Resolute Forest Products Inc. [RFP] Filings

10-Q 1 rfp-20220930.htm 10-Q rfp-20220930

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


			☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 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)


Delaware			98-0526415
(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 class	Trading Symbol	Name of exchange on which registered
Common Stock, par value $0.001 per share	RFP	New 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 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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of October 31, 2022, there were 76,811,811 shares of Resolute Forest Products Inc. common stock, $0.001 par value, outstanding.

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RESOLUTE FOREST PRODUCTS INC.

TABLE OF CONTENTS


			Page Number
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements:

Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021			1

Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2022 and 2021			2

Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021			3

Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2022 and 2021			4

Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021			6

Notes to Unaudited Interim Consolidated Financial Statements			7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			22

Item 3. Quantitative and Qualitative Disclosures About Market Risk			50

Item 4. Controls and Procedures			50

PART II. OTHER INFORMATION

Item 1. Legal Proceedings			51

Item 1A. Risk Factors			51

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			52



Item 6. Exhibits			53

SIGNATURES			54

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RESOLUTE FOREST PRODUCTS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in millions of U.S. dollars, except per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Sales	$	974	$	817	$	2,977	$	2,830
Costs and expenses:
Cost of sales, excluding depreciation, amortization and distribution costs		653		554		1,847		1,642
Depreciation and amortization		34		42		101		123
Distribution costs		107		87		310		264
Selling, general and administrative expenses		57		32		133		114
Closure costs, impairment and other related charges (Note 3)		(1)		—		8		2
Net loss on disposition of assets		—		—		2		—
Operating income		124		102		576		685
Interest expense		(5)		(5)		(16)		(16)
Non-operating pension and other postretirement benefit (costs) credits		(3)		3		(13)		8
Other income (expense), net (Note 4)		37		20		95		(74)
Income before income taxes		153		120		642		603
Income tax provision (Note 12)		(66)		(40)		(89)		(167)
Net income including noncontrolling interest		87		80		553		436
Net income attributable to noncontrolling interest		—		—		—		(1)
Net income attributable to Resolute Forest Products Inc.	$	87	$	80	$	553	$	435
Net income per share attributable to Resolute Forest Products Inc. common shareholders (Note 6):
Basic	$	1.12	$	1.00	$	7.14	$	5.44
Diluted	$	1.11	$	0.99	$	7.07	$	5.39
Weighted-average number of Resolute Forest Products Inc. common shares outstanding:
Basic		77.5		79.4		77.4		80.0
Diluted		78.4		80.1		78.2		80.8

See accompanying notes to unaudited interim Consolidated Financial Statements.

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RESOLUTE FOREST PRODUCTS INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited, in millions of U.S. dollars)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net income including noncontrolling interest	$	87	$	80	$	553	$	436
Other comprehensive income:
Unamortized prior service costs
Change in unamortized prior service costs (Note 5)		—		—		—		(3)
Income tax provision		—		—		—		—
Change in unamortized prior service costs, net of tax		—		—		—		(3)
Unamortized actuarial losses
Change in unamortized actuarial losses (Note 5)		16		16		61		84
Income tax provision		(3)		(4)		(11)		(20)
Change in unamortized actuarial losses, net of tax		13		12		50		64
Foreign currency translation		(3)		—		(3)		—
Other comprehensive income, net of tax		10		12		47		61
Comprehensive income including noncontrolling interest		97		92		600		497




Comprehensive income attributable to noncontrolling interest		—		—		—		(1)
Comprehensive income attributable to Resolute Forest Products Inc.	$	97	$	92	$	600	$	496

See accompanying notes to unaudited interim Consolidated Financial Statements.

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RESOLUTE FOREST PRODUCTS INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited, in millions of U.S. dollars, except per share amount)


	September 30, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	446	$	112
Accounts receivable, net:
Trade		297		257
Other		60		56
Inventories, net (Note 7)		609		510

Other current assets		49		54
Total current assets		1,461		989
Fixed assets, less accumulated depreciation of $1,840 and $1,752 as of September 30, 2022 and December 31, 2021, respectively		1,275		1,270
Amortizable intangible assets, less accumulated amortization of $41 and $37 as of September 30, 2022 and December 31, 2021, respectively		57		57
Goodwill (Note 2)		85		31
Deferred income tax assets		515		653
Operating lease right-of-use assets		54		54
Other assets (Note 8)		606		484
Total assets	$	4,053	$	3,538
Liabilities and equity
Current liabilities:
Accounts payable and other (Note 9)	$	493	$	421
Current portion of long-term debt (Note 10)		1		2
Current portion of operating lease liabilities		8		8

Total current liabilities		502		431
Long-term debt, net of current portion (Note 10)		300		300
Pension and other postretirement benefit obligations		991		1,151
Deferred income tax liabilities		2		—
Operating lease liabilities, net of current portion		48		51
Other liabilities		91		88
Total liabilities		1,934		2,021
Commitments and contingencies (Note 13)
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 September 30, 2022; 121.2 million shares issued and 76.8 million shares outstanding as of December 31, 2021		—		—
Additional paid-in capital		3,811		3,807
Deficit		(456)		(1,009)
Accumulated other comprehensive loss (Note 5)		(1,015)		(1,062)
Treasury stock at cost, 44.5 million shares and 44.4 million shares as of September 30, 2022 and December 31, 2021, respectively		(224)		(222)
Total Resolute Forest Products Inc. shareholders’ equity		2,116		1,514
Noncontrolling interest		3		3
Total equity		2,119		1,517
Total liabilities and equity	$	4,053	$	3,538

See accompanying notes to unaudited interim Consolidated Financial Statements.

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RESOLUTE FOREST PRODUCTS INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited, in millions of U.S. dollars)


	Three Months Ended September 30, 2022
	Resolute Forest Products Inc. Shareholders’ Equity
	Common Stock		Additional Paid-In Capital		Deficit		Accumulated Other Comprehensive Loss		Treasury Stock		Non-controlling Interest		Total Equity
Balance as of June 30, 2022	$	—	$	3,811	$	(543)	$	(1,025)	$	(224)	$	3	$	2,022
Share-based compensation, net of withholding taxes		—		—		—		—		—		—		—
Net income		—		—		87		—		—		—		87



Other comprehensive income, net of tax		—		—		—		10		—		—		10
Balance as of September 30, 2022	$	—	$	3,811	$	(456)	$	(1,015)	$	(224)	$	3	$	2,119

	Nine Months Ended September 30, 2022
	Resolute Forest Products Inc. Shareholders’ Equity
	Common Stock		Additional Paid-In Capital		Deficit		Accumulated Other Comprehensive Loss		Treasury 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		—		4		—		—		—		—		4
Net income		—		—		553		—		—		—		553
Purchases of treasury stock (0.1 million shares) (Note 14)		—		—		—		—		(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		—		—		—		47		—		—		47
Balance as of September 30, 2022	$	—	$	3,811	$	(456)	$	(1,015)	$	(224)	$	3	$	2,119

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RESOLUTE FOREST PRODUCTS INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited, in millions of U.S. dollars)


	Three Months Ended September 30, 2021
	Resolute Forest Products Inc. Shareholders’ Equity
	Common Stock		Additional Paid-In Capital		Deficit		Accumulated Other Comprehensive Loss		Treasury Stock		Non- controlling Interest		Total Equity
Balance as of June 30, 2021	$	—	$	3,805	$	(961)	$	(1,265)	$	(194)	$	2	$	1,387
Share-based compensation, net of withholding taxes		—		—		—		—		—		—		—
Net income		—		—		80		—		—		—		80
Purchases of treasury stock (1.2 million shares) (Note 14)		—		—		—		—		(14)		—		(14)


Other comprehensive income, net of tax		—		—		—		12		—		—		12
Balance as of September 30, 2021	$	—	$	3,805	$	(881)	$	(1,253)	$	(208)	$	2	$	1,465

	Nine Months Ended September 30, 2021
	Resolute Forest Products Inc. Shareholders’ Equity
	Common Stock		Additional Paid-In Capital		Deficit		Accumulated Other Comprehensive Loss		Treasury 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		—		(1)		—		—		—		—		(1)
Net income		—		—		435		—		—		1		436
Purchases of treasury stock (3.3 million shares) (Note 14)		—		—		—		—		(34)		—		(34)
Special dividend (Note 14)		—		2		(81)		—		—		—		(79)
Stock unit awards vested (0.4 million shares), net of shares forfeited for employee withholding taxes		—		—		—		—		—		—		—
Other comprehensive income, net of tax		—		—		—		61		—		—		61
Balance as of September 30, 2021	$	—	$	3,805	$	(881)	$	(1,253)	$	(208)	$	2	$	1,465

See accompanying notes to unaudited interim Consolidated Financial Statements.

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RESOLUTE FOREST PRODUCTS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in millions of U.S. dollars)


	Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities:
Net income including noncontrolling interest	$	553	$	436
Adjustments to reconcile net income including noncontrolling interest to net cash provided by operating activities:
Share-based compensation		6		3
Depreciation and amortization		101		123


Deferred income taxes		85		167
Net pension contributions and other postretirement benefit payments		(34)		(71)
Gain on previously-held equity investments (Note 2)		(42)		—
Net loss on disposition of assets		2		—
Loss (gain) on translation of foreign currency denominated deferred income taxes		42		(7)
(Gain) loss on translation of foreign currency denominated pension and other postretirement benefit obligations		(70)		6


Net planned major maintenance amortization (payments)		19		(15)

Changes in working capital:
Accounts receivable		(39)		(45)
Inventories		(81)		(48)
Other current assets		(19)		(11)
Accounts payable and other		48		34
Other, net		20		8
Net cash provided by operating activities		591		580
Cash flows from investing activities:
Cash invested in fixed assets		(68)		(79)
Cash invested in intangible assets		(3)		—
Acquisitions of businesses, net of cash acquired (Note 2)		(49)		—
Disposition of assets		5		—

Increase in countervailing and anti-dumping duty cash deposits on softwood lumber (Note 8)		(138)		(128)




Other investing activities, net		—		3
Net cash used in investing activities		(253)		(204)
Cash flows from financing activities:

Issuance of long-term debt (Note 10)		—		300

Payment of special dividend		—		(79)

Repayments of debt (Note 10)		(2)		(557)
Purchases of treasury stock (Note 14)		(2)		(34)
Payments of financing fees		—		(7)
Other financing activities, net		—		2
Net cash used in financing activities		(4)		(375)
Effect of exchange rate changes on cash and cash equivalents, and restricted cash		(7)		(1)
Net increase in cash and cash equivalents, and restricted cash	$	327	$	—
Cash and cash equivalents, and restricted cash:
Beginning of period	$	152	$	159
End of period	$	479	$	159
Cash and cash equivalents, and restricted cash at end of period:
Cash and cash equivalents	$	446	$	119

Restricted cash (included in “Other assets”)	$	33	$	40

See accompanying notes to unaudited interim Consolidated Financial Statements.

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RESOLUTE FOREST PRODUCTS INC.

Notes to Unaudited Interim Consolidated Financial Statements

Note 1. Organization and Basis of Presentation

Nature of operations

Resolute Forest Products Inc. (with its subsidiaries, either individually or collectively, unless otherwise indicated, referred to as “Resolute Forest Products,” “we,” “our,” “us,” “Parent,” or the “Company”) is incorporated in Delaware. We are a global leader in the forest products industry with a diverse range of products, including market pulp, tissue, wood products and paper, which are marketed in 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 September 30, 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. Certain prior period amounts in the notes to our Consolidated Financial Statements have been reclassified to conform to the 2022 presentation.

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 Combinations

Potential acquisition by Paper Excellence

On July 5, 2022, Resolute and Paper Excellence Group, through its wholly-owned subsidiary Domtar Corporation (or, “Domtar”), entered into a business combination agreement (or, the “Transaction”) under which Domtar will acquire all of the issued and outstanding common shares of Resolute for $20.50 per share, in cash, without interest, and one contractual contingent value right per share (or, the “CVR”).

Under the CVR, stockholders will receive any refunds on approximately $500 million of deposits on softwood lumber duties paid by Resolute through June 30, 2022, including any interest thereon, net of certain expenses and of applicable taxes. Any proceeds attributable to the CVR will be distributed proportionally to the CVR holders, and the value will ultimately be determined by the terms and timing of the resolution of the softwood lumber dispute between Canada and the United States. The terms and timing of such resolution is uncertain.

On October 31, 2022, Resolute's stockholders approved the Transaction. The Transaction, which is subject to applicable regulatory approvals and the satisfaction of certain other customary closing conditions, is expected to close in the first half of 2023. See Note 16, “Subsequent Events.”

Acquisition of Larouche and St-Prime

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). Larouche and St-Prime, which are engineered wood product facilities

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RESOLUTE FOREST PRODUCTS INC.

Notes to Unaudited Interim Consolidated Financial Statements

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.

The following table summarizes our preliminary allocation of the purchase price to the fair values of assets acquired and liabilities assumed at the Acquisition Date:


(Unaudited, in millions)
Cash and cash equivalents	$	16
Accounts receivable		10
Inventories		16

Current assets acquired	$	42
Fixed assets	$	28

Goodwill (1)		54

Total assets acquired and goodwill	$	124
Accounts payable and other	$	3
Current liabilities assumed		3
Pension and other postretirement benefit obligations		1
Deferred income tax liabilities		2
Total liabilities assumed	$	6
Net assets acquired	$	118
Cash consideration transferred		59
Fair value of the previously held interests in Larouche and St-Prime		59
Total fair value of consideration	$	118

(1)The goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized and is mostly attributable to securing downstream integration and the Larouche and St-Prime assembled workforce. Goodwill has been assigned to the wood products segment, and is included in such segment for goodwill impairment testing purposes. The total amount of goodwill is not deductible for tax purposes.

The allocation of the purchase price to assets acquired and liabilities assumed was based upon a preliminary valuation for all items and may be subject to adjustment during the 12-month measurement period following the Acquisition Date since we are finalizing the assumptions in regards to the fair values of these assets and liabilities.

The allocation of the purchase price was based on management’s estimate of the fair values of the acquired identifiable assets and assumed liabilities using valuation techniques including income, cost and market approaches. We utilized both the cost and market approaches to value fixed assets (Level 3).

At the Acquisition Date, our previously-held equity investments of $17 million were remeasured at a fair value of $59 million, which resulted in a gain of $42 million. The gain was recorded in “Other income (expense), net” in our Consolidated Statements of Operations for the nine months ended September 30, 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

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RESOLUTE FOREST PRODUCTS INC.

Notes to Unaudited Interim Consolidated Financial Statements

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 September 30, 2022, our consolidated financial results included sales of $127 million and net income of $36 million attributable to Larouche and St-Prime.

The following unaudited pro forma information for the three and nine months ended September 30, 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.


	Three Months Ended September 30,				Nine Months Ended September 30,
(Unaudited, in millions)	2022		2021		2022		2021
Sales	$	974	$	853	$	2,997	$	2,903
Net income attributable to Resolute Forest Products Inc. (1)	$	87	$	86	$	521	$	476

(1)For the pro forma information, the gain on previously-held equity investments of $42 million was considered realized in the nine months ended September 30, 2021, and deducted from the nine months ended September 30, 2022.

Acquisition of a power generation facility

On April 1, 2022, we acquired a 34.5 megawatt power generation facility in Senneterre (Quebec) for $8 million, including a contingent consideration. With this acquisition, we will maximize the use of biomass from our regional operations.

Note 3. Closure Costs, Impairment and Other Related Charges

In December 2021, the Company announced the indefinite idling of pulp and paper operations at our Calhoun (Tennessee) mill. We have revised our expected 2022 additional cash closure costs, disclosed in our December 31, 2021 Consolidated Financial Statements, from $32 million to $12 million, due to lower than expected chemical disposal costs. During the three and nine months ended September 30, 2022, we recognized nil and $7 million, respectively, of these costs.

In March 2021, the Company announced the indefinite idling of the Amos and Baie-Comeau (Quebec) paper mills. During the three and nine months ended September 30, 2022, we recognized additional other costs of nil and $4 million, respectively, for the Baie-Comeau paper mill.

Note 4. Other Income (Expense), Net

Other income (expense), net for the three and nine months ended September 30, 2022 and 2021, was comprised of the following:


	Three Months Ended September 30,				Nine Months Ended September 30,
(Unaudited, in millions)	2022		2021		2022		2021
Foreign exchange gain	$	37	$	12	$	45	$	1

Gain (loss) on commodity contracts (1)		—		1		1		(85)
Income from equity method investments		—		8		7		12
Gain on previously-held equity investments (Note 2)		—		—		42		—
Miscellaneous expense		—		(1)		—		(2)
	$	37	$	20	$	95	$	(74)

(1)The loss for the nine months ended September 30, 2021, was principally related to lumber futures contracts; none of these contracts were outstanding as of September 30, 2022 and 2021.

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RESOLUTE FOREST PRODUCTS INC.

Notes to Unaudited Interim Consolidated Financial Statements

Note 5. Accumulated Other Comprehensive Loss

The change in our accumulated other comprehensive loss by component (net of tax) for the three and nine months ended September 30, 2022 and 2021, was as follows:


(Unaudited, in millions)	Unamortized Prior Service Costs		Unamortized Actuarial Losses		Foreign Currency Translation		Total
Balance as of June 30, 2022	$	(5)	$	(1,014)	$	(6)	$	(1,025)
Other comprehensive loss before reclassifications		—		—		(3)		(3)
Amounts reclassified from accumulated other comprehensive loss		—		13		—		13
Net current period other comprehensive income (loss)		—		13		(3)		10
Balance as of September 30, 2022	$	(5)	$	(1,001)	$	(9)	$	(1,015)

(Unaudited, in millions)	Unamortized Prior Service Costs		Unamortized Actuarial Losses		Foreign Currency Translation		Total
Balance as of December 31, 2021	$	(5)	$	(1,051)	$	(6)	$	(1,062)
Other comprehensive income (loss) before reclassifications (1)		—		10		(3)		7
Amounts reclassified from accumulated other comprehensive loss		—		40		—		40
Net current period other comprehensive income (loss)		—		50		(3)		47
Balance as of September 30, 2022	$	(5)	$	(1,001)	$	(9)	$	(1,015)

(1) The indefinite idling of pulp and paper operations at our Calhoun 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).


(Unaudited, in millions)	Unamortized Prior Service Costs		Unamortized Actuarial Losses		Foreign Currency Translation		Total
Balance as of June 30, 2021	$	(4)	$	(1,255)	$	(6)	$	(1,265)

Amounts reclassified from accumulated other comprehensive loss		—		12		—		12
Net current period other comprehensive income		—		12		—		12
Balance as of September 30, 2021	$	(4)	$	(1,243)	$	(6)	$	(1,253)

(Unaudited, in millions)	Unamortized Prior Service Costs		Unamortized Actuarial Losses		Foreign Currency Translation		Total
Balance as of December 31, 2020	$	(1)	$	(1,307)	$	(6)	$	(1,314)
Other comprehensive income before reclassifications (1)		—		22		—		22
Amounts reclassified from accumulated other comprehensive loss		(3)		42		—		39
Net current period other comprehensive (loss) income		(3)		64		—		61
Balance as of September 30, 2021	$	(4)	$	(1,243)	$	(6)	$	(1,253)

(1) The indefinite idling of the Amos and Baie-Comeau 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).

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RESOLUTE FOREST PRODUCTS INC.

Notes to Unaudited Interim Consolidated Financial Statements

The reclassifications out of accumulated other comprehensive loss for the three and nine months ended September 30, 2022 and 2021, were comprised of the following:


	Three Months Ended September 30,				Nine Months Ended September 30,
(Unaudited, in millions)	2022		2021		2022		2021		Affected Line in the Consolidated Statements of Operations
Unamortized Prior Service Costs
Amortization of prior service costs or credits	$	—	$	—	$	—	$	(2)	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		—		—		—		(