10-Q 1 doc1.txt FORM 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, 2001 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.: 000-09409 MERCER INTERNATIONAL INC. (Exact name of Registrant as specified in its charter) WASHINGTON 91-6087550 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) GIESSHUBELSTRASSE 15, ZURICH, SWITZERLAND CH 8045 (Address of principal executive offices) (Zip Code) 41(1) 201 7710 (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 ---- ---- The Registrant had 16,794,899 shares of beneficial interest outstanding as at May 14, 2001. PART I. FINANCIAL INFORMATION --------------------- ITEM 1. FINANCIAL STATEMENTS MERCER INTERNATIONAL INC. CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2001 (UNAUDITED)

MERCER INTERNATIONAL INC. CONSOLIDATED BALANCE SHEETS AS AT MARCH 31, 2001 AND DECEMBER 31, 2000 (UNAUDITED) (DOLLARS IN THOUSANDS) MARCH 31, DECEMBER 31, 2001 2000 ----------- -------------- ASSETS Current Assets Cash and cash equivalents $ 12,417 $ 18,496 Investments 5,735 5,320 Receivables 37,623 46,088 Inventories 20,158 19,977 Prepaid and other 2,624 3,000 ----------- -------------- Total current assets 78,557 92,881 Long-Term Assets Cash restricted 21,652 25,150 Properties 244,797 265,607 Investments 6,334 6,101 Notes receivable 4,296 4,296 Deferred income tax 9,070 9,624 ----------- -------------- 286,149 310,778 ----------- -------------- $ 364,706 $ 403,659 =========== ============== LIABILITIES Current Liabilities Accounts payable and accrued expenses $ 37,186 $ 37,058 Pulp mill renovation costs payable 181 1,146 Note payable 584 839 Debt 10,786 27,173 ----------- -------------- Total current liabilities 48,737 66,216 Long-Term Liabilities Debt 189,783 208,315 Other 3,129 3,721 ----------- -------------- 192,912 212,036 ----------- -------------- Total liabilities 241,649 278,252 SHAREHOLDERS' EQUITY Shares of beneficial interest 99,995 99,995 Retained earnings 93,273 88,698 Accumulated other comprehensive loss (70,211) (63,286) ----------- -------------- 123,057 125,407 ----------- -------------- $ 364,706 $ 403,659 =========== ==============

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

MERCER INTERNATIONAL INC. CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS FOR THREE MONTHS ENDED MARCH 31, 2001 AND 2000 (UNAUDITED) (DOLLARS IN THOUSANDS, EXCEPT FOR EARNINGS PER SHARE) 2001 2000 ------- -------- Revenues Sales $52,366 $55,243 Other 3,630 517 ------- -------- 55,996 55,760 Expenses Cost of sales 41,977 48,892 General and administrative 5,900 1,688 Interest expense 3,544 4,132 ------- -------- 51,421 54,712 ------- -------- Income before income taxes 4,575 1,048 Income taxes (recovery) - (23) ------- -------- Net income 4,575 1,071 Retained earnings, beginning of period 88,698 59,224 ------- -------- Retained earnings, end of period $93,273 $60,295 ======= ======== Earnings per share Basic $ 0.27 $ 0.06 ======= ======== Diluted $ 0.27 $ 0.06 ======= ========

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

MERCER INTERNATIONAL INC. STATEMENTS OF COMPREHENSIVE INCOME FOR THREE MONTHS ENDED MARCH 31, 2001 AND 2000 (UNAUDITED) (DOLLARS IN THOUSANDS) 2001 2000 -------- -------- Net income $ 4,575 $ 1,071 Other comprehensive income (loss): Foreign currency translation adjustments (7,968) (5,852) Unrealized gain (loss) on securities 1,043 (15) -------- -------- Other comprehensive loss (6,925) (5,867) -------- -------- Total comprehensive loss $(2,350) $(4,796) ======== ========

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

MERCER INTERNATIONAL INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THREE MONTHS ENDED MARCH 31, 2001 AND 2000 (UNAUDITED) (DOLLARS IN THOUSANDS) 2001 2000 --------- --------- Cash Flows from Operating Activities: Net income $ 4,575 $ 1,071 Adjustments to reconcile net income from operations to cash Depreciation and amortization 5,346 6,690 Changes in current assets and liabilities Investments (771) 181 Inventories (1,534) 2,184 Receivables 6,545 4,124 Accounts payable and accrued expenses 2,152 3,136 Other 187 (74) --------- --------- Net cash provided by operating activities 16,500 17,312 Cash Flows from Investing Activities: Purchase of fixed assets, net of investment grants (1,407) 18,682 --------- --------- Net cash (used in) provided by investing activities (1,407) 18,682 Cash Flows from Financing Activities: Cash restricted 1,976 - Increase in indebtedness - 6,053 Decrease in indebtedness (21,271) (3) Decrease in pulp mill conversion costs payable (934) (25,750) --------- --------- Net cash used in financing activities (20,229) (19,700) Effect of exchange rate changes on cash and cash equivalents (943) (1,343) --------- --------- Net (decrease) increase in cash and cash equivalents (6,079) 14,951 Cash and cash equivalents, beginning of period 18,496 1,722 --------- --------- Cash and cash equivalents, end of period $ 12,417 $ 16,673 ========= =========

The accompanying notes are an integral part of these financial statements. MERCER INTERNATIONAL INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THREE MONTHS ENDED MARCH 31, 2001 (UNAUDITED) NOTE 1. BASIS OF PRESENTATION The interim period consolidated financial statements contained herein include the accounts of Mercer International Inc. and its subsidiaries (the "Company"). The interim period consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such SEC rules and regulations. The interim period 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, 2000. In the opinion of the Company, the unaudited consolidated financial statements contained herein contain all adjustments necessary to present a fair statement of the results of the interim periods presented. NOTE 2. EARNINGS PER SHARE Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of shares outstanding during a period. Diluted earnings per share takes into consideration shares outstanding (computed under basic earnings per share) and potentially dilutive shares. The weighted average number of shares outstanding for the purposes of calculating basic earnings per share was 16,874,899 and 16,715,399 for the three months ended March 31, 2001 and 2000, respectively. The weighted average number of shares outstanding for the purposes of calculating diluted earnings per share was 17,218,749 and 16,992,883 for the three months ended March 31, 2001 and 2000, respectively. NOTE 3. ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities", established accounting and reporting standards for derivative instruments and hedging activities. SFAS No. 133 was amended by SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133", which deferred the implementation date of SFAS 133 to fiscal years beginning after June 15, 2000. Retroactive application is prohibited. The Company adopts SFAS No. 133 effective from January 1, 2001. All derivative instruments are measured at fair value and reported in the balance sheet as assets or liabilities. Accounting for gains and losses depends on the intended use of the derivative instrument. Gains and losses on derivative instruments not designated as hedging instruments are recognized in earnings in the period of the change in fair value. Accounting for gains and losses on derivative instruments designated as hedging instruments depends on the type of hedge, and such gains and losses are recognized in either earnings or other comprehensive income. NOTE 4. BUSINESS SEGMENT INFORMATION The Company operates in two reportable business segments: pulp and paper. The segments are managed separately because each business requires different production and marketing strategies. Summarized financial information concerning the segments is shown in the following table:

PULP PAPER TOTAL -------- ------- ------- THREE MONTHS ENDED MARCH 31, 2001 Sales to external customers. . . . . . . . . . $36,591 $15,775 $52,366 Intersegment net sales . . . . . . . . . . . . 1,702 - 1,702 Segment profit . . . . . . . . . . . . . . . . 5,513 69 5,582 Reconciliation of profit: Total profit for reportable segments. . . . . $ 5,582 Elimination of intersegment profits . . . . . 269 Unallocated amounts, other corporate expenses (1,276) ------- Consolidated income before income taxes . . $ 4,575 ======= THREE MONTHS ENDED MARCH 31, 2000 Sales to external customers. . . . . . . . . . $32,286 $22,957 $55,243 Intersegment net sales . . . . . . . . . . . . 133 - 133 Segment profit . . . . . . . . . . . . . . . . 898 1,165 2,063 Reconciliation of profit: Total profit for reportable segments. . . . . $ 2,063 Elimination of intersegment profits . . . . . - Unallocated amounts, other corporate expenses (1,015) ------- Consolidated income before income taxes . . $ 1,048 =======

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Mercer International Inc. is a pulp and paper company and its operations are primarily located in Germany. The following discussion and analysis of the results of operations and financial condition of the Company for the three months ended March 31, 2001 should be read in conjunction with the consolidated financial statements and related notes included elsewhere herein. In this document: (i) unless the context otherwise requires, the "Company" refers to Mercer International Inc. and its subsidiaries; and (ii) a "tonne" is one metric ton or 2,204.6 pounds. Based upon period average exchange rates, the U.S. dollar appreciated by approximately 7.0% against the deutschmark in the three months ended March 31, 2001, compared to the same period of 2000. RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 2001 The following table sets forth selected sales data for the Company for the periods indicated:

THREE MONTHS ENDED MARCH 31, ------------------------------ 2001 2000 --------- -------- (UNAUDITED) (IN THOUSANDS) SALES BY PRODUCT CLASS Packaging papers(1) $ - $ 5,205 Specialty papers 9,797 8,495 Printing papers(2) 5,978 9,257 Pulp 36,591 32,286 --------- -------- Total(3) $ 52,366 $ 55,243 ========= ======== SALES BY GEOGRAPHIC AREA Germany $ 26,328 $ 22,799 European Union(4) 16,939 19,467 Eastern Europe and other 9,099 12,977 --------- -------- Total(3) $ 52,366 $ 55,243 ========= ======== SALES BY VOLUME (TONNES) Packaging papers(1) - 17,717 Specialty papers 11,044 10,658 Printing papers(2) 7,049 13,489 Pulp 61,742 58,311 --------- -------- Total(3) 79,835 100,175 ========= ========

(1) The Company sold its packaging paper mill in Trebsen, Germany effective June 2000. (2) The Company sold its printing paper mill in Hainsberg, Germany effective November 2000. (3) Excluding intercompany sales. (4) Not including Germany. In the three months ended March 31, 2001, revenues increased by approximately 0.4% to $56.0 million from $55.8 million in the three months ended March 31, 2000, primarily as a result of higher pulp sales in the current period. The increase in revenues in the current period was partially offset by lower paper sales. In the three months ended March 31, 2001, pulp and paper revenues decreased by approximately 5.2% from the comparable period of 2000, on a 13.3% increase in pulp sales and a 31.3% decrease in paper sales. Pulp sales in the three months ended March 31, 2001 increased to $36.6 million from $32.3 million in the comparable period of 2000. The Company completed a project in late 1999 to convert the Company's pulp mill to the production of kraft pulp and increase its annual production capacity to 280,000 tonnes (the "Conversion Project"). The pulp mill ramped up production in early 2000 and has operated in excess of 90% of capacity since the beginning of the second quarter of 2000. List prices for kraft pulp in Europe decreased from approximately $710 per tonne at the end of 2000 to approximately $650 per tonne during the first quarter of 2001 and approximately $600 per tonne during April 2001. Paper sales in the three months ended March 31, 2001 decreased to $15.8 million from $23.0 million in the comparable period of 2000. Sales of specialty papers increased in the three months ended March 31, 2001 compared to the three months ended March 31, 2000 as a result of increased sales prices, while sales of printing papers declined as a result of the sale of the Company's recycled printing paper mill in Hainsberg, Germany effective November 2000. The Company did not sell any packaging papers during the first quarter of 2001 as a result of the sale of its packaging paper mill in Trebsen, Germany effective June 2000, compared to $5.2 million during the first quarter of 2000. On average, paper prices realized by the Company in the three months ended March 31, 2001 increased by approximately 59% compared to the same period in 2000, with higher prices for both specialty and printing papers. Expenses decreased to $51.4 million in the three months ended March 31, 2001 from $54.7 million in the comparable period of 2000, primarily as a result of an improvement in pulp production efficiency due to the ramping-up of pulp production in early 2000 and a decrease in the production of paper products as a result of the sale of two of the Company's paper mills in 2000. On average, the Company's unit fibre costs for pulp production in the three months ended March 31, 2001 increased by approximately 14% compared to the same period in 2000. Prices for waste paper, which currently comprises approximately 25% of the fibre for the Company's paper mills, also increased in the three months ended March 31, 2001, compared to the same period of 2000. General and administrative expenses were $5.9 million in the three months ended March 31, 2001, compared to $5.7 million in the three months ended December 31, 2000 and $1.7 million in the three months ended March 31, 2000. Interest expense in the three months ended March 31, 2001 decreased to $3.5 million from $4.1 million in the comparable period of 2000, primarily as a result of lower indebtedness during the quarter and a continuing depreciation of the deutschmark relative to the U.S. dollar. For the three months ended March 31, 2001, the Company reported net income of $4.6 million, or $0.27 per share, compared to net income of $1.1 million, or $0.06 per share, in the comparable period of 2000. LIQUIDITY AND CAPITAL RESOURCES The following table is a summary of selected financial information concerning the Company for the periods indicated:

AS AT AS AT MARCH 31, 2001 DECEMBER 31, 2000 ---------------- ------------------ (UNAUDITED) (IN THOUSANDS) FINANCIAL POSITION Working capital . . . . . . . . . . $ 29,820 $ 26,665 Property, plant and equipment (net) 244,797 265,607 Total assets. . . . . . . . . . . . 364,706 403,659 Long-term debt. . . . . . . . . . . 189,783 208,315 Shareholders' equity. . . . . . . . 123,057 125,407

At March 31, 2001, the Company's cash and cash equivalents totalled $12.4 million, a net decrease of $6.1 million from $18.5 million at December 31, 2000. At March 31, 2001, the Company had short-term trading securities totalling $5.7 million, compared to $5.3 million at December 31, 2000. OPERATING ACTIVITIES Operating activities provided cash of $16.5 million in the three months ended March 31, 2001, compared to $17.3 million in the same period in 2000. A decrease in receivables provided cash of $6.5 million in the current period, compared to $4.1 million in the comparative period of 2000. An increase in accounts payable and accrued expenses provided cash of $2.2 million in the three months ended March 31, 2001, compared to $3.1 million in the three months ended March 31, 2000. Higher inventories used cash of $1.5 million in the three months ended March 31, 2001, compared to lower inventories providing cash of $2.2 million in the three months ended March 31, 2000. Net purchases of investment securities used cash of $0.8 million in the three months ended March 31, 2001, compared to net sales of investment securities providing cash of $0.2 million in the comparative period of 2000. INVESTING ACTIVITIES Investing activities in the three months ended March 31, 2001 used cash of $1.4 million, consisting of capital expenditures on properties, compared to providing cash of $18.7 million in the three months ended March 31, 2000. The Company completed the Conversion Project in late 1999. The Conversion Project was financed through a combination of borrowings under a project loan, non-refundable governmental grants, governmental assistance and guarantees for long-term project financing and an equity investment by the Company. The Company is continuing to review its paper operations to define a long-term core competency in respect of products produced in order that future investment may be directed towards that segment. FINANCING ACTIVITIES Financing activities used cash of $20.2 million in the three months ended March 31, 2001, primarily as a result of a decrease in indebtedness relating to the Conversion Project. Financing activities used cash of $19.7 million in the three months ended March 31, 2000. The depreciation of the deutschmark against the U.S. dollar in the three months ended March 31, 2001 resulted in an unrealized foreign exchange translation loss of $0.9 million on cash and cash equivalents, which is included in the Company's statement of comprehensive income and does not affect the Company's net earnings. See "Foreign Currency". Effective January 2000, the Company agreed, subject to certain conditions, to acquire a controlling interest in a "greenfield" project to construct and operate a 550,000-tonne softwood kraft pulp mill to be located at Stendal, Germany (the "Stendal Project"). In 2001, the Company agreed to increase its ultimate ownership position in the Stendal Project to 57.5%. The Company's participation in the Stendal Project is subject to, among other things, completion of due diligence and the Stendal Project itself is subject to, among other things, financing. The Stendal Project is currently estimated to cost approximately DM 1,600.0 million (or $823.3 million) and to be completed in 2004. Financing for the Stendal Project is expected to come from the project partners, government financing, project financing and outside capital. See "Stendal Pulp Mill Project Uncertainties". Other than the agreement relating to the Stendal Project, the Company had no material commitments to acquire assets or operating businesses as at March 31, 2001. The Company anticipates that there will be acquisitions of businesses or commitments to projects in the future. To achieve its long-term goals of expanding its asset and earnings base through mergers and acquisitions, the Company will require substantial capital resources. The necessary resources will be generated from cash flow from operations, cash on hand, borrowing against its assets and/or the sale of assets. FOREIGN CURRENCY Substantially all of the Company's operations are conducted in international markets and its consolidated financial results are subject to foreign currency exchange rate fluctuations, in particular, those in Germany. The Company's pulp and paper products are principally sold in deutschmarks and euros and approximately 99% of the Company's revenues are denominated in deutschmarks and euros. The value of the euro is fixed at 1.95583 deutschmarks. The Company translates foreign assets and liabilities into U.S. dollars at the rate of exchange on the balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the period. Unrealized gains or losses from these translations are recorded as shareholders' equity on the Company's balance sheet and do not affect the net earnings of the Company. Since substantially all of the Company's revenues are received in deutschmarks and euros, the financial position of the Company for any given period, when reported in U.S. dollars, can be significantly affected by the exchange rates for deutschmarks prevailing during that period. In the three months ended March 31, 2001, the depreciation of the deutschmark against the U.S. dollar resulted in a net $8.0 million foreign exchange translation loss and, as a result, the cumulative foreign exchange translation loss increased from $56.3 million at December 31, 2000 to $64.3 million at March 31, 2001. The average and period end exchange rates for the deutschmark to the U.S. dollar for the periods indicated are as follows:

QUARTER ENDED QUARTER ENDED MARCH 31, 2001 MARCH 31, 2000 -------------- -------------- PERIOD END PERIOD AVERAGE PERIOD END PERIOD AVERAGE -------------- -------------- ---------- -------------- RATE OF EXCHANGE Deutschmark 2.2248 2.1213 2.0434 1.9823

Based upon the period average exchange rate in the three months ended March 31, 2001, the U.S. dollar increased by approximately 1.9% in value against the deutschmark since December 31, 2000. CYCLICAL NATURE OF BUSINESS; COMPETITIVE POSITION The pulp and paper business is cyclical in nature and markets for the Company's principal products are characterized by periods of supply and demand imbalance, which in turn affects product prices. The markets for pulp and paper are highly competitive and sensitive to cyclical changes in industry capacity and in the economy, both of which can have a significant influence on selling prices and the earnings of the Company. Demand for pulp and paper products has historically been determined by the level of economic growth and has been closely tied to overall business activity. The competitive position of the Company is influenced by the availability and quality of raw materials (fibre) and its experience in relation to other producers with respect to inflation, energy, transportation, labour costs and productivity. STENDAL PULP MILL PROJECT UNCERTAINTIES The Company's participation in the Stendal Project is subject to certain conditions, including completion of its due diligence and entering into a shareholders' agreement. In addition, the Stendal Project itself is subject to various risks and uncertainties customary to large "greenfield" projects of this nature which may result in the Stendal Project not proceeding as currently planned, or at all, such as availability and cost of materials and labour, construction delays, cost overruns, weather conditions, governmental regulations, availability of adequate financing, increases in long-term interest rates and increases in taxes and other governmental fees. The Stendal Project will also be subject to extensive and complex regulations and environmental compliance which may result in delays, in the project company and/or its shareholders, including the Company, incurring substantial costs in relation thereto or in the Stendal Project being amended or not proceeding at all. The implementation of the Stendal Project is currently expected to commence in the first quarter of 2002 and be completed in 2004. However, there can be no assurance that the Stendal Project will proceed as currently planned, or at all. FORWARD-LOOKING STATEMENTS Statements in this report, to the extent they are not based on historical events, constitute forward-looking statements. Forward-looking statements include, without limitation, statements regarding the outlook for future operations, forecasts of future costs and expenditures, the evaluation of market conditions, the outcome of legal proceedings, the adequacy of reserves, or other business plans. Investors are cautioned that forward-looking statements are subject to an inherent risk that actual results may vary materially from those described herein. Factors that may result in such variance, in addition to those accompanying the forward-looking statements, include changes in interest rates, commodity prices, and other economic conditions; actions by competitors; changing weather conditions and other natural phenomena; actions by government authorities; uncertainties associated with legal proceedings; technological development; future decisions by management in response to changing conditions; and misjudgments in the course of preparing forward-looking statements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to market risks from changes in interest rates, foreign currency exchange rates and equity prices which may affect its results of operations and financial condition. The Company manages these risks through internal risk management policies. The Company also uses derivative instruments in regard to its exposure to interest rate, currency and pulp price risks. The derivative instruments are not designated as hedging instruments and the purpose of the derivative activity is speculative in nature, as management uses such tools either to augment the Company's potential gains or to reduce the Company's potential losses, depending on management's perception of future economic events and developments. If any of the variety of instruments and strategies the Company utilizes are not effective, the Company may incur losses. Many of the Company's strategies are based on historical trading patterns and correlations. However, these strategies may not be fully effective in all market environments or against all types of risks. Unexpected market developments may affect the Company's risk management strategies during this time, and unanticipated developments could impact the Company's risk management strategies in the future. As at March 31, 2001, no derivative contract had been executed with respect to pulp prices. The Company may enter into short-term forward contracts to manage its exposure to currency and interest rate risks. Any change in the fair value of derivative instruments is included in the determination of earnings. Reference is made to the Company's annual report on Form 10-K for the year ended December 31, 2000 for additional information concerning market risk. PART II. OTHER INFORMATION ----------------- ITEM 1. LEGAL PROCEEDINGS The Company is subject to routine litigation incidental to its business. The Company does not believe that the outcome of such litigation will have a material adverse effect on its business or financial condition. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS None. (b) REPORTS ON FORM 8-K The Company filed the following report on Form 8-K with respect to the indicated items during the three months ended March 31, 2001: Form 8-K dated January 23, 2001: Item 5. Other Events Item 7. Financial Statements and Exhibits 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/ R. Ian Rigg ------------------ R. Ian Rigg Vice President and Chief Financial Officer Date: May 14, 2001