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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2022
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM    TO
COMMISSION FILE NUMBER: 001-33776
RESOLUTE FOREST PRODUCTS INC.
(Exact name of registrant as specified in its charter)
Delaware98-0526415
(State or other jurisdiction of incorporation or organization)(I.R.S. employer identification number)
1010 De La Gauchetière Street West
Suite 400
Montreal
Quebec
Canada
H3B 2N2
(Address of principal executive offices) (Zip Code)

(514) 875-2160
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of classTrading SymbolName of exchange on which registered
Common Stock, par value $0.001 per shareRFPNew York Stock Exchange
Toronto Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
    Yes    No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
    Yes    No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated Filer
Non-accelerated FilerSmaller Reporting CompanyEmerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
    Yes     No ☒
As of April 29, 2022, there were 76,796,573 shares of Resolute Forest Products Inc. common stock, $0.001 par value, outstanding.


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


PART I.    FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS
RESOLUTE FOREST PRODUCTS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in millions of U.S. dollars, except per share amounts)
Three Months Ended
March 31,
20222021
Sales$945 $873 
Costs and expenses:
Cost of sales, excluding depreciation, amortization and distribution costs
547 522 
Depreciation and amortization32 41 
Distribution costs92 84 
Selling, general and administrative expenses36 46 
Closure costs, impairment and other related charges4 3 
Net gain on disposition of assets(1) 
Operating income235 177 
Interest expense(5)(6)
Non-operating pension and other postretirement benefit (costs) credits(7)2 
Other income (expense), net (Note 3)45 (45)
Income before income taxes268 128 
Income tax provision (Note 11)(58)(40)
Net income including noncontrolling interest210 88 
Net income attributable to noncontrolling interest (1)
Net income attributable to Resolute Forest Products Inc.$210 $87 
Net income per share attributable to Resolute Forest Products Inc. common shareholders (Note 5):
Basic$2.71 $1.07 
Diluted$2.68 $1.06 
Weighted-average number of Resolute Forest Products Inc. common shares outstanding:
Basic77.4 81.2 
Diluted78.2 81.9 
See accompanying notes to unaudited interim Consolidated Financial Statements.
1

RESOLUTE FOREST PRODUCTS INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited, in millions of U.S. dollars)
Three Months Ended
March 31,
20222021
Net income including noncontrolling interest$210 $88 
Other comprehensive income:
Unamortized prior service costs
Change in unamortized prior service costs (Note 4) (1)
Income tax provision  
Change in unamortized prior service costs, net of tax (1)
Unamortized actuarial losses
Change in unamortized actuarial losses (Note 4)29 49 
Income tax provision(4)(12)
Change in unamortized actuarial losses, net of tax25 37 
Foreign currency translation1  
Other comprehensive income, net of tax26 36 
Comprehensive income including noncontrolling interest236 124 
Comprehensive income attributable to noncontrolling interest (1)
Comprehensive income attributable to Resolute Forest Products Inc.
$
236 $123 
See accompanying notes to unaudited interim Consolidated Financial Statements.
2

RESOLUTE FOREST PRODUCTS INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in millions of U.S. dollars, except per share amount)
March 31,
2022
December 31,
2021
Assets
Current assets:
Cash and cash equivalents$162 $112 
Accounts receivable, net:
Trade301 257 
Other56 56 
Inventories, net (Note 6)595 510 
Other current assets55 54 
Total current assets1,169 989 
Fixed assets, less accumulated depreciation of $1,783 and $1,752 as of March 31, 2022 and December 31, 2021, respectively
1,261 1,270 
Amortizable intangible assets, less accumulated amortization of $38 and $37 as of March 31, 2022 and December 31, 2021, respectively
56 57 
Goodwill (Note 2)104 31 
Deferred income tax assets600 653 
Operating lease right-of-use assets58 54 
Other assets (Note 7)516 484 
Total assets$3,764 $3,538 
Liabilities and equity
Current liabilities:
Accounts payable and other (Note 8)$442 $421 
Current portion of long-term debt (Note 9)2 2 
Current portion of operating lease liabilities8 8 
Total current liabilities452 431 
Long-term debt, net of current portion (Note 9)300 300 
Pension and other postretirement benefit obligations1,124 1,151 
Operating lease liabilities, net of current portion55 51 
Other liabilities81 88 
Total liabilities2,012 2,021 
Commitments and contingencies (Note 12)
Equity:
Resolute Forest Products Inc. shareholders’ equity:
Common stock, $0.001 par value. 121.3 million shares issued and 76.8 million shares outstanding as of March 31, 2022; 121.2 million shares issued and 76.8 million shares outstanding as of December 31, 2021
  
Additional paid-in capital3,808 3,807 
Deficit (799)(1,009)
Accumulated other comprehensive loss (Note 4)(1,036)(1,062)
Treasury stock at cost, 44.5 million shares and 44.4 million shares as of March 31, 2022 and December 31, 2021, respectively
(224)(222)
Total Resolute Forest Products Inc. shareholders’ equity1,749 1,514 
Noncontrolling interest3 3 
Total equity1,752 1,517 
Total liabilities and equity$3,764 $3,538 
See accompanying notes to unaudited interim Consolidated Financial Statements.
3

RESOLUTE FOREST PRODUCTS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited, in millions of U.S. dollars)
Three Months Ended March 31, 2022
 Resolute Forest Products Inc. Shareholders’ Equity  
Common
Stock
Additional
Paid-In
Capital
DeficitAccumulated Other Comprehensive LossTreasury
Stock
Non-controlling
Interest
Total Equity
Balance as of December 31, 2021$ $3,807 $(1,009)$(1,062)$(222)$3 $1,517 
Share-based compensation, net of withholding taxes— 1 — — — — 1 
Net income— — 210 — —  210 
Purchases of treasury stock (0.1 million shares) (Note 13)
— — — — (2)— (2)
Stock unit awards vested and stock options exercised (0.1 million shares), net of shares forfeited for employee withholding taxes
— — — — — —  
Other comprehensive income, net of tax— — — 26 —  26 
Balance as of March 31, 2022$ $3,808 $(799)$(1,036)$(224)$3 $1,752 
Three Months Ended March 31, 2021
 Resolute Forest Products Inc. Shareholders’ Equity  
Common
Stock
Additional
Paid-In
Capital
DeficitAccumulated Other Comprehensive LossTreasury
Stock
Non-
controlling
Interest
Total Equity
Balance as of December 31, 2020$ $3,804 $(1,235)$(1,314)$(174)$1 $1,082 
Share-based compensation, net of withholding taxes
— (2)— — — — (2)
Net income— — 87 — — 1 88 
Purchases of treasury stock (1.7 million shares) (Note 13)
— — — — (17)— (17)
Stock unit awards vested and stock options exercised (0.4 million shares), net of shares forfeited for employee withholding taxes
— — — — — — — 
Other comprehensive income, net of tax— — — 36 —  36 
Balance as of March 31, 2021$ $3,802 $(1,148)$(1,278)$(191)$2 $1,187 
See accompanying notes to unaudited interim Consolidated Financial Statements.
4

RESOLUTE FOREST PRODUCTS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in millions of U.S. dollars)
Three Months Ended
March 31,
20222021
Cash flows from operating activities:
Net income including noncontrolling interest$210 $88 
Adjustments to reconcile net income including noncontrolling interest to net cash provided by operating activities:
Share-based compensation2 2 
Depreciation and amortization32 41 
Closure costs, impairment and other related charges(2) 
Deferred income taxes56 40 
Net pension contributions and other postretirement benefit payments(8)(23)
Gain on previously-held equity investments (Note 2)
(41) 
Net gain on disposition of assets(1) 
Gain on translation of foreign currency denominated deferred income taxes(6)(12)
Loss on translation of foreign currency denominated pension and other postretirement benefit obligations9 16 
(Gain) loss on commodity contracts (Note 3)(2)14 
Net planned major maintenance amortization (payments)7 (3)
Changes in working capital:
Accounts receivable(36)(51)
Inventories(67)(50)
Other current assets(7) 
Accounts payable and other13 2 
Other, net(12)10 
Net cash provided by operating activities147 74 
Cash flows from investing activities:
Cash invested in fixed assets(13)(14)
Acquisition of business, net of cash acquired (Note 2)(43) 
Disposition of assets4  
Increase in countervailing and anti-dumping duty cash deposits on softwood lumber (Note 7)(43)(32)
Other investing activities, net 3 
Net cash used in investing activities(95)(43)
Cash flows from financing activities:
Issuance of long-term debt (Note 9) 300 
Repayments of debt (Note 9) (376)
Purchases of treasury stock (Note 13)(2)(17)
Payments of financing fees (6)
Net cash used in financing activities(2)(99)
Effect of exchange rate changes on cash and cash equivalents, and restricted cash  
Net increase (decrease) in cash and cash equivalents, and restricted cash$50 $(68)
Cash and cash equivalents, and restricted cash:
Beginning of period$152 $159 
End of period$202 $91 
Cash and cash equivalents, and restricted cash at end of period:
Cash and cash equivalents$162 $33 
Restricted cash (included in “Other current assets”)$ $18 
Restricted cash (included in “Other assets”)$40 $40 
See accompanying notes to unaudited interim Consolidated Financial Statements.
5


RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
Note 1. Organization and Basis of Presentation
Nature of operations
Resolute Forest Products Inc. (with its subsidiaries, either individually or collectively, unless otherwise indicated, referred to as “Resolute Forest Products,” “we,” “our,” “us,” “Parent,” or the “Company”) is incorporated in Delaware. We are a global leader in the forest products industry with a diverse range of products, including market pulp, tissue, wood products and paper, which are marketed in over 60 countries. We own or operate some 40 facilities as well as power generation assets, in the U.S. and Canada.
Financial statements
Our unaudited interim consolidated financial statements and accompanying notes (or, the “Consolidated Financial Statements”) have been prepared in accordance with the requirements of the U.S. Securities and Exchange Commission (or, the “SEC”) for interim reporting. Under those rules, certain footnotes and other financial information that are normally required by U.S. generally accepted accounting principles (or, “GAAP”) may be condensed or omitted. In our opinion, all adjustments (consisting of normal recurring adjustments) necessary for the fair statement of the Consolidated Financial Statements have been made. All amounts are expressed in U.S. dollars, unless otherwise indicated. The results for the interim period ended March 31, 2022, are not necessarily indicative of the results to be expected for the full year. These Consolidated Financial Statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 1, 2022.
New accounting pronouncement adopted in 2022
ASU 2021-08 “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”
Effective January 1, 2022, we adopted ASU 2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” issued by the Financial Accounting Standards Board in 2021, which revises the accounting for acquired revenue contracts with customers in a business combination. The adoption of this accounting guidance, which was applied prospectively, did not impact our Consolidated Financial Statements and disclosures.
Note 2. Business Acquisition
On March 4, 2022 (or, the “Acquisition Date”), we acquired control of Resolute-LP Engineered Wood Larouche Inc. and Resolute-LP Engineered Wood St-Prime Limited Partnership (or, “Larouche and St-Prime”), that were previously held as 50% owned joint ventures, by acquiring the remaining 50% equity interests from Louisiana-Pacific Canada Ltd., a wholly-owned subsidiary of Louisiana-Pacific Corporation, for a cash consideration of $51 million (including $1 million of working capital adjustment, and net of cash acquired of $8 million), subject to post-closing adjustments. Larouche and St-Prime, which are engineered wood product facilities located in Quebec, produce I-joists for the construction industry. This acquisition solidifies our presence in the engineered wood product segment.
We accounted for our previously held equity investments in Larouche and St-Prime using the equity method of accounting since we had joint control prior to acquiring a controlling interest on the Acquisition Date.
We accounted for the acquisition of Larouche and St-Prime as a business combination in accordance with the acquisition method of accounting, which requires us to record the identifiable assets acquired and liabilities assumed at fair value. The amount by which the purchase price exceeds the fair value of the net assets acquired is recorded as goodwill. We have commenced the appraisals necessary to assess the fair values of the assets acquired, including amortizable intangible assets identified related to customer relationships, and liabilities assumed and the amount of goodwill to be recognized as of the Acquisition Date. The fair value assessment process of the assets acquired and liabilities assumed is ongoing. Our preliminary allocation of the purchase price is based on the corresponding book values of Larouche and St-Prime as of the Acquisition Date, except for the inventories, which are recorded at their fair values. The amount by which the purchase price exceeds these values was recorded in “Goodwill” in our Consolidated Balance Sheet. This allocation is preliminary in nature and thus, could yield significant adjustments of the values allocated upon completion of the fair value assessment process. The final determination of the fair values of the assets acquired and liabilities assumed will be completed within the measurement period of up to one year from the Acquisition Date permitted under GAAP.
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
The following table summarizes our preliminary allocation of the purchase price of assets acquired and liabilities assumed at the Acquisition Date:
(Unaudited, in millions)
Cash and cash equivalents$16 
Accounts receivable11 
Inventories16 
Current assets acquired$43 
Fixed assets$6 
Goodwill (1)
73 
Deferred income tax assets1 
Total assets acquired and goodwill$123 
Accounts payable and other$4 
Current liabilities assumed4 
Pension and other postretirement benefit obligations1 
Total liabilities assumed$5 
Net assets acquired$118 
Cash consideration transferred59 
Fair value of the previously held interests in Larouche and St-Prime59 
Total fair value of consideration$118 
(1)The preliminary purchase price allocation resulted in the recognition of an amount of goodwill of $73 million. As explained above, the allocation process of assets acquired and liabilities assumed is ongoing and, as a result, the value allocated to goodwill could change significantly following the completion of the purchase price allocation.
At the Acquisition Date, our previously-held equity investments of $18 million were remeasured at a fair value of $59 million, which resulted in a gain of $41 million. The gain was recorded in “Other income (expense), net” in our Consolidated Statements of Operations for the three months ended March 31, 2022.
We applied an income approach, specifically the discounted cash flow (or, the “DCF”) method, to measure the fair value of our equity interest in Larouche and St-Prime, as of immediately prior to the business acquisition. Determining fair value requires the exercise of significant judgments, including the amount and timing of expected future cash flows, discount rate and tax rate. The cash flows employed in the DCF analysis are based on our best estimate of future sales, earnings and cash flows after considering factors such as general market conditions, existing firm orders, long term business plans and recent operating performance. The discount rate utilized in the DCF analysis is based on the respective company’s weighted average cost of capital, which takes into account the relative weights of each component of capital structure (equity and debt) and represents the expected cost of new capital, adjusted as appropriate to consider the risk inherent in future cash flows of the Company.
We ceased applying the equity method for our investments in Larouche and St-Prime and the net assets acquired and results of operations are consolidated from the Acquisition Date and are included in the wood products segment.
From the Acquisition Date to March 31, 2022, our consolidated financial results included sales of $14 million and net income of nil attributable to Larouche and St-Prime.
The following unaudited pro forma information for the three months ended March 31, 2022, represents our results of operations as if the acquisition of Larouche and St-Prime had occurred on January 1, 2021. This pro forma information does not purport to be indicative of the results that would have occurred for the periods presented or that may be expected in the future.
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
Three Months Ended
March 31,
(Unaudited, in millions)20222021
Sales$965$887
Net income attributable to Resolute Forest Products Inc. (1)
$182$120
(1)For the pro forma information, the gain on previously-held equity investments of $41 million was considered realized in the three months ended March 31, 2021, and deducted from the three months ended March 31, 2022.
Note 3. Other Income (Expense), Net
Other income (expense), net for the three months ended March 31, 2022 and 2021, was comprised of the following:
Three Months Ended
March 31,
(Unaudited, in millions)20222021
Foreign exchange loss$(3)$(5)
Gain (loss) on commodity contracts (1)
2 (37)
Income from equity method investments (2)
6  
Gain on previously-held equity investments (Note 2)41  
Miscellaneous expense(1)(3)
 $45 $(45)
(1)    For the three months ended March 31, 2021, the loss was principally related to lumber futures contracts, of which a $14 million loss was unrealized; none of these contracts were outstanding as of March 31, 2022.
(2)Principally related to the equity investment in Larouche and St-Prime in which we acquired a controlling interest during the three months ended March 31, 2022. See Note 2, “Business Acquisition” for more information.
Note 4. Accumulated Other Comprehensive Loss
The change in our accumulated other comprehensive loss by component (net of tax) for the three months ended March 31, 2022 and 2021, was as follows:
(Unaudited, in millions)Unamortized Prior Service CostsUnamortized Actuarial LossesForeign
Currency
Translation
Total
Balance as of December 31, 2021$(5)$(1,051)$(6)$(1,062)
Other comprehensive income before reclassifications (1)
 10 1 11 
Amounts reclassified from accumulated other comprehensive loss 15  15 
Net current period other comprehensive income 25 1 26 
Balance as of March 31, 2022$(5)$(1,026)$(5)$(1,036)
(Unaudited, in millions)Unamortized Prior Service CostsUnamortized Actuarial LossesForeign
Currency
Translation
Total
Balance as of December 31, 2020$(1)$(1,307)$(6)$(1,314)
Other comprehensive income before reclassifications (2)
 22  22 
Amounts reclassified from accumulated other comprehensive loss(1)15  14 
Net current period other comprehensive (loss) income(1)37  36 
Balance as of March 31, 2021$(2)$(1,270)$(6)$(1,278)
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
(1)    The indefinite idling of pulp and paper operations at our Calhoun (Tennessee) mill triggered pension special termination benefit costs and remeasurement of the pension and other postretirement benefit (or, “OPEB”) obligations related to its plans as of January 31, 2022, resulting in a loss of $4 million and an actuarial gain of $14 million, totaling a net gain of $10 million ($10 million net of tax).
(2)    The indefinite idling of the Amos and Baie-Comeau (Quebec) mills triggered curtailment and remeasurement of the pension and OPEB obligations related to their plans as of March 31, 2021, resulting in a curtailment gain of $8 million and an actuarial gain of $22 million, totaling $30 million ($22 million net of tax).
The reclassifications out of accumulated other comprehensive loss for the three months ended March 31, 2022 and 2021, were comprised of the following:
Three Months Ended March 31,
(Unaudited, in millions)20222021Affected Line in the Consolidated Statements of Operations
Unamortized Prior Service Costs or Credits
Amortization of prior service costs$ $ 
Non-operating pension and other postretirement benefit (costs) credits (1)
Curtailment gain (1)
Non-operating pension and other postretirement benefit (costs) credits (1)
Income tax effect of the above  Income tax provision
Net of tax (1)
Unamortized Actuarial Losses
Amortization of actuarial losses16 19 
Non-operating pension and other postretirement benefit (costs) credits (1)
Other items3  
Non-operating pension and other postretirement benefit (costs) credits (1)
Income tax effect of the above(4)(4)Income tax provision
Net of tax15 15 
Total Reclassifications$15 $14 
(1)These items are included in the computation of net periodic benefit cost (credit) related to our pension and OPEB plans summarized in Note 10, “Employee Benefit Plans.”
Note 5. Net Income Per Share
The reconciliation of the basic and diluted net income per share for the three months ended March 31, 2022 and 2021, was as follows:
Three Months Ended
March 31,
(Unaudited, in millions, except per share amounts)20222021
Numerator:
Net income attributable to Resolute Forest Products Inc.$210 $87 
Denominator:
Weighted-average number of Resolute Forest Products Inc. common shares outstanding77.4 81.2 
Dilutive impact of nonvested stock unit awards and stock options0.8 0.7 
Diluted weighted-average number of Resolute Forest Products Inc. common shares outstanding78.2 81.9 
Net income per share attributable to Resolute Forest Products Inc. common shareholders:
Basic
$2.71 $1.07 
Diluted$2.68 $1.06 
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
The weighted-average number of outstanding stock options and nonvested equity-classified restricted stock units, deferred stock units and performance stock units (collectively, “stock unit awards”) that were excluded from the calculation of diluted net income per share, as their impact would have been antidilutive, for the three months ended March 31, 2022 and 2021, was as follows:
Three Months Ended
March 31,
(Unaudited, in millions)20222021
Stock options0.3 0.8 
Stock unit awards  
Note 6. Inventories, Net
Inventories, net as of March 31, 2022 and December 31, 2021, were comprised of the following:
(Unaudited, in millions)March 31,
2022
December 31,
2021
Raw materials$174 $159 
Work in process62 57 
Finished goods205 148 
Mill stores and other supplies154 146 
 $595 $510 
Note 7. Other Assets
Other assets as of March 31, 2022 and December 31, 2021, were comprised of the following:
(Unaudited, in millions)March 31,
2022
December 31,
2021
Countervailing duty cash deposits on softwood lumber (Note 12)$365 $339 
Anti-dumping duty cash deposits on softwood lumber (Note 12)75 58 
Equity method investments11 22 
Restricted cash40 40 
Other25 25 
$516 $484 
Note 8. Accounts Payable and Other
Accounts payable and other as of March 31, 2022 and December 31, 2021, were comprised of the following:
(Unaudited, in millions)March 31,
2022
December 31,
2021
Trade accounts payable$308 $262 
Accrued compensation62 89 
Accrued interest2 6 
Pension and other postretirement benefit obligations14 14 
Accrued provision related to Fibrek Inc. litigation (Note 12)22 21 
Income and other taxes payable5 4 
Other29 25 
$442 $421 
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
Note 9. Long-Term Debt
Overview
Long-term debt, including current portion, as of March 31, 2022 and December 31, 2021, was comprised of the following:
(Unaudited, in millions)March 31,
2022
December 31,
2021
4.875% senior unsecured notes due 2026:
Principal amount$300 $300 
Deferred financing costs(5)(5)
Total 4.875% senior unsecured notes due 2026
295 295 
Finance lease obligations6 6 
Other debt1 1 
Total debt302 302 
Less: Current portion of finance lease obligations and other debt(2)(2)
Long-term debt, net of current portion$300 $300 
Debt availabilities
(Unaudited, in millions)March 31,
2022
December 31,
2021
Term Loan Facility
$180 $180 
Revolving Credit Facility
180 180 
ABL Credit Facility (1)
377 307 
Secured delayed draw term loan facility (C$220 million as of March 31, 2022 and December 31, 2021)
176 174 
Total availability$913 $841 
(1)The availability as of March 31, 2022, was $377 million, net of $73 million of ordinary course letters of credit outstanding, of which $53 million were to guarantee surety bonds of $83 million related to the U.S. softwood lumber cash deposits. The availability as of December 31, 2021, was $307 million, net of $73 million of ordinary course letters of credit outstanding, of which $53 million were to guarantee surety bonds of $83 million related to the U.S. softwood lumber cash deposits.
Senior Unsecured Notes
2026 Notes
On February 2, 2021, we issued $300 million aggregate principal amount of 4.875% senior unsecured notes due 2026 (or, the “2026 Notes”) at an issue price of 100%, pursuant to an indenture as of that date (or, the “Indenture”). Upon their issuance, the 2026 Notes were recorded at their fair value of $300 million. Interest on the 2026 Notes is payable semi-annually on March 1 and September 1 of each year, beginning on September 1, 2021, until their maturity date of March 1, 2026. In connection with the issuance of the 2026 Notes, we incurred financing costs of $6 million, which were deferred and recorded as a reduction of the principal. Deferred financing costs are amortized to “Interest expense” in our Consolidated Statements of Operations using the interest method over the term of the notes.
The fair value of the 2026 Notes (Level 1) was $289 million as of March 31, 2022.
2023 Notes
On February 2, 2021, we placed the net proceeds from the issuance of the 2026 Notes together with additional cash, into trust for the benefit of the holders of the 5.875% senior unsecured notes due 2023 (or, the “2023 Notes”) to redeem all of the $375 million outstanding aggregate principal amount of the 2023 Notes (or, the “Redemption”) at a price of 100% of the aggregate principal amount thereof, plus accrued and unpaid interest to, but not including, the redemption date. The Redemption occurred on February 18, 2021. As a result of the repurchase, we recorded a net loss on extinguishment of debt of
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
$3 million in “Other income (expense), net” in our Consolidated Statement of Operations for the three months ended March 31, 2021.
Senior Secured Credit Facility
On April 19, 2021 (or, the “Effective Date”), we entered into a first amendment to the amended and restated senior secured credit facility (or, the “Senior Secured Credit Facility”). The amount available under the Senior Secured Credit Facility remains unchanged for up to $360 million and is comprised of a term loan facility of up to $180 million with a delayed draw period of up to three years and the choice of maturities of six to ten years from the date of drawing (or, the “Term Loan Facility”); and a six-year revolving credit facility of up to $180 million (or, the “Revolving Credit Facility”). On the Effective Date, we repaid our $180 million term loans under the amended and restated senior secured credit facility with a combination of proceeds of borrowings under the Revolving Credit Facility and cash on hand. The amendment then reinstated the full amount of the Term Loan Facility. There is also an uncommitted option to increase the Senior Secured Credit Facility by up to an additional $360 million, subject to certain terms and conditions.
The obligations under the Senior Secured Credit Facility are guaranteed by certain material U.S. subsidiaries of the Company and are secured by a first priority mortgage on the real property of the Company’s facility in Calhoun and a first priority security interest on the fixtures and equipment located therein. On March 2, 2022, the Company entered into agreements to provide the following additional security under the Senior Secured Credit Facility: (i) a first priority mortgage on the real property of the Company’s sawmill facilities in Glenwood and El Dorado (Arkansas) and a first priority security interest on the fixtures and equipment located therein, and (ii) a first priority security interest on the fixtures and equipment at the Company’s sawmill facility in Cross City (Florida).
ABL Credit Facility
On May 14, 2019, we entered into an amended senior secured asset-based revolving credit facility (or, the “ABL Credit Facility”) with an aggregate lender commitment of up to $500 million at any time outstanding, subject to borrowing base availability based on specified advance rates, eligibility criteria and customary reserves.
Effective January 21, 2021, we reduced the commitment under the Canadian tranche of our senior secured asset-based revolving credit facility by $50 million, to $250 million, resulting in an aggregate commitment of $450 million, subject to borrowing base limitations. The obligations under the ABL Credit Facility are guaranteed by certain of our material subsidiaries.
On December 15, 2021, we entered into an amendment to the credit agreement, which reset the facility and extended the maturity date to December 15, 2026. The agreement also contains hardwired benchmark replacement provisions for future transition of LIBOR and may be amended based on agreed upon Environmental, Social and Governance (or, “ESG”) key performance indicators as described in the credit agreement.
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
Note 10. Employee Benefit Plans
Pension and other postretirement benefit plans
The components of net periodic benefit costs (credits) relating to our pension and OPEB plans for the three months ended March 31, 2022 and 2021, were as follows:
Pension Plans:
Three Months Ended
March 31,
(Unaudited, in millions)20222021
Interest cost$36 $33 
Expected return on plan assets(49)(54)
Amortization of actuarial losses17 21 
Amortization of prior service credits  
Non-operating pension costs4  
Service cost3 4 
Net periodic benefit costs before special events7 4 
Other loss (gain)3 (1)
 $10 $3 
OPEB Plans:
Three Months Ended
March 31,
(Unaudited, in millions)20222021
Interest cost$1 $1 
Amortization of actuarial gains(1)(2)
Non-operating other postretirement benefit credits (1)
Service cost  
Net periodic benefit credits before special events (1)
Curtailment gain  
$ $(1)
Defined contribution plans
Our expense for the defined contribution plans totaled $5 million for the three months ended March 31, 2022 and 2021.
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RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements
Note 11. Income Taxes
The income tax provision attributable to income before income taxes differs from the amounts computed by applying the U.S. federal statutory income tax rate of 21% for the three months ended March 31, 2022 and 2021, as a result of the following:
Three Months Ended
March 31,
(Unaudited, in millions)20222021
Income before income taxes$268 $128 
Income tax provision:
Expected income tax provision(56)(27)
Changes resulting from:
Valuation allowance33 8 
Foreign exchange2 2 
U.S. tax on non-U.S. earnings(29)(18)
State income taxes, net of federal income tax benefit(1)2 
Foreign tax rate differences(13)(8)
Other, net6