Mercer International Inc. Reports 2007 Second Quarter Results



    NEW YORK, Aug. 7 /CNW/ -- Mercer International Inc. (Nasdaq: MERC, TSX:
MRI.U) today reported results for the second quarter of 2007.  In 2006, we
divested our paper mills and account for this business as discontinued
operations and its results are reported separately.  As a result, prior year
reported amounts have been reclassified to conform to the current
presentation.  Except as otherwise noted, the following discussion relates to
our continuing operations.

    
    Highlights of the 2007 Second Quarter
    -- Revenues increased by 17% to euro 176.6 million from euro 150.6 million
       in the comparative quarter of 2006, driven by stronger pulp prices and
       higher sales volume. Average NBSK list prices in Northern Europe rose
       to $783 per ADMT in the quarter from $757 in Q1 and $665 per ADMT in
       the second quarter of 2006. Gains in our pulp price realizations as a
       result of stronger pulp prices were partially offset by a weakening
       U.S. dollar, such that our average pulp price realizations increased
       only marginally to euro 518 per ADMT from euro 512 per ADMT in the
       prior quarter. The U.S. dollar was weaker in the quarter relative to
       both the Euro and Canadian dollar, falling in value by 3% and 4%
       respectively.
    -- We completed scheduled annual maintenance downtime at two of our three
       mills and the final strategic capex upgrades at Celgar.  This reduced
       production by approximately 36,000 ADMTs.
    -- Fiber prices, while materially higher than in the prior year period,
       fell from Q1 levels and in Europe are continuing to trend downwards.
    -- Operating EBITDA in the quarter was virtually unchanged from the year
       prior at euro 25.0 million as improved prices were offset by higher
       fiber costs, currency changes and lower production as a result of
       scheduled downtime.  For a definition of Operating EBITDA, see page 5
       of this press release and for a reconciliation of net income from
       continuing operations to Operating EBITDA, see page 8 of the financial
       tables included in this press release.
    -- Net income from continuing operations was euro 3.3 million, or euro
       0.09 per basic and diluted share, in the current quarter which included
       a net gain on our derivatives and foreign currency denominated long-
       term debt of euro 19.4 million, compared to net income of euro 18.3
       million, or euro 0.55 per basic and euro 0.45 per diluted share, in the
       same period of 2006 which included a net gain on our derivatives and
       foreign currency denominated long-term debt of euro 50.8 million.
    

    
    President's Comments
    Mr. Jimmy S.H. Lee, President and Chairman, stated:
    

    
    -- "Pulp markets continued to show strength in the second quarter of 2007.
       List prices in Europe increased by approximately $40 per ADMT in the
       quarter and producer and buyer inventories remain at historically low
       levels.
    -- We are pleased with the performance of all of our mills in the quarter.
       The annual scheduled maintenance downtime at our Celgar and Stendal
       mills reduced production by approximately 36,000 ADMTs in the quarter.
       Excluding this downtime, production in the quarter was near record
       productivity records.
    -- During the scheduled downtime at Celgar, we implemented the final phase
       of our Blue Goose capital project; consisting of dryer capacity
       expansion.  This upgrade resulted in immediate improved production and
       the mill had a record production day in June.  During the Stendal
       outage, which was its first scheduled downtime since start up in
       September 2004, we also optimized several remaining productivity
       opportunities.  These contributed to June being Stendal's second
       strongest production month since the mill's startup. Additionally, we
       currently expect that Stendal will be able to conclude a final
       settlement of all outstanding matters with its contractors under its
       EPC contract in or about the third quarter of 2007.
    -- Fiber price reductions in Europe are developing as expected.  The
       storm-felled wood from earlier in the year is being consumed by
       sawmills and the pricing of resulting residual chips, which comprise a
       major portion of fiber for our Rosenthal mill, are declining.  Prices
       for residual chips purchased in the second quarter decreased on average
       by over 30% from first quarter levels.  Prices for roundwood, which
       comprises a major portion of fiber for our Stendal mill, have not
       declined materially due to continuing strong demand in northern
       Germany.  As a result, we currently expect to increase the amount of
       residual chips consumed by Stendal in the second half of 2007.  We
       currently anticipate additional declines in the costs of fiber for our
       German mills for deliveries throughout the balance of the year."
    
    Mr. Lee added:  "We are seeing continued strong demand in all our
markets. Further, if the recently announced labor action in coastal British
Columbia continues, it will reduce NBSK supply from that region. We expect
that these factors, along with the weakened U.S. dollar, should result in
higher pulp prices in the upcoming months.  We expect the NBSK market to
remain strong in 2007 as evidenced by the July price increase to approximately
$830 per tonne in the United States."
    Mr. Lee concluded:  "With only a relatively small routine planned
shutdown at our Rosenthal mill in Q3 and all our mills running at historically
high levels, we are well positioned to take advantage of the NBSK price
momentum and falling European fiber prices for the balance of the year."

    Summary Selected Highlights


    
                                        Q2              Q1              Q2
                                       2007            2007            2006
                          (in millions of Euro, except where otherwise stated)
    Revenues                     euro 176.6      euro 169.5        euro 150.6
    Sale of emission allowances           -             0.7               7.6
    Operating income from
     continuing operations             10.9            14.5              10.6
    Operating EBITDA(1)                25.0            28.3              25.2
    Realized gain (loss) on derivative
     instruments                          -             6.8              (1.7)
    Unrealized gain (loss) on
     derivative instruments            18.1            (0.2)             46.3
    Interest expense                   17.6            20.1              22.9
    Unrealized foreign exchange gain
     on debt                            1.3             1.3               6.1
    Net income from continuing
     operations                         3.3             1.1              18.3
    Income per share from continuing
     operations
      Basic                       euro 0.09       euro 0.03         euro 0.55
      Diluted                     euro 0.09       euro 0.03         euro 0.45
    

    
    (1)  For a definition of Operating EBITDA, see page 5 of this press
         release and for a reconciliation of net income (loss) to Operating
         EBITDA, see page 8 of the financial tables included in this press
         release.
    


    
                                        Q2              Q1              Q2
                                       2007            2007            2006
    Pulp Production ('000 ADMTs)      326.4           347.3           307.7
    

    Pulp Sales ('000 ADMTs)           337.0           329.1           334.1

    
    NBSK list price in Europe ($/ADMT)  783             757             665
    Average pulp price realizations
     (euro /ADMT)                       518             512             453
    Average Spot Currency Exchange Rates
    euro / $(1)                      0.7416          0.7630          0.7957
    C$ / $(1)                        1.0981          1.1716          1.1224
    C$ / euro (2)                    1.4810          1.5354          1.4104
    

    
    (1)  Average Federal Reserve Bank of New York noon spot rate over the
         reporting period.
    (2)  Average Bank of Canada noon spot rate over the reporting period.
    
    Three Months Ended June 30, 2007 Compared to Three Months Ended June 30,
2006
    Revenues for the three months ended June 30, 2007 increased by 17% to
euro 176.6 million from euro 150.6 million in the comparative period of 2006,
primarily due to stronger pulp prices and higher sales volume, partially
offset by a 7% weakening of the U.S. dollar versus the Euro. List prices for
NBSK pulp in Europe were approximately euro 579 ($783) per ADMT in the second
quarter of 2007, euro 578 ($757) per ADMT in the first quarter of 2007 and
approximately euro 529 ($665) per ADMT in the comparative second quarter of
last year. Pulp sales volume increased to 337,016 ADMTs in the second quarter
of 2007 from 334,136 ADMTs in the comparative period of 2006.  Average pulp
sales realizations increased to euro 518 per ADMT on average in the second
quarter of 2007 from euro 453 per ADMT in the second quarter of 2006,
primarily as a result of higher pulp prices.
    Cost of sales and general, administrative and other expenses in the
second quarter of 2007 increased to euro 165.7 million from euro 140.0 million
in the comparative period of 2006, primarily as a result of higher fiber costs
which increased by approximately 39% from the year ago quarter.
    Fiber costs at our German pulp mills increased in the second quarter of
2007, primarily as a result of continuing increased demand for wood residuals.
Fiber costs at our Celgar mill increased, primarily because of a weakening
U.S. lumber market that has caused a sharp reduction in sawmill residual
production.  We expect fiber availability in Europe to increase materially as
a result of severe storms in January that felled approximately 60 million
cubic meters of timber, primarily in Germany and Scandinavia.  This, coupled
with the recent strength of the European lumber market, has started to provide
some price relief and we expect further downward pressure on European fiber
prices for deliveries throughout the balance of the year.
    As a result of continued weak markets and prices for the sale of emission
allowances, our contribution to income from the sale of such emission
allowances in the second quarter of 2007 was euro nil, compared to euro 7.6
million in the second quarter of 2006.
    For the second quarter of 2007, operating income increased by
approximately 3% to euro 10.9 million from euro 10.6 million in the
comparative quarter of 2006, primarily as a result of higher pulp prices and
improved operating results at our Celgar mill.  Interest expense in the second
quarter of 2007 decreased to euro 17.6 million from euro 22.9 million in the
2006 comparative quarter, primarily because of the scheduled repayments of the
Stendal facility and the settlement of our cross currency swaps which both
occurred in the first quarter of 2007.
    
    Derivative Instruments and Minority Interest
    
    We recorded a net non-cash gain of euro 18.1 million on our outstanding
interest rate derivatives at the end of the current quarter, compared to a net
gain of euro 44.7 million on our foreign currency and interest rate
derivatives in the comparative quarter of 2006.
    In the second quarter of 2007, minority interest, representing the
minority shareholder's interest in the Stendal mill's income, was euro 1.1
million, compared to its euro 0.4 million share of losses in the comparative
quarter of 2006.
    
    Earnings Per Share and Operating EBITDA
    
    We generated "Operating EBITDA" of euro 25.0 million and euro 25.2
million in the three months ended June 30, 2007 and 2006, respectively. 
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 8 of
the financial tables included in this press release.
    We reported net income from continuing operations for the second quarter
of 2007 of euro 3.3 million, or euro 0.09 per basic and diluted share, which
included an aggregate of euro 19.4 million of net non-cash gains on our
outstanding derivatives and foreign currency denominated long-term debt. In
the second quarter of 2006, we reported net income from continuing operations
of euro 18.3 million, or euro 0.55 per basic and euro 0.45 per diluted share,
which reflected a net gain of euro 50.8 million on our outstanding derivatives
and foreign currency denominated long-term debt.
    
    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 Wednesday,
August 8, 2007 at 10:00 AM EDT.  Listeners can access the conference call live
and archived through September 8, 2007, over the Internet through a link at
the Company's web site at http://www.mercerint.com/en/newsCurrent.cfm, or at
http://www.videonewswire.com/event.asp?id=41217.  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 also be available approximately
two hours after the live call ends until August 15, 2007 at 11:59 p.m.
(Eastern Daylight Time) at (800) 642-1687 for domestic callers or (706) 645-
9291 for international callers, and the passcode is 10286547.
    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 preceding includes forward looking statements which involve known and
unknown risks and uncertainties which may cause the Company's 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: market conditions, competition and other risk factors listed from
time to time in the company's SEC reports.



    -FINANCIAL TABLES FOLLOW-


    MERCER INTERNATIONAL INC.

    
                         CONSOLIDATED BALANCE SHEETS
                     June 30, 2007 and December 31, 2006
                             (Euros in thousands)
    

    
                                                    June 30,      December 31,
                                                      2007            2006
    ASSETS
    Current Assets
        Cash and cash equivalents            euro    48,302   euro    69,367
        Receivables                                 104,494           75,022
        Note receivable, current portion              5,834            7,798
        Inventories                                  94,891           62,857
        Prepaid expenses and other                    5,462            4,662
        Current assets of discontinued operations     1,104            2,094
    Total current assets                            260,087          221,800
    Long-Term Assets
        Cash restricted                              45,000           57,000
        Property, plant and equipment               968,830          972,143
        Investments                                      88                1
        Unrealized foreign exchange rate
         derivative gain                                  -            5,933
        Deferred note issuance and other costs        6,294            6,984
        Deferred income tax                          18,670           29,989
        Note receivable, less current portion         4,506            8,744
    

    
                                                  1,043,388        1,080,794
    Total assets                             euro 1,303,475   euro 1,302,594
    

    
    LIABILITIES
    Current Liabilities
        Accounts payable and accrued
         expenses                            euro   100,970   euro    84,173
        Debt, current portion                        33,364           33,903
        Current liabilities of discontinued
         operations                                     651            1,926
    Total current liabilities                       134,985          120,002
    Long-Term Liabilities
        Debt, less current portion                  848,990          873,928
        Unrealized interest rate derivative loss     17,570           41,355
        Pension and other post-retirement
         benefit obligations                         18,940           17,954
        Capital leases                                6,457            6,202
        Deferred income tax                          24,565           22,911
        Other long-term liabilities                   3,617            1,441
                                                    920,139          963,791
    Total liabilities                             1,055,124        1,083,793
    Minority Interest                                     -                -
    

    
    SHAREHOLDERS' EQUITY
    Common shares                                   202,626          195,642
    Additional paid-in capital                          134              154
    Retained earnings                                19,485           15,240
    Accumulated other comprehensive income           26,106            7,765
    Total shareholders' equity                      248,351          218,801
    Total liabilities and
     shareholders' equity                    euro 1,303,475   euro 1,302,594
    


    (1)



    MERCER INTERNATIONAL INC.

    
                    CONSOLIDATED STATEMENTS OF OPERATIONS
               For the Six Months Ended June 30, 2007 and 2006
                                 (Unaudited)
                 (Euros in thousands, except per share data)
    

    2007           2006

    Revenues                                     euro 346,134   euro 292,262

    
    Costs and expenses
        Operating costs                               277,555        239,292
        Operating depreciation and amortization        27,719         28,325
                                                       40,860         24,645
        General and administrative expenses            16,206         16,314
        (Sale) purchase of emission allowances           (766)       (13,246)
    Operating income from continuing operations        25,420         21,577
    

    
    Other income (expense)
        Interest expense                              (37,709)       (45,728)
        Investment income                               3,195          3,003
        Unrealized foreign exchange gain on debt        2,603         12,173
        Realized gain (loss) on
         derivative instruments                         6,820         (5,219)
        Unrealized gain on derivative instruments      17,852         90,724
    Total other (expense) income                       (7,239)        54,953
    

    
    Income before income taxes and minority interest
     from continuing operations                        18,181         76,530
    Income tax provision                              (13,705)       (42,920)
    Income before minority interest from                4,476         33,610
     continuing operations
    Minority interest                                     (43)           898
    Net income from continuing operations               4,433         34,508
    Net (loss) income from discontinued operations       (188)           501
    Net income                                          4,245         35,009
    

    
    Retained earnings (deficit), beginning
     of period                                         15,240        (47,970)
    Retained earnings (deficit), end of
     period                                       euro 19,485   euro (12,961)
    

    
    Net income per share from continuing
     operations
        Basic                                     euro   0.12   euro    1.04
        Diluted                                   euro   0.12   euro    0.85
    Income per share
        Basic                                     euro   0.12   euro    1.06
        Diluted                                   euro   0.12   euro    0.86
    


    (2)



    MERCER INTERNATIONAL INC.

    
                    CONSOLIDATED STATEMENTS OF OPERATIONS
              For the Three Months Ended June 30, 2007 and 2006
                                 (Unaudited)
                 (Euros in thousands, except per share data)
    

    2007           2006

    Revenues                                     euro 176,603   euro 150,594

    
    Costs and expenses
        Operating costs                               142,808        124,385
        Operating depreciation and amortization        13,990         14,637
                                                       19,805         11,572
        General and administrative expenses             8,901          8,597
        (Sale) purchase of emission allowances            (39)        (7,608)
    Operating income from continuing operations        10,943         10,583
    

    
    Other income (expense)
        Interest expense                              (17,641)       (22,914)
        Investment income                               1,584          1,263
        Unrealized foreign exchange gain on debt        1,349          6,060
        Realized loss on derivative instruments             -         (1,657)
        Unrealized gain on derivative instruments      18,100         46,347
    Total other income                                  3,392         29,099
    

    
    Income before income taxes and minority interest
     from continuing operations                        14,335         39,682
    Income tax provision                               (9,904)       (21,807)
    Income before minority interest from
     continuing operations                              4,431         17,875
    Minority interest                                  (1,091)           449
    Net income from continuing operations               3,340         18,324
    Net (loss) income from discontinued operations       (181)            97
    Net income                                          3,159         18,421
    

    
    Retained earnings (deficit), beginning
     of period                                         16,326        (31,382)
    Retained earnings (deficit), end of
     period                                       euro 19,485   euro (12,961)
    

    
    Net income per share from continuing
     operations
        Basic                                     euro   0.09   euro    0.55
        Diluted                                   euro   0.09   euro    0.45
    Income per share
        Basic                                     euro   0.09   euro    0.56
        Diluted                                   euro   0.09   euro    0.45
    


    (3)



    MERCER INTERNATIONAL INC.

    
                   RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE
                       Combined Condensed Balance Sheet
                             As at June 30, 2007
                             (Euros in thousands)
    
    The terms of the indenture governing our 9.25% senior unsecured notes
requires that we provide the results of operations and financial condition of
Mercer International Inc. ("Mercer Inc.") and our restricted subsidiaries
under the indenture, collectively referred to as the "Restricted Group". As at
and during the six and three months ended June 30, 2007 and 2006, the
Restricted Group was comprised of Mercer International Inc., certain holding
subsidiaries and Rosenthal, and the Celgar mill. The Restricted Group excludes
the Stendal mill and, up to December 31, 2006, the discontinued paper
operations.



    
                                           June 30, 2007
                       Restricted   Unrestricted                  Consolidated
                         Group       Subsidiary    Eliminations       Group
    

    
    ASSETS
    Current assets
      Cash and cash
       equivalents    euro 40,027    euro 8,275  euro       -   euro    48,302
      Receivables          50,159        54,335             -          104,494
      Note receivable,
       current portion        617         5,217             -            5,834
      Inventories          57,306        37,585             -           94,891
      Prepaid expenses
       and other            2,445         3,017             -            5,462
      Current assets from
       discontinued
       operations           1,104             -             -            1,104
    Total current assets  151,658       108,429             -          260,087
    Cash restricted             -        45,000             -           45,000
    Property, plant and
     equipment            397,577       571,253             -          968,830
    Other                   6,382             -             -            6,382
    Deferred income tax    11,715         6,955             -           18,670
    Due from unrestricted
     group                 56,540             -       (56,540)               -
    Note receivable,
     less current           4,506             -             -            4,506
     portion
    Total assets     euro 628,378  euro 731,637  euro (56,540)  euro 1,303,475
    


    
    LIABILITIES
    Current
      Accounts
       payable and
       accrued
       expenses      euro  52,366  euro  48,604  euro       -   euro   100,970
      Debt, current
       portion                  -        33,364             -           33,364
      Current liabilities
       from discontinued
       operations             651             -             -              651
    Total current
     liabilities           53,017        81,968             -          134,985
    Debt, less current
     portion              291,556       557,434             -          848,990
    Due to restricted
     group                      -        56,540       (56,540)               -
    Unrealized derivative
     loss                       -        17,570             -           17,570
    Capital leases          4,520         1,937             -            6,457
    Deferred income tax     4,125        20,440             -           24,565
    Other long-term
     liabilities           22,544            13             -           22,557
    Total liabilities     375,762       735,902       (56,540)       1,055,124
    

    
    SHAREHOLDERS' EQUITY
    Total shareholders'
     equity (deficit)     252,616        (4,265)            -          248,351
    Total liabilities
     and shareholders'
     equity          euro 628,378  euro 731,637  euro (56,540)  euro 1,303,475
    


    (4)



    MERCER INTERNATIONAL INC.

    
                   RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE
                       Combined Condensed Balance Sheet
                           As at December 31, 2006
                             (Euros in thousands)
    

    
                                         December 31, 2006
                       Restricted  Unrestricted                   Consolidated
                         Group     Subsidiaries    Eliminations       Group
    ASSETS
    Current
      Cash and cash
       equivalents    euro 39,078   euro 30,289  euro       -   euro    69,367
      Receivables          38,662        36,360             -           75,022
      Note receivable,
       current portion        620         7,178             -            7,798
      Inventories          41,087        21,770             -           62,857
      Prepaid expenses
       and other            2,352         2,310             -            4,662
      Current assets of
       discontinued
       operations               -         2,094             -            2,094
    Total current assets  121,799       100,001             -          221,800
    Cash restricted             -        57,000             -           57,000
    Property, plant
     and equipment        408,957       563,186             -          972,143
    Other                   8,155         4,763             -           12,918
    Deferred income tax    14,316        15,673             -           29,989
    Due from unrestricted
     group                 51,265             -       (51,265)               -
    Note receivable,
     less current
     portion                5,023         3,721             -            8,744
    Total assets     euro 609,515  euro 744,344  euro (51,265)  euro 1,302,594
    

    
    LIABILITIES
    Current
      Accounts payable
       and accrued
       expenses      euro  46,838  euro  37,335  euro       -   euro    84,173
      Debt, current
       portion                  -        33,903             -           33,903
      Current liabilities
       of discontinued
       operations               -         1,926             -            1,926
    Total current
     liabilities           46,838        73,164             -          120,002
    Debt, less current
     portion              293,781       580,147             -          873,928
    Due to restricted
     group                      -        51,265       (51,265)               -
    Unrealized derivative
     loss                       -        41,355             -           41,355
    Capital leases          2,720         3,482             -            6,202
    Deferred income tax     2,832        20,079             -           22,911
    Other long-term
     liabilities           19,395             -             -           19,395
    Total liabilities     365,566       769,492       (51,265)       1,083,793
    

    
    SHAREHOLDERS' EQUITY
    Total shareholders'
     equity (deficit)     243,949       (25,148)            -          218,801
    Total liabilities
     and shareholders'
     equity          euro 609,515  euro 744,344  euro (51,265)  euro 1,302,594
    


    (5)


    MERCER INTERNATIONAL INC.

    
                   RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE
                 Combined Condensed Statements of Operations
               For the Six Months Ended June 30, 2007 and 2006
                                 (Unaudited)
                             (Euros in thousands)
    


    
                                   Six Months Ended June 30, 2007
                         Restricted   Unrestricted                Consolidated
                           Group       Subsidiary    Eliminations     Group
    

    
    Revenues           euro 204,240  euro 141,894    euro   -    euro 346,134
    Operating costs         161,829       115,726           -         277,555
    Operating
     depreciation and
     amortization            13,661        14,058           -          27,719
    General and
     administrative
     expenses                10,623         5,583           -          16,206
    (Sale) purchase
     of emission
     allowances                (268)         (498)          -            (766)
                            185,845       134,869           -         320,714
         Operating income
          from continuing
          operations         18,395         7,025           -          25,420
    Other income (expense)
      Interest expense      (14,418)      (25,132)      1,841         (37,709)
      Investment income       2,440         2,596      (1,841)          3,195
      Unrealized foreign
       exchange gain
       on debt                2,263           340           -           2,603
      Derivative financial
       instruments, net           -        24,672           -          24,672
      Total other (expense)
       income                (9,715)        2,476           -          (7,239)
         Income before
          income taxes and
          minority interest
          from continuing
          operations          8,680         9,501           -          18,181
    Income tax provision     (4,150)       (9,555)          -         (13,705)
         Income (loss) before
          minority interest
          from continuing
          operations          4,530           (54)          -           4,476
    Minority interest             -           (43)          -             (43)
         Net income (loss)
          from continuing
          operations          4,530           (97)          -           4,433
         Net loss from
          discontinued
          operations           (188)            -           -            (188)
         Net income
          (loss)       euro   4,342  euro     (97)   euro   -    euro   4,245
    



    
                                   Six Months Ended June 30, 2006
                         Restricted  Unrestricted                 Consolidated
                           Group     Subsidiaries    Eliminations     Group
    

    
    Revenues           euro 169,752  euro 122,510    euro   -    euro 292,262
    Operating costs         148,388        90,904           -         239,292
    Operating
     depreciation and
     amortization            14,197        14,128           -          28,325
    General and
     administrative
     expenses                10,375         5,939           -          16,314
    (Sale) purchase
     of emission
     allowances              (3,651)       (9,595)          -         (13,246)
                            169,309       101,376           -         270,685
    

    
         Operating income
          from continuing
          operations            443        21,134           -          21,577
    Other income (expense)
      Interest expense      (16,442)      (31,046)      1,760         (45,728)
      Investment income       2,119         2,644      (1,760)          3,003
      Unrealized foreign
       exchange gain
       on debt               12,173             -           -          12,173
      Derivative financial
       instruments, net           -        85,505           -          85,505
      Total other income
       (expense)             (2,150)       57,103           -          54,953
         Income (loss)
          before income
          taxes and minority
          interest from
          continuing
          operations         (1,707)       78,237           -          76,530
    Income tax provision     (6,905)      (36,015)          -         (42,920)
         Income (loss) before
          minority interest
          from continuing
          operations         (8,612)       42,222           -          33,610
    Minority interest             -           898           -             898
         Net income (loss)
          from continuing
          operations         (8,612)       43,120           -          34,508
         Net income
          from discontinued
          operations              -           501           -             501
         Net income
          (loss)       euro  (8,612) euro  43,621    euro   -    euro  35,009
    

    (6)



    MERCER INTERNATIONAL INC.

    
                   RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE
                 Combined Condensed Statements of Operations
              For the Three Months Ended June 30, 2007 and 2006
                                 (Unaudited)
                             (Euros in thousands)
    

    
                                         Three Months Ended June 30, 2007
                            Restricted  Unrestricted              Consolidated
                                Group    Subsidiary  Eliminations    Group
    Revenues              euro 104,307  euro 72,296    euro  -   euro 176,603
    Operating costs             85,271       57,537          -        142,808
    Operating depreciation
     and amortization            6,975        7,015          -         13,990
    General and administrative
     expenses                    6,264        2,637          -          8,901
    (Sale) purchase of emission
      allowances                    (4)         (35)         -            (39)
                                98,506       67,154          -        165,660
       Operating income from
        continuing operations    5,801        5,142          -         10,943
    Other income (expense)
     Interest expense           (6,961)     (11,606)       926        (17,641)
     Investment income           1,136        1,374       (926)         1,584
     Unrealized foreign exchange
      gain on debt               1,009          340          -          1,349
     Derivative financial
      instruments, net               -       18,100          -         18,100
     Total other income
     (expense)                  (4,816)       8,208          -          3,392
       Income before income taxes
        and minority interest from
        continuing operations      985       13,350          -         14,335
    Income tax provision        (1,612)      (8,292)         -         (9,904)
       Income (loss) before
        minority interest from
        continuing operations     (627)       5,058          -          4,431
    Minority interest                -       (1,091)         -         (1,091)
       Net income (loss) from
        continuing operations     (627)       3,967          -          3,340
       Net loss from discontinued
        operations                (181)           -          -           (181)
       Net income (loss)     euro (808)  euro 3,967    euro  -     euro 3,159
    


    
                                         Three Months Ended June 30, 2006
                            Restricted  Unrestricted              Consolidated
                                Group    Subsidiary  Eliminations    Group
    Revenues               euro 88,741  euro 61,853    euro  -   euro 150,594
    Operating costs             79,249       45,136          -        124,385
    Operating depreciation
     and amortization            7,568        7,069          -         14,637
    General and administrative
     expenses                    5,415        3,182          -          8,597
    (Sale) purchase of emission
     allowances                 (1,884)      (5,724)         -         (7,608)
                                90,348       49,663          -        140,011
    Operating income from
     continuing operations      (1,607)      12,190          -         10,583
    Other income (expense)
     Interest expense           (7,979)     (15,820)       885        (22,914)
     Investment income (loss)     (142)       2,290       (885)         1,263
     Unrealized foreign exchange
      gain on debt               6,060            -          -          6,060
     Derivative financial
      instruments, net              79       44,611          -         44,690
     Total other income
      (expense)                 (1,982)      31,081          -         29,099
        Income (loss) before
         income taxes and minority
         interest from continuing
         operations             (3,589)      43,271          -         39,682
    Income tax provision        (3,872)     (17,935)         -        (21,807)
       Income (loss) before
        minority interest from
        continuing operations   (7,461)      25,336          -         17,875
    Minority interest                -          449          -            449
       Net income (loss) from
        continuing operations   (7,461)      25,785          -         18,324
       Net income from discontinued
        operations                   -           97          -             97
       Net income (loss)   euro (7,461) euro 25,882    euro  -    euro 18,421
    


    (7)



    MERCER INTERNATIONAL INC.

    
                       COMPUTATION OF OPERATING EBITDA
       For the Six Months and Three Months Ended June 30, 2007 and 2006
                                 (Unaudited)
                             (Euros in thousands)
    

    
                                                       Six Months Ended
                                                            June 30,
                                                      2007           2006
                                                        (in thousands)
    Net income from continuing operations         euro 4,433   euro 34,508
    Minority interest                                     43          (898)
    Income taxes                                      13,705        42,920
    Interest expense                                  37,709        45,728
    Investment income                                 (3,195)       (3,003)
    Unrealized foreign exchange gain on debt         (24,672)      (12,173)
    Derivative financial instruments, net gain        (2,603)      (85,505)
    Operating income from continuing operations       25,420        21,577
    Add: Depreciation and amortization                27,847        28,325
    Operating EBITDA(1)                          euro 53,267   euro 49,902
    


    
                                                      Three Months Ended
                                                            June 30,
                                                      2007           2006
                                                        (in thousands)
    Net income from continuing operations         euro 3,340   euro 18,324
    Minority interest                                  1,091          (449)
    Income taxes                                       9,904        21,807
    Interest expense                                  17,641        22,914
    Investment income                                 (1,584)       (1,263)
    Unrealized foreign exchange gain on debt          (1,349)       (6,060)
    Derivative financial instruments, net gain       (18,100)      (44,690)
    Operating income from continuing operations       10,943        10,583
    Add: Depreciation and amortization                14,055        14,637
    Operating EBITDA(1)                          euro 24,998   euro 25,220
    


    
    (1)  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 accounting principles generally accepted
         in the United States, 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.
    

    (8)



    
               COMPUTATION OF RESTRICTED GROUP OPERATING EBITDA
       For the Six Months and Three Months Ended June 30, 2007 and 2006
                                 (Unaudited)
                             (Euros in thousands)
    

    
                                                       Six Months Ended
                                                            June 30,
                                                      2007           2006
                                                        (in thousands)
    Restricted Group
    Net income (loss) from continuing operations  euro 4,530    euro (8,612)
    Income taxes                                       4,150          6,905
    Interest expense                                  14,418         16,442
    Investment and other income                       (2,440)        (2,119)
    Unrealized foreign exchange gain on debt          (2,263)       (12,173)
    Operating income from continuing operations       18,395            443
    Add: Depreciation and amortization                13,661         14,197
    Operating EBITDA(1)                          euro 32,056    euro 14,640
    


    
                                                      Three Months Ended
                                                            June 30,
                                                      2007           2006
                                                        (in thousands)
    Restricted Group
    Net loss from continuing operations          euro   (627)   euro (7,461)
    Income taxes                                       1,612          3,872
    Interest expense                                   6,961          7,979
    Investment and other (income) expense             (1,136)           142
    Unrealized foreign exchange gain on debt          (1,009)        (6,060)
    Derivative financial instruments, net loss             -            (79)
    Operating income (loss) from continuing
     operations                                        5,801         (1,607)
    Add: Depreciation and amortization                 6,975          7,568
    Operating EBITDA(1)                          euro 12,776    euro  5,961
    

    
    (1)  Operating EBITDA does not reflect the impact of a number of items
         that affect 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.
    

    (9)




For further information:

For further information: Jimmy S.H. Lee, Chairman & President, or David
M.  Gandossi, Executive Vice-President & Chief Financial Officer, both of
Mercer  International Inc., +1-604-684-1099; Investors, Eric Boyriven,
Alexandra  Tramont, or Media, Scot Hoffman, all of Financial Dynamics for
Mercer  International Inc., +1-212-850-5600 Web Site: http://www.mercerint.com
                 http://www.mercerint.com/en/newsCurrent.cfm                
 http://www.videonewswire.com/event.asp?id=41217

Organization Profile

Mercer International Inc.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890