Mercer International Inc. Reports 2003 Fourth Quarter Profits And Year End Results

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 [phone], 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., [phone]; Investors: Eric Boyriven or Kellie Nugent, or

Media: David Schemelia, all of Financial Dynamics, all at [phone]



Web site:  http://www.mercerinternational.com/ 

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