NEW YORK, Feb. 11, 2009 (GLOBE NEWSWIRE) -- Mercer International Inc. (Nasdaq:MERC) (TSX:MRI.U) today reported results for the fourth quarter and year ended December 31, 2008. Total revenues in the fourth quarter of 2008 decreased to EUR172.0 million (US$226.6 million) from EUR173.4 million (US$251.3 million) in the same period of 2007. We recorded an Operating EBITDA loss of EUR7.5 million (US$9.9 million) in the current quarter, compared to Operating EBITDA of EUR37.2 million (US$53.9 million) in the fourth quarter of 2007 as rapidly declining market conditions and a non-cash inventory write-down of EUR11.3 million in the current quarter adversely affected our results.
Summary Financial Highlights of the 2008 Fourth Quarter
and Year End Results
Q4 Q3 Q4 Year Year
2008 2008 2007 2008 2007
-------- -------- -------- -------- --------
(in millions of Euros, except where otherwise stated)
Pulp revenues E 161.0 E 178.6 E 167.2 E 689.3 E 704.4
Energy revenues 11.0 6.2 6.2 31.0 22.9
Operating income
(loss) from
continuing
operations (21.4) 9.9 22.7 13.3 69.6
Operating EBITDA
(loss) (7.5) 24.0 37.2 69.1 126.2
Unrealized gain
(loss) on derivative
instruments (29.7) (8.2) 1.4 (25.2) 13.5
Foreign exchange gain
(loss) on debt (0.9) (9.6) 3.7 (4.2) 11.0
Net income (loss)
from continuing
operations (59.0) (17.2) 7.3 (72.5) 22.4
Net income (loss)
per share
Basic E (1.63) E (0.47) E (0.20) E (2.00) E 0.61
Diluted E (1.63) E (0.47) E (0.18) E (2.00) E 0.58
Summary Operating Highlights of the 2008 Fourth Quarter
and Year End Results
Q4 Q3 Q4 Year Year
2008 2008 2007 2008 2007
-------- -------- -------- -------- --------
Pulp Production
('000 ADMTs) 338.9 368.4 370.1 1,425.0 1,404.7
Scheduled Production
Downtime
('000 ADMTs) 21.0 9.0 -- 47.0 46.0
Pulp Sales
('000 ADMTs) 364.1 363.8 322.9 1,423.0 1,352.6
NBSK pulp list price
in Europe (US$/ADMT) 698 878 850 839 800
NBSK pulp list price
in Europe (E/ADMT) 530 585 587 571 584
Average pulp sales
realizations
(E/ADMT)(1) 436 484 512 478 516
Energy Production
('000 MWh) 348.8 377.3 369.0 1,456.6 1,401.9
Energy Sales
('000 MWh) 107.9 119.5 113.4 456.1 430.4
Average Spot Currency
Exchange Rates:
E / $(2) 0.7591 0.6658 0.6901 0.6800 0.7294
C$ / $(2) 1.2118 1.0416 0.9818 1.0669 1.0740
C$ / E(3) 1.5951 1.5620 1.4230 1.5603 1.4690
-------------------------
(1) List price, less discounts and commissions.
(2) Average Federal Reserve Bank of New York noon spot rate over
the reporting period.
(3) Average Bank of Canada noon spot rate over the reporting period.
E = Euros
President's Comments
Mr. Jimmy S.H. Lee, President and Chairman, stated: "During the fourth quarter we faced very difficult market conditions. Collapsing global pulp demand and rising world pulp inventories adversely affected our sales as customers revised their outlook and purchasing patterns. Additionally, like many other commodities, prices for NBSK pulp recently have come under significant pressure over the past number of months, and declined rapidly in the fourth quarter to US$635/ADMT at year end. The current market environment also impacted the carrying value of our finished goods and fiber inventories, requiring us to record a non-cash provision of EUR11.3 million against these inventories in the fourth quarter, in order to reflect lower anticipated selling prices. In 2009, pulp prices to date have stabilized at the current low levels and we do not expect any further inventory write-downs in the first quarter."
Mr. Lee continued: "Amidst these challenging economic conditions, we are taking a variety of actions to conserve cash and reduce costs. Additionally, in February, we successfully completed an agreement to amend the loan facility of our 70% owned subsidiary that operates the Stendal mill, to provide the mill with increased liquidity and financial flexibility to operate through the current market downturn."
Mr. Lee added: "Despite the trying times facing our industry we are carrying out our strategic long-term plans, including our focus on energy generation, and we are very pleased with the recent signing of an energy purchase agreement with BC Hydro for the sale of electricity from our Celgar mill."
Mr. Lee continued: "With pulp market conditions at historically depressed levels, we believe that a rebalancing of supply and demand is essential to a market turn-around. However, before such a rebalancing can occur, we expect that there will be further closures of and downtime at high cost mills."
Mr. Lee concluded: "We believe the long-term fundamentals of our business are sound and our objective during this economic storm is to continue to add value and position ourselves and our shareholders for a strong rebound when the market recovers."
Three Months Ended December 31, 2008 Compared to Three Months Ended December 31, 2007
Pulp revenues for the three months ended December 31, 2008 decreased by 3.7% to EUR161.0 million from EUR167.2 million in the comparative period of 2007, as market conditions deteriorated markedly beginning in the current quarter. Revenues from the sale of excess energy increased by approximately 77.4% in the fourth quarter to EUR11.0 million from EUR6.2 million in the same quarter last year.
Pulp production decreased to 338,909 ADMTs in the current quarter, from 370,081 ADMTs in the same quarter of 2007. We took a total of 11 days scheduled maintenance downtime at our Stendal mill in the current quarter, compared to no downtime at our mills in the fourth quarter of 2007.
Although pulp sales volume increased to 364,088 ADMTs in the current quarter from 322,916 ADMTs in the comparative period of 2007, average pulp sales realizations decreased by approximately 14.8% to EUR436 per ADMT in the fourth quarter of 2008, compared to EUR512 per ADMT in the same period last year.
Costs and expenses in the fourth quarter of 2008 increased to EUR193.4 million from EUR150.7 million in the comparative period of 2007.
On average, our fiber costs increased by approximately 13.4% in the fourth quarter of 2008 from the same period in 2007, primarily because of an inventory provision of EUR7.1 million against our fiber inventories which we were required to record as a result of weakening NBSK pulp markets. Excluding this provision, our fiber costs increased by 4.5% in the current quarter from the same period last year. In Germany fiber costs were generally flat while fiber expenses at our Celgar mill increased in the current quarter due to a decrease in the availability of residual wood chips and the resulting increase in whole log chipping at the mill.
During the fourth quarter of 2008, our raw material inventories decreased to EUR38.2 million from EUR47.0 million at the end of the third quarter of 2008. Our pulp inventories decreased by approximately 33.6% to EUR37.9 million in the fourth quarter of 2008 from EUR57.1 million at the end of the prior quarter as our mills implemented aggressive sales initiatives to reduce high inventory levels, as well as the effect of a provision against such inventories in the amount of EUR4.2 million which we were required to take as a result of weakening NBSK markets.
For the fourth quarter of 2008, we recorded an operating loss from continuing operations of EUR21.4 million, compared to income from continuing operations of EUR22.7 million in the comparative quarter of 2007 primarily due to lower price realizations resulting from deteriorating market conditions and the impact of the non-cash inventory provisions totaling EUR11.3 million taken against our finished goods and fiber inventories.
Interest expense in the fourth quarter of 2008 decreased to EUR16.7 million from EUR17.3 million in the comparative quarter of 2007.
Our 70% owned subsidiary, Stendal, recorded an unrealized loss of EUR29.7 million on our interest rate derivatives at the end of the current quarter, compared to an unrealized gain of EUR1.4 million in the same quarter of last year in large part due to the significant decrease in long-term European interest rates. We recorded a foreign exchange loss on our debt of EUR0.9 million in the fourth quarter of 2008 compared to a gain of EUR3.7 million in the same period last year as a result of the strengthening of the U.S. dollar in the current quarter.
In the fourth quarter of 2008, the minority shareholder's interest in the Stendal loss was EUR10.0 million, compared to EUR0.5 million of income in the same quarter of last year.
In the fourth quarter of 2008, we reported an Operating EBITDA loss of EUR7.5 million compared to Operating EBITDA of EUR37.2 million in the fourth quarter of 2007 and EUR24.0 million in the third quarter of 2008. EBITDA in the current quarter includes a non-cash inventory write-down of EUR11.3 million. Operating EBITDA is defined as operating income (loss) from continuing operations plus depreciation and amortization and non-recurring capital asset impairment charges. Management uses Operating EBITDA as a benchmark measurement of its own operating results, and as a benchmark relative to its competitors. Management considers it to be a meaningful supplement to operating income as a performance measure primarily because depreciation expense and non-recurring capital asset impairment charges are not an actual cash cost, and depreciation expense varies widely from company to company in a manner that management considers largely independent of the underlying cost efficiency of their operating facilities. In addition, we believe Operating EBITDA is commonly used by securities analysts, investors and other interested parties to evaluate our financial performance.
Operating EBITDA does not reflect the impact of a number of items that affect our net income, including financing costs and the effect of derivative instruments. Operating EBITDA is not a measure of financial performance under GAAP, and should not be considered as an alternative to net income or income from operations as a measure of performance, nor as an alternative to net cash from operating activities as a measure of liquidity. Operating EBITDA has significant limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. For a reconciliation of net income to Operating EBITDA, see page 7 of the financial tables included in this press release.
We reported a net loss from continuing operations for the fourth quarter of 2008 of EUR59.0 million, or EUR1.63 per basic and diluted share, compared to net income from continuing operations of EUR7.3 million, or EUR0.20 per basic share and EUR0.18 per diluted share in the fourth quarter of 2007. As at December 31, 2008 and 2007, respectively, we had 36,422,487 and 36,285,027 common shares outstanding.
Year Ended December 31, 2008 Compared to Year Ended December 31, 2007
Pulp revenues for the year ended December 31, 2008 decreased by 2.1% to EUR689.3 million from EUR704.4 million in the year ended December 31, 2007, primarily due to the challenging market conditions in the second half of the year and the weakness of the U.S. dollar in much of the first three quarters of 2008. In 2008, revenues from the sale of excess energy increased to EUR31.0 million from EUR22.9 million in 2007.
Pulp production increased to 1,424,987 ADMTs in 2008, from 1,404,673 ADMTs in 2007 as all of our mills generally performed well and our Stendal and Rosenthal mills marked a record production year. We took a total of 33 days scheduled maintenance downtime at our mills in each of 2008 and 2007 and expect to take approximately 27 days in 2009.
Pulp sales volume increased to 1,423,300 ADMTs in 2008 compared to 1,352,590 ADMTs in 2007. Average pulp sales realizations decreased by approximately 7.4% to EUR478 per ADMT in 2008 from EUR516 per ADMT in 2007 because of weakening market conditions in the second half of 2008.
Costs and expenses in 2008 increased to EUR707.0 million from EUR657.7 million in 2007.
On average, and excluding the effect of the provisions recorded against our fiber inventories, fiber costs in 2008 were generally flat from 2007. In Germany fiber costs decreased slightly as sustained production curtailments by large parts of the European board industry lowered demand for fiber throughout 2008 and decreased prices for roundwood offset price increases in wood chips caused by decreasing sawmilling activity. Fiber costs at our Celgar mill increased in 2008 from the prior year, primarily as a result of increased whole log chipping and higher freight costs incurred in the delivery of wood chips to the mill. Overall, in the short-term, we currently expect fiber prices in Germany to remain generally level with 2008 fourth quarter prices. However, possible reductions in harvesting rates by German forest owners in response to market conditions could lead to an undersupply of roundwood and upward pressure on fiber prices later in the year. Fiber costs at our Celgar mill are expected to decrease as we move further into 2009 as a result of lower wood chip prices, improved logistics and decreased costs for whole log chipping as a result of the recent modernization of our woodroom.
During 2008, our raw material inventories increased slightly to EUR38.2 million from EUR38.0 million at the end of 2007. Our pulp inventories decreased to EUR37.9 million in 2008 from EUR43.1 million at the end of 2007.
For 2008, operating income decreased to EUR13.3 million from EUR69.6 million in 2007 primarily due to lower sales realizations resulting from deteriorating market conditions in the second half of 2008 and inventory provisions of EUR11.3 million.
Interest expense in 2008 decreased to EUR65.8 million from EUR71.4 million in 2007, primarily due to lower levels of borrowing.
We recorded an unrealized loss of EUR25.2 million on our interest rate derivatives at the end of 2008, primarily due to the significant decrease in long-term European interest rates, compared to a net gain on derivatives of EUR20.4 million last year. We recorded a foreign exchange loss on our debt of EUR4.2 million in 2008 as a result of the strengthening of the U.S. dollar in the latter part of the year, compared to a gain of EUR11.0 million in 2007.
In 2008, the minority shareholder's interest in the Stendal loss was EUR13.1 million, compared to EUR1.3 million of income last year.
In 2008, Operating EBITDA was EUR69.1 million compared to EUR126.2 million in 2007. For a definition of Operating EBITDA, see page 4 of this press release and for a reconciliation of net income to Operating EBITDA, see page 7 of the financial tables included in this press release.
We reported a net loss from continuing operations for 2008 of EUR72.5 million, or EUR2.00 per basic and diluted share, as compared to net income from continuing operations of EUR22.4 million, or EUR0.62 per basic share and EUR0.58 per diluted share in 2007.
Liquidity and Capital Resources
In light of the ongoing distress in financial markets and current economic environment, we are providing additional information concerning our liquidity and capital resources as well as our long-term debt commitments.
The following table is a summary of selected financial information for the periods indicated:
Years Ended December 31,
----------------------
2008 2007
---------- ----------
(in thousands)
Financial Position
Cash and cash equivalents E 42,452 E 84,848
Restricted cash 13,000 33,000
Working capital 154,374 168,743
Property, plant and equipment 881,704 933,258
Total assets 1,180,230 1,283,517
Long-term liabilities 909,478 885,339
Shareholders' equity 166,225 276,662
E = Euros
As at December 31, 2008, our cash and cash equivalents were EUR42.5 million, working capital was EUR154.4 million and we had approximately EUR45.0 million in available undrawn lines of credit.
In February 2009, our 70% owned subsidiary, Zellstoff Stendal GmbH ("Stendal"), successfully completed an agreement to amend (the "Amending Agreement") the project loan facility established to build and operate the Stendal mill (the "Stendal Facility") to increase its liquidity and financial flexibility in the current difficult market environment. The Stendal Facility is our only credit facility which currently has scheduled principal payments. The Amending Agreement revises the repayment schedule of principal payments due by deferring approximately EUR164.0 million of principal payments (the "Deferred Amount"), until maturity on September 30, 2017. The Deferred Amount includes approximately EUR20.0 million, EUR26.0 million and EUR21.0 million of scheduled principal payments in 2009, 2010 and 2011, respectively. The Amending Agreement also provides for a 100% cash sweep of any excess cash of Stendal which will be used first to prepay the Deferred Amount and second fund the facility's debt reserve service account. Not included in the cash sweep is a cash amount of EUR15.0 million which Stendal is permitted to retain for working capital purposes. As part of the amendment, we are required to make a capital contribution of EUR10.0 million to the share capital of Stendal.
In January 2009 we also reached an agreement with the lender under the C$40.0 million working capital facility established for our Celgar mill (the "Celgar Facility") to extend its maturity from May 19, 2009 to May 19, 2010.
We are currently seeking a debt financing in the amount of C$45.0 million to fund the green-energy project at our Celgar mill and have commenced preliminary discussions with a number of lenders.
As at December 31, 2008, we had an aggregate amount of EUR531.1 million outstanding under the Stendal Facility and had drawn approximately C$31.0 million under the Celgar Facility. As at December 31, 2008 we had not drawn any amount under the EUR40.0 million working capital facility for our Rosenthal mill.
During the next twelve months, we will be required to make principal payments totaling EUR16.5 million under our Stendal Facility.
Restricted Group
The following table is a summary of selected financial information for the Restricted Group for the periods indicated:
Years Ended December 31,
----------------------
2008 2007
---------- ----------
(in thousands)
Restricted Group Financial Position
Cash and cash equivalents E 26,176 E 59,371
Working capital 101,490 120,486
Property, plant and equipment 351,009 385,569
Total assets 579,777 627,854
Long-term liabilities 324,638 305,158
Shareholders' equity 210,179 278,582
E = Euros
As at December 31, 2008, our Restricted Group had cash and cash equivalents of EUR26.2 million, working capital of EUR101.5 million and approximately EUR45.0 million in available undrawn lines of credit.
Earnings Release Call
In conjunction with this release, Mercer International Inc. will host a conference call, which will be simultaneously broadcast live over the Internet. Management will host the call, which is scheduled for Thursday, February 12, 2009 at 10:00 AM (Eastern Standard Time). Listeners can access the conference call live and archived through March 12, 2009, over the Internet at http://investor.shareholder.com/media/eventdetail.cfm?mediaid=35514&c=MERC&mediakey=6840E432D363FCCF7B6B2DAAE3044B6B&e=0 or through a link on the Company's News/Financial page at http://www.mercerint.com/s/NewsReleases.asp. Please allow 15 minutes prior to the call to visit the site and download and install any necessary audio software. A replay of this call will be available approximately two hours after the live call ends until February 19, 2009 at 11:59 PM (Eastern Standard Time). The replay number is (800) 642-1687 for domestic callers or (706) 645-9291 for international callers, and the passcode is 84881863.
Mercer International Inc. is a global pulp manufacturing company. To obtain further information on the company, please visit its web site at http://www.mercerint.com.
The Mercer International Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5417
The preceding includes forward looking statements which involve known and unknown risks and uncertainties which may cause our actual results in future periods to differ materially from forecasted results. Among those factors which could cause actual results to differ materially are the following: the effects of the current economic and financial turmoil, the highly cyclical nature of our business, raw material costs, our level of indebtedness, competition, foreign exchange and interest rate fluctuations, our use of derivatives, expenditures for capital projects, environmental regulation and compliance, disruptions to our production, market conditions and other risk factors listed from time to time in our SEC reports.
MERCER INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(In thousands of Euros)
December 31,
----------------------
2008 2007
---------- ----------
ASSETS
Current assets
Cash and cash equivalents E 42,452 E 84,848
Cash, restricted 13,000 --
Receivables 100,158 89,890
Note receivable, current portion 642 5,896
Inventories 98,457 103,610
Prepaid expenses and other 4,192 6,015
---------- ----------
Total current assets 258,901 290,259
---------- ----------
Long-term assets
Cash, restricted -- 33,000
Property, plant and equipment 881,704 933,258
Investments 419 96
Deferred note issuance and other costs 4,011 5,303
Deferred income tax 31,666 17,624
Note receivable, less current portion 3,529 3,977
---------- ----------
921,329 993,258
---------- ----------
Total assets E1,180,230 E1,283,517
========== ==========
LIABILITIES
Current liabilities
Accounts payable and accrued expenses E 87,517 E 87,000
Pension and other post-retirement benefit
obligations, current portion 510 493
Debt, current portion 16,500 34,023
---------- ----------
Total current liabilities 104,527 121,516
---------- ----------
Long-term liabilities
Debt, less current portion 803,796 815,832
Unrealized interest rate derivative losses 47,112 21,885
Pension and other post-retirement
benefit obligations 12,846 19,983
Capital leases and other 11,267 8,999
Deferred income tax 34,457 18,640
---------- ----------
909,478 885,339
---------- ----------
Total liabilities 1,014,005 1,006,855
---------- ----------
SHAREHOLDERS' EQUITY
Share capital 202,844 202,844
Paid-in capital 299 134
Retained (deficit) earnings (35,046) 37,419
Accumulated other comprehensive (loss) income (1,872) 36,265
---------- ----------
Total shareholders' equity 166,225 276,662
---------- ----------
Total liabilities and shareholders' equity E1,180,230 E1,283,517
========== ==========
E = Euros
MERCER INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of Euros, except per share data)
Three Months Ended Year Ended
December 31, December 31,
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Revenues
Pulp revenues E 161,031 E 167,146 E 689,320 E 704,391
Energy revenues 10,965 6,242 30,971 22,904
---------- ---------- ---------- ----------
171,996 173,388 720,291 727,295
Costs and expenses
Operating costs 179,822 131,745 626,933 575,238
Operating depreciation
and amortization 13,816 14,397 55,484 56,400
---------- ---------- ---------- ----------
(21,642) 27,246 37,874 95,657
Selling, general and
administrative
expenses 5,355 8,414 30,158 30,714
(Sale) purchase of
emission allowances (5,613) (3,877) (5,613) (4,643)
---------- ---------- ---------- ----------
Operating income from
continuing operations (21,384) 22,709 13,329 69,586
---------- ---------- ---------- ----------
Other income (expense)
Interest expense (16,699) (17,292) (65,756) (71,400)
Investment income
(loss) (874) 667 (1,174) 4,453
Foreign exchange gain
(loss) on debt (943) 3,729 (4,234) 10,958
Realized gain on
derivative
instruments -- -- -- 6,820
Unrealized gain (loss)
on derivative
instruments (29,743) 1,381 (25,228) 13,537
---------- ---------- ---------- ----------
Total other income
(expense) (48,259) (11,515) (96,392) (35,632)
---------- ---------- ---------- ----------
Income (loss) before
income taxes and
minority interest
from continuing
operations (69,643) 11,194 (83,063) 33,954
Income tax benefit
(provision) - current (433) (1,293) (501) (2,170)
- deferred 1,006 (2,185) (1,976) (8,144)
---------- ---------- ---------- ----------
Income (loss) before
minority interest from
continuing operations (69,070) 7,716 (85,540) 23,640
Minority interest 10,038 (466) 13,075 (1,251)
---------- ---------- ---------- ----------
Net income (loss) from
continuing operations (59,032) 7,250 (72,465) 22,389
Net loss from
discontinued
operations -- (12) -- (210)
---------- ---------- ---------- ----------
Net income (loss) E (59,032) E 7,238 E (72,465) E 22,179
========== ========== ========== ==========
Retained earnings
(deficit), beginning
of period 23,986 30,181 37,419 15,240
---------- ---------- ---------- ----------
Retained earnings
(deficit), end
of period E (35,046) E 37,419 E (35,046) E 37,419
========== ========== ========== ==========
Net income (loss) from
continuing operations
per share:
Basic E (1.63) E 0.20 E (2.00) E 0.62
========== ========== ========== ==========
Diluted E (1.63) E 0.18 E (2.00) E 0.58
========== ========== ========== ==========
Net income (loss)
per share:
Basic E (1.63) E 0.20 E (2.00) E 0.61
========== ========== ========== ==========
Diluted E (1.63) E 0.18 E (2.00) E 0.58
========== ========== ========== ==========
E = Euros
MERCER INTERNATIONAL INC.
RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE
Combined Condensed Balance Sheet
(In thousands of Euros)
The terms of the indenture governing our 9.25% senior unsecured notes require that we provide the results of operations and financial condition of Mercer International Inc. and our restricted subsidiaries under the indenture, collectively referred to as the "Restricted Group". As at and during the three months and year ended December 31, 2008 and 2007, the Restricted Group was comprised of Mercer International Inc., certain holding subsidiaries and our Rosenthal and Celgar mills. The Restricted Group excludes the Stendal mill.
December 31, 2008
----------------------------------------------
Restricted Unrestricted Elimin Consolidated
Group Subsidiaries -ations Group
---------- ---------- ---------- ----------
ASSETS
Current
Cash and cash
equivalents E 26,176 E 16,276 E -- E 42,452
Cash, restricted -- 13,000 -- 13,000
Receivables 57,258 42,900 -- 100,158
Note receivable,
current portion 642 -- -- 642
Inventories 59,801 38,656 -- 98,457
Prepaid expenses
and other 2,573 1,619 -- 4,192
---------- ---------- ---------- ----------
Total current assets 146,450 112,451 -- 258,901
Property, plant
and equipment 351,009 530,695 -- 881,704
Other 4,425 5 -- 4,430
Deferred income tax 18,439 13,227 -- 31,666
Due from
unrestricted group 55,925 -- (55,925) --
Note receivable, less
current portion 3,529 -- -- 3,529
---------- ---------- ---------- ----------
Total assets E 579,777 E 656,378 E (55,925) E1,180,230
========== ========== ========== ==========
LIABILITIES
Current
Accounts payable and
accrued expenses E 44,450 E 43,067 E -- E 87,517
Pension and other
post-retirement
benefit obligations,
current portion 510 -- -- 510
Debt, current portion -- 16,500 -- 16,500
---------- ---------- ---------- ----------
Total current
liabilities 44,960 59,567 -- 104,527
Debt, less current
portion 289,222 514,574 -- 803,796
Due to restricted group -- 55,925 (55,925) --
Unrealized derivative
loss -- 47,112 -- 47,112
Pension and other
post-retirement
benefit obligations 12,846 -- -- 12,846
Capital leases
and other 7,167 4,100 -- 11,267
Deferred income tax 15,403 19,054 -- 34,457
---------- ---------- ---------- ----------
Total liabilities 369,598 700,332 (55,925) 1,014,005
---------- ---------- ---------- ----------
SHAREHOLDERS' EQUITY
Total shareholders'
equity (deficit) 210,179 (43,954) -- 166,225
---------- ---------- ---------- ----------
Total liabilities and
shareholders' equity E 579,777 E 656,378 E (55,925) E1,180,230
========== ========== ========== ==========
E = Euros
MERCER INTERNATIONAL INC.
RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE
Combined Condensed Balance Sheet
(In thousands of Euros)
December 31, 2007
----------------------------------------------
Restricted Unrestricted Elimin Consolidated
Group Subsidiaries -ations Group
---------- ---------- ---------- ----------
ASSETS
Current
Cash and cash
equivalents E 59,371 E 25,477 E -- E 84,848
Receivables 37,482 52,408 -- 89,890
Note receivable,
current portion 589 5,307 -- 5,896
Inventories 63,444 40,166 -- 103,610
Prepaid expenses
and other 3,714 2,301 -- 6,015
---------- ---------- ---------- ----------
Total current assets 164,600 125,659 -- 290,259
Cash, restricted -- 33,000 -- 33,000
Property, plant
and equipment 385,569 547,689 -- 933,258
Other 5,399 -- -- 5,399
Deferred income tax 10,852 6,772 -- 17,624
Due from unrestricted
group 57,457 -- (57,457) --
Note receivable, less
current portion 3,977 -- -- 3,977
---------- ---------- ---------- ----------
Total assets E 627,854 E 713,120 E (57,457) E1,283,517
========== ========== ========== ==========
LIABILITIES
Current
Accounts payable and
accrued expenses E 43,621 E 43,379 E -- E 87,000
Pension and other
post-retirement
benefit obligations,
current portion 493 -- -- 493
Debt, current portion -- 34,023 -- 34,023
---------- ---------- ---------- ----------
Total current
liabilities 44,114 77,402 -- 121,516
Debt, less current
portion 273,589 542,243 -- 815,832
Due to restricted
group -- 57,457 (57,457) --
Unrealized
derivative loss -- 21,885 -- 21,885
Pension and other
post-retirement
benefit obligations 19,983 -- -- 19,983
Capital leases
and other 7,033 1,966 -- 8,999
Deferred income tax 4,553 14,087 -- 18,640
---------- ---------- ---------- ----------
Total liabilities 349,272 715,040 (57,457) 1,006,855
---------- ---------- ---------- ----------
SHAREHOLDERS' EQUITY
Total shareholders'
equity (deficit) 278,582 (1,920) -- 276,662
---------- ---------- ---------- ----------
Total liabilities and
shareholders' equity E 627,854 E 713,120 E (57,457) E1,283,517
========== ========== ========== ==========
E = Euros
MERCER INTERNATIONAL INC.
RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE
Combined Condensed Statements of Operations
(In thousands of Euros)
Three Months Ended December 31, 2008
----------------------------------------------
Restricted Unrestricted Elimin Consolidated
Group Subsidiaries -ations Group
---------- ---------- ---------- ----------
Revenues E 103,692 E 68,304 E -- E 171,996
---------- ---------- ---------- ----------
Operating costs 107,615 72,207 -- 179,822
Operating depreciation
and amortization 7,061 6,755 -- 13,816
Selling, general and
administrative
expenses 2,212 3,143 -- 5,355
(Sale) purchase of
emission allowances (433) (5,180) -- (5,613)
---------- ---------- ---------- ----------
116,455 76,925 -- 193,380
---------- ---------- ---------- ----------
Operating income
(loss) from
continuing operations (12,763) (8,621) -- (21,384)
---------- ---------- ---------- ----------
Other income (expense)
Interest expense (7,258) (10,917) 1,476 (16,699)
Investment income
(loss) 1,862 (1,260) (1,476) (874)
Foreign exchange gain
(loss) on debt (933) (10) -- (943)
Derivative financial
instruments -- (29,743) -- (29,743)
---------- ---------- ---------- ----------
Total other income
(expense) (6,329) (41,930) -- (48,259)
---------- ---------- ---------- ----------
Income (loss) before
income taxes and
minority interest
from continuing
operations (19,092) (50,551) -- (69,643)
Income tax benefit
(provision) (5,444) 6,017 -- 573
---------- ---------- ---------- ----------
Income (loss) before
minority interest
from continuing
operations (24,536) (44,534) -- (69,070)
Minority interest -- 10,038 -- 10,038
---------- ---------- ---------- ----------
Net income (loss) E (24,536) E (34,496) E -- E (59,032)
========== ========== ========== ==========
Three Months Ended December 31, 2007
----------------------------------------------
Restricted Unrestricted Elimin Consolidated
Group Subsidiaries -ations Group
---------- ---------- ---------- ----------
Revenues E 92,985 E 80,403 E -- E 173,388
---------- ---------- ---------- ----------
Operating costs 74,048 57,697 -- 131,745
Operating depreciation
and amortization 7,581 6,816 -- 14,397
Selling, general and
administrative
expenses 5,335 3,079 -- 8,414
(Sale) purchase of
emission allowances (1,298) (2,579) -- (3,877)
---------- ---------- ---------- ----------
85,666 65,013 -- 150,679
---------- ---------- ---------- ----------
Operating income
(loss) from
continuing operations 7,319 15,390 -- 22,709
---------- ---------- ---------- ----------
Other income (expense)
Interest expense (7,058) (11,181) 947 (17,292)
Investment income
(loss) 1,542 72 (947) 667
Foreign exchange gain
(loss) on debt 3,821 (92) -- 3,729
Derivative financial
instruments, net -- 1,381 -- 1,381
---------- ---------- ---------- ----------
Total other income
(expense) (1,695) (9,820) -- (11,515)
---------- ---------- ---------- ----------
Income (loss) before
income taxes and
minority interest
from continuing
operations 5,624 5,570 -- 11,194
Income tax benefit
(provision) (1,495) (1,983) -- (3,478)
---------- ---------- ---------- ----------
Income before minority
interest from
continuing operations 4,129 3,587 -- 7,716
Minority interest -- (466) -- (466)
---------- ---------- ---------- ----------
Net income (loss) from
continuing operations 4,129 3,121 -- 7,250
Net income (loss) from
discontinued
operations (12) -- -- (12)
---------- ---------- ---------- ----------
Net income E 4,117 E 3,121 E -- E 7,238
========== ========== ========== ==========
E = Euros
MERCER INTERNATIONAL INC.
RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE
Combined Condensed Statements of Operations
(In thousands of Euros)
Year Ended December 31, 2008
----------------------------------------------
Restricted Unrestricted Elimin Consolidated
Group Subsidiaries -ations Group
---------- ---------- ---------- ----------
Revenues E 413,088 E 307,203 E -- E 720,291
---------- ---------- ---------- ----------
Operating costs 369,923 257,010 -- 626,933
Operating depreciation
and amortization 28,589 26,895 -- 55,484
Selling, general and
administrative
expenses 17,406 12,752 -- 30,158
(Sale) purchase of
emission allowances (433) (5,180) -- (5,613)
---------- ---------- ---------- ----------
Operating income from
continuing
operations (2,397) 15,726 -- 13,329
---------- ---------- ---------- ----------
Other income (expense)
Interest expense (27,027) (43,117) 4,388 (65,756)
Investment income
(loss) 6,834 (3,620) (4,388) (1,174)
Derivative financial
instruments -- (25,228) -- (25,228)
Foreign exchange gain
on debt (4,114) (120) -- (4,234)
---------- ---------- ---------- ----------
Total other income
(expense) (24,307) (72,085) -- (96,392)
---------- ---------- ---------- ----------
Income (loss) before
income taxes and
minority interest
from continuing
operations (26,704) (56,359) -- (83,063)
Income tax benefit
(provision) (3,728) 1,251 -- (2,477)
---------- ---------- ---------- ----------
Income (loss) before
minority interest
from continuing
operations (30,432) (55,108) -- (85,540)
Minority interest -- 13,075 -- 13,075
---------- ---------- ---------- ----------
Net income (loss)
from continuing
operations (30,432) (42,033) -- (72,465)
---------- ---------- ---------- ----------
Net income (loss) E (30,432) E (42,033) E -- E (72,465)
========== ========== ========== ==========
Year Ended December 31, 2007
----------------------------------------------
Restricted Unrestricted Elimin Consolidated
Group Subsidiaries -ations Group
---------- ---------- ---------- ----------
Revenues E 410,369 E 316,926 E -- E 727,295
---------- ---------- ---------- ----------
Operating costs 328,954 246,284 -- 575,238
Operating depreciation
and amortization 28,661 27,739 -- 56,400
Selling, general and
administrative
expenses 17,650 13,064 -- 30,714
(Sale) purchase of
emission allowances (1,566) (3,077) -- (4,643)
---------- ---------- ---------- ----------
Operating income from
continuing
operations 36,670 32,916 -- 69,586
---------- ---------- ---------- ----------
Other income (expense)
Interest income
(expense) (28,472) (46,653) 3,725 (71,400)
Investment income 5,303 2,875 (3,725) 4,453
Derivative financial
instruments, net -- 20,357 -- 20,357
Foreign exchange gain
on debt 10,629 329 -- 10,958
---------- ---------- ---------- ----------
Total other income
(expense) (12,540) (23,092) -- (35,632)
---------- ---------- ---------- ----------
Income (loss) before
income taxes and
minority interest
from continuing
operations 24,130 9,824 -- 33,954
Income tax benefit
(provision) (6,428) (3,886) -- (10,314)
---------- ---------- ---------- ----------
Income (loss) before
minority interest
from continuing
operations 17,702 5,938 -- 23,640
Minority interest -- (1,251) -- (1,251)
---------- ---------- ---------- ----------
Net income (loss)
from continuing
operations 17,702 4,687 -- 22,389
Net income (loss)
from discontinued
operations (210) -- -- (210)
---------- ---------- ---------- ----------
Net income (loss) E 17,492 E 4,687 E -- E 22,179
========== ========== ========== ==========
E = Euros
MERCER INTERNATIONAL INC.
COMPUTATION OF OPERATING EBITDA
(Unaudited)
(In thousands of Euros)
Three Months Ended Year Ended
December 31, December 31,
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Net income (loss)
from continuing
operations E (59,032) E 7,250 E (72,465) E 22,389
Minority interest (10,038) 466 (13,075) 1,251
Income taxes (benefits) (573) 3,478 2,477 10,314
Interest expense 16,699 17,292 65,756 71,400
Investment (income)
loss 874 (667) 1,174 (4,453)
Unrealized foreign
exchange (gain) loss
on debt 943 (3,729) 4,234 (10,958)
Derivative financial
instruments, net 29,743 (1,381) 25,228 (20,357)
---------- ---------- ---------- ----------
Operating income from
continuing operations (21,384) 22,709 13,329 69,586
Add: Depreciation and
amortization 13,883 14,461 55,762 56,658
---------- ---------- ---------- ----------
Operating EBITDA(1) E (7,501) E 37,170 E 69,091 E 126,244
========== ========== ========== ==========
------------------
(1) Operating EBITDA does not reflect the impact of a number of
items that affect our net income (loss), including financing
costs and the effect of derivative instruments. Operating EBITDA
is not a measure of financial performance under accounting
principles generally accepted in the United States, and should
not be considered as an alternative to net income (loss) or
income (loss) from operations as a measure of performance, nor
as an alternative to net cash from operating activities as a
measure of liquidity. Operating EBITDA has significant
limitations as an analytical tool, and should not be considered
in isolation, or as a substitute for analysis of our results as
reported under GAAP.
E = Euros
COMPUTATION OF RESTRICTED GROUP OPERATING EBITDA
(Unaudited)
(In thousands of Euros)
Three Months Ended Year Ended
December 31, December 31,
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Restricted Group
Net income (loss) from
continuing
operations(1) E (24,536) E 4,129 E (30,432) E 17,702
Income taxes (benefits) 5,444 1,495 3,728 6,428
Interest expense 7,258 7,058 27,027 28,472
Investment (income)
loss (1,862) (1,542) (6,834) (5,303)
Unrealized foreign
exchange (gain) loss
on debt 933 (3,821) 4,114 (10,629)
---------- ---------- ---------- ----------
Operating income (loss)
from continuing
operations (12,763) 7,319 (2,397) 36,670
Add: Depreciation and
amortization 7,128 7,648 28,867 28,919
---------- ---------- ---------- ----------
Operating EBITDA(2) E (5,635) E 14,967 E 26,470 E 65,589
========== ========== ========== ==========
------------------
(1) For the Restricted Group, net income (loss) from continuing
operations and net income (loss) are the same in 2008 only.
(2) Operating EBITDA does not reflect the impact of a number of
items that affect our net income (loss), including financing
costs and the effect of derivative instruments. Operating EBITDA
is not a measure of financial performance under accounting
principles generally accepted in the United States, and should
not be considered as an alternative to net income (loss) or
income (loss) from operations as a measure of performance, nor
as an alternative to net cash from operating activities as a
measure of liquidity. Operating EBITDA has significant
limitations as an analytical tool, and should not be considered
in isolation, or as a substitute for analysis of our results as
reported under GAAP.
E = Euros