Mercer International Inc. Reports 2003 Fourth Quarter Profits And
Year End Results NEW YORK, March 1 /PRNewswire-FirstCall/ -- Mercer
International Inc. today reported results for the fourth quarter
and year ended December 31, 2003. Results of Operations - 2003
Fourth Quarter Total revenues for the fourth quarter of 2003 were
euro 50.4 million, versus euro 56.1 million in the fourth quarter
of 2002, primarily because the current period does not include the
revenues from the Landqart specialty paper mill which was
reorganized in December 2002 and is now accounted for under the
equity method. Pulp and paper revenues were euro 47.5 million in
the 2003 fourth quarter, versus euro 53.6 million in the fourth
quarter of 2002. Costs of pulp and paper sales in the fourth
quarter of 2003 were euro 45.5 million, compared to euro 57.4
million in the fourth quarter of 2002. The reduction in costs
versus the year ago period is primarily a result of the exclusion
of results from the Landqart mill. Forthe 2003 fourth quarter, pulp
sales increased to euro 34.2 million from euro 31.2 million in the
same period a year ago and euro 30.0 million in the 2003 third
quarter. List prices for Northern Bleached Softwood Kraft Pulp
("NBSK") in Europe were approximately euro 444 (US$560) per tonne
in the fourth quarter of 2003, approximately euro 444 (US$500) per
tonne in the third quarter of 2003 and approximately euro 440
(US$490) per tonne in the fourth quarter of last year. The increase
in NBSK prices was largely offset by an 8% decline in the value of
the U.S. dollar versus the Euro in the current period. Increased
production volumes due to enhanced operational efficiency lead to
higher pulp revenues. In the 2003 fourth quarter, pulp sales by
volume increased to 81,729 tonnes from 76,052 tonnes in the fourth
quarter of last year and 73,747 tonnes in the third quarter of
2003. Pulp sales realizations were euro 418 per tonne on average in
the 2003 fourth quarter, versus euro 407 per tonne in the third
quarter of 2003 and euro 410 per tonne in the fourth quarter of
2002. Transportation and other revenues for the pulp operations
were euro 2.6 million in the 2003 fourth quarter, compared to euro
2.9 million in the fourth quarter of last year. Despite increased
production volumes, cost of sales and general, administrative and
other expenses for the pulp operations decreased to euro 35.5
million in the 2003 fourth quarter from euro 40.0 million in the
fourth quarter of 2002. On average, per tonnefiber costs for pulp
production decreased by approximately 9% compared to the fourth
quarter of last year. Depreciation for the pulp operations was euro
5.3 million in the current quarter, versus euro 5.4 million a year
ago. For the fourth quarter of2003, our pulp operations generated
operating income of euro 0.8 million, versus an operating loss of
euro 6.2 million in the year ago period. As previously noted,
results for our paper segment reflect the exclusion of results from
the Landqart specialty paper mill, which were included in our 2002
fourth quarter results. Paper sales in the 2003 fourth quarter were
euro 13.3 million, compared with euro 22.4 million in the fourth
quarter of last year. Sales of specialty papers in the 2003 fourth
quarter were euro 9.9 million versus euro 18.5 million in the
fourth quarter of 2002. For the fourth quarter of 2003, total paper
sales volumes were 15,030 tonnes, versus 19,865 tonnes last year.
On average, prices for specialty papers realized in the current
period decreased by approximately 23.7%, reflecting the shift in
product mix after de-consolidation of the Landqart mill. Average
prices for our printing papers remained relatively level with those
seen in the year ago period. Cost of sales and general,
administrative and other expenses for the paper operations in the
fourth quarter of 2003 were euro 15.1 million, versus euro 25.9
million in the comparative quarter of 2002, primarily as a result
of lower paper sales. Depreciation for the paper operations was
euro 0.5 million in the 2003 fourth quarter. There was no
depreciation for the paper operations in the fourth quarter of
2002. For the 2003 fourth quarter, our paper operations generated
an operating loss of euro 1.6 million, comparedto operating income
of euro 3.7 million in the fourth quarter of last year. For the
fourth quarter of 2003, consolidated general and administrative
expenses, which included certain non-capitalized costs related to
the Stendal mill, were euro 6.4 million, compared to euro 4.6
million in the year ago period. In the fourth quarter of 2003, we
reported a loss from operations of euro 2.0 million, compared to a
loss from operations of euro 5.7 million in the same period last
year. Interest expense (excluding capitalized interest of euro 4.9
million relating to the Stendal project) in the fourth quarter of
2003 was euro 4.6 million, compared with euro 2.9 million a year
ago, due primarily to higher borrowings. Pursuant to the euro 827
million loan facility (the "Stendal Loan Facility") for our
greenfield project (the "Stendal project") to construct an
approximately 552,000 tonne NBSK mill near Stendal, Germany, our
63% owned subsidiary, Zellstoff Stendal GmbH ("Stendal"), entered
into variable-to-fixed rate interest swaps for the full term of the
facility to manage the risk exposure with respect to approximately
euro 612.6 million of the principal amount of the Stendal Loan
Facility. Under these swaps, Stendal pays a fixed rate and receives
a floating rate with respect to interest payments calculated on a
notional amount. These swaps manage the exposure to variable cash
flow risk from the variable interest payments under the Stendal
Loan Facility. The swaps are marked to market at the end of each
reporting period and all unrealized gains and losses are recognized
in earnings for a reporting period. As a result of an increase in
long-term interest rates in the 2003 fourth quarter, a non-cash
holding gain of euro 9.5 million before minority interests was
recognized with respect to these swaps in the 2003 fourth quarter,
compared to a loss of euro 8.1 million in the year ago period. We
also entered into a currency forward contract in connection with
the Stendal Loan Facility in the 2003 third quarter on which we
recognized a non-cash holding gain of euro 0.2 million. We had also
entered into currency swaps to manage the exposure with respect to
an aggregate amount of approximately euro 192.2 million of the
principal long-term indebtedness of the Rosenthal mill and currency
forward contracts, as well as forward interest rate and interest
cap contracts in connection with a portion of the indebtedness
relating to the Rosenthal mill. For the fourth quarter of 2003, we
recognized a net gainof euro 10.1 million from the settlement of
these foreign currency derivatives and the valuation of the
interest rate derivatives of Rosenthal, versus a net gain of euro
12.6 million thereon in the year ago period. Minority interest for
the 2003 fourth quarter was a loss of euro 2.9 million,
representing the two minority shareholders' proportionate share in
the Stendal project. In the fourth quarter of 2002, minority
interest was a gain of euro 2.9 million. During the current period,
we recorded avaluation reserve of euro 3.0 million for potential
tax obligations and an asset write-down of euro 2.3 million
relating to the value of certain assets in which we have a non-
controlling interest as a result of Landqart's reorganization. Our
results for the current period included a pre-tax charge of euro
0.4 million for settlement expenses in respect of a proxy
solicitation and settlement agreement relating to our 2003 annual
meeting. We reported net income for the fourth quarter of 2003 of
euro 5.6 million, or euro 0.33 per diluted share, versus euro 1.1
million, or euro 0.07 per diluted share, a year ago. As the Stendal
project is currently under construction and because of its overall
size relative to our other facilities, management uses consolidated
operating results excluding items relating to the Stendal project
to measure the performance and results of our operating units.
Management believes this measure provides meaningful information on
the performance of its operating facilitiesfor a reporting period.
Upon commencement of commercial production, the Stendal project
will be evaluated with our other operating units. Excluding items
related to the Stendal project, we would have reported a net loss
for the 2003 fourth quarter ofeuro 1.2 million, or euro 0.07 per
diluted share, which was determined by subtracting the non-cash
holding gain on the interest rate swaps of euro 9.5 million and the
non-cash holding gain on the currency forward contract of euro 0.2
million from, and adding minority interest of euro 2.9 million to,
the reported net income of euro 5.6 million. This compares with net
income of euro 6.3 million, or euro 0.37 per diluted share, in the
fourth quarter of 2002, when items related to the Stendal project
areexcluded, which was determined by adding back the non-cash
holding loss on interest rate swaps of euro 8.1 million to, and
subtracting minority interest of euro 2.9 million from, the
reported net income of euro 1.1 million. Operating earnings before
depreciation and amortization ("Operating EBITDA") for the fourth
quarter of 2003 was euro 3.9 million, versus Operating EBITDA of
euro (0.3) million in the same period a year ago. 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 is not
an actual cash cost, and varies widely from company to company in a
manner that management considers largely independent of the
underlying cost efficiency of their operating facilities. Because
all companies do not calculate Operating EBITDA in the same manner,
Operating EBITDA as calculated by us may differ from Operating
EBITDA as calculated by other companies. 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. OperatingEBITDA 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. Results of Operations - 2003 Total
revenues for 2003 were euro 194.6 million, versus euro 239.1
million in 2002, primarily because the current period did not
include the revenues from the Landqart specialty paper mill. Pulp
and paper revenues were euro 182.5 million in 2003, versus euro
227.9 million in 2002. Pulp sales totaled euro 126.6 million in
2003, versus euro 130.2 million in 2002. List prices for NBSK pulp
in Europe increased to approximately euro 444 (US$560) per tonne at
the end of 2003 from approximately euro 440 (US$490) per tonne at
the end of 2002, which was largely offset by a 17% decline in the
value of the U.S. dollar against the Euro in 2003. Increased
production volumes due to enhanced operational efficiency lead to
higher pulp revenues. Pulp sales by volume increased to 303,655
tonnes in 2003 from 293,607 tonnes in 2002. Paper sales in 2003
were euro 55.9 million, compared to euro 97.7 million in 2002,
primarily as a result of the exclusion of the results from the
Landqart specialty paper mill. Sales of specialty papers in 2003
were euro 40.1 million, versus euro 79.4 million in 2002 and total
paper sales volumes were 62,018 tonnes in 2003 versus 84,922 tonnes
in 2002, reflecting the shift in product mix after the
deconsolidation of the Landqart mill. General and administrative
expenses in 2003 decreased to euro 19.3 million from euro 25.0
million in 2002, reflecting the exclusion of the results of the
Landqart mill and lower professional fees in the current period. We
reported a loss from operations of euro 4.5 million in 2003,
compared to a loss from operations of euro 1.1 million in 2002.
Interest expense (excluding capitalized interest of euro 17.4
million in respect of the Stendal project) in 2003 decreased to
euro 11.5 million from euro 13.8 million in 2002 because of lower
borrowing costs and lower indebtedness. In 2003, we recorded an
aggregate gain of euro 28.5 million as a result of the settlement
of currency swaps and currency forwards entered into by Rosenthal
and when Rosenthal's interest and interest cap derivatives were
marked to market at the end of the period. In 2002, we recorded a
net gain of euro 23.4 million on the foreign currency and interest
rate derivatives entered into by Rosenthal. In 2003, we recorded a
non-cash holding loss of approximately euro 13.0 million when the
Stendal interest rate swap agreements were marked to market at the
end of the period. The non-cash holding loss on such interest rate
swaps in 2002 was approximately euro 30.1 million. In 2003, we
recognized a non-cash holding gain of approximately euro 0.7
million in respect of the Stendal currency forward contract.
Minority interest for 2003 was euro 5.6 million, compared to euro
11.0 million in 2002, and represented the two minority
shareholders' proportionate share in the Stendal project. Our
results for 2003 include an adjustment of euro 5.6 million for the
non-cash aggregate pre-tax earnings impact of other-than-temporary
impairment losses on certain available-for-sale securities. This
adjustment was reported in other income (expense) in our
consolidated statement of operations. This adjustment did not
affect shareholders' equity since all of our available-for- sale
securities aremarked to market on a quarterly basis and all
unrealized gains or losses are reported through the statement of
comprehensive income in our financial statements and recorded in
other comprehensive income (loss) within shareholders' equity on
our balancesheet. These were legacy investments and unrelated to
our pulp and paper operations and were largely sold in December
2003. Our results for 2003 include a valuation reserve and asset
write-down aggregating euro 5.3 million and a one-time pre-tax
charge of approximately euro 1.0 million for settlement expenses in
respect of the previously mentioned proxy solicitation and
settlement agreement. We reported a net loss for 2003 of euro 3.6
million, or euro 0.21 per diluted share, versus a net loss of euro
6.3 million, or euro 0.38 per diluted share, in 2002. Excluding
items relating to the Stendal project, we would have reported net
income of euro 3.1 million, or euro 0.18 per diluted share, in
2003, which was determined by subtracting the non-cash holding gain
of euro 0.7 million on the currency forward contract and minority
interest of euro 5.6 million from, and adding the non-cash holding
loss of euro 13.0 million on the interest rate swaps to, the
reported net loss of euro 3.6 million. This compares with net
income of euro 12.8 million, or euro 0.76 per diluted share, in
2002, when items related to the Stendal project were excluded,
which was determined by adding back the non-cash holding loss on
the interest rate swaps of euro 30.1 millionto, and subtracting
minority interest of euro 11.0 million from, the reported net loss
of euro 6.3 million. Operating EBITDA in 2003 was euro 19.6
million, versus Operating EBITDA of euro 24.5 million in 2002.
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 is not an actual cash cost, and varies widely
from company to company in a manner that management considers
largely independent of the underlying cost-efficiency of their
operating facilities. 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. At December 31, 2003, our cash and cash equivalents were euro
52.0 million, compared to euro 30.3 million at the end of 2002. We
also had euro 15.2 million of cash restricted to pay construction
in progress costs payable and euro 19.1 million of cash restricted
in a debt service account, both related to the Stendal project. In
addition, we had euro 25.1 million of cash restricted in a debt
service account relating to the Rosenthal mill. At December 31,
2003, we recorded a working capital deficit of euro 48.9 million,
primarily because we pre-finance certain governmental grants which
we expect to receive under a dedicated tranche of our Stendal
credit facility but, under our accounting policies, do not record
these grants until they are received, as well as Stendal
construction in progress costs payable for which we had not drawn
down under the said credit facility. At the end of 2003, we had
applied for investment grants totaling approximately euro 74
million from the federal and state governments of Germany which we
expect to receive in 2004. These grants, when received, will be
applied to repay the amounts drawn under the dedicatedtranche of
the Stendal facility. The grants are not reported in our income and
reduce the cost basis of the assets purchased when they are
received. At the end of 2003, we had Stendal construction in
progress costs payable of euro 42.8 million which will be paid
pursuant to the Stendal credit facility. We expect to continue to
generate sufficient cash flow from operations to pay our interest
and debt service expenses and meet the working and maintenance
capital requirements for our current operations. We expect to meet
the capital requirements for the Stendal mill, including working
capital and potential losses during start up, through shareholder
advances already made to Stendal, the Stendal loan facility, which
includes a revolving line of credit for the mill, the receipt of
government grants and, when operational, cash flow from operations.
Stendal Project Status As of December 31, 2003, progress on the
Stendal project was substantially on schedule and on budget. The
Stendal project has advanced to an average stage of 92% completion.
Engineering is approximately 99% completed. Procurement and
equipment delivery is approximately 99% completed, and civil works
and mechanical assembly are approximately 93% and 70% completed,
respectively. President's Comments Mr. Jimmy S.H. Lee, President
and Chairman, stated, "Our results for the fourth quarter and all
of 2003 are reflective of the weakening of the U.S. dollar versus
the Euro, improving pulp demand and prices and soft conditions in
the markets for our paper products. Although pulp prices steadily
improved in 2003, such improvements were largely offset by the
weakening of the U.S. dollar which fell by approximately 17% versus
the Euro on a year over year basis. As result of the weakening of
the U.S. dollar, during the fourth quarter, we settled a number of
the foreign currency derivatives resulting in a gain of
approximately euro 10.1 million." Mr. Lee continued, "In early
2004, pulp prices have continued to improve both because of
improving demand and a weakening U.S. dollar." Mr. Lee further
stated, "As we enter 2004, we believe we are well positioned for
growth. Conditions in the pulp markets have continued to improve
and we are very pleased with the progress that we have made on the
Stendal pulp mill. The project is substantially on time and on
budget. We are very excited and are looking forward to the
completion of the project and bringing the 552,000 tonne Stendal
pulp mill into production in 2004." He added, "We have contracted
for substantially all of our fiber requirements for 2004 including
the anticipated requirements for the start and ramp up of the
Stendal pulp mill." He concluded, "When completed, the Stendal pulp
mill project will be a seminal event in the company's history,
acting as a major driver of organic growth for the next few years
and allowing us to leverage the unique market opportunity presented
to us by our proximity to customers in western Europe and the
emerging markets of central and eastern Europe." In conjunction
with this release, Mercer International will host a conference
call, which will be simultaneously broadcast live over the
Internet. Management will host the call, which is scheduled for
Monday, March 3, 2004 at 10:00AM EST. Listeners can access the
conference call live and archived over the Internet through a link
at the company's web site at http://www.mercerinternational.com/,
or at
http://www.firstcallevents.com/service/ajwz401256693gf12.html.
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 March 8, 2004 at 11:59 p.m. (Eastern Standard Time).
Thereplay number is (800) 642-1687, and the passcode is 5781803.
Mercer International Inc. is a European pulp and paper
manufacturing company. To obtain further information on the
company, please visit its web site at
http://www.mercerinternational.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.
MERCER INTERNATIONAL INC. CONSOLIDATEDBALANCE SHEETS AS OF DECEMBER
31, 2003 AND 2002 (Euros in thousands) December 31, December 31,
2003 2002 ASSETS Current Assets Cash and cash equivalents euro
51,993 euro 30,261 Cash restricted 15,187 9,459 Investments 6 307
Receivables 32,285 28,132 Cumulative derivative gains 743 3,792
Inventories 23,909 16,375 Prepaid expenses 4,278 7,891 Total
current assets 128,401 96,217 Long-Term Assets Cash restricted
44,180 38,795 Property,plant and equipment 745,178 441,990
Investments 1,644 5,592 Equity method investments 2,309 7,019
Deferred note issuance charges 4,213 - Deferred income tax 9,980
10,137 807,504 503,533 Total assets euro 935,905 euro 599,750
LIABILITIES Current Liabilities Accounts payable and accrued
expenses euro 37,414 euro 32,866 Construction in progress costs
payable 42,756 24,885 Note payable 1,377 832 Note payable,
construction in progress -- 15,000 Debt, construct in progress
80,000 -- Debt, current portion 15,801 16,306 Total current
liabilities 177,348 89,889 Long-Term Liabilities Debt, construction
in progress 324,238 146,485 Debt, less current portion 255,901
205,393 Derivative financial instruments, construction in progress
43,151 30,108 Capital leases and other 2,412 2,906 625,702 384,892
Total liabilities 803,050 474,781 Minority Interest -- --
SHAREHOLDERS' EQUITY Shares of beneficial interest 78,139 76,995
Additional paid-in capital, stock options 223 -- Retained earnings
49,196 52,789 Accumulated other comprehensive income (loss) 5,297
(4,815) Total shareholders' equity 132,855 124,969 Total
liabilities and shareholders' equity euro 935,905 euro 599,750
MERCER INTERNATIONAL INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND
RETAINED EARNINGS For the Years Ended December 31, 2003 and 2002
(Euros in thousands, except per share data) 2003 2002 Revenues Pulp
and paper euro 182,456 euro 227,883 Transportation 3,607 4,953
Other 8,493 6,296 194,556 239,132 Cost of sales Pulp and paper
176,655 208,454 Transportation 3,035 5,009 Gross profit 14,866
25,669 General and administrative expenses 19,323 24,979 Settlement
expenses 1,041 -- Flooding grants, less losses and expenses (957)
1,835 (Loss) income from operations (4,541) (1,145) Other income
(expense) Interest expense (11,523) (13,753) Investment income
1,653 436 Derivative financial instruments Unrealized loss,
construction in progress financing (13,042) (30,108) Realized gain,
construction in progress financing 743 -- Net gains (losses), other
28,467 23,429 Impairment of equity method investment (2,255) --
Impairment of available-for-sale securities (5,570) -- Other --
3,590 Total other expense (1,527) (16,406) Loss before income taxes
and minority interest (6,068) (17,551) Income tax (provision)
benefit (3,172) 264 Loss before minority interest (9,240) (17,287)
Minority interest 5,647 10,965 Net loss (3,593) (6,322) Retained
earnings, beginning of period 52,789 59,111 Retained earnings, end
of period euro 49,196 euro 52,789 Loss per share Basic euro (0.21)
euro (0.38) Diluted euro (0.21) euro (0.38) Weighted average number
of shares outstanding Basic 16,940,858 16,774,515 Diluted
16,940,858 16,774,515 MERCER INTERNATIONAL INC. RECONCILIATION OF
PRO FORMA RESULTS For the Quarter and Year Ended December 31, 2003
and 2002 (Euros in thousands, except per share data) For the
Quarter For the Quarter Ended Ended December 31, 2003 December 31,
2002 (unaudited) Net income reported under GAAP euro 5,580 euro
1,119 Adjustments for: (Gain) loss on interest rate swap contracts,
Stendal project (9,483) 8,097 Gain on currency forward contract,
Stendal project (157) -- Minority interest 2,852 (2,949) Pro forma
net income euro (1,208) euro 6,267 Pro forma income per share Basic
euro (0.07) euro 0.37 Diluted euro (0.07) euro 0.37 For the Year
For the Year Ended Ended December 31, 2003 December 31, 2002 Net
loss reported under GAAP euro (3,593) euro (6,322) Adjustments for:
Loss on interest rate swap contracts, Stendal project 13,042 30,108
Gain on currency forward contract, Stendal project (743) --
Minority interest (5,647) (10,965) Pro forma net income euro 3,059
euro 12,821 Pro forma income per share Basic euro 0.18 euro 0.76
Diluted euro 0.18 euro 0.76 MERCER INTERNATIONAL INC. COMPUTATION
OF OPERATING EBITDA For the Quarter and Year Ended December 31,
2003 and 2002 (Euros in thousands, except per share data) For the
Quarter For the Quarter Ended Ended December 31, 2003 December 31,
2002 (unaudited) Net income, per income statement euro 5,580 euro
1,119 Add (less): Minority interest 2,852 (2,949) Income taxes
(recovery) 2,946 (275) Other income (13,399) (3,558) Loss from
operations (2,021) (5,663) Add: depreciation and amortization 5,970
5,383 Operating EBITDA(1) euro 3,949 euro (280) For the Year For
the Year Ended Ended December 31, 2003 December 31, 2002 Net loss,
per income statement euro (3,593) euro (6,322) Add (less): Minority
interest (5,647) (10,965) Income taxes (recovery) 3,172 (264) Other
expense 1,527 16,406 (Loss) income from operations (4,541) (1,145)
Add: depreciation and amortization 24,105 25,614 Operating
EBITDA(1) euro 19,564 euro 24,469 (1) Operating EBITDA does not
reflect the impact of a number of items that affect the Company's
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 the
Company's results as reported under GAAP. MERCER INTERNATIONAL INC.
COMPANY SALES BY PRODUCT CLASS, GEOGRAPHIC AREA AND VOLUME
(Unaudited) Year Ended December 31, 2003 2002 (Euros in thousands)
Sales by Product Class Pulp(1) euro 126,594 euro 130,173 Specialty
Papers(2) 40,082 79,358 Printing Papers 15,780 18,352 Total(1) euro
182,456 euro 227,883 Sales by Geographic Area Germany euro 80,306
euro 88,808 Italy 46,609 46,027 European Union(3) 29,936 31,631
Eastern Europe and Other 25,605 61,416 Total(1) euro 182,456 euro
227,882 (Amount in tonnes) Sales by Volume Pulp(1) 303,655 293,607
Specialty Papers(2) 40,621 61,727 Printing Papers 21,397 23,195
Total(1) 365,673 378,529 (1) Excluding intercompany sales of 5,527
and 10,768 tonnes of pulp and intercompany net sales revenues of
approximately euro 2.3 million and euro 4.9 million in the years
ended December 31, 2003 and 2002, respectively. (2) As of December
31, 2002, the Company's interest in Landqart AG is no longer
consolidated and is included in the Company's results on an equity
basis. Accordingly, sales from the Landqart specialty paper mill
are not included in the Company's results for the year ended
December 31, 2003, but are included for the year ended December 31,
2002. The Landqart specialty paper mill sold approximately 18,222
tonnes for approximately euro 39.7 million in the year ended
December 31, 2002. (3) Not including Germany or Italy. NOTE: One
tonne = 1.0160 of one ton. MERCER INTERNATIONAL INC. COMPANY SALES
BY PRODUCT CLASS AND VOLUME (Unaudited) Quarter Ended December 31,
2003 2002 (Euros in thousands) Sales by Product Class Pulp(1) euro
34,176 euro 31,211 Specialty Papers(2) 9,897 18,542 Printing Papers
3,448 3,841 Total(1) euro 47,521 euro 53,594 (Amount in tonnes)
Sales by Volume Pulp(1) 81,729 76,052 Specialty Papers(2) 10,201
14,592 Printing Papers 4,829 5,273 Total(1) 96,759 95,917 (1)
Excluding intercompany sales of 361 and 2,240 tonnes of pulp and
intercompany net sales revenues of approximately euro 0.1 million
and euro 1.0 million in the three months ended December 31, 2003
and 2002, respectively. (2) As of December 31, 2002, the Company's
interest in Landqart AG is no longer consolidated and is included
in the Company's results on an equity basis. Accordingly, sales
from the Landqart specialty paper mill are not included in the
Company's results for the fourth quarter of 2003, but are included
for the fourth quarter of 2002. The Landqart specialty paper mill
sold approximately 4,625 tonnes for approximately euro 9.3 million
in the three months ended December 31, 2002. NOTE: One tonne =
1.0160 of one ton. DATASOURCE: Mercer International Inc. CONTACT:
Jimmy S.H. Lee, Chairman & President of Mercer International
Inc., +41-43-344-7070; Investors: Eric Boyriven or Kellie Nugent,
or Media: David Schemelia, all of Financial Dynamics, all at
+1-212-850-5600 Web site: http://www.mercerinternational.com/
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