RAYONIER ADVANCED MATERIALS INC.

Previous wording

This section primarily discusses 2024 and 2023 items and comparisons between these years. For a discussion of year-over-year comparisons between 2023 and 2022 and other financial information related to 2022 that is not included in this 2024 Form 10-K, refer to Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 29, 2024.

Current wording

This section primarily discusses 2025 and 2024 items and comparisons between these years, with the exception of our “Operating Results by Segment,” which has been recast in line with our new segment reporting structure for all periods presented. For a discussion of all other year-over-year comparisons between 2024 and 2023 and other financial information related to 2023 that is not included in this 2025 Form 10-K, refer to Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 6, 2025.

Previous wording

We are a diversified global leader of cellulose-based technologies that operated in the following operating segments during the years presented in this 2024 Form 10-K:

Current wording

We are a diversified global leader of cellulose-based technologies, operating in the following segments:

Previous wording

We manufacture and market high purity cellulose, sold as cellulose specialties or commodity products. We are the leading global producer of cellulose specialties, which are primarily used in dissolving chemical applications that require a highly purified form of cellulose. Pricing for our cellulose specialties products is typically set by contract for at least one year, based on negotiations with customers. Our commodity products primarily consist of commodity viscose and fluff. Commodity viscose is a raw material required for the manufacture of viscose staple fibers, which are used in woven and non-woven applications. Commodity fluff is used as an absorbent medium in consumer products. Pricing for commodity products is typically referenced to published indices or based on publicly available spot market prices. Our specialized assets also produce bioelectricity and biomaterials, including biofuels, lignin and tall oil soap. Sales of chemicals and energy, by-products of our manufacturing process, are also included in the High Purity Cellulose operating segment.

Current wording

We are the leading global producer of cellulose specialties, which are primarily used in dissolving chemical applications that require a highly purified form of cellulose, including liquid crystal displays, filters, textiles and performance additives for pharmaceutical, food and other industrial applications. Pricing for our cellulose specialties products is typically set by contract for at least one year, based on negotiations with customers. Key input costs — wood, chemicals and energy — represent approximately 45 percent of our per MT cost of sales. Transportation, depreciation, labor, maintenance and other manufacturing fixed costs represent our remaining cost of sales.

Previous wording

Our three operating production facilities, located in the U.S., Canada and France, have a combined annual production capacity of 895,000 MTs of cellulose specialties and commodity products, excluding the 150,000 MTs capacity of the Temiscaming plant whose operations were indefinitely suspended in July 2024. Of our total annual capacity, we dedicate 270,000 MTs of annual production to commodity products, primarily fluff.

Current wording

Our three operating production facilities, located in the U.S., Canada and France, have a combined annual production capacity of 885,000 MTs of cellulose specialties and commodities products, excluding the 140,000 MTs capacity of the Temiscaming cellulose plant whose operations were indefinitely suspended in July 2024 and permanently ceased DWP production in the first quarter of 2026. Of our total annual capacity, we dedicate 270,000 MTs of annual production to commodities products, primarily fluff. We can shift our cellulose manufacturing assets from cellulose specialties production to cellulose commodity fluff and viscose production. Our operating lines fluctuate the production of cellulose specialties and commodities products based on market conditions and to generate the most attractive margins. Our Tartas cellulose plant and Temiscaming cellulose plant (when operating) also produce bio-generated electricity utilizing renewable biomass. See Note 3—Indefinite Suspension of Operations to our Financial Statements for further information regarding the indefinite suspension of Temiscaming cellulose operations.

Previous wording

We manufacture paperboard that is used for packaging, printing documents, brochures, promotional materials, paperback book and catalog covers, file folders, tags and lottery tickets. Pricing for paperboard is typically referenced to published indices and marketed through our internal sales team. Our production facility, located in Canada, has an annual production capacity of 180,000 MTs of paperboard.

Current wording

We manufacture Kallima® Coated Cover Paperboard that is used for packaging, printing documents, brochures, promotional materials, paperback book and catalog covers, file folders, tags and lottery tickets. Pricing for paperboard is typically referenced to published indices and marketed through our internal sales team. Our production facility, located in Canada, has an annual production capacity of 180,000 MTs of paperboard. Key input costs — wood pulp, chemicals and energy — represent approximately 50 percent of our per MT cost of sales. Transportation, depreciation, labor, maintenance and other manufacturing fixed costs represent our remaining cost of sales.

Previous wording

We manufacture and market high-yield pulp, which paper manufacturers use to produce paperboard, packaging, printing and writing papers and a variety of other paper products. Pricing for high-yield pulp is typically referenced to published indices marketed through our internal sales team. Our production facility in Canada has an annual production capacity of 290,000 MTs of high-yield pulp.

Current wording

We manufacture high-yield pulp, which paper manufacturers use to produce paperboard, packaging, coated and uncoated printing and writing paper, specialty papers and various other paper products. Pricing for high-yield pulp is typically referenced to published indices marketed through our internal sales team. Our production facility in Temiscaming has an annual production capacity of 290,000 MTs of high-yield pulp. Key input costs — wood, chemicals and energy — represent approximately 35 percent of our per MT cost of sales. Transportation, depreciation, labor, maintenance and other manufacturing fixed costs represent our remaining cost of sales.

Previous wording

See Performance and Liquidity Indicators below for discussion of non-GAAP measures.

Current wording

See Performance and Liquidity Indicators below for a discussion of non-GAAP financial measures.

Previous wording

Net sales decreased $13 million in 2024 compared to 2023 driven by lower sales prices in High Purity Cellulose commodity products and our Paperboard and High-Yield Pulp operating segments and lower sales volumes in High Purity Cellulose commodity products, partially offset by higher sales prices and volumes in cellulose specialties and higher sales volumes in our Paperboard operating segment. See Operating Results by Segment below for further discussion.

Current wording

Net sales decreased $13 million, or 1 percent, in 2024 compared to 2023 driven by lower average sales prices in our Cellulose Commodities, Paperboard and High-Yield Pulp operating segments and lower sales volumes in our Cellulose Commodities operating segment, partially offset by higher average sales price and sales volumes in our Cellulose Specialties operating segment and higher sales volumes in our Paperboard operating segment. See Operating Results by Segment below for further discussion.

Previous wording

EBITDA from continuing operations increased $95 million in 2024 compared to 2023 primarily driven by the prior year fourth quarter $62 million non-cash impairment recorded as a result of the optimization and realignment of our High Purity Cellulose assets, lower costs due to the indefinite suspension of High Purity Cellulose operations at Temiscaming, cost benefit from strategic capital investment, the impact of favorable foreign exchange rates in the current year compared to unfavorable rates in the prior year and the recognition of $10 million in CEWS benefit claims deferred since 2021. Partially offsetting these improvements were the decrease in net sales, one-time charges of $17 million and a $25 million non-cash asset impairment related to the indefinite suspension of Temiscaming High Purity Cellulose operations, higher Corporate variable and other compensation expense, $2 million in immediate repair costs related to the fire at our Jesup plant and the prior year recognition of a $3 million benefit from payroll tax credit carryforwards.

Current wording

Operating results improved $104 million, or 160 percent, in 2024 compared to 2023 driven by the 2023 non-cash impairment of $62 million recorded as a result of the optimization and realignment of our cellulose plant assets, lower costs due to the indefinite suspension of Temiscaming cellulose operations, cost benefit from strategic capital investment, favorable foreign exchange rates in 2024 compared to unfavorable rates in 2023 and the 2024 recognition of $10 million in CEWS benefit claims. Partially offsetting these improvements were the decrease in net sales, the 2024 non-cash impairment of $25 million and one-time charges of $17 million related to the indefinite suspension of Temiscaming cellulose operations, higher variable and other compensation expense, the 2023 recognition of a $3 million benefit from payroll tax credit carryforwards and 2024 repair costs related to the fire at our Jesup plant.

Previous wording

Interest expense increased $12 million in 2024 compared to 2023 driven by an increase in the average effective interest rate on debt, partially offset by a decrease in the average outstanding debt principal balance. Total debt decreased $47 million from December 31, 2023 to December 31, 2024.

Current wording

Interest expense increased $12 million in 2025 compared to 2024 primarily driven by an increase in the average effective interest rate on debt.

Previous wording

During 2024, we recorded charges of $10 million related to the refinancing of our 2026 Notes and 2027 Term Loan.

Current wording

In 2024, we recorded charges of $10 million related to the refinancing of our 2026 Notes and 2027 Term Loan.

Previous wording

The effective tax rate on the loss from continuing operations for 2023 was a benefit of 24 percent. The 2023 effective tax rate differed from the federal statutory rate of 21 percent primarily due to different statutory tax rates in foreign jurisdictions, U.S. tax credits, return-to-accrual adjustments related to previously filed tax returns and changes in the valuation allowance on disallowed interest deductions.

Current wording

The effective tax rate on the loss from continuing operations for 2025 was not meaningful as a result of the valuation allowance placed on our Canadian DTAs in the second quarter, which resulted in a $337 million income tax expense recognition. Also driving the difference between the effective tax rate and the federal statutory rate of 21 percent were different statutory tax rates in foreign jurisdictions, valuation allowances on nondeductible U.S. interest expense and U.S. tax credits.

Previous wording

In 2024, we recorded pre-tax income from discontinued operations of $5 million related to CEWS benefit claims deferred since 2021 and a pre-tax loss of $1 million on the sale of our softwood lumber duty refund rights.

Current wording

In 2024, we recorded pre-tax income from discontinued operations of $5 million related to CEWS benefit claims and a pre-tax loss of $1 million on the sale of our softwood lumber duty refund rights.

Previous wording

Following the indefinite suspension of Temiscaming High Purity Cellulose operations in the third quarter of 2024, the Temiscaming site continues to incur custodial site costs in support of the ongoing energy needs of the Paperboard and High-Yield Pulp operations. Further, the electricity generated from the Temiscaming High Purity Cellulose plant assets is no longer deemed a by-product of the High Purity Cellulose manufacturing process. Due to these assets now running solely to support Paperboard and High-Yield Pulp, beginning in the fourth quarter, the net impact of these electricity sales and the custodial site costs being incurred in support of these operations is reflected within the operating results of the Paperboard and High-Yield Pulp businesses.

Current wording

Following the indefinite suspension of Temiscaming cellulose operations in the third quarter of 2024, certain infrastructure assets of the site’s cellulose plant continue to run in support of the ongoing energy needs of the Paperboard and High-Yield Pulp operations. As such, beginning in the fourth quarter of 2024, the net impact of the custodial site costs being incurred and the sales of any electricity generated by the running of the cellulose plant assets are reflected within the operating results of the Paperboard and High-Yield Pulp businesses.

Previous wording

Net sales of our High Purity Cellulose operating segment for 2024 decreased $11 million compared to 2023. Included within net sales for 2024 and 2023 were $89 million and $98 million, respectively, in other sales primarily from bio-based energy and lignosulfonates, which decreased due to the indefinite suspension of Temiscaming High Purity Cellulose operations. Total sales prices increased 5 percent primarily driven by a higher mix of cellulose specialties and a 1 percent increase in cellulose specialties prices, partially offset by a 3 percent decrease in commodity prices. Despite a cellulose specialties sales volumes increase of 10 percent, total sales volumes decreased 5 percent due to a 19 percent decrease in commodity volumes. The increase in cellulose specialties sales volumes was driven by the closure of a competitor’s plant in late 2023, accelerated volumes due to the indefinite suspension of Temiscaming High Purity Cellulose operations and an uptick in ethers sales volumes, partially offset by the one-time favorable impact in the prior year from a change in customer contract terms. The decrease in commodity sales volumes was primarily driven by the higher mix of cellulose specialties production and the indefinite suspension of Temiscaming High Purity Cellulose operations. Sales volumes were also negatively impacted by the fire at the Jesup plant that impacted operations on two of the plant’s three lines for a two-week period in October 2024.

Current wording

Net sales of our Cellulose Specialties segment increased $96 million, or 12 percent, in 2024 compared to 2023 driven by 2 percent and 8 percent increases in average sales price and sales volumes, respectively. The increase in sales volumes was driven by the closure of a competitor’s plant in late 2023, accelerated volumes due to the indefinite suspension of Temiscaming cellulose operations and an uptick in ethers sales volumes, partially offset by a one-time favorable impact in 2023 from a change in customer contract terms.

Previous wording

Net sales of our Paperboard operating segment increased $9 million in 2024 compared to 2023. Sales volumes increased 12 percent driven by the easing of prior year customer destocking in the current year, partially offset by a 7 percent decrease in sales prices driven by mix and increased competitive activity from European imports.

Current wording

Net sales of our Paperboard operating segment increased $9 million, or 4 percent, in 2024 compared to 2023. Sales volumes increased 12 percent driven by the easing of prior year customer destocking in 2024, partially offset by a 7 percent decrease in average sales price driven by mix and increased competitive activity from European imports.

Previous wording

Operating income of our Paperboard operating segment decreased $6 million in 2024 compared to 2023 driven by the lower sales prices, higher labor costs and $3 million of net custodial site costs for Temiscaming site operations, partially offset by the higher sales volumes, higher productivity and the recognition of $2 million in CEWS benefit claims deferred since 2021.

Current wording

Operating income of our Paperboard operating segment decreased $6 million, or 16 percent, in 2024 compared to 2023 driven by the lower average sales price, higher labor costs and $3 million of net custodial site costs for Temiscaming site operations, partially offset by the higher sales volumes, higher productivity and the 2024 recognition of $2 million in CEWS benefit claims.

Previous wording

(a)Average sales prices and sales volumes for external sales only. During the years ended December 31, 2024 and 2023, the High-Yield Pulp operating segment sold 61,000 MTs and 60,000 MTs of high-yield pulp for $27 million and $25 million, respectively, to the Paperboard operating segment.

Current wording

(a)Average sales prices and sales volumes for external sales only. During the years ended December 31, 2025, 2024 and 2023, the High-Yield Pulp operating segment sold 61,000 MTs, 61,000 MTs and 60,000 MTs of high-yield pulp for $26 million, $27 million and $25 million, respectively, to the Paperboard operating segment.

Previous wording

Net sales of our High-Yield Pulp operating segment decreased $9 million in 2024 compared to 2023 driven by a 9 percent decrease in sales prices and flat sales volumes driven by over-supply in China, lower demand and timing of shipments.

Current wording

Net sales of our High-Yield Pulp operating segment decreased $9 million, or 7 percent, in 2024 compared to 2023 driven by a 9 percent decrease in average sales price and flat sales volumes driven by over-supply in China, lower demand and timing of shipments.

Previous wording

Operating loss of our High-Yield Pulp operating segment increased $5 million in 2024 compared to 2023 driven by the lower sales prices, flat sales volumes, higher labor costs and $4 million of net custodial site costs for Temiscaming site operations, partially offset by lower logistics and key input costs, higher productivity and the recognition of $2 million in CEWS benefit claims deferred since 2021.

Current wording

Operating loss of our High-Yield Pulp operating segment increased $5 million, or 167 percent, in 2024 compared to 2023 driven by the lower sales prices, flat sales volumes, higher labor costs and $4 million of net custodial site costs for Temiscaming site operations, partially offset by lower logistics and key input costs, higher productivity and the 2024 recognition of $2 million in CEWS benefit claims.

Previous wording

Our Corporate operating loss increased $3 million in 2024 compared to 2023 driven by higher variable and other compensation expense, higher discounting and financing fees and higher costs related to our ERP transformation project, partially offset by favorable foreign exchange rates in 2024 compared to unfavorable rates in 2023.

Current wording

Our Corporate operating loss increased $3 million, or 5 percent, in 2024 compared to 2023 driven by higher variable and other compensation costs, higher discounting and financing fees and higher costs related to our ERP transformation project, partially offset by favorable foreign exchange rates in 2024 compared to unfavorable rates in 2023.

Previous wording

Cash flows from operations, primarily driven by operating results, have historically been our primary source of liquidity and capital resources. As operating cash flows can be negatively impacted by fluctuations in market prices for our commodity products and changes in demand for our products, we maintain a key focus on cash, managing working capital closely and optimizing the timing and level of our capital expenditures. We believe our future cash flows from operations, availability under our ABL Credit Facility and 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.

Current wording

Cash flows from operations, primarily driven by operating results, have historically been our primary source of liquidity and capital resources. As operating cash flows can be negatively impacted by fluctuations in market prices for our Cellulose Commodities products and changes in demand for our products, we maintain a key focus on cash, managing working capital closely and optimizing the timing and level of our capital expenditures. We believe our future cash flows from operations, availability under our ABL Credit Facility and 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.

Previous wording

In January 2018, our Board of Directors authorized a $100 million common stock share buyback program. We did not repurchase any shares under this program during the years ended December 31, 2024, 2023 and 2022, and do not expect to utilize any of the remaining $60 million in unused authorization in the future.

Current wording

In January 2018, our Board of Directors authorized a $100 million common stock share buyback program. We have not repurchased any shares under this program since 2018 and do not expect to utilize any of the remaining $60 million in unused authorization in the future.

Previous wording

(a)Amounts available under the ABL Credit Facility fluctuate based on eligible accounts receivable and inventory levels. At December 31, 2024, we had $168 million of gross availability and net available borrowings of $141 million after taking into account outstanding letters of credit of $27 million. In addition to the availability under the ABL Credit Facility, we have $10 million available under our accounts receivable factoring line of credit in France.

Current wording

(a)Amounts available under the ABL Credit Facility fluctuate based on eligible accounts receivable and inventory levels. At December 31, 2025, we had $175 million of gross availability and net available borrowings of $72 million after taking into account the facility’s year end balance of $50 million, outstanding letters of credit of $27 million and required availability of $26 million to avoid triggering the facility’s fixed charge coverage ratio covenant.

Previous wording

In November 2024, we secured €30 million to be provided by SWEN in return for a 20 percent preferred equity interest in BioNova. As of December 31, 2024, we received €15 million from SWEN and we expect to receive the additional €15 million in late 2025. See Note 2—Significant Accounting Policies and Recent Accounting Developments—Redeemable Noncontrolling Interest to our Financial Statements for further information.

Current wording

In November 2024, we secured €30 million to be provided by SWEN in return for a 20 percent preferred equity interest in BioNova. We received €15 million from SWEN in 2024. Subsequent funding is contingent on the achievement of certain project milestones. See Note 14—Redeemable Noncontrolling Interest to our Financial Statements for further information.

Previous wording

In November 2024, we entered into a credit agreement that authorizes up to €37 million in seven- and eight-year secured term loan tranches at an initial floating rate of approximately 5 percent. As of December 31, 2024, we had not yet drawn on these loans. See Note 10—Debt and Finance Leases to our Financial Statements for further information.

Current wording

In November 2024, we entered into a credit agreement that authorizes up to €37 million in seven- and eight-year secured term loan tranches. As of December 31, 2025, no amounts were yet outstanding on the BioNova Term Loan. See Note 10—Debt and Finance Leases to our Financial Statements for further information.

Previous wording

Our principal contractual commitments include standby letters of credit, surety bonds, guarantees, purchase obligations and leases. We utilize arrangements such as standby letters of credit and surety bonds to provide credit support for certain suppliers and vendors in case of their default on critical obligations, collateral for certain of our self-insurance programs and guarantees for the completion of our remediation of environmental liabilities. As part of our ongoing operations, we also periodically issue guarantees to third parties. Our primary purchase obligation payments relate to natural gas, steam energy and wood chips purchase contracts. As of December 31, 2024, our noncancellable unconditional purchase obligations totaled $542 million.

Current wording

Our principal contractual commitments include standby letters of credit, surety bonds, guarantees, purchase obligations and leases. We utilize arrangements such as standby letters of credit and surety bonds to provide credit support for certain suppliers and vendors in case of their default on critical obligations, collateral for certain of our self-insurance programs and guarantees for the completion of our remediation of environmental liabilities. As part of our ongoing operations, we also periodically issue guarantees to third parties. Our primary purchase obligation payments relate to natural gas, steam energy and wood chips purchase contracts. As of December 31, 2025, our noncancellable unconditional purchase obligations totaled $557 million.

Previous wording

We remain subject to purchase obligations under the 20-year wood chip and residual fiber supply agreement with GreenFirst, under which total required purchase volumes of wood chips and residual fiber are dependent on sawmill production. In connection with the indefinite suspension of operations at the Temiscaming High Purity Cellulose plant, we have agreed with GreenFirst that we will purchase the required volumes at market value and sell them to third parties at the same amount for an expected neutral impact.

Current wording

We remain subject to purchase obligations under the 20-year wood chip and residual fiber supply agreement with GreenFirst, under which total required purchase volumes of wood chips and residual fiber are dependent on sawmill production. In connection with the indefinite suspension of operations at the Temiscaming cellulose plant, we have agreed with GreenFirst that we will purchase the required volumes at market value and sell them to third parties at the same amount for an expected neutral impact.

Previous wording

As mentioned in Other Sources of Cash above, the SWEN investment is a redeemable noncontrolling interest, which may require the use of cash to pay dividends and/or in the event SWEN exercises its put option. The timing and amount of dividend payments or a put payment is dependent on certain terms and conditions and would not occur prior to 2027. See Note 2—Significant Accounting Policies and Recent Accounting Developments—Redeemable Noncontrolling Interest to our Financial Statements for further information on the circumstances under which the put may be exercised.

Current wording

As mentioned in Other Sources of Cash above, the SWEN investment is a redeemable noncontrolling interest, which may require the use of cash to pay dividends and/or in the event SWEN exercises its put option. The timing and amount of dividend payments or a put payment is dependent on certain terms and conditions and would not occur prior to 2027. See Note 14—Redeemable Noncontrolling Interest to our Financial Statements for further information on the circumstances under which the put may be exercised.

Previous wording

Cash used in financing activities decreased $45 million primarily due to lower net repayment of long-term debt, SWEN’s €15 million investment in BioNova and a decrease in repurchases of common stock to satisfy tax withholding requirements related to the issuance of stock under our incentive stock plans. The decrease in cash used was partially offset by an increase in debt issuance costs and net repayment of short-term financing.

Current wording

Cash inflows from financing activities increased $72 million due to net borrowings of long-term debt in 2025 compared to net repayments in 2024 and 2024 debt issuance costs of $24 million, partially offset by SWEN’s €15 million investment in BioNova in 2024 and higher repurchases of common stock to satisfy tax withholding requirements related to stock-based compensation.

Previous wording

Loss from continuing operations is reconciled to EBITDA and adjusted EBITDA as follows:

Current wording

Income (loss) from continuing operations is reconciled to EBITDA and Adjusted EBITDA from continuing operations by segment, as follows:

Previous wording

Adjusted free cash flow is defined as cash provided by operating activities adjusted for capital expenditures, net of proceeds from the sale of assets and excluding strategic capital expenditures deemed discretionary by management. Adjusted free cash flow is a non-GAAP financial measure of cash generated during a period that is available for debt reduction, strategic capital expenditures, acquisitions and repurchases of our common stock. Adjusted free cash flow is not necessarily indicative of the adjusted free cash flow that may be generated in future periods.

Current wording

Adjusted Free Cash Flow is a non-GAAP financial measure of cash generated during a period that is available for debt reduction, acquisitions and repurchases of our common stock. Adjusted Free Cash Flow is not necessarily indicative of the Adjusted Free Cash Flow that may be generated in future periods.

Previous wording

(a)Net of proceeds from the sale of assets and excluding strategic capital expenditures. Strategic capital expenditures were $33 million and $45 million for the years ended December 31, 2024 and 2023, respectively.

Current wording

(a)Net of proceeds from the sale of property, plant and equipment and insurance claims. Included in capital expenditures, net were strategic capital expenditures of $25 million, $33 million and $45 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Previous wording

Depreciation expense is computed using the units-of-production method for our high purity cellulose, paperboard and high-yield pulp plant and equipment and the straight-line method for all other property, plant and equipment over the useful economic lives of the assets involved. The total units of production used to calculate depreciation expense is determined by factoring annual production days, based on normal production conditions, by the economic useful life of the asset involved. Our estimate of useful lives and salvage values are based on assumptions and judgments that reflect both historical experience and expectations regarding the future use of our assets, including wear and tear, obsolescence, technical standards, market demand and geographic location. The use of different assumptions and judgments in the calculation of depreciation, especially those involving useful lives, would likely result in significantly different net book values and results of operations.

Current wording

Depreciation expense is computed using the units-of-production method for our Cellulose Specialties, Biomaterials, Cellulose Commodities, Paperboard and High-Yield Pulp production-related plant and equipment, and for all other property, plant and equipment, the straight-line method over the useful economic life of the respective asset. The total units of production used to calculate depreciation expense is determined by factoring annual production days, based on normal production conditions, by the economic useful life of the asset involved. Our estimate of useful lives and salvage values are based on assumptions and judgments that reflect both historical experience and expectations regarding the future use of our assets, including wear and tear, obsolescence, technical standards, market demand and geographic location. The use of different assumptions and judgments in the calculation of depreciation, especially those involving useful lives, would likely result in significantly different net book values and results of operations.

Previous wording

In 2024, we indefinitely suspended operations at our Temiscaming High Purity Cellulose plant. The indefinite suspension does not affect the Temiscaming paperboard and high-yield pulp plants that support our High-Yield Pulp and Paperboard operating segments, which will continue to operate at full capacity while remaining part of an ongoing sales process. The High Purity Cellulose plant was idled in a safe and environmentally sound manner. We will assess on at least an annual basis the possibility of restarting the Temiscaming High Purity Cellulose plant. In the third quarter of 2024, in conjunction with the indefinite suspension of operations, we recognized a non-cash asset impairment of $25 million, as it was determined that the Temiscaming High Purity Cellulose plant’s net carrying value exceeded its estimated fair value.

Current wording

In 2024, we indefinitely suspended operations at our Temiscaming cellulose plant. The indefinite suspension does not affect the Temiscaming paperboard and high-yield pulp plants that support our Paperboard and High-Yield Pulp operating segments, which continue to operate at full capacity, subject to market conditions. In the third quarter of 2024, in conjunction with the indefinite suspension of operations, we recognized a non-cash asset impairment of $25 million, as it was determined that the Temiscaming cellulose plant’s net carrying value exceeded its estimated fair value. In the first quarter of 2026, we determined that we will permanently cease DWP production at the site. The accounting impact of this decision is currently being assessed and may result in a non-cash asset impairment in the first quarter.

Previous wording

In the fourth quarter of 2023, we began efforts towards the optimization and realignment of our High Purity Cellulose assets that included the consolidation of commodity viscose production into our Temiscaming plant and fluff production into our Jesup plant’s C Line. This realignment materially impacts the way we have managed and will manage the underlying assets and ultimately led to the recognition of a $62 million impairment.

Current wording

In the fourth quarter of 2023, we began efforts towards the optimization and realignment of our Cellulose Commodities assets that included the consolidation of commodity viscose production into our Temiscaming plant and fluff production into our Jesup plant’s C Line. This realignment materially impacted the way we have managed and will manage the underlying assets and ultimately led to the recognition of a $62 million impairment.

Previous wording

At December 31, 2024, we had $170 million of accrued liabilities for environmental costs relating to disposed operations. Numerous price, quantity, cost and probability assumptions are used in estimating these obligations. Factors affecting these estimates include changes in the nature or extent of contamination, changes in the content or volume of the material discharged or treated in connection with one or more impacted sites, requirements to perform additional or different assessment or remediation, changes in technology that may lead to additional or different environmental remediation strategies, approaches and workplans, discovery of additional or unanticipated contaminated soil, groundwater or sediment on or off-site, changes in remedy selection, changes in law or interpretation of existing law and the outcome of negotiations with governmental agencies or non-governmental parties. We periodically review our environmental liabilities and also engage third-party consultants to assess our ongoing remediation of contaminated sites. We review our environmental liabilities related to assessment activities and remediation costs quarterly and adjust them as necessary. Liabilities for financial assurance, monitoring and maintenance activities and other activities are assessed annually. A significant change in any of these estimates could have a material effect on our results of operations and financial condition. See Note 11—Environmental Liabilities to our Financial Statements for further information.

Current wording

At December 31, 2025, we had $184 million of accrued liabilities for environmental costs relating to disposed operations. Numerous price, quantity, cost and probability assumptions are used in estimating these obligations. Factors affecting these estimates include changes in the nature or extent of contamination, changes in the content or volume of the material discharged or treated in connection with one or more impacted sites, requirements to perform additional or different assessment or remediation, changes in technology that may lead to additional or different environmental remediation strategies, approaches and workplans, discovery of additional or unanticipated contaminated soil, groundwater or sediment on or off-site, changes in remedy selection, changes in law or interpretation of existing law and the outcome of negotiations with governmental agencies or non-governmental parties. We periodically review our environmental liabilities and also engage third-party consultants to assess our ongoing remediation of contaminated sites. We review our environmental liabilities related to assessment activities and remediation costs quarterly and adjust them as necessary. Liabilities for financial assurance, monitoring and maintenance activities and other activities are assessed annually. A significant change in any of these estimates could have a material effect on our results of operations and financial condition. See Note 11—Environmental Liabilities to our Financial Statements for further information.

Previous wording

Our assumed long-term return on plan assets was established based on historical long-term rates of return on broad equity and bond indices, discussions with our actuary and investment advisors and consideration of the actual historical annualized rate of returns. In determining future pension obligations, we select a discount rate based on information supplied by our actuary. The actuarial rates are developed by models which incorporate high-quality (AA rated), long-term corporate bond rates into their calculations. The weighted average discount rate increased from 4.71 percent at December 31, 2023 to 5.16 percent at December 31, 2024.

Current wording

Our assumed long-term return on plan assets was established based on historical long-term rates of return on broad equity and bond indices, discussions with our actuary and investment advisors and consideration of the actual historical annualized rate of returns. In determining future pension obligations, we select a discount rate based on information supplied by our actuary. The actuarial rates are developed by models which incorporate high-quality (AA rated), long-term corporate bond rates into their calculations. The weighted average discount rate decreased from 5.16 percent at December 31, 2024 to 5.11 percent at December 31, 2025.

Previous wording

Our defined pension plans were underfunded by $61 million at December 31, 2024. The underfunded status decreased by $22 million in 2024, primarily due to actuarial gains because of increased discount rates, partially offset by decreased returns on plan assets. In 2025, pension expense is expected to increase slightly compared to 2024. Many factors will impact future pension expense, including actual investment performance, changes in discount rates, timing of contributions and other employee related matters. See Note 18—Employee Benefit Plans to our Financial Statements for further information.

Current wording

Our defined pension plans were underfunded by $62 million at December 31, 2025. The underfunded status increased by $1 million in 2025, primarily due to actuarial losses because of decreased discount rates, partially offset by increased returns on plan assets. In 2026, pension expense is expected to decrease compared to 2025. Many factors will impact future pension expense, including actual investment performance, changes in discount rates, timing of contributions and other employee related matters. See Note 19—Employee Benefit Plans to our Financial Statements for further information.

Previous wording

In 2024, we made mandatory contributions and benefit payments to plan participants of $9 million. During 2025, we expect to make mandatory contributions and benefit payments to plan participants of $8 million. Future mandatory contribution requirements will vary depending on actual investment performance, changes in valuation assumptions, interest rates and legal requirements to maintain a certain funding status.

Current wording

In 2025, we made mandatory contributions and benefit payments to plan participants of $8 million. During 2026, we expect to make mandatory contributions and benefit payments to plan participants of $8 million. Future mandatory contribution requirements will vary depending on actual investment performance, changes in valuation assumptions, interest rates and legal requirements to maintain a certain funding status.