Derivatives and Hedging Activities and Fair Value Measurement (Tables)

6 Months Ended

Jun. 30, 2024

Derivative Instruments And Hedging Activities Disclosure [Abstract]

The following tables present information about the Company’s financial assets and financial liabilities measured at fair value on a recurring basis (except Long-term debt, see (b) and (c) below) at June 30, 2024 and December 31, 2023, in accordance with the accounting standards for fair value measurements and disclosures and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value.


Fair Value of financial instruments at:	June 30, 2024		Quoted prices in active markets for identical assets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)			Balance sheet classification
	$		$		$		$
Derivatives designated as hedging instruments:
Asset derivatives
Currency derivatives		2		—		2		—	(a)	Prepaid expenses
Natural gas swap contracts		2		—		2		—	(a)	Prepaid expenses
Total Assets		4		—		4		—

Liabilities derivatives
Currency derivatives		7		—		7		—	(a)	Trade and other payables
Natural gas swap contracts		2		—		2		—	(a)	Trade and other payables
Currency derivatives		1		—		1		—	(a)	Other liabilities and deferred credits
Total Liabilities		10		—		10		—

Other Instruments:
Long-term debt due within one year		67		—		67		—	(b)	Long-term debt due within one year
Long-term debt		2,213		—		2,213		—	(c)	Long-term debt
Contingent consideration for contingent value right		143		—		143		—	(d)	Other liabilities and deferred credits


Fair Value of financial instruments at:	December 31, 2023		Quoted prices in active markets for identical assets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)			Balance sheet classification
	$		$		$		$
Derivatives designated as hedging instruments:
Asset derivatives
Currency derivatives		9		—		9		—	(a)	Prepaid expenses
Natural gas swap contracts		1		—		1		—	(a)	Prepaid expenses
Currency derivatives		4		—		4		—	(a)	Other assets
Natural gas swap contracts		1		—		1		—	(a)	Other assets
Total Assets		15		—		15		—

Liabilities derivatives
Currency derivatives		2		—		2		—	(a)	Trade and other payables
Natural gas swap contracts		5		—		5		—	(a)	Trade and other payables
Total Liabilities		7		—		7		—

Other Instruments:
Long-term debt due within one year		67		—		67		—	(b)	Long-term debt due within one year
Long-term debt		2,234		—		2,234		—	(c)	Long-term debt
Contingent consideration for contingent value right		133		—		133		—	(d)	Other liabilities and deferred credits

(a)

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

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

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

(b)

Fair value of the Company’s long-term debt is measured by comparison to market prices of its debt. The Company’s long-term debt is not carried at fair value on the Consolidated Balance Sheets at June 30, 2024 and December 31, 2023. The carrying value of the Company’s long-term debt due within one year is $67 million at both June 30, 2024 and December 31, 2023.

(c)

The carrying value of the Company’s long-term debt is $2,400 million and $2,410 million at June 30, 2024 and December 31, 2023, respectively.

(d)

The Company estimated the fair value of the contingent consideration based on the last price of Resolute's common shares on the New York Stock Exchange on February 28, 2023, which is considered a Level 2 measurement.

Domtar CORP 10-Q