Condensed Consolidating Financial Information | Note 13. Condensed Consolidating Financial Information The following information is presented in accordance with Rule 3-10 of Regulation S-X and the public information requirements of Rule 144 promulgated pursuant to the Securities Act of 1933, as amended, in connection with Resolute Forest Products Inc.’s 2023 Notes that are fully and unconditionally guaranteed, on a joint and several basis, by all of our 100% owned material U.S. subsidiaries (or the “ Guarantor Subsidiaries ”). The 2023 Notes are not guaranteed by our foreign subsidiaries (or the “ Non-guarantor Subsidiaries ”). The following condensed consolidating financial information sets forth the Statements of Operations and Comprehensive (Loss) Income for the three and nine months ended September 30, 2019 and 2018 , the Balance Sheets as of September 30, 2019 and December 31, 2018 , and the Statements of Cash Flows for the nine months ended September 30, 2019 and 2018 for the Parent, the Guarantor Subsidiaries on a combined basis, and the Non-guarantor Subsidiaries also on a combined basis. The condensed consolidating financial information reflects the investments of the Parent in the Guarantor Subsidiaries and Non-guarantor Subsidiaries, as well as the investments of the Guarantor Subsidiaries in the Non-guarantor Subsidiaries, using the equity method of accounting. The principal consolidating adjustments are entries to eliminate the investments in subsidiaries and intercompany balances and transactions. CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME For the Three Months Ended September 30, 2019 (Unaudited, in millions) Parent Guarantor Subsidiaries Non-guarantor Subsidiaries Consolidating Adjustments Consolidated Sales $ — $ 556 $ 526 $ (377 ) $ 705 Costs and expenses: Cost of sales, excluding depreciation, amortization and distribution costs — 562 378 (382 ) 558 Depreciation and amortization — 10 32 — 42 Distribution costs — 23 69 2 94 Selling, general and administrative expenses 2 10 18 — 30 Net gain on disposition of assets — — (1 ) — (1 ) Operating (loss) income (2 ) (49 ) 30 3 (18 ) Interest expense (15 ) (1 ) (3 ) 11 (8 ) Non-operating pension and other postretirement benefit credits — 4 8 — 12 Other income (expense), net — 10 (16 ) (11 ) (17 ) Equity in loss of subsidiaries (26 ) (14 ) — 40 — (Loss) income before income taxes (43 ) (50 ) 19 43 (31 ) Income tax provision — — (11 ) (1 ) (12 ) Net (loss) income including noncontrolling interests (43 ) (50 ) 8 42 (43 ) Net income attributable to noncontrolling interests — — — — — Net (loss) income attributable to Resolute Forest Products Inc. $ (43 ) $ (50 ) $ 8 $ 42 $ (43 ) Comprehensive (loss) income attributable to Resolute Forest Products Inc. $ (41 ) $ (53 ) $ 13 $ 40 $ (41 ) CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) For the Nine Months Ended September 30, 2019 (Unaudited, in millions) Parent Guarantor Subsidiaries Non-guarantor Subsidiaries Consolidating Adjustments Consolidated Sales $ — $ 1,841 $ 1,692 $ (1,278 ) $ 2,255 Costs and expenses: Cost of sales, excluding depreciation, amortization and distribution costs — 1,809 1,120 (1,281 ) 1,648 Depreciation and amortization — 29 95 — 124 Distribution costs — 72 224 (1 ) 295 Selling, general and administrative expenses 12 34 57 — 103 Net gain on disposition of assets — — (1 ) — (1 ) Operating (loss) income (12 ) (103 ) 197 4 86 Interest expense (49 ) (3 ) (9 ) 37 (24 ) Non-operating pension and other postretirement benefit credits — 9 27 — 36 Other (expense) income, net (3 ) 42 (24 ) (37 ) (22 ) Equity in income of subsidiaries 88 4 — (92 ) — Income (loss) before income taxes 24 (51 ) 191 (88 ) 76 Income tax provision — — (51 ) (1 ) (52 ) Net income (loss) including noncontrolling interests 24 (51 ) 140 (89 ) 24 Net income attributable to noncontrolling interests — — — — — Net income (loss) attributable to Resolute Forest Products Inc. $ 24 $ (51 ) $ 140 $ (89 ) $ 24 Comprehensive income (loss) attributable to Resolute Forest Products Inc. $ 28 $ (59 ) $ 152 $ (93 ) $ 28 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME For the Three Months Ended September 30, 2018 (Unaudited, in millions) Parent Guarantor Subsidiaries Non-guarantor Subsidiaries Consolidating Adjustments Consolidated Sales $ — $ 808 $ 609 $ (443 ) $ 974 Costs and expenses: Cost of sales, excluding depreciation, amortization and distribution costs — 708 366 (446 ) 628 Depreciation and amortization — 20 34 — 54 Distribution costs — 42 75 — 117 Selling, general and administrative expenses 6 17 17 — 40 Operating (loss) income (6 ) 21 117 3 135 Interest expense (20 ) (2 ) (3 ) 13 (12 ) Non-operating pension and other postretirement benefit credits — 4 9 — 13 Other income, net — 14 13 (13 ) 14 Equity in income of subsidiaries 143 7 — (150 ) — Income before income taxes 117 44 136 (147 ) 150 Income tax provision — — (32 ) (1 ) (33 ) Net income including noncontrolling interests 117 44 104 (148 ) 117 Net income attributable to noncontrolling interests — — — — — Net income attributable to Resolute Forest Products Inc. $ 117 $ 44 $ 104 $ (148 ) $ 117 Comprehensive income attributable to Resolute Forest Products Inc. $ 117 $ 38 $ 110 $ (148 ) $ 117 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME For the Nine Months Ended September 30, 2018 (Unaudited, in millions) Parent Guarantor Subsidiaries Non-guarantor Subsidiaries Consolidating Adjustments Consolidated Sales $ — $ 2,348 $ 1,875 $ (1,399 ) $ 2,824 Costs and expenses: Cost of sales, excluding depreciation, amortization and distribution costs — 2,145 1,128 (1,392 ) 1,881 Depreciation and amortization — 61 100 — 161 Distribution costs — 119 239 (2 ) 356 Selling, general and administrative expenses 18 48 59 — 125 Closure costs, impairment and other related charges — — 1 — 1 Net gain on disposition of assets — — (4 ) — (4 ) Operating (loss) income (18 ) (25 ) 352 (5 ) 304 Interest expense (67 ) (6 ) (9 ) 46 (36 ) Non-operating pension and other postretirement benefit credits — 11 27 — 38 Other income, net — 47 3 (46 ) 4 Equity in income of subsidiaries 284 56 — (340 ) — Income before income taxes 199 83 373 (345 ) 310 Income tax provision — — (112 ) 1 (111 ) Net income including noncontrolling interests 199 83 261 (344 ) 199 Net income attributable to noncontrolling interests — — — — — Net income attributable to Resolute Forest Products Inc. $ 199 $ 83 $ 261 $ (344 ) $ 199 Comprehensive income attributable to Resolute Forest Products Inc. $ 205 $ 72 $ 278 $ (350 ) $ 205 CONDENSED CONSOLIDATING BALANCE SHEET As of September 30, 2019 (Unaudited, in millions) Parent Guarantor Subsidiaries Non-guarantor Subsidiaries Consolidating Adjustments Consolidated Assets Current assets: Cash and cash equivalents $ — $ 64 $ 5 $ — $ 69 Accounts receivable, net 1 243 133 — 377 Accounts receivable from affiliates — 256 757 (1,013 ) — Inventories, net — 192 339 (9 ) 522 Advance and interest receivable from parent — 67 — (67 ) — Interest receivable from affiliate — 1 — (1 ) — Other current assets — 20 20 — 40 Total current assets 1 843 1,254 (1,090 ) 1,008 Fixed assets, net — 523 954 — 1,477 Amortizable intangible assets, net — 3 46 — 49 Deferred income tax assets — 1 843 2 846 Operating lease right-of-use assets — 28 35 — 63 Notes receivable from parent — 1,280 — (1,280 ) — Note receivable from affiliate — 110 — (110 ) — Investments in consolidated subsidiaries and affiliates 3,851 2,069 — (5,920 ) — Other assets — 172 56 — 228 Total assets $ 3,852 $ 5,029 $ 3,188 $ (8,398 ) $ 3,671 Liabilities and equity Current liabilities: Accounts payable and accrued liabilities $ 13 $ 119 $ 264 $ — $ 396 Current portion of long-term debt — 1 — — 1 Current portion of operating lease liabilities — 4 4 — 8 Accounts payable to affiliates 261 797 — (1,058 ) — Advance and interest payable to subsidiaries 67 — — (67 ) — Interest payable to affiliate — — 1 (1 ) — Total current liabilities 341 921 269 (1,126 ) 405 Long-term debt, net of current portion 371 52 — — 423 Notes payable to subsidiaries 1,280 — — (1,280 ) — Note payable to affiliate — — 110 (110 ) — Pension and other postretirement benefit obligations — 318 861 — 1,179 Operating lease liabilities, net of current portion — 26 32 — 58 Other liabilities — 23 31 — 54 Total liabilities 1,992 1,340 1,303 (2,516 ) 2,119 Total equity 1,860 3,689 1,885 (5,882 ) 1,552 Total liabilities and equity $ 3,852 $ 5,029 $ 3,188 $ (8,398 ) $ 3,671 CONDENSED CONSOLIDATING BALANCE SHEET As of December 31, 2018 (Unaudited, in millions) Parent Guarantor Subsidiaries Non-guarantor Subsidiaries Consolidating Adjustments Consolidated Assets Current assets: Cash and cash equivalents $ — $ 301 $ 3 $ — $ 304 Accounts receivable, net — 301 148 — 449 Accounts receivable from affiliates — 588 1,071 (1,659 ) — Inventories, net — 194 327 (13 ) 508 Note, advance and interest receivable from parent — 422 — (422 ) — Interest receivable from affiliate — 4 — (4 ) — Other current assets — 15 28 — 43 Total current assets — 1,825 1,577 (2,098 ) 1,304 Fixed assets, net — 523 992 — 1,515 Amortizable intangible assets, net — 2 48 — 50 Deferred income tax assets — 1 872 3 876 Notes receivable from parent — 657 — (657 ) — Note receivable from affiliate — 107 — (107 ) — Investments in consolidated subsidiaries and affiliates 4,119 2,205 — (6,324 ) — Other assets — 126 64 — 190 Total assets $ 4,119 $ 5,446 $ 3,553 $ (9,183 ) $ 3,935 Liabilities and equity Current liabilities: Accounts payable and accrued liabilities $ 7 $ 170 $ 250 $ — $ 427 Current portion of long-term debt 222 1 — — 223 Accounts payable to affiliates 592 1,112 — (1,704 ) — Note, advance and interest payable to subsidiaries 422 — — (422 ) — Interest payable to affiliate — — 4 (4 ) — Total current liabilities 1,243 1,283 254 (2,130 ) 650 Long-term debt, net of current portion 370 52 — — 422 Notes payable to subsidiaries 657 — — (657 ) — Note payable to affiliate — — 107 (107 ) — Pension and other postretirement benefit obligations — 342 915 — 1,257 Other liabilities 6 21 44 — 71 Total liabilities 2,276 1,698 1,320 (2,894 ) 2,400 Total equity 1,843 3,748 2,233 (6,289 ) 1,535 Total liabilities and equity $ 4,119 $ 5,446 $ 3,553 $ (9,183 ) $ 3,935 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS For the Nine Months Ended September 30, 2019 (Unaudited, in millions) Parent Guarantor Subsidiaries Non-guarantor Subsidiaries Consolidating Adjustments Consolidated Net cash provided by operating activities $ — $ 64 $ 56 $ — $ 120 Cash flows from investing activities: Cash invested in fixed assets — (26 ) (56 ) — (82 ) Disposition of assets — 2 — — 2 Decrease in countervailing duty cash deposits on supercalendered paper — 1 — — 1 Increase in countervailing and anti-dumping duty cash deposits on softwood lumber — (46 ) — — (46 ) Decrease in countervailing duty cash deposits on uncoated groundwood paper — 6 — — 6 Increase in notes receivable from parent — (237 ) — 237 — Net cash used in investing activities — (300 ) (56 ) 237 (119 ) Cash flows from financing activities: Payments of debt (225 ) — — — (225 ) Purchases of treasury stock (12 ) — — — (12 ) Payments of financing and credit facility fees — (1 ) (1 ) — (2 ) Increase in notes payable to subsidiary 237 — — (237 ) — Net cash used in financing activities — (1 ) (1 ) (237 ) (239 ) Effect of exchange rate changes on cash and cash equivalents, and restricted cash — — 1 — 1 Net decrease in cash and cash equivalents, and restricted cash — (237 ) — — (237 ) Cash and cash equivalents, and restricted cash: Beginning of period — 306 39 — 345 End of period $ — $ 69 $ 39 $ — $ 108 Cash and cash equivalents, and restricted cash at period end: Cash and cash equivalents $ — $ 64 $ 5 $ — $ 69 Restricted cash — 5 34 — 39 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS For the Nine Months Ended September 30, 2018 (Unaudited, in millions) Parent Guarantor Subsidiaries Non-guarantor Subsidiaries Consolidating Adjustments Consolidated Net cash provided by operating activities $ — $ 291 $ 60 $ — $ 351 Cash flows from investing activities: Cash invested in fixed assets — (31 ) (63 ) — (94 ) Disposition of assets — — 2 — 2 Decrease in countervailing duty cash deposits on supercalendered paper, net — 13 — — 13 Increase in countervailing and anti-dumping duty cash deposits on softwood lumber — (62 ) — — (62 ) Increase in countervailing duty cash deposits on uncoated groundwood paper — (6 ) — — (6 ) Advance to parent — (1 ) — 1 — Decrease in notes receivable from affiliate — 1 — (1 ) — Net cash used in investing activities — (86 ) (61 ) — (147 ) Cash flows from financing activities: Net repayments under revolving credit facilities — (144 ) — — (144 ) Payments of financing and credit facility fees (1 ) — — — (1 ) Advance from subsidiary 1 — — (1 ) — Decrease in notes payable to affiliate — — (1 ) 1 — Net cash used in financing activities — (144 ) (1 ) — (145 ) Effect of exchange rate changes on cash and cash equivalents, and restricted cash — — (1 ) — (1 ) Net increase (decrease) in cash and cash equivalents, and restricted cash — 61 (3 ) — 58 Cash and cash equivalents, and restricted cash: Beginning of period — 3 46 — 49 End of period $ — $ 64 $ 43 $ — $ 107 Cash and cash equivalents, and restricted cash at period end: Cash and cash equivalents $ — $ 64 $ 8 $ — $ 72 Restricted cash — — 35 — 35 |