RESOLUTE FOREST PRODUCTS INC. ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On
The information contained and incorporated in Item 2.02 of this Current Report on Form 8-K is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
ITEM 8.01. OTHER EVENTS Risk Factor Update
The Company is supplementing the risk factors described under "Item 1A. Risk
Factors" in its Annual Report on Form 10-K for the year ended
We face various risks related to the novel coronavirus (or "COVID-19")
The outbreak of the COVID-19 pandemic caused by the novel coronavirus has had, and could continue to have a negative impact on financial markets, economic conditions and portions of our business. While we are unable to predict the extent, nature and duration of these impacts at this time, the global COVID-19 pandemic could negatively affect our business and results of operations, as well as the market price of our securities, in a number of ways, including the following:
• While we expect to continue to operate in all of our business segments in
Canada and the United States , we have reduced our operational footprint
to levels consistent with essential needs for the duration of the crisis,
including by the temporary idling of certain machines or facilities of
our operations and implementing temporary layoffs. Further adjustments to
our operational footprint, temporary or permanent, could be made as the
pandemic situation develops.
• The COVID-19 pandemic could accelerate the secular demand decline for
paper products like those we manufacture as widespread confinement is
altering consumer habits. The decline in demand and altered habits could
become permanent.
• The construction slowdown in North America has resulted in a decline in
demand for wood products. Given the impact of COVID-19 on the local and
global economy, which affects housing starts, the demand for wood
products could continue to be affected even after the public health
measures are lifted.
• If the demand for wood products continues to fall and we reduce
harvesting and sawmill activity as a result, we could have greater
difficulty obtaining the supply of timber and wood fiber required for our
operations at favorable prices, or at all.
• There is increased risk that we may not obtain raw materials, chemicals
and other required supplies in timely fashion and at favorable prices due
to the impact of the reduced economic activity as a result of COVID-19 on
our suppliers, which could affect our production output.
• Additional trade restrictions or barriers could also affect negatively
our supply chain as well as the sales or distribution of our products.
• The impact of the reduced economic activity as a result of COVID-19 on
our customers could increase our risk of credit exposure.
• Although the forest products industry has generally been recognized as
critical or essential in locations where we operate, the current health
restrictions, including social distancing measures, are having an impact
on how our workers can fulfill their duties, and limits the number of
employees we can have in our operations, which in turn could impact our
production output and costs.
• It could be difficult or costly to restart certain of our temporarily
idled operations, and we could face personnel shortages if employees are
no longer available or amenable to return to work.
• Further, should any key employees become ill from COVID-19 or unable to
work, the attention of our management team could be diverted.
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• The reduced operations and staffing in our facilities and remote working
conditions could increase the risk of non-compliance and incidents.
In an effort to preserve liquidity, we expect to suspend or defer capital projects, as well as other strategic initiatives. Strategies to increase earnings power or generate additional cash flow, including acquisitions, divestitures and other transactions could be delayed or not materialize given the current economic uncertainty. In response to the COVID-19 pandemic, we could decide to permanently shut down machines or facilities and be required to record significant closure costs, long-lived asset impairments or accelerated depreciation charges.
The economic uncertainty resulting from the COVID-19 pandemic and the ensuing decline in financial market returns and low-interest rate environment could result in an increase in the amount by which our pension plans are underfunded by the next measurement date at year-end. This could result in a significant increase in the amount of our required future pension contributions, which could have an adverse effect on our financial condition.
If we don't generate enough cash to fund our short-term or long-term obligations, we may have to draw further on our credit facilities to meet our obligations or seek additional sources of liquidity. The economic uncertainty resulting from COVID-19 and recent downgrades of our credit ratings could lead to greater difficulty in obtaining additional financing on favorable terms.
The COVID-19 pandemic, including governmental responses, broad economic impacts,
market disruptions and changes in consumer habits, has heightened the risks
related to the other risk factors described in our Annual Report on Form 10-K
for
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
Exhibits Exhibit No. Description 99.1Resolute Forest Products press release datedApril 30, 2020 containing financial information for its quarter endedMarch 31, 2020 .
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