-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CaNkMvViQq9l1fuC4dLBESN7bZR0rM5t/7WAUcgwjyj5EIEhPo6UR+sO6lPvHopO DShJwnhhm8AdZA+rCg+lLA== 0001012410-99-000020.txt : 19990518 0001012410-99-000020.hdr.sgml : 19990518 ACCESSION NUMBER: 0001012410-99-000020 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERCER INTERNATIONAL INC CENTRAL INDEX KEY: 0000075659 STANDARD INDUSTRIAL CLASSIFICATION: PAPER MILLS [2621] IRS NUMBER: 916087550 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-09409 FILM NUMBER: 99627356 BUSINESS ADDRESS: STREET 1: BRNDSCHENKE STR 64 CITY: ZURICH SWITZERLAND C STATE: V6 BUSINESS PHONE: 4112017710 MAIL ADDRESS: STREET 1: 400 BURRARD ST STE 1250 STREET 2: VANCOUVER PROVINCE CITY: B C V6C 3A6 10-Q 1 MERCER INTERNATIONAL INC. - 1ST QTR 1999 FORM 10-Q 1 ============================================================================== 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, 1999 [ ] 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.) Burglistrasse 6, Zurich, Switzerland CH 8002 (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 16,209,963 shares of beneficial interest outstanding as at May 14, 1999. ============================================================================== 2 PART I. FINANCIAL INFORMATION --------------------- ITEM 1. FINANCIAL STATEMENTS MERCER INTERNATIONAL INC. CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 1999 (Unaudited) FORM 10-Q QUARTERLY REPORT - PAGE 2 3 MERCER INTERNATIONAL INC. CONSOLIDATED BALANCE SHEETS As at March 31, 1999 and December 31, 1998 (Unaudited) (dollars in thousands)
March 31, December 31, 1999 1998 ------------ ------------ ASSETS Current Assets Cash and cash equivalents $ 19,851 $ 53,250 Investments 11,259 12,891 Receivables 31,774 33,828 Inventories 16,982 19,540 Other 5,019 2,207 ------------ ------------ Total current assets 84,885 121,716 Long-Term Assets Cash restricted 13,821 15,000 Properties 217,643 161,012 Investments 13,236 13,626 Receivables 10,150 10,150 Deferred income tax 10,930 11,780 ------------ ------------ 265,780 211,568 ------------ ------------ $ 350,665 $ 333,284 ============ ============ LIABILITIES Current Liabilities Accounts payable and accrued expenses $ 43,825 $ 53,518 Notes payable 1,828 1,839 Debt 973 1,338 ------------ ------------ Total current liabilities 46,626 56,695 Long-Term Liabilities Debt 156,328 121,548 Other 1,863 2,022 ------------ ------------ 158,191 123,570 ------------ ------------ Total liabilities 204,817 180,265 SHAREHOLDERS' EQUITY Shares of beneficial interest 95,611 91,913 Cumulative translation adjustment (40,777) (28,663) Net unrealized loss on investments valuation (7,285) (8,398) Retained earnings 98,299 98,167 ------------ ------------ 145,848 153,019 ------------ ------------ $ 350,665 $ 333,284 ============ ============
The accompanying notes are an integral part of these financial statements. FORM 10-Q QUARTERLY REPORT - PAGE 3 4 MERCER INTERNATIONAL INC. CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS For Three Months Ended March 31, 1999 and 1998 (Unaudited) (dollars in thousands, except for earnings per share)
1999 1998 ------------ ------------ Revenues Sales $ 39,729 $ 49,093 Investments and other 1,350 3,416 ------------ ------------ 41,079 52,509 Expenses Cost of sales 35,431 39,580 General and administrative 4,988 5,874 Interest expense 528 793 ------------ ------------ 40,947 46,247 ------------ ------------ Income from operations before income taxes 132 6,262 Income taxes - - ------------ ------------ Net income 132 6,262 Retained earnings, beginning of period 98,167 89,765 ------------ ------------ Retained earnings, end of period $ 98,299 $ 96,027 ============ ============ Earnings per share Basic $ 0.01 $ 0.41 ============ ============ Diluted $ 0.01 $ 0.41 ============ ============
The accompanying notes are an integral part of these financial statements. FORM 10-Q QUARTERLY REPORT - PAGE 4 5 MERCER INTERNATIONAL INC. STATEMENT OF COMPREHENSIVE INCOME For Three Months Ended March 31, 1999 and 1998 (Unaudited) (dollars in thousands)
1999 1998 ------------ ------------ Net income $ 132 $ 6,262 Other comprehensive income (loss): Foreign currency translation adjustments (12,114) (2,178) Unrealised gain on securities 1,113 605 ------------ ------------ Other comprehensive loss (11,001) (1,573) ------------ ------------ Total comprehensive income (loss) $ (10,869) $ 4,689 ============ ============
The accompanying notes are an integral part of these financial statements. FORM 10-Q QUARTERLY REPORT - PAGE 5 6 MERCER INTERNATIONAL INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For Three Months Ended March 31, 1999 and 1998 (Unaudited) (dollars in thousands)
1999 1998 ------------ ------------ Cash Flows from Operating Activities: Net income from continuing operations $ 132 $ 6,263 Adjustments to reconcile net income from continuing operations to cash Depreciation and amortization 3,347 3,289 Non-cash asset acquisitions (145) (2,502) ------------ ------------ 3,334 7,050 Changes in current assets and liabilities Investments 1,401 785 Inventories 1,060 143 Receivables (766) (9,240) Accounts payable and accrued expenses (6,326) 2,023 Other (2,899) (11) ------------ ------------ Net cash (used in) provided by operating activities (4,196) 750 Cash Flows from Investing Activities: Purchase of fixed assets (74,901) (3,923) Other - 14 ------------ ------------ Net cash used in investing activities (74,901) (3,909) Cash Flows from Financing Activities: Increase in bank indebtedness 48,861 831 Decrease in bank indebtedness (108) (1,080) Net proceeds on issuance of shares of beneficial interest - 1,196 ------------ ------------ Net cash provided by financing activities 48,753 947 Effect of exchange rate changes on cash and cash equivalents (3,055) (70) ------------ ------------ Net decrease in cash and cash equivalents (33,399) (2,282) Cash and cash equivalents, beginning of period 53,250 4,414 ------------ ------------ Cash and cash equivalents, end of period $ 19,851 $ 2,132 ============ ============
The accompanying notes are an integral part of these financial statements. FORM 10-Q QUARTERLY REPORT - PAGE 6 7 MERCER INTERNATIONAL INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THREE MONTHS ENDED MARCH 31, 1999 (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 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, 1998. 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 ------------------ Earnings per share is computed on the basis of the weighted average number of shares outstanding during a period after considering convertible securities, warrants and options. The weighted average number of shares outstanding for the purposes of calculating diluted earnings per share was 15,893,867 and 15,243,379 for the three months ended March 31, 1999 and 1998, respectively. FORM 10-Q QUARTERLY REPORT - PAGE 7 8 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, 1999 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. RESULTS OF OPERATIONS - Three Months Ended March 31, 1999 - --------------------------------------------------------- The following table sets forth selected sales data for the Company for the periods indicated:
Quarter Ended Quarter Ended March 31, 1999 March 31, 1998 -------------- -------------- (in thousands) Sales by Product Class - ---------------------- Packaging papers(1) $ 4,621 $ 8,431 Specialty papers 8,107 8,628 Printing papers 10,016 10,672 Pulp 16,132 20,593 Other 853 769 -------------- -------------- Total(2) $ 39,729 $ 49,093 ============== ============== Sales by Geographic Area - ------------------------ Germany $ 20,749 $ 27,319 European Union(3) 15,733 18,611 Other 3,247 3,163 -------------- -------------- Total $ 39,729 $ 49,093 ============== ============== Sales by Volume (tonnes) - --------------- Packaging papers(1) 17,398 31,893 Specialty papers 9,475 10,543 Printing papers 14,175 14,904 Pulp 38,033 42,289 -------------- -------------- Total 79,081 99,629 ============== ==============
- --------------- (1) The Company sold its packaging paper mill in Greiz in the third quarter of 1998. Paper sales from the Greiz paper mill are included in the Company's results of operations for the three months ended March 31, 1998. The Greiz paper mill sold 12,261 tonnes of packaging paper for $3.3 million in the three months ended March 31, 1998. (2) Excluding intercompany sales. (3) Not including Germany. FORM 10-Q QUARTERLY REPORT - PAGE 8 9 In the three months ended March 31, 1999, revenues decreased to $41.1 million from $52.5 million in the comparative period of 1998, primarily as a result of lower sales volumes. In the first quarter of 1999, pulp and paper revenues decreased by approximately 19.6% from the comparable period of 1998, on a 21.7% decrease in pulp sales and an 18.0% decrease in paper sales. In the three months ended March 31,1999, pulp markets remained generally weak. While prices improved marginally during the quarter, they were largely offset by the devaluation of the deutschmark and euro against the U.S. dollar in the same period. On average, pulp prices realized by the Company in the first quarter of 1999 were approximately 12.9% lower than in the same period of 1998. Overall, pulp sales decreased to $16.1 million in the three months ended March 31, 1999 from $20.6 million in the comparative period of 1998. In the three months ended March 31, 1999, markets for specialty and printing papers were generally stable while markets for packaging papers were weaker than in the comparative period of 1998. On average, paper prices realized by the Company increased by approximately 14.6% in the three months ended March 31, 1999, compared to the same period in 1998, primarily as a result of higher prices for specialty papers. Overall, paper sales in the three months ended March 31, 1999 decreased to $22.7 million from $27.7 million in the same period of 1998, primarily as a result of a sales volume decrease of 28.4%. Expenses decreased to $40.9 million in the three months ended March 31, 1999 from $46.2 million in the comparable period of 1998, primarily as a result of lower sales volumes. On average, the Company's fibre costs for pulp production in the three months ended March 31, 1999 decreased by approximately 2.0%, compared to the same period in 1998. Prices for waste paper, which comprises approximately 80% of the fibre for the Company's paper mills, increased by approximately 16.0% in the three months ended March 31, 1999, compared to the same period of 1998, due to the change in the product mix to produce more higher-margin products. General and administrative expenses were $5.0 million in the three months ended March 31, 1999, compared to $5.9 million in the comparable period of 1998. Interest expense in the three months ended March 31, 1999 decreased to $0.5 million from $0.8 million in the comparable period of 1998, as a result of reduced indebtedness during the current period, other than with respect to the financing for the project to convert the Company's pulp mill from the production of sulphite pulp to kraft pulp (the "Conversion Project"). Interest costs in respect of the Conversion Project are being capitalized. In the three months ended March 31, 1999, the Company reported net income of $0.1 million or $0.01 per share, compared to $6.3 million or $0.41 per share in the comparable period of 1998. FORM 10-Q QUARTERLY REPORT - PAGE 9 10 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, 1999 December 31, 1998 -------------- ----------------- (in thousands) FINANCIAL POSITION Working capital $ 38,259 $ 65,021 Total assets 350,665 333,284 Long-term government debt 6,452 7,003 Long-term debt - other 149,876 114,545
At March 31, 1999, the Company's cash and cash equivalents totalled $19.9 million, a net decrease of $33.4 million from $53.3 million at December 31, 1998. At March 31, 1999, the Company had short-term trading securities totalling $11.3 million, compared to $12.9 million at December 31, 1998. Operating Activities - -------------------- Operating activities used cash of $4.2 million in the first quarter of 1999, compared to providing cash of $0.8 million in the same period in 1998. A decrease in accounts payable and accrued expenses used cash of $6.3 million in the three months ended March 31, 1999, compared to an increase in same providing cash of $2.0 million in the three months ended March 31, 1998. Lower inventories provided cash of $1.1 million in the three months ended March 31, 1999, compared to $0.1 million in the three months ended March 31, 1998. An increase in receivables used cash of $0.8 million in the three months ended March 31, 1999, compared to $9.2 million in the three months ended March 31, 1998. The Company expects to generate sufficient cash flow from operations to meet its working capital requirements. Investing Activities - -------------------- Investing activities in the three months ended March 31, 1999 used cash of $74.9 million, consisting primarily of capital expenditures relating to the Conversion Project, compared to $3.9 million in the three months ended March 31, 1998. The Conversion Project was commenced in mid-1998 and is designed, among other things, to convert the Company's pulp mill to produce kraft pulp, increase its annual production capacity from 160,000 tonnes to 280,000 tonnes and reduce its emissions of sulphur dioxides and effluent. The estimated cost for the Conversion Project is approximately $400 million, which is being financed through a combination of borrowings under a project loan (the "Project Loan"), non-refundable governmental grants, governmental assistance and guarantees for long-term project financing and an equity investment by the Company. Capital expenditures in respect of the Conversion Project in 1999 are estimated to be approximately $309.0 million and it is expected to be completed around the end of 1999. FORM 10-Q QUARTERLY REPORT - PAGE 10 11 During the first quarter of 1999, the Conversion Project was on schedule and on budget. The Company has entered into contracts for the purchase of equipment in excess of 90% of the capital budget for the Conversion Project and the Company does not currently anticipate any significant delays with respect to the Conversion Project. In addition, the Company has commenced site preparation at its pulp mill for the installation of certain key items of equipment, including a new recovery boiler. Increased construction activity on the mill site during the current quarter had a limited negative impact on production. As at March 31, 1999, the Company had expended approximately $162.1 million on the Conversion Project. Although the Conversion Project is on schedule, the Company believes that the project may incur cost overruns as a result of higher than expected infrastructure costs relating to site development and piping. Such additional costs have been partially offset by lower than expected costs for new equipment purchases. Pursuant to the terms of the Project Loan, such cost overruns will be funded in equal proportions through borrowings under a cost overrun tranche established under such loan facility and amounts deposited by the Company into a restricted account with the lenders under the Project Loan. Financing Activities - -------------------- Financing activities provided cash of $48.8 million in the first quarter of 1999, primarily as a result of increased borrowing under the Project Loan in respect of the Conversion Project. Financing activities provided cash of $0.9 million in the first quarter of 1998. The depreciation of the deutschmark against the U.S. dollar in the first quarter of 1999 resulted in an unrealized foreign exchange translation loss of $3.1 million on cash and cash equivalents, which is included as shareholders' equity in the Company's balance sheet and does not affect the Company's net earnings. See "Foreign Currency". Other than the Conversion Project, the Company had no material commitments to acquire assets or operating businesses as at March 31, 1999. 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. Approximately 99% of the Company's revenues are denominated in deutschmarks and euros. The value of the euro is fixed at 1.95583 deutschmarks. FORM 10-Q QUARTERLY REPORT - PAGE 11 12 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 year. 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 prevailing during that period. In the three months ended March 31, 1999, the depreciation of the deutschmark against the U.S. dollar resulted in a net $12.1 million foreign exchange translation loss and, as a result, the cumulative foreign exchange translation loss increased from $28.7 million at December 31, 1998 to $40.8 million at March 31, 1999. As both the Company's principal sources of revenues and expenses are in deutschmarks or euros, the Company does not currently enter into any currency hedging arrangements for exchange rate fluctuations. The average and period ending exchange rates for the deutschmark to the U.S. dollar for the periods indicated are as follows:
Quarter Ended Quarter Ended March 31, 1999 March 31, 1998 -------------------------- -------------------------- Period End Period Average Period End Period Average ---------- -------------- ---------- -------------- RATE OF EXCHANGE Deutschmark 1.8088 1.7429 1.8496 1.8189
Based upon the period average exchange rate in the first quarter of 1999, the U.S. dollar increased by approximately 4.6% in value against the deutschmark since December 31, 1998. European Economic and Monetary Union - ------------------------------------ Effective January 1, 1999, the currencies of the majority of the member countries of the European Economic and Monetary Union ("EMU") were replaced by a new currency, the "euro". The Company commenced transacting business in the euro beginning on January 1, 1999. The Company does not anticipate that the conversion rate for the deutschmark into the euro, fixed on January 1, 1999, will significantly impact on the Company's results of operations. However, there can be no assurance that the potential increased competition on the German market, which is the primary market for the Company's pulp and paper products, resulting from the introduction of the euro will not have an adverse effect on the Company's results of operations. Year 2000 - --------- Many of the world's computer systems currently record years in a two-digit format. These computer systems will be unable to properly interpret dates beyond the year 1999, which could lead to business disruptions and is commonly referred to as the "Year 2000" issue. The Company is conducting a comprehensive review of all significant applications that may require modification to FORM 10-Q QUARTERLY REPORT - PAGE 12 13 ensure Year 2000 compliance. The Company is utilizing both internal and external resources to make any required modifications and to test for Year 2000 compliance. The modification and testing process of all significant applications is expected to be completed in the third quarter of 1999. In addition, the Company has initiated communications with its significant suppliers and largest customers to ascertain their Year 2000 readiness and develop contingency plans as required. Based upon its current information, management of the Company has determined that the Year 2000 issue will not pose significant operational problems for its computers. The total cost to the Company of Year 2000 compliance activities has not been and is not currently anticipated to be material to its financial position or results of operations in any given year. The costs and the dates on which the Company plans to complete Year 2000 modification and testing are based on management's best estimates, which were derived utilizing numerous assumptions of future events. However, there can be no assurance that these estimates will be achieved and actual results could differ materially from those anticipated. Conversion Project Uncertainties - -------------------------------- The Company is subject to various uncertainties in connection with the Conversion Project, 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, which may cause fluctuations in its operating results. The Conversion Project is also subject to extensive and complex regulations and environmental compliance, which may result in delays or the Company incurring substantial costs in relation thereto. The Conversion Project has and will continue to adversely affect and disrupt the production of sulphite pulp and the operation of the Company's pulp mill in 1999, as a result of disruptions caused by construction, site development work, installation and removal of equipment, employee training and planned and unplanned downtime. In addition, after the first quarter of 1999, the pulp mill will no longer produce dissolving sulphite pulp, which is a premium priced grade of sulphite pulp. Construction of the Conversion Project is expected to be completed around the end of 1999 and the pulp mill will take approximately three months of downtime to facilitate its completion. Upon completion of construction, the pulp mill will go through a "start-up" or "ramp-up" period. The Company expects that the pulp mill will operate at approximately 80% of capacity by mid-2000 and at or near full capacity by the end of 2000. While the Conversion Project is on schedule, there can be no assurance that the project will not suffer delays during the construction phase as a result of, among other things, delays in the shipment and installation of equipment, materials or labour shortages, delays in the receipt of permits, weather conditions, or governmental actions. In addition, there are a number of risks and uncertainties inherent in the start-up of the pulp mill after the completion of construction. There can be no assurance that the pulp mill will not experience any operating difficulties or delays during the start-up period, any of which could have a material adverse effect on the Company's operations. FORM 10-Q QUARTERLY REPORT - PAGE 13 14 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, labour costs and productivity. 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 Not applicable. FORM 10-Q QUARTERLY REPORT - PAGE 14 15 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 Exhibit Number Description ------- ----------- 27 Article 5 - Financial Data Schedule for the 1st Quarter 1999 - Form 10-Q. (b) Reports on Form 8-K None. FORM 10-Q QUARTERLY REPORT - PAGE 15 16 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. /s/ Jimmy S.H. Lee ------------------------------------- Jimmy S.H. Lee President and Chief Executive Officer Date: May 14, 1999 FORM 10-Q QUARTERLY REPORT - PAGE 16 17 EXHIBIT INDEX Exhibit Number Description - ------- ----------- 27 Article 5 - Financial Data Schedule for the 1st Quarter 1999 - Form 10-Q. EX-27 2 ARTICLE 5 - FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES INCLUDED IN THIS FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 19,851 11,259 31,774 0 16,982 84,885 217,643 0 350,665 46,626 156,328 0 0 95,611 50,237 350,665 39,729 41,079 35,431 40,947 0 0 528 132 0 132 0 0 0 132 0.01 0.01
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