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 2, 2013
MERCER INTERNATIONAL INC.
(Exact name of Registrant as specified in its charter)
Washington
(State or other jurisdiction
of incorporation or organization)
000-51826 | 47-0956945 | |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
Suite 1120, 700 West Pender Street, Vancouver, British Columbia, Canada V6C 1G8
(Address of Office)
(604) 684-1099
(Registrants 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):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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 2, 2013 Mercer International Inc. (the Company) announced by press release the Companys results for its first quarter ended March 31, 2013. A copy of the Companys 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 2, 2013 |
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 2, 2013
MERCER INTERNATIONAL INC.
FORM 8-K
EXHIBIT INDEX
Exhibit Number |
Description | |
99.1 | Press release dated May 2, 2013 |
Exhibit 99.1
For Immediate Release
MERCER INTERNATIONAL INC. REPORTS 2013 FIRST QUARTER RESULTS
NEW YORK, NY, May 2, 2013 - Mercer International Inc. (Nasdaq: MERC, TSX: MRI.U) today reported results for the first quarter ended March 31, 2013. Operating EBITDA* in the first quarter of 2013 was 24.3 million ($32.1 million), compared to 30.6 million ($40.1 million) in the first quarter of 2012 and 21.3 million ($27.6 million) in the fourth quarter of 2012.
For the first quarter of 2013, we had a net loss of 0.4 million ($0.5 million), or 0.01 ($0.01) per share, compared to net income of 1.2 million ($1.6 million), or 0.02 ($0.03) per share, in the first quarter of 2012 and a net loss of 5.2 million ($6.7 million), or 0.09 ($0.12) per share, for the fourth quarter of 2012.
Summary Financial Highlights
Q1 2013 |
Q4 2012 |
Q1 2012 |
||||||||||
(in millions, except per share amounts) | ||||||||||||
Pulp revenues |
| 180.1 | | 171.3 | | 199.4 | ||||||
Energy and chemical revenues |
18.2 | 17.2 | 18.9 | |||||||||
Operating income |
9.5 | 7.3 | 16.2 | |||||||||
Operating EBITDA |
24.3 | 21.3 | 30.6 | |||||||||
Gain on derivative instruments |
4.8 | 2.4 | 0.9 | |||||||||
Income tax benefit (provision) |
(0.9 | ) | (2.4 | ) | (0.7 | ) | ||||||
Net income (loss) (1) |
(0.4 | ) | (5.2 | ) | 1.2 | |||||||
Net income (loss) per share(1)(2) |
| (0.01 | ) | | (0.09 | ) | | 0.02 | ||||
Common shares outstanding at period end |
55.8 | 55.8 | 55.8 |
(1) | Attributable to common shareholders. |
(2) | Per basic and diluted share. |
Summary Operating Highlights
Q1 2013 |
Q4 2012 |
Q1 2012 |
||||||||||
Pulp Production (000 ADMTs) |
361.2 | 349.5 | 380.3 | |||||||||
Scheduled Production Downtime (000 ADMTs) |
| 18.1 | | |||||||||
Pulp Sales (000 ADMTs) |
356.7 | 335.2 | 384.8 | |||||||||
Average NBSK pulp list price in Europe ($/ADMT)(1) |
832 | 803 | 837 | |||||||||
Average NBSK pulp list price in Europe (/ADMT) |
630 | 619 | 638 | |||||||||
Average pulp sales realizations (/ADMT)(2) |
499 | 504 | 512 | |||||||||
Energy Production (000 MWh) |
424.4 | 405.9 | 436.2 | |||||||||
Energy Sales (000 MWh) |
173.6 | 163.8 | 182.4 |
(1) | Source: RISI pricing report. |
(2) | Sales realizations after discounts. Incorporates the effect of pulp price variations occurring between the order and shipment dates. |
* | Operating EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States (GAAP) and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. See page 9 of the financial tables included in this press release for a reconciliation of net income (loss) attributable to common shareholders to Operating EBITDA. |
Page 2
Q1 2013 |
Q4 2012 |
Q1 2012 |
||||||||||
Average Spot Currency Exchange Rates: |
||||||||||||
/ $(1) |
0.7580 | 0.7707 | 0.7623 | |||||||||
C$ / $(1) |
1.0087 | 0.9912 | 1.0009 | |||||||||
C$ / (2) |
1.3319 | 1.2862 | 1.3129 |
(1) | Average Federal Reserve Bank of New York noon spot rate over the reporting period. |
(2) | Average Bank of Canada noon spot rate over the reporting period. |
Presidents Comments
Mr. Jimmy S.H. Lee, President and Chairman, stated: Despite a continued weak NBSK pulp price environment, we achieved Operating EBITDA of 24.3 million in the current quarter, primarily as a result of strong sales volumes and energy and chemical sales at our mills. Overall, pulp sales volumes increased by approximately 6% to 356,660 ADMTs during the first quarter of 2013 from 335,215 ADMTs in the prior quarter. Energy and chemical revenues also increased by approximately 6% to 18.2 million in the current quarter compared to the prior quarter. A weakening of the U.S. dollar by 1% compared to the first quarter of 2012 negatively impacted our operating results.
Mr. Lee continued: Pulp prices marginally increased in the first quarter of 2013. However, we believe that overall prices are still low given current projected supply and demand levels. At the end of the first quarter of 2013, list prices in Europe were approximately $840 per ADMT and in North America and China were approximately $900 and $700 per ADMT, respectively.
Mr. Lee continued: Project Blue Mill at our Stendal mill, which is designed to increase our Stendal mills annual energy production by 109,000 MWh and annual pulp production by 30,000 ADMTs, remains on schedule and budget and is currently expected to start to generate power sales in or about the end of September 2013.
Mr. Lee added: Our average overall fiber costs were slightly higher than the previous quarter. Fiber costs at our German mills were up during the first quarter of 2013 due to increased demand from the European pellet and board producers, reduced wood supply because of longer than normal winter weather conditions and lower availability of trucking transportation. Fiber costs at our Celgar mill decreased as a result of increased sawmill activity in the region. The recent extreme weather conditions are expected to put upward pressure on fiber costs at our German mills in the short term, whereas we expect fiber costs at our Celgar mill to continue to decrease in the short term.
Page 3
Mr. Lee concluded: We currently expect strong demand from China as purchasers re-stock inventories which, along with annual maintenance shuts by producers, should cause NBSK pulp prices to continue to gradually increase in the medium term.
Three Months Ended March 31, 2013 Compared to Three Months Ended March 31, 2012
Total revenues for the three months ended March 31, 2013 decreased by approximately 9% to 198.3 million ($261.8 million) from 218.4 million ($286.4 million) in the same period in 2012, due to lower pulp revenues and energy and chemical revenues. Pulp revenues for the three months ended March 31, 2013 decreased to 180.1 million from 199.4 million in the comparative period of 2012, primarily due to the combined effect of lower pulp sales volumes and average pulp sales realizations and a weaker U.S. dollar relative to the Euro.
Energy and chemical revenues decreased by approximately 4% in the first quarter to 18.2 million from 18.9 million in the same quarter last year, primarily as a result of lower pulp production at our Celgar mill.
Pulp production decreased by approximately 5% to 361,164 ADMTs in the current quarter from 380,342 ADMTs in the same quarter of 2012, primarily due to decreased pulp production at our Celgar and Stendal mills. We have 11 days (approximately 16,000 ADMTs) of maintenance downtime scheduled for our Celgar mill in the second quarter of 2013 in order to perform annual maintenance.
Pulp sales volume decreased by approximately 7% to 356,660 ADMTs in the current quarter from 384,826 ADMTs in the comparative period of 2012, primarily due to lower sales to China and the United States. Average pulp sales realizations decreased by approximately 3% to 499 per ADMT in the first quarter of 2013, compared to 512 per ADMT in the same period last year, due to lower pulp prices and a weaker U.S. dollar.
Costs and expenses in the first quarter of 2013 decreased by 7% to 188.7 million from 202.1 million in the comparative period of 2012, primarily due to lower pulp sales volumes and fiber costs, partially offset by higher natural gas costs at our German mills resulting from higher usage and prices.
On average, our overall per unit fiber costs in the current quarter decreased by approximately 2% from the same period in 2012.
Page 4
Selling, general and administrative expenses decreased to 8.9 million in the first quarter of 2013 from 10.1 million in the first quarter of 2012.
For the first quarter of 2013, operating income decreased to 9.5 million from 16.2 million in the comparative quarter of 2012, primarily due to the combined effect of lower pulp prices and sales volumes.
Interest expense in the first quarter of 2013 decreased to 13.1 million from 14.1 million in the comparative quarter of 2012, primarily due to lower debt levels associated with the Stendal mill in the first quarter of 2013.
We recorded a net derivative gain of 4.8 million, which includes a 0.3 million loss related to fixed price pulp swap contracts entered into in the fourth quarter of 2012 and an unrealized gain of approximately 5.1 million on the mark to market adjustment of our Stendal mills interest rate derivative, compared to an unrealized derivative gain of 0.9 million in the same quarter of last year.
The noncontrolling shareholders interest in each of the first quarters of 2013 and 2012 was 0.7 million.
In the first quarter of 2013, Operating EBITDA decreased to 24.3 million from 30.6 million in the first quarter of 2012. Operating EBITDA is defined as operating income (loss) plus depreciation and amortization and non-recurring capital asset impairment charges. Operating EBITDA has significant limitations as an analytical tool and should not be considered in isolation or as a substitute for our results as reported under GAAP. See page 9 of the financial tables included in the press release for a reconciliation of net income (loss) attributable to common shareholders to Operating EBITDA.
We reported a net loss attributable to common shareholders of 0.4 million, or 0.01 per basic and diluted share, for the first quarter of 2013, which included a net non-cash unrealized gain of 4.7 million on the fixed price pulp swaps and Stendal interest rate derivative, partially offset by a non-cash charge for stock compensation of 0.3 million. In the first quarter of 2012, we reported net income attributable to common shareholders of 1.2 million, or 0.02 per basic and diluted share, which included a non-cash unrealized gain of 0.9 million on the Stendal interest rate derivative, offset by a non-cash charge for stock compensation of 0.9 million.
Page 5
Liquidity and Capital Resources
The following table is a summary of selected financial information as at the dates indicated:
As at March
31, 2013 |
As at December
31, 2012 |
|||||||
(in thousands) | ||||||||
Financial Position |
||||||||
Cash and cash equivalents |
| 110,664 | | 104,239 | ||||
Working capital |
202,331 | 208,573 | ||||||
Total assets |
1,185,560 | 1,183,603 | ||||||
Long-term liabilities |
756,192 | 768,253 | ||||||
Total equity |
275,824 | 278,925 |
As at March 31, 2013, we had approximately 26.2 million and C$22.3 million available under our Rosenthal and Celgar facilities, respectively. As at March 31, 2013, approximately 432.9 million was outstanding under our Stendal mills loan facility, compared to 467.9 million as at March 31, 2012.
Restricted Group
The following table is a summary of selected financial information for the Restricted Group (which, under the indenture for our 2017 9.5% Senior Notes, is comprised of Mercer International Inc., certain holding subsidiaries and our Rosenthal and Celgar mills) as at the dates indicated:
As at March 31, 2013 |
As at December 31, 2012 |
|||||||
(in thousands) | ||||||||
Financial Position |
||||||||
Cash and cash equivalents |
| 52,032 | | 36,714 | ||||
Working capital |
135,744 | 132,130 | ||||||
Total assets |
661,657 | 644,119 | ||||||
Long-term liabilities |
266,151 | 260,185 | ||||||
Total equity |
330,177 | 335,353 |
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 Friday, May 3, 2013 at 10:00 AM (Eastern Daylight Time). Listeners can access the conference call live and archived through June 2, 2013, over the Internet at http://investor.shareholder.com/media/event detail.cfm?eventid=128464&CompanyID=MERC&e=1&mediaKey=
1AE35D7DABC3ECD95E2779DA87354812 or through a link on the Companys home page at http://www.mercerint.com. Please allow 15 minutes prior to the call to visit the site and download and install any necessary audio software.
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.
Page 6
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. Words such as expects, anticipates, projects, intends, designed, will, believes, estimates, may, could and variations of such words and similar expressions are intended to identify such forward-looking statements. 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
(604) 684-1099
David M. Gandossi
Executive Vice-President &
Chief Financial Officer
(604) 684-1099
-FINANCIAL TABLES FOLLOW-
MERCER INTERNATIONAL INC.
INTERIM CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands of Euros)
March 31, 2013 |
December 31, 2012 |
|||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
| 110,664 | | 104,239 | ||||
Receivables |
120,184 | 110,087 | ||||||
Inventories |
112,908 | 118,300 | ||||||
Prepaid expenses and other |
8,295 | 7,907 | ||||||
Deferred income tax |
3,824 | 4,465 | ||||||
|
|
|
|
|||||
Total current assets |
355,875 | 344,998 | ||||||
|
|
|
|
|||||
Long-term assets |
||||||||
Property, plant and equipment |
802,959 | 808,878 | ||||||
Deferred note issuance and other |
11,622 | 12,162 | ||||||
Deferred income tax |
15,104 | 17,565 | ||||||
|
|
|
|
|||||
829,685 | 838,605 | |||||||
|
|
|
|
|||||
Total assets |
| 1,185,560 | | 1,183,603 | ||||
|
|
|
|
|||||
LIABILITIES |
||||||||
Current liabilities |
||||||||
Accounts payable and other |
| 97,645 | | 89,950 | ||||
Pension and other post-retirement benefit obligations |
818 | 813 | ||||||
Debt |
55,081 | 45,662 | ||||||
|
|
|
|
|||||
Total current liabilities |
153,544 | 136,425 | ||||||
|
|
|
|
|||||
Long-term liabilities |
||||||||
Debt |
658,166 | 665,741 | ||||||
Unrealized interest rate derivative losses |
45,513 | 50,678 | ||||||
Pension and other post-retirement benefit obligations |
32,451 | 32,141 | ||||||
Capital leases and other |
13,887 | 13,936 | ||||||
Deferred income tax |
6,175 | 5,757 | ||||||
|
|
|
|
|||||
756,192 | 768,253 | |||||||
|
|
|
|
|||||
Total liabilities |
909,736 | 904,678 | ||||||
|
|
|
|
|||||
EQUITY |
||||||||
Shareholders equity |
||||||||
Share capital |
248,757 | 248,371 | ||||||
Paid-in capital |
(3,706 | ) | (3,547 | ) | ||||
Retained earnings |
25,375 | 25,800 | ||||||
Accumulated other comprehensive income |
21,570 | 25,181 | ||||||
|
|
|
|
|||||
Total shareholders equity |
291,996 | 295,805 | ||||||
|
|
|
|
|||||
Noncontrolling interest (deficit) |
(16,172 | ) | (16,880 | ) | ||||
|
|
|
|
|||||
Total equity |
275,824 | 278,925 | ||||||
|
|
|
|
|||||
Total liabilities and equity |
| 1,185,560 | | 1,183,603 | ||||
|
|
|
|
(1)
MERCER INTERNATIONAL INC.
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands of Euros, except per share data)
Three Months Ended March 31, |
||||||||
2013 | 2012 | |||||||
Revenues |
||||||||
Pulp |
| 180,120 | | 199,439 | ||||
Energy and chemicals |
18,152 | 18,919 | ||||||
|
|
|
|
|||||
198,272 | 218,358 | |||||||
Costs and expenses |
||||||||
Operating costs |
165,098 | 177,770 | ||||||
Operating depreciation and amortization |
14,731 | 14,287 | ||||||
|
|
|
|
|||||
18,443 | 26,301 | |||||||
Selling, general and administrative expenses |
8,895 | 10,058 | ||||||
|
|
|
|
|||||
Operating income |
9,548 | 16,243 | ||||||
|
|
|
|
|||||
Other income (expense) |
||||||||
Interest expense |
(13,148 | ) | (14,133 | ) | ||||
Gain on derivative instruments |
4,820 | 876 | ||||||
Other income (expense) |
(70 | ) | (410 | ) | ||||
|
|
|
|
|||||
Total other income (expense) |
(8,398 | ) | (13,667 | ) | ||||
|
|
|
|
|||||
Income before income taxes |
1,150 | 2,576 | ||||||
Income tax benefit (provision) |
||||||||
Current |
3,271 | (56 | ) | |||||
Deferred |
(4,138 | ) | (676 | ) | ||||
|
|
|
|
|||||
Net income |
283 | 1,844 | ||||||
Less: net income attributable to noncontrolling interest |
(708 | ) | (671 | ) | ||||
|
|
|
|
|||||
Net income (loss) attributable to common shareholders |
| (425 | ) | | 1,173 | |||
|
|
|
|
|||||
Net income (loss) per share attributable to common shareholders |
||||||||
Basic and diluted |
| (0.01 | ) | | 0.02 |
(2)
MERCER INTERNATIONAL INC.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands of Euros)
Three Months Ended March 31, |
||||||||
2013 | 2012 | |||||||
Cash flows from (used in) operating activities |
||||||||
Net income |
| 283 | | 1,844 | ||||
Adjustments to reconcile net income to cash flows from operating activities |
||||||||
Unrealized gain on derivative instruments |
(4,695 | ) | (876 | ) | ||||
Depreciation and amortization |
14,794 | 14,350 | ||||||
Deferred income taxes |
4,138 | 676 | ||||||
Stock compensation expense |
267 | 868 | ||||||
Pension and other post-retirement expense, net of funding |
121 | (14 | ) | |||||
Other |
1,183 | 793 | ||||||
Changes in working capital |
||||||||
Receivables |
(9,704 | ) | 2,685 | |||||
Inventories |
5,746 | 11,738 | ||||||
Accounts payable and accrued expenses |
10,597 | 2,649 | ||||||
Other |
(782 | ) | 1,424 | |||||
|
|
|
|
|||||
Net cash from (used in) operating activities |
21,948 | 36,137 | ||||||
|
|
|
|
|||||
Cash flows from (used in) investing activities |
||||||||
Purchase of property, plant and equipment |
(11,395 | ) | (8,465 | ) | ||||
Proceeds on sale of property, plant and equipment |
13 | 226 | ||||||
|
|
|
|
|||||
Net cash from (used in) investing activities |
(11,382 | ) | (8,239 | ) | ||||
|
|
|
|
|||||
Cash flows from (used in) financing activities |
||||||||
Repayment of debt |
(20,545 | ) | (10,126 | ) | ||||
Proceeds from borrowings of debt |
10,000 | | ||||||
Repayment of capital lease obligations |
(700 | ) | (611 | ) | ||||
Proceeds from credit facilities, net |
5,968 | 3,759 | ||||||
Payment of note issuance costs |
| (1,621 | ) | |||||
Proceeds from government grants |
730 | 630 | ||||||
|
|
|
|
|||||
Net cash from (used in) financing activities |
(4,547 | ) | (7,969 | ) | ||||
|
|
|
|
|||||
Effect of exchange rate changes on cash and cash equivalents |
406 | (805 | ) | |||||
|
|
|
|
|||||
Net increase in cash and cash equivalents |
6,425 | 19,124 | ||||||
Cash and cash equivalents, beginning of period |
104,239 | 105,072 | ||||||
|
|
|
|
|||||
Cash and cash equivalents, end of period |
| 110,664 | | 124,196 | ||||
|
|
|
|
(3)
MERCER INTERNATIONAL INC.
RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE
Combined Condensed Balance Sheets
(Unaudited)
(In thousands of Euros)
The terms of the indenture governing our 9.5% Senior Notes require 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, 2013 and 2012, 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, 2013 | ||||||||||||||||
Restricted Group |
Unrestricted Subsidiaries |
Eliminations | Consolidated Group |
|||||||||||||
ASSETS |
||||||||||||||||
Current assets |
||||||||||||||||
Cash and cash equivalents |
| 52,032 | | 58,632 | | | | 110,664 | ||||||||
Receivables |
69,944 | 50,240 | | 120,184 | ||||||||||||
Inventories |
72,073 | 40,835 | | 112,908 | ||||||||||||
Prepaid expenses and other |
4,834 | 3,461 | | 8,295 | ||||||||||||
Deferred income tax |
2,190 | 1,634 | | 3,824 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total current assets |
201,073 | 154,802 | | 355,875 | ||||||||||||
Long-term assets |
||||||||||||||||
Property, plant and equipment |
340,459 | 462,500 | | 802,959 | ||||||||||||
Deferred note issuance and other |
6,322 | 5,300 | | 11,622 | ||||||||||||
Deferred income tax |
9,222 | 5,882 | | 15,104 | ||||||||||||
Due from unrestricted group |
104,581 | | (104,581 | ) | | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets |
| 661,657 | | 628,484 | | (104,581 | ) | | 1,185,560 | |||||||
|
|
|
|
|
|
|
|
|||||||||
LIABILITIES |
||||||||||||||||
Current liabilities |
||||||||||||||||
Accounts payable and other |
| 52,688 | | 44,957 | | | | 97,645 | ||||||||
Pension and other post-retirement benefit obligations |
818 | | | 818 | ||||||||||||
Debt |
11,823 | 43,258 | | 55,081 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total current liabilities |
65,329 | 88,215 | | 153,544 | ||||||||||||
Long-term liabilities |
||||||||||||||||
Debt |
221,430 | 436,736 | | 658,166 | ||||||||||||
Due to restricted group |
| 104,581 | (104,581 | ) | | |||||||||||
Unrealized interest rate derivative losses |
| 45,513 | | 45,513 | ||||||||||||
Pension and other post-retirement benefit obligations |
32,451 | | | 32,451 | ||||||||||||
Capital leases and other |
6,095 | 7,792 | | 13,887 | ||||||||||||
Deferred income tax |
6,175 | | | 6,175 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total liabilities |
331,480 | 682,837 | (104,581 | ) | 909,736 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
EQUITY |
||||||||||||||||
Total shareholders equity (deficit) |
330,177 | (38,181 | ) | | 291,996 | |||||||||||
Noncontrolling interest (deficit) |
| (16,172 | ) | | (16,172 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total liabilities and equity |
| 661,657 | | 628,484 | | (104,581 | ) | | 1,185,560 | |||||||
|
|
|
|
|
|
|
|
(4)
MERCER INTERNATIONAL INC.
RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE
Combined Condensed Balance Sheets
(Unaudited)
(In thousands of Euros)
December 31, 2012 | ||||||||||||||||
Restricted Group |
Unrestricted Subsidiaries |
Eliminations | Consolidated Group |
|||||||||||||
ASSETS |
||||||||||||||||
Current assets |
||||||||||||||||
Cash and cash equivalents |
| 36,714 | | 67,525 | | | | 104,239 | ||||||||
Receivables |
61,212 | 48,875 | | 110,087 | ||||||||||||
Inventories |
74,786 | 43,514 | | 118,300 | ||||||||||||
Prepaid expenses and other |
5,811 | 2,096 | | 7,907 | ||||||||||||
Deferred income tax |
2,188 | 2,277 | | 4,465 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total current assets |
180,711 | 164,287 | | 344,998 | ||||||||||||
Long-term assets |
||||||||||||||||
Property, plant and equipment |
345,311 | 463,567 | | 808,878 | ||||||||||||
Deferred note issuance and other |
6,607 | 5,555 | | 12,162 | ||||||||||||
Deferred income tax |
9,179 | 8,386 | | 17,565 | ||||||||||||
Due from unrestricted group |
102,311 | | (102,311 | ) | | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets |
| 644,119 | | 641,795 | | (102,311 | ) | | 1,183,603 | |||||||
|
|
|
|
|
|
|
|
|||||||||
LIABILITIES |
||||||||||||||||
Current liabilities |
||||||||||||||||
Accounts payable and other |
| 42,106 | | 47,844 | | | | 89,950 | ||||||||
Pension and other post-retirement benefit obligations |
813 | | | 813 | ||||||||||||
Debt |
5,662 | 40,000 | | 45,662 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total current liabilities |
48,581 | 87,844 | | 136,425 | ||||||||||||
Long-term liabilities |
||||||||||||||||
Debt |
216,214 | 449,527 | | 665,741 | ||||||||||||
Due to restricted group |
| 102,311 | (102,311 | ) | | |||||||||||
Unrealized interest rate derivative losses |
| 50,678 | | 50,678 | ||||||||||||
Pension and other post-retirement benefit obligations |
32,141 | | | 32,141 | ||||||||||||
Capital leases and other |
6,073 | 7,863 | | 13,936 | ||||||||||||
Deferred income tax |
5,757 | | | 5,757 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total liabilities |
308,766 | 698,223 | (102,311 | ) | 904,678 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
EQUITY |
||||||||||||||||
Total shareholders equity (deficit) |
335,353 | (39,548 | ) | | 295,805 | |||||||||||
Noncontrolling interest (deficit) |
| (16,880 | ) | | (16,880 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total liabilities and equity |
| 644,119 | | 641,795 | | (102,311 | ) | | 1,183,603 | |||||||
|
|
|
|
|
|
|
|
(5)
MERCER INTERNATIONAL INC.
RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE
Combined Condensed Statements of Operations
(Unaudited)
(In thousands of Euros)
Three months ended March 31, 2013 | ||||||||||||||||
Restricted Group |
Unrestricted Subsidiaries |
Eliminations | Consolidated Group |
|||||||||||||
Revenues |
||||||||||||||||
Pulp |
| 100,240 | | 79,880 | | | | 180,120 | ||||||||
Energy and chemicals |
7,090 | 11,062 | | 18,152 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
107,330 | 90,942 | | 198,272 | |||||||||||||
Operating costs |
89,523 | 75,575 | | 165,098 | ||||||||||||
Operating depreciation and amortization |
8,191 | 6,540 | | 14,731 | ||||||||||||
Selling, general and administrative expenses |
5,716 | 3,179 | | 8,895 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
103,430 | 85,294 | | 188,724 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating income |
3,900 | 5,648 | | 9,548 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Other income (expense) |
||||||||||||||||
Interest expense |
(5,866 | ) | (8,930 | ) | 1,648 | (13,148 | ) | |||||||||
Gain (loss) on derivative instruments |
(345 | ) | 5,165 | | 4,820 | |||||||||||
Other income (expense) |
1,535 | 43 | (1,648 | ) | (70 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total other income (expense) |
(4,676 | ) | (3,722 | ) | | (8,398 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Income (loss) before income taxes |
(776 | ) | 1,926 | | 1,150 | |||||||||||
Income tax benefit (provision) |
(1,016 | ) | 149 | | (867 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) |
(1,792 | ) | 2,075 | | 283 | |||||||||||
Less: net income attributable to noncontrolling interest |
| (708 | ) | | (708 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) attributable to common shareholders |
| (1,792 | ) | | 1,367 | | | | (425 | ) | ||||||
|
|
|
|
|
|
|
|
Three months ended March 31, 2012 | ||||||||||||||||
Restricted Group |
Unrestricted Subsidiaries |
Eliminations | Consolidated Group |
|||||||||||||
Revenues |
||||||||||||||||
Pulp |
| 109,889 | | 89,550 | | | | 199,439 | ||||||||
Energy and chemicals |
7,991 | 10,928 | | 18,919 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
117,880 | 100,478 | | 218,358 | |||||||||||||
Operating costs |
98,336 | 79,434 | | 177,770 | ||||||||||||
Operating depreciation and amortization |
7,640 | 6,647 | | 14,287 | ||||||||||||
Selling, general and administrative expenses |
6,521 | 3,537 | | 10,058 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
112,497 | 89,618 | | 202,115 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating income |
5,383 | 10,860 | | 16,243 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Other income (expense) |
||||||||||||||||
Interest expense |
(5,810 | ) | (9,664 | ) | 1,341 | (14,133 | ) | |||||||||
Gain on derivative instruments |
| 876 | | 876 | ||||||||||||
Other income (expense) |
825 | 106 | (1,341 | ) | (410 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total other income (expense) |
(4,985 | ) | (8,682 | ) | | (13,667 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Income before income taxes |
398 | 2,178 | | 2,576 | ||||||||||||
Income tax benefit (provision) |
(715 | ) | (17 | ) | | (732 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) |
(317 | ) | 2,161 | | 1,844 | |||||||||||
Less: net income attributable to noncontrolling interest |
| (671 | ) | | (671 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) attributable to common shareholders |
| (317 | ) | | 1,490 | | | | 1,173 | |||||||
|
|
|
|
|
|
|
|
(6)
MERCER INTERNATIONAL INC.
RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE
Combined Condensed Statements of Cash Flows
(Unaudited)
(In thousands of Euros)
Three months ended March 31, 2013 | ||||||||||||
Restricted Group |
Unrestricted Subsidiaries |
Consolidated Group |
||||||||||
Cash flows from (used in) operating activities |
||||||||||||
Net income (loss) |
| (1,792 | ) | | 2,075 | | 283 | |||||
Adjustments to reconcile net income (loss) to cash flows from operating activities |
||||||||||||
Unrealized loss (gain) on derivative instruments |
470 | (5,165 | ) | (4,695 | ) | |||||||
Depreciation and amortization |
8,254 | 6,540 | 14,794 | |||||||||
Deferred income taxes |
991 | 3,147 | 4,138 | |||||||||
Stock compensation expense |
267 | | 267 | |||||||||
Pension and other post-retirement expense, net of funding |
121 | | 121 | |||||||||
Other |
413 | 770 | 1,183 | |||||||||
Changes in working capital |
||||||||||||
Receivables |
(8,339 | ) | (1,365 | ) | (9,704 | ) | ||||||
Inventories |
3,067 | 2,679 | 5,746 | |||||||||
Accounts payable and accrued expenses |
10,505 | 92 | 10,597 | |||||||||
Other(1) |
(1,714 | ) | 932 | (782 | ) | |||||||
|
|
|
|
|
|
|||||||
Net cash from (used in) operating activities |
12,243 | 9,705 | 21,948 | |||||||||
|
|
|
|
|
|
|||||||
Cash flows from (used in) investing activities |
||||||||||||
Purchase of property, plant and equipment |
(2,645 | ) | (8,750 | ) | (11,395 | ) | ||||||
Proceeds on sale of property, plant and equipment |
13 | | 13 | |||||||||
|
|
|
|
|
|
|||||||
Net cash from (used in) investing activities |
(2,632 | ) | (8,750 | ) | (11,382 | ) | ||||||
|
|
|
|
|
|
|||||||
Cash flows from (used in) financing activities |
||||||||||||
Repayment of debt |
(545 | ) | (20,000 | ) | (20,545 | ) | ||||||
Proceeds from borrowings of debt |
| 10,000 | 10,000 | |||||||||
Repayment of capital lease obligations |
(122 | ) | (578 | ) | (700 | ) | ||||||
Proceeds from credit facilities, net |
5,968 | | 5,968 | |||||||||
Proceeds from government grants |
| 730 | 730 | |||||||||
|
|
|
|
|
|
|||||||
Net cash from (used in) financing activities |
5,301 | (9,848 | ) | (4,547 | ) | |||||||
|
|
|
|
|
|
|||||||
Effect of exchange rate changes on cash and cash equivalents |
406 | | 406 | |||||||||
|
|
|
|
|
|
|||||||
Net increase (decrease) in cash and cash equivalents |
15,318 | (8,893 | ) | 6,425 | ||||||||
Cash and cash equivalents, beginning of period |
36,714 | 67,525 | 104,239 | |||||||||
|
|
|
|
|
|
|||||||
Cash and cash equivalents, end of period |
| 52,032 | | 58,632 | | 110,664 | ||||||
|
|
|
|
|
|
(1) | Includes intercompany related transactions. |
(7)
MERCER INTERNATIONAL INC.
RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE
Combined Condensed Statements of Cash Flows
(Unaudited)
(In thousands of Euros)
Three months ended March 31, 2012 | ||||||||||||
Restricted Group |
Unrestricted Subsidiaries |
Consolidated Group |
||||||||||
Cash flows from (used in) operating activities |
||||||||||||
Net income (loss) |
| (317 | ) | | 2,161 | | 1,844 | |||||
Adjustments to reconcile net income (loss) to cash flows from operating activities |
||||||||||||
Unrealized gain on derivative instruments |
| (876 | ) | (876 | ) | |||||||
Depreciation and amortization |
7,703 | 6,647 | 14,350 | |||||||||
Deferred income taxes |
676 | | 676 | |||||||||
Stock compensation expense |
868 | | 868 | |||||||||
Pension and other post-retirement expense, net of funding |
(14 | ) | | (14 | ) | |||||||
Other |
58 | 735 | 793 | |||||||||
Changes in working capital |
||||||||||||
Receivables |
(2,110 | ) | 4,795 | 2,685 | ||||||||
Inventories |
4,018 | 7,720 | 11,738 | |||||||||
Accounts payable and accrued expenses |
5,535 | (2,886 | ) | 2,649 | ||||||||
Other(1) |
(6,474 | ) | 7,898 | 1,424 | ||||||||
|
|
|
|
|
|
|||||||
Net cash from (used in) operating activities |
9,943 | 26,194 | 36,137 | |||||||||
|
|
|
|
|
|
|||||||
Cash flows from (used in) investing activities |
||||||||||||
Purchase of property, plant and equipment |
(4,218 | ) | (4,247 | ) | (8,465 | ) | ||||||
Proceeds on sale of property, plant and equipment |
186 | 40 | 226 | |||||||||
|
|
|
|
|
|
|||||||
Net cash from (used in) investing activities |
(4,032 | ) | (4,207 | ) | (8,239 | ) | ||||||
|
|
|
|
|
|
|||||||
Cash flows from (used in) financing activities |
||||||||||||
Repayment of debt |
(543 | ) | (9,583 | ) | (10,126 | ) | ||||||
Repayment of capital lease obligations |
(186 | ) | (425 | ) | (611 | ) | ||||||
Proceeds from credit facilities, net |
3,759 | | 3,759 | |||||||||
Payment of note issuance costs |
| (1,621 | ) | (1,621 | ) | |||||||
Proceeds from government grants |
630 | | 630 | |||||||||
|
|
|
|
|
|
|||||||
Net cash from (used in) financing activities |
3,660 | (11,629 | ) | (7,969 | ) | |||||||
|
|
|
|
|
|
|||||||
Effect of exchange rate changes on cash and cash equivalents |
(805 | ) | | (805 | ) | |||||||
|
|
|
|
|
|
|||||||
Net increase in cash and cash equivalents |
8,766 | 10,358 | 19,124 | |||||||||
Cash and cash equivalents, beginning of period |
44,829 | 60,243 | 105,072 | |||||||||
|
|
|
|
|
|
|||||||
Cash and cash equivalents, end of period |
| 53,595 | | 70,601 | | 124,196 | ||||||
|
|
|
|
|
|
(1) | Includes intercompany related transactions. |
(8)
MERCER INTERNATIONAL INC.
COMPUTATION OF OPERATING EBITDA
(Unaudited)
(In thousands of Euros)
Operating EBITDA is defined as operating income (loss) 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 (loss) 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 (loss), 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 (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. The following tables set forth the net income (loss) attributable to common shareholders to Operating EBITDA for both the consolidated group and our Restricted Group:
Three Months
Ended March 31, |
||||||||
2013 | 2012 | |||||||
(in thousands) | ||||||||
Net income (loss) attributable to common shareholders |
| (425 | ) | | 1,173 | |||
Net income attributable to noncontrolling interest |
708 | 671 | ||||||
Income tax provision (benefit) |
867 | 732 | ||||||
Interest expense |
13,148 | 14,133 | ||||||
Gain on derivative instruments |
(4,820 | ) | (876 | ) | ||||
Other expense (income) |
70 | 410 | ||||||
|
|
|
|
|||||
Operating income |
9,548 | 16,243 | ||||||
Add: Depreciation and amortization |
14,794 | 14,350 | ||||||
|
|
|
|
|||||
Operating EBITDA |
| 24,342 | | 30,593 | ||||
|
|
|
|
Three Months
Ended March 31, |
||||||||
2013 | 2012 | |||||||
(in thousands) | ||||||||
Restricted Group(1) |
||||||||
Net loss |
| (1,792 | ) | | (317 | ) | ||
Income tax provision (benefit) |
1,016 | 715 | ||||||
Interest expense |
5,866 | 5,810 | ||||||
Loss on derivative instruments |
345 | | ||||||
Other expense (income) |
(1,535 | ) | (825 | ) | ||||
|
|
|
|
|||||
Operating income |
3,900 | 5,383 | ||||||
Add: Depreciation and amortization |
8,254 | 7,703 | ||||||
|
|
|
|
|||||
Operating EBITDA |
| 12,154 | | 13,086 | ||||
|
|
|
|
(1) | For the Restricted Group, net income (loss) attributable to common shareholders and net income (loss) are the same. |
# # #
(9)