ufs-10q_20200630.htm

Large accelerated filer

Accelerated filer

Non-accelerated filer

Small reporting company

Emerging growth company

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2020

☐	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 001-33164

DOMTAR CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

20-5901152

(State of Incorporation)

(I.R.S. Employer

Identification No.)

234 Kingsley Park Drive, Fort Mill, SC 29715

(Address of principal executive offices)

(zip code)

(803) 802-7500

(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act: Common Stock, Par Value $0.01 Per Share; Common stock traded on the New York Stock Exchange; trading symbol UFS.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation ST (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.

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 ☒

At July 31, 2020, 55,192,623 shares of the issuer’s common stock were outstanding.

DOMTAR CORPORATION

FORM 10-Q

For the Quarterly Period Ended June 30, 2020

INDEX

PART I.	FINANCIAL INFORMATION	3

ITEM 1.	FINANCIAL STATEMENTS (UNAUDITED)	3

	CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (LOSS)	3

	CONSOLIDATED BALANCE SHEETS	4

	CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY	5

	CONSOLIDATED STATEMENTS OF CASH FLOWS	7

	INDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	8

	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	9

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	46

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	59

ITEM 4.	CONTROLS AND PROCEDURES	59

PART II	OTHER INFORMATION	60

ITEM 1.	LEGAL PROCEEDINGS	60

ITEM 1A.	RISK FACTORS	60

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	60

ITEM 3.	DEFAULT UPON SENIOR SECURITIES	61

ITEM 4.	MINE SAFETY DISCLOSURES	61

ITEM 5.	OTHER INFORMATION	61

ITEM 6.	EXHIBITS	62

PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS (UNAUDITED)

DOMTAR CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (LOSS)

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

	For the three months ended						For the six months ended
	June 30,			June 30,			June 30,			June 30,
	2020			2019			2020			2019
	(Unaudited)
	$			$			$			$
Sales		1,012			1,317			2,290			2,693
Operating expenses
Cost of sales, excluding depreciation and amortization		837			1,079			1,920			2,131
Depreciation and amortization		71			74			143			147
Selling, general and administrative		93			105			195			228
Impairment of long-lived assets (NOTE 12)		—			15			—			25
Closure and restructuring costs (NOTE 12)		1			8			1			12
Other operating (income) loss, net (NOTE 7)		(4	)		2			(2	)		1
		998			1,283			2,257			2,544
Operating income		14			34			33			149
Interest expense, net		15			13			29			26
Non-service components of net periodic benefit cost (NOTE 6)		(5	)		(2	)		(9	)		(5	)
Earnings before income taxes and equity loss		4			23			13			128
Income tax (benefit) expense (NOTE 8)		(15	)		5			(12	)		29
Equity loss, net of taxes		—			—			1			1
Net earnings		19			18			24			98
Per common share (in dollars) (NOTE 5)
Net earnings
Basic		0.34			0.29			0.43			1.56
Diluted		0.34			0.28			0.43			1.55
Weighted average number of common shares outstanding (millions)
Basic		55.2			63.0			55.6			63.0
Diluted		55.3			63.3			55.7			63.3
Cash dividends per common share		0.46			0.44			0.91			0.87

Net earnings		19			18			24			98
Other comprehensive income (loss) (NOTE 14):
Net derivative gains (losses) on cash flow hedges:
Net gains (losses) arising during the period, net of tax of $(9) and $7, respectively (2019 – $(1) and $(5), respectively)		29			3			(20	)		14
Less: Reclassification adjustment for losses included in net earnings, net of tax of $(2) and $(4), respectively (2019 – $(1) and $(1), respectively)		6			1			13			2
Foreign currency translation adjustments		39			20			(35	)		22
Change in unrecognized gains and prior service cost related to pension and post-retirement benefit plans, net of tax of nil and $(1), respectively (2019 – $(1) and $(2), respectively)		2			2			3			5
Other comprehensive income (loss)		76			26			(39	)		43
Comprehensive income (loss)		95			44			(15	)		141

The accompanying notes are an integral part of the consolidated financial statements.

DOMTAR CORPORATION

CONSOLIDATED BALANCE SHEETS

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

	At
	June 30,			December 31,
	2020			2019
	(Unaudited)
	$			$
Assets
Current assets
Cash and cash equivalents		124			61
Receivables, less allowances of $11 and $6		535			577
Inventories (NOTE 9)		767			786
Prepaid expenses		36			33
Income and other taxes receivable		34			61
Total current assets		1,496			1,518
Property, plant and equipment, net		2,509			2,567
Operating lease right-of-use assets (NOTE 10)		74			81
Intangible assets, net (NOTE 11)		564			573
Other assets		162			164
Total assets		4,805			4,903
Liabilities and shareholders' equity
Current liabilities
Bank indebtedness		—			9
Trade and other payables		565			705
Income and other taxes payable		33			23
Operating lease liabilities due within one year (NOTE 10)		28			28
Long-term debt due within one year		13			1
Total current liabilities		639			766
Long-term debt		1,089			938
Operating lease liabilities (NOTE 10)		62			69
Deferred income taxes and other		461			479
Other liabilities and deferred credits		277			275
Commitments and contingencies (NOTE 16)
Shareholders' equity (NOTE 15)
Common stock $0.01 par value; authorized 2,000,000,000 shares; issued 65,001,104 and 65,001,104 shares		1			1
Treasury stock $0.01 par value; 9,809,399 and 8,120,194 shares		—			—
Additional paid-in capital		1,711			1,770
Retained earnings		997			998
Accumulated other comprehensive loss		(432	)		(393	)
Total shareholders' equity		2,277			2,376
Total liabilities and shareholders' equity		4,805			4,903

The accompanying notes are an integral part of the consolidated financial statements.

DOMTAR CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

	For the three months ended
	June 30, 2020
	Issued and outstanding common shares (millions of shares)		Common stock, at par		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss			Total shareholders' equity
	(Unaudited)
			$		$		$		$			$
Balance at March 31, 2020		55.2		1		1,710		978		(508	)		2,181
Stock-based compensation, net of tax		—		—		1		—		—			1
Net earnings		—		—		—		19		—			19
Net derivative gains on cash flow hedges:
Net gains arising during the period, net of tax of $(9)		—		—		—		—		29			29
Less: Reclassification adjustment for losses included in net earnings, net of tax of $(2)		—		—		—		—		6			6
Foreign currency translation adjustments		—		—		—		—		39			39
Change in unrecognized gains and prior service cost related to pension and post-retirement benefit plans, net of tax of nil		—		—		—		—		2			2
Balance at June 30, 2020		55.2		1		1,711		997		(432	)		2,277

	For the six months ended
	June 30, 2020
	Issued and outstanding common shares (millions of shares)			Common stock, at par		Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Total shareholders' equity
	(Unaudited)
				$		$			$			$			$
Balance at December 31, 2019		56.9			1		1,770			998			(393	)		2,376
Stock-based compensation, net of tax		0.1			—		—			—			—			—
Net earnings		—			—		—			24			—			24
Net derivative losses on cash flow hedges:
Net losses arising during the period, net of tax of $7		—			—		—			—			(20	)		(20	)
Less: Reclassification adjustment for losses included in net earnings, net of tax of $(4)		—			—		—			—			13			13
Foreign currency translation adjustments		—			—		—			—			(35	)		(35	)
Change in unrecognized gains and prior service cost related to pension and post-retirement benefit plans, net of tax of $(1)		—			—		—			—			3			3
Stock repurchase		(1.8	)		—		(59	)		—			—			(59	)
Cash dividends declared		—			—		—			(25	)		—			(25	)
Balance at June 30, 2020		55.2			1		1,711			997			(432	)		2,277

The accompanying notes are an integral part of the consolidated financial statements.

DOMTAR CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

	For the three months ended
	June 30, 2019
	Issued and outstanding common shares (millions of shares)			Common stock, at par		Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Total shareholders' equity
	(Unaudited)
				$		$			$			$			$
Balance at March 31, 2019		63.1			1		1,982			1,075			(450	)		2,608
Stock-based compensation, net of tax		—			—		3			—			—			3
Net earnings		—			—		—			18			—			18
Net derivative gains on cash flow hedges:
Net gains arising during the period, net of tax of $(1)		—			—		—			—			3			3
Less: Reclassification adjustment for losses included in net earnings, net of tax of $(1)		—			—		—			—			1			1
Foreign currency translation adjustments		—			—		—			—			20			20
Change in unrecognized gains and prior service cost related to pension and post-retirement benefit plans, net of tax of $(1)		—			—		—			—			2			2
Stock repurchase		(0.2	)		—		(8	)		—			—			(8	)
Cash dividends declared		—			—		—			(28	)		—			(28	)
Balance at June 30, 2019		62.9			1		1,977			1,065			(424	)		2,619

	For the six months ended
	June 30, 2019
	Issued and outstanding common shares (millions of shares)			Common stock, at par		Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Total shareholders' equity
	(Unaudited)
				$		$			$			$			$
Balance at December 31, 2018		62.9			1		1,981			1,023			(467	)		2,538
Stock-based compensation, net of tax		0.2			—		4			—			—			4
Net earnings		—			—		—			98			—			98
Net derivative gains on cash flow hedges:
Net gains arising during the period, net of tax of $(5)		—			—		—			—			14			14
Less: Reclassification adjustment for losses included in net earnings, net of tax of $(1)		—			—		—			—			2			2
Foreign currency translation adjustments		—			—		—			—			22			22
Change in unrecognized gains and prior service cost related to pension and post-retirement benefit plans, net of tax of $(2)		—			—		—			—			5			5
Stock repurchase		(0.2	)		—		(8	)		—			—			(8	)
Cash dividends declared		—			—		—			(56	)		—			(56	)
Balance at June 30, 2019		62.9			1		1,977			1,065			(424	)		2,619

The accompanying notes are an integral part of the consolidated financial statements.

DOMTAR CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN MILLIONS OF DOLLARS)

	For the six months ended
	June 30, 2020			June 30, 2019
	(Unaudited)
	$			$
Operating activities
Net earnings		24			98
Adjustments to reconcile net earnings to cash flows from operating activities
Depreciation and amortization		143			147
Deferred income taxes and tax uncertainties		(12	)		(1	)
Impairment of long-lived assets		—			25
Stock-based compensation expense		3			5
Equity loss, net		1			1
Changes in assets and liabilities, excluding the effect of acquisition of business
Receivables		42			40
Inventories		20			(54	)
Prepaid expenses		2			(11	)
Trade and other payables		(95	)		(76	)
Income and other taxes		40			(14	)
Difference between employer pension and other post-retirement contributions and pension and other post-retirement expense		(1	)		1
Other assets and other liabilities		(12	)		13
Cash flows from operating activities		155			174
Investing activities
Additions to property, plant and equipment		(102	)		(101	)
Proceeds from disposals of property, plant and equipment		—			1
Acquisition of business, net of cash acquired		(30	)		—
Cash flows used for investing activities		(132	)		(100	)
Financing activities
Dividend payments		(51	)		(55	)
Stock repurchase		(59	)		(8	)
Net change in bank indebtedness		(10	)		3
Change in revolving credit facility		(80	)		—
Proceeds from receivables securitization facility		25			80
Repayments of receivables securitization facility		(80	)		(110	)
Issuance of long-term debt		300			—
Repayments of long-term debt		—			(1	)
Other		(4	)		(1	)
Cash flows provided from (used for) financing activities		41			(92	)
Net increase (decrease) in cash and cash equivalents		64			(18	)
Impact of foreign exchange on cash		(1	)		—
Cash and cash equivalents at beginning of period		61			111
Cash and cash equivalents at end of period		124			93
Supplemental cash flow information
Net cash payments (refund) for:
Interest		25			23
Income taxes		(24	)		50

The accompanying notes are an integral part of the consolidated financial statements.

INDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1	BASIS OF PRESENTATION	9

NOTE 2	RECENT ACCOUNTING PRONOUNCEMENTS	10

NOTE 3	ACQUISITION OF BUSINESS	11

NOTE 4	DERIVATIVES AND HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENT	12

NOTE 5	EARNINGS PER COMMON SHARE	17

NOTE 6	PENSION PLANS AND OTHER POST-RETIREMENT BENEFIT PLANS	18

NOTE 7	OTHER OPERATING (INCOME) LOSS, NET	20

NOTE 8	INCOME TAXES	21

NOTE 9	INVENTORIES	22

NOTE 10	LEASES	23

NOTE 11	INTANGIBLE ASSETS	26

NOTE 12	CLOSURE AND RESTRUCTURING COSTS AND IMPAIRMENT OF LONG-LIVED ASSETS	27

NOTE 13	LONG-TERM DEBT	28

NOTE 14	CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS BY COMPONENT	29

NOTE 15	SHAREHOLDERS’ EQUITY	32

NOTE 16	COMMITMENTS AND CONTINGENCIES	33

NOTE 17	SEGMENT DISCLOSURES	36

NOTE 18	SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION	38

NOTE 19	SUBSEQUENT EVENT	45

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 1.

_________________

BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, in the opinion of Management, include all adjustments that are necessary for the fair statement of Domtar Corporation’s (“the Company”) financial position, results of operations, and cash flows for the interim periods presented. Results for the first six months of the year may not necessarily be indicative of full-year results. It is suggested that these consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Domtar Corporation Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as filed with the Securities and Exchange Commission. The December 31, 2019 Consolidated Balance Sheet, presented for comparative purposes in this interim report, was derived from audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 2.

_________________

RECENT ACCOUNTING PRONOUNCEMENTS

ACCOUNTING CHANGES IMPLEMENTED

IMPLEMENTATION COSTS FOR CLOUD COMPUTING ARRANGEMENTS

In August 2018, the FASB issued Accounting Standards Update (“ASU”) 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract”. Under the guidance, implementation costs for cloud computing arrangements should be evaluated for capitalization using the same approach as implementation costs associated with internal-use software and expensed over the term of the hosting arrangement. The ASU also provides guidance on presentation and disclosure.

The Company adopted the new guidance on January 1, 2020 with no significant impact on the consolidated financial statements.

RECEIVABLES

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses”. This ASU added a new impairment model (known as the current expected credit loss (“CECL”) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes an allowance for its estimate of expected credit losses and applies to most debt instruments, trade receivables, lease receivables, financial guarantee contracts, and other loan commitments. The CECL model does not have a minimum threshold for recognition of impairment losses and entities will need to measure expected credit losses on assets that have a low risk of loss.

The Company adopted the new guidance on January 1, 2020 with no significant impact on the consolidated financial statements.

FUTURE ACCOUNTING CHANGES

TRANSITION AWAY FROM INTERBANK OFFERED RATES

On March 12, 2020, the FASB issued ASU 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting”. The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued.

The amendments in the ASU are elective and apply to entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. An entity may elect to apply the amendments prospectively through December 31, 2022.

The Company has begun its impact assessment and while its evaluation of this guidance is in the early stages, the Company does not expect the adoption of this guidance to have a material impact on the consolidated financial statements.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 3.

_________________

ACQUISITION OF BUSINESS

Purchase of Appvion Point of Sale business

On April 27, 2020, Domtar Corporation completed the acquisition of the Point of Sale paper business from Appvion Operation Inc. The business includes the coater and related equipment located at Appvion’s West Carrollton, Ohio, facility as well as a license for all corresponding intellectual property and assumed liabilities related to post-retirement benefits. The results of this business have been included in the consolidated financial statements as of April 27, 2020 and are presented in the Pulp and Paper reportable segment. The purchase price was $20 million in cash plus the book value of raw materials and finished goods inventory, subject to post-closing adjustments. The acquisition was accounted for as a business combination under the acquisition method of accounting. The total purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on the Company’s preliminary estimates of their fair value, which was based on information currently available. The items to be finalized are inventory, equipment, assumed liabilities, intangible assets, deferred tax balances and goodwill. The Company will complete the valuation of all assets and liabilities within the next 12 months.

The table below illustrates the preliminary purchase price allocation:

Fair value of net assets acquired at the date of acquisition
Inventories	$	11
Property, plant and equipment		25
Total assets		36

Less: Assumed liabilities		6

Fair value of net assets acquired at the date of acquisition		30

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 4.

________________

DERIVATIVES AND HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENT

HEDGING PROGRAMS

The Company is exposed to market risk, such as changes in currency exchange rates, commodity prices, interest rates and prices of the Company’s common stock with regard to the Company’s stock-based compensation program. To the extent the Company decides to manage the volatility related to these exposures, the Company may enter into various financial derivatives that are accounted for under the derivatives and hedging guidance. These transactions are governed by the Company's hedging policies which provide direction on acceptable hedging activities, including instrument type and acceptable counterparty exposure.

Upon inception, the Company formally documents the relationship between hedging instruments and hedged items. At inception and quarterly thereafter, the Company formally assesses whether the financial instruments used in hedging transactions are effective at offsetting changes in either the cash flow or the fair value of the underlying exposures. The Company does not hold derivative financial instruments for trading purposes.

CREDIT RISK

The Company is exposed to credit risk on accounts receivable from its customers. In order to reduce this risk, the Company reviews new customers’ credit history before granting credit and conducts regular reviews of existing customers’ credit performance. As of June 30, 2020, one Pulp and Paper segment customer located in the U.S. represented 10% or $53 million of the Company’s receivables (December 31, 2019 – two Pulp and Paper segment customers located in the U.S. represented 11% or $66 million, and 11% or $65 million, respectively).

The Company is exposed to credit risk in the event of non-performance by counterparties to its financial instruments. The Company attempts to minimize this exposure by entering into contracts with counterparties that are believed to be of high credit quality. Collateral or other security to support financial instruments subject to credit risk is usually not obtained. The credit standing of counterparties is regularly monitored.

INTEREST RATE RISK

The Company is exposed to interest rate risk arising from fluctuations in interest rates on its cash and cash equivalents, bank indebtedness, revolving credit facility and securitization, term loan and long-term debt. The Company’s objective in managing exposure to interest rate changes is to minimize the impact of interest rate changes on earnings and cash flows and to lower its overall borrowing costs. The Company may manage this interest rate exposure through the use of derivative instruments such as interest rate swap contracts, whereby it agrees to exchange the difference between fixed and variable interest amounts calculated by reference to an agreed upon notional principal amount.

EQUITY RISK

The Company is exposed to changes in share prices with regard to its stock-based compensation program. The Company manages its exposure through the use of derivative instruments such as equity swap contracts. In March 2020, the Company entered into a total return swap agreement covering 500,000 common shares maturing on March 4, 2022.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 4. DERIVATIVES AND HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENT (CONTINUED)

COST RISK

Cash flow hedges:

The Company is exposed to price volatility for raw materials and energy used in its manufacturing process. The Company manages its exposure to cost risk primarily through the use of supplier contracts. The Company purchases natural gas at the prevailing market price at the time of delivery. To reduce the impact on cash flow and earnings due to pricing volatility, the Company may utilize derivatives to fix the price of forecasted natural gas purchases. The changes in the fair value on qualifying instruments are included in Accumulated other comprehensive loss to the extent effective, and reclassified into Cost of sales in the period during which the hedged transaction affects earnings. Current contracts are used to hedge a portion of forecasted purchases over the next 42 months.

The following table presents the volumes under derivative financial instruments for natural gas contracts outstanding as of June 30, 2020 to hedge forecasted purchases:

Commodity	Notional contractual quantity under derivative contracts MMBtu⁽²⁾		Notional contractual value under derivative contracts (in millions of dollars)			Percentage of forecasted purchases under derivative contracts
Natural gas
2020 ⁽¹⁾		4,351,238		$	13	35%
2021		9,270,000		$	27	37%
2022		9,270,000		$	25	37%
2023		4,210,000		$	12	17%

⁽¹⁾	Represents the remaining six months of 2020

⁽²⁾	MMBtu: Millions of British thermal units

The natural gas derivative contracts were effective as of June 30, 2020.

FOREIGN CURRENCY RISK

Cash flow hedges:

The Company has manufacturing operations in the United States, Canada and Europe. As a result, it is exposed to movements in foreign currency exchange rates in Canada and Europe. Moreover, certain assets and liabilities are denominated in currencies other than the U.S. dollar and are exposed to foreign currency movements. Accordingly, the Company’s earnings are affected by increases or decreases in the value of the Canadian dollar and European currencies. The Company’s European subsidiaries are also exposed to movements in foreign currency exchange rates on transactions denominated in a currency other than their Euro functional currency. The Company’s risk management policy allows it to hedge a significant portion of its exposure to fluctuations in foreign currency exchange rates for periods up to three years. The Company may use derivative financial instruments (currency options and foreign exchange forward contracts) to mitigate its exposure to fluctuations in foreign currency exchange rates.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 4. DERIVATIVES AND HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENT (CONTINUED)

Derivatives are used to hedge forecasted purchases in Canadian dollars by the Company’s Canadian subsidiary over the next 24 months. Such derivatives are designated as cash flow hedges. The changes in the fair value on qualifying instruments are included in Accumulated other comprehensive loss to the extent effective, and reclassified into Sales or Cost of sales in the period during which the hedged transaction affects earnings.

The following table presents the currency values under significant currency positions pursuant to currency derivatives outstanding as of June 30, 2020 to hedge forecasted purchases and sales:

Currency exposure hedged

Business Segment

Year of

maturity

Notional

contractual value

Percentage of

forecasted net

exposures under

contracts

Average

Protection rate

Average

Obligation rate

CAD/USD

Pulp and Paper

2020⁽¹⁾

447 CAD

94%

1 USD = 1.3246

1 USD = 1.3414

CAD/USD

Pulp and Paper

2021

651 CAD

69%

1 USD = 1.3450

1 USD = 1.3560

CAD/USD

Pulp and Paper

2022

216 CAD

23%

1 USD = 1.3723

⁽¹⁾Represents the remaining six months of 2020

The foreign exchange derivative contracts were effective as of June 30, 2020.

FAIR VALUE MEASUREMENT

The accounting standards for fair value measurements and disclosures establish a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three levels. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is available and significant to the fair value measurement.

Level 1

Quoted prices in active markets for identical assets or liabilities.

Level 2

Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3

Inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 4. DERIVATIVES AND HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENT (CONTINUED)

The following tables present information about the Company’s financial assets and financial liabilities measured at fair value on a recurring basis (except Long-term debt, see (b) below) at June 30, 2020 and December 31, 2019, in accordance with the accounting standards for fair value measurements and disclosures and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value.

Fair Value of financial instruments at:	June 30, 2020		Quoted prices in active markets for identical assets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)			Balance sheet classification
	$		$		$		$
Derivatives designated as hedging instruments:
Asset derivatives
Currency derivatives		6		—		6		—	(a)	Prepaid expenses
Currency derivatives		4		—		4		—	(a)	Other assets
Total Assets		10		—		10		—

Liabilities derivatives
Currency derivatives		14		—		14		—	(a)	Trade and other payables
Natural gas swap contracts		5		—		5		—	(a)	Trade and other payables
Currency derivatives		6		—		6		—	(a)	Other liabilities and deferred credits
Natural gas swap contracts		5		—		5		—	(a)	Other liabilities and deferred credits
Total Liabilities		30		—		30		—

Other instruments:
Stock-based compensation - liability awards		4		4		—		—		Trade and other payables
Stock-based compensation - liability awards		10		10		—		—		Other liabilities and deferred credits
Equity swap contracts		3		3		—		—		Other liabilities and deferred credits
Long-term debt		1,160		—		1,160		—	(b)	Long-term debt

The net cumulative loss recorded in Accumulated other comprehensive loss relating to natural gas contracts is $10 million at June 30, 2020, of which a loss of $5 million is expected to be recognized in Cost of sales upon maturity of the derivatives over the next 12 months at the then prevailing values, which may be different from those at June 30, 2020.

The net cumulative loss recorded in Accumulated other comprehensive loss relating to currency options and forwards hedging forecasted purchases is $10 million at June 30, 2020, of which a loss of $8 million is expected to be recognized in Cost of sales or Sales upon maturity of the derivatives over the next 12 months at the then prevailing values, which may be different from those at June 30, 2020.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 4. DERIVATIVES AND HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENT (CONTINUED)

Fair Value of financial instruments at:	December 31, 2019		Quoted prices in active markets for identical assets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)			Balance sheet classification
	$		$		$		$
Derivatives designated as hedging instruments:
Asset derivatives
Currency derivatives		4		—		4		—	(a)	Prepaid expenses
Currency derivatives		4		—		4		—	(a)	Other assets
Total Assets		8		—		8		—

Liabilities derivatives
Currency derivatives		2		—		2		—	(a)	Trade and other payables
Natural gas swap contracts		9		—		9		—	(a)	Trade and other payables
Natural gas swap contracts		8		—		8		—	(a)	Other liabilities and deferred credits
Total Liabilities		19		—		19		—

Other Instruments:
Stock-based compensation - liability awards		7		7		—		—		Trade and other payables
Stock-based compensation - liability awards		18		18		—		—		Other liabilities and deferred credits
Long-term debt		1,030		—		1,030		—	(b)	Long-term debt

(a)	Fair value of the Company’s derivatives are classified under Level 2 (inputs that are observable; directly or indirectly) as it is measured as follows:

For currency derivatives: Foreign currency forward and option contracts are valued using standard valuation models. Interest rates, forward market rates and volatility are used as inputs for such valuation techniques.

For natural gas contracts: Fair value is measured using the discounted difference between contractual rates and quoted market future rates.

(b)

Fair value of the Company’s long-term debt is measured by comparison to market prices of its debt. The Company’s long-term debt is not carried at fair value on the Consolidated Balance Sheets at June 30, 2020 and December 31, 2019. The carrying value of the Company’s long-term debt is $1,102 million and $939 million at June 30, 2020 and December 31, 2019, respectively.

Due to their short-term maturity, the carrying amounts of cash and cash equivalents, receivables, bank indebtedness, trade and other payables and income and other taxes approximate their fair values.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 5.

_________________

EARNINGS PER COMMON SHARE

The following table provides the reconciliation between basic and diluted earnings per common share:

	For the three months ended				For the six months ended
	June 30,		June 30,		June 30,		June 30,
	2020		2019		2020		2019
Net earnings	$	19	$	18	$	24	$	98
Weighted average number of common shares outstanding (millions)		55.2		63.0		55.6		63.0
Effect of dilutive securities (millions)		0.1		0.3		0.1		0.3
Weighted average number of diluted common shares outstanding (millions)		55.3		63.3		55.7		63.3

Basic net earnings per common share (in dollars)	$	0.34	$	0.29	$	0.43	$	1.56
Diluted net earnings per common share (in dollars)	$	0.34	$	0.28	$	0.43	$	1.55

The following table provides the securities that could potentially dilute basic earnings per common share in the future, but were not included in the computation of diluted earnings per common share because to do so would have been anti-dilutive:

	For the three months ended				For the six months ended
	June 30,		June 30,		June 30,		June 30,
	2020		2019		2020		2019
Options to purchase common shares		409,776		219,211		409,776		219,211

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 6.

_________________

PENSION PLANS AND OTHER POST-RETIREMENT BENEFIT PLANS

DEFINED CONTRIBUTION PLANS

The Company has several defined contribution plans, including multiemployer plans. The pension expense under these plans is equal to the Company’s contribution. For the three and six months ended June 30, 2020, the pension expense was $9 million and $21 million, respectively (2019 – $9 million and $23 million, respectively).

DEFINED BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFIT PLANS

The Company sponsors both contributory and non-contributory defined benefit pension plans. Non-unionized employees in Canada joining the Company after January 1, 1998 participate in a defined contribution pension plan. Salaried employees in the U.S. joining the Company after January 1, 2008 participate in a defined contribution pension plan. Unionized and non-union hourly employees in the U.S. who are not grandfathered under the existing defined benefit pension plans, participate in a defined contribution pension plan for future service. The Company also sponsors a number of other post-retirement benefit plans for eligible U.S. and non-U.S. employees; the plans are unfunded and include life insurance programs and medical and dental benefits. The Company also provides supplemental unfunded defined benefit pension plans and supplemental unfunded defined contribution pension plans to certain senior management employees.

Components of net periodic benefit cost for pension plans and other post-retirement benefit plans:

	For the three months ended						For the six months ended
	June 30, 2020						June 30, 2020
	Pension plans			Other post-retirement benefit plans			Pension plans			Other post-retirement benefit plans
	$			$			$			$
Service cost		7			1			14			1
Interest expense		9			1			20			1
Expected return on plan assets		(17	)		—			(34	)		—
Amortization of net actuarial loss (gain)		2			(1	)		4			(1	)
Amortization of prior year service costs		1			—			1			—
Net periodic benefit cost		2			1			5			1

Components of net periodic benefit cost for pension plans and other post-retirement benefit plans:

	For the three months ended						For the six months ended
	June 30, 2019						June 30, 2019
	Pension plans			Other post-retirement benefit plans			Pension plans			Other post-retirement benefit plans
	$			$			$			$
Service cost		7			1			15			1
Interest expense		14			1			27			1
Expected return on plan assets		(20	)		—			(40	)		—
Amortization of net actuarial loss (gain)		2			(1	)		5			(1	)
Amortization of prior year service costs		2			—			3			—
Net periodic benefit cost		5			1			10			1

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 6. PENSION PLANS AND OTHER POST-RETIREMENT BENEFIT PLANS (CONTINUED)

The components of net periodic benefit cost for pension plans and other post-retirement benefits plans, other than service cost, are presented in Non-service components of net periodic benefit cost on the Consolidated Statement of Earnings and Comprehensive Income (Loss).

For the three and six months ended June 30, 2020, the Company contributed $2 million and $4 million, respectively (2019 – $4 million and $7 million, respectively) to the pension plans and $1 million and $2 million, respectively (2019 – $1 million and $2 million, respectively) to the other post-retirement benefit plans.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 7.

_________________

OTHER OPERATING (INCOME) LOSS, NET

Other operating (income) loss, net is an aggregate of both recurring and non-recurring loss or income items and, as a result, can fluctuate from period to period. The Company’s other operating (income) loss, net includes the following:

	For the three months ended					For the six months ended
	June 30,			June 30,		June 30,			June 30,
	2020			2019		2020			2019
	$			$		$			$
Bad debt expense		1			1		5			1
Environmental provision		—			—		1			1
Non-production agreement terminated		(7	)		—		(7	)		—
Foreign exchange loss		2			1		—			2
Other		—			—		(1	)		(3	)
Other operating (income) loss, net		(4	)		2		(2	)		1

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 8.

_________________

INCOME TAXES

For the second quarter of 2020, the Company’s income tax benefit was $15 million, consisting of a current income tax benefit of $2 million and a deferred income tax benefit of $13 million. This compares to an income tax expense of $5 million in the second quarter of 2019, consisting of a current income tax expense of $3 million and a deferred income tax expense of $2 million. The Company made income tax payments, net of refunds, of $1 million during the second quarter of 2020. The effective tax rate was -375% compared with an effective tax rate of 22% in the second quarter of 2019. The Company’s tax provision for interim periods is determined using an estimate of its annual effective tax rate and then making adjustments for discrete items arising in that quarter. In each interim quarter the Company updates its estimate of the annual effective tax rate and, if the estimated annual tax rate changes, makes a cumulative adjustment in that quarter. The effective tax rate for the second quarter of 2020 was significantly impacted by such an adjustment, mainly due to a change in the mix of earnings or loss between jurisdictions. The effective tax rate for the second quarter of 2020 was also favorably impacted by the recognition of additional tax credits in various jurisdictions, as well as by the CARES Act, which granted companies the ability to carry back tax losses generated in the U.S. in 2020 to a tax year with a higher statutory tax rate. The effective tax rate for the second quarter of 2019 was favorably impacted by a change in Arkansas law, which was mostly offset by the recording of a valuation allowance against certain state tax credit carryforwards.

For the first six months of 2020, the Company’s income tax benefit was $12 million, consisting entirely of a deferred income tax benefit of $12 million. This compares to an income tax expense of $29 million in the first six months of 2019, consisting of a current income tax expense of $30 million and a deferred income tax benefit of $1 million. The Company received refunds, net of income tax payments, of $24 million during the first six months of 2020. The effective tax rate was -92% compared to an effective tax rate of 23% in the first six months of 2019. The effective tax rate for the first six months of 2020 was significantly impacted by the mix of earnings or loss in the Company’s major jurisdictions, by the recognition of additional tax credits in various jurisdictions, and by the ability to carry back U.S. tax losses generated in 2020 to a tax year with a higher statutory tax rate. These favorable impacts were partially offset by an increase in the valuation allowance related to the expected realization of certain U.S. state tax credits. The effective tax rate for the first six months of 2019 was favorably impacted by the recognition of a $1 million R&D credit in a U.S. state as well as by a change in Arkansas law, which was mostly offset by the recording of a valuation allowance against certain state tax credit carryforwards.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 9.

_________________

INVENTORIES

The following table presents the components of inventories:

	June 30,		December 31,
	2020		2019
	$		$
Work in process and finished goods		390	401
Raw materials		145	153
Operating and maintenance supplies		232	232
		767	786

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 10.

_________________

LEASES

In the normal course of business, the Company enters into operating and finance leases mainly for manufacturing and warehousing facilities, corporate offices, motor vehicles, mobile equipment and manufacturing equipment.

While the Company’s lease payments are generally fixed over the lease term, some leases may include price escalation terms that are fixed at the lease commencement date.

The Company has remaining lease terms ranging from 1 year to 13 years, some of which may include options to extend the leases for up to 10 years, and some of which may include options to terminate the leases within 1 year.

The components of lease expense were as follows:

	For the three months ended				For the six months ended
	June 30,		June 30,		June 30,		June 30,
	2020		2019		2020		2019
	$		$		$		$
Operating lease expense		8		7		16		14

Finance lease expense:
Amortization of right-of-use assets		—		—		—		—
Interest on lease liabilities		—		—		—		—
Total finance lease expense		—		—		—		—

Supplemental cash flow information related to leases was as follows:

		For the six months ended
		June 30,		June 30,
		2020		2019
		$		$
Cash paid for amounts included in the measurement of lease liabilities:
	Operating cash flows from operating leases		17		15
	Operating cash flows from finance leases		—		—
	Financing cash flows from finance leases		—		—

Right-of-use assets obtained in exchange for lease liabilities:
	Operating leases		5		11
	Finance leases		—		—

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 10. LEASES (CONTINUED)

Supplemental balance sheet information related to leases was as follows:

			June 30,			December 31,
			2020			2019
			$			$
Operating leases
	Operating leases right-of-use assets			74			81

	Lease liabilities due within one year			28			28
	Operating lease liabilities			62			69
				90			97

Finance leases
	Property, plant and equipment			14			15
	Accumulated depreciation			(7	)		(7	)
				7			8

	Long-term debt due within one year			1			1
	Long-term debt			8			9
				9			10

	Weighted-average remaining lease term
		Operating leases	4.6 years			4.9 years
		Finance leases	9.5 years			10 years

	Weighted-average discount rate
		Operating leases		4.5	%		4.6	%
		Finance leases		6.2	%		6.7	%

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 10. LEASES (CONTINUED)

Maturities of lease liabilities June 30, 2020 were as follows:

	Operating leases		Finance leases
	June 30,		June 30,
	2020		2020
	$		$
2020 ⁽¹⁾		15		1
2021		26		2
2022		20		1
2023		15		1
2024		9		1
Thereafter		15		6
Total lease payments		100		12

Less: Imputed interest		10		3

Total lease liabilities		90		9

⁽¹⁾

Represents the remaining six months of 2020.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 11.

_________________

INTANGIBLE ASSETS

The following table presents the components of intangible assets:

		June 30, 2020							December 31, 2019
	Estimated useful lives (in years)	Gross carrying amount		Accumulated amortization			Net		Gross carrying amount		Accumulated amortization			Net
		$		$			$		$		$			$
Definite-lived intangible assets subject to amortization
Water rights	40		3		(1	)		2		3		(1	)		2
Customer relationships	10 – 40		380		(116	)		264		380		(108	)		272
Technology	7 – 20		8		(5	)		3		8		(5	)		3
Non-Compete	9		1		(1	)		—		1		(1	)		—
License rights	12		29		(17	)		12		29		(16	)		13
			421		(140	)		281		421		(131	)		290
Indefinite-lived intangible assets not subject to amortization
Water rights			4		—			4		4		—			4
Trade names			235		—			235		235		—			235
License rights			6		—			6		6		—			6
Catalog rights			38		—			38		38		—			38
Total			704		(140	)		564		704		(131	)		573

Amortization expense related to intangible assets for the three and six months ended June 30, 2020 was $4 million and $9 million, respectively (2019 – $4 million and $9 million, respectively).

Amortization expense for the next five years related to intangible assets is expected to be as follows:

	2020	2021		2022		2023		2024
	$	$		$		$		$
Amortization expense related to intangible assets	21 ⁽¹⁾		21		20		20		20

⁽¹⁾

Represents twelve months of amortization

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 12.

_________________

CLOSURE AND RESTRUCTURING COSTS AND IMPAIRMENT OF LONG-LIVED ASSETS

Other costs

For the three and six months ended June 30, 2020, other costs related to previous and ongoing closures and restructuring included $1 million of severance and termination costs (2019 – nil).

Waco, Texas facility

On November 1, 2018, the Company announced a margin improvement plan within the Personal Care Division. As part of this plan, the Board of Directors approved the permanent closure of its Waco, Texas Personal Care manufacturing and distribution facility, the relocation of certain of its manufacturing assets and a workforce reduction across the division. The Waco, Texas facility ceased operations during the second quarter of 2019.

For the three and six months ended June 30, 2019, the Company recorded $15 million and $25 million, respectively, of accelerated depreciation and impairment of operating lease right-of-use assets under Impairment of long-lived assets on the Consolidated Statement of Earnings and Comprehensive Income (Loss). For the three and six months ended June 30, 2019, the Company also recorded $1 million and $4 million, respectively, of severance and termination costs; nil and $1 million, respectively, of inventory obsolescence; and $7 million and $7 million, respectively, of asset relocation and other costs, under Closure and restructuring costs.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 13.

_________________

LONG-TERM DEBT

TERM LOAN

On May 5, 2020, the Company entered into a $300 million Term Loan Agreement (the “Term Loan Agreement”) that matures on May 5, 2025. The Company used borrowings under the Term Loan Agreement to repay other debt and to pay related fees and expenses. Borrowings under the Term Loan Agreement bear interest at LIBOR plus a margin of 2.5% and require principal repayments of $3 million each quarter. The Term Loan Agreement contains customary covenants, including two financial covenants: (i) an interest coverage ratio, as defined in the Term Loan Agreement, that must be maintained at a level of not less than 3 to 1 and (ii) a leverage ratio, as defined in the Term Loan Agreement that must be maintained at a level of not greater than 3.75 to 1. All borrowings under the Term Loan are unsecured. Certain domestic subsidiaries of the Company guarantee the obligations arising under the Term Loan Agreement.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 14.

_________________

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS BY COMPONENT

The following table presents the changes in Accumulated other comprehensive loss by component⁽¹⁾ for the six months ended June 30, 2020 and the year ended December 31, 2019:

	Net derivative gains (losses) on cash flow hedges			Pension items⁽²⁾			Post-retirement benefit items⁽²⁾			Foreign currency items			Total
	$			$			$			$			$
Balance at December 31, 2018		(24	)		(231	)		11			(223	)		(467	)
Natural gas swap contracts		(10	)	N/A			N/A			N/A				(10	)
Currency options		5		N/A			N/A			N/A				5
Foreign exchange forward contracts		16		N/A			N/A			N/A				16
Net gain	N/A			1			1			N/A				2
Foreign currency items	N/A			N/A			N/A				21			21
Other comprehensive income before reclassifications		11			1			1			21			34
Amounts reclassified from Accumulated other comprehensive loss		8			33			(1	)		—			40
Net current period other comprehensive income		19			34			—			21			74
Balance at December 31, 2019		(5	)		(197	)		11			(202	)		(393	)
Natural gas swap contracts		(1	)	N/A			N/A			N/A				(1	)
Currency options		(3	)	N/A			N/A			N/A				(3	)
Foreign exchange forward contracts		(16	)	N/A			N/A			N/A				(16	)
Foreign currency items	N/A			N/A			N/A				(35	)		(35	)
Other comprehensive loss before reclassifications		(20	)		—			—			(35	)		(55	)
Amounts reclassified from Accumulated other comprehensive loss		13			4			(1	)		—			16
Net current period other comprehensive (loss) income		(7	)		4			(1	)		(35	)		(39	)
Balance at June 30, 2020		(12	)		(193	)		10			(237	)		(432	)

⁽¹⁾	All amounts are after tax. Amounts in parentheses indicate losses.

⁽²⁾	The projected benefit obligation is actuarially determined on an annual basis as of December 31.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 14. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS BY COMPONENT (CONTINUED)

The following tables present reclassifications out of Accumulated other comprehensive loss for the three and six months ended June 30, 2020 and 2019:

Details about Accumulated other comprehensive loss components	Amounts reclassified from Accumulated other comprehensive loss
	For the three months ended
	June 30, 2020			June 30, 2019
	$			$
Net derivative losses on cash flow hedge
Natural gas swap contracts ⁽¹⁾		(3	)		—
Currency options and forwards ⁽¹⁾		(5	)		(2	)
Total before tax		(8	)		(2	)
Tax benefit		2			1
Net of tax		(6	)		(1	)

Amortization of defined benefit pension items
Amortization of net actuarial loss ⁽²⁾		(2	)		(2	)
Amortization of prior year service cost ⁽²⁾		(1	)		(2	)
Total before tax		(3	)		(4	)
Tax benefit		—			1
Net of tax		(3	)		(3	)

Amortization of other post-retirement benefit items
Amortization of net actuarial gain ⁽²⁾		1			1
Amortization of prior year service cost ⁽²⁾		—			—
Total before tax		1			1
Tax expense		—			—
Net of tax		1			1

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 14. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS BY COMPONENT (CONTINUED)

	Amounts reclassified from Accumulated other comprehensive loss
	For the six months ended
	June 30, 2020			June 30, 2019
	$			$
Net derivatives losses on cash flow hedge
Natural gas swap contracts ⁽¹⁾		(8	)		—
Currency options and forwards ⁽¹⁾		(9	)		(3	)
Total before tax		(17	)		(3	)
Tax benefit		4			1
Net of tax		(13	)		(2	)

Amortization of defined benefit pension items
Amortization of net actuarial loss ⁽²⁾		(4	)		(5	)
Amortization of prior year service cost ⁽²⁾		(1	)		(3	)
Total before tax		(5	)		(8	)
Tax benefit		1			2
Net of tax		(4	)		(6	)

Amortization of other post-retirement benefit items
Amortization of net actuarial gain ⁽²⁾		1			1
Amortization of prior year service cost ⁽²⁾		—			—
Total before tax		1			1
Tax benefit		—			—
Net of tax		1			1

⁽¹⁾	These amounts are included in Cost of Sales in the Consolidated Statements of Earnings and Comprehensive Income (Loss).

⁽²⁾	These amounts are included in the computation of net periodic benefit cost (see Note 6 “Pension Plans and Other Post-Retirement Benefit Plans” for more details).

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 15.

_________________

SHAREHOLDERS’ EQUITY

DIVIDENDS

On February 18, 2020, the Company’s Board of Directors approved a quarterly dividend of $0.455 per share, to be paid to holders of the Company’s common stock. Total dividends of approximately $25 million were paid on April 15, 2020 to shareholders of record on April 2, 2020.

STOCK REPURCHASE PROGRAM

The Company’s Board of Directors has authorized a stock repurchase program (the “Program”) of up to $1.3 billion. On November 5, 2019, the Company’s Board of Directors approved an increase to the Program from $1.3 billion to $1.6 billion. Under the Program, the Company is authorized to repurchase, from time to time, shares of its outstanding common stock on the open market or in privately negotiated transactions. The timing and amount of stock repurchases will depend on a variety of factors, including the market conditions as well as corporate and regulatory considerations. The Program may be suspended, modified or discontinued at any time, and the Company has no obligation to repurchase any amount of its common stock under the Program. The Program has no set expiration date. The Company repurchases its common stock in part to reduce the dilutive effects of stock options and awards, and to improve shareholders’ returns.

The Company makes open market purchases of its common stock using general corporate funds. Additionally, the Company may enter into structured stock repurchase agreements with large financial institutions using general corporate funds in order to lower the average cost to acquire shares. The agreements would require the Company to make up-front payments to the counterparty financial institutions, which would result in either the receipt of stock at the beginning of the term of the agreements followed by a share adjustment at the maturity of the agreements, or the receipt of either stock or cash at the maturity of the agreements, depending upon the price of the stock.

During the first six months of 2020, the Company repurchased 1,798,306 shares at an average price of $33.05 for a total cost of $59 million.

During the first six months of 2019, the Company repurchased 194,407 shares at an average price of $42.26 for a total cost of $8 million.

SUSPENSION OF CAPITAL RETURN PROGRAM

On May 5, 2020, due to the unprecedented market conditions and uncertainty caused by COVID-19, the Company suspended the payment of its regular quarterly dividend and stock repurchase program in order to preserve cash and provide additional flexibility in the current environment. The Board of Directors will continue to evaluate the Company’s capital return program based upon customary considerations, including market conditions.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 16.

_________________

COMMITMENTS AND CONTINGENCIES

ENVIRONMENTAL MATTERS

The Company is subject to environmental laws and regulations enacted by federal, provincial, state and local authorities. The Company may also incur substantial costs in relation to enforcement actions (including orders requiring corrective measures, installation of pollution control equipment or other remedial actions) as a result of violations of, or liabilities under, environmental laws and regulations applicable to its past and present properties. The Company’s ongoing efforts to identify potential environmental concerns that may be associated with such properties may result in additional environmental costs and liabilities which cannot be reasonably estimated at this time.

In connection with contamination of a site bordering Burrard Inlet in North Vancouver, on February 16, 2010, the government of British Columbia issued a Remediation Order to Seaspan International Ltd. and the Company, in order to define and implement an action plan to address soil, sediment and groundwater issues. Construction began in January 2017 and was completed in the first quarter of 2019. The Company previously recorded an environmental reserve to address its estimated exposure.

A former owner of the Company’s Dryden, Ontario manufacturing site (the "Dryden Property") operated a chlor-alkali plant during the 1960s and 1970s, during which time mercury and other pollutants were used and discharged into the natural environment. In conjunction with the sale and redevelopment of the Dryden Property, the Province of Ontario (the “Province”) provided a broad indemnity (the "Indemnity") in 1985 to the then purchaser of the Dryden Property and its successors and assigns with respect to the discharge of any pollutant, including mercury, by the historical operators of the Dryden Property. This Indemnity subsequently was assigned to Domtar in connection with its 2007 purchase of the Dryden Property.

As the current owner of the Dryden Property, Domtar is actively engaged with the Province with respect to the management of the historical contamination.

The Province issued a Director's order under environmental laws to certain prior owners of the Dryden Property in connection with a nearby waste disposal site that never has been owned by Domtar. The Director's order required certain work to be conducted by those prior owners. The prior owners asserted that the Indemnity covered the work required by the Director’s order. Following extensive litigation, the Supreme Court of Canada found, among other things, that the Indemnity covered third-party claims, but not first-party claims, such as the Director's order.

In the future, the Province may challenge whether Domtar has the benefit of the Indemnity. In addition to the Indemnity, Domtar has other recourses relating to the historical contamination.

The situation involving the historical contamination is continuing to develop, and Domtar cannot predict its outcome. While Domtar currently does not believe that it will be required to incur costs that would have a material impact on its results of operations or financial condition, there is no certainty that this is in fact the case.

The following table reflects changes in the reserve for environmental remediation and asset retirement obligations:

	June 30, 2020
	$
Balance at beginning of year		35
Additions and other changes		2
Environmental spending		(2	)
Effect of foreign currency exchange rate change		(1	)
Balance at end of period		34

The U.S. Environmental Protection Agency (the “EPA”) and/or various state agencies have notified the Company that it may be a potentially responsible party under the Comprehensive Environmental Response Compensation and Liability Act, commonly known as “Superfund”, and similar state laws with respect to other hazardous waste sites as to which no proceedings have been instituted against the Company. The Company continues to take remedial action under its Care and Control Program at its former wood preserving sites, and at a number of operating sites, due to possible soil, sediment or groundwater contamination.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 16. COMMITMENTS AND CONTINGENCIES (CONTINUED)

Climate change and air quality regulation

Various national and local laws and regulations relating to climate change have been established or are emerging in jurisdictions where the Company currently has, or may have in the future, manufacturing facilities or investments.

The EPA repealed the Clean Power Plan and replaced it with the “Affordable Clean Energy” (“ACE”) rule. Unlike the Clean Power Plan, which would have required significant changes across the entire power sector, ACE only requires states to develop plans for efficiency improvements at coal-fired electric utility generating units. The rule has been challenged in the U.S. Court of Appeals for the D.C. Circuit. Regardless of the outcome for the ACE rule, the Company does not expect to be disproportionately affected compared with other pulp and paper producers located in the states where the Company operates.

The province of Quebec has a greenhouse gases (“GHG”) cap-and-trade system with reduction targets. British Columbia has a carbon tax that applies to the purchase of fossil fuels within the province. The Company does not expect its facilities to be disproportionately affected by these measures compared to the other pulp and paper producers located in these provinces.

The Government of Canada has established a federal carbon pricing system in provinces that do not already impose a cost on carbon emissions. The Government of Canada has imposed its carbon pricing program for regulating GHG emissions in Ontario, which took effect on January 1, 2019. To reduce GHG emissions and recognize the unique circumstances of the province’s diverse economy, Ontario finalized its own GHG Emission Performance Standards regulation. The Ontario Government is in discussions with the Canadian Government to replace the federal program in Ontario with its provincial program. Additional environmental costs may result from this effort which cannot be reasonably estimated at this time.

The EPA proposed to revise its Industrial Boiler Maximum Achievable Control Technology Standard (“MACT”), or Boiler MACT, in a notice signed on July 8, 2020 but not yet published. The proposed rule is a response to two court decisions that remanded certain issues for further review by the EPA, and it includes revisions to 34 different emission limitations that could apply to some of the Company’s facilities. Although the EPA has indicated that a small number of facilities may need to reduce emissions further compared to the current limits, the Company does not expect its facilities to be disproportionately affected compared to other U.S. pulp and paper producers.

CONTINGENCIES

In the normal course of operations, the Company becomes involved in various legal actions mostly related to contract disputes, patent infringements, environmental and product warranty claims, and labor issues. While the final outcome with respect to actions outstanding or pending at June 30, 2020, cannot be predicted with certainty, it is management’s opinion that their resolution will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

INDEMNIFICATIONS

In the normal course of business, the Company offers indemnifications relating to the sale of its businesses and real estate. In general, these indemnifications may relate to claims from past business operations, the failure to abide by covenants and the breach of representations and warranties included in the sales agreements. Typically, such representations and warranties relate to taxation, environmental, product and employee matters. The terms of these indemnification agreements are generally for an unlimited period of time. At June 30, 2020, the Company is unable to estimate the potential maximum liabilities for these types of indemnification guarantees as the amounts are contingent upon the outcome of future events, the nature and likelihood of which cannot be reasonably estimated at this time. Accordingly, no provision has been recorded. These indemnifications have not yielded a significant expense in the past.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 16. COMMITMENTS AND CONTINGENCIES (CONTINUED)

Pension Plans

The Company has indemnified and held harmless the trustees of its pension funds, and the respective officers, directors, employees and agents of such trustees, from any and all costs and expenses arising out of the performance of their obligations under the relevant trust agreements, including in respect of their reliance on authorized instructions from the Company or for failing to act in the absence of authorized instructions. These indemnifications survive the termination of such agreements. As of June 30, 2020, the Company has not recorded a liability associated with these indemnifications, as it does not expect to make any payments pertaining to these indemnifications.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 17.

_________________

SEGMENT DISCLOSURES

The Company’s two reportable segments described below also represent its two operating segments. Each reportable segment offers different products and services and requires different manufacturing processes, technology and/or marketing strategies. The following summary briefly describes the operations included in each of the Company’s reportable segments:

•	Pulp and Paper – consists of the design, manufacturing, marketing and distribution of communication, specialty and packaging papers, as well as softwood, fluff and hardwood market pulp.

•	Personal Care – consists of the design, manufacturing, marketing and distribution of absorbent hygiene products.

As a result of changes in Domtar’s organization structure, the Company has changed its segment reporting. Starting January 1, 2020, Domtar’s materials business, EAM Corporation, a manufacturer of high quality airlaid and ultrathin laminated cores, previously reported under its Personal Care segment is now presented under its Pulp and Paper segment. Prior period segment results have been restated to the new segment presentation with no significant impact on segment results. There were no changes to the Company’s consolidated sales or operating income.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 17. SEGMENT DISCLOSURES (CONTINUED)

An analysis and reconciliation of the Company’s business segment information to the respective information in the financial statements is as follows:

	For the three months ended						For the six months ended
SEGMENT DATA	June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
	$			$			$			$
Sales by segment
Pulp and Paper		802			1,106			1,833			2,263
Personal Care		229			228			495			467
Total for reportable segments		1,031			1,334			2,328			2,730
Intersegment sales		(19	)		(17	)		(38	)		(37	)
Consolidated sales		1,012			1,317			2,290			2,693

Sales by product group
Communication papers		385			643			1,008			1,328
Specialty and packaging papers		127			162			277			331
Market pulp		261			275			492			550
Absorbent hygiene products		239			237			513			484
Consolidated sales		1,012			1,317			2,290			2,693

Depreciation and amortization
Pulp and Paper		56			59			114			117
Personal Care		15			15			29			30
Total for reportable segments		71			74			143			147
Impairment of long-lived assets - Personal Care		—			15			—			25
Consolidated depreciation and amortization and impairment of long-lived assets		71			89			143			172

Operating income (loss) ⁽¹⁾
Pulp and Paper		3			62			7			206
Personal Care		18			(18	)		38			(26	)
Corporate		(7	)		(10	)		(12	)		(31	)
Consolidated operating income		14			34			33			149
Interest expense, net		15			13			29			26
Non-service components of net periodic benefit cost		(5	)		(2	)		(9	)		(5	)
Earnings before income taxes and equity loss		4			23			13			128
Income tax (benefit) expense		(15	)		5			(12	)		29
Equity loss, net of taxes		—			—			1			1
Net earnings		19			18			24			98

⁽¹⁾

The Government of Canada created the Canada Emergency Wage Subsidy (“CEWS”) to provide financial support for businesses during the COVID-19 pandemic and prevent large layoffs. CEWS allows eligible entities to receive a subsidy retroactive to March 15, 2020. The Company qualified and applied for the first four periods identified under CEWS, from March 15 through July 4, 2020. The Company recognized $25 million of income (CDN $34 million) ($21 million in Cost of sales (CDN $29 million) and $4 million in Selling, general and administrative (CDN $5 million)) related to this program in the second quarter of 2020.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 18.

_________________

SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

The following information is presented as required under Rule 3-10 of Regulation S-X, in connection with the Company’s issuance of debt securities that are fully and unconditionally guaranteed by Domtar’s significant 100% owned domestic subsidiaries, including Domtar Paper Company, LLC, Domtar Industries LLC (and subsidiaries, excluding Domtar Funding LLC), Domtar A.W. LLC, Attends Healthcare Products Inc., EAM Corporation, Associated Hygienic Products LLC and Home Delivery Incontinent Supplies Co., (“Guarantor Subsidiaries”), on a joint and several basis. The Guaranteed Debt is not guaranteed by certain of Domtar’s foreign and non-significant domestic subsidiaries, all 100% owned, (collectively the “Non-Guarantor Subsidiaries”). A subsidiary’s guarantee may be released in certain customary circumstances, such as if the subsidiary is sold or sells all of its assets, if the subsidiary’s guarantee of the Credit Agreement is terminated or released and if the requirements for legal defeasance to discharge the indenture have been satisfied.

The following supplemental condensed consolidating financial information sets forth, on an unconsolidated basis, the Balance Sheets at June 30, 2020 and December 31, 2019, the Statements of Earnings (Loss) and Comprehensive Income (Loss) for the three and six months ended June 30, 2020 and 2019 and the Statements of Cash Flows for the six months ended June 30, 2020 and 2019 for Domtar Corporation (the “Parent”), and on a combined basis for the Guarantor Subsidiaries and, on a combined basis, the Non-Guarantor Subsidiaries. The supplemental condensed consolidating financial information reflects the investments of the Parent in the Guarantor Subsidiaries, as well as the investments of the Guarantor Subsidiaries in the Non-Guarantor Subsidiaries, using the equity method.

	For the three months ended
	June 30, 2020
							Non-
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS				Guarantor			Guarantor			Consolidating
(LOSS) AND COMPREHENSIVE INCOME (LOSS)	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated
	$			$			$			$			$
Sales		—			812			419			(219	)		1,012
Operating expenses
Cost of sales, excluding depreciation and amortization		—			743			313			(219	)		837
Depreciation and amortization		—			50			21			—			71
Selling, general and administrative		3			46			44			—			93
Closure and restructuring costs		—			1			—			—			1
Other operating loss (income), net		1			—			(5	)		—			(4	)
		4			840			373			(219	)		998
Operating (loss) income		(4	)		(28	)		46			—			14
Interest expense (income), net		16			19			(20	)		—			15
Non-service components of net periodic benefit cost		—			(3	)		(2	)		—			(5	)
(Loss) earnings before income taxes		(20	)		(44	)		68			—			4
Income tax (benefit) expense		(92	)		(103	)		180			—			(15	)
Share in earnings of equity accounted investees		(53	)		(112	)		—			165			—
Net earnings (loss)		19			(53	)		(112	)		165			19
Other comprehensive income		76			74			40			(114	)		76
Comprehensive income (loss)		95			21			(72	)		51			95

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 18. SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION (CONTINUED)

	For the six months ended
	June 30, 2020
							Non-
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS (LOSS)				Guarantor			Guarantor			Consolidating
AND COMPREHENSIVE LOSS	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated
	$			$			$			$			$
Sales		—			1,857			884			(451	)		2,290
Operating expenses
Cost of sales, excluding depreciation and amortization		—			1,690			681			(451	)		1,920
Depreciation and amortization		—			101			42			—			143
Selling, general and administrative		5			72			118			—			195
Closure and restructuring costs		—			1			—			—			1
Other operating loss (income), net		1			4			(7	)		—			(2	)
		6			1,868			834			(451	)		2,257
Operating (loss) income		(6	)		(11	)		50			—			33
Interest expense (income), net		32			38			(41	)		—			29
Non-service components of net periodic benefit cost		—			(4	)		(5	)		—			(9	)
(Loss) earnings before income taxes and equity loss		(38	)		(45	)		96			—			13
Income tax (benefit) expense		(94	)		(100	)		182			—			(12	)
Equity loss, net of taxes		—			1			—			—			1
Share in earnings of equity accounted investees		(32	)		(86	)		—			118			—
Net earnings (loss)		24			(32	)		(86	)		118			24
Other comprehensive loss		(39	)		(43	)		(33	)		76			(39	)
Comprehensive loss		(15	)		(75	)		(119	)		194			(15	)

	For the three months ended
	June 30, 2019
						Non-
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS				Guarantor		Guarantor			Consolidating
AND COMPREHENSIVE INCOME	Parent			Subsidiaries		Subsidiaries			Adjustments			Consolidated
	$			$		$			$			$
Sales		—			1,082		488			(253	)		1,317
Operating expenses
Cost of sales, excluding depreciation and amortization		—			925		407			(253	)		1,079
Depreciation and amortization		—			53		21			—			74
Selling, general and administrative		1			55		49			—			105
Impairment of long-lived assets		—			15		—			—			15
Closure and restructuring costs		—			8		—			—			8
Other operating loss, net		—			—		2			—			2
		1			1,056		479			(253	)		1,283
Operating (loss) income		(1	)		26		9			—			34
Interest expense (income), net		17			22		(26	)		—			13
Non-service components of net periodic benefit cost		—			—		(2	)		—			(2	)
(Loss) earnings before income taxes		(18	)		4		37			—			23
Income tax (benefit) expense		(3	)		—		8			—			5
Share in earnings of equity accounted investees		33			29		—			(62	)		—
Net earnings		18			33		29			(62	)		18
Other comprehensive income		26			31		21			(52	)		26
Comprehensive income		44			64		50			(114	)		44

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 18. SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION (CONTINUED)

	For the six months ended
	June 30, 2019
							Non-
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS				Guarantor			Guarantor			Consolidating
AND COMPREHENSIVE INCOME	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated
	$			$			$			$			$
Sales		—			2,208			1,019			(534	)		2,693
Operating expenses
Cost of sales, excluding depreciation and amortization		—			1,855			810			(534	)		2,131
Depreciation and amortization		—			104			43			—			147
Selling, general and administrative		7			111			110			—			228
Impairment of long-lived assets		—			25			—			—			25
Closure and restructuring costs		—			10			2			—			12
Other operating (income) loss, net		—			(4	)		5			—			1
		7			2,101			970			(534	)		2,544
Operating (loss) income		(7	)		107			49			—			149
Interest expense (income), net		34			42			(50	)		—			26
Non-service components of net periodic benefit cost		—			—			(5	)		—			(5	)
(Loss) earnings before income taxes		(41	)		65			104			—			128
Income tax (benefit) expense		(9	)		14			24			—			29
Equity loss, net of taxes		—			—			1			—			1
Share in earnings of equity accounted investees		130			79			—			(209	)		—
Net earnings		98			130			79			(209	)		98
Other comprehensive income		43			48			25			(73	)		43
Comprehensive income		141			178			104			(282	)		141

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 18. SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION (CONTINUED)

	June 30, 2020
					Non-
			Guarantor		Guarantor		Consolidating
CONDENSED CONSOLIDATING BALANCE SHEET	Parent		Subsidiaries		Subsidiaries		Adjustments			Consolidated
	$		$		$		$			$
Assets
Current assets
Cash and cash equivalents		24		31		69		—			124
Receivables		—		144		391		—			535
Inventories		—		528		239		—			767
Prepaid expenses		5		19		12		—			36
Income and other taxes receivable		128		74		20		(188	)		34
Intercompany accounts		497		394		165		(1,056	)		—
Total current assets		654		1,190		896		(1,244	)		1,496
Property, plant and equipment, net		—		1,677		832		—			2,509
Operating lease right-of-use assets		—		59		15		—			74
Intangible assets, net		—		240		324		—			564
Investments in affiliates		3,551		2,349		—		(5,900	)		—
Intercompany long-term advances		5		1		1,529		(1,535	)		—
Other assets		14		26		134		(12	)		162
Total assets		4,224		5,542		3,730		(8,691	)		4,805
Liabilities and shareholders' equity
Current liabilities
Trade and other payables		29		323		213		—			565
Intercompany accounts		182		227		647		(1,056	)		—
Income and other taxes payable		27		1		193		(188	)		33
Operating lease liabilities due within one year		—		22		6		—			28
Long-term debt due within one year		12		—		1		—			13
Total current liabilities		250		573		1,060		(1,244	)		639
Long-term debt		1,080		—		9		—			1,089
Operating lease liabilities		—		53		9		—			62
Intercompany long-term loans		591		943		1		(1,535	)		—
Deferred income taxes and other		1		308		164		(12	)		461
Other liabilities and deferred credits		25		114		138		—			277
Shareholders' equity		2,277		3,551		2,349		(5,900	)		2,277
Total liabilities and shareholders' equity		4,224		5,542		3,730		(8,691	)		4,805

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 18. SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION (CONTINUED)

	December 31, 2019
					Non-
			Guarantor		Guarantor		Consolidating
CONDENSED CONSOLIDATING BALANCE SHEET	Parent		Subsidiaries		Subsidiaries		Adjustments			Consolidated
	$		$		$		$			$
Assets
Current assets
Cash and cash equivalents		1		11		49		—			61
Receivables		—		146		431		—			577
Inventories		—		543		243		—			786
Prepaid expenses		5		17		11		—			33
Income and other taxes receivable		34		—		27		—			61
Intercompany accounts		538		547		237		(1,322	)		—
Total current assets		578		1,264		998		(1,322	)		1,518
Property, plant and equipment, net		—		1,689		878		—			2,567
Operating lease right-of-use assets		—		63		18		—			81
Intangible assets, net		—		245		328		—			573
Investments in affiliates		3,627		2,493		—		(6,120	)		—
Intercompany long-term advances		5		1		1,482		(1,488	)		—
Other assets		14		30		131		(11	)		164
Total assets		4,224		5,785		3,835		(8,941	)		4,903
Liabilities and shareholders' equity
Current liabilities
Bank indebtedness		—		9		—		—			9
Trade and other payables		57		390		258		—			705
Intercompany accounts		344		299		679		(1,322	)		—
Income and other taxes payable		1		12		10		—			23
Operating lease liabilities due within one year		—		21		7		—			28
Long-term debt due within one year		—		—		1		—			1
Total current liabilities		402		731		955		(1,322	)		766
Long-term debt		873		—		65		—			938
Operating lease liabilities		—		58		11		—			69
Intercompany long-term loans		541		946		1		(1,488	)		—
Deferred income taxes and other		—		324		166		(11	)		479
Other liabilities and deferred credits		32		99		144		—			275
Shareholders' equity		2,376		3,627		2,493		(6,120	)		2,376
Total liabilities and shareholders' equity		4,224		5,785		3,835		(8,941	)		4,903

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 18. SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION (CONTINUED)

	For the six months ended
	June 30, 2020
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
	$			$			$			$			$
Operating activities
Net earnings (loss)		24			(32	)		(86	)		118			24
Changes in operating and intercompany assets and liabilities and non-cash items, included in net earnings (loss)		(182	)		57			374			(118	)		131
Cash flows (used for) provided from operating activities		(158	)		25			288			—			155
Investing activities
Additions to property, plant and equipment		—			(61	)		(41	)		—			(102	)
Acquisition of business, net of cash acquired		—			—			(30	)		—			(30	)
Cash flows used for investing activities		—			(61	)		(71	)		—			(132	)
Financing activities
Dividend payments		(51	)		—			—			—			(51	)
Stock repurchase		(59	)		—			—			—			(59	)
Net change in bank indebtedness		—			(10	)		—			—			(10	)
Change in revolving credit facility		(80	)		—			—			—			(80	)
Proceeds from receivables securitization facility		—			—			25			—			25
Repayments of receivables securitization facility		—			—			(80	)		—			(80	)
Issuance of long-term debt		300			—			—			—			300
Increase in long-term advances to related parties		—			—			(141	)		141			—
Decrease in long-term advances to related parties		75			66			—			(141	)		—
Other		(4	)		—			—			—			(4	)
Cash flows provided from (used for) financing activities		181			56			(196	)		—			41
Net increase in cash and cash equivalents		23			20			21			—			64
Impact of foreign exchange on cash		—			—			(1	)		—			(1	)
Cash and cash equivalents at beginning of period		1			11			49			—			61
Cash and cash equivalents at end of period		24			31			69			—			124

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 18. SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION (CONTINUED)

	For the six months ended
	June 30, 2019
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
	$			$			$			$			$
Operating activities
Net earnings		98			130			79			(209	)		98
Changes in operating and intercompany assets and liabilities and non-cash items, included in net earnings		(89	)		(116	)		72			209			76
Cash flows from operating activities		9			14			151			—			174
Investing activities
Additions to property, plant and equipment		—			(62	)		(39	)		—			(101	)
Proceeds from disposals of property, plant and equipment		—			1			—			—			1
Cash flows used for investing activities		—			(61	)		(39	)		—			(100	)
Financing activities
Dividend payments		(55	)		—			—			—			(55	)
Stock repurchase		(8	)		—			—			—			(8	)
Net change in bank indebtedness		—			3			—			—			3
Proceeds from receivables securitization facility		—			—			80			—			80
Repayments of receivables securitization facility		—			—			(110	)		—			(110	)
Repayments of long-term debt		—			—			(1	)		—			(1	)
Increase in long-term advances to related parties		—			—			(101	)		101			—
Decrease in long-term advances to related parties		56			45			—			(101	)		—
Other		(1	)		—			—			—			(1	)
Cash flows (used for) provided from financing activities		(8	)		48			(132	)		—			(92	)
Net increase (decrease) in cash and cash equivalents		1			1			(20	)		—			(18	)
Cash and cash equivalents at beginning of period		—			—			111			—			111
Cash and cash equivalents at end of period		1			1			91			—			93

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 19.

_________________

SUBSEQUENT EVENT

COST REDUCTION PROGRAM

On August 7, 2020, the Company announced the implementation of a cost reduction program, targeting $200 million in annual run-rate cost savings to be realized by the end of 2021. The goal of the program is to build a stronger business operation, enhance the Company’s cost efficiency, and improve operating margins and maximize productivity and cash flow. The cost saving initiatives include capacity reduction and asset closures, mill-level cost savings and rightsizing support functions. The leaner organizational structure is also expected to improve communication flow and cross-functional collaboration, leveraging more efficient business processes.

As part of the cost savings program, the Company will permanently close the uncoated freesheet manufacturing at the Kingsport, Tennessee and Port Huron, Michigan mills, the remaining paper machine at the Ashdown, Arkansas mill and the converting center in Ridgefields, Tennessee. These actions will reduce the Company’s annual uncoated freesheet paper capacity by approximately 721,000 short tons, and will result in a workforce reduction of approximately 780 employees. The Kingsport and Ashdown paper machines, which have been idled since April 2020, will not recommence operations. The Port Huron and Ridgefields mills are expected to shut down by the end of the first quarter of 2021.

The Company plans to enter the linerboard market with the conversion of the Kingsport paper machine. Once in full operation, the mill will produce and market approximately 600,000 tons annually of high-quality recycled linerboard and medium, providing the Company with a strategic footprint in a growing adjacent market. The conversion is expected to be completed by the first quarter of 2023.

Domtar estimates the conversion cost to be between $300 and $350 million. Once fully operational, the mill is expected to be a very low-cost, first quartile recycled linerboard mill in North America. The converted mill is expected to directly employ approximately 160 employees.

The Company will complete the conversion of the Ashdown mill to 100% softwood and fluff pulp, which will require $15 to $20 million of capital investments and will take 12 to 14 months to implement. The mill will produce additional market hardwood pulp until it converts the fiberline to softwood pulp. The conversion of the fiberline to 100% softwood is also necessary for an eventual expansion into containerboard. Following the fiberline conversion, Ashdown will be a world-class market pulp mill with annual production capacity of 775,000 tons of fluff and softwood pulp.

The aggregate pre-tax earnings charge in connection with these closures is estimated to be $200 million, which includes: a) an estimated $167 million in charges relating to accelerated depreciation and impairment of the carrying amounts of certain manufacturing equipment and the impairment of related spare parts; b) $31 million of estimated severance and related employee benefits; and c) $2 million of estimated other costs. Of the estimated total pre-tax charge of approximately $200 million, $184 million is expected to be recognized in the third quarter of 2020 and the remaining $16 million is expected to be incurred by the end of the first quarter of 2021.

As a result of the third quarter decision to change the nature and use of the Kingsport, Tennessee mill, the carrying amount of the remaining assets of the Kingsport mill will be tested for impairment and could result in an impairment charge in the third quarter of 2020. The carrying amount of such assets was approximately $80 million at June 30, 2020.

Closure and restructuring costs are based on management’s best estimates. Although the Company does not anticipate significant changes, actual costs may differ from these estimates due to subsequent business developments. As such, additional costs and further impairment charges may be required in future periods.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with Domtar Corporation’s unaudited interim financial statements and notes thereto included in this Quarterly Report on Form 10-Q. This MD&A should also be read in conjunction with the historical financial information contained in our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission (“SEC”) on February 25, 2020. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in forward-looking statements. Factors that might cause a difference include, but are not limited to, those discussed below under “Forward-looking statements”, as well as in Part II, Item 1A, Risk Factors, in this report. Throughout this MD&A, unless otherwise specified, “Domtar Corporation,” “the Company,” “Domtar,” “we,” “us” and “our” refer to Domtar Corporation and its subsidiaries. Domtar Corporation’s common stock is listed on the New York Stock Exchange and the Toronto Stock Exchange. Except where otherwise indicated, all financial information reflected herein is determined on the basis of accounting principles generally accepted in the United States.

The information contained on our website, www.domtar.com, is not incorporated by reference into this Form 10-Q and should in no way be construed as a part of this or any other report that we file with or furnish to the SEC.

In accordance with industry practice, in this report, the term “ton” or the symbol “ST” refers to a short ton, an imperial unit of measurement equal to 0.9072 metric tons. The term “metric ton” or the symbol “ADMT” refers to an air dry metric ton. In this report, unless otherwise indicated, all dollar amounts are expressed in U.S. dollars, and the term “dollars” and the symbol “$” refer to U.S. dollars. In the following discussion, unless otherwise noted, references to increases or decreases in income and expense items, prices, contribution to net earnings, and shipment volumes are based on the three and six months ended June 30, 2020 and June 30, 2019. The three month and six month periods are also referred to as the second quarter and first half of 2020 and 2019. Reference to notes refers to footnotes to the consolidated financial statements and notes thereto included in Part I, Item 1 in this report.

This MD&A is intended to provide investors with an understanding of our recent performance, financial condition and outlook. Topics discussed and analyzed include:

•

Overview

•

Subsequent Event

•

Highlights for the three month and six month periods ended June 30, 2020

•

Impact of the COVID-19 Pandemic and Outlook

•

Consolidated Results of Operations and Segment Review

•

Liquidity and Capital Resources

Purchase of Appvion Point of Sale Business

On April 27, 2020, we completed the acquisition of the Point of Sale paper business from Appvion Operation Inc. The business includes the coater and related equipment located at Appvion’s West Carrollton, Ohio, facility as well as a license for all corresponding intellectual property and assumed liabilities related to post-retirement benefits. The results of this business have been included in the consolidated financial statements as of April 27, 2020 and are presented in the Pulp and Paper reportable segment. For more information, refer to Note 3 “Acquisition of Business” of the financial statements in this Quarterly Report on Form 10-Q for more information.

Change in Segment Reporting for EAM Corporation

As a result of changes in our organizational structure, we have changed our segment reporting. Starting January 1, 2020, our materials business, EAM Corporation, a manufacturer of high quality airlaid and ultrathin laminated cores, previously reported under our Personal Care segment is now presented under our Pulp and Paper segment. There were no changes to our consolidated sales or operating income. Prior period segment results have been restated to the new segment presentation with no significant impact on segment results.

OVERVIEW

We design, manufacture, market and distribute a wide variety of fiber-based products including communication papers, specialty and packaging papers and absorbent hygiene products. The foundation of our business is a network of wood fiber converting assets that produce paper grade, fluff and specialty pulp. More than 50% of our pulp production is consumed internally to manufacture paper and

other consumer products, with the balance sold as market pulp. We are the largest integrated marketer of uncoated freesheet paper in North America serving a variety of customers, including merchants, retail outlets, stationers, printers, publishers, converters and end-users. We are also a marketer and producer of a broad line of incontinence care products as well as infant diapers. To learn more, visit www.domtar.com.

We have two reportable segments as described below, which also represent our two operating segments. Each reportable segment offers different products and services and requires different manufacturing processes, technology and/or marketing strategies. The following summary briefly describes the operations included in each of our reportable segments.

Pulp and Paper: Our Pulp and Paper segment consists of the design, manufacturing, marketing and distribution of communication, specialty and packaging papers, as well as softwood, fluff and hardwood market pulp.

Personal Care: Our Personal Care segment consists of the design, manufacturing, marketing and distribution of absorbent hygiene products.

SUBSEQUENT EVENT

COST REDUCTION PROGRAM

On August 7, 2020, we announced the implementation of a cost reduction program, targeting $200 million in annual run-rate cost savings to be realized by the end of 2021. The goal of the program is to build a stronger business operation, enhance our cost efficiency, and improve operating margins and maximize productivity and cash flow. The cost saving initiatives include capacity reduction and asset closures, mill-level cost savings and rightsizing support functions. The leaner organizational structure is also expected to improve communication flow and cross-functional collaboration, leveraging more efficient business processes.

As part of the cost savings program, we will permanently close the uncoated freesheet manufacturing at our Kingsport, Tennessee and Port Huron, Michigan mills, the remaining paper machine at our Ashdown, Arkansas mill and our converting center in Ridgefields, Tennessee. These actions will reduce our annual uncoated freesheet paper capacity by approximately 721,000 short tons, and will result in a workforce reduction of approximately 780 employees. Our Kingsport and Ashdown paper machines, which have been idled since April 2020, will not recommence operations. The Port Huron and Ridgefields mills are expected to shut down by the end of the first quarter of 2021.

We plan to enter the linerboard market with the conversion of our Kingsport paper machine. Once in full operation, the mill will produce and market approximately 600,000 tons annually of high-quality recycled linerboard and medium, providing us with a strategic footprint in a growing adjacent market. The conversion is expected to be completed by the first quarter of 2023.

We estimate the conversion cost to be between $300 and $350 million. Once fully operational, the mill is expected to be a very low-cost, first quartile recycled linerboard mill in North America. The converted mill is expected to directly employ approximately 160 employees.

We will complete the conversion of our Ashdown mill to 100% softwood and fluff pulp, which will require $15 to $20 million of capital investments and will take 12 to 14 months to implement. The mill will produce additional market hardwood pulp until it converts the fiberline to softwood pulp. The conversion of the fiberline to 100% softwood is also necessary for an eventual expansion into containerboard. Following the fiberline conversion, Ashdown will be a world-class market pulp mill with annual production capacity of 775,000 tons of fluff and softwood pulp.

The aggregate pre-tax earnings charge in connection with these closures is estimated to be $200 million, which includes: a) an estimated $167 million in charges related to accelerated depreciation and impairment of the carrying amounts of certain manufacturing equipment and the impairment of related spare parts; b) $31 million of estimated severance and related employee benefits; and c) $2 million of estimated other costs. Of the estimated total pre-tax charge of approximately $200 million, $184 million is expected to be recognized in the third quarter of 2020 and the remaining $16 million is expected to be incurred by the end of the first quarter of 2021.

As a result of the third quarter decision to change the nature and use of our Kingsport, Tennessee mill, the carrying amount of the remaining assets of our Kingsport mill will be tested for impairment and could result in an impairment charge in the third quarter of 2020. The carrying amount of such assets was approximately $80 million at June 30, 2020.

Closure and restructuring costs are based on management’s best estimates. Although we do not anticipate significant changes, actual costs may differ from these estimates due to subsequent business developments. As such, additional costs and further impairment charges may be required in future periods.

HIGHLIGHTS FOR THE THREE MONTH PERIOD ENDED JUNE 30, 2020

•

Operating income decreased by 59% while net earnings increased by 6% from the second quarter of 2019

•

Sales decreased by 23% from the second quarter of 2019. Net average selling prices for pulp and paper were down from the second quarter of 2019. Our manufactured paper volume was down, while our pulp volume was up, when compared to the second quarter of 2019. Our Personal Care business had higher volume and unfavorable mix when compared to the second quarter of 2019

•

Recognized $25 million (CDN $34 million) from the Canada Emergency Wage Subsidy (“CEWS”) in the second quarter of 2020. This program was created by the Government of Canada to provide financial support for businesses during the COVID-19 pandemic to prevent large layoffs. Received a $7 million payment in the second quarter of 2020 from lifting the non-production clause related to the sale agreement of our Lebel-sur-Quévillon kraft pulp mill in 2012

•

We paid $25 million in dividends. Our capital return program, which includes our regular quarterly dividend and stock repurchase program, has been suspended

HIGHLIGHTS FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2020

•

Operating income and net earnings decreased by 78% and 76%, respectively, from the first half of 2019

•

Sales decreased by 15% from the first half of 2019. Net average selling prices for pulp and paper were down from the first half of 2019. Our manufactured paper volume was down while our pulp volume was up and our Personal Care business had higher volume when compared to the first half of 2019

•

In the second quarter of 2020, recognized $25 million (CDN $34 million) from the CEWS and received a $7 million payment from lifting the non-production clause related to the sale agreement of our Lebel-sur-Quévillon kraft pulp mill in 2012, as described above

•

We repurchased $59 million of our common stock and paid $51 million in dividends. Our capital return program, which includes our regular quarterly dividend and stock repurchase program, has been suspended

	Three months ended										Six months ended
					Variance										Variance
FINANCIAL HIGHLIGHTS	June 30, 2020		June 30, 2019		$			%			June 30, 2020		June 30, 2019		$			%
(In millions of dollars, unless otherwise noted)
Sales	$	1,012	$	1,317		(305	)		-23	%	$	2,290	$	2,693		(403	)		-15	%
Operating income		14		34		(20	)		-59	%		33		149		(116	)		-78	%
Net earnings		19		18		1			6	%		24		98		(74	)		-76	%
Net earnings per common share (in dollars)¹:
Basic	$	0.34	$	0.29		0.05			17	%	$	0.43	$	1.56		(1.13	)		-72	%
Diluted	$	0.34	$	0.28		0.06			21	%	$	0.43	$	1.55		(1.12	)		-72	%

															At June 30, 2020			At December 31, 2019
Total assets															$	4,805		$	4,903
Total long-term debt, including current portion															$	1,102		$	939

¹	See Note 5 “Earnings per Common Share” of the financial statements in this Quarterly Report on Form 10-Q for more

information on the calculation of net earnings per common share.

Impact of the COVID-19 pandemic

With the unprecedented and rapid spread of COVID-19 and social distancing measures implemented throughout the world due to the pandemic, we have seen the profound impact this virus is having on human health, the global economy and society in general. We are actively monitoring the impact of COVID-19 on all aspects of our business, including how it is impacting our employees, operations, customers, suppliers, liquidity and capital resources.

Our operations are considered to be essential services in the jurisdictions where we operate. Certain of our paper products are used in the testing for COVID-19 as well as for personal protection medical gowns, and our personal care products are essential to the daily lives of consumers. However, demand for our paper has declined significantly since the beginning of April, largely due to work-from home rules and the overall economic slowdown. The length and severity of the reduction in paper demand is uncertain; at the current time, we expect the adverse impact to continue through the third quarter of 2020. Beyond the third quarter of 2020, paper demand will depend largely on when, and the extent to which, work-from home reduces and on the timing of the return to normal global economic activities.

Effects from COVID-19 began for us at the end of the first quarter of 2020 but were not material to the three-month’s results ended March 31, 2020. Shipments of paper were lower by approximately 32% in the second quarter when compared to the first quarter of 2020. As a result of the decrease in demand, we took 297,000 tons of downtime in the second quarter of 2020.

On August 7, 2020, we announced that we will permanently close the uncoated freesheet manufacturing at our Kingsport, Tennessee and Port Huron, Michigan mills, the remaining paper machine at our Ashdown, Arkansas mill and the converting center in Ridgefields, Tennessee. These actions will reduce our annual uncoated freesheet paper capacity by approximately 721,000 short tons, and will result in a workforce reduction of approximately 780 employees. The Kingsport and Ashdown paper machines, which have been idled since April 2020, will not recommence operations. The Port Huron and Ridgefields mills are expected to shut down by the end of the first quarter of 2021.

Our pulp shipments were strong in the three months ended June 30, 2020. We expect near-term pulp markets to be impacted by seasonal softness, elevated global inventories, and weak demand trends from paper end markets.

Our Personal care business experienced minimal impacts due to COVID-19 during the three months ended June 30, 2020. We expect to see continued strong demand for some of our products from higher usage and the impact from new customer wins, which may be followed later in the year by potential demand softness and volatility as consumers use existing home inventories and as demand returns to more normal levels. The ultimate timing and impact of this demand volatility will depend on the duration and scope of COVID-19, global economic conditions and consumer preferences.

Below we further describe specific impacts and the measures we have taken since March 2020.

Health and Safety of our Employees

The safety of our employees continues to be our primary focus. As COVID-19 has evolved, we have taken numerous steps to protect the health and safety of our employees, including: social distancing, providing personnel protection and thermal scanning, health monitoring, contact tracing and enhanced cleaning measures. In addition, we implemented travel restrictions and work-from home policies for employees who have the ability to work remotely.

Operations and Supply Chain

We continue to operate in compliance with the orders and restrictions imposed by government authorities in each of our locations, and we are working with our customers to meet their specific shipment needs. We continue to place a priority on business continuity and contingency planning, including potential planning for extended closures of any key facilities, whether because of government action or workforce disruption, or because of disruptions related to our key suppliers that might arise related to COVID-19. At this point, we have experienced only minor disruptions. We are actively monitoring our supply chain, and we may experience disruptions in our supply chain as the pandemic continues. We cannot reasonably estimate the potential impacts or timing of those events, nor can we reasonably estimate our ability to mitigate such impacts.

Cost Reduction Program

On August 7, 2020 we announced the implementation of a cost reduction program targeting $200 million in annual run-rate cost savings to be realized by the end of 2021. The goal of the program is to build a stronger business operation, enhance our cost efficiency, and improve operating margins and maximize productivity and cash flow. The cost saving initiatives include capacity reduction and asset closures (noted above), mill-level cost savings and rightsizing of support functions.

Liquidity and Capital Resources

We have taken actions and may take other actions, intended to increase our cash position and preserve financial flexibility in light of the current uncertainty in the global markets. On May 5, 2020, we entered into a five-year $300 million term loan. We have also suspended our regular quarterly dividend and stock repurchase program until further notice. In addition, we completed a review of all

planned capital expenditures for 2020 and reduced or delayed spending without compromising on safety or regulatory compliance. Our capital expenditures for 2020 are expected to be between $160 million and $170 million, a decrease of approximately $80 million compared to our planned spending.

Government Assistance

The U.S. and Canadian governments have launched several support programs to provide assistance to companies during this COVID-19 pandemic. We will continue to review the details of the various programs to determine whether we might qualify.

The Government of Canada created the CEWS to provide financial support for businesses during the COVID-19 pandemic and to prevent large layoffs. CEWS allows eligible entities to receive a subsidy retroactive to March 15, 2020. We qualified and applied for the first four periods identified under CEWS, from March 15 through July 4, 2020. We recognized $25 million (CDN $34 million) of income related to this subsidy in the second quarter of 2020. We received $7 million (CDN $9 million) of cash by June 30, 2020 and expect to receive the remaining $18 million (CDN $25 million) in the third quarter of 2020. The Government of Canada has extended this subsidy to the end of 2020 with a number of modifications. These modifications are expected to significantly decrease the amount of claim per period in the future compared to the amount claimed during the period of March 15 to July 4, 2020.

OUTLOOK

We expect the overall environment to continue to be challenging. In Paper, we expect demand to remain weak, with some incremental recovery expected in quarter three and towards year-end. We expect near-term pulp markets to be impacted by seasonal softness, elevated global inventories, and weak demand trends from paper markets. Personal Care will continue to benefit from productivity gains and the impact from new customer wins. Overall raw material costs are expected to remain stable.

CONSOLIDATED RESULTS OF OPERATIONS AND SEGMENT REVIEW

This section presents a discussion and analysis of our second quarter and first half of 2020 and 2019 sales, operating income (loss) and other information relevant to the understanding of our results of operations.

ANALYSIS OF NET SALES
By Business Segment	Three months ended										Six months ended
							Variance										Variance
	June 30, 2020			June 30, 2019			$			%	June 30, 2020			June 30, 2019			$			%
Pulp and Paper	$	802		$	1,106			(304	)	-27%	$	1,833		$	2,263			(430	)	-19%
Personal Care		229			228			1		-%		495			467			28		6%
Total for reportable segments		1,031			1,334			(303	)	-23%		2,328			2,730			(402	)	-15%
Intersegment sales		(19	)		(17	)		(2	)			(38	)		(37	)		(1	)
Consolidated		1,012			1,317			(305	)	-23%		2,290			2,693			(403	)	-15%

Shipments
Paper - manufactured (in thousands of ST)		459			681			(222	)	-33%		1,138			1,417			(279	)	-20%
Communication Papers		366			567			(201	)	-35%		935			1,182			(247	)	-21%
Specialty and Packaging		93			114			(21	)	-18%		203			235			(32	)	-14%
Paper - sourced from third parties (in thousands of ST)		12			21			(9	)	-43%		34			44			(10	)	-23%
Paper - total (in thousands of ST)		471			702			(231	)	-33%		1,172			1,461			(289	)	-20%
Pulp (in thousands of ADMT)		427			370			57		15%		816			719			97		13%

ANALYSIS OF CHANGES IN SALES
	Second quarter of 2020 versus Second quarter of 2019												First half of 2020 versus First half of 2019
	% Change in Net Sales due to												% Change in Net Sales due to
	Net Price			Volume / Mix			Currency			Total			Net Price			Volume / Mix			Currency			Total
Pulp and Paper		-7	%		-20	%		-	%		-27	%		-8	%		-11	%		-	%		-19	%
Personal Care		-	%		2	%		-2	%		-	%		-	%		7	%		-1	%		6	%
Consolidated sales		-6	%		-17	%		-	%		-23	%		-6	%		-9	%		-	%		-15	%

ANALYSIS OF OPERATING INCOME (LOSS)
	Three months ended													Six months ended
By Business Segment								Variance													Variance
	June 30, 2020			June 30, 2019			^(a)	$			%			June 30, 2020			June 30, 2019			^(b)	$			%
Operating income (loss)
Pulp and Paper	$	3		$	62				(59	)		-95	%	$	7		$	206				(199	)		-97	%
Personal Care		18			(18	)			36			200	%		38			(26	)			64			246	%
Corporate		(7	)		(10	)			3			30	%		(12	)		(31	)			19			61	%
Consolidated operating income		14			34				(20	)		-59	%		33			149				(116	)		-78	%

(a)	Includes closure and restructuring charges as well as accelerated depreciation and impairment of operating lease right-of-use assets under Impairment of long-lived assets, related to our announced margin improvement plan within our Personal Care segment, of $8 million and $15 million respectively.

(b)	Includes closure and restructuring charges as well as accelerated depreciation and impairment of operating lease right-of-use assets under Impairment of long-lived assets, related to our announced margin improvement plan within our Personal Care segment, of $12 million and $25 million respectively.

Second quarter of 2020 versus Second quarter of 2019
By Business Segment
	$ Change in Segmented Operating Income (Loss) due to
	Volume/Mix			Net Price			Input Costs ^(a)		Operating Expenses^(b)		Currency			Depreciation/ Impairment ^(c)		Restructuring ^(d)			Other Income/ Expense ^(e)		Total
Pulp and Paper		(47	)		(83	)		16		47		1			3		(1	)		5		(59	)
Personal Care		(3	)		1			5		11		(2	)		16		8			—		36
Corporate		—			—			—		2		—			—		—			1		3
Consolidated operating income (loss)		(50	)		(82	)		21		60		(1	)		19		7			6		(20	)

(a)	Includes raw materials (such as fiber, chemicals, nonwovens and super absorbent polymers) and energy costs.

(b)	Includes maintenance, freight costs, selling, general and administrative (“SG&A”) expenses and other costs.

(c)

Depreciation charges were lower by $4 million in the second quarter of 2020, excluding foreign currency impact and there were no accelerated depreciation charges. In the second quarter of 2019, we recorded $15 million of accelerated depreciation and impairment of operating lease right-of-use assets under Impairment of long-lived assets related to our margin improvement plan within the Personal Care segment.

(d)

We recorded $1 million of severance and termination costs in the second quarter of 2020 within the Pulp and Paper segment. We recorded $7 million of relocation and other costs and $1 million of severance and termination costs under Closure and restructuring costs in the second quarter of 2019 related to our announced margin improvement plan within the Personal Care segment.

(e)Second quarter of 2020 other operating

income/expense includes:

Second quarter of 2019 other operating

income/expense includes:

- Income from termination of non-production agreement ($7 million)

- Bad debt expense ($1 million)

- Foreign currency loss on working capital items

($2 million)

- Bad debt expense ($1 million)

- Foreign currency loss on working capital items

($1 million)

Commentary – Second quarter of 2020 compared to Second quarter of 2019

Interest Expense, net

We incurred $15 million of net interest expense in the second quarter of 2020, an increase of $2 million compared to net interest expense of $13 million in the second quarter of 2019. The net interest expense was impacted by the $300 million Term Loan entered into on May 5, 2020.

Income Taxes

For the second quarter of 2020, our income tax benefit was $15 million, consisting of $2 million of current income tax benefit and $13 million of deferred income tax benefit. This compares to an income tax expense of $5 million in the second quarter of 2019, consisting of a current income tax expense of $3 million and a deferred income tax expense of $2 million. We made income tax payments, net of refunds, of $1 million during the second quarter of 2020. The effective tax rate for the second quarter of 2020 was -375% compared with an effective tax rate of 22% in the second quarter of 2019. Our tax provision for interim periods is determined using an estimate of our annual effective tax rate and then making adjustments for discrete items arising in that quarter. In each interim quarter we update our estimate of our annual effective tax rate and, if the estimated annual tax rate changes, make a cumulative adjustment in that quarter. Our effective tax rate for the second quarter of 2020 was significantly impacted by such an adjustment, mainly due to a change in the mix of earnings or loss between jurisdictions. Our effective tax rate for the second quarter of 2020 was also favorably impacted by our recognition of additional tax credits in various jurisdictions, as well as by the CARES Act, which granted companies the ability to carry back tax losses generated in the U.S. in 2020 to a tax year with a higher statutory tax rate. Our effective tax rate for the second quarter of 2019 was favorably impacted by a change in Arkansas law, which was mostly offset by the recording of a valuation allowance against certain state tax credit carryforwards.

First half of 2020 versus First half of 2019
By Business Segment
	$ Change in Segmented Operating Income (Loss) due to
	Volume/Mix			Net Price			Input Costs ^(a)		Operating Expenses^(b)			Currency			Depreciation/ Impairment ^(c)		Restructuring ^(d)			Other Income/ Expense ^(e)			Total
Pulp and Paper		(54	)		(171	)		32		(14	)		2			2		(1	)		5			(199	)
Personal Care		5			1			13		10			(3	)		26		12			—			64
Corporate		—			—			—		20			1			—		—			(2	)		19
Consolidated operating income (loss)		(49	)		(170	)		45		16			—			28		11			3			(116	)

(a)	Includes raw materials (such as fiber, chemicals, nonwovens and super absorbent polymers) and energy costs.

(b)	Includes maintenance, freight costs, SG&A expenses and other costs.

(c)

Depreciation charges were lower by $3 million in the first half of 2020, excluding foreign currency impact and there were no accelerated depreciation charges. In the first half of 2019, we recorded $25 million of accelerated depreciation and impairment of operating lease right-of-use assets under Impairment of long-lived assets related to our margin improvement plan in our Personal Care segment.

(d)

We recorded $1 million of severance and termination costs in the first half of 2020 within our Pulp and Paper segment. In the first half of 2019, we recorded $7 million of relocation and other costs, $4 million of severance and termination costs and a $1 million write-down of inventory under Closure and restructuring costs related to our announced margin improvement plan within the Personal Care segment.

(e) First half of 2020 other operating income/

expense includes:

First half of 2019 other operating income/

expense includes:

- Income from termination of non-production agreement ($7 million)

- Environmental provision ($1 million)

- Bad debt expense ($5 million)

- Other income ($1 million)

- Foreign exchange loss on working capital items ($2 million)

- Environmental provision ($1 million)

- Bad debt expense ($1 million)

- Other income ($3 million)

Commentary – First half of 2020 compared to first half of 2019

Interest Expense, net

We incurred $29 million of net interest expense in the first half of 2020, an increase of $3 million compared to net interest expense of $26 million in the first half of 2019. The net interest expense was impacted by the $300 million Term Loan entered into on May 5, 2020 as well as an increase in borrowing under the revolving credit facility.

Income Taxes

For the first half of 2020, our income tax benefit was $12 million, consisting entirely of a deferred income tax benefit of $12 million. This compares to an income tax expense of $29 million in the first half of 2019, consisting of a current income tax expense of $30 million and a deferred income tax benefit of $1 million. We received refunds, net of income tax payments, of $24 million during the first half of 2020. Our effective tax rate was -92% compared to an effective tax rate of 23% in the half of 2019. The effective tax rate for the first half of 2020 was significantly impacted by our mix of earnings or loss in our major jurisdictions, by our recognition of

additional tax credits in various jurisdictions, and by our ability to carry back U.S. tax losses generated in 2020 to a tax year with a higher statutory tax rate. These favorable impacts were partially offset by an increase in the valuation allowance related to the expected realization of certain U.S. state tax credits. Our effective tax rate for the first half of 2019 was favorably impacted by the recognition of a $1 million R&D credit in a U.S. state as well as by a change in Arkansas law, which was mostly offset by the recording of a valuation allowance against certain state tax credit carryforwards.

Commentary – Segment Review

Pulp and Paper Segment

EAM’s results of operations, previously reported under our Personal Care segment, are now presented under our Pulp and Paper segment with no significant impact on our segment results. Prior period segment results have been restated to the new segment presentation.

Sales in our Pulp and Paper segment decreased by $304 million, or 27%, when compared to sales in the second quarter of 2019. This decrease in sales is mostly due to a decrease in our paper sales volumes and a decrease in our net average selling prices for pulp and paper. These decreases were partially offset by an increase in pulp sales volumes.

Operating income in our Pulp and Paper segment amounted to $3 million in the second quarter of 2020, a decrease of $59 million, when compared to operating income of $62 million in the second quarter of 2019. Our results were negatively impacted by:

•

Lower net average selling prices for pulp and paper ($83 million)

•

Lower volume/mix ($47 million)

•

Higher restructuring charges ($1 million)

These decreases were partially offset by:

•

Lower operating expenses ($47 million) mostly due to lower maintenance and other costs due to our cash conservation program and idling of machines in light of the COVID-19 pandemic and amounts recognized from the CEWS. These decreases were partially offset by lower production when compared to the second quarter of 2019

•

Lower input costs ($16 million) mostly related to lower cost of fiber due, in part, to wet weather as well as unfavorable market conditions in the second quarter of 2019

•

Higher other income ($5 million)

•

Lower depreciation/impairment charges ($3 million)

•

Positive impact of a weaker Canadian dollar on our Canadian denominated expenses, net of our hedging program ($1 million)

Sales in our Pulp and Paper segment decreased by $430 million, or 19%, when compared to sales in the first half of 2019. This decrease in sales is mostly due to a decrease in our paper sales volumes as well as a decrease in our net average selling prices for pulp and paper. These decreases were partially offset by an increase in pulp sales volumes.

Operating income in our Pulp and Paper segment amounted to $7 million in the first half of 2020, a decrease of $199 million, when compared to operating income of $206 million in the first half of 2019. Our results were negatively impacted by:

•

Lower net average selling prices for pulp and paper ($171 million)

•

Lower volume/mix ($54 million)

•

Higher operating expenses ($14 million) related to lower production, partially offset by lower maintenance and other costs due to our cash conservation program and idling of machines in light of the COVID-19 pandemic as well as amounts recognized from the CEWS when compared to the first half of 2019

•

Higher restructuring charges ($1 million)

These decreases were partially offset by:

•

Lower input costs ($32 million) mostly related to lower cost of fiber due, in part, to wet weather in the first half of 2019 as well as unfavorable market conditions

•

Higher other income ($5 million)

•

Lower depreciation/impairment charges ($2 million)

•

Positive impact of a weaker Canadian dollar on our Canadian denominated expenses, net of our hedging program ($2 million)

Economic conditions and uncertainties

The markets in which our pulp and paper business operate are highly competitive with well-established domestic and foreign manufacturers. Most of our products are commodities that are widely available from other producers as well. Because commodity products have few distinguishing qualities from producer to producer, competition for these products is based primarily on price, which is determined by supply relative to demand. We also compete on the basis of product quality, breadth of offering and service solutions. Further, we compete against electronic transmission and document storage alternatives. As a result of such competition, we are experiencing ongoing decreasing demand for most of our existing paper products. In addition, current global economic conditions are highly volatile due to the COVID-19 pandemic, resulting in both market size contractions in certain countries due to economic slowdowns and government restrictions on movement.

The pulp market is highly fragmented with many manufacturers competing worldwide. Competition is primarily on the basis of access to low-cost wood fiber, product quality and competitively priced pulp products.

The high degree of uncertainty and volatility day-to-day and the longer term potential impacts of the economic lockdown remain unclear. We expect the overall environment to continue to be challenging. In Paper, we expect demand to remain weak, with some incremental recovery expected in quarter three and towards year-end. We expect near-term pulp markets to be impacted by seasonal softness, elevated global inventories, and weak demand trends from paper markets. Overall raw material costs are expected to remain stable.

Personal Care Segment

Sales in our Personal Care segment increased by $1 million when compared to sales in the second quarter of 2019. This increase was mainly driven by higher volume, partially offset by unfavorable foreign exchange when compared to the second quarter of 2019.

Operating income increased by $36 million, in the second quarter of 2020 compared to the second quarter of 2019. Our results were positively impacted by:

•

Lower depreciation/impairment charge ($16 million) mostly due to the non-cash impairment of long-lived assets charge of $15 million recorded in the first half of 2019, related to our margin improvement plan

•

Lower operating expenses mostly due to higher production and lower SG&A ($11 million)

•

Lower closure and restructuring charges ($8 million) related to our 2019 margin improvement plan

•

Favorable input costs ($5 million) mostly due to lower raw material pricing

•

Higher net average selling prices ($1 million)

These increases were partially offset by:

•

Unfavorable mix ($3 million)

•

Unfavorable foreign exchange ($2 million) mostly between the Euro and the U.S. dollar, net of our hedging program

Sales in our Personal Care segment increased by $28 million, or 6%, when compared to sales in the first half of 2019. This increase in sales was driven by higher volume, partially offset by unfavorable foreign exchange, mostly due to the fluctuation between the U.S. dollar and the Euro.

Operating income increased by $64 million, in the first half of 2020 when compared to the first half of 2019. Our results were positively impacted by:

•

Lower depreciation/impairment charge ($26 million) mostly due to the non-cash impairment of long-lived assets charge of $25 million recorded in the first half of 2019, related to our margin improvement plan

•

Favorable input costs ($13 million) mostly due to lower raw material pricing

•

Lower closure and restructuring charges ($12 million) related to our 2019 margin improvement plan

•

Lower operating expenses mostly due to higher production and lower SG&A ($10 million)

•

Higher sales volume partially offset by unfavorable mix ($5 million)

•

Higher net average selling prices ($1 million)

These increases were partially offset by:

•

Unfavorable foreign exchange ($3 million) mostly between the Euro and the U.S. dollar, net of our hedging program

Economic conditions and uncertainties

In our absorbent hygiene products business, we compete in an industry with fundamental drivers for long-term growth; however, competitive market pressures in the healthcare and retail markets have grown significantly in recent years.

While we are expected to benefit from the overall increase in healthcare spending due to an aging population, the pressures to limit spending on healthcare may impact overall consumption or the channels in which consumption occurs. Additionally, excess industry capacity has increased pricing pressure in all markets and instigated a shift in the infant and adult private label retail space as competitors that were historically almost absent in our markets have increased their presence in such markets.

The principal levers of competition remain brand loyalty, product innovation, quality, price and marketing and distribution capabilities.

Personal Care will continue to benefit from productivity gains and the impact from new customer wins. Overall raw material costs are expected to remain stable.

Margin Improvement Plan

On November 1, 2018, we announced a margin improvement plan within our Personal Care Division. As part of this plan, our Board of Directors approved the permanent closure of our Waco, Texas manufacturing and distribution facility, the relocation of certain of our manufacturing assets and a workforce reduction across the division. The Waco, Texas facility ceased operations during the second quarter of 2019.

For the three and six months ended June 30, 2019, we recorded $15 million and $25 million, respectively, of accelerated depreciation and impairment of operating lease right-of-use assets under Impairment of long-lived assets on the Consolidated Statement of Earnings and Comprehensive Income (Loss). For the three and six months ended June 30, 2019, we also recorded $1 million and $4 million, respectively, of severance and termination costs, nil and $1 million, respectively, of a write-down of inventory; and $7 million and $7 million, respectively, of asset relocation and other costs, under Closure and restructuring costs.

STOCK-BASED COMPENSATION EXPENSE

For the first half of 2020, stock-based compensation expense recognized in our results of operations was nil for all outstanding awards which includes the mark-to-market recovery related to liability awards of $9 million. This compares to a stock-based compensation expense of $20 million for all outstanding awards which includes the mark-to-market expense related to liability awards of $11 million in the first half of 2019. Compensation costs for performance awards are based on management’s best estimate of the final performance measurement.

LIQUIDITY AND CAPITAL RESOURCES

Our principal cash requirements are for ongoing operating costs, pension contributions, working capital and capital expenditures, as well as principal and interest payments on our debt and income tax payments. We expect to fund our liquidity needs primarily with internally generated funds from our operations and, to the extent necessary, through borrowings under our $700 million credit facility, of which $651 million is currently undrawn and available, or through our $150 million receivables securitization facility, of which $131 million is currently undrawn and available. Under adverse market conditions, there can be no assurance that these agreements would be available or sufficient. See “Capital Resources” below.

Our ability to make payments on the requirements mentioned above will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Our credit and

receivable securitization facilities and debt indentures impose various restrictions and covenants on us that could limit our ability to respond to market conditions, to provide for unanticipated capital investments or to take advantage of business opportunities.

A portion of our cash is held outside the U.S. by foreign subsidiaries. The earnings of the foreign subsidiaries reflect full provision for local income taxes. The U.S. Tax Reform includes a mandatory one-time tax on accumulated earnings of foreign subsidiaries for which we recorded a provisional repatriation tax amount of $46 million in 2017 and adjusted by $7 million in 2018. After completing our evaluation of the U.S. Tax Reform’s impact on the business operations, we have determined that we are no longer indefinitely reinvested in these undistributed foreign earnings as well as foreign earnings after December 31, 2017. We remain indefinitely reinvested in the outside basis differences of our foreign subsidiaries.

Operating Activities

Our operating cash flow requirements are primarily for salaries and benefits, the purchase of raw materials, including fiber and energy, and other expenses such as income tax and property taxes.

Cash flows from operating activities totaled $155 million in the first half of 2020, a $19 million decrease compared to cash flows from operating activities of $174 million in the first half of 2019. This decrease in cash flows from operating activities is primarily due to a decrease in profitability. This decrease was partially offset by an improvement in cash flow from working capital requirements. We received income tax refunds, net of payments, of $24 million during the first half of 2020 compared to income tax payments, net of refunds, of $50 million in the first half of 2019.

Investing Activities

Cash flows used for investing activities in the first half of 2020 amounted to $132 million, a $32 million increase compared to cash flows used for investing activities of $100 million in the first half of 2019.

The use of cash in the first half of 2020 was attributable to additions to property, plant and equipment of $102 million and the acquisition of the Appvion Point of Sale Business in the second quarter of 2020 ($30 million).

The use of cash in the first half of 2019 was attributable to additions to property, plant and equipment of $101 million. This use of cash was partially offset by proceeds of disposals of property, plant and equipment of $1 million.

Our capital expenditures for 2020 are expected to be between $160 million and $170 million.

Financing Activities

Cash flows provided from financing activities totaled $41 million in the first half of 2020 compared to cash flows used for financing activities of $92 million in the first half of 2019.

The primary source of cash flows provided from financing activities was from proceeds of the term loan in the first half of 2020 ($300 million). This was partially offset by the decrease in borrowings under our credit facilities (revolver and receivables securitization) ($135 million), the repurchase of our common stock ($59 million), dividend payments ($51 million) and a decrease in bank indebtedness ($10 million).

The use of cash in the first half of 2019 was primarily the result of dividend payments ($55 million), the net repayments of borrowings under our receivable securitization ($30 million) and the repurchase of our common stock ($8 million).

Capital Resources

Net indebtedness, consisting of bank indebtedness and long-term debt, net of cash and cash equivalents, was $978 million as of June 30, 2020 compared to $887 million as of December 31, 2019.

Term Loan

On May 5, 2020, we entered into a $300 million Term Loan Agreement that matures on May 5, 2025. We used borrowings under the Term Loan Agreement to repay other debt, to pay related fees and expenses. For more information, refer to Note 13 “Long-Term Debt” of the financial statements in this Quarterly Report on Form 10-Q for more information.

Revolving Credit Facility

We have an unsecured $700 million revolving credit facility (the “Credit Agreement”) with certain domestic and foreign banks that matures on August 22, 2023.

Borrowings by the Company under the Credit Agreement are guaranteed by our significant domestic subsidiaries. Borrowings by certain foreign subsidiaries under the Credit Agreement are guaranteed by the Company, our significant domestic subsidiaries and certain of our significant foreign subsidiaries.

Borrowings under the Credit Agreement bear interest at the LIBOR, EURIBOR, Canadian bankers’ acceptance or prime rate, as applicable, plus a margin linked to our credit rating. In addition, we pay facility fees quarterly at rates dependent on our credit ratings. The Financial Conduct Authority in the United Kingdom plans to phase out LIBOR by the end of 2021. We do not anticipate a significant impact to our financial position from the planned phase out of LIBOR.

The Credit Agreement contains customary covenants and events of default for transactions of this type, including two financial covenants: (i) an interest coverage ratio, as defined in the Credit Agreement, that must be maintained at a level of not less than 3 to 1 and (ii) a leverage ratio, as defined in the Credit Agreement, that must be maintained at a level of not greater than 3.75 to 1 (or 4.00 to 1 upon the occurrence of certain qualifying material acquisitions). At June 30, 2020 and June 30, 2019, we were in compliance with these financial covenants, and had no borrowings under the Credit Agreement (June 30, 2019 – nil). At June 30, 2020 and June 30, 2019, our interest coverage ratio was 8.2 and 15.2, respectively, and our leverage ratio was 2.5 and 1.0, respectively. At June 30, 2020 and June 30, 2019, we had $49 million and nil, respectively, of outstanding letters of credit, leaving $651 million unused and available under this facility (June 30, 2019 – $700 million).

Receivables Securitization

We have a $150 million receivables securitization facility that matures in November 2021.

At June 30, 2020, we had no borrowings under the receivables securitization facility, and we had no outstanding letters of credit under the program (June 30, 2019 – $20 million and $49 million, respectively). The program contains certain termination events, which include, but are not limited to, matters related to receivable performance, certain defaults occurring under the Credit Agreement or our failure to repay or satisfy material obligations. At June 30, 2020, we had $131 million unused and available under the receivable securitization facility.

Common Stock

On February 18, 2020, our Board of Directors approved a quarterly dividend of $0.455 per share, to be paid to holders of our common stock. Total dividends of approximately $25 million were paid on April 15, 2020, to shareholders of record on April 2, 2020.

On May 5, 2020, we suspended the distribution of our regular quarterly dividend and stock repurchase program in light of current uncertainty in the global markets. Our Board of Directors will continue to evaluate our capital return program based upon customary considerations, including market conditions.

GUARANTEES

Indemnifications

In the normal course of business, we offer indemnifications relating to the sale of our businesses and real estate. In general, these indemnifications may relate to claims from past business operations, the failure to abide by covenants and the breach of representations and warranties included in sales agreements. Typically, such representations and warranties relate to taxation, environmental, product and employee matters. The terms of these indemnification agreements are generally for an unlimited period of time. At June 30, 2020, we were unable to estimate the potential maximum liabilities for these types of indemnification guarantees as the amounts are contingent upon the outcome of future events, the nature and likelihood of which cannot be reasonably estimated at this time. Accordingly, no provision has been recorded. These indemnifications have not yielded significant expenses in the past.

Pension Plans

We have indemnified and held harmless the trustees of our pension funds, and the respective officers, directors, employees and agents of such trustees, from any and all costs and expenses arising out of the performance of their obligations under the relevant trust agreements, including in respect of their reliance on authorized instructions from us or for failing to act in the absence of authorized instructions. These indemnifications survive the termination of such agreements. At June 30, 2020, we have not recorded a liability associated with these indemnifications, as we do not expect to make any payments pertaining to these indemnifications.

RECENT ACCOUNTING PRONOUNCEMENTS

Refer to Note 2 “Recent Accounting Pronouncements,” of the financial statements in this Quarterly Report on Form 10-Q.

CRITICAL ACCOUNTING ESTIMATES AND POLICIES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates, assumptions and choices amongst acceptable accounting methods that affect our reported results of operations and financial position. Critical accounting estimates pertain to matters that contain a significant level of management estimates about future events, encompass the most complex and subjective judgments and are subject to a fair degree of measurement uncertainty. On an ongoing basis, management reviews its estimates, including those related to environmental matters and asset retirement obligations, impairment and useful lives of long-lived assets, closure and restructuring costs, intangible assets impairment, pension and other post-retirement benefit plans, income taxes, and contingencies related to legal claims. These critical accounting estimates and policies have been reviewed with the Audit Committee of our Board of Directors. We believe these accounting policies, and others, should be reviewed as they are essential to understanding our results of operations, cash flows and financial condition. Actual results could differ from those estimates.

For more details on critical accounting policies, refer to our Annual Report on Form 10-K for the year ended December 31, 2019.

There has not been any material change to our policies since December 31, 2019. For more details, refer to Note 2 “Recent Accounting Pronouncements” of the financial statements in this Quarterly Report on Form 10-Q.

FORWARD-LOOKING STATEMENTS

The information included in this Quarterly Report on Form 10-Q, contains forward-looking statements relating to trends in, or representing management’s beliefs about, Domtar Corporation’s future growth, results of operations, performance, liquidity and business prospects and opportunities. These forward-looking statements are generally denoted by the use of words such as “anticipate”, “believe”, “expect”, “intend”, “aim”, “target”, “plan”, “continue”, “estimate”, “project”, “may”, “will”, “should” and similar expressions. These statements reflect management’s current beliefs and are based on information currently available to management. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to known and unknown risks and uncertainties and other factors that could cause actual results to differ materially from historical results or those anticipated. Accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will occur, or if any occurs, what effect they will have on Domtar Corporation’s results of operations or financial condition. These factors include, but are not limited to:

•

continued decline in usage of fine paper products in our core North American market;

•

our ability to implement our business diversification initiatives, including repurposing of assets and strategic acquisitions or divestitures, including facility closings;

•

failure to achieve our cost containment goals, costs of conversion in excess of our expectations and demand for linerboard;

•

product selling prices;

•

raw material prices, including wood fiber, chemical and energy;

•

conditions in the global capital and credit markets, and the economy generally, particularly in the U.S., Canada and Europe;

•

performance of our manufacturing operations, including unexpected maintenance requirements;

•

the level of competition from domestic and foreign producers;

•

cyberattack or other security breaches;

•

the effect of, or change in, forestry, land use, environmental and other governmental regulations and accounting regulations;

•

the effect of weather and the risk of loss from fires, floods, windstorms, hurricanes and other natural disasters;

•

transportation costs;

•

the loss of current customers or the inability to obtain new customers;

•

legal proceedings;

•

changes in asset valuations, including impairment of long-lived assets, inventory, accounts receivable or other assets for impairment or other reasons;

•

changes in currency exchange rates, particularly the relative value of the U.S. dollar to the Canadian dollar and European currencies;

•

the effect of timing of retirements and changes in the market price of Domtar Corporation’s common stock on charges for stock-based compensation;

•

performance of pension fund investments and related derivatives, if any;

•

a material disruption in our supply chain, manufacturing, distribution operations or customer demand such as public health crises that impact trade or the general economy, including COVID-19 and other viruses, diseases or illnesses; and

•

the other factors described under “Risk Factors”, in item 1A of our Annual Report on Form 10-K, for the year ended December 31, 2019.

You are cautioned not to unduly rely on such forward-looking statements, which speak only as of the date made, when evaluating the information presented in this Quarterly Report on Form 10-Q. Unless specifically required by law, Domtar Corporation disclaims any obligation to update or revise these forward-looking statements to reflect new events or circumstances.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Information relating to quantitative and qualitative disclosure about market risk is contained in our Annual Report on Form 10-K for the year ended December 31, 2019. Except for the addition of “Equity Risk”, there has not been any material change in our exposure to market risk since December 31, 2019. A full discussion on Quantitative and Qualitative Disclosure about Market Risk, is found in Note 4 “Derivatives and Hedging Activities and Fair Value Measurement,” of the financial statements in this Quarterly Report on Form 10-Q.

EQUITY RISK

We are exposed to changes in share price with regard to our stock-based compensation program. We manage our exposure through the use of derivative instruments such as equity swap contracts. In March 2020, we entered into a total return swap agreement covering 500,000 common shares maturing on March 4, 2022.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports under the Securities and Exchange Act of 1934, as amended (“Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of June 30, 2020, an evaluation was performed by members of management, at the direction and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act). Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2020, our disclosure controls and procedures were effective.

Change in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal control over financial reporting during the period covered by this report.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note 16 “Commitments and Contingencies” of the financial statements in this Quarterly Report on Form 10-Q for the discussion regarding legal proceedings.

For a description of previously reported legal proceedings refer to Part I, Item 3, “Legal Proceedings,” of our Annual Report on Form 10-K for the year ended December 31, 2019.

ITEM 1A. RISK FACTORS

Our Annual Report on Form 10-K for the year ended December 31, 2019, contains important risk factors that could cause our actual results to differ materially from those projected in any forward-looking statement. Except as stated below, there were no material changes to the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2019.

A global pandemic (or any disease outbreak, including epidemics, pandemics, or similar widespread public health concerns such as the recent COVID-19 pandemic) could have a material adverse effect on the Company’s business operations, results of operations, cash flows and financial position

The Company’s business may be negatively impacted by the fear of exposure to or actual effects of a disease outbreak, epidemic, pandemic, or similar widespread public health concern, such as travel restrictions or recommendations or mandates from governmental authorities to avoid large gatherings or to self-quarantine. These impacts include, but are not limited to:

• Significant reductions in demand or significant volatility in demand for one or more of the Company’s products, which may be caused by, among other things: the closing of offices where paper is used extensively, the temporary inability of consumers to purchase the Company’s products due to illness, quarantine or other travel restrictions, financial hardship, shifts in demand away from one or more of our more discretionary or higher priced products to lower priced products or use of alternatives, stockpiling or similar pantry-loading activity; if prolonged, such impacts can further increase the difficulty of planning for operations and may adversely impact the Company’s results;

• Inability to meet the Company’s customers’ needs and achieve cost targets due to disruptions in the Company’s manufacturing and supply arrangements caused by constrained workforce capacity or the loss or disruption of other essential manufacturing and supply elements such as raw materials or other finished product components, transportation, or other manufacturing and distribution capability;

• Failure of third parties on which the Company rely, including the Company’s suppliers, distributors, contractors or commercial banks, to meet their obligations to the Company, or significant disruptions in their ability to do so, which may be caused by their own financial or operational difficulties and may adversely impact the Company’s operations; or

• Significant changes in the political conditions in the markets in which the Company manufactures, sells or distributes its products, including quarantines, import/export restrictions, price controls, or governmental or regulatory actions, closures or other restrictions that limit or close the Company’s operating and manufacturing facilities, restrict the Company’s employees’ ability to travel or perform necessary business functions, or otherwise prevent the Company’s suppliers or customers from sufficiently staffing operations, including operations necessary for the production, distribution and sale of the Company’s products, which could adversely impact the Company’s results.

Despite the Company’s efforts to manage and remedy these impacts to the Company, their ultimate impact also depends on factors beyond our knowledge or control, including the duration and severity of any such outbreak as well as third-party actions taken to contain its spread and mitigate its public health effects.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On May 5, 2020, due to the unprecedented market conditions and uncertainty caused by the COVID-19 pandemic, we suspended our regular quarterly dividend and stock repurchase program, in order to preserve cash and provide additional flexibility in the current environment. Our Board of Directors will continue to evaluate our capital return program based upon customary considerations, including market conditions.

Share repurchase activity under our share repurchase program was as follows during the three-month period ended June 30, 2020:


Period	(a) Total Number of Shares Purchased		(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		(d) Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs (in 000s)
April 1 through April 30, 2020		—	$	—		—	$	343,601
May 1 through May 31, 2020		—	$	—		—	$	343,601
June 1 through June 30, 2020		—	$	—		—	$	343,601
		—	$	—		—

During the second quarter of 2020, we did not repurchase any shares under our share repurchase program (the “Program”). As of June 30, 2020, we had $344 million of remaining availability under our Program. The Program may be suspended, modified or discontinued at any time and we have no obligation to repurchase any amount of our common stock. The Program has no set expiration date. We repurchase our common stock, in part to reduce the dilutive effects of our stock options and awards and to improve shareholders’ returns. The timing and amount of stock repurchases will depend on a variety of factors, including market conditions, availability under the program as well as corporate and regulatory considerations. All shares repurchased are recorded as Treasury stock on the Consolidated Balance Sheets under the par value method at $0.01 per share.

During the first half of 2020, we repurchased 1,798,306 shares at an average price of $33.05 for a total cost of $59 million.

During the first half of 2019, we repurchased 194,407 shares at an average price of $42.26 for a total cost of $8 million.

ITEM 3. DEFAULT UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS

		Incorporated by reference to:
Exhibit Number	Exhibit Description	Form	Exhibit	Filing Date



31.1	Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1	Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2	Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH	Inline XBRL Taxonomy Extension Schema

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase

101.PRE	Inline XBRL Extension Presentation Linkbase

104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized.

DOMTAR CORPORATION

Date: August 7, 2020

By:	/s/ Daniel Buron
	Daniel Buron
	Senior Vice-President and Chief Financial Officer

By:	/s/ Razvan L. Theodoru
	Razvan L. Theodoru
	Vice-President, Corporate Law and Secretary

ufs-ex311_9.htm

Exhibit 31.1

CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John D. Williams, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Domtar Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 7, 2020

/s/ John D. Williams

John D. Williams

President and Chief Executive Officer

ufs-ex312_6.htm

Exhibit 31.2

CERTIFICATION BY THE CHIEF FINANCIAL OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Daniel Buron, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Domtar Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as the end of the period covered by this report based on such evaluation; and

5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 7, 2020

/s/ Daniel Buron

Daniel Buron

Senior Vice-President and Chief Financial Officer

ufs-ex321_8.htm

Exhibit 32.1

CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certifies that to his knowledge, the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2020 (the “Form 10-Q”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 7, 2020

/s/ John D. Williams

John D. Williams

President and Chief Executive Officer

ufs-ex322_7.htm

Exhibit 32.2

CERTIFICATION BY THE CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Date: August 7, 2020

/s/ Daniel Buron

Daniel Buron

Senior Vice-President and Chief Financial Officer

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2020	Jul. 31, 2020
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Trading Symbol	UFS
Entity Registrant Name	DOMTAR CORP
Entity Central Index Key	0001381531
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Small Business	false
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		55,192,623
Entity File Number	001-33164
Entity Tax Identification Number	20-5901152
Entity Address, Address Line One	234 Kingsley Park Drive
Entity Address, City or Town	Fort Mill
Entity Address, State or Province	SC
Entity Address, Postal Zip Code	29715
City Area Code	803
Local Phone Number	802-7500
Entity Incorporation, State or Country Code	DE
Document Quarterly Report	true
Document Transition Report	false
Title of 12(b) Security	Common Stock, Par Value $0.01 Per Share
Security Exchange Name	NYSE

Consolidated Statements of Earnings and Comprehensive Income (Loss) (Unaudited) - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Statement [Abstract]
Sales	$ 1,012	$ 1,317	$ 2,290	$ 2,693
Operating expenses
Cost of sales, excluding depreciation and amortization	837	1,079	1,920	2,131
Depreciation and amortization	71	74	143	147
Selling, general and administrative	93	105	195	228
Impairment of long-lived assets (NOTE 12)		15		25
Closure and restructuring costs (NOTE 12)	1	8	1	12
Other operating (income) loss, net (NOTE 7)	(4)	2	(2)	1
Operating expenses	998	1,283	2,257	2,544
Operating income	14	34	33	149
Interest expense, net	15	13	29	26
Non-service components of net periodic benefit cost (NOTE 6)	(5)	(2)	(9)	(5)
Earnings before income taxes and equity loss	4	23	13	128
Income tax (benefit) expense (NOTE 8)	(15)	5	(12)	29
Equity loss, net of taxes			1	1
Net earnings	$ 19	$ 18	$ 24	$ 98
Per common share (in dollars) (NOTE 5)
Basic	$ 0.34	$ 0.29	$ 0.43	$ 1.56
Diluted	$ 0.34	$ 0.28	$ 0.43	$ 1.55
Weighted average number of common shares outstanding (millions)
Basic	55.2	63.0	55.6	63.0
Diluted	55.3	63.3	55.7	63.3
Cash dividends per common share	$ 0.46	$ 0.44	$ 0.91	$ 0.87
Net earnings	$ 19	$ 18	$ 24	$ 98
Net derivative gains (losses) on cash flow hedges:
Net gains (losses) arising during the period, net of tax of $(9) and $7, respectively (2019 – $(1) and $(5), respectively)	29	3	(20)	14
Less: Reclassification adjustment for losses included in net earnings, net of tax of $(2) and $(4), respectively (2019 – $(1) and $(1), respectively)	6	1	13	2
Foreign currency translation adjustments	39	20	(35)	22
Change in unrecognized gains and prior service cost related to pension and post-retirement benefit plans, net of tax of nil and $(1), respectively (2019 – $(1) and $(2), respectively)	2	2	3	5
Other comprehensive income (loss)	76	26	(39)	43
Comprehensive income (loss)	$ 95	$ 44	$ (15)	$ 141

Consolidated Statements of Earnings and Comprehensive Income (Loss) (Parenthetical) (Unaudited) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Statement [Abstract]
Net (losses) gains arising during the period, tax	$ (9)	$ (1)	$ 7	$ (5)
Reclassification adjustment for losses included in net earnings, net, tax	$ (2)	(1)	(4)	(1)
Change in unrecognized gains and prior service cost related to pension and post-retirement benefit plans, tax		$ (1)	$ (1)	$ (2)

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Current assets
Cash and cash equivalents	$ 124	$ 61
Receivables, less allowances of $11 and $6	535	577
Inventories (NOTE 9)	767	786
Prepaid expenses	36	33
Income and other taxes receivable	34	61
Total current assets	1,496	1,518
Property, plant and equipment, net	2,509	2,567
Operating lease right-of-use assets (NOTE 10)	74	81
Intangible assets, net (NOTE 11)	564	573
Other assets	162	164
Total assets	4,805	4,903
Current liabilities
Bank indebtedness		9
Trade and other payables	565	705
Income and other taxes payable	33	23
Operating lease liabilities due within one year (NOTE 10)	28	28
Long-term debt due within one year	13	1
Total current liabilities	639	766
Long-term debt	1,089	938
Operating lease liabilities (NOTE 10)	62	69
Deferred income taxes and other	461	479
Other liabilities and deferred credits	277	275
Commitments and contingencies (NOTE 16)
Shareholders' equity (NOTE 15)
Common stock $0.01 par value; authorized 2,000,000,000 shares; issued 65,001,104 and 65,001,104 shares	1	1
Additional paid-in capital	1,711	1,770
Retained earnings	997	998
Accumulated other comprehensive loss	(432)	(393)
Total shareholders' equity	2,277	2,376
Total liabilities and shareholders' equity	$ 4,805	$ 4,903

Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Statement Of Financial Position [Abstract]
Receivables, allowances	$ 11	$ 6
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	2,000,000,000	2,000,000,000
Common stock, shares issued	65,001,104	65,001,104
Treasury stock, par value	$ 0.01	$ 0.01
Treasury stock, shares	9,809,399	8,120,194

Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) $ in Millions	Total	Issued and Outstanding Common Shares [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]
Balance at Dec. 31, 2018	$ 2,538	$ 1	$ 1,981	$ 1,023	$ (467)
Balance, Shares at Dec. 31, 2018		62,900,000
Stock-based compensation, net of tax	4		4
Stock-based compensation, net of tax, shares		200,000
Net earnings	98			98
Net derivative gains (losses) on cash flow hedges:
Net gains (losses) arising during the period, net of tax	14				14
Less: Reclassification adjustment for losses included in net earnings, net of tax	2				2
Foreign currency translation adjustments	22				22
Change in unrecognized gains and prior service cost related to pension and post-retirement benefit plans, net of tax	5				5
Stock repurchase	$ (8)		(8)
Stock repurchase, shares	(194,407)	(200,000)
Cash dividends declared	$ (56)			(56)
Balance at Jun. 30, 2019	2,619	$ 1	1,977	1,065	(424)
Balance, Shares at Jun. 30, 2019		62,900,000
Balance at Mar. 31, 2019	2,608	$ 1	1,982	1,075	(450)
Balance, Shares at Mar. 31, 2019		63,100,000
Stock-based compensation, net of tax	3		3
Net earnings	18			18
Net derivative gains (losses) on cash flow hedges:
Net gains (losses) arising during the period, net of tax	3				3
Less: Reclassification adjustment for losses included in net earnings, net of tax	1				1
Foreign currency translation adjustments	20				20
Change in unrecognized gains and prior service cost related to pension and post-retirement benefit plans, net of tax	2				2
Stock repurchase	(8)		(8)
Stock repurchase, shares		(200,000)
Cash dividends declared	(28)			(28)
Balance at Jun. 30, 2019	2,619	$ 1	1,977	1,065	(424)
Balance, Shares at Jun. 30, 2019		62,900,000
Balance at Dec. 31, 2019	2,376	$ 1	1,770	998	(393)
Balance, Shares at Dec. 31, 2019		56,900,000
Stock-based compensation, net of tax, shares		100,000
Net earnings	24			24
Net derivative gains (losses) on cash flow hedges:
Net gains (losses) arising during the period, net of tax	(20)				(20)
Less: Reclassification adjustment for losses included in net earnings, net of tax	13				13
Foreign currency translation adjustments	(35)				(35)
Change in unrecognized gains and prior service cost related to pension and post-retirement benefit plans, net of tax	3				3
Stock repurchase	$ (59)		(59)
Stock repurchase, shares	(1,798,306)	(1,800,000)
Cash dividends declared	$ (25)			(25)
Balance at Jun. 30, 2020	2,277	$ 1	1,711	997	(432)
Balance, Shares at Jun. 30, 2020		55,200,000
Balance at Mar. 31, 2020	2,181	$ 1	1,710	978	(508)
Balance, Shares at Mar. 31, 2020		55,200,000
Stock-based compensation, net of tax	1		1
Net earnings	19			19
Net derivative gains (losses) on cash flow hedges:
Net gains (losses) arising during the period, net of tax	29				29
Less: Reclassification adjustment for losses included in net earnings, net of tax	6				6
Foreign currency translation adjustments	39				39
Change in unrecognized gains and prior service cost related to pension and post-retirement benefit plans, net of tax	2				2
Balance at Jun. 30, 2020	$ 2,277	$ 1	$ 1,711	$ 997	$ (432)
Balance, Shares at Jun. 30, 2020		55,200,000

Consolidated Statements of Shareholders' Equity (Parenthetical) (Unaudited) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Statement Of Stockholders Equity [Abstract]
Net (gains) losses arising during the period, tax	$ (9)	$ (1)	$ 7	$ (5)
Reclassification adjustment for losses included in net earnings, net, tax	$ (2)	(1)	(4)	(1)
Change in unrecognized gains and prior service cost related to pension and post-retirement benefit plans, tax		$ (1)	$ (1)	$ (2)

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Operating activities
Net earnings	$ 24	$ 98
Adjustments to reconcile net earnings to cash flows from operating activities
Depreciation and amortization	143	147
Deferred income taxes and tax uncertainties	(12)	(1)
Impairment of long-lived assets		25
Stock-based compensation expense	3	5
Equity loss, net of taxes	1	1
Changes in assets and liabilities, excluding the effect of acquisition of business
Receivables	42	40
Inventories	20	(54)
Prepaid expenses	2	(11)
Trade and other payables	(95)	(76)
Income and other taxes	40	(14)
Difference between employer pension and other post-retirement contributions and pension and other post-retirement expense	(1)	1
Other assets and other liabilities	(12)	13
Cash flows from operating activities	155	174
Investing activities
Additions to property, plant and equipment	(102)	(101)
Proceeds from disposals of property, plant and equipment		1
Acquisition of business, net of cash acquired	(30)
Cash flows used for investing activities	(132)	(100)
Financing activities
Dividend payments	(51)	(55)
Stock repurchase	(59)	(8)
Net change in bank indebtedness	(10)	3
Change in revolving credit facility	(80)
Proceeds from receivables securitization facility	25	80
Repayments of receivables securitization facility	(80)	(110)
Issuance of long-term debt	300
Repayments of long-term debt		(1)
Other	(4)	(1)
Cash flows provided from (used for) financing activities	41	(92)
Net increase (decrease) in cash and cash equivalents	64	(18)
Impact of foreign exchange on cash	(1)
Cash and cash equivalents at beginning of period	61	111
Cash and cash equivalents at end of period	124	93
Supplemental cash flow information
Interest	25	23
Income taxes	$ (24)	$ 50

Basis of Presentation

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Basis of Presentation

NOTE 1.

_________________

BASIS OF PRESENTATION

Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2020

Accounting Changes And Error Corrections [Abstract]

Recent Accounting Pronouncements

NOTE 2.

_________________

RECENT ACCOUNTING PRONOUNCEMENTS

ACCOUNTING CHANGES IMPLEMENTED

IMPLEMENTATION COSTS FOR CLOUD COMPUTING ARRANGEMENTS

The Company adopted the new guidance on January 1, 2020 with no significant impact on the consolidated financial statements.

RECEIVABLES

The Company adopted the new guidance on January 1, 2020 with no significant impact on the consolidated financial statements.

FUTURE ACCOUNTING CHANGES

TRANSITION AWAY FROM INTERBANK OFFERED RATES

Acquisition of Business

6 Months Ended

Jun. 30, 2020

Business Combinations [Abstract]

Acquisition of Business

NOTE 3.

_________________

ACQUISITION OF BUSINESS

Purchase of Appvion Point of Sale business

The table below illustrates the preliminary purchase price allocation:

Fair value of net assets acquired at the date of acquisition
Inventories	$	11
Property, plant and equipment		25
Total assets		36

Less: Assumed liabilities		6

Fair value of net assets acquired at the date of acquisition		30

Derivatives and Hedging Activities and Fair Value Measurement

6 Months Ended

Jun. 30, 2020

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivatives and Hedging Activities and Fair Value Measurement

NOTE 4.

________________

DERIVATIVES AND HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENT

HEDGING PROGRAMS

CREDIT RISK

INTEREST RATE RISK

EQUITY RISK

COST RISK

Cash flow hedges:

The following table presents the volumes under derivative financial instruments for natural gas contracts outstanding as of June 30, 2020 to hedge forecasted purchases:

Commodity	Notional contractual quantity under derivative contracts MMBtu⁽²⁾		Notional contractual value under derivative contracts (in millions of dollars)			Percentage of forecasted purchases under derivative contracts
Natural gas
2020 ⁽¹⁾		4,351,238		$	13	35%
2021		9,270,000		$	27	37%
2022		9,270,000		$	25	37%
2023		4,210,000		$	12	17%

⁽¹⁾	Represents the remaining six months of 2020

⁽²⁾	MMBtu: Millions of British thermal units

The natural gas derivative contracts were effective as of June 30, 2020.

FOREIGN CURRENCY RISK

Cash flow hedges:

The following table presents the currency values under significant currency positions pursuant to currency derivatives outstanding as of June 30, 2020 to hedge forecasted purchases and sales:

Currency exposure hedged

Business Segment

Year of

maturity

Notional

contractual value

Percentage of

forecasted net

exposures under

contracts

Average

Protection rate

Average

Obligation rate

CAD/USD

Pulp and Paper

2020⁽¹⁾

447 CAD

94%

1 USD = 1.3246

1 USD = 1.3414

CAD/USD

Pulp and Paper

2021

651 CAD

69%

1 USD = 1.3450

1 USD = 1.3560

CAD/USD

Pulp and Paper

2022

216 CAD

23%

1 USD = 1.3723

⁽¹⁾Represents the remaining six months of 2020

The foreign exchange derivative contracts were effective as of June 30, 2020.

FAIR VALUE MEASUREMENT

Level 1

Quoted prices in active markets for identical assets or liabilities.

Level 2

Level 3

Inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

Fair Value of financial instruments at:	June 30, 2020		Quoted prices in active markets for identical assets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)			Balance sheet classification
	$		$		$		$
Derivatives designated as hedging instruments:
Asset derivatives
Currency derivatives		6		—		6		—	(a)	Prepaid expenses
Currency derivatives		4		—		4		—	(a)	Other assets
Total Assets		10		—		10		—

Liabilities derivatives
Currency derivatives		14		—		14		—	(a)	Trade and other payables
Natural gas swap contracts		5		—		5		—	(a)	Trade and other payables
Currency derivatives		6		—		6		—	(a)	Other liabilities and deferred credits
Natural gas swap contracts		5		—		5		—	(a)	Other liabilities and deferred credits
Total Liabilities		30		—		30		—

Other instruments:
Stock-based compensation - liability awards		4		4		—		—		Trade and other payables
Stock-based compensation - liability awards		10		10		—		—		Other liabilities and deferred credits
Equity swap contracts		3		3		—		—		Other liabilities and deferred credits
Long-term debt		1,160		—		1,160		—	(b)	Long-term debt

Fair Value of financial instruments at:	December 31, 2019		Quoted prices in active markets for identical assets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)			Balance sheet classification
	$		$		$		$
Derivatives designated as hedging instruments:
Asset derivatives
Currency derivatives		4		—		4		—	(a)	Prepaid expenses
Currency derivatives		4		—		4		—	(a)	Other assets
Total Assets		8		—		8		—

Liabilities derivatives
Currency derivatives		2		—		2		—	(a)	Trade and other payables
Natural gas swap contracts		9		—		9		—	(a)	Trade and other payables
Natural gas swap contracts		8		—		8		—	(a)	Other liabilities and deferred credits
Total Liabilities		19		—		19		—

Other Instruments:
Stock-based compensation - liability awards		7		7		—		—		Trade and other payables
Stock-based compensation - liability awards		18		18		—		—		Other liabilities and deferred credits
Long-term debt		1,030		—		1,030		—	(b)	Long-term debt

(a)	Fair value of the Company’s derivatives are classified under Level 2 (inputs that are observable; directly or indirectly) as it is measured as follows:

For natural gas contracts: Fair value is measured using the discounted difference between contractual rates and quoted market future rates.

(b)

Due to their short-term maturity, the carrying amounts of cash and cash equivalents, receivables, bank indebtedness, trade and other payables and income and other taxes approximate their fair values.

Earnings Per Common Share

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Earnings Per Common Share

NOTE 5.

_________________

EARNINGS PER COMMON SHARE

The following table provides the reconciliation between basic and diluted earnings per common share:

	For the three months ended				For the six months ended
	June 30,		June 30,		June 30,		June 30,
	2020		2019		2020		2019
Net earnings	$	19	$	18	$	24	$	98
Weighted average number of common shares outstanding (millions)		55.2		63.0		55.6		63.0
Effect of dilutive securities (millions)		0.1		0.3		0.1		0.3
Weighted average number of diluted common shares outstanding (millions)		55.3		63.3		55.7		63.3

Basic net earnings per common share (in dollars)	$	0.34	$	0.29	$	0.43	$	1.56
Diluted net earnings per common share (in dollars)	$	0.34	$	0.28	$	0.43	$	1.55

	For the three months ended				For the six months ended
	June 30,		June 30,		June 30,		June 30,
	2020		2019		2020		2019
Options to purchase common shares		409,776		219,211		409,776		219,211

Pension Plans and Other Post-Retirement Benefit Plans

6 Months Ended

Jun. 30, 2020

Compensation And Retirement Disclosure [Abstract]

Pension Plans and Other Post-Retirement Benefit Plans

NOTE 6.

_________________

PENSION PLANS AND OTHER POST-RETIREMENT BENEFIT PLANS

DEFINED CONTRIBUTION PLANS

DEFINED BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFIT PLANS

Components of net periodic benefit cost for pension plans and other post-retirement benefit plans:

	For the three months ended						For the six months ended
	June 30, 2020						June 30, 2020
	Pension plans			Other post-retirement benefit plans			Pension plans			Other post-retirement benefit plans
	$			$			$			$
Service cost		7			1			14			1
Interest expense		9			1			20			1
Expected return on plan assets		(17	)		—			(34	)		—
Amortization of net actuarial loss (gain)		2			(1	)		4			(1	)
Amortization of prior year service costs		1			—			1			—
Net periodic benefit cost		2			1			5			1

Components of net periodic benefit cost for pension plans and other post-retirement benefit plans:

	For the three months ended						For the six months ended
	June 30, 2019						June 30, 2019
	Pension plans			Other post-retirement benefit plans			Pension plans			Other post-retirement benefit plans
	$			$			$			$
Service cost		7			1			15			1
Interest expense		14			1			27			1
Expected return on plan assets		(20	)		—			(40	)		—
Amortization of net actuarial loss (gain)		2			(1	)		5			(1	)
Amortization of prior year service costs		2			—			3			—
Net periodic benefit cost		5			1			10			1

Other Operating (Income) Loss, Net

6 Months Ended

Jun. 30, 2020

Other Income And Expenses [Abstract]

Other Operating (Income) Loss, Net

NOTE 7.

_________________

OTHER OPERATING (INCOME) LOSS, NET

	For the three months ended					For the six months ended
	June 30,			June 30,		June 30,			June 30,
	2020			2019		2020			2019
	$			$		$			$
Bad debt expense		1			1		5			1
Environmental provision		—			—		1			1
Non-production agreement terminated		(7	)		—		(7	)		—
Foreign exchange loss		2			1		—			2
Other		—			—		(1	)		(3	)
Other operating (income) loss, net		(4	)		2		(2	)		1

Income Taxes

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 8.

_________________

INCOME TAXES

Inventories

6 Months Ended

Jun. 30, 2020

Inventory Disclosure [Abstract]

Inventories

NOTE 9.

_________________

INVENTORIES

The following table presents the components of inventories:

	June 30,		December 31,
	2020		2019
	$		$
Work in process and finished goods		390	401
Raw materials		145	153
Operating and maintenance supplies		232	232
		767	786

Leases

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Leases

NOTE 10.

_________________

LEASES

While the Company’s lease payments are generally fixed over the lease term, some leases may include price escalation terms that are fixed at the lease commencement date.

The components of lease expense were as follows:

	For the three months ended				For the six months ended
	June 30,		June 30,		June 30,		June 30,
	2020		2019		2020		2019
	$		$		$		$
Operating lease expense		8		7		16		14

Finance lease expense:
Amortization of right-of-use assets		—		—		—		—
Interest on lease liabilities		—		—		—		—
Total finance lease expense		—		—		—		—

Supplemental cash flow information related to leases was as follows:

		For the six months ended
		June 30,		June 30,
		2020		2019
		$		$
Cash paid for amounts included in the measurement of lease liabilities:
	Operating cash flows from operating leases		17		15
	Operating cash flows from finance leases		—		—
	Financing cash flows from finance leases		—		—

Right-of-use assets obtained in exchange for lease liabilities:
	Operating leases		5		11
	Finance leases		—		—

Supplemental balance sheet information related to leases was as follows:

			June 30,			December 31,
			2020			2019
			$			$
Operating leases
	Operating leases right-of-use assets			74			81

	Lease liabilities due within one year			28			28
	Operating lease liabilities			62			69
				90			97

Finance leases
	Property, plant and equipment			14			15
	Accumulated depreciation			(7	)		(7	)
				7			8

	Long-term debt due within one year			1			1
	Long-term debt			8			9
				9			10

	Weighted-average remaining lease term
		Operating leases	4.6 years			4.9 years
		Finance leases	9.5 years			10 years

	Weighted-average discount rate
		Operating leases		4.5	%		4.6	%
		Finance leases		6.2	%		6.7	%

Maturities of lease liabilities June 30, 2020 were as follows:

	Operating leases		Finance leases
	June 30,		June 30,
	2020		2020
	$		$
2020 ⁽¹⁾		15		1
2021		26		2
2022		20		1
2023		15		1
2024		9		1
Thereafter		15		6
Total lease payments		100		12

Less: Imputed interest		10		3

Total lease liabilities		90		9

⁽¹⁾

^{Represents the remaining six months of 2020.}

Intangible Assets

6 Months Ended

Jun. 30, 2020

Goodwill And Intangible Assets Disclosure [Abstract]

Intangible Assets

NOTE 11.

_________________

INTANGIBLE ASSETS

The following table presents the components of intangible assets:

		June 30, 2020							December 31, 2019
	Estimated useful lives (in years)	Gross carrying amount		Accumulated amortization			Net		Gross carrying amount		Accumulated amortization			Net
		$		$			$		$		$			$
Definite-lived intangible assets subject to amortization
Water rights	40		3		(1	)		2		3		(1	)		2
Customer relationships	10 – 40		380		(116	)		264		380		(108	)		272
Technology	7 – 20		8		(5	)		3		8		(5	)		3
Non-Compete	9		1		(1	)		—		1		(1	)		—
License rights	12		29		(17	)		12		29		(16	)		13
			421		(140	)		281		421		(131	)		290
Indefinite-lived intangible assets not subject to amortization
Water rights			4		—			4		4		—			4
Trade names			235		—			235		235		—			235
License rights			6		—			6		6		—			6
Catalog rights			38		—			38		38		—			38
Total			704		(140	)		564		704		(131	)		573

Amortization expense related to intangible assets for the three and six months ended June 30, 2020 was $4 million and $9 million, respectively (2019 – $4 million and $9 million, respectively).

Amortization expense for the next five years related to intangible assets is expected to be as follows:

	2020	2021		2022		2023		2024
	$	$		$		$		$
Amortization expense related to intangible assets	21 ⁽¹⁾		21		20		20		20

⁽¹⁾

^{Represents twelve months of amortization}

Closure and Restructuring Costs and Impairment of Long-Lived Assets

6 Months Ended

Jun. 30, 2020

Restructuring And Related Activities [Abstract]

Closure and Restructuring Costs and Impairment of Long-Lived Assets

NOTE 12.

_________________

CLOSURE AND RESTRUCTURING COSTS AND IMPAIRMENT OF LONG-LIVED ASSETS

Other costs

For the three and six months ended June 30, 2020, other costs related to previous and ongoing closures and restructuring included $1 million of severance and termination costs (2019 – nil).

Waco, Texas facility

Long-Term Debt

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Long-Term Debt

NOTE 13.

_________________

LONG-TERM DEBT

TERM LOAN

Changes in Accumulated Other Comprehensive Loss by Component

6 Months Ended

Jun. 30, 2020

Equity [Abstract]

Changes in Accumulated Other Comprehensive Loss by Component

NOTE 14.

_________________

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS BY COMPONENT

The following table presents the changes in Accumulated other comprehensive loss by component⁽¹⁾ for the six months ended June 30, 2020 and the year ended December 31, 2019:

	Net derivative gains (losses) on cash flow hedges			Pension items⁽²⁾			Post-retirement benefit items⁽²⁾			Foreign currency items			Total
	$			$			$			$			$
Balance at December 31, 2018		(24	)		(231	)		11			(223	)		(467	)
Natural gas swap contracts		(10	)	N/A			N/A			N/A				(10	)
Currency options		5		N/A			N/A			N/A				5
Foreign exchange forward contracts		16		N/A			N/A			N/A				16
Net gain	N/A			1			1			N/A				2
Foreign currency items	N/A			N/A			N/A				21			21
Other comprehensive income before reclassifications		11			1			1			21			34
Amounts reclassified from Accumulated other comprehensive loss		8			33			(1	)		—			40
Net current period other comprehensive income		19			34			—			21			74
Balance at December 31, 2019		(5	)		(197	)		11			(202	)		(393	)
Natural gas swap contracts		(1	)	N/A			N/A			N/A				(1	)
Currency options		(3	)	N/A			N/A			N/A				(3	)
Foreign exchange forward contracts		(16	)	N/A			N/A			N/A				(16	)
Foreign currency items	N/A			N/A			N/A				(35	)		(35	)
Other comprehensive loss before reclassifications		(20	)		—			—			(35	)		(55	)
Amounts reclassified from Accumulated other comprehensive loss		13			4			(1	)		—			16
Net current period other comprehensive (loss) income		(7	)		4			(1	)		(35	)		(39	)
Balance at June 30, 2020		(12	)		(193	)		10			(237	)		(432	)

⁽¹⁾	All amounts are after tax. Amounts in parentheses indicate losses.

⁽²⁾	The projected benefit obligation is actuarially determined on an annual basis as of December 31.

The following tables present reclassifications out of Accumulated other comprehensive loss for the three and six months ended June 30, 2020 and 2019:

Details about Accumulated other comprehensive loss components	Amounts reclassified from Accumulated other comprehensive loss
	For the three months ended
	June 30, 2020			June 30, 2019
	$			$
Net derivative losses on cash flow hedge
Natural gas swap contracts ⁽¹⁾		(3	)		—
Currency options and forwards ⁽¹⁾		(5	)		(2	)
Total before tax		(8	)		(2	)
Tax benefit		2			1
Net of tax		(6	)		(1	)

Amortization of defined benefit pension items
Amortization of net actuarial loss ⁽²⁾		(2	)		(2	)
Amortization of prior year service cost ⁽²⁾		(1	)		(2	)
Total before tax		(3	)		(4	)
Tax benefit		—			1
Net of tax		(3	)		(3	)

Amortization of other post-retirement benefit items
Amortization of net actuarial gain ⁽²⁾		1			1
Amortization of prior year service cost ⁽²⁾		—			—
Total before tax		1			1
Tax expense		—			—
Net of tax		1			1

	Amounts reclassified from Accumulated other comprehensive loss
	For the six months ended
	June 30, 2020			June 30, 2019
	$			$
Net derivatives losses on cash flow hedge
Natural gas swap contracts ⁽¹⁾		(8	)		—
Currency options and forwards ⁽¹⁾		(9	)		(3	)
Total before tax		(17	)		(3	)
Tax benefit		4			1
Net of tax		(13	)		(2	)

Amortization of defined benefit pension items
Amortization of net actuarial loss ⁽²⁾		(4	)		(5	)
Amortization of prior year service cost ⁽²⁾		(1	)		(3	)
Total before tax		(5	)		(8	)
Tax benefit		1			2
Net of tax		(4	)		(6	)

Amortization of other post-retirement benefit items
Amortization of net actuarial gain ⁽²⁾		1			1
Amortization of prior year service cost ⁽²⁾		—			—
Total before tax		1			1
Tax benefit		—			—
Net of tax		1			1

⁽¹⁾	These amounts are included in Cost of Sales in the Consolidated Statements of Earnings and Comprehensive Income (Loss).

⁽²⁾	These amounts are included in the computation of net periodic benefit cost (see Note 6 “Pension Plans and Other Post-Retirement Benefit Plans” for more details).

Shareholders' Equity

6 Months Ended

Jun. 30, 2020

Equity [Abstract]

Shareholders' Equity

NOTE 15.

_________________

SHAREHOLDERS’ EQUITY

DIVIDENDS

STOCK REPURCHASE PROGRAM

During the first six months of 2020, the Company repurchased 1,798,306 shares at an average price of $33.05 for a total cost of $59 million.

During the first six months of 2019, the Company repurchased 194,407 shares at an average price of $42.26 for a total cost of $8 million.

SUSPENSION OF CAPITAL RETURN PROGRAM

Commitments and Contingencies

6 Months Ended

Jun. 30, 2020

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 16.

_________________

COMMITMENTS AND CONTINGENCIES

ENVIRONMENTAL MATTERS

As the current owner of the Dryden Property, Domtar is actively engaged with the Province with respect to the management of the historical contamination.

In the future, the Province may challenge whether Domtar has the benefit of the Indemnity. In addition to the Indemnity, Domtar has other recourses relating to the historical contamination.

The following table reflects changes in the reserve for environmental remediation and asset retirement obligations:

	June 30, 2020
	$
Balance at beginning of year		35
Additions and other changes		2
Environmental spending		(2	)
Effect of foreign currency exchange rate change		(1	)
Balance at end of period		34

Climate change and air quality regulation

CONTINGENCIES

INDEMNIFICATIONS

Pension Plans

Segment Disclosures

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Segment Disclosures

NOTE 17.

_________________

SEGMENT DISCLOSURES

•	Pulp and Paper – consists of the design, manufacturing, marketing and distribution of communication, specialty and packaging papers, as well as softwood, fluff and hardwood market pulp.

•	Personal Care – consists of the design, manufacturing, marketing and distribution of absorbent hygiene products.

An analysis and reconciliation of the Company’s business segment information to the respective information in the financial statements is as follows:

	For the three months ended						For the six months ended
SEGMENT DATA	June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
	$			$			$			$
Sales by segment
Pulp and Paper		802			1,106			1,833			2,263
Personal Care		229			228			495			467
Total for reportable segments		1,031			1,334			2,328			2,730
Intersegment sales		(19	)		(17	)		(38	)		(37	)
Consolidated sales		1,012			1,317			2,290			2,693

Sales by product group
Communication papers		385			643			1,008			1,328
Specialty and packaging papers		127			162			277			331
Market pulp		261			275			492			550
Absorbent hygiene products		239			237			513			484
Consolidated sales		1,012			1,317			2,290			2,693

Depreciation and amortization
Pulp and Paper		56			59			114			117
Personal Care		15			15			29			30
Total for reportable segments		71			74			143			147
Impairment of long-lived assets - Personal Care		—			15			—			25
Consolidated depreciation and amortization and impairment of long-lived assets		71			89			143			172

Operating income (loss) ⁽¹⁾
Pulp and Paper		3			62			7			206
Personal Care		18			(18	)		38			(26	)
Corporate		(7	)		(10	)		(12	)		(31	)
Consolidated operating income		14			34			33			149
Interest expense, net		15			13			29			26
Non-service components of net periodic benefit cost		(5	)		(2	)		(9	)		(5	)
Earnings before income taxes and equity loss		4			23			13			128
Income tax (benefit) expense		(15	)		5			(12	)		29
Equity loss, net of taxes		—			—			1			1
Net earnings		19			18			24			98

⁽¹⁾

^{The Government of Canada created the Canada Emergency Wage Subsidy (“CEWS”) to provide financial support for businesses during the COVID-19 pandemic and prevent large layoffs. CEWS allows eligible entities to receive a subsidy retroactive to March 15, 2020. The Company qualified and applied for the first four periods identified under CEWS, from March 15 through July 4, 2020. The Company recognized $25 million of income (CDN $34 million) ($21 million in Cost of sales (CDN $29 million) and $4 million in Selling, general and administrative (CDN $5 million)) related to this program in the second quarter of 2020.}

Supplemental Guarantor Financial Information

6 Months Ended

Jun. 30, 2020

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Supplemental Guarantor Financial Information

NOTE 18.

_________________

SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

	For the three months ended
	June 30, 2020
							Non-
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS				Guarantor			Guarantor			Consolidating
(LOSS) AND COMPREHENSIVE INCOME (LOSS)	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated
	$			$			$			$			$
Sales		—			812			419			(219	)		1,012
Operating expenses
Cost of sales, excluding depreciation and amortization		—			743			313			(219	)		837
Depreciation and amortization		—			50			21			—			71
Selling, general and administrative		3			46			44			—			93
Closure and restructuring costs		—			1			—			—			1
Other operating loss (income), net		1			—			(5	)		—			(4	)
		4			840			373			(219	)		998
Operating (loss) income		(4	)		(28	)		46			—			14
Interest expense (income), net		16			19			(20	)		—			15
Non-service components of net periodic benefit cost		—			(3	)		(2	)		—			(5	)
(Loss) earnings before income taxes		(20	)		(44	)		68			—			4
Income tax (benefit) expense		(92	)		(103	)		180			—			(15	)
Share in earnings of equity accounted investees		(53	)		(112	)		—			165			—
Net earnings (loss)		19			(53	)		(112	)		165			19
Other comprehensive income		76			74			40			(114	)		76
Comprehensive income (loss)		95			21			(72	)		51			95

	For the six months ended
	June 30, 2020
							Non-
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS (LOSS)				Guarantor			Guarantor			Consolidating
AND COMPREHENSIVE LOSS	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated
	$			$			$			$			$
Sales		—			1,857			884			(451	)		2,290
Operating expenses
Cost of sales, excluding depreciation and amortization		—			1,690			681			(451	)		1,920
Depreciation and amortization		—			101			42			—			143
Selling, general and administrative		5			72			118			—			195
Closure and restructuring costs		—			1			—			—			1
Other operating loss (income), net		1			4			(7	)		—			(2	)
		6			1,868			834			(451	)		2,257
Operating (loss) income		(6	)		(11	)		50			—			33
Interest expense (income), net		32			38			(41	)		—			29
Non-service components of net periodic benefit cost		—			(4	)		(5	)		—			(9	)
(Loss) earnings before income taxes and equity loss		(38	)		(45	)		96			—			13
Income tax (benefit) expense		(94	)		(100	)		182			—			(12	)
Equity loss, net of taxes		—			1			—			—			1
Share in earnings of equity accounted investees		(32	)		(86	)		—			118			—
Net earnings (loss)		24			(32	)		(86	)		118			24
Other comprehensive loss		(39	)		(43	)		(33	)		76			(39	)
Comprehensive loss		(15	)		(75	)		(119	)		194			(15	)

	For the three months ended
	June 30, 2019
						Non-
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS				Guarantor		Guarantor			Consolidating
AND COMPREHENSIVE INCOME	Parent			Subsidiaries		Subsidiaries			Adjustments			Consolidated
	$			$		$			$			$
Sales		—			1,082		488			(253	)		1,317
Operating expenses
Cost of sales, excluding depreciation and amortization		—			925		407			(253	)		1,079
Depreciation and amortization		—			53		21			—			74
Selling, general and administrative		1			55		49			—			105
Impairment of long-lived assets		—			15		—			—			15
Closure and restructuring costs		—			8		—			—			8
Other operating loss, net		—			—		2			—			2
		1			1,056		479			(253	)		1,283
Operating (loss) income		(1	)		26		9			—			34
Interest expense (income), net		17			22		(26	)		—			13
Non-service components of net periodic benefit cost		—			—		(2	)		—			(2	)
(Loss) earnings before income taxes		(18	)		4		37			—			23
Income tax (benefit) expense		(3	)		—		8			—			5
Share in earnings of equity accounted investees		33			29		—			(62	)		—
Net earnings		18			33		29			(62	)		18
Other comprehensive income		26			31		21			(52	)		26
Comprehensive income		44			64		50			(114	)		44

	For the six months ended
	June 30, 2019
							Non-
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS				Guarantor			Guarantor			Consolidating
AND COMPREHENSIVE INCOME	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated
	$			$			$			$			$
Sales		—			2,208			1,019			(534	)		2,693
Operating expenses
Cost of sales, excluding depreciation and amortization		—			1,855			810			(534	)		2,131
Depreciation and amortization		—			104			43			—			147
Selling, general and administrative		7			111			110			—			228
Impairment of long-lived assets		—			25			—			—			25
Closure and restructuring costs		—			10			2			—			12
Other operating (income) loss, net		—			(4	)		5			—			1
		7			2,101			970			(534	)		2,544
Operating (loss) income		(7	)		107			49			—			149
Interest expense (income), net		34			42			(50	)		—			26
Non-service components of net periodic benefit cost		—			—			(5	)		—			(5	)
(Loss) earnings before income taxes		(41	)		65			104			—			128
Income tax (benefit) expense		(9	)		14			24			—			29
Equity loss, net of taxes		—			—			1			—			1
Share in earnings of equity accounted investees		130			79			—			(209	)		—
Net earnings		98			130			79			(209	)		98
Other comprehensive income		43			48			25			(73	)		43
Comprehensive income		141			178			104			(282	)		141

	June 30, 2020
					Non-
			Guarantor		Guarantor		Consolidating
CONDENSED CONSOLIDATING BALANCE SHEET	Parent		Subsidiaries		Subsidiaries		Adjustments			Consolidated
	$		$		$		$			$
Assets
Current assets
Cash and cash equivalents		24		31		69		—			124
Receivables		—		144		391		—			535
Inventories		—		528		239		—			767
Prepaid expenses		5		19		12		—			36
Income and other taxes receivable		128		74		20		(188	)		34
Intercompany accounts		497		394		165		(1,056	)		—
Total current assets		654		1,190		896		(1,244	)		1,496
Property, plant and equipment, net		—		1,677		832		—			2,509
Operating lease right-of-use assets		—		59		15		—			74
Intangible assets, net		—		240		324		—			564
Investments in affiliates		3,551		2,349		—		(5,900	)		—
Intercompany long-term advances		5		1		1,529		(1,535	)		—
Other assets		14		26		134		(12	)		162
Total assets		4,224		5,542		3,730		(8,691	)		4,805
Liabilities and shareholders' equity
Current liabilities
Trade and other payables		29		323		213		—			565
Intercompany accounts		182		227		647		(1,056	)		—
Income and other taxes payable		27		1		193		(188	)		33
Operating lease liabilities due within one year		—		22		6		—			28
Long-term debt due within one year		12		—		1		—			13
Total current liabilities		250		573		1,060		(1,244	)		639
Long-term debt		1,080		—		9		—			1,089
Operating lease liabilities		—		53		9		—			62
Intercompany long-term loans		591		943		1		(1,535	)		—
Deferred income taxes and other		1		308		164		(12	)		461
Other liabilities and deferred credits		25		114		138		—			277
Shareholders' equity		2,277		3,551		2,349		(5,900	)		2,277
Total liabilities and shareholders' equity		4,224		5,542		3,730		(8,691	)		4,805

	December 31, 2019
					Non-
			Guarantor		Guarantor		Consolidating
CONDENSED CONSOLIDATING BALANCE SHEET	Parent		Subsidiaries		Subsidiaries		Adjustments			Consolidated
	$		$		$		$			$
Assets
Current assets
Cash and cash equivalents		1		11		49		—			61
Receivables		—		146		431		—			577
Inventories		—		543		243		—			786
Prepaid expenses		5		17		11		—			33
Income and other taxes receivable		34		—		27		—			61
Intercompany accounts		538		547		237		(1,322	)		—
Total current assets		578		1,264		998		(1,322	)		1,518
Property, plant and equipment, net		—		1,689		878		—			2,567
Operating lease right-of-use assets		—		63		18		—			81
Intangible assets, net		—		245		328		—			573
Investments in affiliates		3,627		2,493		—		(6,120	)		—
Intercompany long-term advances		5		1		1,482		(1,488	)		—
Other assets		14		30		131		(11	)		164
Total assets		4,224		5,785		3,835		(8,941	)		4,903
Liabilities and shareholders' equity
Current liabilities
Bank indebtedness		—		9		—		—			9
Trade and other payables		57		390		258		—			705
Intercompany accounts		344		299		679		(1,322	)		—
Income and other taxes payable		1		12		10		—			23
Operating lease liabilities due within one year		—		21		7		—			28
Long-term debt due within one year		—		—		1		—			1
Total current liabilities		402		731		955		(1,322	)		766
Long-term debt		873		—		65		—			938
Operating lease liabilities		—		58		11		—			69
Intercompany long-term loans		541		946		1		(1,488	)		—
Deferred income taxes and other		—		324		166		(11	)		479
Other liabilities and deferred credits		32		99		144		—			275
Shareholders' equity		2,376		3,627		2,493		(6,120	)		2,376
Total liabilities and shareholders' equity		4,224		5,785		3,835		(8,941	)		4,903

	For the six months ended
	June 30, 2020
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
	$			$			$			$			$
Operating activities
Net earnings (loss)		24			(32	)		(86	)		118			24
Changes in operating and intercompany assets and liabilities and non-cash items, included in net earnings (loss)		(182	)		57			374			(118	)		131
Cash flows (used for) provided from operating activities		(158	)		25			288			—			155
Investing activities
Additions to property, plant and equipment		—			(61	)		(41	)		—			(102	)
Acquisition of business, net of cash acquired		—			—			(30	)		—			(30	)
Cash flows used for investing activities		—			(61	)		(71	)		—			(132	)
Financing activities
Dividend payments		(51	)		—			—			—			(51	)
Stock repurchase		(59	)		—			—			—			(59	)
Net change in bank indebtedness		—			(10	)		—			—			(10	)
Change in revolving credit facility		(80	)		—			—			—			(80	)
Proceeds from receivables securitization facility		—			—			25			—			25
Repayments of receivables securitization facility		—			—			(80	)		—			(80	)
Issuance of long-term debt		300			—			—			—			300
Increase in long-term advances to related parties		—			—			(141	)		141			—
Decrease in long-term advances to related parties		75			66			—			(141	)		—
Other		(4	)		—			—			—			(4	)
Cash flows provided from (used for) financing activities		181			56			(196	)		—			41
Net increase in cash and cash equivalents		23			20			21			—			64
Impact of foreign exchange on cash		—			—			(1	)		—			(1	)
Cash and cash equivalents at beginning of period		1			11			49			—			61
Cash and cash equivalents at end of period		24			31			69			—			124

	For the six months ended
	June 30, 2019
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
	$			$			$			$			$
Operating activities
Net earnings		98			130			79			(209	)		98
Changes in operating and intercompany assets and liabilities and non-cash items, included in net earnings		(89	)		(116	)		72			209			76
Cash flows from operating activities		9			14			151			—			174
Investing activities
Additions to property, plant and equipment		—			(62	)		(39	)		—			(101	)
Proceeds from disposals of property, plant and equipment		—			1			—			—			1
Cash flows used for investing activities		—			(61	)		(39	)		—			(100	)
Financing activities
Dividend payments		(55	)		—			—			—			(55	)
Stock repurchase		(8	)		—			—			—			(8	)
Net change in bank indebtedness		—			3			—			—			3
Proceeds from receivables securitization facility		—			—			80			—			80
Repayments of receivables securitization facility		—			—			(110	)		—			(110	)
Repayments of long-term debt		—			—			(1	)		—			(1	)
Increase in long-term advances to related parties		—			—			(101	)		101			—
Decrease in long-term advances to related parties		56			45			—			(101	)		—
Other		(1	)		—			—			—			(1	)
Cash flows (used for) provided from financing activities		(8	)		48			(132	)		—			(92	)
Net increase (decrease) in cash and cash equivalents		1			1			(20	)		—			(18	)
Cash and cash equivalents at beginning of period		—			—			111			—			111
Cash and cash equivalents at end of period		1			1			91			—			93

Subsequent Event

6 Months Ended

Jun. 30, 2020

Subsequent Events [Abstract]

Subsequent Event

NOTE 19.

_________________

SUBSEQUENT EVENT

COST REDUCTION PROGRAM

Recent Accounting Pronouncements (Policies)	6 Months Ended
Recent Accounting Pronouncements (Policies)	Jun. 30, 2020
Implementation Costs for Cloud Computing Arrangements	IMPLEMENTATION COSTS FOR CLOUD COMPUTING ARRANGEMENTS In August 2018, the FASB issued Accounting Standards Update (“ASU”) 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract”. Under the guidance, implementation costs for cloud computing arrangements should be evaluated for capitalization using the same approach as implementation costs associated with internal-use software and expensed over the term of the hosting arrangement. The ASU also provides guidance on presentation and disclosure. The Company adopted the new guidance on January 1, 2020 with no significant impact on the consolidated financial statements.
Receivables	RECEIVABLES In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses”. This ASU added a new impairment model (known as the current expected credit loss (“CECL”) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes an allowance for its estimate of expected credit losses and applies to most debt instruments, trade receivables, lease receivables, financial guarantee contracts, and other loan commitments. The CECL model does not have a minimum threshold for recognition of impairment losses and entities will need to measure expected credit losses on assets that have a low risk of loss. The Company adopted the new guidance on January 1, 2020 with no significant impact on the consolidated financial statements.
Future Accounting Changes [Member]
Transition Away from Interbank Offered Rates	FUTURE ACCOUNTING CHANGES TRANSITION AWAY FROM INTERBANK OFFERED RATES On March 12, 2020, the FASB issued ASU 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting”. The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The amendments in the ASU are elective and apply to entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. An entity may elect to apply the amendments prospectively through December 31, 2022. The Company has begun its impact assessment and while its evaluation of this guidance is in the early stages, the Company does not expect the adoption of this guidance to have a material impact on the consolidated financial statements.

Acquisition of Business (Tables)

6 Months Ended

Jun. 30, 2020

Business Combinations [Abstract]

Schedule of Preliminary Purchase Price Allocation

The table below illustrates the preliminary purchase price allocation:

Fair value of net assets acquired at the date of acquisition
Inventories	$	11
Property, plant and equipment		25
Total assets		36

Less: Assumed liabilities		6

Fair value of net assets acquired at the date of acquisition		30

Derivatives and Hedging Activities and Fair Value Measurement (Tables)

6 Months Ended

Jun. 30, 2020

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments for Natural Gas Contracts Outstanding

The following table presents the volumes under derivative financial instruments for natural gas contracts outstanding as of June 30, 2020 to hedge forecasted purchases:

Commodity	Notional contractual quantity under derivative contracts MMBtu⁽²⁾		Notional contractual value under derivative contracts (in millions of dollars)			Percentage of forecasted purchases under derivative contracts
Natural gas
2020 ⁽¹⁾		4,351,238		$	13	35%
2021		9,270,000		$	27	37%
2022		9,270,000		$	25	37%
2023		4,210,000		$	12	17%

⁽¹⁾	Represents the remaining six months of 2020

⁽²⁾	MMBtu: Millions of British thermal units

Currency Values under Significant Currency Positions Pursuant to Currency Derivatives Outstanding

The following table presents the currency values under significant currency positions pursuant to currency derivatives outstanding as of June 30, 2020 to hedge forecasted purchases and sales:

Currency exposure hedged

Business Segment

Year of

maturity

Notional

contractual value

Percentage of

forecasted net

exposures under

contracts

Average

Protection rate

Average

Obligation rate

CAD/USD

Pulp and Paper

2020⁽¹⁾

447 CAD

94%

1 USD = 1.3246

1 USD = 1.3414

CAD/USD

Pulp and Paper

2021

651 CAD

69%

1 USD = 1.3450

1 USD = 1.3560

CAD/USD

Pulp and Paper

2022

216 CAD

23%

1 USD = 1.3723

⁽¹⁾Represents the remaining six months of 2020

Fair Value of Financial Instruments

Fair Value of financial instruments at:	June 30, 2020		Quoted prices in active markets for identical assets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)			Balance sheet classification
	$		$		$		$
Derivatives designated as hedging instruments:
Asset derivatives
Currency derivatives		6		—		6		—	(a)	Prepaid expenses
Currency derivatives		4		—		4		—	(a)	Other assets
Total Assets		10		—		10		—

Liabilities derivatives
Currency derivatives		14		—		14		—	(a)	Trade and other payables
Natural gas swap contracts		5		—		5		—	(a)	Trade and other payables
Currency derivatives		6		—		6		—	(a)	Other liabilities and deferred credits
Natural gas swap contracts		5		—		5		—	(a)	Other liabilities and deferred credits
Total Liabilities		30		—		30		—

Other instruments:
Stock-based compensation - liability awards		4		4		—		—		Trade and other payables
Stock-based compensation - liability awards		10		10		—		—		Other liabilities and deferred credits
Equity swap contracts		3		3		—		—		Other liabilities and deferred credits
Long-term debt		1,160		—		1,160		—	(b)	Long-term debt

Fair Value of financial instruments at:	December 31, 2019		Quoted prices in active markets for identical assets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)			Balance sheet classification
	$		$		$		$
Derivatives designated as hedging instruments:
Asset derivatives
Currency derivatives		4		—		4		—	(a)	Prepaid expenses
Currency derivatives		4		—		4		—	(a)	Other assets
Total Assets		8		—		8		—

Liabilities derivatives
Currency derivatives		2		—		2		—	(a)	Trade and other payables
Natural gas swap contracts		9		—		9		—	(a)	Trade and other payables
Natural gas swap contracts		8		—		8		—	(a)	Other liabilities and deferred credits
Total Liabilities		19		—		19		—

Other Instruments:
Stock-based compensation - liability awards		7		7		—		—		Trade and other payables
Stock-based compensation - liability awards		18		18		—		—		Other liabilities and deferred credits
Long-term debt		1,030		—		1,030		—	(b)	Long-term debt

(a)	Fair value of the Company’s derivatives are classified under Level 2 (inputs that are observable; directly or indirectly) as it is measured as follows:

For natural gas contracts: Fair value is measured using the discounted difference between contractual rates and quoted market future rates.

(b)

Earnings Per Common Share (Tables)

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Reconciliation Between Basic and Diluted Earnings Per Common Share

The following table provides the reconciliation between basic and diluted earnings per common share:

	For the three months ended				For the six months ended
	June 30,		June 30,		June 30,		June 30,
	2020		2019		2020		2019
Net earnings	$	19	$	18	$	24	$	98
Weighted average number of common shares outstanding (millions)		55.2		63.0		55.6		63.0
Effect of dilutive securities (millions)		0.1		0.3		0.1		0.3
Weighted average number of diluted common shares outstanding (millions)		55.3		63.3		55.7		63.3

Basic net earnings per common share (in dollars)	$	0.34	$	0.29	$	0.43	$	1.56
Diluted net earnings per common share (in dollars)	$	0.34	$	0.28	$	0.43	$	1.55

Securities that Could Potentially Dilute Basic Earnings Per Common Share in Future

	For the three months ended				For the six months ended
	June 30,		June 30,		June 30,		June 30,
	2020		2019		2020		2019
Options to purchase common shares		409,776		219,211		409,776		219,211

Pension Plans and Other Post-Retirement Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2020

Compensation And Retirement Disclosure [Abstract]

Components of Net Periodic Benefit Cost for Pension Plans and Other Post-Retirement Benefit Plans

Components of net periodic benefit cost for pension plans and other post-retirement benefit plans:

	For the three months ended						For the six months ended
	June 30, 2020						June 30, 2020
	Pension plans			Other post-retirement benefit plans			Pension plans			Other post-retirement benefit plans
	$			$			$			$
Service cost		7			1			14			1
Interest expense		9			1			20			1
Expected return on plan assets		(17	)		—			(34	)		—
Amortization of net actuarial loss (gain)		2			(1	)		4			(1	)
Amortization of prior year service costs		1			—			1			—
Net periodic benefit cost		2			1			5			1

Components of net periodic benefit cost for pension plans and other post-retirement benefit plans:

	For the three months ended						For the six months ended
	June 30, 2019						June 30, 2019
	Pension plans			Other post-retirement benefit plans			Pension plans			Other post-retirement benefit plans
	$			$			$			$
Service cost		7			1			15			1
Interest expense		14			1			27			1
Expected return on plan assets		(20	)		—			(40	)		—
Amortization of net actuarial loss (gain)		2			(1	)		5			(1	)
Amortization of prior year service costs		2			—			3			—
Net periodic benefit cost		5			1			10			1

Other Operating (Income) Loss, Net (Tables)

6 Months Ended

Jun. 30, 2020

Other Income And Expenses [Abstract]

Components of Other Operating (Income) Loss, Net

The Company’s other operating (income) loss, net includes the following:

	For the three months ended					For the six months ended
	June 30,			June 30,		June 30,			June 30,
	2020			2019		2020			2019
	$			$		$			$
Bad debt expense		1			1		5			1
Environmental provision		—			—		1			1
Non-production agreement terminated		(7	)		—		(7	)		—
Foreign exchange loss		2			1		—			2
Other		—			—		(1	)		(3	)
Other operating (income) loss, net		(4	)		2		(2	)		1

Inventories (Tables)

6 Months Ended

Jun. 30, 2020

Inventory Disclosure [Abstract]

Components of Inventories

The following table presents the components of inventories:

	June 30,		December 31,
	2020		2019
	$		$
Work in process and finished goods		390	401
Raw materials		145	153
Operating and maintenance supplies		232	232
		767	786

Leases (Tables)

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Summary of Components of Lease Expense

The components of lease expense were as follows:

	For the three months ended				For the six months ended
	June 30,		June 30,		June 30,		June 30,
	2020		2019		2020		2019
	$		$		$		$
Operating lease expense		8		7		16		14

Finance lease expense:
Amortization of right-of-use assets		—		—		—		—
Interest on lease liabilities		—		—		—		—
Total finance lease expense		—		—		—		—

Summary of Supplemental Cash Flow Information Related to Leases

Supplemental cash flow information related to leases was as follows:

		For the six months ended
		June 30,		June 30,
		2020		2019
		$		$
Cash paid for amounts included in the measurement of lease liabilities:
	Operating cash flows from operating leases		17		15
	Operating cash flows from finance leases		—		—
	Financing cash flows from finance leases		—		—

Right-of-use assets obtained in exchange for lease liabilities:
	Operating leases		5		11
	Finance leases		—		—

Summary of Supplemental Balance Sheet Information Related to Leases

Supplemental balance sheet information related to leases was as follows:

			June 30,			December 31,
			2020			2019
			$			$
Operating leases
	Operating leases right-of-use assets			74			81

	Lease liabilities due within one year			28			28
	Operating lease liabilities			62			69
				90			97

Finance leases
	Property, plant and equipment			14			15
	Accumulated depreciation			(7	)		(7	)
				7			8

	Long-term debt due within one year			1			1
	Long-term debt			8			9
				9			10

	Weighted-average remaining lease term
		Operating leases	4.6 years			4.9 years
		Finance leases	9.5 years			10 years

	Weighted-average discount rate
		Operating leases		4.5	%		4.6	%
		Finance leases		6.2	%		6.7	%

Summary of Maturities of Lease Liabilities

Maturities of lease liabilities June 30, 2020 were as follows:

	Operating leases		Finance leases
	June 30,		June 30,
	2020		2020
	$		$
2020 ⁽¹⁾		15		1
2021		26		2
2022		20		1
2023		15		1
2024		9		1
Thereafter		15		6
Total lease payments		100		12

Less: Imputed interest		10		3

Total lease liabilities		90		9

⁽¹⁾

^{Represents the remaining six months of 2020.}

Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2020

Goodwill And Intangible Assets Disclosure [Abstract]

Components of Intangible Assets

The following table presents the components of intangible assets:

		June 30, 2020							December 31, 2019
	Estimated useful lives (in years)	Gross carrying amount		Accumulated amortization			Net		Gross carrying amount		Accumulated amortization			Net
		$		$			$		$		$			$
Definite-lived intangible assets subject to amortization
Water rights	40		3		(1	)		2		3		(1	)		2
Customer relationships	10 – 40		380		(116	)		264		380		(108	)		272
Technology	7 – 20		8		(5	)		3		8		(5	)		3
Non-Compete	9		1		(1	)		—		1		(1	)		—
License rights	12		29		(17	)		12		29		(16	)		13
			421		(140	)		281		421		(131	)		290
Indefinite-lived intangible assets not subject to amortization
Water rights			4		—			4		4		—			4
Trade names			235		—			235		235		—			235
License rights			6		—			6		6		—			6
Catalog rights			38		—			38		38		—			38
Total			704		(140	)		564		704		(131	)		573

Amortization Expense Related to Intangible Assets

Amortization expense for the next five years related to intangible assets is expected to be as follows:

	2020	2021		2022		2023		2024
	$	$		$		$		$
Amortization expense related to intangible assets	21 ⁽¹⁾		21		20		20		20

⁽¹⁾

^{Represents twelve months of amortization}

Changes in Accumulated Other Comprehensive Loss by Component (Tables)

6 Months Ended

Jun. 30, 2020

Equity [Abstract]

Schedule of Changes in Accumulated Other Comprehensive Loss by Component

The following table presents the changes in Accumulated other comprehensive loss by component⁽¹⁾ for the six months ended June 30, 2020 and the year ended December 31, 2019:

	Net derivative gains (losses) on cash flow hedges			Pension items⁽²⁾			Post-retirement benefit items⁽²⁾			Foreign currency items			Total
	$			$			$			$			$
Balance at December 31, 2018		(24	)		(231	)		11			(223	)		(467	)
Natural gas swap contracts		(10	)	N/A			N/A			N/A				(10	)
Currency options		5		N/A			N/A			N/A				5
Foreign exchange forward contracts		16		N/A			N/A			N/A				16
Net gain	N/A			1			1			N/A				2
Foreign currency items	N/A			N/A			N/A				21			21
Other comprehensive income before reclassifications		11			1			1			21			34
Amounts reclassified from Accumulated other comprehensive loss		8			33			(1	)		—			40
Net current period other comprehensive income		19			34			—			21			74
Balance at December 31, 2019		(5	)		(197	)		11			(202	)		(393	)
Natural gas swap contracts		(1	)	N/A			N/A			N/A				(1	)
Currency options		(3	)	N/A			N/A			N/A				(3	)
Foreign exchange forward contracts		(16	)	N/A			N/A			N/A				(16	)
Foreign currency items	N/A			N/A			N/A				(35	)		(35	)
Other comprehensive loss before reclassifications		(20	)		—			—			(35	)		(55	)
Amounts reclassified from Accumulated other comprehensive loss		13			4			(1	)		—			16
Net current period other comprehensive (loss) income		(7	)		4			(1	)		(35	)		(39	)
Balance at June 30, 2020		(12	)		(193	)		10			(237	)		(432	)

⁽¹⁾	All amounts are after tax. Amounts in parentheses indicate losses.

⁽²⁾	The projected benefit obligation is actuarially determined on an annual basis as of December 31.

Schedule of Reclassifications Out of Accumulated Other Comprehensive Loss

The following tables present reclassifications out of Accumulated other comprehensive loss for the three and six months ended June 30, 2020 and 2019:

Details about Accumulated other comprehensive loss components	Amounts reclassified from Accumulated other comprehensive loss
	For the three months ended
	June 30, 2020			June 30, 2019
	$			$
Net derivative losses on cash flow hedge
Natural gas swap contracts ⁽¹⁾		(3	)		—
Currency options and forwards ⁽¹⁾		(5	)		(2	)
Total before tax		(8	)		(2	)
Tax benefit		2			1
Net of tax		(6	)		(1	)

Amortization of defined benefit pension items
Amortization of net actuarial loss ⁽²⁾		(2	)		(2	)
Amortization of prior year service cost ⁽²⁾		(1	)		(2	)
Total before tax		(3	)		(4	)
Tax benefit		—			1
Net of tax		(3	)		(3	)

Amortization of other post-retirement benefit items
Amortization of net actuarial gain ⁽²⁾		1			1
Amortization of prior year service cost ⁽²⁾		—			—
Total before tax		1			1
Tax expense		—			—
Net of tax		1			1

	Amounts reclassified from Accumulated other comprehensive loss
	For the six months ended
	June 30, 2020			June 30, 2019
	$			$
Net derivatives losses on cash flow hedge
Natural gas swap contracts ⁽¹⁾		(8	)		—
Currency options and forwards ⁽¹⁾		(9	)		(3	)
Total before tax		(17	)		(3	)
Tax benefit		4			1
Net of tax		(13	)		(2	)

Amortization of defined benefit pension items
Amortization of net actuarial loss ⁽²⁾		(4	)		(5	)
Amortization of prior year service cost ⁽²⁾		(1	)		(3	)
Total before tax		(5	)		(8	)
Tax benefit		1			2
Net of tax		(4	)		(6	)

Amortization of other post-retirement benefit items
Amortization of net actuarial gain ⁽²⁾		1			1
Amortization of prior year service cost ⁽²⁾		—			—
Total before tax		1			1
Tax benefit		—			—
Net of tax		1			1

⁽¹⁾	These amounts are included in Cost of Sales in the Consolidated Statements of Earnings and Comprehensive Income (Loss).

⁽²⁾	These amounts are included in the computation of net periodic benefit cost (see Note 6 “Pension Plans and Other Post-Retirement Benefit Plans” for more details).

Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2020

Environmental Remediation Obligations [Abstract]

Changes in Reserve for Environmental Remediation and Asset Retirement Obligations

The following table reflects changes in the reserve for environmental remediation and asset retirement obligations:

	June 30, 2020
	$
Balance at beginning of year		35
Additions and other changes		2
Environmental spending		(2	)
Effect of foreign currency exchange rate change		(1	)
Balance at end of period		34

Segment Disclosures (Tables)

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Analysis and Reconciliation of Reportable Segment Information

An analysis and reconciliation of the Company’s business segment information to the respective information in the financial statements is as follows:

	For the three months ended						For the six months ended
SEGMENT DATA	June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
	$			$			$			$
Sales by segment
Pulp and Paper		802			1,106			1,833			2,263
Personal Care		229			228			495			467
Total for reportable segments		1,031			1,334			2,328			2,730
Intersegment sales		(19	)		(17	)		(38	)		(37	)
Consolidated sales		1,012			1,317			2,290			2,693

Sales by product group
Communication papers		385			643			1,008			1,328
Specialty and packaging papers		127			162			277			331
Market pulp		261			275			492			550
Absorbent hygiene products		239			237			513			484
Consolidated sales		1,012			1,317			2,290			2,693

Depreciation and amortization
Pulp and Paper		56			59			114			117
Personal Care		15			15			29			30
Total for reportable segments		71			74			143			147
Impairment of long-lived assets - Personal Care		—			15			—			25
Consolidated depreciation and amortization and impairment of long-lived assets		71			89			143			172

Operating income (loss) ⁽¹⁾
Pulp and Paper		3			62			7			206
Personal Care		18			(18	)		38			(26	)
Corporate		(7	)		(10	)		(12	)		(31	)
Consolidated operating income		14			34			33			149
Interest expense, net		15			13			29			26
Non-service components of net periodic benefit cost		(5	)		(2	)		(9	)		(5	)
Earnings before income taxes and equity loss		4			23			13			128
Income tax (benefit) expense		(15	)		5			(12	)		29
Equity loss, net of taxes		—			—			1			1
Net earnings		19			18			24			98

Supplemental Guarantor Financial Information (Tables)

6 Months Ended

Jun. 30, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Condensed Consolidating Statement of Earnings (Loss) and Comprehensive Income (Loss)

	For the three months ended
	June 30, 2020
							Non-
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS				Guarantor			Guarantor			Consolidating
(LOSS) AND COMPREHENSIVE INCOME (LOSS)	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated
	$			$			$			$			$
Sales		—			812			419			(219	)		1,012
Operating expenses
Cost of sales, excluding depreciation and amortization		—			743			313			(219	)		837
Depreciation and amortization		—			50			21			—			71
Selling, general and administrative		3			46			44			—			93
Closure and restructuring costs		—			1			—			—			1
Other operating loss (income), net		1			—			(5	)		—			(4	)
		4			840			373			(219	)		998
Operating (loss) income		(4	)		(28	)		46			—			14
Interest expense (income), net		16			19			(20	)		—			15
Non-service components of net periodic benefit cost		—			(3	)		(2	)		—			(5	)
(Loss) earnings before income taxes		(20	)		(44	)		68			—			4
Income tax (benefit) expense		(92	)		(103	)		180			—			(15	)
Share in earnings of equity accounted investees		(53	)		(112	)		—			165			—
Net earnings (loss)		19			(53	)		(112	)		165			19
Other comprehensive income		76			74			40			(114	)		76
Comprehensive income (loss)		95			21			(72	)		51			95

	For the six months ended
	June 30, 2020
							Non-
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS (LOSS)				Guarantor			Guarantor			Consolidating
AND COMPREHENSIVE LOSS	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated
	$			$			$			$			$
Sales		—			1,857			884			(451	)		2,290
Operating expenses
Cost of sales, excluding depreciation and amortization		—			1,690			681			(451	)		1,920
Depreciation and amortization		—			101			42			—			143
Selling, general and administrative		5			72			118			—			195
Closure and restructuring costs		—			1			—			—			1
Other operating loss (income), net		1			4			(7	)		—			(2	)
		6			1,868			834			(451	)		2,257
Operating (loss) income		(6	)		(11	)		50			—			33
Interest expense (income), net		32			38			(41	)		—			29
Non-service components of net periodic benefit cost		—			(4	)		(5	)		—			(9	)
(Loss) earnings before income taxes and equity loss		(38	)		(45	)		96			—			13
Income tax (benefit) expense		(94	)		(100	)		182			—			(12	)
Equity loss, net of taxes		—			1			—			—			1
Share in earnings of equity accounted investees		(32	)		(86	)		—			118			—
Net earnings (loss)		24			(32	)		(86	)		118			24
Other comprehensive loss		(39	)		(43	)		(33	)		76			(39	)
Comprehensive loss		(15	)		(75	)		(119	)		194			(15	)

	For the three months ended
	June 30, 2019
						Non-
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS				Guarantor		Guarantor			Consolidating
AND COMPREHENSIVE INCOME	Parent			Subsidiaries		Subsidiaries			Adjustments			Consolidated
	$			$		$			$			$
Sales		—			1,082		488			(253	)		1,317
Operating expenses
Cost of sales, excluding depreciation and amortization		—			925		407			(253	)		1,079
Depreciation and amortization		—			53		21			—			74
Selling, general and administrative		1			55		49			—			105
Impairment of long-lived assets		—			15		—			—			15
Closure and restructuring costs		—			8		—			—			8
Other operating loss, net		—			—		2			—			2
		1			1,056		479			(253	)		1,283
Operating (loss) income		(1	)		26		9			—			34
Interest expense (income), net		17			22		(26	)		—			13
Non-service components of net periodic benefit cost		—			—		(2	)		—			(2	)
(Loss) earnings before income taxes		(18	)		4		37			—			23
Income tax (benefit) expense		(3	)		—		8			—			5
Share in earnings of equity accounted investees		33			29		—			(62	)		—
Net earnings		18			33		29			(62	)		18
Other comprehensive income		26			31		21			(52	)		26
Comprehensive income		44			64		50			(114	)		44

	For the six months ended
	June 30, 2019
							Non-
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS				Guarantor			Guarantor			Consolidating
AND COMPREHENSIVE INCOME	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated
	$			$			$			$			$
Sales		—			2,208			1,019			(534	)		2,693
Operating expenses
Cost of sales, excluding depreciation and amortization		—			1,855			810			(534	)		2,131
Depreciation and amortization		—			104			43			—			147
Selling, general and administrative		7			111			110			—			228
Impairment of long-lived assets		—			25			—			—			25
Closure and restructuring costs		—			10			2			—			12
Other operating (income) loss, net		—			(4	)		5			—			1
		7			2,101			970			(534	)		2,544
Operating (loss) income		(7	)		107			49			—			149
Interest expense (income), net		34			42			(50	)		—			26
Non-service components of net periodic benefit cost		—			—			(5	)		—			(5	)
(Loss) earnings before income taxes		(41	)		65			104			—			128
Income tax (benefit) expense		(9	)		14			24			—			29
Equity loss, net of taxes		—			—			1			—			1
Share in earnings of equity accounted investees		130			79			—			(209	)		—
Net earnings		98			130			79			(209	)		98
Other comprehensive income		43			48			25			(73	)		43
Comprehensive income		141			178			104			(282	)		141

Condensed Consolidating Balance Sheet

	June 30, 2020
					Non-
			Guarantor		Guarantor		Consolidating
CONDENSED CONSOLIDATING BALANCE SHEET	Parent		Subsidiaries		Subsidiaries		Adjustments			Consolidated
	$		$		$		$			$
Assets
Current assets
Cash and cash equivalents		24		31		69		—			124
Receivables		—		144		391		—			535
Inventories		—		528		239		—			767
Prepaid expenses		5		19		12		—			36
Income and other taxes receivable		128		74		20		(188	)		34
Intercompany accounts		497		394		165		(1,056	)		—
Total current assets		654		1,190		896		(1,244	)		1,496
Property, plant and equipment, net		—		1,677		832		—			2,509
Operating lease right-of-use assets		—		59		15		—			74
Intangible assets, net		—		240		324		—			564
Investments in affiliates		3,551		2,349		—		(5,900	)		—
Intercompany long-term advances		5		1		1,529		(1,535	)		—
Other assets		14		26		134		(12	)		162
Total assets		4,224		5,542		3,730		(8,691	)		4,805
Liabilities and shareholders' equity
Current liabilities
Trade and other payables		29		323		213		—			565
Intercompany accounts		182		227		647		(1,056	)		—
Income and other taxes payable		27		1		193		(188	)		33
Operating lease liabilities due within one year		—		22		6		—			28
Long-term debt due within one year		12		—		1		—			13
Total current liabilities		250		573		1,060		(1,244	)		639
Long-term debt		1,080		—		9		—			1,089
Operating lease liabilities		—		53		9		—			62
Intercompany long-term loans		591		943		1		(1,535	)		—
Deferred income taxes and other		1		308		164		(12	)		461
Other liabilities and deferred credits		25		114		138		—			277
Shareholders' equity		2,277		3,551		2,349		(5,900	)		2,277
Total liabilities and shareholders' equity		4,224		5,542		3,730		(8,691	)		4,805

	December 31, 2019
					Non-
			Guarantor		Guarantor		Consolidating
CONDENSED CONSOLIDATING BALANCE SHEET	Parent		Subsidiaries		Subsidiaries		Adjustments			Consolidated
	$		$		$		$			$
Assets
Current assets
Cash and cash equivalents		1		11		49		—			61
Receivables		—		146		431		—			577
Inventories		—		543		243		—			786
Prepaid expenses		5		17		11		—			33
Income and other taxes receivable		34		—		27		—			61
Intercompany accounts		538		547		237		(1,322	)		—
Total current assets		578		1,264		998		(1,322	)		1,518
Property, plant and equipment, net		—		1,689		878		—			2,567
Operating lease right-of-use assets		—		63		18		—			81
Intangible assets, net		—		245		328		—			573
Investments in affiliates		3,627		2,493		—		(6,120	)		—
Intercompany long-term advances		5		1		1,482		(1,488	)		—
Other assets		14		30		131		(11	)		164
Total assets		4,224		5,785		3,835		(8,941	)		4,903
Liabilities and shareholders' equity
Current liabilities
Bank indebtedness		—		9		—		—			9
Trade and other payables		57		390		258		—			705
Intercompany accounts		344		299		679		(1,322	)		—
Income and other taxes payable		1		12		10		—			23
Operating lease liabilities due within one year		—		21		7		—			28
Long-term debt due within one year		—		—		1		—			1
Total current liabilities		402		731		955		(1,322	)		766
Long-term debt		873		—		65		—			938
Operating lease liabilities		—		58		11		—			69
Intercompany long-term loans		541		946		1		(1,488	)		—
Deferred income taxes and other		—		324		166		(11	)		479
Other liabilities and deferred credits		32		99		144		—			275
Shareholders' equity		2,376		3,627		2,493		(6,120	)		2,376
Total liabilities and shareholders' equity		4,224		5,785		3,835		(8,941	)		4,903

Condensed Consolidating Statement of Cash Flows

	For the six months ended
	June 30, 2020
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
	$			$			$			$			$
Operating activities
Net earnings (loss)		24			(32	)		(86	)		118			24
Changes in operating and intercompany assets and liabilities and non-cash items, included in net earnings (loss)		(182	)		57			374			(118	)		131
Cash flows (used for) provided from operating activities		(158	)		25			288			—			155
Investing activities
Additions to property, plant and equipment		—			(61	)		(41	)		—			(102	)
Acquisition of business, net of cash acquired		—			—			(30	)		—			(30	)
Cash flows used for investing activities		—			(61	)		(71	)		—			(132	)
Financing activities
Dividend payments		(51	)		—			—			—			(51	)
Stock repurchase		(59	)		—			—			—			(59	)
Net change in bank indebtedness		—			(10	)		—			—			(10	)
Change in revolving credit facility		(80	)		—			—			—			(80	)
Proceeds from receivables securitization facility		—			—			25			—			25
Repayments of receivables securitization facility		—			—			(80	)		—			(80	)
Issuance of long-term debt		300			—			—			—			300
Increase in long-term advances to related parties		—			—			(141	)		141			—
Decrease in long-term advances to related parties		75			66			—			(141	)		—
Other		(4	)		—			—			—			(4	)
Cash flows provided from (used for) financing activities		181			56			(196	)		—			41
Net increase in cash and cash equivalents		23			20			21			—			64
Impact of foreign exchange on cash		—			—			(1	)		—			(1	)
Cash and cash equivalents at beginning of period		1			11			49			—			61
Cash and cash equivalents at end of period		24			31			69			—			124

	For the six months ended
	June 30, 2019
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
	$			$			$			$			$
Operating activities
Net earnings		98			130			79			(209	)		98
Changes in operating and intercompany assets and liabilities and non-cash items, included in net earnings		(89	)		(116	)		72			209			76
Cash flows from operating activities		9			14			151			—			174
Investing activities
Additions to property, plant and equipment		—			(62	)		(39	)		—			(101	)
Proceeds from disposals of property, plant and equipment		—			1			—			—			1
Cash flows used for investing activities		—			(61	)		(39	)		—			(100	)
Financing activities
Dividend payments		(55	)		—			—			—			(55	)
Stock repurchase		(8	)		—			—			—			(8	)
Net change in bank indebtedness		—			3			—			—			3
Proceeds from receivables securitization facility		—			—			80			—			80
Repayments of receivables securitization facility		—			—			(110	)		—			(110	)
Repayments of long-term debt		—			—			(1	)		—			(1	)
Increase in long-term advances to related parties		—			—			(101	)		101			—
Decrease in long-term advances to related parties		56			45			—			(101	)		—
Other		(1	)		—			—			—			(1	)
Cash flows (used for) provided from financing activities		(8	)		48			(132	)		—			(92	)
Net increase (decrease) in cash and cash equivalents		1			1			(20	)		—			(18	)
Cash and cash equivalents at beginning of period		—			—			111			—			111
Cash and cash equivalents at end of period		1			1			91			—			93

Acquisition of Business - Additional Information (Detail) - USD ($) $ in Millions		6 Months Ended
	Apr. 27, 2020	Jun. 30, 2020
Business Acquisition [Line Items]
Purchase price		$ 30
Appvion Operations, Inc. [Member]
Business Acquisition [Line Items]
Purchase price	$ 20

Acquisition of Business - Schedule of Preliminary Purchase Price Allocation (Detail) - Appvion Operations, Inc. [Member] $ in Millions	Jun. 30, 2020 USD ($)
Business Acquisition [Line Items]
Inventories	$ 11
Property, plant and equipment	25
Total assets	36
Less: Assumed liabilities	6
Fair value of net assets acquired at the date of acquisition	$ 30

Derivatives and Hedging Activities and Fair Value Measurement - Additional Information (Detail) $ in Millions	1 Months Ended	6 Months Ended	12 Months Ended
	Mar. 31, 2020 shares	Jun. 30, 2020 USD ($) Customer	Dec. 31, 2019 USD ($) Customer
Derivative [Line Items]
Number of major customers \| Customer		1	2
Maximum [Member] \| Canadian Subsidiary [Member] \| Canadian Dollars [Member]
Derivative [Line Items]
Length of time current hedges cover		24 months
Equity Total Return Swap Agreement [Member]
Derivative [Line Items]
Number of common shares covered in swap agreement \| shares	500,000
Maturity date of swap agreement	Mar. 04, 2022
Forecasted Natural Gas and Oil Purchases [Member] \| Maximum [Member]
Derivative [Line Items]
Length of time current hedges cover		42 months
Foreign Currency Investment [Member]
Derivative [Line Items]
Length of time current hedges cover		3 years
Natural Gas Swap Contracts [Member]
Derivative [Line Items]
Cumulative (loss) gain recorded in accumulated other comprehensive loss		$ (10)
Natural Gas Swap Contracts [Member] \| Cost of Sale [Member]
Derivative [Line Items]
Cumulative (loss) gain recorded in accumulated other comprehensive loss will be recognized upon maturity of derivatives		(5)
Currency Derivatives [Member]
Derivative [Line Items]
Cumulative (loss) gain recorded in accumulated other comprehensive loss		(10)
Currency Derivatives [Member] \| Cost of Sale [Member]
Derivative [Line Items]
Cumulative (loss) gain recorded in accumulated other comprehensive loss		(8)
Pulp and Paper Segment Customer One [Member]
Derivative [Line Items]
Receivables from major customers		$ 53	$ 66
Pulp and Paper Segment Customer Two [Member]
Derivative [Line Items]
Receivables from major customers			$ 65
Accounts Receivable [Member] \| Credit Concentration Risk [Member] \| Pulp and Paper Segment Customer One [Member]
Derivative [Line Items]
Maximum percentage of receivables a single customer represents		10.00%	11.00%
Accounts Receivable [Member] \| Credit Concentration Risk [Member] \| Pulp and Paper Segment Customer Two [Member]
Derivative [Line Items]
Maximum percentage of receivables a single customer represents			11.00%

Derivatives and Hedging Activities and Fair Value Measurement - Derivative Financial Instruments for Natural Gas Contracts Outstanding (Detail)	Jun. 30, 2020 USD ($) MMBTU
2020 [Member]
Derivative [Line Items]
Notional contractual quantity under derivative contracts \| MMBTU	4,351,238
Notional contractual value under derivative contracts \| $	$ 13,000,000
Percentage of forecasted purchases under derivative contracts	35.00%
2021 [Member]
Derivative [Line Items]
Notional contractual quantity under derivative contracts \| MMBTU	9,270,000
Notional contractual value under derivative contracts \| $	$ 27,000,000
Percentage of forecasted purchases under derivative contracts	37.00%
2022 [Member]
Derivative [Line Items]
Notional contractual quantity under derivative contracts \| MMBTU	9,270,000
Notional contractual value under derivative contracts \| $	$ 25,000,000
Percentage of forecasted purchases under derivative contracts	37.00%
2023 [Member]
Derivative [Line Items]
Notional contractual quantity under derivative contracts \| MMBTU	4,210,000
Notional contractual value under derivative contracts \| $	$ 12,000,000
Percentage of forecasted purchases under derivative contracts	17.00%

Derivatives and Hedging Activities and Fair Value Measurement - Currency Values under Significant Currency Positions Pursuant to Currency Derivatives Outstanding (Detail) - Long [Member] - Pulp and Paper [Member]	6 Months Ended
	Jun. 30, 2020 CAD ($)
CAD/USD Denominated Notional Contractual Value For 2020 [Member]
Derivative [Line Items]
Notional contractual value	$ 447,000,000
Percentage of forecasted net exposures under contracts	94.00%
Currency exposure hedged, Average Protection rate	1.3246
Currency exposure hedged, Average Obligation rate	1.3414
CAD/USD Denominated Notional Contractual Value For 2021 [Member]
Derivative [Line Items]
Notional contractual value	$ 651,000,000
Percentage of forecasted net exposures under contracts	69.00%
Currency exposure hedged, Average Protection rate	1.3450
Currency exposure hedged, Average Obligation rate	1.3560
CAD/USD Denominated Notional Contractual Value For 2022 [Member]
Derivative [Line Items]
Notional contractual value	$ 216,000,000
Percentage of forecasted net exposures under contracts	23.00%
Currency exposure hedged, Average Protection rate	1.3723
Currency exposure hedged, Average Obligation rate	1.3723

Derivatives and Hedging Activities and Fair Value Measurement - Fair Value of Financial Instruments (Detail) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Derivative [Line Items]
Total Assets	$ 10	$ 8
Total Liabilities	30	19
Long-term debt	1,160	1,030
Trade and Other Payables [Member]
Derivative [Line Items]
Stock-based compensation - liability awards	4	7
Other Liabilities and Deferred Credits [Member]
Derivative [Line Items]
Stock-based compensation - liability awards	10	18
Equity swap contracts	3
Currency Derivatives [Member] \| Prepaid Expenses [Member]
Derivative [Line Items]
Total Assets	6	4
Currency Derivatives [Member] \| Other Assets [Member]
Derivative [Line Items]
Total Assets	4	4
Currency Derivatives [Member] \| Trade and Other Payables [Member]
Derivative [Line Items]
Total Liabilities	14	2
Currency Derivatives [Member] \| Other Liabilities and Deferred Credits [Member]
Derivative [Line Items]
Total Liabilities	6
Natural Gas Swap Contracts [Member] \| Trade and Other Payables [Member]
Derivative [Line Items]
Total Liabilities	5	9
Natural Gas Swap Contracts [Member] \| Other Liabilities and Deferred Credits [Member]
Derivative [Line Items]
Total Liabilities	5	8
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] \| Trade and Other Payables [Member]
Derivative [Line Items]
Stock-based compensation - liability awards	4	7
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] \| Other Liabilities and Deferred Credits [Member]
Derivative [Line Items]
Stock-based compensation - liability awards	10	18
Equity swap contracts	3
Significant Observable Inputs (Level 2) [Member]
Derivative [Line Items]
Total Assets	10	8
Total Liabilities	30	19
Long-term debt	1,160	1,030
Significant Observable Inputs (Level 2) [Member] \| Currency Derivatives [Member] \| Prepaid Expenses [Member]
Derivative [Line Items]
Total Assets	6	4
Significant Observable Inputs (Level 2) [Member] \| Currency Derivatives [Member] \| Other Assets [Member]
Derivative [Line Items]
Total Assets	4	4
Significant Observable Inputs (Level 2) [Member] \| Currency Derivatives [Member] \| Trade and Other Payables [Member]
Derivative [Line Items]
Total Liabilities	14	2
Significant Observable Inputs (Level 2) [Member] \| Currency Derivatives [Member] \| Other Liabilities and Deferred Credits [Member]
Derivative [Line Items]
Total Liabilities	6
Significant Observable Inputs (Level 2) [Member] \| Natural Gas Swap Contracts [Member] \| Trade and Other Payables [Member]
Derivative [Line Items]
Total Liabilities	5	9
Significant Observable Inputs (Level 2) [Member] \| Natural Gas Swap Contracts [Member] \| Other Liabilities and Deferred Credits [Member]
Derivative [Line Items]
Total Liabilities	$ 5	$ 8

Derivatives and Hedging Activities and Fair Value Measurement - Fair Value of Financial Instruments (Parenthetical) (Detail) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Derivative Instruments And Hedging Activities Disclosure [Abstract]
The carrying value of the Company's long-term debt	$ 1,102	$ 939

Earnings Per Common Share - Reconciliation Between Basic and Diluted Earnings Per Common Share (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Earnings Per Share [Abstract]
Net earnings	$ 19	$ 18	$ 24	$ 98
Weighted average number of common shares outstanding (millions)	55.2	63.0	55.6	63.0
Effect of dilutive securities (millions)	0.1	0.3	0.1	0.3
Weighted average number of diluted common shares outstanding (millions)	55.3	63.3	55.7	63.3
Basic net earnings per common share (in dollars)	$ 0.34	$ 0.29	$ 0.43	$ 1.56
Diluted net earnings per common share (in dollars)	$ 0.34	$ 0.28	$ 0.43	$ 1.55

Earnings Per Common Share - Securities that Could Potentially Dilute Basic Earnings Per Common Share in Future (Detail) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Stock Options [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Options to purchase common shares	409,776	219,211	409,776	219,211

Pension Plans and Other Post-Retirement Benefit Plans - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items]
Pension expense	$ 9	$ 9	$ 21	$ 23
Pension Plans [Member]
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items]
Plan contributions	2	4	4	7
Other Post-Retirement Benefit Plans [Member]
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items]
Plan contributions	$ 1	$ 1	$ 2	$ 2

Pension Plans and Other Post-Retirement Benefit Plans - Components of Net Periodic Benefit Cost for Pension Plans and Other Post-Retirement Benefit Plans (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Pension Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 7	$ 7	$ 14	$ 15
Interest expense	9	14	20	27
Expected return on plan assets	(17)	(20)	(34)	(40)
Amortization of net actuarial loss (gain)	2	2	4	5
Amortization of prior year service costs	1	2	1	3
Net periodic benefit cost	2	5	5	10
Other Post-Retirement Benefit Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost	1	1	1	1
Interest expense	1	1	1	1
Amortization of net actuarial loss (gain)	(1)	(1)	(1)	(1)
Net periodic benefit cost	$ 1	$ 1	$ 1	$ 1

Other Operating (Income) Loss, Net - Components of Other Operating (Income) Loss, Net (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Other Income And Expenses [Abstract]
Bad debt expense	$ 1	$ 1	$ 5	$ 1
Environmental provision			1	1
Non-production agreement terminated	(7)		(7)
Foreign exchange loss	2	1		2
Other			(1)	(3)
Other operating (income) loss, net	$ (4)	$ 2	$ (2)	$ 1

Income Taxes - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Tax Disclosure [Abstract]
Income tax (benefit) expense	$ (15)	$ 5	$ (12)	$ 29
Current income tax expense (benefit)	(2)	3		30
Deferred income tax expense (benefit)	(13)	$ 2	(12)	(1)
Income tax payments, net of refunds	$ 1		$ (24)	$ 50
Effective income tax rate	(375.00%)	22.00%	(92.00%)	23.00%
Income tax research and development credit amount				$ 1

Inventories - Components of Inventories (Detail) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Inventory Disclosure [Abstract]
Work in process and finished goods	$ 390	$ 401
Raw materials	145	153
Operating and maintenance supplies	232	232
Total inventories	$ 767	$ 786

Leases - Additional Information (Detail)	6 Months Ended
Leases - Additional Information (Detail)	Jun. 30, 2020
Lessee Lease Description [Line Items]
Leases, terminable lease term	1 year
Minimum [Member]
Lessee Lease Description [Line Items]
Leases, remaining lease term	1 year
Maximum [Member]
Lessee Lease Description [Line Items]
Leases, remaining lease term	13 years
Leases, extendable lease term	10 years

Leases - Summary of Components of Lease Expense (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Leases [Abstract]
Operating lease expense	$ 8	$ 7	$ 16	$ 14

Leases - Summary of Supplemental Cash Flow Information Related To Leases (Detail) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 17	$ 15
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$ 5	$ 11

Leases - Summary of Supplemental Balance Sheet Information Related to Leases (Detail) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Operating leases
Operating leases right-of-use assets	$ 74	$ 81
Lease liabilities due within one year	28	28
Operating lease liabilities	62	69
Operating lease liabilities, total	90	97
Finance leases
Property, plant and equipment	14	15
Accumulated depreciation	(7)	(7)
Property, plant and equipment, net	$ 7	$ 8
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	us-gaap:PropertyPlantAndEquipmentNet	us-gaap:PropertyPlantAndEquipmentNet
Long-term debt due within one year	$ 1	$ 1
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List]	us-gaap:LongTermDebtAndCapitalLeaseObligationsCurrent	us-gaap:LongTermDebtAndCapitalLeaseObligationsCurrent
Long-term debt	$ 8	$ 9
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	us-gaap:LongTermDebtAndCapitalLeaseObligations	us-gaap:LongTermDebtAndCapitalLeaseObligations
Finance leases liabilities, total	$ 9	$ 10
Weighted-average remaining lease term
Operating leases	4 years 7 months 6 days	4 years 10 months 24 days
Finance leases	9 years 6 months	10 years
Weighted-average discount rate
Operating leases	4.50%	4.60%
Finance leases	6.20%	6.70%

Leases - Summary of Maturities of Lease Liabilities (Detail) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Leases [Abstract]
Operating leases, 2020	$ 15
Operating leases, 2021	26
Operating leases, 2022	20
Operating leases, 2023	15
Operating leases, 2024	9
Operating leases, Thereafter	15
Operating leases, Total lease payments	100
Operating leases, Imputed interest	10
Operating leases, Total lease liabilities	90	$ 97
Finance leases, 2020	1
Finance leases, 2021	2
Finance leases, 2022	1
Finance leases, 2023	1
Finance leases, 2024	1
Finance leases, Thereafter	6
Finance leases, Total lease payments	12
Finance leases, Imputed interest	3
Finance leases, Total lease liabilities	$ 9	$ 10

Intangible Assets - Components of Intangible Assets (Detail) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Intangible Assets Excluding Goodwill [Line Items]
Definite-lived intangible assets subject to amortization, gross carrying amount	$ 421	$ 421
Accumulated amortization	(140)	(131)
Finite lived intangible assets net	281	290
Total, Gross carrying amount	704	704
Intangible assets, net of amortization	564	573
Water Rights [Member]
Intangible Assets Excluding Goodwill [Line Items]
Indefinite-lived intangible assets not subject to amortization	4	4
Trade Names [Member]
Intangible Assets Excluding Goodwill [Line Items]
Indefinite-lived intangible assets not subject to amortization	235	235
License Rights [Member]
Intangible Assets Excluding Goodwill [Line Items]
Indefinite-lived intangible assets not subject to amortization	6	6
Catalog Rights [Member]
Intangible Assets Excluding Goodwill [Line Items]
Indefinite-lived intangible assets not subject to amortization	$ 38	38
Water Rights [Member]
Intangible Assets Excluding Goodwill [Line Items]
Estimated useful lives (in years)	40 years
Definite-lived intangible assets subject to amortization, gross carrying amount	$ 3	3
Accumulated amortization	(1)	(1)
Finite lived intangible assets net	2	2
Customer Relationships [Member]
Intangible Assets Excluding Goodwill [Line Items]
Definite-lived intangible assets subject to amortization, gross carrying amount	380	380
Accumulated amortization	(116)	(108)
Finite lived intangible assets net	$ 264	272
Customer Relationships [Member] \| Minimum [Member]
Intangible Assets Excluding Goodwill [Line Items]
Estimated useful lives (in years)	10 years
Customer Relationships [Member] \| Maximum [Member]
Intangible Assets Excluding Goodwill [Line Items]
Estimated useful lives (in years)	40 years
Technology [Member]
Intangible Assets Excluding Goodwill [Line Items]
Definite-lived intangible assets subject to amortization, gross carrying amount	$ 8	8
Accumulated amortization	(5)	(5)
Finite lived intangible assets net	$ 3	3
Technology [Member] \| Minimum [Member]
Intangible Assets Excluding Goodwill [Line Items]
Estimated useful lives (in years)	7 years
Technology [Member] \| Maximum [Member]
Intangible Assets Excluding Goodwill [Line Items]
Estimated useful lives (in years)	20 years
Non-Compete [Member]
Intangible Assets Excluding Goodwill [Line Items]
Estimated useful lives (in years)	9 years
Definite-lived intangible assets subject to amortization, gross carrying amount	$ 1	1
Accumulated amortization	$ (1)	(1)
License Rights [Member]
Intangible Assets Excluding Goodwill [Line Items]
Estimated useful lives (in years)	12 years
Definite-lived intangible assets subject to amortization, gross carrying amount	$ 29	29
Accumulated amortization	(17)	(16)
Finite lived intangible assets net	$ 12	$ 13

Intangible Assets - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Goodwill And Intangible Assets Disclosure [Abstract]
Amortization expense	$ 4	$ 4	$ 9	$ 9

Intangible Assets - Amortization Expense Related to Intangible Assets (Detail) $ in Millions	Jun. 30, 2020 USD ($)
Goodwill And Intangible Assets Disclosure [Abstract]
Amortization expense related to intangible assets, 2020	$ 21
Amortization expense related to intangible assets, 2021	21
Amortization expense related to intangible assets, 2022	20
Amortization expense related to intangible assets, 2023	20
Amortization expense related to intangible assets, 2024	$ 20

Closure and Restructuring Costs and Impairment of Long-lived Assets - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Restructuring Cost And Reserve [Line Items]
Severance and termination costs	$ 1	$ 8	$ 1	$ 12
Personal Care [Member] \| Waco, Texas Facility [Member]
Restructuring Cost And Reserve [Line Items]
Severance and termination costs		1		4
Accelerated depreciation and impairment of operating lease right-of-use assets		15		25
Inventory write-down		0		1
Relocation and other costs		7		7
Previous and Ongoing Closures and Restructuring [Member]
Restructuring Cost And Reserve [Line Items]
Severance and termination costs	$ 1	$ 0	$ 1	$ 0

Long-Term Debt - Additional Information (Detail) - Term Loan [Member] $ in Millions	May 05, 2020 USD ($)
Debt Instrument [Line Items]
Debt instrument principal amount	$ 300
Debt instrument maturity date	May 05, 2025
Debt instrument periodic repayment of principal, each quarter	$ 3
Debt instrument, covenant description	The Term Loan Agreement contains customary covenants, including two financial covenants: (i) an interest coverage ratio, as defined in the Term Loan Agreement, that must be maintained at a level of not less than 3 to 1 and (ii) a leverage ratio, as defined in the Term Loan Agreement that must be maintained at a level of not greater than 3.75 to 1.
LIBOR [Member]
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate	2.50%

Changes in Accumulated Other Comprehensive Loss by Component - Schedule of Changes in Accumulated Other Comprehensive Loss by Component (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning balance			$ (393)
Other comprehensive (loss) income before reclassifications			(55)		$ 34
Amounts reclassified from Accumulated other comprehensive loss			16		40
Other comprehensive income (loss)	$ 76	$ 26	(39)	$ 43	74
Ending balance	(432)		(432)		(393)
Balance	2,181	2,608	2,376	2,538	2,538
Balance	2,277	2,619	2,277	2,619	2,376
Natural Gas Swap Contracts [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Other comprehensive (loss) income before reclassifications			(1)		(10)
Currency Options [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Other comprehensive (loss) income before reclassifications			(3)		5
Foreign Exchange Forward Contracts [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Other comprehensive (loss) income before reclassifications			(16)		16
Foreign Currency Items [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Other comprehensive (loss) income before reclassifications			(35)		21
Net Gain [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Other comprehensive (loss) income before reclassifications					2
Net Derivative (Losses) Gains on Cash Flow Hedges [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning balance			(5)	(24)	(24)
Other comprehensive (loss) income before reclassifications			(20)		11
Amounts reclassified from Accumulated other comprehensive loss			13		8
Other comprehensive income (loss)			(7)		19
Ending balance	(12)		(12)		(5)
Net Derivative (Losses) Gains on Cash Flow Hedges [Member] \| Natural Gas Swap Contracts [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Other comprehensive (loss) income before reclassifications			(1)		(10)
Net Derivative (Losses) Gains on Cash Flow Hedges [Member] \| Currency Options [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Other comprehensive (loss) income before reclassifications			(3)		5
Net Derivative (Losses) Gains on Cash Flow Hedges [Member] \| Foreign Exchange Forward Contracts [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Other comprehensive (loss) income before reclassifications			(16)		16
Accumulated Defined Benefit Plans Adjustment [Member] \| Pension Plans [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning balance			(197)	(231)	(231)
Other comprehensive (loss) income before reclassifications					1
Amounts reclassified from Accumulated other comprehensive loss			4		33
Other comprehensive income (loss)			4		34
Ending balance	(193)		(193)		(197)
Accumulated Defined Benefit Plans Adjustment [Member] \| Pension Plans [Member] \| Net Gain [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Other comprehensive (loss) income before reclassifications					1
Accumulated Defined Benefit Plans Adjustment [Member] \| Other Post-Retirement Benefit Plans [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning balance			11	11	11
Other comprehensive (loss) income before reclassifications					1
Amounts reclassified from Accumulated other comprehensive loss			(1)		(1)
Other comprehensive income (loss)			(1)
Ending balance	10		10		11
Accumulated Defined Benefit Plans Adjustment [Member] \| Other Post-Retirement Benefit Plans [Member] \| Net Gain [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Other comprehensive (loss) income before reclassifications					1
Foreign Currency Items [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning balance			(202)	(223)	(223)
Other comprehensive (loss) income before reclassifications			(35)		21
Other comprehensive income (loss)			(35)		21
Ending balance	(237)		(237)		(202)
Foreign Currency Items [Member] \| Foreign Currency Items [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Other comprehensive (loss) income before reclassifications			(35)		21
Accumulated Other Comprehensive Loss [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Balance	(508)	(450)	(393)	(467)	(467)
Balance	$ (432)	$ (424)	$ (432)	$ (424)	$ (393)

Changes in Accumulated Other Comprehensive Loss by Component - Schedule of Reclassifications Out of Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Earnings before income taxes and equity loss	$ 4	$ 23	$ 13	$ 128
Tax benefit (expense)	15	(5)	12	(29)
Net earnings	19	18	24	98
Reclassification Out of Accumulated Other Comprehensive Income [Member] \| Net Derivative Gains (Losses) on Cash Flow Hedge [Member]
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Earnings before income taxes and equity loss	(8)	(2)	(17)	(3)
Tax benefit (expense)	2	1	4	1
Net earnings	(6)	(1)	(13)	(2)
Reclassification Out of Accumulated Other Comprehensive Income [Member] \| Net Derivative Gains (Losses) on Cash Flow Hedge [Member] \| Natural Gas Swap Contracts [Member]
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Cost of Sales	(3)		(8)
Reclassification Out of Accumulated Other Comprehensive Income [Member] \| Net Derivative Gains (Losses) on Cash Flow Hedge [Member] \| Currency Options and Forwards [Member]
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Cost of Sales	(5)	(2)	(9)	(3)
Reclassification Out of Accumulated Other Comprehensive Income [Member] \| Accumulated Defined Benefit Plans Adjustment [Member]
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Amortization of net actuarial gain (loss)	(2)	(2)	(4)	(5)
Amortization of prior year service cost	(1)	(2)	(1)	(3)
Earnings before income taxes and equity loss	(3)	(4)	(5)	(8)
Tax benefit (expense)		1	1	2
Net earnings	(3)	(3)	(4)	(6)
Reclassification Out of Accumulated Other Comprehensive Income [Member] \| Other Post-Retirement Benefit Plans [Member]
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Amortization of net actuarial gain (loss)	1	1	1	1
Earnings before income taxes and equity loss	1	1	1	1
Net earnings	$ 1	$ 1	$ 1	$ 1

Shareholders' Equity - Additional Information (Detail) - USD ($)			3 Months Ended	6 Months Ended
	Apr. 15, 2020	Feb. 18, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Nov. 05, 2019	Nov. 04, 2019
Shareholders' Equity [Line Items]
Declared date		Feb. 18, 2020
Dividend per share		$ 0.455
Dividends paid	$ 25,000,000
Payment date		Apr. 15, 2020
Record date		Apr. 02, 2020
Stock repurchased, shares				1,798,306	194,407
Stock repurchased, average price				$ 33.05	$ 42.26
Stock repurchased, value			$ 8,000,000	$ 59,000,000	$ 8,000,000
Maximum [Member]
Shareholders' Equity [Line Items]
Stock repurchase program authorized amount						$ 1,600,000,000	$ 1,300,000,000

Commitments and Contingencies - Changes in Reserve for Environmental Remediation and Asset Retirement Obligations (Detail) $ in Millions	6 Months Ended
	Jun. 30, 2020 USD ($)
Accrual for Environmental Loss Contingencies [Roll Forward]
Balance at beginning of year	$ 35
Additions and other changes	2
Environmental spending	(2)
Effect of foreign currency exchange rate change	(1)
Balance at end of period	$ 34

Commitments and Contingencies - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2020 USD ($)
Pension Plans [Member]
Commitments And Contingencies [Line Items]
Provision for liability	$ 0
Indemnification Guarantee [Member]
Commitments And Contingencies [Line Items]
Provision for liability	$ 0

Segment Disclosures - Additional Information (Detail)	6 Months Ended
Segment Disclosures - Additional Information (Detail)	Jun. 30, 2020 Segment
Segment Reporting [Abstract]
Number of reportable segments	2
Number of operating segments	2

Segment Disclosures - Analysis and Reconciliation of Reportable Segment Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Segment Reporting Information [Line Items]
Sales	$ 1,012	$ 1,317	$ 2,290	$ 2,693
Depreciation and amortization	71	74	143	147
Impairment of long-lived assets		15		25
Consolidated depreciation and amortization and impairment of long-lived assets	71	89	143	172
Operating income (loss)	14	34	33	149
Interest expense, net	15	13	29	26
Non-service components of net periodic benefit cost	(5)	(2)	(9)	(5)
Earnings before income taxes and equity loss	4	23	13	128
Income tax (benefit) expense (NOTE 8)	(15)	5	(12)	29
Equity loss, net of taxes			1	1
Net earnings	19	18	24	98
Operating Segments [Member]
Segment Reporting Information [Line Items]
Sales	1,031	1,334	2,328	2,730
Depreciation and amortization	71	74	143	147
Operating Segments [Member] \| Communication Papers [Member]
Segment Reporting Information [Line Items]
Sales	385	643	1,008	1,328
Operating Segments [Member] \| Specialty and Packaging Papers [Member]
Segment Reporting Information [Line Items]
Sales	127	162	277	331
Operating Segments [Member] \| Market Pulp [Member]
Segment Reporting Information [Line Items]
Sales	261	275	492	550
Operating Segments [Member] \| Absorbent Hygiene Products [Member]
Segment Reporting Information [Line Items]
Sales	239	237	513	484
Operating Segments [Member] \| Pulp and Paper [Member]
Segment Reporting Information [Line Items]
Sales	802	1,106	1,833	2,263
Depreciation and amortization	56	59	114	117
Operating income (loss)	3	62	7	206
Operating Segments [Member] \| Personal Care [Member]
Segment Reporting Information [Line Items]
Sales	229	228	495	467
Depreciation and amortization	15	15	29	30
Impairment of long-lived assets		15		25
Operating income (loss)	18	(18)	38	(26)
Intersegment Sales [Member]
Segment Reporting Information [Line Items]
Sales	(19)	(17)	(38)	(37)
Corporate [Member]
Segment Reporting Information [Line Items]
Operating income (loss)	$ (7)	$ (10)	$ (12)	$ (31)

Segment Disclosures - Analysis and Reconciliation of Reportable Segment Information (Parenthetical) (Detail) - 3 months ended Jun. 30, 2020 - Canada Emergency Wage Subsidy [Member] $ in Millions, $ in Millions	USD ($)	CAD ($)
Segment Reporting Information [Line Items]
Total Income	$ 25	$ 34
Cost of Sale [Member]
Segment Reporting Information [Line Items]
Total Income	21	29
Selling, General And Administrative [Member]
Segment Reporting Information [Line Items]
Total Income	$ 4	$ 5

Supplemental Guarantor Financial Information - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2020
Guarantor Subsidiaries [Member]
Condensed Financial Statements Captions [Line Items]
Ownership percentage	100.00%
Non-Guarantor Subsidiaries [Member]
Condensed Financial Statements Captions [Line Items]
Ownership percentage	100.00%

Supplemental Guarantor Financial Information - Condensed Consolidating Statement of Earnings (Loss) and Comprehensive Income (Loss) (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Condensed Income Statements Captions [Line Items]
Sales	$ 1,012	$ 1,317	$ 2,290	$ 2,693
Operating expenses
Cost of sales, excluding depreciation and amortization	837	1,079	1,920	2,131
Depreciation and amortization	71	74	143	147
Selling, general and administrative	93	105	195	228
Impairment of long-lived assets		15		25
Closure and restructuring costs	1	8	1	12
Other operating loss (income), net	(4)	2	(2)	1
Operating expenses	998	1,283	2,257	2,544
Operating income	14	34	33	149
Interest expense (income), net	15	13	29	26
Non-service components of net periodic benefit cost	(5)	(2)	(9)	(5)
Earnings before income taxes and equity loss	4	23	13	128
Income tax (benefit) expense	(15)	5	(12)	29
Equity loss, net of taxes			1	1
Net earnings	19	18	24	98
Other comprehensive income (loss)	76	26	(39)	43	$ 74
Comprehensive income (loss)	95	44	(15)	141
Reportable Legal Entities [Member] \| Parent [Member]
Operating expenses
Selling, general and administrative	3	1	5	7
Other operating loss (income), net	1		1
Operating expenses	4	1	6	7
Operating income	(4)	(1)	(6)	(7)
Interest expense (income), net	16	17	32	34
Earnings before income taxes and equity loss	(20)	(18)	(38)	(41)
Income tax (benefit) expense	(92)	(3)	(94)	(9)
Share in earnings of equity accounted investees	(53)	33	(32)	130
Net earnings	19	18	24	98
Other comprehensive income (loss)	76	26	(39)	43
Comprehensive income (loss)	95	44	(15)	141
Reportable Legal Entities [Member] \| Guarantor Subsidiaries [Member]
Condensed Income Statements Captions [Line Items]
Sales	812	1,082	1,857	2,208
Operating expenses
Cost of sales, excluding depreciation and amortization	743	925	1,690	1,855
Depreciation and amortization	50	53	101	104
Selling, general and administrative	46	55	72	111
Impairment of long-lived assets		15		25
Closure and restructuring costs	1	8	1	10
Other operating loss (income), net			4	(4)
Operating expenses	840	1,056	1,868	2,101
Operating income	(28)	26	(11)	107
Interest expense (income), net	19	22	38	42
Non-service components of net periodic benefit cost	(3)		(4)
Earnings before income taxes and equity loss	(44)	4	(45)	65
Income tax (benefit) expense	(103)		(100)	14
Equity loss, net of taxes			1
Share in earnings of equity accounted investees	(112)	29	(86)	79
Net earnings	(53)	33	(32)	130
Other comprehensive income (loss)	74	31	(43)	48
Comprehensive income (loss)	21	64	(75)	178
Reportable Legal Entities [Member] \| Non-Guarantor Subsidiaries [Member]
Condensed Income Statements Captions [Line Items]
Sales	419	488	884	1,019
Operating expenses
Cost of sales, excluding depreciation and amortization	313	407	681	810
Depreciation and amortization	21	21	42	43
Selling, general and administrative	44	49	118	110
Closure and restructuring costs				2
Other operating loss (income), net	(5)	2	(7)	5
Operating expenses	373	479	834	970
Operating income	46	9	50	49
Interest expense (income), net	(20)	(26)	(41)	(50)
Non-service components of net periodic benefit cost	(2)	(2)	(5)	(5)
Earnings before income taxes and equity loss	68	37	96	104
Income tax (benefit) expense	180	8	182	24
Equity loss, net of taxes				1
Net earnings	(112)	29	(86)	79
Other comprehensive income (loss)	40	21	(33)	25
Comprehensive income (loss)	(72)	50	(119)	104
Consolidating Adjustments [Member]
Condensed Income Statements Captions [Line Items]
Sales	(219)	(253)	(451)	(534)
Operating expenses
Cost of sales, excluding depreciation and amortization	(219)	(253)	(451)	(534)
Operating expenses	(219)	(253)	(451)	(534)
Share in earnings of equity accounted investees	165	(62)	118	(209)
Net earnings	165	(62)	118	(209)
Other comprehensive income (loss)	(114)	(52)	76	(73)
Comprehensive income (loss)	$ 51	$ (114)	$ 194	$ (282)

Supplemental Guarantor Financial Information - Condensed Consolidating Balance Sheet (Detail) - USD ($) $ in Millions	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018
Current assets
Cash and cash equivalents	$ 124		$ 61
Receivables	535		577
Inventories	767		786
Prepaid expenses	36		33
Income and other taxes receivable	34		61
Total current assets	1,496		1,518
Property, plant and equipment, net	2,509		2,567
Operating lease right-of-use assets	74		81
Intangible assets, net	564		573
Other assets	162		164
Total assets	4,805		4,903
Current liabilities
Bank indebtedness			9
Trade and other payables	565		705
Income and other taxes payable	33		23
Operating lease liabilities due within one year	28		28
Long-term debt due within one year	13		1
Total current liabilities	639		766
Long-term debt	1,089		938
Operating lease liabilities	62		69
Deferred income taxes and other	461		479
Other liabilities and deferred credits	277		275
Shareholders' equity	2,277	$ 2,181	2,376	$ 2,619	$ 2,608	$ 2,538
Total liabilities and shareholders' equity	4,805		4,903
Reportable Legal Entities [Member] \| Parent [Member]
Current assets
Cash and cash equivalents	24		1
Prepaid expenses	5		5
Income and other taxes receivable	128		34
Intercompany accounts	497		538
Total current assets	654		578
Investments in affiliates	3,551		3,627
Intercompany long-term advances	5		5
Other assets	14		14
Total assets	4,224		4,224
Current liabilities
Trade and other payables	29		57
Intercompany accounts	182		344
Income and other taxes payable	27		1
Long-term debt due within one year	12
Total current liabilities	250		402
Long-term debt	1,080		873
Intercompany long-term loans	591		541
Deferred income taxes and other	1
Other liabilities and deferred credits	25		32
Shareholders' equity	2,277		2,376
Total liabilities and shareholders' equity	4,224		4,224
Reportable Legal Entities [Member] \| Guarantor Subsidiaries [Member]
Current assets
Cash and cash equivalents	31		11
Receivables	144		146
Inventories	528		543
Prepaid expenses	19		17
Income and other taxes receivable	74
Intercompany accounts	394		547
Total current assets	1,190		1,264
Property, plant and equipment, net	1,677		1,689
Operating lease right-of-use assets	59		63
Intangible assets, net	240		245
Investments in affiliates	2,349		2,493
Intercompany long-term advances	1		1
Other assets	26		30
Total assets	5,542		5,785
Current liabilities
Bank indebtedness			9
Trade and other payables	323		390
Intercompany accounts	227		299
Income and other taxes payable	1		12
Operating lease liabilities due within one year	22		21
Total current liabilities	573		731
Operating lease liabilities	53		58
Intercompany long-term loans	943		946
Deferred income taxes and other	308		324
Other liabilities and deferred credits	114		99
Shareholders' equity	3,551		3,627
Total liabilities and shareholders' equity	5,542		5,785
Reportable Legal Entities [Member] \| Non-Guarantor Subsidiaries [Member]
Current assets
Cash and cash equivalents	69		49
Receivables	391		431
Inventories	239		243
Prepaid expenses	12		11
Income and other taxes receivable	20		27
Intercompany accounts	165		237
Total current assets	896		998
Property, plant and equipment, net	832		878
Operating lease right-of-use assets	15		18
Intangible assets, net	324		328
Intercompany long-term advances	1,529		1,482
Other assets	134		131
Total assets	3,730		3,835
Current liabilities
Trade and other payables	213		258
Intercompany accounts	647		679
Income and other taxes payable	193		10
Operating lease liabilities due within one year	6		7
Long-term debt due within one year	1		1
Total current liabilities	1,060		955
Long-term debt	9		65
Operating lease liabilities	9		11
Intercompany long-term loans	1		1
Deferred income taxes and other	164		166
Other liabilities and deferred credits	138		144
Shareholders' equity	2,349		2,493
Total liabilities and shareholders' equity	3,730		3,835
Consolidating Adjustments [Member]
Current assets
Income and other taxes receivable	(188)
Intercompany accounts	(1,056)		(1,322)
Total current assets	(1,244)		(1,322)
Investments in affiliates	(5,900)		(6,120)
Intercompany long-term advances	(1,535)		(1,488)
Other assets	(12)		(11)
Total assets	(8,691)		(8,941)
Current liabilities
Intercompany accounts	(1,056)		(1,322)
Income and other taxes payable	(188)
Total current liabilities	(1,244)		(1,322)
Intercompany long-term loans	(1,535)		(1,488)
Deferred income taxes and other	(12)		(11)
Shareholders' equity	(5,900)		(6,120)
Total liabilities and shareholders' equity	$ (8,691)		$ (8,941)

Supplemental Guarantor Financial Information - Condensed Consolidating Statement of Cash Flows (Detail) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Operating activities
Net earnings	$ 24	$ 98
Changes in operating and intercompany assets and liabilities and non-cash items, included in net earnings (loss)	131	76
Cash flows from operating activities	155	174
Investing activities
Additions to property, plant and equipment	(102)	(101)
Proceeds from disposals of property, plant and equipment		1
Acquisition of business, net of cash acquired	(30)
Cash flows used for investing activities	(132)	(100)
Financing activities
Dividend payments	(51)	(55)
Stock repurchase	(59)	(8)
Net change in bank indebtedness	(10)	3
Change in revolving credit facility	(80)
Proceeds from receivables securitization facility	25	80
Repayments of long-term debt		(1)
Repayments of receivables securitization facility	(80)	(110)
Issuance of long-term debt	300
Other	(4)	(1)
Cash flows provided from (used for) financing activities	41	(92)
Net increase (decrease) in cash and cash equivalents	64	(18)
Impact of foreign exchange on cash	(1)
Cash and cash equivalents at beginning of period	61	111
Cash and cash equivalents at end of period	124	93
Reportable Legal Entities [Member] \| Parent [Member]
Operating activities
Net earnings	24	98
Changes in operating and intercompany assets and liabilities and non-cash items, included in net earnings (loss)	(182)	(89)
Cash flows from operating activities	(158)	9
Financing activities
Dividend payments	(51)	(55)
Stock repurchase	(59)	(8)
Change in revolving credit facility	(80)
Issuance of long-term debt	300
Decrease in long-term advances to related parties	75	56
Other	(4)	(1)
Cash flows provided from (used for) financing activities	181	(8)
Net increase (decrease) in cash and cash equivalents	23	1
Cash and cash equivalents at beginning of period	1
Cash and cash equivalents at end of period	24	1
Reportable Legal Entities [Member] \| Guarantor Subsidiaries [Member]
Operating activities
Net earnings	(32)	130
Changes in operating and intercompany assets and liabilities and non-cash items, included in net earnings (loss)	57	(116)
Cash flows from operating activities	25	14
Investing activities
Additions to property, plant and equipment	(61)	(62)
Proceeds from disposals of property, plant and equipment		1
Cash flows used for investing activities	(61)	(61)
Financing activities
Net change in bank indebtedness	(10)	3
Decrease in long-term advances to related parties	66	45
Cash flows provided from (used for) financing activities	56	48
Net increase (decrease) in cash and cash equivalents	20	1
Cash and cash equivalents at beginning of period	11
Cash and cash equivalents at end of period	31	1
Reportable Legal Entities [Member] \| Non-Guarantor Subsidiaries [Member]
Operating activities
Net earnings	(86)	79
Changes in operating and intercompany assets and liabilities and non-cash items, included in net earnings (loss)	374	72
Cash flows from operating activities	288	151
Investing activities
Additions to property, plant and equipment	(41)	(39)
Acquisition of business, net of cash acquired	(30)
Cash flows used for investing activities	(71)	(39)
Financing activities
Proceeds from receivables securitization facility	25	80
Repayments of long-term debt		(1)
Repayments of receivables securitization facility	(80)	(110)
Increase in long-term advances to related parties	(141)	(101)
Cash flows provided from (used for) financing activities	(196)	(132)
Net increase (decrease) in cash and cash equivalents	21	(20)
Impact of foreign exchange on cash	(1)
Cash and cash equivalents at beginning of period	49	111
Cash and cash equivalents at end of period	69	91
Consolidating Adjustments [Member]
Operating activities
Net earnings	118	(209)
Changes in operating and intercompany assets and liabilities and non-cash items, included in net earnings (loss)	(118)	209
Financing activities
Increase in long-term advances to related parties	141	101
Decrease in long-term advances to related parties	$ (141)	$ (101)

Subsequent Event - Additional Information (Detail) $ in Millions		3 Months Ended
	Aug. 07, 2020 USD ($) T	Mar. 31, 2023 USD ($) Employees T	Mar. 31, 2021 USD ($) Employees T	Sep. 30, 2020 USD ($)	Jun. 30, 2020 USD ($)
Forecast
Subsequent Event [Line Items]
Restructuring Expense expected			$ 16	$ 184
Kingsport, Tennessee and Port Huron, Michigan mills Ashdown, Arkansas mill Ridgefields Tennessee [Member] \| Forecast
Subsequent Event [Line Items]
Reduction In Annual Production Capacity Of Paper \| T			721,000
Number of Positions Eliminated \| Employees			780
Kingsport, Tennessee Mill [Member]
Subsequent Event [Line Items]
Carrying Amount of Remaining Assets					$ 80
Kingsport, Tennessee Mill [Member] \| Forecast
Subsequent Event [Line Items]
Annual expected production of recycled linerboard and medium \| T		600,000
Converted mill number of employees \| Employees		160
Kingsport, Tennessee Mill [Member] \| Forecast \| Minimum [Member]
Subsequent Event [Line Items]
Conversion Costs		$ 300
Kingsport, Tennessee Mill [Member] \| Forecast \| Maximum [Member]
Subsequent Event [Line Items]
Conversion Costs		$ 350
Subsequent Event
Subsequent Event [Line Items]
Expected Annual Cost Reduction Amount	$ 200
Cost Saving Program Description	As part of the cost savings program, the Company will permanently close the uncoated freesheet manufacturing at the Kingsport, Tennessee and Port Huron, Michigan mills, the remaining paper machine at the Ashdown, Arkansas mill and the converting center in Ridgefields, Tennessee. These actions will reduce the Company’s annual uncoated freesheet paper capacity by approximately 721,000 short tons, and will result in a workforce reduction of approximately 780 employees. The Kingsport and Ashdown paper machines, which have been idled since April 2020, will not recommence operations. The Port Huron and Ridgefields mills are expected to shut down by the end of the first quarter of 2021
Restructuring Expense expected	$ 200
Accelerated Depreciation	167
Severance Costs	31
Other Restructuring Costs	$ 2
Subsequent Event \| Ashdown, Arkansas Mill [Member]
Subsequent Event [Line Items]
Conversion of mill to softwood and fluff pulp, percentage	100.00%
Annual production capacity of fluff and softwood pulp \| T	775,000
Subsequent Event \| Ashdown, Arkansas Mill [Member] \| Minimum [Member]
Subsequent Event [Line Items]
Conversion Costs	$ 15
Duration to complete conversion of mill	12 months
Subsequent Event \| Ashdown, Arkansas Mill [Member] \| Maximum [Member]
Subsequent Event [Line Items]
Conversion Costs	$ 20
Duration to complete conversion of mill	14 months