8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 5, 2008

MERCER INTERNATIONAL INC.

(Exact name of Registrant as specified in its charter)

Washington
(State or other jurisdiction of incorporation or organization)

000-51826
(Commission File Number) 47-0956945
(I.R.S. Employer 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)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

The information contained in this Current Report shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

On May 5, 2008, Mercer International Inc. (the “Company”) announced by press release the Company’s results for its first quarter ended March 31, 2008. A copy of the Company’s press release is attached hereto as Exhibit 99.1.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

Exhibit No.	Description
99.1	Press Release dated May 5, 2008

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

MERCER INTERNATIONAL INC.
 

/s/ David M. Gandossi  

David M. Gandossi 

Chief Financial Officer 

Date: May 5, 2008

MERCER INTERNATIONAL INC.

FORM 8-K

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press release dated May 5, 2008

EX-99.1

EXHIBIT 99.1

For Immediate Release

MERCER INTERNATIONAL INC. REPORTS IMPROVED 2008 FIRST QUARTER
RESULTS VERSUS 2007 AND ANNOUNCES NEW GREEN ENERGY PROJECT

     NEW YORK, NY, May 5, 2008 — Mercer International Inc. (Nasdaq: MERC, TSX: MRI.U) today reported improved 2008 first quarter results. Revenues and Operating EBITDA in the first quarter of 2008 increased to €179.1 million (U.S.$268.8 million) and €32.8 million (U.S.$49.4 million) from €169.5 million (U.S.$222.1 million) and €28.3 million (U.S.$37.1 million), respectively, in the first quarter of 2007, primarily because of higher prices and sales volumes, along with lower wood costs partially offset by a weaker U.S. dollar. Operating EBITDA is defined on page 4 of this press release and reconciled to net income from continuing operations on page 6 of the financial tables in this press release.

Summary Financial Highlights

	Q1			Q4		Q1
	2008			2007		2007
	(in millions of Euro, except where otherwise stated)
Revenues	€	179.1		€	167.1	€	169.5
Operating income from continuing operations		18.6			22.7		14.5
Operating EBITDA		32.8			37.2		28.3
Unrealized gain (loss) on derivative instruments		(7.9	)		1.4		(0.2	)
Foreign exchange gain on debt		6.0			3.7		1.3
Net income		2.9			7.3		1.1
Net income per share
Basic	€	0.08		€	0.20	€	0.03
Diluted	€	0.08		€	0.18	€	0.03

Summary Operating Highlights

	Q1		Q4		Q1
	2008		2007		2007
Pulp Production (‘000 ADMTs)		360.9		370.1		347.3
Scheduled Production Downtime (‘000 ADMTs)		1.5	nil		nil
Pulp Sales (‘000 ADMTs)		348.2		322.9		329.1
NBSK pulp list price in Europe (US$/ADMT)		880		850		757
NBSK pulp list price in Europe (€/ADMT)		586		587		578
Average pulp sales realizations (€/ADMT)(1)		510		512		512
Average Spot Currency Exchange Rates:
€ / $(2)		0.6666		0.6901		0.7630
C$ / $(2)		1.0015		0.9818		1.1716
C$ / €(3)		1.5060		1.4230		1.5354

(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.

(more)

Page 2

President’s Comments

     Mr. Jimmy S.H. Lee, President and Chairman, stated: “A U.S.$30 per ADMT increase in list prices in Europe in the current quarter was largely offset by a 3% weakening of the U.S. dollar versus the Euro compared to the prior quarter.” Mr. Lee added: “Fiber costs in Europe were lower over the prior year’s quarter because of increased availability from damage to forests from winter storms and production curtailments in the European board industry.” He continued: “As part of our continued focus on energy production and sales, we are pleased to announce that our Board has authorized management to proceed with a new energy project at our Celgar mill to increase its production of “green energy” and optimize its power generation capacity. It is designed to be a high return capital project with an estimated cost of approximately €35.0 million. This project will take about two years to complete and includes the installation of a second turbo generator with a design capacity of 48 MW and upgrades to the mill’s bark boiler and steam facilities. Upon completion, the project is expected to provide the mill with between approximately 25 to 30 megawatts of incremental power that should be available for sale on a continuous basis. The Company has ordered the generator, which has a delivery lead time of approximately 18 months and costs approximately €7.0 million.”

     Mr. Lee concluded: “In Europe, we currently expect to see continued downward pressure on fiber costs in the second and third quarters of 2008. Offsetting this is the slumping U.S. dollar, which negatively impacts both our revenues and operating margins. NBSK producers implemented a U.S.$20 price increase in April 2008 and we currently expect a further U.S.$20 price increase to be implemented in May 2008.

     While the state of the global economy has created some uncertainty, world chemical market pulp demand has increased in 2008 to date and NBSK pulp operating rates are around 97%. As a result, we currently believe that the strength of this demand, along with the near capacity operating rates, should provide a strong basis for further price improvements later in the year.”

Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007

     Revenues for the three months ended March 31, 2008 increased by 5.7% to €179.1 million from €169.5 million in the comparative period of 2007, primarily due to higher pulp list prices, in large part offset by a 13% weakening of the U.S. dollar versus the Euro. Although list prices for NBSK pulp in Europe were approximately U.S.$120 higher in the current quarter from the prior year quarter, because of the slumping U.S. dollar, in Euro terms, the increase was only €8.

     Pulp production was 360,881 ADMTs in the current quarter, compared to 347,256 in the same quarter of 2007 and 370,080 in the prior quarter. In the current quarter, all of our mills generally performed well and our Rosenthal mill had its highest first quarter production ever.

(more)

Page 3

     Pulp sales volume increased to 348,176 ADMTs in the first quarter of 2008 from 329,135 ADMTs in the comparative period of 2007. Average pulp sales realizations were €510 per ADMT in the first quarter of 2008 compared to €512 per ADMT in the first quarter of 2007, as higher prices were offset by the weakening of the U.S. dollar versus the Euro and the Canadian dollar.

     Our Celgar mill pulp inventories were about 50% higher in the current quarter from the comparative quarter of 2007, as we and other producers work through a shipment backlog resulting from congestion and slowdowns at the Port of Vancouver in late 2007 which delayed shipments to China. This inventory is generally already committed to customer orders but we do not record the sale until the pulp is loaded. We currently expect to work through such shipping backlog and have our Celgar pulp inventories returned to normalized levels over the next two quarters.

     Costs and expenses in the first quarter of 2008 increased to €160.5 million from €155.8 million in the comparative period of 2007, primarily due to higher production and sales volume.

     On average, our fiber costs decreased by approximately 6% in the first quarter of 2008 from the same period of 2007. Our fiber costs in Germany were lower because of increased availability resulting from damage to forests caused by storms in Germany and Austria in the quarter and lower fiber demand caused by production curtailments in the European board industry. Fiber costs at our Celgar mill were also lower in the current quarter from the prior period of 2007 because of various initiatives to increase fiber supply including incremental whole log chipping and woodroom optimization. However, the deterioration of the housing and lumber markets in North America has sharply reduced sawmilling activity and residual chip supply in western Canada. This is expected to put slight upward pressure on the fiber costs for our Celgar mill during the balance of 2008.

     During the first quarter of 2008, our raw material inventories were brought down to €29.0 million from €38.0 million at the end of 2007, as we drew down the large seasonal build up of fiber supply at our German mills following enhanced purchases of storm damaged wood in 2007.

     In the current quarter, we had no sales of emission allowances compared to €0.7 million in the prior year period. In the current quarter, sales of surplus energy were largely unchanged from the first quarter of 2007.

     For the first quarter of 2008, operating income from continuing operations increased by approximately 28% to €18.6 million from €14.5 million in the comparative quarter of 2007, primarily as a result of higher pulp prices and improved production.

(more)

Page 4

     Interest expense in the first quarter of 2008 decreased to €16.6 million from €20.1 million in the comparative quarter of 2007, primarily due to a lower level of borrowing and the absence of cross-currency swaps which were settled in the first quarter of 2007. During the current quarter, our Stendal mill made its scheduled repayment of €16.9 million of principal against its indebtedness.

     We recorded an unrealized loss of €7.9 million before minority interests on our interest rate derivatives at the end of the current quarter as a result of a decrease in long-term interest rates, compared to a gain of €6.6 million on our outstanding foreign currency and interest rate derivatives in the same quarter of last year, of which a €6.8 million gain was realized upon the settlement of foreign currency swaps. We recorded unrealized foreign exchange gains of €6.0 million and €1.3 million on our debt in the current and prior year quarters, respectively.

     In the first quarter of 2008, minority interest, representing the minority shareholder’s interest in the Stendal mill, was €3.2 million, compared to €1.0 million in the same quarter of last year.

     Operating EBITDA increased by 16% to €32.8 million in the first quarter of 2008 from €28.3 million in the first quarter of 2007. Operating EBITDA is defined as operating income (loss) from continuing operations plus depreciation and amortization and non-recurring capital asset impairment charges. Management uses Operating EBITDA as a benchmark measurement of its own operating results, and as a benchmark relative to its competitors. Management considers it to be a meaningful supplement to operating income as a performance measure primarily because depreciation expense and non-recurring capital asset impairment charges are not an actual cash cost, and depreciation expense varies widely from company to company in a manner that management considers largely independent of the underlying cost efficiency of their operating facilities. In addition, we believe Operating EBITDA is commonly used by securities analysts, investors and other interested parties to evaluate our financial performance.

     Operating EBITDA does not reflect the impact of a number of items that affect our net income, including financing costs and the effect of derivative instruments. Operating EBITDA is not a measure of financial performance under GAAP, and should not be considered as an alternative to net income or income from operations as a measure of performance, nor as an alternative to net cash from operating activities as a measure of liquidity. Operating EBITDA has significant limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. For a reconciliation of net income to Operating EBITDA, see page 6 of the financial tables included in this press release.

(more)

Page 5

     We reported net income from continuing operations for the first quarter of 2008 of €2.9 million, or €0.08 per basic and diluted share, as compared to net income from continuing operations of €1.1 million, or €0.03 per basic and diluted share in the first quarter of 2007.

Earnings Release Call

     In conjunction with this release, Mercer International Inc. will host a conference call, which will be simultaneously broadcast live over the Internet. Management will host the call, which is scheduled for Tuesday, May 6, 2008 at 10:00 AM EDT. Listeners can access the conference call live and archived through June 6, 2008, over the Internet through a link at the Company’s web site at http://www.mercerint.com/en/newsCurrent.cfm, or at http://www.videonewswire.com/event.asp?id=47803. 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 May 13, 2008 at 11:59 p.m. (Eastern Daylight Time). The replay number is (800) 642-1687 for domestic callers or (706) 645-9291 for international callers, and the passcode is 44255548.

     Mercer International Inc. is a global pulp manufacturing company. To obtain further information on the company, please visit its web site at http://www.mercerint.com.

     The preceding includes forward looking statements which involve known and unknown risks and uncertainties which may cause our actual results in future periods to differ materially from forecasted results. Among those factors which could cause actual results to differ materially are the following: the highly cyclical nature of our business, raw material costs, our level of indebtedness, competition, foreign exchange and interest rate fluctuations, our use of derivatives, expenditures for capital projects, environmental regulation and compliance, disruptions to our production, market conditions and other risk factors listed from time to time in our SEC reports.

APPROVED BY: Jimmy S.H. Lee Chairman & President	Financial Dynamics Investors: Eric Boyriven, Alexandra Tramont Media: Jordana Miller (212) 850-5600
(604) 684-1099
David M. Gandossi Executive Vice-President & Chief Financial Officer (604) 684-1099

-FINANCIAL TABLES FOLLOW-

(more)

MERCER INTERNATIONAL INC.

INTERIM CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands of Euros)

	March 31,		December 31,
	2008		2007
ASSETS
Current Assets
Cash and cash equivalents	€	69,735	€	84,848
Receivables		91,241		89,890
Note receivable, current portion		5,167		5,896
Inventories		97,181		103,610
Prepaid expenses and other		5,019		6,015
Total current assets		268,343		290,259
Long-Term Assets
Cash, restricted		33,000		33,000
Property, plant and equipment		903,402		933,258
Investments		72		96
Deferred note issuance and other costs		4,955		5,303
Deferred income tax		18,746		17,624
Note receivable, less current portion		3,536		3,977
		963,711		993,258
Total assets	€	1,232,054	€	1,283,517
LIABILITIES
Current Liabilities
Accounts payable and accrued expenses	€	74,331	€	87,000
Pension and other post-retirement benefit obligations, current portion		438		493
Debt, current portion		35,042		34,023
Total current liabilities		109,811		121,516
Long-Term Liabilities
Debt, less current portion		773,972		815,832
Unrealized interest rate derivative losses		29,735		21,885
Pension and other post-retirement benefit obligations		17,310		19,983
Capital leases and other		10,754		8,999
Deferred income tax		20,971		18,640
		852,742		885,339
Total liabilities		962,553		1,006,855
SHAREHOLDERS’ EQUITY
Share capital		202,844		202,844
Additional paid-in capital		233		134
Retained earnings		40,288		37,419
Accumulated other comprehensive income		26,136		36,265
Total shareholders’ equity		269,501		276,662
Total liabilities and shareholders’ equity	€	1,232,054	€	1,283,517

(1)

MERCER INTERNATIONAL INC.

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands of Euros, except per share data)

	Three Months Ended
	March 31,
	2008			2007
Revenues	€	179,101		€	169,531
Costs and expenses
Operating costs		139,441			133,846
Operating depreciation and amortization		14,121			13,729
		25,539			21,956
Selling, general and administrative expenses		6,896			8,206
(Sale) purchase of emission allowances		—			(727	)
Operating income from continuing operations		18,643			14,477
Other income (expense)
Interest expense		(16,620	)		(20,068	)
Investment income		310			1,611
Foreign exchange gain on debt		6,031			1,254
Realized gain on derivative instruments		—			6,820
Unrealized loss on derivative instruments		(7,850	)		(248	)
Total other expense		(18,129	)		(10,631	)
Income before income taxes and minority interest from continuing operations		514			3,846
Income tax benefit (provision) — current		376			(349	)
— deferred		(1,204	)		(3,452	)
(Loss) income before minority interest from continuing operations		(314	)		45
Minority interest		3,183			1,048
Net income from continuing operations		2,869			1,093
Net loss from discontinued operations		—			(7	)
Net income		2,869			1,086
Retained earnings, beginning of period		37,419			14,440
Retained earnings, end of period	€	40,288		€	15,526
Net income from continuing operations per share:
Basic and diluted	€	0.08		€	0.03
Net income per share:
Basic and diluted	€	0.08		€	0.03

(2)

MERCER INTERNATIONAL INC.

RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE
Combined Condensed Balance Sheet
(Unaudited)
(In thousands of Euros)

The terms of the indenture governing our 9.25% senior unsecured notes requires that we provide the results of operations and financial condition of Mercer International Inc. and our restricted subsidiaries under the indenture, collectively referred to as the “Restricted Group”. As at and during the three months ended March 31, 2008 and 2007, the Restricted Group was comprised of Mercer International Inc., certain holding subsidiaries and our Rosenthal and Celgar mills. The Restricted Group excludes the Stendal mill.

	March 31, 2008
	Restricted		Unrestricted						Consolidated
	Group		Subsidiaries			Eliminations			Group
ASSETS
Current
Cash and cash equivalents	€	53,371	€	16,364		€	—		€	69,735
Receivables		46,791		44,450			—			91,241
Note receivable, current portion		549		4,618			—			5,167
Inventories		64,619		32,562			—			97,181
Prepaid expenses and other		3,800		1,219			—			5,019
Total current assets		169,130		99,213			—			268,343
Cash, restricted		—		33,000			—			33,000
Property, plant and equipment		359,497		543,905			—			903,402
Other		5,024		3			—			5,027
Deferred income tax		10,072		8,674			—			18,746
Due from unrestricted group		58,942		—			(58,942	)		—
Note receivable, less current portion		3,536		—			—			3,536
Total assets	€	606,201	€	684,795		€	(58,942	)	€	1,232,054
LIABILITIES
Current
Accounts payable and accrued expenses	€	42,487	€	31,844		€	—		€	74,331
Pension and other post-retirement benefit obligations, current portion		438		—			—			438
Debt, current portion		—		35,042			—			35,042
Total current liabilities		42,925		66,885			—			109,811
Debt, less current portion		252,236		521,736			—			773,972
Due to restricted group		—		58,942			(58,942	)		—
Unrealized derivative loss		—		29,735			—			29,735
Pension and other post-retirement benefit obligations		17,310		—			—			17,310
Capital leases and other		7,078		3,676			—			10,754
Deferred income tax		6,120		14,851			—			20,971
Total liabilities		325,669		695,826			(58,942	)		962,553
SHAREHOLDERS’ EQUITY
Total shareholders’ equity (deficit)		280,532		(11,031	)		—			269,501
Total liabilities and shareholders’ equity	€	606,201	€	684,795		€	(58,942	)	€	1,232,054

(3)

MERCER INTERNATIONAL INC.

RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE
Combined Condensed Balance Sheet
(Unaudited)
(In thousands of Euros)

	December 31, 2007
	Restricted		Unrestricted						Consolidated
	Group		Subsidiaries			Eliminations			Group
ASSETS
Current
Cash and cash equivalents	€	59,371	€	25,477		€	—		€	84,848
Receivables		37,482		52,408			—			89,890
Note receivable, current portion		589		5,307			—			5,896
Inventories		63,444		40,166			—			103,610
Prepaid expenses and other		3,714		2,301			—			6,015
Total current assets		164,600		125,659			—			290,259
Cash, restricted		—		33,000			—			33,000
Property, plant and equipment		385,569		547,689			—			933,258
Other		5,399		—			—			5,399
Deferred income tax		10,852		6,772			—			17,624
Due from unrestricted group		57,457		—			(57,457	)		—
Note receivable, less current portion		3,977		—			—			3,977
Total assets	€	627,854	€	713,120		€	(57,457	)	€	1,283,517
LIABILITIES
Current
Accounts payable and accrued expenses	€	43,621	€	43,379		€	—		€	87,000
Pension and other post-retirement benefit obligations, current portion		493		—			—			493
Debt, current portion		—		34,023			—			34,023
Total current liabilities		44,114		77,402			—			121,516
Debt, less current portion		273,589		542,243			—			815,832
Due to restricted group		—		57,457			(57,457	)		—
Unrealized derivative loss		—		21,885			—			21,885
Pension and other post-retirement benefit obligations		19,983		—			—			19,983
Capital leases and other		7,033		1,966			—			8,999
Deferred income tax		4,553		14,087			—			18,640
Total liabilities		349,272		715,040			(57,457	)		1,006,855
SHAREHOLDERS’ EQUITY
Total shareholders’ equity (deficit)		278,582		(1,920	)		—			276,662
Total liabilities and shareholders’ equity	€	627,854	€	713,120		€	(57,457	)	€	1,283,517

(4)

MERCER INTERNATIONAL INC.

RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE
Combined Condensed Statements of Operations
(Unaudited)
(In thousands of Euros)

	Three Months Ended March 31, 2008
	Restricted			Unrestricted						Consolidated
	Group			Subsidiaries			Eliminations			Group
Revenues	€	101,102		€	77,999		€	—		€	179,101
Operating costs		77,656			61,785			—			139,441
Operating depreciation and amortization		7,421			6,700			—			14,121
Selling, general and administrative expenses		3,744			3,152			—			6,896
		88,821			71,637			—			160,458
Operating income from continuing operations		12,281			6,362			—			18,643
Other income (expense)
Interest expense		(6,712	)		(10,867	)		959			(16,620	)
Investment income (expense)		1,736			(467	)		(959	)		310
Foreign exchange gain (loss) on debt		6,627			(596	)		—			6,031
Derivative financial instruments		—			(7,850	)		—			(7,850	)
Total other income (expense)		1,651			(19,780	)		—			(18,129	)
Income (loss) before income taxes and minority interest from continuing operations		13,932			(13,418	)		—			514
Income tax benefit (provision)		(2,154	)		1,326			—			(828	)
Income (loss) before minority interest from continuing operations		11,778			(12,092	)		—			(314	)
Minority interest		—			3,183			—			3,183
Net income (loss)	€	11,778		€	(8,909	)	€	—		€	2,869

	Three Months Ended March 31, 2007
	Restricted			Unrestricted						Consolidated
	Group			Subsidiaries			Eliminations			Group
Revenues	€	99,933		€	69,598		€	—		€	169,531
Operating costs		76,930			56,916			—			133,846
Operating depreciation and amortization		6,686			7,043			—			13,729
Selling, general and administrative expenses		4,545			3,661			—			8,206
(Sale) purchase of emission allowances		(264	)		(463	)		—			(727	)
		87,897			67,157			—			155,054
Operating income from continuing operations		12,036			2,441			—			14,477
Other income (expense)
Interest expense		(7,458	)		(13,525	)		915			(20,068	)
Investment income		1,305			1,221			(915	)		1,611
Foreign exchange gain on debt		1,254			—			—			1,254
Derivative financial instruments, net		—			6,572			—			6,572
Total other expense		(4,899	)		(5,732	)		—			(10,631	)
Income (loss) before income taxes and minority interest from continuing operations		7,137			(3,291	)		—			3,846
Income tax provision		(2,738	)		(1,063	)		—			(3,801	)
Income (loss) before minority interest from continuing operations		4,399			(4,354	)		—			45
Minority interest		—			1,048			—			1,048
Net income (loss) from continuing operations		4,399			(3,306	)		—			1,093
Net loss from discontinued operations		—			(7	)		—			(7	)
Net income (loss)	€	4,399		€	(3,313	)	€	—		€	1,086

(5)

MERCER INTERNATIONAL INC.

COMPUTATION OF OPERATING EBITDA
(Unaudited)
(In thousands of Euros)

	Three Months Ended
	March 31,
	2008			2007
	(in thousands)
Net income from continuing operations	€	2,869		€	1,093
Minority interest		(3,183	)		(1,048	)
Income taxes		828			3,801
Interest expense		16,620			20,068
Investment income		(310	)		(1,611	)
Unrealized foreign exchange gain on debt		(6,031	)		(1,254	)
Derivative financial instruments, net		7,850			(6,572	)
Operating income from continuing operations		18,643			14,477
Add: Depreciation and amortization		14,192			13,792
Operating EBITDA	€	32,835		€	28,269

(1) Operating EBITDA does not reflect the impact of a number of items that affect our net income (loss), including financing costs and the effect of derivative instruments. Operating EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States, and should not be considered as an alternative to net income (loss) or income (loss) from operations as a measure of performance, nor as an alternative to net cash from operating activities as a measure of liquidity. Operating EBITDA has significant limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP.

COMPUTATION OF RESTRICTED GROUP OPERATING EBITDA
(Unaudited)
(In thousands of Euros)

	Three Months Ended
	March 31,
	2008			2007
Restricted Group
Net income from continuing operations(1)	€	11,778		€	4,399
Income taxes		2,154			2,738
Interest expense		6,712			7,458
Investment income		(1,736	)		(1,305	)
Unrealized foreign exchange gain on debt		(6,627	)		(1,254	)
Operating income from continuing operations		12,281			12,036
Add: Depreciation and amortization		7,492			6,749
Operating EBITDA(2)	€	19,773		€	18,785

(1)

For the Restricted Group, net income (loss) from continuing operations and net income (loss) are the same.

(2)

Operating EBITDA does not reflect the impact of a number of items that affect our net income (loss), including financing costs and the effect of derivative instruments. Operating EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States, and should not be considered as an alternative to net income (loss) or income (loss) from operations as a measure of performance, nor as an alternative to net cash from operating activities as a measure of liquidity. Operating EBITDA has significant limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP.

(6)

# # #