UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended ~~September 26, 2020~~March 27, 2021


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


			For the transition period from to

Commission File Number 001-36285

RAYONIER ADVANCED MATERIALS INC.

Incorporated in the State of Delaware

I.R.S. Employer Identification No. 46-4559529

1301 RIVERPLACE BOULEVARD, SUITE 2300

JACKSONVILLE, FL 32207

(Principal Executive Office)

Telephone Number: (904) 357-4600

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	RYAM	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

The registrant had ~~63,344,967~~63,597,353 shares of common stock, $.01 par value per share, outstanding as of ~~November 2, 2020.~~May 3, 2021.

Table of Contents


Item	Item		Page	Item		Page
		Part I — Financial Information			Part I — Financial Information
1.	1.	Financial Statements (U naudited)		1.	Financial Statements (U naudited)
		Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the Three and Nine Months Ended September 2 6 , 2020 and September 2 8 , 2019	1		Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the Three Months Ended March 27 , 202 1 and March 28, 2020	1
		Consolidated Balance Sheets as of September 26, 2020 and December 31, 2019	3		Consolidated Balance Sheets as of March 27, 2021 a nd December 31, 2020	3
		Consolidated Statements of Cash Flows for the Nine Months Ended September 26, 2020 and September 28, 2019	4		Consolidated Statements of Cash Flows for the Three Months Ended March 27 , 2021 and March 28, 2020	4
		Notes to Consolidated Financial Statements	5		Notes to Consolidated Financial Statements	5
2.	2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23	2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
3.	3.	Quantitative and Qualitative Disclosures about Market Risk	38	3.	Quantitative and Qualitative Disclosures about Market Risk	33
4.	4.	Controls and Procedures	39	4.	Controls and Procedures	34
		Part II — Other Information			Part II — Other Information
1.	1.	Legal Proceedings	40	1.	Legal Proceedings	35
1A.	1A.	Risk Factors	40	1A.	Risk Factors	35
2.	2.	Unregistered Sales of Equity Securities and Use of Proceeds	41	2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
6.	6.	Exhibits	42	6.	Exhibits	37
		Signature	43		Signature	38

Table of Contents


Part I.			Financial Information


Item 1.			Financial Statements

Rayonier Advanced Materials Inc.

Consolidated Statements of Income (Loss)

(Unaudited)

(Dollars in thousands, except per share amounts)


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019				March 27, 2021		March 28, 2020
Net Sales	Net Sales	$	423,924	$	416,129	$	1,230,484	$	1,307,422	Net Sales		$	465,141	$	409,808
Cost of Sales	Cost of Sales	(373,954)		(399,510)		(1,149,839)		(1,265,217)		Cost of Sales		(380,981)		(399,347)
Gross Margin	Gross Margin	49,970		16,619		80,645		42,205		Gross Margin		84,160		10,461

Selling, general and administrative expenses	Selling, general and administrative expenses	(19,734)		(23,416)		(62,238)		(72,026)		Selling, general and administrative expenses		(17,748)		(20,247)
Duties	Duties	(7,979)		(4,542)		(20,098)		(16,062)		Duties		(6,515)		(6,451)
Foreign exchange gains (losses)	Foreign exchange gains (losses)	(1,096)		26		615		(2,880)		Foreign exchange gains (losses)		(691)		5,797
Other operating income (expense), net	Other operating income (expense), net	(3,773)		2,749		(8,964)		(2,720)		Other operating income (expense), net		(4,410)		(1,568)
Operating Income (Loss)	Operating Income (Loss)	17,388		(8,564)		(10,040)		(51,483)		Operating Income (Loss)		54,796		(12,008)
Interest expense	Interest expense	(15,901)		(14,580)		(46,887)		(42,598)		Interest expense		(17,963)		(15,225)
Interest income and other, net	Interest income and other, net	(2,749)		3,439		(3,412)		3,341		Interest income and other, net		(845)		423
Other components of pension and OPEB, excluding service costs	Other components of pension and OPEB, excluding service costs	2,661		846		3,411		3,313		Other components of pension and OPEB, excluding service costs		1,203		353

Income (Loss) from Continuing Operations Before Income Taxes	Income (Loss) from Continuing Operations Before Income Taxes	1,399		(18,859)		(56,928)		(87,427)		Income (Loss) from Continuing Operations Before Income Taxes		37,191		(26,457)
Income tax benefit (Note 16)		27,478		4,506		48,042		25,813
Income tax (expense) benefit (Note 16)										Income tax (expense) benefit (Note 16)		(63,910)		1,622
Equity in income (loss) of equity method investment										Equity in income (loss) of equity method investment		(308)		0
Income (Loss) from Continuing Operations	Income (Loss) from Continuing Operations	28,877		(14,353)		(8,886)		(61,614)		Income (Loss) from Continuing Operations		(27,027)		(24,835)
Income from discontinued operations, net of taxes (Note 2)	Income from discontinued operations, net of taxes (Note 2)	(17)		137		756		10,431		Income from discontinued operations, net of taxes (Note 2)		0		708
Net Income (Loss) Attributable to the Company		28,860		(14,216)		(8,130)		(51,183)
Mandatory convertible preferred stock dividends		0		(1,777)		0		(8,582)
Net Income (Loss) Available to Common Stockholders		$	28,860	$	(15,993)	$	(8,130)	$	(59,765)
Net Income (Loss)										Net Income (Loss)		$	(27,027)	$	(24,127)

Basic Earnings Per Common Share (Note 13)	Basic Earnings Per Common Share (Note 13)									Basic Earnings Per Common Share (Note 13)
Income (loss) from continuing operations	Income (loss) from continuing operations	$	0.46	$	(0.29)	$	(0.14)	$	(1.36)	Income (loss) from continuing operations		$	(0.43)	$	(0.39)
Income from discontinued operations	Income from discontinued operations	0		0		0.01		0.20		Income from discontinued operations		0		0.01
Net income (loss) per common share-basic	Net income (loss) per common share-basic	$	0.46	$	(0.29)	$	(0.13)	$	(1.16)	Net income (loss) per common share-basic		$	(0.43)	$	(0.38)
Diluted Earnings Per Common Share (Note 13)	Diluted Earnings Per Common Share (Note 13)									Diluted Earnings Per Common Share (Note 13)
Income (loss) from continuing operations	Income (loss) from continuing operations	$	0.45	$	(0.29)	$	(0.14)	$	(1.36)	Income (loss) from continuing operations		$	(0.43)	$	(0.39)
Income from discontinued operations	Income from discontinued operations	0		0		0.01		0.20		Income from discontinued operations		0		0.01
Net income (loss) per common share-diluted	Net income (loss) per common share-diluted	$	0.45	$	(0.29)	$	(0.13)	$	(1.16)	Net income (loss) per common share-diluted		$	(0.43)	$	(0.38)

See Notes to Consolidated Financial Statements.

Table of Contents

Rayonier Advanced Materials Inc.

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(Dollars in thousands)


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019				March 27, 2021		March 28, 2020
Net Income (Loss)	Net Income (Loss)	$	28,860	$	(14,216)	$	(8,130)	$	(51,183)	Net Income (Loss)		$	(27,027)	$	(24,127)
Other Comprehensive Income (Loss), net of tax (Note 11):	Other Comprehensive Income (Loss), net of tax (Note 11):									Other Comprehensive Income (Loss), net of tax (Note 11):
Foreign currency translation adjustments	Foreign currency translation adjustments	10,572		(11,210)		9,989		(12,905)		Foreign currency translation adjustments		(9,268)		(6,471)
Unrealized gain (loss) on derivative instruments	Unrealized gain (loss) on derivative instruments	7,589		(3,283)		(2,942)		7,982		Unrealized gain (loss) on derivative instruments		(1,268)		(20,660)
Net gain from pension and postretirement plans	Net gain from pension and postretirement plans	2,733		2,365		12,047		6,122		Net gain from pension and postretirement plans		3,302		6,573
Total other comprehensive income (loss)	Total other comprehensive income (loss)	20,894		(12,128)		19,094		1,199		Total other comprehensive income (loss)		(7,234)		(20,558)
Comprehensive Income (Loss)	Comprehensive Income (Loss)	$	49,754	$	(26,344)	$	10,964	$	(49,984)	Comprehensive Income (Loss)		$	(34,261)	$	(44,685)

See Notes to Consolidated Financial Statements.

Table of Contents

Rayonier Advanced Materials Inc.

Consolidated Balance Sheets

(Unaudited)

(Dollars in ~~thousands)~~thousands, except per share amounts)


		September 26, 2020		December 31, 2019			March 27, 2021		December 31, 2020
Assets	Assets					Assets
Current Assets	Current Assets					Current Assets
Cash and cash equivalents	Cash and cash equivalents	$	82,889	$	64,025	Cash and cash equivalents	$	106,750	$	93,653
Accounts receivable, net (Note 3)	Accounts receivable, net (Note 3)	161,662		181,658		Accounts receivable, net (Note 3)	182,639		179,208
Inventory (Note 4)	Inventory (Note 4)	256,999		251,180		Inventory (Note 4)	295,544		233,484
Income tax receivable	Income tax receivable	58,050		16,118		Income tax receivable	53,309		58,657
Prepaid and other current assets	Prepaid and other current assets	81,524		60,846		Prepaid and other current assets	61,148		68,570

Total current assets	Total current assets	641,124		573,827		Total current assets	699,390		633,572

Property, Plant and Equipment (net of accumulated depreciation of $1,580,813 at September 26, 2020 and $1,482,261 at December 31, 2019)		1,263,125		1,316,055
Property, Plant and Equipment (net of accumulated depreciation of $1,633,320 at March 27, 2021 and $1,610,454 at December 31, 2020)						Property, Plant and Equipment (net of accumulated depreciation of $1,633,320 at March 27, 2021 and $1,610,454 at December 31, 2020)	1,249,390		1,274,942
Deferred Tax Assets	Deferred Tax Assets	370,561		384,513		Deferred Tax Assets	330,012		385,459
Intangible Assets, net	Intangible Assets, net	40,193		45,451		Intangible Assets, net	36,689		38,441
Other Assets	Other Assets	175,440		160,301		Other Assets	199,794		197,451

Total Assets	Total Assets	$	2,490,443	$	2,480,147	Total Assets	$	2,515,275	$	2,529,865

Liabilities and Stockholders’ Equity	Liabilities and Stockholders’ Equity					Liabilities and Stockholders’ Equity
Current Liabilities	Current Liabilities					Current Liabilities
Accounts payable	Accounts payable	$	151,609	$	153,181	Accounts payable	$	145,857	$	156,721
Accrued and other current liabilities (Note 6)	Accrued and other current liabilities (Note 6)	122,278		102,178		Accrued and other current liabilities (Note 6)	137,850		110,495
Current maturities of long-term debt (Note 7)		15,640		19,448
Debt due within one year (Note 7)						Debt due within one year (Note 7)	17,446		17,100
Current environmental liabilities (Note 8)	Current environmental liabilities (Note 8)	11,141		11,339		Current environmental liabilities (Note 8)	8,694		8,684

Total current liabilities	Total current liabilities	300,668		286,146		Total current liabilities	309,847		293,000

Long-Term Debt (Note 7)	Long-Term Debt (Note 7)	1,061,903		1,062,695		Long-Term Debt (Note 7)	1,065,163		1,066,837
Long-Term Environmental Liabilities (Note 8)	Long-Term Environmental Liabilities (Note 8)	160,113		160,037		Long-Term Environmental Liabilities (Note 8)	162,946		162,995
Pension and Other Postretirement Benefits	Pension and Other Postretirement Benefits	218,703		236,625		Pension and Other Postretirement Benefits	258,195		260,708
Deferred Tax Liabilities	Deferred Tax Liabilities	22,895		24,847		Deferred Tax Liabilities	30,136		24,462
Other Long-Term Liabilities	Other Long-Term Liabilities	26,017		26,999		Other Long-Term Liabilities	30,234		26,776

Commitments and Contingencies (Note 18)	Commitments and Contingencies (Note 18)					Commitments and Contingencies (Note 18)	0		0

Stockholders’ Equity	Stockholders’ Equity					Stockholders’ Equity

Common stock, 140,000,000 shares authorized at $0.01 par value, 63,334,918 and 63,136,129 issued and outstanding, as of September 26, 2020 and December 31, 2019, respectively		633		632
Common stock, 140,000,000 shares authorized at $0.01 par value, 63,597,356 and 63,359,839 issued and outstanding, as of March 27, 2021 and December 31, 2020, respectively						Common stock, 140,000,000 shares authorized at $0.01 par value, 63,597,356 and 63,359,839 issued and outstanding, as of March 27, 2021 and December 31, 2020, respectively	636		633
Additional paid-in capital	Additional paid-in capital	405,401		399,020		Additional paid-in capital	403,086		405,161
Retained earnings	Retained earnings	414,243		422,373		Retained earnings	395,901		422,928
Accumulated other comprehensive income (loss) (Note 11)	Accumulated other comprehensive income (loss) (Note 11)	(120,133)		(139,227)		Accumulated other comprehensive income (loss) (Note 11)	(140,869)		(133,635)
Total Stockholders’ Equity	Total Stockholders’ Equity	700,144		682,798		Total Stockholders’ Equity	658,754		695,087
Total Liabilities and Stockholders’ Equity	Total Liabilities and Stockholders’ Equity	$	2,490,443	$	2,480,147	Total Liabilities and Stockholders’ Equity	$	2,515,275	$	2,529,865

See Notes to Consolidated Financial Statements.

Table of Contents

Rayonier Advanced Materials Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(Dollars in thousands)


		Nine Months Ended					Three Months Ended
		September 26, 2020		September 28, 2019			March 27, 2021		March 28, 2020
Operating Activities	Operating Activities					Operating Activities
Net income (loss) attributable to the Company		$	(8,130)	$	(51,183)
Net income (loss)						Net income (loss)	$	(27,027)	$	(24,127)
Loss (income) from discontinued operations	Loss (income) from discontinued operations	(756)		(10,431)		Loss (income) from discontinued operations	0		(708)
Adjustments to reconcile income (loss) from continuing operations to cash provided by operating activities:	Adjustments to reconcile income (loss) from continuing operations to cash provided by operating activities:					Adjustments to reconcile income (loss) from continuing operations to cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	110,581		111,695		Depreciation and amortization	36,489		37,842
Stock-based incentive compensation expense	Stock-based incentive compensation expense	6,839		5,696		Stock-based incentive compensation expense	(653)		1,943

Deferred income tax expense (benefit)	Deferred income tax expense (benefit)	8,364		(22,847)		Deferred income tax expense (benefit)	61,698		17,381

Net periodic benefit cost of pension and other postretirement plans	Net periodic benefit cost of pension and other postretirement plans	5,580		5,412		Net periodic benefit cost of pension and other postretirement plans	2,250		2,677

Unrealized loss (gain) on derivative instruments	Unrealized loss (gain) on derivative instruments	3,049		0		Unrealized loss (gain) on derivative instruments	0		6,792
Unrealized loss (gain) from foreign currency	Unrealized loss (gain) from foreign currency	(1,508)		4,180		Unrealized loss (gain) from foreign currency	1,599		(11,368)
Other	Other	1,987		(2,149)		Other	879		275
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Receivables	Receivables	16,114		35,232		Receivables	(6,580)		(10,686)
Inventories	Inventories	(4,854)		11,308		Inventories	(63,133)		(24,924)
Accounts payable	Accounts payable	(1,317)		(35,217)		Accounts payable	(256)		(1,518)
Accrued liabilities	Accrued liabilities	16,233		(8,612)		Accrued liabilities	27,375		20,707
All other operating activities	All other operating activities	(81,879)		(32,459)		All other operating activities	7,156		(25,292)
Contributions to pension and other postretirement plans	Contributions to pension and other postretirement plans	(7,433)		(6,004)		Contributions to pension and other postretirement plans	(1,582)		(1,944)

Cash Provided by (Used for) Operating Activities-continuing operations	Cash Provided by (Used for) Operating Activities-continuing operations	62,870		4,621		Cash Provided by (Used for) Operating Activities-continuing operations	38,215		(12,950)
Cash Provided by (Used for) Operating Activities-discontinued operations	Cash Provided by (Used for) Operating Activities-discontinued operations	204		19,437		Cash Provided by (Used for) Operating Activities-discontinued operations	0		204
Cash Provided by (Used for) Operating Activities	Cash Provided by (Used for) Operating Activities	63,074		24,058		Cash Provided by (Used for) Operating Activities	38,215		(12,746)

Investing Activities	Investing Activities					Investing Activities

Capital expenditures		(42,819)		(80,806)
Capital expenditures, net						Capital expenditures, net	(19,525)		(12,582)

Investment in equity method investment						Investment in equity method investment	(987)		0

Cash Used for Investing Activities						Cash Used for Investing Activities	(20,512)		(12,582)

Cash Used for Investing Activities-continuing operations		(42,819)		(80,806)
Cash Used for Investing Activities-discontinued operations		0		(2,606)
Cash Used for Investing Activities		(42,819)		(83,412)

Financing Activities	Financing Activities					Financing Activities

Borrowings on revolving credit and other facilities		22,887		88,627
Repayments of revolving credit and other facilities		(17,000)		(36,000)
Repayment of debt		(4,208)		(9,929)
Dividends paid on common stock		0		(8,569)
Dividends paid on preferred stock		0		(10,350)
Revolving credit facility and other borrowings						Revolving credit facility and other borrowings	0		7,592

Repayment of long-term debt						Repayment of long-term debt	(1,549)		(1,786)
Short-term financing, net						Short-term financing, net	(520)		0

Common stock repurchased	Common stock repurchased	(456)		(5,830)		Common stock repurchased	(1,420)		(438)
Debt issue costs		(3,378)		0

Cash Provided by (Used for) Financing Activities-continuing operations		(2,155)		17,949
Cash Provided by (Used for) Financing Activities-discontinued operations		0		0

Cash Provided by (Used for) Financing Activities	Cash Provided by (Used for) Financing Activities	(2,155)		17,949		Cash Provided by (Used for) Financing Activities	(3,489)		5,368

Cash and Cash Equivalents	Cash and Cash Equivalents					Cash and Cash Equivalents
Change in cash and cash equivalents	Change in cash and cash equivalents	18,100		(41,405)		Change in cash and cash equivalents	14,214		(19,960)
Net effect of foreign exchange on cash and cash equivalents	Net effect of foreign exchange on cash and cash equivalents	764		(4,799)		Net effect of foreign exchange on cash and cash equivalents	(1,117)		(1,393)
Balance, beginning of year	Balance, beginning of year	64,025		108,966		Balance, beginning of year	93,653		64,025
Balance, end of period	Balance, end of period	$	82,889	$	62,762	Balance, end of period	$	106,750	$	42,672

See Notes to Consolidated Financial Statements.

Table of Contents

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands unless otherwise stated)

1. Basis of Presentation and New Accounting Pronouncements

Basis of Presentation

The unaudited consolidated financial statements and notes thereto of Rayonier Advanced Materials Inc. (the “Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, these consolidated financial statements and notes reflect all adjustments (all of which are normal recurring adjustments) necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented. These statements and notes should be read in conjunction with the consolidated financial statements and supplementary data included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, as filed with the SEC on March ~~2, 2020.~~1, 2021.

The Company has reclassified certain prior year amounts to conform to the current year’s presentation for discontinued operations to reflect the November 2019 sale of its Matane high-yield pulp operations. Unless otherwise stated, information in these notes to consolidated financial statements relates to continuing operations. See Note 2 —Discontinued Operations for additional information.

~~The~~Coronavirus Pandemic

During 2020, the Company’s businesses ~~have been~~were significantly impacted by the coronavirus ("COVID-19") pandemic. ~~However, due to the role they play in producing critical raw materials~~While market demand and pricing for ~~pharmaceutical, food, cleaning and other products,~~certain of the Company’s ~~manufacturing~~products began to recover towards the end of the year and continued to improve throughout the first quarter of 2021, the Company's operations remain vulnerable to a reversal of these trends or other continuing negative effects caused by COVID-19.

In its operating facilities ~~in the U.S., Canada~~ and ~~France have remained operating. In order to mitigate the impact of COVID-19 on its financial results and operations,~~work spaces, the Company ~~has taken the following actions:~~

•~~To ensure the safety of our employees and the continuity of our operations, the Company has~~continues to maintain protocols previously implemented ~~exacting protocols~~ to reduce the potential spread of COVID-19 ~~in its operating facilities~~ and ~~work spaces.~~

•~~To control costs and minimize pandemic driven losses,~~ensure the ~~Company has curtailed operations as necessary to match production with market demand.~~

•~~To maximize cash flow and liquidity, the Company entered into an amendment~~safety of its ~~Senior Secured Credit Agreement under which, among other changes, the lenders have agreed to relax the financial covenants through 2022~~employees and ~~provide additional liquidity by reducing the minimum availability the Company is required to maintain.~~continuity of operations.

Due to the financial impacts of COVID-19, the Company ishas actively ~~monitoring~~monitored the recoverability of the carrying value of its long-term ~~assets compared to the business’s future estimated undiscounted future cash flows.~~assets. During the three ~~and nine~~ months ended ~~September 26,~~March 27, 2021 and the year ended December 31, 2020, the Company did not recognize any impairment charges related to long-lived assets held for use. However, the Company’s estimates of undiscounted cash flows are highly subjective and actual results may vary from the estimates due to the current uncertain market conditions and their impact on the projection of long-term financial performance. The Company will continue to evaluate the recoverability of these and other assets as necessary.

New or Recently Adopted Accounting Pronouncements

~~In December 2019,~~There have been no new accounting pronouncements not yet effective or adopted in the ~~Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12,~~ ~~Simplifying the Accounting for Income Taxes, which, among other things, eliminates certain exceptions related~~current year that we believe have a significant impact, or potential significant impact, to our unaudited consolidated interim financial statements.

Subsequent Events

Sale of lumber and newsprint assets

Events and transactions subsequent to the ~~approach~~consolidated balance sheets date have been evaluated for ~~intraperiod tax allocation,~~potential recognition and disclosure through the ~~methodology~~date of issuance of these Consolidated Financial Statements. The following subsequent events warranting disclosure were identified.

On April 12, 2021, the Company announced the sale of its lumber and newsprint assets (the “Purchased Assets”) located in Ontario and Québec Canada to GreenFirst Forest Products, Inc. (“GreenFirst”), for ~~calculating taxes during~~approximately $214 million, including an assumed $74 million associated with finished goods, work-in-process and raw materials inventory value, which is subject to fluctuation until closing. The purchase price, to be adjusted at closing by changes in the ~~quarters when a year-to-date loss exceeds~~value of the ~~anticipated loss for the year~~inventory, will be paid 85 percent in cash and the ~~recognition~~remainder in common shares of ~~deferred tax liabilities~~GreenFirst. In addition, a credit note will be issued to the Company by GreenFirst in the amount of CDN$8 million, which may be offset against amounts owed to GreenFirst in the future for ~~outside basis differences. ASU 2019-12~~wood chip purchases, equally over the next 5 years. The closing of the transaction, which is ~~effective beginning January 1, 2020 with early adoption permitted. The Company adopted ASU 2019-12 during~~expected to occur in the ~~third quarter~~second half of ~~2020 with no material impact on~~2021, but not before July 31, is subject to customary closing conditions, including receipt of regulatory approvals, the ~~Company’s consolidated financial statements.~~

~~The Company adopted ASU 2016-13,~~ ~~Financial Instruments-Credit Losses on Financial Instruments (Topic 326),~~ ~~on January 1, 2020. The updated guidance replaced~~transfer of forestry licenses and the ~~incurred loss impairment approach with a methodology to reflect expected credit losses by requiring consideration~~approval of ~~a broader range of reasonable and supportable information to explain~~ the ~~credit loss estimates. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.~~TSX Venture Exchange.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

The Purchased Assets include the Company’s 6 lumber facilities, newsprint facility, inventory and certain real property, machinery, inventory, permits, leases, licenses, pension assets and liabilities and other related assets associated with the successful operations of these businesses. Other assets and liabilities, including accounts receivable, accounts payable, certain retained inventory and rights to softwood lumber duties, generated or incurred through the closing date, are excluded. Since 2017, the Company has paid a total of $98 million in duties.

In ~~March 2020,~~connection with the ~~Financial Accounting Standards Board (“FASB”~~transaction, the Company will enter into a 20 year wood chip and residual fiber supply agreement with GreenFirst, securing supply for the Company’s operations at the Temiscaming plant. Additionally, the parties entered into a Transition Services Agreement ("TSA") ~~issued ASU 2020-04,~~ ~~Reference Rate Reform (Topic 848): Facilitation~~whereby the Company will provide certain transitional services to GreenFirst, for a period of time following the closing of the ~~Effects~~transaction, not to exceed twelve months from such date. The TSA includes support related to information technology, accounting, treasury, human resources and payroll, tax, supply chain and procurement functions. Costs incurred by the Company associated with the TSA will be reimbursed by GreenFirst.

As of ~~Reference Rate Reform on Financial Reporting~~. The amendments provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in ASU 2020-04 apply only to contracts, hedging relationships, and other transactions that reference London interbank offered rate (“LIBOR”) or another reference rate expected to be discontinued becauseMarch 27, 2021, the carrying value of the ~~reference rate reform. In~~net assets included in the ~~second quarter~~transaction was $238 million, including the carrying value of ~~2020,~~inventory which was $107 million. The Company expects a cash tax impact in 2022 of less than $10 million as a result of this transaction, although the full extent of tax impacts are still being evaluated.

Contingency resolution

On April 19, 2021, the Company ~~adopted certain applicable practical expedients to assist~~reached final settlement in its dispute with the ~~transition related to~~Market Assessment and Compliance Division (“MACD”) branch of the ~~phaseout~~Independent Electricity System Operator (“IESO”) regarding the investigation of ~~LIBOR. The adoption of these expedients did not have a material impact on~~ the ~~Company’s consolidated financial statements.~~Kapuskasing facility. See Note 18 —

~~Subsequent Events~~

~~Events~~Contingencies and ~~transactions subsequent to the consolidated balance sheets date have been evaluated~~ Guarantees for ~~potential recognition and disclosure through November 5, 2020, the date these consolidated financial statements were available to be issued. There were no subsequent events warranting disclosure.~~additional information.

2. Discontinued Operations

In November 2019, the Company sold its Matane, Quebec pulp mill to Sappi Limited, a global diversified wood fiber company, for a gross purchase price of approximately $175 million. Income from discontinued operations for the three ~~and nine~~ months ended ~~September 26,~~March 28, 2020 represents an adjustment to the gain on sale of the Matane mill from working capital adjustments that arose following the November 2019 closing. ~~Income (loss) from discontinued operations for the three and nine months ended September 26, 2020 and September 28, 2019 is comprised of the following:~~

Three Months Ended Nine Months Ended
September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019
Revenues $ 0 $ 34,781 $ 0 $ 114,085
Cost of sales 0 (31,271) 0 (93,567)
Gross margin 0 3,510 0 20,518
Selling, general and administrative expenses and other 0 (2,001) 0 (2,855)
Operating income (loss) 0 1,509 0 17,663
Interest expense (a) 0 (1,160) 0 (3,516)
Other non-operating income 0 87 0 262
Income from discontinued operations, before income taxes 0 436 0 14,409
Income tax expense 0 (299) 0 (3,978)
Income from discontinued operations, net of taxes $ 0 $ 137 $ 0 $ 10,431
Adjustment to gain from sale of discontinued operations 0 0 956 0
Income tax (expense) benefit on gain from sale
(17) 0 (200) 0
Income from Discontinued Operations $ (17) $ 137 756 $ 10,431

(a) The Company was required to pay $100 million of debt from proceeds received from the sale of the Matane mill in November 2019. As such, interest expense has been allocated to discontinued operations using the weighted-average interest rates in effect for each period presented based on the proportionate amounts required to be repaid.

~~Other discontinued operations information is as follows:~~

Three Months Ended Nine Months Ended
September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019
Depreciation and amortization $ 0 $ 230 $ 0 $ 1,590
Capital expenditures $ 0 $ 1,531 $ 0 $ 2,606

~~Rayonier Advanced Materials Inc.~~

~~Notes to Consolidated Financial Statements - (Unaudited) (Continued)~~

3. Accounts Receivable, Net

The Company’s accounts receivable included the following:


		September 26, 2020		December 31, 2019			March 27, 2021		December 31, 2020
Accounts receivable, trade	Accounts receivable, trade	$	138,897	$	142,181	Accounts receivable, trade	$	152,194	$	140,036
Accounts receivable, other (a)	Accounts receivable, other (a)	23,322		40,082		Accounts receivable, other (a)	30,935		39,659

Allowance for doubtful accounts	Allowance for doubtful accounts	(557)		(605)		Allowance for doubtful accounts	(490)		(487)
Total accounts receivable, net	Total accounts receivable, net	$	161,662	$	181,658	Total accounts receivable, net	$	182,639	$	179,208

(a) Accounts receivable, other consists primarily of value added/consumption taxes, grants receivable and accrued billings due from government agencies.

4. Inventory

The Company’s inventory included the following:


		September 26, 2020		December 31, 2019			March 27, 2021		December 31, 2020
Finished goods	Finished goods	$	158,202	$	150,259	Finished goods	$	163,618	$	138,064
Work-in-progress	Work-in-progress	13,295		17,065		Work-in-progress	19,243		17,246
Raw materials	Raw materials	73,968		73,385		Raw materials	104,189		70,009
Manufacturing and maintenance supplies	Manufacturing and maintenance supplies	11,534		10,471		Manufacturing and maintenance supplies	8,494		8,165
Total inventory	Total inventory	$	256,999	$	251,180	Total inventory	$	295,544	$	233,484

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

5. Leases

The Company’s operating and finance leases are primarily for corporate offices, warehouse space, rail cars and equipment. As of ~~September 26, 2020,~~March 27, 2021, the Company’s leases have remaining lease terms of 1 year to ~~8.4~~7.9 years with standard renewal and termination options available at the Company’s discretion. Certain equipment leases have purchase options at the end of the term of the lease, which are not included in the Right of Use (“ROU”) assets as it is not reasonably certain that the Company will exercise such options. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company uses its incremental borrowing rate in determining the present value of lease payments unless the lease provides an implicit or explicit interest rate. The weighted average discount rate used in determining the operating lease ROU assets and liabilities as of ~~September 26, 2020~~March 27, 2021 and December 31, ~~2019~~2020 was ~~6.1~~5.8 percent and ~~6.0~~6.1 percent, respectively. The weighted average discount rate used in determining the finance lease ROU assets and liabilities as of ~~September 26, 2020~~March 27, 2021 and December 31, ~~2019~~2020 was 7.0 percent.

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

Three Months Ended Nine Months Ended
September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019
Operating Leases
   Operating lease expense $ 1,726 $ 1,715 $ 5,326 $ 4,322
Finance Leases
   Amortization of ROU assets 83 77 244 228
   Interest 46 52 142 159
Total $ 1,855 $ 1,844 $ 5,712 $ 4,709

~~Rayonier Advanced Materials Inc.~~

~~Notes to Consolidated Financial Statements - (Unaudited) (Continued)~~


	Three Months Ended
		March 27, 2021		March 28, 2020
Operating Leases
Operating lease expense		$	1,841	$	1,804
Finance Leases
Amortization of ROU assets		86		80
Interest		43		49
Total		$	1,970	$	1,933

As of ~~September 26, 2020,~~March 27, 2021, the weighted average remaining lease term is ~~3.8~~3.4 years and ~~6.2~~5.7 years for operating leases and financing leases, respectively. As of December 31, ~~2019,~~2020, the weighted average remaining lease term is ~~4.3~~3.6 years and ~~6.9~~5.9 years for operating leases and finance leases, respectively. Cash provided by operating activities includes approximately $5$2 million and $4$2 million from operating lease payments made during the ~~nine~~three months ended ~~September 26,~~March 27, 2021 and March 28, 2020, ~~and September 28, 2019,~~ respectively. Finance lease cash flows were immaterial during the ~~nine~~three months ended ~~September 26,~~March 27, 2021 and March 28, 2020.

As of March 27, 2021 and December 31, 2020, assets acquired under finance leases of $2 million and ~~September 28, 2019.~~

$2 million, respectively, are reflected in Property, Plant and Equipment, net. The Company’s finance leases are included as debt and the maturities for the remainder of ~~2020~~2021 and the next four years and thereafter are included in Note 7 — ~~Long Term~~ Debt and Finance Leases. The Company’s consolidated balance sheet includes the following operating lease assets and liabilities:


		Balance Sheet Classification	September 26, 2020		December 31, 2019			Balance Sheet Classification	March 27, 2021		December 31, 2020
Right-of-use assets	Right-of-use assets	Other assets	$	19,020	$	22,406	Right-of-use assets	Other assets	$	18,238	$	17,566
Lease liabilities, current	Lease liabilities, current	Accrued and other current liabilities	$	5,684	$	5,887	Lease liabilities, current	Accrued and other current liabilities	$	6,266	$	5,666
Lease liabilities, non-current	Lease liabilities, non-current	Other long-term liabilities	$	14,003	$	17,522	Lease liabilities, non-current	Other long-term liabilities	$	13,140	$	13,007

As of ~~September 26, 2020,~~March 27, 2021, operating lease maturities for the remainder of ~~2020~~2021 through ~~2024~~2025 and thereafter are as follows:

September 26, 2020
Remainder of 2020 $ 1,762
2021 6,439
2022 5,893
2023 4,840
2024 1,609
Thereafter 1,556
Total minimum lease payments $ 22,099
Less: imputed interest (2,412)
Present value of future minimum lease payments $ 19,687

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)


	March 27, 2021
Remainder of 2021	$	5,437
2022	6,819
2023	5,713
2024	1,835
2025	789
Thereafter	841
Total minimum lease payments	$	21,434
Less: imputed interest	(2,028)
Present value of future minimum lease payments	$	19,406

6. Accrued and Other Current Liabilities

The Company’s accrued and other current liabilities included the following:


		September 26, 2020		December 31, 2019			March 27, 2021		December 31, 2020
Accrued customer incentives and prepayments	Accrued customer incentives and prepayments	$	24,063	$	31,696	Accrued customer incentives and prepayments	$	24,651	$	29,387
Accrued payroll and benefits	Accrued payroll and benefits	28,856		23,593		Accrued payroll and benefits	30,118		21,500
Accrued interest	Accrued interest	11,841		2,785		Accrued interest	19,343		3,230
Accrued income taxes	Accrued income taxes	4,163		3,616		Accrued income taxes	6,000		5,052
Derivative instruments		3,278		995
Accrued stumpage						Accrued stumpage	19,017		10,045
Accrued property and other taxes	Accrued property and other taxes	10,585		5,643		Accrued property and other taxes	6,194		3,995
Short-term factoring facility - France		2,218		0

Other current liabilities	Other current liabilities	37,274		33,850		Other current liabilities	32,527		37,286
Total accrued and other current liabilities	Total accrued and other current liabilities	$	122,278	$	102,178	Total accrued and other current liabilities	$	137,850	$	110,495

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

7. ~~Long Term~~ Debt and Finance Leases

The Company’s ~~long term~~ debt and finance leases included the following:


		September 26, 2020		December 31, 2019			March 27, 2021		December 31, 2020
U.S. Revolver of $84 million maturing in November 2022, $38 million available, bearing interest at PRIME plus 2.75% or LIBOR plus 3.75% at September 26, 2020		$	0	$	0
Multi-currency Revolver of $126 million maturing in November 2022, $59 million available, bearing interest at PRIME plus 2.75% or LIBOR plus 3.75% at September 26, 2020		0		0
Term A-1 Loan Facility borrowings maturing through November 2022 bearing interest at LIBOR floor of 1.00% plus 3.75%, interest rate of 4.75% at September 26, 2020		133,283		133,283
Term A-2 Loan Facility borrowings maturing through November 2024 bearing interest at LIBOR floor of 1.00% plus 3.40% (after consideration of 0.60% patronage benefit), interest rate of 4.40% at September 26, 2020		365,592		365,592
ABL Credit Facility due 2025, $142 million available, bearing interest 0.25% LIBOR floor plus 2.75%, interest rate of 3.00% at March 27, 2021						ABL Credit Facility due 2025, $142 million available, bearing interest 0.25% LIBOR floor plus 2.75%, interest rate of 3.00% at March 27, 2021	0		0
Senior Secured Notes due 2026 at a fixed interest rate of 7.625%						Senior Secured Notes due 2026 at a fixed interest rate of 7.625%	$	500,000	$	500,000
Senior Notes due 2024 at a fixed interest rate of 5.5%	Senior Notes due 2024 at a fixed interest rate of 5.5%	495,647		495,647		Senior Notes due 2024 at a fixed interest rate of 5.5%	495,647		495,647
Canadian dollar, fixed interest rate term loans with rates ranging from 5.5% to 6.86% and maturity dates ranging from September 2020 through April 2028, secured by certain assets of the Temiscaming mill		78,204		83,122
Canadian dollar, fixed interest rate term loans with rates ranging from 5.5% to 6.86% and maturity dates ranging from July 2022 through April 2028, secured by certain assets of the Temiscaming mill						Canadian dollar, fixed interest rate term loans with rates ranging from 5.5% to 6.86% and maturity dates ranging from July 2022 through April 2028, secured by certain assets of the Temiscaming mill	73,686		73,791
Other loans (a)	Other loans (a)	9,971		7,285		Other loans (a)	17,082		18,193
Short-term factoring facility-France						Short-term factoring facility-France	4,471		5,089
Finance lease obligation	Finance lease obligation	2,574		2,818		Finance lease obligation	2,404		2,489
Total debt principal payments due	Total debt principal payments due	1,085,271		1,087,747		Total debt principal payments due	1,093,290		1,095,209
Less: Debt premium, original issue discount and issuance costs, net	Less: Debt premium, original issue discount and issuance costs, net	(7,728)		(5,604)		Less: Debt premium, original issue discount and issuance costs, net	(10,681)		(11,272)
Total debt	Total debt	1,077,543		1,082,143		Total debt	1,082,609		1,083,937
Less: Current maturities of long-term debt		(15,640)		(19,448)
Less: Debt due within one year						Less: Debt due within one year	(17,446)		(17,100)
Long-term debt	Long-term debt	$	1,061,903	$	1,062,695	Long-term debt	$	1,065,163	$	1,066,837
(a) Primarily loans for energy projects in France.	(a) Primarily loans for energy projects in France.					(a) Primarily loans for energy projects in France.

As of ~~September 26, 2020,~~March 27, 2021, debt and finance lease payments due during the remainder of ~~2020 and~~2021, the next four years and thereafter are as follows:

Finance Lease Payments Debt Principal Payments
2020 $ 129 $ 8,819
2021 515 9,766
2022 515 160,696
2023 515 8,499
2024 515 869,641
Thereafter 988 25,276
Total principal payments $ 3,177 $ 1,082,697
Less: Imputed interest (603)
Present value minimum finance lease payments $ 2,574

In March 2020, Investment Quebec (“IQ”), a holder of the Company’s Canadian dollar fixed rate term loans secured by certain assets of the Temiscaming mill, agreed to defer required monthly principal payments totaling approximately $6 million. The sum of these deferred principal payments will be reallocated over the remaining monthly principal payments which resume in March 2021. The final maturity of the loan was not extended, and the Company continues to make the required monthly interest payments.

In March 2020, IQ also granted all of its customers, including the Company, a 6-month deferral on principal payments, which resulted in the deferral of an additional $7 million of principal payment that was originally due to be paid in March 2020

~~Rayonier Advanced Materials Inc.~~

~~Notes to Consolidated Financial Statements - (Unaudited) (Continued)~~

~~to the end of September 2020. The Company paid $7 million on September 30, 2020.~~

In June 2020, the Company entered into an amendment of its Senior Secured Credit Agreement (the “Amendment”) under which, among other changes, the lenders have agreed to relax the financial covenants through 2022. In addition, the Amendment provides additional liquidity to the Company by reducing the minimum availability the Company is required to maintain under its revolving credit facility. The Amendment added a 1 percent LIBOR floor and lenders were paid a customary fee as consideration for their consent to the Amendment.


	Finance Lease Payments		Debt Principal Payments
Remainder of 2021	$	386	$	14,649
2022	515		30,426
2023	515		10,326
2024	515		505,895
2025	515		10,290
Thereafter	473		519,300
Total principal payments	$	2,919	$	1,090,886
Less: Imputed interest	515
Present value minimum finance lease payments	$	2,404

8. Environmental Liabilities

An analysis of liabilities for the ~~nine~~three months ended ~~September 26, 2020~~March 27, 2021 is as follows:



Balance, December 31, ~~2019~~2020	$	~~171,376~~171,679
Increase in liabilities	~~3,755~~225
Payments	~~(3,476)~~(419)
Foreign currency adjustments	~~(401)~~155
Balance, ~~September 26, 2020~~March 27, 2021	~~171,254~~171,640
Less: Current portion	~~(11,141)~~(8,694)
Long-term environmental liabilities	$	~~160,113~~162,946

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

In addition to the estimated liabilities, the Company is subject to the risk of reasonably possible additional liabilities in excess of the established reserves due to potential changes in circumstances and future events, including, without limitation, changes to current laws and regulations; changes in governmental agency personnel, direction, philosophy and/or enforcement policies; developments in remediation technologies; increases in the cost of remediation, operation, maintenance and monitoring of its environmental liability sites; changes in the volume, nature or extent of contamination to be remediated or monitoring to be undertaken; the outcome of negotiations with governmental agencies and non-governmental parties; and changes in accounting rules or interpretations. Based on information available as of ~~September 26, 2020,~~March 27, 2021, the Company estimates this exposure could range up to approximately $78 million, although no assurances can be given that this amount will not be exceeded given the factors described above. These potential additional costs are attributable to several sites and other applicable liabilities. Further, this estimate excludes reasonably possible liabilities which are not currently estimable primarily due to the factors discussed above.

Subject to the previous paragraph, the Company believes established liabilities are sufficient for probable costs expected to be incurred over the next 20 years with respect to its environmental liabilities. However, no assurances are given they will be sufficient for the reasons described above, and additional liabilities could have a material adverse effect on the Company’s financial position, results of operations and cash flows.

9. Derivative Instruments

The Company’s earnings and cash flows are subject to fluctuations due to changes in interest rates and foreign currency exchange rates. The Company allows for the use of derivative financial instruments to manage interest rate and foreign currency exchange rate exposure but does not allow derivatives to be used for speculative purposes.

All derivative instruments are recognized on the consolidated balance sheets at their fair value and are either designated as a hedge of a forecasted transaction or undesignated. Changes in the fair value of a derivative designated as a hedge are recorded in other comprehensive income until earnings are affected by the hedged transaction and are then reported in current earnings. Changes in the fair value of undesignated derivative instruments and the ineffective portion of designated derivative instruments are reported in current earnings.

In December 2020, the Company terminated all outstanding derivative instruments, which had been previously designated as hedging instruments and had various maturity dates through 2028. Accumulated gains and losses associated with these instruments were deferred as a component of accumulated other comprehensive income (loss), totaling a net after tax gain of $2 million as of December 31, 2020, to be recognized in earnings as the underlying hedged transactions occur and affect earnings. During the three months ended March 27, 2021, the Company recognized a $1.3 million after-tax gain associated with the deferred component in accumulated other comprehensive income (loss) related to these settlements. A $0.6 million net after tax gain remains deferred within accumulated other comprehensive income (loss) as of March 27, 2021, which will be recognized in earnings as the underlying hedged transactions occur and affect earnings.

Interest Rate Risk

The Company’s ~~primary~~current debt obligations ~~utilize variable-rate LIBOR, exposing the Company~~are primarily fixed and therefore not materially exposed to variability in interest payments due to changes in interest rates. The Company previously entered into interest rate swap agreements to reduce the volatility of ~~financing costs,~~interest expense, achieve a desired proportion of fixed-rate versus floating-rate debt and to hedge the variability in cash flows attributable to interest rate risks caused by changes in the LIBOR benchmark.

~~Rayonier Advanced Materials Inc.~~

~~Notes to Consolidated Financial Statements - (Unaudited) (Continued)~~

The Company had designated the swaps as cash flow hedges and ~~is assessing~~assesses their effectiveness using the hypothetical derivative method in conjunction with regression. Effective gains and losses deferred to ~~accumulated other comprehensive income (loss) (“AOCI”),~~AOCI are reclassified into earnings over the life of the associated hedge. Ineffective gains and losses are classified to earnings immediately. There was no hedge ineffectiveness during 2020.

Foreign Currency Exchange Rate Risk

Foreign currency fluctuations affect investments in foreign subsidiaries and foreign currency cash flows related to third party purchases, product shipments, and ~~foreign currency denominated~~foreign-denominated debt. The Company is also exposed to the translation of foreign currency earnings to the U.S. dollar. Management may use foreign currency forward contracts to selectively hedge its foreign currency cash ~~flow~~flows exposure and manage risk associated with changes in currency exchange rates. The Company’s principal foreign currency exposure is to the Canadian dollar, and to a lesser extent, the euro.

The ~~notional amounts of outstanding derivative instruments are as follows:~~

September 26, 2020 December 31, 2019
Interest rate swaps (a) $ 200,000 $ 200,000
Foreign exchange forward contracts (b) $ 151,331 $ 343,665
Foreign exchange forward contracts (c) $ 67,224 $ 83,126

~~(a) Maturity date of December 2020~~

~~(b) Various maturity dates through March 2021~~

~~(c) Various maturity dates in 2022 and 2028~~

~~The fair values of derivative instruments included in the consolidated balance sheets as of September 26, 2020 and December 31, 2019 are provided in the below table. See Note 10 —~~ ~~Fair Value Measurements~~ ~~for additional information related to the Company’s derivatives.~~

Balance Sheet Location September 26, 2020 December 31, 2019
Assets
Derivatives designated as hedging instruments:
Foreign exchange forward contracts Prepaid and other current assets $ 1,502 $ 4,857
Foreign exchange forward contracts Other assets 0 5
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts Prepaid and other current assets 0 246
Liabilities
Derivatives designated as hedging instruments:
Interest rate swaps Accrued and other current liabilities (917) (639)
Foreign exchange forward contracts Accrued and other current liabilities (2,361) (340)
Foreign exchange forward contracts Other long-term liabilities (1,978) (759)
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts Accrued and other current liabilities 0 (16)
Total net derivative assets (liabilities) $ (3,754) $ 3,354

~~The~~ effects of derivatives designated as hedging instruments, the related changes in AOCI and the gains and losses in income is as follows:

1110

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)


		Three Months Ended September 26, 2020						Three Months Ended March 27, 2021
Derivatives Designated as Hedging Instruments	Derivatives Designated as Hedging Instruments	Gain (Loss) Recognized in OCI on Derivative		Gain (Loss) Reclassified from AOCI into Income		Location on Statement of Income	Derivatives Designated as Hedging Instruments	Gain (Loss) Recognized in OCI on Derivative		Gain (Loss) Reclassified from AOCI into Income		Location on Statement of Income
Interest rate swaps	Interest rate swaps	$	273	$	(595)	Interest expense	Interest rate swaps	$	0	$	0	Interest expense
Foreign exchange forward contracts	Foreign exchange forward contracts	$	2,176	$	223	Other operating income (expense), net	Foreign exchange forward contracts	$	0	$	0	Other operating income (expense), net
Foreign exchange forward contracts	Foreign exchange forward contracts	$	3,197	$	(3,197)	Cost of sales	Foreign exchange forward contracts	$	0	$	1,828	Cost of sales
Foreign exchange forward contracts	Foreign exchange forward contracts	$	1,992	$	1,316	Interest income and other, net	Foreign exchange forward contracts	$	0	$	(100)	Interest income and other, net

		Three Months Ended September 28, 2019						Three Months Ended March 28, 2020
		Gain (Loss) Recognized in OCI on Derivative		Gain (Loss) Reclassified from AOCI into Income		Location on Statement of Income		Gain (Loss) Recognized in OCI on Derivative		Gain (Loss) Reclassified from AOCI into Income		Location on Statement of Income
Interest rate swaps	Interest rate swaps	$	(64)	$	172	Interest expense	Interest rate swaps	$	(1,757)	$	(120)	Interest expense
Foreign exchange forward contracts	Foreign exchange forward contracts	$	(5,940)	$	(76)	Other operating income (expense), net	Foreign exchange forward contracts	$	(26,532)	$	(1,361)	Other operating income (expense), net
Foreign exchange forward contracts	Foreign exchange forward contracts	$	1,256	$	(1,256)	Cost of sales	Foreign exchange forward contracts	$	(394)	$	394	Cost of sales
Foreign exchange forward contracts	Foreign exchange forward contracts	$	(2,000)	$	(1,290)	Interest income and other, net	Foreign exchange forward contracts	$	(6,902)	$	(6,732)	Interest income and other, net

		Nine Months Ended September 26, 2020
Derivatives Designated as Hedging Instruments		Gain (Loss) Recognized in OCI on Derivative		Gain (Loss) Reclassified from AOCI into Income		Location on Statement of Income
Interest rate swaps		$	(1,709)	$	(1,431)	Interest expense
Foreign exchange forward contracts		$	(18,442)	$	(771)	Other operating income (expense), net
Foreign exchange forward contracts		$	6,666	$	(6,666)	Cost of sales
Foreign exchange forward contracts		$	(2,718)	$	(3,281)	Interest income and other, net

		Nine Months Ended September 28, 2019
Derivatives Designated as Hedging Instruments		Gain (Loss) Recognized in OCI on Derivative		Gain (Loss) Reclassified from AOCI into Income		Location on Statement of Income
Interest rate swaps		$	(2,237)	$	728	Interest expense
Foreign exchange forward contracts		$	(1,903)	$	600	Other operating income (expense), net
Foreign exchange forward contracts		$	8,822	$	(8,822)	Cost of sales
Foreign exchange forward contracts		$	1,031	$	2,077	Interest income and other, net

The effects of derivative instruments not designated as hedging instruments on the consolidated statement of income were as follows:

Three Months Ended Nine Months Ended
Derivatives Not Designated as Hedging Instruments Location of Gain (Loss) Recognized in Income on Derivative September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019
Foreign exchange forward contracts Other operating income (expense), net $ 0 $ (137) $ (703) $ 193

~~Rayonier Advanced Materials Inc.~~

~~Notes to Consolidated Financial Statements - (Unaudited) (Continued)~~

Three Months Ended

Derivatives Not Designated as Hedging Instruments

Location of Gain (Loss) Recognized in Income on Derivative

March 27, 2021

March 28, 2020

Foreign exchange forward contracts

Other operating income (expense), net

(721)

The after-tax amounts of unrealized gains (losses) in AOCI related to hedge derivatives are presented below:

September 26, 2020 December 31, 2019
Interest rate cash flow hedges $ (715) $ (499)
Foreign exchange cash flow hedges $ (937) $ 1,789


	March 27, 2021		December 31, 2020

Foreign exchange cash flow hedges	$	566	$	1,834

The amount of future reclassifications from AOCI will fluctuate with movements in the underlying markets.

10. Fair Value Measurements

The following table presents the carrying amount, estimated fair values and categorization under the fair value hierarchy for financial instruments held by the Company, using market information and what management believes to be appropriate valuation methodologies:

September 26, 2020 December 31, 2019
Carrying
Amount Fair Value Carrying
Amount Fair Value
Assets: Level 1 Level 2 Level 1 Level 2
Cash and cash equivalents $ 82,889 $ 82,889 $ 0 $ 64,025 $ 64,025 $ 0
Foreign currency forward contracts (a) 1,502 0 1,502 5,108 0 5,108
Liabilities (b):
Interest rate swaps (a) 917 0 917 639 0 639
Foreign currency forward contracts (a) 4,339 0 4,339 1,115 0 1,115
Fixed-rate long-term debt 582,795 0 428,521 585,027 0 465,449
Variable-rate long-term debt 492,175 0 498,875 494,299 0 498,875


	March 27, 2021						December 31, 2020
	Carrying Amount		Fair Value				Carrying Amount		Fair Value
Assets:			Level 1		Level 2				Level 1		Level 2
Cash and cash equivalents	$	106,750	$	106,750	$	0	$	93,653	$	93,653	$	0



Liabilities (a):


Fixed-rate long-term debt	1,075,734		0		1,104,025		1,076,359		0		1,050,287

(a) ~~These items represent derivative instruments.~~

~~(b)~~ Liabilities exclude finance lease obligation.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

The Company uses the following methods and assumptions in estimating the fair value of its financial instruments:

Cash and cash equivalents — The carrying amount is equal to fair market value.

~~Derivative instruments~~ — The fair value is calculated based on standard valuation models using quoted prices and market observable data of similar instruments. The interest rate derivatives are based on the LIBOR swap rate, which is observable at commonly quoted intervals for the full term of the swap and therefore is considered Level 2. The foreign currency derivatives are contracts to buy foreign currency at a fixed rate on a specified future date. The foreign exchange rate is observable for the full term of the swap and is therefore considered Level 2. See Note 9 — ~~Derivative Instruments~~ ~~for additional information related to the derivative instruments.~~

Debt — The fair value of fixed rate debt is based upon quoted market prices for debt with similar terms and maturities. ~~The variable rate debt adjusts with changes in the market rate, therefore the carrying value approximates fair value.~~

~~Rayonier Advanced Materials Inc.~~

~~Notes to Consolidated Financial Statements - (Unaudited) (Continued)~~

11. Accumulated Other Comprehensive Income (Loss)

The components of AOCI are as follows:


		Nine Months Ended					Three Months Ended
		September 26, 2020		September 28, 2019			March 27, 2021		March 28, 2020
Unrecognized components of employee benefit plans, net of tax:	Unrecognized components of employee benefit plans, net of tax:					Unrecognized components of employee benefit plans, net of tax:
Balance, beginning of year	Balance, beginning of year	$	(126,638)	$	(135,590)	Balance, beginning of year	$	(146,614)	$	(126,638)
Other comprehensive gain (loss) before reclassifications	Other comprehensive gain (loss) before reclassifications	4,781		0		Other comprehensive gain (loss) before reclassifications	0		4,781
Income tax on other comprehensive loss	Income tax on other comprehensive loss	(1,238)		0		Income tax on other comprehensive loss	0		(1,238)
Reclassifications to earnings: (a)	Reclassifications to earnings: (a)					Reclassifications to earnings: (a)
Amortization of losses	Amortization of losses	10,143		7,829		Amortization of losses	4,082		3,393
Amortization of prior service costs	Amortization of prior service costs	422		311		Amortization of prior service costs	138		141

Income tax on reclassifications	Income tax on reclassifications	(2,061)		(1,804)		Income tax on reclassifications	(918)		(504)
Foreign currency adjustments	Foreign currency adjustments	0		(214)		Foreign currency adjustments	0		0
Net comprehensive gain (loss) on employee benefit plans, net of tax	Net comprehensive gain (loss) on employee benefit plans, net of tax	12,047		6,122		Net comprehensive gain (loss) on employee benefit plans, net of tax	3,302		6,573
Balance, end of quarter	Balance, end of quarter	(114,591)		(129,468)		Balance, end of quarter	(143,312)		(120,065)

Unrealized gain (loss) on derivative instruments, net of tax:	Unrealized gain (loss) on derivative instruments, net of tax:					Unrealized gain (loss) on derivative instruments, net of tax:
Balance, beginning of year	Balance, beginning of year	1,290		(11,622)		Balance, beginning of year	1,834		1,290
Other comprehensive gain (loss) before reclassifications	Other comprehensive gain (loss) before reclassifications	(16,203)		5,713		Other comprehensive gain (loss) before reclassifications	0		(35,585)
Income tax on other comprehensive income	Income tax on other comprehensive income	3,778		(1,446)		Income tax on other comprehensive income	0		8,255
Reclassifications to earnings: (b)	Reclassifications to earnings: (b)					Reclassifications to earnings: (b)
Interest rate contracts	Interest rate contracts	1,431		(728)		Interest rate contracts	0		120
Foreign exchange contracts	Foreign exchange contracts	10,718		6,145		Foreign exchange contracts	(1,728)		7,699
Income tax on reclassifications	Income tax on reclassifications	(2,666)		(1,702)		Income tax on reclassifications	460		(1,149)
Net comprehensive gain (loss) on derivative instruments, net of tax	Net comprehensive gain (loss) on derivative instruments, net of tax	(2,942)		7,982		Net comprehensive gain (loss) on derivative instruments, net of tax	(1,268)		(20,660)
Balance, end of quarter	Balance, end of quarter	(1,652)		(3,640)		Balance, end of quarter	566		(19,370)

Foreign currency translation adjustments:	Foreign currency translation adjustments:					Foreign currency translation adjustments:
Balance, beginning of year	Balance, beginning of year	(13,879)		(8,485)		Balance, beginning of year	11,145		(13,879)
Foreign currency translation adjustment, net of tax of $0 and $0	Foreign currency translation adjustment, net of tax of $0 and $0	9,989		(12,905)		Foreign currency translation adjustment, net of tax of $0 and $0	(9,268)		(6,471)
Balance, end of quarter	Balance, end of quarter	(3,890)		(21,390)		Balance, end of quarter	1,877		(20,350)

Accumulated other comprehensive income (loss), end of quarter	Accumulated other comprehensive income (loss), end of quarter	$	(120,133)	$	(154,498)	Accumulated other comprehensive income (loss), end of quarter	$	(140,869)	$	(159,785)

(a)The AOCI components for defined benefit pension and post-retirement plans are included in the computation of net periodic benefit cost. See Note 15— Employee Benefit Plans for additional information.

(b)Reclassifications of interest rate contracts are recorded in interest expense. Reclassifications of foreign currency exchange contracts are recorded in cost of sales, other operating income or non-operating income as appropriate. See Note 9 —Derivative Instruments for additional information.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

12. Stockholders' Equity

An analysis of stockholders’ equity is shown below (share amounts not in thousands):



	Common Stock			Additional Paid in Capital	Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Par Value









For the three months ended March 27, 2021
Balance, January 1, 2021	63,359,839	$	633		$	405,161	$	422,928	$	(133,635)	$	695,087
Net income (loss)	—	—			—		(27,027)		—		(27,027)
Other comprehensive income (loss), net of tax	—	—			—		—		(7,234)		(7,234)

Issuance of common stock under incentive stock plans	369,713	4			(4)		—		—		0
Stock-based compensation	—	—			(653)		—		—		(653)
Repurchase of common shares (a)	(132,196)	(1)			(1,418)		—		—		(1,419)


Balance, March 27, 2021	63,597,356	$	636		$	403,086	$	395,901	$	(140,869)	$	658,754













For the three months ended March 28, 2020
Balance, January 1, 2020	63,136,129	$	632		$	399,020	$	422,373	$	(139,227)	$	682,798
Net income (loss)	—	—			—		(24,127)		—		(24,127)
Other comprehensive income (loss), net of tax	—	—			—		—		(20,558)		(20,558)

Issuance of common stock under incentive stock plans	290,689	3			(3)		—		—		0
Stock-based compensation	—	—			1,943		—		—		1,943
Repurchase of common shares (a)	(179,951)	(3)			(435)		—		—		(438)


Balance, March 28, 2020	63,246,867	$	632		$	400,525	$	398,246	$	(159,785)	$	639,618

(a) Repurchased to satisfy the tax withholding requirements related to the issuance of stock under the Rayonier Advanced Materials ~~Inc.~~

~~Notes to Consolidated Financial Statements - (Unaudited) (Continued)~~

Common Stock Preferred Stock Additional Paid in Capital Retained
Earnings Accumulated Other Comprehensive Loss Total Stockholders’
Equity
Shares Par Value Shares Par Value
For the nine months ended September 26, 2020
Balance, December 31, 2019 63,136,129 $ 632 0 $ 0 $ 399,020 $ 422,373 $ (139,227) $ 682,798
Net income (loss) — — — — — (8,130) — (8,130)
Other comprehensive income (loss), net of tax — — — — — — 19,094 19,094
Issuance of common stock under incentive stock plans 390,448 4 — — (4) — — 0
Stock-based compensation — — — — 6,839 — — 6,839
Repurchase of common stock (191,659) (3) — — (454) — — (457)
Balance, September 26, 2020 63,334,918 $ 633 0 $ 0 $ 405,401 $ 414,243 $ (120,133) $ 700,144
For the three months ended September 26, 2020
Balance, June 27, 2020 63,347,326 $ 633 0 $ 0 $ 403,737 $ 385,383 $ (141,027) $ 648,726
Net income (loss) — — — — — 28,860 — 28,860
Other comprehensive income (loss), net of tax — — — — — — 20,894 20,894
Issuance of common stock under incentive stock plans (6,305) 0 — — 0 — — 0
Stock-based compensation — — — — 1,682 — — 1,682
Repurchase of common shares (6,103) 0 — — (18) — — (18)
Balance, September 26, 2020 63,334,918 $ 633 0 $ 0 $ 405,401 $ 414,243 $ (120,133) $ 700,144
For the nine months ended September 28, 2019
Balance, December 31, 2018 49,291,130 $ 493 1,725,000 $ 17 $ 399,490 $ 462,568 $ (155,697) $ 706,871
Net income (loss) — — — — — (51,183) — (51,183)
Other comprehensive income (loss), net of tax — — — — — — 1,199 1,199
Preferred stock converted to common stock 13,361,678 133 (1,725,000) (17) (116) — — 0
Issuance of common stock under incentive stock plans 980,968 10 — — (10) — — 0
Stock-based compensation — — — — 5,696 — — 5,696
Repurchase of common stock (422,965) (4) — — (5,826) — — (5,830)
Common stock dividends
($0.14 per share)
— — — — — (7,395) — (7,395)
Preferred stock dividends
($6.00 per share)
— — — — — (10,350) — (10,350)
Balance, September 28, 2019 63,210,811 $ 632 0 $ 0 $ 399,234 $ 393,640 $ (154,498) $ 639,008
For the three months ended September 28, 2019
Balance, June 29, 2019 49,848,087 $ 498 1,725,000 $ 17 $ 397,115 $ 411,306 $ (142,370) $ 666,566
Net income (loss) — — — — — (14,216) — (14,216)
Other comprehensive income (loss), net of tax — — — — — — (12,128) (12,128)
Preferred stock converted to common stock 13,361,678 133 (1,725,000) (17) (116) — — 0
Issuance of common stock under incentive stock plans 953 0 — — 0 — — 0
Stock-based compensation — — — — 2,240 — — 2,240
Repurchase of common shares 93 1 — — (5) — — (4)
Common stock dividends — — — — — 0 — 0
Preferred stock dividends
($2.00 per share)
— — — — — (3,450) — (3,450)
Balance, September 28, 2019 63,210,811 $ 632 0 $ 0 $ 399,234 $ 393,640 $ (154,498) $ 639,008

~~Rayonier Advanced Materials Inc.~~

~~Notes to Consolidated Financial Statements - (Unaudited) (Continued)~~

~~Series A Mandatory Convertible Preferred~~Incentive Stock

On August 15, 2019 each share of the Preferred Stock automatically converted into shares of common stock at the conversion rate per share of 7.7459 and the Company issued approximately 13.4 million shares of common stock. Plan.

Common Stock Buyback

On January 29, 2018, the Board of Directors authorized a share buyback program pursuant to which the Company may, from time to time, purchase shares of its common stock with an aggregate purchase price of up to $100 million. During the ~~nine~~three months ended ~~September 26,~~March 27, 2021 and March 28, 2020, ~~and September 28, 2019,~~ the Company did not repurchase any common shares under this buyback program. As of ~~September 26, 2020,~~March 27, 2021, there was approximately $60 million of share repurchase authorization remaining under the program. The Company does not expect to utilize any further authorization in the near future.

1613

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

13. Earnings Per Share of Common Stock

The following table provides details of the calculations of basic and diluted earnings per share:


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019				March 27, 2021		March 28, 2020
Income (loss) from continuing operations	Income (loss) from continuing operations	$	28,877	$	(14,353)	$	(8,886)	$	(61,614)	Income (loss) from continuing operations		$	(27,027)	$	(24,835)
Preferred Stock dividends		0		(1,777)		0		(8,582)
Income (loss) from continuing operations attributable to common stockholders		28,877		(16,130)		(8,886)		(70,196)

Income (loss) from discontinued operations	Income (loss) from discontinued operations	(17)		137		756		10,431		Income (loss) from discontinued operations		0		708
Net income (loss) available for common stockholders	Net income (loss) available for common stockholders	$	28,860	$	(15,993)	$	(8,130)	$	(59,765)	Net income (loss) available for common stockholders		$	(27,027)	$	(24,127)

Shares used for determining basic earnings per share of common stock	Shares used for determining basic earnings per share of common stock	63,310,689		56,089,839		63,178,342		51,576,123		Shares used for determining basic earnings per share of common stock		63,430,601		62,982,735
Dilutive effect of:	Dilutive effect of:									Dilutive effect of:
Stock options	Stock options	0		0		0		0		Stock options		0		0
Performance and restricted stock	Performance and restricted stock	605,553		0		0		0		Performance and restricted stock		0		0
Preferred stock	Preferred stock	0		0		0		0		Preferred stock		0		0
Shares used for determining diluted earnings per share of common stock	Shares used for determining diluted earnings per share of common stock	63,916,242		56,089,839		63,178,342		51,576,123		Shares used for determining diluted earnings per share of common stock		63,430,601		62,982,735

Basic per share amounts	Basic per share amounts									Basic per share amounts
Income (loss) from continuing operations	Income (loss) from continuing operations	$	0.46	$	(0.29)	$	(0.14)	$	(1.36)	Income (loss) from continuing operations		$	(0.43)	$	(0.39)
Income (loss) from discontinued operations	Income (loss) from discontinued operations	0		0		0.01		0.20		Income (loss) from discontinued operations		0		0.01
Net income (loss)	Net income (loss)	$	0.46	$	(0.29)	$	(0.13)	$	(1.16)	Net income (loss)		$	(0.43)	$	(0.38)
Diluted per share amounts	Diluted per share amounts									Diluted per share amounts
Income (loss) from continuing operations	Income (loss) from continuing operations	$	0.45	$	(0.29)	$	(0.14)	$	(1.36)	Income (loss) from continuing operations		$	(0.43)	$	(0.39)
Income (loss) from discontinued operations	Income (loss) from discontinued operations	0		0		0.01		0.20		Income (loss) from discontinued operations		0		0.01
Net income (loss)	Net income (loss)	$	0.45	$	(0.29)	$	(0.13)	$	(1.16)	Net income (loss)		$	(0.43)	$	(0.38)

Anti-dilutive instruments excluded from the computation of diluted earnings per share:


		Three Months Ended		Nine Months Ended			Three Months Ended
		September 26, 2020	September 28, 2019	September 26, 2020	September 28, 2019			March 27, 2021	March 28, 2020
Stock options	Stock options	152,281	225,934	152,281	225,934	Stock options		122,525	157,033
Performance and restricted stock	Performance and restricted stock	564,425	688,029	2,676,002	502,888	Performance and restricted stock		2,338,111	448,812

Total anti-dilutive instruments	Total anti-dilutive instruments	716,706	913,963	2,828,283	728,822	Total anti-dilutive instruments		2,460,636	605,845

14. Incentive Stock Plans

The Company’s total stock-based compensation ~~expense~~ for the three months ended ~~September 26,~~March 27, 2021 and March 28, 2020 was a benefit of $1 million and ~~September 28, 2019 was~~expense of $2 million, ~~and $2 million, respectively. The Company’s total stock-based compensation expense for the nine months ended September 26, 2020 and September 28, 2019 was $7 million and $6 million,~~ respectively.

The Company made new grants of restricted stock units and performance-based stock units to certain employees during the first ~~nine~~three months of ~~2020.~~2021. The ~~2020~~2021 restricted stock unit awards cliff vest ~~over~~after three years. The ~~2020~~2021 performance-based stock unit ~~award payout is calculated using a combination of Company specific performance metrics and~~awards measure total shareholder return ~~which is measured~~(“TSR”) on an absolute basis ~~as well as~~and relative to peers. Participants can earn between 0 and 200 percent of the target award. Performance below the threshold for the absolute TSR would result in a ~~peer group~~0 payout for the TSR metric. There is a performance-based stock award and cash unit stock award that will be measured using the same objectives but paid and accounted for separately. As required by Accounting Standards Codification 718, Compensation-Stock Compensation, the portion of ~~companies. Depending on performance against these~~the award to be settled in cash is classified as a liability and remeasured to fair value at the end of each reporting period until settlement.

1714

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

~~targets, the awards will pay out in common stock amounts between 0 and 200 percent of the performance-based stock units awarded.~~

In March ~~2020,~~2021, the performance-based share units granted in ~~2017~~2018 were settled at an average of 7660 percent of the performance-based stock units awarded, resulting in the issuance of ~~266,154~~182,811 shares of common stock.

The following table summarizes the activity on the Company’s incentive stock awards for the ~~nine~~three months ended ~~September 26, 2020:~~March 27, 2021:


		Stock Options			Restricted Stock and Stock Units			Performance-Based Stock Units			Stock Options			Restricted Stock and Stock Units			Performance-Based Stock Units
		Options	Weighted Average Exercise Price		Awards	Weighted Average Grant Date Fair Value		Awards	Weighted Average Grant Date Fair Value				Options	Weighted Average Exercise Price		Awards	Weighted Average Grant Date Fair Value		Awards	Weighted Average Grant Date Fair Value
Outstanding at January 1, 2020		205,026	$	36.10	833,596	$	14.55	1,190,526	$	17.77
Outstanding at January 1, 2021												Outstanding at January 1, 2021	152,281	$	38.26	828,955	$	10.27	1,821,402	$	8.77
Granted	Granted	0	0		426,469	3.73		1,100,567	2.07			Granted	0	0		409,912	10.46		135,699	17.61
Forfeited	Forfeited	0	0		(62,443)	12.66		(63,741)	17.06			Forfeited	0	0		(71,647)	14.11		(296,864)	9.01
Exercised or settled	Exercised or settled	0	0		(345,045)	11.71		(403,927)	15.68			Exercised or settled	0	0		(186,830)	22.21		(302,516)	22.76
Expired or cancelled	Expired or cancelled	(52,745)	29.79		0	0		0	0			Expired or cancelled	(29,756)	33.39		0	0		0	0
Outstanding at September 26, 2020		152,281	$	38.29	852,577	$	10.50	1,823,425	$	8.78
Outstanding at March 27, 2021												Outstanding at March 27, 2021	122,525	$	39.44	980,390	$	7.79	1,357,721	$	6.49

15. Employee Benefit Plans

The Company has defined benefit pension and other long-term and postretirement benefit plans covering certain union and non-union employees, primarily in the U.S., Canada and France. The defined benefit pension plans are closed to new participants. The liabilities for these plans are calculated using actuarial estimates and management assumptions. These estimates are based on historical information, along with certain assumptions about future events.

The components of net periodic benefit costs from these plans that have been recorded are shown in the following table:


		Pension				Postretirement					Pension				Postretirement
		Three Months Ended				Three Months Ended					Three Months Ended				Three Months Ended
Components of Net Periodic Benefit Cost	Components of Net Periodic Benefit Cost	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		Components of Net Periodic Benefit Cost	March 27, 2021		March 28, 2020		March 27, 2021		March 28, 2020
Service cost	Service cost	$	2,719	$	2,412	$	346	$	456	Service cost	$	3,083	$	2,667	$	370	$	363
Interest cost	Interest cost	6,350		9,199		(1,971)		352		Interest cost	4,806		6,340		207		318
Expected return on plan assets	Expected return on plan assets	(10,561)		(13,111)		0		0		Expected return on plan assets	(10,436)		(10,545)		0		0
Amortization of prior service cost	Amortization of prior service cost	179		142		(38)		(38)		Amortization of prior service cost	176		179		(38)		(38)
Amortization of losses	Amortization of losses	3,428		2,590		(47)		20		Amortization of losses	4,079		3,427		3		(34)

Total net periodic benefit cost	Total net periodic benefit cost	$	2,115	$	1,232	$	(1,710)	$	790	Total net periodic benefit cost	$	1,708	$	2,068	$	542	$	609

		Pension				Postretirement
		Nine Months Ended				Nine Months Ended
Components of Net Periodic Benefit Cost		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019
Service cost		$	7,959	$	7,338	$	1,031	$	1,387
Interest cost		18,942		27,949		(1,469)		1,072
Expected return on plan assets		(31,449)		(40,474)		0		0
Amortization of prior service cost		537		426		(115)		(115)
Amortization of losses		10,282		7,768		(138)		61

Total net periodic benefit cost		$	6,271	$	3,007	$	(691)	$	2,405

Service cost is included in cost of sales and selling, general and administrative expenses in the statements of income, as appropriate. Interest cost, expected return on plan assets, amortization of prior service cost and amortization of losses are included in other components of pension and OPEB, excluding service cost on the consolidated statement of income.

~~Rayonier Advanced Materials Inc.~~

~~Notes to Consolidated Financial Statements - (Unaudited) (Continued)~~

16. Income Taxes

~~Given the combination of the~~The Company’s ~~results during the three and nine months ended September 26, 2020 and certain tax adjustments recorded during those periods, as described below, the~~ effective tax ~~rates~~rate from continuing operations for the three ~~and nine~~ months ended ~~September 26, 2020 are not meaningful. The effective tax rate from continuing operations were~~March 27, 2021 was an expense of 172 percent, compared with a benefit of ~~24 percent and 30~~6 percent for the three ~~and nine~~ months ended ~~September~~March 28, ~~2019 respectively.~~2020.

The current quarter ~~and year-to-date September 26, 2020~~March 27, 2021 effective rate differs from the federal statutory rate of 21 percent primarily due to ~~the release of certain valuation allowances related to nondeductible U.S. interest expense, benefits from the Coronavirus Aid, Relief, and Economic Security Act~~Global Intangible Low Taxed Income (“~~CARES Act”~~GILTI”), ~~return~~disallowed interest deductions in the U.S., and different statutory tax rates of foreign operations. The application of GILTI effectively results in double book taxation of the majority of the Company’s high Canadian earnings. The Company currently expects minimal cash taxes to ~~accrual adjustments, and tax credits, partially offset by increases to uncertain tax position reserves, nondeductible executive compensation, and lower tax deductions on vested stock compensation.~~be paid in 2021 or 2022 as a result of 2021 earnings. The effective tax rate benefit for the three ~~and nine~~ months ended ~~September~~March 28, ~~2019~~2020 differs from the federal statutory rate primarily due to ~~tax credits~~nondeductible interest expense in the U.S. and ~~excess~~lower tax deductions on vested stock compensation, ~~which vested in that period.~~partially offset by benefits from the CARES Act (see below).

On March 27, 2020, the United States Congress passed the CARES Act to provide taxpayer protection against the economic impacts of COVID-19. As part of the CARES Act, the Company is able to carry 2019 and 2020 tax net operating losses back to tax years when the U.S. Federal Statutory rate was 35 percent compared with the current 21 percent. ~~The~~ To date, the

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

Company ~~has recognized a $20 million tax benefit arising from the remeasured increased value of the tax net operating loss and~~ has recorded a $33 million current receivable related to the ~~refund~~2019 loss carryback which is expected to be received in ~~the fourth quarter of 2020. The Company has also recorded~~2021 and a ~~tax~~$9 million non-current receivable related to the 2020 ~~tax return~~loss carryback expected to be filed in ~~2021. This receivable is not expected to be realized until~~ the ~~fourth~~second quarter of ~~2021 and is therefore recorded in “Other Noncurrent Assets” in the current quarter.~~2021. Separately, the Company has a $22 million ~~current~~ receivable related to tax years under examination by the ~~IRS. The Company believes the examination will~~IRS, $17 million of which is expected to be ~~completed in time to receive this refund~~received within the next twelve months.

There ~~has~~have been ~~an increase of $1 million~~no material changes to the balance of unrecognized tax benefits reported at December 31, ~~2019.~~

The tax benefit for the three and nine-month periods ended September 26, 2020 includes an adjustment to reverse a valuation allowance, which was initially recorded for the year ended December 31, 2019, on a deferred tax asset generated from a disallowed interest deduction. Under the Internal Revenue Code Section 163(j), U.S. interest is only deductible up to 30 percent of “adjusted taxable income” (“ATI”). The disallowed interest deduction can be carried forward indefinitely but will only be realized to the extent the Company has net U.S. interest expense below 30 percent of ATI in any given year after first utilizing its current year interest expense. Based on its projected interest expense and ATI, the Company does not believe it will be able to realize any of the existing suspended interest deductions and, as a result, had recorded a full valuation allowance on these deferred tax assets as of December 31, 2019. However, in December of 2019 the American Institute of Certified Public Accountants (“AICPA”) issued Technical Questions and Answers (“TQA”) 3300.01-02 which asserts that a valuation allowance should only be recognized to the extent that the reversal of existing deferred tax assets and liabilities is not sufficient to realize the disallowed interest carryforward, ignoring material evidence including the expectation of future earnings or losses and future interest expense. In strict compliance with the AICPA’s TQA, in the second quarter of 2020, the Company reversed a portion of the valuation allowance on the deferred tax assets generated from disallowed interest through the second quarter of 2020 resulting in a $11 million increase in the tax benefit, of which $9 million related to the year ended December 31, 2019. The Company has determined that the adjustment was not material to the December 31, 2019 consolidated financial statements, nor to the consolidated financial statements for the three months ended June 27, 2020, and the three and nine-months ended September 26, 2020. The Company’s conclusion was reached in consideration of qualitative factors such as the fact that the deferred tax asset will likely never be realized or impact cash taxes and the fact that the income tax benefit does not impact operating cash flows, operating income, earnings before interest, depreciation and amortization and adjusted free cash flow. The continued application of this AICPA guidance is expected to result in future recognition of additional deferred tax assets that the Company believes will not be realized.

17. Segment and Geographical Information

The Company currently operates in the following 5 business segments: High Purity Cellulose, Forest Products, Paperboard, Pulp & Newsprint and Corporate. All prior period amounts presented herein have been reclassified to conform to this segment structure. The Corporate operations consist primarily of senior management, accounting, information systems, human resources, treasury, tax and legal administrative functions that provide support services to the operating business units. The Company allocates a portion of the cost of maintaining these support functions to its operating units.

~~Rayonier Advanced Materials Inc.~~

~~Notes to Consolidated Financial Statements - (Unaudited) (Continued)~~

The Company evaluates the performance of its segments based on operating income. Intersegment sales consist primarily of wood chips sales from Forest Products to High Purity Cellulose, Paperboard and Pulp & Newsprint segments and high-yield pulp sales from Pulp & Newsprint to Paperboard. Intersegment sales prices are at rates that approximate market for the respective operating area.

Net sales, disaggregated by product-line, was comprised of the following:

Three Months Ended Nine Months Ended
September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019
High Purity Cellulose
Cellulose Specialties $ 168,549 $ 180,718 $ 489,859 $ 563,604
Commodity Products 64,916 67,348 206,867 197,492
Other sales (a) 19,243 19,675 60,614 61,445
Total High Purity Cellulose 252,708 267,741 757,340 822,541
Forest Products
Lumber 85,419 49,195 201,385 170,855
Other sales (b) 17,457 16,265 54,080 50,982
Total Forest Products 102,876 65,460 255,465 221,837
Paperboard
Paperboard 46,862 53,818 140,492 151,161
Pulp & Newsprint
Pulp 29,622 26,159 91,444 94,746
Newsprint 7,937 19,948 35,633 66,613
Total Pulp & Newsprint 37,559 46,107 127,077 161,359
Eliminations (16,081) (16,997) (49,890) (49,476)
Total net sales $ 423,924 $ 416,129 $ 1,230,484 $ 1,307,422
(a) Other sales include sales of electricity, lignin and other by-products to third-parties
(b) Other sales include sales of logs, wood chips and other by-products to other Company segments and third-parties

~~Operating income (loss) by segment was comprised of the following:~~


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019				March 27, 2021		March 28, 2020
High Purity Cellulose	High Purity Cellulose	$	7,752	$	6,745	$	9,615	$	10,665	High Purity Cellulose
Cellulose Specialties										Cellulose Specialties		$	167,837	$	160,235
Commodity Products										Commodity Products		58,933		66,524
Other sales (a)										Other sales (a)		22,991		22,819
Total High Purity Cellulose										Total High Purity Cellulose		249,761		249,578
Forest Products	Forest Products	25,184		(5,076)		20,072		(26,664)		Forest Products
Lumber										Lumber		127,711		60,549
Other sales (b)										Other sales (b)		19,060		21,750
Total Forest Products										Total Forest Products		146,771		82,299
Paperboard										Paperboard
Paperboard	Paperboard	3,380		2,426		14,315		595		Paperboard		47,849		50,486
Pulp & Newsprint	Pulp & Newsprint	(6,179)		(4,322)		(17,558)		3,241		Pulp & Newsprint
Corporate		(12,749)		(8,337)		(36,484)		(39,320)
Total operating income (loss)		$	17,388	$	(8,564)	$	(10,040)	$	(51,483)
Pulp										Pulp		27,544		29,975
Newsprint										Newsprint		11,491		16,703
Total Pulp & Newsprint										Total Pulp & Newsprint		39,035		46,678

Eliminations										Eliminations		(18,275)		(19,233)
Total net sales										Total net sales		$	465,141	$	409,808
(a) Other sales include sales of electricity, lignin and other by-products to third-parties										(a) Other sales include sales of electricity, lignin and other by-products to third-parties
(b) Other sales include sales of logs, wood chips and other by-products to other Company segments and third-parties										(b) Other sales include sales of logs, wood chips and other by-products to other Company segments and third-parties

2016

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

Operating income (loss) by segment was comprised of the following:


	Three Months Ended
		March 27, 2021		March 28, 2020
High Purity Cellulose		$	6,427	$	(4,858)
Forest Products		60,750		(1,311)
Paperboard		5,755		4,674
Pulp & Newsprint		(5,900)		(5,876)
Corporate		(12,236)		(4,637)
Total operating income (loss)		$	54,796	$	(12,008)

Identifiable assets by segment were as follows:


		September 26, 2020		December 31, 2019			March 27, 2021		December 31, 2020
High Purity Cellulose	High Purity Cellulose	$	1,519,160	$	1,559,073	High Purity Cellulose	$	1,511,465	$	1,528,929
Forest Products	Forest Products	175,780		171,167		Forest Products	235,996		186,321
Paperboard	Paperboard	135,317		145,030		Paperboard	127,525		129,871
Pulp & Newsprint	Pulp & Newsprint	104,220		102,959		Pulp & Newsprint	100,844		99,374
Corporate	Corporate	555,966		501,918		Corporate	539,445		585,370

Total identifiable assets	Total identifiable assets	$	2,490,443	$	2,480,147	Total identifiable assets	$	2,515,275	$	2,529,865

18. Commitments and Contingencies

Commitments

The Company has no material changes to the purchase obligations presented in Note 22 — Commitments and Contingencies in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, as filed with the SEC on March ~~2, 2020,~~1, 2021, that are outside the normal course of business for the ~~nine~~three months ended ~~September 26, 2020.~~March 27, 2021. The Company’s purchase obligations continue to primarily consist of commitments for the purchase of natural gas, steam energy and electricity ~~contracts.~~contracts entered into within the normal course of business.

The Company leases certain buildings, machinery and equipment under various operating leases. See Note 5 — Leases, for additional information.

Litigation and Contingencies

Final Settlement Reached in Dispute with IESO Relating to Investigation of the Kapuskasing Newsprint Facility. ~~Since~~From the period from 2014 to early 2021, the Market Assessment and Compliance Division (“MACD”) branch of the Independent Electricity System Operator (“IESO”), the governmental agency responsible for operating the wholesale electricity market and directing the operation of the bulk electrical system in the province of Ontario, Canada, ~~has~~had been engaged in reviewing the Company's compliance with the published rules that govern the operation of the wholesale electricity market in Ontario, Canada. ~~MACD has been specifically reviewing issues relating to~~The inquiry was focused primarily on payments made by IESO to the ~~Company’s facility in Kapuskasing, Ontario. The inquiry has focused primarily on payments made by IESO~~Company between 2010 and 2019 under market rules in connection with multiple planned, extended and unplanned forced outages that caused extensive downtime, in ~~respect~~full or in part, of ~~parts or~~ the ~~entire~~Company’s Kapuskasing, Ontario newsprint facility.

In May 2020, MACD finalized 2two of its 4four investigations into the Company’s electricity management practices at its Kapuskasing newsprint facility and issued orders ~~claiming~~asserting penalties of CAD $25 ~~million in connection therewith were issued by the IESO. More particularly, the~~million. These orders ~~would require~~called for the Company to pay penalties of CAD $3 million immediately and CAD $12 million over a ~~10-year~~10 year period, with the remaining CAD $10 million to be deferred and ultimately forgiven assuming the Company otherwise ~~complies~~complied with the orders’ remaining ~~terms of the orders.~~terms. The Company, ~~believes~~which maintained it ~~has~~had complied in all material respects with the published rules, ~~and is~~ vigorously ~~contesting~~contested IESO’s orders, including through the filing of judicial review proceedings with the divisional Court (Superior Court of Justice) of Ontario seeking invalidation of the orders. At the time these orders were issued, the remaining two investigations remained open, subjecting the Company to the risk that MACD may in the future issue additional orders upon finalization of these additional investigations.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

On April 19, 2021, the Company and IESO entered into Minutes of Settlement (“MOS”) pursuant to which the parties agreed to fully and finally settle all claims relating to all four of the investigations (whether completed or not) and related orders, the judicial review proceedings and underlying disputes. As part of the settlement, the Company agreed to a fixed obligation to pay a sum of CAD $12 million over a period of 5 years comprised of a CAD $4.5 million up-front payment and a CAD $7.5 million payment to be spread (on a front-weighted basis) over the next 5 anniversaries of the MOS, without interest. In addition to the foregoing, the MOS provides that a “suspended” sum of CAD $10.4 million would become due and payable in the event the Company fails to comply with any of the terms and conditions of the MOS or commits an event of default, as defined under the applicable market rules, unless such breach or event of default is remedied on a timely basis. This contingent “suspended” sum decreases annually as the scheduled fixed, or non-contingent, payments are made under the MOS. Assuming no uncured event of default or breach occurs during the repayment period, upon full payment of the CAD $12 million, the entire "suspended" sum shall be extinguished and RYAM shall be released from any payment obligation with respect thereto.

Given the parties’ finalization of and entry into the MOS, the Company considers this matter concluded (subject only to the parties’ obligations yet to be performed under the MOS).

Duties on Canadian softwood lumber sold to the U.S.The Company ~~does not believe~~operates 6 softwood lumber mills in Ontario and Quebec, Canada and exports softwood lumber into the ~~ultimate outcome~~United States from Canada. In 2017, anti-dumping and countervailing duties were assessed by the United States Department of ~~this dispute~~Commerce (“USDOC”) on lumber exported into the United States, with the Company being assigned an anti-dumping duty rate of 6 percent and a countervailing duty rate of 14 percent. In December 2020, following its administrative review of the period of April 28, 2017 through December 31, 2018, USDOC determined revised rates for anti-dumping and countervailing duties, and the Company is now subject to an anti-dumping duty rate of approximately 1.6 percent and a countervailing duty rate of approximately 7.4 percent. The reduced rates will be ~~material~~applied by the Company for lumber sold into the U.S. in the future. Canada’s legal challenge to ~~its business or financial condition, although no assurances can be given.~~the USDOC’s assessment of duties continues in spite of the recent revision in rates.

The Company has paid approximately $98 million in lumber duties to date, recorded as expense in the periods incurred. The Company currently has a $21 million long-term receivable associated with the December 2020 determination of the revised rates for the 2017 and 2018 periods. Cash is not expected to return to the Company until final resolution of the softwood lumber dispute, which remains subject to legal challenges and to USDOC further administrative review processes covering periods after December 31, 2018.

Other. In addition to the above, the Company is engaged in various legal and regulatory actions and proceedings, and has been named as a defendant in various lawsuits and claims arising in the ordinary course of its business. While the Company has procured reasonable and customary insurance covering risks normally occurring in connection with its businesses, the Company has in certain cases retained some risk through the operation of self-insurance, primarily in the areas of workers’ compensation, property insurance and general liability. These other lawsuits and claims, either individually or in ~~the~~ aggregate, are not expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

~~As of September 26, 2020, all of the Company’s collective bargaining agreements covering its unionized employees are current.~~

Guarantees and Other

The Company provides financial guarantees as required by creditors, insurance programs and various governmental agencies. As of ~~September 26, 2020,~~March 27, 2021, the Company had net exposure of ~~$43~~$44 million from various standby letters of credit, primarily for financial assurance relating to environmental remediation, credit support for natural gas and electricity purchases, and guarantees related to foreign retirement plan obligations. These standby letters of credit represent a contingent liability. The

~~Rayonier Advanced Materials Inc.~~

~~Notes to Consolidated Financial Statements - (Unaudited) (Continued)~~

Company would only be liable upon its default on the related payment obligations. The letters of credit have various expiration dates and will be renewed as required.

The Company had surety bonds of ~~$86~~$85 million as of ~~September 26, 2020,~~March 27, 2021, primarily to comply with financial assurance requirements relating to environmental remediation and post closure care, to provide collateral for the Company’s workers’ compensation program, and to guarantee taxes and duties for products shipped internationally. These surety bonds expire at various dates and are expected to be renewed annually as required.

LignoTech Florida (“LTF”) is a venture in which the Company owns 45 percent and its partner Borregaard ASA owns 55 percent. The Company is a guarantor of LTF’s financing agreements and, in the event of default, expects it would only be liable for its proportional share of any repayment under the agreements. The Company’s proportion of the LTF financing agreement guarantee was $33 million at ~~September 26, 2020.~~March 27, 2021.

The Company has not recorded any liabilities for these financial guarantees in its consolidated balance sheets, either because the Company has recorded the underlying liability associated with the guarantee or the guarantee is dependent on the

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements - (Unaudited) (Continued)

Company’s own performance and, therefore, is not subject to the measurement requirements or because the Company has calculated the estimated fair value of the guarantee and determined it to be immaterial based upon the current facts and circumstances that would trigger a payment obligation.

It is not possible to determine the maximum potential amount of the liability under these potential obligations due to the unique set of facts and circumstances likely to be involved with each provision.

As of March 27, 2021, all of the Company’s collective bargaining agreements covering its unionized employees are current.

19. Supplemental Disclosures of Cash ~~Flows~~Flow Information

Supplemental disclosures of cash flows information were comprised of the following for the ~~nine~~three months ended:

September 26, 2020 September 28, 2019
Cash paid (received) during the period:
Interest $ 33,934 $ 37,126
Income taxes $ 1,086 $ 1,858


	March 27, 2021		March 28, 2020

Interest paid	$	851	$	8,115
Income taxes paid (received)	$	54	$	(390)
Capital assets purchased on account	$	12,848	$	7,622
Assets acquired under operating leases	$	1,768	$	119

2219

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

When we refer to “we,” “us,” “our” or “the Company,” we mean Rayonier Advanced Materials Inc. and its consolidated subsidiaries. References herein to “Notes to Consolidated Financial Statements” refer to the Notes to the Consolidated Financial Statements of Rayonier Advanced Materials Inc. included in Item 1 of this Quarterly Report on Form 10-Q (the “Report.”)

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of our consolidated financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity and certain other factors which may affect future results. This MD&A should be read in conjunction with our ~~2019~~2020 Annual Report on Form 10-K and information contained in our subsequent Forms 8-K and other reports to the U.S. Securities and Exchange Commission (the “SEC”).

Note About Forward-Looking Statements

Certain statements in this Report regarding anticipated financial, business, legal or other outcomes including business and market conditions, outlook and other similar statements relating to Rayonier Advanced ~~Materials~~Materials’ (“the Company” ) future events, developments, or financial or operational performance or results, are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are identified by the use of words such as “may,” “will,” “should,” “expect,” “estimate,” “believe,” “intend,” “forecast,” “anticipate” “guidance” and other similar language. However, the absence of these or similar words or expressions does not mean a statement is not forward-looking. While we believe these forward-looking statements are reasonable when made, forward-looking statements are not guarantees of future performance or events and undue reliance should not be placed on these statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance these expectations will be attained, and it is possible actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. The following risk factors and those contained in Item 1A —Risk Factors, among others, could cause actual results or events to differ materially from the Company’s historical experience and those expressed in forward-looking statements made in this document.

Amounts contained in this Report may not always add due to rounding.

Our operations are subject to a number of risks and uncertainties including, but not limited to, those listed below. When considering an investment in our securities, you should carefully read and consider these risks, together with all other information in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 as filed with the SEC and our other filings and submissions to the SEC, which provide much more information and detail on the risks described below. If any of the events described in the following risk factors actually occur, our business, financial condition or operating results, as well as the market price of our securities, could be materially adversely affected. These risks and events include, without limitation:

~~Business~~Epidemics and ~~Operating~~Pandemic Risks

•We are subject to risks associated with epidemics and pandemics, including the COVID-19 pandemic and related impacts. The nature and extent of ongoing and future impacts of the pandemic are highly uncertain and unpredictable.

Macroeconomic and Industry Risks

•The businesses we operate are highly competitive and many of them are cyclical, which may result in fluctuations in pricing and volume that can adversely ~~impact~~affect our business, financial condition and results of operations.

•Our ten largest customers represented approximately 33 percent of our 2019 sales, and the loss of all or a substantial portion of our revenue from these large customers could have a material adverse effect on our business.

•A material disruption at one of our major manufacturing facilities could prevent us from meeting customer demand, reduce our sales and profitability, increase our cost of production and capital needs, or otherwise adversely affect our business, financial condition and results of operation.

•Changes in raw material and energy availability and prices could ~~affect our business, financial condition and results of operations.~~

•~~The availability of, and prices for, wood fiber could materially impact~~have a material adverse effect on our business, results of operations and financial ~~condition.~~condition..

•We are subject to risks associated with doing business outside of the United States.

•~~Our operations require substantial capital.~~

•Currency fluctuations may have a negative impact on our business, financial condition and results of operations.

•Restrictions on trade through tariffs, countervailing and anti-dumping duties, quotas and other trade barriers, in the United States and internationally, ~~especially with respect to China, Canada and as a result of “Brexit”,~~ could materially adversely affect our ability to access certain ~~markets~~markets.

Business and Operating Risks

•Our ten largest customers represent approximately 31 percent of our 2020 revenue, and the loss of all or a substantial portion of our revenue from these large customers could have a material adverse effect on our business.

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•A material disruption at one of our major manufacturing facilities could prevent us from meeting customer demand, reduce our sales and profitability, increase our cost of production and capital needs, or otherwise ~~impact~~materially adversely affect our business, financial condition and results of ~~operations.~~operation.

•The availability of, and prices for, wood fiber may have a material adverse impact on our business, results of operations and financial condition.

•Our operations require substantial capital.

•We depend on third parties for transportation services and increases in costs and the availability of transportation could materially adversely affect our business.

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•~~Our business is subject to extensive environmental laws, regulations and permits that may restrict or adversely affect our financial results and how we conduct business.~~

•~~The potential impacts of climate change and climate-related initiatives, remain uncertain at this time.~~

•Our failure to maintain satisfactory labor relations could have a material adverse effect on our business.

•We are dependent upon attracting and retaining key personnel, the loss of whom could materially adversely affect our business.

•Failure to develop new products or discover new applications for our existing products, or our inability to protect the intellectual property underlying such new products or applications, could have a material negative impact on our business.

•The risk of loss of the Company’s intellectual property and sensitive ~~business information,~~data, or disruption of its manufacturing operations, in each case due to cyberattacks or cybersecurity breaches, could materially adversely impact the Company.

Regulatory Risks

•Our business is subject to extensive environmental laws, regulations and permits that may materially restrict or adversely affect how we conduct business and our financial results.

•The potential longer-term impacts of climate related risks remain uncertain at this time.

•The Company considers and evaluates climate-related risks in three general categories; Regulatory, Transition to a low-carbon economy, and Physical risks related to climate-change.

Financial Risks

•We may need to make significant additional cash contributions to our retirement benefit plans if investment returns on pension assets are lower than expected or interest rates decline, and/or due to changes to regulatory, accounting and actuarial requirements.

•Public health crises such as epidemics or pandemics could have a material adverse effect on our financial condition, liquidity or results of operations - specifically, we are subject to risks associated with the COVID-19 pandemic and related impacts, which have had, and we expect will continue to have, a material adverse effect on our business, the nature and extent of which are highly uncertain and unpredictable.

~~Debt-Related Risks~~

•While we have entered into an amendment (the “Amendment”) to our Senior Secured Credit Facilities (as amended by the Amendment, the “Credit Agreement”), there can be no assurances that we will continue in full compliance with the amended covenants provided in the Credit Amendment.

•We have ~~significant~~ debt obligations that could materially adversely affect our business and our ability to meet our obligations.

•The phase-out of the London Inter Bank Office Rate (“LIBOR”) as an interest rate benchmark ~~could result~~ in ~~an increase to~~2023 may impact our borrowing costs.

•Challenges in the commercial and credit environments may materially adversely affect our future access to capital.

•We may need additional financing in the future to meet our capital needs or to make acquisitions, and such financing may not be available on favorable terms, if at all, and may be dilutive to existing stockholders.

~~Risks Related to the~~ Company’s Common Stock and Certain Corporate Matters Risks

•Your percentage of ownership in the Company may be diluted in the future.

•Certain provisions in our amended and restated certificate of incorporation and bylaws, and of Delaware law, could prevent or delay an acquisition of the Company, which could decrease the price of our common stock.

Forward-looking statements are only as of the date they are made, and the Company undertakes no duty to update its forward-looking statements except as required by law. You are advised, however, to review any further disclosures we have made or may make in our filings and other submissions to the ~~SEC,~~U.S. Securities and Exchange Commission (the “SEC”), including those on Forms 10-Q, 10-K, 8-K and other reports. Details on each of the above risk factors are more specifically described in Item 1A - Risk Factors.

Note About Non-GAAP Financial Measures

A “non-GAAP financial measure” is generally defined as a numerical measure of a company’s historical or future performance that excludes or includes amounts, or is subject to adjustments, so as to be different from the most directly comparable measure calculated and presented in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). This Report contains certain non-GAAP financial measures, including Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), adjusted EBITDA, and adjusted free cash flows. These non-GAAP measures are reconciled to each of their respective most directly comparable GAAP financial measures in Item 27 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.

We believe these non-GAAP measures provide useful information to our Board of Directors, management and investors regarding certain trends relating to our financial condition and results of operations. Our management uses these non-GAAP

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measures to compare our performance to that of prior periods for trend analyses, purposes of determining management incentive compensation and budgeting, forecasting and planning purposes.

We do not consider non-GAAP measures an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is they may exclude significant expense and income items that are required by GAAP to be recognized in our consolidated financial statements. In addition, they reflect the exercise of management’s judgment about which expense and income items are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, reconciliations of the non-GAAP financial measures we use to

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their most directly comparable GAAP measures are provided. Non-GAAP financial measures should not be relied upon, in whole or part, in evaluating the financial condition, results of operations or future prospects of the Company.

Business

We are a global leader of cellulose-based technologies, ~~including~~which comprise a broad offering of high purity cellulose specialties, a natural polymer commonly ~~found~~used in ~~cell phone~~the production of specialty chemicals and ~~computer screens,~~polymers for use in producing LCD displays, filters, fibers, performance additives for pharmaceutical, food ~~pharmaceuticals~~ and other industrial applications. Starting from a tree and building upon more than 90 years of experience in cellulose chemistry, we provide high quality high-purity cellulose pulp products that make up the essential building blocks for our customers’ products while providing exceptional service and value. In addition, we ~~manufacture products~~produce lumber, paperboard, newsprint and high-yield pulp for use in consumer products.

Recent developments

Sale of lumber ~~paper~~ and ~~packaging markets which provide more diversified earnings streams.~~newsprint assets

~~In November 2019,~~On April 12, 2021, we sold the Matane pulp mill to Sappi Limited for $175 million with net cash proceeds of $158 million after expenses and other adjustments. As of result of the sale, we have reclassified the Matane mill’s prior year operating results as discontinued operations. Followingannounced the sale of ~~the Matane mill, we operate~~our lumber and newsprint assets located in Ontario and Québec Canada to GreenFirst, for approximately $214 million, including an assumed $74 million associated with finished goods, work-in-process and raw materials inventory value, which is subject to fluctuation until closing. The purchase price, to be adjusted at closing by changes in the ~~following business segments: High Purity Cellulose, Forest Products, Paperboard~~value of the inventory, will be paid 85% in cash and ~~Pulp & Newsprint.~~the remainder in common shares of GreenFirst. In addition, a credit note will be issued to us by GreenFirst in the amount of CDN$8 million, which may be offset against amounts owed by us to GreenFirst in the future for wood chip purchases, equally over the next 5 years. The closing of the transaction, which is expected to occur in the second half of 2021, but not before July 31, is subject to customary closing conditions, including receipt of regulatory approvals, the transfer of forestry licenses and the approval of the TSX Venture Exchange. See Note 1 —Basis of Presentation and New Accounting Pronouncements for additional information.

~~Coronavirus~~

In 2020, the assets generated approximately $439 million of revenue and $55 million of operating income and $51 million of Adjusted EBITDA.

Final Settlement Reached in Dispute with IESO Relating to Investigation of the Kapuskasing Newsprint Facility

We had previously been engaged in litigation with the Market Assessment and Compliance Division (“MACD”) branch of the Independent Electricity System Operator (“IESO”) regarding their investigations into the Company's compliance with the published rules that govern the operation of the wholesale electricity market in Ontario, Canada. On April 19, 2021, we and the IESO entered into Minutes of Settlement (“MOS”) pursuant to which the parties agreed to fully and finally settle all claims relating to their investigations. As part of the settlement, the Company agreed to a fixed obligation to pay a sum of CAD $12 million over a period of 5 years comprised of a CAD $4.5 million up-front payment and a CAD $7.5 payment to be spread (on a front-weighted basis) over the next 5 anniversaries of the MOS, without interest. In addition to the foregoing, the MOS provides that a “suspended” sum of CAD $10.4 million would become due and payable in the event the Company fails to comply with any of the terms and conditions of the MOS or commits an event of default, as defined under the applicable market rules, unless such breach or event of default is remedied on a timely basis. See Note 18 —Commitments and Contingencies for additional information.

We consider this matter concluded (subject only to the parties’ obligations yet to be performed under the MOS).

Coronavirus-Update

Our businesses ~~have been~~were significantly impacted by the coronavirus ("COVID-19") ~~pandemic. However, due~~pandemic in 2020. While market demand and pricing for certain of our products began to recover towards the ~~role they play in producing critical raw materials for pharmaceutical, food, cleaning~~end of the year and continued to improve throughout the first quarter of 2021, our operations remain vulnerable to a reversal of these trends or other ~~products,~~continuing negative effects caused by COVID-19.

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In our ~~manufacturing~~operating facilities inand work spaces, we continue to maintain protocols previously implemented to reduce the ~~U.S., Canada and France have remained operating. In order to mitigate the impact~~potential spread of COVID-19 ~~on our financial results~~ and ~~operations, we have taken the following actions:~~

•To ensure the safety of our employees and ~~the~~ continuity of ~~our operations, we have implemented exacting protocols to reduce the potential spread of COVID-19 in our operating facilities and work spaces.~~

•~~To control costs and minimize pandemic driven losses, we have curtailed operations as necessary to match production with market demand.~~

•To maximize cash flow and liquidity, we entered into an amendment of our Senior Secured Credit Facilities under which, among other changes, the lenders have agreed to relax the financial covenants through 2022 and provide additional liquidity by reducing the minimum availability we are required to maintain. See ~~Note 7~~ — ~~Long Term Debt and Finance Leases~~ ~~andManagement’s Discussion and Analysis of Liquidity and Capital Resources~~ ~~for additional information.~~operations.

Due to the financial impacts of COVID-19, we ~~are~~have actively ~~monitoring~~monitored the recoverability of the carrying value of our long-term ~~assets compared to the business’s future estimated undiscounted future cash flows.~~assets. During the three ~~and nine~~ months ended ~~September 26,~~March 27, 2021 and the year ended December 31, 2020, we did not recognize any impairment charges related to long-lived assets held for use. However, our estimates of undiscounted cash flows are highly subjective and actual results may vary from the estimates due to the current uncertain market conditions and their impact on the projection of long-term financial performance. We will continue to evaluate the recoverability of these and other assets as necessary.

Market Assessment

The full year outlook for each of our segments remains difficult to provide due to the uncertainty of the magnitude and timing of economic recovery due to the COVID-19 pandemic and the risk of supply chain disruptions beyond our control. As such, we have determined to suspend our guidance. The market assessment ~~below~~ represents our best current estimate of each business in this environment.

High Purity Cellulose

~~During the third quarter, we experienced a reduction in overall sales volumes~~Pricing levels for our cellulose specialties products driven by weakness in the industrial, automotive and construction markets. We believe our diversified end-markets, and our customers’ focus on security of supply, provide greater earnings stability but does not eliminate the risk associated with the demand impact of COVID-19 on our end markets. The outlook for sales of cellulose specialties is highly dependent on the global economic recovery, which will likely continue to be negatively impacted by the pandemic for the foreseeable future. For our commodity products ~~viscose prices have improved from lows~~increased during the first quarter and are forecasted to increase further in the second quarter. Prices for cellulose specialties declined slightly and in line with expectations for the full year.Total High Purity Cellulose volumes are expected to ~~continue into~~remain stable for the ~~fourth quarter, with price increases for both October and November, marking the first increase in two years. Meanwhile, fluff pulp prices have declined modestly. Overall,~~full year, however, we expect ~~higher commodity sales~~a more favorable mix towards cellulose specialties. The annual maintenance outage at the Jesup facility in the ~~fourth~~second quarter ~~due to shipping delays and strong production in the third quarter.~~is currently ongoing.

~~Certain~~

Key costs, including ~~wood,~~ energy and commodity chemical prices have ~~declined from prior year levels due to both market conditions~~increased rapidly during the first quarter and ~~strategic actions.However, future input prices and availability are~~remain difficult to ~~predict due~~predict. We remain committed to investing in this core business to reduce costs, improve reliability and provide new platforms for growth. The sale of the ~~current unprecedented economic conditions.~~lumber and newsprint assets discussed below will provide us with a key opportunity to reinvest in our core high purity cellulose business and our BioFuture.

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Forest Products

~~Late~~Prices for lumber continue to strengthen to record levels driven by the exceptional demand in the ~~second quarter, lumber sales prices surged on the back~~U.S housing market and high levels of ~~strong~~ repair and remodel ~~activity with high demand for stud lumber. U.S. housing~~activity. Housing starts in ~~September 2020 were approximately 1.4~~March 2021 reached 1.7 million units, seasonally adjusted, while building permits reached 1.8 million. We are focused on ensuring reliable operations and capturing the benefit of high lumber prices through completion of the sale, which is ~~an improvement from lows in April of 0.9 million units. Market prices reached all-time highs in September before trailing off in October. We expect strong volumes~~expected in the ~~fourth quarter with historically high sales prices.~~

~~As announced in February by the U.S. Department~~second half of ~~Commerce, we expect duties on softwood lumber imported into the U.S. to be reduced from 20 percent to 8 percent in late 2020. Since 2017, we have paid approximately $80 million in duties.~~2021.

Paperboard

~~COVID-19 has had a modest impact on~~ Paperboard ~~sales while profitability has benefited~~prices have increased 5 percent from ~~lower input costs~~fourth quarter and are expected to increase further, helping offset ~~by sales and mix impact declines.Paperboard for packaging and lottery markets have been generally resilient, while commercial printing has shown weakness.~~increases in raw material cost.

Pulp & Newsprint

~~After significant improvements~~High-yield pulp and newsprint markets have experienced price increases during the first quarter and additional price increases are expected in ~~high yield pulp demand and pricing~~the near-term. Additionally, we continue to manage production at the ~~beginning of the year, the weakness~~newsprint facility to minimize costs and improve sales mix while experiencing early success in the ~~broader paper pulp market caused by the COVID-19 pandemic has negatively impacted pricing~~expansion of ~~high yield pulp products.~~ Prices have recently increased, while overall input costs have remained stable and we expect to produce at normal levels for the near future with elevated sales volumes in the fourth quarter due to improved logistics.

Demand for newsprint products has declined approximately 31 percent since the beginning of the year, primarily due to COVID-19, resulting in reduced sales prices and volumes. In response, North American producers have announced production downtime, resulting in a temporary reduction of newsprint production capacity of approximately one third. We are managing our production to maximize profitability and optimize cash flows until the market stabilizes, including reducing capacity to run only one of our two production lines.~~Late in the third quarter, we launched~~ the Envirosmart™ food service bag, ~~targeting~~which targets the quick service restaurant end-market and used for items such as sandwiches and to-go ~~orders, which~~orders.

Growing RYAM’s BioFuture

Upon the consummation of the sale of the lumber and newsprint assets, we will be focusing on and investing in further leveraging our four high purity cellulose plants as biorefineries. We believe we are in a unique position, starting with natural, renewably sourced feedstock, to capitalize on the global demand for more sustainable products with our leading cellulose specialties offerings as alternatives for petroleum-based incumbents and specialized assets capable of generating green fuels, electricity and other biomaterials. We have ~~grown~~executed on several high return projects to enhance the value of these assets, including recent investments in green energy in Tartas, France. Additionally, TemSilk™, a new product being produced in Temiscaming, Quebec, is a critical input in the ~~post COVID-19 environment.~~

production of Lyocell, a more sustainable textile. We are also a lead investor in Anomera, Inc. (“Anomera”), a Canadian start-up corporation headquartered in Montreal, Quebec. Anomera manufactures Carboxylated Cellulose Nanocrystals (CNC), a patented, biodegradable product, with uses in the cosmetics industry and various other industrial applications, including concrete, inks and pigments, polymer composites, coatings and adhesives industries. The investment in Anomera provides a new platform for cellulose specialties as we leverage the combined knowledge of cellulose chemistry to develop new markets for cellulose. We will seek further opportunities to leverage our core knowledge of creating the remarkable from the renewable to drive incremental value in our BioFuture.

Critical Accounting Policies and Use of Estimates

The preparation of financial statements requires us to make estimates, assumptions and judgments that affect our assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. We base these estimates and assumptions

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on historical data and trends, current fact patterns, expectations and other sources of information we believe are reasonable. Actual results may differ from these estimates.

For a full description of our critical accounting policies, see Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations in our ~~2019~~2020 Annual Report on Form 10-K. For recent accounting pronouncements see Item 1 of Part I, Financial Statements — Note 1 —Basis of Presentation and New Accounting Pronouncements for additional information.

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Results of Operations


Financial Information	Financial Information	Three Months Ended						%	Nine Months Ended						%	Financial Information	Three Months Ended				%
(in millions, except percentages)	(in millions, except percentages)	September 26, 2020			September 28, 2019			Change	September 26, 2020			September 28, 2019			Change	(in millions, except percentages)		March 27, 2021			March 28, 2020			Change
Net Sales	Net Sales	$	424		$	416		2%	$	1,230		$	1,307		(6)%	Net Sales		$	465		$	410		13%
Cost of Sales	Cost of Sales	(374)			(399)				(1,150)			(1,265)				Cost of Sales		(381)			(399)
Gross Margin	Gross Margin	50			17			201%	80			42			90%	Gross Margin		84			11			664%

Selling, general and administrative expenses	Selling, general and administrative expenses	(20)			(23)				(62)			(72)				Selling, general and administrative expenses		(18)			(20)
Duties	Duties	(8)			(5)				(20)			(16)				Duties		(7)			(6)
Foreign exchange gains (losses)	Foreign exchange gains (losses)	(1)			—				1			(3)				Foreign exchange gains (losses)		(1)			6
Other operating income (expense), net	Other operating income (expense), net	(4)			3				(9)			(2)				Other operating income (expense), net		(4)			(2)
Operating Income (Loss)	Operating Income (Loss)	17			(8)			317%	(10)			(51)			80%	Operating Income (Loss)		55			(12)			558%
Interest expense	Interest expense	(16)			(15)				(47)			(43)				Interest expense		(18)			(15)
Interest income and other, net	Interest income and other, net	(3)			3				(3)			3				Interest income and other, net		(1)			—

Net periodic pension and OPEB income (expense), excluding service costs	Net periodic pension and OPEB income (expense), excluding service costs	3			1				3			3				Net periodic pension and OPEB income (expense), excluding service costs		1			—

Income (Loss) From Continuing Operations Before Income Taxes	Income (Loss) From Continuing Operations Before Income Taxes	1			(19)			105%	(57)			(88)			35%	Income (Loss) From Continuing Operations Before Income Taxes		37			(27)			237%
Income tax benefit (expense)	Income tax benefit (expense)	28			5				48			26				Income tax benefit (expense)		(64)			2
Equity in income (loss) of equity method investment																Equity in income (loss) of equity method investment		$	—		$	—
Income (Loss) from Continuing Operations	Income (Loss) from Continuing Operations	$	29		$	(14)		307%	$	(9)		$	(62)		85%	Income (Loss) from Continuing Operations		$	(27)		$	(25)		(8)%
Income (loss) from discontinued operations, net of taxes	Income (loss) from discontinued operations, net of taxes	—			—				1			10				Income (loss) from discontinued operations, net of taxes		—			1
Net Income (Loss)	Net Income (Loss)	$	29		$	(14)			$	(8)		$	(52)			Net Income (Loss)		$	(27)		$	(24)

Gross Margin %	Gross Margin %	12		%	4		%		7		%	3		%		Gross Margin %		18		%	3		%
Operating Margin %	Operating Margin %	4		%	(2)		%		(1)		%	(4)		%		Operating Margin %		12		%	(3)		%
Effective Tax Rate %	Effective Tax Rate %	1,964		%	24		%		84		%	30		%		Effective Tax Rate %		(172)		%	(6)		%

Net sales by segment were as ~~follows:~~follows:


		Three Months Ended				Nine Months Ended					Three Months Ended
Net sales (in millions)	Net sales (in millions)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		Net sales (in millions)		March 27, 2021		March 28, 2020
High Purity Cellulose	High Purity Cellulose	$	253	$	268	$	757	$	822	High Purity Cellulose		$	250	$	250
Forest Products	Forest Products	103		65		255		222		Forest Products		147		82
Paperboard	Paperboard	47		54		140		151		Paperboard		48		50
Pulp & Newsprint	Pulp & Newsprint	38		46		127		161		Pulp & Newsprint		39		47

Eliminations	Eliminations	(17)		(17)		(49)		(49)		Eliminations		(19)		(19)
Total net sales	Total net sales	$	424	$	416	$	1,230	$	1,307	Total net sales		$	465	$	410

Net sales increased $8by $55 million during the three months ended ~~September 26, 2020, up by approximately 2 percent~~March 27, 2021 when compared to the ~~same prior year period due~~three months ended March 28, 2020 primarily ~~to strong~~driven by higher lumber and High Purity Cellulose commodity prices ~~and higher~~along with cellulose specialties ~~prices as well as higher commodity volumes,~~sales volumes. The increases were partially offset by lower High Purity Cellulose commodity ~~prices and lower volumes and prices for paperboard and newsprint. Net~~product sales ~~declined~~volumes. For further discussion, see Operating Results by $77 million during the nine months ended September 26, 2020 when compared to the nine months ended September 28, 2019. These decreases were primarily driven by lower prices for commodity products and newsprint, as well as lower volumes for cellulose specialties products and lumber, partially offsetSegment.

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~~by higher commodity volumes, higher lumber prices and higher cellulose specialties prices. For further discussion, see Operating Results by Segment.~~

Operating income (loss) by segment was as follows:


		Three Months Ended				Nine Months Ended					Three Months Ended
Operating income (loss) (in millions)	Operating income (loss) (in millions)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		Operating income (loss) (in millions)		March 27, 2021		March 28, 2020
High Purity Cellulose	High Purity Cellulose	$	8	$	7	$	10	$	11	High Purity Cellulose		$	6	$	(5)
Forest Products	Forest Products	25		(5)		20		(27)		Forest Products		61		(1)
Paperboard	Paperboard	3		2		14		1		Paperboard		6		5
Pulp & Newsprint	Pulp & Newsprint	(6)		(4)		(18)		3		Pulp & Newsprint		(6)		(6)
Corporate	Corporate	(13)		(8)		(36)		(39)		Corporate		(12)		(5)
Total operating income (loss)	Total operating income (loss)	$	17	$	(8)	$	(10)	$	(51)	Total operating income (loss)		$	55	$	(12)

The operating ~~loss~~results for the three month period ended ~~September 26, 2020~~March 27, 2021 improved by ~~$25~~$67 million, to operating income of ~~$17~~$55 million when compared to the same prior year period primarily due to strong lumber prices, lower operating costs, higher High Purity Cellulose commodity prices and ~~higher~~increased cellulose specialties prices. For the nine months ended September 26, 2020, the operating loss of $10 million improved by $41 million when compared to the same prior year period, primarily driven by higher lumber prices, lower costs, higher cellulose specialties prices and higher sales ~~volumes for commodity products. For further discussion, see Operating Results by Segment.~~volumes.

Non-operating Expenses

Interest expense increased $1$3 million to ~~$16~~$18 million for the three months ended ~~September 26, 2020~~March 27, 2021 when compared to the same prior year period. ~~Interest expense increased $4 million to $47 million for~~The increase was principally driven by the ~~nine months ended September 26, 2020 compared~~higher interest rate and additional amortization of debt issuance costs related to the ~~same prior year period. The increases were due to higher interest rates resulting from higher interest spreads on our amended Senior Secured Credit Facilities, partially offset by slightly lower~~December 2020 refinancing of certain debt ~~levels.~~instruments. See Note 7 — ~~Long Term~~ Debt and Finance Leases for further information.

Income Tax Benefit (Expense)

Given the combination of our results during the three and nine months ended September 26, 2020 and certain tax adjustments recorded during those periods, the effective tax rates from continuing operations for the three and nine months ended September 26, 2020 are not meaningful. The ~~2020~~ effective tax rate expense for the first quarter of 2021 was 172 percent compared to a benefit ~~for these periods~~rate of 6 percent in the same period of 2020. The 2021 effective tax rate differs from the ~~federal~~ statutory rate of 21 percent primarily due to ~~the release of certain valuation allowances related to nondeductible U.S.~~Global Intangible Low Taxed Income (“GILTI”) on foreign earnings, disallowed interest expense, benefits from the CARES Act, return to accrual adjustments, and tax credits. These differences are partially offset by remaining nondeductible U.S. interest expense, taxable income generated from the 2020 credit agreement amendment, increases to uncertain tax position reserves, nondeductible executive compensation, and lower tax deductions ~~on vested stock compensation.~~

The third quarter and year to date September 28, 2019 effective tax rate from continuing operations was a benefit of 24 percent and 30 percent, respectively. The effective tax rate differs from the federal statutory rate of 21 percent primarily due to nondeductible interest expense in the U.S., ~~tax credits, excess tax deductions on vested stock compensation, U.S. Global Intangible Low-Taxed Income,~~ and different statutory tax rates of foreign operations. The application of GILTI effectively results in double book taxation of the majority of the Company’s high Canadian earnings. The Company currently expects minimal cash taxes to be paid in 2021 or 2022 as a result of 2021 earnings. See Note 16 — Income Taxes for additional information.

Discontinued Operations

The Company has presented the operating results for its Matane operations that was sold in November 2019 as discontinued operations for the three and nine months ended September 28, 2019. Included in discontinued operations is allocated interest expense for debt that was required to be repaid upon completion of the sale. The three and nine months ended September 28, 2019 also include legal and administrative costs to sell the operation.operations. The Company had an after tax benefit of $1 million as a result of the working capital adjustments as required by the sale agreement for the ~~nine~~three months ended ~~September 26,~~March 28, 2020.

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Operating Results by Segment

High Purity Cellulose


		Three Months Ended				Nine Months Ended					Three Months Ended
(in millions)	(in millions)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		(in millions)		March 27, 2021		March 28, 2020
Net Sales	Net Sales	$	253	$	268	$	757	$	822	Net Sales		$	250	$	250
Operating income (loss)	Operating income (loss)	$	8	$	7	$	10	$	11	Operating income (loss)		$	6	$	(5)
Average Sales Prices ($ per metric ton):	Average Sales Prices ($ per metric ton):									Average Sales Prices ($ per metric ton):
Cellulose Specialties		$	1,348	$	1,317	$	1,321	$	1,303
Commodity Products		$	624	$	768	$	611	$	803
High Purity Cellulose										High Purity Cellulose		$	1,046	963
Sales Volumes (thousands of metric tons):	Sales Volumes (thousands of metric tons):									Sales Volumes (thousands of metric tons):
Cellulose Specialties		125		137		371		432
Commodity Products		104		88		338		246
High Purity Cellulose										High Purity Cellulose		217		235

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Changes in High Purity Cellulose net sales are as follows:


Three Months Ended	Three Months Ended			Changes Attributable to:						Three Months Ended			Changes Attributable to:
Net Sales (in millions)	Net Sales (in millions)	September 28, 2019		Price		Volume/Mix/Other		September 26, 2020		Net Sales (in millions)	March 28, 2020		Price		Volume/Mix/Other		March 27, 2021
Cellulose Specialties	Cellulose Specialties	$	181	$	4	$	(16)	$	169	Cellulose Specialties	$	160	$	(2)	$	10	$	168
Commodity Products	Commodity Products	67		(11)		9		65		Commodity Products	67		8		(16)		59
Other sales (a)	Other sales (a)	20		—		(1)		19		Other sales (a)	23		—		—		23
Total Net Sales	Total Net Sales	$	268	$	(7)	$	(8)	$	253	Total Net Sales	$	250	$	6	$	(6)	$	250
(a) Other sales consist of electricity, resins, lignin and other by-products to third-parties.
(a) Other sales consist of electricity, lignin and other by-products to third-parties.										(a) Other sales consist of electricity, lignin and other by-products to third-parties.

Total net sales for the three months ended September 26, 2020 declined $15 million, or 6 percent, to $253 million. This decline was driven by a 9 percent decrease in cellulose specialties volumes primarily due to the continued negative impact of COVID-19 and related demand weakness in the industrial, automotive and construction end markets. Commodity product sales prices declined 19 percent also primarily driven by the COVID-19 impact on the larger commodity pulp and textile markets. This decline was partially offset by a 18 percent increase in commodity sales volumes and a 2 percent increase in cellulose specialties sales prices.

Nine Months Ended Changes Attributable to:
Net Sales (in millions)
September 28, 2019 Price Volume/Mix/Other September 26, 2020
Cellulose Specialties $ 564 $ 7 $ (81) $ 490
Commodity Products 197 (55) 65 207
Other sales (a) 61 — — 61
Total Net Sales $ 822 $ (48) $ (16) $ 757
(a) Other sales consist of electricity, resins, lignin and other by-products to third-parties.

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Total net sales for the nine months ended September 26, 2020 declined $65 million, or 8 percent, to $757 million. The decline was driven by a 14 percent decrease in cellulose specialties volumes as well as a 24 percent decrease in commodity prices when comparedMarch 27, 2021 were comparable to the same prior year ~~period. These were partially offset~~period at $250 million. Cellulose specialties volumes improved by ~~a 37~~6 percent ~~improvement in commodity product volumes and a~~while sales prices declined slightly by 1 percent ~~increase in cellulose specialties~~during the quarter ended March 27, 2021. Commodity product sales ~~prices.~~prices increased 15 percent during the first quarter of 2021, however sales volumes decreased by 23 percent.

Changes in High Purity Cellulose operating income are as ~~follows:~~follows


Three Months Ended	Three Months Ended				Gross Margin Changes Attributable to (a):															Three Months Ended				Gross Margin Changes Attributable to (a):
(in millions)	(in millions)	September 28, 2019			Sales Price			Sales Volume/Mix/Other			Cost			SG&A and other			September 26, 2020			(in millions)	March 28, 2020			Sales Price			Sales Volume/Mix/Other			Cost			SG&A and other			March 27, 2021
Operating income (loss)	Operating income (loss)	$	7		$	(7)		$	(7)		$	14		$	1		$	8		Operating income (loss)	$	(5)		$	6		$	(1)		$	5		$	1		$	6
Operating margin %	Operating margin %	2.6		%	(2.6)		%	(2.8)		%	5.5		%	0.4		%	3.1		%	Operating margin %	(2.0)		%	2.4		%	(0.4)		%	2.0		%	0.4		%	2.4		%
(a) Sales Volume computed based on contribution margin.

Operating income for the three months ended September 26, 2020 was $8 million, which was consistent with the same prior year period. Lower commodity product sales prices and lower cellulose specialty sales volumes were offsetresults improved by ~~a decrease in costs of $14~~$11 million during the three months ended ~~September 26, 2020 and higher cellulose specialties sales prices. The favorable costs were largely driven by lower wood and chemical prices as well as improved operations.~~

Nine Months Ended Gross Margin Changes Attributable to (a):

(in millions)
September 28, 2019 Sales Price Sales Volume/Mix/Other Cost SG&A and other September 26, 2020
Operating income (loss) $ 11 $ (48) $ (28) $ 73 $ 2 $ 10
Operating margin % 1.3 % (6.1) % (3.8) % 9.6 % 0.3 % 1.3 %
(a) Sales Volume computed based on contribution margin.

~~Operating~~March 27, 2021 to operating income ~~declined by $1 million during the nine months ended September 26, 2020 to $10~~of $6 million when compared to the same prior year period. ~~The decrease was~~Sales prices for the segment increased 9 percent during the current three-month period driven by higher commodity prices and increased cellulose specialties sales when compared to the same prior year period. Compared to the prior year, sales volumes for the segment were impacted by shipping constraints and declined 8 percent during the current three-month period driven by lower commodities volumes, partially offset by higher cellulose specialties sales volumes driven by improved demand. Additionally, better productivity and ~~commodity product sales prices, partially offset by higher commodity product volumes and higher cellulose specialties prices. Costs decreased by $73 million during~~ the ~~nine months ended September 26, 2020 due primarily to lower wood, chemical and energy prices as well as~~impact of shutdowns improved ~~operations.~~operational costs.

Forest Products


		Three Months Ended				Nine Months Ended					Three Months Ended
(in millions)	(in millions)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		(in millions)		March 27, 2021		March 28, 2020
Net Sales	Net Sales	$	103	$	65	$	255	$	222	Net Sales		$	147	$	82
Operating income (loss)	Operating income (loss)	$	25	$	(5)	$	20	$	(27)	Operating income (loss)		$	61	$	(1)
Average Sales Prices ($ per thousand board feet):	Average Sales Prices ($ per thousand board feet):									Average Sales Prices ($ per thousand board feet):
Lumber	Lumber	$	592	$	366	$	463	$	370	Lumber		$	888	$	407
Sales Volumes (millions of board feet):	Sales Volumes (millions of board feet):									Sales Volumes (millions of board feet):
Lumber	Lumber	144		134		435		462		Lumber		144		149

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Changes in Forest Products net sales are as follows:


Three Months Ended	Three Months Ended	September 28, 2019		Changes Attributable to:				September 26, 2020		Three Months Ended	March 28, 2020		Changes Attributable to:				March 27, 2021
Net Sales (in millions)	Net Sales (in millions)			Price		Volume/Mix/Other				Net Sales (in millions)			Price		Volume/Mix/Other
Lumber	Lumber	$	49	$	32	$	4	$	85	Lumber	$	61	$	70	$	(3)	$	128
Other sales (a)	Other sales (a)	16		—		1		17		Other sales (a)	21		—		(2)		19
Total Net Sales	Total Net Sales	$	65	$	32	$	5	$	103	Total Net Sales	$	82	$	70	$	(5)	$	147
(a) Other sales consist of sales of logs, wood chips, and other by-products to other segments and third-parties	(a) Other sales consist of sales of logs, wood chips, and other by-products to other segments and third-parties									(a) Other sales consist of sales of logs, wood chips, and other by-products to other segments and third-parties

Total net sales for the three months ended ~~September 26, 2020~~March 27, 2021 increased ~~$38~~$65 million, or 57 percent, to $103 million. Average lumber sales prices improved by 62 percent and lumber sales volumes improved by 7 percent as a result of strong lumber markets and increased productivity. Other sales improved due to higher chips sales.

Nine Months Ended September 28, 2019 Changes Attributable to: September 26, 2020
Net Sales
(in millions)
Price Volume/Mix/Other
Lumber $ 171 $ 40 $ (10) $ 201
Other sales (a) 51 — 3 54
Total Net Sales $ 222 $ 40 $ (7) $ 255
(a) Other sales consist of sales of logs, wood chips, and other by-products to other segments and third-parties

~~Total net sales for the nine months ended September 26, 2020 increased $33 million, or 15~~78 percent when compared to the same prior year period ended ~~2019. Although~~2020. The improvement is due to a 118 percent increase in lumber ~~sales~~prices. Sales volumes ~~fell 6 percent, as a result of the planned mill closures, primarily~~were slightly lower than in the ~~second quarter~~prior year resulting from timing of ~~2020 due to the COVID-19 pandemic, lumber sales prices improved by 25 percent due to strong market demand in the third quarter. Log~~shipments and ~~chips sales were both higher during the nine months ended September 26, 2020.~~logistic constraints.

Changes in Forest Products operating income are as follows:

Three Months Ended Gross Margin Changes Attributable to (a)

(in millions)
September 28, 2019 Sales Price Sales Volume/Mix/Other Cost SG&A and other September 26, 2020
Operating income (loss) $ (5) $ 32 $ 2 $ (1) $ (3) $ 25
Operating margin % (7.7) % 35.5 % 0.3 % (1.0) % (2.9) % 24.2 %
(a) Sales Volume computed based on contribution margin.


Three Months Ended				Gross Margin Changes Attributable to (a)
(in millions)	March 28, 2020			Sales Price			Sales Volume/Mix/Other			Cost			SG&A and other			March 27, 2021
Operating income (loss)	$	(1)		$	70		$	(5)		$	(3)		$	—		$	61
Operating margin %	(1.2)		%	46.6		%	(1.9)		%	(2.0)		%	—		%	41.5		%
(a) Sales Volume computed based on contribution margin.

Operating results improved by ~~$30~~$62 million ~~for~~during the three months ended September 26, 2020 to operating income of $25 million. The favorable change was driven by higher lumber sales prices partially offset by higher lumber duties resulting from the higher sales prices and increased volumes sold to the U.S.

Nine Months Ended Gross Margin Changes Attributable to (a)

(in millions)
September 28, 2019 Sales Price Sales Volume/Mix/Other Cost SG&A and other September 26, 2020
Operating income (loss) $ (27) $ 40 $ — $ 10 $ (3) $ 20
Operating margin % (12.2) % 17.1 % — % 3.9 % (1.2) % 7.6 %
(a) Sales Volume computed based on contribution margin.

~~Table of Contents~~

~~Operating results improved by $47 million during the nine months ended September 26, 2020~~March 27, 2021 to an operating income of ~~$20~~$61 million. The favorable results were driven by higher lumber prices partly offset by lower sales volumes discussed above and ~~lower costs due~~the impact of higher residual stumpage costs. The Company deposited $7 million and $6 million of softwood lumber duties in the quarter ended March 27, 2021 and 2020, respectively. While the Company benefits from the December 2020 rate reduction from 20% to ~~lower wood and energy costs as well as lower fixed costs as a result~~9%, the increase in lumber prices resulted in an increase to the total value of the ~~planned mill closures previously mentioned. Selling, general and administrative expenses increased from higher~~ duties ~~driven by higher lumber prices and higher volumes sold to the U.S. during the nine months ended September 26, 2020.~~paid.

Paperboard


		Three Months Ended				Nine Months Ended					Three Months Ended
(in millions)	(in millions)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		(in millions)		March 27, 2021		March 28, 2020
Net Sales	Net Sales	$	47	$	54	$	140	$	151	Net Sales		$	48	$	50
Operating income	Operating income	$	3	$	2	$	14	$	1	Operating income		$	6	$	5
Average Sales Prices ($ per metric tons) (a):
Average Sales Prices ($ per metric tons):										Average Sales Prices ($ per metric tons):
Paperboard	Paperboard	$	1,048	$	1,097	$	1,082	$	1,105	Paperboard		$	1,111	$	1,107
Sales Volumes (in thousands of metric tons) (a):
Sales Volumes (in thousands of metric tons):										Sales Volumes (in thousands of metric tons):
Paperboard	Paperboard	45		49		130		137		Paperboard		43		46

Changes in Paperboard net sales are as follows:

Three Months Ended September 28, 2019 Changes Attributable to: September 26, 2020
Net Sales
(in millions)
Price Volume/Mix
Paperboard $ 54 $ (2) $ (5) $ 47

Total net sales for the three months ended September 26, 2020 decreased $7 million, or 13 percent, to $47 million. The decrease was primarily from a 4 percent decline in paperboard sales prices due to increased competition. In addition, sales volumes decreased 8 percent primarily due to the negative impact on demand from COVID-19 and increased competition.

Nine Months Ended September 28, 2019 Changes Attributable to: September 26, 2020
Net Sales
(in millions)
Price Volume/Mix
Paperboard $ 151 $ (3) $ (8) $ 140

Total net sales for the nine months ended September 26, 2020 decreased $11 million or 7 percent, to $140 million. Paperboard sales prices declined by approximately 2 percent, due to increased competition. Paperboard sales volumes declined by approximately 5 percent primarily due to the negative impact on demand from COVID-19 and increased competition.

~~Changes in Paperboard operating income are as follows:~~

Three Months Ended Gross Margin Changes Attributable to (a):

(in millions)
September 28, 2019 Sales Price Sales Volume/Mix Cost SG&A and other September 26, 2020
Operating income (loss) $ 2 $ (2) $ (2) $ 5 $ — $ 3
Operating margin % 3.7 % (3.7) % (4.3) % 10.6 % — % 6.3 %
(a) Sales Volume computed based on contribution margin.

Operating results improved by $1 million for the three months ended September 26, 2020 to operating income of $3 million. The increase was driven primarily by lower raw material pulp prices as well as favorable transportation costs, partly offset by lower sales prices and volumes.


Three Months Ended	March 28, 2020		Changes Attributable to:				March 27, 2021
Net Sales (in millions)	March 28, 2020		Price		Volume/Mix		March 27, 2021
Paperboard	$	50	$	—	$	(2)	$	48

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Nine Months Ended Gross Margin Changes Attributable to (a):

(in millions)
September 28, 2019 Sales Price Sales Volume/Mix Cost SG&A and other September 26, 2020
Operating income (loss) $ 1 $ (3) $ (3) $ 20 $ (1) $ 14
Operating margin % 0.7 % (2.0) % (2.2) % 14.3 % (0.7) % 10.1 %
(a) Sales Volume computed based on contribution margin.
Sales for the three months ended March 27, 2021 decreased $2 million as sales volumes declined 7 percent driven by timing of sales compared to the prior year.


Three Months Ended				Gross Margin Changes Attributable to (a):
(in millions)	March 28, 2020			Sales Price			Sales Volume/Mix			Cost			SG&A and other			March 27, 2021
Operating income (loss)	$	5		$	—		$	(1)		$	2		$	—		$	6
Operating margin %	10.0		%	—		%	(1.7)		%	4.2		%	—		%	12.5		%
(a) Computed based on contribution margin.

Operating results improved by $131 million during the ~~nine~~three months ended ~~September 26, 2020~~March 27, 2021 to operating income of ~~$14~~$6 million. The improvement was primarily due ~~primarily~~ to lower ~~raw material pulp prices as well as lower transportation costs, partly offset by lower average sales prices and volumes.~~operational costs.

Pulp and Newsprint


		Three Months Ended				Nine Months Ended					Three Months Ended
(in millions)	(in millions)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		(in millions)		March 27, 2021		March 28, 2020
Net Sales	Net Sales	$	38	$	46	$	127	$	161	Net Sales		$	39	$	47
Operating income (loss)	Operating income (loss)	$	(6)	$	(4)	$	(18)	$	3	Operating income (loss)		$	(6)	$	(6)
Average Sales Prices ($ per metric ton):	Average Sales Prices ($ per metric ton):									Average Sales Prices ($ per metric ton):
Pulp (a)	Pulp (a)	$	486	$	455	$	481	$	524	Pulp (a)		$	474	$	463
Newsprint	Newsprint	$	428	$	532	$	418	$	542	Newsprint		$	468	$	417
Sales Volumes (in metric tons):	Sales Volumes (in metric tons):									Sales Volumes (in metric tons):
Pulp (a)	Pulp (a)	49		45		154		145		Pulp (a)		44		52
Newsprint	Newsprint	19		38		85		123		Newsprint		25		40
Average sales prices and volumes for external sales only. For the three month period ended September 26, 2020 and September 28, 2019, the Pulp & Newsprint segment sold approximately 16,000 MT and 16,000 MT of high-yield pulp for $6 million and $6 million, respectively, to the Paperboard segment. For the nine month period ended September 26, 2020 and September 28, 2019, the Pulp & Newsprint segment sold approximately 50,000 MT and 48,000 MT of high-yield pulp for $18 million and $19 million, respectively, to the Paperboard segment.
(a) Average sales prices and volumes for external sales only. For the three month period ended March 27, 2021 and March 28, 2020, the Pulp & Newsprint segment sold approximately 17,000 metric tons and 16,000 metric tons of high-yield pulp for $7 million and $6 million, respectively, to the Paperboard segment.										(a) Average sales prices and volumes for external sales only. For the three month period ended March 27, 2021 and March 28, 2020, the Pulp & Newsprint segment sold approximately 17,000 metric tons and 16,000 metric tons of high-yield pulp for $7 million and $6 million, respectively, to the Paperboard segment.

Changes in Pulp & Newsprint net sales are as follows:

Three Months Ended September 28, 2019 Changes Attributable to: September 26, 2020
Net Sales
(in millions)
Price Volume/Mix
Pulp $ 26 $ 2 $ 2 $ 30
Newsprint 20 (2) (10) 8
Total Net Sales $ 46 $ — $ (8) $ 38

Total net sales for the three months ended September 26, 2020 declined $8 million, or 19 percent, to $38 million. Pulp sales prices increased by 7 percent primarily while pulp sales volumes increased by 9 percent. Newsprint sales price declined 20 percent primarily due to lower demand as a result of the COVID-19 pandemic. Newsprint sales volumes decreased 50 percent primarily due to the production curtailments at the Kapuskasing mill to address the weak demand for newsprint.


Nine Months Ended		September 28, 2019		Changes Attributable to:					September 26, 2020
Three Months Ended						Three Months Ended		March 28, 2020			Changes Attributable to:									March 27, 2021
Net Sales (in millions)	Net Sales (in millions)			September 28, 2019		Price							Volume/Mix				September 26, 2020		Net Sales (in millions)			Price				Volume/Mix
Pulp	Pulp	$	(8)			$	5			Pulp	$	30			$	1							$	(4)			$	28
Newsprint	Newsprint	67		(11)		(20)			36		Newsprint		17				1				(6)				11
Total Net Sales	Total Net Sales	$	161	$	(19)	$	(15)		$	127	Total Net Sales		$	47			$	2			$	(10)			$	39

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Total sales for the ~~nine~~three months ended ~~September 26, 2020~~March 27, 2021 were down ~~$34~~$8 million or 2116 percent when compared to the same ~~nine~~three months ended ~~September~~March 28, ~~2019. Pulp~~2020. High-yield pulp and newsprint sales prices were ~~down 8~~up 2 percent ~~as a result of weaker market conditions,~~and 12 percent, respectively, while high-yield pulp and newsprint sales volumes ~~rose 6~~decreased 15 percent and 38 percent, respectively. Declines in newsprint volumes were due to the absence of production issues that occurred during the prior year. Newsprint sales price and volume declined by 23 percent and 31 percent, respectively, due primarily to weaker market conditions caused bycontinued weak demand stemming from the COVID-19 ~~pandemic.~~pandemic and management’s decision to produce on only one of its newsprint two operating lines.

Changes in Pulp & Newsprint operating income are as follows:


Three Months Ended	Three Months Ended				Gross Margin Changes Attributable to (a):															Three Months Ended				Gross Margin Changes Attributable to (a):
(in millions)	(in millions)	September 28, 2019			Sales Price			Sales Volume/Mix			Cost			SG&A and other			September 26, 2020			(in millions)	March 28, 2020			Sales Price			Sales Volume/Mix			Cost			SG&A and other			March 27, 2021
Operating income (loss)	Operating income (loss)	$	(4)		$	—		$	(5)		$	3		$	—		$	(6)		Operating income (loss)	$	(6)		$	2		$	(4)		$	2		$	—		$	(6)
Operating margin %	Operating margin %	(8.7)		%	—		%	(15.0)		%	7.9		%	—		%	(15.8)		%	Operating margin %	(12.8)		%	4.6		%	(12.3)		%	5.1		%	—		%	(15.4)		%
(a) Sales Volume computed based on contribution margin.

Operating ~~income decreased $2 million~~results for the three months ended ~~September 26, 2020~~March 27, 2021 remained flat when compared to ~~an operating loss of $6 million. The decline was primarily driven~~the same prior year period. Lower newsprint and high-yield pulp sales volumes were offset by ~~lower~~improvements in high-yield pulp and newsprint sales ~~prices~~prices. Declines in high-yield pulp volumes were impacted by the timing of shipments and ~~volumes. Costs decreased due to lower transportation and energy costs.~~

Operating income decreased $21 million during the nine months ended September 26, 2020 to an operating loss of $18 million. The decline was primarily driven by lower prices in both product lines as well a decrease in newsprint volumes during the year to date period ended September 26, 2020. Costs decreased due to lower transportation, chemical, labor and maintenance costs partially offset by lower energy credits at the Kapuskasing mill.logistics constraints.

Corporate


		Three Months Ended				Nine Months Ended					Three Months Ended
Operating Income (Loss) (in millions)	Operating Income (Loss) (in millions)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		Operating Income (Loss) (in millions)		March 27, 2021		March 28, 2020
Operating loss	Operating loss	$	(13)	$	(8)	$	(36)	$	(39)	Operating loss		$	(12)	$	(5)

The operating loss for the three months ended ~~September 26, 2020~~March 27, 2021 increased $5$7 million when compared to the same prior year period primarily ~~from the impact of a $4 million insurance recovery in the third quarter of 2019 and~~due to unfavorable foreign exchange impacts ~~of $2 million offset by lower costs in~~and an increased reserve associated with the ~~current period.~~

The operating loss for the year to date ended September 26, 2020 decreased $3 million primarily due to favorable foreign exchange impacts of $3 million and overall lower spending in the current year, partly offset by higher non-cash amortization of technology assets in the current year and the impact of a $4 million insurance recovery in the nine months ended September 28, 2019.dispute settlement discussed above.

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Liquidity and Capital Resources

Cash flows from operations, primarily driven by operating results, have historically been our primary source of liquidity and capital resources. However, our operating cash flows have ~~declined significantly since early 2019~~been volatile in recent years due to ~~significant~~ decreases in ~~the~~ market prices for our commodity products ~~primarily viscose, fluff, high-yield pulp, lumber, paperboard and newsprint. Viscose prices were significantly impacted by~~as well as the ~~Chinese duties imposed. Further, some of these declines have been exacerbated~~impact on demand driven by the COVID-19 ~~pandemic impact on demand during 2020.~~pandemic. In response, we ~~have amended~~maintain a key focus on cash, managing working capital closely and optimizing the ~~financial covenants~~timing and ~~certain other provisions~~level of our Senior Secured Credit Facilities, most recently on June 5, 2020. The latest amendment to our Senior Secured Credit Facilities reduced the restrictions of our first lien secured gross leverage ratio and the interest coverage ratio tests, and provided additional liquidity.capital expenditures.

As of ~~September 26, 2020,~~March 27, 2021, we ~~remain well within~~are in compliance with ~~our~~all financial ~~covenants under our amended Senior Secured Credit Facilities including a gross secured leverage ratio of 4.0 times covenant EBITDA compared to a requirement of 6.65 times,~~ and an interest coverage ratio of 2.4 times covenant EBITDA compared to a requirement of 1.4 times. The lenders under the Credit Facilities have a first priority security interest in substantially all present and future material U.S. and Canadian assets, excluding the assets of certain non-guarantor subsidiaries. The non-guarantor subsidiaries had assets of $1.7 billion, year-to-date revenue of $148 million, covenant EBITDA for the last twelve months of $1 million and liabilities of $1.5 billion as of September 26, 2020.other customary covenants. We ~~continue to~~ believe our future cash flows from operations and availability under our ~~revolving credit facility,~~ABL Credit Facility, as well as our ability to access the capital markets, if necessary or desirable, will be adequate to fund our operations and anticipated long-term funding requirements, including capital expenditures, defined benefit plan contributions, and repayment of debt ~~maturities, although no assurances can~~maturities.

The non-guarantor subsidiaries had assets of $719 million, year-to-date revenue of $54 million, covenant EBITDA for the last twelve months is a $33 million loss and liabilities of $285 million as of March 27, 2021.

On September 6, 2019, our Board of Directors suspended our quarterly common stock dividend. No dividends have been declared since. The declaration and payment of future common stock dividends, if any, will be ~~given. See Note 7 —~~ ~~Long Term Debt~~at the discretion of the Board of Directors and ~~Finance Leases~~will be dependent upon our financial condition, results of operations, capital requirements and other factors the Board of Directors deem relevant. In addition, our ~~consolidated financial statements for additional information.~~debt facilities place limitations on the declaration and payment of future dividends.

On January 29, 2018, ~~the~~our Board of Directors authorized a $100 million common stock share ~~buyback.~~buyback program. For the ~~nine~~three months ended ~~September 26,~~March 27, 2021 and March 28, 2020, we did not repurchase any common shares under this buyback ~~program and we~~program. We do not expect to utilize ~~this~~any further authorization in the near future.

A summary of liquidity and capital resources is shown below (in millions of dollars):


		September 26, 2020			December 31, 2019				March 27, 2021			December 31, 2020
Cash and cash equivalents (a)	Cash and cash equivalents (a)	$	83		$	64		Cash and cash equivalents (a)	$	107		$	94
Availability under the Revolving Credit Facility (b)		97			87
Availability under the ABL Credit Facility (b)								Availability under the ABL Credit Facility (b)	142			102
Total debt (c)	Total debt (c)	1,078			1,082			Total debt (c)	1,083			1,084
Stockholders’ equity	Stockholders’ equity	700			683			Stockholders’ equity	659			695
Total capitalization (total debt plus equity)	Total capitalization (total debt plus equity)	$	1,778		$	1,765		Total capitalization (total debt plus equity)	$	1,742		$	1,779
Debt to capital ratio	Debt to capital ratio	61		%	61		%	Debt to capital ratio	62		%	61		%

(a) Cash and cash equivalents consisted of cash, money market deposits and time deposits with original maturities of 90 days or less.

(b) ~~We are required to maintain $70~~Amounts available under the ABL Credit Facility fluctuate based on eligible accounts receivable and inventory levels. At March 27, 2021, we had $186 million of gross availability ~~on our revolving~~and net available borrowings of $142 million after taking into account standby letters of credit ~~facility, therefore we have reflected this amount as a reduction to the revolver's stated availability.~~of approximately $44 million. In addition to the ~~$97 million available~~availability under the ~~revolving credit facility,~~ABL Credit Facility, we have ~~approximately $16~~$19 million available under an accounts receivable factoring line of credit in France. The amounts available under the revolving credit facility have been reduced by standby letters of credit of approximately $43 million and $33 million at September 26, 2020 and December 31, 2019, respectively.

(c) See Note 7 — ~~Long Term~~ Debt and Finance Leases of our consolidated financial statements for additional information.

~~During the nine months ended September 26, 2020, we did not have any required principal repayments on the Term A-1 or Term A-2 Loan Facility.~~

~~Table of Contents~~

Cash Flows (in millions of dollars)

The following table summarizes our cash flows from operating, investing and financing activities for the ~~nine~~three months ended:


Cash Flows Provided by (Used for):	Cash Flows Provided by (Used for):	September 26, 2020		September 28, 2019		Cash Flows Provided by (Used for):	March 27, 2021		March 28, 2020
Operating activities	Operating activities	$	63	$	24	Operating activities	$	38	$	(13)
Investing activities	Investing activities	$	(43)	$	(83)	Investing activities	$	(21)	$	(13)
Financing activities	Financing activities	$	(2)	$	18	Financing activities	$	(3)	$	5

Cash flows provided by operating activities improved ~~$39~~$51 million during the ~~nine~~three months ended ~~September 26, 2020~~March 27, 2021 to $38 million when compared to the same prior year period due to favorable operating results ~~resulting~~driven from higher lumber and High Purity Cellulose prices and lower ~~costs.~~operating costs partially offset by seasonal working capital increases. Higher non-cash expenses primarily related to deferred tax expense were ~~partially~~partly offset by ~~an increase in~~unfavorable changes to working capital. The ~~increase in working capital includes~~three

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months ended March 28, 2020 included a ~~$42~~$20 million increase into the U.S. income tax receivable ~~primarily~~ from the passage of the CARES Act in March ~~2020. Cash flows provided by discontinued operations decreased $19 million due to the sale~~ of ~~the Matane pulp mill in November 2019.~~2020.

Cash flows used for investing activities ~~decreased $41~~increased $8 million during the ~~nine~~three months ended ~~September 26, 2020~~March 27, 2021 when compared to the same prior year ~~period. Cash flow used by continuing investing activities decreased $38 million primarily due to lower planned~~period from increased capital spending. ~~Cash flows used~~The increase also includes a $1 million non-voting investment in ~~investing activities from discontinued operations decreased $3 million due to the sale of the Matane pulp mill.~~Anomera, Inc.

Cash flows from financing activities ~~decreased $20~~changed by $8 million during the ~~nine~~three months ended ~~September 26, 2020~~March 27, 2021 to cash used for investing activities of $2$3 million when compared to the same prior year period. The ~~nine~~decline is primarily from a decrease in borrowings, net of payments, during the three months ended ~~September 26, 2020 decrease was driven~~March 27, 2021, partially offset by ~~lower borrowings as a result of improvements in~~ cash ~~used by operating activities, lower capital spending, as well as the discontinuance of dividends~~paid for common stock ~~and preferred stock. The preferred stock converted to common stock~~repurchased in ~~August 2019. Repurchases~~lieu of ~~common stock decreased during the nine months ended September 26, 2020 due to lower tax payment requirements~~income taxes from the vesting of ~~common stock related to~~ incentive stock ~~grants. In addition,~~grants which was $1 million higher during the ~~nine months ended September 26, 2020 included $3 million debt issuance costs for the modification of terms on the Senior Secured Credit Facilities.~~current period. See Note 7 — ~~Long Term~~ Debt and Finance Leases and Note 12 — Stockholders' Equity, to our consolidated financial statements for additional information.

Performance and Liquidity Indicators

The discussion below is presented to enhance the reader’s understanding of our operating performance, liquidity, ability to generate cash and satisfy rating agency and creditor requirements. This information includes the following measures of financial results: EBITDA, adjusted EBITDA and adjusted free cash flows. These measures are not defined by U.S. Generally Accepted Accounting Principles (“GAAP”) and the discussion of EBITDA, adjusted EBITDA and adjusted free cash flows is not intended to conflict with or change any of the GAAP disclosures described above. ~~Management~~Our management uses these non-GAAP measures to compare our performance to that of prior periods for trend analyses, purposes of determining management incentive compensation and budgeting, forecasting and planning purposes. Our management considers these measures, in addition to operating income, to be important to estimate the enterprise and stockholder values of the Company, and for making strategic and operating decisions. In addition, analysts, investors and creditors use these measures when analyzing our operating performance, financial condition and cash generating ability. ~~Management~~Our management uses EBITDA and adjusted EBITDA as a performance ~~measure~~measures and adjusted free cash flows as a liquidity measure. See ~~Item 2 —~~ ~~Note~~“Note about Non-GAAP Financial ~~Measures~~Measures” on page 21 for limitations associated with non-GAAP measures.

EBITDA is defined by SEC rules as earnings before interest, taxes, depreciation and amortization. EBITDA is not necessarily indicative of results that may be generated in future periods.

~~Table of Contents~~

Below is a reconciliation of Income (Loss) from Continuing Operations to EBITDA ~~and Adjusted EBITDA~~ by segment (in millions of dollars):


Three Months Ended:		Forest Products		Paperboard		Pulp & Newsprint		High Purity Cellulose		Corporate & Other		Total
September 26, 2020

Three Months Ended														Three Months Ended	Forest Products		Paperboard		Pulp & Newsprint (a)				High Purity Cellulose		Corporate & Other		Total
March 27, 2021														March 27, 2021
																			Newsprint		Pulp
Income (loss) from continuing operations	Income (loss) from continuing operations	$	26	$	3	$	(5)	$	8	$	(3)	$	29	Income (loss) from continuing operations	$	61	$	6	$	(5)	$	—	$	7	$	(96)	$	(27)
Depreciation and amortization	Depreciation and amortization	3		4		1		28		2		38		Depreciation and amortization	2		4		1		—		28		1		36
Interest expense, net	Interest expense, net	—		—		—		—		16		16		Interest expense, net	—		—		—		—		—		18		18
Income tax expense (benefit)	Income tax expense (benefit)	—		—		—		—		(28)		(28)		Income tax expense (benefit)	—		—		—		—		—		64		64
EBITDA	EBITDA	$	29	$	7	$	(4)	$	36	$	(13)	$	55	EBITDA	$	63	$	10	$	(4)	$	—	$	35	$	(13)	$	91

September 28, 2019
Income (loss) from continuing operations		$	(5)	$	3	$	(2)	$	8	$	(18)	$	(14)
Depreciation and amortization		2		4		1		33		—		40
Interest expense, net		—		—		—		—		15		15
Income tax expense (benefit)		—		—		—		—		(5)		(5)
EBITDA		$	(3)	$	7	$	(1)	$	41	$	(8)	$	36
Insurance recovery		—		—		—		—		(4)		(4)

Loan amendment costs		—		—		—		—		3		3
Adjusted EBITDA		$	(3)	$	7	$	(1)	$	41	$	(9)	$	35

Nine Months Ended		Forest Products		Paperboard		Pulp & Newsprint		High Purity Cellulose		Corporate & Other		Total
September 26, 2020
March 28, 2020														March 28, 2020
Income (loss) from continuing operations	Income (loss) from continuing operations	$	20	$	15	$	(14)	$	8	$	(38)	$	(9)	Income (loss) from continuing operations	$	(1)	$	5	$	(4)	$	(1)	$	(5)	$	(19)	$	(25)
Depreciation and amortization	Depreciation and amortization	8		12		3		85		3		111		Depreciation and amortization	2		4		—		1		30		—		38
Interest expense, net	Interest expense, net	—		—		—		—		47		47		Interest expense, net	—		—		—		—		—		15		15
Income tax expense (benefit)	Income tax expense (benefit)	—		—		—		—		(48)		(48)		Income tax expense (benefit)	—		—		—		—		—		(2)		(2)
EBITDA	EBITDA	$	28	$	26	$	(11)	$	93	$	(36)	$	100	EBITDA	$	1	$	9	$	(4)	$	—	$	26	$	(5)	$	27

September 28, 2019
Income (loss) from continuing operations		$	(27)	$	2	$	9	$	10	$	(56)	$	(62)
Depreciation and amortization		7		12		3		90		—		112
Interest expense, net		—		—		—		—		43		43
Income tax expense (benefit)		—		—		—		—		(26)		(26)
EBITDA		$	(20)	$	14	$	12	$	100	$	(39)	$	67
Insurance recovery		—		—		—		—		(4)		(4)
Loan amendment costs		—		—		—		—		3		3
Non-recurring expense (a)		—		—		—		—		1		1
Adjusted EBITDA		$	(20)	$	14	$	12	100		(39)		$	67

(a) ~~Non-recurring expenses are related~~Due to the ~~Company’s review~~announced sale of ~~its commodity asset portfolio.~~our lumber and newsprint assets, we are providing a break out of EBITDA for the Pulp & Newsprint segment.

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~~Adjusted~~ EBITDA for the three ~~and nine~~ months ended ~~September 26, 2020~~March 27, 2021 improved by ~~$19 million and $33~~$64 million when compared to the quarter ended ~~September~~March 28, ~~2019, respectively,~~2020, primarily from favorable operating results driven by higher lumber and High Purity Cellulose prices and lower costs. For the full discussion of changes to operating income, see Management’s Discussion of Results of Operations.

~~We define adjusted~~Adjusted free cash flows is defined as cash provided by ~~(used for)~~ operating activities ~~from~~of continuing operations adjusted for capital expenditures, net of proceeds from sale of assets, excluding strategic ~~capital.~~capital expenditures. Adjusted free cash flows, as defined by the Company, is a non-GAAP measure of cash generated during a period which is available for ~~dividend distribution,~~ debt reduction, strategic capital expenditures and acquisitions and repurchase of ~~our~~the Company’s common stock. Adjusted free cash flows is not necessarily indicative of the adjusted free cash flows that may be generated in future periods.

Below is a reconciliation of cash flows from operations to adjusted free cash flows for the respective periods (in millions of dollars):


		Nine Months Ended					Three Months Ended
Cash Flows from Operations to Adjusted Free Cash Flows Reconciliation	Cash Flows from Operations to Adjusted Free Cash Flows Reconciliation	September 26, 2020		September 28, 2019		Cash Flows from Operations to Adjusted Free Cash Flows Reconciliation	March 27, 2021		March 28, 2020
Cash provided by (used for) operating activities - continuing operations	Cash provided by (used for) operating activities - continuing operations	$	63	$	5	Cash provided by (used for) operating activities - continuing operations	$	38	$	(13)
Capital expenditures (a)	Capital expenditures (a)	(29)		(63)		Capital expenditures (a)	(17)		(10)
Adjusted Free Cash Flows	Adjusted Free Cash Flows	$	34	$	(58)	Adjusted Free Cash Flows	$	21	$	(23)

(a) Capital expenditures exclude strategic capital expenditures which are deemed discretionary by management. Strategic expenditures for the first ~~nine~~three months of ~~2020~~2021 were approximately ~~$14~~$2 million. Strategic capital expenditures for the same period of ~~2019~~2020 were approximately ~~$18~~$2 million.

Adjusted free cash flows improved primarily due to favorable operating results primarily from higher lumber and ~~lower~~High Purity Cellulose prices partly offset by higher capital expenditure requirements. For the full discussion of operating cash flows, see Management’s Discussion and Analysis of Cash Flows.

Contractual Financial Obligations and Off-Balance Sheet Arrangements

We have no material changes outside the ordinary course of business to the Contractual Financial Obligations table as presented in Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations in our ~~2019~~2020 Annual Report on Form 10-K.

See Note 18 — Commitments and Contingencies for details on our letters of credit and surety bonds as of ~~September 26, 2020.~~March 27, 2021.


Item 3.			Quantitative and Qualitative Disclosures About Market Risk

Market and Other Economic Risks

We are exposed to various market risks, primarily changes in interest rates, currency and commodity prices. Our objective is to minimize the economic impact of these market risks. We may use derivatives in accordance with policies and procedures approved by the Audit Committee of our Board of Directors. Derivatives are managed by a senior executive committee whose responsibilities include initiating, managing and monitoring resulting exposures. See Note 9 — Derivative Instruments for additional information.

We manage our foreign currency exposures by balancing certain assets and liabilities denominated in foreign currencies. We may also use foreign currency forward contracts to manage these exposures. The principal objective of such contracts is to minimize the potential volatility and financial impact of changes in foreign currency exchange rates. We do not utilize financial instruments for trading or other speculative purposes.

The prices, sales volumes and margins of the commodity products of our High Purity Cellulose segment and all the products of the Forest Products and Pulp ~~and Paper~~& Newsprint segments have historically been cyclically affected by economic and market shifts, fluctuations in capacity, and changes in foreign currency exchange rates. In general, these products are commodities that are widely available from other producers; because these products have few distinguishing qualities from producer to producer, competition is based primarily on price, which is determined by supply relative to demand. The overall levels of demand for the products we manufacture, and consequently our sales and profitability, reflect fluctuations in end user demand. Our cellulose specialties product prices are impacted by market supply and demand, raw material and processing costs, changes in global currencies and other factors. While these prices are not directly correlated to commodity dissolving wood pulp and paper pulp prices, changes in commodity dissolving wood pulp and paper pulp prices may impact competitors' actions ~~which can lead to an~~

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which can lead to an impact in prices for cellulose specialties products. In addition, ~~a majority~~approximately half of our cellulose specialties ~~products~~contracted volumes are under multi-year contracts that expire between ~~2020~~2021 and 2023.

As of ~~September 26, 2020,~~March 27, 2021, we had ~~$499~~$4 million ~~principal amount~~of variable rate debt which is subject to interest rate risk. At this borrowing level, a hypothetical one-percentage point increase/decrease in interest rates would result in ~~a corresponding~~an immaterial increase/decrease ~~of approximately $5 million~~ in interest payments and expense over a ~~12 month~~12-month period. ~~Our primary interest rate exposure on variable rate debt results from changes in the London interbank offered rate (“LIBOR”).~~

The fair market value of our long-term fixed interest rate debt is also subject to interest rate risk. However, we intend to hold most of our debt until maturity. The estimated fair value of our fixed-rate debt at ~~September 26, 2020~~March 27, 2021 was ~~$429~~$1,104 million compared to the ~~$584~~$1,076 million carrying value of principal amount. We use quoted market prices to estimate the fair value of our fixed-rate debt. Generally, the fair market value of fixed-rate debt will increase as interest rates fall and decrease as interest rates rise.

We may periodically enter into commodity forward contracts to fix some of our energy costs that are subject to price volatility caused by weather, supply conditions, political and economic variables and other unpredictable factors. Such forward contracts partially mitigate the risk of changes to our gross margins resulting from an increase or decrease in these costs. Forward contracts which are derivative instruments are reported in the consolidated balance sheets at their fair values, unless they qualify for the normal purchase normal sale ("NPNS") exception and such exception has been elected. If the NPNS exception is elected, the fair values of such contracts are not recognized on the ~~consolidated~~ balance ~~sheets.~~sheet.


Item 4.			Controls and Procedures

Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining adequate disclosure controls and procedures. Disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)), are designed with the objective of ensuring that information required to be disclosed in reports filed under the Exchange Act, such as this quarterly report on Form 10-Q, is (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Because of the inherent limitations in all control systems, no control evaluation can provide absolute assurance that all control exceptions and instances of fraud have been prevented or detected on a timely basis. Even systems determined to be effective can provide only reasonable assurance their objectives are achieved.

Based on an evaluation of our disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q, our management, including the Chief Executive Officer and Chief Financial Officer, concluded the design and operation of the disclosure controls and procedures were effective as of ~~September 26, 2020.~~March 27, 2021.

During the quarter ended ~~September 26, 2020,~~March 27, 2021, based upon the evaluation required by paragraph (d) of SEC Rule 13a-15, there were no changes in our internal control over financial reporting that would materially affect or are reasonably likely to materially affect our internal control over financial reporting.

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Part II.			Other Information


Item 1.			Legal Proceedings

The Company is engaged in various legal and regulatory actions and proceedings, and has been named as a defendant in various lawsuits and claims arising in the ordinary course of its business. While the Company has procured reasonable and customary insurance covering risks normally occurring in connection with its businesses, the Company has in certain cases retained some risk through the operation of self-insurance, primarily in the areas of workers’ compensation, property insurance, business interruption and general liability. While there can be no assurance, the ultimate outcome of these actions, either individually or in the aggregate, is not expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows, except as may be noted below.

~~The Company’s statements set forth~~Final Settlement Reached in ~~the Legal Proceedings section (Item 3) of its Annual Report on SEC Form 10-K for the year ended December 31, 2019 (filed March 2, 2020) remain applicable, subject~~Dispute with IESO Relating to ~~the Jesup Plant Permit case conclusion disclosed in Part II, Item 1 of the Quarterly Report on Form 10-Q for the quarter ended March 28, 2020 (filed on May 7, 2020) and the following update:~~

~~IESO~~ Investigation of the Kapuskasing Newsprint Facility

~~Since~~From the period from 2014 to early 2021, the Market Assessment and Compliance Division (“MACD”) branch of the Independent Electricity System Operator (“IESO”), the governmental agency responsible for operating the wholesale electricity market and directing the operation of the bulk electrical system in the province of Ontario, Canada, ~~has~~had been engaged in reviewing the Company's compliance with the published rules that govern the operation of the wholesale electricity market in Ontario, Canada. ~~MACD has been specifically reviewing issues relating to~~The inquiry was focused primarily on payments made by IESO to the ~~Company’s facility in Kapuskasing, Ontario. The inquiry has focused primarily on payments made by IESO~~Company between 2010 and 2019 under market rules in connection with multiple planned, extended and unplanned forced outages that caused extensive downtime, in ~~respect~~full or in part, of ~~parts or~~ the ~~entire~~Company’s Kapuskasing, Ontario newsprint facility.

In May 2020, MACD finalized two of its four investigations into the Company’s electricity management practices at its Kapuskasing newsprint facility and issued orders ~~claiming~~asserting penalties of CAD $25 ~~million in connection therewith were issued by the IESO. More particularly, the~~million. These orders ~~would require~~called for the Company to pay penalties of CAD $3 million immediately and CAD $12 million over a 10-year period, with the remaining CAD $10 million to be deferred and ultimately forgiven assuming the Company otherwise complied with the orders’ remaining ~~terms of the orders.~~terms. The Company, ~~believes~~which maintained it ~~has~~had complied in all material respects with the published rules, ~~and is~~ vigorously ~~contesting~~contested IESO’s orders, including through the filing of judicial review proceedings with the divisional Court (Superior Court of Justice) of Ontario seeking invalidation of the orders. ~~The~~At the time these orders were issued, the remaining two investigations remained open, subjecting the Company ~~does not believe~~to the ~~ultimate outcome~~risk that MACD may in the future issue additional orders upon finalization of these additional investigations.

On April 19, 2021, the Company and IESO entered into Minutes of Settlement (“MOS”) pursuant to which the parties agreed to fully and finally settle all claims relating to all four of the investigations (whether completed or not) and related orders, the judicial review proceedings and underlying disputes. As part of the settlement, the Company agreed to a fixed obligation to pay a sum of CAD $12 million over a period of 5 years comprised of a CAD $4.5 million up-front payment and a CAD $7.5 payment to be spread (on a front-weighted basis) over the next 5 anniversaries of the MOS, without interest. In addition to the foregoing, the MOS provides that a “suspended” sum of CAD $10.4 million would become due and payable in the event the Company fails to comply with any of the terms and conditions of the MOS or commits an event of default, as defined under the applicable market rules, unless such breach or event of default is remedied on a timely basis. This contingent “suspended” sum decreases annually as the scheduled fixed, or non-contingent, payments are made under the MOS. Assuming no uncured event of default or breach occurs during the repayment period, upon full payment of the CAD $12 million, the entire "suspended" sum shall be extinguished and RYAM shall be released from any payment obligation with respect thereto.

Given the parties’ finalization of and entry into the MOS, the Company considers this ~~dispute will~~matter concluded (subject only to the parties’ obligations yet to be ~~material to its business or financial condition, although no assurances can be given.~~performed under the MOS).


Item 1A.			Risk Factors

~~The following is intended~~There have been no material changes to ~~restate and supplement~~ the ~~Risk Factor entitled “Public health crises such as epidemics or pandemics, including~~risk factors previously disclosed in Part I, Item 1A, of our 2020 Annual Report on Form 10-K during the recent COVID-19 outbreak, could have a material adverse effect on our financial condition, liquidity or results of operations,” which was incorporated in and a part of the Company’s 2019 Form 10-K:period covered by this report.

We are subject to risks associated with the COVID-19 pandemic and related impacts, which have had, and we expect will continue to have, a material adverse effect on our business. The nature and extent of future impacts are highly uncertain and unpredictable.

Our global operations expose us to risks associated with public health crises, including epidemics and pandemics, such as the COVID-19 pandemic which continues to generate significant volatility, uncertainty and economic disruption across the globe including in many markets in which we do business. COVID-19 has had, and we expect will continue to have, a materially adverse impact on our business and financial condition, including as a result of impacts associated with preventive and precautionary measures that we, other businesses, governments and individual consumers have taken and are continuing to take. These impacts could be magnified if the pandemic severity or duration persists or exacerbates over an extended period of time. While the full extent of the COVID-19 pandemic’s ongoing and future impacts on our business cannot currently be predicted with certainty, we continue to promote the health and safety of our employees and to closely monitor the pandemic's impacts on our liquidity, capital markets, reliability, customers, suppliers, and the macroeconomic conditions relevant to our business, including general economic uncertainty, unemployment rates and recessionary pressures.

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~~Specific risks associated with COVID-19 include, but are not limited to, the following:~~

•We have experienced, and expect to continue to experience, significant and unpredictable reductions and other fluctuations in demand for certain of our products due to pandemic-driven factors such as end-market weakness and customer security-of-supply concerns.

•A significant number of our suppliers, vendors and other global supply chain partners have been adversely affected by the COVID-19 pandemic, and these impacts have impaired and could continue to impair our ability to timely and efficiently move our products through the various steps in the global supply chain process to our end customers.

•To the extent our operational, management or other personnel are impacted in significant numbers by COVID-19 and are not available to perform their professional duties, we could experience delays in, or the suspension of, our operations and other functions.

•The ongoing adverse impacts of COVID-19 on the global economy and capital markets worldwide may, among other consequences, restrict our access to capital, increase financing costs, and/or adversely affect our liquidity and perceptions of our creditworthiness.

•To the extent that COVID-19 continues to adversely affect our business, financial condition or results of operations, it may also heighten other risks described in the “Risk Factors” section in our 2019 Annual Report.


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

Issuer Purchases of Equity Securities

The following table provides information regarding our purchases of Rayonier Advanced Materials common stock during the quarter ended ~~September 26, 2020:~~March 27, 2021:

Period Total Number of Shares Purchased (b) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (a)
June 28 to August 1 — $ — — $ 60,294,000
August 2 to August 29 6,053 $ 2.91 — $ 60,294,000
August 30 to September 26 50 $ 3.21 — $ 60,294,000
Total 6,103 —


Period	Total Number of Shares Purchased (b)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (a)
January 1 to January 30	—	$	—	—	$	60,294,000
January 31 to February 27	3,828	$	12.04	—	$	60,294,000
February 28 to March 27	127,801	$	10.70	—	$	60,294,000
Total	131,629			—

(a) As of ~~September 26, 2020,~~March 27, 2021, approximately $60 million of share repurchase authorization remains under the authorization declared by the Board of Directors on January 29, 2018.

(b) Repurchased to satisfy the tax withholding requirements related to the issuance of stock under the Rayonier Advanced Materials Incentive Stock Plan.

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Item 6.			Exhibits


3.1	Amended and Restated Certificate of Incorporation of Rayonier Advanced Materials Inc.	Incorporated herein by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on June 30, 2014
3.2	Certificate of Designations of 8.00% Series A Mandatory Convertible Preferred Stock of Rayonier Advanced Materials Inc., filed with the Secretary of State of the State of Delaware and effective August 10, 2016	Incorporated herein by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on August 10, 2016
3.3	Amended and Restated Bylaws of Rayonier Advanced Materials Inc	Incorporated herein by reference to Exhibit 3.2 to the Registrant’s Form 8-K filed on June 30, 2014
10.1	Asset Purchase Agreement by and between 9437-6001 Quebec Inc., as purchaser and GreenFirst Forest Products Inc., as Purchaser guarantor, and Rayonier A.M. Canada G.P. and Rayonier A.M. Canada Industries Inc., collectively the Seller, dated as of April 10, 2021¹	Filed herewith
31.1	Chief Executive Officer’s Certification Pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
31.2	Chief Financial Officer’s Certification Pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
32	Certification of Periodic Financial Reports Under Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith
101	The following financial information from our Quarterly Report on Form 10-Q for the three ~~and nine~~ months ended ~~September 26, 2020~~March 27, 2021 formatted in Extensible Business Reporting Language (“XBRL”), includes: (i) the Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the Three Month Ended March 27, 2021 and ~~Nine Months Ended September 26, 2020 and September~~March 28, ~~2019;~~2020; (ii) the Condensed Consolidated Balance Sheets as of ~~September 26, 2020~~March 27, 2021 and December 31, ~~2019;~~2020; (iii) the Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 26, 2020~~March 27, 2021 and ~~September~~March 28, ~~2019;~~2020; and (iv) the Notes to Condensed Consolidated Financial Statements	Filed herewith
104	Cover Page Interactive Data File - formatted as Inline XBRL and contained in Exhibit 101

¹ Certain confidential portions of this exhibit were omitted by means of marking such portions with asterisks because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed.

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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 thereunto duly authorized.


						Rayonier Advanced Materials Inc.
						(Registrant)

			By:			/s/ MARCUS J. MOELTNER
						Marcus J. Moeltner Chief Financial Officer and Senior Vice President, Finance (Duly Authorized Officer and Principal Financial Officer)

Date: ~~November 5, 2020~~May 6, 2021

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	September 26, 2020
Remainder of 2020	$	1,762
2021	6,439
2022	5,893
2023	4,840
2024	1,609
Thereafter	1,556
Total minimum lease payments	$	22,099
Less: imputed interest	(2,412)
Present value of future minimum lease payments	$	19,687


	Finance Lease Payments		Debt Principal Payments
2020	$	129	$	8,819
2021	515		9,766
2022	515		160,696
2023	515		8,499
2024	515		869,641
Thereafter	988		25,276
Total principal payments	$	3,177	$	1,082,697
Less: Imputed interest	(603)
Present value minimum finance lease payments	$	2,574


	September 26, 2020		December 31, 2019
Interest rate swaps (a)	$	200,000	$	200,000
Foreign exchange forward contracts (b)	$	151,331	$	343,665
Foreign exchange forward contracts (c)	$	67,224	$	83,126


	Balance Sheet Location	September 26, 2020		December 31, 2019
Assets
Derivatives designated as hedging instruments:


Foreign exchange forward contracts	Prepaid and other current assets	$	1,502	$	4,857
Foreign exchange forward contracts	Other assets	0		5
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts	Prepaid and other current assets	0		246

Liabilities
Derivatives designated as hedging instruments:
Interest rate swaps	Accrued and other current liabilities	(917)		(639)

Foreign exchange forward contracts	Accrued and other current liabilities	(2,361)		(340)
Foreign exchange forward contracts	Other long-term liabilities	(1,978)		(759)
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts	Accrued and other current liabilities	0		(16)
Total net derivative assets (liabilities)		$	(3,754)	$	3,354


	September 26, 2020		December 31, 2019
Interest rate cash flow hedges	$	(715)	$	(499)
Foreign exchange cash flow hedges	$	(937)	$	1,789


	September 26, 2020		September 28, 2019
Cash paid (received) during the period:
Interest	$	33,934	$	37,126
Income taxes	$	1,086	$	1,858