Attached files
| file | filename |
|---|---|
| 8-K - 8-K - MERCER INTERNATIONAL INC. | d766990d8k.htm |
Exhibit 99.1
For Immediate Release
MERCER INTERNATIONAL INC. REPORTS 2014 SECOND QUARTER RESULTS
NEW YORK, NY, July 31, 2014 - Mercer International Inc. (Nasdaq: MERC, TSX: MRI.U) today reported results for the second quarter ended June 30, 2014. Operating EBITDA* in the second quarter of 2014 increased to $41.9 million from $18.2 million in the second quarter of 2013, but declined from $59.0 million in the prior quarter of 2014, primarily as a result of scheduled maintenance downtime.
For the second quarter of 2014, we had net income of $0.6 million, or $0.01 per basic and diluted share, compared to net loss of $13.0 million, or $0.23 per basic and diluted share, in the second quarter of 2013.
On October 1, 2013, we changed our reporting currency from the Euro to the U.S. dollar.
Summary Financial Highlights
| Q2 | Q1 | Q2 | YTD | YTD | ||||||||||||||||
| 2014 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||
| (in millions, except per share amounts) | ||||||||||||||||||||
| Pulp revenues |
$ | 259.5 | $ | 278.5 | $ | 253.2 | $ | 538.0 | $ | 491.0 | ||||||||||
| Energy and chemical revenues |
$ | 25.7 | $ | 27.2 | $ | 21.5 | $ | 52.9 | $ | 45.5 | ||||||||||
| Operating income (loss) |
$ | 22.0 | $ | 39.2 | $ | (1.2) | $ | 61.3 | $ | 11.4 | ||||||||||
| Operating EBITDA |
$ | 41.9 | $ | 59.0 | $ | 18.2 | $ | 100.9 | $ | 50.3 | ||||||||||
| Gain on derivative instruments |
$ | 2.5 | $ | 3.2 | $ | 6.9 | $ | 5.8 | $ | 13.3 | ||||||||||
| Income tax benefit (provision) |
$ | (4.6) | $ | (1.9) | $ | (0.8) | $ | (6.4) | $ | (2.0) | ||||||||||
| Net income (loss)(1) |
$ | 0.6 | $ | 21.0 | $ | (13.0) | $ | 21.6 | $ | (13.6) | ||||||||||
| Net income (loss) per share(1) |
||||||||||||||||||||
| Basic |
$ | 0.01 | $ | 0.38 | $ | (0.23) | $ | 0.36 | $ | (0.24) | ||||||||||
| Diluted |
$ | 0.01 | $ | 0.37 | $ | (0.23) | $ | 0.36 | $ | (0.24) | ||||||||||
| Common shares outstanding at period end |
64.3 | 55.9 | 55.9 | 64.3 | 55.9 | |||||||||||||||
| (1) | Attributable to common shareholders. |
Summary Operating Highlights
| Q2 | Q1 | Q2 | YTD | YTD | ||||||||||||||||
| 2014 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||
| Pulp production (‘000 ADMTs) |
353.8 | 381.8 | 349.5 | 735.6 | 710.7 | |||||||||||||||
| Scheduled production downtime (‘000 ADMTs) |
17.7 | - | 16.0 | 17.7 | 16.0 | |||||||||||||||
| Scheduled production downtime (days) |
12 | - | 11 | 12 | 11 | |||||||||||||||
| Pulp sales (‘000 ADMTs) |
356.8 | 381.4 | 368.3 | 738.1 | 724.9 | |||||||||||||||
| Average NBSK pulp list price in Europe ($/ADMT)(1) |
925 | 920 | 857 | 923 | 844 | |||||||||||||||
| Average pulp sales realizations ($/ADMT)(2) |
720 | 723 | 679 | 722 | 669 | |||||||||||||||
| Energy production (‘000 MWh) |
446.2 | 466.3 | 405.8 | 912.5 | 830.2 | |||||||||||||||
| Energy sales (‘000 MWh) |
197.1 | 201.5 | 167.5 | 398.6 | 341.1 | |||||||||||||||
| Average Spot Currency Exchange Rates: |
||||||||||||||||||||
| $ / €(3) |
1.3716 | 1.3705 | 1.3064 | 1.3711 | 1.3129 | |||||||||||||||
| $ / C$(3) |
0.9169 | 0.9065 | 0.9777 | 0.9118 | 0.9845 | |||||||||||||||
| (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 spot rate over the reporting period. |
* Operating EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States (“GAAP”) and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. See page 12 of the financial tables included in this press release for a reconciliation of net income (loss) attributable to common shareholders to Operating EBITDA.
Page 2
President’s Comments
Mr. Jimmy S.H. Lee, President and Chairman, stated: “For the second quarter of 2014, our Operating EBITDA increased by approximately 130% to $41.9 million from $18.2 million in the comparative quarter of 2013. Our Operating EBITDA decreased by approximately 29% from $59.0 million in the first quarter of 2014 primarily as a result of 12 days of scheduled maintenance downtime at our Celgar and Stendal mills which we estimate adversely impacted Operating EBITDA by approximately $18.4 million, comprised of approximately $13.0 million in direct out-of-pocket expenses and the balance for reduced production. Many of our competitors that report their financial results using “IFRS” capitalize their direct costs of maintenance shutdowns.”
Mr. Lee continued: “In the current quarter, our German mills achieved near record production levels and sales volumes increased compared to the same period in 2013 due to generally strong demand in Europe. After strong sales in the last two months of the current quarter, our Celgar mill’s sales volumes decreased compared to the same period in 2013, due to weaker demand from China and lower production. Our results also reflect the continuing strength of the Euro, partially offset by a weak Canadian dollar.”
Mr. Lee added: “In the current quarter, our Celgar mill took ten days of scheduled maintenance downtime, or approximately 14,000 ADMTs. Our Stendal mill took two days of scheduled maintenance downtime, or approximately 3,700 ADMTs. Going forward, our Rosenthal mill’s 12-day annual maintenance shutdown is scheduled for the third quarter of 2014 and our Stendal mill will have a further two-day scheduled maintenance shutdown in the fourth quarter.”
Mr. Lee continued: “In the second quarter of 2014, energy production at our mills increased by approximately 10% compared to the same period in 2013. Energy and chemical revenues increased by approximately 20% in the current quarter from the same period of 2013. We currently expect energy and chemical revenues to remain consistent in the third quarter of 2014.”
Mr. Lee continued: “NBSK list prices in Europe and North America were essentially flat during the second quarter of 2014 compared to the prior quarter due to steady demand. List prices in China, however, declined by approximately 4% in the second quarter of 2014 from the prior quarter of 2014, due to market expectations that declining hardwood prices would pressure NBSK prices. At the end of the current quarter, list pulp prices in Europe and North America were approximately $925 per ADMT and $1,030 per ADMT, respectively, while list prices in China had decreased to $720 per ADMT. We currently expect list prices to remain flat during the summer months in Europe and North America with modest increases beginning in the fourth quarter.”
Mr. Lee continued: “The NBSK pulp market remained generally under-balanced at approximately 25 days’ supply at the end of the current quarter. During the quarter, world producer inventories declined by three days from the end of the first quarter of 2014. We currently expect producer maintenance and other mill downtime to keep the NBSK pulp market generally firm in the near term.”
Page 3
Mr. Lee continued: “On average, our overall per unit fiber costs in the current quarter decreased by approximately 5% from the same period in 2013. Timber harvesting was steady through the quarter and sawmills ran at high rates which led to a good supply of pulpwood and residual chips. In addition, less demand pressure on German timber due to the availability of storm damaged wood in Eastern Europe resulted in moderately lower German wood costs in the quarter. For the next quarter of 2014, we currently expect our overall fiber costs to remain stable, with modest increases in Canada being offset by slightly lower prices in Germany.”
Mr. Lee concluded: “Overall, our mills operated generally well in the current quarter. This, along with generally favorable markets and prices, let us generate solid results, despite the continuing weakness of the U.S. dollar relative to the Euro and our scheduled maintenance in the current quarter. Going forward, our Celgar mill should continue to benefit from the decline of the Canadian dollar versus the U.S. dollar and our Rosenthal mill will benefit from the completion of a capital project to enable it to produce and sell tall oil, a chemical by-product. We believe these factors should help position us to further build value for our stakeholders in the second half of 2014.”
Three Months Ended June 30, 2014 Compared to Three Months Ended June 30, 2013
Total revenues for the three months ended June 30, 2014 increased by approximately 4% to $285.2 million from $274.7 million in the same period in 2013, due to higher pulp prices and higher energy sales volumes.
Pulp revenues for the three months ended June 30, 2014 increased by approximately 2% to $259.5 million from $253.2 million in the comparative quarter of 2013, due to higher price realizations, partially offset by lower sales volumes.
Energy and chemical revenues increased by approximately 20% to $25.7 million in the second quarter of 2014 from $21.5 million in the same quarter last year, primarily because of higher energy sales volume resulting from Project Blue Mill coming online at our Stendal mill at the end of 2013.
Pulp production increased by approximately 1% to 353,803 ADMTs in the current quarter from 349,502 ADMTs in the same quarter of 2013. We had an aggregate of 12 days (approximately 17,700 ADMTs) of scheduled maintenance downtime at our Stendal and Celgar mills in the second quarter of 2014.
Our Rosenthal mill’s annual maintenance shutdown is scheduled for the third quarter and our Stendal mill is scheduled to have a second two-day maintenance shutdown in the fourth quarter.
Pulp sales volumes decreased by approximately 3% to 356,755 ADMTs in the current quarter from 368,285 ADMTs in the comparative quarter, primarily due to weaker demand from China and lower production at our Celgar mill.
Average pulp sales realizations increased by approximately 6% to $720 per ADMT in the second quarter of 2014, compared to $679 per ADMT in the same period last year primarily due to higher pulp prices.
Page 4
Costs and expenses in the second quarter of 2014 decreased by approximately 5% to $263.2 million from $275.9 million in the comparative period of 2013, primarily due to lower fiber costs and lower sales volumes.
On average, our overall per unit fiber costs in the current quarter decreased by approximately 5% from the same period in 2013.
For the second quarter of 2014, our operating income increased to $22.0 million from an operating loss of $1.2 million in the comparative quarter of 2013, primarily due to higher pulp sales realizations and lower fiber costs, partially offset by a weaker U.S. dollar relative to the Euro.
Interest expense was $17.2 million in the second quarter of 2014 and 2013, respectively.
We recorded a derivative gain of $2.5 million on the mark to market adjustment of our Stendal mill’s interest rate derivative, compared to a net derivative gain of $6.9 million in the same quarter of last year.
The noncontrolling shareholder’s interest in the Stendal mill’s net income in the second quarter of 2014 was $2.2 million, compared to $0.8 million in the same quarter last year.
In the second quarter of 2014, Operating EBITDA increased to $41.9 million from $18.2 million in the second quarter of 2013. Operating EBITDA is defined as operating income (loss) plus depreciation and amortization and non-recurring capital asset impairment charges. Operating EBITDA has significant limitations as an analytical tool and should not be considered in isolation or as a substitute for our results as reported under GAAP. See page 12 of the financial tables included in the press release for a reconciliation of net income (loss) attributable to common shareholders to Operating EBITDA.
We reported net income attributable to common shareholders of $0.6 million, or $0.01 per basic and diluted share, for the second quarter of 2014, which included a non-cash unrealized gain on the interest rate derivative of $2.5 million. In the second quarter of 2013, the net loss attributable to common shareholders was $13.0 million, or $0.23 per basic and diluted share, which included a total non-cash net unrealized gain of $7.4 million on the Stendal interest rate derivative and fixed price pulp swaps.
On April 2, 2014, we completed our registered public offering of 8,050,000 shares of our common stock at $7.15 per share and realized net proceeds of approximately $53.6 million therefrom.
Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013
Total revenues for the six months ended June 30, 2014 increased by approximately 10% to $590.9 million from $536.5 million in the same period in 2013, due to higher pulp and energy revenues.
Pulp revenues for the six months ended June 30, 2014 increased by approximately 10% to $538.0 million from $491.0 million in the comparative period of 2013, due to higher pulp price realizations.
Page 5
Energy and chemical revenues increased by approximately 16% to $52.9 million in the first half of 2014 from $45.5 million in the same period last year, primarily because of higher energy sales volume resulting from Project Blue Mill coming online at our Stendal mill at the end of 2013.
Pulp production increased by approximately 4% to 735,588 ADMTs in the first half of 2014 from 710,666 ADMTs in the same period of 2013. We had an aggregate of 12 days (approximately 17,700 ADMTs) of scheduled maintenance downtime at our Stendal and Celgar mills in the first half of 2014.
Pulp sales volumes increased by approximately 2% to 738,110 ADMTs in the first half of 2014 from 724,945 ADMTs in the comparative period of 2013, primarily due to higher sales in North America.
Average pulp sales realizations increased by approximately 8% to $722 per ADMT in the first half of 2014, compared to $669 per ADMT in the comparative period of 2013, primarily due to higher pulp prices.
Costs and expenses in the first half of 2014 increased by approximately 1% to $529.6 million from $525.0 million in the comparative period of 2013, primarily due to the impact of a weaker U.S. dollar relative to the Euro, partially offset by lower fiber costs.
On average, our overall per unit fiber costs in the first half of 2014 decreased by approximately 1% from the same period in 2013.
In the first half of 2014, our operating income increased to $61.3 million from $11.4 million in the comparative period of 2013, primarily due to higher sales realizations and sales volumes and lower fiber costs.
Interest expense in the first half of 2014 increased marginally to $34.6 million from $34.5 million in the comparative period of 2013.
We recorded a derivative gain of $5.8 million on the mark to market adjustment of our Stendal mill’s interest rate derivative, compared to a net derivative gain of $13.3 million in the same period of last year.
In the six months ended June 30, 2014, Operating EBITDA increased to $100.9 million from $50.3 million in the same period of 2013. See page 12 of the financial tables included in the press release for a reconciliation of net income (loss) attributable to common shareholders to Operating EBITDA.
We reported net income attributable to common shareholders of $21.6 million, or $0.36 per basic and diluted share, for the first half of 2014, which included a non-cash unrealized gain on the interest rate derivative of $5.8 million. In the first half of 2013, the net loss attributable to common shareholders was $13.6 million, or $0.24 per basic and diluted share, which included a total non-cash net unrealized gain of $13.6 million on the Stendal interest rate derivative and fixed price pulp swaps.
Page 6
Liquidity and Capital Resources
The following table is a summary of selected financial information as at the dates indicated:
| As at June 30, 2014 |
As at December 31, 2013 |
|||||||
| (in thousands) | ||||||||
| Financial Position |
||||||||
| Cash and cash equivalents |
$ | 241,023 | $ | 147,728 | ||||
| Working capital |
$ | 378,810 | $ | 306,274 | ||||
| Total assets |
$ | 1,608,828 | $ | 1,548,559 | ||||
| Long-term liabilities |
$ | 1,004,065 | $ | 1,034,743 | ||||
| Total equity |
$ | 425,613 | $ | 348,317 | ||||
As at June 30, 2014, we had approximately €28.4 million and C$38.3 million available under our Rosenthal and Celgar revolving credit facilities, respectively.
In July 2014, our Stendal mill received lenders’ approval to amend its two term credit facilities to provide greater financial flexibility to Stendal. Such amendments include, among other things, loosening the financial covenant ratios Stendal must meet and reducing the scheduled principal repayments under the Stendal project loan by 50% while retaining its current “cash sweep”. In connection with such amendments, we will provide Stendal with additional capital of $20.0 million. The amendments are subject to customary closing conditions, including, among others, execution and delivery of definitive agreements.
Restricted Group
The following table is a summary of selected financial information for the Restricted Group (which, under the indenture for our 2017 9.5% Senior Notes, is comprised of Mercer International Inc., certain holding subsidiaries and our Rosenthal and Celgar mills) as at the dates indicated:
| As at June 30, 2014 |
As at December 31, 2013 |
|||||||
| (in thousands) | ||||||||
| Financial Position |
||||||||
| Cash and cash equivalents |
$ | 157,418 | $ | 82,910 | ||||
| Working capital |
$ | 277,973 | $ | 211,749 | ||||
| Total assets |
$ | 936,001 | $ | 858,824 | ||||
| Long-term liabilities |
$ | 406,669 | $ | 394,821 | ||||
| Total equity |
$ | 464,539 | $ | 412,033 | ||||
Earnings Release Call
In conjunction with this release, Mercer International Inc. will host a conference call, which will be simultaneously broadcast live over the Internet. Management will host the call, which is scheduled for Friday, August 1, 2014 at 10:00 AM (Eastern Daylight Time). Listeners can access the conference call live and archived through August 31, 2014, over the Internet at http://www.media-server.com/m/p/6jctbeam or through a link on the Company’s home page at http://www.mercerint.com. Please allow 15 minutes prior to the call to visit the site and download and install any necessary audio software.
Page 7
Mercer International Inc. is a global pulp manufacturing company. To obtain further information on the company, please visit its web site at http://www.mercerint.com.
The preceding includes forward looking statements which involve known and unknown risks and uncertainties which may cause our actual results in future periods to differ materially from forecasted results. Words such as “expects”, “anticipates”, “projects”, “intends”, “designed”, “will”, “believes”, “estimates”, “may”, “could” and variations of such words and similar expressions are intended to identify such forward-looking statements. Among those factors which could cause actual results to differ materially are the following: the highly cyclical nature of our business, raw material costs, our level of indebtedness, competition, foreign exchange and interest rate fluctuations, our use of derivatives, expenditures for capital projects, environmental regulation and compliance, disruptions to our production, market conditions and other risk factors listed from time to time in our SEC reports.
APPROVED BY:
Jimmy S.H. Lee
Chairman, CEO & President
(604) 684-1099
David M. Gandossi
Executive Vice-President,
Chief Financial Officer & Secretary
(604) 684-1099
-FINANCIAL TABLES FOLLOW-
MERCER INTERNATIONAL INC.
INTERIM CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
| June 30, | December 31, | |||||||
| 2014 | 2013 | |||||||
| ASSETS |
||||||||
| Current assets |
||||||||
| Cash and cash equivalents |
$ | 241,023 | $ | 147,728 | ||||
| Receivables |
134,749 | 135,893 | ||||||
| Inventories |
165,072 | 170,908 | ||||||
| Prepaid expenses and other |
10,100 | 10,918 | ||||||
| Deferred income tax |
7,016 | 6,326 | ||||||
|
|
|
|
|
|||||
| Total current assets |
557,960 | 471,773 | ||||||
|
|
|
|
|
|||||
| Long-term assets |
||||||||
| Property, plant and equipment |
1,006,906 | 1,038,631 | ||||||
| Deferred note issuance costs and other |
20,600 | 20,998 | ||||||
| Deferred income tax |
23,362 | 17,157 | ||||||
|
|
|
|
|
|||||
| 1,050,868 | 1,076,786 | |||||||
|
|
|
|
|
|||||
| Total assets |
$ | 1,608,828 | $ | 1,548,559 | ||||
|
|
|
|
|
|||||
| LIABILITIES |
||||||||
| Current liabilities |
||||||||
| Accounts payable and other |
$ | 115,643 | $ | 103,814 | ||||
| Pension and other post-retirement benefit obligations |
1,325 | 1,330 | ||||||
| Debt |
62,182 | 60,355 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
179,150 | 165,499 | ||||||
|
|
|
|
|
|||||
| Long-term liabilities |
||||||||
| Debt |
882,443 | 919,017 | ||||||
| Interest rate derivative liability |
40,447 | 46,517 | ||||||
| Pension and other post-retirement benefit obligations |
35,370 | 35,466 | ||||||
| Capital leases and other |
19,576 | 19,293 | ||||||
| Deferred income tax |
26,229 | 14,450 | ||||||
|
|
|
|
|
|||||
| 1,004,065 | 1,034,743 | |||||||
|
|
|
|
|
|||||
| Total liabilities |
1,183,215 | 1,200,242 | ||||||
|
|
|
|
|
|||||
| EQUITY |
||||||||
| Shareholders’ equity |
||||||||
| Share capital |
386,081 | 328,549 | ||||||
| Paid-in capital |
(15,356) | (11,756) | ||||||
| Retained earnings |
32,427 | 10,815 | ||||||
| Accumulated other comprehensive income |
28,892 | 31,470 | ||||||
|
|
|
|
|
|||||
| Total shareholders’ equity |
432,044 | 359,078 | ||||||
|
|
|
|
|
|||||
| Noncontrolling interest (deficit) |
(6,431) | (10,761) | ||||||
|
|
|
|
|
|||||
| Total equity |
425,613 | 348,317 | ||||||
|
|
|
|
|
|||||
| Total liabilities and equity |
$ | 1,608,828 | $ | 1,548,559 | ||||
|
|
|
|
|
|||||
(1)
MERCER INTERNATIONAL INC.
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Revenues |
||||||||||||||||
| Pulp |
$ | 259,482 | $ | 253,166 | $ | 537,988 | $ | 490,984 | ||||||||
| Energy and chemicals |
25,710 | 21,534 | 52,889 | 45,501 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 285,192 | 274,700 | 590,877 | 536,485 | |||||||||||||
| Costs and expenses |
||||||||||||||||
| Operating costs |
230,465 | 244,363 | 466,769 | 462,347 | ||||||||||||
| Operating depreciation and amortization |
19,768 | 19,267 | 39,470 | 38,717 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 34,959 | 11,070 | 84,638 | 35,421 | |||||||||||||
| Selling, general and administrative expenses |
12,938 | 12,239 | 23,374 | 23,983 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating income (loss) |
22,021 | (1,169) | 61,264 | 11,438 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Other income (expense) |
||||||||||||||||
| Interest expense |
(17,165) | (17,170) | (34,615) | (34,530) | ||||||||||||
| Gain (loss) on derivative instruments |
2,549 | 6,921 | 5,777 | 13,285 | ||||||||||||
| Other income (expense) |
(82) | 8 | (76) | (84) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total other income (expense) |
(14,698) | (10,241) | (28,914) | (21,329) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income (loss) before income taxes |
7,323 | (11,410) | 32,350 | (9,891) | ||||||||||||
| Income tax benefit (provision) |
||||||||||||||||
| Current |
(1,405) | (275) | (1,527) | 4,044 | ||||||||||||
| Deferred |
(3,153) | (540) | (4,881) | (6,004) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) |
2,765 | (12,225) | 25,942 | (11,851) | ||||||||||||
| Less: net income attributable to noncontrolling interest |
(2,194) | (790) | (4,330) | (1,725) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) attributable to common shareholders |
$ | 571 | $ | (13,015) | $ | 21,612 | $ | (13,576) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) per share attributable to common shareholders |
||||||||||||||||
| Basic and diluted |
$ | 0.01 | $ | (0.23) | $ | 0.36 | $ | (0.24) | ||||||||
(2)
MERCER INTERNATIONAL INC.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Cash flows from (used in) operating activities |
||||||||||||||||
| Net income (loss) |
$ | 2,765 | $ | (12,225) | $ | 25,942 | $ | (11,851) | ||||||||
| Adjustments to reconcile net income (loss) to cash flows from operating activities |
||||||||||||||||
| Unrealized loss (gain) on derivative instruments |
(2,549) | (7,431) | (5,777) | (13,630) | ||||||||||||
| Depreciation and amortization |
19,851 | 19,354 | 39,638 | 38,887 | ||||||||||||
| Deferred income taxes |
3,153 | 540 | 4,881 | 6,004 | ||||||||||||
| Stock compensation expense |
600 | 396 | 331 | 752 | ||||||||||||
| Pension and other post-retirement expense, net of funding |
214 | 277 | 425 | 437 | ||||||||||||
| Other |
852 | 1,266 | 1,504 | 2,828 | ||||||||||||
| Changes in working capital |
||||||||||||||||
| Receivables |
14,517 | 28,635 | (2,815) | 15,822 | ||||||||||||
| Inventories |
(13,390) | 2,781 | 5,333 | 10,368 | ||||||||||||
| Accounts payable and accrued expenses |
(8,062) | (2,134) | 14,180 | 11,858 | ||||||||||||
| Other |
3,338 | (7,492) | (2,674) | (8,525) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net cash from (used in) operating activities |
21,289 | 23,967 | 80,968 | 52,950 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Cash flows from (used in) investing activities |
||||||||||||||||
| Purchase of property, plant and equipment |
(6,151) | (14,349) | (12,717) | (29,394) | ||||||||||||
| Purchase of intangible assets |
(715) | - | (2,455) | - | ||||||||||||
| Proceeds on sale of property, plant and equipment |
94 | 3 | 273 | 20 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net cash from (used in) investing activities |
(6,772) | (14,346) | (14,899) | (29,374) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Cash flows from (used in) financing activities |
||||||||||||||||
| Repayment of debt |
- | - | (30,541) | (26,420) | ||||||||||||
| Proceeds from borrowings of debt |
- | 9,090 | - | 22,223 | ||||||||||||
| Proceeds from issuance of shares |
53,942 | - | 53,942 | - | ||||||||||||
| Repayment of capital lease obligations |
(532) | (522) | (1,192) | (1,446) | ||||||||||||
| Proceeds from sale and lease-back transactions |
- | - | 1,047 | - | ||||||||||||
| Proceeds from (repayment of) credit facilities, net |
- | 9,112 | - | 17,060 | ||||||||||||
| Proceeds from government grants |
761 | 4,441 | 4,058 | 5,413 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net cash from (used in) financing activities |
54,171 | 22,121 | 27,314 | 16,830 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Effect of exchange rate changes on cash and cash equivalents |
226 | 1,040 | (88) | (2,948) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in cash and cash equivalents |
68,914 | 32,782 | 93,295 | 37,458 | ||||||||||||
| Cash and cash equivalents, beginning of period |
172,109 | 142,115 | 147,728 | 137,439 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Cash and cash equivalents, end of period |
$ | 241,023 | $ | 174,897 | $ | 241,023 | $ | 174,897 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
(3)
MERCER INTERNATIONAL INC.
RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE
Combined Condensed Balance Sheets
(Unaudited)
(In thousands)
The terms of the indenture governing our 9.5% senior unsecured notes requires that we provide the results of operations and financial condition of Mercer International Inc. and our restricted subsidiaries under the indenture, collectively referred to as the “Restricted Group”. As at and during the three and six months ended June 30, 2014 and 2013, the Restricted Group was comprised of Mercer International Inc., certain holding subsidiaries and our Rosenthal and Celgar mills. The Restricted Group excludes the Stendal mill.
| June 30, 2014 | ||||||||||||||||
| Restricted | Unrestricted | Consolidated | ||||||||||||||
| Group | Subsidiaries | Eliminations | Group | |||||||||||||
| ASSETS |
||||||||||||||||
| Current assets |
||||||||||||||||
| Cash and cash equivalents |
$ | 157,418 | $ | 83,605 | $ | - | $ | 241,023 | ||||||||
| Receivables |
69,808 | 64,941 | - | 134,749 | ||||||||||||
| Inventories |
104,124 | 60,948 | - | 165,072 | ||||||||||||
| Prepaid expenses and other |
7,810 | 2,290 | - | 10,100 | ||||||||||||
| Deferred income tax |
3,606 | 3,410 | - | 7,016 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total current assets |
342,766 | 215,194 | - | 557,960 | ||||||||||||
| Long-term assets |
||||||||||||||||
| Property, plant and equipment |
410,110 | 596,796 | - | 1,006,906 | ||||||||||||
| Deferred note issuance costs and other |
11,136 | 9,464 | - | 20,600 | ||||||||||||
| Deferred income tax |
16,522 | 6,840 | - | 23,362 | ||||||||||||
| Due from unrestricted group |
155,467 | - | (155,467) | - | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total assets |
$ | 936,001 | $ | 828,294 | $ | (155,467) | $ | 1,608,828 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| LIABILITIES |
||||||||||||||||
| Current liabilities |
||||||||||||||||
| Accounts payable and other |
$ | 63,468 | $ | 52,175 | $ | - | $ | 115,643 | ||||||||
| Pension and other post-retirement benefit obligations |
1,325 | - | - | 1,325 | ||||||||||||
| Debt |
- | 62,182 | - | 62,182 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total current liabilities |
64,793 | 114,357 | - | 179,150 | ||||||||||||
| Long-term liabilities |
||||||||||||||||
| Debt |
336,124 | 546,319 | - | 882,443 | ||||||||||||
| Due to restricted group |
- | 155,467 | (155,467) | - | ||||||||||||
| Interest rate derivative liability |
- | 40,447 | - | 40,447 | ||||||||||||
| Pension and other post-retirement benefit obligations |
35,370 | - | - | 35,370 | ||||||||||||
| Capital leases and other |
8,946 | 10,630 | - | 19,576 | ||||||||||||
| Deferred income tax |
26,229 | - | - | 26,229 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total liabilities |
471,462 | 867,220 | (155,467) | 1,183,215 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| EQUITY |
||||||||||||||||
| Total shareholders’ equity (deficit) |
464,539 | (32,495) | - | 432,044 | ||||||||||||
| Noncontrolling interest (deficit) |
- | (6,431) | - | (6,431) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total liabilities and equity |
$ | 936,001 | $ | 828,294 | $ | (155,467) | $ | 1,608,828 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
(4)
MERCER INTERNATIONAL INC.
RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE
Combined Condensed Balance Sheets
(Unaudited)
(In thousands)
| December 31, 2013 | ||||||||||||||||
| Restricted | Unrestricted | Consolidated | ||||||||||||||
| Group | Subsidiaries | Eliminations | Group | |||||||||||||
| ASSETS |
||||||||||||||||
| Current assets |
||||||||||||||||
| Cash and cash equivalents |
$ | 82,910 | $ | 64,818 | $ | - | $ | 147,728 | ||||||||
| Receivables |
75,987 | 59,906 | - | 135,893 | ||||||||||||
| Inventories |
93,807 | 77,101 | - | 170,908 | ||||||||||||
| Prepaid expenses and other |
7,742 | 3,176 | - | 10,918 | ||||||||||||
| Deferred income tax |
3,273 | 3,053 | - | 6,326 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total current assets |
263,719 | 208,054 | - | 471,773 | ||||||||||||
| Long-term assets |
||||||||||||||||
| Property, plant and equipment |
420,373 | 618,258 | - | 1,038,631 | ||||||||||||
| Deferred note issuance costs and other |
10,987 | 10,011 | - | 20,998 | ||||||||||||
| Deferred income tax |
9,894 | 7,263 | - | 17,157 | ||||||||||||
| Due from unrestricted group |
153,851 | - | (153,851) | - | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total assets |
$ | 858,824 | $ | 843,586 | $ | (153,851) | $ | 1,548,559 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| LIABILITIES |
||||||||||||||||
| Current liabilities |
||||||||||||||||
| Accounts payable and other |
$ | 49,891 | $ | 53,923 | $ | - | $ | 103,814 | ||||||||
| Pension and other post-retirement benefit obligations |
1,330 | - | - | 1,330 | ||||||||||||
| Debt |
749 | 59,606 | - | 60,355 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total current liabilities |
51,970 | 113,529 | - | 165,499 | ||||||||||||
| Long-term liabilities |
||||||||||||||||
| Debt |
336,382 | 582,635 | - | 919,017 | ||||||||||||
| Due to restricted group |
- | 153,851 | (153,851) | - | ||||||||||||
| Interest rate derivative liability |
- | 46,517 | - | 46,517 | ||||||||||||
| Pension and other post-retirement benefit obligations |
35,466 | - | - | 35,466 | ||||||||||||
| Capital leases and other |
8,523 | 10,770 | - | 19,293 | ||||||||||||
| Deferred income tax |
14,450 | - | - | 14,450 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total liabilities |
446,791 | 907,302 | (153,851) | 1,200,242 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| EQUITY |
||||||||||||||||
| Total shareholders’ equity (deficit) |
412,033 | (52,955) | - | 359,078 | ||||||||||||
| Noncontrolling interest (deficit) |
- | (10,761) | - | (10,761) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total liabilities and equity |
$ | 858,824 | $ | 843,586 | $ | (153,851) | $ | 1,548,559 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
(5)
MERCER INTERNATIONAL INC.
RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE
Combined Condensed Statements of Operations
(Unaudited)
(In thousands)
| Three Months Ended June 30, 2014 | ||||||||||||||||
| Restricted | Unrestricted | Consolidated | ||||||||||||||
| Group | Subsidiaries | Eliminations | Group | |||||||||||||
| Revenues |
||||||||||||||||
| Pulp |
$ | 136,632 | $ | 122,850 | $ | - | $ | 259,482 | ||||||||
| Energy and chemicals |
7,649 | 18,061 | - | 25,710 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 144,281 | 140,911 | - | 285,192 | |||||||||||||
| Operating costs |
122,043 | 108,422 | - | 230,465 | ||||||||||||
| Operating depreciation and amortization |
10,631 | 9,137 | - | 19,768 | ||||||||||||
| Selling, general and administrative expenses |
8,647 | 4,291 | - | 12,938 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 141,321 | 121,850 | - | 263,171 | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating income (loss) |
2,960 | 19,061 | - | 22,021 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Other income (expense) |
||||||||||||||||
| Interest expense |
(8,548) | (8,757) | 140 | (17,165) | ||||||||||||
| Gain (loss) on derivative instruments |
- | 2,549 | - | 2,549 | ||||||||||||
| Other income (expense) |
26 | 32 | (140) | (82) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total other income (expense) |
(8,522) | (6,176) | - | (14,698) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income (loss) before income taxes |
(5,562) | 12,885 | - | 7,323 | ||||||||||||
| Income tax benefit (provision) |
(4,033) | (525) | - | (4,558) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) |
(9,595) | 12,360 | - | 2,765 | ||||||||||||
| Less: net income attributable to noncontrolling interest |
- | (2,194) | - | (2,194) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) attributable to common shareholders |
$ | (9,595) | $ | 10,166 | $ | - | $ | 571 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Three Months Ended June 30, 2013 | ||||||||||||||||
| Restricted | Unrestricted | Consolidated | ||||||||||||||
| Group | Subsidiaries | Eliminations | Group | |||||||||||||
| Revenues |
||||||||||||||||
| Pulp |
$ | 137,957 | $ | 115,209 | $ | - | $ | 253,166 | ||||||||
| Energy and chemicals |
7,886 | 13,648 | - | 21,534 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 145,843 | 128,857 | - | 274,700 | |||||||||||||
| Operating costs |
135,425 | 108,938 | - | 244,363 | ||||||||||||
| Operating depreciation and amortization |
10,791 | 8,476 | - | 19,267 | ||||||||||||
| Selling, general and administrative expenses |
7,375 | 4,864 | - | 12,239 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 153,591 | 122,278 | - | 275,869 | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating income (loss) |
(7,748) | 6,579 | - | (1,169) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Other income (expense) |
||||||||||||||||
| Interest expense |
(7,685) | (11,639) | 2,154 | (17,170) | ||||||||||||
| Gain (loss) on derivative instruments |
(551) | 7,472 | - | 6,921 | ||||||||||||
| Other income (expense) |
2,118 | 44 | (2,154) | 8 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total other income (expense) |
(6,118) | (4,123) | - | (10,241) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income (loss) before income taxes |
(13,866) | 2,456 | - | (11,410) | ||||||||||||
| Income tax benefit (provision) |
(795) | (20) | - | (815) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) |
(14,661) | 2,436 | - | (12,225) | ||||||||||||
| Less: net income attributable to noncontrolling interest |
- | (790) | - | (790) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) attributable to common shareholders |
$ | (14,661) | $ | 1,646 | $ | - | $ | (13,015) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
(6)
MERCER INTERNATIONAL INC.
RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE
Combined Condensed Statements of Operations
(Unaudited)
(In thousands)
| Six Months Ended June 30, 2014 | ||||||||||||||||
| Restricted Group |
Unrestricted Subsidiaries |
Eliminations | Consolidated Group |
|||||||||||||
| Revenues |
||||||||||||||||
| Pulp |
$ | 277,429 | $ | 260,559 | $ | - | $ | 537,988 | ||||||||
| Energy and chemicals |
16,530 | 36,359 | - | 52,889 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 293,959 | 296,918 | - | 590,877 | |||||||||||||
| Operating costs |
233,411 | 233,358 | - | 466,769 | ||||||||||||
| Operating depreciation and amortization |
21,205 | 18,265 | - | 39,470 | ||||||||||||
| Selling, general and administrative expenses |
15,098 | 8,276 | - | 23,374 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 269,714 | 259,899 | - | 529,613 | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating income (loss) |
24,245 | 37,019 | - | 61,264 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Other income (expense) |
||||||||||||||||
| Interest expense |
(17,066) | (17,829) | 280 | (34,615) | ||||||||||||
| Gain (loss) on derivative instruments |
- | 5,777 | - | 5,777 | ||||||||||||
| Other income (expense) |
138 | 66 | (280) | (76) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total other income (expense) |
(16,928) | (11,986) | - | (28,914) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income (loss) before income taxes |
7,317 | 25,033 | - | 32,350 | ||||||||||||
| Income tax benefit (provision) |
(5,785) | (623) | - | (6,408) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) |
1,532 | 24,410 | - | 25,942 | ||||||||||||
| Less: net income attributable to noncontrolling interest |
- | (4,330) | - | (4,330) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) attributable to common shareholders |
$ | 1,532 | $ | 20,080 | $ | - | $ | 21,612 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Six Months Ended June 30, 2013 | ||||||||||||||||
| Restricted | Unrestricted | Consolidated | ||||||||||||||
| Group | Subsidiaries | Eliminations | Group | |||||||||||||
| Revenues |
||||||||||||||||
| Pulp |
$ | 270,307 | $ | 220,677 | $ | - | $ | 490,984 | ||||||||
| Energy and chemicals |
17,247 | 28,254 | - | 45,501 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 287,554 | 248,931 | - | 536,485 | |||||||||||||
| Operating costs |
253,625 | 208,722 | - | 462,347 | ||||||||||||
| Operating depreciation and amortization |
21,606 | 17,111 | - | 38,717 | ||||||||||||
| Selling, general and administrative expenses |
14,922 | 9,061 | - | 23,983 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 290,153 | 234,894 | - | 525,047 | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating income (loss) |
(2,599) | 14,037 | - | 11,438 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Other income (expense) |
||||||||||||||||
| Interest expense |
(15,430) | (23,430) | 4,330 | (34,530) | ||||||||||||
| Gain (loss) on derivative instruments |
(1,007) | 14,292 | - | 13,285 | ||||||||||||
| Other income (expense) |
4,145 | 101 | (4,330) | (84) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total other income (expense) |
(12,292) | (9,037) | - | (21,329) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income (loss) before income taxes |
(14,891) | 5,000 | - | (9,891) | ||||||||||||
| Income tax benefit (provision) |
(2,137) | 177 | - | (1,960) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) |
(17,028) | 5,177 | - | (11,851) | ||||||||||||
| Less: net income attributable to noncontrolling interest |
- | (1,725) | - | (1,725) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) attributable to common shareholders |
$ | (17,028) | $ | 3,452 | $ | - | $ | (13,576) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
(7)
MERCER INTERNATIONAL INC.
RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE
Combined Condensed Statements of Cash Flows
(Unaudited)
(In thousands)
| Three Months Ended June 30, 2014 | ||||||||||||
| Restricted | Unrestricted | Consolidated | ||||||||||
| Group | Subsidiaries | Group | ||||||||||
| Cash flows from (used in) operating activities |
||||||||||||
| Net income (loss) |
$ | (9,595) | $ | 12,360 | $ | 2,765 | ||||||
| Adjustments to reconcile net income (loss) to cash flows from operating activities |
||||||||||||
| Unrealized loss (gain) on derivative instruments |
- | (2,549) | (2,549) | |||||||||
| Depreciation and amortization |
10,714 | 9,137 | 19,851 | |||||||||
| Deferred income taxes |
3,153 | - | 3,153 | |||||||||
| Stock compensation expense |
600 | - | 600 | |||||||||
| Pension and other post-retirement expense, net of funding |
214 | - | 214 | |||||||||
| Other |
412 | 440 | 852 | |||||||||
| Changes in working capital |
||||||||||||
| Receivables |
4,808 | 9,709 | 14,517 | |||||||||
| Inventories |
(8,753) | (4,637) | (13,390) | |||||||||
| Accounts payable and accrued expenses |
(2,397) | (5,665) | (8,062) | |||||||||
| Other(1) |
1,529 | 1,809 | 3,338 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net cash from (used in) operating activities |
685 | 20,604 | 21,289 | |||||||||
|
|
|
|
|
|
|
|||||||
| Cash flows from (used in) investing activities |
||||||||||||
| Purchase of property, plant and equipment |
(5,571) | (580) | (6,151) | |||||||||
| Purchase of intangible assets |
(229) | (486) | (715) | |||||||||
| Proceeds on sale of property, plant and equipment |
81 | 13 | 94 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net cash from (used in) investing activities |
(5,719) | (1,053) | (6,772) | |||||||||
|
|
|
|
|
|
|
|||||||
| Cash flows from (used in) financing activities |
||||||||||||
| Proceeds from issuance of shares |
53,942 | - | 53,942 | |||||||||
| Repayment of capital lease obligations |
(202) | (330) | (532) | |||||||||
| Proceeds from government grants |
- | 761 | 761 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net cash from (used in) financing activities |
53,740 | 431 | 54,171 | |||||||||
|
|
|
|
|
|
|
|||||||
| Effect of exchange rate changes on cash and cash equivalents |
666 | (440) | 226 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net increase (decrease) in cash and cash equivalents |
49,372 | 19,542 | 68,914 | |||||||||
| Cash and cash equivalents, beginning of period |
108,046 | 64,063 | 172,109 | |||||||||
|
|
|
|
|
|
|
|||||||
| Cash and cash equivalents, end of period |
$ | 157,418 | $ | 83,605 | $ | 241,023 | ||||||
|
|
|
|
|
|
|
|||||||
| (1) | Includes intercompany working capital related transactions. |
(8)
MERCER INTERNATIONAL INC.
RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE
Combined Condensed Statements of Cash Flows
(Unaudited)
(In thousands)
| Three Months Ended June 30, 2013 | ||||||||||||
| Restricted | Unrestricted | Consolidated | ||||||||||
| Group | Subsidiaries | Group | ||||||||||
| Cash flows from (used in) operating activities |
||||||||||||
| Net income (loss) |
$ | (14,661) | $ | 2,436 | $ | (12,225) | ||||||
| Adjustments to reconcile net income (loss) to cash flows from operating activities |
||||||||||||
| Unrealized loss (gain) on derivative instruments |
41 | (7,472) | (7,431) | |||||||||
| Depreciation and amortization |
10,878 | 8,476 | 19,354 | |||||||||
| Deferred income taxes |
561 | (21) | 540 | |||||||||
| Stock compensation expense |
396 | - | 396 | |||||||||
| Pension and other post-retirement expense, net of funding |
277 | - | 277 | |||||||||
| Other |
378 | 888 | 1,266 | |||||||||
| Changes in working capital |
||||||||||||
| Receivables |
24,835 | 3,800 | 28,635 | |||||||||
| Inventories |
6,945 | (4,164) | 2,781 | |||||||||
| Accounts payable and accrued expenses |
(2,540) | 406 | (2,134) | |||||||||
| Other(1) |
(9,085) | 1,593 | (7,492) | |||||||||
|
|
|
|
|
|
|
|||||||
| Net cash from (used in) operating activities |
18,025 | 5,942 | 23,967 | |||||||||
|
|
|
|
|
|
|
|||||||
| Cash flows from (used in) investing activities |
||||||||||||
| Purchase of property, plant and equipment |
(3,401) | (10,948) | (14,349) | |||||||||
| Proceeds on sale of property, plant and equipment |
- | 3 | 3 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net cash from (used in) investing activities |
(3,401) | (10,945) | (14,346) | |||||||||
|
|
|
|
|
|
|
|||||||
| Cash flows from (used in) financing activities |
||||||||||||
| Proceeds from borrowings of debt |
- | 9,090 | 9,090 | |||||||||
| Repayment of capital lease obligations |
(159) | (363) | (522) | |||||||||
| Proceeds from (repayment of) credit facilities, net |
9,112 | - | 9,112 | |||||||||
| Proceeds from government grants |
- | 4,441 | 4,441 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net cash from (used in) financing activities |
8,953 | 13,168 | 22,121 | |||||||||
|
|
|
|
|
|
|
|||||||
| Effect of exchange rate changes on cash and cash equivalents |
(21) | 1,061 | 1,040 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net increase (decrease) in cash and cash equivalents |
23,556 | 9,226 | 32,782 | |||||||||
| Cash and cash equivalents, beginning of period |
66,820 | 75,295 | 142,115 | |||||||||
|
|
|
|
|
|
|
|||||||
| Cash and cash equivalents, end of period |
$ | 90,376 | $ | 84,521 | $ | 174,897 | ||||||
|
|
|
|
|
|
|
|||||||
| (1) | Includes intercompany working capital related transactions. |
(9)
MERCER INTERNATIONAL INC.
RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE
Combined Condensed Statements of Cash Flows
(Unaudited)
(In thousands)
| Six Months Ended June 30, 2014 | ||||||||||||
| Restricted Group |
Unrestricted Subsidiaries |
Consolidated Group |
||||||||||
| Cash flows from (used in) operating activities |
||||||||||||
| Net income (loss) |
$ | 1,532 | $ | 24,410 | $ | 25,942 | ||||||
| Adjustments to reconcile net income (loss) to cash flows from operating activities |
||||||||||||
| Unrealized loss (gain) on derivative instruments |
- | (5,777) | (5,777) | |||||||||
| Depreciation and amortization |
21,373 | 18,265 | 39,638 | |||||||||
| Deferred income taxes |
4,881 | - | 4,881 | |||||||||
| Stock compensation expense |
331 | - | 331 | |||||||||
| Pension and other post-retirement expense, net of funding |
425 | - | 425 | |||||||||
| Other |
583 | 921 | 1,504 | |||||||||
| Changes in working capital |
||||||||||||
| Receivables |
4,712 | (7,527) | (2,815) | |||||||||
| Inventories |
(10,342) | 15,675 | 5,333 | |||||||||
| Accounts payable and accrued expenses |
12,286 | 1,894 | 14,180 | |||||||||
| Other(1) |
(6,563) | 3,889 | (2,674) | |||||||||
|
|
|
|
|
|
|
|||||||
| Net cash from (used in) operating activities |
29,218 | 51,750 | 80,968 | |||||||||
|
|
|
|
|
|
|
|||||||
| Cash flows from (used in) investing activities |
||||||||||||
| Purchase of property, plant and equipment |
(8,531) | (4,186) | (12,717) | |||||||||
| Purchase of intangible assets |
(1,203) | (1,252) | (2,455) | |||||||||
| Proceeds on sale of property, plant and equipment |
215 | 58 | 273 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net cash from (used in) investing activities |
(9,519) | (5,380) | (14,899) | |||||||||
|
|
|
|
|
|
|
|||||||
| Cash flows from (used in) financing activities |
||||||||||||
| Repayment of debt |
(744) | (29,797) | (30,541) | |||||||||
| Proceeds from issuance of shares |
53,942 | - | 53,942 | |||||||||
| Repayment of capital lease obligations |
(474) | (718) | (1,192) | |||||||||
| Proceeds from sale and lease-back transactions |
1,047 | - | 1,047 | |||||||||
| Proceeds from government grants |
832 | 3,226 | 4,058 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net cash from (used in) financing activities |
54,603 | (27,289) | 27,314 | |||||||||
|
|
|
|
|
|
|
|||||||
| Effect of exchange rate changes on cash and cash equivalents |
206 | (294) | (88) | |||||||||
|
|
|
|
|
|
|
|||||||
| Net increase (decrease) in cash and cash equivalents |
74,508 | 18,787 | 93,295 | |||||||||
| Cash and cash equivalents, beginning of year |
82,910 | 64,818 | 147,728 | |||||||||
|
|
|
|
|
|
|
|||||||
| Cash and cash equivalents, end of year |
$ | 157,418 | $ | 83,605 | $ | 241,023 | ||||||
|
|
|
|
|
|
|
|||||||
| (1) | Includes intercompany working capital related transactions. |
(10)
MERCER INTERNATIONAL INC.
RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE
Combined Condensed Statements of Cash Flows
(Unaudited)
(In thousands)
| Six Months Ended June 30, 2013 | ||||||||||||
| Restricted | Unrestricted | Consolidated | ||||||||||
| Group | Subsidiaries | Group | ||||||||||
| Cash flows from (used in) operating activities |
||||||||||||
| Net income (loss) |
$ | (17,028) | $ | 5,177 | $ | (11,851) | ||||||
| Adjustments to reconcile net income (loss) to cash flows from operating activities |
||||||||||||
| Unrealized loss (gain) on derivative instruments |
662 | (14,292) | (13,630) | |||||||||
| Depreciation and amortization |
21,776 | 17,111 | 38,887 | |||||||||
| Deferred income taxes |
1,870 | 4,134 | 6,004 | |||||||||
| Stock compensation expense |
752 | - | 752 | |||||||||
| Pension and other post-retirement expense, net of funding |
437 | - | 437 | |||||||||
| Other |
923 | 1,905 | 2,828 | |||||||||
| Changes in working capital |
||||||||||||
| Receivables |
13,824 | 1,998 | 15,822 | |||||||||
| Inventories |
10,995 | (627) | 10,368 | |||||||||
| Accounts payable and accrued expenses |
11,331 | 527 | 11,858 | |||||||||
| Other(1) |
(11,349) | 2,824 | (8,525) | |||||||||
|
|
|
|
|
|
|
|||||||
| Net cash from (used in) operating activities |
34,193 | 18,757 | 52,950 | |||||||||
|
|
|
|
|
|
|
|||||||
| Cash flows from (used in) investing activities |
||||||||||||
| Purchase of property, plant and equipment |
(6,893) | (22,501) | (29,394) | |||||||||
| Proceeds on sale of property, plant and equipment |
17 | 3 | 20 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net cash from (used in) investing activities |
(6,876) | (22,498) | (29,374) | |||||||||
|
|
|
|
|
|
|
|||||||
| Cash flows from (used in) financing activities |
||||||||||||
| Repayment of debt |
(736) | (25,684) | (26,420) | |||||||||
| Proceeds from borrowings of debt |
- | 22,223 | 22,223 | |||||||||
| Repayment of capital lease obligations |
(320) | (1,126) | (1,446) | |||||||||
| Proceeds from (repayment of) credit facilities, net |
17,060 | - | 17,060 | |||||||||
| Proceeds from government grants |
- | 5,413 | 5,413 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net cash from (used in) financing activities |
16,004 | 826 | 16,830 | |||||||||
|
|
|
|
|
|
|
|||||||
| Effect of exchange rate changes on cash and cash equivalents |
(1,352) | (1,596) | (2,948) | |||||||||
|
|
|
|
|
|
|
|||||||
| Net increase (decrease) in cash and cash equivalents |
41,969 | (4,511) | 37,458 | |||||||||
| Cash and cash equivalents, beginning of period |
48,407 | 89,032 | 137,439 | |||||||||
|
|
|
|
|
|
|
|||||||
| Cash and cash equivalents, end of period |
$ | 90,376 | $ | 84,521 | $ | 174,897 | ||||||
|
|
|
|
|
|
|
|||||||
| (1) | Includes intercompany working capital related transactions. |
(11)
MERCER INTERNATIONAL INC.
COMPUTATION OF OPERATING EBITDA
(Unaudited)
(In thousands)
Operating EBITDA is defined as operating income (loss) plus depreciation and amortization and non-recurring capital asset impairment charges. Management uses Operating EBITDA as a benchmark measurement of its own operating results, and as a benchmark relative to its competitors. Management considers it to be a meaningful supplement to operating income (loss) as a performance measure primarily because depreciation expense and non-recurring capital asset impairment charges are not an actual cash cost, and depreciation expense varies widely from company to company in a manner that management considers largely independent of the underlying cost efficiency of their operating facilities. In addition, we believe Operating EBITDA is commonly used by securities analysts, investors and other interested parties to evaluate our financial performance.
Operating EBITDA does not reflect the impact of a number of items that affect our net income (loss), including financing costs and the effect of derivative instruments. Operating EBITDA is not a measure of financial performance under GAAP, and should not be considered as an alternative to net income (loss) or income (loss) from operations as a measure of performance, nor as an alternative to net cash from operating activities as a measure of liquidity. The following tables set forth the net income (loss) attributable to common shareholders to Operating EBITDA for both the consolidated group and our Restricted Group:
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Net income (loss) attributable to common shareholders |
$ | 571 | $ | (13,015) | $ | 21,612 | $ | (13,576) | ||||||||
| Net income attributable to noncontrolling interest |
2,194 | 790 | 4,330 | 1,725 | ||||||||||||
| Income tax provision |
4,558 | 815 | 6,408 | 1,960 | ||||||||||||
| Interest expense |
17,165 | 17,170 | 34,615 | 34,530 | ||||||||||||
| (Gain) loss on derivative instruments |
(2,549) | (6,921) | (5,777) | (13,285) | ||||||||||||
| Other (income) expense |
82 | (8) | 76 | 84 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating income (loss) |
22,021 | (1,169) | 61,264 | 11,438 | ||||||||||||
| Add: Depreciation and amortization |
19,851 | 19,354 | 39,638 | 38,887 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating EBITDA |
$ | 41,872 | $ | 18,185 | $ | 100,902 | $ | 50,325 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Restricted Group |
||||||||||||||||
| Net income (loss) |
$ | (9,595) | $ | (14,661) | $ | 1,532 | $ | (17,028) | ||||||||
| Income tax provision |
4,033 | 795 | 5,785 | 2,137 | ||||||||||||
| Interest expense |
8,548 | 7,685 | 17,066 | 15,430 | ||||||||||||
| (Gain) loss on derivative instruments |
- | 551 | - | 1,007 | ||||||||||||
| Other (income) expense |
(26) | (2,118) | (138) | (4,145) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating income (loss) |
2,960 | (7,748) | 24,245 | (2,599) | ||||||||||||
| Add: Depreciation and amortization |
10,714 | 10,878 | 21,373 | 21,776 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating EBITDA |
$ | 13,674 | $ | 3,130 | $ | 45,618 | $ | 19,177 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
(12)
# # #