##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File No.: 000-51826
 MERCER INTERNATIONAL INC.
 (Exact name of Registrant as specified in its charter)
 Washington
    
    47-0956945(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)
 Suite 2840, 650 West Georgia Street, Vancouver, British Columbia, Canada, V6B 4N8  (Address of office)
 (604) 684-1099  (Registrants telephone number, including area code)
 Securities Exchange Act of 1934 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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TABLE OF CONTENTS  PART I. FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 4. CONTROLS AND PROCEDURESPART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGSITEM 1A. RISK FACTORSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERSITEM 6. EXHIBITSSIGNATURESSection 302 - CEO CertificationSection 302 - CFO CertificationSection 906 - CEO CertificationSection 906 - CFO Certification    Table of Contents  
 PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 MERCER INTERNATIONAL INC.
 INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE SIX MONTHS ENDED JUNE 30, 2008
 (Unaudited)




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##### Table of Contents



MERCER INTERNATIONAL INC.
 INTERIM CONSOLIDATED BALANCE SHEETS
 (Unaudited)
(In thousands of Euros)
 June 30,
    
    
    December 31,2008
    
    
    2007ASSETSCurrent assetsCash and cash equivalents
    
    
    83,295
    
    
    
    84,848Receivables
    
    
    98,181
    
    
    
    89,890Note receivable, current portion
    
    
    557
    
    
    
    5,896Inventories (Note 4)
    
    
    106,360
    
    
    
    103,610Prepaid expenses and other
    
    
    6,485
    
    
    
    6,015Total current assets
    
    
    294,878
    
    
    
    290,259Long-term assetsCash, restricted
    
    
    33,000
    
    
    
    33,000Property, plant and equipment
    
    
    897,377
    
    
    
    933,258Investments
    
    
    778
    
    
    
    96Deferred note issuance and other costs
    
    
    4,640
    
    
    
    5,303Deferred income tax
    
    
    12,202
    
    
    
    17,624Note receivable, less current portion
    
    
    3,406
    
    
    
    3,977951,403
    
    
    
    993,258Total assets
    
    
    1,246,281
    
    
    
    1,283,517LIABILITIESCurrent liabilitiesAccounts payable and accrued expenses
    
    
    89,914
    
    
    
    87,000Pension and other post-retirement benefit obligations,
current portion
    
    
    438
    
    
    
    493Debt, current portion
    
    
    35,042
    
    
    
    34,023Total current liabilities
    
    
    125,394
    
    
    
    121,516Long-term liabilitiesDebt, less current portion
    
    
    786,988
    
    
    
    815,832Unrealized interest rate derivative losses
    
    
    9,155
    
    
    
    21,885Pension and other post-retirement benefit obligations (Note 6)
    
    
    17,450
    
    
    
    19,983Capital leases and other
    
    
    11,534
    
    
    
    8,999Deferred income tax
    
    
    22,361
    
    
    
    18,640847,488
    
    
    
    885,339Total liabilities
    
    
    972,882
    
    
    
    1,006,855SHAREHOLDERS EQUITYShare capital (Note 7)
    
    
    203,600
    
    
    
    202,844Additional paid-in capital
    
    
    445
    
    
    
    134Retained earnings
    
    
    41,159
    
    
    
    37,419Accumulated other comprehensive income
    
    
    28,195
    
    
    
    36,265Total shareholders equity
    
    
    273,399
    
    
    
    276,662Total liabilities and shareholders equity
    
    
    1,246,281
    
    
    
    1,283,517
 The accompanying notes are an integral part of these interim consolidated financial statements.




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##### Table of Contents



MERCER INTERNATIONAL INC.
 INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
(In thousands of Euros, except per share data)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues
    
    
    170,585
    
    
    
    176,603
    
    
    
    349,686
    
    
    
    346,134Costs and expensesOperating costs
    
    
    142,902
    
    
    
    143,658
    
    
    
    282,343
    
    
    
    278,302Operating depreciation and amortization
    
    
    13,514
    
    
    
    13,990
    
    
    
    27,635
    
    
    
    27,71914,169
    
    
    
    18,995
    
    
    
    39,708
    
    
    
    40,113Selling, general and administrative expenses
    
    
    7,953
    
    
    
    8,051
    
    
    
    14,849
    
    
    
    15,459(Sale) purchase of emission allowances
    
    
    
    
    
    
    (39
    )
    
    
    
    
    
    
    (766
    )Operating income from continuing operations
    
    
    6,216
    
    
    
    10,943
    
    
    
    24,859
    
    
    
    25,420Other income (expense)Interest expense
    
    
    (16,013
    )
    
    
    (17,641
    )
    
    
    (32,633
    )
    
    
    (37,709
    )Investment income
    
    
    1,421
    
    
    
    1,584
    
    
    
    1,731
    
    
    
    3,195Foreign exchange gain on debt
    
    
    238
    
    
    
    1,349
    
    
    
    6,269
    
    
    
    2,603Realized gain on derivative instruments (Note 5)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,820Unrealized gain on derivative instruments (Note 5)
    
    
    20,580
    
    
    
    18,100
    
    
    
    12,730
    
    
    
    17,852Total other income (expense)
    
    
    6,226
    
    
    
    3,392
    
    
    
    (11,903
    )
    
    
    (7,239
    )Income before income taxes and minority interest
from continuing operations
    
    
    12,442
    
    
    
    14,335
    
    
    
    12,956
    
    
    
    18,181Income tax benefit (provision)  current
    
    
    (213
    )
    
    
    (384
    )
    
    
    163
    
    
    
    (733
    ) deferred
    
    
    (7,922
    )
    
    
    (9,520
    )
    
    
    (9,126
    )
    
    
    (12,972
    )Income before minority interest from continuing operations
    
    
    4,307
    
    
    
    4,431
    
    
    
    3,993
    
    
    
    4,476Minority interest
    
    
    (3,436
    )
    
    
    (1,091
    )
    
    
    (253
    )
    
    
    (43
    )Net income from continuing operations
    
    
    871
    
    
    
    3,340
    
    
    
    3,740
    
    
    
    4,433Net loss from discontinued operations
    
    
    
    
    
    
    (181
    )
    
    
    
    
    
    
    (188
    )Net income
    
    
    871
    
    
    
    3,159
    
    
    
    3,740
    
    
    
    4,245Retained earnings, beginning of period
    
    
    40,288
    
    
    
    16,326
    
    
    
    37,419
    
    
    
    15,240Retained earnings, end of period
    
    
    41,159
    
    
    
    19,485
    
    
    
    41,159
    
    
    
    19,485Net income from continuing operations per share (Note 3):Basic and diluted
    
    
    0.02
    
    
    
    0.09
    
    
    
    0.10
    
    
    
    0.12Net income per share:Basic and diluted
    
    
    0.02
    
    
    
    0.09
    
    
    
    0.10
    
    
    
    0.12
 The accompanying notes are an integral part of these interim consolidated financial statements.




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MERCER INTERNATIONAL INC.
 INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
 (Unaudited)
(In thousands of Euros)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    
    871
    
    
    
    3,159
    
    
    
    3,740
    
    
    
    4,245Other comprehensive income:Foreign currency translation adjustment
    
    
    2,056
    
    
    
    16,350
    
    
    
    (8,048
    )
    
    
    18,254Unrealized
(losses) gains on securities arising during the period
    
    
    3
    
    
    
    85
    
    
    
    (22
    )
    
    
    87Other comprehensive (loss) income
    
    
    2,059
    
    
    
    16,435
    
    
    
    (8,070
    )
    
    
    18,341Total comprehensive (loss) income
    
    
    2,930
    
    
    
    19,594
    
    
    
    (4,330
    )
    
    
    22,586
 The accompanying notes are an integral part of these interim consolidated financial statements.




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##### Table of Contents



MERCER INTERNATIONAL INC.
 INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
(In thousands of Euros)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Cash flows from (used in) operating activities:Net income
    
    
    871
    
    
    
    3,159
    
    
    
    3,740
    
    
    
    4,245Adjustments
to reconcile net income to cash flows from operating activitiesUnrealized gains on derivatives
    
    
    (20,580
    )
    
    
    (18,100
    )
    
    
    (12,730
    )
    
    
    (17,852
    )Unrealized foreign exchange gain on debt
    
    
    (238
    )
    
    
    (1,349
    )
    
    
    (6,269
    )
    
    
    (2,603
    )Loss (gain) on sale of assets
    
    
    64
    
    
    
    69
    
    
    
    (958
    )
    
    
    (23
    )Operating depreciation and amortization
    
    
    13,514
    
    
    
    13,990
    
    
    
    27,635
    
    
    
    27,719Non-operating amortization
    
    
    70
    
    
    
    65
    
    
    
    141
    
    
    
    128Minority interest
    
    
    3,436
    
    
    
    1,091
    
    
    
    253
    
    
    
    43Deferred income taxes
    
    
    7,922
    
    
    
    9,520
    
    
    
    9,126
    
    
    
    12,972Stock compensation expense
    
    
    207
    
    
    
    (37
    )
    
    
    355
    
    
    
    196Pension and other post-retirement expense
    
    
    491
    
    
    
    506
    
    
    
    1,006
    
    
    
    955Pension and other post-retirement benefit funding
    
    
    (676
    )
    
    
    (443
    )
    
    
    (1,125
    )
    
    
    (833
    )Other
    
    
    (427
    )
    
    
    646
    
    
    
    (486
    )
    
    
    947Changes in current assets and liabilitiesReceivables
    
    
    (6,845
    )
    
    
    (4,989
    )
    
    
    (10,678
    )
    
    
    (26,721
    )Inventories
    
    
    (8,389
    )
    
    
    (9,720
    )
    
    
    (7,683
    )
    
    
    (29,670
    )Accounts payable and accrued expenses
    
    
    17,181
    
    
    
    8,958
    
    
    
    5,801
    
    
    
    15,129Other
    
    
    (796
    )
    
    
    147
    
    
    
    1,301
    
    
    
    1,280Net cash from (used in) operating activities
    
    
    5,805
    
    
    
    3,513
    
    
    
    9,429
    
    
    
    (14,088
    )Cash flows from (used in) investing activities:Purchase of property, plant and equipment
    
    
    (4,859
    )
    
    
    (4,512
    )
    
    
    (7,861
    )
    
    
    (10,537
    )Proceeds on sale of property, plant and equipment
    
    
    653
    
    
    
    417
    
    
    
    1,613
    
    
    
    527Cash restricted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,000Notes receivable
    
    
    5,303
    
    
    
    4,463
    
    
    
    5,303
    
    
    
    4,731Net cash from (used in) investing activities
    
    
    1,097
    
    
    
    368
    
    
    
    (945
    )
    
    
    6,721Cash flows from (used in) financing activities:Repayment of notes payable and debt
    
    
    
    
    
    
    (1,232
    )
    
    
    (16,891
    )
    
    
    (13,453
    )Repayment of capital lease obligations
    
    
    (194
    )
    
    
    (1,392
    )
    
    
    (832
    )
    
    
    (2,576
    )Decrease in construction costs payable
    
    
    
    
    
    
    907
    
    
    
    
    
    
    
    Proceeds from borrowings of notes payable and debt
    
    
    8,431
    
    
    
    
    
    
    
    8,431
    
    
    
    Issuance of common shares
    
    
    
    
    
    
    59
    
    
    
    
    
    
    
    305Net cash from (used in) financing activities
    
    
    8,237
    
    
    
    (1,658
    )
    
    
    (9,292
    )
    
    
    (15,724
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (1,579
    )
    
    
    1,206
    
    
    
    (745
    )
    
    
    2,171Net decrease in cash and cash equivalents
    
    
    13,560
    
    
    
    3,429
    
    
    
    (1,553
    )
    
    
    (20,920
    )Cash and cash equivalents, beginning of period(1)
    
    
    69,735
    
    
    
    45,455
    
    
    
    84,848
    
    
    
    69,804Cash and cash equivalents, end of period(2)
    
    
    83,295
    
    
    
    48,884
    
    
    
    83,295
    
    
    
    48,884
 
 (1)
    
    Includes amounts related to discontinued operations of: 2008   nil (2007   437)(2)
    
    Includes amounts related to discontinued operations of: 2008   nil (2007   582) The accompanying notes are an integral part of these interim consolidated financial statements.




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##### Table of Contents



MERCER INTERNATIONAL INC.
 INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
 (Unaudited)
(In thousands of Euros)
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2008
    
    2007
    
    2008
    
    2007Supplemental disclosure of cash flow information:Cash paid (received) during the period for:Interest
    
    
    4,280
    
    
    
    7,230
    
    
    
    30,766
    
    
    
    17,624Income taxes
    
    
    (332
    )
    
    
    
    
    
    
    (318
    )
    
    
    615Supplemental schedule of non-cash investing and financing activities:Acquisition of production and other equipment under capital lease
obligations
    
    
    977
    
    
    
    196
    
    
    
    3,699
    
    
    
    2,215Common shares issued in satisfaction of floating rate note
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,728
 The accompanying notes are an integral part of these interim consolidated financial statements.




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##### Table of Contents



MERCER INTERNATIONAL INC.
 NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
(In thousands of Euros, except per share data)
 Note 1. Basis of Presentation
     New Accounting Standards
 The Fair Value Option for Financial Assets and Financial Liabilities




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##### Table of Contents



MERCER INTERNATIONAL INC.
 NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands of Euros, except per share data)
 Note 1. Basis of Presentation (contd)
 Disclosures
about Derivative Instruments and Hedging Activities
 The Hierarchy of
Generally Accepted Accounting Principles The Meaning of Present
Fairly in Conformity With Generally Accepted Accounting Principles
 Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Settlement)




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MERCER INTERNATIONAL INC.
 NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands of Euros, except per share data)
 Note 2. Stock-Based Compensation
  Stock Options
  Outstanding Options
    
    Exercisable OptionsWeightedAverage
    
    Weighted
    
    
    
    
    
    WeightedExercise
    
    
    
    
    
    Remaining
    
    Average
    
    
    
    
    
    AveragePrice Range
    
    Number
    
    Contractual Life
    
    Exercise price
    
    Number
    
    Exercise Price0(In U.S. Dollars)
    
    
    
    
    
    (Years)
    
    (In U.S. Dollars)
    
    
    
    
    
    (In U.S. Dollars)$5.65  - 6.375
    
    
    830,000
    
    
    
    2.00
    
    
    $
    6.29
    
    
    
    830,000
    
    
    $
    6.297.30
    
    
    30,000
    
    
    
    7.00
    
    
    
    7.30
    
    
    
    30,000
    
    
    
    7.307.92
    
    
    68,334
    
    
    
    7.25
    
    
    
    7.92
    
    
    
    68,334
    
    
    
    7.92




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MERCER INTERNATIONAL INC.
 NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands of Euros, except per share data)
 Note 2. Stock-Based Compensation (continued)
 Restricted Stock
    
 
   Performance Stock
  
 




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##### Table of Contents



MERCER INTERNATIONAL INC.
 NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands of Euros, except per share data)
 Note 3. Income Per Share
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income from continuing operations  basic and diluted
    
    
    871
    
    
    
    3,340
    
    
    
    3,740
    
    
    
    4,433Net income from continuing operations per share:Basic and diluted
    
    
    0.02
    
    
    
    0.09
    
    
    
    0.10
    
    
    
    0.12Net income from continuing operations
    
    
    871
    
    
    
    3,340
    
    
    
    3,740
    
    
    
    4,433Net loss from discontinued operations
    
    
    
    
    
    
    (181
    )
    
    
    
    
    
    
    (188
    )Net income  basic and diluted
    
    
    871
    
    
    
    3,159
    
    
    
    3,740
    
    
    
    4,245Net income per share:Basic and diluted
    
    
    0.02
    
    
    
    0.09
    
    
    
    0.10
    
    
    
    0.12Weighted average number of common shares outstanding:Basic
    
    
    36,405,641
    
    
    
    36,256,472
    
    
    
    36,371,569
    
    
    
    35,873,800Effect of dilutive instruments:Stock options and awards
    
    
    131,817
    
    
    
    437,715
    
    
    
    141,689
    
    
    
    465,146Diluted
    
    
    36,537,458
    
    
    
    36,694,187
    
    
    
    36,513,258
    
    
    
    36,338,946




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##### Table of Contents



MERCER INTERNATIONAL INC.
 NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands of Euros, except per share data)
 Note 4. Inventories
 June 30, 2008
    
    
    December 31, 2007Raw materials
    
    
    30,813
    
    
    
    38,045Finished goods
    
    
    52,164
    
    
    
    43,127Work in process and other
    
    
    23,383
    
    
    
    22,438
    106,360
    
    
    
    103,610
 Note 5. Derivatives Transactions
 Three Months Ended June 30,2008
    
    
    2007Realized net gain on foreign exchange derivatives
    
    
    
    
    
    
    Unrealized net gain on interest rate derivatives
    
    
    20,580
    
    
    
    18,100Unrealized net loss on foreign exchange derivatives
    
    
    
    
    
    
    Unrealized net gain on derivative financial instruments
    
    
    20,580
    
    
    
    18,100
 Six Months Ended June 30,2008
    
    
    2007Realized net gain on foreign exchange derivatives
    
    
    
    
    
    
    6,820Unrealized net gain on interest rate derivatives
    
    
    12,730
    
    
    
    23,786Unrealized net loss on foreign exchange derivatives
    
    
    
    
    
    
    (5,934
    )Unrealized net gain on derivative financial instruments
    
    
    12,730
    
    
    
    17,852




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##### Table of Contents



MERCER INTERNATIONAL INC.
 NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands of Euros, except per share data)
 Note 6. Pension and Other Post-Retirement Benefit Obligations
     
 
 Three Months Ended June 30,2008
    
    
    2007Post-
    
    
    
    
    
    
    Post-Pension
    
    
    Retirement
    
    
    Pension
    
    
    RetirementBenefits
    
    
    Benefits
    
    
    Benefits
    
    
    BenefitsService cost
    
    
    195
    
    
    
    124
    
    
    
    209
    
    
    
    117Interest cost
    
    
    335
    
    
    
    198
    
    
    
    339
    
    
    
    184Expected return on plan assets
    
    
    (381
    )
    
    
    
    
    
    
    (415
    )
    
    
    Recognized net loss
    
    
    
    
    
    
    20
    
    
    
    
    
    
    
    16Net periodic benefit cost
    
    
    149
    
    
    
    342
    
    
    
    133
    
    
    
    317
 Six Months Ended June 30,2008
    
    
    2007Post-
    
    
    
    
    
    
    Post-Pension
    
    
    Retirement
    
    
    Pension
    
    
    RetirementBenefits
    
    
    Benefits
    
    
    Benefits
    
    
    BenefitsService cost
    
    
    399
    
    
    
    254
    
    
    
    410
    
    
    
    230Interest cost
    
    
    686
    
    
    
    405
    
    
    
    666
    
    
    
    362Expected return on plan assets
    
    
    (780
    )
    
    
    
    
    
    
    (815
    )
    
    
    Recognized net loss
    
    
    
    
    
    
    42
    
    
    
    
    
    
    
    31Net periodic benefit cost
    
    
    305
    
    
    
    701
    
    
    
    261
    
    
    
    623




---



##### Table of Contents



MERCER INTERNATIONAL INC.
 NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands of Euros, except per share data)
 Note 7. Share Capital
 Authorized
    Issued and Outstanding




---



##### Table of Contents



MERCER INTERNATIONAL INC.
 NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands of Euros, except per share data)
 Note 8. Restricted Group Supplemental Disclosure
  Combined Condensed Balance Sheet
 June 30, 2008Restricted
    
    
    Unrestricted
    
    
    
    
    
    
    ConsolidatedGroup
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    GroupASSETSCurrentCash and cash equivalents
    
    
    70,151
    
    
    
    13,144
    
    
    
    
    
    
    
    83,295Receivables
    
    
    47,978
    
    
    
    50,203
    
    
    
    
    
    
    
    98,181Note receivable, current portion
    
    
    557
    
    
    
    
    
    
    
    
    
    
    
    557Inventories
    
    
    64,451
    
    
    
    41,909
    
    
    
    
    
    
    
    106,360Prepaid expenses and other
    
    
    4,612
    
    
    
    1,873
    
    
    
    
    
    
    
    6,485Total current assets
    
    
    187,749
    
    
    
    107,129
    
    
    
    
    
    
    
    294,878Cash, restricted
    
    
    
    
    
    
    33,000
    
    
    
    
    
    
    
    33,000Property, plant and equipment
    
    
    358,250
    
    
    
    539,127
    
    
    
    
    
    
    
    897,377Other
    
    
    5,414
    
    
    
    4
    
    
    
    
    
    
    
    5,418Deferred income tax
    
    
    9,122
    
    
    
    3,080
    
    
    
    
    
    
    
    12,202Due from unrestricted group
    
    
    53,993
    
    
    
    
    
    
    
    (53,993
    )
    
    
    Note receivable, less current portion
    
    
    3,406
    
    
    
    
    
    
    
    
    
    
    
    3,406Total assets
    
    
    617,934
    
    
    
    682,340
    
    
    
    (53,993
    )
    
    
    1,246,281LIABILITIESCurrentAccounts payable and accrued expenses
    
    
    49,922
    
    
    
    39,992
    
    
    
    
    
    
    
    89,914Pension and other post-retirement
benefit obligations, current portion
    
    
    438
    
    
    
    
    
    
    
    
    
    
    
    438Debt, current portion
    
    
    
    
    
    
    35,042
    
    
    
    
    
    
    
    35,042Total current liabilities
    
    
    50,360
    
    
    
    75,034
    
    
    
    
    
    
    
    125,394Debt, less current portion
    
    
    261,376
    
    
    
    525,612
    
    
    
    
    
    
    
    786,988Due to restricted group
    
    
    
    
    
    
    53,993
    
    
    
    (53,993
    )
    
    
    Unrealized derivative loss
    
    
    
    
    
    
    9,155
    
    
    
    
    
    
    
    9,155Pension and other post-retirement
benefit obligations
    
    
    17,450
    
    
    
    
    
    
    
    
    
    
    
    17,450Capital leases and other
    
    
    7,063
    
    
    
    4,471
    
    
    
    
    
    
    
    11,534Deferred income tax
    
    
    6,374
    
    
    
    15,987
    
    
    
    
    
    
    
    22,361Total liabilities
    
    
    342,623
    
    
    
    684,252
    
    
    
    (53,993
    )
    
    
    972,882SHAREHOLDERS EQUITYTotal shareholders equity (deficit)
    
    
    275,311
    
    
    
    (1,912
    )
    
    
    
    
    
    
    273,399Total liabilities and shareholders equity
    
    
    617,934
    
    
    
    682,340
    
    
    
    (53,993
    )
    
    
    1,246,281




---



##### Table of Contents



MERCER INTERNATIONAL INC.
 NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands of Euros, except per share data)
 Note 8. Restricted Group Supplemental Disclosure (continued)
 Combined Condensed Balance Sheet
 December 31, 2007Restricted
    
    
    Unrestricted
    
    
    
    
    
    
    ConsolidatedGroup
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    GroupASSETSCurrentCash and cash equivalents
    
    
    59,371
    
    
    
    25,477
    
    
    
    
    
    
    
    84,848Receivables
    
    
    37,482
    
    
    
    52,408
    
    
    
    
    
    
    
    89,890Note receivable, current portion
    
    
    589
    
    
    
    5,307
    
    
    
    
    
    
    
    5,896Inventories
    
    
    63,444
    
    
    
    40,166
    
    
    
    
    
    
    
    103,610Prepaid expenses and other
    
    
    3,714
    
    
    
    2,301
    
    
    
    
    
    
    
    6,015Total current assets
    
    
    164,600
    
    
    
    125,659
    
    
    
    
    
    
    
    290,259Cash, restricted
    
    
    
    
    
    
    33,000
    
    
    
    
    
    
    
    33,000Property, plant and equipment
    
    
    385,569
    
    
    
    547,689
    
    
    
    
    
    
    
    933,258Other
    
    
    5,399
    
    
    
    
    
    
    
    
    
    
    
    5,399Deferred income tax
    
    
    10,852
    
    
    
    6,772
    
    
    
    
    
    
    
    17,624Due from unrestricted group
    
    
    57,457
    
    
    
    
    
    
    
    (57,457
    )
    
    
    Note receivable, less current portion
    
    
    3,977
    
    
    
    
    
    
    
    
    
    
    
    3,977Total assets
    
    
    627,854
    
    
    
    713,120
    
    
    
    (57,457
    )
    
    
    1,283,517LIABILITIESCurrentAccounts payable and accrued expenses
    
    
    43,621
    
    
    
    43,379
    
    
    
    
    
    
    
    87,000Pension and other post-retirement
benefit obligations, current portion
    
    
    493
    
    
    
    
    
    
    
    
    
    
    
    493Debt, current portion
    
    
    
    
    
    
    34,023
    
    
    
    
    
    
    
    34,023Total current liabilities
    
    
    44,114
    
    
    
    77,402
    
    
    
    
    
    
    
    121,516Debt, less current portion
    
    
    273,589
    
    
    
    542,243
    
    
    
    
    
    
    
    815,832Due to restricted group
    
    
    
    
    
    
    57,457
    
    
    
    (57,457
    )
    
    
    Unrealized derivative loss
    
    
    
    
    
    
    21,885
    
    
    
    
    
    
    
    21,885Pension and other post-retirement
benefit obligations
    
    
    19,983
    
    
    
    
    
    
    
    
    
    
    
    19,983Capital leases and other
    
    
    7,033
    
    
    
    1,966
    
    
    
    
    
    
    
    8,999Deferred income tax
    
    
    4,553
    
    
    
    14,087
    
    
    
    
    
    
    
    18,640Total liabilities
    
    
    349,272
    
    
    
    715,040
    
    
    
    (57,457
    )
    
    
    1,006,855SHAREHOLDERS EQUITYTotal shareholders equity (deficit)
    
    
    278,582
    
    
    
    (1,920
    )
    
    
    
    
    
    
    276,662Total liabilities and shareholders equity
    
    
    627,854
    
    
    
    713,120
    
    
    
    (57,457
    )
    
    
    1,283,517




---



##### Table of Contents



MERCER INTERNATIONAL INC.
 NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands of Euros, except per share data)
 Note 8. Restricted Group Supplemental Disclosure (continued)
 Combined Condensed Statements of Operations
 Three Months Ended June 30, 2008Restricted
    
    
    Unrestricted
    
    
    
    
    
    
    ConsolidatedGroup
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    GroupRevenues
    
    
    97,694
    
    
    
    72,891
    
    
    
    
    
    
    
    170,585Operating costs
    
    
    87,938
    
    
    
    54,964
    
    
    
    
    
    
    
    142,902Operating depreciation and amortization
    
    
    6,774
    
    
    
    6,740
    
    
    
    
    
    
    
    13,514Selling, general and administrative expenses
    
    
    4,865
    
    
    
    3,088
    
    
    
    
    
    
    
    7,953(Sale) purchase of emission allowances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99,577
    
    
    
    64,792
    
    
    
    
    
    
    
    164,369Operating income (loss) from continuing operations
    
    
    (1,883
    )
    
    
    8,099
    
    
    
    
    
    
    
    6,216Other income (expense)Interest expense
    
    
    (4,440
    )
    
    
    (10,614
    )
    
    
    (959
    )
    
    
    (16,013
    )Investment income (expense)
    
    
    (373
    )
    
    
    835
    
    
    
    959
    
    
    
    1,421Foreign exchange gain (loss) on debt
    
    
    (248
    )
    
    
    486
    
    
    
    
    
    
    
    238Derivative financial instruments
    
    
    
    
    
    
    20,580
    
    
    
    
    
    
    
    20,580Total other income (expense)
    
    
    (5,061
    )
    
    
    11,287
    
    
    
    
    
    
    
    6,226Income (loss) before income taxes and
minority interest from continuing operations
    
    
    (6,944
    )
    
    
    19,386
    
    
    
    
    
    
    
    12,442Income tax provision
    
    
    (1,303
    )
    
    
    (6,832
    )
    
    
    
    
    
    
    (8,135
    )Income (loss) before minority interest from
continuing operations
    
    
    (8,247
    )
    
    
    12,554
    
    
    
    
    
    
    
    4,307Minority interest
    
    
    
    
    
    
    (3,436
    )
    
    
    
    
    
    
    (3,436
    )Net income (loss)
    
    
    (8,247
    )
    
    
    9,118
    
    
    
    
    
    
    
    871
 Three Months Ended June 30, 2007Restricted
    
    
    Unrestricted
    
    
    
    
    
    
    ConsolidatedGroup
    
    
    Subsidiary
    
    
    Eliminations
    
    
    GroupRevenues
    
    
    104,307
    
    
    
    72,296
    
    
    
    
    
    
    
    176,603Operating costs
    
    
    86,893
    
    
    
    56,765
    
    
    
    
    
    
    
    143,658Operating depreciation and amortization
    
    
    6,975
    
    
    
    7,015
    
    
    
    
    
    
    
    13,990Selling, general and administrative expenses
    
    
    4,642
    
    
    
    3,409
    
    
    
    
    
    
    
    8,051(Sale) purchase of emission allowances
    
    
    (4
    )
    
    
    (35
    )
    
    
    
    
    
    
    (39
    )98,506
    
    
    
    67,154
    
    
    
    
    
    
    
    165,660Operating income from continuing operations
    
    
    5,801
    
    
    
    5,142
    
    
    
    
    
    
    
    10,943Other income (expense)Interest expense
    
    
    (6,961
    )
    
    
    (11,606
    )
    
    
    926
    
    
    
    (17,641
    )Investment income
    
    
    1,136
    
    
    
    1,374
    
    
    
    (926
    )
    
    
    1,584Foreign exchange gain on debt
    
    
    1,009
    
    
    
    340
    
    
    
    
    
    
    
    1,349Derivative financial instruments, net
    
    
    
    
    
    
    18,100
    
    
    
    
    
    
    
    18,100Total other income (expense)
    
    
    (4,816
    )
    
    
    8,208
    
    
    
    
    
    
    
    3,392Income before income taxes and
minority interest from continuing operations
    
    
    985
    
    
    
    13,350
    
    
    
    
    
    
    
    14,335Income tax provision
    
    
    (1,612
    )
    
    
    (8,292
    )
    
    
    
    
    
    
    (9,904
    )Income (loss) before minority interest from continuing
operations
    
    
    (627
    )
    
    
    5,058
    
    
    
    
    
    
    
    4,431Minority interest
    
    
    
    
    
    
    (1,091
    )
    
    
    
    
    
    
    (1,091
    )Net income (loss) from continuing operations
    
    
    (627
    )
    
    
    3,967
    
    
    
    
    
    
    
    3,340Net loss from discontinued operations
    
    
    (181
    )
    
    
    
    
    
    
    
    
    
    
    (181
    )Net income (loss)
    
    
    (808
    )
    
    
    3,967
    
    
    
    
    
    
    
    3,159




---



##### Table of Contents



MERCER INTERNATIONAL INC.
 NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands of Euros, except per share data)
 Note 8. Restricted Group Supplemental Disclosure (continued)
 Combined Condensed Statements of Operations
 Six Months Ended June 30, 2008Restricted
    
    
    Unrestricted
    
    
    
    
    
    
    ConsolidatedGroup
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    GroupRevenues
    
    
    198,796
    
    
    
    150,890
    
    
    
    
    
    
    
    349,686Operating costs
    
    
    165,594
    
    
    
    116,749
    
    
    
    
    
    
    
    282,343Operating depreciation and amortization
    
    
    14,195
    
    
    
    13,440
    
    
    
    
    
    
    
    27,635Selling, general and administrative expenses
    
    
    8,609
    
    
    
    6,240
    
    
    
    
    
    
    
    14,849(Sale) purchase of emission allowances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    188,398
    
    
    
    136,429
    
    
    
    
    
    
    
    324,827Operating income
    
    
    10,398
    
    
    
    14,461
    
    
    
    
    
    
    
    24,859Other income (expense)Interest expense
    
    
    (11,152
    )
    
    
    (21,481
    )
    
    
    
    
    
    
    (32,633
    )Investment income
    
    
    1,363
    
    
    
    368
    
    
    
    
    
    
    
    1,731Foreign exchange gain (loss) on debt
    
    
    6,379
    
    
    
    (110
    )
    
    
    
    
    
    
    6,269Derivative financial instruments
    
    
    
    
    
    
    12,730
    
    
    
    
    
    
    
    12,730Total other expense
    
    
    (3,410
    )
    
    
    (8,493
    )
    
    
    
    
    
    
    (11,903
    )Income before income taxes and
minority interest from continuing operations
    
    
    6,988
    
    
    
    5,968
    
    
    
    
    
    
    
    12,956Income tax provision
    
    
    (3,457
    )
    
    
    (5,506
    )
    
    
    
    
    
    
    (8,963
    )Income before minority interest from continuing operations
    
    
    3,531
    
    
    
    462
    
    
    
    
    
    
    
    3,993Minority interest
    
    
    
    
    
    
    (253
    )
    
    
    
    
    
    
    (253
    )Net income
    
    
    3,531
    
    
    
    209
    
    
    
    
    
    
    
    3,740
 Six Months Ended June 30, 2007Restricted
    
    
    Unrestricted
    
    
    
    
    
    
    ConsolidatedGroup
    
    
    Subsidiary
    
    
    Eliminations
    
    
    GroupRevenues
    
    
    204,240
    
    
    
    141,894
    
    
    
    
    
    
    
    346,134Operating costs
    
    
    163,747
    
    
    
    114,555
    
    
    
    
    
    
    
    278,302Operating depreciation and amortization
    
    
    13,661
    
    
    
    14,058
    
    
    
    
    
    
    
    27,719Selling, general and administrative expenses
    
    
    8,705
    
    
    
    6,754
    
    
    
    
    
    
    
    15,459(Sale) purchase of emission allowances
    
    
    (268
    )
    
    
    (498
    )
    
    
    
    
    
    
    (766
    )185,845
    
    
    
    134,869
    
    
    
    
    
    
    
    320,714Operating income from continuing operations
    
    
    18,395
    
    
    
    7,025
    
    
    
    
    
    
    
    25,420Other income (expense)Interest expense
    
    
    (14,418
    )
    
    
    (25,132
    )
    
    
    1,841
    
    
    
    (37,709
    )Investment income
    
    
    2,440
    
    
    
    2,596
    
    
    
    (1,841
    )
    
    
    3,195Foreign exchange gain on debt
    
    
    2,263
    
    
    
    340
    
    
    
    
    
    
    
    2,603Derivative financial instruments, net
    
    
    
    
    
    
    24,672
    
    
    
    
    
    
    
    24,672Total other income (expense)
    
    
    (9,715
    )
    
    
    2,476
    
    
    
    
    
    
    
    (7,239
    )Income before income taxes and
minority interest from continuing operations
    
    
    8,680
    
    
    
    9,501
    
    
    
    
    
    
    
    18,181Income tax provision
    
    
    (4,150
    )
    
    
    (9,555
    )
    
    
    
    
    
    
    (13,705
    )Income (loss) before minority interest from continuing
operations
    
    
    4,530
    
    
    
    (54
    )
    
    
    
    
    
    
    4,476Minority interest
    
    
    
    
    
    
    (43
    )
    
    
    
    
    
    
    (43
    )Net income (loss) from continuing operations
    
    
    4,530
    
    
    
    (97
    )
    
    
    
    
    
    
    4,433Net loss from discontinued operations
    
    
    (188
    )
    
    
    
    
    
    
    
    
    
    
    (188
    )Net income (loss)
    
    
    4,342
    
    
    
    (97
    )
    
    
    
    
    
    
    4,245




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
   Results of Operations
 Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
  Three Months Ended June 30,2008
    
    
    2007Pulp Production (000 ADMTs)
    
    
    356.8
    
    
    
    326.4Scheduled Production Downtime (000 ADMTs)
    
    
    15
    
    
    
    37Pulp Sales (000 ADMTs)
    
    
    347.3
    
    
    
    337.0Revenues (in millions)
    
    
    170.6
    
    
    
    176.6NBSK pulp list prices in Europe ($/ADMT)
    
    $
    900
    
    
    $
    783NBSK pulp list prices in Europe (/ADMT)
    
    
    576
    
    
    
    579Average pulp sales realizations (/ADMT)(1)
    
    
    485
    
    
    
    518Average Spot Currency Exchange Rates / $(2)
    
    
    0.6401
    
    
    
    0.7416C$ / $(2)
    
    
    1.0099
    
    
    
    1.0981C$ / (3)
    
    
    1.5783
    
    
    
    1.4810
 
 (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.  
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Three Months EndedJune 30,2008
    
    
    2007(in thousands)Net income from continuing operations
    
    
    871
    
    
    
    3,340Minority interest
    
    
    3,436
    
    
    
    1,091Income taxes
    
    
    8,135
    
    
    
    9,904Interest expense
    
    
    16,013
    
    
    
    17,641Investment income
    
    
    (1,421
    )
    
    
    (1,584
    )Unrealized foreign exchange gain on debt
    
    
    (238
    )
    
    
    (1,349
    )Derivative financial instruments, net
    
    
    (20,580
    )
    
    
    (18,100
    )Operating income from continuing operations
    
    
    6,216
    
    
    
    10,943Add: Depreciation and amortization
    
    
    13,584
    
    
    
    14,055Operating EBITDA
    
    
    19,800
    
    
    
    24,998




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Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
  Six Months Ended June 30,2008
    
    
    2007Pulp Production (000 ADMTs)
    
    
    717.7
    
    
    
    673.6Scheduled Production Downtime (000 ADMTs)
    
    
    17
    
    
    
    37Pulp Sales (000 ADMTs)
    
    
    695.4
    
    
    
    666.2Revenues (in millions)
    
    
    349.7
    
    
    
    346.1NBSK pulp list prices in Europe ($/ADMT)
    
    $
    890
    
    
    $
    770NBSK pulp list prices in Europe (/ADMT)
    
    
    581
    
    
    
    570Average pulp sales realizations (/ADMT)(1)
    
    
    498
    
    
    
    515Average Spot Currency Exchange Rates / $(2)
    
    
    0.6530
    
    
    
    0.7522C$ / $(2)
    
    
    1.0070
    
    
    
    1.1349C$ / (3)
    
    
    1.5420
    
    
    
    1.5082
 
 (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.  
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  
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  
  Six Months EndedJune 30,2008
    
    
    2007(in thousands)Net income from continuing operations
    
    
    3,740
    
    
    
    4,433Minority interest
    
    
    253
    
    
    
    43Income taxes
    
    
    8,963
    
    
    
    13,705Interest expense
    
    
    32,633
    
    
    
    37,709Investment income
    
    
    (1,731
    )
    
    
    (3,195
    )Unrealized foreign exchange gain on debt
    
    
    (6,269
    )
    
    
    (2,603
    )Derivative financial instruments, net
    
    
    (12,730
    )
    
    
    (24,672
    )Operating income from continuing operations
    
    
    24,859
    
    
    
    25,420Add: Depreciation and amortization
    
    
    27,776
    
    
    
    27,847Operating EBITDA
    
    
    52,635
    
    
    
    53,267




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Liquidity and Capital Resources
  As at
    
    As atJune 30,
    
    December 31,2008
    
    2007(in thousands)Financial PositionCash and cash equivalents
    
    
    83,295
    
    
    
    84,848Working capital
    
    
    169,484
    
    
    
    168,743Property, plant and equipment
    
    
    897,377
    
    
    
    933,258Total assets
    
    
    1,246,281
    
    
    
    1,283,517Long-term liabilities
    
    
    847,488
    
    
    
    885,339Shareholders equity
    
    
    273,399
    
    
    
    276,662
     
   Operating Activities
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  Investing Activities
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
  
 Financing Activities
   
  Contractual Obligations and Commitments
  Capital Resources
  Foreign Currency




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
  Celgar
Collective Agreement
  Results of Operations of the Restricted Group Under Our Senior Note Indenture
   Restricted Group Results  Three Months Ended June 30, 2008 Compared to Three Months Ended June 30,
2007
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Three Months EndedJune 30,2008
    
    
    2007(in thousands)Restricted GroupNet loss from continuing operations(1)
    
    
    (8,247
    )
    
    
    (627
    )Income taxes
    
    
    1,303
    
    
    
    1,612Interest expense
    
    
    4,440
    
    
    
    6,961Investment income (expense)
    
    
    373
    
    
    
    (1,136
    )Unrealized foreign exchange gain (loss) on debt
    
    
    248
    
    
    
    (1,009
    )Operating income (loss) from continuing operations
    
    
    (1,883
    )
    
    
    5,801Add: Depreciation and amortization
    
    
    6,844
    
    
    
    7,040Operating EBITDA(1)
    
    
    4,961
    
    
    
    12,841
 
 (1)
    
    See Note 8 of the interim consolidated financial statements included elsewhere herein for a
reconciliation to our consolidated results. Restricted Group Results  Six Months Ended June 30, 2008 Compared to Six Months Ended June 30,
2007
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 
   Six Months EndedJune 30,2008
    
    
    2007(in thousands)Restricted GroupNet income from continuing operations(1)
    
    
    3,531
    
    
    
    4,530Income taxes
    
    
    3,457
    
    
    
    4,150Interest expense
    
    
    11,152
    
    
    
    14,418Investment income
    
    
    (1,363
    )
    
    
    (2,440
    )Unrealized foreign exchange gain on debt
    
    
    (6,379
    )
    
    
    (2,263
    )Operating income from continuing operations
    
    
    10,398
    
    
    
    18,395Add: Depreciation and amortization
    
    
    14,336
    
    
    
    13,789Operating EBITDA(1)
    
    
    24,734
    
    
    
    32,184
 
 (1)
    
    See Note 8 of the interim consolidated financial statements included elsewhere herein for a
reconciliation to our consolidated results. Liquidity and Capital Resources of the Restricted Group
  As at
    
    As atJune 30,
    
    December 31,2008
    
    2007(in thousands)Restricted Group Financial Position(1)Cash and cash equivalents
    
    
    70,151
    
    
    
    59,371Working capital
    
    
    137,389
    
    
    
    120,486Property, plant and equipment
    
    
    358,250
    
    
    
    385,569Total assets
    
    
    617,934
    
    
    
    627,854Long-term liabilities
    
    
    292,263
    
    
    
    305,158Shareholders equity
    
    
    275,311
    
    
    
    278,582
 
 (1)
    
    See Note 8 of the interim consolidated financial statements included elsewhere herein for a
reconciliation to our consolidated results.   
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Critical Accounting Policies
    New Accounting Standards
  Cautionary Statement Regarding Forward-Looking Information
 Private Securities
Litigation Reform Act of 1995




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Cyclical Nature of Business
 Revenues
     Costs




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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ITEM 4. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures. Securities Exchange Act of 1934
  Changes in Internal Controls.




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PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
    
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
   For
    
    Withheld
    
    Abstentions and Broker Non-VotesJimmy S.H. Lee
    
    
    25,154,655
    
    
    
    95,552
    
    
    
    Kenneth A. Shields
    
    
    25,152,529
    
    
    
    97,678
    
    
    
    William D. McCartney
    
    
    25,152,529
    
    
    
    97,678
    
    
    
    Graeme A. Witts
    
    
    25,154,655
    
    
    
    95,552
    
    
    
    Eric Lauritzen
    
    
    25,154,655
    
    
    
    95,552
    
    
    
    Guy W. Adams
    
    
    25,154,655
    
    
    
    95,552
    
    
    
    George Malpass
    
    
    25,154,655
    
    
    
    95,552
    
    
    
    
  For
    
    Against
    
    Abstentions and Broker Non-VotesRatification of
appointment of
PricewaterhouseCoopers
LLP
    
    
    24,483,337
    
    
    
    759,834
    
    
    
    7,036




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ITEM 6. EXHIBITS
 ExhibitNo.
    
    Description31.1
    
    Section 302 Certification of Chief Executive Officer31.2
    
    Section 302 Certification of Chief Financial Officer32.1*
    
    Section 906 Certification of Chief Executive Officer32.2*
    
    Section 906 Certification of Chief Financial Officer
 
 *
    
    In accordance with Release 33-8212 of the Commission, these Certifications: (i) are
furnished to the Commission and are not filed for the purposes of liability under the
Securities Exchange Act of 1934, as amended; and (ii) are not to be subject to automatic
incorporation by reference into any of the Companys registration statements filed under the
Securities Act of 1933, as amended for the purposes of liability thereunder or any offering
memorandum, unless the Company specifically incorporates them by reference therein.




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SIGNATURES
 Securities Exchange Act of 1934
 MERCER INTERNATIONAL INC.By:
    /s/ David M. GandossiDavid M. GandossiSecretary and Chief Financial Officer