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

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 ☒ NO ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☒ NO ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of "large accelerated filer", "accelerated filer", "non-accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

The Registrant had ~~65,799,946~~65,868,086 shares of common stock outstanding as ~~at April~~of July 29, 2020.

	Three Months Ended March 31,						Three Months Ended June 30						Six Months Ended June 30
	2020			2019			2020			2019			2020			2019
Revenues	$	350,599		$	483,950		$	341,195		$	425,753		$	691,794		$	909,703
Costs and expenses
Cost of sales, excluding depreciation and amortization		276,056			343,033			284,333			336,433			560,389			679,466
Cost of sales depreciation and amortization		32,911			30,136			30,179			32,038			63,090			62,174
Selling, general and administrative expenses		17,570			17,229			16,368			19,472			33,938			36,701
Operating income		24,062			93,552			10,315			37,810			34,377			131,362
Other income (expenses)
Interest expense		(20,084	)		(18,551	)		(20,108	)		(18,369	)		(40,192	)		(36,920	)
Other income (expenses)		(2,026	)		1,039
Other income								2,264			1,251			238			2,290
Total other expenses, net		(22,110	)		(17,512	)		(17,844	)		(17,118	)		(39,954	)		(34,630	)
Income before provision for income taxes		1,952			76,040
Income (loss) before provision for income taxes								(7,529	)		20,692			(5,577	)		96,732
Provision for income taxes		(5,344	)		(24,424	)		(882	)		(10,433	)		(6,226	)		(34,857	)
Net income (loss)	$	(3,392	)	$	51,616		$	(8,411	)	$	10,259		$	(11,803	)	$	61,875
Net income (loss) per common share
Basic	$	(0.05	)	$	0.79
Diluted	$	(0.05	)	$	0.78
Basic and diluted							$	(0.13	)	$	0.16		$	(0.18	)	$	0.94
Dividends declared per common share	$	0.1375		$	0.1250		$	0.0650		$	0.1375		$	0.2025		$	0.2625

	Three Months Ended March 31,						Three Months Ended June 30					Six Months Ended June 30
	2020			2019			2020			2019		2020			2019
Net income (loss)	$	(3,392	)	$	51,616		$	(8,411	)	$	10,259	$	(11,803	)	$	61,875
Other comprehensive income (loss), net of taxes
Foreign currency translation adjustment		(74,994	)		(3,872	)		44,202			24,125		(30,792	)		20,253
Change in unrecognized losses and prior service costs related to defined benefit pension plans, net of tax of $nil (2019 - $6)		6			60
Other comprehensive loss, net of taxes		(74,988	)		(3,812	)
Change in unrecognized losses and prior service costs related to defined benefit pension plans, net of tax of $nil (2019 - $30 and $36, respectively)								17			35		23			95
Other comprehensive income (loss), net of taxes								44,219			24,160		(30,769	)		20,348
Total comprehensive income (loss)	$	(78,380	)	$	47,804		$	35,808		$	34,419	$	(42,572	)	$	82,223

	March 31,			December 31,			June 30,			December 31,
	2020			2019			2020			2019
ASSETS
Current assets
Cash and cash equivalents	$	286,526		$	351,085		$	303,334		$	351,085
Accounts receivable, net		221,921			208,740			209,184			208,740
Inventories		269,812			272,599			261,453			272,599
Prepaid expenses and other		10,294			12,273			9,665			12,273
Total current assets		788,553			844,697			783,636			844,697
Property, plant and equipment, net		1,020,345			1,074,242			1,040,171			1,074,242
Investment in joint ventures		48,188			53,122			48,413			53,122
Amortizable intangible assets, net		48,957			53,371			49,893			53,371
Operating lease right-of-use assets		11,866			13,004			12,866			13,004
Other long-term assets		32,848			26,038			37,414			26,038
Deferred income tax		1,232			1,246			1,216			1,246
Total assets	$	1,951,989		$	2,065,720		$	1,973,609		$	2,065,720
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable and other	$	184,447		$	255,544		$	196,238		$	255,544
Pension and other post-retirement benefit obligations		696			768			716			768
Total current liabilities		185,143			256,312			196,954			256,312
Debt		1,136,454			1,087,932			1,114,069			1,087,932
Pension and other post-retirement benefit obligations		23,157			25,489			24,044			25,489
Finance lease liabilities		37,537			31,103			38,628			31,103
Operating lease liabilities		9,436			10,520			10,052			10,520
Other long-term liabilities		13,323			14,114			13,733			14,114
Deferred income tax		84,171			89,847			81,869			89,847
Total liabilities		1,489,221			1,515,317			1,479,349			1,515,317
Shareholders’ equity
Common shares $1 par value; 200,000,000 authorized; 65,800,000 issued and outstanding (2019 – 65,629,000)		65,769			65,598
Common shares $1 par value; 200,000,000 authorized; 65,868,000 issued and outstanding (2019 – 65,629,000)								65,800			65,598
Additional paid-in capital		344,753			344,994			344,688			344,994
Retained earnings		243,794			256,371			231,101			256,371
Accumulated other comprehensive loss		(191,548	)		(116,560	)		(147,329	)		(116,560	)
Total shareholders’ equity		462,768			550,403			494,260			550,403
Total liabilities and shareholders’ equity	$	1,951,989		$	2,065,720		$	1,973,609		$	2,065,720

Commitments and contingencies (Note 13)
Subsequent events (Note 7,14)
Subsequent event (Note 7)

	Common shares																		Common shares
	Number (thousands of shares)			Amount, at Par Value			Additional Paid -in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders' Equity			Number (thousands of shares)			Amount, at Par Value			Additional Paid -in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders' Equity
Three Months Ended March 31:
Balance as of December 31, 2019		65,629		$	65,598		$	344,994		$	256,371		$	(116,560	)	$	550,403
Shares issued on grants of performance share units		195			195			(195	)		—			—			—
Three Months Ended June 30:
Balance as of March 31, 2020																				65,800		$	65,769		$	344,753		$	243,794		$	(191,548	)	$	462,768
Shares issued on grants of restricted shares																				68			31			(31	)		—			—			—
Stock compensation recovery		—			—			(46	)		—			—			(46	)		—			—			(34	)		—			—			(34	)
Net loss		—			—			—			(3,392	)		—			(3,392	)		—			—			—			(8,411	)		—			(8,411	)
Dividends declared		—			—			—			(9,047	)		—			(9,047	)		—			—			—			(4,282	)		—			(4,282	)
Repurchase of common shares		(24	)		(24	)		—			(138	)		—			(162	)
Other comprehensive loss		—			—			—			—			(74,988	)		(74,988	)
Balance as of March 31, 2020		65,800		$	65,769		$	344,753		$	243,794		$	(191,548	)	$	462,768
Other comprehensive income																				—			—			—			—			44,219			44,219
Balance as of June 30, 2020																				65,868		$	65,800		$	344,688		$	231,101		$	(147,329	)	$	494,260

Balance as of December 31, 2018		65,202		$	65,171		$	342,438		$	301,990		$	(128,170	)	$	581,429
Shares issued on grants of performance share units		449			449			(449	)		—			—			—
Stock compensation recovery		—			—			(345	)		—			—			(345	)
Balance as of March 31, 2019																				65,651		$	65,620		$	341,644		$	345,400		$	(131,982	)	$	620,682
Shares issued on grants of restricted shares																				31			31			(31	)		—			—			—
Stock compensation expense																				—			—			1,202			—			—			1,202
Net income		—			—			—			51,616			—			51,616			—			—			—			10,259			—			10,259
Dividends declared		—			—			—			(8,206	)		—			(8,206	)		—			—			—			(9,024	)		—			(9,024	)
Other comprehensive loss		—			—			—			—			(3,812	)		(3,812	)
Balance as of March 31, 2019		65,651		$	65,620		$	341,644		$	345,400		$	(131,982	)	$	620,682
Repurchase of common shares																				(53	)		(53	)		—			(701	)		—			(754	)
Other comprehensive income																				—			—			—			—			24,160			24,160
Balance as of June 30, 2019																				65,629		$	65,598		$	342,815		$	345,934		$	(107,822	)	$	646,525

Six Months Ended June 30:
Balance as of December 31, 2019	65,629		$	65,598		$	344,994		$	256,371		$	(116,560	)	$	550,403
Shares issued on grants of restricted shares	68			31			(31	)		—			—			—
Shares issued on grants of performance share units	195			195			(195	)		—			—			—
Stock compensation recovery	—			—			(80	)		—			—			(80	)
Net loss	—			—			—			(11,803	)		—			(11,803	)
Dividends declared	—			—			—			(13,329	)		—			(13,329	)
Repurchase of common shares	(24	)		(24	)		—			(138	)		—			(162	)
Other comprehensive loss	—			—			—			—			(30,769	)		(30,769	)
Balance as of June 30, 2020	65,868		$	65,800		$	344,688		$	231,101		$	(147,329	)	$	494,260

Balance as of December 31, 2018	65,202		$	65,171		$	342,438		$	301,990		$	(128,170	)	$	581,429
Shares issued on grants of restricted shares	31			31			(31	)		—			—			—
Shares issued on grants of performance share units	449			449			(449	)		—			—			—
Stock compensation expense	—			—			857			—			—			857
Net income	—			—			—			61,875			—			61,875
Dividends declared	—			—			—			(17,230	)		—			(17,230	)
Repurchase of common shares	(53	)		(53	)		—			(701	)		—			(754	)
Other comprehensive income	—			—			—			—			20,348			20,348
Balance as of June 30, 2019	65,629		$	65,598		$	342,815		$	345,934		$	(107,822	)	$	646,525

	Three Months Ended March 31,						Three Months Ended June 30						Six Months Ended June 30
	2020			2019			2020			2019			2020			2019
Cash flows from (used in) operating activities
Net income (loss)	$	(3,392	)	$	51,616		$	(8,411	)	$	10,259		$	(11,803	)	$	61,875
Adjustments to reconcile net income (loss) to cash flows from operating activities
Depreciation and amortization		32,946			30,247			30,201			32,148			63,147			62,395
Deferred income tax provision (benefit)		(1,331	)		3,639			(4,744	)		426			(6,075	)		4,065
Inventory impairment		5,734			—			6,530			6,900			12,264			6,900
Defined benefit pension plans and other post-retirement benefit plan expense		762			856			739			860			1,501			1,716
Stock compensation recovery		(46	)		(345	)
Foreign exchange transaction gains		(6,144	)		(263	)
Stock compensation expense (recovery)								(34	)		1,202			(80	)		857
Foreign exchange transaction losses								6,880			9,505			736			9,242
Other		(497	)		704			(695	)		740			(1,192	)		1,444
Defined benefit pension plans and other post-retirement benefit plan contributions		(915	)		(1,158	)		(797	)		(270	)		(1,712	)		(1,428	)
Changes in working capital
Accounts receivable		(20,926	)		(56,353	)		14,938			32,204			(5,988	)		(24,149	)
Inventories		(18,120	)		21,141			11,442			(7,769	)		(6,678	)		13,372
Accounts payable and accrued expenses		(57,660	)		(173	)		7,879			4,197			(49,781	)		4,024
Other		(253	)		(7,725	)		177			(1,681	)		(76	)		(9,406	)
Net cash from (used in) operating activities		(69,842	)		42,186			64,105			88,721			(5,737	)		130,907
Cash flows from (used in) investing activities
Purchase of property, plant and equipment		(23,018	)		(19,389	)		(21,544	)		(24,979	)		(44,562	)		(44,368	)
Purchase of amortizable intangible assets		(438	)		(316	)		(89	)		(179	)		(527	)		(495	)
Other		51			(261	)		796			(82	)		847			(343	)
Net cash from (used in) investing activities		(23,405	)		(19,966	)		(20,837	)		(25,240	)		(44,242	)		(45,206	)
Cash flows from (used in) financing activities
Proceeds from (repayment of) revolving credit facilities, net		51,260			(33,672	)		(25,651	)		(24,732	)		25,609			(58,404	)
Dividend payments		(9,047	)		—			—			(8,206	)		(9,047	)		(8,206	)
Repurchase of common shares		(162	)		—			—			(754	)		(162	)		(754	)
Payment of debt issuance costs		—			(509	)		—			(248	)		—			(757	)
Proceeds from government grants		—			6,320			299			—			299			6,320
Other		(9,801	)		(862	)		(1,996	)		(6,067	)		(11,797	)		(6,929	)
Net cash from (used in) financing activities		32,250			(28,723	)		(27,348	)		(40,007	)		4,902			(68,730	)
Effect of exchange rate changes on cash and cash equivalents		(3,562	)		(754	)		888			614			(2,674	)		(140	)
Net decrease in cash and cash equivalents		(64,559	)		(7,257	)
Net increase (decrease) in cash and cash equivalents								16,808			24,088			(47,751	)		16,831
Cash and cash equivalents, beginning of period		351,085			240,491			286,526			233,234			351,085			240,491
Cash and cash equivalents, end of period	$	286,526		$	233,234		$	303,334		$	257,322		$	303,334		$	257,322

Supplemental cash flow disclosure
Cash paid for interest		$	37,278	$	16,983		$	950	$	5,902	$	38,228	$	22,885
Cash paid for income taxes		$	12,974	$	23,613		$	1,907	$	15,124	$	14,881	$	38,737
Supplemental schedule of non-cash investing and financing activities:	Supplemental schedule of non-cash investing and financing activities:					Supplemental schedule of non-cash investing and financing activities:
Leased production equipment		$	8,994	$	—		$	1,702	$	—	$	10,696	$	—

The Interim Consolidated Financial Statements contained herein include the accounts of Mercer International Inc. ("Mercer Inc.") and all of its subsidiaries (collectively the "Company"). Mercer Inc. owns 100% of the economic interest in its subsidiaries with the exception of the 50% joint venture interest in the Cariboo mill with West Fraser Mills Ltd., which is accounted for using the equity method. The Company's shares of common stock are quoted and listed for trading on the NASDAQ Global Select Market.

The Interim Consolidated Financial Statements have been prepared by the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission (the "SEC"). The year-end Consolidated Balance Sheet data was derived from audited financial statements. The footnote disclosure included herein has been prepared in accordance with accounting principles generally accepted for interim financial statements in the United States ("GAAP"). The unaudited Interim Consolidated Financial Statements should be read together with the audited Consolidated Financial Statements and accompanying notes included in the Company's latest Annual Report on Form 10‑K for the fiscal year ended December 31, 2019. In the opinion of the Company, the unaudited Interim Consolidated Financial Statements contained herein have been prepared on a consistent basis (except for the change in policy referred to below) 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, 2019 and contain all adjustments necessary for a fair statement of the results of the interim periods included. The results for the periods included herein may not be indicative of the results for the entire year.

In these Interim Consolidated Financial Statements, unless otherwise indicated, all amounts are expressed in United States dollars ("U.S. dollars" or "$"). The symbol "€" refers to euros and the symbol "C$" refers to Canadian dollars.

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

The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on the Company's business is highly uncertain and difficult to predict, as the response to the pandemic ~~is in its early stages~~ and information ~~is rapidly evolving. Furthermore,~~continues to evolve. Although capital markets and economies worldwide ~~have also been negatively impacted by~~improved during the second quarter from the initial negative impacts of the COVID-19 pandemic, there remains uncertainty around the strength and ~~it is possible that it~~timing of global economic recoveries which could cause a local and/or global economic recession. Such economic disruption could have a material adverse effect on our business.

The severity of the impact of the COVID-19 pandemic on the Company's business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on the Company's customers, all of which are uncertain and cannot be predicted. The Company's future results of operations and liquidity could be adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions and uncertain demand, and the impact of any initiatives or programs that the Company may undertake to address financial and operational challenges faced by its customers. As of the date of issuance of these Interim Consolidated Financial Statements, the extent to which the COVID-19 pandemic may materially impact the Company's financial condition, liquidity, or results of operations isremain uncertain.

In June 2016, the Financial Accounting Standards Board ~~(“FASB”~~("FASB") issued Accounting Standards Update ~~(“ASU”~~("ASU") 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the current incurred loss impairment method with a method that reflects expected credit losses. In May 2019, the FASB issued ASU 2019-05, Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief, which provides entities with targeted transition relief that is intended to increase comparability of financial statement information for some entities that otherwise would have measured similar financial instruments using different measurement methodologies. These updates were effective for financial statements issued after December 15, 2019. The Company adopted these updates on January 1, 2020 using the modified-retrospective approach. The adoption of these updates did not have an impact on the Interim Consolidated Financial Statements as the Company’s credit risk associated with its sales is currently managed through the purchase of credit insurance, letters of credit and setting credit limits prior to the sale. The Company reviews new ~~customers’~~customers' credit history before granting credit and conducts regular reviews of existing ~~customers’~~customers' credit performance. The Company is exposed to credit risk in the event of non-performance by counterparties to its financial instruments. The Company attempts to minimize this exposure by entering into contracts with counterparties that are believed to be of high credit quality.

The ~~Company’s~~Company's exposure to credit losses may increase if its customers are adversely affected by the COVID-19 pandemic. Although the Company has historically not experienced significant credit losses, it is possible that there could be a material adverse impact from potential adjustments of the carrying amount of trade receivables if the cash flows of the ~~Company’s~~Company's customers are adversely impacted by the COVID-19 pandemic.

In December 2019, the FASB issued ASU 2019-12, Income Taxes – Simplifying the Accounting for Income Taxes, which removes certain exceptions for investments, intraperiod tax allocations and interim calculations, and adds guidance to reduce complexity in accounting for income taxes. This update is effective for financial statements issued for fiscal years beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of this ~~update but believes it will not have a significant impact on the consolidated financial statements.~~update.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) -: Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments provide optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company is currently evaluating its contracts and the optional expedients provided by the new standard.

Inventories as of ~~March 31,~~June 30, 2020 and December 31, 2019, were comprised of the following:

	March 31,		December 31,		June 30,		December 31,
	2020		2019		2020		2019
Raw materials	$	86,198	$	99,754	$	66,896	$	99,754
Finished goods		88,915		77,815		96,209		77,815
Spare parts and other		94,699		95,030		98,348		95,030
	$	269,812	$	272,599	$	261,453	$	272,599

For the three ~~months~~and six month periods ended ~~March 31,~~June 30, 2020, as a result of low pulp prices and high fiber costs for the Canadian mills, the Company recorded inventory impairment charges of ~~$5,734~~$12,264 and $17,998, respectively at certain Canadian mills (2019 – ~~$nil)~~$6,900 and $6,900). These charges were recorded in ~~“Cost~~'Cost of sales, excluding depreciation and ~~amortization”~~amortization" in the Interim Consolidated Statements of Operations. As of ~~March 31,~~June 30, 2020, ~~$3,681~~$5,725 of the write-down was recorded in raw materials inventory and ~~$2,053~~$6,539 of the write-down was recorded in finished goods inventory. As of December 31, 2019, the Company recorded a $3,500 write-down in raw materials inventory and a $5,700 write-down in finished goods inventory.

Accounts payable and other as of ~~March 31,~~June 30, 2020 and December 31, 2019, was comprised of the following:

	March 31,		December 31,		June 30,		December 31,
	2020		2019		2020		2019
Trade payables	$	62,652	$	73,721	$	53,267	$	73,721
Accrued expenses		87,091		111,696		82,337		111,696
Interest payable		14,902		33,198		33,204		33,198
Income tax payable		10,337		28,080		13,293		28,080
Other		9,465		8,849		14,137		8,849
	$	184,447	$	255,544	$	196,238	$	255,544

Debt as of ~~March 31,~~June 30, 2020 and December 31, 2019, was comprised of the following:

	March 31,		December 31,		June 30,		December 31,
	2020		2019		2020		2019
2024 Senior Notes, principal amount $250,000 (a)	$	247,100	$	246,911	$	247,289	$	246,911
2025 Senior Notes, principal amount $550,000 (a)		545,875		545,665		546,090		545,665
2026 Senior Notes, principal amount $300,000 (a)		295,548		295,356		295,741		295,356
Credit arrangements
€200 million joint revolving credit facility (b)		—		—		—		—
C$60 million revolving credit facility (c)		23,261		—		13,942		—
C$40 million revolving credit facility (d)		24,670		—
C$60 million revolving credit facility (d)						11,007		—
€2.6 million demand loan (e)		—		—		—		—
	$	1,136,454	$	1,087,932	$	1,114,069	$	1,087,932

The maturities of the principal portion of debt as of ~~March 31,~~June 30, 2020 were as follows:

2020	$	—	$	—
2021		—		—
2022		—		—
2023		24,670		11,007
2024		273,261		263,942
Thereafter		850,000		850,000
	$	1,147,931	$	1,124,949

Certain of the ~~Company’s~~Company's debt instruments were issued under agreements which, among other things, may limit its ability and the ability of its subsidiaries to make certain payments, including dividends. These limitations are subject to specific exceptions. As of ~~March 31,~~June 30, 2020, the Company was in compliance with the terms of its debt agreements.

In October 2019, the Company issued an additional $200,000 in aggregate principal amount of 2025 Senior Notes at a price of 102.75% of their principal amount for a yield to worst of 6.435%. The net proceeds of the offering were $202,063 after deducting the ~~underwriter’s~~underwriter's discount and offering expenses. The net proceeds were used to redeem $100,000 of remaining aggregate principal amount of outstanding senior notes due 2022 (the "2022 Senior Notes") and for general corporate purposes.

In 2017, the Company issued $300,000 in aggregate principal amount of 5.50% senior notes which mature on January 15, 2026 (the ~~“2026~~"2026 Senior ~~Notes”~~Notes"). The 2026 Senior Notes were issued at a price of 100% of their principal amount. The net proceeds of the offering were $293,795 after deducting the ~~underwriter’s~~underwriter's discount and offering expenses. In 2018, the net proceeds, together with cash on hand, were used to redeem $300,000 in aggregate principal amount of the 2022 Senior Notes.

In 2017, the Company issued $250,000 in aggregate principal amount of 6.50% senior notes which mature on February 1, 2024 (the ~~“2024~~"2024 Senior ~~Notes”~~Notes" and collectively with the 2025 Senior Notes and 2026 Senior Notes, the ~~“Senior Notes”~~"Senior Notes"). The 2024 Senior Notes were issued at a price of 100% of their principal amount. The net proceeds of the offering were $244,711 after deducting the ~~underwriter’s~~underwriter's discount and offering expenses. The net proceeds, together with cash on hand, were used to redeem $227,000 of remaining aggregate principal amount of outstanding senior notes due 2019, to finance the acquisition of the Friesau mill and for general working capital purposes.

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

The Company may redeem all or a part of the 2025 Senior Notes or 2026 Senior Notes, upon not less than 10 ~~days’~~days' or more than 60 ~~days’~~days' notice and the Company may redeem all or a part of the 2024 Senior Notes, upon not less than 30 ~~days’~~days' or more than 60 ~~days’~~days' notice at the redemption price plus accrued and unpaid interest to (but not including) the applicable redemption date.

The following table presents the redemption prices (expressed as percentages of principal amount) and the redemption periods of the outstanding Senior Notes:

Pension benefits are based on employees' earnings and years of service. The defined benefit plans are funded by contributions from the Company based on actuarial estimates and statutory requirements. The components of the net benefit costs for the Celgar and MPR defined benefit plans, in aggregate for the three and six month periods ended ~~March 31,~~June 30, 2020 and 2019 were as follows:

	Three Months Ended March 31,												Three Months Ended June 30,
	2020						2019						2020						2019
	Pension			Other Post- Retirement Benefits			Pension			Other Post- Retirement Benefits			Pension			Other Post- Retirement Benefits			Pension			Other Post- Retirement Benefits
Service cost	$	849		$	64		$	716		$	68		$	824		$	63		$	711		$	67
Interest cost		840			96			877			137			814			93			872			136
Expected return on plan assets		(1,093	)		—			(1,002	)		—			(1,072	)		—			(997	)		—
Amortization of unrecognized items		228			(222	)		215			(155	)		233			(216	)		253			(182	)
Net benefit costs	$	824		$	(62	)	$	806		$	50		$	799		$	(60	)	$	839		$	21

The components of the net benefit costs other than service cost are recorded in ~~“Other income (expenses)”~~"Other income" in the Interim Consolidated Statements of Operations. The amortization of unrecognized items relates to net actuarial losses and prior service costs.

Effective December 31, 2008, the defined benefit plans at the Celgar mill were closed to new members. In addition, the related defined benefit service accrual ceased on December 31, 2008, and members began to receive pension benefits, at a fixed contractual rate, under a new defined contribution plan effective January 1, 2009. During the three and six month ~~period~~periods ended ~~March 31,~~June 30, 2020, the Company made contributions of ~~$413~~$58 and $471, respectively to this plan (2019 – ~~$448), to this plan.~~$298 and $746).

The Company participates in a multiemployer plan for the hourly-paid employees at the Celgar mill. The contributions to the plan are determined based on a percentage of pensionable earnings pursuant to a collective bargaining agreement. The Company has no current or future contribution obligations in excess of the contractual contributions. During the three and six month ~~period~~periods ended ~~March 31,~~June 30, 2020, the Company made contributions of ~~$451~~$555 and $1,006, respectively to this plan (2019 – ~~$323), to this plan.~~$648 and $971).

Differences between the U.S. Federal statutory and the Company's effective rates for the three and six month periods ended ~~March 31,~~June 30, 2020 and 2019, were as follows:

	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019			2020			2019
U.S. Federal statutory rate	21%			21%			21%			21%			21%			21%
U.S. Federal statutory rate on income before provision for income taxes	$	(410	)	$	(15,968	)	$	1,581		$	(4,346	)	$	1,171		$	(20,314	)
Tax differential on foreign income		(1,219	)		(5,916	)		(662	)		(2,446	)		(1,881	)		(8,362	)
Effect of foreign earnings (a)		(1,575	)		(11,887	)		(1,295	)		(153	)		(2,870	)		(12,040	)
Valuation allowance		4			8,341			(3,169	)		(4,580	)		(3,165	)		3,761
Tax benefit of partnership structure		935			958			935			963			1,870			1,921
Non-taxable foreign subsidies		686			368			678			1,026			1,364			1,394
True-up of prior year taxes		(1,222	)		1,275			1,068			(2,396	)		(154	)		(1,121	)
Other		(2,543	)		(1,595	)		(18	)		1,499			(2,561	)		(96	)
	$	(5,344	)	$	(24,424	)	$	(882	)	$	(10,433	)	$	(6,226	)	$	(34,857	)
Comprised of:
Current income tax provision	$	(6,675	)	$	(20,785	)	$	(5,626	)	$	(10,007	)	$	(12,301	)	$	(30,792	)
Deferred income tax benefit (provision)		1,331			(3,639	)		4,744			(426	)		6,075			(4,065	)
	$	(5,344	)	$	(24,424	)	$	(882	)	$	(10,433	)	$	(6,226	)	$	(34,857	)

~~In February~~During the six month period ended June 30, 2020, the Company's board of directors declared athe following quarterly ~~dividend of $0.1375 per common share. Payment of the dividend was made on April 1, 2020 to all shareholders of record on March 25, 2020.~~dividends:

In ~~April~~July 2020, the Company's board of directors declared a quarterly dividend of $0.065 per common share. Payment of the dividend will be made on ~~July 7,~~October 6, 2020 to all shareholders of record on ~~June 25,~~September 29, 2020. Future dividends are subject to approval by the board of directors and may be adjusted as business and industry conditions warrant.

In May 2019, the ~~Company’s~~Company's board of directors authorized a common stock repurchase program under which the Company may repurchase up to $50,000 of its shares ~~until~~ which expired in May ~~2020.~~2020. During the ~~three~~six month period ended ~~March 31,~~June 30, 2020, the Company paid $162 to acquire 23,584 common shares at an average repurchase price of $6.84. The shares were retired upon repurchase.

In June 2010, the Company adopted a stock incentive plan which provides for options, restricted stock rights, restricted shares, performance shares, performance share units ("PSUs") and stock appreciation rights to be awarded to employees, consultants and non-employee directors. During the three and six month ~~period~~periods ended ~~March 31,~~June 30, 2020, there were 0 issued and outstanding options, restricted stock rights, performance shares or stock appreciation rights. As of ~~March 31,~~June 30, 2020, after factoring in all allocated shares, there remain approximately ~~1.8~~1.7 million common shares available for grant.

PSUs comprise rights to receive common shares at a future date that are contingent on the Company and the grantee achieving certain performance objectives. The performance objective period is generally three years. For the three and six month ~~period~~periods ended ~~March 31,~~June 30, 2020, the Company recognized a recovery of ~~$159~~$154 and $313, respectively related to PSUs (2019 – ~~a recovery~~an expense of ~~$475)~~$1,078 and $603).

Restricted shares generally vest at the end of one year. For the three and six month ~~period~~periods ended ~~March 31,~~June 30, 2020, the Company recognized an expense of ~~$113~~$120 and $233, respectively related to restricted shares (2019 - ~~$130)~~$124 and $254). As of ~~March 31,~~June 30, 2020, the total remaining unrecognized compensation cost related to restricted shares amounted to approximately ~~$75~~$504 which will be amortized over the remaining vesting periods.

The reconciliation of basic and diluted net income (loss) per common share for the three and six month periods ended ~~March 31,~~June 30, 2020 and 2019 was as follows:

	Three Months Ended March 31,					Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019		2020			2019
Net income (loss)
Basic and diluted	$	(3,392	)	$	51,616	$	(8,411	)	$	10,259	$	(11,803	)	$	61,875

Net income (loss) per common share
Basic	$	(0.05	)	$	0.79
Diluted	$	(0.05	)	$	0.78
Basic and diluted						$	(0.13	)	$	0.16	$	(0.18	)	$	0.94

Weighted average number of common shares outstanding:
Basic (a)		65,694,460			65,400,222		65,778,894			65,611,484		65,736,677			65,507,469
Effect of dilutive instruments:
PSUs		—			490,814		—			213,243		—			352,029
Restricted shares		—			20,102		—			17,012		—			18,557
Diluted		65,694,460			65,911,138		65,778,894			65,841,739		65,736,677			65,878,055

The calculation of diluted net income (loss) per common share does not assume the exercise of any instruments that would have an anti-dilutive effect on net income (loss) per common share. Instruments excluded from the calculation of net income (loss) per common share because they were anti-dilutive for the three and six month periods ended ~~March 31,~~June 30, 2020 and 2019 were as follows:

	Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019		2020		2019
PSUs		2,409,176		—		2,391,082		—		2,391,082		—
Restricted shares		31,405		—		68,140		—		68,140		—

The change in the accumulated other comprehensive loss by component (net of tax) for the ~~three~~six month period ended ~~March 31,~~June 30, 2020 was as follows:

	Foreign Currency Translation Adjustment			Defined Benefit Pension and Other Post- Retirement Benefit Items			Total			Foreign Currency Translation Adjustment			Defined Benefit Pension and Other Post- Retirement Benefit Items			Total
Balance as of January 1, 2020	$	(114,709	)	$	(1,851	)	$	(116,560	)	$	(114,709	)	$	(1,851	)	$	(116,560	)
Other comprehensive loss before reclassifications		(74,994	)		—			(74,994	)		(30,792	)		—			(30,792	)
Amounts reclassified from accumulated other comprehensive loss		—			6			6			—			23			23
Other comprehensive income (loss), net of taxes		(74,994	)		6			(74,988	)		(30,792	)		23			(30,769	)
Balance as of March 31, 2020	$	(189,703	)	$	(1,845	)	$	(191,548	)
Balance as of June 30, 2020										$	(145,501	)	$	(1,828	)	$	(147,329	)

The Company enters into related party transactions with its joint ventures. For the three and six month ~~period~~periods ended ~~March 31,~~June 30, 2020, pulp purchases from the ~~Company’s~~Company's 50% owned Cariboo mill, which are transacted at the Cariboo ~~mill’s~~mill's cost, were ~~$19,594~~$13,942 and $33,536, respectively (2019 – ~~$24,633)~~$30,523 and $55,156) and as of ~~March 31,~~June 30, 2020 the Company had a ~~payable~~receivable balance tofrom the Cariboo mill of ~~$1,725~~$2,826 (December 31, 2019 – ~~a receivable balance of~~ $3,462). For the three and six month ~~period~~periods ended ~~March 31,~~June 30, 2020, services from the ~~Company’s~~Company's 50% owned logging and chipping operation, which are transacted at ~~arm’s~~arm's length negotiated prices, were ~~$6,543~~$1,735 and $8,278, respectively (2019 – ~~$5,794)~~$3,055 and $8,849) and as of ~~March 31,~~June 30, 2020 the Company had a payable balance to the operation of ~~$3,383~~$1,688 (December 31, 2019 – $1,151).

The Company is managed based on the primary products it manufactures: pulp and wood products. Accordingly, the Company's 4 pulp mills and its 50% interest in the Cariboo mill are aggregated into the pulp business segment, and the Friesau sawmill is a separate reportable business segment, wood products. The Company's sandalwood business is included in Corporate and Other as it does not meet the criteria to be reported as a separate segment.

None of the income or loss items following operating income in the Company's Interim Consolidated Statements of Operations are allocated to the segments, as those items are reviewed separately by management.

Information about certain segment data for the three and six month periods ended ~~March 31,~~June 30, 2020 and 2019, was as follows:

Three Months Ended March 31, 2020	Pulp		Wood Products		Corporate and Other			Consolidated
Three Months Ended June 30, 2020										Pulp		Wood Products		Corporate and Other			Consolidated
Revenues from external customers	$	303,605	$	45,778	$	1,216		$	350,599	$	298,046	$	41,727	$	1,422		$	341,195
Operating income (loss)	$	21,439	$	5,555	$	(2,932	)	$	24,062	$	8,110	$	4,327	$	(2,122	)	$	10,315
Depreciation and amortization	$	30,371	$	2,377	$	198		$	32,946	$	27,219	$	2,804	$	178		$	30,201
Total assets (a)	$	1,716,808	$	93,288	$	141,893		$	1,951,989
Revenues by major products
Pulp	$	278,948	$	—	$	—		$	278,948	$	276,919	$	—	$	—		$	276,919
Lumber		—		40,986		—			40,986		—		37,611		—			37,611
Energy and chemicals		24,657		2,631		1,216			28,504		21,127		2,629		1,422			25,178
Wood residuals		—		2,161		—			2,161		—		1,487		—			1,487
Total revenues	$	303,605	$	45,778	$	1,216		$	350,599	$	298,046	$	41,727	$	1,422		$	341,195
Revenues by geographical markets (b)
Revenues by geographical markets (a)
U.S.	$	33,867	$	17,622	$	—		$	51,489	$	39,651	$	17,622	$	575		$	57,848
Germany		89,672		14,903		—			104,575		77,568		12,294		—			89,862
China		85,548		—		—			85,548		78,814		—		—			78,814
Other countries		94,518		13,253		1,216			108,987		102,013		11,811		847			114,671
Total revenues	$	303,605	$	45,778	$	1,216		$	350,599	$	298,046	$	41,727	$	1,422		$	341,195

Three Months Ended March 31, 2019	Pulp		Wood Products		Corporate and Other			Consolidated
Three Months Ended June 30, 2019										Pulp		Wood Products			Corporate and Other			Consolidated
Revenues from external customers	$	436,474	$	44,439	$	3,037		$	483,950	$	384,799	$	39,452		$	1,502		$	425,753
Operating income (loss)	$	93,520	$	1,620	$	(1,588	)	$	93,552	$	42,251	$	(89	)	$	(4,352	)	$	37,810
Depreciation and amortization	$	28,023	$	1,911	$	313		$	30,247	$	29,849	$	2,010		$	289		$	32,148
Revenues by major products
Pulp	$	413,313	$	—	$	—		$	413,313	$	359,205	$	—		$	—		$	359,205
Lumber		—		39,163		—			39,163		—		35,322			—			35,322
Energy and chemicals		23,161		2,666		3,037			28,864		25,594		2,788			1,502			29,884
Wood residuals		—		2,610		—			2,610		—		1,342			—			1,342
Total revenues	$	436,474	$	44,439	$	3,037		$	483,950	$	384,799	$	39,452		$	1,502		$	425,753
Revenues by geographical markets (a)
U.S.	$	54,568	$	13,292	$	—		$	67,860	$	38,778	$	12,678		$	—		$	51,456
Germany		132,189		14,916		—			147,105		109,150		14,029			—			123,179
China		115,319		—		—			115,319		118,335		—			—			118,335
Other countries		134,398		16,231		3,037			153,666		118,536		12,745			1,502			132,783
Total revenues	$	436,474	$	44,439	$	3,037		$	483,950	$	384,799	$	39,452		$	1,502		$	425,753

Six Months Ended June 30, 2020	Pulp		Wood Products		Corporate and Other			Consolidated
Revenues from external customers	$	601,651	$	87,505	$	2,638		$	691,794
Operating income (loss)	$	29,549	$	9,882	$	(5,054	)	$	34,377
Depreciation and amortization	$	57,590	$	5,181	$	376		$	63,147
Total assets (a)	$	1,682,524	$	90,741	$	200,344		$	1,973,609
Revenues by major products
Pulp	$	555,867	$	—	$	—		$	555,867
Lumber		—		78,597		—			78,597
Energy and chemicals		45,784		5,260		2,638			53,682
Wood residuals		—		3,648		—			3,648
Total revenues	$	601,651	$	87,505	$	2,638		$	691,794
Revenues by geographical markets (b)
U.S.	$	73,518	$	35,244	$	1,161		$	109,923
Germany		167,240		27,197		—			194,437
China		164,362		—		—			164,362
Other countries		196,531		25,064		1,477			223,072
Total revenues	$	601,651	$	87,505	$	2,638		$	691,794

Six Months Ended June 30, 2019	Pulp		Wood Products		Corporate and Other			Consolidated
Revenues from external customers	$	821,273	$	83,891	$	4,539		$	909,703
Operating income (loss)	$	135,771	$	1,531	$	(5,940	)	$	131,362
Depreciation and amortization	$	57,872	$	3,921	$	602		$	62,395
Revenues by major products
Pulp	$	772,518	$	—	$	—		$	772,518
Lumber		—		74,485		—			74,485
Energy and chemicals		48,755		5,454		4,539			58,748
Wood residuals		—		3,952		—			3,952
Total revenues	$	821,273	$	83,891	$	4,539		$	909,703
Revenues by geographical markets (a)
U.S.	$	93,346	$	25,970	$	—		$	119,316
Germany		241,339		28,945		—			270,284
China		233,654		—		—			233,654
Other countries		252,934		28,976		4,539			286,449
Total revenues	$	821,273	$	83,891	$	4,539		$	909,703

As of December 31, 2019, the Company had total assets of $1,782,105 in the pulp segment, $83,102 in the wood products segment and $200,513 in corporate and other. Total assets for the pulp segment includes the Company's $53,122 investment in joint ventures, primarily for the Cariboo mill.

Revenues between segments are accounted for at prices that approximate fair value. These include revenues from the sale of residual fiber from the wood products segment to the pulp segment for use in the pulp production process and from the sale of residual fuel from the pulp segment to the wood products segment for use in energy production. For the three and six month ~~period~~periods ended ~~March 31,~~June 30, 2020, the pulp segment sold ~~$182~~$164 and $346, respectively of residual fuel to the wood products segment (2019 – ~~$256)~~$108 and $364) and the wood products segment sold ~~$3,836~~$3,594 and $7,430, respectively of residual fiber to the pulp segment (2019 – ~~$5,407)~~$3,946 and $9,353).

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

The estimated fair values of the ~~Company’s~~Company's outstanding debt under the fair value hierarchy as of ~~March 31,~~June 30, 2020 and December 31, 2019 were as follows:

	Fair value measurements as of March 31, 2020 using:								Fair value measurements as of June 30, 2020 using:
Description	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Revolving credit facilities	$	—	$	47,931	$	—	$	47,931	$	—	$	24,949	$	—	$	24,949
Senior Notes		—		898,336		—		898,336		—		1,074,928		—		1,074,928
	$	—	$	946,267	$	—	$	946,267	$	—	$	1,099,877	$	—	$	1,099,877

The carrying value of the revolving credit facilities classified as Level 2 approximates the fair value as the variable interest rates reflect current interest rates for financial instruments with similar characteristics and maturities.

The fair value of the Senior Notes classified as Level 2 was determined using quoted prices in a dealer market, or using recent market transactions. The ~~Company’s~~Company's Senior Notes are not carried at fair value on the Interim Consolidated Balance Sheets as of ~~March 31,~~June 30, 2020 and December 31, 2019. However, fair value disclosure is required. The carrying value of the ~~Company’s~~Company's Senior Notes, net of note issuance costs and premium is ~~$1,088,523~~$1,089,120 as of ~~March 31,~~June 30, 2020 (December 31, 2019 – $1,087,932).

The Company's credit risk is primarily attributable to cash held in bank accounts and accounts receivable. The Company maintains cash balances in foreign financial institutions in excess of insured limits. The Company limits its credit exposure on cash held in bank accounts by periodically investing cash in excess of short-term operating requirements and debt obligations in low risk government bonds, or similar debt instruments. The Company's credit risk associated with the sale of pulp, lumber and other wood residuals is managed through setting credit limits, the purchase of credit insurance and for certain customers a letter of credit is received prior to shipping the product. The Company reviews new ~~customers’~~customers' credit history before granting credit and conducts regular reviews of existing ~~customers’~~customers' credit performance. Concentrations of credit risk on the sale of pulp, lumber and other wood residuals are with customers and agents based primarily in Germany, China, the U.S. and Italy.

The carrying amount of cash and cash equivalents of ~~$286,526~~$303,334 and accounts receivable of ~~$221,921~~$209,184 recorded in the Interim Consolidated Balance Sheet, net of any allowances for losses, represents the Company's maximum exposure to credit risk.

~~On April 20, 2020, the Company’s 50% owned joint venture Cariboo pulp mill announced approximately~~ ~~four weeks~~ of downtime which will result in a reduction of NBSK production of approximately 30,000 tonnes of which Mercer’s share is 15,000 tonnes. The downtime is in connection with reduced fiber availability resulting from regional sawmill downtime. The cogeneration facility at the Cariboo mill is continuing to operate during such downtime.

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

Operating EBITDA is defined as operating income ~~(loss)~~ plus depreciation and amortization and non-recurring capital asset impairment charges. We use Operating EBITDA as a benchmark measurement of our own operating results and as a benchmark relative to our competitors. We consider it to be a meaningful supplement to operating income as a performance measure primarily because depreciation expense and non-recurring capital asset impairment charges are not actual cash costs, and depreciation expense varies widely from company to company in a manner that we consider largely independent of the underlying cost efficiency of our operating facilities. In addition, we believe Operating EBITDA is commonly used by securities analysts, investors and other interested parties to evaluate our financial performance.

Operating EBITDA does not reflect the impact of a number of items that affect our net income (loss), including financing costs and the effect of derivative instruments. Operating EBITDA is not a measure of financial performance under GAAP, and should not be considered as an alternative to net income (loss) or operating income ~~(loss) from operations~~ as a measure of performance, or as an alternative to net cash from operating activities as a measure of liquidity. Operating EBITDA is an internal measure and therefore may not be comparable to other companies.

Operating EBITDA has significant limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are that Operating EBITDA does not reflect: (i) our cash expenditures, or future requirements, for capital expenditures or contractual commitments; (ii) changes in, or cash requirements for, working capital needs; (iii) the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our outstanding debt; (iv) the impact of realized or marked to market changes in our derivative positions, which can be substantial; and (v) the impact of non-recurring impairment charges against our investments or assets. Because of these limitations, Operating EBITDA should only be considered as a supplemental performance measure and should not be considered as a measure of liquidity or cash available to us to invest in the growth of our business. Because all companies do not calculate Operating EBITDA in the same manner, Operating EBITDA as calculated by us may differ from Operating EBITDA or EBITDA as calculated by other companies. We compensate for these limitations by using Operating EBITDA as a supplemental measure of our performance and by relying primarily on our GAAP financial statements.

In this document: (i) unless the context otherwise requires, references to "we", "our", "us", the "Company" or "Mercer" mean Mercer International Inc. and its subsidiaries; (ii) references to "Mercer Inc." mean the Company excluding its subsidiaries; (iii) information is provided as of ~~March 31,~~June 30, 2020, unless otherwise stated; (iv) our reporting currency is dollars and references to "€" mean euros and "C$" mean Canadian dollars; (v) "ADMTs" refers to air-dried metric tonnes; (vi) "NBSK" refers to northern bleached softwood kraft; (vii) "NBHK" refers to northern bleached hardwood kraft; (viii) "MW" refers to megawatts and "MWh" refers to megawatt hours; (ix) "Mfbm" refers to thousand board feet of lumber and "MMfbm" mean million board feet of lumber; and (x) our lumber metrics are converted from cubic meters to Mfbm using a conversion ratio of 1.6 cubic meters to one Mfbm, which is the ratio commonly used in the industry.

Due to rounding, numbers presented throughout this report may not add up precisely to totals we provide and percentages may not precisely reflect the absolute figure.

The following discussion and analysis of our results of operations and financial condition for the three and six months ended ~~March 31,~~June 30, 2020 should be read in conjunction with our Interim Consolidated Financial Statements and related notes included in this quarterly report, as well as our most recent annual report on Form 10-K for the fiscal year ended December 31, 2019 filed with the Securities and Exchange Commission, referred to as the "SEC".

Each segment offers primarily different products and requires different manufacturing processes, technology and sales and marketing.

The ~~current~~ COVID-19 pandemic ~~has resulted in~~is continuing to cause significant widespread global infections and fatalities. It has also materially adversely affected global economic activity, caused significant market volatility and resulted in numerous governments declaring emergencies and implementing measures, such as travel bans, quarantines, business closures, shelter-in-place and other restrictions.

Commencing around the end of the second quarter of 2020, many countries have taken measures to ease restrictions on economic and social activities to, among other things, reopen their economies by allowing businesses to restart and encourage economic recovery. The results of such economic measures and the reopening have varied from country to country, with certain countries currently reporting relatively stable infection rates and others, such as the United States, reporting a spike in infections and fatalities. Currently we are unable to predict the outcome or pace of such economic reopening and the strength or timing of any recovery. Neither can we predict whether the easing of pandemic health restrictions will result in such a material resurgence in infections and fatalities as would cause governments to re-impose some or all prior or new restrictive measures, including business closures. See "Part II. Other Information - Item 1A. Risk Factors - The COVID-19 pandemic could materially adversely affect our business, financial position and results of operations".

~~Our products are an important constituent~~Since the start of ~~many~~the COVID-19 pandemic, ~~related high demand goods such as tissue and cleaning products and certain personal protective equipment. Accordingly,~~ we have implemented a number of ~~new and~~ important health and safety measures at our operations both to protect our employees and to allow our mills to operate responsibly and ~~efficiently.~~efficiently

including with respect to social distancing, sanitation and personal protection equipment. Such measures include those recommended by governments and health agencies. We are constantly monitoring our operations and guidance from governmental and health organizations to ensure we take appropriate and necessary actions to protect our people.

During the ~~first~~second quarter of 2020, ~~pulp prices modestly increased from the fourth quarter of 2019 as a result of steady demand. Overall in the current quarter,~~ our average NBSK pulp sales realizations ~~declined by about 3% from~~were approximately 2% higher compared to the ~~fourth~~first quarter of ~~2019,~~2020 as ~~the modest price improvements were staggered and will not be fully implemented until the second quarter~~a result of ~~2020.~~steady demand.

At the end of the current quarter, NBSK list prices in Europe and North America were approximately $840 per ADMT and ~~$1,135~~$1,160 per ADMT, respectively. Commencing in 2020 only net prices (which are net of discounts, allowances and rebates) are published for China. At the end of the current quarter, NBSK net prices in China were approximately ~~$580~~$555 per ADMT. NBHK list prices in North America were approximately ~~$890~~$900 per ADMT and NBHK net prices in China were approximately ~~$455~~$450 per ADMT.

~~Although there is~~As a ~~great deal~~result of the global ~~business~~economic uncertainty resulting from the COVID-19 pandemic including efforts to reopen economies and ~~its effect and societal responses~~the seasonal third quarter slowdown, we are ~~evolving and can change quickly,~~expecting an overall weakening in pulp demand in the ~~second quarter we are currently expecting to see steady pulp demand from tissue and hygiene producers but a weakening in demand from our printing and writing paper producers.~~upcoming quarter.

On the pulp supply side, ~~in the upcoming quarter, we are currently expecting certain mills~~ to ~~curtail production as a result of fiber shortages resulting from sawmill downtime. Further, some pulp mills have announced some sporadic production curtailments resulting from COVID-19. Additionally,~~date various pulp mills globally have delayed their annual maintenance schedules ~~as a result of~~due to the current pandemic. ~~This is expected~~As a result, we currently expect mills to curtail production to implement such delayed maintenance in the later part of ~~the~~this year or the early part of next year.

In the second quarter of 2020, our pulp mills have six days of scheduled maintenance downtime, or approximately 9,700 ADMTs. However, these shuts may be deferred if there is a lack of contractor availability as a result of the current pandemic. Our Peace River mill is also currently scheduled to have five days of annual maintenance downtime in the fourth quarter of 2020.

~~In the first quarter of 2020, lumber markets overall were stable and~~ lumber sales realizations were flat from the ~~fourth~~first quarter of ~~2019 as~~2020. We currently expect strong lumber demand and higher ~~pricing in the U.S. market offset lower~~ lumber sales realizations in the ~~European~~U.S. market ~~resulting from the supply of lumber processed from beetle damaged wood. We currently expect weakening lumber markets~~ and ~~lower~~steady demand and sales ~~price~~ realizations in the ~~second quarter of 2020 due to a drop~~European lumber market in ~~housing starts and business slowdowns and disruptions resulting from~~ the ~~COVID-19 pandemic in our major markets.~~upcoming quarter.

	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019			2020			2019
	(in thousands, other than per share amounts)						(in thousands, other than per share amounts)
Statement of Operations Data
Pulp segment revenues	$	303,605		$	436,474		$	298,046		$	384,799		$	601,651		$	821,273
Wood products segment revenues		45,778			44,439			41,727			39,452			87,505			83,891
Corporate and other revenues		1,216			3,037			1,422			1,502			2,638			4,539
Total revenues	$	350,599		$	483,950		$	341,195		$	425,753		$	691,794		$	909,703

Pulp segment operating income	$	21,439		$	93,520		$	8,110		$	42,251		$	29,549		$	135,771
Wood products segment operating income		5,555			1,620
Wood products segment operating income (loss)								4,327			(89	)		9,882			1,531
Corporate and other operating loss		(2,932	)		(1,588	)		(2,122	)		(4,352	)		(5,054	)		(5,940	)
Total operating income	$	24,062		$	93,552		$	10,315		$	37,810		$	34,377		$	131,362

Pulp segment depreciation and amortization	$	30,371		$	28,023		$	27,219		$	29,849		$	57,590		$	57,872
Wood products segment depreciation and amortization		2,377			1,911			2,804			2,010			5,181			3,921
Corporate and other depreciation and amortization		198			313			178			289			376			602
Total depreciation and amortization	$	32,946		$	30,247		$	30,201		$	32,148		$	63,147		$	62,395

Operating EBITDA⁽¹⁾	$	57,008		$	123,799		$	40,516		$	69,958		$	97,524		$	193,757
Provision for income taxes	$	(5,344	)	$	(24,424	)	$	(882	)	$	(10,433	)	$	(6,226	)	$	(34,857	)
Net income (loss)	$	(3,392	)	$	51,616		$	(8,411	)	$	10,259		$	(11,803	)	$	61,875
Net income (loss) per common share
Basic	$	(0.05	)	$	0.79
Diluted	$	(0.05	)	$	0.78
Basic and diluted							$	(0.13	)	$	0.16		$	(0.18	)	$	0.94
Common shares outstanding at period end		65,800			65,651			65,868			65,629			65,868			65,629

	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019			2020			2019
	(in thousands)						(in thousands)
Net income (loss)	$	(3,392	)	$	51,616		$	(8,411	)	$	10,259		$	(11,803	)	$	61,875
Provision for income taxes		5,344			24,424			882			10,433			6,226			34,857
Interest expense		20,084			18,551			20,108			18,369			40,192			36,920
Other (income) expenses		2,026			(1,039	)
Other income								(2,264	)		(1,251	)		(238	)		(2,290	)
Operating income		24,062			93,552			10,315			37,810			34,377			131,362
Add: Depreciation and amortization		32,946			30,247			30,201			32,148			63,147			62,395
Operating EBITDA	$	57,008		$	123,799		$	40,516		$	69,958		$	97,524		$	193,757

	Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019		2020		2019
Pulp Segment
Pulp production ('000 ADMTs)
NBSK		455.2		460.6		423.8		452.8		879.0		913.4
NBHK		78.9		78.6		88.8		89.4		167.8		168.0
Annual maintenance downtime ('000 ADMTs)		2.3		—		11.3		7.5		13.6		7.5
Annual maintenance downtime (days)		2		—		15		15		17		15
Pulp sales ('000 ADMTs)
NBSK		438.3		466.9		422.6		438.5		860.9		905.4
NBHK		66.0		87.8		69.3		81.5		135.4		169.4
Average NBSK pulp prices ($/ADMT)⁽¹⁾
Europe		833		1,105		850		997		842		1,051
China		573		700		572		630		573		665
North America		1,127		1,380		1,158		1,292		1,143		1,336
Average NBHK pulp prices ($/ADMT)⁽¹⁾
China		460		695		465		607		463		651
North America		890		1,180		897		1,100		893		1,140
Average pulp sales realizations ($/ADMT)⁽²⁾
NBSK		561		757		573		699		567		729
NBHK		468		656		475		618		472		638
Energy production ('000 MWh)⁽³⁾		578.4		560.5		562.9		575.4		1,141.3		1,135.8
Energy sales ('000 MWh)⁽³⁾		231.7		211.8		222.0		231.9		453.7		443.7
Average energy sales realizations ($/MWh)⁽³⁾		95		94		85		93		90		94

Wood Products Segment
Lumber production (MMfbm)		116.4		110.7		113.5		100.8		229.8		211.5
Lumber sales (MMfbm)		117.7		109.2		109.0		101.5		226.7		210.7
Average lumber sales realizations ($/Mfbm)		348		359		345		348		347		354
Energy production and sales ('000 MWh)		22.8		22.4		22.7		24.1		45.4		46.4
Average energy sales realizations ($/MWh)		116		119		116		116		116		118

Average Spot Currency Exchange Rates
$ / €⁽⁴⁾		1.1022		1.1354		1.1016		1.1237		1.1019		1.1293
$ / C$⁽⁴⁾		0.7438		0.7521		0.7221		0.7475		0.7328		0.7497

Consolidated ‑ Three Months Ended ~~March 31,~~June 30, 2020 Compared to Three Months Ended ~~March 31,~~June 30, 2019

Total revenues for the three months ended ~~March 31,~~June 30, 2020 decreased by approximately ~~28%~~20% to ~~$350.6~~$341.2 million from ~~$484.0~~$425.8 million in the same quarter of 2019 primarily due to lower pulp sales realizations and ~~lower~~ pulp sales volumes.

Costs and expenses in the current quarter decreased by approximately ~~16%~~15% to ~~$326.5~~$330.9 million from ~~$390.4~~$387.9 million in the ~~first~~second quarter of 2019 primarily due to lower ~~pulp sales volume, lower~~ per unit fiber costs and lower pulp sales volumes and the positive impact of a stronger dollar ~~against the~~on our Canadian dollar and euro ~~primarily on the dollar~~ denominated ~~cash~~costs and ~~receivables held at our operations.~~ expenses.

In the ~~first~~second quarter of 2020, cost of sales depreciation and amortization ~~increased~~decreased to ~~$32.9~~$30.2 million from ~~$30.1~~$32.0 million in the same quarter of ~~2019.~~2019 primarily due to the positive impact of a stronger dollar.

Selling, general and administrative expenses ~~increased~~decreased to ~~$17.6~~$16.4 million in the ~~first~~second quarter of 2020 from ~~$17.2 million in the same quarter of 2019.~~

~~In the first quarter of 2020, our operating income decreased by approximately 74% to $24.1 million from $93.6~~$19.5 million in the same quarter of 2019 primarily due to lower ~~pulp sales realizations partially offset by lower per unit fiber costs.~~stock based compensation expense and the positive impact of a stronger dollar.

Interest expense in the current quarter increased to $20.1 million from $18.6 million in the same quarter of 2019 primarily as a result of the net issuance in October 2019 of an additional $100.0 million of our senior notes.

During the first quarter of 2020, the provision for income taxes was $5.3 million primarily due to income before tax for our German entities only partially offset by tax recoveries for our Canadian entities. In the ~~comparative quarter of 2019, the provision for income taxes was $24.4 million due to higher income.~~

~~For the first~~second quarter of 2020, our ~~net loss was $3.4 million, or $0.05 per share compared to net~~operating income ~~of $51.6 million, or $0.79 per basic share and $0.78 per diluted share, in the same quarter of 2019.~~

~~In the first quarter of 2020, Operating EBITDA~~ decreased by approximately ~~54%~~73% to ~~$57.0~~$10.3 million from ~~$123.8~~$37.8 million in the same quarter of 2019 primarily due to lower pulp sales realizations partially offset by lower per unit fiber costs and the positive impact of a stronger ~~dollar versus~~dollar.

Interest expense in the ~~euro~~current quarter increased to $20.1 million from $18.4 million in the same quarter of 2019 primarily as a result of higher indebtedness.

During the second quarter of 2020, the provision for income taxes was $0.9 million primarily due to income before tax for our German operations only partially offset by tax recoveries for our Canadian operations. In the comparative quarter of 2019, the provision for income taxes was $10.4 million due to higher income.

For the second quarter of 2020, our net loss was $8.4 million, or $0.13 per share compared to net income of $10.3 million, or $0.16 per share, in the same quarter of 2019.

In the second quarter of 2020, Operating EBITDA decreased by approximately 42% to $40.5 million from $70.0 million in the same quarter of 2019 primarily due to lower pulp sales realizations partially offset by lower per unit fiber costs and ~~Canadian~~the positive impact of a stronger dollar.

None of the income or loss items following operating income in our Interim Consolidated Statements of Operations are allocated to our segments, since those items are reviewed separately by management.

Pulp Segment ‑ Three Months Ended ~~March 31,~~June 30, 2020 Compared to Three Months Ended ~~March 31,~~June 30, 2019

	Three Months Ended March 31,				Three Months Ended June 30,
	2020		2019		2020		2019
	(in thousands)				(in thousands)
Pulp revenues	$	278,948	$	413,313	$	276,919	$	359,205
Energy and chemical revenues	$	24,657	$	23,161	$	21,127	$	25,594
Depreciation and amortization	$	30,371	$	28,023	$	27,219	$	29,849
Operating income	$	21,439	$	93,520	$	8,110	$	42,251

Pulp revenues in the ~~first~~second quarter of 2020 decreased by approximately ~~33%~~23% to ~~$278.9~~$276.9 million from ~~$413.3~~$359.2 million in the same quarter of 2019 due to lower sales realizations and sales volumes.

Energy and chemical revenues ~~increased~~decreased by approximately 6%18% to ~~$24.7~~$21.1 million in the ~~first~~second quarter of 2020 from ~~$23.2~~$25.6 million in the same quarter of 2019 primarily due to ~~higher~~lower chemical production at our ~~Celgar~~German mills caused by processing dry beetle damaged wood and lower energy revenue at our Peace River mill.

NBSK pulp production ~~modestly~~ declined 6% to ~~455,192~~423,773 ADMTs in the current quarter from ~~460,613~~452,835 ADMTs in the same quarter of 2019 primarily due to ~~two~~ planned downtime at our pulp mills and modestly lower production at all our mills. In the current quarter of 2020, our pulp mills had 15days of annual maintenance downtime (approximately ~~2,300~~11,300 ADMTs) inand our 50% joint venture Cariboo mill had four weeks of market related downtime. In the ~~current quarter and no downtime in the same~~comparative quarter of ~~2019.~~2019, the Cariboo mill had 15 days of scheduled maintenance downtime (approximately 7,500 ADMTs).

We estimate that annual maintenance downtime in the current quarter adversely impacted our operating income by approximately ~~$1.0 million.~~$4.5 million, comprised of approximately $2.0 million in direct out-of-pocket expenses and the balance in reduced production.

In the ~~second~~third quarter of 2020, our pulp mills have planned for six days of annual maintenance downtime or approximately ~~9,700~~9,500 ADMTs. Further, as previously announced, starting in July 2020 our Celgar mill is taking 30 days of market related downtime.

NBSK pulp sales volumes decreased by approximately 6%4% to ~~438,326~~422,586 ADMTs in the current quarter from ~~466,893~~438,520 ADMTs in the same quarter of 2019 primarily due to ~~logistics issues early in the current quarter related to closures, restrictions and other effects related to the COVID-19 pandemic.~~lower production.

In the current quarter of 2020, prices for NBSK pulp decreased from the same quarter of 2019 largely as a result of high producer inventory ~~levels and market uncertainty as COVID-19 spread through China.~~levels. Average list prices for NBSK pulp in Europe and North America were approximately ~~$833~~$850 per ADMT and ~~$1,127~~$1,158 per ADMT, respectively in the ~~first~~second quarter of 2020 compared to approximately ~~$1,105~~$997 per ADMT and ~~$1,380~~$1,292 per ADMT, respectively, in the same quarter of 2019. NBSK net prices in China were approximately ~~$573~~$572 per ADMT in the current quarter compared to approximately ~~$700~~$630 per ADMT in the same quarter of 2019.

Average NBSK pulp sales realizations decreased by approximately ~~26%~~18% to ~~$561~~$573 per ADMT in the ~~first~~second quarter of 2020 from approximately ~~$757~~$699 per ADMT in the same quarter of 2019.

~~Certain of~~In the current quarter our Canadian mills recorded a non-cash write down of our inventory carrying values of ~~$5.7~~$12.3 million as a result of lower pulp sales realizations and high fiber costs. In the same quarter of the prior year our Canadian mills recorded a non-cash write down of our inventory carrying values of $6.9 million.

In the current quarter of 2020 as a result of the effect of the ~~strengthening~~stronger dollar ~~against the~~on our Canadian dollar and euro ~~primarily on the dollar~~ denominated ~~cash~~costs and ~~receivables held at our mills,~~expenses, we recorded a positive impact of approximately ~~$17.1~~$5.3 million in operating income due to foreign exchange compared to the same quarter of 2019.

Costs and expenses in the current quarter decreased by approximately ~~18%~~15% to ~~$282.3~~$290.1 million from ~~$343.2~~$342.7 million in the ~~first~~second quarter of 2019 primarily due to lower per unit fiber costs, lower pulp sales volumes and the positive impact of a stronger ~~dollar and lower per unit fiber costs.~~dollar. In the current quarter of 2020 we received approximately $4.5 million of wage assistance under a Canadian wage subsidy program.

In the ~~first~~second quarter of 2020, depreciation and amortization ~~increased~~decreased to ~~$30.4~~$27.2 million from ~~$28.0~~$29.8 million in the same quarter of ~~2019.~~2019 primarily due to the positive impact of a stronger dollar.

On average, in the current quarter overall per unit fiber costs decreased by approximately ~~12%~~16% from the same quarter of 2019 ~~primarily~~ due to lower per unit fiber costs for all of our ~~German~~ mills. In the current quarter, per unit fiber costs for our German mills declined due to the continued availability of beetle damaged wood. For our Canadian mills, per unit fiber costs ~~were flat~~declined but remained at historically high levels due to strong demand for fiber in the ~~mills’~~mills' fiber procurement areas. We currently expect stable per unit fiber costs in the ~~second~~third quarter of 2020.

Transportation costs for our pulp segment decreased to ~~$35.6~~$34.6 million in the current quarter from ~~$37.9~~$36.3 million in the same quarter of 2019 primarily as a result of lower sales volumes.

In the ~~first~~second quarter of 2020, pulp segment operating income decreased to ~~$21.4~~$8.1 million from ~~$93.5~~$42.3 million in the same quarter of 2019 as lower pulp sales realizations were only partially offset by the positive impact of ~~a stronger dollar and~~ lower per unit fiber ~~costs.~~costs and a stronger dollar.

Wood Products Segment ‑ Three Months Ended ~~March 31,~~June 30, 2020 Compared to Three Months Ended ~~March 31,~~June 30, 2019

	Three Months Ended March 31,				Three Months Ended June 30,
	2020		2019		2020		2019
	(in thousands)				(in thousands)
Lumber revenues	$	40,986	$	39,163	$	37,611	$	35,322
Energy revenues	$	2,631	$	2,666	$	2,629	$	2,788
Wood residual revenues	$	2,161	$	2,610	$	1,487	$	1,342
Depreciation and amortization	$	2,377	$	1,911	$	2,804	$	2,010
Operating income	$	5,555	$	1,620
Operating income (loss)					$	4,327	$	(89	)

In the ~~first~~second quarter of 2020, lumber revenues increased 5%7% to ~~$41.0~~$37.6 million from ~~$39.2~~$35.3 million in the same quarter of 2019 due to higher sales volumes. In the current quarter approximately 38% of sales volumes were in the U.S. market and the majority of remaining sales were to Europe.

Lumber production increased by approximately 13% to 113.5 MMfbm in the current quarter of 2020 from 100.8 MMfbm in the same quarter of 2019 primarily due to capital improvements.

Average lumber sales realizations were generally flat at approximately $345 per Mfbm in the second quarter of 2020 compared to approximately $348 per Mfbm in the same quarter of 2019 as higher pricing in the U.S. market was offset by lower pricing in Europe. U.S. lumber pricing increased due to stronger demand during the current quarter. European lumber pricing declined due to an increase in the supply of lumber processed from beetle damaged wood which generally obtains lower prices.

Fiber costs were approximately 70% of our lumber cash production costs in the current quarter. In the current quarter per unit fiber costs decreased by approximately 26% from the same quarter of 2019 primarily due to the availability of lower cost beetle damaged wood. We currently expect stable per unit fiber costs in the third quarter of 2020 due to the continuing availability of such wood.

In the second quarter of 2020, depreciation and amortization increased to $2.8 million from $2.0 million in the same quarter of 2019 primarily due to the completion of capital projects.

Transportation costs for our wood products segment in the second quarter of 2020 increased by approximately 22% to $7.2 million from $5.9 million in the same quarter of 2019 primarily due to higher sales volumes to the U.S.

In the second quarter of 2020, our wood products segment had operating income of $4.3 million compared to an operating loss of $0.1 million in the same quarter of 2019 primarily due to strong production and lower per unit fiber costs.

Consolidated ‑ Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

Total revenues for the first half of 2020 decreased by approximately 24% to $691.8 million from $909.7 million in the first half of 2019 primarily due to lower pulp sales realizations and pulp sales volumes.

Costs and expenses in the first half of 2020 decreased by approximately 16% to $657.4 million from $778.3 million in the first half of 2019 primarily due to lower per unit fiber costs, lower pulp sales volumes and the positive impact of a stronger dollar on our Canadian dollar and euro denominated costs and expenses.

In the first half of 2020, cost of sales depreciation and amortization increased to $63.1 million from $62.2 million in the same period of 2019.

Selling, general and administrative expenses decreased to $33.9 million in the first half of 2020 from $36.7 million in the first half of 2019 primarily due to lower stock based compensation expense and the positive impact of a stronger dollar.

In the first half of 2020, our operating income decreased by approximately 74% to $34.4 million from $131.4 million in the same period of 2019 primarily due to lower pulp sales realizations and pulp sales volumes partially offset by lower ~~sales realizations.~~per unit fiber costs and the positive impact of a stronger dollar.

Interest expense in the first half of 2020 increased to $40.2 million from $36.9 million in the same period of 2019 primarily as a result of higher indebtedness resulting from our issuance of an additional $100.0 million of senior notes in October 2019.

During the first half of 2020, the provision for income taxes was $6.2 million primarily due to income before tax for our German operations only partially offset by tax recoveries for our Canadian operations. In the ~~current quarter~~same period of 2019, the provision for income taxes was $34.9 million due to higher income.

For the first half of 2020, our net loss was $11.8 million, or $0.18 per share compared to net income of $61.9 million, or $0.94 per share, in the same period of 2019.

In the first half of 2020, Operating EBITDA decreased by approximately ~~31%~~50% to $97.5 million from $193.8 million in the same period of 2019 primarily due to lower pulp sales realizations and pulp sales volumes partially offset by lower per unit fiber costs and the positive impact of a stronger dollar versus the Canadian dollar and euro.

Pulp Segment ‑ Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

Pulp revenues in the first half of 2020 decreased by approximately 28% to $555.9 million from $772.5 million in the same period of 2019 due to lower sales realizations and sales volumes.

Energy and chemical revenues decreased by approximately 6% to $45.8 million in the first half of 2020 from $48.8 million in the same period of 2019 primarily due to lower chemical production caused by our German mills processing dry beetle damaged wood.

NBSK pulp production declined approximately 4% to 878,965 ADMTs in the first half of 2020 from 913,448 ADMTs in the same period of 2019 primarily due to 17 days of annual maintenance downtime (approximately 13,600 ADMTs) and four weeks of planned market related downtime at our 50% joint venture Cariboo mill and modestly lower production at our German and Peace River mills. In the first half of 2019, the Cariboo mill had 15 days of scheduled maintenance downtime (approximately 7,500 ADMTs).

We estimate that annual maintenance downtime in the first half of 2020 adversely impacted our operating income by approximately $5.5 million, comprised of approximately $2.4 million in direct out-of-pocket expenses and the balance in reduced production.

NBSK pulp sales volumes decreasedby approximately 5% to 860,912 ADMTs in the first half of 2020 from 905,413 ADMTs in the same period of 2019 primarily due to lower production.

In the first half of 2020, prices for NBSK pulp decreased from the same period of 2019, largely as a result of high producer inventory levels and market uncertainty due to the COVID-19 pandemic. Average list prices for NBSK pulp in Europe and North America were approximately $842 per ADMT and $1,143 per ADMT, respectively in the first half of 2020 compared to approximately $1,051 per ADMT and $1,336 per ADMT, respectively, in the same period of 2019. NBSK net prices in China were approximately $573 per ADMT in the first half of 2020 compared to approximately $665 per ADMT in the first half of 2019.

Average NBSK pulp sales realizations decreased by approximately 22% to $567 per ADMT in the first half of 2020 from approximately $729 per ADMT in the same period of 2019.

In the first half of 2020, our Canadian mills recorded non-cash write downs of our inventory carrying values of $18.0 million as a result of lower pulp sales realizations and high fiber costs. In the same period of 2019 our Canadian mills recorded a non-cash write down of our inventory carrying values of $6.9 million.

In the first half of 2020 primarily as a result of the effect of the strengthening dollar on our Canadian dollar and euro denominated costs and expenses, we recorded a positive impact of approximately $22.0 million in operating income due to foreign exchange compared to the same period of 2019.

Costs and expenses in the first half of 2020 decreased by approximately 17% to $572.4 million from $685.9 million in the first half of 2019 primarily due to lower pulp sales volumes, lower per unit fiber costs and the positive impact of a stronger dollar. In the first half of 2020 we have received approximately $4.5 million of wage assistance under a Canadian wage subsidy program.

In the first half of 2020, depreciation and amortization decreased to $57.6 million from $57.9 million in the same period of 2019.

On average, in the first half of 2020 overall per unit fiber costs decreased by approximately 14% from the same period of 2019 primarily due to lower per unit fiber costs at our German mills. In the first half of 2020, per unit fiber costs for our German mills declined due to the continued availability of beetle damaged wood. For our Canadian mills, per unit fiber costs modestly declined but remained at historically high levels due to strong demand for fiber in the mills' fiber procurement areas.

Transportation costs for our pulp segment decreased to $70.2 million in the first half of 2020 from $74.2 million in the same period of 2019 primarily as a result of lower sales volumes.

In the first half of 2020, pulp segment operating income decreased to $29.5 million from $135.8 million in the same period of 2019 as lower pulp sales realizations and pulp sales volumes were only partially offset by the positive impact of lower per unit fiber costs and a stronger dollar.

Wood Products Segment ‑ Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

In the first half of 2020, lumber revenues increased approximately 6% to $78.6 million from $74.5 million in the same period of 2019 due to higher sales volumes. In the first half of 2020 approximately 34% of sales volumes were in the U.S. market and the majority of remaining sales were to Europe.

Energy and wood residual revenues decreased 9%approximately 5% to ~~$4.8~~$8.9 million in the first ~~quarter~~half of 2020 from ~~$5.3~~$9.4 million in the same ~~quarter~~period of 2019 primarily due to lower sales realizations for wood residuals.

Lumber production increased by approximately 5%9% to ~~a record 116.4~~229.8 MMfbm in the ~~current quarter~~first half of 2020 from ~~110.7~~211.5 MMfbm in the same ~~quarter~~period of 2019 primarily due to capital improvements.

Average lumber sales realizations decreased by approximately 3%2% to ~~$348~~$347 per Mfbm in the first ~~quarter~~half of 2020 from approximately ~~$359~~$354 per Mfbm in the same ~~quarter~~period of 2019 primarily due to lower pricing in Europe partially offset by higher pricing in the U.S. market. European lumber pricing declined due to an increase in the supply of lumber processed from beetle damaged wood which generally obtains lower prices. U.S. lumber pricing increased due to ~~strong demand during the current quarter.~~stronger demand.

Fiber costs were approximately 70% of our lumber cash production costs in the ~~current quarter.~~first half of 2020. In the ~~current quarter~~first half of 2020 per unit fiber costs decreased by approximately ~~25%~~26% from the same ~~quarter~~period of 2019 primarily due to the availability of lower cost beetle damaged wood. We currently expect stable per unit fiber costs in the ~~second~~third quarter of 2020 ~~because of~~due to the continuing availability of beetle damaged wood.

In the first ~~quarter~~half of 2020, ~~lumber segment~~ depreciation and amortization increased to ~~$2.4~~$5.2 million from ~~$1.9~~$3.9 million in the same ~~quarter~~period of 2019 primarily due to the completion of capital projects.

Transportation costs for our wood products segment in the first ~~quarter~~half of 2020 increased by approximately ~~10%~~16% to ~~$6.8~~$14.0 million from ~~$6.2~~$12.1 million in the same ~~quarter~~period of 2019 primarily due to higher ~~lumber~~ sales ~~volumes.~~volumes to the U.S.

In the first ~~quarter~~half of 2020, our wood products segment had ~~record~~ operating income of ~~$5.6~~$9.9 million compared to ~~$1.6~~$1.5 million in the same ~~quarter~~period of 2019 primarily due to ~~record~~strong production and lower per unit fiber costs.

	Three Months Ended March 31,						Six Months Ended June 30,
	2020			2019			2020			2019
	(in thousands)						(in thousands)
Net cash from (used in) operating activities	$	(69,842	)	$	42,186		$	(5,737	)	$	130,907
Net cash used in investing activities		(23,405	)		(19,966	)		(44,242	)		(45,206	)
Net cash from (used in) financing activities		32,250			(28,723	)		4,902			(68,730	)
Effect of exchange rate changes on cash and cash equivalents		(3,562	)		(754	)		(2,674	)		(140	)
Net decrease in cash and cash equivalents	$	(64,559	)	$	(7,257	)
Net increase (decrease) in cash and cash equivalents							$	(47,751	)	$	16,831

We operate in a cyclical industry and our operating cash flows vary accordingly. Our principal operating cash expenditures are for fiber, labor and chemicals. Working capital levels fluctuate throughout the year and are affected by maintenance downtime, changing sales patterns, seasonality and the timing of receivables and sales and the payment of payables and expenses.

Cash Flows from Operating Activities. Cash used in operating activities was ~~$69.8~~$5.7 million in the ~~three~~six months ended ~~March 31,~~June 30, 2020 compared to cash provided by operating activities of ~~$42.2~~$130.9 million in the comparative period of 2019. An increase in accounts receivable used cash of ~~$20.9~~$6.0 million in the ~~three~~six months ended ~~March 31,~~June 30, 2020 compared to ~~$56.4~~$24.1 million in the same period of 2019. An increase in inventories used cash of ~~$18.1~~$6.7 million in the ~~three~~six months ended ~~March 31,~~June 30, 2020 compared to a decrease in inventories providing cash of ~~$21.1~~$13.4 million in the same period of 2019. A decrease in accounts payable and accrued expenses used cash of ~~$57.7~~$49.8 million in the ~~three~~six months ended ~~March 31,~~June 30, 2020 compared to ~~$0.2~~an increase in accounts payable and accrued expenses providing cash of $4.0 million in the same period of 2019.

Cash Flows from Investing Activities. Investing activities in the ~~three~~six months ended ~~March 31,~~June 30, 2020 used cash of ~~$23.4~~$44.2 million primarily related to capital expenditures of ~~$23.0~~$44.6 million. In the ~~three~~six months ended ~~March 31,~~June 30, 2020, capital expenditures included the ~~planer line replacement~~Phase II expansion and optimization project ~~and other upgrades~~ at our Friesau sawmill, additional land for fiber storage at the Stendal mill and other smaller maintenance and optimization ~~projects at the Celgar mill.~~projects. In the ~~three~~six months ended ~~March 31,~~June 30, 2019, investing activities used cash of ~~$20.0~~$45.2 million primarily related to capital expenditures of ~~$19.4~~$44.4 million. In the ~~three months ended March 31,~~first half of 2019, capital expenditures included the planer line replacement project at our Friesau sawmill, wastewater improvement projects at our German pulp mills and large maintenance projects at our Celgar mill.

Cash Flows from Financing Activities. In the ~~three months ended March 31,~~first half of 2020, financing activities provided cash of ~~$32.3~~$4.9 million primarily from ~~$51.3~~$25.6 million of borrowings under our revolving credit facilities. In the ~~three~~six months ended ~~March 31,~~June 30, 2020 we paid dividends of $9.0 ~~million.~~million and used $0.2 million to repurchase common shares. In the ~~three months ended March 31,~~first half of 2019, financing activities used cash of ~~$28.7~~$68.7 million primarily to repay ~~$33.7~~$58.4 million ofunder our revolving credit facilities. In the ~~three~~six months ended ~~March 31,~~June 30, 2019, we received $6.3 million of government grants to finance greenhouse gas reduction capital projects at the Peace River ~~mill.~~ mill, paid dividends of $8.2 million and used $0.8 million to repurchase common shares.

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

	March 31,		December 31,		June 30,		December 31,
	2020		2019		2020		2019
	(in thousands)				(in thousands)
Cash and cash equivalents	$	286,526	$	351,085	$	303,334	$	351,085
Working capital	$	603,410	$	588,385	$	586,682	$	588,385
Total assets	$	1,951,989	$	2,065,720	$	1,973,609	$	2,065,720
Long-term liabilities	$	1,304,078	$	1,259,005	$	1,282,395	$	1,259,005
Total equity	$	462,768	$	550,403	$	494,260	$	550,403

Our principal sources of funds are cash flows from operations and cash and cash equivalents on hand. Our principal uses of funds consist of operating expenditures, capital expenditures and interest payments on our senior notes.

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

	Three Months Ended March 31,				Six Months Ended June 30,
	2020		2019		2020		2019
	(in thousands)				(in thousands)
Capital expenditures	$	23,018	$	19,389	$	44,562	$	44,368
Cash paid for interest expense⁽¹⁾	$	37,278	$	16,983	$	38,228	$	22,885
Interest expense⁽²⁾	$	20,084	$	18,551	$	40,192	$	36,920

As ~~a result~~ of ~~the global and financial uncertainty resulting from the COVID-19 pandemic,~~June 30, 2020 we are working to lower our costs and working capital usage and conservatively managing liquidity. As a result, we have reduced our planned 2020 capital expenditures, excluding amounts being financed by government grants and expected insurance proceeds, to about $90 million and reduced our quarterly dividend to $0.065 per share.

~~As at March 31, 2020 our~~had cash and cash equivalents ~~were $286.5~~of $303.3 million ~~compared to $351.1 million at the end of 2019. As at March 31, 2020, we had~~and approximately ~~$229.9~~$263.5 million available under our revolving credit ~~facilities. As of March 31, 2020, our cash~~facilities and ~~cash equivalents and availability under our revolving credit facilities provide~~as a result aggregate liquidity of about ~~$516.5~~$566.8 million.

We currently consider the majority of undistributed earnings of our foreign subsidiaries to be indefinitely reinvested and, accordingly, no U.S. income tax has been provided on such earnings. However, if we were required to repatriate funds to the United States, we believe that we currently could repatriate the majority thereof without incurring any material amount of taxes as a result of our shareholder advances and U.S. tax reform. However, it is currently not practical to estimate the income tax liability that might be incurred if such earnings were remitted to the United States. Substantially all of our undistributed earnings are held by our foreign subsidiaries outside of the United States.

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

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

Certain of our long-term obligations contain various financial tests and covenants customary to these types of arrangements. See our annual report on Form 10-K for the fiscal year ended December 31, 2019.

As ~~at March 31,~~of June 30, 2020, we were in full compliance with all of the covenants of our indebtedness.

At ~~March 31,~~June 30, 2020, we did not have any off-balance sheet arrangements (as defined in Item 303(a)(4)(ii) of Regulation S-K).

There were no material changes outside the ordinary course to any of our material contractual obligations during the ~~three~~six months ended ~~March 31,~~June 30, 2020.

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

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

As a result of the strengthening of the dollar versus the Canadian dollar and euro as ~~at March 31,~~of June 30, 2020, we recorded a non-cash decrease of ~~$75.0~~$30.8 million in the carrying value of our net assets, consisting primarily of our fixed assets denominated in Canadian dollars and euros. This non-cash decrease does not affect our net income (loss), Operating EBITDA or cash but is reflected in our other comprehensive ~~loss~~income (loss) and as a decrease to our total equity. As a result, our accumulated other comprehensive loss increased to ~~$191.5~~$147.3 million.

Based upon the exchange rate as ~~at March 31,~~of June 30, 2020, the dollar was flat against the euro and has strengthened by approximately 8%5% against the Canadian dollar ~~and 2% against the euro~~ since December 31, 2019. See "Quantitative and Qualitative Disclosures about Market Risk".

We and our Senior Notes are rated by Standard & Poor's Rating Services, referred to as "S&P", and Moody's Investors Service, Inc., referred to as "Moody's".

In July 2020 Moody's confirmed its rating on our Senior Notes is Ba3 and its outlook is stable. In April 2020, S&P reduced its rating on our Senior Notes to B+ from BB- and its outlook to negative from stable. Its recovery rating remained unchanged at "3". Credit ratings are not recommendations to buy, sell or hold securities and may be subject to revision or withdrawal by the assigning rating organization. Each rating should be evaluated independently of any other rating.

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

Our significant accounting policies are disclosed in Note 1 to our audited annual financial statements included in our annual report on Form 10-K for the fiscal year ended December 31, 2019. While all of the significant accounting policies are important to the consolidated financial statements, some of these policies may be viewed as having a high degree of judgment. On an ongoing basis using currently available information, management reviews its estimates, including those related to accounting for, among other things, pension and other post-retirement benefit obligations, deferred income taxes (valuation allowance and permanent reinvestment), depreciation and amortization, future cash flows associated with impairment testing for long-lived assets, the allocation of the purchase price in a business combination to the assets acquired and liabilities assumed, legal liabilities and contingencies. Actual results could differ materially from these estimates, and changes in these estimates are recorded when known.

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

For information about both our significant and critical accounting policies, see our annual report on Form 10-K for the fiscal year ended December 31, 2019.

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

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

Given these uncertainties, you should not place undue reliance on our forward-looking statements. The foregoing review of important factors is not exhaustive or necessarily in order of importance and should be read in conjunction with the risks and assumptions including those set forth under "Part II. Other Information – Item 1A. Risk Factors" and in reports and other documents we have filed with or furnished to the SEC, including in our annual report on Form 10-K for the fiscal year ended December 31, 2019. We advise you that these cautionary remarks expressly qualify in their entirety all forward-looking statements attributable to us or persons acting on our behalf. Unless required by law, we do not assume any obligation to update forward-looking statements based on unanticipated events or changed expectations. However, you should carefully review the reports and other documents we file from time to time with the SEC.

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

Industry capacity can fluctuate as changing industry conditions can influence producers to idle production capacity or permanently close mills. In addition, to avoid substantial cash costs in idling or closing a mill, some producers will choose to operate at a loss, sometimes even a cash loss, which can prolong weak pricing environments due to oversupply. Oversupply of our products can also result from producers introducing new capacity in response to

favorable pricing trends. Certain integrated pulp and paper producers have the ability to discontinue paper production by idling their paper machines and selling their pulp production on the market, if market conditions, prices and trends warrant such actions.

Demand for each of pulp and lumber has historically been determined primarily by general global macro-economic conditions and has been closely tied to overall business activity. Pulp prices have been and are likely to continue to be volatile and can fluctuate widely over time. Between 2010 and 2019, European list prices for NBSK pulp have fluctuated between a low of approximately $760 per ADMT in 2012 to a high of $1,230 per ADMT in 2018. In the same period, the average North American NBHK price has fluctuated between a low of $700 per ADMT in 2012 to a high of $1,235 per ADMT in 2018.

Our mills and operations voluntarily subject themselves to third-party certification as to compliance with internationally recognized, sustainable management standards because end use paper and lumber customers have shown an increased interest in understanding the origin of products they purchase. Demand for our products could be adversely affected if we, or our suppliers, are unable to achieve compliance, or are perceived by the public as failing to comply, with these standards or if our customers require compliance with alternate standards for which our operations are not certified.

A pulp producer's actual sales price realizations are net of customer discounts, rebates and other selling concessions.

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

Our production costs are influenced by the availability and cost of raw materials, energy and labor, and our plant efficiencies and productivity. Our main raw material is fiber in the form of wood chips, pulp logs and sawlogs. Wood chip, pulp log and sawlog costs are primarily affected by the supply of, and demand for, lumber and pulp, which are both highly cyclical. Higher fiber prices could affect producer profit margins if they are unable to pass along price increases to pulp and lumber customers or purchasers of surplus energy.

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

We are exposed to market risks from changes in interest rates and foreign currency exchange rates, particularly the exchange rates between the dollar and the euro and Canadian dollar. Changes in these rates may affect our results of operations and financial condition and, consequently, our fair value. We seek to manage these risks through internal risk management policies as well as the periodic use of derivatives.

For additional information, please refer to Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk included in our annual report on Form 10-K for the fiscal year ended December 31, 2019.

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

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

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

We are subject to routine litigation incidental to our business, including that which is described in our latest annual report on Form 10-K for the fiscal year ended December 31, 2019. We do not believe that the outcome of such litigation will have a material adverse effect on our business or financial condition.

Other than as set out below, there have been no material changes to the factors disclosed in Item 1A. Risk Factors in our annual report on Form 10-K for the fiscal year ended December 31, 2019.

The COVID-19 pandemic could materially adversely affect our business, financial position and results of operations.

The outbreak of COVID-19 in late 2019 initially in China ~~in December 2019~~ and ~~the~~its subsequent spread ~~of the virus~~ globally through ~~the first quarter of~~ 2020 has resulted in significant and widespread global infections and fatalities. In March 2020, the World Health Organization declared the spread of the COVID-19 virus a pandemic. The rapid spread of the virus has resulted in various federal, state and provincial governments declaring emergency measures and the implementation of numerous measures to attempt to contain the virus, including travel bans and restrictions, quarantines, business closures, shelter in place orders and other shutdowns and restrictions.

The impact of the pandemic and the global response thereto has, among other things, significantly disrupted global economic activity, negatively impacted gross domestic product and caused significant volatility in financial markets, with various countries already reporting significant declines in gross domestic product and business activity and material increases in unemployment. While various countries, including the United States, Germany, Canada and China have implemented stimulus packages and other fiscal measures to attempt to reduce the impact of the pandemic on their economies, the impact of the pandemic on global economic activity and markets both in the short and longer term is uncertain at this time.

As demand for our products has principally historically been determined by general global macro-economic activities, demand and prices for our products have historically decreased substantially during economic slowdowns. A significant economic downturn may adversely affect our sales and profitability and may also adversely affect our customers and suppliers. Additionally, significant disruptions and volatility in financial markets could have a negative impact on our ability to access capital in the future.

Our products are an important constituent of many pandemic related high demand goods such as tissue and cleaning products and certain personal protective equipment. However, our mills could experience disruptions, downtime and closures in the future as a result of changes to existing government response measures, outbreaks of the virus among our employees or operations or disruptions to raw material supplies or access to logistics networks.

The magnitude and duration of the disruption and resulting decline in business activity resulting from the COVID-19 pandemic is currently uncertain. The extent to which the COVID-19 pandemic impacts our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including:

The effect of the pandemic, including remote working arrangements for employees, ~~may~~has also ~~increase~~increased the risk of cyberattacks on, and other material breaches of, our and our third party service providers' information technology systems.

Any of these events could cause or contribute to the risks and uncertainties enumerated in our annual report on Form 10-K for the year ended December 31, 2019 and could materially adversely affect our business, financial position and results of operations.

In May 2019, our board of directors authorized a common stock repurchase program under which we may purchase up to $50 million of our shares ~~until~~which expired in May 2020. Repurchases may be made from time to time under the program through open market or in privately negotiated transactions, through block trades or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 under the Exchange Act. The repurchase program iswas subject to market conditions, applicable legal requirements and other factors. ~~The repurchase program does not obligate us to acquire any specific number of shares and may be suspended or terminated at any time.~~

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.

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

2024 Senior Notes				2025 Senior Notes				2026 Senior Notes
12 Month Period Beginning	Percentage			12 Month Period Beginning	Percentage			12 Month Period Beginning	Percentage
February 1, 2020		103.250	%	January 15, 2021		103.688	%	January 15, 2021		102.750	%
February 1, 2021		101.625	%	January 15, 2022		101.844	%	January 15, 2022		101.375	%
February 1, 2022 and thereafter		100.000	%	January 15, 2023 and thereafter		100.000	%	January 15, 2023 and thereafter		100.000	%

	Number of PSUs
Outstanding as of January 1, 2020		1,764,976
Granted		1,140,834
Vested and issued		(194,948	)
Forfeited		(~~301,686~~319,780	)
Outstanding as of ~~March 31,~~June 30, 2020		~~2,409,176~~2,391,082

	Number of Restricted Shares
Outstanding as of January 1, 2020		31,405
Granted		68,140
Vested		(31,405	)
Outstanding as of June 30, 2020		68,140

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of a Publicly Announced Program		Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program
March 1 - March 31, 2020		23,584	$	6.84		23,584	$	49,084,880


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

Date Declared	Dividend Per Common Share		Amount
February 13, 2020	$	0.1375	$	9,047
April 30, 2020		0.0650		4,282
	$	0.2025	$	13,329

Exhibit No.		Description


31.1		Section 302 Certification of Chief Executive Officer

31.2		Section 302 Certification of Chief Financial Officer

32.1*		Section 906 Certification of Chief Executive Officer

32.2*		Section 906 Certification of Chief Financial Officer

101		The following financial information from the Quarterly Report on Form 10-Q for the fiscal period ended ~~March 31,~~June 30, 2020 of Mercer International Inc., formatted in Inline Extensible Business Reporting Language (iXBRL): (i) Interim Consolidated Statements of Operations; (ii) Interim Consolidated Statements of Comprehensive Income (Loss); (iii) Interim Consolidated Balance Sheets; (iv) Interim Consolidated Statements of Changes in Shareholders' Equity; (v) Interim Consolidated Statements of Cash Flows; and (vi) Notes to the Interim Consolidated Financial Statements.
104		The cover page from the ~~Company’s~~Company's Quarterly Report on Form 10-Q for the quarter ended ~~March 31,~~June 30, 2020 has been formatted in Inline XBRL.

	MERCER INTERNATIONAL INC.

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