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EX-32.2 - EXHIBIT 32.2 - Resolute Forest Products Inc.rfp-2017331xex322.htm
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EX-31.2 - EXHIBIT 31.2 - Resolute Forest Products Inc.rfp-2017331xex312.htm
EX-31.1 - EXHIBIT 31.1 - Resolute Forest Products Inc.rfp-2017331xex311.htm
EX-10.2 - EXHIBIT 10.2 - Resolute Forest Products Inc.rfp-2017331xex102.htm
EX-10.1 - EXHIBIT 10.1 - Resolute Forest Products Inc.rfp-2017331xex101.htm

 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
 
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2017
 
¨

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)
111 Duke Street, Suite 5000; Montréal, Quebec; Canada H3C 2M1
(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)
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 þ    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted 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 and post such files).
    Yes þ    No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 þ
Non-accelerated filer ¨ (Do not check if a smaller reporting company)
 
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 þ
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes þ    No ¨
As of April 28, 2017, there were 89,750,964 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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



PART I.
FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
RESOLUTE FOREST PRODUCTS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in millions, except per share amounts)

 
Three Months Ended 
 March 31,
 
2017
 
 
2016
 
 
Sales
$
872

 
$
877

 
Costs and expenses:
 
 
 
 
 
 
Cost of sales, excluding depreciation, amortization and distribution costs
 
667

 
 
677

 
Depreciation and amortization
 
51

 
 
52

 
Distribution costs
 
110

 
 
112

 
Selling, general and administrative expenses
 
43

 
 
38

 
Closure costs, impairment and other related charges
 
7

 
 

 
Net gain on disposition of assets
 

 
 
(2
)
 
Operating loss
 
(6
)
 
 

 
Interest expense
 
(11
)
 
 
(10
)
 
Other income, net
 

 
 
13

 
(Loss) income before income taxes
 
(17
)
 
 
3

 
Income tax provision
 
(29
)
 
 
(10
)
 
Net loss including noncontrolling interests
 
(46
)
 
 
(7
)
 
Net income attributable to noncontrolling interests
 
(1
)
 
 
(1
)
 
Net loss attributable to Resolute Forest Products Inc.
$
(47
)
 
$
(8
)
 
Net loss per share attributable to Resolute Forest Products Inc. common shareholders:
 
 
 
 
 
 
Basic
$
(0.52
)
 
$
(0.09
)
 
Diluted
 
(0.52
)
 
 
(0.09
)
 
Weighted-average number of Resolute Forest Products Inc. common shares outstanding:
 
 
 
 
 
 
Basic
 
90.2

 
 
89.6

 
Diluted
 
90.2

 
 
89.6

 
See accompanying notes to unaudited interim Consolidated Financial Statements.


1


RESOLUTE FOREST PRODUCTS INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited, in millions)

 
Three Months Ended 
 March 31,
 
2017
 
 
2016
 
 
Net loss including noncontrolling interests
$
(46
)
 
$
(7
)
 
Other comprehensive income:
 
 
 
 
 
 
Unamortized prior service credits
 
 
 
 
 
 
Change in unamortized prior service credits
 
(4
)
 
 
(4
)
 
Income tax provision
 

 
 

 
Change in unamortized prior service credits, net of tax
 
(4
)
 
 
(4
)
 
Unamortized actuarial losses
 
 
 
 
 
 
Change in unamortized actuarial losses
 
14

 
 
12

 
Income tax provision
 
(2
)
 
 
(3
)
 
Change in unamortized actuarial losses, net of tax
 
12

 
 
9

 
Foreign currency translation
 
1

 
 

 
Other comprehensive income, net of tax
 
9

 
 
5

 
Comprehensive loss including noncontrolling interests
 
(37
)
 
 
(2
)
 
Comprehensive income attributable to noncontrolling interests
 
(1
)
 
 
(1
)
 
Comprehensive loss attributable to Resolute Forest Products Inc.
$
(38
)
 
$
(3
)
 
See accompanying notes to unaudited interim Consolidated Financial Statements.

2


RESOLUTE FOREST PRODUCTS INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in millions, except per share amount)

 
March 31,
2017
December 31,
2016
Assets
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
$
39

 
$
35

 
Accounts receivable, net:
 
 
 
 
 
 
Trade
 
370

 
 
358

 
Other
 
84

 
 
83

 
Inventories, net
 
608

 
 
570

 
Other current assets
 
36

 
 
35

 
Total current assets
 
1,137

 
 
1,081

 
Fixed assets, less accumulated depreciation of $1,464 and $1,415 as of March 31, 2017 and December 31, 2016, respectively
 
1,866

 
 
1,842

 
Amortizable intangible assets, less accumulated amortization of $18 and $16 as of March 31, 2017 and December 31, 2016, respectively
 
68

 
 
70

 
Goodwill
 
81

 
 
81

 
Deferred income tax assets
 
1,054

 
 
1,039

 
Other assets
 
129

 
 
164

 
Total assets
$
4,335

 
$
4,277

 
 
 
 
 
 
 
 
Liabilities and equity
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
Accounts payable and accrued liabilities
$
468

 
$
466

 
Current portion of long-term debt
 
1

 
 
1

 
Total current liabilities
 
469

 
 
467

 
Long-term debt, net of current portion
 
880

 
 
761

 
Pension and other postretirement benefit obligations
 
1,251

 
 
1,281

 
Deferred income tax liabilities
 
5

 
 
2

 
Other liabilities
 
56

 
 
55

 
Total liabilities
 
2,661

 
 
2,566

 
Commitments and contingencies
 

 
 

 
Equity:
 
 
 
 
 
 
Resolute Forest Products Inc. shareholders’ equity:
 
 
 
 
 
 
Common stock, $0.001 par value. 117.8 shares issued and 89.8 shares outstanding as of March 31, 2017 and December 31, 2016
 

 
 

 
Additional paid-in capital
 
3,778

 
 
3,775

 
Deficit
 
(1,257
)
 
 
(1,207
)
 
Accumulated other comprehensive loss
 
(746
)
 
 
(755
)
 
Treasury stock at cost, 28.0 shares as of March 31, 2017 and December 31, 2016
 
(120
)
 
 
(120
)
 
Total Resolute Forest Products Inc. shareholders’ equity
 
1,655

 
 
1,693

 
Noncontrolling interests
 
19

 
 
18

 
Total equity
 
1,674

 
 
1,711

 
Total liabilities and equity
$
4,335

 
$
4,277

 
See accompanying notes to unaudited interim Consolidated Financial Statements.

3


RESOLUTE FOREST PRODUCTS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited, in millions)
 
 
Three Months Ended March 31, 2017
 
Resolute Forest Products Inc. Shareholders’ Equity
 
 
 
 
 
 
 
Common
Stock
Additional
Paid-In
Capital
Deficit
Accumulated Other Comprehensive Loss
Treasury
Stock
Non-controlling
Interests
Total Equity
Balance as of December 31, 2016
$

 
$
3,775

 
$
(1,207
)
 
$
(755
)
 
$
(120
)
 
$
18

 
$
1,711

 
Share-based compensation costs for equity-classified awards
 

 
 
3

 
 

 
 

 
 

 
 

 
 
3

 
Net (loss) income
 

 
 

 
 
(47
)
 
 

 
 

 
 
1

 
 
(46
)
 
Cumulative-effect adjustment upon deferred tax charge elimination (Note 9)
 

 
 

 
 
(3
)
 
 

 
 

 
 

 
 
(3
)
 
Other comprehensive income, net of tax
 

 
 

 
 

 
 
9

 
 

 
 

 
 
9

 
Balance as of March 31, 2017
$

 
$
3,778

 
$
(1,257
)
 
$
(746
)
 
$
(120
)
 
$
19

 
$
1,674

 

 
Three Months Ended March 31, 2016
 
Resolute Forest Products Inc. Shareholders’ Equity
 
 
 
 
 
 
 
Common
Stock
Additional
Paid-In
Capital
Deficit
Accumulated Other Comprehensive Loss
Treasury
Stock
Non-
controlling
Interests
Total Equity
Balance as of December 31, 2015
$

 
$
3,765

 
$
(1,126
)
 
$
(587
)
 
$
(120
)
 
$
13

 
$
1,945

 
Share-based compensation costs for equity-classified awards
 

 
 
3

 
 

 
 

 
 

 
 

 
 
3

 
Net (loss) income
 

 
 

 
 
(8
)
 
 

 
 

 
 
1

 
 
(7
)
 
Other comprehensive income, net of tax
 

 
 

 
 

 
 
5

 
 

 
 

 
 
5

 
Balance as of March 31, 2016
$

 
$
3,768

 
$
(1,134
)
 
$
(582
)
 
$
(120
)
 
$
14

 
$
1,946

 
See accompanying notes to unaudited interim Consolidated Financial Statements.


4


RESOLUTE FOREST PRODUCTS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in millions)

 
Three Months Ended 
 March 31,
 
2017
 
 
2016
 
 
Cash flows from operating activities:
 
 
 
 
 
 
Net loss including noncontrolling interests
$
(46
)
 
$
(7
)
 
Adjustments to reconcile net loss including noncontrolling interests to net cash (used in) provided by operating activities:
 
 
 
 
 
 
Share-based compensation
 
4

 
 
3

 
Depreciation and amortization
 
51

 
 
52

 
Inventory write-downs related to closures
 
4

 
 

 
Deferred income taxes
 
28

 
 
10

 
Net pension contributions and other postretirement benefit payments
 
(30
)
 
 
(21
)
 
Net gain on disposition of assets
 

 
 
(2
)
 
Gain on translation of foreign currency denominated deferred income taxes
 
(10
)
 
 
(63
)
 
Loss on translation of foreign currency denominated pension and other postretirement benefit obligations
 
9

 
 
52

 
Gain on disposition of equity method investment
 

 
 
(5
)
 
Net planned major maintenance amortization
 
1

 
 

 
Changes in working capital:
 
 
 
 
 
 
Accounts receivable
 
(11
)
 
 
(12
)
 
Inventories
 
(40
)
 
 
(20
)
 
Accounts payable and accrued liabilities
 
1

 
 
22

 
Other, net
 

 
 
(3
)
 
Net cash (used in) provided by operating activities
 
(39
)
 
 
6

 
Cash flows from investing activities:
 
 
 
 
 
 
Cash invested in fixed assets
 
(69
)
 
 
(47
)
 
Disposition of assets
 

 
 
5

 
Increase in countervailing duty cash deposits
 
(5
)
 
 
(6
)
 
Increase in restricted cash
 
(2
)
 
 

 
Decrease in deposit requirements for letters of credit, net
 
1

 
 

 
Net cash used in investing activities
 
(75
)
 
 
(48
)
 
Cash flows from financing activities:
 
 
 
 
 
 
Net borrowings under revolving credit facilities
 
118

 
 
20

 
Net cash provided by financing activities
 
118

 
 
20

 
Effect of exchange rate changes on cash and cash equivalents
 

 
 
1

 
Net increase (decrease) in cash and cash equivalents
 
4

 
 
(21
)
 
Cash and cash equivalents:
 
 
 
 
 
 
Beginning of period
 
35

 
 
58

 
End of period
$
39

 
$
37

 
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 and affiliates, 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, newsprint and specialty papers, which are marketed in over 70 countries. We own or operate over 40 pulp, paper, tissue and wood products facilities, as well as power generation assets in the United States and Canada.
Financial statements
Our interim Consolidated Financial Statements are unaudited and have been prepared in accordance with the requirements of the U.S. Securities and Exchange Commission (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 may be condensed or omitted. In our opinion, all adjustments (consisting of normal recurring adjustments) necessary for the fair statement of the unaudited interim 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, 2017, are not necessarily indicative of the results to be expected for the full year. These unaudited interim Consolidated Financial Statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 1, 2017. Certain prior period amounts in our footnotes have been reclassified to conform to the 2017 presentation. For additional information, see Note 11, “Segment Information.”
New accounting pronouncements adopted
In October 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-16, “Intra-Entity Transfers of Assets Other Than Inventory,” which eliminates the deferral of the tax effects of intra-entity asset transfers other than inventory until the transferred assets are sold to a third party or recovered through use. This update is effective on a modified retrospective approach for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. As early adoption is permitted as of the beginning of an annual period, we adopted this ASU on January 1, 2017. For additional information, see Note 9, “Income Taxes.”
Accounting pronouncements not yet adopted
In March 2017, the FASB issued ASU 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which requires employers that present a measure of operating income in their statements of earnings to disaggregate and present only the service cost component of net periodic benefit cost and net periodic postretirement benefit cost in operating expenses (together with other employee compensation costs arising during the period). The other components of the net periodic benefit cost are to be reported separately outside any subtotal of operating income. This update is effective retrospectively for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted for fiscal years beginning after December 31, 2016. We plan to adopt this ASU on January 1, 2018. The adoption of this accounting guidance will impact the presentation of our results of operations, the effect of which cannot be reasonably estimated due to the inherent uncertainties with respect to the variations in assumptions used to determine the net periodic benefit cost, and could be material.
Note 2. Closure Costs, Impairment and Other Related Charges
During the three months ended March 31, 2017, we recorded severance and other costs of $7 million, as a result of the permanent closure of our Mokpo, South Korea, paper mill on March 9, 2017.
 
 

6


RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements

Note 3. Other Income, Net
Other income, net for the three months ended March 31, 2017 and 2016, was comprised of the following:
 
Three Months Ended 
 March 31,
(Unaudited, in millions)
2017
 
 
2016
 
 
Foreign exchange gain
$

 
$
6

 
Gain on disposition of equity method investment (1)
 

 
 
5

 
Miscellaneous income
 

 
 
2

 
 
$

 
$
13

 
(1) 
On February 1, 2016, we sold for total consideration of $5 million our interest in Produits Forestiers Petit-Paris Inc., an unconsolidated entity located in Saint-Ludger-de-Milot, Quebec, in which we had a 50% interest, resulting in a gain on disposition of $5 million.
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, 2017, was as follows:
(Unaudited, in millions)
Unamortized Prior Service Credits
Unamortized Actuarial Losses
Foreign
Currency
Translation
Total
Balance as of December 31, 2016
$
67

 
$
(819
)
 
$
(3
)
 
$
(755
)
 
Other comprehensive income before reclassifications
 

 
 
1

 
 
1

 
 
2

 
Amounts reclassified from accumulated other comprehensive loss (1)
 
(4
)
 
 
11

 
 

 
 
7

 
Net current period other comprehensive (loss) income
 
(4
)
 
 
12

 
 
1

 
 
9

 
Balance as of March 31, 2017
$
63

 
$
(807
)
 
$
(2
)
 
$
(746
)
 
(1) 
See the table below for details about these reclassifications.
The reclassifications out of accumulated other comprehensive loss for the three months ended March 31, 2017, were comprised of the following:
(Unaudited, in millions)
Amounts Reclassified From Accumulated Other Comprehensive Loss
Affected Line in the Consolidated Statements of Operations
Unamortized Prior Service Credits
 
 
 
 
Amortization of prior service credits
$
(4
)
 
Cost of sales, excluding depreciation, amortization and distribution costs (1)
 
 

 
Income tax provision
 
$
(4
)
 
Net of tax
Unamortized Actuarial Losses
 
 
 
 
Amortization of actuarial losses
$
13

 
Cost of sales, excluding depreciation, amortization and distribution costs (1)
 
 
(2
)
 
Income tax provision
 
$
11

 
Net of tax
Total Reclassifications
$
7

 
Net of tax
(1) 
These items are included in the computation of net periodic benefit cost related to our pension and other postretirement benefit (“OPEB”) plans summarized in Note 8, “Employee Benefit Plans.”

7


RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements

Note 5. Net Loss Per Share
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”), for the three months ended March 31, 2017 and 2016, was as follows:
 
Three Months Ended 
 March 31,
(Unaudited, in millions)
2017

 
2016

 
Stock options
1.4

 
1.5

 
Stock unit awards (1)
4.6

 
2.5

 
(1) 
Excludes contingently issuable shares that are included in the basic weighted-average number of common shares outstanding, given that all the necessary conditions have been satisfied.
These stock options and stock unit awards were excluded from the calculation of diluted net loss per share as the impact would have been antidilutive.
Note 6. Inventories, Net
Inventories, net as of March 31, 2017 and December 31, 2016, were comprised of the following:
(Unaudited, in millions)
March 31,
2017
December 31,
2016
Raw materials and work in process
$
184

 
$
171

 
Finished goods
 
201

 
 
183

 
Mill stores and other supplies
 
223

 
 
216

 
 
$
608

 
$
570

 
During the three months ended March 31, 2017, we recorded charges of $4 million for write-downs of mill stores and other supplies primarily as a result of the permanent closure of our Mokpo paper mill. These charges were included in “Cost of sales, excluding depreciation, amortization and distribution costs” in our Consolidated Statements of Operations.
Note 7. Long-Term Debt
Overview
Long-term debt, including current portion, as of March 31, 2017 and December 31, 2016, was comprised of the following:
(Unaudited, in millions)
March 31,
2017
December 31,
2016
5.875% senior notes due 2023:
 
 
 
 
 
 
Principal amount
$
600

 
$
600

 
Deferred financing costs
 
(5
)
 
 
(6
)
 
Unamortized discount
 
(4
)
 
 
(4
)
 
Total senior notes due 2023
 
591

 
 
590

 
Term loan due 2025
 
46

 
 
46

 
Borrowings under revolving credit facilities
 
243

 
 
125

 
Capital lease obligation
 
1

 
 
1

 
Total debt
 
881

 
 
762

 
Less: Current portion of long-term debt
 
(1
)
 
 
(1
)
 
Long-term debt, net of current portion
$
880

 
$
761

 

8


RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements

2023 Notes
We issued $600 million in aggregate principal amount of 5.875% senior notes due 2023 (the “2023 Notes”) on May 8, 2013. Upon their issuance, the notes were recorded at their fair value of $594 million, which reflected a discount of $6 million that is being amortized to “Interest expense” in our Consolidated Statements of Operations using the interest method over the term of the notes, resulting in an effective interest rate of 6%. Interest on the notes is payable semi-annually on May 15 and November 15, until their maturity date of May 15, 2023. In connection with the issuance of the notes, we incurred financing costs of approximately $9 million, which were deferred and recorded as a reduction of the notes. These deferred financing costs are being 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 2023 Notes was $550 million and $543 million as of March 31, 2017 and December 31, 2016, respectively, and was determined by reference to over-the-counter prices (Level 1).
Senior Secured Credit Facility
On September 7, 2016, we entered into a senior secured credit facility (the “Senior Secured Credit Facility”) for up to $185 million. The Senior Secured Credit Facility provides a term loan of $46 million with a maturity date of September 7, 2025 (“Term Loan”), and a revolving credit facility of up to $139 million with a maturity date of September 7, 2022 (“Revolving Credit Facility”). As of March 31, 2017, we had fully borrowed the $139 million available under the Revolving Credit Facility. The fair values of the Term Loan and Revolving Credit Facility approximated their carrying values as of March 31, 2017, as the variable interest rates reflect current interest rates for financial instruments with similar characteristics and maturities (Level 2).
ABL Credit Facility
On May 22, 2015, we entered into a senior secured asset-based revolving credit facility (the “ABL Credit Facility”), with an aggregate lender commitment of up to $600 million at any time outstanding, subject to borrowing base availability based on specified advance rates, eligibility criteria and customary reserves. The ABL Credit Facility will mature on May 22, 2020. As of March 31, 2017, we had $341 million of availability under the ABL Credit Facility, net of $104 million of borrowings and $31 million of ordinary course letters of credit outstanding. The fair value of the ABL Credit Facility approximated its carrying value as of March 31, 2017, as the variable interest rates reflect current interest rates for financial instruments with similar characteristics and maturities (Level 2).
Capital lease obligation
We have a capital lease obligation for a warehouse with a maturity date of December 1, 2017, which can be renewed for 20 years at our option. Minimum monthly payments are determined by an escalatory price clause.
Note 8. Employee Benefit Plans
Pension and OPEB plans
The components of net periodic benefit cost relating to our pension and OPEB plans for the three months ended March 31, 2017 and 2016, were as follows:
Pension Plans:
 
Three Months Ended 
 March 31,
(Unaudited, in millions)
2017
 
 
2016
 
 
Service cost
$
5

 
$
5

 
Interest cost
 
49

 
 
52

 
Expected return on plan assets
 
(63
)
 
 
(60
)
 
Amortization of actuarial losses
 
14

 
 
13

 
 
$
5

 
$
10

 

9


RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements

OPEB Plans:
 
Three Months Ended 
 March 31,
(Unaudited, in millions)
2017
 
 
2016
 
 
Interest cost
 
2

 
 
2

 
Amortization of actuarial gains
 
(1
)
 
 
(1
)
 
Amortization of prior service credits
 
(4
)
 
 
(4
)
 
 
$
(3
)
 
$
(3
)
 
Defined contribution plans
Our expense for the defined contribution plans totaled $5 million for both the three months ended March 31, 2017 and 2016.
Canadian pension funding
On March 31, 2017, we reached an agreement with the province of Ontario with respect to the additional solvency deficit reduction contributions required for past capacity reductions in Ontario, stipulating that we are no longer required to make additional contributions for capacity reductions that occurred in Ontario after April 15, 2014. As a result, our requirement to make additional contributions to our material Canadian registered pension plans will be reduced by Cdn $16 million in 2017 and Cdn $8 million in 2018. The expiration of the original 2010 undertaking in December 2015 did not eliminate the obligations already incurred under the terms of that undertaking prior to its expiration.
Note 9. Income Taxes
The income tax provision attributable to (loss) income before income taxes differs from the amounts computed by applying the U.S. federal statutory income tax rate of 35% for the three months ended March 31, 2017 and 2016, as a result of the following:
 
Three Months Ended 
 March 31,
(Unaudited, in millions)
2017
 
 
2016
 
 
(Loss) income before income taxes
$
(17
)
 
$
3

 
Income tax provision:
 
 
 
 
 
 
Expected income tax benefit (provision)
 
6

 
 
(1
)
 
Changes resulting from:
 
 
 
 
 
 
Valuation allowance (1)
 
(26
)
 
 
(18
)
 
Enactment of change in foreign tax rate
 
(12
)
 
 

 
Foreign exchange
 
(1
)
 
 
3

 
State income taxes, net of federal income tax benefit
 
2

 
 
2

 
Foreign tax rate differences
 
3

 
 
4

 
Other, net
 
(1
)
 
 

 
 
$
(29
)
 
$
(10
)
 
(1) 
We recorded a valuation allowance of $26 million and $18 million for the three months ended March 31, 2017 and 2016, respectively, primarily related to our U.S. operations where we recognize a full valuation allowance against our net deferred income tax assets.
Deferred tax charge
On January 1, 2017, we adopted ASU 2016-16, “Intra-Entity Transfers of Assets Other Than Inventory,” which eliminates the deferral of the tax effects of intra-entity asset transfers other than inventory until the transferred assets are sold to a third party or recovered through use. Accordingly, the deferred tax charge recognized in 2015 as a result of a gain on an intercompany asset transfer in connection with an operating company realignment was eliminated, resulting in a decrease in “Other assets” of $35 million and an increase in deferred tax assets of $32 million, with a cumulative-effect adjustment of $3 million to “Deficit” in our Consolidated Balance Sheet as of January 1, 2017.

10


RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements

Note 10. Commitments and Contingencies
Legal matters
We become involved in various legal proceedings and other disputes in the normal course of business, including matters related to contracts, commercial disputes, taxes, environmental issues, activists’ damages, employment and workers’ compensation claims, Aboriginal claims and other matters. Although the final outcome is subject to many variables and cannot be predicted with any degree of certainty, we regularly assess the status of the matters and establish provisions (including legal costs expected to be incurred) when we believe an adverse outcome is probable, and the amount can be reasonably estimated. Except as described below and for claims that cannot be assessed due to their preliminary nature, we believe that the ultimate disposition of these matters outstanding or pending as of March 31, 2017, will not have a material adverse effect on our Consolidated Financial Statements.
On April 24, 2017, the U.S. Department of Commerce (“Commerce”) announced its preliminary determinations in its countervailing duty investigation of Canadian-origin softwood lumber products exported to the U.S., and, as a result, since April 28, 2017, we have been required to pay cash deposits to the U.S. at a rate of 12.82% for estimated countervailing duties on our imports to the U.S. of the majority of softwood lumber products produced at our Canadian sawmills. For additional information, see Note 13, “Subsequent Event.”
Effective January 1, 2015, we modified our U.S. OPEB plan so that unionized participants, upon reaching Medicare eligibility, are provided Medicare coverage via a Medicare Exchange program rather than via a Company-sponsored medical plan. On March 2, 2016, a proposed class action lawsuit (Reynolds, et al v. Resolute Forest Products Inc., Resolute FP US Inc., Resolute FP US Health and Resolute Welfare Benefit Plan) was filed in the United States District Court for the Eastern District of Tennessee (“District Court”) on behalf of certain Medicare-eligible retirees who were previously unionized employees of our Calhoun, Tennessee; Catawba, South Carolina; and Coosa Pines, Alabama, mills, and their spouses and dependents. The plaintiffs allege that the modifications described above breach the collective bargaining agreements and plan covering the members of the proposed class in the lawsuit. Plaintiffs seek reinstatement of the health care benefits as in effect before January 1, 2015, for the proposed class in the lawsuit. The Company disputes the allegations in the complaint and intends to defend the action. On May 23, 2016, the Company filed a motion to dismiss the complaint. The motion to dismiss was denied by the District Court on March 1, 2017. The proposed class action lawsuit is at a preliminary stage and no class has been certified. Accordingly, we are not presently able to determine the ultimate resolution of this matter or to reasonably estimate the potential impact on our Consolidated Financial Statements.
On February 26, 2015, a countervailing duty petition was filed with Commerce and the U.S. International Trade Commission by certain U.S. supercalendered (“SC”) paper producers requesting that the U.S. government impose countervailing duties on Canadian-origin SC paper exported to the U.S. market. One of our subsidiaries was identified in the petition as being a Canadian exporting producer of SC paper to the U.S. and was selected as a mandatory respondent to be investigated by Commerce. As a result of that investigation, since August 3, 2015, we have been required to pay cash deposits to the U.S. for estimated countervailing duties on our imports to the U.S. of SC paper produced at our Canadian mills. Between August 3, 2015 and October 15, 2015, we were required to make cash deposits at a rate of 2.04%. On October 15, 2015, that rate increased to 17.87%, 17.10% of which was not based on any countervailable subsidy we received, but rather on a punitive application of “adverse facts available.” We are required to continue making cash deposits at the 17.87% rate until Commerce sets a countervailing duty rate in an administrative review, which Commerce commenced on February 13, 2017. Commerce has not yet announced whether we will be a mandatory respondent in that review. If we are a mandatory respondent, our countervailing duty rate, if any, will be based on Commerce’s determination as to whether we receive countervailable subsidies that benefit our Canadian production of SC paper. Following the initial administrative review, which may not be finalized in 2017, we may remain subject to annual administrative reviews until December 2020, or possibly later. The decision in each administrative review is subject to appeal. If we are not selected as a mandatory respondent, we would be required to pay duties at an “all others” rate, which would be calculated as a weighted average of the rates determined by Commerce for companies that are selected as mandatory respondents.
Following Commerce’s rate determination in 2015, we appealed that determination to a bi-national panel under the North American Free Trade Agreement (the “Panel”). On April 13, 2017, the Panel issued its decision, remanding the matter to Commerce and upholding several of Commerce’s determinations, including among others its application of adverse facts available in setting our 17.87% subsidy rate. Notwithstanding the Panel’s decision, Commerce’s prior determination of adverse facts available does not apply in an administrative review. In addition, the Panel’s decision can be challenged by the Canadian government, although not until the conclusion of the remand process. The Canadian government has already filed a separate World Trade Organization challenge to Commerce’s countervailing duty determination in the SC paper investigation, including Commerce’s use of adverse facts available against us.

11


RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements

Through March 31, 2017, our cash deposits totaled $32 million, and based on our current operating parameters, could be as high as $25 million in 2017. To the extent the countervailing duty rate set by Commerce is lower than 17.87%, we will recover excess deposits, plus interest. If the countervailing duty rate set by Commerce is at or above 17.87%, the deposits and any deficiency will be converted into actual countervailing duties. We are not presently able to determine the ultimate resolution of this matter, but we believe it is not probable that we will ultimately be assessed with significant countervailing duties on our Canadian-produced SC paper. Accordingly, no contingent loss was recorded in respect of this petition in our Consolidated Statement of Operations for the three months ended March 31, 2017.
Effective July 31, 2012, we completed the final step of the transaction pursuant to which we acquired the remaining 25.4% of the outstanding Fibrek Inc. (“Fibrek”) shares, following the approval of Fibrek’s shareholders on July 23, 2012, and the issuance of a final order of the Quebec Superior Court in Canada approving the arrangement on July 27, 2012. Certain former shareholders of Fibrek exercised (or purported to exercise) rights of dissent in respect of the transaction, asking for a judicial determination of the fair value of their claim under the Canada Business Corporations Act. No consideration has to date been paid to the former Fibrek shareholders who exercised (or purported to exercise) rights of dissent. Any such consideration will only be paid out upon settlement or judicial determination of the fair value of their claims and will be paid entirely in cash. Accordingly, we cannot presently determine the amount that ultimately will be paid to former holders of Fibrek shares in connection with the proceedings, but we have accrued approximately Cdn $14 million ($11 million, based on the exchange rate in effect on March 31, 2017) for the eventual payment of those claims. The hearing in this matter is expected to begin in 2019.
On June 12, 2012, we filed a motion for directives with the Quebec Superior Court, the court with jurisdiction in the creditor protection proceedings under the Companies’ Creditors Arrangement Act (Canada) (the “CCAA Creditor Protection Proceedings”), seeking an order to prevent pension regulators in each of Quebec, New Brunswick, and Newfoundland and Labrador from declaring partial wind-ups of pension plans relating to employees of former operations in New Brunswick, and Newfoundland and Labrador, or a declaration that any claim for accelerated reimbursements of deficits arising from a partial wind-up is a barred claim under the CCAA Creditor Protection Proceedings. We contend, among other things, that any such declaration, if issued, would be inconsistent with the Quebec Superior Court’s sanction order confirming the CCAA debtors’ CCAA Plan of Reorganization and Compromise, as amended, and the terms of our emergence from the CCAA Creditor Protection Proceedings. A partial wind-up would likely shorten the period in which any deficit within those plans, which could reach up to Cdn $150 million ($115 million, based on the exchange rate in effect on March 31, 2017), would have to be funded if we do not obtain the relief sought. No hearing date has been set to date.
Environmental matters
We are subject to a variety of federal or national, state, provincial and local environmental laws and regulations in the jurisdictions in which we operate. We believe our operations are in material compliance with current applicable environmental laws and regulations. Environmental regulations promulgated in the future could require substantial additional expenditures for compliance and could have a material impact on us, in particular, and the industry in general.
We may be a “potentially responsible party” with respect to four hazardous waste sites that are being addressed pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (commonly known as Superfund) or the Resource Conservation and Recovery Act corrective action authority. We believe we will not be liable for any significant amounts at any of these sites.
We have recorded $8 million of environmental liabilities as of both March 31, 2017 and December 31, 2016, primarily related to environmental remediation related to closed sites. The amount of these liabilities represents management’s estimate of the ultimate settlement based on an assessment of relevant factors and assumptions and could be affected by changes in facts or assumptions not currently known to management for which the outcome cannot be reasonably estimated at this time. These liabilities are included in “Accounts payable and accrued liabilities” or “Other liabilities” in our Consolidated Balance Sheets.
We have also recorded $22 million and $23 million of asset retirement obligations as of March 31, 2017 and December 31, 2016, respectively, primarily consisting of liabilities associated with landfills, sludge basins and the dismantling of retired assets. These liabilities are included in “Accounts payable and accrued liabilities” or “Other liabilities” in our Consolidated Balance Sheets.

12


RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements

Other matters
On October 30, 2014, we received a notice from the Ministry of Natural Resources and Forestry of Ontario (the “MNRF”) directing us to repay a conditional incentive of Cdn $23 million ($17 million, based on the exchange rate in effect on March 31, 2017) offered to us in 2007 toward the construction of an electricity-producing turbine, should we fail to restart our Fort Frances, Ontario, pulp and paper mill or otherwise implement an alternative remedy acceptable to the MNRF. Several extensions of the deadline to implement an alternative remedy were granted to us by the MNRF, the last of which extended the remedy date to June 30, 2017. We continue to believe that we will reach an acceptable outcome. Accordingly, no contingent liability was recorded in respect of this notice in our Consolidated Balance Sheet as of March 31, 2017.
Note 11. Segment Information
We manage our business based on the products we manufacture. Accordingly, our reportable segments correspond to our principal product lines: market pulp, tissue, wood products, newsprint and specialty papers.
None of the income or loss items following “Operating loss” in our Consolidated Statements of Operations are allocated to our segments, since those items are reviewed separately by management. For the same reason, closure costs, impairment and other related charges, inventory write-downs related to closures, start-up costs, gains and losses on disposition of assets, certain components of pension and OPEB costs and credits as well as other discretionary charges or credits are not allocated to our segments. We allocate depreciation and amortization expense to our segments, although the related fixed assets and amortizable intangible assets are not allocated to segment assets. Additionally, all selling, general and administrative expenses are allocated to our segments, with the exception of certain discretionary charges and credits, which we present under “corporate and other.”
In the first quarter of 2017, we changed our presentation of segment operating income to reallocate the amortization of prior service credits component of pension and OPEB costs from the reportable segments to “corporate and other.” Current service costs will continue to be allocated to the reportable segments. This approach is consistent with the indicators management uses internally to evaluate performance, including those used by the chief operating decision maker. Prior period amounts have been reclassified to conform to the 2017 presentation.
Information about certain segment data for the three months ended March 31, 2017 and 2016, was as follows:
(Unaudited,
in millions)

Market Pulp (1)
Tissue
Wood Products (2)
Newsprint
Specialty
Papers
Segment
Total
Corporate
and Other
Total
Sales
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First three months
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2017
$
209

 
$
20

 
$
177

 
$
226

 
$
240

 
$
872

 
$

 
$
872

 
2016
 
211

 
 
23

 
 
119

 
 
257

 
 
267

 
 
877

 
 

 
 
877

 
Depreciation and amortization
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First three months
 
 
 
 
 
 
 
 
2017
$
8

 
$
1

 
$
9

 
$
16

 
$
12

 
$
46

 
$
5

 
$
51

 
2016
 
7

 
 
2

 
 
7

 
 
20

 
 
13

 
 
49

 
 
3

 
 
52

 
Operating income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First three months
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2017
$
7

 
$

 
$
20

 
$
(4
)
 
$
4

 
$
27

 
$
(33
)
 
$
(6
)
 
2016
 
19

 
 
(2
)
 
 
(4
)
 
 
(5
)
 
 
5

 
 
13

 
 
(13
)
 
 

 
(1) 
Inter-segment sales of $9 million and $5 million, which are transacted at cost, were excluded from market pulp sales for the three months ended March 31, 2017 and 2016, respectively.
(2) 
Wood products sales to our joint ventures, which are transacted at arm’s length negotiated prices, were $4 million and $5 million for the three months ended March 31, 2017 and 2016, respectively.

13


RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements

Note 12. Condensed Consolidating Financial Information
The following information is presented in accordance with Rule 3-10 of Regulation S-X and the public information requirements of Rule 144 promulgated pursuant to the Securities Act of 1933, as amended, in connection with Resolute Forest Products Inc.’s 2023 Notes that are fully and unconditionally guaranteed, on a joint and several basis, by all of our 100% owned material U.S. subsidiaries (the “Guarantor Subsidiaries”). The 2023 Notes are not guaranteed by our foreign subsidiaries (the “Non-guarantor Subsidiaries”).
The following condensed consolidating financial information sets forth the Statements of Operations and Comprehensive (Loss) Income for the three months ended March 31, 2017 and 2016, the Balance Sheets as of March 31, 2017 and December 31, 2016, and the Statements of Cash Flows for the three months ended March 31, 2017 and 2016 for the Parent, the Guarantor Subsidiaries on a combined basis, and the Non-guarantor Subsidiaries also on a combined basis. The condensed consolidating financial information reflects the investments of the Parent in the Guarantor Subsidiaries and Non-guarantor Subsidiaries, as well as the investments of the Guarantor Subsidiaries in the Non-guarantor Subsidiaries, using the equity method of accounting. The principal consolidating adjustments are entries to eliminate the investments in subsidiaries and intercompany balances and transactions.
 
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
For the Three Months Ended March 31, 2017
(Unaudited, in millions)
Parent
Guarantor
Subsidiaries
Non-guarantor
Subsidiaries
Consolidating
Adjustments
Consolidated
Sales
$

 
$
709

 
$
550

 
$
(387
)
 
$
872

 
Costs and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of sales, excluding depreciation, amortization and distribution costs
 

 
 
677

 
 
378

 
 
(388
)
 
 
667

 
Depreciation and amortization
 

 
 
19

 
 
32

 
 

 
 
51

 
Distribution costs
 

 
 
41

 
 
69

 
 

 
 
110

 
Selling, general and administrative expenses
 
9

 
 
17

 
 
17

 
 

 
 
43

 
Closure costs, impairment and other related charges
 

 
 

 
 
7

 
 

 
 
7

 
Operating (loss) income
 
(9
)
 
 
(45
)
 
 
47

 
 
1

 
 
(6
)
 
Interest expense
 
(20
)
 
 
(1
)
 
 
(3
)
 
 
13

 
 
(11
)
 
Other income, net
 

 
 
13

 
 

 
 
(13
)
 
 

 
Equity in (loss) income of subsidiaries
 
(18
)
 
 
1

 
 

 
 
17

 
 

 
(Loss) income before income taxes
 
(47
)
 
 
(32
)
 
 
44

 
 
18

 
 
(17
)
 
Income tax provision
 

 
 

 
 
(29
)
 
 

 
 
(29
)
 
Net (loss) income including noncontrolling interests
 
(47
)
 
 
(32
)
 
 
15

 
 
18

 
 
(46
)
 
Net income attributable to noncontrolling interests
 

 
 

 
 
(1
)
 
 

 
 
(1
)
 
Net (loss) income attributable to Resolute Forest Products Inc.
$
(47
)
 
$
(32
)
 
$
14

 
$
18

 
$
(47
)
 
Comprehensive (loss) income attributable to Resolute Forest Products Inc.
$
(38
)
 
$
(33
)
 
$
24

 
$
9

 
$
(38
)
 
 
 

14


RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
For the Three Months Ended March 31, 2016
(Unaudited, in millions)
Parent
Guarantor
Subsidiaries
Non-guarantor
Subsidiaries
Consolidating
Adjustments
Consolidated
Sales
$

 
$
741

 
$
516

 
$
(380
)
 
$
877

 
Costs and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of sales, excluding depreciation, amortization and distribution costs
 

 
 
705

 
 
353

 
 
(381
)
 
 
677

 
Depreciation and amortization
 

 
 
22

 
 
30

 
 

 
 
52

 
Distribution costs
 

 
 
43

 
 
69

 
 

 
 
112

 
Selling, general and administrative expenses
 
5

 
 
16

 
 
17

 
 

 
 
38

 
Net gain on disposition of assets
 

 
 

 
 
(2
)
 
 

 
 
(2
)
 
Operating (loss) income
 
(5
)
 
 
(45
)
 
 
49

 
 
1

 
 

 
Interest expense
 
(18
)
 
 

 
 
(4
)
 
 
12

 
 
(10
)
 
Other income, net
 

 
 
19

 
 
6

 
 
(12
)
 
 
13

 
Equity in income (loss) of subsidiaries
 
15

 
 
(13
)
 
 

 
 
(2
)
 
 

 
(Loss) income before income taxes
 
(8
)
 
 
(39
)
 
 
51

 
 
(1
)
 
 
3

 
Income tax provision
 

 
 

 
 
(10
)
 
 

 
 
(10
)
 
Net (loss) income including noncontrolling interests
 
(8
)
 
 
(39
)
 
 
41

 
 
(1
)
 
 
(7
)
 
Net income attributable to noncontrolling interests
 

 
 

 
 
(1
)
 
 

 
 
(1
)
 
Net (loss) income attributable to Resolute Forest Products Inc.
$
(8
)
 
$
(39
)
 
$
40

 
$
(1
)
 
$
(8
)
 
Comprehensive (loss) income attributable to Resolute Forest Products Inc.
$
(3
)
 
$
(42
)
 
$
48

 
$
(6
)
 
$
(3
)
 

15


RESOLUTE FOREST PRODUCTS INC.
Notes to Unaudited Interim Consolidated Financial Statements

CONDENSED CONSOLIDATING BALANCE SHEET
As of March 31, 2017
(Unaudited, in millions)
Parent
Guarantor
Subsidiaries
Non-guarantor
Subsidiaries
Consolidating
Adjustments
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$

 
$
2

 
$
37

 
$

 
$
39

 
Accounts receivable, net
 

 
 
285

 
 
169

 
 

 
 
454

 
Accounts receivable from affiliates
 
1

 
 
484

 
 
403

 
 
(888
)
 
 

 
Inventories, net
 

 
 
273

 
 
346

 
 
(11
)
 
 
608

 
Note, advance and interest receivable from parent
 

 
 
66

 
 

 
 
(66
)
 
 

 
Notes and interest receivable from affiliates
 

 
 
59

 
 

 
 
(59
)
 
 

 
Other current assets
 

 
 
15

 
 
21

 
 

 
 
36

 
Total current assets
 
1

 
 
1,184

 
 
976

 
 
(1,024
)
 
 
1,137

 
Fixed assets, net
 

 
 
778

 
 
1,088

 
 

 
 
1,866

 
Amortizable intangible assets, net
 

 
 
14

 
 
54

 
 

 
 
68

 
Goodwill
 

 
 
81

 
 

 
 

 
 
81

 
Deferred income tax assets
 

 
 

 
 
1,051

 
 
3

 
 
1,054

 
Notes receivable from parent
 

 
 
761

 
 

 
 
(761
)
 
 

 
Note receivable from affiliate
 

 
 
110

 
 

 
 
(110
)
 
 

 
Investments in consolidated subsidiaries and affiliates
 
3,909

 
 
2,069

 
 

 
 
(5,978
)
 
 

 
Other assets
 

 
 
63

 
 
66

 
 

 
 
129

 
Total assets
$
3,910

 
$
5,060

 
$
3,235

 
$
(7,870
)
 
$
4,335

 
Liabilities and equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
$
14

 
$
221

 
$
233

 
$

 
$
468

 
Current portion of long-term debt
 

 
 
1

 
 

 
 

 
 
1

 
Accounts payable to affiliates
 
484

 
 
403

 
 
1

 
 
(888
)
 
 

 
Note, advance and interest payable to subsidiaries
 
66

 
 

 
 

 
 
(66
)
 
 

 
Notes and interest payable to affiliate
 

 
 

 
 
59

 
 
(59
)
 
 

 
Total current liabilities
 
564

 
 
625

 
 
293

 
 
(1,013
)
 
 
469

 
Long-term debt, net of current portion
 
591

 
 
289

 
 

 
 

 
 
880

 
Note payable to subsidiaries
 
761

 
 

 
 

 
 
(761
)
 
 

 
Note payable to affiliate
 

 
 

 
 
110

 
 
(110
)
 
 

 
Pension and other postretirement benefit obligations
 

 
 
389

 
 
862

 
 

 
 
1,251

 
Deferred income tax liabilities
 

 
 
1

 
 
4

 
 

 
 
5

 
Other liabilities
 
1

 
 
24

 
 
31