10-Q 1 ryam-20220326.htm 10-Q ryam-20220326
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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 26, 2022
OR
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
ryam-20220326_g1.jpg
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: (904357-4600

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueRYAMNew 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
o
Accelerated filer
x
Non-accelerated filer  
o
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 63,849,147 shares of common stock, $.01 par value per share, outstanding as of April 29, 2022.



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
March 26, 2022March 27, 2021
Net Sales$351,716 $318,678 
Cost of Sales(345,789)(298,254)
Gross Margin5,927 20,424 
Selling, general and administrative expenses(20,107)(15,840)
Other operating expense, net(1,612)(5,056)
Operating Loss(15,792)(472)
Interest expense(16,198)(15,349)
Interest income and other, net(513)(795)
Other components of pension and OPEB, excluding service costs
1,010 808 
Unrealized gain on GreenFirst equity securities8,900  
Loss from Continuing Operations Before Income Taxes(22,593)(15,808)
Income tax expense (Note 16)(1,398)(93)
  Equity in loss of equity method investment(389)(309)
Loss from Continuing Operations(24,380)(16,210)
Loss from discontinued operations, net of taxes (Note 2)(471)(10,817)
Net Loss$(24,851)$(27,027)
Basic Earnings (Loss) Per Common Share (Note 13)
Loss from continuing operations$(0.38)$(0.26)
Loss from discontinued operations(0.01)(0.17)
Loss per common share-basic$(0.39)$(0.43)
Diluted Earnings (Loss) Per Common Share (Note 13)
Loss from continuing operations$(0.38)$(0.26)
Loss from discontinued operations(0.01)(0.17)
Loss per common share-diluted$(0.39)$(0.43)

See Notes to Consolidated Financial Statements.

1

Rayonier Advanced Materials Inc.
Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
(Dollars in thousands)
Three Months Ended
March 26, 2022March 27, 2021
Net Loss$(24,851)$(27,027)
Other Comprehensive Loss, net of tax (Note 11):
Foreign currency translation adjustments
(6,282)(9,268)
Unrealized gain (loss) on derivative instruments
80 (1,268)
Net gain from pension and postretirement plans
1,948 3,302 
Total other comprehensive loss(4,254)(7,234)
Comprehensive Loss$(29,105)$(34,261)


See Notes to Consolidated Financial Statements.
2

Rayonier Advanced Materials Inc.
Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands, except per share amounts)
 March 26, 2022December 31, 2021
Assets
Current Assets
Cash and cash equivalents$178,749 $253,307 
Accounts receivable, net (Note 3)201,433 181,604 
Inventory (Note 4)223,318 230,691 
Income tax receivable20,927 21,411 
Investment in GreenFirst equity securities (Note 10) 48,087 38,510 
Prepaid and other current assets72,236 50,597 
Total current assets744,750 776,120 
Property, Plant and Equipment (net of accumulated depreciation of $1,662,746 at March 26, 2022 and $1,642,442 at December 31, 2021)
1,172,866 1,146,162 
Deferred Tax Assets336,208 335,119 
Intangible Assets, net29,680 31,432 
Other Assets155,811 156,191 
Total Assets$2,439,315 $2,445,024 
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable$193,394 $169,456 
Accrued and other current liabilities (Note 6)140,589 136,124 
Debt due within one year (Note 7)32,884 37,680 
Current environmental liabilities (Note 8)11,310 11,303 
Total current liabilities378,177 354,563 
Long-Term Debt (Note 7)892,523 891,031 
Long-Term Environmental Liabilities (Note 8)
160,340 159,919 
Pension and Other Postretirement Benefits168,374 170,317 
Deferred Tax Liabilities20,686 20,485 
Other Long-Term Liabilities32,022 34,366 
Commitments and Contingencies (Note 18)
Stockholders’ Equity
Common stock, 140,000,000 shares authorized at $0.01 par value, 63,849,147 and 63,738,409 issued and outstanding, as of March 26, 2022 and December 31, 2021, respectively
638 637 
Additional paid-in capital410,788 408,834 
Retained earnings464,491 489,342 
Accumulated other comprehensive loss (Note 11)(88,724)(84,470)
Total Stockholders’ Equity787,193 814,343 
Total Liabilities and Stockholders’ Equity$2,439,315 $2,445,024 

See Notes to Consolidated Financial Statements.
3

Rayonier Advanced Materials Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
Three Months Ended
March 26, 2022March 27, 2021
Operating Activities
Net loss$(24,851)$(27,027)
Loss from discontinued operations 471 10,817 
Adjustments to reconcile loss from continuing operations to cash provided by operating activities:
Depreciation and amortization27,393 33,316 
Stock-based incentive compensation expense (benefit)2,259 (687)
Deferred income tax expense(697)(2,119)
Unrealized gain on GreenFirst equity securities(8,900) 
Net periodic benefit cost of pension and other postretirement plans1,519 2,104 
Unrealized gain on derivative instruments (1,728)
Unrealized loss from foreign currency1,533 1,636 
Other1,757 808 
Changes in operating assets and liabilities:
Receivables(22,751)(6,580)
Inventories6,946 (19,154)
Accounts payable13,505 (2,470)
Accrued liabilities5,053 26,958 
All other operating activities(24,503)8,146 
Contributions to pension and other postretirement plans(1,619)(1,582)
Cash (Used in) Provided by Operating Activities-continuing operations(22,885)22,438 
Cash (Used in) Provided by Operating Activities-discontinued operations (635)15,777 
Cash (Used in) Provided by Operating Activities(23,520)38,215 
Investing Activities
Capital expenditures, net (45,167)(16,094)
Investment in equity method investment (987)
Cash Used for Investing Activities-continuing operations(45,167)(17,081)
Cash Used for Investing Activities-discontinued operations (3,431)
Cash Used for Investing Activities(45,167)(20,512)
Financing Activities
Revolving credit facility and other borrowings3,397  
Repayment of long-term debt(2,119)(1,549)
Short-term financing, net(5,388)(520)
Common stock repurchased(304)(1,420)
Cash Used for Financing Activities(4,414)(3,489)
Cash and Cash Equivalents
Change in cash and cash equivalents(73,101)14,214 
Net effect of foreign exchange on cash and cash equivalents(1,457)(1,117)
Balance, beginning of period253,307 93,653 
Balance, end of period$178,749 $106,750 

See Notes to Consolidated Financial Statements.
4

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, 2021, as filed with the SEC on March 1, 2022.
As a result of the sale of its lumber and newsprint assets in August 2021 to GreenFirst Forest Products, Inc. (“GreenFirst”), the Company has reclassified certain prior year amounts to conform to the current year’s presentation for discontinued operations. 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 the Company’s operations and financial results. See Note 2 —Discontinued Operations for additional information.
New or Recently Adopted Accounting Pronouncements
There have been no new or recently adopted accounting pronouncements impacting the Company’s unaudited 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 the date of issuance of these Consolidated Financial Statements. The following subsequent events warranting disclosure were identified:
On May 2, 2022, the Company announced the sale of the 28,684,433 common shares of GreenFirst it received in connection with the sale of its lumber and newsprint assets in August 2021. The common shares were sold for approximately $43 million. The sale agreement contains a purchase price protection clause whereby the Company is entitled to participate in further share price appreciation under certain circumstances over the next 18 months.



5


Rayonier Advanced Materials Inc.
Notes to Consolidated Financial Statements - (Unaudited) (Continued)
2.    Discontinued Operations
On August 28, 2021, the Company completed the sale of its lumber and newsprint facilities and certain related assets located in Ontario and Québec Canada, to GreenFirst for $232 million, paid in cash, 28.7 million shares of GreenFirst’s common stock and a credit note issued to the Company by GreenFirst in the amount of CAD $8 million (approximately USD $5 million after present value discount). The GreenFirst common shares have been accounted for at fair value, with changes in fair value recorded in the Consolidated Statements of Income and Comprehensive Income. See Note 10 — Fair Value Measurements for additional information. The Company recently sold the GreenFirst common shares. See Note 1 — Basis of Presentation and New Accounting Pronouncements for additional information.
The cash received at closing was preliminary and subject to final purchase price and other sale-related adjustments. During the first quarter of 2022, the Company trued-up certain sale-related items with GreenFirst for a total net cash outflow of $3 million, as previously disclosed. Pursuant to the terms of the asset purchase agreement, GreenFirst and the Company continue efforts to finalize the closing inventory valuation adjustment.
In connection with the transaction, the parties entered into a Transition Services Agreement ("TSA") whereby the Company would provide certain transitional services to GreenFirst, including information technology, accounting, treasury and other services following the closing of the transaction. The TSA is expected to be terminated in the second quarter of 2022.

Income (loss) from discontinued operations is comprised of the following:
Three Months Ended
March 26, 2022March 27, 2021
Net sales (a)$ $146,463 
Cost of sales(173)(82,727)
Gross margin(173)63,736 
Selling, general and administrative expenses and other (458)(8,466)
Operating income (loss) (631)55,270 
Interest expense (b) (2,614)
Other non-operating income(4)345 
Income (loss) from discontinued operations before income taxes(635)53,001 
Income tax benefit (expense)164 (63,818)
Loss from discontinued operations, net of taxes$(471)$(10,817)

(a)    Net of intercompany sales of $0 million and $12 million for three months ended March 26, 2022 and March 27, 2021, respectively.

(b)    The Company allocated interest expense to discontinued operations based on the total portion of debt not attributable to other operations repaid as a result of the transaction.

Other discontinued operations information is as follows:    
Three Months Ended
March 26, 2022March 27, 2021
Depreciation and amortization$ $3,173 
Capital expenditures$ $3,488 

6

Rayonier Advanced Materials Inc.
Notes to Consolidated Financial Statements - (Unaudited) (Continued)
3.    Accounts Receivable, Net
The Company’s accounts receivable included the following:
 March 26, 2022December 31, 2021
Accounts receivable, trade$160,726 $131,371 
Accounts receivable, other (a)41,756 51,007 
Allowance for expected credit losses(1,049)(774)
Total accounts receivable, net$201,433 $181,604 
(a)    Accounts receivable, other consists primarily of value added/consumption taxes, grants receivable and accrued billings due from government agencies.

4.    Inventory
The Company’s inventory included the following:
 March 26, 2022December 31, 2021
Finished goods$167,980 $175,832 
Work-in-progress1,792 6,533 
Raw materials46,835 41,974 
Manufacturing and maintenance supplies6,711 6,352 
Total inventory$223,318 $230,691 

5     Leases
The Company’s operating and finance leases are primarily for corporate offices, warehouse space, rail cars and equipment. As of March 26, 2022, the Company’s leases have remaining lease terms of 1 year to 14.6 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 March 26, 2022 and December 31, 2021 was 7.7 percent and 7.6 percent, respectively. The weighted average discount rate used in determining the finance lease ROU assets and liabilities as of March 26, 2022 and December 31, 2021 was 7.0 percent.

The Company’s operating and finance lease cost is as follows:
7

Rayonier Advanced Materials Inc.
Notes to Consolidated Financial Statements - (Unaudited) (Continued)
Three Months Ended
March 26, 2022March 27, 2021
Operating Leases
   Operating lease expense $1,931 $1,369 
Finance Leases
   Amortization of ROU assets92 86 
   Interest37 43 
Total$2,060 $1,498 
As of March 26, 2022, the weighted average remaining lease term is 5.3 years and 4.6 years for operating leases and financing leases, respectively. As of December 31, 2021, the weighted average remaining lease term is 5.3 years and 4.9 years for operating leases and finance leases, respectively. Cash provided by operating activities includes approximately $2 million and $1 million from operating lease payments made during the three months ended March 26, 2022 and March 27, 2021, respectively. Finance lease cash flows were immaterial during the three months ended March 26, 2022 and March 27, 2021.
As of March 26, 2022 and December 31, 2021, 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 2022 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:
Balance Sheet ClassificationMarch 26, 2022December 31, 2021
Right-of-use assets Other assets$17,438 $18,316 
Lease liabilities, currentAccrued and other current liabilities$6,291 $6,050 
Lease liabilities, non-currentOther long-term liabilities$11,641 $12,551 
As of March 26, 2022, operating lease maturities for the remainder of 2022 through 2026 and thereafter are as follows:
March 26, 2022
Remainder of 2022$5,875 
20236,077 
20242,616 
20251,705 
20261,103 
Thereafter5,351 
Total minimum lease payments$22,727 
Less: imputed interest(4,794)
Present value of future minimum lease payments$17,933 

8

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:
 March 26, 2022December 31, 2021
Accrued customer incentives$28,703 $26,726 
Accrued payroll and benefits22,121 13,363 
Accrued interest15,126 19,153 
Accrued income taxes10,381 9,210 
Accrued property and other taxes5,684 4,074 
Deferred revenue (a)23,068 22,519 
Other current liabilities35,506 41,080 
Total accrued and other current liabilities$140,589 $136,124 
(a) Includes CAD $25 million (approximately $20 million) associated with funds received in 2021 for the Canada Emergency Wage Subsidy (“CEWS”). All CEWS claims are subject to mandatory audit. The Company will recognize amounts from these claims in income at the time that there is sufficient evidence that it will not be required to repay such amounts.
7.    Debt and Finance Leases
The Company’s debt and finance leases included the following:
March 26, 2022December 31, 2021
ABL Credit Facility due 2025, $100 million available, bearing interest of approximately 0.45% LIBOR floor plus 2.25%, interest rate of 2.70% at March 26, 2022
$ $ 
Senior Secured Notes due 2026 at a fixed interest rate of 7.625%
475,000 475,000 
Senior Notes due 2024 at a fixed interest rate of 5.5%
369,185 369,185 
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
64,676 65,451 
Other loans (a)20,701 18,280 
Short-term factoring facility-France1,730 7,118 
Finance lease obligation2,052 2,138 
Total debt principal payments due933,344 937,172 
Less: Debt premium, original issue discount and issuance costs, net(7,937)(8,461)
Total debt925,407 928,711 
Less: Debt due within one year(32,884)(37,680)
Long-term debt$892,523 $891,031 
(a) Loans for energy/bioethanol projects in France.

As of March 26, 2022, debt and finance lease payments due during the remainder of 2022, the next four years and thereafter are as follows:
9

Rayonier Advanced Materials Inc.
Notes to Consolidated Financial Statements - (Unaudited) (Continued)
Debt Principal Payments
Remainder of 2022$30,486 
202310,782 
2024380,445 
202511,301 
2026485,662 
Thereafter12,616 
Total principal payments$931,292 


8.    Environmental Liabilities
An analysis of liabilities for the three months ended March 26, 2022 is as follows:
Balance, December 31, 2021$171,222 
Increase in liabilities827 
Payments(558)
Foreign currency adjustments159 
Balance, March 26, 2022171,650 
Less: Current portion(11,310)
Long-term environmental liabilities$160,340 
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 March 26, 2022, the Company estimates this exposure could range up to approximately $86 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 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
10

Rayonier Advanced Materials Inc.
Notes to Consolidated Financial Statements - (Unaudited) (Continued)
instruments were deferred as a component of accumulated other comprehensive income (loss) to be recognized in earnings as the underlying hedged transactions occur and affect earnings.
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-denominated debt. The Company is also exposed to the translation of foreign currency earnings to the U.S. dollar. Management may use foreign currency forward contracts to selectively hedge its foreign currency cash 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 effects of derivatives designated as hedging instruments, the related changes in AOCI and the gains and losses in income is as follows:
Three Months Ended March 26, 2022
Derivatives Designated as Hedging InstrumentsGain (Loss) Recognized in OCI on DerivativeGain (Loss) Reclassified from AOCI into Income Location on Statement of Income
Foreign exchange forward contracts
$ $(92)Interest income and other, net
Three Months Ended March 27, 2021
Gain (Loss) Recognized in OCI on DerivativeGain (Loss) Reclassified from AOCI into Income Location on Statement of Income
Foreign exchange forward contracts
$ $1,828 Cost of sales
Foreign exchange forward contracts
$ $(100)Interest income and other, net

The after-tax amounts of unrealized gains (losses) in AOCI related to hedge derivatives are presented below:
March 26, 2022December 31, 2021
Foreign exchange cash flow hedges
$(767)$(847)


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:
March 26, 2022December 31, 2021
Carrying
Amount
Fair Value (b)Carrying
Amount
Fair Value (b)
Assets:Level 1Level 2Level 1Level 2
Cash and cash equivalents$178,749 $178,749 $ $253,307 $253,307 $ 
Investment in GreenFirst equity securities$48,087 $48,087 $ $38,510 $ $38,510 
Liabilities (a):
Fixed-rate long-term debt921,625  934,787 919,455  964,308 
(a) Liabilities exclude finance lease obligation.
(b) The Company did not have Level 3 assets or liabilities at March 26, 2022 or December 31, 2021.
11

Rayonier Advanced Materials Inc.
Notes to Consolidated Financial Statements - (Unaudited) (Continued)
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.
Investment in GreenFirst shares — The Company received shares of common stock in connection with the sale of the lumber and newsprint assets to GreenFirst, which the Company was required to hold for a minimum of six months following the close of the transaction. Accordingly, prior to February 28, 2022, the fair value of these shares reflected a discount for lack of marketability (“DLOM”) given the restriction on sale by the Company. The primary inputs in the fair value estimate during the minimum holding period were expected term, dividend yield, volatility and risk-free rate. All inputs to the DLOM were observable. GreenFirst is based in Canada and currently does not pay a dividend. At March 26, 2022, the DLOM is no longer applicable as the six-month sale restriction has expired.
The following were the key inputs at each measurement date:

March 26, 2022December 31, 2021At closing of transaction
Expected Termn/a 0.16 years0.5 years
Risk-free rate n/a 0.10 %0.20 %
Dividend yield   
Volatilityn/a 73.77 %92.04 %
    
DLOMn/a 6.77 %14.38 %
The Company recently sold the GreenFirst common shares. See Note 1 — Basis of Presentation and New Accounting Pronouncements for additional information.

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.
12

Rayonier Advanced Materials Inc.
Notes to Consolidated Financial Statements - (Unaudited) (Continued)
11.    Accumulated Other Comprehensive Income (Loss)
The components of AOCI are as follows:
Three Months Ended
March 26, 2022March 27, 2021
Unrecognized components of employee benefit plans, net of tax:
Balance, beginning of year
$(76,849)$(146,614)
Other comprehensive gain (loss) before reclassifications
 
Income tax on other comprehensive loss
 
Reclassifications to earnings: (a)
Amortization of losses
2,488 4,082 
Amortization of prior service costs
8 138 
Income tax on reclassifications
(548)(918)
Net comprehensive gain on employee benefit plans, net of tax1,948 3,302 
Balance, end of period(74,901)(143,312)
Unrealized gain (loss) on derivative instruments, net of tax:
Balance, beginning of year
(847)1,834 
Reclassifications to earnings: (b)
Foreign exchange contracts
92 (1,728)
Income tax on reclassifications
(12)460 
Net comprehensive loss on derivative instruments, net of tax80 (1,268)
Balance, end of period(767)566 
Foreign currency translation adjustments:
Balance, beginning of year
(6,774)11,145 
Foreign currency translation adjustment, net of tax of $0 and $0
(6,282)(9,268)
Balance, end of period(13,056)1,877 
Accumulated other comprehensive income (loss), end of period$(88,724)$(140,869)
(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 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.
13

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 StockAdditional Paid in CapitalRetained
Earnings
Accumulated Other Comprehensive LossTotal Stockholders’
 Equity
SharesPar Value
For the three months ended March 26, 2022
Balance, December 31, 202163,738,409 $637 $408,834 $489,342 $(84,470)$814,343 
Net income (loss)— — — (24,851)— (24,851)
Other comprehensive income (loss), net of tax
— — — — (4,254)(4,254)
Issuance of common stock under incentive stock plans
172,920 2 (2)— —  
Stock-based compensation — — 2,259 — — 2,259 
Repurchase of common shares (a)(62,179)(1)(303)— — (304)
Balance, March 26, 202263,849,150 $638 $410,788 $464,491 $(88,724)$787,193 
For the three months ended March 27, 2021
Balance, December 31, 202063,359,839 $633 $405,161 $422,928 $(133,635)$695,087 
Net income (loss)— — — (27,027)— (27,027)
Other comprehensive income (loss), net of tax
— — — — (7,234)(7,234)
Issuance of common stock under incentive stock plans
369,713 4 (4)— —  
Stock-based compensation— — (653)— — (653)
Repurchase of common shares (a)(132,196)(1)(1,418)— — (1,419)
Balance, March 27, 202163,597,356 $636 $403,086 $395,901 $(140,869)$658,754 
(a) Repurchased to satisfy the tax withholding requirements related to the issuance of stock under the Rayonier Advanced Materials Incentive Stock Plan.
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 months ended March 26, 2022 and March 27, 2021, the Company did not repurchase any common shares under this buyback program. As of March 26, 2022, 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.
Shareholder Rights Plan
On March 21, 2022, the Company adopted a shareholder rights plan (the “Rights Agreement”) whereby a significant penalty is imposed upon any person or group which acquires beneficial ownership of 10% or more of the Company Common Stock without the approval of the Board of Directors (the “Board”). Also on this date, the Board declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of common stock of the Company, par value $0.01 per share (“Company Common Stock”), payable on March 31, 2022 to Company stockholders of record as of the close of business on March 31, 2022.

The Rights trade with, and are inseparable from, shares of the Company Common Stock. Each Right will allow its holder to purchase from the Company one one-hundredth of a share of Series A Junior Participating Preferred Stock for $35.00, once the Rights become exercisable. This portion of a Preferred Share will give the stockholder approximately the same dividend, voting and liquidation rights as would one share of Company Common Stock. The Rights will not be exercisable until 10 days after the public announcement or public disclosure that a person or group has become an “Acquiring Person” by obtaining beneficial ownership of 10% or more of the outstanding Company Common Stock (including certain derivative positions), subject to certain exceptions. The Rights will expire on March 20, 2023.

14

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
March 26, 2022March 27, 2021
Loss from continuing operations $(24,380)$(16,210)
Loss from discontinued operations (471)(10,817)
Net loss available for common stockholders$(24,851)$(27,027)
Shares used for determining basic earnings per share of common stock
63,771,484 63,430,601 
Dilutive effect of:
Stock options  
Performance and restricted stock  
Shares used for determining diluted earnings per share of common stock
63,771,484 63,430,601 
Basic per share amounts
Loss from continuing operations $(0.38)$(0.26)
Loss from discontinued operations(0.01)(0.17)
Net loss $(0.39)$(0.43)
Diluted per share amounts
Loss from continuing operations $(0.38)$(0.26)
Loss from discontinued operations(0.01)(0.17)
Net loss $(0.39)$(0.43)
Anti-dilutive instruments excluded from the computation of diluted earnings per share:
Three Months Ended
March 26, 2022March 27, 2021
Stock options80,120 122,525 
Performance and restricted stock3,401,875 2,338,111 
Total anti-dilutive instruments3,481,995 2,460,636 

14.    Incentive Stock Plans
The Company’s total stock-based compensation for the three months ended March 26, 2022 and March 27, 2021 was expense of $2 million and a benefit of $1 million, respectively.
The Company made new grants of restricted stock units and performance-based stock units to certain employees during the first three months of 2022. The 2022 restricted stock unit awards cliff vest after three years. The 2022 performance-based stock unit awards measure total shareholder return (“TSR”) on an absolute basis and relative to peers. Participants can earn between 0 and 250 percent of the target award. Performance below the threshold for the absolute TSR would result in a zero payout for the TSR metric. There is a performance-based stock 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.
15

Rayonier Advanced Materials Inc.
Notes to Consolidated Financial Statements - (Unaudited) (Continued)
In March 2022, the performance-based share units granted in 2019 vested without meeting the performance thresholds, resulting in no stock units being awarded and no shares of common stock issued.
The following table summarizes the activity on the Company’s incentive stock awards for the three months ended March 26, 2022:
Stock OptionsRestricted Stock UnitsPerformance-Based Stock Units
OptionsWeighted Average Exercise PriceAwardsWeighted Average Grant Date Fair ValueAwardsWeighted Average Grant Date Fair Value
Outstanding at January 1, 2022111,124 $39.47 927,556 $8.72 1,459,716 $6.51 
Granted  869,791 5.88 1,146,202 8.51 
Forfeited  (750)10.70 (815,443)6.74 
Exercised or settled  (185,197)13.42   
Expired or cancelled(31,004)38.16     
Outstanding at March 26, 202280,120 $39.94 1,611,400 $6.64 1,790,475 $7.68 

15.    Employee Benefit Plans
The Company has defined benefit pension and other long-term and postretirement plans covering certain union and non-union employees, primarily in the U.S. and Canada. The defined benefit pension plans are closed to new participants. 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.
The components of net periodic benefit costs from these plans that have been recorded are shown in the following table:
PensionPostretirement
Three Months EndedThree Months Ended
Components of Net Periodic Benefit CostMarch 26, 2022March 27, 2021March 26, 2022March 27, 2021
Service cost$2,176 $2,551 $353 $362 
Interest cost4,606 4,418 216 176 
Expected return on plan assets(8,328)(9,623)  
Amortization of prior service cost39 176 (31)(38)
Amortization of losses2,473 4,079 15 3 
Total net periodic benefit cost$966 $1,601 $553 $503 
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 rate on the loss from continuing operations for the three months ended March 26, 2022 was an expense of 6 percent, compared to an expense of 1 percent on the loss from continuing operations for the three months ended March 27, 2021.
The current quarter to date March 26, 2022 effective rate differs from the federal statutory rate of 21 percent primarily due to disallowed interest deductions in the U.S. and nondeductible executive compensation, partially offset by US tax credits and tax return to accrual adjustments. The effective tax rate for the three months ended March 27, 2021 differs from the federal statutory rate primarily due to disallowed interest deductions in the U.S., lower tax deductions on vested stock compensation, and tax return to accrual adjustments.

The Company has a $21 million receivable related to tax years recently examined by the IRS which is expected to be received within the next twelve months.

There has been a $1 million increase to the balance of unrecognized tax benefits reported at December 31, 2021.
16

Rayonier Advanced Materials Inc.
Notes to Consolidated Financial Statements - (Unaudited) (Continued)

17.    Segment and Geographical Information
The Company operates in the following business segments: High Purity Cellulose, Paperboard, High-Yield Pulp 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 allocates a portion of the cost of maintaining these support functions to its operating units.
The Company evaluates the performance of its segments based on operating income. Intersegment sales consist primarily of High-Yield Pulp sales 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
 March 26, 2022March 27, 2021
High Purity Cellulose
Cellulose Specialties$183,554 $