10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[ X ]        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

OR

[    ]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File No.: 000-51826

MERCER INTERNATIONAL INC.

(Exact name of Registrant as specified in its charter)

Washington	47-0956945
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Suite 1120, 700 West Pender Street, Vancouver, British Columbia, Canada, V6C 1G8

(Address of office)

(604) 684-1099

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X]  No [    ]

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months or for such shorter period that the registrant was required to submit and post such files). Yes [X]  No [    ]

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer  [X] Accelerated Filer  [    ] Non-Accelerated Filer  [    ] Smaller Reporting Company  [    ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES [    ]  NO [X]

The Registrant had 64,656,138 shares of common stock outstanding as at April 27, 2016.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MERCER INTERNATIONAL INC.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2016

(Unaudited)

FORM 10-Q

QUARTERLY REPORT - PAGE 2

MERCER INTERNATIONAL INC.

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands of U.S. dollars, except per share data)

	Three Months Ended March 31,
	2016		2015
Revenues
Pulp	$	230,629	$	234,657
Energy and chemicals		23,214		22,890
		253,843		257,547
Costs and expenses
Operating costs, excluding depreciation and amortization		196,942		184,948
Operating depreciation and amortization		17,032		17,304
Selling, general and administrative expenses		11,769		11,364
Operating income		28,100		43,931
Other income (expense)
Interest expense		(13,191)		(13,884)
Foreign exchange gain (loss) on intercompany debt		555		(6,610)
Loss on derivative instruments (Note 9)		(210)		(524)
Other expense		(286)		(14)
Total other expense		(13,132)		(21,032)
Income before provision for income taxes		14,968		22,899
Current income tax provision		(1,753)		(3,352)
Deferred income tax provision		(4,446)		(5,913)
Net income	$	8,769	$	13,634
Net income per common share (Note 7)
Basic and diluted	$	0.14	$	0.21
Cash dividend declared per common share (Note 6)	$	0.115	$	-

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands of U.S. dollars)

	Three Months Ended March 31,
	2016		2015
Net income	$	8,769	$	13,634
Other comprehensive income (loss), net of taxes
Foreign currency translation adjustment (net of tax effect of $nil in all periods)		52,336		(111,805)
Change in unrecognized losses and prior service costs related to defined benefit plans (net of tax effect of $nil in all periods)		290		248
Change in unrealized gains/losses on marketable securities (net of tax effect of $nil in all periods)		(2)		(71)
Other comprehensive income (loss), net of taxes		52,624		(111,628)
Comprehensive income (loss)	$	61,393	$	(97,994)

The accompanying notes are an integral part of these interim consolidated financial statements.

FORM 10-Q

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MERCER INTERNATIONAL INC.

INTERIM CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands of U.S. dollars, except share and per share data)

	March 31, 2016		December 31, 2015
ASSETS
Current assets
Cash and cash equivalents	$	129,869	$	99,629
Restricted cash (Note 9)		9,682		9,230
Accounts receivable		137,344		134,254
Inventories (Note 2)		133,688		141,001
Prepaid expenses and other		5,411		4,697
Total current assets		415,994		388,811
Property, plant and equipment, net		791,893		762,391
Intangible and other assets		9,333		8,461
Deferred income tax		21,244		23,154
Total assets	$	1,238,464	$	1,182,817
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable and other (Note 3)	$	122,044	$	103,450
Pension and other post-retirement benefit obligations (Note 5)		1,036		971
Total current liabilities		123,080		104,421
Debt (Note 4)		615,966		638,043
Interest rate derivative liability (Note 9)		7,008		6,533
Pension and other post-retirement benefit obligations (Note 5)		26,916		25,374
Capital leases and other		12,304		12,299
Deferred income tax		15,365		13,171
Total liabilities		800,639		799,841
Shareholders’ equity
Common shares $1 par value; 200,000,000 authorized;
64,656,000 issued and outstanding (2015 - 64,502,000)		64,618		64,424
Additional paid-in capital		329,943		329,246
Retained earnings (Note 6)		162,214		160,880
Accumulated other comprehensive loss (Note 8)		(118,950)		(171,574)
Total shareholders’ equity		437,825		382,976
Total liabilities and shareholders’ equity	$	1,238,464	$	1,182,817
Commitments and contingencies (Note 11)
Subsequent event (Note 6)

The accompanying notes are an integral part of these interim consolidated financial statements.

FORM 10-Q

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MERCER INTERNATIONAL INC.

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands of U.S. dollars)

	Three Months Ended March 31,
	2016		2015
Cash flows from (used in) operating activities
Net income	$	8,769	$	13,634
Adjustments to reconcile net income to cash flows from operating activities
Unrealized loss on derivative instruments		210		524
Depreciation and amortization		17,219		17,387
Deferred income taxes		4,446		5,913
Foreign exchange (gain) loss on intercompany debt		(555)		6,610
Defined benefit pension plan and other post-retirement benefit plan expense		476		709
Stock compensation expense		891		630
Other		1,016		456
Defined benefit pension plan and other post-retirement benefit plan contributions		(426)		(475)
Changes in working capital
Accounts receivable		3,953		(9,621)
Inventories		14,636		(4,921)
Accounts payable and accrued expenses		13,210		27,773
Other		(379)		1,226
Net cash from (used in) operating activities		63,466		59,845
Cash flows from (used in) investing activities
Purchase of property, plant and equipment		(6,936)		(7,064)
Purchase of intangible assets		(520)		(873)
Other		(102)		222
Net cash from (used in) investing activities		(7,558)		(7,715)
Cash flows from (used in) financing activities
Repurchase of notes		(23,079)		-
Dividend payment		(7,418)		-
Proceeds from (repayment of) revolving credit facilities, net		-		953
Other		(486)		(218)
Net cash from (used in) financing activities		(30,983)		735
Effect of exchange rate changes on cash and cash equivalents		5,315		(6,194)
Net increase in cash and cash equivalents		30,240		46,671
Cash and cash equivalents, beginning of period		99,629		53,172
Cash and cash equivalents, end of period	$	129,869	$	99,843
Supplemental cash flow disclosure
Cash paid for interest	$	599	$	126
Cash paid for income taxes	$	4,630	$	413

The accompanying notes are an integral part of these interim consolidated financial statements.

FORM 10-Q

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MERCER INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands of U.S. dollars, except share and per share data)

Note 1. The Company and Summary of Significant Accounting Policies

Nature of Operations and Basis of Presentation

The interim consolidated financial statements contained herein include the accounts of Mercer International Inc. (“Mercer Inc.”) and all of its subsidiaries (collectively the “Company”). The Company’s shares of common stock are quoted and listed for trading on both the NASDAQ Global Market and the Toronto Stock Exchange.

The interim consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). The year-end Consolidated Balance Sheet data was derived from audited financial statements. The footnote disclosure included herein has been prepared in accordance with accounting principles generally accepted for interim financial statements in the United States (“GAAP”). The interim consolidated financial statements should be read together with the audited consolidated financial statements and accompanying notes included in the Company’s latest annual report on Form 10-K for the fiscal year ended December 31, 2015. In the opinion of the Company, the unaudited interim consolidated financial statements contained herein contain all adjustments necessary for a fair statement of the results of the interim periods included. The results for the periods included herein may not be indicative of the results for the entire year.

The Company has three pulp mills that are aggregated into one reportable business segment, market pulp. Accordingly, the results presented are those of the reportable business segment.

In these interim consolidated financial statements, unless otherwise indicated, all amounts are expressed in United States dollars (“U.S. dollars” or “$”). The symbol “€” refers to euros and the symbol “C$” refers to Canadian dollars.

Use of Estimates

Preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant management judgment is required in determining the accounting for, among other things, pensions and other post-retirement benefit obligations, deferred income taxes (valuation allowance and permanent reinvestment), depreciation and amortization, future cash flows associated with impairment testing for long-lived assets, legal liabilities and contingencies. Actual results could differ materially from these estimates, and changes in these estimates are recorded when known.

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014-9, Revenue Recognition – Revenue from Contracts with Customers (“ASU 2014-9”) that requires companies to recognize revenue when a customer obtains control rather than when companies have transferred substantially all risks and rewards of a good or service. This update is effective for annual reporting periods beginning on or after December 15, 2017 and interim periods therein and requires expanded disclosures. The Company is currently assessing the impact, if any, the adoption of ASU 2014-9 will have on its consolidated financial statements.

In July 2015, the Financial Accounting Standards Board issued Accounting Standards Update 2015-11, Simplifying the Measurement of Inventory (“ASU 2015-11”) which requires that inventory within the scope of this update, including inventory stated at average cost, be measured at the lower of cost and net realizable value. This update is effective for financial statements issued for fiscal years beginning after December 15, 2016, with early adoption permitted as of the beginning of an interim or annual reporting period. The adoption of this accounting guidance will not materially impact the Company’s financial position.

In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-2, Leases (“ASU 2016-2”) which requires lessees to recognize virtually all of their leases on the balance sheet, by recording a right-of-use asset and liability. This update is effective for financial statements issued for fiscal years beginning after December 15, 2018, with early adoption permitted as of the beginning of an interim or annual reporting period. The Company is currently assessing the impact the adoption of ASU 2016-2 will have on its consolidated financial statements.

FORM 10-Q

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MERCER INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands of U.S. dollars, except share and per share data)

Note 1. The Company and Summary of Significant Accounting Policies (continued)

In March 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-9, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-9”) which simplifies several aspects of accounting for share-based payment transactions including income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows and accounting for forfeitures. This update is effective for financial statements issued for fiscal years beginning after December 15, 2016. The Company is currently assessing the impact the adoption of ASU 2016-9 will have on its consolidated financial statements.

Note 2. Inventories

	March 31, 2016		December 31, 2015
Raw materials	$	52,494	$	57,592
Finished goods		29,821		36,829
Spare parts and other		51,373		46,580
	$	133,688	$	141,001

Note 3. Accounts Payable and Other

	March 31, 2016		December 31, 2015
Trade payables	$	25,550	$	20,637
Accrued expenses		54,892		55,648
Accrued interest payable		15,938		4,050
Interest rate derivative liability, current portion (Note 9)		10,951		10,380
Dividend payable (Note 6)		7,435		7,418
Other		7,278		5,317
	$	122,044	$	103,450

Note 4. Debt

	March 31, 2016		December 31, 2015
2019 Senior Notes, unsecured, $227,000 face value (a)	$	223,336	$	245,689
2022 Senior Notes, unsecured, $400,000 face value (a)		392,630		392,354
Revolving credit facilities
€75.0 million (b)		-		-
C$40.0 million (c)		-		-
€25.0 million (d)		-		-
€5.0 million (e)		-		-
	$	615,966	$	638,043

FORM 10-Q

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MERCER INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands of U.S. dollars, except share and per share data)

Note 4. Debt (continued)

As at March 31, 2016, the maturities of the principal portion of debt are as follows:

2016	$	-
2017		-
2018		-
2019		227,000
2020		-
Thereafter		400,000
	$	627,000

Certain of the Company’s debt instruments were issued under agreements which, among other things, may limit its ability and the ability of its subsidiaries to make certain payments, including dividends. These limitations are subject to specific exceptions. As at March 31, 2016, the Company is in compliance with the terms of its debt agreements.

(a) On November 26, 2014, the Company issued $650,000 of senior notes consisting of $250,000 in aggregate principal amount of 7.00% senior notes which mature on December 1, 2019 (“2019 Senior Notes”) and $400,000 in aggregate principal amount of 7.75% senior notes which mature on December 1, 2022 (“2022 Senior Notes” and collectively with the 2019 Senior Notes, the “Senior Notes”). The Senior Notes were issued at a price of 100% of their principal amount. Upon their issuance the Senior Notes were recorded at $635,949 which included debt issuance costs of $14,051. These costs were proportionally allocated to the 2019 Senior Notes and the 2022 Senior Notes.

The Senior Notes are general unsecured senior obligations of the Company. They rank equal in right of payment with all existing and future unsecured senior indebtedness of the Company and are senior in right of payment to any current or future subordinated indebtedness of the Company. The Senior Notes are effectively junior in right of payment to all existing and future secured indebtedness, to the extent of the assets securing such indebtedness, and all indebtedness and liabilities of the Company’s subsidiaries.

The Company may redeem all or a part of the Senior Notes, upon not less than 30 days’ or more than 60 days’ notice, at the redemption prices (expressed as percentages of principal amount) discussed below, plus accrued and unpaid interest to (but not including) the applicable redemption date. The 2019 Senior Notes redemption prices are equal to 103.50% for the twelve month period beginning on December 1, 2016, 101.75% for the twelve month period beginning on December 1, 2017, and 100.00% beginning on December 1, 2018 and at any time thereafter. The 2022 Senior Notes redemption prices are equal to 105.813% for the twelve month period beginning on December 1, 2017, 103.875% for the twelve month period beginning on December 1, 2018, 101.938% for the twelve month period beginning on December 1, 2019, and 100.00% beginning on December 1, 2020 and at any time thereafter.

In March 2016, the Company purchased $23,000 in aggregate principal amount of its 2019 Senior Notes. In connection with this purchase the Company recorded a loss on extinguishment of debt of $454 in other expense in the Interim Consolidated Statement of Operations which included the write-off of unamortized debt issuance costs.

(b) A €75.0 million revolving credit facility at the Stendal mill that matures in October 2019. Borrowings under the facility are collateralized by the mill’s inventory and accounts receivable and bear interest at Euribor plus 3.50%. As at March 31, 2016, approximately €75.0 million ($85,433) was available.

(c) A C$40.0 million revolving credit facility at the Celgar mill that matures in May 2019. Borrowings under the facility are collateralized by the mill’s inventory and accounts receivable and are restricted by a borrowing base calculated on the mill’s inventory and accounts receivable. Canadian dollar denominated amounts bear interest at bankers acceptance plus 1.50% or Canadian prime. U.S. dollar denominated amounts bear interest at LIBOR plus 1.50% or U.S. base. As at March 31, 2016, approximately C$1.7 million ($1,310) was supporting letters of credit and approximately C$38.3 million ($29,528) was available.

FORM 10-Q

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MERCER INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands of U.S. dollars, except share and per share data)

Note 4. Debt (continued)

(d) A €25.0 million revolving credit facility at the Rosenthal mill that matures in October 2019. Borrowings under the facility are collateralized by the mill’s inventory and accounts receivable and bear interest at Euribor plus 2.95%. As at March 31, 2016, approximately €3.1 million ($3,487) of this facility was supporting bank guarantees leaving approximately €21.9 million ($24,991) available.

(e) A €5.0 million revolving credit facility at the Rosenthal mill that matures in December 2018. Borrowings under this facility bear interest at the rate of the three-month Euribor plus 2.50% and are secured by certain land at the Rosenthal mill. As at March 31, 2016, approximately €3.8 million ($4,309) of this facility was supporting bank guarantees leaving approximately €1.2 million ($1,386) available.

Note 5. Pension and Other Post-Retirement Benefit Obligations

Defined Benefit Plans

Included in pension and other post-retirement benefit obligations are amounts related to the Company’s Celgar and Rosenthal mills. The largest component of these obligations is with respect to the Celgar mill which maintains a defined benefit pension plan and other post-retirement benefit plans for certain employees (the “Celgar Defined Benefit Plans”).

Pension benefits are based on employees’ earnings and years of service. The Celgar Defined Benefit Plans are funded by contributions from the Company based on actuarial estimates and statutory requirements.

The components of the net periodic benefit costs relating to the Celgar Defined Benefit Plans, for the three months ended March 31, 2016 and 2015 were as follows:

	Three Months Ended March 31,
	2016						2015
	Pension			Other Post- Retirement Benefits			Pension			Other Post- Retirement Benefits
Service cost	$	22		$	117		$	31		$	205
Interest cost		261			251			448			326
Expected return on plan assets		(465	)		-			(529	)		-
Amortization of unrecognized items		334			(44	)		226			2
Net periodic benefit cost	$	152		$	324		$	176		$	533

Defined Contribution Plan

Effective December 31, 2008, the Celgar Defined Benefit Plans were closed to new members. In addition, the defined benefit service accrual ceased on December 31, 2008, and members began to receive pension benefits, at a fixed contractual rate, under a new defined contribution plan effective January 1, 2009. During the three months ended March 31, 2016, the Company made contributions of $163 (2015 – $169) to this plan.

Multiemployer Plan

The Company participates in a multiemployer plan for the hourly-paid employees at the Celgar mill. The contributions to the plan are determined based on a percentage of pensionable earnings pursuant to a collective bargaining agreement. The Company has no current or future contribution obligations in excess of the contractual contributions. Contributions during the three months ended March 31, 2016 totaled $376 (2015 – $451).

FORM 10-Q

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MERCER INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands of U.S. dollars, except share and per share data)

Note 6. Shareholders’ Equity

Dividends

In February 2016, the Company’s Board of Directors declared a quarterly dividend of $0.115 per common share. Payment of the dividend was made on April 5, 2016 to all shareholders of record on March 28, 2016.

In April 2016, the Company’s Board of Directors declared a quarterly dividend of $0.115 per common share. Payment of the dividend will be made on July 7, 2016 to all shareholders of record on June 27, 2016. Future dividends are subject to approval by the Board of Directors and may be adjusted as business and industry conditions warrant.

Stock Based Compensation

In June 2010, the Company adopted a stock incentive plan (the “2010 Plan”) which provides for options, restricted stock rights, restricted shares, performance shares, performance share units (“PSUs”) and stock appreciation rights to be awarded to employees, consultants and non-employee directors. During the three months ended March 31, 2016, there were no issued and outstanding stock options, restricted stock rights, performance shares or stock appreciation rights. As at March 31, 2016, after factoring in all allocated shares, there remain approximately 1,051,112 common shares available for grant.

PSUs

PSUs comprise rights to receive common shares at a future date that are contingent on the Company and the grantee achieving certain performance objectives. The performance objective period is generally three years.

For the three months ended March 31, 2016, the Company recognized an expense of $737 related to PSUs (2015 – $501).

The following table summarizes PSU activity during the period:

	Number of PSUs
Outstanding at January 1, 2016		1,255,919
Granted		997,863
Vested and issued		(154,242)
Outstanding at March 31, 2016		2,099,540

Restricted Shares

Restricted shares generally vest at the end of one year; however, 200,000 restricted shares granted during the year ended December 31, 2011 vested in equal amounts over a five-year period commencing in 2012.

For the three months ended March 31, 2016, the Company recognized an expense of $154 (2015 – $129). As at March 31, 2016, the total remaining unrecognized compensation cost related to restricted shares amounted to approximately $90 which will be amortized over the remaining vesting periods.

The following table summarizes restricted share activity during the period:

	Number of     Restricted Shares
Outstanding at January 1, 2016		78,000
Vested and issued		(40,000)
Outstanding at March 31, 2016		38,000

FORM 10-Q

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MERCER INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands of U.S. dollars, except share and per share data)

Note 6. Shareholders’ Equity (continued)

Retained Earnings

	Three Months Ended March 31,
	2016		2015
Net income	$	8,769	$	13,634
Retained earnings, beginning of period		160,880		100,214
Cash dividend declared ($0.115 per common share)		(7,435)		-
Retained earnings, end of period	$	162,214	$	113,848

Note 7. Net Income Per Common Share

	Three Months Ended March 31,
	2016		2015
Net income
Basic and diluted	$	8,769	$	13,634
Net income per common share
Basic and diluted	$	0.14	$	0.21
Weighted average number of common shares outstanding:
Basic(1)		64,584,985		64,276,452
Effect of dilutive shares:
PSUs		273,102		341,516
Restricted shares		43,641		88,361
Diluted		64,901,728		64,706,329

(1) For the three months ended March 31, 2016, the basic weighted average number of shares excludes 38,000 restricted shares which have been issued, but have not vested as at March 31, 2016 (2015 – 78,000 restricted shares).

The calculation of diluted net income per common share does not assume the exercise of any instruments that would have an anti-dilutive effect on net income per common share. There were no anti-dilutive instruments for the three months ended March 31, 2016 and 2015.

Note 8. Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss are as follows:

	Foreign Currency Translation Adjustment			Unrecognized Losses and Prior Service Costs Related to Defined Benefit Plans			Unrealized Gains (Losses) on Marketable Securities			Total
Balance December 31, 2015	$	(156,223	)	$	(15,338	)	$	(13	)	$	(171,574	)
Other comprehensive income (loss) before reclassifications		52,336			-			(2	)		52,334
Amounts reclassified from accumulated other comprehensive income (loss)		-			290			-			290
Other comprehensive income (loss), net of taxes		52,336			290			(2	)		52,624
Balance March 31, 2016	$	(103,887	)	$	(15,048	)	$	(15	)	$	(118,950	)

FORM 10-Q

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MERCER INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands of U.S. dollars, except share and per share data)

Note 9. Derivative Transactions

The Company is exposed to certain market risks relating to its ongoing business. The Company seeks to manage these risks through internal risk management policies as well as, from time to time, the use of derivatives. The derivatives are measured at fair value with changes in fair value immediately recognized in loss on derivative instruments in the Interim Consolidated Statement of Operations.

Interest Rate Derivative

During 2002, the Company entered into certain variable-to-fixed interest rate swaps in connection with the Stendal mill with respect to an aggregate maximum amount of approximately €612.6 million of the principal amount of the indebtedness under the Stendal mill’s senior project finance facility, which was settled in November 2014. Under the remaining interest rate swaps, the Company pays a fixed rate and receives a floating rate with the derivative payments being calculated on a notional amount. As at March 31, 2016, the contract has a fair value of €15.8 million ($17,959; 2015 – $16,913) of which €9.6 million ($10,951; 2015 – $10,380) is classified as current within accounts payable and other and €6.2 million ($7,008; 2015 – $6,533) is classified as a long-term liability in the Interim Consolidated Balance Sheet. The contract has an aggregate notional amount of €192.4 million, a fixed interest rate of 5.28% and matures in October 2017.

The Company has pledged as collateral cash in the amount of 67% of the fair value of the interest rate swaps up to €8.5 million to the derivative counterparty. The calculation to determine the collateral is performed semi-annually, with the final calculation in October 2017. As at March 31, 2016, the collateral was €8.5 million ($9,682; 2015 – $9,230). This cash has been classified as restricted cash in the Interim Consolidated Balance Sheet.

The counterparty to the interest rate derivative is a bank that is a member of a banking syndicate that holds the Stendal €75.0 million revolving credit facility and the Company does not anticipate non-performance by the bank.

Note 10. Fair Value Measurement and Disclosure

Due to their short-term maturity, the carrying amounts of cash and cash equivalents, restricted cash, accounts receivable and accounts payable and other approximates their fair value.

The fair value of the interest rate derivative liability classified as Level 2 is determined using a discounted cash flow model that uses as its basis readily observable market inputs, such as forward interest rates and yield curves observable at specified intervals. The observable inputs reflect market data obtained from independent sources, including the Euribor rate provided by the counterparty to the interest rate derivative.

The fair value of debt classified as Level 2 is determined using quoted prices in a dealer market, or using recent market transactions.

The following table presents a summary of the Company’s outstanding financial instruments and their estimated fair values under the fair value hierarchy:

	Fair value measurements at March 31, 2016 using:
Description	Level 1		Level 2		Level 3		Total
Liabilities
Interest rate derivative	$	-	$	17,959	$	-	$	17,959
Debt
Senior Notes		-		626,635		-		626,635
	$	-	$	644,594	$	-	$	644,594

FORM 10-Q

QUARTERLY REPORT - PAGE 12

MERCER INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands of U.S. dollars, except share and per share data)

Note 10. Fair Value Measurement and Disclosure (continued)

	Fair value measurements at December 31, 2015 using:
Description	Level 1		Level 2		Level 3		Total
Liabilities
Interest rate derivative	$	-	$	16,913	$	-	$	16,913
Debt
Senior Notes		-		654,625		-		654,625
	$	-	$	671,538	$	-	$	671,538

Note 11. Commitments and Contingencies

(a) The Company is involved in legal actions and claims arising in the ordinary course of business. While the outcome of any legal actions and claims cannot be predicted with certainty, it is the opinion of management that the outcome of any such claim which is pending or threatened, either individually or on a combined basis, will not have a material adverse effect on the consolidated financial condition, results of operations or liquidity of the Company.

(b) In 2012, as a result of a regular tax field audit for the Stendal mill, German public authorities commenced a preliminary investigation into past managers of the mill relating to whether certain settlement amounts received by the Stendal mill in 2007, 2010 and 2011 from the main contractor under the contract for the construction of the Stendal mill should have reduced the assessment base for the original investment subsidies granted to the mill by German authorities. In March 2016, the German public authorities closed its investigation of the past managers of the mill, with no action taken against the past managers or the Company.

(c) The Company is subject to regulations that require the handling and disposal of asbestos in a prescribed manner if a property undergoes a major renovation or demolition. Otherwise, the Company is not required to remove asbestos from its facilities. Generally asbestos is found on steam and condensate piping systems as well as certain cladding on buildings and in building insulation throughout older facilities. The Company’s obligation for the proper removal and disposal of asbestos products from the Company’s mills is a conditional asset retirement obligation. As a result of the longevity of the Company’s mills, due in part to the maintenance procedures and the fact that the Company does not have plans for major changes that require the removal of asbestos, the timing of the asbestos removal is indeterminate. As a result, the Company is currently unable to reasonably estimate the fair value of its asbestos removal and disposal obligation. The Company will recognize a liability in the period in which sufficient information is available to reasonably estimate its fair value.

FORM 10-Q

QUARTERLY REPORT - PAGE 13

NON-GAAP FINANCIAL MEASURES

This quarterly report on Form 10-Q contains “non-GAAP financial measures”, that is, financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measure calculated and presented in accordance with the generally accepted accounting principles in the United States, referred to as “GAAP”. Specifically, we make use of the non-GAAP measure “Operating EBITDA”.

Operating EBITDA is defined as operating income (loss) plus depreciation and amortization and non-recurring capital asset impairment charges. We use Operating EBITDA as a benchmark measurement of our own operating results and as a benchmark relative to our competitors. We consider 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 actual cash costs, and depreciation expense varies widely from company to company in a manner that we consider largely independent of the underlying cost efficiency of our 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, or as an alternative to net cash from operating activities as a measure of liquidity. Operating EBITDA is an internal measure and therefore may not be comparable to other companies.

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. Some of these limitations are that Operating EBITDA does not reflect: (i) our cash expenditures, or future requirements, for capital expenditures or contractual commitments; (ii) changes in, or cash requirements for, working capital needs; (iii) the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our outstanding debt; (iv) noncontrolling interests in our Stendal northern bleached softwood kraft, or “NBSK”, pulp mill operations prior to our acquisition of 100% of the economic interest of Stendal in September 2014; (v) the impact of realized or marked to market changes in our derivative positions, which can be substantial; and (vi) the impact of impairment charges against our investments or assets. Because of these limitations, Operating EBITDA should only be considered as a supplemental performance measure and should not be considered as a measure of liquidity or cash available to us to invest in the growth of our business. Because all companies do not calculate Operating EBITDA in the same manner, Operating EBITDA as calculated by us may differ from Operating EBITDA or EBITDA as calculated by other companies. We compensate for these limitations by using Operating EBITDA as a supplemental measure of our performance and by relying primarily on our GAAP financial statements.

FORM 10-Q

QUARTERLY REPORT - PAGE 14

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In this document: (i) unless the context otherwise requires, references to “we”, “our”, “us”, the “Company” or “Mercer” mean Mercer International Inc. and its subsidiaries; (ii) references to “Mercer Inc.” mean the Company excluding its subsidiaries; (iii) information is provided as of March 31, 2016, unless otherwise stated; (iv) all references to “$” mean U.S. dollars, which is our reporting currency, “€” refers to euros and “C$” refers to Canadian dollars; (v) “ADMTs” refers to air-dried metric tonnes; and (vi) “MW” refers to megawatts and “MWh” refers to megawatt hours.

Results of Operations

General

We operate in the pulp business and our operations are located in Germany and Western Canada. Our mills have a current combined annual production capacity of approximately 1.5 million ADMTs of northern bleached softwood kraft pulp, referred to as “NBSK pulp”, and 305 MW of electrical generation.

The following discussion and analysis of our results of operations and financial condition for the three months ended March 31, 2016 should be read in conjunction with our interim consolidated financial statements and related notes included in this quarterly report, as well as our most recent annual report on Form 10-K for the fiscal year ended December 31, 2015 filed with the Securities and Exchange Commission, referred to as the “SEC”.

Current Market Environment

During the first quarter of 2016, pulp list prices decreased marginally in Europe and China, and were generally flat in North America, compared to the end of 2015. At the end of the current quarter, list prices in Europe, North America and China were approximately $790, $950 and $590 per ADMT, respectively.

In the first quarter of 2016, pulp prices in China declined slightly compared to the last quarter of 2015 as a result of downward pressure on the Chinese currency and weakening hardwood pulp prices. In Europe, pulp prices were also marginally lower in the first quarter of 2016 compared to the trailing quarter as a result of weakening hardwood pulp prices. This resulted in our average pulp sales realizations being approximately 5% lower in the first quarter of 2016 compared to the last quarter of 2015.

Currently, the NBSK pulp market is generally balanced with world producer inventories at about 30 days’ supply.

Looking forward we currently expect steady pulp demand in the second quarter of 2016 with some upward demand and price pressure in Europe and China resulting from seasonal maintenance downtime in Europe and lower inventories in China.

FORM 10-Q

QUARTERLY REPORT - PAGE 15

Our current 2016 annual maintenance downtime schedule for our mills is:

2016 Quarter	Celgar	Rosenthal	Stendal
	(number of days)
Second	18(1)	-	3
Third	-	12	-
Fourth	-	-	12

(1) Annual maintenance downtime for our Celgar mill was initially scheduled for 12 days but, on a further review of maintenance matters, was extended to 18 days.

Summary Financial Highlights

	Three Months Ended March 31,
	2016			2015
	(in thousands, other than per share amounts)
Pulp revenues	$	230,629		$	234,657
Energy and chemical revenues	$	23,214		$	22,890
Operating income	$	28,100		$	43,931
Operating EBITDA(1)	$	45,319		$	61,318
Foreign exchange gain (loss) on intercompany debt	$	555		$	(6,610	)
Loss on derivative instruments	$	(210	)	$	(524	)
Income tax provision	$	(6,199	)	$	(9,265	)
Net income	$	8,769		$	13,634
Net income per common share
Basic and diluted	$	0.14		$	0.21
Common shares outstanding at period end		64,656			64,464

(1) The following table provides a reconciliation of net income to operating income and Operating EBITDA for the periods indicated:

	Three Months Ended March 31,
	2016			2015
	(in thousands)
Net income	$	8,769		$	13,634
Income tax provision		6,199			9,265
Interest expense		13,191			13,884
Foreign exchange (gain) loss on intercompany debt		(555	)		6,610
Loss on derivative instruments		210			524
Other expense		286			14
Operating income		28,100			43,931
Add: Depreciation and amortization		17,219			17,387
Operating EBITDA	$	45,319		$	61,318

FORM 10-Q

QUARTERLY REPORT - PAGE 16

Selected Production, Sales and Other Data

	Three Months Ended March 31,
	2016		2015
Pulp production (‘000 ADMTs)		378.0		362.6
Annual maintenance downtime (‘000 ADMTs)		-		19.2
Annual maintenance downtime (days)		-		14
Pulp sales (‘000 ADMTs)		393.5		349.7
Average NBSK pulp list prices in Europe ($/ADMT)(1)		792		887
Average NBSK pulp list prices in North America ($/ADMT)(1)		943		995
Average NBSK pulp list prices in China ($/ADMT)(1)		590		663
Average pulp sales realizations ($/ADMT)(2)		580		665
Energy production (‘000 MWh)		475.5		455.0
Energy sales (‘000 MWh)		207.4		199.2
Average energy sales realizations ($/MWh)		93		95
Average Spot Currency Exchange Rates
$ / €(3)		1.1035		1.1246
$ / C$(3)		0.7301		0.8057

(1) Source: RISI pricing report.

(2) Sales realizations after discounts. Incorporates the effect of pulp price variations occurring between the order and shipment dates.

(3) Average Federal Reserve Bank of New York Noon Buying Rates over the reporting period.

Three Months Ended March 31, 2016 Compared to Three Months Ended March 31, 2015

Total revenues for the three months ended March 31, 2016 decreased marginally to $253.8 million from $257.5 million in the same quarter of 2015, due to lower pulp revenues.

Pulp revenues in the first quarter of 2016 decreased by approximately 2% to $230.6 million from $234.7 million in the same quarter of 2015, due to lower pulp sales realizations partially offset by higher sales volumes.

Energy and chemical revenues increased marginally to $23.2 million in the first quarter of 2016 from $22.9 million in the same quarter of 2015, primarily due to higher sales volumes.

Pulp production increased by approximately 4% to 377,992 ADMTs in the current quarter from 362,629 ADMTs in the same quarter of 2015, primarily due to no annual maintenance downtime in the current quarter compared to 14 days in the same quarter of 2015.

Pulp sales volumes increased by approximately 13% to 393,461 ADMTs in the current quarter from 349,691 ADMTs in the same quarter of 2015, primarily due to steady demand in both China and Europe.

In the current quarter of 2016, list prices for NBSK pulp declined from the same quarter of 2015, largely as a result of the stronger dollar and weakening hardwood pulp prices. Average list prices for NBSK pulp in Europe were approximately $792 per ADMT in the first quarter of 2016, compared to approximately $887 per ADMT in the same quarter of 2015. Average list prices for NBSK pulp in North America and China were approximately $943 per ADMT and $590 per ADMT, respectively, in the first quarter of 2016, compared to approximately $995 per ADMT and $663 per ADMT, respectively, in the same quarter of 2015.

FORM 10-Q

QUARTERLY REPORT - PAGE 17

Average pulp sales realizations decreased by approximately 13% to $580 per ADMT in the first quarter of 2016 from approximately $665 per ADMT in the same quarter last year, primarily due to lower list prices.

Near the end of the current quarter, the dollar weakened and as at March 31, 2016 was approximately 5% and 7% lower versus the euro and the Canadian dollar, respectively, compared to December 31, 2015. This resulted in a negative impact on our dollar-denominated cash balances and receivables which was partially offset by the positive impact of a stronger dollar during the quarter on our euro and Canadian dollar-denominated costs and expenses. The net impact of foreign exchange reduced our Operating EBITDA in the current quarter by $3.2 million compared to the same quarter of 2015 and by $9.2 million compared to the last quarter of 2015.

Costs and expenses in the current quarter increased by approximately 6% to $225.7 million from $213.6 million in the first quarter of 2015, primarily due to higher sales volumes partially offset by lower annual maintenance costs.

In the first quarter of 2016, operating depreciation and amortization decreased marginally to $17.0 million from $17.3 million in the same quarter of 2015, due to the impact of a stronger dollar relative to the euro and Canadian dollar.

Selling, general and administrative expenses increased to $11.8 million in the first quarter of 2016 from $11.4 million in the same quarter of 2015.

Transportation costs increased by approximately 6% to $18.3 million in the current quarter from $17.3 million in the same quarter of 2015 due to increased sales volumes.

On average, our overall per unit fiber costs in the current quarter decreased by approximately 10% from the same quarter of 2015, primarily as a result of a balanced wood market in both Germany and in the Celgar mill’s fiber basket. In the current quarter, in euro terms, average fiber prices in Germany were approximately 6% lower than the comparative quarter. In the current quarter, in Canadian dollar terms, average fiber prices for our Celgar mill were marginally lower than the comparative quarter.

In the first quarter of 2016, our operating income decreased by approximately 36% to $28.1 million from $43.9 million in the same quarter of 2015, primarily due to lower pulp sales realizations partially offset by lower annual maintenance costs and higher sales volumes.

Interest expense in the current quarter decreased to $13.2 million from $13.9 million in the same quarter of 2015, primarily as a result of lower indebtedness.

As a result of a weakening of the dollar versus the euro at the end of the first quarter of 2016, we recorded a non-cash gain on the foreign exchange translation of certain intercompany debt between Mercer Inc. and its wholly-owned subsidiaries, which increased our net income by $0.6 million.

In the current quarter, the non-cash unrealized derivative loss on the mark to market adjustment of our Stendal mill’s interest rate derivative was $0.2 million, compared to $0.5 million in the same quarter of 2015.

FORM 10-Q

QUARTERLY REPORT - PAGE 18

In the current quarter, other expense included a loss of $0.5 million, primarily due to the write-off of deferred financing costs associated with our repurchase and cancellation of $23.0 million of our 2019 Senior Notes.

During the first quarter of 2016, income tax expense decreased to $6.2 million from $9.3 million in the same quarter of 2015 due to lower taxable income for our German mills.

For the first quarter of 2016, we reported net income of $8.8 million, or $0.14 per basic and diluted share compared to net income of $13.6 million, or $0.21 per basic and diluted share, in the same quarter of 2015.

In the first quarter of 2016, Operating EBITDA decreased by approximately 26% to $45.3 million from $61.3 million in the same quarter of 2015, primarily as a result of lower pulp sales realizations partially offset by lower annual maintenance costs and higher sales volumes.

Liquidity and Capital Resources

Summary of Cash Flows

	Three Months Ended March 31,
	2016			2015
	(in thousands)
Net cash provided by operating activities	$	63,466		$	59,845
Net cash used in investing activities		(7,558	)		(7,715	)
Net cash (used in) provided by financing activities		(30,983	)		735
Effect of exchange rate on changes in cash and cash equivalents		5,315			(6,194	)
Net increase in cash and cash equivalents	$	30,240		$	46,671

Cash Flows from Operating Activities. We operate in a cyclical industry and our operating cash flows vary accordingly. Our principal operating cash expenditures are for labor, fiber and chemicals.

Working capital levels fluctuate throughout the year and are affected by maintenance downtime, changing sales patterns, seasonality and the timing of receivables and revenues and the payment of payables and expenses.

Cash provided by operating activities was $63.5 million in the three months ended March 31, 2016 and $59.8 million in the comparative period of 2015. An increase in accounts payable and accrued expenses provided cash of $13.2 million in the current period of 2016, compared to $27.8 million in the same period of 2015. A decrease in inventories provided cash of $14.6 million in the current period, compared to an increase in inventories using cash of $4.9 million in the comparative period of 2015. A decrease in accounts receivable, excluding non-cash items, provided cash of $4.0 million in the three months ended March 31, 2016, compared to an increase in accounts receivable using cash of $9.6 million in the same period of 2015.

Cash Flows from Investing Activities. Investing activities in the three months ended March 31, 2016 used cash of $7.6 million, primarily related to capital expenditures of $6.9 million. In the same period of 2015, investing activities used cash of $7.7 million.

FORM 10-Q

QUARTERLY REPORT - PAGE 19

Cash Flows from Financing Activities. In the first quarter of 2016, financing activities used cash of $31.0 million, including $23.1 million to repurchase and cancel $23.0 million of our 2019 Senior Notes and $7.4 million for the payment of dividends. In the same period of 2015, financing activities provided cash of $0.7 million.

Balance Sheet Data

The following table is a summary of selected financial information as at the dates indicated:

	March 31,		December 31,
	2016		2015
Financial Position	(in thousands)
Cash and cash equivalents	$	129,869	$	99,629
Total current assets	$	415,994	$	388,811
Total current liabilities	$	123,080	$	104,421
Working capital	$	292,914	$	284,390
Total assets	$	1,238,464	$	1,182,817
Debt	$	615,966	$	638,043
Total liabilities	$	800,639	$	799,841
Total equity	$	437,825	$	382,976

As a result of the weakening of the dollar versus the euro and the Canadian dollar as at March 31, 2016, we recorded a non-cash increase in the carrying value of our net assets, consisting primarily of our fixed assets, denominated in euros and Canadian dollars. This non-cash increase of approximately $52.3 million does not affect our net income, Operating EBITDA or cash flows but is reflected in our other comprehensive income (loss) and as an increase to our total equity.

Sources and Uses of Funds

Our principal sources of funds are cash flows from operations, cash and cash equivalents on hand and our revolving credit facilities. Our principal uses of funds consist of operating expenses, capital expenditures and semi-annual interest payments on our outstanding 7.0% Senior Notes due 2019 and 7.75% Senior Notes due 2022.

The following table sets out our total capital expenditures and interest expense for the periods indicated:

	Three Months Ended March 31,
	2016		2015
	(in thousands)
Capital expenditures	$	6,936	$	7,064
Cash paid for interest expense(1)	$	599	$	126
Interest expense(2)	$	13,191	$	13,884

(1) Amounts differ from interest expense which includes non-cash items. See supplemental disclosure of cash flow information from our Interim Consolidated Statement of Cash Flows included in this report.

(2) Interest on our 2019 Senior Notes and 2022 Senior Notes is paid semi-annually in June and December of each year.

In the current quarter, we expended $23.1 million to repurchase and cancel $23.0 million of our 2019 Senior Notes. We also paid a quarterly dividend of $0.115 per common share ($7.4 million) on January 5, 2016 to shareholders of record on December 28, 2015.

FORM 10-Q

QUARTERLY REPORT - PAGE 20

As at March 31, 2016, our cash and cash equivalents had increased to $129.9 million from $99.6 million at the end of 2015 and our working capital had increased to $292.9 million from $284.4 million at the end of 2015.

As at March 31, 2016, we had approximately $141.3 million available under our revolving credit facilities.

As at March 31, 2016, we had no material commitments to acquire assets or operating businesses.

Based upon the current level of operations and our current expectations for future periods in light of the current economic environment, and in particular, current and expected pulp pricing and foreign exchange rates, we believe that cash flow from operations and available cash, together with available borrowings under our revolving credit facilities, will be adequate to finance the capital requirements for our business including the payment of our quarterly dividend during the next 12 months.

In the future we may make acquisitions of businesses or assets or commitments to additional capital projects. To achieve the long-term goals of expanding our assets and earnings, including through acquisitions, capital resources will be required. Depending on the size of a transaction, the capital resources that will be required can be substantial. The necessary resources will be generated from cash flow from operations, cash on hand, borrowing against our assets or the issuance of securities.

Debt Covenants

Certain of our long-term obligations contain various financial tests and covenants customary to these types of arrangements. See our annual report on Form 10-K for the fiscal year ended December 31, 2015.

As at March 31, 2016, we were in full compliance with all of the covenants of our indebtedness.

Off-Balance Sheet Arrangements

At March 31, 2016, we did not have any off-balance sheet arrangements (as defined in Item 303(a)(4)(ii) of Regulation S-K).

Contractual Obligations and Commitments

There were no material changes outside the ordinary course to any of our material contractual obligations during the three months ended March 31, 2016.

Foreign Currency

As a majority of our assets, liabilities and expenditures are held or denominated in euros or Canadian dollars, our consolidated financial results are subject to foreign currency exchange rate fluctuations.

FORM 10-Q

QUARTERLY REPORT - PAGE 21

We translate foreign denominated assets and liabilities into dollars at the rate of exchange on the balance sheet date. Equity accounts are translated using historical exchange rates. Unrealized gains or losses from these translations are recorded in other comprehensive income (loss) and do not affect our net earnings.

As a result of the weakening of the dollar versus the euro and Canadian dollar as at March 31, 2016, we recorded a non-cash increase in the carrying value of our net assets, consisting primarily of our fixed assets, denominated in euros and Canadian dollars. As a result, our accumulated other comprehensive loss decreased to $119.0 million.

Based upon the exchange rate as at March 31, 2016, the dollar has weakened by approximately 5% and 7% in value against the euro and the Canadian dollar, respectively, since December 31, 2015. See “Quantitative and Qualitative Disclosures about Market Risk”.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect both the amount and the timing of the recording of assets, liabilities, revenues, and expenses in the consolidated financial statements and accompanying note disclosures. Our management routinely makes judgments and estimates about the effects of matters that are inherently uncertain. As the number of variables and assumptions affecting the probable future resolution of the uncertainties increases, these judgments become even more subjective and complex.

Our significant accounting policies are disclosed in Note 1 to our audited annual financial statements included in our annual report on Form 10-K for the fiscal year ended December 31, 2015. While all of the significant accounting policies are important to the consolidated financial statements, some of these policies may be viewed as having a high degree of judgment. On an ongoing basis using currently available information, management reviews its estimates, including those related to accounting for, among other things, pensions and other post-retirement benefit obligations, deferred income taxes (valuation allowance and permanent reinvestment), depreciation and amortization, future cash flows associated with impairment testing for long-lived assets, legal liabilities and contingencies. Actual results could differ materially from these estimates, and changes in these estimates are recorded when known.

We have identified certain accounting policies that are the most important to the portrayal of our current financial condition and results of operations.

For information about both our significant and critical accounting policies, see our annual report on Form 10-K for the fiscal year ended December 31, 2015.

Cautionary Statement Regarding Forward-Looking Information

The statements in this report that are not reported financial results or other historical information are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended.

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QUARTERLY REPORT - PAGE 22

Generally, forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, or words of similar meaning, or future or conditional verbs, such as “will”, “should”, “could”, or “may”, although not all forward-looking statements contain these identifying words. Forward-looking statements are based on expectations, forecasts and assumptions by our management and involve a number of risks, uncertainties and other factors, many of which are beyond our control, that could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. These factors include, but are not limited to, the following:

• our business is highly cyclical;

• a weakening of the global economy, including capital and credit markets, could adversely affect our business and financial results and have a material adverse effect on our liquidity and capital resources;

• our level of indebtedness could negatively impact our financial condition, results of operations and liquidity;

• cyclical fluctuations in the price and supply of our raw materials, particularly fiber, could adversely affect our business;

• we face intense competition in our markets;

• we are exposed to currency exchange rate fluctuations;

• we are subject to extensive environmental regulation and we could incur substantial costs as a result of compliance with, violations of or liabilities under applicable environmental laws and regulations;

• our business is subject to risks associated with climate change and social and government responses thereto;

• our new ERP system may cost more than expected, be delayed, fail to perform as planned and interrupt operational transactions during and following the implementation, which could adversely affect our operations and results of operations;

• we periodically use derivatives to manage certain risks which has caused significant fluctuations in our operating results;

• our operations require substantial capital and we may be unable to maintain adequate capital resources to provide for such capital requirements;

• future acquisitions may result in additional risks and uncertainties in our business;

• changes in credit ratings issued by nationally recognized statistical rating organizations could adversely affect our cost of financing and have an adverse effect on the market price of our securities;

• we rely on government grants and participate in German statutory energy programs;

• we are subject to risks related to our employees;

• we are dependent on key personnel;

• we may experience material disruptions to our production (including as a result of, among other things, planned and unplanned maintenance downtime);

FORM 10-Q

QUARTERLY REPORT - PAGE 23

• if our long-lived assets become impaired, we may be required to record non-cash impairment charges that could have a material impact on our results of operations;

• we may incur losses as a result of unforeseen or catastrophic events, including the emergence of a pandemic, terrorist attacks or natural disasters;

• our insurance coverage may not be adequate;

• we rely on third parties for transportation services;

• failures or security breaches of our information technology systems could disrupt our operations and negatively impact our business;

• the price of our common stock may be volatile;

• a small number of our shareholders could significantly influence our business;

• our international sales and operations are subject to applicable laws relating to trade, export controls and foreign corrupt practices, the violation of which could adversely affect our operations; and

• we are exposed to interest rate fluctuations.

Given these uncertainties, you should not place undue reliance on our forward-looking statements. The forgoing review of important factors is not exhaustive or necessarily in order of importance and should be read in conjunction with the risks and assumptions including those set forth in reports and other documents we have filed with or furnished to the SEC, including in our annual report on Form 10-K for the fiscal year ended December 31, 2015. We advise you that these cautionary remarks expressly qualify in their entirety all forward-looking statements attributable to us or persons acting on our behalf. Unless required by law, we do not assume any obligation to update forward-looking statements based on unanticipated events or changed expectations. However, you should carefully review the reports and other documents we file from time to time with the SEC.

Cyclical Nature of Business

Revenues

The pulp business is highly cyclical in nature and markets are characterized by periods of supply and demand imbalance, which in turn can materially affect prices. Pulp markets are sensitive to cyclical changes in the global economy, industry capacity and foreign exchange rates, all of which can have a significant influence on selling prices and our operating results. The length and magnitude of industry cycles have varied over time but generally reflect changes in macro-economic conditions and levels of industry capacity. Pulp is a commodity that is generally available from other producers. Because commodity products have few distinguishing qualities from producer to producer, competition is generally based upon price, which is generally determined by supply relative to demand.

Industry capacity can fluctuate as changing industry conditions can influence producers to idle production capacity or permanently close mills. In addition, to avoid substantial cash costs in idling or closing a mill, some producers will choose to operate at a loss, sometimes even a cash loss, which can prolong weak pricing environments due to oversupply. Oversupply of our products can also result from producers introducing new capacity in response to favorable pricing trends. Certain integrated pulp and paper producers have the ability to discontinue paper production by idling their paper machines and selling their NBSK pulp production on the market, if market conditions, prices and trends warrant such actions.

FORM 10-Q

QUARTERLY REPORT - PAGE 24

Demand for pulp has historically been determined primarily by general global macroeconomic conditions and has been closely tied to overall business activity. NBSK pulp prices have been and are likely to continue to be volatile and can fluctuate widely over time. Between 2005 and 2015, European list prices for NBSK pulp have fluctuated between a low of approximately $575 per ADMT in 2009 to a high of $1,030 per ADMT in 2011.

A producer’s actual pulp sales realizations are list prices net of customer discounts, rebates and other selling concessions. Over the last three years, these have increased as producers compete for customers and sales. Our pulp sales realizations may also be affected by NBSK price movements between the order and shipment dates.

Accordingly, prices for pulp are driven by many factors outside our control, and we have little influence over the timing and extent of price changes, which are often volatile. Because market conditions beyond our control determine the price for pulp, prices may fall below our cash production costs, requiring us to either incur short-term losses on product sales or cease production at one or more of our mills. Therefore, our profitability depends on managing our cost structure, particularly raw materials which represent a significant component of our operating costs and can fluctuate based upon factors beyond our control. If the prices of our products decline, or if prices for our raw materials increase, or both, our results of operations and cash flows could be materially adversely affected.

Costs

Our production costs are influenced by the availability and cost of raw materials, energy and labor, and our plant efficiencies and productivity. Our main raw material is fiber in the form of wood chips and pulp logs. Wood chip and pulp log costs are primarily affected by the supply of, and demand for, lumber and pulp, which are both highly cyclical. Over the last three years, the demand and competition for fiber has also been impacted by renewable energy producers in Germany, particularly by wood pellet producers. Higher fiber costs could affect producer profit margins if they are unable to pass along price increases to pulp customers or purchasers of surplus energy.

Currency

We have manufacturing operations in Germany and Canada. Most of the operating costs and expenses of our German mills are incurred in euros and those of our Celgar mill in Canadian dollars. However, the majority of our sales are in products quoted in dollars. Our results of operations and financial condition are reported in dollars. As a result, our costs generally benefit from a strengthening dollar but are adversely affected by a decrease in the value of the dollar relative to the euro and to the Canadian dollar. Such shifts in currencies relative to the euro and the Canadian dollar reduce our operating margins and the cash flow available to fund our operations and to service our debt. This could have a material adverse effect on our business, financial condition, results of operations and cash flows.

FORM 10-Q

QUARTERLY REPORT - PAGE 25

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks from changes in interest rates and foreign currency exchange rates, particularly the exchange rates between the U.S. dollar and the euro and Canadian dollar. Changes in these rates may affect our results of operations and financial condition and, consequently, our fair value. We seek to manage these risks through internal risk management policies as well as the periodic use of derivatives. We may use derivatives to reduce or limit our exposure to interest rate, currency and pulp price risks. We use derivatives to reduce our potential losses or to augment our potential gains, depending on our management’s perception of future economic events and developments. These types of derivatives are generally highly speculative in nature. They are also very volatile as they are highly leveraged given that margin requirements are relatively low in proportion to notional amounts.

For additional information, please refer to Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk included in our annual report on Form 10-K for the fiscal year ended December 31, 2015.

We record unrealized gains and losses on our outstanding derivatives when they are marked to market at the end of each reporting period and realized gains or losses on them when they are settled. We determine market valuations based primarily upon valuations provided by our counterparties.

During the first quarter of 2016, we recorded a non-cash unrealized derivative loss of approximately $0.2 million on our outstanding interest rate derivative, compared to a non-cash unrealized derivative loss of approximately $0.5 million in the same period of 2015.

FORM 10-Q

QUARTERLY REPORT - PAGE 26

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, referred to as the “Exchange Act”), as of the end of the period covered by this report. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive officer and principal financial officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act.

It should be noted that any system of controls is based in part upon certain assumptions designed to obtain reasonable (and not absolute) assurance as to its effectiveness and there can be no assurance that any design will succeed in achieving its stated goals.

Changes in Internal Controls

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

FORM 10-Q

QUARTERLY REPORT - PAGE 27

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are subject to routine litigation incidental to our business, including that which is described in our latest annual report on Form 10-K for the fiscal year ended December 31, 2015. We do not believe that the outcome of such litigation will have a material adverse effect on our business or financial condition.

ITEM 1A. RISK FACTORS

As of March 31, 2016, there have been no material changes to the factors disclosed in Item 1A. Risk Factors in our latest annual report on Form 10-K for the fiscal year ended December 31, 2015.

ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

FORM 10-Q

QUARTERLY REPORT - PAGE 28

ITEM 6. EXHIBITS

Exhibit No.	Description
31.1	Section 302 Certification of Chief Executive Officer
31.2	Section 302 Certification of Chief Financial Officer
32.1*	Section 906 Certification of Chief Executive Officer
32.2*	Section 906 Certification of Chief Financial Officer
101	The following financial statements from the Company’s Form 10-Q for the fiscal period ended March 31, 2016, formatted in XBRL: (i) Interim Consolidated Balance Sheets; (ii) Interim Consolidated Statements of Operations; (iii) Interim Consolidated Statements of Retained Earnings; (iv) Interim Consolidated Statements of Comprehensive Income (Loss); (v) Interim Consolidated Statements of Cash Flows; and (vi) Notes to Interim Consolidated Financial Statements.

* In accordance with Release No. 33-8212 of the SEC, these Certifications: (i) are “furnished” to the SEC and are not “filed” for the purposes of liability under the Securities Exchange Act of 1934, as amended; and (ii) are not to be subject to automatic incorporation by reference into any of the Company’s registration statements filed under the Securities Act of 1933, as amended, for the purposes of liability thereunder or any offering memorandum, unless the Company specifically incorporates them by reference therein.

FORM 10-Q

QUARTERLY REPORT - PAGE 29

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, thereunto duly authorized.

MERCER INTERNATIONAL INC.
By:	/s/ David M. Gandossi
	David M. Gandossi
	Chief Executive Officer and President

Date: April 28, 2016

FORM 10-Q

QUARTERLY REPORT - PAGE 30

EX-31.1

Exhibit 31.1

CERTIFICATION OF PERIODIC REPORT

I, David M. Gandossi, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Mercer International Inc. (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: April 28, 2016

/s/ David M. Gandossi

David M. Gandossi

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF PERIODIC REPORT

I, David K. Ure, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Mercer International Inc. (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: April 28, 2016

/s/ David K. Ure

David K. Ure

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF PERIODIC REPORT

I, David M. Gandossi, Chief Executive Officer of Mercer International Inc. (the “Company”), certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) the Quarterly Report on Form 10-Q of the Company for the quarterly period ended March 31, 2016 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: April 28, 2016

/s/ David M. Gandossi

David M. Gandossi

Chief Executive Officer

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to Mercer International Inc. and will be retained by Mercer International Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

EX-32.2

Exhibit 32.2

CERTIFICATION OF PERIODIC REPORT

I, David K. Ure, Chief Financial Officer of Mercer International Inc. (the “Company”), certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) the Quarterly Report on Form 10-Q of the Company for the quarterly period ended March 31, 2016 (the “Report”) fully complies with the requirements of Section 13(a) or 15 (d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: April 28, 2016

/s/ David K. Ure

David K. Ure

Chief Financial Officer

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to Mercer International Inc. and will be retained by Mercer International Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	Apr. 27, 2016
Document and Entity Information
Entity Registrant Name	MERCER INTERNATIONAL INC.
Entity Central Index Key	0001333274
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Trading Symbol	merc
Amendment Flag	false
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		64,656,138

XML

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Revenues
Pulp	$ 230,629	$ 234,657
Energy and chemicals	23,214	22,890
Total revenues	253,843	257,547
Costs and expenses
Operating costs, excluding depreciation and amortization	196,942	184,948
Operating depreciation and amortization	17,032	17,304
Selling, general and administrative expenses	11,769	11,364
Operating income	28,100	43,931
Other income (expense)
Interest expense	(13,191)	(13,884)
Foreign exchange gain (loss) on intercompany debt	555	(6,610)
Loss on derivative instruments (Note 9)	210	524
Other expense	(286)	(14)
Total other expense	(13,132)	(21,032)
Income before provision for income taxes	14,968	22,899
Current income tax provision	(1,753)	(3,352)
Deferred income tax provision	(4,446)	(5,913)
Net income	$ 8,769	$ 13,634
Net income per common share (Note 7)
Basic and diluted	$ 0.14	$ 0.21
Cash dividend declared per common share (Note 6)	$ 0.115	$ 0

XML

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Statement of Comprehensive Income [Abstract]
Net income	$ 8,769	$ 13,634
Other comprehensive income (loss), net of taxes
Foreign currency translation adjustment (net of tax effect of $nil in all periods)	52,336	(111,805)
Change in unrecognized losses and prior service costs related to defined benefit plans (net of tax effect of $nil in all periods)	290	248
Change in unrealized gains/losses on marketable securities (net of tax effect of $nil in all periods)	(2)	(71)
Other comprehensive income (loss), net of taxes	52,624	(111,628)
Comprehensive income (loss)	$ 61,393	$ (97,994)

XML

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Statement of Comprehensive Income [Abstract]
Foreign currency translation adjustment, tax effect	$ 0	$ 0
Changes in unrecognized losses and prior service costs related to defined benefit plans, tax effect	0	0
Change in unrealized gains/losses on marketable securities, tax effect	$ 0	$ 0

XML

INTERIM CONSOLIDATED BALANCE SHEETS $ in Thousands, € in Millions	Mar. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Current assets
Cash and cash equivalents	$ 129,869	$ 99,629
Restricted cash (Note 9)	9,682	9,230
Accounts receivable	137,344	134,254
Inventories (Note 2)	133,688	141,001
Prepaid expenses and other	5,411	4,697
Total current assets	415,994	388,811
Property, plant and equipment, net	791,893	762,391
Intangible and other assets	9,333	8,461
Deferred income tax	21,244	23,154
Total assets	1,238,464	1,182,817
Current liabilities
Accounts payable and other (Note 3)	122,044	103,450
Pension and other post-retirement benefit obligations (Note 5)	1,036	971
Total current liabilities	123,080	104,421
Debt (Note 4)	615,966	638,043
Interest rate derivative liability (Note 9)	7,008	6,533
Pension and other post-retirement benefit obligations (Note 5)	26,916	25,374
Capital leases and other	12,304	12,299
Deferred income tax	15,365	13,171
Total liabilities	800,639	799,841
Shareholders’ equity
Common shares $1 par value; 200,000,000 authorized; 64,656,000 issued and outstanding (2015 – 64,502,000)	64,618	64,424
Additional paid-in capital	329,943	329,246
Retained earnings (Note 6)	162,214	160,880
Accumulated other comprehensive loss (Note 8)	(118,950)	(171,574)
Total shareholders’ equity	437,825	382,976
Total liabilities and shareholders’ equity	$ 1,238,464	$ 1,182,817
Commitments and contingencies (Note 11)

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Common Stock, Shares Authorized (in shares)	200,000,000	200,000,000
Common Stock, Shares, Issued (in shares)	64,656,000	64,502,000
Common Stock, Shares, Outstanding (in shares)	64,656,000	64,502,000
Common Stock, Par or Stated Value Per Share (in usd per share)	$ 1	$ 1

XML

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Cash flows from (used in) operating activities
Net income	$ 8,769	$ 13,634
Adjustments to reconcile net income to cash flows from operating activities
Unrealized loss on derivative instruments	210	524
Depreciation and amortization	17,219	17,387
Deferred income taxes	4,446	5,913
Foreign exchange (gain) loss on intercompany debt	(555)	6,610
Defined benefit pension plan and other post-retirement benefit plan expense	476	709
Stock compensation expense	891	630
Other	1,016	456
Defined benefit pension plan and other post-retirement benefit plan contributions	(426)	(475)
Changes in working capital
Accounts receivable	3,953	(9,621)
Inventories	14,636	(4,921)
Accounts payable and accrued expenses	13,210	27,773
Other	(379)	1,226
Net cash from (used in) operating activities	63,466	59,845
Cash flows from (used in) investing activities
Purchase of property, plant and equipment	(6,936)	(7,064)
Purchase of intangible assets	(520)	(873)
Other	(102)	222
Net cash from (used in) investing activities	(7,558)	(7,715)
Cash flows from (used in) financing activities
Repurchase of notes	(23,079)	0
Dividend payment	(7,418)	0
Proceeds from (repayment of) revolving credit facilities, net	0	953
Other	(486)	(218)
Net cash from (used in) financing activities	(30,983)	735
Effect of exchange rate changes on cash and cash equivalents	5,315	(6,194)
Net increase in cash and cash equivalents	30,240	46,671
Cash and cash equivalents, beginning of period	99,629	53,172
Cash and cash equivalents, end of period	129,869	99,843
Supplemental cash flow disclosure
Cash paid for interest	599	126
Cash paid for income taxes	$ 4,630	$ 413

XML

The Company And Summary Of Significant Accounting Policies

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

The Company And Summary Of Significant Accounting Policies

The Company and Summary of Significant Accounting Policies

Nature of Operations and Basis of Presentation

The interim consolidated financial statements contained herein include the accounts of Mercer International Inc. ("Mercer Inc.") and all of its subsidiaries (collectively the "Company"). The Company’s shares of common stock are quoted and listed for trading on both the NASDAQ Global Market and the Toronto Stock Exchange.

The interim consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission (the "SEC"). The year-end Consolidated Balance Sheet data was derived from audited financial statements. The footnote disclosure included herein has been prepared in accordance with accounting principles generally accepted for interim financial statements in the United States ("GAAP"). The interim consolidated financial statements should be read together with the audited consolidated financial statements and accompanying notes included in the Company’s latest annual report on Form 10‑K for the fiscal year ended December 31, 2015. In the opinion of the Company, the unaudited interim consolidated financial statements contained herein contain all adjustments necessary for a fair statement of the results of the interim periods included. The results for the periods included herein may not be indicative of the results for the entire year.

The Company has three pulp mills that are aggregated into one reportable business segment, market pulp. Accordingly, the results presented are those of the reportable business segment.

In these interim consolidated financial statements, unless otherwise indicated, all amounts are expressed in United States dollars ("U.S. dollars" or "$"). The symbol “€” refers to euros and the symbol "C$" refers to Canadian dollars.

Use of Estimates

Preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant management judgment is required in determining the accounting for, among other things, pensions and other post-retirement benefit obligations, deferred income taxes (valuation allowance and permanent reinvestment), depreciation and amortization, future cash flows associated with impairment testing for long-lived assets, legal liabilities and contingencies. Actual results could differ materially from these estimates, and changes in these estimates are recorded when known.

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014-9, Revenue Recognition – Revenue from Contracts with Customers (“ASU 2014-9”) that requires companies to recognize revenue when a customer obtains control rather than when companies have transferred substantially all risks and rewards of a good or service. This update is effective for annual reporting periods beginning on or after December 15, 2017 and interim periods therein and requires expanded disclosures. The Company is currently assessing the impact, if any, the adoption of ASU 2014-9 will have on its consolidated financial statements.

In July 2015, the Financial Accounting Standards Board issued Accounting Standards Update 2015-11, Simplifying the Measurement of Inventory (“ASU 2015-11”) which requires that inventory within the scope of this update, including inventory stated at average cost, be measured at the lower of cost and net realizable value. This update is effective for financial statements issued for fiscal years beginning after December 15, 2016, with early adoption permitted as of the beginning of an interim or annual reporting period. The adoption of this accounting guidance will not materially impact the Company’s financial position.

In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-2, Leases (“ASU 2016-2”) which requires lessees to recognize virtually all of their leases on the balance sheet, by recording a right-of-use asset and liability. This update is effective for financial statements issued for fiscal years beginning after December 15, 2018, with early adoption permitted as of the beginning of an interim or annual reporting period. The Company is currently assessing the impact the adoption of ASU 2016-2 will have on its consolidated financial statements.

Note 1. The Company and Summary of Significant Accounting Policies (continued)

In March 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-9,  Improvements to Employee Share-Based Payment Accounting (“ASU 2016-9”) which simplifies several aspects of accounting for share-based payment transactions including income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows and accounting for forfeitures. This update is effective for financial statements issued for fiscal years beginning after December 15, 2016. The Company is currently assessing the impact the adoption of ASU 2016-9 will have on its consolidated financial statements.

XML

Inventories

3 Months Ended

Mar. 31, 2016

Inventory, Net [Abstract]

Inventories

Inventories

	March 31,		December 31,
	2016		2015
Raw materials	$	52,494	$	57,592
Finished goods	29,821		36,829
Spare parts and other	51,373		46,580
	$	133,688	$	141,001

XML

Accounts Payable and Other

3 Months Ended

Mar. 31, 2016

Payables and Accruals [Abstract]

Accounts Payable and Other

Accounts Payable and Other

	March 31,		December 31,
	2016		2015
Trade payables	$	25,550	$	20,637
Accrued expenses	54,892		55,648
Accrued interest payable	15,938		4,050
Interest rate derivative liability, current portion (Note 9)	10,951		10,380
Dividend payable (Note 6)	7,435		7,418
Other	7,278		5,317
	$	122,044	$	103,450

XML

Debt

3 Months Ended

Mar. 31, 2016

Debt Disclosure [Abstract]

Debt

Debt

	March 31,		December 31,
	2016		2015
2019 Senior Notes, unsecured, $227,000 face value (a)	$	223,336	$	245,689
2022 Senior Notes, unsecured, $400,000 face value (a)	392,630		392,354
Revolving credit facilities
€75.0 million (b)	—		—
C$40.0 million (c)	—		—
€25.0 million (d)	—		—
€5.0 million (e)	—		—
	$	615,966	$	638,043

Note 4. Debt (continued)

As at March 31, 2016, the maturities of the principal portion of debt are as follows:

2016	$	—
2017	—
2018	—
2019	227,000
2020	—
Thereafter	400,000
	$	627,000

Certain of the Company’s debt instruments were issued under agreements which, among other things, may limit its ability and the ability of its subsidiaries to make certain payments, including dividends. These limitations are subject to specific exceptions. As at March 31, 2016, the Company is in compliance with the terms of its debt agreements.

(a) On November 26, 2014, the Company issued $650,000 of senior notes consisting of $250,000 in aggregate principal amount of 7.00% senior notes which mature on December 1, 2019 (“2019 Senior Notes”) and $400,000 in aggregate principal amount of 7.75% senior notes which mature on December 1, 2022 (“2022 Senior Notes” and collectively with the 2019 Senior Notes, the “Senior Notes”). The Senior Notes were issued at a price of 100% of their principal amount. Upon their issuance the Senior Notes were recorded at $635,949 which included debt issuance costs of $14,051. These costs were proportionally allocated to the 2019 Senior Notes and the 2022 Senior Notes.

The Senior Notes are general unsecured senior obligations of the Company. They rank equal in right of payment with all existing and future unsecured senior indebtedness of the Company and are senior in right of payment to any current or future subordinated indebtedness of the Company. The Senior Notes are effectively junior in right of payment to all existing and future secured indebtedness, to the extent of the assets securing such indebtedness, and all indebtedness and liabilities of the Company’s subsidiaries.

The Company may redeem all or a part of the Senior Notes, upon not less than 30 days’ or more than 60 days’ notice, at the redemption prices (expressed as percentages of principal amount) discussed below, plus accrued and unpaid interest to (but not including) the applicable redemption date. The 2019 Senior Notes redemption prices are equal to 103.50% for the twelve month period beginning on December 1, 2016, 101.75% for the twelve month period beginning on December 1, 2017, and 100.00% beginning on December 1, 2018 and at any time thereafter. The 2022 Senior Notes redemption prices are equal to 105.813% for the twelve month period beginning on December 1, 2017, 103.875% for the twelve month period beginning on December 1, 2018, 101.938% for the twelve month period beginning on December 1, 2019, and 100.00%beginning on December 1, 2020 and at any time thereafter.

In March 2016, the Company purchased $23,000 in aggregate principal amount of its 2019 Senior Notes. In connection with this purchase the Company recorded a loss on extinguishment of debt of $454 in other expense in the Interim Consolidated Statement of Operations which included the write-off of unamortized debt issuance costs.

(b) A €75.0 million revolving credit facility at the Stendal mill that matures in October 2019. Borrowings under the facility are collateralized by the mill’s inventory and accounts receivable and bear interest at Euribor plus 3.50%. As at March 31, 2016, approximately €75.0 million ($85,433) was available.

(c) A C$40.0 million revolving credit facility at the Celgar mill that matures in May 2019. Borrowings under the facility are collateralized by the mill’s inventory and accounts receivable and are restricted by a borrowing base calculated on the mill’s inventory and accounts receivable. Canadian dollar denominated amounts bear interest at bankers acceptance plus 1.50% or Canadian prime. U.S. dollar denominated amounts bear interest at LIBOR plus 1.50% or U.S. base. As at March 31, 2016, approximately C$1.7 million ($1,310) was supporting letters of credit and approximately C$38.3 million ($29,528) was available.

Note 4. Debt (continued)

(d) A €25.0 million revolving credit facility at the Rosenthal mill that matures in October 2019. Borrowings under the facility are collateralized by the mill’s inventory and accounts receivable and bear interest at Euribor plus 2.95%. As at March 31, 2016, approximately €3.1 million ($3,487) of this facility was supporting bank guarantees leaving approximately €21.9 million ($24,991) available.

(e) A €5.0 million revolving credit facility at the Rosenthal mill that matures in December 2018. Borrowings under this facility bear interest at the rate of the three-month Euribor plus 2.50% and are secured by certain land at the Rosenthal mill. As at March 31, 2016, approximately €3.8 million ($4,309) of this facility was supporting bank guarantees leaving approximately €1.2 million ($1,386) available.

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Pension and Other Post-Retirement Benefit Obligations

3 Months Ended

Mar. 31, 2016

Compensation and Retirement Disclosure [Abstract]

Pension and Other Post-Retirement Benefit Obligations

Pension and Other Post-Retirement Benefit Obligations

Defined Benefit Plans

Included in pension and other post-retirement benefit obligations are amounts related to the Company’s Celgar and Rosenthal mills. The largest component of these obligations is with respect to the Celgar mill which maintains a defined benefit pension plan and other post-retirement benefit plans for certain employees (the “Celgar Defined Benefit Plans”).

Pension benefits are based on employees’ earnings and years of service. The Celgar Defined Benefit Plans are funded by contributions from the Company based on actuarial estimates and statutory requirements.

The components of the net periodic benefit costs relating to the Celgar Defined Benefit Plans, for the three months ended March 31, 2016 and 2015 were as follows:

	Three Months Ended March 31,
	2016						2015
	Pension			Other Post-Retirement Benefits			Pension			Other Post-Retirement Benefits
Service cost	$	22		$	117		$	31		$	205
Interest cost	261			251			448			326
Expected return on plan assets	(465		)	—			(529		)	—
Amortization of unrecognized items	334			(44		)	226			2
Net periodic benefit cost	$	152		$	324		$	176		$	533

Defined Contribution Plan

Effective December 31, 2008, the Celgar Defined Benefit Plans were closed to new members. In addition, the defined benefit service accrual ceased on December 31, 2008, and members began to receive pension benefits, at a fixed contractual rate, under a new defined contribution plan effective January 1, 2009. During the three months ended March 31, 2016, the Company made contributions of $163 (2015 – $169) to this plan.

Multiemployer Plan

The Company participates in a multiemployer plan for the hourly-paid employees at the Celgar mill. The contributions to the plan are determined based on a percentage of pensionable earnings pursuant to a collective bargaining agreement. The Company has no current or future contribution obligations in excess of the contractual contributions. Contributions during the three months ended March 31, 2016 totaled $376 (2015 – $451).

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Shareholders' Equity

3 Months Ended

Mar. 31, 2016

Equity [Abstract]

Shareholders' Equity

Shareholders’ Equity

Dividends

In February 2016, the Company’s Board of Directors declared a quarterly dividend of $0.115 per common share. Payment of the dividend was made on April 5, 2016 to all shareholders of record on March 28, 2016.

In April 2016, the Company’s Board of Directors declared a quarterly dividend of $0.115 per common share. Payment of the dividend will be made on July 7, 2016 to all shareholders of record on June 27, 2016. Future dividends are subject to approval by the Board of Directors and may be adjusted as business and industry conditions warrant.

Stock Based Compensation

In June 2010, the Company adopted a stock incentive plan (the “2010 Plan”) which provides for options, restricted stock rights, restricted shares, performance shares, performance share units (“PSUs”) and stock appreciation rights to be awarded to employees, consultants and non-employee directors. During the three months ended March 31, 2016, there were no issued and outstanding stock options, restricted stock rights, performance shares or stock appreciation rights. As at March 31, 2016, after factoring in all allocated shares, there remain approximately 1,051,112 common shares available for grant.

PSUs

PSUs comprise rights to receive common shares at a future date that are contingent on the Company and the grantee achieving certain performance objectives. The performance objective period is generally three years.

For the three months ended March 31, 2016, the Company recognized an expense of $737 related to PSUs (2015 – $501).

The following table summarizes PSU activity during the period:

	Number of PSUs
Outstanding at January 1, 2016	1,255,919
Granted	997,863
Vested and issued	(154,242	)
Outstanding at March 31, 2016	2,099,540

Restricted Shares

Restricted shares generally vest at the end of one year; however, 200,000 restricted shares granted during the year ended December 31, 2011 vested in equal amounts over a five-year period commencing in 2012.

For the three months ended March 31, 2016, the Company recognized an expense of $154 (2015 – $129). As at March 31, 2016, the total remaining unrecognized compensation cost related to restricted shares amounted to approximately $90 which will be amortized over the remaining vesting periods.

The following table summarizes restricted share activity during the period:

	Number of  Restricted Shares
Outstanding at January 1, 2016	78,000
Vested and issued	(40,000	)
Outstanding at March 31, 2016	38,000

Note 6. Shareholders’ Equity (continued)

Retained Earnings

	Three Months Ended March 31,
	2016			2015
Net income	$	8,769		$	13,634
Retained earnings, beginning of period	160,880			100,214
Cash dividend declared ($0.115 per common share)	(7,435		)	—
Retained earnings, end of period	$	162,214		$	113,848

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Net Income Per Common Share

3 Months Ended

Mar. 31, 2016

Earnings Per Share [Abstract]

Net Income Per Common Share

Net Income Per Common Share

	Three Months Ended March 31,
	2016		2015
Net income
Basic and diluted	$	8,769	$	13,634
Net income per common share
Basic and diluted	$	0.14	$	0.21
Weighted average number of common shares outstanding:
Basic(1)	64,584,985		64,276,452
Effect of dilutive shares:
PSUs	273,102		341,516
Restricted shares	43,641		88,361
Diluted	64,901,728		64,706,329

(1) For the three months ended March 31, 2016, the basic weighted average number of shares excludes 38,000 restricted shares which have been issued, but have not vested as at March 31, 2016 (2015 – 78,000 restricted shares).

The calculation of diluted net income per common share does not assume the exercise of any instruments that would have an anti-dilutive effect on net income per common share. There were no anti-dilutive instruments for the three months ended March 31, 2016 and 2015.

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Accumulated Other Comprehensive Loss

3 Months Ended

Mar. 31, 2016

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss are as follows:

	Foreign Currency Translation Adjustment			Unrecognized Losses and Prior Service Costs Related to Defined Benefit Plans			Unrealized Gains (Losses) on Marketable Securities			Total
Balance December 31, 2015	$	(156,223	)	$	(15,338	)	$	(13	)	$	(171,574	)
Other comprehensive income (loss) before reclassifications	52,336			—			(2		)	52,334
Amounts reclassified from accumulated other comprehensive income (loss)	—			290			—			290
Other comprehensive income (loss), net of taxes	52,336			290			(2		)	52,624
Balance March 31, 2016	$	(103,887	)	$	(15,048	)	$	(15	)	$	(118,950	)

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Derivative Transactions

3 Months Ended

Mar. 31, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Transactions

Derivative Transactions

The Company is exposed to certain market risks relating to its ongoing business. The Company seeks to manage these risks through internal risk management policies as well as, from time to time, the use of derivatives. The derivatives are measured at fair value with changes in fair value immediately recognized in loss on derivative instruments in the Interim Consolidated Statement of Operations.

Interest Rate Derivative

During 2002, the Company entered into certain variable-to-fixed interest rate swaps in connection with the Stendal mill with respect to an aggregate maximum amount of approximately €612.6 million of the principal amount of the indebtedness under the Stendal mill’s senior project finance facility, which was settled in November 2014. Under the remaining interest rate swaps, the Company pays a fixed rate and receives a floating rate with the derivative payments being calculated on a notional amount. As at March 31, 2016, the contract has a fair value of €15.8 million ($17,959; 2015 – $16,913) of which €9.6 million ($10,951; 2015 – $10,380) is classified as current within accounts payable and other and €6.2 million ($7,008; 2015 – $6,533) is classified as a long-term liability in the Interim Consolidated Balance Sheet. The contract has an aggregate notional amount of €192.4 million, a fixed interest rate of 5.28% and matures in October 2017.

The Company has pledged as collateral cash in the amount of 67% of the fair value of the interest rate swaps up to €8.5 million to the derivative counterparty. The calculation to determine the collateral is performed semi-annually, with the final calculation in October 2017. As at March 31, 2016, the collateral was €8.5 million ($9,682; 2015 – $9,230). This cash has been classified as restricted cash in the Interim Consolidated Balance Sheet.

The counterparty to the interest rate derivative is a bank that is a member of a banking syndicate that holds the Stendal €75.0 million revolving credit facility and the Company does not anticipate non-performance by the bank.

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Fair Value Measurement and Disclosure

3 Months Ended

Mar. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurement and Disclosure

Fair Value Measurement and Disclosure

Due to their short-term maturity, the carrying amounts of cash and cash equivalents, restricted cash, accounts receivable and accounts payable and other approximates their fair value.

The fair value of the interest rate derivative liability classified as Level 2 is determined using a discounted cash flow model that uses as its basis readily observable market inputs, such as forward interest rates and yield curves observable at specified intervals. The observable inputs reflect market data obtained from independent sources, including the Euribor rate provided by the counterparty to the interest rate derivative.

The fair value of debt classified as Level 2 is determined using quoted prices in a dealer market, or using recent market transactions.

The following table presents a summary of the Company’s outstanding financial instruments and their estimated fair values under the fair value hierarchy:

	Fair value measurements at March 31, 2016 using:
Description	Level 1		Level 2		Level 3		Total
Liabilities
Interest rate derivative	$	—	$	17,959	$	—	$	17,959
Debt
Senior Notes	—		626,635		—		626,635
	$	—	$	644,594	$	—	$	644,594

Note 10. Fair Value Measurement and Disclosure (continued)

	Fair value measurements at December 31, 2015 using:
Description	Level 1		Level 2		Level 3		Total
Liabilities
Interest rate derivative	$	—	$	16,913	$	—	$	16,913
Debt
Senior Notes	—		654,625		—		654,625
	$	—	$	671,538	$	—	$	671,538

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

(a) The Company is involved in legal actions and claims arising in the ordinary course of business. While the outcome of any legal actions and claims cannot be predicted with certainty, it is the opinion of management that the outcome of any such claim which is pending or threatened, either individually or on a combined basis, will not have a material adverse effect on the consolidated financial condition, results of operations or liquidity of the Company.

(b) In 2012, as a result of a regular tax field audit for the Stendal mill, German public authorities commenced a preliminary investigation into past managers of the mill relating to whether certain settlement amounts received by the Stendal mill in 2007, 2010 and 2011 from the main contractor under the contract for the construction of the Stendal mill should have reduced the assessment base for the original investment subsidies granted to the mill by German authorities. In March 2016, the German public authorities closed its investigation of the past managers of the mill, with no action taken against the past managers or the Company.

(d) The Company is subject to regulations that require the handling and disposal of asbestos in a prescribed manner if a property undergoes a major renovation or demolition. Otherwise, the Company is not required to remove asbestos from its facilities. Generally asbestos is found on steam and condensate piping systems as well as certain cladding on buildings and in building insulation throughout older facilities. The Company’s obligation for the proper removal and disposal of asbestos products from the Company’s mills is a conditional asset retirement obligation. As a result of the longevity of the Company’s mills, due in part to the maintenance procedures and the fact that the Company does not have plans for major changes that require the removal of asbestos, the timing of the asbestos removal is indeterminate. As a result, the Company is currently unable to reasonably estimate the fair value of its asbestos removal and disposal obligation. The Company will recognize a liability in the period in which sufficient information is available to reasonably estimate its fair value.

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The Company And Summary Of Significant Accounting Policies (Policy)

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Nature of Operations and Basis of Presentation

Nature of Operations and Basis of Presentation

The interim consolidated financial statements contained herein include the accounts of Mercer International Inc. ("Mercer Inc.") and all of its subsidiaries (collectively the "Company"). The Company’s shares of common stock are quoted and listed for trading on both the NASDAQ Global Market and the Toronto Stock Exchange.

The interim consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission (the "SEC"). The year-end Consolidated Balance Sheet data was derived from audited financial statements. The footnote disclosure included herein has been prepared in accordance with accounting principles generally accepted for interim financial statements in the United States ("GAAP"). The interim consolidated financial statements should be read together with the audited consolidated financial statements and accompanying notes included in the Company’s latest annual report on Form 10‑K for the fiscal year ended December 31, 2015. In the opinion of the Company, the unaudited interim consolidated financial statements contained herein contain all adjustments necessary for a fair statement of the results of the interim periods included. The results for the periods included herein may not be indicative of the results for the entire year.

The Company has three pulp mills that are aggregated into one reportable business segment, market pulp. Accordingly, the results presented are those of the reportable business segment.

In these interim consolidated financial statements, unless otherwise indicated, all amounts are expressed in United States dollars ("U.S. dollars" or "$"). The symbol “€” refers to euros and the symbol "C$" refers to Canadian dollars.

Use of Estimates

Use of Estimates

Preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant management judgment is required in determining the accounting for, among other things, pensions and other post-retirement benefit obligations, deferred income taxes (valuation allowance and permanent reinvestment), depreciation and amortization, future cash flows associated with impairment testing for long-lived assets, legal liabilities and contingencies. Actual results could differ materially from these estimates, and changes in these estimates are recorded when known.

New Accounting Pronouncements

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014-9, Revenue Recognition – Revenue from Contracts with Customers (“ASU 2014-9”) that requires companies to recognize revenue when a customer obtains control rather than when companies have transferred substantially all risks and rewards of a good or service. This update is effective for annual reporting periods beginning on or after December 15, 2017 and interim periods therein and requires expanded disclosures. The Company is currently assessing the impact, if any, the adoption of ASU 2014-9 will have on its consolidated financial statements.

In July 2015, the Financial Accounting Standards Board issued Accounting Standards Update 2015-11, Simplifying the Measurement of Inventory (“ASU 2015-11”) which requires that inventory within the scope of this update, including inventory stated at average cost, be measured at the lower of cost and net realizable value. This update is effective for financial statements issued for fiscal years beginning after December 15, 2016, with early adoption permitted as of the beginning of an interim or annual reporting period. The adoption of this accounting guidance will not materially impact the Company’s financial position.

In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-2, Leases (“ASU 2016-2”) which requires lessees to recognize virtually all of their leases on the balance sheet, by recording a right-of-use asset and liability. This update is effective for financial statements issued for fiscal years beginning after December 15, 2018, with early adoption permitted as of the beginning of an interim or annual reporting period. The Company is currently assessing the impact the adoption of ASU 2016-2 will have on its consolidated financial statements.

Note 1. The Company and Summary of Significant Accounting Policies (continued)

In March 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-9,  Improvements to Employee Share-Based Payment Accounting (“ASU 2016-9”) which simplifies several aspects of accounting for share-based payment transactions including income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows and accounting for forfeitures. This update is effective for financial statements issued for fiscal years beginning after December 15, 2016. The Company is currently assessing the impact the adoption of ASU 2016-9 will have on its consolidated financial statements.

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Inventories (Tables)

3 Months Ended

Mar. 31, 2016

Inventory, Net [Abstract]

Components of Inventory

	March 31,		December 31,
	2016		2015
Raw materials	$	52,494	$	57,592
Finished goods	29,821		36,829
Spare parts and other	51,373		46,580
	$	133,688	$	141,001

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Accounts Payable and Other (Tables)

3 Months Ended

Mar. 31, 2016

Payables and Accruals [Abstract]

Schedule of Accounts Payable and Other

	March 31,		December 31,
	2016		2015
Trade payables	$	25,550	$	20,637
Accrued expenses	54,892		55,648
Accrued interest payable	15,938		4,050
Interest rate derivative liability, current portion (Note 9)	10,951		10,380
Dividend payable (Note 6)	7,435		7,418
Other	7,278		5,317
	$	122,044	$	103,450

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Debt (Tables)

3 Months Ended

Mar. 31, 2016

Debt Disclosure [Abstract]

Schedule Of Debt

	March 31,		December 31,
	2016		2015
2019 Senior Notes, unsecured, $227,000 face value (a)	$	223,336	$	245,689
2022 Senior Notes, unsecured, $400,000 face value (a)	392,630		392,354
Revolving credit facilities
€75.0 million (b)	—		—
C$40.0 million (c)	—		—
€25.0 million (d)	—		—
€5.0 million (e)	—		—
	$	615,966	$	638,043

(a) On November 26, 2014, the Company issued $650,000 of senior notes consisting of $250,000 in aggregate principal amount of 7.00% senior notes which mature on December 1, 2019 (“2019 Senior Notes”) and $400,000 in aggregate principal amount of 7.75% senior notes which mature on December 1, 2022 (“2022 Senior Notes” and collectively with the 2019 Senior Notes, the “Senior Notes”). The Senior Notes were issued at a price of 100% of their principal amount. Upon their issuance the Senior Notes were recorded at $635,949 which included debt issuance costs of $14,051. These costs were proportionally allocated to the 2019 Senior Notes and the 2022 Senior Notes.

The Senior Notes are general unsecured senior obligations of the Company. They rank equal in right of payment with all existing and future unsecured senior indebtedness of the Company and are senior in right of payment to any current or future subordinated indebtedness of the Company. The Senior Notes are effectively junior in right of payment to all existing and future secured indebtedness, to the extent of the assets securing such indebtedness, and all indebtedness and liabilities of the Company’s subsidiaries.

The Company may redeem all or a part of the Senior Notes, upon not less than 30 days’ or more than 60 days’ notice, at the redemption prices (expressed as percentages of principal amount) discussed below, plus accrued and unpaid interest to (but not including) the applicable redemption date. The 2019 Senior Notes redemption prices are equal to 103.50% for the twelve month period beginning on December 1, 2016, 101.75% for the twelve month period beginning on December 1, 2017, and 100.00% beginning on December 1, 2018 and at any time thereafter. The 2022 Senior Notes redemption prices are equal to 105.813% for the twelve month period beginning on December 1, 2017, 103.875% for the twelve month period beginning on December 1, 2018, 101.938% for the twelve month period beginning on December 1, 2019, and 100.00%beginning on December 1, 2020 and at any time thereafter.

In March 2016, the Company purchased $23,000 in aggregate principal amount of its 2019 Senior Notes. In connection with this purchase the Company recorded a loss on extinguishment of debt of $(454) in other expense in the Interim Consolidated Statement of Operations which included the write-off of unamortizated debt issuance costs.

(b) A €75.0 million revolving credit facility at the Stendal mill that matures in October 2019. Borrowings under the facility are collateralized by the mill’s inventory and accounts receivable and bear interest at Euribor plus 3.50%. As at March 31, 2016, approximately €75.0 million ($85,433) was available.

(c) A C$40.0 million revolving credit facility at the Celgar mill that matures in May 2019. Borrowings under the facility are collateralized by the mill’s inventory and accounts receivable and are restricted by a borrowing base calculated on the mill’s inventory and accounts receivable. Canadian dollar denominated amounts bear interest at bankers acceptance plus 1.50% or Canadian prime. U.S. dollar denominated amounts bear interest at LIBOR plus 1.50% or U.S. base. As at March 31, 2016, approximately C$1.7 million ($1,310) was supporting letters of credit and approximately C$38.3 million ($29,528) was available.

(d) A €25.0 million revolving credit facility at the Rosenthal mill that matures in October 2019. Borrowings under the facility are collateralized by the mill’s inventory and accounts receivable and bear interest at Euribor plus 2.95%. As at March 31, 2016, approximately €3.1 million ($3,487) of this facility was supporting bank guarantees leaving approximately €21.9 million ($24,991) available.

(e) A €5.0 million revolving credit facility at the Rosenthal mill that matures in December 2018. Borrowings under this facility bear interest at the rate of the three-month Euribor plus 2.50% and are secured by certain land at the Rosenthal mill. As at March 31, 2016, approximately €3.8 million ($4,309) of this facility was supporting bank guarantees leaving approximately €1.2 million ($1,386) available.

Principal Maturities Of Debt

As at March 31, 2016, the maturities of the principal portion of debt are as follows:

2016	$	—
2017	—
2018	—
2019	227,000
2020	—
Thereafter	400,000
	$	627,000

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Pension And Other Post-Retirement Benefit Obligations (Tables)

3 Months Ended

Mar. 31, 2016

Compensation and Retirement Disclosure [Abstract]

Components of the Net Periodic Benefit Costs

The components of the net periodic benefit costs relating to the Celgar Defined Benefit Plans, for the three months ended March 31, 2016 and 2015 were as follows:

	Three Months Ended March 31,
	2016						2015
	Pension			Other Post-Retirement Benefits			Pension			Other Post-Retirement Benefits
Service cost	$	22		$	117		$	31		$	205
Interest cost	261			251			448			326
Expected return on plan assets	(465		)	—			(529		)	—
Amortization of unrecognized items	334			(44		)	226			2
Net periodic benefit cost	$	152		$	324		$	176		$	533

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Shareholders' Equity (Tables)

3 Months Ended

Mar. 31, 2016

Equity [Abstract]

Summary Of Performance Stock Units Activity

The following table summarizes PSU activity during the period:

	Number of PSUs
Outstanding at January 1, 2016	1,255,919
Granted	997,863
Vested and issued	(154,242	)
Outstanding at March 31, 2016	2,099,540

Summary of Restricted Stock Units Activity

The following table summarizes restricted share activity during the period:

	Number of  Restricted Shares
Outstanding at January 1, 2016	78,000
Vested and issued	(40,000	)
Outstanding at March 31, 2016	38,000

Schedule of Retained Earnings [Table Text Block]

Retained Earnings

	Three Months Ended March 31,
	2016			2015
Net income	$	8,769		$	13,634
Retained earnings, beginning of period	160,880			100,214
Cash dividend declared ($0.115 per common share)	(7,435		)	—
Retained earnings, end of period	$	162,214		$	113,848

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Net Income Per Common Share (Tables)

3 Months Ended

Mar. 31, 2016

Earnings Per Share [Abstract]

Schedule Of Net Income Per Common Share

	Three Months Ended March 31,
	2016		2015
Net income
Basic and diluted	$	8,769	$	13,634
Net income per common share
Basic and diluted	$	0.14	$	0.21
Weighted average number of common shares outstanding:
Basic(1)	64,584,985		64,276,452
Effect of dilutive shares:
PSUs	273,102		341,516
Restricted shares	43,641		88,361
Diluted	64,901,728		64,706,329

(1) For the three months ended March 31, 2016, the basic weighted average number of shares excludes 38,000 restricted shares which have been issued, but have not vested as at March 31, 2016 (2015 – 78,000 restricted shares).

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Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Mar. 31, 2016

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive loss are as follows:

	Foreign Currency Translation Adjustment			Unrecognized Losses and Prior Service Costs Related to Defined Benefit Plans			Unrealized Gains (Losses) on Marketable Securities			Total
Balance December 31, 2015	$	(156,223	)	$	(15,338	)	$	(13	)	$	(171,574	)
Other comprehensive income (loss) before reclassifications	52,336			—			(2		)	52,334
Amounts reclassified from accumulated other comprehensive income (loss)	—			290			—			290
Other comprehensive income (loss), net of taxes	52,336			290			(2		)	52,624
Balance March 31, 2016	$	(103,887	)	$	(15,048	)	$	(15	)	$	(118,950	)

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Fair Value Measurement and Disclosure (Tables)

3 Months Ended

Mar. 31, 2016

Fair Value Disclosures [Abstract]

Outstanding Financial Instruments And Estimated Fair Values

The following table presents a summary of the Company’s outstanding financial instruments and their estimated fair values under the fair value hierarchy:

	Fair value measurements at March 31, 2016 using:
Description	Level 1		Level 2		Level 3		Total
Liabilities
Interest rate derivative	$	—	$	17,959	$	—	$	17,959
Debt
Senior Notes	—		626,635		—		626,635
	$	—	$	644,594	$	—	$	644,594

Note 10. Fair Value Measurement and Disclosure (continued)

	Fair value measurements at December 31, 2015 using:
Description	Level 1		Level 2		Level 3		Total
Liabilities
Interest rate derivative	$	—	$	16,913	$	—	$	16,913
Debt
Senior Notes	—		654,625		—		654,625
	$	—	$	671,538	$	—	$	671,538

XML

The Company And Summary Of Significant Accounting Policies (Details)	3 Months Ended
	Mar. 31, 2016 item mill
Accounting Policies [Abstract]
Number of pulp mills | mill	3
Number of Reportable Segments | item	1

XML

Inventories (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Inventory, Net [Abstract]
Raw materials	$ 52,494	$ 57,592
Finished goods	29,821	36,829
Spare parts and other	51,373	46,580
Inventories	$ 133,688	$ 141,001

XML

Accounts Payable and Other (Details) $ in Thousands, € in Millions	Mar. 31, 2016 EUR (€)	Mar. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Payables and Accruals [Abstract]
Trade payables		$ 25,550	$ 20,637
Accrued expenses		54,892	55,648
Accrued interest payable		15,938	4,050
Interest rate derivative liability, current portion (Note 9)	€ 9.6	10,951	10,380
Dividends payable (Note 6)		7,435	7,418
Other		7,278	5,317
Accounts payable and other		$ 122,044	$ 103,450

XML

Debt (Schedule Of Debt) (Details) $ in Thousands	Mar. 31, 2016 CAD	Mar. 31, 2016 EUR (€)	Mar. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Nov. 26, 2014 USD ($)
Debt Instrument [Line Items]
Debt			$ 615,966	$ 638,043
2019 Senior Notes
Debt Instrument [Line Items]
Debt			223,336	245,689
Debt, face amount			227,000		$ 250,000
2022 Senior Notes
Debt Instrument [Line Items]
Debt			392,630	392,354
Debt, face amount			400,000		$ 400,000
Stendal Credit Facility - EUR 75.0 Million
Debt Instrument [Line Items]
Debt			0	0
Maximum borrowing capacity | €		€ 75,000,000.0
Celgar Credit Facility - C$40.0 Million
Debt Instrument [Line Items]
Debt			0	0
Maximum borrowing capacity | CAD	CAD 40,000,000.0
Rosenthal Credit Facility - EUR 25.0 Million
Debt Instrument [Line Items]
Debt			0	0
Maximum borrowing capacity | €		25,000,000.0
Rosenthal Credit Facility - EUR 5.0 Million
Debt Instrument [Line Items]
Debt			$ 0	$ 0
Maximum borrowing capacity | €		€ 5,000,000.0

XML

Debt (Principal Maturities Of Debt) (Details) $ in Thousands	Mar. 31, 2016 USD ($)
Debt Disclosure [Abstract]
2016	$ 0
2017	0
2018	0
2019	227,000
2020	0
Thereafter	400,000
Total debt	$ 627,000

XML

Debt (Narrative) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2016 USD ($)	Mar. 31, 2016 CAD	Mar. 31, 2016 EUR (€)	Mar. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Nov. 26, 2014 USD ($)
Debt Instrument [Line Items]
Debt				$ 615,966	$ 638,043
Senior Notes
Debt Instrument [Line Items]
Debt, offering date	Nov. 26, 2014
Debt, face amount						$ 650,000
Issued price percentage of principal amount						100.00%
Debt						$ 635,949
Debt Issuance Cost						14,051
Senior note redemption notice minimum days	30 days
Senior note redemption notice maximum days	60 days
2019 Senior Notes
Debt Instrument [Line Items]
Debt, face amount				227,000		$ 250,000
Debt instrument interest rate						7.00%
Debt, maturity date	Dec. 01, 2019
Debt				223,336	245,689
Debt instrument, repurchased aggregate principal amount				23,000
Loss on extinguishment of debt	$ 454
2019 Senior Notes | Twelve month period beginning on December 1, 2016
Debt Instrument [Line Items]
Debt instrument, redemption price, percentage	103.50%
2019 Senior Notes | Twelve month period beginning on December 1, 2017
Debt Instrument [Line Items]
Debt instrument, redemption price, percentage	101.75%
2019 Senior Notes | Twelve month period beginning on December 1, 2018 and thereafter
Debt Instrument [Line Items]
Debt instrument, redemption price, percentage	100.00%
2022 Senior Notes
Debt Instrument [Line Items]
Debt, face amount				400,000		$ 400,000
Debt instrument interest rate						7.75%
Debt, maturity date	Dec. 01, 2022
Debt				392,630	392,354
2022 Senior Notes | Twelve month period beginning on December 1, 2017
Debt Instrument [Line Items]
Debt instrument, redemption price, percentage	105.813%
2022 Senior Notes | Twelve month period beginning on December 1, 2018
Debt Instrument [Line Items]
Debt instrument, redemption price, percentage	103.875%
2022 Senior Notes | Twelve month period beginning on December 31, 2019
Debt Instrument [Line Items]
Debt instrument, redemption price, percentage	101.938%
2022 Senior Notes | Twelve month period beginning on December 1, 2020 and thereafter
Debt Instrument [Line Items]
Debt instrument, redemption price, percentage	100.00%
Stendal Credit Facility - EUR 75.0 Million
Debt Instrument [Line Items]
Debt, maturity date	Oct. 01, 2019
Debt				0	0
Maximum borrowing capacity | €			€ 75,000,000.0
Description of variable basis spread	Euribor
Varying basis spread	3.50%
Remaining borrowing capacity			75,000,000	85,433
Celgar Credit Facility - C$40.0 Million
Debt Instrument [Line Items]
Debt, maturity date	May 01, 2019
Debt				0	0
Maximum borrowing capacity | CAD		CAD 40,000,000.0
Remaining borrowing capacity		38,300,000		29,528
Letters of credit outstanding, amount		CAD 1,700,000		1,310
Celgar Credit Facility - C$40.0 Million | Canadian Dollar Borrowings Rate Option 1
Debt Instrument [Line Items]
Description of variable basis spread	bankers acceptance
Varying basis spread	1.50%
Celgar Credit Facility - C$40.0 Million | Canadian Dollar Borrowings Rate Option 2
Debt Instrument [Line Items]
Description of variable basis spread	Canadian prime
Celgar Credit Facility - C$40.0 Million | US Dollar Borrowings Rate Option 1
Debt Instrument [Line Items]
Description of variable basis spread	LIBOR
Varying basis spread	1.50%
Celgar Credit Facility - C$40.0 Million | US Dollar Borrowings Rate Option 2
Debt Instrument [Line Items]
Description of variable basis spread	U.S. base
Rosenthal Credit Facility - EUR 25.0 Million
Debt Instrument [Line Items]
Debt, maturity date	Oct. 01, 2019
Debt				0	0
Maximum borrowing capacity | €			25,000,000.0
Description of variable basis spread	Euribor
Varying basis spread	2.95%
Remaining borrowing capacity			21,900,000	24,991
Debt instrument, amount of debt supporting bank guarantees			3,100,000	3,487
Rosenthal Credit Facility - EUR 5.0 Million
Debt Instrument [Line Items]
Debt, maturity date	Dec. 01, 2018
Debt				0	$ 0
Maximum borrowing capacity | €			5,000,000.0
Description of variable basis spread	three-month Euribor
Varying basis spread	2.50%
Remaining borrowing capacity			1,200,000	1,386
Debt instrument, amount of debt supporting bank guarantees			€ 3,800,000	$ 4,309

XML

Pension And Other Post-Retirement Benefit Obligations (Plan Information) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Pension
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 22	$ 31
Interest cost	261	448
Expected return on plan assets	(465)	(529)
Amortization of unrecognized items	334	226
Net periodic benefit cost	152	176
Other Post-Retirement Benefits
Defined Benefit Plan Disclosure [Line Items]
Service cost	117	205
Interest cost	251	326
Expected return on plan assets	0	0
Amortization of unrecognized items	(44)	2
Net periodic benefit cost	$ 324	$ 533

XML

Pension And Other Post-Retirement Benefit Obligations (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Multiemployer Plan
Defined Benefit Plan Disclosure [Line Items]
Multiemployer contributions	$ 376	$ 451
Defined Contribution Plan Jan 1, 2009
Defined Benefit Plan Disclosure [Line Items]
Pension contributions	$ 163	$ 169

XML

Shareholders' Equity (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		12 Months Ended
	Apr. 28, 2016	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2011	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Cash dividend declared per common share		$ 0.115	$ 0
Common shares available for grant (in shares)		1,051,112
Performance Share Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period		3 years
Expense recognized		$ 737	$ 501
Shares granted (in shares)		997,863
Shares outstanding (in shares)		2,099,540			1,255,919
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period		1 year
Expense recognized		$ 154	$ 129
Shares outstanding (in shares)		38,000			78,000
Unrecognized compensation cost		$ 90
Restricted Shares, 2011 Grant To Chief Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period				5 years
Shares granted (in shares)				200,000
Stock Appreciation Rights (SARs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)		0
Shares outstanding (in shares)		0
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)		0
Shares outstanding (in shares)		0
Restricted Stock Rights
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)		0
Shares outstanding (in shares)		0
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)		0
Shares outstanding (in shares)		0
Dividend Declared in February 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividends payable, date declared		Feb. 11, 2016
Cash dividend declared per common share		$ 0.115
Dividends payable, date to be paid		Apr. 05, 2016
Dividends payable, date of record		Mar. 28, 2016
Subsequent Event | Dividend Declared in April 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividends payable, date declared	Apr. 28, 2016
Cash dividend declared per common share	$ 0.115
Dividends payable, date to be paid	Jul. 07, 2016
Dividends payable, date of record	Jun. 27, 2016

XML

Shareholders' Equity (Summary Of Share Activity - PSU's) (Details) - Performance Share Units	3 Months Ended
	Mar. 31, 2016 shares
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Outstanding - Beginning (in shares)	1,255,919
Shares granted (in shares)	997,863
Vested and issued (in shares)	(154,242)
Outstanding - Ending (in shares)	2,099,540

XML

Shareholders' Equity (Summary Of Share Activity - Restricted Shares) (Details) - Restricted Stock	3 Months Ended
	Mar. 31, 2016 shares
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Outstanding - Beginning (in shares)	78,000
Vested and issued (in shares)	(40,000)
Outstanding - Ending (in shares)	38,000

XML

Shareholders' Equity Shareholders' Equity (Retained Earnings Roll Forward) (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended
	Apr. 30, 2016	Mar. 31, 2016	Mar. 31, 2015
Equity [Abstract]
Net income		$ 8,769	$ 13,634
Retained Earnings [Roll Forward]
Retained earnings, beginning of period	$ 162,214	160,880	100,214
Cash dividend declared ($0.115 per common share)		(7,435)	0
Retained earnings, end of period		$ 162,214	$ 113,848
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Cash dividend declared per common share		$ 0.115	$ 0
Dividend Declared | Subsequent Event
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Cash dividend declared per common share	$ 0.115

XML

Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Net Income Per Share Attributable To Common Shareholders Basic And Diluted [Line Items]
Net income - basic and diluted	$ 8,769	$ 13,634
Net income per common share, basic and diluted	$ 0.14	$ 0.21
Weighted average number of common shares outstanding, basic (in shares)	64,584,985	64,276,452
Weighted average number of common shares outstanding, diluted (in shares)	64,901,728	64,706,329
Anti-dilutive securities excluded from EPS computation	0	0
Performance Share Units
Net Income Per Share Attributable To Common Shareholders Basic And Diluted [Line Items]
Effect of dilutive instruments (in shares)	273,102	341,516
Restricted Stock
Net Income Per Share Attributable To Common Shareholders Basic And Diluted [Line Items]
Effect of dilutive instruments (in shares)	43,641	88,361
Contingently issuable shares excluded from the basic weighted average shares outstanding (in shares)	38,000	78,000

XML

Accumulated Other Comprehensive Loss (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2016 USD ($)
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Accumulated other comprehensive income, beginning balance	$ 382,976
Accumulated other comprehensive income, ending balance	437,825
Foreign Currency Translation Adjustment
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Accumulated other comprehensive income, beginning balance	(156,223)
Other comprehensive income (loss) before reclassifications	52,336
Amounts reclassified from accumulated other comprehensive income (loss)	0
Other comprehensive income (loss), net of taxes	52,336
Accumulated other comprehensive income, ending balance	(103,887)
Unrecognized Losses and Prior Service Costs Related to Defined Benefit Plans
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Accumulated other comprehensive income, beginning balance	(15,338)
Other comprehensive income (loss) before reclassifications	0
Amounts reclassified from accumulated other comprehensive income (loss)	290
Other comprehensive income (loss), net of taxes	290
Accumulated other comprehensive income, ending balance	(15,048)
Unrealized Gains (Losses) on Marketable Securities
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Accumulated other comprehensive income, beginning balance	(13)
Other comprehensive income (loss) before reclassifications	(2)
Amounts reclassified from accumulated other comprehensive income (loss)	0
Other comprehensive income (loss), net of taxes	(2)
Accumulated other comprehensive income, ending balance	(15)
AOCI Attributable to Parent
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Accumulated other comprehensive income, beginning balance	(171,574)
Other comprehensive income (loss) before reclassifications	52,334
Amounts reclassified from accumulated other comprehensive income (loss)	290
Other comprehensive income (loss), net of taxes	52,624
Accumulated other comprehensive income, ending balance	$ (118,950)

XML

Derivative Transactions (Narrative) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2016 EUR (€)	Mar. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Dec. 01, 2002 EUR (€)
Derivative [Line Items]
Interest rate derivative liability, total	€ 15,800,000	$ 17,959	$ 16,913
Interest rate derivative liability, current	9,600,000	10,951	10,380
Interest rate derivative liability, noncurrent	6,200,000	7,008	6,533
Restricted cash, at carrying value	8,500,000	$ 9,682	$ 9,230
Stendal Credit Facility - EUR 75.0 Million
Derivative [Line Items]
Maximum borrowing capacity	75,000,000.0
Interest Rate Swap
Derivative [Line Items]
Aggregate notional amount of interest rate swap	€ 192,400,000
Derivative fixed interest rate	5.28%	5.28%
Derivative maturity date	Oct. 01, 2017
Percentage of fair value of interest rate swap collaterized	67.00%	67.00%
Maximum amount of collateral for interest rate swap	€ 8,500,000
Interest Rate Swap | Stendal Credit Facility - EUR 75.0 Million
Derivative [Line Items]
Aggregate maximum principal amount of the Stendal loan facility covered by interest rate swaps				€ 612,600,000

XML

Fair Value Measurement and Disclosure (Outstanding Financial Instruments and Estimated Fair Value) (Details) $ in Thousands, € in Millions	Mar. 31, 2016 EUR (€)	Mar. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate derivative, fair value	€ 15.8	$ 17,959	$ 16,913
Total financial liabilities, fair value		644,594	671,538
Fair Value, Quoted Prices In Active Markets For Identical Assets (Level 1)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate derivative, fair value		0	0
Total financial liabilities, fair value		0	0
Fair Value, Significant Other Observable Inputs (Level 2)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate derivative, fair value		17,959	16,913
Total financial liabilities, fair value		644,594	671,538
Fair Value, Significant unobservable inputs (Level 3)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate derivative, fair value		0	0
Total financial liabilities, fair value		0	0
Senior Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt, senior notes, fair value		626,635	654,625
Senior Notes | Fair Value, Quoted Prices In Active Markets For Identical Assets (Level 1)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt, senior notes, fair value		0	0
Senior Notes | Fair Value, Significant Other Observable Inputs (Level 2)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt, senior notes, fair value		626,635	654,625
Senior Notes | Fair Value, Significant unobservable inputs (Level 3)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt, senior notes, fair value		$ 0	$ 0