Business Radar | Domtar Paper Company, LLC

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READY FOR THE FUTURE 2018 ANNUAL REPORT

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SELECTED FINANCIAL FIGURES Years ended December 31 2016 2017 2018 (In millions of dollars unless otherwise noted) Consolidated sales per segment Pulp and Paper 4,239 4,216 4,523 Intersegment sales (58) (64) (68) Personal Care 909 996 1,000 Consolidated sales 5,090 5,148 5,455 Operating income (loss) per segment Pulp and Paper 201 237 438 Personal Care 57 (527) (5) Corporate (50) (38) (47) Operating income (loss) 208 (328) 386 Net earnings (loss) 128 (258) 283 Cash flows from operating activities 465 449 554 Capital expenditures 347 182 195 Free cash flow1 118 267 359 Total assets 5,680 5,212 4,925 Long-term debt, including current portion 1,281 1,130 854 Net debt-to-total capitalization ratio1 30% 29% 23% Total shareholders’ equity 2,676 2,483 2,538 Weighted average number of common shares outstanding in millions (diluted) 62.7 62.7 63.1 1 Non-GAAP financial measure. Please see “Reconciliation of non-GAAP Financial Measures” at the end of this document. 2 As at December 31, 2018

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+4.8% SALES EBITDA (In millions of dollars) BEFORE ITEMS1 (In millions of dollars) 5,090 5,148 5,455 725 QUARTERLY DIVIDEND 635 INCREASE TO 569 $0.435 PER COMMON SHARE 2016 2017 2018 2016 2017 2018 $1.6B RETURNED TO SHAREHOLDERS FREE CASH FLOWS FROM SINCE 2011 CASH FLOW1 OPERATING ACTIVITIES (In millions of dollars) (In millions of dollars) 359 554 465 449 267 118 23% NET DEBT TO TOTAL CAPITALIZATION 2016 2017 2018 2016 2017 2018 RATIO1,2 DOMTAR 2018 ANNUAL REPORT 1

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2 DOMTAR 2018 ANNUAL REPORT

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MESSAGE TO SHAREHOLDERS DOMTAR ACHIEVED SOLID EARNINGS AND CASH FLOW IN 2018 WHILE SIGNIFICANTLY DE-RISKING ITS BUSINESS WITH THE UNVEILING OF A FLEXIBLE, LONG-TERM ASSET CONVERSION ROADMAP DOMTAR 2018 ANNUAL REPORT 3

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MESSAGE TO SHAREHOLDERS With a legacy of 170 years, Domtar is EXECUTING OUR PAPER STRATEGY ready for the future. Our confidence The North American paper market reached a positive inflection point in 2018 driven by improved demand and permanent stems from our clear strategy to create supply curtailments in the industry. Through a combination value by remaining the supplier of choice of market share gains, price increases and higher productivity to our paper customers, while building across our mill system, we achieved a strong performance in new businesses in growing markets. this business. Domtar generated $725 million of EBITDA before items1 and We were able to capitalize on the favorable market dynamics cash flows from operating activities of $554 million in 2018. because of our long-standing commitment to be the leading We returned $108 million to shareholders in the form of North American supplier of uncoated freesheet. In this regard, dividends, re-invested $195 million in our business, and repaid the significant cash flows we derive annually from this business $276 million of debt. Our net debt-to-total capitalization ratio1 are evidence of its resilience. at year-end stood at a comfortable 23%. Our strong financial performance was driven by our papers THE RECENT DECISION BY A MAJOR SUPPLIER business, complemented by one of our strongest performances TO EXIT THE UNCOATED FREESHEET MARKET IS in market pulp. We closed the year with a robust fourth quarter, STRENGTHENING DOMTAR’S POSITION. IN LINE strong momentum in pulp and paper, and greater visibility on our path forward. WITH OUR LONG-TERM STRATEGY, WE WILL CONTINUE TO FOCUS ON EXTENDING THE CASH The results and progress achieved in 2018 demonstrate that we FLOW RUNWAY IN PAPER BY LEVERAGING OUR are well-positioned to create value in the years ahead. LOW-COST POSITION, FLEXIBLE SERVICE MODEL AND CUSTOMER RELATIONSHIPS. $554M $725M GENERATING HIGH RETURNS IN PULP In market pulp, we benefited from strong global demand for tissue, absorbent hygiene products and packaging, as well CASH FLOWS EBITDA BEFORE as rising prices to more than double our EBITDA 1 in 2018 FROM OPERATING ITEMS1 compared to the prior year. In so doing, we confirmed the potential of market pulp as a major source of cash flow for ACTIVITIES Domtar. 1 Non-GAAP financial measure. Please see “Reconciliation of non-GAAP Financial Measures” at the end of this document. 4 DOMTAR 2018 ANNUAL REPORT

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As a result of investments in mill conversions, we now have the The optionality embedded in our paper assets provides a path capacity to produce 1.8 million air-dry metric tons of market for their future. Our conversion roadmap significantly de-risks pulp – mostly in softwood, fluff and specialty grades – for a our business for the benefit of Domtar’s many stakeholders – global customer base. shareholders, employees and communities among them. Now that we have achieved scale, our focus is on driving We are taking a long-term view, with the timing and sequence growth and enhancing our customer value proposition. We are of potential mill conversions to be determined by market and also investing in high-return initiatives to optimize production economic conditions affecting our paper business. and increase efficiencies across our mills with the objective of driving cost performance. As one of the leaders in the global softwood and fluff markets, we are looking at pulp as a IMPROVING MARGINS IN PERSONAL CARE long-term generator of earnings growth for Domtar. Over several years, we have established a billion-dollar business in the personal care market. Although this business is currently not providing the returns we expected, its long-term value is LEVERAGING OUR ASSET BASE underpinned by attractive demographic and market trends, as While generating steady cash flows, we have been actively well as an efficient manufacturing platform. finding new uses for our paper mills and repurposing these assets to manufacture products in growing markets. Over Stiff headwinds in the form of escalating raw materials prices the past several years, we have reduced paper capacity by and intense price competition have led to disappointing results. 1.5 million short tons to balance our supply with our customer Faced with margin erosion, we initiated actions across the demand. Today, these repurposed mills produce market pulp division in 2018 to improve our financial performance. and/or specialty papers, thereby maximizing the value of these assets and maintaining the thousands of jobs they support in These actions include division-wide cost reductions, product our communities. rationalization, and manufacturing optimization with the closure of one North American facility and equipment relocation to sister plants. The objective is to realize annual margin WE ADDED AN IMPORTANT NEW DIMENSION improvement of approximately $25 million to $30 million, with TO OUR STRATEGY IN 2018 BY DETAILING A full run-rate effect by the end of 2020. LONG-TERM CONVERSION ROADMAP FOR Global demand for adult incontinence products is growing FOUR OF OUR LARGEST PAPER MILLS. at a rate of 3-5% annually due to an aging population and increased product adoption rates. The sizeable infant diaper Our studies have confirmed that Domtar can be a significant category continues to see a shift to store-brand products in and competitive supplier to the containerboard market in North America and Europe, creating a significant opportunity addition to increasing our pulp production. for market penetration. By executing its margin improvement plan, our personal care division will be a more agile competitor in a growing market. DOMTAR 2018 ANNUAL REPORT 5

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MESSAGE TO SHAREHOLDERS OPTIMIZING CAPITAL DEPLOYMENT Over the past decade, we have made progress in key areas such Our businesses have remained highly cash-generative as forest certification, environmental performance, and the throughout the years, and we have been very disciplined in beneficial reuse of manufacturing byproducts. Our workplaces our capital deployment decisions to strike an optimal balance are inclusive, welcoming people from diverse backgrounds. We between shareholder returns and the execution of our treat our employees with respect and prioritize their health business strategy. and safety. Since 2011, Domtar has returned $1.6 billion to shareholders I am also proud to highlight Domtar’s award-winning disclosure in the form of dividends and share repurchases. Our annual in environmental and social reporting. We will publish our next dividend payout for 2018 was $108 million and the yield for our Sustainability Report in 2019, outlining our targets, challenges shareholders is among the highest in our industry. In the years and achievements. ahead, we will remain true to our commitment of returning the majority of our free cash flow to shareholders while continuing to invest in the future of our businesses. READY FOR THE FUTURE We ended 2018 feeling confident about our short-term prospects and our positioning for the long term. We have some OPERATING RESPONSIBLY of the best paper assets in North America, a world-class pulp Our long-standing pursuit of sustainable business practices business, great asset optionality, and flexibility in the timing of remains an integral part of our DNA and of our long-term future conversions. strategy. Our track record in environmental and social responsibility differentiates us in the eyes of our customers and contributes to our financial results. I THANK OUR EMPLOYEES FOR THEIR EFFORTS, OUR SHAREHOLDERS FOR THEIR CONTINUED CONFIDENCE, AND THE MEMBERS OF OUR PULP AND PAPER PERSONAL CARE TOTAL INJURY TOTAL INJURY BOARD OF DIRECTORS FOR THEIR VALUED FREQUENCY RATES FREQUENCY RATES COUNSEL AND SUPPORT. 0.86 0.84 0.79 0.68 0.73 0.64 Our strategy as a leading fiber-based technology company is delivering value and we are keenly focused on seizing market opportunities. Domtar is ready for the future. 2016 2017 2018 2016 2017 2018 John D. Williams President and Chief Executive Officer 6 DOMTAR 2018 ANNUAL REPORT

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MANAGEMENT COMMITTEE AND BOARD OF DIRECTORS OUR LEADERSHIP TEAM Domtar upholds the highest standards of business integrity and We have adopted a wide range of policies, regularly corporate social responsibility. Our commitment to operating reviewed and updated, to promote strong governance, best responsibly is supported by our Code of Business Conduct and practices, diversity and sustainability. For more information Ethics applicable to Board members and employees alike. Strict on governance at Domtar, or to consult our proxy statement, Corporate Governance Guidelines are the basis for a robust please visit domtar.com. compliance program. MANAGEMENT COMMITTEE BOARD OF DIRECTORS John D. Williams Daniel Buron Robert E. Apple Giannella Alvarez President and Senior Vice President Chairman of the Board Chief Executive Officer Chief Executive Officer and Chief Financial Domtar Corporation Beanitos, Inc. Officer Chief Operating Officer Austin, Texas MasTec, Inc. Miami, Florida Michael D. Garcia Michael Fagan David J. Illingworth Brian M. Levitt President President Corporate Director Chairman of the Board Pulp and Paper Personal Care Orchid, Florida The Toronto Division Division Dominion Bank Kingston, Ontario Zygmunt Jablonski Patrick Loulou David G. Maffucci Pamela B. Strobel Senior Vice President Senior Vice President Corporate Director Corporate Director and Chief Legal Corporate Isle of Palms, Chicago, Illinois and Administrative Development South Carolina Officer Denis Turcotte John D. Williams Managing Partner President and Brookfield Asset Chief Executive Officer Management Inc. Domtar Corporation Toronto, Ontario Charlotte, North Carolina Mary A. Winston President WinsCo Enterprises, Inc. Charlotte, North Carolina DOMTAR 2018 ANNUAL REPORT 7

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BUSINESS OVERVIEW PULP AND PAPER SEGMENT 3 MILLION 1.5 MILLION SHORT TONS AIR-DRY METRIC OF UNCOATED TONS OF MARKET FREESHEET PAPER PULP 13 PULP AND PAPER MILLS IN NORTH AMERICA 8 DOMTAR 2018 ANNUAL REPORT

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7,100 PULP AND PAPER EMPLOYEES 13 CUSTOMERS IN 40+ READY CONVERTING FACILITIES COUNTRIES AROUND THE FOR THE WORLD FUTURE DOMTAR 2018 ANNUAL REPORT 9

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BUSINESS OVERVIEW PULP AND PAPER SEGMENT PULP AND PAPER Favorable market conditions and higher productivity across the mill system are highlights of a successful year for Domtar’s pulp and paper segment in 2018. We increased paper shipments, solidifying our position as the supplier of choice for communication papers in North America, while continuing to grow our market pulp business globally. Sales of our specialty paper grades were also higher than in the prior year. Several of Domtar’s communication STRONG paper mills achieved records in slush We entered 2019 with high operating rates and improved paper prices. In PAPER pulp and paper production in 2018. addition, permanent capacity closures PERFORMANCE Paper productivity and daily production of slush pulp – wood fiber that is ready have been announced by competitors effective during the first half of 2019 Domtar’s sales of uncoated freesheet for making paper or market pulp – both and into 2020. papers increased 7% in 2018, while exceeded our annual targets. Paper shipments were up 3% to approximately production was 3% higher than in the 3 million short tons. Already North prior year. America’s largest manufacturer of communication papers, we gained DOMTAR PAPER PRODUCTS AND APPLICATIONS new business as some competitors announced permanent uncoated freesheet capacity reductions. Communication Specialty and Papers Packaging Papers North American production of uncoated CATEGORY Business Commercial Printing • Thermal papers Papers and Publishing Papers • Food packaging freesheet paper declined 3.4% in 2018 • Bag stock to 7.1 million short tons. Demand was GRADE • Copy • Premium • Offset • Opaques imaging • Security papers approximately 7.5 million short tons, a • Colors • Premium • Imaging papers • Technology • Index opaques 0.5% decrease compared to 2017. Global papers • Lightweight • Label papers • Tag demand for uncoated freesheet was • Bristol • Tradebook • Medical disposables estimated at 44.4 million short tons in 2018, similar to the previous year. APPLICATION • Photocopies • Presentations • Commercial • Stationery • Food and candy • Office • Reports printing • Brochures packaging documents • Direct mail • Annual reports • Fast food takeout • Presentations • Pamphlets bag stock • Books • Brochures • Check and security • Catalogs papers • Cards • Forms and • Surgical gowns • Posters Envelopes 10 DOMTAR 2018 ANNUAL REPORT

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RELIABLE LONG-TERM PAPER SUPPLIER Domtar has been steadfast in its strategy to remain North America’s largest uncoated freesheet producer and reliable long-term supplier to its customers. This strategy has served us well and continues to be our path. We are keeping our promise to customers by investing annually in our paper mills to increase operational reliability and efficiency, as well as in ongoing product development and innovation to meet their needs. We offer a broad selection of high- A strong culture of sustainability is quality uncoated papers – from office, embedded throughout our operations. printing, publishing, digital and inkjet Our commitment to sustainable papers, to innovative converting and forest management, responsible use specialty papers – and responsive, of resources, and safe and healthy world-class service. workplaces help our customers achieve their own social responsibility goals. NORTH AMERICAN At the same time, Domtar is taking a UNCOATED FREESHEET deliberate approach to finding new uses CAPACITY1 for its paper assets in growing markets. Domtar Market Share vs. Next Four Competitors But we are not going to repurpose Making and selling uncoated freesheet our mills prematurely, simply because in the current market environment 35% we can. is highly attractive, and Domtar is 24% committed to remain the supplier of choice to its customers in 2019 – and 11% for the long term. 7% 3% Domtar A B C D Source: RISI 1 Reflects the decision by a major supplier to curtail its uncoated freesheet capacity in 2019. DOMTAR 2018 ANNUAL REPORT 11

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BUSINESS OVERVIEW PULP AND PAPER SEGMENT Long-term conversion potential REPURPOSING In 2018, we completed a feasibility study with FOR A internal and external resources to determine PURPOSE the next best use for several of our largest paper mills. The outcome was a confirmation For Domtar, asset quality and flexibility, that we have the right fiber basket, assets access to abundant wood fiber, and a skilled and core competencies at several mills to and experienced workforce offer strategic make an impactful entry into the global optionality. Our “steel in the ground” has containerboard market while also expanding long-term value and, when needed, we can our position in market pulp. Specifically, repurpose some of our mills to the next we hold the keys to successfully produce best use, creating new cash flow sources up to 2.5 million tons of containerboard and sustaining the economic life of our and/or 570,000 air-dr y metric tons of communities. additional market softwood and fluff pulp. Over the past decade, we have successfully Containerboard is a highly attractive market removed and converted 1.5 million short tons with strong long-term fundamentals. The of paper capacity to manufacture products in domestic U.S. containerboard market exceeds growing markets while balancing our paper 30 million tons annually, with a historical supply with customer demand. growth rate of 1.9%. On a global basis, containerboard is the largest category in the paper industry and growing. Global demand for market pulp is also growing, and certain mills are well suited for this purpose when the paper they currently produce is no longer needed to meet customer demand. 12 DOMTAR 2018 ANNUAL REPORT

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The exact timing and sequence of any will take comfort in knowing that Domtar has conversion will be determined by the attractive opportunities in growth markets. profitability trends in our paper business, Our repurposing roadmap significantly de-risks m a r k e t c o n d i t i o n s, a n d t h e s u p p l y our business and allows all our stakeholders requirements of our paper customers. to look ahead with confidence. Ready for the future At the right time, our communication paper While our first conversion is not imminent, we mills and our employees are ready to execute. have a long-term conversion roadmap. Our Domtar is ready for the future! shareholders, employees and communities ASSET CONVERSION ROADMAP Mill Annual UFS Conversion Production Potential Capacity (Approximate) A ASHDOWN 265,000 • 400,000 tons of kraft AR short tons linerboard • 75,000 ADMT of fluff pulp OR • 255,000 ADMT of fluff pulp and southern bleached softwood kraft B C B HAWESVILLE 596,000 • 580,000 tons of kraft KY short tons linerboard D • 320,000 tons of recycled medium A C KINGSPORT 426,000 • 600,000 tons of recycled TN short tons linerboard D MARLBORO 274,000 • 600,000 tons of kraft SC short tons linerboard OR • 315,000 ADMT of fluff pulp UFS: Uncoated freesheet paper ADMT: Air-dry metric tons DOMTAR 2018 ANNUAL REPORT 13

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BUSINESS OVERVIEW PULP AND PAPER SEGMENT product categories. We are one of the in the industry due to weather and HIGH RETURNS world’s largest producers of market pulp, other events. Domtar experienced an IN PULP selling our products to customers in orderly weather-related shutdown at over 40 countries. one location, but total production across Domtar’s market pulp shipments totalled the mill system was consistent with the 1.5 million air-dry metric tons in 2018, Global demand for chemical market prior year. with strong demand in the markets pulp was approximately 61.5 million we serve and higher prices across all tons in 2018, similar to the prior year. We entered 2019 with sound market North American demand decreased fundamentals, with strong demand in 4.8% to 7.5 million tons, while in China, our end markets, and no major industry a key driver of global pulp consumption, capacity increase announcements. demand was 20.9 million tons, stable Because China has accounted for a when compared to 2017. significant share of demand growth for softwood pulp over the past several Supply disruptions were a key factor in years, its economy will be an important the global pulp market in 2018, with factor in price trends in 2019. significant unplanned capacity outages EXPLORING THE POTENTIAL OF WOOD-BASED BIOMATERIALS In a world seeking to transition from compounds such as acr ylonitrile fuels. While material revenues are petroleum-based products, Domtar butadiene styrene (ABS), a material not expected from biomaterials in is exploring the potential for using widely used in injection molding and the short term, we see compelling wood fiber as a viable replacement 3D manufacturing, as well as other high- reasons to continue our research or supplement. As fiber experts value fiber and lignin applications. We and development for the benefit and innovators, we know that also installed a demonstration plant in of Domtar and our planet. trees can be used as feedstock for Canada to show how lignin pellets can developing a variety of sustainable potentially be used as a bio-alternative and biodegradable alternatives to to petroleum-based products, including materials or chemicals currently plastics. made with petroleum. These are but two tangible initiatives In 2018, Domtar acquired an led by our BioMaterials Innovation team. interest in a company that uses They are also looking at extractives, lignin to make engineered plastic advanced fibers and thermochemical 14 DOMTAR 2018 ANNUAL REPORT

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• Our Plymouth Mill is focused on increasing PULP, A GROWTH reliability to generate higher fluff pulp DRIVER production and reducing energy and chemical use. Since establishing pulp as a growth driver, Domtar has been taking actions to build a • We continue to increase fluff pulp production globally competitive business. Market pulp at our Ashdown Mill, which operates one of sales have increased significantly to account the world’s largest and most advanced fluff for 22% of consolidated sales in 2018. pulp machines. Having achieved global scale, we are As one of the world’s largest market pulp increasingly focused on enhancing our producers, Domtar is well-positioned to customer value proposition to build strong capitalize on growth opportunities in attractive long-term relationships while increasing sales markets. in higher margin product segments. This is supported by a disciplined investment plan on high-return projects over the next three years DOMTAR PULP SHIPMENTS to optimize and improve efficiencies across BY END USES1 our market pulp mills, with the objective of driving cost performance towards industry END USE % of total shipments first quartile ranking. ABSORBENT HYGIENE 40% • Our Kamloops Mill undertook a major debottleneck ing project and other improvements in 2018 that have resulted TOWEL AND TISSUE 38% in increased softwood pulp production and improved environmental performance. SPECIALTY PAPER AND MATERIALS 18% • At our Dryden Mill, which also produces softwood pulp, we are taking actions to PRINTING AND WRITING 4% increase fiber yield. 1 Includes pulp shipments to Personal Care DOMTAR 2018 ANNUAL REPORT 15

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BUSINESS OVERVIEW PERSONAL CARE SEGMENT 2.6 BILLION 2,200 UNITS OF ADULT PERSONAL CARE DIAPERS EMPLOYEES 6 MANUFACTURING FACILITIES IN EUROPE AND NORTH AMERICA 16 DOMTAR 2018 ANNUAL REPORT

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PERSONAL CARE Long-term growth trends for adult incontinence and infant products remain strong but adverse market conditions made for a difficult year in 2018. Domtar’s vision to be a leader in this market has not changed and we are taking strong measures across the business to improve our performance. We expect these actions to generate A YEAR OF $25 million to $30 million in annual TRANSITION margin improvement and to strengthen our long-term competitive position. Significant increases in input costs, over The full run rate effect of the margin and above the commodity inflation improvement initiatives is expected by experienced in the prior year, and intense the end of 2020. pricing pressure have compressed margins in our personal care business in 2018. We were also affected by an unfavorable tender balance, and costs FOCUS ON associated with ramping up a significant PRODUCTS AND new customer beginning in the final quarter of the year. CUSTOMERS Continued investments will also be made in our direct-to-consumer A globally integrated provider of channel in North America to drive We responded to market conditions absorbent hygiene solutions, Domtar is sales of our full line of branded adult by launching a division-wide margin gaining traction as a supplier of partner- incontinence products, including improvement plan in the second half branded adult incontinence and infant protective underwear, briefs, underpads, of 2018. This included streamlining products in North America and Europe. pads and washcloths. administrative and sales expenses, cost This strategy continues to be a major reductions, product rationalization, and focus going forward. With our ability to create high-quality commercial initiatives. and cost-effective products, our well- We are making inroads in the institutional invested manufacturing footprint, Our Waco, Texas facility will be market for adult incontinence products and dedicated employees, we are permanently shut by the third quarter in Europe, and we completed the determined to rise to the challenge of of 2019, and some of the equipment installation of a new protective a competitive market and to champion will be installed in other locations as underwear line with the objective of health, dignity and comfort through part of a manufacturing optimization. capturing additional market share. effective and affordable care. Our guiding principle is to reduce complexity to improve efficiency and productivity. DOMTAR 2018 ANNUAL REPORT 17

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BUSINESS OVERVIEW SEGMENTED INFORMATION PULP AND PAPER PERSONAL CARE Years ended December 31 2016 2017 2018 Years ended December 31 20161 2017 2018 (In millions of dollars) (In millions of dollars) Sales (including sales to Personal Care) 4,239 4,216 4,523 Sales 909 996 1,000 Operating income 201 237 438 Operating income (loss) 57 (527) (5) Depreciation and amortization 284 254 238 Depreciation and amortization 64 67 70 Capital expenditures 287 128 164 Capital expenditures 55 48 37 Total assets 3,637 3,649 3,475 Total assets 1,884 1,406 1,331 Paper shipments–manufactured (‘000 ST) 3,021 2,891 2,971 Market pulp shipments (‘000 ADMT) 1,513 1,722 1,536 1 Including HDIS since October 1, 2016 MANUFACTURING CAPACITY BY REGION SALES BY PRODUCT CATEGORY PAPER MARKET PULP U.S. 77% U.S. 54% Adult Incontinence 66% Canada 23% Canada 46% Infant 25% Other 9% SALES BY REGION SALES BY REGION PAPER MARKET PULP U.S. 82% Other 58% U.S. 50% Canada 10% U.S. 39% Europe 48% Other 8% Canada 3% Other 2% SHIPMENTS BY GRADE SALES BY CHANNEL 2 PAPER–MANUFACTURED MARKET PULP Communication 82% Softwood 56% Healthcare 47% Specialty and Fluff 40% Retail 36% Packaging 18% Hardwood 4% Direct-to-Consumer 9% Other 8% 2 Includes pulp shipments to Personal Care 18 DOMTAR 2018 ANNUAL REPORT

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READY FOR THE FUTURE DOMTAR 2018 ANNUAL REPORT 19

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 or ‘ 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: 001-33164 Domtar Corporation (Exact name of registrant as specified in its charter) Delaware 20-5901152 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 234 Kingsley Park Drive Fort Mill, SC 29715 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (803) 802-7500 Securities registered pursuant to Section 12(b) of the Act: Common Stock, Par Value $0.01 Per Share; Common stock traded on the New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES È NO ‘ Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YES ‘ NO È 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 È NO ‘ 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 È NO ‘ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ‘ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 È Accelerated filer ‘ Non-accelerated filer ‘ Small 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. ‘ Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ‘ NO È The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of the shares of common stock on The New York Stock Exchange on June 30, 2018, was $3,002,586,945. The number of shares of Registrant’s Common Stock outstanding as of February 16, 2019 was 62,923,743. Portions of the Registrant’s Proxy Statement relating to the Annual Meeting of Shareholders, scheduled to be held on May 8, 2019, are incorporated by reference into Part III of this Report.

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DOMTAR CORPORATION ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2018 TABLE OF CONTENTS PART I ITEM 1 BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Availability of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Our Corporate Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Our Business Segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pulp and Paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Personal Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Our Strategic Initiatives and Financial Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Our Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Our Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Our Approach to Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Our Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Our Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Our Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Forward-looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ITEM 1A RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ITEM 1B UNRESOLVED STAFF COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ITEM 2 PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ITEM 3 LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ITEM 4 MINE SAFETY DISCLOSURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART II ITEM 5 MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES . . . . . . . . . . . . . . Market Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Performance Graph . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ITEM 6 SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2018 Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Results of Operations and Segment Review . . . . . . . . . . . . . . . . . . . . . . . Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recent Accounting Pronouncements and Critical Accounting Estimates and Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 PAGE 4 4 4 4 4 5 10 11 12 13 13 14 14 15 15 17 26 26 28 28 29 29 29 29 30 31 31 31 32 33 41 45

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PAGE ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK . . . . 53 ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . . . . 55 Management’s Reports to Shareholders of Domtar Corporation . . . . . . . . . . . . . . . . . . 55 Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss) . . . . . 58 Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Consolidated Statement of Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 ITEM 9A CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 ITEM 9B OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 PART III ITEM 10 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE . . . . . . 135 ITEM 11 EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . 135 ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 ITEM 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136 PART IV ITEM 15 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . 137 Schedule II – Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 ITEM 16 FORM 10-K SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142 3

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PART I ITEM 1. BUSINESS GENERAL We design, manufacture, market and distribute a wide variety of fiber-based products including communication papers, specialty and packaging papers and absorbent hygiene products. The foundation of our business is a network of wood fiber converting assets that produce paper grade, fluff and specialty pulp. More than 50% of our pulp production is consumed internally to manufacture paper and other consumer products, with the balance sold as market pulp. We are the largest integrated marketer of uncoated freesheet paper in North America serving a variety of customers, including merchants, retail outlets, stationers, printers, publishers, converters and end-users. We are also a marketer and producer of a broad line of incontinence care products as well as infant diapers. To learn more, visit www.domtar.com. We operate the following business segments: Pulp and Paper and Personal Care. We had revenues of $5.5 billion in 2018, of which approximately 82% was from the Pulp and Paper segment and approximately 18% was from the Personal Care segment. Throughout this Annual Report on Form 10-K, unless otherwise specified, “Domtar Corporation,” “the Company,” “Domtar,” “we,” “us” and “our” refer to Domtar Corporation, its subsidiaries, as well as its investments. AVAILABILITY OF INFORMATION In this Annual Report on Form 10-K, we incorporate by reference certain information contained in other documents filed with the Securities and Exchange Commission (“SEC”) and we refer you to such information. We file annual, quarterly and current reports and other information with the SEC. The SEC maintains a website at www.sec.gov that contains our quarterly and current reports, proxy and information statements, and other information we file electronically with the SEC. You may also access, free of charge, our reports filed with the SEC through our website. Reports filed or furnished to the SEC will be available through our website as soon as reasonably practicable after they are filed or furnished to the SEC. The information contained on or connected to our website, www.domtar.com, is not incorporated by reference into this Form 10-K and should in no way be construed as a part of this or any other report that we filed with or furnished to the SEC. OUR CORPORATE STRUCTURE At December 31, 2018, Domtar Corporation had a total of 62,914,569 shares of common stock issued and outstanding. Our common stock is traded on the New York Stock Exchange and the Toronto Stock Exchange under the symbol “UFS”. Information regarding our common stock is included in Item 8, Financial Statements and Supplementary Data under Note 20 “Shareholders’ Equity”. OUR BUSINESS SEGMENTS We have two reportable segments as described below, which also represent our two operating segments. Each reportable segment offers different products and services and requires different manufacturing processes, technology and/or marketing strategies. The following summary briefly describes the operations included in each of our reportable segments. • Pulp and Paper: Our Pulp and Paper segment consists of the design, manufacturing, marketing and distribution of communication, specialty and packaging papers, as well as softwood, fluff and hardwood market pulp. 4

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• Personal Care: Our Personal Care segment consists of the design, manufacturing, marketing and distribution of absorbent hygiene products. Information regarding our reportable segments is included in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, as well as Item 8, Financial Statements and Supplementary Data under Note 23 “Segment Disclosures”. Geographic information is also included under Note 23 of the Financial Statements and Supplementary Data. PULP AND PAPER Our Manufacturing Operations We produce approximately 4 million metric tons of softwood, fluff and hardwood pulp at 12 of our 13 mills (Port Huron being a non-integrated paper mill). More than 50% of our pulp is consumed internally to manufacture paper, with the balance being sold as market pulp. We also purchase limited papergrade pulp from third parties for specific grades and to optimize the logistics of our pulp capacity while reducing transportation costs. We are the largest integrated manufacturer and marketer of uncoated freesheet paper in North America. We have nine integrated pulp and paper mills and one non-integrated paper mill (eight in the United States and two in Canada), with an annual paper production capacity of approximately 3 million tons of uncoated freesheet paper. Our paper manufacturing operations are supported by 13 converting and forms manufacturing operations (including a network of 10 plants located offsite from our paper making operations). Approximately 77% of our paper production capacity is in the United States and the remaining 23% is located in Canada. We produce market pulp in excess of our internal requirements at our pulp and paper mills in Ashdown, Espanola, Hawesville, Windsor, Marlboro and Nekoosa. We also produce papergrade, fluff and specialty pulps at our three stand-alone pulp mills in Kamloops, Dryden and Plymouth. We can sell approximately 1.8 million metric tons of pulp per year depending on market conditions. Approximately 54% of our trade pulp production capacity is in the U.S., and the remaining 46% is located in Canada. 5

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The table below lists our operating pulp and paper mills and their annual production capacity: Saleable PRODUCTION FACILITY Fiberline Pulp Capacity Paper (1) # lines (‘000 ADMT) (2) # machines Category (3) (‘000 ST) (2) Uncoated freesheet Ashdown, Arkansas 3 707 2 Communication 265 Windsor, Quebec 1 447 2 Communication 642 Hawesville, Kentucky 1 412 2 Communication 596 Kingsport, Tennessee 1 304 1 Communication 426 Marlboro, South Carolina 1 320 1 Specialty & Packaging 274 Johnsonburg, Pennsylvania 1 228 2 Communication 344 Nekoosa, Wisconsin 1 155 3 Specialty & Packaging 168 Rothschild, Wisconsin 1 65 1 Communication 131 Port Huron, Michigan — — 4 Specialty & Packaging 113 Espanola, Ontario 2 327 2 Specialty & Packaging 69 Total Uncoated freesheet 12 2,965 20 3,028 Pulp Kamloops, British Columbia 1 354 — — Dryden, Ontario 1 327 — — Plymouth, North Carolina 1 390 — — Total Pulp 3 1,071 — — Total 15 4,036 20 3,028 Total Trade Pulp (4) 1,789 (1) Paper capacity is based on an operating schedule of 360 days and the production at the winder. (2) ADMT refers to an air dry metric ton and ST refers to short ton. (3) Represents the majority of the capacity at each of these facilities. (4) Estimated third-party shipments dependent upon market conditions. This also includes shipments to our Personal Care segment. Our Raw Materials The manufacturing of pulp and paper requires wood fiber, chemicals and energy. We discuss these three major raw materials used in our manufacturing operations below. Wood Fiber United States pulp and paper mills The fiber used by our pulp and paper mills in the United States is softwood and hardwood, both readily available in the market from multiple third-party sources. The mills obtain fiber from a variety of sources, depending on their location. These sources include a combination of supply contracts, wood lot management arrangements, advance stumpage purchases and spot market purchases. Canadian pulp and paper mills The fiber used at our Windsor pulp and paper mill is hardwood originating from a variety of sources, including purchases on the open market in Canada and the United States, contracts with Quebec wood producers’ marketing boards, public land where we have wood supply allocations and from Domtar’s private lands. The softwood and hardwood fiber for our Espanola pulp and paper mill and the softwood fiber for our Dryden pulp 6

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mill, are obtained from third parties, directly or indirectly from public lands and through designated wood supply allocations. The fiber used at our Kamloops pulp mill is all softwood, originating mostly from third-party sawmill operations in the southern-interior part of British Columbia. Cutting rights on public lands related to our pulp and paper mills in Canada represent about 1.5 million cubic meters of softwood and 0.8 million cubic meters of hardwood per year. Access to harvesting of fiber on public lands in Ontario and Quebec is subject to licenses and review by the respective governmental authorities. During 2018, the cost of wood fiber relating to our Pulp and Paper segment comprised approximately 20% of the total consolidated cost of sales. Chemicals We use various chemical compounds in our pulp and paper manufacturing operations that we purchase, primarily on a centralized basis, through contracts varying between one and ten years in length to ensure product availability. Most of the contracts have pricing that fluctuates based on prevailing market conditions. For pulp manufacturing, we use numerous chemicals including caustic soda, sodium chlorate, sulfuric acid, lime and peroxide. For paper manufacturing, we also use several chemical products including starch, precipitated calcium carbonate, optical brighteners, dyes and aluminum sulfate. During 2018, the cost of chemicals relating to our Pulp and Paper segment comprised approximately 12% of the total consolidated cost of sales. Energy Our operations produce and consume substantial amounts of energy. Our primary energy sources include: biomass, natural gas and electricity. Approximately 72% of the total energy required to manufacture our products comes from renewable fuels such as bark and spent pulping liquor, generated as byproducts from our manufacturing processes. The remainder of the energy comes from smaller amounts of other fossil fuels and purchased steam procured under supply contracts. Under most of these contracts, suppliers are committed to provide quantities within pre-determined ranges that provide us with our needs for a particular type of fuel at a specific facility. Most of these contracts have pricing that fluctuate based on prevailing market conditions. Biomass and fossil fuels are consumed primarily to produce steam that is used in the manufacturing process and, to a lesser extent, to provide direct heat used in the chemical recovery process. We own cogenerating assets at all of our integrated pulp and paper mills, as well as hydro assets at three locations: Espanola, Nekoosa and Rothschild. These generating assets produce approximately 72% of the electricity requirements of this business segment, with the balance supplied from local utilities. Electricity is primarily used to drive motors, pumps and other equipment, as well as provide lighting. During 2018, net energy costs relating to our Pulp and Paper segment comprised approximately 5% of the total consolidated cost of sales. Our Transportation Transportation of raw materials, wood fiber, chemicals and pulp into our mills is mostly done by rail and trucks, although barges are used in certain circumstances. We rely strictly on third parties for the transportation of our pulp and paper products between our mills, converting operations, distribution centers and customers. Our paper products are shipped mostly by truck and logistics are managed centrally in collaboration with each location. Our pulp is either shipped by vessel, rail or truck depending on destination and customer preference. We work with all major railroads and approximately 350 trucking companies in the United States and Canada. Service agreements are typically negotiated on an annual basis. We pay diesel fuel surcharges which vary depending on the mode of transportation used, and the cost of diesel fuel. 7

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During 2018, outbound transportation costs relating to our Pulp and Paper segment comprised approximately 11% of the total consolidated cost of sales. Our Product Offering and Go-to-Market Strategy PAPER Our uncoated freesheet papers are categorized into both communication papers and specialty and packaging papers. Communication papers are further categorized into business papers and commercial printing and publishing papers. Our business papers include copy and electronic imaging papers, which are used with inkjet and laser printers, photocopiers and plain-paper fax machines, as well as computer papers, preprinted forms and digital papers. These products are primarily for office and home use. Business papers accounted for approximately 50% of our shipments of paper products in 2018. Our commercial printing and publishing papers include uncoated freesheet papers, such as offset papers and opaques. These uncoated freesheet grades are used in sheet and roll fed offset presses across the spectrum of commercial printing end-uses, including digital printing. Our publishing papers include tradebook and lightweight uncoated papers used primarily in book publishing applications such as textbooks, dictionaries, catalogs, magazines, hard cover novels and financial documents. These products also include base papers that are converted into finished products, such as envelopes, tablets, business forms and data processing/computer forms. Commercial printing and publishing papers accounted for approximately 32% of our shipments of paper products in 2018. Our specialty and packaging papers includes papers used for thermal printing, flexible packaging, food packaging, medical packaging, medical gowns and drapes, sandpaper backing, carbonless printing, labels and other papers used for coating and laminating applications. We also manufacture papers for industrial and specialty applications including carrier papers, treated papers, security papers and specialized printing and converting applications. These specialty and packaging papers accounted for approximately 18% of our shipments of paper products in 2018. These grades of papers require a certain amount of innovation and agility in the manufacturing system. The chart below illustrates our main uncoated freesheet papers products and their applications: Communication Papers Specialty and Packaging Papers Commercial Printing and Publishing Category Business Papers Papers Grade Copy Premium imaging Offset Opaques Thermal papers Technology papers Colors Premium opaques Food packaging Index Lightweight Bag stock Tag Tradebook Security papers Bristol Imaging papers Label papers Medical disposables Application Photocopies Presentations Commercial Stationery Food & candy packaging Office Reports printing Brochures Fast food takeout bag stock documents Direct mail Annual reports Check and security papers Presentations Pamphlets Books Surgical gowns Brochures Catalogs Cards Forms & Posters Envelopes 8

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Our paper sales channels are aligned to efficiently bring a competitive and complete product offering to our varied customers. Our customer service personnel work closely with sales, marketing and production staff to provide service and support to merchants, converters, end-users, stationers, printers and retailers. We promote our products directly to end-users and others who influence paper purchasing decisions in order to enhance brand recognition and increase product demand. In addition, our sales representatives work closely with mill-based product development personnel and undertake joint marketing initiatives with customers in order to better understand their business needs and to support their future requirements. We sell business papers primarily to paper stationers, merchants, office equipment manufacturers and retail outlets. We distribute uncoated commercial printing and publishing papers to end-users and commercial printers, mainly through paper merchants, as well as selling directly to converters. We sell our specialty and packaging papers mainly to converters, who apply a further production process such as coating, laminating, folding or waxing to our papers before selling them to a variety of specialized end-users. The chart below illustrates our channels of distribution for our paper products: Communication Papers Specialty and Packaging Papers Commercial Printing and Publishing Category Business Papers Papers Domtar sells Retailers Merchants Office Merchants Converters End-Users Converters to: ↓ ↓ Equipment ↓ ↓ ↓ Manufacturers / Stationers ↓ Customer sells Printers / Printers / Retailers / Printers / Merchants End-users to: End-users Retailers / Stationers / Converters / Retailers End-users End-users / End-users PULP Our pulp products are comprised of softwood, fluff and hardwood kraft. These grades are sold to customers in over 40 countries worldwide. Our pulp is used in a variety of end products, such as diapers and personal hygiene products, bathroom and facial tissue, specialty and packaging papers, customers who make printing and writing grades, building products and electrical insulating papers. We sell market pulp to customers in North America mainly through a North American sales force while sales to most overseas customers are made directly or through commission agents. We maintain pulp supplies at strategically located warehouses, which allow us to respond to customer orders on short notice. Our Customers Our ten largest customers represented approximately 44% of our Pulp and Paper segment sales or approximately 36% of our total sales in 2018. In 2018, Staples, a customer of our Pulp and Paper segment, represented approximately 10% of our total sales. The majority of our customers purchase products through individual purchase orders. In 2018, approximately 71% of our Pulp and Paper segment sales were in the United States, 11% were in Canada, and 18% were in other countries. 9

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PERSONAL CARE Our Operations Our Personal Care business consists of the design, manufacturing, marketing and distribution of absorbent hygiene products, including adult incontinence and infant diaper products. We are one of the leading suppliers of adult incontinence products sold into North America and Europe, servicing institutional and consumer channels, marketed primarily under our Attends®, IncoPack®, Indasec® and Reassure® brands, in addition to our customers’ brands. We currently operate six manufacturing facilities, with each having the ability to produce multiple product categories. At our Jesup facility, we have research and development capabilities and production lines which manufacture high quality airlaid and ultrathin laminated absorbent cores and we also have research and development activities in our divisional headquarters in Raleigh, North Carolina. We operate in the United States and in Europe. On November 1, 2018, we announced a margin improvement plan within our Personal Care segment. As part of this plan, we announced the permanent closure of our Waco, Texas, manufacturing and distribution facility, the relocation of certain of our manufacturing assets and a workforce reduction of 214 full time employees as well as certain temporary positions across the division. The Waco, Texas facility is expected to cease operations in the third quarter of 2019. Our Industry Dynamics Aging population We compete in an industry with fundamental drivers for long-term growth. The worldwide aging population suggests that adult incontinence will become much more prevalent over the next several decades, as baby boomers enter their senior years and medical advances continue to extend the average lifespan. By the year 2030, approximately one billion people worldwide are estimated to be 65 years old or older, representing 12% of the projected total world population. Increased healthcare spending While we are expected to benefit from the overall increase in healthcare spending due to an aging population, the pressure to limit public spending on healthcare may impact overall consumption or the channels in which consumption occurs. Infant products We compete within the competitive store brand segment of infant diapers and training pants. Future demand growth based on birth rate and demographic trends is forecasted to be limited in North America and Europe. The importance of the category to key retailers is expected to remain strong given the purchasing power and strategic importance of the infant diaper shopper. Today, our business is focused on securing multiyear contracts with large retailers that control the majority of volume, leading to intense competition with other manufacturers in the industry. We believe that our product assortment provides our customers with the complete bundle of products at a scale required to meet their national distribution requirements. 10

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Our Raw Materials The primary raw materials used in our manufacturing process are fluff pulp, nonwovens and super absorbent polymers. A significant portion of the fluff pulp used in our Personal Care business is supplied internally from our Pulp and Paper business. The majority of our nonwoven and super absorbent polymers are purchased centrally based on multiyear contracts with pricing that fluctuates with market conditions. Other raw materials used in our manufacturing process include polypropylene film, elastics and adhesives which are also purchased with multiyear contracts. Our Product Offering and Go-to-Market Strategy Our products, which include branded and private label briefs, protective underwear, underpads, pads and washcloths, as well as baby diapers, youth pants and infant training pants, are available in a variety of sizes, differing performance levels and product attributes. Our broad product portfolio covers most price points across each category. We serve the healthcare, retail and direct-to-consumer channels. Through the utilization of our flexible production platform, manufacturing expertise and efficient supply chain management, we believe that we are able to provide a complete and high-quality line of products to customers across all channels, under our own brands or those of our customers. We maintain a direct sales organization in the United States and certain European countries. Our Product Development We currently offer a comprehensive, full suite of products, and we continue to focus on product development to improve products for our customers. We continue to explore materials, designs and processes that will allow us to manufacture products that absorb wetness more quickly, reduce skin dryness and improve containment. OUR STRATEGIC INITIATIVES AND FINANCIAL PRIORITIES As a leading fiber-based technology company, Domtar is focused on driving innovation, enhancing our operating platforms, and delivering high quality products. To further bolster our position and drive enhanced value for our stockholders, Domtar is focused on four key business objectives: (1) driving value in our Pulp and Paper business through strategic investment; (2) building on our core competencies in wood fiber to diversify and expand Domtar’s footprint in growth markets and industries; (3) maintaining a balanced and disciplined approach to capital allocation that allows for investments in growth opportunities and rewards stockholders with capital returns; and (4) operating with a focus on environmental responsibility and sustainability. We are confident that the continued focus on these objectives will bolster the competitive position of our business and drive value for our stakeholders, including stockholders, customers and employees. Driving value in the Pulp and Paper business. Domtar’s Pulp and Paper business remains an important part of our growth plan, and we have strategies and operating priorities designed to maximize the value of the business. Our key priorities include: increasing productivity in our pulp business, pursuing new sources of paper consumption, pursuing asset repurposing opportunities and operating an optimal portfolio of strategic assets. We believe that execution on these priorities will enable Domtar to expand into complementary growth areas and protect its market position in Pulp and Paper. Expanding into areas of growth and leveraging our fiber expertise. We are focused on optimizing and expanding our operations in markets with positive demand dynamics through investments for organic growth, the repurposing of assets and strategic acquisitions. Domtar has a history of proactively adapting to changing market conditions, and today, we are repositioning the Company towards areas of growth. We are well positioned to 11

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capitalize on new opportunities in the wood fiber market. The Company already has the financial resources, infrastructure, raw materials, technologies and expertise necessary to deliver new products. We believe that we have built a strong foundation for diversification and continue to make important, but disciplined, progress. Maintaining a balanced and disciplined approach to capital allocation that allows for investments in growth opportunities and rewards stockholders with capital returns. We believe in a balanced and disciplined approach to capital allocation, and we are committed to deploying capital only to the areas that will achieve the best possible return for our stockholders. Domtar’s free cash flow allows us to invest in growth opportunities and maintain a strong and flexible financial position for operating and strategic initiatives, while still returning capital to our stockholders. To continue generating free cash flow, we are focused on assigning our capital expenditures effectively and minimizing working capital requirements by reducing discretionary spending, reviewing procurement costs and pursuing the balance of production and inventory control. Operating responsibly on behalf of all of Domtar’s stakeholders. We try to make a positive difference every day by pursuing sustainable growth, valuing relationships, and responsibly managing our resources. We aim to care for our customers, end-users and stakeholders in the communities where we operate, all seeking assurances that resources are managed in a sustainable manner. We strive to provide these assurances by certifying our distribution and manufacturing operations and measuring our performance against internationally recognized benchmarks. Domtar is committed to the responsible use of forest resources across our operations, and we are enrolled in programs and initiatives to encourage landowners to pursue certification to improve their market access and increase their revenue opportunities. We believe that each of these initiatives also creates value for our stockholders and is part of our larger business strategy and commitment to environmental sustainability. OUR COMPETITION The markets in which our businesses operate are highly competitive with well-established domestic and foreign manufacturers. In the paper business, our paper production does not rely on proprietary processes or formulas, except in highly specialized papers or customized products. In uncoated freesheet, we compete primarily on the basis of product quality, breadth of offering, service solutions and competitively priced paper products, which include an extensive offering of high quality Forest Stewardship Council (“FSC”)-certified paper products. While we have a leading position in the North American uncoated freesheet market, we also compete with other paper grades, including coated freesheet, and with electronic transmission and document storage alternatives. As the use of these alternative products continues to grow, we continue to see a decrease in the overall demand for paper products. All of our pulp and paper manufacturing facilities are located in the United States or in Canada where we sell approximately 82% of our products. Domtar is the largest of the five manufacturers of uncoated freesheet papers in North America that represent approximately 80% of the total production capacity. On a global basis, there are hundreds of manufacturers that produce and sell uncoated freesheet paper. The level of competitive pressures from foreign producers in the North American market is highly dependent upon exchange rates, particularly the rate between the U.S. dollar and the Euro as well as the U.S. dollar and the Brazilian real. The market pulp we sell is fluff, softwood or hardwood pulp. The pulp market is highly fragmented with many manufacturers competing worldwide. Competition is primarily on the basis of access to low-cost wood fiber, product quality and competitively priced pulp products. The fluff pulp we sell is used in absorbent products, incontinence products, diapers and feminine hygiene products. The softwood and hardwood pulp we sell is primarily slow growth northern bleached softwood and hardwood kraft, and we produce specialty engineered pulp grades with a pre-determined mix of wood species. Our softwood and hardwood pulps are sold to customers who make a variety of products for specialty paper, packaging, tissue and industrial applications, and customers who make printing and writing grades. We also seek product differentiation through the certification of our pulp mills to the FSC chain-of-custody standard and the procurement of FSC-certified virgin 12

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fiber. All of our market pulp production capacity is located in the United States or in Canada, and we sell approximately 58% of our pulp to other countries. For the adult incontinence business, competition is primarily faced across four major product categories: protective underwear, pads, briefs and underpads, with customers served through the healthcare, retail (mass retailers, dollar stores, supermarkets, warehouse clubs), and direct to consumer channels. The retail channel in Europe is more fragmented than in North America, with a mix of larger chains and smaller players. Approximately 74% of institutional and homecare expenditures are reimbursed by governments in Western Europe. For the infant diaper business, competition is primarily across three major product categories: diapers, training pants and youth pants with customers served through the retail (mass retailers, dollar stores, supermarkets, warehouse clubs) and direct to consumer channels. In North America, branded labels represent the majority of the infant market with the top two manufacturers supplying a significant portion of the branded demand. The remaining supply is represented by private label, and is split among the competition. In Europe, the top manufacturer supplies approximately 50% of the demand with branded labels, and the remainder is represented by private label. Products are marketed in multiple channels: mass retailers, dollar stores, supermarkets, warehouse clubs, internet and home health care. In both the adult incontinence and infant diaper businesses, the principal methods and elements of competition remain brand recognition and loyalty, product innovation, quality and performance, price and marketing and distribution capabilities. Growing competitive market pressures in the healthcare and retail markets in recent years, including the entry of new competitors in the private label category, excess industry capacity and the pressure to limit public healthcare spending are resulting in lower than previously anticipated sales and operating margins. OUR EMPLOYEES We have approximately 10,000 employees, of which approximately 60% are employed in the United States, 28% in Canada and 12% in Europe. Approximately 44% of our employees are covered by collective bargaining agreements, generally on a facility-by-facility basis. Certain agreements will expire in 2019 and others will expire between 2020 and 2022. OUR APPROACH TO SUSTAINABILITY Domtar aims to deliver value to our customers, employees, shareholders and communities by viewing our business decisions within the larger context of sustainability. We take a long-term view on managing natural resources for the future. We strive to minimize waste and encourage recycling. We aim to have the highest standards for ethical conduct, for caring about the health and safety of each other, and for maintaining the environmental quality in the communities where we live and work. We value the partnerships we have formed with non-governmental organizations and believe they make us a better company. We focus on agility to respond to new opportunities, and we are committed to turning innovation into value creation. By embracing sustainability as our operating philosophy, we seek to internalize the fact that the choices we have and the impact of the decisions we make on our stakeholders are all interconnected. We believe that our business and the people and communities who depend on us are better served as we weave this focus on sustainability into the things we do. Domtar executes this commitment to sustainability at every level and every location across the company. With the support of the Board of Directors, our Management Committee empowers senior managers from manufacturing, technology, finance, sales and marketing and corporate staff functions to regularly come together and establish key sustainability performance metrics, and to routinely assess and report on progress. We have a vice-president position to help lead this effort, allowing the company’s organizational structure to better reflect the priority the company places on sustainable performance. We believe that weaving sustainability into our business better positions Domtar for the future. 13

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OUR ENVIRONMENTAL COMPLIANCE Our business is subject to a wide range of general and industry-specific laws and regulations in the United States and other countries where we have operations, relating to the protection of the environment, including those governing wood harvesting, air emissions, climate change, waste water discharges, storage, management and disposal of hazardous substances and wastes, contaminated sites, landfill operation and closure obligations and health and safety matters. Compliance with these laws and regulations is a significant factor in the operation of our business. We may encounter situations in which our operations fail to maintain full compliance with applicable environmental requirements, possibly leading to civil or criminal fines, penalties or enforcement actions, including those that could result in governmental or judicial orders that stop or interrupt our operations or require us to take corrective measures at substantial costs, such as the installation of additional pollution control equipment or other remedial actions. Compliance with environmental laws and regulations involves capital expenditures as well as additional operating costs. Additional information regarding environmental matters is included in Item 8, Financial Statements and Supplementary Data under Note 21 “Commitments and Contingencies” and in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations under the section of Critical accounting estimates and policies, caption “Environmental matters and asset retirement obligations”. OUR INTELLECTUAL PROPERTY Many of our brand name products are protected by registered trademarks. Our key trademarks include Cougar®, Lynx® Opaque Ultra, Husky® Opaque Offset, First Choice®, EarthChoice®, Attends®, NovaThin®, NovaZorb®, IncoPack®, Indasec®, Reassure® and Ariva®. These brand names and trademarks are important to our business. Our numerous trademarks have been registered in the United States and/or in other countries where our products are sold. The current registrations of these trademarks are effective for various periods of time. These trademarks may be renewed periodically, provided that we, as the registered owner, and/or licensee comply with all applicable renewal requirements, including the continued use of the trademarks in connection with similar goods. We own U.S. and foreign patents and have several pending patent applications. Our management regards these patents and patent applications as important but does not consider any single patent or group of patents to be materially important to our business as a whole. 14

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OUR EXECUTIVE OFFICERS (“MANAGEMENT COMMITTEE”) Name Age Position and Business Experience John D. Williams 64 President and Chief Executive Officer of the Company since January 2009. He is also a member of the Board of Directors. Previously, Mr. Williams served as President of SCA Packaging Europe between 2005 and 2008. Prior to assuming his leadership position with SCA Packaging Europe, Mr. Williams held increasingly senior management and operational roles in the packaging business and related industries. Mr. Williams is Lead Independent Director of the Board of Directors of Owens Corning, the Chair of the advisory board of the Stern Center for Sustainable Business at New York University and the Non-Executive Chairman of Form Technologies, Inc., a privately-held leading global group of precision component manufacturers based in Charlotte, North Carolina. Daniel Buron 55 Senior Vice-President and Chief Financial Officer of the Company since March 2007. Mr. Buron was previously Senior Vice-President and Chief Financial Officer of Domtar Inc. since May 2004. He joined Domtar Inc. in 1999. Prior to May 2004, he was Vice-President, Finance, Pulp and Paper sales division and, prior to September 2002, he was Vice-President and Controller. He has over 30 years of experience in finance. Mr. Buron is a Director of the McGill University Health Centre Foundation. Michael D. Garcia 54 President, Pulp and Paper Division of the Company. Mr. Garcia joined Domtar in 2014. Prior to joining the Company, he was the chief executive officer at EVRAZ Highveld Steel & Vanadium Co., South Africa’s second largest steel producer. Mr. Garcia has more than 25 years of international management experience in paper, steel, and aluminum manufacturing and marketing. He has broad global experience, including executive assignments in Asia and Africa. Mr. Garcia is a Director of the Federal Reserve Bank of Richmond, Charlotte Branch, and of the USO of North Carolina. Michael Fagan 57 President, Personal Care Division of the Company. Mr. Fagan joined Domtar in 2011, following the acquisition of Attends Healthcare Products, Inc. Mr. Fagan has been with Attends since 1999, when he was hired as Senior Vice-President of Sales and Marketing. He was promoted to President and CEO in 2006. Prior to joining Attends, Mr. Fagan held a variety of sales development roles with Procter & Gamble, the previous owners of the Attends line of products. Zygmunt Jablonski 65 Senior Vice-President and Chief Legal and Administrative Officer of the Company. Mr. Jablonski joined Domtar in 2008, after serving in various in-house counsel positions for major manufacturing and distribution companies in the paper industry for 13 years. From 1985 to 1994, he practiced law in Washington, DC. Patrick Loulou 50 Senior Vice-President, Corporate Development since he joined the Company in March 2007. Previously, he held a number of positions in the telecommunications sector as well as in management consulting. His over 20 year career has spanned a number of areas and functions such as corporate strategy, M&A, operations, and business development. FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains forward-looking statements relating to trends in, or representing management’s beliefs about, Domtar Corporation’s future growth, results of operations, performance and 15

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business prospects and opportunities. These forward-looking statements are generally denoted by the use of words such as “anticipate,” “believe,” “expect,” “intend,” “aim,” “target,” “plan,” “continue,” “estimate,” “project,” “may,” “will,” “should” and similar expressions. These statements reflect management’s current beliefs and are based on information currently available to management. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to known and unknown risks and uncertainties and other factors that could cause actual results to differ materially from historical results or those anticipated. Accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will occur, or if any occur, what effect they will have on Domtar Corporation’s results of operations or financial condition. These factors include, but are not limited to: • continued decline in usage of fine paper products in our core North American market; • our ability to implement our business diversification initiatives, including repurposing of assets and strategic acquisitions; • product selling prices; • raw material prices, including wood fiber, chemical and energy; • conditions in the global capital and credit markets, and the economy generally, particularly in the U.S., Canada and Europe; • performance of Domtar Corporation’s manufacturing operations, including unexpected maintenance requirements; • the level of competition from domestic and foreign producers; • cyberattack or other security breaches; • the effect of, or change in, forestry, land use, environmental and other governmental regulations and accounting regulations; • the effect of weather and the risk of loss from fires, floods, windstorms, hurricanes and other natural disasters; • transportation costs; • the loss of current customers or the inability to obtain new customers; • legal proceedings; • changes in asset valuations, including impairment of property, plant and equipment, inventory, accounts receivable or other assets for impairment or other reasons; • changes in currency exchange rates, particularly the relative value of the U.S. dollar to the Canadian dollar and European currencies; • the effect of timing of retirements and changes in the market price of Domtar Corporation’s common stock on charges for stock-based compensation; • performance of pension fund investments and related derivatives, if any; and • the other factors described under “Risk Factors,” Item 1A. You are cautioned not to unduly rely on such forward-looking statements, which speak only as of the date made, when evaluating the information presented in this Annual Report on Form 10-K. Unless specifically required by law, Domtar Corporation disclaims any obligation to update or revise these forward-looking statements to reflect new events or circumstances. 16

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ITEM 1A. RISK FACTORS You should carefully consider the risks described below in addition to the other information presented in this Annual Report on Form 10-K. Conditions in the global political and economic environment, including the global capital and credit markets, can adversely affect the Company’s business, results of operations and financial position. A significant or prolonged downturn in the general economic environment may affect the Company’s sales and profitability. The Company has exposure to counterparties with which it routinely executes transactions. Such counterparties include commercial banks, insurance companies and other financial institutions, some of which may be exposed to bankruptcy or liquidity risks. A bankruptcy or illiquidity event by one of its significant counterparties may materially and adversely affect the Company’s access to capital, future business and results of operations. In addition, the Company’s customers and suppliers may be adversely affected by severe economic conditions. This could result in reduced demand for its products or its inability to obtain necessary supplies at reasonable costs, or at all. The Company may be negatively impacted by political issues or crisis in individual countries or regions, including sovereign risk related to a default by or deterioration in the credit worthiness of local governments. Any of these effects, and others the Company cannot anticipate, may have a negative effect and may adversely affect the Company’s business. Certain countries in Europe provide medicare coverage for adult incontinence products. The governments of these countries may decide to no longer reimburse part or all of the costs of adult incontinence products, and this may have a negative impact on the Company’s operating results in the future. The Company faces intense competition in its markets, and the failure to compete effectively could have a material adverse effect on its business and results of operations. The Company competes with U.S., Canadian and European producers and, for many of its product lines with global producers, some of which may have greater financial resources and lower production costs than the Company. The principal basis for competition is selling price. The Company’s ability to maintain satisfactory margins depends largely on its ability to control its costs. Our industries also are particularly sensitive to other factors including innovation, design, quality and service, with varying emphasis on these factors depending on the product line. The Company cannot provide assurance that it will compete effectively and maintain current levels of sales and profitability. If the Company cannot compete effectively, such failure could have a material adverse effect on its business and results of operations. Failure to successfully implement the Company’s business diversification initiatives could have a material adverse effect on its business, results of operations and financial position. The Company is pursuing strategic initiatives that management considers important to our long-term success. The intent of these initiatives is to help grow the business and counteract the secular decline in our North American paper business. These initiatives may involve organic growth, select joint ventures and strategic acquisitions. The success of these initiatives will depend on, among other things, our ability to identify potential strategic initiatives, understand the key trends and principal drivers affecting those businesses and to execute the initiatives in a cost effective manner. There are significant risks involved with the execution of such initiatives, including significant business, economic and competitive uncertainties, many of which are outside the Company’s control. In addition, in the past we have converted paper mills to fluff pulp production facilities. If circumstances warrant, in the future we may again convert paper mills to produce pulp or other products. Conversions can be 17

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capital intensive and can involve the shutdown of a facility for an extended period of time, followed by an extended ramp-up and customer certification process. In addition, the success of a conversion depends upon demand over time for the new product relative to the previously produced paper products, as well as costs and other factors, and there can be no assurance that a conversion will be as successful as expected. Strategic acquisitions may expose the Company to additional risks. The Company may have to compete for acquisition targets and any acquisition it makes may fail to accomplish our strategic objectives or may not perform as expected. In addition, the costs of integrating an acquired business may exceed our estimates and may require significant time and attention from senior management. Accordingly, the Company cannot predict whether it will succeed in implementing these strategic initiatives. If it fails to successfully diversify our business, it may have a material adverse effect on the Company’s competitive position, financial condition and operating results. The Company’s paper products are vulnerable to long-term declines in demand due to competing technologies or materials. The Company’s paper business competes with electronic transmission and document storage alternatives, as well as with paper grades it does not produce, such as uncoated groundwood. As a result of such competition, the Company is experiencing ongoing decreasing demand for most of its existing paper products. As the use of these alternatives grows, demand for paper products is likely to decline further. Declines in demand for our paper products may adversely affect the Company’s business, results of operations and financial position. The pulp and paper industry is highly cyclical. Fluctuations in the prices of and the demand for the Company’s pulp and paper products could result in lower sales volumes and smaller profit margins. The pulp and paper industry is highly cyclical. Historically, economic and market shifts, fluctuations in capacity and changes in foreign currency exchange rates have created cyclical changes in prices, sales volume and margins for the Company’s pulp and paper products. The length and magnitude of industry cycles have varied over time and by product, but generally reflect changes in macroeconomic conditions and levels of industry capacity. Most of the Company’s paper products are commodities that are widely available from other producers. Because commodity products have few distinguishing qualities from producer to producer, competition for these products is based primarily on price, which is determined by supply relative to demand. The overall levels of demand for the pulp and paper products that the Company manufactures and distributes, and consequently its sales and profitability, reflect fluctuations in levels of end-user demand, which depend in part on general macroeconomic conditions in North America and worldwide, the continuation of the current level of service and cost of postal services, as well as competition from electronic substitution. See “Conditions in the global political and economic environment, including the global capital and credit markets, can adversely affect the Company’s business, results of operations and financial position” and “The Company’s paper products are vulnerable to long-term declines in demand due to competing technologies or materials”. Industry supply of pulp and paper products is also subject to fluctuation, as changing industry conditions can influence producers to idle or permanently close individual machines or entire mills. Such closures can result in significant cash and/or non-cash charges. In addition, to avoid substantial cash costs in connection with idling or closing a mill, some producers will choose to continue to operate at a loss, sometimes even a cash loss, which could prolong weak pricing environments due to oversupply. Oversupply can also result from producers introducing new capacity in response to favorable pricing trends. Industry supply of pulp and paper products is also influenced by overseas production capacity, which has grown in recent years and is expected to continue to grow. As a result, prices for all of the Company’s pulp and paper products are driven by many factors outside of its control, and the Company has little influence over the timing and extent of price changes, which are often 18

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volatile. Because market conditions beyond the Company’s control determine the prices for its commodity products, the price for any one or more of these products may fall below its cash production costs, requiring the Company to either incur cash losses on product sales or cease production at one or more of its pulp and paper manufacturing facilities. The Company continuously evaluates potential adjustments to its production capacity, which may include additional closures of machines or entire mills, and the Company could recognize significant cash and/or non-cash charges relating to any such closures in future periods. Refer to Item 8, Financial Statements and Supplementary Data under Note 15 “Closure and restructuring costs and liability” for more details. Therefore, the Company’s profitability with respect to these products depends on managing its cost structure, particularly wood fiber, chemical, transportation and energy costs, which represent the largest components of its operating costs and can fluctuate based upon factors beyond its control. If the prices or demand for its pulp and paper products decline, or if its wood fiber, chemical, transportation or energy costs increase, or both, this could adversely affect the Company’s results of operations and financial position. The Company is affected by changes in currency exchange rates. The Company has manufacturing operations in the United States, Canada, Sweden and Spain. As a result, it is exposed to movements in foreign currency exchange rates in Canada and Europe. Moreover, certain assets and liabilities are denominated in currencies other than the U.S. dollar and are exposed to foreign currency movements. As a result, the Company’s earnings are affected by increases or decreases in the value of the Canadian dollar and of other European currencies relative to the U.S. dollar. The Company’s European subsidiaries are exposed to movements in foreign currency exchange rates on transactions denominated in a different currency than their Euro functional currency. Additionally, there has been, and may continue to be, volatility in currency exchange rates. The Company’s risk management policy allows hedging a significant portion of its exposure to fluctuations in foreign currency exchange rates for periods up to three years. The Company may use foreign exchange derivative instruments to mitigate its exposure to fluctuations in foreign currency exchange rates. There can be no assurance that the Company will be protected against substantial foreign currency fluctuations. Currency exchange rates could adversely affect the Company’s results of operations and financial position. The Company relies heavily on a small number of significant customers, including one customer that represented approximately 10% of the Company’s sales in 2018. A significant change in customer relationships or in customer demand for our products could materially adversely affect the Company’s business, financial condition or results of operations. The Company heavily relies on a small number of significant customers. The Company’s largest customer, Staples, represented approximately 10% of the Company’s sales in 2018. A significant reduction in sales to any of the Company’s key customers could materially adversely affect the Company’s business, financial condition or results of operations, could result from such customers further diversifying their product sourcing, or experiencing financial difficulty or consolidating with each other. The Company’s operations require substantial capital, and it may not have adequate capital resources to provide for all of its capital requirements. The Company’s businesses are capital intensive and require ongoing capital expenditures in order to maintain its equipment, increase its operating efficiency and comply with environmental laws. In 2018, the Company’s total capital expenditures were $195 million. If the Company’s available cash resources and cash generated from operations are not sufficient to fund its operating needs and capital expenditures, the Company would have to obtain additional funds from borrowings or other available sources or reduce or delay its capital expenditures. The Company may not be able to obtain additional funds on favorable terms, or at all. In addition, the Company’s debt service obligations will reduce its available cash flows. If the Company cannot maintain or upgrade its equipment as it requires or allocate funds to 19

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ensure environmental compliance, it could be required to curtail or cease some of its manufacturing operations, or it may become unable to manufacture products that compete effectively in one or more of its product lines. The Company and its subsidiaries may incur substantially more debt. This could increase risks associated with its leverage. The Company and its subsidiaries may incur substantial additional indebtedness in the future. Although the revolving credit facility contains restrictions on the incurrence of additional indebtedness, including secured indebtedness, these restrictions are subject to a number of qualifications and exceptions, and additional indebtedness incurred in compliance with these restrictions could be substantial. Refer to Item 8, Financial Statements and Supplementary Data under Note 18 “Long-term debt” for more details. The Company’s ability to generate the significant amount of cash needed to pay interest and principal on the Company’s unsecured long-term notes and service its other debt and financial obligations and its ability to refinance all or a portion of its indebtedness or obtain additional financing depends on many factors beyond the Company’s control. In 2018, the Company paid approximately $358 million in interest and principal payments. The Company’s ability to make payments on and refinance its debt, including the Company’s unsecured long-term notes and amounts borrowed under its revolving credit facility and term loan, if any, and other financial obligations and to fund its operations will depend on its ability to generate substantial operating cash flow. The Company’s cash flow generation will depend on its future performance, which will be subject to prevailing economic conditions and to financial, business and other factors, many of which are beyond its control. The Company’s business may not generate sufficient cash flow from operations and future borrowings may not be available to the Company under its revolving credit facility or otherwise in amounts sufficient to enable the Company to service its indebtedness, including the Company’s unsecured long-term notes, and borrowings, if any, under its revolving credit facility and securitization or to fund its other liquidity needs. If the Company cannot service its debt, the Company will have to take actions such as reducing or delaying capital investments, selling assets, restructuring or refinancing its debt or seek additional equity capital. Any of these remedies may not be executed on commercially reasonable terms, or at all, and may impede the implementation of its business strategy. Furthermore, the revolving credit facility may restrict the Company from adopting any of these alternatives. Because of these and other factors that may be beyond its control, the Company may be unable to service its indebtedness. The Company could incur substantial costs as a result of compliance with, violations of or liabilities under applicable environmental laws and regulations. It could also incur costs as a result of asbestos-related personal injury litigation. The Company is subject to a wide range of general and industry-specific laws and regulations in the United States and other countries where we have operations, relating to the protection of the environment and natural resources, including those governing air emissions, greenhouse gases and climate change, wastewater discharges, harvesting, silvicultural activities, storage, management and disposal of hazardous substances and wastes, the cleanup of contaminated sites, landfill operation and closure obligations, forestry operations and endangered species habitat, and health and safety matters. In particular, the pulp and paper industry in the United States is subject to the United States Environmental Protection Agency’s (“EPA”) Cluster Rules. The Company has incurred, and expects that it will continue to incur, significant capital, operating and other expenditures complying with applicable environmental laws and regulations as a result of remedial obligations. The Company incurred $68 million of operating expenses and $8 million of capital expenditures in connection with environmental compliance and remediation in 2018. As of December 31, 2018, the Company had a provision of $37 million for environmental expenditures, including certain asset retirement obligations (such as for landfill capping). 20

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The Company could also incur substantial costs, such as civil or criminal fines, sanctions and enforcement actions (including orders limiting its operations or requiring corrective measures, installation of pollution control equipment or other remedial actions), cleanup and closure costs, and third-party claims for property damage and personal injury as a result of violations of, or liabilities under, environmental laws and regulations. The Company’s ongoing efforts to identify potential environmental concerns that may be associated with its past and present properties may lead to future environmental investigations. Those efforts may result in the determination of additional environmental costs and liabilities which cannot be reasonably estimated at this time. As the owner and operator of real estate, the Company may be liable under environmental laws for cleanup, closure and other damages resulting from the presence and release of hazardous substances, including asbestos, on or from its properties or operations, including properties that it no longer owns. The amount and timing of environmental expenditures is difficult to predict, and, in some cases, the Company’s liability may be imposed without regard to contribution or to whether it knew of, or caused, the release of hazardous substances and may exceed forecasted amounts or the value of the property itself. The discovery of additional contamination or the imposition of additional cleanup obligations at the Company’s or third-party sites may result in significant additional costs. Any material liability the Company incurs could adversely impact its financial condition or preclude it from making capital expenditures that would otherwise benefit its business. In addition, the Company may be subject to asbestos-related personal injury litigation arising out of exposure to asbestos on or from its properties or operations, and may incur substantial costs as a result of any defense, settlement, or adverse judgment in such litigation. The Company may not have access to insurance proceeds to cover costs associated with asbestos-related personal injury litigation. Enactment of new environmental laws or regulations or changes in existing laws or regulations (such as changes in climate change regulation), or interpretation thereof, might require significant expenditures. For additional information, refer to Item 8, Financial Statements and Supplementary Data under Note 21 “Commitments and Contingencies”. The Company may be unable to generate funds or other sources of liquidity and capital to fund environmental liabilities or expenditures. Failure to comply with applicable laws and regulations could have a material adverse effect on our business, financial results or condition. In addition to environmental laws, the Company’s business and operations are subject to a broad range of other laws and regulations in the United States and Canada as well as other jurisdictions in which the Company operates, including antitrust and competition laws, occupational health and safety laws, healthcare reimbursement laws, such as Medicare and Medicaid, and employment laws. Many of these laws and regulations are complex and subject to evolving and differing interpretation. If the Company is determined to have violated any such laws or regulations, whether inadvertently or willfully, it may be subject to civil and criminal penalties, including substantial fines, loss of authorizations to participate in or exclusion from government programs, claims for damages by third parties or fines or monetary penalties which may have a material adverse effect on the Company’s financial position, results of operations or cash flows. For additional information, refer to Item 8, Financial Statements and Supplementary Data under Note 21 “Commitments and Contingencies” under the caption “Spanish Competition Investigation”. The Company’s financial results could be affected by changes in U.S. and foreign tax laws or in the mix of our U.S. and foreign earnings, as well as adjustments to our estimates of uncertain tax issues or results from audits by U.S. or foreign tax authorities. The Company is subject to U.S. and foreign tax laws and regulations. Tax laws, regulations, and administrative practices in various jurisdictions may be subject to significant change, with or without notice, due to economic, political and other conditions, and significant judgment is required in evaluating and estimating our provision and accruals for these taxes. Recently, international tax norms governing each country’s jurisdiction to 21

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tax cross-border international trade have evolved partly due to the Base Erosion and Profit Shifting project led by the Organization for Economic Cooperation and Development and supported by the G20. Changes in these laws and regulations, or any change in the position of tax authorities regarding their application, administration or interpretation could adversely affect the Company’s financial results. In addition, a number of countries are actively pursuing changes to their tax laws applicable to multinational corporations, such as the U.S. Tax Cuts and Jobs Acts (“U.S. Tax Reform”), enacted in 2017. Finally, foreign governments may enact tax laws in response to the U.S. Tax Reform that could result in further changes to global taxation and materially impact the Company’s financial results. The U.S. Tax Reform significantly changes how the U.S. taxes corporations. The U.S. Tax Reform requires complex computations to be performed that were not previously required under U.S. tax law, significant judgments to be made in interpretation of the provision of the U.S Tax Reform and significant estimates in calculations, and the preparation and analysis of information not previously relevant or regularly produced. The U.S. Treasury Department, the IRS, and other standard-setting bodies could interpret or issue guidance on how provisions of the U.S. Tax Reform will be applied or otherwise administered that is different from the Company’s interpretation. The Company’s effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates or changes in the valuation of deferred tax assets and liabilities. The Company is also subject to the examination of its tax returns and other matters by tax authorities and governmental bodies. The Company regularly assesses the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of its provision for taxes and as of December 31, 2018, has a reserve for liabilities relating to uncertain tax positions of $32 million. Taxing authorities may disagree with the positions the Company has taken regarding the tax treatment or characterization of its transactions. If any tax authorities were successful in challenging the tax treatment or characterization of any of the Company’s transactions, it could also adversely affect its financial results. The Company’s Pulp and Paper business may have difficulty obtaining wood fiber at favorable prices, or at all. Wood fiber is the principal raw material used by the Company’s Pulp and Paper business, comprising approximately 20% of the consolidated cost of sales in 2018. Wood fiber is a commodity, and prices historically have been impacted by a variety of factors. The primary source for wood fiber is timber. Environmental litigation and regulatory developments, alternative use for energy production and reduction in harvesting related to the housing market, have caused, and may cause in the future, significant reductions in the amount of timber available for commercial harvest in the United States and Canada. In addition, future domestic or foreign legislation and litigation concerning the use of timberlands, the protection of endangered species, the promotion of forest health and the response to and prevention of catastrophic wildfires could also affect timber supplies. Availability of harvested timber may be further limited by adverse weather, fire, insect infestation, disease, ice storms, wind storms, flooding and other natural and man-made causes, thereby reducing supply and increasing prices. Wood fiber pricing is subject to regional market influences, and the Company’s cost of wood fiber may increase in particular regions due to market shifts in those regions. Any sustained increase in wood fiber prices would increase the Company’s operating costs, and the Company may be unable to increase prices for its products in response to increased wood fiber costs due to additional factors affecting the demand or supply of these products. The Company currently meets its wood fiber requirements by purchasing wood fiber from third parties and by harvesting timber pursuant to its forest licenses and forest management agreements. If the Company’s cutting rights, pursuant to its forest licenses or forest management agreements are reduced, or any third-party supplier of wood fiber stops selling or is unable to sell wood fiber to the Company, its financial condition or results of operations could be materially and adversely affected. 22

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An increase in the cost of the Company’s purchased energy or other raw materials would lead to higher manufacturing costs, thereby reducing its margins. The Company’s operations consume substantial amounts of energy such as electricity, natural gas, fuel oil, coal and hog fuel. Energy prices, particularly for electricity, natural gas and fuel oil, have been volatile in recent years. As a result, fluctuations in energy prices will impact the Company’s manufacturing costs and contribute to earnings volatility. While the Company purchases substantial portions of its energy under supply contracts, most of these contracts are based on market pricing. Other raw materials the Company uses include various chemical compounds, such as precipitated calcium carbonate, sodium chlorate, sulfuric acid, dyes, peroxide, methanol and aluminum sulfate, super absorbent polymers and nonwovens. The costs of these other raw materials have been volatile historically, and they are influenced by capacity utilization, energy prices and other factors beyond the Company’s control. Due to the commodity nature of the Company’s products, the relationship between supply and demand for these products, rather than changes in the cost of raw materials or purchased energy, will determine the Company’s ability to increase prices. Consequently, the Company may be unable to pass on increases in its operating costs to its customers. Any sustained increase in raw material or energy prices without any corresponding increase in product pricing would reduce the Company’s operating margins and may have a material adverse effect on its business and results of operations. The Company depends on third parties for transportation services. The Company relies primarily on third parties for transportation of the products it manufactures and/or distributes, as well as delivery of its raw materials. In particular, a significant portion of the goods it manufactures and raw materials it uses are transported by railroad or trucks, which are highly regulated. If any of its third-party transportation providers were to fail to deliver the goods that the Company manufactures or distributes in a timely manner, the Company may be unable to sell those products at full value, or at all. Similarly, if any of these providers were to fail to deliver raw materials to the Company in a timely manner, it may be unable to manufacture its products in response to customer demand. In addition, if any of these third parties were to cease operations or cease doing business with the Company, it may be unable to replace them at reasonable cost. Any failure of a third-party transportation provider to deliver raw materials or finished products in a timely manner could harm the Company’s reputation, negatively impact its customer relationships and may have a material adverse effect on its financial condition and results of operations. The Company could experience disruptions in operations and/or increased labor costs due to labor disputes or restructuring activities. Employees at 17 of the Company’s facilities, representing approximately half of the Company’s employees, are represented by unions through collective bargaining agreements generally negotiated on a facility-by-facility basis. In the future, the Company may not be able to negotiate acceptable new collective bargaining agreements, which could result in strikes or work stoppages or other labor disputes by affected workers. Renewal of collective bargaining agreements could also result in higher wages or benefits paid to union members. In addition, labor organizing activities could occur at any of the Company’s facilities. Therefore, the Company could experience a disruption of its operations or higher ongoing labor costs, which could have a material adverse effect on its business and results of operations. The Company continues to evaluate potential adjustments to its production capacity, which may include additional closures of machines or entire mills, and the Company could recognize significant cash and/or non-cash charges relating to any such closures in the future. 23

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A material disruption at one or more of the Company’s manufacturing facilities could prevent it from meeting customer demand, reduce its sales and/or negatively impact its results of operations. Any of the Company’s manufacturing facilities, or any of its machines within an otherwise operational facility, could cease operations unexpectedly due to a number of events, including: • unscheduled maintenance outages; • prolonged power failures; • equipment failure; • chemical spill or release; • malfunction of a boiler; • the effect of a drought or reduced rainfall on its water supply; • labor difficulties; • government regulations; • disruptions in the transportation infrastructure, including roads, bridges, railroad tracks and tunnels; • adverse weather, fires, floods, earthquakes, hurricanes or other catastrophes; • cyberattack or other security breaches; • terrorism or threats of terrorism; or • other operational problems, including those resulting from the risks described in this section. Events such as those listed above have resulted in operating losses in the past. Future events may cause shutdowns, which may result in additional downtime and/or cause additional damage to the Company’s facilities. Any such downtime or facility damage could prevent the Company from meeting customer demand for its products and/or require it to make unplanned capital expenditures. If one or more of these machines or facilities were to incur significant downtime, it may have a material adverse effect on the Company’s results of operations and financial position. The efficiency of our operations could be adversely affected by disruptions to our Information Technology (IT) Services. The Company’s IT systems, some of which are dependent on services provided by third parties, serve an important role in the efficient operation of its business. The protection of customers, employees and company data is critical to the Company’s business. This role includes ordering and managing materials from suppliers, managing its inventory, converting materials to finished products, facilitating order entry and fulfillment and processing of transactions, summarizing and reporting its financial results, facilitating internal and external communications, administering human resources functions, retaining certain personal information and providing other processes necessary to manage its business. The Company is exposed to the risk of cyber incidents in the normal course of business. Cyber incidents may be deliberate attacks for the theft of intellectual property or other sensitive information or may be the result of unintentional events. Like most companies, the Company’s information technology systems may be vulnerable to interruption due to a variety of events beyond the Company’s control, including, but not limited to, natural disasters, terrorist attacks, power and/or telecommunications failures, computer viruses, hackers and other security issues. The Company has technology security initiatives and disaster recovery plans in place to mitigate the Company’s risk to these vulnerabilities, including protection of confidential or personal information, but these measures may not be adequate or implemented properly to ensure that the Company’s operations are not disrupted. The Company’s IT systems have been, and will likely continue to be, subject to computer viruses or other malicious codes, unauthorized access attempts, phishing and other cyber-incidents. The Company cannot guarantee that its security efforts will 24

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prevent breaches or breakdowns to its IT systems or those of its third party providers. Potential consequences of a material cyber incident, which could result in confidential or personal information being accessed, obtained, damaged or used by unauthorized or improper persons, include damage to the Company’s reputation, litigation, inefficiencies or production downtimes and increased cyber security protection and remediation costs. Such consequences could have a negative impact on the Company’s ability to meet customers’ orders, resulting in a delay or decrease to its revenue and a reduction to its operating margins. The Company could encounter difficulties restructuring operations or closing or disposing of facilities. The Company is continuously seeking the most cost-effective means and structure to serve our customers and to respond to changes in our markets. Accordingly, from time to time, the Company has, and is likely to again close facilities, sell non-core assets and otherwise restructure operations in an effort to improve cost competitiveness and profitability. As a result, restructuring and divesture costs have been, and are expected to be, a recurring component of our operating costs, and may vary significantly from year to year depending on the scope of such activities. Divestures and restructuring may also result in significant financial charges for the impairment of assets, including intangible assets. For example, the Company expects that its 2019 results will include approximately $42 million of closure and restructuring costs related to its 2018 announced margin improvement plan at its Waco, Texas, Personal Care manufacturing and distribution facility. Furthermore, such activities may divert the attention of management, disrupt our ordinary operations, or result in a reduction in the volume of products produced and sold. There is no guarantee that any such activities will achieve its goal, and if the Company cannot successfully manage the associated risks, its financial condition and results of operations could be adversely affected. The Company has liabilities with respect to its pension plans and the actual cost of its pension plan obligations could exceed current provisions. As of December 31, 2018, the Company’s defined benefit plans had a surplus of $107 million on certain plans and a deficit of $88 million on others. Since pension fund obligations are primarily long-term in nature, losses in pension fund investments, if any, would result in increased contributions by the Company, to be paid over 5 year or 10 year periods, depending upon the applicable legislation for funding pension deficits. Losses, if any, would also impact the Company’s results over a longer period of time and immediately increase liabilities and reduce equity. The Company’s future funding obligations for its defined benefit pension plans depend upon changes to the level of benefits provided by the plans, the future performance of assets set aside in trusts for these plans, the level of interest rates used to determine minimum funding levels, actuarial data and experience, and any changes in government laws and regulations. As of December 31, 2018, the Company’s defined benefit pension plans held assets with a fair value of $1,588 million. The Company’s intellectual property rights are valuable, and any inability to protect them could reduce the value of its products and its brands. The Company relies on patent, trademark and other intellectual property laws of the United States and other countries to protect its intellectual property rights. However, the Company may be unable to prevent third parties from using its intellectual property without its authorization, which may reduce any competitive advantage it has developed. If the Company had to litigate to protect these rights, any proceedings could be costly, and it may not prevail. The Company cannot guarantee that any United States or foreign patents, issued or pending, will provide it with any competitive advantage or will not be challenged by third parties. Additionally, the Company has obtained and applied for United States and foreign trademark registrations, and will continue to evaluate the registration of additional service marks and trademarks, as appropriate. The Company cannot guarantee that any of its pending patent or trademark applications will be approved by the applicable governmental authorities and, even if the applications are approved, third parties may seek to oppose or otherwise challenge these registrations. The failure to secure any pending patent or trademark applications may limit the Company’s ability to protect the intellectual property rights that these applications were intended to cover. 25

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If the Company is unable to successfully retain and develop executive leadership and other key personnel, it may be unable to fully realize critical organizational strategies, goals and objectives. The success of the Company is substantially dependent on the efforts and abilities of its key personnel, including its executive management team, to develop and implement its business strategies and manage its operations. The failure to retain key personnel or to develop successors with appropriate skills and experience for key positions in the Company could adversely affect the development and achievement of critical organizational strategies, goals and objectives. There can be no assurance that the Company will be able to retain or develop the key personnel it needs and the failure to do so may adversely affect its financial condition and results of operations. The Company’s balance sheet includes a significant amount of intangible assets. The Company may be required to record a material charge to earnings due to impairment of intangible assets carried on its balance sheet. As a result of business acquisitions in the past years, mostly in the Personal Care segment, the Company carries on its balance sheet intangible assets. As of December 31, 2018, the Company’s balance sheet included intangible assets of $597 million, of which $311 million related to intangible assets subject to amortization and $286 million related to indefinite-lived intangible assets. The Company performs annual evaluations or more frequently if indicators arise, for potential impairment of the carrying value of its intangible assets. Impairment assessments inherently involve management judgment as to the assumptions used to estimate fair value of the intangible asset being tested. Changes in assumptions or estimates can materially affect the determination of fair value. The major factors that influence the analysis of fair value are the Company’s assessment of industry and market conditions, estimates for future revenue growth rates, royalty rates, economic indicators, tax rates and the discount rate associated with the asset being tested. In connection with the Company’s annual impairment testing performed in the fourth quarter of 2018, the Company performed a quantitative assessment for each indefinite-lived intangible asset (trade names and catalog rights) of the Personal Care segment. The tests indicated that the indefinite-lived intangible assets had fair values that exceeded their carrying amounts. Two Personal Care segment indefinite-lived intangible assets are considered to be at risk for future impairment given their respective fair values exceed their respective carrying values by 3% and 20% at the time the test was performed. As of December 31, 2018, the carrying value of these indefinite-lived intangible assets was $116 million and $39 million. If assumed revenue growth is not achieved in future periods and/or events occur that lead to a royalty rate decrease and/or there is an increase to the rate used to discount the estimated cash flows, there is the potential for partial or full impairment related to the indefinite- lived intangible assets. If the Company is required to impair all or a significant amount of the carrying value of related intangible assets, and consequently record a non-cash impairment charge, the Company’s net earnings could be materially and adversely affected. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2. PROPERTIES A description of our mills and related properties is included in Part I, Item I, Business, of this Annual Report on Form 10-K. Production facilities We own substantially all of our production facilities with the exception of some production facilities where a certain portion is subject to a lease in connection with an industrial development bond arrangement, or are leased with a third party or are fee-in-lieu-of-tax agreements, and lease substantially all of our sales offices, regional replenishment centers and warehouse facilities. We believe our properties are in good operating condition and are suitable and adequate for the operations for which they are used. We own substantially all of the equipment used in our facilities. 26

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Forestlands We manage approximately 5 million acres of forestlands that are directly licensed or owned by Domtar in Canada, through efficient management and the application of certified sustainable forest management practices. We also have access to fiber from an additional 24 million acres of public forestlands in Canada that are licensed and managed by third parties. We believe that these forestlands will provide a continuous supply of wood for future needs. Listing of facilities and locations CORPORATE OFFICES Griffin, Georgia Representative Office— Fort Mill, South Carolina Owensboro, Kentucky International Montreal, Quebec Ridgefields, Tennessee Hong Kong, China Rock Hill, South Carolina PULP & PAPER Ariva—Canada Tatum, South Carolina DIVISION HEADQUARTERS Ottawa, Ontario Washington Court House, Ohio Fort Mill, South Carolina Toronto, Ontario Local Distribution Centers Montreal, Quebec Uncoated Freesheet Buffalo, New York Quebec City, Quebec Ashdown, Arkansas Cincinnati, Ohio Halifax, Nova Scotia Espanola, Ontario Cleveland, Ohio Mount Pearl, Newfoundland and Hawesville, Kentucky Des Moines, Iowa Labrador Johnsonburg, Pennsylvania Houston, Texas Kingsport, Tennessee PERSONAL CARE Kansas City, Kansas Marlboro (Bennettsville), DIVISION HEADQUARTERS Minneapolis, Minnesota South Carolina Raleigh, North Carolina Nashville, Tennessee Nekoosa, Wisconsin Phoenix, Arizona Personal Care—Manufacturing Port Huron, Michigan Plain City, Ohio and Distribution Rothschild, Wisconsin Richmond, Virginia Windsor, Quebec NORTH AMERICA Salt Lake City, Utah Delaware, Ohio Pulp San Antonio, Texas Greenville, North Carolina Dryden, Ontario San Lorenzo, California Jesup, Georgia Kamloops, British Columbia St. Louis, Missouri Waco, Texas (1) Plymouth, North Carolina Vancouver, Washington Walton, Kentucky EUROPE Chip Mills Wayne, Michigan Aneby, Sweden Hawesville, Kentucky Wisconsin Rapids, Wisconsin Toledo, Spain Johnsonburg, Pennsylvania Kingsport, Tennessee Regional Replenishment Personal Care— Marlboro (Bennettsville), Centers—United States Sales offices South Carolina Mira Loma, California Daytona Beach, Florida Jacksonville, Florida Tuitjenhorn, The Netherlands Converting and Distribution— Chicago, Illinois Olivette, Missouri Onsite Indianapolis, Indiana Oslo, Norway Ashdown, Arkansas Delran, New Jersey Linz, Austria Rothschild, Wisconsin Charlotte, North Carolina Madrid, Spain Windsor, Quebec Dallas, Texas Pusignan, France Converting and Forms Seattle, Washington Rheinfelden, Switzerland Manufacturing Schwalbach am Taunus, Regional Replenishment Addison, Illinois Germany Centers—Canada Brownsville, Tennessee Stockholm, Sweden Richmond, Quebec Dallas, Texas Texarkana, Arkansas Toronto, Ontario DuBois, Pennsylvania Wakefield, United Kingdom Winnipeg, Manitoba (1) On November 1, 2018, we announced a margin improvement plan within our Personal Care segment, including the permanent closure of our Waco, Texas, manufacturing and distribution facility. The facility is expected to cease operations in the third quarter of 2019. 27

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ITEM 3. LEGAL PROCEEDINGS In the normal course of operations, the Company becomes involved in various legal actions mostly related to contract disputes, patent infringements, environmental and product warranty claims, and labor issues. The Company periodically reviews the status of these proceedings and assesses the likelihood of any adverse judgments or outcomes of these legal proceedings, as well as analyzes probable losses. Although the final outcome of any legal proceeding is subject to a number of variables and cannot be predicted with any degree of certainty, management currently believes that the ultimate outcome of current legal proceedings will not have a material adverse effect on the Company’s long-term results of operations, cash flow or financial position. However, an adverse outcome in one or more of the significant legal proceedings could have a material adverse effect on the Company’s results, financial condition or cash flow in a given quarter or year. For a discussion of commitments, legal proceedings and related contingencies, refer to Item 8, Financial Statements and Supplementary Data under Note 21 “Commitments and Contingencies” for more details. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 28

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