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Resolute Reports Preliminary Second Quarter 2012 Results

August 1, 2012

US $

        --  Second quarter adjusted EBITDA of $120 million, up 69% from
            first quarter
        --  $116 million of cash provided by operating activities
        --  Net debt of $212 million
        --  Fibrek acquisition complete

MONTREAL, Aug. 1, 2012 /PRNewswire/ – Resolute Forest Products Inc.
(NYSE: RFP) (TSX: RFP), today reported a net loss of $20 million for
the second quarter, or $(0.20) per share, on sales of $1.2 billion.
This compares with net income of $61 million, or $0.63 per diluted
share, on sales of $1.2 billion in the second quarter of 2011.

Excluding $50 million of special items described below, net income for
the quarter was $30 million, or $0.30 per diluted share.  Net income
excluding special items for the second quarter of 2011 was $63 million,
or $0.65 per diluted share, and included a $44 million income tax
benefit from a tax reserve adjustment.

“Resolute’s newsprint, specialty papers and wood products segments each
delivered their strongest quarterly results in recent history, more
than making up for headwinds in the pulp and coated papers segments”
said Richard Garneau, president and chief executive officer. “Our
cost-focused strategy positions us to continually optimize our
diversified asset base and generate cash even in challenging
environments.”

DESCRIPTION OF SPECIAL ITEMS

Special items incurred in the second quarter of 2012, net of tax,
included:

        --  $45 million charge related to closure costs, impairment and
            other related charges on the indefinite idling of our Mersey,
            Nova Scotia, newsprint mill
        --  $13 million non-cash gain related to reorganization tax
            adjustments
        --  $10 million non-cash charge on translation of Canadian dollar
            net monetary assets
        --  $4 million non-cash charge for inventory write-downs on the
            indefinite idling of our Mersey mill
        --  $3 million of transaction costs related to the acquisition of
            Fibrek
        --  A severance charge and post-emergence costs, offset by a gain
            on disposition of assets and other income

Special items incurred in the second quarter of 2011, net of tax,
included:

        --  $8 million charge for post-emergence costs
        --  $7 million income, net, from a gain on disposition of assets
            and other income
        --  $5 million charge related to closure costs and severance
            charges
        --  $4 million non-cash gain on translation of Canadian dollar net
            monetary assets

Non-GAAP financial measures, such as adjusted EBITDA and special item
adjustments, are reconciled below.

SEGMENT DETAILS

Newsprint

The newsprint segment generated operating income of $32 million, an $11
million increase over the first quarter of 2012, the result of seasonal
improvements in power costs, various mill efficiency initiatives and a
weaker Canadian dollar, as well as seasonally higher volume.  The
increase outweighed a modest decline in transaction price, which is
attributable to declining prices in certain export markets, primarily
as result of unfavorable currency fluctuations.  The Company announced
the indefinite idling of its export-focused mill in Nova Scotia in
response to these conditions, which have negatively affected exports to
these markets.

Coated Papers 

Operating income in the coated papers segment was $5 million higher in
the second quarter than in the first, at $4 million. Operating costs
were down $40 per short ton, mainly because of the significant costs
associated with an extended outage in the first quarter for maintenance
and capital improvements.  Shipments were down 5%, while average
transaction price was down only 1%.  In the quarter, as previously
reported, the Company announced the idling, for an indeterminate
period, of one paper machine at the Catawba mill, as it explores ways
to further improve the mill’s overall profitability.

Specialty Papers

The specialty papers segment generated operating income of $27 million,
a $12 million increase over the previous quarter.  Operating costs were
$30 per short ton lower in the quarter, due to seasonal improvements in
power costs, various mill efficiency initiatives and a weaker Canadian
dollar, as well as seasonally higher volume.

Market Pulp

Operating loss in the market pulp segment was $7 million, a $14 million
improvement from the $21 million operating loss in the previous
quarter. Not including Fibrek, which contributed $2 million to
operating income in the quarter, average transaction price rose 2% in
the second quarter and shipments were up 6%.  Shipments increased due
in part to annual maintenance in the first quarter at the Coosa Pines
and Catawba mills.  As planned, the second quarter included major
maintenance at two other mills, while the Company chose to delay the
last outage to the third quarter.  Inventory increased over 60,000
metric tons, reflecting the addition of Fibrek.  Starting May 2,
Fibrek’s northern bleached softwood kraft pulp mill and its two
recycled bleached kraft pulp mills have been consolidated within
Resolute’s market pulp segment.

Wood Products

The wood products segment reported operating income of $12 million in
the second quarter, compared to a loss of $6 million in the first
quarter. Improving North American housing starts led to a $39 per
thousand board feet increase in average transaction price, a 5%
increase in shipments and an 11% drop in inventory.

CORPORATE & FINANCE INITIATIVES

The Company used cash on hand to repurchase 1,054,267 shares of its
common stock during the quarter, at a total cost of $12 million.  With
$510 million of cash, the Company ended the quarter with approximately
$1 billion of available liquidity.  Resolute continued to improve
working capital, reducing it a further $33 million in the quarter, and
also decreased restricted cash by $72 million on the release of a tax
indemnity given in connection with the sale of Quebec hydroelectric
assets in 2009.

As of June 30, Resolute had acquired 74.6% of the outstanding shares of
Fibrek Inc. (TSX: FBK), for aggregate consideration of approximately
2.8 million shares and $53 million.  On July 31, the Company completed
the second step transaction for the remaining 25.4% of Fibrek, pursuant
to which it distributed aggregate additional consideration of
approximately 940,000 shares and $18 million.

OUTLOOK

“We are encouraged by the positive momentum building in U.S. housing
starts and pleased with the effect this gradual improvement is having
on our wood products segment,” said Mr. Garneau.  “Despite challenging
environments, the newsprint segment continues to generate consistent
margins, including a noteworthy second quarter 12% EBITDA margin.
Keeping with our optimization strategy, we will continue to manage our
exposure to export markets where unfavorable currency fluctuations have
created difficult conditions for North American producers.  We expect a
modest improvement in the coated, specialty and newsprint segments as a
result of seasonal demand increases, but the impact of recent newsprint
and specialty paper mill restart announcements is creating
uncertainty.  Based on current conditions, we do not see a meaningful
improvement in the pulp segment for the balance of the year.”

EARNINGS CONFERENCE CALL

The Company will hold a conference call to discuss the financial results
at 9:00 a.m. (ET) today.  The public is invited to join the call at
(866) 696-5910 (pass code 6266741) at least fifteen minutes before its
scheduled start time.  A simultaneous webcast, with visual
presentation, will also be available using the link provided under
“Presentations and Webcasts” in the “Investors” section of www.resolutefp.com.  A replay of the webcast will be archived on the Company’s website.  A
phone replay will also be available until August 15 by dialing (800)
408-3053 with the pass code 9217638.

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION

Statements in this press release and the earnings conference call
referred to above that are not reported financial results or other
historical information of Resolute Forest Products are “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. They include, for example, statements relating to
our: efforts to continue to reduce costs and increase revenues and
profitability, including our cost-reduction initiatives regarding
selling, general and administrative expenses; business and operating
outlook; assessment of market conditions; prospects, growth strategies
and the industry in which we operate; and strategies for achieving our
goals generally.  Forward-looking statements may be identified by the
use of forward-looking terminology such as the words “should,” “would,”
“could,” “will,” “may,” “expect,” “believe,” “anticipate,” “attempt,”
“project” and other terms with similar meaning indicating possible
future events or potential impact on our business or Resolute’s
shareholders.

The reader is cautioned not to place undue reliance on these
forward-looking statements, which are not guarantees of future
performance.  These statements are based on management’s current
assumptions, beliefs and expectations, all of which involve a number of
business risks and uncertainties that could cause actual results to
differ materially.  The potential risks and uncertainties that could
cause Resolute’s actual future financial condition, results of
operations and performance to differ materially from those expressed or
implied in the presentation referred to above include, but are not
limited to, the potential risks and uncertainties set forth under the
heading “Risk Factors” in Part I, Item 1A of Resolute’s annual report
on Form 10-K for the year ended December 31, 2011, filed with the
United States Securities and Exchange Commission and Resolute’s other
filings with the Canadian securities regulatory authorities.

All forward-looking statements in the presentation referred to above are
expressly qualified by the cautionary statements contained or referred
to above and in Resolute’s other filings with the SEC and the Canadian
securities regulatory authorities. Resolute disclaims any obligation to
publicly update or revise any forward-looking information, whether as a
result of new information, future events or otherwise, except as
required by law.

ABOUT RESOLUTE FOREST PRODUCTS

Resolute Forest Products is a global leader in the forest products
industry with a diverse range of products, including newsprint,
commercial printing papers, market pulp and wood products. The Company
owns or operates 21 pulp and paper mills and 22 wood products
facilities in the United States, Canada and South Korea. Marketing its
products in more than 90 countries, Resolute has third-party certified
100% of its managed woodlands to sustainable forest management
standards. The shares of Resolute Forest Products trade under the stock
symbol RFP on both the New York Stock Exchange and the Toronto Stock
Exchange.

Resolute and other member companies of the Forest Products Association
of Canada, as well as a number of environmental organizations, are
partners in the Canadian Boreal Forest Agreement. The group works to
identify solutions to conservation issues that meet the goal of
balancing equally the three pillars of sustainability linked to human
activities:  environmental, social and economic. Resolute is also a
member of the World Wildlife Fund’s Climate Savers program, in which
businesses establish ambitious targets to voluntarily reduce greenhouse
gas emissions and work aggressively toward achieving them.

RESOLUTE FOREST PRODUCTS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in millions except per share amounts)


                         Three
                         Months     Three Months   Six Months   Six Months
                       Ended June    Ended June    Ended June   Ended June
                          30,           30,           30,          30,
                          2012          2011          2012         2011

    Sales              $    1,168   $      1,200   $    2,222   $    2,385

    Costs and
    expenses:                                                             

      Cost of sales,
      excluding
      depreciation,
      amortization and
      cost of timber
      harvested               885            911        1,721        1,833

      Depreciation,
      amortization and
      cost of timber
      harvested                58             55          115          109

      Distribution
      costs                   133            141          254          274

      Selling, general
      and
      administrative
      expenses                 41             40           73           77

      Closure costs,
      impairment and
      other related
      charges  (2)             88              4           93           17

      Net gain on
      disposition of
      assets   (3)            (1)            (3)         (24)          (4)

    Operating (loss)
    income                   (36)             52         (10)           79

    Other (expense)
    income:                                                               

      Interest expense       (18)           (28)         (34)         (58)

      Foreign currency
      translation
      (loss) gain  (4)        (9)              2            3           30

      Other, net              (1)            (4)            -         (13)

    (Loss) Income
    before income
    taxes                    (64)             22         (41)           38

    Income tax
    (provision)
    benefit  (5)              (1)             39            9           53

    Net (loss) income
    including
    noncontrolling
    interests                (65)             61         (32)           91

    Net loss
    attributable to
    noncontrolling
    interests                  45              -           35            -

    Net (loss) income
    attributable to
    Resolute Forest
    Products Inc.      $     (20)   $         61   $        3   $       91

    Net (loss) income
    per share
    attributable to
    Resolute Forest
    Products Inc.
    common
    shareholders: (6)                                                     

      Basic            $   (0.20)   $       0.63   $     0.03   $     0.94

      Diluted          $   (0.20)   $       0.63   $     0.03   $     0.94

    Weighted-average
    number of Resolute
    Forest Products
    Inc. common shares
    outstanding: (6)                                                      

      Basic                  98.9           97.1         98.0         97.1

      Diluted                98.9           97.1         98.0         97.1

RESOLUTE FOREST PRODUCTS INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in millions)


                                                  June 30,     December 31,
                                                      2012             2011

    Assets                                                                 

    Current assets:                                                        

      Cash and cash equivalents                 $      510   $          369

      Accounts receivable trade, net                   572              582

      Accounts receivable other                        109              168

      Inventories, net                                 512              475

      Assets held for sale (3)                          80                7

      Deferred income tax assets                       110              109

      Other current assets                              66               59

        Total current assets                         1,959            1,769

    Fixed assets, net                                2,500            2,502

    Amortizable intangible assets, net                  70               18

    Deferred income tax assets                       1,755            1,749

    Other assets                                       189              260

      Total assets                              $    6,473   $        6,298

    Liabilities and equity                                                 

    Current liabilities:                                                   

      Accounts payable and accrued
      liabilities                               $      549   $          544

      Short-term bank debt                              21                -

      Current portion of long-term debt                 77                -

      Liabilities associated with assets held
      for sale (3)                                      63                -

        Total current liabilities                      710              544

    Long-term debt, net of current portion             624              621

    Pension and other postretirement benefit
    obligations                                      1,520            1,524

    Deferred income tax liabilities                     73               75

    Other long-term liabilities                         56               57

        Total liabilities                            2,983            2,821

    Commitments and contingencies                                          

    Equity:                                                                

    Common stock                                         -                -

    Additional paid-in capital                       3,726            3,687

    Retained earnings                                   44               41

    Accumulated other comprehensive loss             (315)            (311)

    Treasury stock at cost                            (12)                -

      Total Resolute Forest Products Inc.
      shareholders' equity                           3,443            3,417

    Noncontrolling interests                            47               60

      Total equity                                   3,490            3,477

      Total liabilities and equity              $    6,473   $        6,298

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


                                              Six Months       Six Months
                                            Ended June 30,   Ended June 30,
                                                 2012             2011

    Cash flows from operating activities:                                  

    Net (loss) income including
    noncontrolling interests                $         (32)   $           91

      Adjustments to reconcile net (loss)
      income including noncontrolling
      interests to net cash provided by
      operating activities:                                                

      Share-based compensation                           3                1

      Depreciation, amortization and cost
      of timber harvested                              115              109

      Closure costs, impairment and other
      related charges                                   93               16

      Write-downs of inventory                           7                1

      Deferred income taxes                            (3)             (53)

      Net pension contributions                       (35)             (62)

      Net gain on disposition of assets               (24)              (4)

      Gain on translation of foreign
      currency denominated deferred income
      taxes                                            (6)             (47)

      Loss on translation of foreign
      currency denominated pension
      and other postretirement benefit
      obligations                                        5               33

      Premium related to debt redemptions                -             (11)

      Dividends received from equity method
      investees in excess of income                      -                3

      Other, net                                         1                1

      Changes in working capital:                                          

        Accounts receivable                             75             (53)

        Inventories                                      8              (8)

        Other current assets                             2               18

        Accounts payable and accrued
        liabilities                                   (36)             (20)

          Net change in working capital                 49             (63)

        Net cash provided by operating
        activities                                     173               15

    Cash flows from investing activities:                                  

    Cash invested in fixed assets                     (58)             (32)

    Disposition of investment in ACH
    Limited Partnership                                  -              296

    Disposition of other assets                         26                8

    Acquisition of Fibrek Inc., net of cash
    acquired (1)                                      (24)                -

    Proceeds from insurance settlement                   -                4

    Decrease (increase) in restricted cash              76              (3)

    Increase in deposit requirements for
    letters of credit, net                             (7)              (7)

        Net cash provided by investing
        activities                                      13              266

    Cash flows from financing activities:                                  

    Purchases of treasury stock                       (12)                -

    Dividends and distribution to
    noncontrolling interests                           (1)             (19)

    Acquisition of noncontrolling interest
    (1)                                               (17)             (15)

    Payments of long-term debt                        (15)            (269)

        Net cash used in financing
        activities                                    (45)            (303)

    Net increase (decrease) in cash and
    cash equivalents                                   141             (22)

    Cash and cash equivalents:                                             

        Beginning of period                            369              319

        End of period                       $          510   $          297

RESOLUTE FOREST PRODUCTS INC.
STATEMENTS OF OPERATING INCOME AND NET INCOME ADJUSTED FOR SPECIAL ITEMS

A reconciliation of our operating income, net income and net income per
share reported before special items is presented in the tables below.
See Note 7 to the Unaudited Consolidated Financial Statement
Information regarding our use of non-GAAP measures.


    Three Months Ended June 30,      Operating          Net
    2012                           income (loss)   (loss) income
    (unaudited, in millions
    except per share amounts)                                         EPS

    GAAP as reported               $        (36)   $        (20)   $ (0.20)

    Adjustments for special
    items:                                                                 

      Foreign currency
      translation loss                         -              10       0.10

      Severance                                1               1       0.01

      Closure costs, impairment
      and other related charges               88              45       0.45

      Inventory write-downs
      included in cost of sales                7               4       0.04

      Net gain on disposition of
      assets                                 (1)             (1)     (0.01)

      Post-emergence costs                     -               2       0.02

      Transaction costs                        3               3       0.03

      Other income, net                        -             (1)     (0.01)

      Reorganization tax
      adjustments                              -            (13)     (0.13)

    GAAP as adjusted for special
    items                          $          62   $          30   $   0.30

    Three Months Ended June 30,      Operating          Net
    2011                           income (loss)   (loss) income
    (unaudited, in millions
    except per share amounts)                                         EPS

    GAAP as reported               $          52   $          61   $   0.63

    Adjustments for special
    items:                                                                 

      Foreign currency
      translation gain                         -             (4)     (0.04)

      Severance                                3               2       0.02

      Closure costs, impairment
      and other related charges                4               3       0.03

      Net gain on disposition of
      assets                                 (3)             (2)     (0.02)

      Post-emergence costs                     -               8       0.08

      Other income, net                        -             (5)     (0.05)

    GAAP as adjusted for special
    items                          $          56   $          63   $   0.65

    Six Months Ended June 30,        Operating          Net
    2012                           income (loss)   income (loss)
    (unaudited, in millions
    except per share amounts)                                         EPS

    GAAP as reported               $        (10)   $           3   $   0.03

    Adjustments for special
    items:                                                                 

      Foreign currency
      translation gain                         -             (5)     (0.05)

      Severance                                3               2       0.02

      Closure costs, impairment
      and other related charges               93              49       0.50

      Inventory write-downs
      included in cost of sales                7               4       0.04

      Net gain on disposition of
      assets                                (24)            (13)     (0.13)

      Post-emergence costs                     -               3       0.03

      Transaction costs                        7               7       0.07

      Other income, net                        -             (3)     (0.03)

      Reorganization tax
      adjustments                              -            (10)     (0.10)

    GAAP as adjusted for special
    items                          $          76   $          37   $   0.38

    Six Months Ended June 30,        Operating          Net
    2011                           income (loss)   (loss) income
    (unaudited, in millions
    except per share amounts)                                         EPS

    GAAP as reported               $          79   $          91   $   0.94

    Adjustments for special
    items:                                                                 

      Foreign currency
      translation gain                         -            (33)     (0.34)

      Severance                                7               5       0.05

      Closure costs, impairment
      and other related charges               17              12       0.12

      Inventory write-downs
      included in cost of sales                1               1       0.01

      Net gain on disposition of
      assets                                 (4)             (3)     (0.03)

      Post-emergence costs                     -              16       0.16

      Other income, net                        -             (6)     (0.06)

      Reorganization tax
      adjustments                              -            (10)     (0.10)

    GAAP as adjusted for special
    items                          $         100   $          73   $   0.75

See Notes to the Unaudited Consolidated Financial Statement Information

RESOLUTE FOREST PRODUCTS INC.
STATEMENTS OF EBITDA AND ADJUSTED EBITDA

A reconciliation of our net income including noncontrolling interests to
EBITDA and Adjusted EBITDA is presented in the tables below. See Note 7
to the Unaudited Consolidated Financial Statement Information regarding
our use of non-GAAP measures EBITDA and Adjusted EBITDA


    Three Months
    Ended June 30,
    2012                                                         Corporate
    (unaudited, in             Coated Specialty Market    Wood      and
    millions)        Newsprint papers  papers    pulp   products   other    Total

    Net income
    (loss)
    including
    noncontrolling
    interests         $     32  $   4  $     27  $  (7)  $    12  $  (133)  $ (65)

    Interest
    expense, net                                                        18      18

    Income tax
    provision                                                            1       1

    Depreciation,
    amortization
    and cost of
    timber
    harvested               18      9        12      10        9                58

    EBITDA                  50     13        39       3       21     (114)      12

    Foreign
    currency
    translation
    loss                                                                 9       9

    Severance                                                            1       1

    Closure costs,
    impairment and
    other related
    charges                                                             88      88

    Inventory
    write-downs
    included in
    cost of sales                                                        7       7

    Net gain on
    disposition of
    assets                                                             (1)     (1)

    Post-emergence
    costs                                                                3       3

    Transaction
    costs                                                                3       3

    Other income,
    net                                                                (2)     (2)

    Adjusted
    EBITDA            $     50  $  13  $     39  $    3  $    21  $    (6)  $  120

    Three Months
    Ended June 30,
    2011
    (unaudited, in             Coated Specialty Market    Wood   Corporate
    millions)        Newsprint papers  papers    pulp   products and other  Total

    Net income
    (loss)
    including
    noncontrolling
    interests         $     26  $  23  $     11  $   14  $  (14)  $      1  $   61

    Interest
    expense, net                                                        28      28

    Income tax
    benefit                                                           (39)    (39)

    Depreciation,
    amortization
    and cost of
    timber
    harvested               17      8        13       7       10       (1)      54

    EBITDA                  43     31        24      21      (4)      (11)     104

    Foreign
    currency
    translation
    gain                                                               (2)     (2)

    Severance                                                            3       3

    Closure costs,
    impairment and
    other related
    charges                                                              4       4

    Net gain on
    disposition of
    assets                                                             (3)     (3)

    Post-emergence
    costs                                                               11      11

    Other income,
    net                                                                (7)     (7)

    Adjusted
    EBITDA            $     43  $  31  $     24  $   21  $   (4)  $    (5)  $  110

    Six Months
    Ended June 30,
    2012
    (unaudited, in             Coated Specialty Market    Wood   Corporate
    millions)        Newsprint papers  papers    pulp   products and other  Total

    Net income
    (loss)
    including
    noncontrolling
    interests        $      53 $    3 $      42 $  (28) $      6 $   (108)  $ (32)

    Interest
    expense, net                                                        34      34

    Income tax
    benefit                                                            (9)     (9)

    Depreciation,
    amortization
    and cost of
    timber
    harvested               36     19        24      18       18               115

    EBITDA                  89     22        66    (10)       24      (83)     108

    Foreign
    currency
    translation
    gain                                                               (3)     (3)

    Severance                                                            3       3

    Closure costs,
    impairment and
    other related
    charges                                                             93      93

    Inventory
    write-downs
    included in
    cost of sales                                                        7       7

    Net gain on
    disposition of
    assets                                                            (24)    (24)

    Post-emergence
    costs                                                                5       5

    Transaction
    costs                                                                7       7

    Other income,
    net                                                                (5)     (5)

    Adjusted
    EBITDA            $     89  $  22  $     66  $ (10)  $    24  $    (0)  $  191

    Six Months                 Coated Specialty Market    Wood   Corporate
    Ended June 30,             papers  papers    pulp   products and other
    2011
    (unaudited, in
    millions)        Newsprint                                              Total

    Net income
    (loss)
    including
    noncontrolling
    interests        $      45 $   26 $      11 $    37 $   (17) $    (11) $    91

    Interest
    expense, net                                                        58      58

    Income tax
    benefit                                                           (53)    (53)

    Depreciation,
    amortization
    and cost of
    timber
    harvested               37     17        24      14       17               109

    EBITDA                  82     43        35      51        -       (6)     205

    Foreign
    currency
    translation
    gain                                                              (30)    (30)

    Severance                                                            7       7

    Closure costs,
    impairment and
    other related
    charges                                                             17      17

    Inventory
    write-downs
    included in
    cost of sales                                                        1       1

    Net gain on
    disposition of
    assets                                                             (4)     (4)

    Post-emergence
    costs                                                               22      22

    Other income,
    net                                                                (9)     (9)

    Adjusted
    EBITDA            $     82  $  43  $     35  $   51  $     -  $    (2)  $  209

RESOLUTE FOREST PRODUCTS INC.
Notes to the Unaudited Consolidated Financial Statement Information


    1. Acquisition of Fibrek Inc.

       On December 15, 2011, we announced an offer to purchase all of the
       issued and outstanding shares of Fibrek Inc. ("Fibrek"), a producer
       and marketer of virgin and recycled kraft pulp, operating three
       mills. Our acquisition of Fibrek has been achieved in stages. In
       connection with the offer, as of April 23, 2012, we had taken up and
       accepted for payment approximately 48.8% of the then outstanding
       Fibrek shares. On May 2, 2012, we took up and accepted for payment
       additional shares of Fibrek, after which we owned a controlling
       interest (approximately 50.1% of the then outstanding Fibrek shares)
       and Fibrek became a consolidated subsidiary. We subsequently
       acquired additional shares of Fibrek and, as of May 17, 2012 (the
       date the offer expired), we owned approximately 74.6% of the then
       outstanding Fibrek shares. As aggregate consideration for all of the
       Fibrek shares we purchased, we distributed approximately 2.8 million
       newly-issued shares of our common stock and Cdn$53 million ($53
       million, based on the exchange rates in effect on each of the dates
       we acquired the shares of Fibrek) in cash. Consequently the results
       reported for the second quarter of 2012 include the financial
       results of Fibrek for the period from May 2, 2012 to June 30, 2012.
       Fibrek's results of operations are included in the market pulp
       segment.

    2. Closure costs, impairment and other related charges for the three
       and six months ended June 30, 2012 and 2011 were comprised of the
       following:

                                    Three Months Ended   Six Months Ended
                                         June 30,            June 30,

    (Unaudited, in millions)          2012        2011     2012      2011

    Accelerated depreciation        $    - $         3   $    - $       4

    Impairment of assets held for       70           -       70         -
    sale

    Impairment of long-lived assets      -           -        -         7

    Severance and other costs           18           1       23         6

                                    $   88 $         4   $   93 $      17

        Impairment of assets held for sale

        In June 2012, we announced the indefinite idling of our Mersey
        newsprint mill in Nova Scotia. During the three months ended June
        30, 2012, we recorded long-lived asset impairment charges of $70
        million (including a $7 million write-down of an asset retirement
        obligation for environmental liabilities) related to the assets
        held for sale for our interest in Bowater Mersey Paper Company
        Limited (our "Mersey operations") to reduce the carrying value of
        our net assets to fair value less costs to sell.

        Severance and other costs

        During the three months ended June 30, 2012, we recorded $9 million
        of severance costs and $7 million for a pension plan curtailment
        loss as a result of the indefinite idling of our Mersey newsprint
        mill and $2 million for a pension plan settlement loss related to a
        workforce reduction at our Mersey Operations in the fourth quarter
        of 2011.

        During the six months ended June 30, 2012, we also recorded $2
        million of severance costs and a $2 million pension curtailment
        loss as a result of a workforce reduction at our Baie-Comeau paper
        mill, as well as a $1 million credit adjustment for severance costs
        and a $2 million pension curtailment loss related to the permanent
        closure in December 2011 of a paper machine at our Kenogami, Quebec
        paper mill.

    3 . During the three months ended June 30, 2012, we sold our Petit
        Saguenay sawmill, our recycling division's assets located in
        Phoenix, Arizona and various other assets resulting in a net gain
        on disposition of assets of approximately $1 million.

        During the six months ended June 30, 2012, we also sold a portion
        of our Mersey timberlands and various other assets for proceeds of
        $26 million, resulting in a net gain on disposition of assets of
        $23 million.

        As of June 30, 2012, we held for sale our Mersey operations and a
        parcel of land. The assets held for sale are carried in our
        Consolidated Balance Sheets as of June 30, 2012 and December 31,
        2011 at the lower of carrying value or fair value less costs to
        sell. We expect to complete a sale of all of these assets within
        the next twelve months for amounts that equal or exceed their
        individual carrying values.

    4.  During the three months ended June 30, 2012, we recorded a foreign
        currency translation loss of $9 million. This loss is a result of
        the weaker Canadian dollar relative to the U.S. dollar at June 30,
        2012 and its impact on the translation of our Canadian dollar net
        monetary assets in the Company's principal Canadian operating
        subsidiary. During the six months ended June 30, 2012, we recorded
        a foreign currency translation gain of $3 million as a result of
        the translation of our Canadian dollar balance sheet amounts.

    5.  During the three months ended June 30, 2012, we recorded an income
        tax provision of $1 million, which included an increase in the
        valuation allowance related to costs associated with the indefinite
        idling of our Mersey operations, a $13 million favorable
        reorganization-related adjustment, as well as foreign exchange
        related items. The income tax benefit of $9 million for the six
        months ended June 30, 2012, also included favorable adjustments
        related to research and development tax incentives, offset by an
        unfavorable reorganization-related tax adjustment.

    6.  For the calculation of basic and diluted income per share for the
        three and six months ended June 30, 2012 and 2011, no adjustments
        to net income attributable to Resolute Forest Products were
        necessary.

    7.  Tables represent a reconciliation of certain financial statement
        line items reported under generally accepted accounting principles
        ("GAAP") to our use of non-GAAP measures of operating income
        (loss), net income (loss) and net income (loss) per share, in each
        case adjusted for special items, as well as EBITDA and adjusted
        EBITDA, in each case by reportable segment. We believe that these
        measures are useful because they allow the reader to more easily
        compare our ongoing operations, financial performance and EPS from
        period to period.  They are also consistent with the indicators
        management uses internally to measure our performance. These
        non-GAAP measures should be considered in addition to and not a
        substitute for measures of financial performance calculated and
        presented in accordance with GAAP in our consolidated statement of
        operations in our filings with the Securities and Exchange
        Commission. Consequently, readers should rely on GAAP operating
        income (loss), operating income (loss) by reportable segment, net
        income (loss) and net income (loss) per share. Non-GAAP measures
        included in our press release include:

        Operating income (loss) adjusted for special items - is defined as
        operating income (loss) from our Consolidated Statements of
        Operations excluding special items, such as closure costs,
        impairment and other related charges, severance costs, inventory
        write-downs, gains and losses on dispositions of assets,
        transaction costs and other charges or credits that are excluded
        from our segment's performance from GAAP operating income (loss).

        Net income (loss) adjusted for special items - is defined as net
        income (loss) from our Consolidated Statements of Operations
        excluding the same items as under operating income (loss) adjusted
        for the special items, in addition to the effects of foreign
        currency translation, post-emergence costs, other income (expense)
        and reorganization tax adjustments.
        Net income (loss) per share (EPS) adjusted for special items - is
        defined as diluted EPS calculated based on the net income (loss)
        adjusted for special items as described above.

        EBITDA by reportable segment - is defined as net income (loss)
        including noncontrolling interests from our Consolidated Statements
        of Operations, allocated to each of our reportable segments
        (newsprint, coated papers, specialty papers, market pulp and wood
        products) in accordance with FASB ASC 290, "Segment Reporting," and
        adjusted for depreciation, amortization and cost of timber
        harvested.  EBITDA for the corporate and other segment is defined
        as net income (loss) including noncontrolling interests from our
        Consolidated Statements of Operations after the allocation to
        reportable segments, adjusted for interest expense, income taxes
        and depreciation, amortization and cost of timber harvested.

        Adjusted EBITDA - is defined as EBITDA excluding the special items
        described above.

 

 

 

SOURCE RESOLUTE FOREST PRODUCTS INC.


Source: PR Newswire