be given that this amount will not be exceeded given the factors described above. These potential additional costs are attributable to several sites and other applicable liabilities. Further, this estimate excludes reasonably possible liabilities which are not currently estimable primarily due to the factors discussed above.

Subject to the previous paragraph, the Company believes established liabilities are sufficient for probable costs expected to be incurred over the next 20 years with respect to its environmental liabilities. However, no assurances are given they will be

~~Rayonier Advanced Materials Inc.~~

~~Notes to Consolidated Financial Statements - (Unaudited) (Continued)~~

sufficient for the reasons described above, and additional liabilities could have a material adverse effect on the Company’s financial position, results of operations and cash flows.

9. Derivative Instruments

The Company’s earnings and cash flows are subject to fluctuations due to changes in interest rates and foreign currency exchange rates. The Company allows for the use of derivative financial instruments to manage interest rate and foreign currency exchange rate exposure but does not allow derivatives to be used for speculative purposes.

All derivative instruments are recognized on the consolidated balance sheets at their fair value and are either designated as a hedge of a forecasted transaction or undesignated. Changes in the fair value of a derivative designated as a hedge are recorded in other comprehensive income until earnings are affected by the hedged transaction and are then reported in current earnings. Changes in the fair value of undesignated derivative instruments and the ineffective portion of designated derivative instruments are reported in current earnings.

In December 2020, the Company terminated all outstanding derivative instruments, which had been previously designated as hedging instruments and had various maturity dates through 2028. Accumulated gains and losses associated with these instruments were deferred as a component of accumulated other comprehensive income (loss), totaling a net after tax gain of $2 million as of December 31, 2020, to be recognized in earnings as the underlying hedged transactions occur and affect earnings. During the three and six months ended June 26, 2021, the Company recognized after-tax gains of $1.6 million and $2.9 million, respectively, associated with the deferred component in accumulated other comprehensive income (loss) related to these settlements. A $1.0 million net after-tax loss remains deferred within accumulated other comprehensive income (loss) as of June 26, 2021, which will be recognized in earnings as the underlying hedged transactions occur and affect earnings.

Interest Rate Risk

The Company’s ~~primary~~current debt obligations ~~utilize variable-rate LIBOR, exposing the Company~~are primarily fixed and therefore not materially exposed to variability in interest payments due to changes in interest rates. The Company previously entered into interest rate swap agreements to reduce the volatility of ~~financing costs,~~interest expense, achieve a desired proportion of fixed-rate versus floating-rate debt and to hedge the variability in cash flows attributable to interest rate risks caused by changes in the LIBOR benchmark.

The Company had designated the swaps as cash flow hedges and ~~is assessing~~assesses their effectiveness using the hypothetical derivative method in conjunction with regression. Effective gains and losses deferred to ~~accumulated other comprehensive income (loss) (“AOCI”),~~AOCI are reclassified into earnings over the life of the associated hedge. Ineffective gains and losses are classified to earnings immediately. There was no hedge ineffectiveness during 2020.

Foreign Currency Exchange Rate Risk

Foreign currency fluctuations affect investments in foreign subsidiaries and foreign currency cash flows related to third party purchases, product shipments, and ~~foreign currency denominated~~foreign-denominated debt. The Company is also exposed to the translation of foreign currency earnings to the U.S. dollar. Management ~~uses~~may use foreign currency forward contracts to selectively hedge its foreign currency cash ~~flow~~flows exposure and manage risk associated with changes in currency exchange rates. The Company’s principal foreign currency exposure is to the Canadian dollar, and to a lesser extent, the euro.

~~The notional amounts of outstanding derivative instruments are as follows:~~

June 27, 2020 December 31, 2019
Interest rate swaps (a) $ 200,000 $ 200,000
Foreign exchange forward contracts (b) $ 245,074 $ 343,665
Foreign exchange forward contracts (c) $ 67,707 $ 83,126

~~(a) Maturity date of December 2020~~

~~(b) Various maturity dates through March 2021~~

~~(c) Various maturity dates in 2022 and 2028~~

~~The fair values of derivative instruments included in the consolidated balance sheets as of June 27, 2020 and December 31, 2019 are provided in the below table. See Note 10 —~~ ~~Fair Value Measurements~~ ~~for additional information related to the Company’s derivatives.~~

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

Balance Sheet Location June 27, 2020 December 31, 2019
Assets
Derivatives designated as hedging instruments:
Foreign exchange forward contracts Prepaid and other current assets $ 1,041 $ 4,857
Foreign exchange forward contracts Other assets — 5
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts Prepaid and other current assets — 246
Liabilities
Derivatives designated as hedging instruments:
Interest rate swaps Accrued and other current liabilities (1,785) (639)
Foreign exchange forward contracts Accrued and other current liabilities (8,286) (340)
Foreign exchange forward contracts Other long-term liabilities (3,876) (759)
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts Accrued and other current liabilities — (16)
Total net derivative assets (liabilities) $ (12,906) $ 3,354

The effects of derivatives designated as hedging instruments, the related changes in AOCI and the gains and losses in income is as follows:

~~Rayonier Advanced Materials Inc.~~

~~Notes to Consolidated Financial Statements - (Unaudited) (Continued)~~


		Three Months Ended June 27, 2020								Three Months Ended June 26, 2021
Derivatives Designated as Hedging Instruments	Derivatives Designated as Hedging Instruments	Gain (Loss) Recognized in OCI on Derivative		Gain (Loss) Reclassified from AOCI into Income		Location on Statement of Income	Derivatives Designated as Hedging Instruments	Gain (Loss) Recognized in OCI on Derivative		Gain (Loss) Reclassified from AOCI into Income		Location on Statement of Income
Interest rate swaps		$	(225)	$	(716)	Interest expense
Foreign exchange forward contracts		$	5,914	$	367	Other operating income (expense), net

Foreign exchange forward contracts	Foreign exchange forward contracts	$	3,863	$	(3,863)	Cost of sales	Foreign exchange forward contracts	$	0	$	2,260	Cost of sales
Foreign exchange forward contracts	Foreign exchange forward contracts	$	2,192	$	2,135	Interest income and other, net	Foreign exchange forward contracts	$	0	$	(102)	Interest income and other, net

		Three Months Ended June 29, 2019								Three Months Ended June 27, 2020
		Gain (Loss) Recognized in OCI on Derivative		Gain (Loss) Reclassified from AOCI into Income		Location on Statement of Income		Gain (Loss) Recognized in OCI on Derivative		Gain (Loss) Reclassified from AOCI into Income		Location on Statement of Income
Interest rate swaps	Interest rate swaps	$	(1,471)	$	276	Interest expense	Interest rate swaps	$	(225)	$	(716)	Interest expense
Foreign exchange forward contracts	Foreign exchange forward contracts	$	1,817	$	612	Other operating income (expense), net	Foreign exchange forward contracts	$	5,914	$	367	Other operating income (expense), net
Foreign exchange forward contracts	Foreign exchange forward contracts	$	3,137	$	(3,137)	Cost of sales	Foreign exchange forward contracts	$	3,863	$	(3,863)	Cost of sales
Foreign exchange forward contracts	Foreign exchange forward contracts	$	672	$	1,568	Interest income and other, net	Foreign exchange forward contracts	$	2,192	$	2,135	Interest income and other, net

		Six Months Ended June 27, 2020								Six Months Ended June 26, 2021
Derivatives Designated as Hedging Instruments	Derivatives Designated as Hedging Instruments	Gain (Loss) Recognized in OCI on Derivative		Gain (Loss) Reclassified from AOCI into Income		Location on Statement of Income	Derivatives Designated as Hedging Instruments	Gain (Loss) Recognized in OCI on Derivative		Gain (Loss) Reclassified from AOCI into Income		Location on Statement of Income
Interest rate swaps		$	(1,982)	$	(836)	Interest expense
Foreign exchange forward contracts		$	(20,618)	$	(994)	Other operating income (expense), net

Foreign exchange forward contracts	Foreign exchange forward contracts	$	3,469	$	(3,469)	Cost of sales	Foreign exchange forward contracts	$	0	$	4,088	Cost of sales
Foreign exchange forward contracts	Foreign exchange forward contracts	$	(4,710)	$	(4,597)	Interest income and other, net	Foreign exchange forward contracts	$	0	$	(202)	Interest income and other, net

		Six Months Ended June 29, 2019								Six Months Ended June 27, 2020
Derivatives Designated as Hedging Instruments	Derivatives Designated as Hedging Instruments	Gain (Loss) Recognized in OCI on Derivative		Gain (Loss) Reclassified from AOCI into Income		Location on Statement of Income	Derivatives Designated as Hedging Instruments	Gain (Loss) Recognized in OCI on Derivative		Gain (Loss) Reclassified from AOCI into Income		Location on Statement of Income
Interest rate swaps	Interest rate swaps	$	(2,173)	$	556	Interest expense	Interest rate swaps	$	(1,982)	$	(836)	Interest expense
Foreign exchange forward contracts	Foreign exchange forward contracts	$	4,037	$	676	Other operating income (expense), net	Foreign exchange forward contracts	$	(20,618)	$	(994)	Other operating income (expense), net
Foreign exchange forward contracts	Foreign exchange forward contracts	$	7,566	$	(7,566)	Cost of sales	Foreign exchange forward contracts	$	3,469	$	(3,469)	Cost of sales
Foreign exchange forward contracts	Foreign exchange forward contracts	$	3,031	$	3,367	Interest income and other, net	Foreign exchange forward contracts	$	(4,710)	$	(4,597)	Interest income and other, net

The effects of derivative instruments not designated as hedging instruments on the consolidated statement of income were as follows:


			Three Months Ended						Six Months Ended								Three Months Ended				Six Months Ended
Derivatives Not Designated as Hedging Instruments	Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income on Derivative	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019		Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income on Derivative	June 26, 2021		June 27, 2020		June 26, 2021		June 27, 2020
Foreign exchange forward contracts	Foreign exchange forward contracts	Other operating income (expense), net	$	18	$	656	$	(703)	$	330	Foreign exchange forward contracts	Other operating income (expense), net	$	0	$	18	$	0	$	(703)

~~Rayonier Advanced Materials Inc.~~

~~Notes to Consolidated Financial Statements - (Unaudited) (Continued)~~

The after-tax amounts of unrealized gains (losses) in AOCI related to hedge derivatives are presented below:

June 27, 2020 December 31, 2019
Interest rate cash flow hedges $ (1,393) $ (499)
Foreign exchange cash flow hedges $ (7,847) $ 1,789


	June 26, 2021		December 31, 2020

Foreign exchange cash flow hedges	$	(1,019)	$	1,834

The amount of future reclassifications from AOCI will fluctuate with movements in the underlying markets.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

10. Fair Value Measurements

The following table presents the carrying amount, estimated fair values and categorization under the fair value hierarchy for financial instruments held by the Company, using market information and what management believes to be appropriate valuation methodologies:

June 27, 2020 December 31, 2019
Carrying
Amount Fair Value Carrying
Amount Fair Value
Assets: Level 1 Level 2 Level 1 Level 2
Cash and cash equivalents $ 48,739 $ 48,739 $ — $ 64,025 $ 64,025 $ —
Foreign currency forward contracts (a) 1,041 — 1,041 5,108 — 5,108
Liabilities (b):
Interest rate swaps (a) 1,785 — 1,785 639 — 639
Foreign currency forward contracts (a) 12,162 — 12,162 1,115 — 1,115
Fixed-rate long-term debt 581,322 — 386,369 585,027 — 465,449
Variable-rate long-term debt 491,672 — 498,875 494,299 — 498,875


	June 26, 2021						December 31, 2020
	Carrying Amount		Fair Value				Carrying Amount		Fair Value
Assets:			Level 1		Level 2				Level 1		Level 2
Cash and cash equivalents	$	214,739	$	214,739	$	0	$	93,653	$	93,653	$	0



Liabilities (a):


Fixed-rate long-term debt	1,074,705		0		1,093,500		1,076,359		0		1,050,287

(a) ~~These items represent derivative instruments.~~

~~(b)~~ Liabilities exclude finance lease obligation.

The Company uses the following methods and assumptions in estimating the fair value of its financial instruments:

Cash and cash equivalents — The carrying amount is equal to fair market value.

~~Derivative instruments~~ — The fair value is calculated based on standard valuation models using quoted prices and market observable data of similar instruments. The interest rate derivatives are based on the LIBOR swap rate, which is observable at commonly quoted intervals for the full term of the swap and therefore is considered Level 2. The foreign currency derivatives are contracts to buy foreign currency at a fixed rate on a specified future date. The foreign exchange rate is observable for the full term of the swap and is therefore considered Level 2. See Note 9 — ~~Derivative Instruments~~ ~~for additional information related to the derivative instruments.~~

Debt — The fair value of fixed rate debt is based upon quoted market prices for debt with similar terms and maturities. ~~The variable rate debt adjusts with changes in the market rate, therefore the carrying value approximates fair value.~~

1413

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

11. Accumulated Other Comprehensive Income (Loss)

The components of AOCI are as follows:


		Six Months Ended							Six Months Ended
		June 27, 2020		June 29, 2019			June 26, 2021		June 27, 2020
Unrecognized components of employee benefit plans, net of tax:	Unrecognized components of employee benefit plans, net of tax:					Unrecognized components of employee benefit plans, net of tax:
Balance, beginning of year	Balance, beginning of year	$	(126,638)	$	(135,590)	Balance, beginning of year	$	(146,614)	$	(126,638)
Other comprehensive gain (loss) before reclassifications	Other comprehensive gain (loss) before reclassifications	4,781		—		Other comprehensive gain (loss) before reclassifications	0		4,781
Income tax on other comprehensive loss	Income tax on other comprehensive loss	(1,238)		—		Income tax on other comprehensive loss	0		(1,238)
Reclassifications to earnings: (a)	Reclassifications to earnings: (a)					Reclassifications to earnings: (a)
Pension settlement loss						Pension settlement loss	111		0
Amortization of losses	Amortization of losses	6,764		5,219		Amortization of losses	8,169		6,764
Amortization of prior service costs	Amortization of prior service costs	280		207		Amortization of prior service costs	276		280

Income tax on reclassifications	Income tax on reclassifications	(1,274)		(1,196)		Income tax on reclassifications	(1,892)		(1,274)
Foreign currency adjustments		—		(474)

Net comprehensive gain (loss) on employee benefit plans, net of tax	Net comprehensive gain (loss) on employee benefit plans, net of tax	9,313		3,756		Net comprehensive gain (loss) on employee benefit plans, net of tax	6,664		9,313
Balance, end of quarter		(117,325)		(131,834)
Balance, end of period						Balance, end of period	(139,950)		(117,325)

Unrealized gain (loss) on derivative instruments, net of tax:	Unrealized gain (loss) on derivative instruments, net of tax:					Unrealized gain (loss) on derivative instruments, net of tax:
Balance, beginning of year	Balance, beginning of year	1,290		(11,622)		Balance, beginning of year	1,834		1,290
Other comprehensive gain (loss) before reclassifications	Other comprehensive gain (loss) before reclassifications	(23,841)		12,461		Other comprehensive gain (loss) before reclassifications	0		(23,841)
Income tax on other comprehensive income	Income tax on other comprehensive income	5,487		(2,931)		Income tax on other comprehensive income	0		5,487
Reclassifications to earnings: (b)	Reclassifications to earnings: (b)					Reclassifications to earnings: (b)
Interest rate contracts	Interest rate contracts	836		(556)		Interest rate contracts	0		836
Foreign exchange contracts	Foreign exchange contracts	9,060		3,523		Foreign exchange contracts	(3,886)		9,060
Income tax on reclassifications	Income tax on reclassifications	(2,072)		(1,232)		Income tax on reclassifications	1,033		(2,072)
Net comprehensive gain (loss) on derivative instruments, net of tax	Net comprehensive gain (loss) on derivative instruments, net of tax	(10,530)		11,265		Net comprehensive gain (loss) on derivative instruments, net of tax	(2,853)		(10,530)
Balance, end of quarter		(9,240)		(357)
Balance, end of period						Balance, end of period	(1,019)		(9,240)

Foreign currency translation adjustments:	Foreign currency translation adjustments:					Foreign currency translation adjustments:
Balance, beginning of year	Balance, beginning of year	(13,879)		(8,485)		Balance, beginning of year	11,145		(13,879)
Foreign currency translation adjustment, net of tax of $0 and $0	Foreign currency translation adjustment, net of tax of $0 and $0	(583)		(1,694)		Foreign currency translation adjustment, net of tax of $0 and $0	(6,221)		(583)
Balance, end of quarter		(14,462)		(10,179)
Balance, end of period						Balance, end of period	4,924		(14,462)

Accumulated other comprehensive income (loss), end of quarter	Accumulated other comprehensive income (loss), end of quarter	$	(141,027)	$	(142,370)	Accumulated other comprehensive income (loss), end of quarter	$	(136,045)	$	(141,027)

(a)The AOCI components for defined benefit pension and post-retirement plans are included in the computation of net periodic benefit cost. See Note 15— Employee Benefit Plans for additional information.

(b)Reclassifications of interest rate contracts are recorded in interest expense. Reclassifications of foreign currency exchange contracts are recorded in cost of sales, other operating income or non-operating income as appropriate. See Note 9 —Derivative Instruments for additional information.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

12. Stockholders' Equity

An analysis of stockholders’ equity is shown below (share amounts not in thousands):



	Common Stock			Additional Paid in Capital	Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Par Value
For the six months ended June 26, 2021
Balance, January 1, 2021	63,359,839	$	633		$	405,161	$	422,928	$	(133,635)	$	695,087
Net income (loss)	—	—			—		95,201		—		95,201
Other comprehensive income (loss), net of tax	—	—			—		—		(2,410)		(2,410)
Issuance of common stock under incentive stock plans	509,713	5			(5)		—		—		0
Stock-based compensation	—	—			385		—		—		385
Repurchase of common shares (a)	(132,196)	(1)			(1,421)		—		—		(1,422)
Balance June 26, 2021	63,737,356	$	637		$	404,120	$	518,129	$	(136,045)	$	786,841

For the three months ended June 26, 2021
Balance March 27, 2021	63,597,356	$	636		$	403,086	$	395,901	$	(140,869)	$	658,754
Net income (loss)	—	—			—		122,228		—		122,228
Other comprehensive income (loss), net of tax	—	—			—		—		4,824		4,824

Issuance of common stock under incentive stock plans	140,000	1			(1)		—		—		0
Stock-based compensation	—	—			1,038		—		—		1,038
Repurchase of common shares (a)	—	—			(3)		—		—		(3)


Balance, June 26, 2021	63,737,356	$	637		$	404,120	$	518,129	$	(136,045)	$	786,841

For the six months ended June 27, 2020
Balance, January 1, 2020	63,136,129	$	632		$	399,020	$	422,373	$	(139,227)	$	682,798
Net income (loss)	—	—			—		(36,990)		—		(36,990)
Other comprehensive income (loss), net of tax	—	—			—		—		(1,800)		(1,800)

Issuance of common stock under incentive stock plans	396,753	3			(4)		—		—		(1)
Stock-based compensation	—	—			5,157		—		—		5,157
Repurchase of common shares (a)	(185,556)	(2)			(436)		—		—		(438)


Balance June 27, 2020	63,347,326	$	633		$	403,737	$	385,383	$	(141,027)	$	648,726

For the three months ended June 27, 2020
Balance, March 28, 2020	63,246,867	$	632		$	400,525	$	398,246	$	(159,785)	$	639,618
Net income (loss)	—	—			—		(12,863)		—		(12,863)
Other comprehensive income (loss), net of tax	—	—			—		—		18,758		18,758

Issuance of common stock under incentive stock plans	106,064	1			(2)		—		—		(1)
Stock-based compensation	—	—			3,214		—		—		3,214
Repurchase of common shares (a)	(5,605)	—			—		—		—		0


Balance, June 27, 2020	63,347,326	$	633		$	403,737	$	385,383	$	(141,027)	$	648,726

(a) Repurchased to satisfy the tax withholding requirements related to the issuance of stock under the Rayonier Advanced Materials Incentive Stock Plan.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

Common Stock Preferred Stock Additional Paid in Capital Retained
Earnings Accumulated Other Comprehensive Loss Total Stockholders’
Equity
Shares Par Value Shares Par Value
For the six months ended June 27, 2020
Balance, December 31, 2019 63,136,129 $ 632 — $ — $ 399,020 $ 422,373 $ (139,227) $ 682,798
Net income (loss) — — — — — (36,990) — (36,990)
Other comprehensive income (loss), net of tax — — — — — — (1,800) (1,800)
Issuance of common stock under incentive stock plans 396,753 3 — — (4) — — (1)
Stock-based compensation — — — — 5,157 — — 5,157
Repurchase of common stock (185,556) (2) — — (436) — — (438)
Balance, June 27, 2020 63,347,326 $ 633 — $ — $ 403,737 $ 385,383 $ (141,027) $ 648,726
For the three months ended June 27, 2020
Balance, March 28, 2020 63,246,867 $ 632 — $ — $ 400,525 $ 398,246 $ (159,785) $ 639,618
Net income (loss) — — — — — (12,863) — (12,863)
Other comprehensive income (loss), net of tax — — — — — — 18,758 18,758
Issuance of common stock under incentive stock plans 106,064 1 — — (2) — — (1)
Stock-based compensation — — — — 3,214 — — 3,214
Repurchase of common shares (5,605) — — — — — — —
Balance, June 27, 2020 63,347,326 $ 633 — $ — $ 403,737 $ 385,383 $ (141,027) $ 648,726
For the six months ended June 29, 2019
Balance, December 31, 2018 49,291,130 $ 493 1,725,000 $ 17 $ 399,490 $ 462,568 $ (155,697) $ 706,871
Net income (loss) — — — — — (36,967) — (36,967)
Other comprehensive income (loss), net of tax — — — — — — 13,327 13,327
Issuance of common stock under incentive stock plans 980,015 10 — — (10) — — —
Stock-based compensation — — — — 3,456 — — 3,456
Repurchase of common stock (423,058) (5) — — (5,821) — — (5,826)
Common stock dividends
($0.14 per share)
— — — — — (7,395) — (7,395)
Preferred stock dividends
($4.00 per share)
— — — — — (6,900) — (6,900)
Balance, June 29, 2019 49,848,087 $ 498 1,725,000 $ 17 $ 397,115 $ 411,306 $ (142,370) $ 666,566
For the three months ended June 29, 2019
Balance, March 30, 2019 49,798,884 $ 498 1,725,000 $ 17 $ 397,606 $ 433,256 $ (151,286) $ 680,091
Net income (loss) — — — — — (14,917) — (14,917)
Other comprehensive income (loss), net of tax — — — — — — 8,916 8,916
Preferred stock converted to common stock — — — — — — — —
Issuance of common stock under incentive stock plans 51,414 — — — — — — —
Stock-based compensation — — — — (476) — — (476)
Repurchase of common shares (2,211) — — — (15) — — (15)
Common stock dividends
($0.07 per share)
— — — — — (3,583) — (3,583)
Preferred stock dividends
($2.00 per share)
— — — — — (3,450) — (3,450)
Balance, June 29, 2019 49,848,087 $ 498 1,725,000 $ 17 $ 397,115 $ 411,306 $ (142,370) $ 666,566

~~Rayonier Advanced Materials Inc.~~

~~Notes to Consolidated Financial Statements - (Unaudited) (Continued)~~

~~Series A Mandatory Convertible Preferred Stock~~

On August 15, 2019 each share of the Preferred Stock automatically converted into shares of common stock at the conversion rate per share of 7.7459 and the Company issued approximately 13.4 million shares of common stock.

Common Stock Buyback

On January 29, 2018, the Board of Directors authorized a share buyback program pursuant to which the Company may, from time to time, purchase shares of its common stock with an aggregate purchase price of up to $100 million. During the three ~~and six~~ months ended June ~~27, 2020~~26, 2021 and June ~~29, 2019,~~27, 2020, the Company did not repurchase any common shares under this buyback program. As of June ~~27, 2020,~~26, 2021, there was approximately $60 million of share repurchase authorization remaining under the program. The Company does not expect to utilize any further authorization in the near future.

~~Rayonier Advanced Materials Inc.~~

~~Notes to Consolidated Financial Statements - (Unaudited) (Continued)~~

13. Earnings Per Share of Common Stock

The following table provides details of the calculations of basic and diluted earnings per share:


		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
		June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019			June 26, 2021		June 27, 2020		June 26, 2021		June 27, 2020
Income (loss) from continuing operations	Income (loss) from continuing operations	$	(12,927)	$	(19,274)	$	(37,762)	$	(47,261)	Income (loss) from continuing operations	$	8,297	$	(3,505)	$	(7,913)	$	(21,493)
Preferred Stock dividends		—		(3,441)		—		(6,805)
Income (loss) from continuing operations attributable to common stockholders		(12,927)		(22,715)		(37,762)		(54,066)

Income (loss) from discontinued operations	Income (loss) from discontinued operations	64		4,357		772		10,294		Income (loss) from discontinued operations	113,931		(9,358)		103,114		(15,497)
Net income (loss) available for common stockholders	Net income (loss) available for common stockholders	$	(12,863)	$	(18,358)	$	(36,990)	$	(43,772)	Net income (loss) available for common stockholders	$	122,228	$	(12,863)	$	95,201	$	(36,990)

Shares used for determining basic earnings per share of common stock	Shares used for determining basic earnings per share of common stock	63,235,151		49,572,055		63,111,058		49,282,418		Shares used for determining basic earnings per share of common stock	63,654,278		63,235,151		63,545,599		63,111,058
Dilutive effect of:	Dilutive effect of:									Dilutive effect of:
Stock options	Stock options	—		—		—		—		Stock options	0		0		0		0
Performance and restricted stock	Performance and restricted stock	—		—		—		—		Performance and restricted stock	1,159,735		0		0		0
Preferred stock		—		—		—		—

Shares used for determining diluted earnings per share of common stock	Shares used for determining diluted earnings per share of common stock	63,235,151		49,572,055		63,111,058		49,282,418		Shares used for determining diluted earnings per share of common stock	64,814,013		63,235,151		63,545,599		63,111,058

Basic per share amounts	Basic per share amounts									Basic per share amounts
Income (loss) from continuing operations	Income (loss) from continuing operations	$	(0.20)	$	(0.46)	$	(0.60)	$	(1.10)	Income (loss) from continuing operations	$	0.13	$	(0.05)	$	(0.12)	$	(0.34)
Income (loss) from discontinued operations	Income (loss) from discontinued operations	—		0.09		0.01		0.21		Income (loss) from discontinued operations	1.79		(0.15)		1.62		(0.25)
Net income (loss)	Net income (loss)	$	(0.20)	$	(0.37)	$	(0.59)	$	(0.89)	Net income (loss)	$	1.92	$	(0.20)	$	1.50	$	(0.59)
Diluted per share amounts	Diluted per share amounts									Diluted per share amounts
Income (loss) from continuing operations	Income (loss) from continuing operations	$	(0.20)	$	(0.46)	$	(0.60)	$	(1.10)	Income (loss) from continuing operations	$	0.13	$	(0.05)	$	(0.12)	$	(0.34)
Income (loss) from discontinued operations	Income (loss) from discontinued operations	—		0.09		0.01		0.21		Income (loss) from discontinued operations	1.76		(0.15)		1.62		(0.25)
Net income (loss)	Net income (loss)	$	(0.20)	$	(0.37)	$	(0.59)	$	(0.89)	Net income (loss)	$	1.89	$	(0.20)	$	1.50	$	(0.59)

Anti-dilutive instruments excluded from the computation of diluted earnings per share:


		Three Months Ended			Six Months Ended				Three Months Ended		Six Months Ended
		June 27, 2020	June 29, 2019	June 27, 2020	June 29, 2019		June 26, 2021	June 27, 2020	June 26, 2021	June 27, 2020
Stock options	Stock options	153,977	226,058	153,977	226,058	Stock options	122,525	153,977	122,525	153,977
Performance and restricted stock	Performance and restricted stock	2,691,362	845,935	2,691,362	454,959	Performance and restricted stock	655,540	2,691,362	2,286,865	2,691,362
Preferred stock		—	13,361,678	—	13,361,678

Total anti-dilutive instruments	Total anti-dilutive instruments	2,845,339	14,433,671	2,845,339	14,042,695	Total anti-dilutive instruments	778,065	2,845,339	2,409,390	2,845,339

14. Incentive Stock Plans

The Company’s total stock-based compensation expense for the three months ended June 26, 2021 and June 27, 2020 ~~and June 29, 2019~~ was ~~expense of~~$1 million and $3 million, ~~and a benefit of $476 thousand,~~ respectively. ~~The Company’s total stock-based~~Stock-based compensation expense for the six months ended June 26, 2021 and June 27, 2020 was $385 thousand and ~~June 29, 2019 was~~ $5 ~~million and $3~~ million, respectively.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

The Company made new grants of restricted stock units and performance-based stock units to certain employees during the first six months of ~~2020.~~2021. The ~~2020~~2021 restricted stock unit awards cliff vest ~~over~~after three years. The ~~2020~~2021 performance-based stock unit ~~award payout is calculated using a combination of Company specific performance metrics and~~awards measure total shareholder return ~~which is~~

~~Rayonier Advanced Materials Inc.~~

~~Notes to Consolidated Financial Statements - (Unaudited) (Continued)~~

~~measured~~(“TSR”) on an absolute basis ~~as well as~~and relative to ~~a peer group of companies. Depending on performance against these targets, the awards will pay out in common stock amounts~~peers. Participants can earn between 0 and 200 percent of the target award. Performance below the threshold for the absolute TSR would result in a 0 payout for the TSR metric. There is a performance-based stock ~~units awarded.~~award and cash unit stock award that will be measured using the same objectives but paid and accounted for separately. As required by Accounting Standards Codification 718, Compensation-Stock Compensation, the portion of the award to be settled in cash is classified as a liability and remeasured to fair value at the end of each reporting period until settlement.

In March ~~2020,~~2021, the performance-based share units granted in ~~2017~~2018 were settled at an average of 7660 percent of the performance-based stock units awarded, resulting in the issuance of ~~266,154~~182,811 shares of common stock.

The following table summarizes the activity on the Company’s incentive stock awards for the six months ended June ~~27, 2020:~~26, 2021:


		Stock Options				Restricted Stock and Stock Units					Performance-Based Stock Units						Stock Options			Restricted Stock Units		Performance-Based Stock Units
		Options	Weighted Average Exercise Price		Awards	Weighted Average Grant Date Fair Value		Awards	Weighted Average Grant Date Fair Value				Options	Weighted Average Exercise Price		Awards	Weighted Average Grant Date Fair Value		Awards	Weighted Average Grant Date Fair Value
Outstanding at January 1, 2020		205,026	$	36.10	833,596	$	14.55	1,190,526	$	17.77
Outstanding at January 1, 2021												Outstanding at January 1, 2021	152,281	$	38.26	828,955	$	10.27	1,821,402	$	8.77
Granted	Granted	—	—		412,969	3.77		1,100,567	2.07			Granted	0	0		551,476	9.76		136,061	17.61
Forfeited	Forfeited	—	—		(52,388)	13.06		(60,103)	17.52			Forfeited	0	0		(108,986)	11.68		(312,697)	8.92
Exercised or settled	Exercised or settled	—	—		(329,877)	11.63		(403,928)	15.68			Exercised or settled	0	0		(326,830)	13.50		(302,516)	22.76
Expired or cancelled	Expired or cancelled	(51,049)	29.52		—	—		—	—			Expired or cancelled	(29,756)	33.39		0	0		0	0
Outstanding at June 27, 2020		153,977	$	38.28	864,300	$	10.61	1,827,062	$	8.78
Outstanding at June 26, 2021												Outstanding at June 26, 2021	122,525	$	39.44	944,615	$	8.69	1,342,250	$	6.48

15. Employee Benefit Plans

The Company has defined benefit pension and other long-term and postretirement benefit plans covering certain union and non-union employees, primarily in the U.S., Canada and France. The defined benefit pension plans are closed to new participants. ~~Employee defined benefit plan~~The liabilities for these plans are calculated using actuarial estimates and management assumptions. These estimates are based on historical information, along with certain assumptions about future events.

During 2019, the Company settled certain Canadian pension liabilities through the purchase of annuity contracts with an insurance company. The settlement resulted in the recognition of a $1 million loss during the three and six months ended June 26, 2021. The settlement was recognized in “Other components of net periodic benefit ~~costs from defined benefit plans that have been recorded are shown~~costs” in our Consolidated Statement of Income and Comprehensive Income for the ~~following table:~~

Pension Postretirement
Three Months Ended Three Months Ended
Components of Net Periodic Benefit Cost June 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019
Service cost $ 2,573 $ 2,459 $ 322 $ 464
Interest cost 6,252 9,359 184 360
Expected return on plan assets (10,343) (13,520) — —
Amortization of prior service cost 178 142 (38) (38)
Amortization of losses 3,427 2,587 (57) 20
Total net periodic benefit cost $ 2,087 $ 1,027 $ 411 $ 806
Pension Postretirement
Six Months Ended Six Months Ended
Components of Net Periodic Benefit Cost June 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019
Service cost $ 5,241 $ 4,928 $ 686 $ 931
Interest cost 12,592 18,750 501 720
Expected return on plan assets (20,888) (27,365) — —
Amortization of prior service cost 357 284 (77) (77)
Amortization of losses 6,854 5,178 (91) 41
Total net periodic benefit cost $ 4,156 $ 1,775 $ 1,019 $ 1,615
three and six months ended June 26, 2021.

1917

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

The components of net periodic benefit costs from these plans that have been recorded are shown in the following table:


	Pension				Postretirement
	Three Months Ended				Three Months Ended
Components of Net Periodic Benefit Cost	June 26, 2021		June 27, 2020		June 26, 2021		June 27, 2020
Service cost	$	2,600	$	2,207	$	363	$	316
Interest cost	4,446		5,844		176		149
Expected return on plan assets	(9,673)		(9,246)		0		0
Amortization of prior service cost	177		178		(38)		(38)
Amortization of losses	4,086		3,427		2		(57)
Pension settlement loss (gain)	890		0		0		0
Total net periodic benefit cost	$	2,526	$	2,410	$	503	$	370

	Pension				Postretirement
	Six Months Ended				Six Months Ended
Components of Net Periodic Benefit Cost	June 26, 2021		June 27, 2020		June 26, 2021		June 27, 2020
Service cost	$	5,181	$	4,482	$	725	$	674
Interest cost	8,851		11,748		351		428
Expected return on plan assets	(19,279)		(18,612)		0		0
Amortization of prior service cost	352		357		(76)		(77)
Amortization of losses	8,163		6,854		6		(91)
Pension settlement loss (gain)	890		0		0		0
Total net periodic benefit cost	$	4,158	$	4,829	$	1,006	$	934

Service cost is included in cost of sales and selling, general and administrative expenses in the statements of income, as appropriate. Interest cost, expected return on plan assets, amortization of prior service cost and amortization of losses are included in other components of pension and OPEB, excluding service cost on the consolidated statement of income.

16. Income Taxes

The Company’s effective tax benefit rate from continuing operations for the three and six months ended June ~~27, 2020~~26, 2021 was ~~a benefit of 59~~153 percent and 3577 percent, respectively, compared towith a benefit rate of 3483 percent and 3147 percent for the three and six months ended June ~~29, 2019~~27, 2020, respectively.

The current quarter and ~~year-to-date~~year to date June ~~27, 2020~~26, 2021 effective rate differs from the federal statutory rate of 21 percent primarily due to a tax benefit recognized by remeasuring the Company’s Canadian deferred tax assets at a higher Canadian blended statutory tax rate. The statutory tax rate is higher as a result of changing the allocation of income between the Canadian provinces once the sale of FPG and Newsprint is completed.Other factors impacting the effective benefit rate are return to accrual adjustments and tax credits, partially offset by nondeductible interest expense in the U.S. and lower tax deductions on vested stock compensation.

The effective tax rate benefit for the period ended June 27, 2020 differs from the federal statutory rate primarily due to the release of certain valuation allowances related to nondeductible ~~U.S.~~ interest expense, ~~(see below),~~ benefits from the CARES Act, return to accrual adjustments and tax credits, partially offset by ~~remaining~~ nondeductible ~~U.S.~~ interest expense in the U.S., taxable income generated from the 2020 credit agreement amendment, increases to uncertain tax position reserves, nondeductible executive compensation, and lower tax deductions on vested stock compensation. The effective tax rate benefit for the three and six months ended June 29, 2019 differs from the federal statutory rate primarily due to tax credits and excess tax deductions on vested stock compensation which vested in that period.

On March 27, 2020, the United States Congress passed the CARES Act to provide taxpayer protection against the economic impacts of COVID-19. As part of the CARES Act, the Company is able to carry a 2019 tax net operating loss back to tax years when the U.S. Federal Statutory rate was 35 percent compared with the current 21 percent. The Company has recognized a $12 million tax benefit arising from the remeasured increased value of the tax net operating loss and has recorded a $31 million current receivable related to the refund expected to be received in the fourth quarter of 2020. Additionally, the Company has a $21 million current receivable related to tax years under examination by the IRS. The Company believes the examination will be completed in time to receive this refund within the next twelve months.

There has been ~~an increase of $12 million~~no material change to the balance of unrecognized tax benefits reported at December 31, ~~2019.~~2020.

~~The tax benefit for the three and six-month period ended June 27, 2020 includes an adjustment~~

Rayonier Advanced Materials Inc.

Notes to reverse a valuation allowance, which was recorded for the year ended December 31, 2019, on a deferred tax asset generated from a disallowed interest deduction. Under the Internal Revenue Code Section 163(j), U.S. interest is only deductible up to 30 percent of “adjusted taxable income” (“ATI”). The disallowed interest deduction can be carried forward indefinitely but will only be realized to the extent the Company has net U.S. interest expense below 30 percent of ATI in any given year after first utilizing its current year interest expense. Based on its projected interest expense and ATI, the Company does not believe it will be able to realize any of the existing suspended interest deductions and, as a result, had recorded a full valuation allowance on these deferred tax assets as of December 31, 2019. However, in December of 2019 the American Institute of Certified Public Accountants (“AICPA”) issued Technical Questions and Answers (“TQA”) 3300.01- 02 which asserts that a valuation allowance should only be recognized to the extent that the reversal of existing deferred tax assets and liabilities is not sufficient to realize the disallowed interest carryforward, ignoring material evidence including the expectation of future earnings or losses and future interest expense. In strict compliance with the AICPA’s TQA, the Company reversed a portion of the valuation allowance on the deferred tax assets generated from disallowed interest through the second quarter of 2020 resulting in a $11 million increase in the tax benefit, of which $9 million related to the year ended December 31, 2019. The Company has determined that the adjustment is not material to the December 31, 2019 consolidated financial statements, nor to the consolidated financial statements for the three and six-months ended June 27, 2020. The Company’s conclusion was reached in consideration of qualitative factors such as the fact that the deferred tax asset will likely never be realized or impact cash taxes and the fact that the income tax benefit does not impact operating cash flows, operating income, earnings before interest, depreciation and amortization and adjusted free cash flow.Consolidated Financial Statements - (Unaudited) (Continued)

17. Segment and Geographical Information

~~The~~As a result of the announced sale of the Company’s lumber and newsprint assets, the Company operates in the following 5 business segments: High Purity Cellulose, ~~Forest Products,~~ Paperboard, High-Yield Pulp ~~& Newsprint~~ and Corporate. The Corporate operations consist primarily of senior management, accounting, information systems, human resources, treasury, tax and legal administrative functions that provide support services to the operating business units. The Company ~~does not currently allocate~~allocates a portion of the cost of maintaining these support functions to its operating units. ~~All prior period amounts presented herein have been reclassified to conform to this segment structure.~~

~~Rayonier Advanced Materials Inc.~~

~~Notes to Consolidated Financial Statements - (Unaudited) (Continued)~~

The Company evaluates the performance of its segments based on operating income. Intersegment sales consist primarily of ~~wood chips~~High-Yield Pulp sales ~~from Forest Products to High Purity Cellulose, Paperboard and Pulp & Newsprint segments and high-yield pulp sales from Pulp & Newsprint~~ to Paperboard. Intersegment sales prices are at rates that approximate market for the respective operating area.

Net sales, disaggregated by product-line, was comprised of the following:


		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
		June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019			June 26, 2021		June 27, 2020		June 26, 2021		June 27, 2020
High Purity Cellulose	High Purity Cellulose									High Purity Cellulose
Cellulose Specialties	Cellulose Specialties	$	161,075	$	190,782	$	321,310	$	382,885	Cellulose Specialties	$	167,576	$	161,075	$	335,413	$	321,310
Commodity Products	Commodity Products	75,428		56,187		141,951		130,144		Commodity Products	62,384		75,428		121,317		141,951
Other sales (a)	Other sales (a)	18,552		21,821		41,371		41,770		Other sales (a)	24,639		18,552		47,630		41,371
Total High Purity Cellulose	Total High Purity Cellulose	255,055		268,790		504,632		554,799		Total High Purity Cellulose	254,599		255,055		504,360		504,632
Forest Products
Lumber		55,416		64,308		115,965		121,660
Other sales (b)		14,874		16,890		36,624		34,717
Total Forest Products		70,290		81,198		152,589		156,377
Paperboard	Paperboard									Paperboard
Paperboard	Paperboard	43,144		50,006		93,630		97,344		Paperboard	56,762		43,144		104,611		93,630
Pulp & Newsprint
Pulp		31,847		40,629		61,822		68,588
Newsprint		10,994		24,028		27,697		46,664
Total Pulp & Newsprint		42,841		64,657		89,519		115,252
High-Yield Pulp										High-Yield Pulp
High-Yield Pulp										High-Yield Pulp	36,786		31,847		64,330		61,822

Eliminations	Eliminations	(14,577)		(14,418)		(33,809)		(32,479)		Eliminations	(7,128)		(5,876)		(13,604)		(11,439)
Total net sales	Total net sales	$	396,753	$	450,233	$	806,561	$	891,293	Total net sales	$	341,019	$	324,170	$	659,697	$	648,645
(a) Other sales include sales of electricity, lignin and other by-products to third-parties	(a) Other sales include sales of electricity, lignin and other by-products to third-parties																	(a) Other sales include sales of electricity, lignin and other by-products to third-parties
(b) Other sales include sales of logs, wood chips and other by-products to other segments and third-parties

Operating income (loss) by segment was comprised of the following:


		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
		June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019			June 26, 2021		June 27, 2020		June 26, 2021		June 27, 2020
High Purity Cellulose	High Purity Cellulose	$	6,721	$	6,713	$	1,863	$	3,920	High Purity Cellulose	$	10,623	$	6,721	$	17,051	$	1,863
Forest Products		(3,801)		(16,340)		(5,111)		(21,588)

Paperboard	Paperboard	6,261		552		10,936		(1,831)		Paperboard	2,441		6,261		8,196		10,936
Pulp & Newsprint		(5,503)		5,653		(11,379)		7,563
High-Yield Pulp										High-Yield Pulp	1,079		570		538		(476)
Corporate	Corporate	(19,098)		(11,897)		(23,736)		(30,983)		Corporate	(12,766)		(19,713)		(24,882)		(24,650)
Total operating income (loss)	Total operating income (loss)	$	(15,420)	$	(15,319)	$	(27,427)	$	(42,919)	Total operating income (loss)	$	1,377	$	(6,161)	$	903	$	(12,327)

Identifiable assets by segment were as follows:


	June 26, 2021		December 31, 2020
High Purity Cellulose	$	1,540,743	$	1,528,929

Paperboard	120,125		129,871
High-Yield Pulp	38,985		33,259
Corporate and other (a)	702,806		624,541
Assets Held for Sale	245,643		213,265
Total identifiable assets	$	2,648,302	$	2,529,865

2119

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

~~Identifiable~~(a) Includes the remaining assets ~~by segment were as follows:~~of the lumber and newsprint operations excluded from the GreenFirst sale.

June 27, 2020 December 31, 2019
High Purity Cellulose $ 1,518,816 $ 1,559,073
Forest Products 167,375 171,167
Paperboard 142,283 145,030
Pulp & Newsprint 98,673 102,959
Corporate 518,145 501,918
Total identifiable assets $ 2,445,292 $ 2,480,147

18. Commitments and Contingencies

Commitments

The Company has no material changes to the purchase obligations presented in Note 22 — Commitments and Contingencies in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, as filed with the SEC on March ~~2, 2020,~~1, 2021, that are outside the normal course of business for the ~~six~~three months ended June ~~27, 2020.~~26, 2021. The Company’s purchase obligations continue to primarily consist of commitments for the purchase of natural gas, steam energy and electricity ~~contracts.~~contracts entered into within the normal course of business.

The Company leases certain buildings, machinery and equipment under various operating leases. See Note 5 — Leases, for additional information.

Litigation and Contingencies

Final Settlement Reached in Dispute with IESO Relating to Investigation of the Kapuskasing Newsprint Facility. ~~Since~~From the period from 2014 to early 2021, the Market Assessment and Compliance Division (“MACD”) branch of the Independent Electricity System Operator (“IESO”), the governmental agency responsible for operating the wholesale electricity market and directing the operation of the bulk electrical system in the province of Ontario, Canada, ~~has~~had been engaged in reviewing the Company's compliance with the published rules that govern the operation of the wholesale electricity market in Ontario, Canada. ~~MACD has been specifically reviewing issues relating to~~The inquiry was focused primarily on payments made by IESO to the ~~Company’s facility in Kapuskasing, Ontario. The inquiry has focused primarily on payments made by IESO~~Company between 2010 and 2019 under market rules in connection with multiple planned, extended and unplanned forced outages that caused extensive downtime, in ~~respect~~full or in part, of ~~parts or~~ the ~~entire~~Company’s Kapuskasing, Ontario newsprint facility.

In May 2020, MACD finalized 2two of its 4four investigations into the Company’s electricity management practices at its Kapuskasing newsprint facility and issued orders ~~claiming~~asserting penalties of CAD $25 ~~million in connection therewith were issued by the IESO. More particularly, the~~million. These orders ~~would require~~called for the Company to pay penalties of CAD $3 million immediately and CAD $12 million over a ~~10-year~~10 year period, with the remaining CAD $10 million to be deferred and ultimately forgiven assuming the Company otherwise complied with the orders’ remaining ~~terms of the orders.~~terms. The Company, ~~believes~~which maintained it ~~has~~had complied in all material respects with the published rules, ~~and is~~ vigorously ~~contesting~~contested IESO’s orders, including through the ~~Company’s June 2, 2020~~ filing of judicial review proceedings with the divisional Court (Superior Court of Justice) of Ontario seeking invalidation of the orders. At the time these orders were issued, the remaining two investigations remained open, subjecting the Company to the risk that MACD may in the future issue additional orders upon finalization of these additional investigations.

On April 19, 2021, the Company and IESO entered into Minutes of Settlement (“MOS”) pursuant to which the parties agreed to fully and finally settle all claims relating to all four of the investigations (whether completed or not) and related orders, the judicial review proceedings and underlying disputes. As part of the settlement, the Company agreed to a fixed obligation to pay a sum of CAD $12 million over a period of 5 years comprised of a CAD $4.5 million up-front payment and a CAD $7.5 million payment to be spread (on a front-weighted basis) over the next 5 anniversaries of the MOS, without interest. In addition to the foregoing, the MOS provides that a “suspended” sum of CAD $10.4 million would become due and payable in the event the Company fails to comply with any of the terms and conditions of the MOS or commits an event of default, as defined under the applicable market rules, unless such breach or event of default is remedied on a timely basis. This contingent “suspended” sum decreases annually as the scheduled fixed, or non-contingent, payments are made under the MOS. Assuming no uncured event of default or breach occurs during the repayment period, upon full payment of the CAD $12 million, the entire "suspended" sum shall be extinguished and RYAM shall be released from any payment obligation with respect thereto.

Given the parties’ finalization of and entry into the MOS, the Company considers this matter concluded (subject only to the parties’ obligations yet to be performed under the MOS).

Duties on Canadian softwood lumber sold to the U.S.The Company ~~does not believe~~has operated 6 softwood lumber mills in Ontario and Quebec, Canada and has exported softwood lumber into the ~~ultimate outcome~~United States from Canada. In 2017, anti-dumping and countervailing duties were assessed by the United States Department of ~~this dispute~~Commerce (“USDOC”) on lumber exported into the United States, with the Company being assigned an anti-dumping duty rate of 6 percent and a countervailing duty rate of 14 percent. In December 2020, following its administrative review of the period of April 28, 2017 through December 31, 2018, USDOC determined revised rates for anti-dumping and countervailing duties, and the Company is now subject to an anti-dumping duty rate of approximately 1.6 percent and a countervailing duty rate of approximately 7.4 percent. The reduced rates will be ~~material~~applied by the Company for lumber sold into the U.S. in the future. Canada’s legal challenge to the USDOC’s assessment of duties continues in spite of the recent revision in rates.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

The Company has paid approximately $108 million in lumber duties to date, recorded as expense in the periods incurred. The Company currently has a $21 million long-term receivable associated with the December 2020 determination of the revised rates for the 2017 and 2018 periods. Cash is not expected to return to the Company until final resolution of the softwood lumber dispute, which remains subject to legal challenges and to USDOC further administrative review processes covering periods after December 31, 2018. As part of the sale of its ~~business~~lumber assets, the Company retains all rights and obligations to softwood lumber duties, generated or ~~financial condition, although no assurances can be given.~~incurred through the closing date of the transaction.

Other. In addition to the above, the Company is engaged in various legal and regulatory actions and proceedings, and has been named as a defendant in various lawsuits and claims arising in the ordinary course of its business. While the Company has procured reasonable and customary insurance covering risks normally occurring in connection with its businesses, the Company has in certain cases retained some risk through the operation of self-insurance, primarily in the areas of workers’ compensation, property insurance and general liability. These other lawsuits and claims, either individually or in aggregate, are not expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

~~As of June 27, 2020, all the Company’s collective bargaining agreements covering its unionized employees are current.~~

Guarantees and Other

The Company provides financial guarantees as required by creditors, insurance programs and various governmental agencies. As of June ~~27, 2020,~~26, 2021, the Company had net exposure of ~~$42~~$41 million from various standby letters of credit, primarily for financial assurance relating to environmental remediation, credit support for natural gas and electricity purchases, and guarantees related to foreign retirement plan obligations. These standby letters of credit represent a contingent liability. The Company would only be liable upon its default on the related payment obligations. The letters of credit have various expiration dates and will be renewed as required.

~~Rayonier Advanced Materials Inc.~~

~~Notes to Consolidated Financial Statements - (Unaudited) (Continued)~~

The Company had surety bonds of ~~$87~~$86 million as of June ~~27, 2020,~~26, 2021, primarily to comply with financial assurance requirements relating to environmental remediation and post closure care, to provide collateral for the Company’s workers’ compensation program, and to guarantee taxes and duties for products shipped internationally. These surety bonds expire at various dates and are expected to be renewed annually as required.

LignoTech Florida (“LTF”) is a venture in which the Company owns 45 percent and its partner Borregaard ASA owns 55 percent. The Company is a guarantor of LTF’s financing agreements and, in the event of default, expects it would only be liable for its proportional share of any repayment under the agreements. The Company’s proportion of the LTF financing agreement guarantee was $33 million at June ~~27, 2020.~~26, 2021.

The Company has not recorded any liabilities for these financial guarantees in its consolidated balance sheets, either because the Company has recorded the underlying liability associated with the guarantee or the guarantee is dependent on the Company’s own performance and, therefore, is not subject to the measurement requirements or because the Company has calculated the estimated fair value of the guarantee and determined it to be immaterial based upon the current facts and circumstances that would trigger a payment obligation.

It is not possible to determine the maximum potential amount of the liability under these potential obligations due to the unique set of facts and circumstances likely to be involved with each provision.

As of June 26, 2021, the Company is working to reach agreements for certain expired collective bargaining agreements covering unionized employees in Canada working in the lumber and newsprint operations. All other collective bargaining agreements covering its unionized employees are current. See Note 2 —Discontinued Operations for additional information.

19. Supplemental Disclosures of Cash ~~Flows~~Flow Information

Supplemental disclosures of cash flows information were comprised of the following for the six months ended:

June 27, 2020 June 29, 2019
Cash paid (received) during the period:
Interest $ 28,792 $ 28,620
Income taxes $ 633 $ (99)


	June 26, 2021		June 27, 2020

Interest paid	$	13,394	$	24,916
Income taxes paid (received)	$	(21,032)	$	633
Capital assets purchased on account	$	15,704	$	11,136
Assets acquired under operating leases	$	624	$	658

2321

Table of Contents


Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations

When we refer to “we,” “us,” “our” or “the Company,” we mean Rayonier Advanced Materials Inc. and its consolidated subsidiaries. References herein to “Notes to Consolidated Financial Statements” refer to the Notes to the Consolidated Financial Statements of Rayonier Advanced Materials Inc. included in Item 1 of this Quarterly Report on Form 10-Q (the “Report.”)

~~The~~This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of our consolidated financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity and certain other factors which may affect future results. ~~Our~~This MD&A should be read in conjunction with our ~~2019~~2020 Annual Report on Form 10-K and information contained in our subsequent Forms 8-K and other reports to the U.S. Securities and Exchange Commission (the “SEC”).

As a result of the announced sale of the lumber and newsprint assets in April 2021, these operations have been presented as discontinued operations and we have reclassified certain prior year amounts to conform to this presentation. Unless otherwise stated, information in this MD&A relates to continuing operations. We present businesses that represent components as discontinued operations when they meet the criteria for held for sale or are sold, and their disposal represents a strategic shift that has, or will have, a major effect on our operations and financial results. See Note 2 —Discontinued Operationsfor additional information on the upcoming sale.

As a result of reclassifying the lumber and newsprint operations to discontinued operations as discussed above, we operate in the following business segments: High Purity Cellulose, Paperboard, High-Yield Pulp and Corporate.

Note About Forward-Looking Statements

Certain statements in this Report regarding anticipated financial, business, legal or other outcomes including business and market conditions, outlook and other similar statements relating to Rayonier Advanced ~~Materials~~Materials’ (“the Company” ) future events, developments, or financial or operational performance or results, are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are identified by the use of words such as “may,” “will,” “should,” “expect,” “estimate,” “believe,” “intend,” “forecast,” “anticipate” “guidance” and other similar language. However, the absence of these or similar words or expressions does not mean a statement is not forward-looking. While we believe these forward-looking statements are reasonable when made, forward-looking statements are not guarantees of future performance or events and undue reliance should not be placed on these statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance these expectations will be attained, and it is possible actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. The following risk factors and those contained in Item 1A —Risk Factors, among others, could cause actual results or events to differ materially from the Company’s historical experience and those expressed in forward-looking statements made in this document.

Amounts contained in this Report may not always add due to rounding.

Our operations are subject to a number of risks and uncertainties including, but not limited to, those listed below. When considering an investment in our securities, you should carefully read and consider these risks, together with all other information in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 as filed with the SEC and our other filings and submissions to the SEC, which provide much more information and detail on the risks described below. If any of the events described in the following risk factors actually occur, our business, financial condition or operating results, as well as the market price of our securities, could be materially adversely affected. These risks and events include, without limitation:

~~Business~~

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Epidemics and ~~Operating~~Pandemic Risks

•We are subject to risks associated with epidemics and pandemics, including the COVID-19 pandemic and related impacts. The nature and extent of ongoing and future impacts of the pandemic are highly uncertain and unpredictable.

Macroeconomic and Industry Risks

•The businesses we operate are highly competitive and many of them are cyclical, which may result in fluctuations in pricing and volume that can adversely ~~impact~~affect our business, financial condition and results of operations.

•Changes in raw material and energy availability and prices could have a material adverse effect on our business, results of operations and financial condition..

•We are subject to risks associated with doing business outside of the United States.

•Currency fluctuations may have a negative impact on our business, financial condition and results of operations.

•Restrictions on trade through tariffs, countervailing and anti-dumping duties, quotas and other trade barriers, in the United States and internationally, could materially adversely affect our ability to access certain markets.

Business and Operating Risks

•Our ten largest customers ~~represented~~represent approximately 3331 percent of our ~~2019 sales,~~2020 revenue, and the loss of all or a substantial portion of our revenue from these large customers could have a material adverse effect on our business.

•A material disruption at one of our major manufacturing facilities could prevent us from meeting customer demand, reduce our sales and profitability, increase our cost of production and capital needs, or otherwise materially adversely affect our business, financial condition and results of operation.

•~~Changes in raw material and energy availability and prices could affect our business, financial condition and results of operations.~~

•The availability of, and prices for, wood fiber ~~could materially~~may have a material adverse impact on our business, results of operations and financial condition.

•~~We are subject to risks associated with doing business outside of the United States.~~

•Our operations require substantial capital.

•~~Currency fluctuations may have a negative impact on our business, financial condition and results of operations.~~

•Restrictions on trade through tariffs, countervailing and anti-dumping duties, quotas and other trade barriers, in the United States and internationally, especially with respect to China, Canada and as a result of “Brexit”, could adversely affect our ability to access certain markets and otherwise impact our results of operations.

•We depend on third parties for transportation services and increases in costs and the availability of transportation could materially adversely affect our business.

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•~~Our business is subject to extensive environmental laws, regulations and permits that may restrict or adversely affect our financial results and how we conduct business.~~

•~~The potential impacts of climate change and climate-related initiatives, remain uncertain at this time.~~

•Our failure to maintain satisfactory labor relations could have a material adverse effect on our business.

•We are dependent upon attracting and retaining key personnel, the loss of whom could materially adversely affect our business.

•Failure to develop new products or discover new applications for our existing products, or our inability to protect the intellectual property underlying such new products or applications, could have a material negative impact on our business.

•The risk of loss of the Company’s intellectual property and sensitive ~~business information,~~data, or disruption of its manufacturing operations, in each case due to cyberattacks or cybersecurity breaches, could materially adversely impact the Company.

Regulatory Risks

•Our business is subject to extensive environmental laws, regulations and permits that may materially restrict or adversely affect how we conduct business and our financial results.

•The potential longer-term impacts of climate related risks remain uncertain at this time.

•The Company considers and evaluates climate-related risks in three general categories; Regulatory, Transition to a low-carbon economy, and Physical risks related to climate-change.

Financial Risks

•We may need to make significant additional cash contributions to our retirement benefit plans if investment returns on pension assets are lower than expected or interest rates decline, and/or due to changes to regulatory, accounting and actuarial requirements.

•Public health crises such as epidemics or pandemics could have a material adverse effect on our financial condition, liquidity or results of operations - specifically, we are subject to risks associated with the COVID-19 pandemic and related impacts, which have had, and we expect will continue to have, a material adverse effect on our business, the nature and extent of which are highly uncertain and unpredictable.

~~Debt-Related Risks~~

•While we have entered into an amendment (the “Amendment”) to our Senior Secured Credit Facilities (as amended by the Amendment, the “Credit Agreement”), there can be no assurances that we will continue in full compliance with the amended covenants provided in the Credit Amendment.

•We have ~~significant~~ debt obligations that could materially adversely affect our business and our ability to meet our obligations.

•The phase-out of the London Inter Bank Office Rate (“LIBOR”) as an interest rate benchmark ~~could result~~ in ~~an increase to~~2023 may impact our borrowing costs.

•Challenges in the commercial and credit environments may materially adversely affect our future access to capital.

•We may need additional financing in the future to meet our capital needs or to make acquisitions, and such financing may not be available on favorable terms, if at all, and may be dilutive to existing stockholders.

~~Risks Related to the~~

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Company’s Common Stock and Certain Corporate Matters Risks

•Your percentage of ownership in the Company may be diluted in the future.

•Certain provisions in our amended and restated certificate of incorporation and bylaws, and of Delaware law, could prevent or delay an acquisition of the Company, which could decrease the price of our common stock.

Merger and Acquisition Risks

•Failure to consummate the closing of the sale of the lumber and newsprint facilities and related assets to GreenFirst as contemplated under the binding asset purchase agreement could negatively impact the Company’s future earnings volatility and ability to reduce its leverage and invest in its core business.

•Fifteen percent (15%) of the purchase price for the GreenFirst transaction is payable in the common shares of the capital of GreenFirst (to be held by the Company for a minimum of six (6) months following the transaction closing) and the Company’s ability to ultimately realize the benefit of this consideration is subject to market conditions and GreenFirst’s future performance.

Forward-looking statements are only as of the date they are made, and the Company undertakes no duty to update its forward-looking statements except as required by law. You are advised, however, to review any further disclosures we have made or may make in our filings and other submissions to the ~~SEC,~~U.S. Securities and Exchange Commission (the “SEC”), including those on Forms 10-Q, 10-K, 8-K and other reports. Details on each of the above risk factors are more specifically described in Item 1A - Risk Factors.

Note About Non-GAAP Financial Measures

A “non-GAAP financial measure” is generally defined as a numerical measure of a company’s historical or future performance that excludes or includes amounts, or is subject to adjustments, so as to be different from the most directly comparable measure calculated and presented in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). This Report contains certain non-GAAP financial measures, including Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), adjusted EBITDA, and adjusted free cash flows. These non-GAAP measures are reconciled to each of their respective most directly comparable GAAP financial measures in Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.

We believe these non-GAAP measures provide useful information to our Board of Directors, management and investors regarding certain trends relating to our financial condition and results of operations. Our management uses these non-GAAP measures to compare our performance to that of prior periods for trend analyses, purposes of determining management incentive compensation and budgeting, forecasting and planning purposes.

We do not consider non-GAAP measures an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is they may exclude significant expense and income items that are required by GAAP to be recognized in our consolidated financial statements. In addition, they reflect the exercise of management’s judgment about which expense and income items are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, reconciliations of the non-GAAP financial measures we use to

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their most directly comparable GAAP measures are provided. Non-GAAP financial measures should not be relied upon, in whole or part, in evaluating the financial condition, results of operations or future prospects of the Company.

Business

We are a global leader of cellulose-based technologies, ~~including~~which comprise a broad offering of high purity cellulose specialties, a natural polymer commonly ~~found~~used in the production of specialty chemicals and polymers for use in producing LCD displays, filters, fibers, performance additives for pharmaceutical, food ~~pharmaceuticals~~ and other industrial applications. ~~High purity~~Starting from a tree and building upon more than 90 years of experience in cellulose ~~specialties are a natural polymer commonly found in cell phone~~chemistry, we provide high quality high-purity cellulose pulp products that make up the essential building blocks for our customers’ products while providing exceptional service and ~~computer screens, filters and pharmaceuticals.~~value. In addition, we ~~manufacture products~~produce lumber, paperboard, newsprint and high-yield pulp for ~~lumber, paper and packaging markets which provide more diversified earnings streams.~~

use in consumer products. In ~~November 2019, we sold~~connection with the ~~Matane pulp mill to Sappi Limited for $175 million with net cash proceeds of $158 million after expenses and other adjustments. As of result~~announced sale of the ~~sale,~~lumber and newsprint assets (see below), expected to close on August 28, 2021, we ~~have reclassified~~will cease to manufacture lumber and newsprint products.

Recent developments

CEWS

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As previously disclosed, in January 2021, our Canadian subsidiaries applied for the ~~Matane mill’s prior year operating results as discontinued operations. Following~~Canada Emergency Wage Subsidy (“CEWS”) in the amount of CAD $25 million for periods between March 2020 and August 2020. Through June 26, 2021, we had received cash of CAD $6 million and subsequently has received the remaining CAD $19 million. All CEWS claims are subject to mandatory audit. We will recognize amounts from these claims in income at the time that there is sufficient evidence that we will not be required to repay such amounts.

Sale of lumber and newsprint assets

On April 12, 2021, we announced the sale of our lumber and newsprint assets located in Ontario and Québec Canada to GreenFirst. The closing of the ~~Matane mill,~~transaction, which is expected to occur on August 28, 2021, is subject to customary closing conditions, including receipt of regulatory approvals, the transfer of forestry licenses and the approval of the TSX Venture Exchange. See Note 2 —Discontinued Operations for additional information.

Final Settlement Reached in Dispute with IESO Relating to Investigation of the Kapuskasing Newsprint Facility

We had previously been engaged in litigation with the Market Assessment and Compliance Division (“MACD”) branch of the Independent Electricity System Operator (“IESO”) regarding their investigations into the Company's compliance with the published rules that govern the operation of the wholesale electricity market in Ontario, Canada. On April 19, 2021, we ~~operate in~~and the ~~following business segments: High Purity Cellulose, Forest Products, Paperboard~~IESO entered into Minutes of Settlement (“MOS”) pursuant to which the parties agreed to fully and ~~Pulp & Newsprint.~~finally settle all claims relating to their investigations. We consider this matter concluded (subject only to the parties’ obligations yet to be performed under the MOS). See Note 18 —Commitments and Contingencies for additional information.

~~Coronavirus~~Coronavirus-Update

Our businesses ~~have been~~were significantly impacted by the ~~novel~~ coronavirus ("COVID-19") ~~pandemic. However, due~~pandemic in 2020. While market demand and pricing for certain of our products began to recover towards the ~~role they play in producing critical raw materials for pharmaceutical, food, cleaning~~end of the year and continued to improve throughout the first half of 2021, our operations remain vulnerable to a reversal of these trends or other ~~products,~~continuing negative effects caused by COVID-19.

In our ~~manufacturing~~operating facilities inand work spaces, we continue to maintain protocols previously implemented to reduce the ~~U.S., Canada and France have been deemed “essential businesses” and have remained operating. In order to mitigate the impact~~potential spread of COVID-19 ~~on our financial results~~ and ~~operations, we have taken the following decisive actions:~~

•To ensure the safety of our employees and ~~the~~ continuity of ~~our operations, we have implemented exacting protocols to reduce the potential spread of COVID-19 in our operating facilities and work spaces.~~

•~~To control costs and minimize pandemic driven losses, we have curtailed operations to match production with market demand.~~

•To maximize cash flow and liquidity, we entered into an amendment of our Senior Secured Credit Facilities under which, among other changes, the lenders have agreed to relax the financial covenants through 2022 and provide additional liquidity by reducing the minimum availability we are required to maintain. See See ~~Note 7~~ — ~~Debt and Finance Leases~~ ~~andManagement’s Discussion and Anaylsis of Liquidity and Capital Resources~~ ~~for additional information.~~

Due to the financial impacts of COVID-19, we are actively monitoring the recoverability of the carrying value of our long-term asset compared to the business’s future estimated undiscounted future cash flows. During the three and six months ended June 27, 2020, we did not recognize any impairment charges related to long-lived assets held for use. However, our estimates of undiscounted cash flows are highly subjective and actual results may vary from the estimates due to the current uncertain market conditions and their impact on the projection of long-term financial performance. We will continue to evaluate the recoverability of these and other assets as necessary.operations.

Market Assessment

A full year outlook for each of our segments is difficult to provide due to the uncertainty of the magnitude and timing of economic recovery due to the COVID-19 pandemic and the risk of supply chain disruptions beyond our control. As such, we have determined to suspend our guidance.The market assessment represents our best current estimate of each business in this environment.

High Purity Cellulose

~~During~~Pricing levels for our commodity products increased significantly during the second quarter and we expect this upward trend to continue into the third quarter. Prices for cellulose specialties are in line with expectations for the full year.Cellulose specialties volumes are expected to be well above prior year due to strong demand while total segment volumes will decline slightly for the full year mainly due to the length of extended planned maintenance outages. Volumes for both cellulose specialties and commodity products are expected to increase significantly in the second half of 2021 from first half levels.

Key costs are difficult to predict. Prices for energy, wood and commodity chemicals as well as logistics costs, have continued to increase during the second quarter and are expected to escalate in the back half of the year. Further, logistic and shipping constraints may negatively impact operating and sales results through the end of the year.

With current market conditions, including strong demand for cellulose specialties products, specifically in construction, automotive and plastics end markets, and elevated pricing for commodity viscose and fluff products, we believe we are well positioned to maintain or improve cellulose specialties margins in 2022 in spite of inflationary pressures. We also remain committed to investing in our core business to reduce costs, improve reliability, optimize performance and provide new platforms for growth.

Paperboard

Paperboard prices continued to increase in the second quarter as ~~a direct result of the COVID-19 pandemic, we experienced a reduction~~expected, due to strong demand in ~~overall~~both commercial printing and packaging segments, helping offset increases in raw material costs. Paperboard prices are expected to increase further as demand for our ~~cellulose specialties~~ products ~~driven~~continues to strengthen, and additionally supported by ~~weakness in the automotive, industrial and construction end-markets, while demand for acetate tow, food and pharmaceutical end-markets remained relatively stable.We believe our diversified end-markets, and our customers’ focus on security of~~industry supply ~~provide greater earnings stability during times of uncertainty but do not eliminate the risk associated with the demand impact of COVID-19 on its end markets.The outlook for sales of cellulose specialties is highly dependent on the recovery of economic growth as the world emerges from the pandemic.For our commodity products, the pricing momentum of absorbent materials, primarily fluff pulp, experienced in the second quarter has dissipated and modest decreases have recently been experienced.Viscose pulp markets remain extremely weak as the U.S. tariffs on Chinese textiles combined with the global "stay at home" directives have significantly reduced demand for textiles and clothing.~~disruptions.

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High-Yield Pulp

~~Certain costs, specifically wood, energy~~ ~~and commodity chemical prices have declined from prior year levels.However, future input prices and availability of chemicals are difficult to predict~~High-yield pulp markets experienced additional price increases during the second quarter that we will recognize in the third quarter due to the ~~current unprecedented economic conditions.~~Wetypical sales lag. However, pulp market prices are ~~seeing increasing pressure on certain chemical and transportation costs.Logistics delays, especially as it relates~~forecasted to ~~ocean transportation, could result~~decrease later in the ~~variability~~year. Logistics constraints and higher costs may negatively impact operating results through the end of ~~revenue recognition.~~the year. ~~Operations at all~~

Growing RYAM’s BioFuture

Upon the completion of the sale of the lumber and newsprint assets, we will focus on and invest in leveraging our four high purity cellulose ~~mills~~plants to capitalize on the global demand for more sustainable products with our leading cellulose specialties offerings as alternatives for petroleum-based incumbents. Not only are ~~running at or near normal levels.~~these specialized assets capable of creating the world’s leading plant-based high purity cellulose, they are also ideally suited for generating green fuels, bioelectricity and other biomaterials such as lignins and tall oils. We ~~will continue~~have executed on several high return projects to ~~optimize our commodity products mix to maximize profitability~~enhance the value of these assets, including investments in green energy in Tartas, France, in TemSilk™ pulp, a critical input in the production of Lyocell, a more sustainable textile, and ~~if necessary, will curtail production to minimize impacts~~in Anomera, Inc., a company that manufactures carboxylated cellulose nanocrystals (CNC), a patented, biodegradable product for use in cosmetics and a wide variety of ~~reduced demand.~~

~~Forest Products~~

~~Early~~industrial applications. The Tartas green energy project is fully operational in the second quarter ~~stemming~~and we anticipate realizing $10 million in annualized benefits from this investment. We will also leverage our world-class R&D facilities to work with new and existing customers to develop natural-based solutions.

We will seek further opportunities to leverage our core knowledge of creating the remarkable from the ~~COVID-19 pandemic, lumber demand and prices declined rapidly causing producers~~renewable to ~~curtail approximately 30 percent (at peak) of North American lumber production capacity.Later~~drive incremental value in ~~the quarter, the demand for lumber improved significantly while North American production rates have been slower to restart, resulting in a supply and demand imbalance.As a result, lumber sales prices have surged.Repair and remodel activity is the main catalyst for this market resurgence with strong demand for stud lumber, resulting in a rare premium for stud products above random length lumber.~~U.S. housing starts in June 2020 were approximately 1.2 million units, seasonally adjusted, which is an improvement from lows in April of 0.9 million units, but still 25 percent below the pre-COVID-19 February 2020 seasonally adjusted levels.~~As a result of the improved pricing, we are currently operating~~ our ~~lumber assets near full capacity.~~

~~As announced in January by the U.S. Department of Commerce, we expect duties on softwood lumber imported into the U.S. to be reduced from 20 percent to 8 percent later in 2020 or early 2021.Since 2017, we have paid approximately $72 million in duties.~~

~~Paperboard~~

~~COVID-19 has had a muted impact on Paperboard sales and profitability has benefited from lower input costs offset by some sales mix decline.Paperboard for packaging and lottery markets have been generally resilient, while commercial printing has shown weakness.We expect stable sales volumes and to operate the paperboard assets at normal levels going forward.~~

~~Pulp & Newsprint~~

After significant improvements in high yield pulp demand and pricing at the beginning of the year, the weakness in the broader paper pulp market caused by the COVID-19 pandemic is now negatively impacting pricing of high yield pulp products.~~Overall input costs have remained stable and we expect to produce at normal levels for the near future.However, a further deterioration of markets could require modest downtime to control inventory levels.~~

~~Demand for newsprint products have declined approximately 23 percent since the beginning of the year resulting in reduced sales prices and volumes, while input costs have remained stable.In response, North American producers have announced production downtime, resulting in reduced newsprint production capacity of approximately 33 percent.We intend to manage our production based on demand to maximize profitability and optimize cash flows until the market stabilizes.~~

BioFuture.

Critical Accounting Policies and Use of Estimates

The preparation of financial statements requires us to make estimates, assumptions and judgments that affect our assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. We base these estimates and assumptions on historical data and trends, current fact patterns, expectations and other sources of information we believe are reasonable. Actual results may differ from these estimates.

For a full description of our critical accounting policies, see Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations in our ~~2019~~2020 Annual Report on Form 10-K. For recent accounting pronouncements see Item 1 of Part I, Financial Statements — Note 1 —Basis of Presentation and New Accounting Pronouncements for additional information.

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Results of Operations


Financial Information	Financial Information	Three Months Ended							%			Six Months Ended									%		Financial Information	Three Months Ended				%			Six Months Ended	%
(in millions, except percentages)	(in millions, except percentages)	June 27, 2020			June 29, 2019			Change	June 27, 2020			June 29, 2019			Change	(in millions, except percentages)	June 26, 2021			June 27, 2020				Change	June 26, 2021			June 27, 2020			Change
Net Sales	Net Sales	$	397		$	450		(12)%	$	807		$	891		(9)%	Net Sales	$	341		$	324			5%	$	660		$	649		2%
Cost of Sales	Cost of Sales	(377)			(432)				(776)			(866)				Cost of Sales	(319)			(301)					(617)			(618)
Gross Margin	Gross Margin	20			18			12%	31			26			19%	Gross Margin	22			23				(1)%	43			31			39%

Selling, general and administrative expenses	Selling, general and administrative expenses	(22)			(20)				(43)			(49)				Selling, general and administrative expenses	(18)			(20)					(34)			(39)
Duties		(6)			(7)				(12)			(12)

Foreign exchange gains (losses)	Foreign exchange gains (losses)	(4)			(2)				2			3				Foreign exchange gains (losses)	(2)			(5)					(3)			1
Other operating income (expense), net	Other operating income (expense), net	(4)			(4)				(5)			(11)				Other operating income (expense), net	(1)			(4)					(5)			(5)
Operating Income (Loss)	Operating Income (Loss)	(15)			(15)			1%	(27)			(43)			(37)%	Operating Income (Loss)	1			(6)				123%	1			(12)			108%
Interest expense	Interest expense	(16)			(14)				(31)			(28)				Interest expense	(16)			(14)					(32)			(27)
Interest income and other, net	Interest income and other, net	(1)			(1)				(1)			—				Interest income and other, net	(2)			(1)					(2)			(1)

Net periodic pension and OPEB income (expense), excluding service costs	Net periodic pension and OPEB income (expense), excluding service costs	—			1				1			2				Net periodic pension and OPEB income (expense), excluding service costs	—			—					1			—

Income (Loss) From Continuing Operations Before Income Taxes	Income (Loss) From Continuing Operations Before Income Taxes	(32)			(29)			8%	(58)			(69)			(16)%	Income (Loss) From Continuing Operations Before Income Taxes	(17)			(21)				19%	(32)			(40)			20%
Income tax benefit (expense)	Income tax benefit (expense)	19			10				21			21				Income tax benefit (expense)	25			17					25			19
Equity in income (loss) of equity method investment																Equity in income (loss) of equity method investment	—			$	—				$	(1)		$	—
Income (Loss) from Continuing Operations	Income (Loss) from Continuing Operations	$	(13)		$	(19)		(33)%	$	(38)		$	(47)		(19)%	Income (Loss) from Continuing Operations	$	8		$	(4)			300%	$	(8)		$	(21)		62%
Income (loss) from discontinued operations, net of taxes	Income (loss) from discontinued operations, net of taxes	—			4				1			10				Income (loss) from discontinued operations, net of taxes	114			(9)					103			(16)
Net Income (Loss)	Net Income (Loss)	$	(13)		$	(15)			$	(37)		$	(37)			Net Income (Loss)	$	122		$	(13)				$	95		$	(37)

Gross Margin %	Gross Margin %	5		%	4		%		4		%	3		%		Gross Margin %	7		%	7		%			6		%	5		%
Operating Margin %	Operating Margin %	(4)		%	(3)		%		(3)		%	(5)		%		Operating Margin %	—		%	(2)		%			—		%	(2)		%
Effective Tax Rate %	Effective Tax Rate %	59		%	34		%		35		%	31		%		Effective Tax Rate %	153		%	83		%			77		%	47		%

Net sales by segment were as ~~follows:~~follows:


		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
Net sales (in millions)	Net sales (in millions)	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019		Net sales (in millions)	June 26, 2021		June 27, 2020		June 26, 2021		June 27, 2020
High Purity Cellulose	High Purity Cellulose	$	255	$	269	$	505	$	555	High Purity Cellulose	$	255	$	255	$	504	$	505
Forest Products		70		81		153		156
Paperboard	Paperboard	43		50		94		97		Paperboard	57		43		105		94
Pulp & Newsprint		43		65		90		115
High-Yield Pulp										High-Yield Pulp	37		32		64		62

Eliminations	Eliminations	(15)		(14)		(34)		(32)		Eliminations	(8)		(6)		(13)		(12)
Total net sales	Total net sales	$	397	$	450	$	807	$	891	Total net sales	$	341	$	324	$	660	$	649

Net sales ~~decreased $53~~increased by $17 million and $11 million during the three and six months ended June ~~27, 2020, down approximately 12 percent~~26, 2021 when compared to the same prior ~~year period. Net sales declined by $85 million during the six months~~periods ended June 27, 2020, ~~when compared to the six months ended June 29, 2019. These decreases were~~respectively, primarily driven by ~~lower~~higher High Purity Cellulose commodity sales prices ~~for commodity products, high-yield pulp and newsprint, as well as lower~~along with stronger cellulose specialties sales volumes, in addition to increased Paperboard sales volumes and ~~lumber~~prices. The increases were partially offset by lower High Purity Cellulose commodity product sales volumes. For further discussion, see Operating Results by Segment.

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Operating income (loss) by segment was as follows:


		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
Operating income (loss) (in millions)	Operating income (loss) (in millions)	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019		Operating income (loss) (in millions)	June 26, 2021		June 27, 2020		June 26, 2021		June 27, 2020
High Purity Cellulose	High Purity Cellulose	$	7	$	7	$	2	$	4	High Purity Cellulose	$	11	$	7	$	17	$	2
Forest Products		(4)		(16)		(5)		(22)
Paperboard	Paperboard	6		1		11		(2)		Paperboard	2		6		8		11
Pulp & Newsprint		(6)		6		(11)		8
High-Yield Pulp										High-Yield Pulp	1		1		1		—
Corporate	Corporate	(19)		(12)		(24)		(31)		Corporate	(13)		(20)		(25)		(25)
Total operating income (loss)	Total operating income (loss)	$	(15)	$	(15)	$	(27)	$	(43)	Total operating income (loss)	$	1	$	(6)	$	1	$	(12)

The operating ~~loss~~results for the three and six month ~~period~~periods ended June ~~27, 2020 was $15 million, comparable to the same prior year period. For the six months ended June 27, 2020, the operating loss of $27 million~~26, 2021 improved by ~~$15~~$7 million and $13 million, respectively, when compared to the same prior year ~~period,~~periods ended June 27, 2020. The three months ended June 26, 2021 was primarily due to higher High Purity Cellulose commodity prices and Paperboard sales volumes, partially offset by lower commodity volumes. The improvements during the six months ended June 26, 2021 were primarily driven by higher High Purity Cellulose commodity prices and cellulose specialties sales prices, partly offset by lower ~~costs and higher~~commodity sales ~~volumes in certain segments. For further discussion, see Operating Results by Segment.~~volumes.

Non-operating Expenses

Interest expense increased $2 million and $5 million to $16 million ~~for~~and $32 million during the three and six months ended June ~~27, 2020~~26, 2021, respectively, when compared to the same prior year ~~period. Interest expense increased $3 million to $31 million for the six months ended June 27, 2020 compared to the same prior year period.~~periods. The increases were ~~due~~principally driven by the higher interest ~~rates as a result~~rate and additional amortization of ~~higher interest spreads on its amended Senior Secured Credit Facilities partially offset~~debt issuance costs related to the ~~slightly lower~~December 2020 refinancing of certain debt ~~levels.~~instruments. See Note 7 — Debt and Finance Leases for further information.

Income Tax Benefit (Expense)

The ~~second quarter and year to date June 27, 2020~~ effective tax rate ~~from continuing operations~~for the second quarter 2021 was a benefit of 59153 percent ~~and 35~~compared to a benefit of 83 percent ~~respectively.~~in the same quarter of 2020. The ~~2020~~ effective tax rate for the six months ended June 26, 2021 was a benefit ~~differs~~of 77 percent compared to a benefit of 47 percent for the comparable prior year period. The 2021 effective tax rates differ from the ~~federal~~ statutory rate of 21 percent primarily due to a tax benefit recognized by remeasuring the ~~release of certain valuation allowances related to nondeductible U.S. interest expense, benefits from the CARES Act, return to accrual adjustments, and~~Company’s Canadian deferred tax credits. These differences are partially offset by remaining nondeductible U.S. interest expense, taxable income generated from the 2020 credit agreement amendment, increases to uncertain tax position reserves, nondeductible executive compensation, and lower tax deductions on vested stock compensation.

~~The second quarter and year to date June 29, 2019 effective~~assets at a higher blended statutory tax rate ~~from continuing operations was a benefit of 34 percent and 31 percent, respectively.~~in Canada. The ~~effective~~statutory tax rate ~~differs from~~is higher as a result of changing the ~~federal statutory rate~~allocation of ~~21 percent primarily due to nondeductible interest expense in~~income between the ~~U.S., tax credits, excess tax deductions on vested stock compensation, U.S. Global Intangible Low-Taxed Income,~~Canadian provinces once the sale of the lumber and ~~different statutory tax rates of foreign operations.~~newsprint assets is completed. See Note 16 — Income Taxes for additional information.

Discontinued Operations

~~The Company has presented the operating results for its Matane~~Income from discontinued operations, ~~that was sold in November 2019 as discontinued operations~~net of taxes, for the three ~~and six~~ months ended June ~~29, 2019. Included in discontinued operations is allocated interest expense for debt that~~26, 2021 was ~~required~~$114 million compared to ~~be repaid upon completion~~a loss of ~~the sale. The three and six months ended June 27, 2019 also include legal and administrative costs to sell the operation. The Company had an after tax benefit of $1~~$9 million ~~as a result of the working capital adjustments as required by the sale agreement~~ for the ~~six months~~comparable prior period ended June 27, 2020. The improvement was driven by an increase in prices for lumber of 213 percent and higher volumes by 10 percent partially offset by higher operational and residual stumpage costs as well as the impact of Global Intangible Low Taxed Income (“GILTI”) on foreign earnings. The application of GILTI effectively results in double book taxation of the majority of the Company’s high Canadian earnings.

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Income from discontinued operations net of taxes, during the six months ended June 26, 2021 was $103 million compared to a loss of $16 million for the same prior year period ended June 27, 2020. The improvement was driven by an increase in prices for lumber of 166 percent and higher volumes by 3 percent partially offset by higher operational and residual stumpage costs as well as the impact of GILTI on foreign earnings.

We expect minimal cash taxes to be paid in 2021 or 2022 as a result of 2021 earnings associated with its discontinued operations.

Operating Results by Segment

High Purity Cellulose


		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
(in millions)	(in millions)	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019		(in millions)	June 26, 2021		June 27, 2020		June 26, 2021		June 27, 2020
Net Sales	Net Sales	$	255	$	269	$	505	$	555	Net Sales	$	255	$	255	$	504	$	505
Operating income (loss)	Operating income (loss)	$	7	$	7	$	2	$	4	Operating income (loss)	$	11	$	7	$	17	$	2
Average Sales Prices ($ per metric ton):	Average Sales Prices ($ per metric ton):									Average Sales Prices ($ per metric ton):
Cellulose Specialties		$	1,309	$	1,310	$	1,307	$	1,297
Commodity Products		$	620	$	792	$	606	$	822
High Purity Cellulose										High Purity Cellulose	$	1,128	$	966	$	1,086	$	965
Sales Volumes (thousands of metric tons):	Sales Volumes (thousands of metric tons):									Sales Volumes (thousands of metric tons):
Cellulose Specialties		123		146		246		295
Commodity Products		122		71		234		158
High Purity Cellulose										High Purity Cellulose	204		245		421		480

Changes in High Purity Cellulose net sales are as follows:

Three Months Ended Changes Attributable to:
Net Sales
(in millions)
June 29, 2019 Price Volume/Mix/Other June 27, 2020
Cellulose Specialties $ 191 $ — $ (30) $ 161
Commodity Products 56 (18) 37 75
Other sales (a) 22 — (3) 19
Total Net Sales $ 269 $ (18) $ 4 $ 255
(a) Other sales consist of electricity, resins, lignin and other by-products to third-parties.


Three Months Ended			Changes Attributable to:
Net Sales (in millions)	June 27, 2020		Price		Volume/Mix/Other		June 26, 2021



Total Net Sales (a)	$	255	$	14	$	(14)	$	255
(a) includes other sales consisting of electricity, lignin and other by-products to third-parties.

Total ~~net~~ sales for the three months ended June ~~27, 2020 declined $14 million, or 5~~26, 2021 were flat when compared to the same prior year quarter. Cellulose specialties sales volumes increased 6 percent ~~to $255 million. This decline was~~ driven by a 16 percent decrease in cellulose specialties volumes, as expected, due to our decision to enhance product margins by not pursuing lower margin business, a negative impact from the timing of sales as a result of ocean shipment delays as a result of COVID-19 and weakness in the automotive end markets. Commodity productimproved demand, while sales prices declined 22slightly during the three months ended June 26, 2021. Commodity product prices rose 37 percent whiles commodity product sales volumes decreased 40 percent due to ~~weaker markets as~~ a ~~result of COVID-19, as well as a higher~~more favorable mix of ~~lower priced absorbent materials products. This decline was partially offset by a 72 percent increase in commodity sales volumes primarily due to lower demand for~~ cellulose ~~specialties.~~specialties, logistics constraints and the extended planned maintenance outage at the Jesup, Georgia facility.

Six Months Ended Changes Attributable to:
Net Sales (in millions)
June 29, 2019 Price Volume/Mix/Other June 27, 2020
Cellulose Specialties $ 383 $ 2 $ (64) $ 321
Commodity Products 130 (45) 57 142
Other sales (a) 42 — (1) 41
Total Net Sales $ 555 $ (43) $ (8) $ 505
(a) Other sales consist of electricity, resins, lignin and other by-products to third-parties.


Six Months Ended			Changes Attributable to:
Net Sales (in millions)	June 27, 2020		Price		Volume/Mix/Other		June 26, 2021



Total Net Sales (a)	$	505	$	19	$	(20)	$	504
(a) includes other sales consisting of electricity, lignin and other by-products to third-parties.

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Total net sales for the six months ended June ~~27, 2020 declined $50 million, or 9 percent, to $505 million. The decline was driven by a 17 percent decrease in cellulose specialties volumes as well as a~~ 26, ~~percent decrease in commodity prices~~2021 were down slightly when compared to the same prior year period ~~partially offset~~at $504 million. Cellulose specialties volumes improved by ~~a 48~~6 percent ~~improvement in commodity product volumes~~ due to ~~lower~~increased demand, ~~for~~while sales prices declined slightly by 1 percent during the year to date ended June 26, 2021. Commodity product sales prices increased 25 percent during the first six months of 2021, however sales volumes decreased by 32 percent due to a more favorable mix of cellulose specialties, logistics constraints and ~~improved commodity production~~the extended planned maintenance outage at the ~~Temiscaming mill.~~Jesup, Georgia facility.

Changes in High Purity Cellulose operating income are as follows


Three Months Ended				Gross Margin Changes Attributable to (a):
(in millions)	June 27, 2020			Sales Price			Sales Volume/Mix/Other			Cost			SG&A and other			June 26, 2021
Operating income	$	7		$	14		$	(1)		$	(10)		$	1		$	11
Operating margin %	2.7		%	5.1		%	—		%	(3.9)		%	0.4		%	4.3		%
(a) Sales Volume computed based on contribution margin.

Operating results improved by $4 million during the three months ended June 26, 2021 to operating income of $11 million when compared to the same prior year quarter. Sales prices for the segment increased 17 percent during the current quarter driven by higher commodity prices. Compared to the prior year, sales volumes declined 17 percent during the current quarter driven by lower commodities volumes, shipping constraints and planned maintenance shutdowns, partially offset by higher cellulose specialties sales volumes. Additionally, costs increased during the second quarter of 2021 primarily due to the impact of inflation on key input costs and higher maintenance and logistic expenses.


Six Months Ended				Gross Margin Changes Attributable to (a):
(in millions)	June 27, 2020			Sales Price			Sales Volume/Mix/Other			Cost			SG&A and other			June 26, 2021
Operating income (loss)	$	2		$	19		$	(2)		$	(4)		$	2		$	17
Operating margin %	0.4		%	3.6		%	(0.2)		%	(0.8)		%	0.4		%	3.4		%
(a) Sales Volume computed based on contribution margin.

Operating results improved by $15 million during the six months ended June 26, 2021 to operating income of $17 million when compared to the same prior year period. Sales prices for the segment increased 13 percent during the year to date period driven by higher commodity prices from increased demand. Compared to the prior year, sales volumes for the segment were impacted by shipping constraints and planned maintenance outages. Volumes declined 12 percent during the current six-month period driven by lower commodities volumes, partially offset by higher cellulose specialties sales volumes. Additionally, costs increased during the year to date period ended June 26, 2021 primarily due to due to the impact of inflation on key input costs and higher maintenance and logistic expenses.

Paperboard


	Three Months Ended				Six Months Ended
(in millions)	June 26, 2021		June 27, 2020		June 26, 2021		June 27, 2020
Net Sales	$	57	$	43	$	105	$	94
Operating income	$	2	$	6	$	8	$	11
Average Sales Prices ($ per metric tons):
Paperboard	$	1,150	$	1,091	$	1,132	$	1,100
Sales Volumes (in thousands of metric tons):
Paperboard	49		40		92		85

Table of Contents

Changes in Paperboard net sales are as follows:

Three Months Ended Gross Margin Changes Attributable to (a):

(in millions)
June 29, 2019 Sales Price Sales Volume/Mix/Other Cost SG&A and other June 27, 2020
Operating income (loss) $ 7 $ (18) $ (8) $ 24 $ 2 $ 7
Operating margin % 2.6 % (7.0) % (3.1) % 9.4 % 0.8 % 2.7 %
(a) Sales Volume computed based on contribution margin.


Three Months Ended	June 27, 2020		Changes Attributable to:				June 26, 2021
Net Sales (in millions)	June 27, 2020		Price		Volume/Mix		June 26, 2021
Paperboard	$	43	$	3	$	11	$	57

Sales for the three months ended June 26, 2021 increased $14 million compared to the three months ended June 26, 2020. During the second quarter ended June 26, 2021, sales volumes increased 23 percent while sales prices were up 5 percent when compared to the same prior year period.


Six Months Ended	June 27, 2020		Changes Attributable to:				June 26, 2021
Net Sales (in millions)	June 27, 2020		Price		Volume/Mix		June 26, 2021
Paperboard	$	94	$	3	$	8	$	105

Sales for the six months ended June 26, 2021 increased $11 million as sales volumes and prices improved by 8 percent and 3 percent, respectively, when compared to the same prior year period. The increased volumes and prices were driven by improved market demand.

Changes in Paperboard operating income are as follows:


Three Months Ended				Gross Margin Changes Attributable to (a):
(in millions)	June 27, 2020			Sales Price			Sales Volume/Mix			Cost			SG&A and other			June 26, 2021
Operating income (loss)	$	6		$	3		$	5		$	(12)		$	—		$	2
Operating margin %	13.6		%	5.5		%	5.4		%	(21.1)		%	—		%	3.5		%
(a) Computed based on contribution margin.

Operating income for the three months ended June 27, 2020 was $7 million, which was consistent with the same prior year period. Lower commodity product sales prices were offset by a cost decrease of $24 million during the three months ended June 27, 2020. The favorable costs were largely driven by lower wood prices, primarily hardwood, and chemical prices, primarily caustic and ammonia.

Six Months Ended Gross Margin Changes Attributable to (a):

(in millions)
June 29, 2019 Sales Price Sales Volume/Mix/Other Cost SG&A and other June 27, 2020
Operating income (loss) $ 4 $ (43) $ (21) $ 60 $ 2 $ 2
Operating margin % 0.7 % (8.3) % (4.3) % 11.9 % 0.4 % 0.4 %
(a) Sales Volume computed based on contribution margin.

~~Operating income~~26, 2021 declined ~~by $2 million during the six months ended June 27, 2020 to $2~~$4 million when compared to the same prior year ~~period. The decrease was driven by lower cellulose specialties sales volumes~~period primarily due to higher raw material input costs and ~~commodity product sales prices,~~higher operational costs partially offset by ~~higher commodity product~~improvements in sales prices and volumes. ~~Costs decreased by $60 million during the six months ended June 27, 2020 due primarily to lower hardwood, chemical and energy prices as well as improved production at the Temiscaming mill.~~

~~Forest Products~~

Three Months Ended Six Months Ended
(in millions) June 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019
Net Sales $ 70 $ 81 $ 153 $ 156
Operating income (loss) (4) (16) $ (5) $ (22)
Average Sales Prices ($ per thousand board feet):
Lumber $ 391 $ 356 $ 399 $ 371
Sales Volumes (millions of board feet):
Lumber 142 180 290 328


Six Months Ended				Gross Margin Changes Attributable to (a):
(in millions)	June 27, 2020			Sales Price			Sales Volume/Mix			Cost			SG&A and other			June 26, 2021
Operating income (loss)	$	11		$	3		$	4		$	(10)		$	—		$	8
Operating margin %	11.7		%	2.7		%	2.7		%	(9.5)		%	—		%	7.6		%
(a) Computed based on contribution margin.

Table of Contents

~~Changes in Forest Products net sales are as follows:~~


~~Three Months Ended~~	~~June 29, 2019~~		~~Changes Attributable to:~~						~~June 27, 2020~~
~~Net Sales~~ ~~(in millions)~~					~~Price~~		~~Volume/Mix/Other~~
~~Lumber~~	$	64	$	5	$	~~(14)~~	$	55
~~Other sales (a)~~	17		—		~~(2)~~		15
~~Total Net Sales~~	$	81	$	5	$	~~(16)~~	$	70
~~(a) Other sales consist of sales of logs, wood chips, and other by-products to other segments and third-parties~~

~~Total net sales for~~Operating results declined by$3 million during the three months ended June ~~27, 2020 decreased $11 million, or 13 percent,~~26, 2021 to ~~$70~~operating income of $8 million. ~~Although average lumber sales prices improved by 10 percent, lumber sales volumes declined by 21 percent as a result of the planned mill closures~~The decrease was primarily due to ~~the COVID-19 pandemic. Other sales declined due to lower wood chip~~higher raw material input costs and ~~log sales to third-parties, partially offset by an increase in log sales to other segments.~~


~~Six Months Ended~~	~~June 29, 2019~~		~~Changes Attributable to:~~						~~June 27, 2020~~
~~Net Sales~~ ~~(in millions)~~					~~Price~~		~~Volume/Mix/Other~~
~~Lumber~~	$	~~122~~	$	8	$	~~(14)~~	$	~~116~~
~~Other sales (a)~~	35		—		2		37
~~Total Net Sales~~	$	~~156~~	$	8	$	~~(12)~~	$	~~153~~
~~(a) Other sales consist of sales of logs, wood chips, and other by-products to other segments and third-parties~~

Total net sales for the six months ended June 27, 2020 decreased $4 million, or 2 percent when compared to the same prior year period ended 2019. Lumber sales volumes fell 12 percent, as a result of the planned mill closures due to the COVID-19 pandemic, while sales prices improved by 8 percent due to improved demand.

~~Changes in Forest Products operating income are as follows:~~

Three Months Ended Gross Margin Changes Attributable to (a)

(in millions)
June 29, 2019 Sales Price Sales Volume/Mix/Other Cost SG&A and other June 27, 2020
Operating income (loss) $ (16) $ 5 $ (6) $ 12 $ 1 $ (4)
Operating margin % (19.8) % 7.0 % (11.5) % 17.1 % 1.4 % (5.8) %
(a) Sales Volume computed based on contribution margin.

~~Operating results improved by $13 million for the three months ended June 27, 2020 to an operating loss of $4 million. The favorable change was primarily driven by~~ higher ~~lumber sales prices and lower~~operational costs partially offset by ~~lower lumber~~improvements in sales prices and volumes. ~~Costs decreased due to lower wood and energy costs as well as lower fixed costs as a result of the planned downtime in response to lower demand early in the quarter associated with COVID-19.~~

Six Months Ended Gross Margin Changes Attributable to (a)

(in millions)
June 29, 2019 Sales Price Sales Volume/Mix/Other Cost SG&A and other June 27, 2020
Operating income (loss) $ (22) $ 8 $ (2) $ 11 $ — $ (5)
Operating margin % (14.1) % 5.6 % (2.0) % 7.2 % — % (3.3) %
(a) Sales Volume computed based on contribution margin.
High-Yield Pulp


	Three Months Ended				Six Months Ended
(in millions)	June 26, 2021		June 27, 2020		June 26, 2021		June 27, 2020
Net Sales	$	37	$	32	$	64	$	62
Operating income (loss)	$	1	$	1	$	1	$	—
Average Sales Prices ($ per metric ton):
High-Yield Pulp (a)	$	539	$	493	$	510	$	478
Sales Volumes (in metric tons):
High-Yield Pulp (a)	55		53		99		105
(a) Average sales prices and volumes for external sales only. For the three month period ended June 26, 2021 and June 27, 2020, the High-Yield Pulp segment sold 17,000 metric tons and 17,000 metric tons of high-yield pulp for $7 million and $6 million, respectively, to the Paperboard segment. For the six months ended June 26, 2021 and June 27, 2020, the High-Yield Pulp segment sold 34,000 metric tons and 33,000 metric tons of high-yield pulp for $14 million and $12 million, respectively, to the Paperboard segment.

Table of Contents

Operating results improved by $16 million during the six months ended June 27, 2020 to an operating loss of $5 million. The favorable results were driven by higher lumber prices, partially offset by a decline in volumes. Cost decreased due to lower wood and energy costs as well as lower fixed costs as a result of the planned downtime previously mentioned.

~~Paperboard~~

Three Months Ended Six Months Ended
(in millions) June 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019
Net Sales $ 43 $ 50 $ 94 $ 97
Operating income $ 6 $ 1 $ 11 $ (2)
Average Sales Prices ($ per metric tons) (a):
Paperboard $ 1,091 $ 1,117 $ 1,100 $ 1,109
Sales Volumes (in thousands of metric tons) (a):
Paperboard 40 45 85 88

Changes in ~~Paperboard~~High-Yield Pulp net sales are as follows:


Three Months Ended	Three Months Ended	June 29, 2019		Changes Attributable to:								June 27, 2020	Three Months Ended	June 27, 2020		Changes Attributable to:					June 26, 2021
Net Sales (in millions)	Net Sales (in millions)					Price		Volume/Mix									Price		Volume/Mix			June 26, 2021
Paperboard		$	50	$	(1)	$	(6)	$	43
High-Yield Pulp Net Sales										High-Yield Pulp Net Sales	$	32		$	4		$	1	$	37

~~Total net~~High-yield pulp sales ~~for~~prices and volumes increased 9 percent and 4 percent, respectively, during the three months ended June 27, 2020 decreased $7 million, or 14 percent, to $43 million. The decrease was primarily from a 2 percent decline in paperboard sales prices due to increased competition. In addition, sales volumes decreased 11 percent due to timing of revenue recognition.

Six Months Ended June 29, 2019 Changes Attributable to: June 27, 2020
Net Sales
(in millions)
Price Volume/Mix
Paperboard $ 97 $ (1) $ (3) $ 94

Total net sales for the six months ended June 27, 2020 decreased $4 million or 4 percent, to $94 million. Paperboard sales prices declined by approximately 1 percent, due to increased competition. Paperboard sales volumes declined by approximately 3 percent due to timing of revenue recognition.

~~Changes in Paperboard operating income are as follows:~~

Three Months Ended Gross Margin Changes Attributable to (a):

(in millions)
June 29, 2019 Sales Price Sales Volume/Mix Cost SG&A and other June 27, 2020
Operating income (loss) $ 1 $ (1) $ (2) $ 8 $ — $ 6
Operating margin % 2.0 % (2.0) % (4.7) % 18.6 % — % 13.9 %
(a) Sales Volume computed based on contribution margin.

Operating results improved by $6 million for the three months ended June 27, 2020 to operating income of $6 million. The increase was driven primarily by lower raw material pulp prices as well as favorable transportation costs.

~~Table of Contents~~

Six Months Ended Gross Margin Changes Attributable to (a):

(in millions)
June 29, 2019 Sales Price Sales Volume/Mix Cost SG&A and other June 27, 2020
Operating income (loss) $ (2) $ (1) $ (1) $ 15 $ — $ 11
Operating margin % (2.1) % (1.1) % (1.2) % 16.1 % — % 11.7 %
(a) Sales Volume computed based on contribution margin.

~~Operating results improved by$13 million during the six months ended June 27, 2020 to operating income of $11 million. The improvement was due primarily to lower raw material pulp prices as well as lower transportation costs.~~

~~Pulp and Newsprint~~

Three Months Ended Six Months Ended
(in millions) June 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019
Net Sales $ 43 $ 65 $ 90 $ 115
Operating income (loss) $ (6) $ 6 $ (11) $ 8
Average Sales Prices ($ per metric ton):
Pulp (a) $ 493 $ 539 $ 478 $ 555
Newsprint $ 412 $ 508 $ 415 $ 546
Sales Volumes (in metric tons):
Pulp (a) 53 64 105 100
Newsprint 27 47 67 85
Average sales prices and volumes for external sales only. For the three month period ended June 27, 2020 and June 29, 2019, the Pulp & Newsprint segment sold approximately 17,000 MT and 16,000 MT of high-yield pulp for $6 million and $6 million, respectively, to the Paperboard segment. For the six month period ended June 27, 2020 and June 29, 2019, the Pulp & Newsprint segment sold approximately 33,000 MT and 32,000 MT of high-yield pulp for $12 million and $13 million, respectively, to the Paperboard segment.

~~Changes in Pulp & Newsprint net sales are as follows:~~

Three Months Ended June 29, 2019 Changes Attributable to: June 27, 2020
Net Sales
(in millions)
Price Volume/Mix
Pulp $ 41 $ (3) $ (5) $ 32
Newsprint 24 (3) (10) 11
Total Net Sales $ 65 $ (6) $ (15) $ 43

Total net sales for the three months ended June 27, 2020 declined $22 million, or 34 percent, to $43 million. Pulp sales prices declined by 9 percent primarily from weaker markets while pulp sales volumes also decreased by 17 percent. Newsprint sales price declined 19 percent primarily due to lower demand as a result of the COVID-19 pandemic. Newsprint sales volumes decreased 43 percent primarily due26, 2021 when compared to the ~~production curtailments at the Kapuskasing mill to address the weak~~same prior year period. The increases were primarily driven by market demand ~~for newsprint.~~improvements.

Six Months Ended June 29, 2019 Changes Attributable to: June 27, 2020
Net Sales
(in millions)
Price Volume/Mix
Pulp $ 69 $ (10) $ 3 62
Newsprint 47 (9) (10) 28
Total Net Sales $ 116 $ (19) $ (7) $ 90

~~Table of Contents~~


Six Months Ended	June 27, 2020		Changes Attributable to:				June 26, 2021
Net Sales (in millions)	June 27, 2020		Price		Volume/Mix		June 26, 2021
High-Yield Pulp Net Sales	$	62	$	5	$	(3)	$	64

Total sales for the six months ended June ~~27, 2020~~26, 2021 were ~~down $26~~up $2 million or 224 percent when compared to the ~~same six months ended June 29, 2019. Pulp~~comparable period in 2020. High-yield pulp sales prices were ~~down 14~~up 7 percent ~~as a result of weaker market conditions,~~ while high-yield pulp sales volumes ~~rose 5~~decreased 6 percent ~~due to the absence of production issues that occurred~~ during the ~~first six months of 2019. Newsprint sales price and volume declined by 24 percent and 21 percent, respectively, due primarily to weaker market conditions caused by the COVID-19 pandemic.~~period ended June 26, 2021.

Changes in High-Yield Pulp ~~& Newsprint~~ operating income are as follows:


Three Months Ended	Three Months Ended							Gross Margin Changes Attributable to (a):																								Three Months Ended				Gross Margin Changes Attributable to (a):
(in millions)	(in millions)	June 29, 2019						Sales Price				Sales Volume/Mix				Cost				SG&A and other				June 27, 2020		(in millions)		June 27, 2020	Sales Price				Sales Volume/Mix			Cost			SG&A and other				June 26, 2021
Operating income (loss)	Operating income (loss)	$	6		$	(6)			$	(8)			$	1			$	1			$	(6)		Operating income (loss)	$	1			$	—			$	(4)		$	—		$	1
Operating margin %	Operating margin %	9.2		%	(9.2)		%		(18.2)		%		2.3		%		2.3		%		(13.6)		%	Operating margin %	3.1		%		10.8		%		(0.4)		%	(10.8)		%	—		%		2.7	%
(a) Sales Volume computed based on contribution margin.	(a) Sales Volume computed based on contribution margin.																																									(a) Sales Volume computed based on contribution margin.

Operating ~~income decreased $11 million~~results for the ~~three months~~second quarter ended June ~~27, 2020~~26, 2021 remained flat when compared to ~~an operating loss of $6 million. The decline was primarily driven by lower newsprint and~~the same prior year period. Higher high-yield pulp sales prices ~~and volumes. Costs decreased due to lower chemical prices, transportation costs, labor costs and maintenance costs partially~~were partly offset by ~~lower energy credits at the Kapuskasing mill.~~higher operational costs.


Six Months Ended	Six Months Ended							Gross Margin Changes Attributable to (a):																								Six Months Ended				Gross Margin Changes Attributable to (a):
(in millions)	(in millions)	June 29, 2019						Sales Price				Sales Volume/Mix				Cost				SG&A and other				June 27, 2020		(in millions)		June 27, 2020	Sales Price				Sales Volume/Mix			Cost			SG&A and other				June 26, 2021
Operating income (loss)	Operating income (loss)	$	8		$	(19)			$	(4)			$	3			$	1			$	(11)		Operating income (loss)	$	—			$	(1)			$	(3)		$	—		$	1
Operating margin %	Operating margin %	6.9		%	(18.2)		%		(5.3)		%		3.3		%		1.1		%		(12.2)		%	Operating margin %	—		%		7.5		%		(1.2)		%	(4.7)		%	—		%		1.6	%
(a) Sales Volume computed based on contribution margin.	(a) Sales Volume computed based on contribution margin.																																									(a) Sales Volume computed based on contribution margin.

Operating ~~income decreased $19 million during~~results for the six months ended June ~~27, 2020~~26, 2021 improved by $1 million when compared to ~~an operating loss of $11 million. The decline was primarily driven by lower~~the same prior year period. Higher high-yield pulp sales prices in both product lines as well a decrease in Newsprint volumes during the year to date period ended June 27, 2020. Costs decreased due to lower chemical prices, transportation costs, labor costs and maintenance costs partiallywere partly offset by lower ~~energy credits at the Kapuskasing mill.~~volumes impacted by logistics constraints and higher operational costs.

Corporate


		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
Operating Income (Loss) (in millions)	Operating Income (Loss) (in millions)	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019		Operating Income (Loss) (in millions)	June 26, 2021		June 27, 2020		June 26, 2021		June 27, 2020
Operating loss	Operating loss	$	(19)	$	(12)	$	(24)	$	(31)	Operating loss	$	(13)	$	(20)	$	(25)	$	(25)

The operating loss for the ~~three months~~three-month period ended June ~~27, 2020 increased~~26, 2021 improved by $7 million ~~primarily from higher incentive compensation expense and unfavorable foreign exchange impacts,~~to $13 million, when compared to the ~~second quarter of 2019.~~

same prior year period primarily due to favorable foreign currency impacts and lower variable compensation costs. The operating loss for the ~~year to date~~six-month period ended June ~~27, 2020 decreased $7~~26, 2021, remained unchanged at $25 million ~~due to favorable foreign exchange impacts, lower incentive compensation expense and lower overall spending~~ when compared to the ~~six months ended June 29, 2019.~~same prior year period as unfavorable foreign exchange impacts were offset by lower variable compensation costs.

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Liquidity and Capital Resources

Cash flows from operations, primarily driven by operating results, have historically been our primary source of liquidity and capital resources. However, our operating cash flows have ~~declined significantly over the last 18 months~~been volatile in recent years due to ~~the significant~~ decreases in ~~the~~ market prices for our commodity products primarily viscose, fluff, high-yield pulp, lumber, paperboard and newsprint, and the impacts of the COVID-19 pandemic, and, as result, we amended the financial covenants and certain other provisions of our Senior Secured Credit Facilities on June 5, 2020. The amendment of our Senior Secured Credit Facilities reduced the restrictions of our first lien secured gross leverage ratio and the interest coverage ratio tests, as well as ~~provided additional liquidity.~~the impact on demand driven by the COVID-19 pandemic. In response, we maintain a key focus on cash, managing working capital closely and optimizing the timing and level of our capital expenditures.

As of June ~~27, 2020,~~26, 2021, we ~~remain well within~~are in compliance with ~~our~~all financial ~~covenants under our amended Senior Secured Credit Facilities including a gross secured leverage ratio of 4.8 times covenant EBITDA compared to the covenant requirement of 6.2 times covenant EBITDA,~~ and an interest coverage ratio of 2.0 times covenant EBITDA compared to the required 1.6 times covenant EBITDA. The lenders under the Credit Facilities have a first priority security interest in substantially all present and future material U.S. and Canadian assets, excluding the assets of certain non-guarantor subsidiaries. The non-guarantor subsidiaries had assets of $1.7 billion, year-to-date revenue of $104 million, covenant EBITDA for the last twelve months of $11 million and liabilities of $1.5 billion as of June 27, 2020.other customary covenants. We ~~continue to~~ believe our future cash flows from operations and availability under our ~~revolving credit facility,~~ABL Credit Facility, as well as our ability to access the capital markets, if necessary or desirable, will be adequate to fund our operations and anticipated long-term funding requirements, including capital expenditures, defined benefit plan contributions, and repayment of debt ~~maturities, although no assurances can~~maturities.

The non-guarantor subsidiaries had assets of $758 million, year-to-date revenue of $112 million, covenant EBITDA for the last twelve months is a $41 million loss and liabilities of $277 million as of June 26, 2021.

On September 6, 2019, our Board of Directors suspended our quarterly common stock dividend. No dividends have been declared since. The declaration and payment of future common stock dividends, if any, will be ~~given. See Note 7 —~~ ~~Debt~~at the discretion of the Board of Directors and ~~Finance Leases~~will be dependent upon our financial condition, results of operations, capital requirements and other factors the Board of Directors deem relevant. In addition, our ~~consolidated financial statements for additional information.~~debt facilities place limitations on the declaration and payment of future dividends.

On January 29, 2018, ~~the~~our Board of Directors authorized a $100 million common stock share ~~buyback.~~buyback program. For the three and six months ended June 26, 2021 and June 27, 2020, we did not repurchase any common shares under this buyback ~~program and we~~program. We do not expect to utilize ~~this~~any further authorization in the near future.

A summary of liquidity and capital resources is shown below (in millions of dollars):


		June 27, 2020			December 31, 2019				June 26, 2021			December 31, 2020
Cash and cash equivalents (a)	Cash and cash equivalents (a)	$	49		$	64		Cash and cash equivalents (a)	$	215		$	94
Availability under the Revolving Credit Facility (b)		98			87
Availability under the ABL Credit Facility (b)								Availability under the ABL Credit Facility (b)	124			102
Total debt (c)	Total debt (c)	1,076			1,082			Total debt (c)	1,081			1,084
Stockholders’ equity	Stockholders’ equity	649			683			Stockholders’ equity	787			695
Total capitalization (total debt plus equity)	Total capitalization (total debt plus equity)	$	1,724		$	1,765		Total capitalization (total debt plus equity)	$	1,868		$	1,779
Debt to capital ratio	Debt to capital ratio	62		%	61		%	Debt to capital ratio	58		%	61		%

(a) Cash and cash equivalents consisted of cash, money market deposits and time deposits with original maturities of 90 days or less.

(b) ~~We are required to maintain $70~~Amounts available under the ABL Credit Facility fluctuate based on eligible accounts receivable and inventory levels. At June 26, 2021, we had $165 million of gross availability ~~on our revolving~~and net available borrowings of $124 million after taking into account standby letters of credit ~~facility, therefore we have reflected this amount as a reduction~~of approximately $41 million. Subsequent to the ~~revolver's stated availability.~~sale of the lumber and newsprint assets, we expect net availability under the ABL Credit Facility will decrease by $30 million to $40 million. In addition to the ~~$98 million available~~availability under the ~~revolving credit facility,~~ABL Credit Facility, we have ~~approximately $19~~$20 million available under an accounts receivable factoring line of credit in France. The amounts available under the revolving credit facility have been reduced by standby letters of credit of approximately $42 million and $33 million at June 27, 2020 and December 31, 2019, respectively.

~~During the six months ended June 27, 2020, we did not have any required principal repayments on the Term A-1 or Term A-2 Loan Facility.~~

Cash Flows (in millions of dollars)

The following table summarizes our cash flows from operating, investing and financing activities for the six months ended:


Cash Flows Provided by (Used for):	Cash Flows Provided by (Used for):	June 27, 2020		June 29, 2019		Cash Flows Provided by (Used for):	June 26, 2021		June 27, 2020
Operating activities		$	11	$	18
Investing activities		$	(23)	$	(60)
Operating activities-continuing operations						Operating activities-continuing operations	$	46	$	23
Operating activities-discontinued operations						Operating activities-discontinued operations	$	141	$	(12)
Investing activities-continuing operations						Investing activities-continuing operations	$	(51)	$	(19)
Investing activities-discontinued operations						Investing activities-discontinued operations	$	(6)	$	(3)
Financing activities	Financing activities	$	(4)	$	23	Financing activities	$	(8)	$	(4)

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Cash flows provided by operating activities ~~decreased $7~~of continuing operations improved $23 million during the six months ended June ~~27, 2020 when compared~~26, 2021 to ~~the same prior year period. Cash flows used for continuing operating activities increased $7~~$46 million when compared to the same prior year period due to favorable operating results driven from higher High Purity Cellulose prices in addition to $21 million of total income tax cash refunds received in the current period, partially offset by higher operational costs. Higher non-cash ~~expenses~~benefits primarily related to deferred tax expense ~~partially~~were partly offset by ~~higher cash flows used for~~favorable working capital ~~due to~~and other balance sheet changes. The six months ended June 27, 2020 included a $24 million increase into the U.S. income tax receivable ~~net of reserves, primarily~~ from the passage of the CARES Act in March of 2020.

Cash ~~flows~~ provided by operating activities of discontinued operations ~~decreased $14~~during the six months ended June 26, 2021 improved by $152 million ~~due~~when compared to the ~~sale of~~same prior year period primarily driven by the ~~Matane pulp mill~~increase in ~~November 2019.~~lumber sales prices. In addition, newsprint operations improved with sales price increases and lower operational costs during the six months ended June 26, 2021.

Cash flows used for investing activities ~~decreased $37~~of continuing operations increased $32 million during the ~~first~~ six months ended June ~~27, 2020~~26, 2021 when compared to the same prior year ~~period. Cash flow used by continuing investing activities decreased $36 million due~~period primarily from ~~lower planned~~increased capital spending. ~~Cash flows used~~The increase also includes a $4 million investment in ~~investing activities from discontinued operations decreased $1 million due to the sale of the Matane pulp mill.~~Anomera, Inc.

Cash ~~flows from financing activities decreased $27 million during the first six months ended June 27, 2020 to cash~~ used for investing activities of discontinued operations increased $2 million to $6 million during the six months ended June 26, 2021 compared to the same prior year period ended. The increase is driven by higher capital expenditures.

Cash flows used for financing activities increased by $4 million during the six months ended June 26, 2021 to $8 million when compared to the same prior year period. The ~~six months ended June 27, 2020 decrease was driven~~increase is primarily from lower borrowings partly offset by lower borrowings as a result of decreased cash used by operating and investing activities as well as the discontinuance of dividends for common stock, as a result of board of directors’ actions, and preferred stock, as a result of its conversion to common stock in August 2019. Repurchases of common stock decreasedrepayments, during the six months ended June ~~27, 2020 due~~26, 2021. Cash used to ~~lower tax payment requirements~~repurchase common stock in lieu of income taxes from the vesting of ~~common stock related to~~ incentive stock ~~grants.~~grants was $1 million higher during the current period. In addition, the six months ended June 27, 2020 ~~included~~had $3 million of higher debt issuance costs ~~for~~when compared to the ~~modification of terms on the Senior Secured Credit Facilities.~~current period. See Note 7 — Debt and Finance Leases and Note 12 — Stockholders' Equity, to our consolidated financial statements for additional information.

Performance and Liquidity Indicators

The discussion below is presented to enhance the reader’s understanding of our operating performance, liquidity, ability to generate cash and satisfy rating agency and creditor requirements. This information includes the following measures of financial results: EBITDA, adjusted EBITDA and adjusted free cash flows. These measures are not defined by U.S. Generally Accepted Accounting Principles (“GAAP”) and the discussion of EBITDA, adjusted EBITDA and adjusted free cash flows is not intended to conflict with or change any of the GAAP disclosures described above. ~~Management~~Our management uses these non-GAAP measures to compare our performance to that of prior periods for trend analyses, purposes of determining management incentive compensation and budgeting, forecasting and planning purposes. Our management considers these measures, in addition to operating income, to be important to estimate the enterprise and stockholder values of the Company, and for making strategic and operating decisions. In addition, analysts, investors and creditors use these measures when analyzing our operating performance, financial condition and cash generating ability. ~~Management~~Our management uses EBITDA and adjusted EBITDA as a performance ~~measure~~measures and adjusted free cash flows as a liquidity measure. See ~~Item 2 —~~ ~~Note~~“Note about Non-GAAP Financial ~~Measures~~Measures” on page 21 for limitations associated with non-GAAP measures.

EBITDA is defined by SEC rules as earnings before interest, taxes, depreciation and amortization. EBITDA is not necessarily indicative of results that may be generated in future periods.

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Below is a reconciliation of Income (Loss) from Continuing Operations to EBITDA ~~and Adjusted EBITDA~~from continuing operations by segment (in millions of dollars):

Three Months Ended: Forest Products Paperboard Pulp & Newsprint High Purity Cellulose Corporate & Other Total
June 27, 2020
Income (loss) from continuing operations $ (4) $ 6 $ (5) $ 5 $ (16) $ (13)
Depreciation and amortization 2 4 1 26 2 35
Interest expense, net — — — — 16 16
Income tax expense (benefit) — — — — (19) (19)
EBITDA $ (2) $ 10 $ (4) $ 31 $ (17) $ 19
June 29, 2019
Income (loss) from continuing operations $ (16) $ 1 $ 7 $ 6 $ (17) $ (19)
Depreciation and amortization 2 4 1 28 — 35
Interest expense, net — — — — 14 14
Income tax expense (benefit) — — — — (10) (10)
EBITDA $ (14) $ 5 $ 8 $ 34 $ (13) $ 20
Non-recurring expense (a) — — — — 1 1
Adjusted EBITDA $ (14) $ 5 $ 8 $ 34 $ (12) $ 21
Six Months Ended Forest Products Paperboard Pulp & Newsprint High Purity Cellulose Corporate & Other Total
June 27, 2020
Income (loss) from continuing operations $ (5) $ 11 $ (10) $ — $ (35) $ (38)
Depreciation and amortization 5 8 2 57 2 73
Interest expense, net — — — — 31 31
Income tax expense (benefit) — — — — (21) (21)
EBITDA $ — $ 19 $ (8) $ 57 $ (22) $ 46
June 29, 2019
Income (loss) from continuing operations $ (22) $ (1) $ 11 $ 2 $ (38) $ (47)
Depreciation and amortization 4 8 2 57 — 71
Interest expense, net — — — — 28 28
Income tax expense (benefit) — — — — (21) (21)
EBITDA $ (18) $ 7 $ 13 $ 59 $ (31) $ 30
Non-recurring expense (a) — — — — 1 1
Adjusted EBITDA $ (18) $ 7 $ 13 59 (30) $ 31

~~(a) Non-recurring expenses are related to the Company’s review of its commodity asset portfolio.~~


Three Months Ended:	High Purity Cellulose		Paperboard		High-Yield Pulp		Corporate & Other		Total
June 26, 2021
Income (loss) from continuing operations	$	11	$	3	$	1	$	(7)	$	8
Depreciation and amortization	27		4		1		1		33
Interest expense, net	—		—		—		16		16
Income tax expense (benefit)	—		—		—		(25)		(25)
EBITDA from continuing operations	$	38	$	6	$	2	$	(15)	$	32
Pension settlement (gain) loss	—		—		—		1		1




Adjusted EBITDA from continuing operations	$	38	$	6	$	2	$	(14)	$	33

June 27, 2020
Income (loss) from continuing operations	$	5	$	6	$	1	$	(16)	$	(4)
Depreciation and amortization	26		4		1		1		32
Interest expense, net	—		—		—		14		14
Income tax expense (benefit)	—		—		—		(17)		(17)
EBITDA from continuing operations	$	31	$	10	$	2	$	(18)	$	25





Six Months Ended:	High Purity Cellulose		Paperboard		High-Yield Pulp		Corporate & Other		Total
June 26, 2021

Income (loss) from continuing operations	$	18	$	9	$	1	$	(36)	$	(8)
Depreciation and amortization	55		8		1		2		66
Interest expense, net	—		—		—		32		32
Income tax expense (benefit)	—		—		—		(25)		(25)
EBITDA form continuing operations	$	73	$	17	$	2	$	(27)	$	65
Pension settlement (gain) loss	—		—		—		1		1



Adjusted EBITDA from continuing operations	$	73	$	17	$	2	$	(26)	$	66

June 27, 2020
Income (loss) from continuing operations	$	—	$	11	$	—	$	(32)	$	(21)
Depreciation and amortization	57		8		1		1		67
Interest expense, net	—		—		—		27		27
Income tax expense (benefit)	—		—		—		(19)		(19)
EBITDA from continuing operations	$	57	$	19	$	1	$	(23)	$	54

EBITDA from continuing operations for the three and six months ended June ~~27, 2020 decreased slightly~~26, 2021 improved by $8 million and $12 million, respectively, when compared to the quarter ended June ~~29, 2019~~27, 2020, primarily from favorable operating results driven by higher ~~costs within the corporate segment. EBITDA for the six months ended June 27, 2020 increased primarily due to improved operating income, primarily from efforts to lower costs in 2020.~~High Purity Cellulose prices, partially offset by higher operational costs. For the full discussion of changes to operating income, see Management’s Discussion of Results of Operations.

~~Table of Contents~~

~~We define adjusted~~Adjusted free cash flows is defined as cash provided by ~~(used for)~~ operating activities ~~from~~of continuing operations adjusted for capital expenditures, net of proceeds from sale of assets, excluding strategic ~~capital.~~capital expenditures. Adjusted free cash flows, as defined by the Company, is a non-GAAP measure of cash generated during a period which is available for ~~dividend distribution,~~ debt reduction, strategic

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capital expenditures and acquisitions and repurchase of ~~our~~the Company’s common stock. Adjusted free cash flows is not necessarily indicative of the adjusted free cash flows that may be generated in future periods.

Below is a reconciliation of cash flows from operations of continuing operations to adjusted free cash flows of continuing operations for the respective periods (in millions of dollars):


		Six Months Ended							Six Months Ended
Cash Flows from Operations to Adjusted Free Cash Flows Reconciliation	Cash Flows from Operations to Adjusted Free Cash Flows Reconciliation	June 27, 2020		June 29, 2019		Cash Flows from Operations to Adjusted Free Cash Flows Reconciliation	June 26, 2021		June 27, 2020
Cash provided by (used for) operating activities - continuing operations	Cash provided by (used for) operating activities - continuing operations	$	11	$	4	Cash provided by (used for) operating activities - continuing operations	$	46	$	23
Capital expenditures (a)	Capital expenditures (a)	(17)		(50)		Capital expenditures (a)	(43)		(15)
Adjusted Free Cash Flows	Adjusted Free Cash Flows	$	(7)	$	(46)	Adjusted Free Cash Flows	$	3	$	8

(a) Capital expenditures exclude strategic capital expenditures which are deemed discretionary by management. Strategic expenditures for the first six months of ~~2020~~2021 were approximately $5$4 million. Strategic capital expenditures for the same period of ~~2019~~2020 were approximately $9$4 million.

Adjusted free cash flows ~~improved~~of continuing operations declined primarily due to ~~lower~~higher capital ~~expenditure requirements and a decrease in cash used for operating activities.~~expenditures. For the full discussion of operating cash flows, see Management’s Discussion and Analysis of Cash Flows.

Contractual Financial Obligations and Off-Balance Sheet Arrangements

We have no material changes outside the ordinary course of business to the Contractual Financial Obligations table as presented in Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations in our ~~2019~~2020 Annual Report on Form 10-K.

See Note 18 — Commitments and Contingencies for details on our letters of credit and surety bonds as of June ~~27, 2020.~~26, 2021.


Item 3.			Quantitative and Qualitative Disclosures About Market Risk

Market and Other Economic Risks

We are exposed to various market risks, primarily changes in interest rates, currency and commodity prices. Our objective is to minimize the economic impact of these market risks. We may use derivatives in accordance with policies and procedures approved by the Audit Committee of our Board of Directors. Derivatives are managed by a senior executive committee whose responsibilities include initiating, managing and monitoring resulting exposures. See Note 9 — Derivative Instruments for additional information.

We manage our foreign currency exposures by balancing certain assets and liabilities denominated in foreign currencies. We may also use foreign currency forward contracts to manage these exposures. The principal objective of such contracts is to minimize the potential volatility and financial impact of changes in foreign currency exchange rates. We do not utilize financial instruments for trading or other speculative purposes.

The prices, sales volumes and margins of the commodity products of our High Purity Cellulose segment and all the products of the ~~Forest Products,~~High-Yield Pulp ~~and Paper segments~~segment have historically been cyclically affected by economic and market shifts, fluctuations in capacity, and changes in foreign currency exchange rates. In general, these products are commodities that are widely available from other producers; because these products have few distinguishing qualities from producer to producer, competition is based primarily on price, which is determined by supply relative to demand. The overall levels of demand for the products we manufacture, and consequently our sales and profitability, reflect fluctuations in end user demand. Our cellulose specialties product prices are impacted by market supply and demand, raw material and processing costs, changes in global currencies and other factors. ~~They~~While these prices are not directly correlated to commodity dissolving wood pulp and paper pulp ~~prices.~~prices, changes in commodity dissolving wood pulp and paper pulp prices may impact competitors' actions which can lead to an impact in prices for cellulose specialties products. In addition, ~~a majority~~approximately half of our cellulose specialties ~~products~~contracted volumes are under multi-year contracts that expire between 2021 and 2023.

As of June ~~27, 2020,~~26, 2021, we had ~~$499~~$4 million ~~principal amount~~of variable rate debt which is subject to interest rate risk. At this borrowing level, a hypothetical one-percentage point increase/decrease in interest rates would result in ~~a corresponding~~an immaterial increase/decrease ~~of approximately $5 million~~ in interest payments and expense over a ~~12 month~~12-month period. ~~Our primary interest rate exposure on variable rate debt results from changes in the London interbank offered rate (“LIBOR”).~~

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The fair market value of our long-term fixed interest rate debt is also subject to interest rate risk. However, we intend to hold most of our debt until maturity. The estimated fair value of our fixed-rate debt at June ~~27, 2020~~26, 2021 was ~~$386~~$1,093 million compared to the ~~$582~~$1,075 million carrying value of principal amount. We use quoted market prices to estimate the fair value of our fixed-rate debt. Generally, the fair market value of fixed-rate debt will increase as interest rates fall and decrease as interest rates rise.

We may periodically enter into commodity forward contracts to fix some of our energy costs that are subject to price volatility caused by weather, supply conditions, political and economic variables and other unpredictable factors. Such forward contracts partially mitigate the risk of changes to our gross margins resulting from an increase or decrease in these costs. Forward contracts which are derivative instruments are reported in the consolidated balance sheets at their fair values, unless they qualify for the normal purchase normal sale ("NPNS") exception and such exception has been elected. If the NPNS exception is elected, the fair values of such contracts are not recognized on the ~~consolidated~~ balance ~~sheets.~~sheet.


Item 4.			Controls and Procedures

Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining adequate disclosure controls and procedures. Disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)), are designed with the objective of ensuring that information required to be disclosed in reports filed under the Exchange Act, such as this quarterly report on Form 10-Q, is (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Because of the inherent limitations in all control systems, no control evaluation can provide absolute assurance that all control exceptions and instances of fraud have been prevented or detected on a timely basis. Even systems determined to be effective can provide only reasonable assurance their objectives are achieved.

Based on an evaluation of our disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q, our management, including the Chief Executive Officer and Chief Financial Officer, concluded the design and operation of the disclosure controls and procedures were effective as of June ~~27, 2020.~~26, 2021.

During the quarter ended June ~~27, 2020,~~26, 2021, based upon the evaluation required by paragraph (d) of SEC Rule 13a-15, there were no changes in our internal control over financial reporting that would materially affect or are reasonably likely to materially affect our internal control over financial reporting.

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Part II.			Other Information


Item 1.			Legal Proceedings

The Company is engaged in various legal and regulatory actions and proceedings, and has been named as a defendant in various lawsuits and claims arising in the ordinary course of its business. While the Company has procured reasonable and customary insurance covering risks normally occurring in connection with its businesses, the Company has in certain cases retained some risk through the operation of self-insurance, primarily in the areas of workers’ compensation, property insurance, business interruption and general liability. While there can be no assurance, the ultimate outcome of these actions, either individually or in the aggregate, is not expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows, except as may be noted below.

~~The Company’s statements set forth~~Final Settlement Reached in ~~the Legal Proceedings section (Item 3) of its Annual Report on SEC Form 10-K for the year ended December 31, 2019 (filed March 2, 2020) remain applicable, subject~~Dispute with IESO Relating to ~~the Jesup Plant Permit case conclusion disclosed in Part II, Item 1 of the Quarterly Report on Form 10-Q for the quarter ended March 28, 2020 (filed on May 7, 2020) and the following update:~~

~~IESO~~ Investigation of the Kapuskasing Newsprint Facility

~~Since~~From the period from 2014 to early 2021, the Market Assessment and Compliance Division (“MACD”) branch of the Independent Electricity System Operator (“IESO”), the governmental agency responsible for operating the wholesale electricity market and directing the operation of the bulk electrical system in the province of Ontario, Canada, ~~has~~had been engaged in reviewing the Company's compliance with the published rules that govern the operation of the wholesale electricity market in Ontario, Canada. ~~MACD has been specifically reviewing issues relating to~~The inquiry was focused primarily on payments made by IESO to the ~~Company’s facility in Kapuskasing, Ontario. The inquiry has focused primarily on payments made by IESO~~Company between 2010 and 2019 under market rules in connection with multiple planned, extended and unplanned forced outages that caused extensive downtime, in ~~respect~~full or in part, of ~~parts or~~ the ~~entire~~Company’s Kapuskasing, Ontario newsprint facility.

In May 2020, MACD finalized two of its four investigations into the Company’s electricity management practices at its Kapuskasing newsprint facility and issued orders ~~claiming~~asserting penalties of CAD $25 ~~million in connection therewith were issued by the IESO. More particularly, the~~million. These orders ~~would require~~called for the Company to pay penalties of CAD $3 million immediately and CAD $12 million over a 10-year period, with the remaining CAD $10 million to be deferred and ultimately forgiven assuming the Company otherwise complied with the orders’ remaining ~~terms of the orders.~~terms. The Company, ~~believes~~which maintained it ~~has~~had complied in all material respects with the published rules, ~~and is~~ vigorously ~~contesting~~contested IESO’s orders, including through the ~~Company’s June 2, 2020~~ filing of judicial review proceedings with the divisional Court (Superior Court of Justice) of Ontario seeking invalidation of the orders. ~~The~~At the time these orders were issued, the remaining two investigations remained open, subjecting the Company ~~does not believe~~to the ~~ultimate outcome~~risk that MACD may in the future issue additional orders upon finalization of these additional investigations.

On April 19, 2021, the Company and IESO entered into Minutes of Settlement (“MOS”) pursuant to which the parties agreed to fully and finally settle all claims relating to all four of the investigations (whether completed or not) and related orders, the judicial review proceedings and underlying disputes. As part of the settlement, the Company agreed to a fixed obligation to pay a sum of CAD $12 million over a period of 5 years comprised of a CAD $4.5 million up-front payment and a CAD $7.5 payment to be spread (on a front-weighted basis) over the next 5 anniversaries of the MOS, without interest. In addition to the foregoing, the MOS provides that a “suspended” sum of CAD $10.4 million would become due and payable in the event the Company fails to comply with any of the terms and conditions of the MOS or commits an event of default, as defined under the applicable market rules, unless such breach or event of default is remedied on a timely basis. This contingent “suspended” sum decreases annually as the scheduled fixed, or non-contingent, payments are made under the MOS. Assuming no uncured event of default or breach occurs during the repayment period, upon full payment of the CAD $12 million, the entire "suspended" sum shall be extinguished and RYAM shall be released from any payment obligation with respect thereto.

Given the parties’ finalization of and entry into the MOS, the Company considers this ~~dispute will~~matter concluded (subject only to the parties’ obligations yet to be ~~material to its business or financial condition, although no assurances can be given.~~performed under the MOS).


Item 1A.			Risk Factors

~~The~~

In addition to the risk factors previously disclosed in our 2020 Annual Report on Form 10-K, the following is intended to restate and supplement the Risk Factor entitled “Public health crises such as epidemics or pandemics, including the recent COVID-19 outbreak, could have a material adverse effect on our financial condition, liquidity or results of operations,” which was incorporated in and a part of the Company’s 2019 Form 10-K:risk factors are hereby added:

~~We are subject~~Merger and Acquisition Risks

•Failure to ~~risks associated with~~consummate the ~~COVID-19 pandemic~~closing of the sale of the lumber and newsprint facilities and related ~~impacts, which have had,~~assets to GreenFirst as contemplated under the binding asset purchase agreement could negatively impact the Company’s future earnings volatility and ~~we expect will continue~~ability to ~~have, a material adverse effect on our~~reduce its leverage and invest in its core business. ~~The nature and extent of future impacts are highly uncertain and unpredictable.~~

Our global operations expose us to risks associated with public health crises, including epidemics and pandemics, such as the COVID-19 pandemic which continues to generate significant volatility, uncertainty and economic disruption across the globe including in many markets in which we do business. COVID-19 has had, and we expect will continue to have, a materially adverse impact on our business and financial condition, including as a result of impacts associated with preventive and precautionary measures that we, other businesses, governments and individual consumers have taken and are continuing to take. These impacts could be magnified if the pandemic severity or duration persists or exacerbates over an extended period of time. While the full extent of the COVID-19 pandemic’s ongoing and future impacts on our business cannot currently be predicted with certainty, we continue to promote the health and safety of our employees and to closely monitor the pandemic's impacts on our liquidity, capital markets, reliability, customers, suppliers, and the macroeconomic conditions relevant to our business, including general economic uncertainty, unemployment rates and recessionary pressures.

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~~Specific risks associated with COVID-19 include, but are not limited to, the following:~~

•~~We have experienced, and expect to continue to experience, significant and unpredictable reductions and other fluctuations~~Fifteen percent (15%) of the purchase price for the GreenFirst transaction is payable in ~~demand for certain~~the common shares of ~~our products due to pandemic-driven factors such as end-market weakness and customer security-of-supply concerns.~~

•~~A significant number~~the capital of ~~our suppliers, vendors and other global supply chain partners have been adversely affected~~GreenFirst (to be held by the ~~COVID-19 pandemic,~~Company for a minimum of six (6) months following transaction closing), and ~~these impacts have impaired and could continue to impair our~~the Company’s ability to ~~timely~~ultimately realize the benefit of this consideration is subject to market conditions and ~~efficiently move our products through the various steps in the global supply chain process to our end customers.~~

•To the extent our operational, management or other personnel are impacted in significant numbers by COVID-19 and are not available to perform their professional duties, we could experience delays in, or the suspension of, our operations and other functions.

•The ongoing adverse impacts of COVID-19 on the global economy and capital markets worldwide may, among other consequences, restrict our access to capital, increase financing costs, and/or adversely affect our liquidity and perceptions of our creditworthiness.

•To the extent that COVID-19 continues to adversely affect our business, financial condition or results of operations, it may also heighten other risks described in the “Risk Factors” section in our 2019 Annual Report.

GreenFirst’s future performance.


Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table provides information regarding our purchases of Rayonier Advanced Materials common stock during the quarter ended June ~~27, 2020:~~26, 2021:

Period Total Number of Shares Purchased (b) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (a)
March 29 to May 2 — $ — — $ 60,294,000
May 3 to May 30 5,603 $ 1.85 — $ 60,294,000
May 31 to June 27 — $ — — $ 60,294,000
Total 5,603 —


Period	Total Number of Shares Purchased (b)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (a)
March 28 to April 1	—	$	—	—	$	60,294,000
April 2 to May 29	—	$	—	—	$	60,294,000
May 30 to June 26	—	$	—	—	$	60,294,000
Total	—			—

(a) As of June ~~27, 2020,~~26, 2021, approximately $60 million of share repurchase authorization remains under the authorization declared by the Board of Directors on January 29, 2018.

(b) Repurchased to satisfy the tax withholding requirements related to the issuance of stock under the Rayonier Advanced Materials Incentive Stock Plan.

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Item 6.			Exhibits


3.1	Amended and Restated Certificate of Incorporation of Rayonier Advanced Materials Inc.	Incorporated herein by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on June 30, 2014
3.2	Certificate of Designations of 8.00% Series A Mandatory Convertible Preferred Stock of Rayonier Advanced Materials Inc., filed with the Secretary of State of the State of Delaware and effective August 10, 2016	Incorporated herein by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on August 10, 2016
3.33.3	Amended and Restated Bylaws of Rayonier Advanced Materials Inc	Incorporated herein by reference to Exhibit 3.2 to the Registrant’s Form 8-K filed on June 30, 2014
10.1	~~Second Amendment to Amended and Restated Credit Agreement, dated as~~ ~~of June 5, 2020, among~~ Rayonier Advanced Materials Inc.~~, as Holdings,~~ 2021 Incentive Stock Plan*	Incorporated herein by reference to Appendix B to the Registrant’s Proxy Statement filed on April 2, 2021
~~Rayonier A.M. Products Inc. and Rayonier Performance Fibers, LLC, as~~10.2	~~Borrowers, certain subsidiaries~~Description of Rayonier Advanced Materials Inc. ~~party~~ ~~thereto, the lenders and L/C issuers party thereto and Bank of America,~~ ~~N.A., as Administrative Agent.~~2021 Performance Share Award Program*#	~~Incorporated herein by reference to~~ ~~Exhibit 10.1 to the Registrant’s~~ ~~Form 8-K filed on June 8, 2020~~ Filed herewith
31.1	Chief Executive Officer’s Certification Pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
31.2	Chief Financial Officer’s Certification Pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
32	Certification of Periodic Financial Reports Under Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith
101	The following financial information from our Quarterly Report on Form 10-Q for the three and six months ended June ~~27, 2020~~26, 2021 formatted in Extensible Business Reporting Language (“XBRL”), includes: (i) the Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the Three and Six Months Ended June ~~27, 2020~~26, 2021 and June ~~29, 2019;~~27, 2020; (ii) the Condensed Consolidated Balance Sheets as of June ~~27, 2020~~26, 2021 and December 31, ~~2019;~~2020; (iii) the Condensed Consolidated Statements of Cash Flows for the Six Months Ended June ~~27, 2020~~26, 2021 and June ~~29, 2019;~~27, 2020; and (iv) the Notes to Condensed Consolidated Financial Statements	Filed herewith
104	Cover Page Interactive Data File - formatted as Inline XBRL and contained in Exhibit 101

*Management contract or compensatory plan.

#Certain confidential portions of this exhibit were omitted by means of marking such portions with asterisks because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed.

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Signature

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.


						Rayonier Advanced Materials Inc.
						(Registrant)

			By:			/s/ MARCUS J. MOELTNER
						Marcus J. Moeltner Chief Financial Officer and Senior Vice President, Finance (Duly Authorized Officer and Principal Financial Officer)

Date: August ~~6, 2020~~5, 2021

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	June 27, 2020		December 31, 2019
U.S. Revolver of $84 million maturing in November 2022, $38 million available, bearing interest at PRIME plus 2.75% or LIBOR plus 3.75% at June 27, 2020	$	—	$	—
Multi-currency Revolver of $126 million maturing in November 2022, $60 million available, bearing interest at PRIME plus 2.75% or LIBOR plus 3.75% at June 27, 2020	—		—
Term A-1 Loan Facility borrowings maturing through November 2022 bearing interest at LIBOR floor of 1% plus 3.75%, interest rate of 4.75% at June 27, 2020	133,283		133,283
Term A-2 Loan Facility borrowings maturing through November 2024 bearing interest at LIBOR floor of 1% plus 3.40% (after consideration of 0.60% patronage benefit), interest rate of 4.40% at June 27, 2020	365,592		365,592
Senior Notes due 2024 at a fixed interest rate of 5.5%	495,647		495,647
Canadian dollar, fixed interest rate term loans with rates ranging from 5.5% to 6.86% and maturity dates ranging from September 2020 through April 2028, secured by certain assets of the Temiscaming mill	76,989		83,122
Other loans	9,792		7,285
Finance lease obligation	2,656		2,818
Total debt principal payments due	1,083,959		1,087,747
Less: Debt premium, original issue discount and issuance costs, net	(8,309)		(5,604)
Total debt	1,075,650		1,082,143
Less: Current maturities of long-term debt	(14,399)		(19,448)
Long-term debt	$	1,061,251	$	1,062,695


	Finance Lease Payments		Debt Principal Payments
2020	$	258	$	10,312
2021	515		9,361
2022	515		159,919
2023	515		8,115
2024	515		869,258
Thereafter	987		24,338
Total principal payments	$	3,305	$	1,081,303
Less: Imputed interest	649
Present value minimum finance lease payments	$	2,656


	June 27, 2020		December 31, 2019
Interest rate swaps (a)	$	200,000	$	200,000
Foreign exchange forward contracts (b)	$	245,074	$	343,665
Foreign exchange forward contracts (c)	$	67,707	$	83,126


	Balance Sheet Location	June 27, 2020		December 31, 2019
Assets
Derivatives designated as hedging instruments:


Foreign exchange forward contracts	Prepaid and other current assets	$	1,041	$	4,857
Foreign exchange forward contracts	Other assets	—		5
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts	Prepaid and other current assets	—		246

Liabilities
Derivatives designated as hedging instruments:
Interest rate swaps	Accrued and other current liabilities	(1,785)		(639)

Foreign exchange forward contracts	Accrued and other current liabilities	(8,286)		(340)
Foreign exchange forward contracts	Other long-term liabilities	(3,876)		(759)
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts	Accrued and other current liabilities	—		(16)
Total net derivative assets (liabilities)		$	(12,906)	$	3,354


	June 27, 2020		December 31, 2019
Interest rate cash flow hedges	$	(1,393)	$	(499)
Foreign exchange cash flow hedges	$	(7,847)	$	1,789


	June 27, 2020		June 29, 2019
Cash paid (received) during the period:
Interest	$	28,792	$	28,620
Income taxes	$	633	$	(99)