Tembec Acquisition

12 Months Ended

Dec. 31, 2019

On November 17, 2017, the Company acquired all of the outstanding common shares of Tembec for an aggregate purchase price of approximately $317 million Canadian dollars cash and 8.4 million shares of the Company’s common stock, par value $0.01 per share (the “Acquisition”). The aggregate purchase price was allocated to the major categories of assets and liabilities acquired based upon their estimated fair values as of December 31, 2017, which were based, in part, upon outside preliminary appraisals for certain assets. As a result of the preliminary allocation, a gain on bargain purchase was recognized of $317 million, primarily as a result of the elimination of Tembec’s valuation allowance associated with certain deferred tax assets. The Company finalized the valuation and completed the purchase consideration allocation within the measurement period and recognized an additional gain on bargain purchase of $20 million during 2018.

Tembec’s operating results contributed net revenue of $139 million and no operating income for the period from the acquisition date of November 17, 2017 to December 31, 2017. The Company recognized $34 million of acquisition related expenses in operating expense during 2017.

The following presents the unaudited pro forma consolidated financial information of the Company as if the acquisition of Tembec was completed on January 1, 2017. The unaudited pro forma financial information includes adjustments for the pro forma year ended December 31, 2017 for (i) depreciation on acquired property, plant and equipment of $15 million; (ii) amortization of intangible assets recorded at the date of the transactions of $7 million; (iii) the elimination of acquisition related costs of $49 million and the fair value write-up of inventory of $23 million; (iv) the elimination of interest expense related to Tembec debt that was paid off, net of interest expense associated with financing the acquisition of $38 million; (v) the elimination of the gain on bargain purchase and (vi) total weighted average shares outstanding related to the acquisition. This information is presented for informational purposes only and does not purport to be indicative of the results of future operations or the results that would have occurred had the transaction taken place on January 1, 2017.



	Year Ended December 31, 2017
Unaudited pro forma net revenue (includes the results of the Matane mill)	$	2,122,000
Unaudited pro forma net income attributable to the Company	$	111,000
Unaudited pro forma basic net income per share	$	1.92
Unaudited pro forma diluted net income per share	$	1.76