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~~Yes ☒ NONo ☐

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~~Yes ☒ NONo ☐

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~~Yes ☐ NONo ☒

The Registrant had ~~65,868,086~~66,037,552 shares of common stock outstanding as of July ~~29, 2020.~~28, 2021.

	Three Months Ended June 30						Six Months Ended June 30						Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019			2021			2020			2021			2020
Revenues	$	341,195		$	425,753		$	691,794		$	909,703		$	401,832		$	341,195		$	814,552		$	691,794
Costs and expenses
Cost of sales, excluding depreciation and amortization		284,333			336,433			560,389			679,466			297,826			284,333			608,023			560,389
Cost of sales depreciation and amortization		30,179			32,038			63,090			62,174			31,935			30,179			62,881			63,090
Selling, general and administrative expenses		16,368			19,472			33,938			36,701			20,235			16,368			40,783			33,938
Operating income		10,315			37,810			34,377			131,362			51,836			10,315			102,865			34,377
Other income (expenses)
Interest expense		(20,108	)		(18,369	)		(40,192	)		(36,920	)		(17,130	)		(20,108	)		(36,149	)		(40,192	)
Other income		2,264			1,251			238			2,290
Loss on early extinguishment of debt														0			0			(30,368	)		0
Other income (expenses)														(2,606	)		2,264			4,383			238
Total other expenses, net		(17,844	)		(17,118	)		(39,954	)		(34,630	)		(19,736	)		(17,844	)		(62,134	)		(39,954	)
Income (loss) before provision for income taxes		(7,529	)		20,692			(5,577	)		96,732
Provision for income taxes		(882	)		(10,433	)		(6,226	)		(34,857	)
Income (loss) before income taxes														32,100			(7,529	)		40,731			(5,577	)
Income tax provision														(10,685	)		(882	)		(13,383	)		(6,226	)
Net income (loss)	$	(8,411	)	$	10,259		$	(11,803	)	$	61,875		$	21,415		$	(8,411	)	$	27,348		$	(11,803	)
Net income (loss) per common share
Basic and diluted	$	(0.13	)	$	0.16		$	(0.18	)	$	0.94		$	0.32		$	(0.13	)	$	0.41		$	(0.18	)
Dividends declared per common share	$	0.0650		$	0.1375		$	0.2025		$	0.2625		$	0.0650		$	0.0650		$	0.1300		$	0.2025

	Three Months Ended June 30					Six Months Ended June 30					Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019		2020			2019		2021			2020			2021			2020
Net income (loss)	$	(8,411	)	$	10,259	$	(11,803	)	$	61,875	$	21,415		$	(8,411	)	$	27,348		$	(11,803	)
Other comprehensive income (loss), net of taxes
Foreign currency translation adjustment		44,202			24,125		(30,792	)		20,253		18,457			44,202			(17,566	)		(30,792	)
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
Change in unrecognized losses and prior service costs related to defined benefit pension plans, net of tax expense of $nil and $681, respectively (2020 — $nil)												(58	)		17			322			23
Other comprehensive income (loss), net of taxes		44,219			24,160		(30,769	)		20,348		18,399			44,219			(17,244	)		(30,769	)
Total comprehensive income (loss)	$	35,808		$	34,419	$	(42,572	)	$	82,223	$	39,814		$	35,808		$	10,104		$	(42,572	)

	June 30,			December 31,			June 30,			December 31,
	2020			2019			2021			2020
ASSETS
Current assets
Cash and cash equivalents	$	303,334		$	351,085		$	384,534		$	361,098
Accounts receivable, net		209,184			208,740			225,238			227,055
Inventories		261,453			272,599			313,354			271,696
Prepaid expenses and other		9,665			12,273			14,475			15,003
Total current assets		783,636			844,697			937,601			874,852
Property, plant and equipment, net		1,040,171			1,074,242			1,133,292			1,109,740
Investment in joint ventures		48,413			53,122			45,844			46,429
Amortizable intangible assets, net		49,893			53,371			50,982			51,571
Operating lease right-of-use assets		12,866			13,004			11,829			13,251
Other long-term assets		37,414			26,038			33,896			31,928
Deferred income tax		1,216			1,246			1,254			1,355
Total assets	$	1,973,609		$	2,065,720		$	2,214,698		$	2,129,126
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable and other	$	196,238		$	255,544		$	264,459		$	210,994
Pension and other post-retirement benefit obligations		716			768			905			802
Total current liabilities		196,954			256,312			265,364			211,796
Debt		1,114,069			1,087,932			1,157,873			1,145,294
Pension and other post-retirement benefit obligations		24,044			25,489			31,057			31,810
Finance lease liabilities		38,628			31,103			57,039			41,329
Operating lease liabilities		10,052			10,520			8,488			9,933
Other long-term liabilities		13,733			14,114			12,130			10,909
Deferred income tax		81,869			89,847			78,613			77,028
Total liabilities		1,479,349			1,515,317			1,610,564			1,528,099
Shareholders’ equity
Common shares $1 par value; 200,000,000 authorized; 65,868,000 issued and outstanding (2019 – 65,629,000)		65,800			65,598
Common shares $1 par value; 200,000,000 authorized; 66,037,000 issued and outstanding (2020 – 65,868,000)								65,988			65,800
Additional paid-in capital		344,688			344,994			347,093			345,696
Retained earnings		231,101			256,371			235,872			217,106
Accumulated other comprehensive loss		(147,329	)		(116,560	)		(44,819	)		(27,575	)
Total shareholders’ equity		494,260			550,403			604,134			601,027
Total liabilities and shareholders’ equity	$	1,973,609		$	2,065,720		$	2,214,698		$	2,129,126

Commitments and contingencies (Note 13)
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 June 30:
Balance as of March 31, 2021																				65,988	$	65,920	$	346,186		$	218,750		$	(63,218	)	$	567,638
Shares issued on grants of restricted shares																				49		68		(68	)		—			—			—
Stock compensation expense																				—		—		975			—			—			975
Net income																				—		—		—			21,415			—			21,415
Dividends declared																				—		—		—			(4,293	)		—			(4,293	)
Other comprehensive income																				—		—		—			—			18,399			18,399
Balance as of June 30, 2021																				66,037	$	65,988	$	347,093		$	235,872		$	(44,819	)	$	604,134

Balance as of March 31, 2020		65,800		$	65,769		$	344,753		$	243,794		$	(191,548	)	$	462,768			65,800	$	65,769	$	344,753		$	243,794		$	(191,548	)	$	462,768
Shares issued on grants of restricted shares		68			31			(31	)		—			—			—			68		31		(31	)		—			—			—
Stock compensation recovery		—			—			(34	)		—			—			(34	)
Stock compensation reversal																				—		—		(34	)		—			—			(34	)
Net loss		—			—			—			(8,411	)		—			(8,411	)		—		—		—			(8,411	)		—			(8,411	)
Dividends declared		—			—			—			(4,282	)		—			(4,282	)		—		—		—			(4,282	)		—			(4,282	)
Other comprehensive income		—			—			—			—			44,219			44,219			—		—		—			—			44,219			44,219
Balance as of June 30, 2020		65,868		$	65,800		$	344,688		$	231,101		$	(147,329	)	$	494,260			65,868	$	65,800	$	344,688		$	231,101		$	(147,329	)	$	494,260

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		—			—			—			10,259			—			10,259
Dividends declared		—			—			—			(9,024	)		—			(9,024	)
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, 2020																		65,868		$	65,800		$	345,696		$	217,106		$	(27,575	)	$	601,027
Shares issued on grants of restricted shares																		49			68			(68	)		—			—			—
Shares issued on grants of performance share units																		120			120			(120	)		—			—			—
Stock compensation expense																		—			—			1,585			—			—			1,585
Net income																		—			—			—			27,348			—			27,348
Dividends declared																		—			—			—			(8,582	)		—			(8,582	)
Other comprehensive loss																		—			—			—			—			(17,244	)		(17,244	)
Balance as of June 30, 2021																		66,037		$	65,988		$	347,093		$	235,872		$	(44,819	)	$	604,134

Balance as of December 31, 2019	65,629		$	65,598		$	344,994		$	256,371		$	(116,560	)	$	550,403		65,629		$	65,598		$	344,994		$	256,371		$	(116,560	)	$	550,403
Shares issued on grants of restricted shares	68			31			(31	)		—			—			—		68			31			(31	)		—			—			—
Shares issued on grants of performance share units	195			195			(195	)		—			—			—		195			195			(195	)		—			—			—
Stock compensation recovery	—			—			(80	)		—			—			(80	)
Stock compensation reversal																		—			—			(80	)		—			—			(80	)
Net loss	—			—			—			(11,803	)		—			(11,803	)	—			—			—			(11,803	)		—			(11,803	)
Dividends declared	—			—			—			(13,329	)		—			(13,329	)	—			—			—			(13,329	)		—			(13,329	)
Repurchase of common shares	(24	)		(24	)		—			(138	)		—			(162	)	(24	)		(24	)		—			(138	)		—			(162	)
Other comprehensive loss	—			—			—			—			(30,769	)		(30,769	)	—			—			—			—			(30,769	)		(30,769	)
Balance as of June 30, 2020	65,868		$	65,800		$	344,688		$	231,101		$	(147,329	)	$	494,260		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 June 30						Six Months Ended June 30						Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019			2021			2020			2021			2020
Cash flows from (used in) operating activities
Net income (loss)	$	(8,411	)	$	10,259		$	(11,803	)	$	61,875		$	21,415		$	(8,411	)	$	27,348		$	(11,803	)
Adjustments to reconcile net income (loss) to cash flows from operating activities
Depreciation and amortization		30,201			32,148			63,147			62,395			31,955			30,201			62,922			63,147
Deferred income tax provision (benefit)		(4,744	)		426			(6,075	)		4,065
Deferred income tax provision (recovery)														1,276			(4,744	)		2,480			(6,075	)
Inventory impairment		6,530			6,900			12,264			6,900			0			6,530			0			12,264
Loss on early extinguishment of debt														0			0			30,368			0
Defined benefit pension plans and other post-retirement benefit plan expense		739			860			1,501			1,716			856			739			1,775			1,501
Stock compensation expense (recovery)		(34	)		1,202			(80	)		857
Foreign exchange transaction losses		6,880			9,505			736			9,242
Stock compensation expense (reversal)														975			(34	)		1,585			(80	)
Foreign exchange transaction losses (gains)														1,966			6,880			(6,640	)		736
Other		(695	)		740			(1,192	)		1,444			356			(695	)		(260	)		(1,192	)
Defined benefit pension plans and other post-retirement benefit plan contributions		(797	)		(270	)		(1,712	)		(1,428	)		(1,202	)		(797	)		(2,125	)		(1,712	)
Changes in working capital
Accounts receivable		14,938			32,204			(5,988	)		(24,149	)		16,364			14,938			3,941			(5,988	)
Inventories		11,442			(7,769	)		(6,678	)		13,372			(21,964	)		11,442			(42,763	)		(6,678	)
Accounts payable and accrued expenses		7,879			4,197			(49,781	)		4,024			30,167			7,879			34,603			(49,781	)
Other		177			(1,681	)		(76	)		(9,406	)		(1,012	)		177			(1,794	)		(76	)
Net cash from (used in) operating activities		64,105			88,721			(5,737	)		130,907			81,152			64,105			111,440			(5,737	)
Cash flows from (used in) investing activities
Purchase of property, plant and equipment		(21,544	)		(24,979	)		(44,562	)		(44,368	)		(62,124	)		(21,544	)		(87,386	)		(44,562	)
Insurance proceeds														20,048			0			20,048			0
Purchase of amortizable intangible assets		(89	)		(179	)		(527	)		(495	)		(568	)		(89	)		(1,209	)		(527	)
Other		796			(82	)		847			(343	)		285			796			(109	)		847
Net cash from (used in) investing activities		(20,837	)		(25,240	)		(44,242	)		(45,206	)		(42,359	)		(20,837	)		(68,656	)		(44,242	)
Cash flows from (used in) financing activities
Redemption of senior notes														0			0			(824,557	)		0
Proceeds from issuance of senior notes														0			0			875,000			0
Proceeds from (repayment of) revolving credit facilities, net		(25,651	)		(24,732	)		25,609			(58,404	)		(42,042	)		(25,651	)		(57,112	)		25,609
Dividend payments		—			(8,206	)		(9,047	)		(8,206	)		(4,289	)		0			(4,289	)		(9,047	)
Repurchase of common shares		—			(754	)		(162	)		(754	)
Payment of debt issuance costs		—			(248	)		—			(757	)		0			0			(14,414	)		0
Proceeds from government grants		299			—			299			6,320			0			299			8,532			299
Repurchase of common shares														0			0			0			(162	)
Other		(1,996	)		(6,067	)		(11,797	)		(6,929	)		(1,832	)		(1,996	)		89			(11,797	)
Net cash from (used in) financing activities		(27,348	)		(40,007	)		4,902			(68,730	)		(48,163	)		(27,348	)		(16,751	)		4,902
Effect of exchange rate changes on cash and cash equivalents		888			614			(2,674	)		(140	)		(1,179	)		888			(2,597	)		(2,674	)
Net increase (decrease) in cash and cash equivalents		16,808			24,088			(47,751	)		16,831			(10,549	)		16,808			23,436			(47,751	)
Cash and cash equivalents, beginning of period		286,526			233,234			351,085			240,491			395,083			286,526			361,098			351,085
Cash and cash equivalents, end of period	$	303,334		$	257,322		$	303,334		$	257,322		$	384,534		$	303,334		$	384,534		$	303,334

Supplemental cash flow disclosure
Supplemental cash flow disclosure:
Cash paid for interest		$	950	$	5,902	$	38,228	$	22,885		$	1,084	$	950	$	40,110	$	38,228
Cash paid for income taxes		$	1,907	$	15,124	$	14,881	$	38,737		$	3,290	$	1,907	$	5,135	$	14,881
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		$	1,702	$	—	$	10,696	$	—		$	7,210	$	1,702	$	23,179	$	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.~~2020. 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~~2020 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. Recently many countries eased restrictions on economic and social activities to, among other things, reopen their economies by allowing businesses to restart and encourage economic recovery. The ~~extent of the~~ impact of the ~~COVID-19 pandemic~~eased restrictions on the ~~Company's~~COVID-19 virus infection rate and the possible re-imposition of some restrictions on social, business and other activities is ~~highly~~ uncertain and difficult to predict, as the response to the pandemic and information continues to evolve. Although capital markets and economies worldwide improved during the second quarter from the initial negative impacts of the COVID-19 pandemic, there remains uncertainty around the strength and 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 remain uncertain.

~~In June 2016,~~As of the ~~Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement~~date 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 comparabilityissuance 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' credit history before granting credit and conducts regular reviews of existing 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 exposure to credit losses may increase if its customers are adversely affected by the COVID-19 pandemic. Although~~ the Company has ~~historically~~ not ~~experienced~~had significant credit losses, ~~it is possible that there could be a~~downtime or closures at its mills or disruptions to raw material ~~adverse~~supplies or access to logistics networks due to the COVID-19 pandemic, but the extent to which the COVID-19 pandemic may materially impact ~~from potential adjustments of the carrying amount of trade receivables if the cash flows of~~ the Company's ~~customers are adversely impacted by the COVID-19 pandemic.~~future financial condition, liquidity, or results of operations remains uncertain.

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.

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 June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, were comprised of the following:

	June 30,		December 31,		June 30,		December 31,
	2020		2019		2021		2020
Raw materials	$	66,896	$	99,754	$	107,150	$	74,526
Finished goods		96,209		77,815		98,413		88,256
Spare parts and other		98,348		95,030		107,791		108,914
	$	261,453	$	272,599	$	313,354	$	271,696

For the three and six month periods ended 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 $12,264 and $17,998, respectively at certain Canadian mills (2019 – $6,900 and $6,900). These charges were recorded in 'Cost of sales, excluding depreciation and amortization" in the Interim Consolidated Statements of Operations. As of June 30, 2020, $5,725 of the write-down was recorded in raw materials inventory and $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 June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, was comprised of the following:

	June 30,		December 31,		June 30,		December 31,
	2020		2019		2021		2020
Trade payables	$	53,267	$	73,721	$	67,679	$	42,730
Accrued expenses		82,337		111,696		109,142		90,875
Interest payable		33,204		33,198		27,289		33,241
Income tax payable		13,293		28,080		21,319		23,256
Government grants (a)						9,105		7,161
Insurance proceeds (a)						6,941		3,369
Other		14,137		8,849		22,984		10,362
	$	196,238	$	255,544	$	264,459	$	210,994

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

The maturities of the principal portion of debt as of June 30, ~~2020~~2021 were as follows:

2020	$	—
2021		—	$	0
2022		—		0
2023		11,007		0
2024		263,942		0
2025				0
Thereafter		850,000		1,175,000
	$	1,124,949	$	1,175,000

Certain of the Company's debt instruments were issued under agreements which, among other things, may limit its ability and the ability of its subsidiaries to make certain payments, including dividends. These limitations are subject to specific exceptions. As of June 30, ~~2020,~~2021, 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~~The 2029 Senior Notes ~~at a price of 102.75% of their principal amount for a yield to worst of 6.435%. The net proceeds of~~and the offering were $202,063 after deducting the 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"). 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 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 Senior Notes"~~Notes” and collectively with the ~~2025 Senior Notes and 2026~~2029 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 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 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' notice and the Company may redeem all or a part of the 2024 Senior Notes, upon not less than 30 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~~Peace River defined benefit plans, in aggregate for the three and six month periods ended June 30, ~~2020~~2021 and ~~2019~~2020 were as follows:

	Three Months Ended June 30,												Three Months Ended June 30,
	2020						2019						2021						2020
	Pension			Other Post- Retirement Benefits			Pension			Other Post- Retirement Benefits			Pension			Other Post- Retirement Benefits			Pension			Other Post- Retirement Benefits
Service cost	$	824		$	63		$	711		$	67		$	956		$	73		$	824		$	63
Interest cost		814			93			872			136			854			94			814			93
Expected return on plan assets		(1,072	)		—			(997	)		—			(1,095	)		0			(1,072	)		0
Amortization of unrecognized items		233			(216	)		253			(182	)		165			(191	)		233			(216	)
Net benefit costs	$	799		$	(60	)	$	839		$	21		$	880		$	(24	)	$	799		$	(60	)

	Six Months Ended June 30,												Six Months Ended June 30,
	2020						2019						2021						2020
	Pension			Other Post- Retirement Benefits			Pension			Other Post- Retirement Benefits			Pension			Other Post- Retirement Benefits			Pension			Other Post- Retirement Benefits
Service cost	$	1,673		$	127		$	1,427		$	135		$	1,981		$	152		$	1,673		$	127
Interest cost		1,654			189			1,749			273			1,771			196			1,654			189
Expected return on plan assets		(2,165	)		—			(1,999	)		—			(2,269	)		0			(2,165	)		0
Amortization of unrecognized items		461			(438	)		468			(337	)		341			(397	)		461			(438	)
Net benefit costs	$	1,623		$	(122	)	$	1,645		$	71		$	1,824		$	(49	)	$	1,623		$	(122	)

The components of the net benefit costs other than service cost are recorded in "Other ~~income"~~income (expenses)" 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 periods ended June 30, ~~2020,~~2021, the Company made contributions of ~~$58~~$315 and ~~$471,~~$695, respectively to this plan ~~(2019~~(2020 – ~~$298~~$58 and ~~$746)~~$471).

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 periods ended June 30, ~~2020,~~2021, the Company made contributions of ~~$555~~$610 and ~~$1,006,~~$1,324, respectively to this plan ~~(2019~~(2020 – ~~$648~~$555 and ~~$971)~~$1,006).

Differences between the U.S. Federal statutory and the Company's effective tax rates for the three and six month periods ended June 30, ~~2020~~2021 and ~~2019,~~2020, were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019			2021			2020			2021			2020
U.S. Federal statutory rate	21%			21%			21%			21%			21%			21%			21%			21%
U.S. Federal statutory rate on income before provision for income taxes	$	1,581		$	(4,346	)	$	1,171		$	(20,314	)
U.S. Federal statutory rate on income (loss) before income taxes													$	(6,741	)	$	1,581		$	(8,554	)	$	1,171
Tax differential on foreign income		(662	)		(2,446	)		(1,881	)		(8,362	)		(6,532	)		(662	)		(9,380	)		(1,881	)
Effect of foreign earnings (a)		(1,295	)		(153	)		(2,870	)		(12,040	)		(3,508	)		(1,295	)		(6,620	)		(2,870	)
Valuation allowance(b)		(3,169	)		(4,580	)		(3,165	)		3,761			165			(3,169	)		(10,952	)		(3,165	)
Tax benefit of partnership structure		935			963			1,870			1,921			673			935			1,566			1,870
Non-taxable foreign subsidies		678			1,026			1,364			1,394			743			678			1,491			1,364
True-up of prior year taxes		1,068			(2,396	)		(154	)		(1,121	)		(46	)		1,068			3,124			(154	)
Other		(18	)		1,499			(2,561	)		(96	)
	$	(882	)	$	(10,433	)	$	(6,226	)	$	(34,857	)
Annual effective tax rate adjustment														4,700			—			18,000			—
Other, net														(139	)		(18	)		(2,058	)		(2,561	)
Income tax provision													$	(10,685	)	$	(882	)	$	(13,383	)	$	(6,226	)
Comprised of:
Current income tax provision	$	(5,626	)	$	(10,007	)	$	(12,301	)	$	(30,792	)	$	(9,409	)	$	(5,626	)	$	(10,903	)	$	(12,301	)
Deferred income tax benefit (provision)		4,744			(426	)		6,075			(4,065	)
	$	(882	)	$	(10,433	)	$	(6,226	)	$	(34,857	)
Deferred income tax recovery (provision)														(1,276	)		4,744			(2,480	)		6,075
Income tax provision													$	(10,685	)	$	(882	)	$	(13,383	)	$	(6,226	)

During the six month period ended June 30, ~~2020,~~2021, the Company's board of directors declared the following quarterly dividends:

In July ~~2020,~~2021, the Company's board of directors declared a quarterly dividend of $0.065 per common share. Payment of the dividend will be made on October 6, ~~2020~~2021 to all shareholders of record on September 29, ~~2020.~~2021. 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 board of directors authorized a common stock repurchase program under which the Company may repurchase up to $50,000 of its shares which expired in~~ ~~May 2020. During the six month period ended 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~~The Company ~~adopted~~has 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 periods ended June 30, ~~2020,~~2021, there were 0 issued and outstanding options, restricted stock rights, performance shares or stock appreciation rights. As of June 30, ~~2020,~~2021, after factoring in all allocated shares, there remain approximately ~~1.7~~1.2 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 periods ended June 30, ~~2020,~~2021, the Company recognized ~~a recovery~~an expense of ~~$154~~$822 and ~~$313,~~$1,295, respectively related to PSUs ~~(2019~~(2020 – ~~an expense~~a reversal of ~~$1,078~~$154 and ~~$603)~~$313).

Restricted shares generally vest at the end of one year. For the three and six month periods ended June 30, ~~2020,~~2021, the Company recognized an expense of ~~$120~~$153 and ~~$233,~~$290, respectively related to restricted shares ~~(2019~~(2020 - ~~$124~~$120 and ~~$254)~~$233). As of June 30, ~~2020,~~2021, the total remaining unrecognized compensation cost related to restricted shares amounted to approximately ~~$504~~$669 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 June 30, ~~2020~~2021 and ~~2019~~2020 was as follows:

	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019		2021		2020			2021		2020
Net income (loss)
Basic and diluted	$	(8,411	)	$	10,259	$	(11,803	)	$	61,875	$	21,415	$	(8,411	)	$	27,348	$	(11,803	)

Net income (loss) per common share
Basic and diluted	$	(0.13	)	$	0.16	$	(0.18	)	$	0.94	$	0.32	$	(0.13	)	$	0.41	$	(0.18	)

Weighted average number of common shares outstanding:
Basic (a)		65,778,894			65,611,484		65,736,677			65,507,469		65,941,932		65,778,894			65,899,904		65,736,677
Effect of dilutive instruments:
PSUs		—			213,243		—			352,029		352,170		—			318,770		—
Restricted shares		—			17,012		—			18,557		38,581		—			47,342		—
Diluted		65,778,894			65,841,739		65,736,677			65,878,055		66,332,683		65,778,894			66,266,016		65,736,677

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 June 30, ~~2020~~2021 and ~~2019~~2020 were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019		2021		2020		2021		2020
PSUs		2,391,082		—		2,391,082		—		—		2,391,082		—		2,391,082
Restricted shares		68,140		—		68,140		—		—		68,140		—		68,140

The change in the accumulated other comprehensive loss by component (net of tax) for the six month period ended June 30, ~~2020~~2021 was as follows:

The Company enters into related party transactions with its joint ventures. For the three and six month periods ended June 30, ~~2020,~~2021, pulp purchases from the Company's 50% owned Cariboo mill, which are transacted at the Cariboo mill's cost, were $27,152 and $48,195, respectively (2020 –$13,942 and ~~$33,536, respectively (2019~~ – ~~$30,523 and $55,156)~~$33,536) and as of June 30, ~~2020~~2021 the Company had a receivable balance from the Cariboo mill of ~~$2,826~~$2,791 (December 31, ~~2019~~2020 – ~~$3,462)~~$3,518). For the three and six month periods ended June 30, ~~2020,~~2021, services from the Company's 50% owned logging and chipping operation, which are transacted at arm's length negotiated prices, were $610 and $5,234, respectively (2020 –$1,735 and ~~$8,278, respectively (2019~~ – ~~$3,055 and $8,849)~~$8,278) and as of June 30, ~~2020~~2021 the Company had a payable balance to the operation of ~~$1,688~~$2,172 (December 31, ~~2019~~2020 – ~~$1,151)~~$1,953).

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 reportable 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 June 30, ~~2020~~2021 and ~~2019,~~2020, was as follows:

Three Months Ended June 30, 2020	Pulp		Wood Products		Corporate and Other			Consolidated
Three Months Ended June 30, 2021										Pulp		Wood Products		Corporate and Other			Consolidated
Revenues from external customers	$	298,046	$	41,727	$	1,422		$	341,195	$	310,249	$	90,439	$	1,144		$	401,832
Operating income (loss)	$	8,110	$	4,327	$	(2,122	)	$	10,315	$	13,338	$	42,314	$	(3,816	)	$	51,836
Depreciation and amortization	$	27,219	$	2,804	$	178		$	30,201	$	27,967	$	3,748	$	240		$	31,955
Revenues by major products
Pulp	$	276,919	$	—	$	—		$	276,919	$	297,191	$	0	$	0		$	297,191
Lumber		—		37,611		—			37,611		0		86,285		0			86,285
Energy and chemicals		21,127		2,629		1,422			25,178		13,058		2,692		1,144			16,894
Wood residuals		—		1,487		—			1,487		0		1,462		0			1,462
Total revenues	$	298,046	$	41,727	$	1,422		$	341,195	$	310,249	$	90,439	$	1,144		$	401,832
Revenues by geographical markets (a)
U.S.	$	39,651	$	17,622	$	575		$	57,848	$	34,406	$	53,610	$	547		$	88,563
Germany		77,568		12,294		—			89,862		101,095		17,422		0			118,517
China		78,814		—		—			78,814		68,008		469		0			68,477
Other countries		102,013		11,811		847			114,671		106,740		18,938		597			126,275
Total revenues	$	298,046	$	41,727	$	1,422		$	341,195	$	310,249	$	90,439	$	1,144		$	401,832

Three Months Ended June 30, 2020	Pulp		Wood Products		Corporate and Other			Consolidated
Revenues from external customers	$	298,046	$	41,727	$	1,422		$	341,195
Operating income (loss)	$	8,110	$	4,327	$	(2,122	)	$	10,315
Depreciation and amortization	$	27,219	$	2,804	$	178		$	30,201
Revenues by major products
Pulp	$	276,919	$	0	$	0		$	276,919
Lumber		0		37,611		0			37,611
Energy and chemicals		21,127		2,629		1,422			25,178
Wood residuals		0		1,487		0			1,487
Total revenues	$	298,046	$	41,727	$	1,422		$	341,195
Revenues by geographical markets (a)
U.S.	$	39,651	$	17,622	$	575		$	57,848
Germany		77,568		12,294		0			89,862
China		78,814		0		0			78,814
Other countries		102,013		11,811		847			114,671
Total revenues	$	298,046	$	41,727	$	1,422		$	341,195

Six Months Ended June 30, 2021	Pulp		Wood Products		Corporate and Other			Consolidated
Revenues from external customers	$	650,005	$	161,426	$	3,121		$	814,552
Operating income (loss)	$	38,634	$	70,291	$	(6,060	)	$	102,865
Depreciation and amortization	$	55,013	$	7,471	$	438		$	62,922
Total assets (a)	$	1,778,079	$	249,205	$	187,414		$	2,214,698
Revenues by major products
Pulp	$	614,773	$	0	$	0		$	614,773
Lumber		0		153,596		0			153,596
Energy and chemicals		35,232		4,806		3,121			43,159
Wood residuals		0		3,024		0			3,024
Total revenues	$	650,005	$	161,426	$	3,121		$	814,552
Revenues by geographical markets (b)
U.S.	$	80,278	$	98,702	$	1,306		$	180,286
Germany		193,632		29,539		0			223,171
China		163,543		846		0			164,389
Other countries		212,552		32,339		1,815			246,706
Total revenues	$	650,005	$	161,426	$	3,121		$	814,552

Three Months Ended June 30, 2019	Pulp		Wood Products			Corporate and Other			Consolidated
Six Months Ended June 30, 2020											Pulp		Wood Products		Corporate and Other			Consolidated
Revenues from external customers	$	384,799	$	39,452		$	1,502		$	425,753	$	601,651	$	87,505	$	2,638		$	691,794
Operating income (loss)	$	42,251	$	(89	)	$	(4,352	)	$	37,810	$	29,549	$	9,882	$	(5,054	)	$	34,377
Depreciation and amortization	$	29,849	$	2,010		$	289		$	32,148	$	57,590	$	5,181	$	376		$	63,147
Revenues by major products
Pulp	$	359,205	$	—		$	—		$	359,205	$	555,867	$	0	$	0		$	555,867
Lumber		—		35,322			—			35,322		0		78,597		0			78,597
Energy and chemicals		25,594		2,788			1,502			29,884		45,784		5,260		2,638			53,682
Wood residuals		—		1,342			—			1,342		0		3,648		0			3,648
Total revenues	$	384,799	$	39,452		$	1,502		$	425,753	$	601,651	$	87,505	$	2,638		$	691,794
Revenues by geographical markets (a)
U.S.	$	38,778	$	12,678		$	—		$	51,456	$	73,518	$	35,244	$	1,161		$	109,923
Germany		109,150		14,029			—			123,179		167,240		27,197		0			194,437
China		118,335		—			—			118,335		164,362		0		0			164,362
Other countries		118,536		12,745			1,502			132,783		196,531		25,064		1,477			223,072
Total revenues	$	384,799	$	39,452		$	1,502		$	425,753	$	601,651	$	87,505	$	2,638		$	691,794

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,~~2020, the Company had total assets of ~~$1,782,105~~$1,740,233 in the pulp segment, ~~$83,102~~$112,267 in the wood products segment and ~~$200,513~~$276,626 in corporate and other. Total assets for the pulp segment includes the Company's ~~$53,122~~$46,429 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 periods ended June 30, ~~2020,~~2021, the pulp segment sold ~~$164~~$52 and ~~$346,~~$151, respectively of residual fuel to the wood products segment ~~(2019~~(2020 – ~~$108~~$164 and ~~$364)~~$346) and the wood products segment sold ~~$3,594~~$2,901 and ~~$7,430,~~$5,833, respectively of residual fiber to the pulp segment ~~(2019~~(2020 – ~~$3,946~~$3,594 and ~~$9,353)~~$7,430).

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 outstanding debt under the fair value hierarchy as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 were as follows:

	Fair value measurements as of December 31, 2019 using:								Fair value measurements as of December 31, 2020 using:
Description	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Senior Notes	$	—	$	1,156,673	$	—	$	1,156,673
Revolving credit facilities									$	0	$	54,980	$	0	$	54,980
Senior notes										0		1,131,229		0		1,131,229
									$	0	$	1,186,209	$	0	$	1,186,209

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~~senior notes classified as Level 2 was determined using quoted prices in a dealer market, or using recent market transactions. The Company's ~~Senior Notes~~senior notes are not carried at fair value onin the Interim Consolidated Balance Sheets as of June 30, ~~2020 and~~2021 or December 31, ~~2019.~~2020. However, fair value disclosure is required. The carrying value of the Company's ~~Senior Notes,~~senior notes, net of note issuance costs and premium is ~~$1,089,120~~$1,157,873 as of June 30, ~~2020~~2021 (December 31, ~~2019~~2020 – ~~$1,087,932)~~$1,090,314).

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' credit history before granting credit and conducts regular reviews of existing 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 and the U.S. ~~and Italy.~~

The 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 customers are adversely impacted by the COVID-19 pandemic. As of June 30, 2021, the Company has not had significant credit losses due to the COVID-19 pandemic.

The carrying amount of cash and cash equivalents of ~~$303,334~~$384,534 and accounts receivable of ~~$209,184~~$225,238 recorded in the Interim Consolidated Balance Sheet, net of any allowances for losses, represents the Company's maximum exposure to credit risk.

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 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 as a measure of performance, or as an alternative to net cash from (used in) 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 June 30, ~~2020,~~2021, 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 June 30, ~~2020~~2021 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~~2020 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.

Looking ahead to the third quarter, we expect strong pulp market fundamentals to support marginally higher NBSK pulp prices in Europe but we expect a modest price decline in China. As well, we expect lumber demand and pricing to remain steady in all markets. Although there was a recent significant price correction in the U.S. lumber market, prices remain at historically attractive levels. Further, we believe U.S. lumber prices are near a floor level and expect them to slowly increase once home construction ramps up in the early fall.

Currently NBSK list prices in Europe and North America are approximately $1,340 per ADMT and $1,615 per ADMT, respectively and NBSK net prices in China are approximately $850 per ADMT. Prices for China are net of discounts, allowances and rebates.

The ~~COVID-19 pandemic is continuing~~significant ramp up in the administration of vaccines has led to ~~cause significant widespread global infections and fatalities. It has also materially adversely affected global economic activity, caused significant market volatility and resulted~~a decline 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,~~infection rates in many countries ~~have taken~~and the lifting of certain restrictive measures by them to ~~ease restrictions on economic and social activities to, among other things,~~ reopen their economies, ~~by allowing businesses to restart and encourage economic recovery.~~including in countries where we have operations. However, currently there remains ongoing uncertainty about the impact of COVID-19 variations on infection levels. The ~~results~~re-emergence of ~~such economic measures and the reopening have varied from country to country, with certain countries currently reporting relatively stable~~significant increases in 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 willcould result in ~~such a material resurgence in infections and fatalities as would cause governments to re-impose some or all prior or new~~countries re-imposing restrictive measures ~~including business closures. See "Part II. Other Information~~that could reduce or impair economic activity. Further, the rollout of vaccines among countries has varied and been uneven.

QUARTERLY REPORT - ~~Item 1A. Risk Factors - The COVID-19 pandemic could materially adversely affect our business, financial position and results of operations".~~PAGE 21

~~Since the start of the COVID-19 pandemic, we have implemented a number of~~We are continuing with important health and safety measures at our operations ~~both~~ to protect our employees and to allow our mills to operate responsibly and efficiently

including with respect to social distancing, sanitation and personal protection equipment. ~~Such measures include those recommended by governments and health agencies. We~~Further, 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 second quarter of 2020,~~ To date we have not had any downtime at our ~~average NBSK pulp sales realizations were approximately 2% higher compared~~mills or material disruptions to ~~the first quarter of 2020 as a result of steady demand.~~

At the end of the current quarter, NBSK list prices in Europe and North America were approximately $840 per ADMT and $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 $555 per ADMT. NBHK list prices in North America were approximately $900 per ADMT and NBHK net prices in China were approximately $450 per ADMT.

~~As a result of the global economic uncertainty resulting from the COVID-19 pandemic including efforts~~raw material supplies or access to ~~reopen economies and the seasonal third quarter slowdown, we are expecting an overall weakening in pulp demand in the upcoming quarter.~~

~~On the pulp supply side, to date various pulp mills globally have delayed their annual maintenance schedules~~logistics networks due to the ~~current~~COVID-19 pandemic. ~~As a result, we currently expect mills to curtail production to implement such delayed maintenance in the later part of this year or the early part of next year.~~

In the second quarter of 2020, lumber sales realizations were flat from the first quarter of 2020. We currently expect strong lumber demand and higher lumber sales realizations in the U.S. market and steady demand and sales realizations in the European lumber market in the upcoming quarter.

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019			2021			2020			2021				2020
	(in thousands, other than per share amounts)												(in thousands, other than per share amounts)
Statement of Operations Data
Pulp segment revenues	$	298,046		$	384,799		$	601,651		$	821,273		$	310,249		$	298,046		$	650,005			$	601,651
Wood products segment revenues		41,727			39,452			87,505			83,891			90,439			41,727			161,426				87,505
Corporate and other revenues		1,422			1,502			2,638			4,539			1,144			1,422			3,121				2,638
Total revenues	$	341,195		$	425,753		$	691,794		$	909,703		$	401,832		$	341,195		$	814,552			$	691,794

Pulp segment operating income	$	8,110		$	42,251		$	29,549		$	135,771		$	13,338		$	8,110		$	38,634			$	29,549
Wood products segment operating income (loss)		4,327			(89	)		9,882			1,531
Wood products segment operating income														42,314			4,327			70,291				9,882
Corporate and other operating loss		(2,122	)		(4,352	)		(5,054	)		(5,940	)		(3,816	)		(2,122	)		(6,060	)			(5,054	)
Total operating income	$	10,315		$	37,810		$	34,377		$	131,362		$	51,836		$	10,315		$	102,865			$	34,377

Pulp segment depreciation and amortization	$	27,219		$	29,849		$	57,590		$	57,872		$	27,967		$	27,219		$	55,013			$	57,590
Wood products segment depreciation and amortization		2,804			2,010			5,181			3,921			3,748			2,804			7,471				5,181
Corporate and other depreciation and amortization		178			289			376			602			240			178			438				376
Total depreciation and amortization	$	30,201		$	32,148		$	63,147		$	62,395		$	31,955		$	30,201		$	62,922			$	63,147

Operating EBITDA⁽¹⁾	$	40,516		$	69,958		$	97,524		$	193,757		$	83,791		$	40,516		$	165,787			$	97,524
Provision for income taxes	$	(882	)	$	(10,433	)	$	(6,226	)	$	(34,857	)
Loss on early extinguishment of debt													$	—		$	—		$	(30,368	)	⁽²⁾	$	—
Income tax provision													$	(10,685	)	$	(882	)	$	(13,383	)		$	(6,226	)
Net income (loss)	$	(8,411	)	$	10,259		$	(11,803	)	$	61,875		$	21,415		$	(8,411	)	$	27,348			$	(11,803	)
Net income (loss) per common share
Basic and diluted	$	(0.13	)	$	0.16		$	(0.18	)	$	0.94		$	0.32		$	(0.13	)	$	0.41			$	(0.18	)
Common shares outstanding at period end		65,868			65,629			65,868			65,629			66,037			65,868			66,037				65,868

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019			2020			2019			2021		2020			2021			2020
	(in thousands)												(in thousands)
Net income (loss)	$	(8,411	)	$	10,259		$	(11,803	)	$	61,875		$	21,415	$	(8,411	)	$	27,348		$	(11,803	)
Provision for income taxes		882			10,433			6,226			34,857
Income tax provision														10,685		882			13,383			6,226
Interest expense		20,108			18,369			40,192			36,920			17,130		20,108			36,149			40,192
Other income		(2,264	)		(1,251	)		(238	)		(2,290	)
Loss on early extinguishment of debt														—		—			30,368			—
Other expenses (income)														2,606		(2,264	)		(4,383	)		(238	)
Operating income		10,315			37,810			34,377			131,362			51,836		10,315			102,865			34,377
Add: Depreciation and amortization		30,201			32,148			63,147			62,395			31,955		30,201			62,922			63,147
Operating EBITDA	$	40,516		$	69,958		$	97,524		$	193,757		$	83,791	$	40,516		$	165,787		$	97,524

	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019		2021		2020		2021		2020
Pulp Segment
Pulp production ('000 ADMTs)
NBSK		423.8		452.8		879.0		913.4		355.1		423.8		752.0		879.0
NBHK		88.8		89.4		167.8		168.0		4.5		88.8		86.1		167.8
Annual maintenance downtime ('000 ADMTs)		11.3		7.5		13.6		7.5		173.1		11.3		210.9		13.6
Annual maintenance downtime (days)		15		15		17		15		117		15		144		17
Pulp sales ('000 ADMTs)
NBSK		422.6		438.5		860.9		905.4		330.4		422.6		749.1		860.9
NBHK		69.3		81.5		135.4		169.4		30.3		69.3		99.4		135.4
Average NBSK pulp prices ($/ADMT)⁽¹⁾
Europe		850		997		842		1,051		1,288		850		1,163		842
China		572		630		573		665		962		572		922		573
North America		1,158		1,292		1,143		1,336		1,598		1,158		1,450		1,143
Average NBHK pulp prices ($/ADMT)⁽¹⁾
China		465		607		463		651		767		465		729		463
North America		897		1,100		893		1,140		1,297		897		1,158		893
Average pulp sales realizations ($/ADMT)⁽²⁾
NBSK		573		699		567		729		830		573		739		567
NBHK		475		618		472		638		672		475		566		472
Energy production ('000 MWh)⁽³⁾		562.9		575.4		1,141.3		1,135.8		362.0		562.9		881.1		1,141.3
Energy sales ('000 MWh)⁽³⁾		222.0		231.9		453.7		443.7		130.9		222.0		332.0		453.7
Average energy sales realizations ($/MWh)⁽³⁾		85		93		90		94		90		85		94		90

Wood Products Segment
Lumber production (MMfbm)		113.5		100.8		229.8		211.5		116.7		113.5		234.5		229.8
Lumber sales (MMfbm)		109.0		101.5		226.7		210.7		109.3		109.0		217.5		226.7
Average lumber sales realizations ($/Mfbm)		345		348		347		354		789		345		706		347
Energy production and sales ('000 MWh)		22.7		24.1		45.4		46.4		21.0		22.7		37.3		45.4
Average energy sales realizations ($/MWh)		116		116		116		118		128		116		129		116

Average Spot Currency Exchange Rates
$ / €⁽⁴⁾		1.1016		1.1237		1.1019		1.1293		1.2050		1.1016		1.2048		1.1019
$ / C$⁽⁴⁾		0.7221		0.7475		0.7328		0.7497		0.8142		0.7221		0.8026		0.7328

Consolidated ‑ Three Months Ended June 30, ~~2020~~2021 Compared to Three Months Ended June 30, ~~2019~~2020

Total revenues for the three months ended June 30, ~~2020 decreased~~2021 increased by approximately ~~20%~~18% to ~~$341.2~~$401.8 million from ~~$425.8~~$341.2 million in the same quarter of ~~2019~~2020 primarily due to ~~lower~~higher pulp and lumber sales realizations ~~and~~partially offset by lower pulp sales volumes.

Costs and expenses in the current quarter ~~decreased~~increased by approximately ~~15%~~6% to ~~$330.9~~$350.0 million from ~~$387.9~~$330.9 million in the second quarter of ~~2019~~2020 primarily due to ~~lower per unit fiber~~higher maintenance costs and ~~lower pulp sales volumes and~~ the ~~positive~~negative impact of a ~~stronger~~weaker dollar on our Canadian dollar and euro denominated costs and ~~expenses.~~expenses partially offset by lower pulp sales volumes.

In the second quarter of ~~2020,~~2021, cost of sales depreciation and amortization ~~decreased~~increased to ~~$30.2~~$31.9 million from ~~$32.0~~$30.2 million in the same quarter of ~~2019~~2020 primarily due to the ~~positive~~negative impact of a ~~stronger~~weaker dollar.

Selling, general and administrative expenses ~~decreased~~increased by approximately 23% to ~~$16.4~~$20.2 million in the second quarter of ~~2020~~2021 from ~~$19.5~~$16.4 million in the same quarter of ~~2019~~2020 primarily due to ~~lower~~the negative impact of a weaker dollar and higher stock based compensation ~~expense and the positive impact of a stronger dollar.~~expense.

In the second quarter of ~~2020,~~2021, our operating income ~~decreased by approximately 73%~~increased to ~~$10.3~~$51.8 million from ~~$37.8~~$10.3 million in the same quarter of ~~2019~~2020 primarily due to ~~lower~~higher pulp and lumber sales realizations partially offset by ~~lower per unit fiber~~higher maintenance costs, ~~and~~ the ~~positive~~negative impact of a ~~stronger dollar.~~weaker dollar on our Canadian dollar and euro denominated costs and expenses and lower pulp sales volumes.

Interest expense in the current quarter ~~increased~~decreased to ~~$20.1~~$17.1 million from ~~$18.4~~$20.1 million in the same quarter of ~~2019~~2020 primarily as a result of ~~higher indebtedness.~~a lower weighted average interest rate.

In the second quarter of 2021, other expenses were $2.6 million compared to other income of $2.3 million in the same quarter of 2020. Other expenses in the current quarter is primarily due to foreign exchange losses on U.S. dollar denominated cash balances.

During the second quarter of 2021, the provision for income taxes was $10.7 million or an effective tax rate of approximately 33%. In the comparative quarter of 2020, the provision for income taxes was $0.9 million primarily due to ~~income before~~ tax for our German operations being 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,~~2021, our net income was $21.4 million, or $0.32 per share compared to a net loss ~~was~~of $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.~~2020.

In the second quarter of ~~2020,~~2021, Operating EBITDA ~~decreased by approximately 42%~~increased to ~~$40.5~~$83.8 million from ~~$70.0~~$40.5 million in the same quarter of ~~2019~~2020 primarily due to ~~lower~~higher pulp and lumber sales realizations partially offset by ~~lower per unit fiber~~higher maintenance costs, ~~and~~ the ~~positive~~negative impact of a ~~stronger dollar.~~weaker dollar and lower pulp sales volumes.

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 June 30, ~~2020~~2021 Compared to Three Months Ended June 30, ~~2019~~2020

	Three Months Ended June 30,				Three Months Ended June 30,
	2020		2019		2021		2020
	(in thousands)				(in thousands)
Pulp revenues	$	276,919	$	359,205	$	297,191	$	276,919
Energy and chemical revenues	$	21,127	$	25,594	$	13,058	$	21,127
Depreciation and amortization	$	27,219	$	29,849	$	27,967	$	27,219
Operating income	$	8,110	$	42,251	$	13,338	$	8,110

Pulp revenues in the second quarter of ~~2020 decreased~~2021 increased by approximately ~~23%~~7% to ~~$276.9~~$297.2 million from ~~$359.2~~$276.9 million in the same quarter of ~~2019~~2020 due to ~~lower~~higher sales realizations ~~and~~partially offset by lower sales volumes.

Energy and chemical revenues decreased by approximately ~~18%~~38% to ~~$21.1~~$13.1 million in the second quarter of ~~2020~~2021 from ~~$25.6~~$21.1 million in the same quarter of ~~2019~~2020 primarily due to lower ~~chemical~~energy production ~~at our German mills caused by processing dry beetle damaged wood and lower energy revenue at our Peace River mill.~~as a result of annual maintenance downtime.

NBSK pulp production declined 6%by approximately 16% to ~~423,773~~355,103 ADMTs in the current quarter from ~~452,835~~423,773 ADMTs in the same quarter of ~~2019~~2020 primarily due to ~~planned downtime at our pulp mills~~capital projects and ~~modestly lower production at all our mills.~~maintenance downtime. In the current quarter of ~~2020,~~2021, our pulp mills had 15117 days of ~~annual~~ maintenance downtime (approximately ~~11,300~~173,100 ADMTs) ~~and~~including our 50% ~~joint venture~~owned Cariboo mill. Approximately 79 days of such downtime was at our Peace River mill ~~had four weeks~~and primarily related to boiler work which was deferred from last year relating to a 2017 incident. The Peace River mill

maintenance shut was about 25 days longer than planned, nine days of ~~market related downtime.~~ which were in July, but we expect the majority of this extra downtime will be covered by our insurance.

In the ~~comparative~~second quarter of ~~2019,~~2021, we received insurance proceeds of $20.0 million in connection with the ~~Cariboo~~costs of the Peace River mill ~~had 15 days~~boiler work along with an initial payment of ~~scheduled maintenance downtime (approximately 7,500 ADMTs).~~$4.2 million for our business interruption insurance claims. We currently expect our remaining business interruption insurance claim to be in excess of $15 million.

We estimate that annual maintenance downtime in the current quarter adversely impacted our operating income by approximately ~~$4.5~~$80.1 million, comprised of approximately ~~$2.0~~$45.0 million in direct out-of-pocket expenses and the balance in reduced ~~production.~~production (exclusive of business interruption insurance proceeds).

In the third quarter of ~~2020,~~2021, excluding our ~~pulp mills~~50% owned Cariboo mill, we have ~~planned for six~~24 days of ~~annual maintenance downtime or approximately 9,500 ADMTs. Further, as previously announced, starting~~scheduled maintenance. Also, while our Rosenthal mill will be operating and producing pulp, in ~~July 2020 our Celgar~~the third quarter of 2021 it will take down and rebuild its turbine. This work is expected to continue into the early fourth quarter and require the mill ~~is taking 30 days of market related downtime.~~to purchase its energy requirements.

NBSK pulp sales volumes decreased by approximately 4%22% to ~~422,586~~330,425 ADMTs in the current quarter from ~~438,520~~422,586 ADMTs in the same quarter of ~~2019~~2020 primarily due to lower production.

In the current quarter of ~~2020,~~2021, prices for NBSK pulp ~~decreased~~increased from the same quarter of ~~2019~~2020 largely as a result of ~~high producer~~strong demand and low customer inventory levels. Average list prices for NBSK pulp in Europe and North America were approximately $1,288 per ADMT and $1,598 per ADMT, respectively in the second quarter of 2021 compared to approximately $850 per ADMT and $1,158 per ADMT, respectively, in the ~~second quarter of 2020 compared to approximately $997 per ADMT and $1,292 per ADMT, respectively, in the~~ same quarter of ~~2019.~~2020. Average NBSK net prices in China were approximately ~~$572~~$962 per ADMT in the current quarter compared to approximately ~~$630~~$572 per ADMT in the same quarter of ~~2019.~~2020.

Average NBSK pulp sales realizations ~~decreased~~increased by approximately ~~18%~~45% to ~~$573~~$830 per ADMT in the second quarter of ~~2020~~2021 from approximately ~~$699~~$573 per ADMT in the same quarter of ~~2019.~~

In the current quarter our Canadian mills recorded a non-cash write down of our inventory carrying values of $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.2020.

In the current quarter of ~~2020~~2021, primarily as a result of the effect of the ~~stronger~~weaker dollar on our Canadian dollar and euro denominated costs and expenses, we recorded a ~~positive~~negative impact of approximately ~~$5.3~~$23.3 million in operating income due to foreign exchange compared to the same quarter of ~~2019.~~2020.

Costs and expenses in the current quarter ~~decreased~~increased by approximately ~~15%~~2% to ~~$290.1~~$297.0 million from ~~$342.7~~$290.1 million in the second quarter of ~~2019~~2020 primarily due to ~~lower per unit fiber~~higher maintenance costs and the negative impact of a weaker dollar partially offset by lower pulp sales ~~volumes and the positive impact of a stronger dollar. In the current quarter of 2020 we received approximately $4.5 million of wage assistance under a Canadian wage subsidy program.~~

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

On average, in the current quarter overall per unit fiber costs ~~decreased by approximately 16% from~~were flat when compared to the same quarter of ~~2019 due to lower per unit fiber costs for all of our mills.~~2020. 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 ~~declined but remained at historically high levels~~increased due to ~~strong demand for fiber in~~a higher proportion of more expensive softwood chips due to the ~~mills' fiber procurement areas.~~annual maintenance downtime at the Peace River mill. We currently expect ~~stable~~modestly higher per unit fiber costs in the third quarter of ~~2020.~~2021 due to strong fiber demand.

Transportation costs for our pulp segment decreased to ~~$34.6~~$24.9 million in the current quarter from ~~$36.3~~$34.6 million in the same quarter of ~~2019~~2020 primarily as a result of lower sales volumes.

In the second quarter of ~~2020, pulp segment operating income decreased~~2021, depreciation and amortization increased to ~~$8.1~~$28.0 million from ~~$42.3~~$27.2 million in the same quarter of ~~2019~~2020 primarily due to the negative impact of a weaker dollar.

In the second quarter of 2021, pulp segment operating income increased by approximately 64% to $13.3 million from $8.1 million in the same quarter of 2020 as ~~lower~~higher pulp sales realizations were only partially offset by higher maintenance costs, the ~~positive~~negative impact of a weaker dollar and lower ~~per unit fiber costs and a stronger dollar.~~pulp sales volumes.

Wood Products Segment ‑ Three Months Ended June 30, ~~2020~~2021 Compared to Three Months Ended June 30, ~~2019~~2020

	Three Months Ended June 30,					Three Months Ended June 30,
	2020		2019			2021		2020
	(in thousands)					(in thousands)
Lumber revenues	$	37,611	$	35,322		$	86,285	$	37,611
Energy revenues	$	2,629	$	2,788		$	2,692	$	2,629
Wood residual revenues	$	1,487	$	1,342		$	1,462	$	1,487
Depreciation and amortization	$	2,804	$	2,010		$	3,748	$	2,804
Operating income (loss)	$	4,327	$	(89	)
Operating income						$	42,314	$	4,327

In the second quarter of ~~2020,~~2021, lumber revenues increased 7% to ~~$37.6~~$86.3 million from ~~$35.3~~$37.6 million in the same quarter of ~~2019~~2020 due to higher sales ~~volumes.~~realizations. In the current quarter, ~~approximately 38% of sales volumes were in~~both the U.S. and European markets were strong. The U.S. market accounted for approximately 62% of our lumber revenues and ~~the~~approximately 39% of our lumber sales volumes. The majority of our remaining sales were to Europe.

Energy and wood residual revenues in the second quarter of 2021 were flat at $4.2 million compared to $4.1 ~~million.~~million in the same quarter of 2020.

Lumber production increased by approximately ~~13%~~3% to ~~113.5~~116.7 MMfbm in the current quarter of ~~2020~~2021 from ~~100.8~~113.5 MMfbm in the same quarter of ~~2019~~2020 primarily due to capital improvements. In the third quarter of 2021, our Friesau sawmill has four weeks of seasonal scheduled downtime.

Average lumber sales realizations ~~were generally flat at approximately $345~~increased to $789 per Mfbm in the second quarter of ~~2020 compared to~~2021 from approximately ~~$348~~$345 per Mfbm in the same quarter of ~~2019 as~~2020 due to higher pricing in both the U.S. ~~market was offset by lower pricing in Europe.~~and European markets. U.S. lumber pricing increased due to ~~stronger~~strong demand ~~during~~from the ~~current quarter.~~housing and renovation markets. European lumber pricing ~~declined~~increased due to ~~an increase in the supply of lumber processed from beetle damaged wood which generally obtains lower prices.~~steady demand with limited supply.

Fiber costs were approximately ~~70%~~75% of our lumber cash production costs in the current quarter. In the current quarter per unit fiber costs ~~decreased~~increased by approximately ~~26%~~30% from the same quarter of ~~2019~~2020 primarily due to strong demand for sawlogs and the ~~availability~~negative impact of ~~lower cost beetle damaged wood.~~a weaker dollar on our euro denominated fiber costs. We currently expect ~~stable~~modestly increasing per unit fiber costs in the third quarter of ~~2020~~2021 due to ~~the continuing availability of such wood.~~continued strong demand.

In the second quarter of ~~2020,~~2021, depreciation and amortization increased to ~~$2.8~~$3.7 million from ~~$2.0~~$2.8 million in the same quarter of ~~2019~~2020 primarily due to the completion of capital projects.

Transportation costs for our wood products segment in the second quarter of ~~2020~~2021 increased by approximately ~~22%~~15% to ~~$7.2~~$8.3 million from ~~$5.9~~$7.2 million in the same quarter of ~~2019~~2020 primarily due to ~~higher sales volumes to~~ the ~~U.S.~~negative impact of a weaker dollar on our euro denominated transportations costs.

In the second quarter of ~~2020,~~2021, our wood products segment had record operating income of ~~$4.3~~$42.3 million compared to ~~an operating loss of $0.1~~$4.3 million in the same quarter of ~~2019~~2020 primarily due to ~~strong production and lower per unit fiber costs.~~a higher lumber realized sales price.

Consolidated ‑ Six Months Ended June 30, ~~2020~~2021 Compared to Six Months Ended June 30, ~~2019~~2020

Total revenues for the first half of ~~2020 decreased~~2021 increased by approximately ~~24%~~18% to ~~$691.8~~$814.6 million from ~~$909.7~~$691.8 million in the first half of ~~2019~~2020 primarily due to ~~lower~~higher pulp and lumber sales realizations ~~and~~partially offset by lower pulp sales volumes.

Costs and expenses in the first half of ~~2020 decreased~~2021 increased by approximately ~~16%~~8% to ~~$657.4~~$711.7 million from ~~$778.3~~$657.4 million in the first half of ~~2019~~2020 primarily due to ~~lower per unit fiber costs, lower pulp sales volumes and~~ the ~~positive~~negative impact of a ~~stronger~~weaker dollar on our Canadian dollar and euro denominated costs and ~~expenses.~~expenses and higher maintenance costs partially offset by lower pulp sales volumes and lower per unit fiber costs.

In the first half of ~~2020,~~2021, cost of sales depreciation and amortization ~~increased~~slightly decreased to ~~$63.1~~$62.9 million from ~~$62.2~~$63.1 million in the same period of ~~2019.~~2020.

Selling, general and administrative expenses ~~decreased~~increased by approximately 20% to $40.8 million in the first half of 2021 from $33.9 million in the first half of 2020 ~~from $36.7 million in the first half of 2019~~ primarily due to ~~lower~~the negative impact of a weaker dollar and higher stock based compensation ~~expense and the positive impact of a stronger dollar.~~expense.

In the first half of ~~2020,~~2021, our operating income ~~decreased by approximately 74%~~increased to ~~$34.4~~$102.9 million from ~~$131.4~~$34.4 million in the same period of ~~2019~~2020 primarily due to ~~lower~~higher pulp and lumber sales realizations and ~~pulp sales volumes partially offset by~~ lower per unit fiber costs ~~and~~partially offset by the ~~positive~~negative impact of a ~~stronger dollar.~~weaker dollar, higher maintenance costs and lower pulp and energy sales volumes.

In January 2021, we refinanced (the “Refinancing”) a significant portion of our debt by issuing $875.0 million of 5.125% senior notes due 2029 (the “2029 Senior Notes”) and used the proceeds to redeem and/or repurchase all of our 6.5% 2024 Senior Notes and 7.375% 2025 Senior Notes at a cost including premium of $824.6 million (the “Redemption”). We recorded a loss on such Redemption of $30.4 million (being $0.46 per share). The Refinancing reduced our annual interest expense going forward by approximately $12 million.

Interest expense in the first half of ~~2020 increased~~2021 decreased to ~~$40.2~~$36.1 million from ~~$36.9~~$40.2 million in the same period of ~~2019~~2020 primarily as a result of ~~higher indebtedness resulting~~a lower interest rate for our 2029 Senior Notes.

In the first half of 2021, other income increased to $4.4 million from ~~our issuance~~$0.2 million in the same period of ~~an additional $100.0 million~~2020. Other income in the first half of ~~senior notes in October 2019.~~2021 is primarily due to foreign exchange gains on U.S. dollar denominated cash balances.

During the first half of 2021, the provision for income taxes was $13.4 million or an effective tax rate of 33%. In the same period of 2020, the provision for income taxes was $6.2 million ~~primarily~~ due to ~~income before~~ tax for our German operations being only partially offset by tax recoveries for our Canadian operations. ~~In the same period of 2019, the provision for income taxes was $34.9 million due to higher income.~~

For the first half of ~~2020,~~2021, our net income was $27.3 million, or $0.41 per share compared to a net loss ~~was~~of $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.~~2020.

In the first half of ~~2020,~~2021, Operating EBITDA ~~decreased~~increased by approximately ~~50%~~70% to ~~$97.5~~$165.8 million from ~~$193.8~~$97.5 million in the same period of ~~2019~~2020 primarily due to ~~lower~~higher pulp and lumber sales realizations and ~~pulp sales volumes partially offset by~~ lower per unit fiber costs ~~and~~partially offset by higher maintenance costs, the ~~positive~~negative impact of a ~~stronger dollar versus the Canadian~~weaker dollar and ~~euro.~~lower pulp and energy sales volumes.

Pulp Segment ‑ Six Months Ended June 30, ~~2020~~2021 Compared to Six Months Ended June 30, ~~2019~~2020

	Six Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2021		2020
	(in thousands)				(in thousands)
Pulp revenues	$	555,867	$	772,518	$	614,773	$	555,867
Energy and chemical revenues	$	45,784	$	48,755	$	35,232	$	45,784
Depreciation and amortization	$	57,590	$	57,872	$	55,013	$	57,590
Operating income	$	29,549	$	135,771	$	38,634	$	29,549

Pulp revenues in the first half of ~~2020 decreased~~2021 increased by approximately ~~28%~~11% to ~~$555.9~~$614.8 million from ~~$772.5~~$555.9 million in the same period of ~~2019~~2020 due to ~~lower~~higher sales realizations ~~and~~partially offset by lower sales volumes.

Energy and chemical revenues decreased by approximately 6%23% to ~~$45.8~~$35.2 million in the first half of ~~2020~~2021 from ~~$48.8~~$45.8 million in the same period of ~~2019~~2020 primarily due to lower ~~chemical~~energy production ~~caused by our German mills processing dry beetle damaged wood.~~as a result of annual maintenance downtime.

NBSK pulp production ~~declined~~decreased by approximately 4%14% to ~~878,965~~751,968 ADMTs in the first half of ~~2020~~2021 from ~~913,448~~878,965 ADMTs in the same period of ~~2019~~2020 primarily due to 17annual maintenance downtime at our pulp mills. In the first half of 2021, our pulp mills had 144 days of annual maintenance downtime (approximately ~~13,600~~210,900 ADMTs) ~~and four weeks~~including our 50% owned Cariboo mill. Approximately 79 days of ~~planned market related~~such downtime was at our ~~50% joint venture Cariboo~~Peace River mill and ~~modestly lower production at our German and Peace River mills.~~primarily related to boiler work which was deferred from last year. In the first half of ~~2019,~~2021, we received insurance proceeds of $20.0 million in connection with the ~~Cariboo mill had 15 days~~costs of ~~scheduled maintenance downtime (approximately 7,500 ADMTs).~~this mill's boiler work along with an initial payment of $4.2 million for our business interruption insurance claims.

We estimate that annual maintenance downtime in the first half of ~~2020~~2021 adversely impacted our operating income by approximately ~~$5.5~~$110.4 million, comprised of approximately ~~$2.4~~$66.8 million in direct out-of-pocket expenses and the balance in reduced ~~production.~~production (exclusive of business interruption insurance proceeds).

NBSK pulp sales volumes decreased by approximately 5%13% to ~~860,912~~749,070 ADMTs in the first half of ~~2020~~2021 from ~~905,413~~860,912 ADMTs in the same period of ~~2019~~2020 primarily due to lower production.

In the first half of ~~2020,~~2021, prices for NBSK pulp ~~decreased~~increased from the same period of ~~2019,~~2020, largely as a result of ~~high producer~~strong demand and low customer inventory ~~levels and market uncertainty due to the COVID-19 pandemic.~~levels. Average list prices for NBSK pulp in Europe and North America were approximately $1,163 per ADMT and $1,450 per ADMT, respectively in the first half of 2021 compared to 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.~~2020. Average NBSK net prices in China were approximately $922 per ADMT in the first half of 2021 compared to approximately $573 per ADMT in the first half of ~~2020 compared~~2020.

Average NBSK pulp sales realizations increased by approximately 30% to ~~approximately $665~~$739 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~~2021 from approximately ~~$729~~$567 per ADMT in the same period of ~~2019.~~2020.

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~~2021, primarily as a result of the effect of the ~~strengthening~~weakening dollar on our Canadian dollar and euro denominated costs and expenses, we recorded a ~~positive~~negative impact of approximately ~~$22.0~~$54.8 million in operating income due to foreign exchange compared to the same period of ~~2019.~~2020.

Costs and expenses in the first half of ~~2020 decreased~~2021 increased by approximately ~~17%~~7% to ~~$572.4~~$611.5 million from ~~$685.9~~$572.4 million in the first half of ~~2019~~2020 primarily due to higher maintenance costs and the negative impact of a weaker dollar partially offset by lower pulp sales volumes ~~lower~~and 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.~~ costs.

On average, in the first half of ~~2020~~2021 overall per unit fiber costs decreased by approximately ~~14%~~5% from the same period of ~~2019 primarily~~2020 due to lower per unit fiber costs atfor all of our ~~German~~ mills. In the first half of ~~2020,~~2021, 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.~~improved chip supply as a result of increased sawmill activity.

Transportation costs for our pulp segment decreased to ~~$70.2~~$61.1 million in the first half of ~~2020~~2021 from ~~$74.2~~$70.2 million in the same period of ~~2019~~2020 primarily as a result of lower pulp sales volumes.

In the first half of ~~2020, pulp segment operating income~~2021, depreciation and amortization decreased to ~~$29.5~~$55.0 million from ~~$135.8~~$57.6 million in the same period of ~~2019~~2020.

In the first half of 2021, pulp segment operating income increased by approximately 31% to $38.6 million from $29.5 million in the same period of 2020 as ~~lower~~higher pulp sales realizations and ~~pulp sales volumes~~lower per unit fiber costs were only partially offset by higher maintenance costs, the ~~positive~~negative impact of a weaker dollar and lower ~~per unit fiber costs~~pulp and ~~a stronger dollar.~~energy sales volumes.

Wood Products Segment ‑ Six Months Ended June 30, ~~2020~~2021 Compared to Six Months Ended June 30, ~~2019~~2020

	Six Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2021		2020
	(in thousands)				(in thousands)
Lumber revenues	$	78,597	$	74,485	$	153,596	$	78,597
Energy revenues	$	5,260	$	5,454	$	4,806	$	5,260
Wood residual revenues	$	3,648	$	3,952	$	3,024	$	3,648
Depreciation and amortization	$	5,181	$	3,921	$	7,471	$	5,181
Operating income	$	9,882	$	1,531	$	70,291	$	9,882

In the first half of ~~2020,~~2021, lumber revenues increased ~~approximately 6%~~ to ~~$78.6~~$153.6 million from ~~$74.5~~$78.6 million in the same period of ~~2019~~2020 due to higher sales ~~volumes.~~realizations. In the first half of ~~2020~~2021, both the U.S. and European markets were strong. The U.S. market accounted for approximately ~~34%~~64% of our lumber revenues and approximately 41% of our lumber sales volumes, ~~were in the U.S. market and~~while the majority of remaining sales were to Europe.

Energy and wood residual revenues decreased by approximately 5%12% to ~~$8.9~~$7.8 million in the first half of ~~2020~~2021 from ~~$9.4~~$8.9 million in the same period of ~~2019~~2020 primarily due to lower sales realizations for wood residuals.

Lumber production increased by approximately 9%2% to ~~229.8~~234.5 MMfbm in the first half of ~~2020~~2021 from ~~211.5~~229.8 MMfbm in the same period of ~~2019~~2020 primarily due to capital improvements.

Average lumber sales realizations ~~decreased by approximately 2%~~increased to ~~$347~~$706 per Mfbm in the first half of ~~2020~~2021 from approximately ~~$354~~$347 per Mfbm in the same period of ~~2019~~2020 primarily due to ~~lower pricing in Europe partially offset by~~ higher pricing in the U.S. ~~market.~~and European ~~lumber pricing declined due to an increase in the supply of lumber processed from beetle damaged wood which generally obtains lower prices.~~markets. U.S. lumber pricing increased due to ~~stronger demand.~~strong demand from the housing and renovation markets. European lumber pricing increased due to steady demand with limited supply.

Fiber costs were approximately ~~70%~~75% of our lumber cash production costs in the first half of ~~2020.~~2021. In the first half of ~~2020~~2021 per unit fiber costs ~~decreased~~increased by approximately ~~26%~~18% from the same period of ~~2019~~2020 primarily due to the ~~availability~~negative impact of ~~lower cost beetle damaged wood. We currently expect stable per unit~~a weaker dollar on our euro denominated fiber costs ~~in the third quarter of 2020 due to the continuing availability of beetle damaged wood.~~ and strong demand for sawlogs.

In the first half of ~~2020,~~2021, depreciation and amortization increased to ~~$5.2~~$7.5 million from ~~$3.9~~$5.2 million in the same period of ~~2019~~2020 primarily due to the completion of capital projects.

Transportation costs for our wood products segment in the first half of ~~2020~~2021 increased by approximately ~~16%~~15% to ~~$14.0~~$16.1 million from ~~$12.1~~$14.0 million in the same period of ~~2019~~2020 primarily due to ~~higher sales volumes to~~ the ~~U.S.~~negative impact of a weaker dollar on our euro denominated transportations costs.

In the first half of ~~2020,~~2021, our wood products segment had operating income of ~~$9.9~~$70.3 million compared to ~~$1.5~~$9.9 million in the same period of ~~2019~~2020 primarily due to ~~strong production and lower per unit fiber costs.~~a higher lumber realized sales price.

	Six Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2021			2020
	(in thousands)						(in thousands)
Net cash from (used in) operating activities	$	(5,737	)	$	130,907		$	111,440		$	(5,737	)
Net cash used in investing activities		(44,242	)		(45,206	)		(68,656	)		(44,242	)
Net cash from (used in) financing activities		4,902			(68,730	)		(16,751	)		4,902
Effect of exchange rate changes on cash and cash equivalents		(2,674	)		(140	)		(2,597	)		(2,674	)
Net increase (decrease) in cash and cash equivalents	$	(47,751	)	$	16,831		$	23,436		$	(47,751	)

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~~provided by operating activities was ~~$5.7~~$111.4 million in the six months ended June 30, ~~2020~~2021 compared to cash ~~provided by~~used in operating activities of ~~$130.9~~$5.7 million in the comparative period of ~~2019. An~~2020. In the first half of 2021, a decrease in accounts receivable provided cash of $3.9 million compared to an increase in accounts receivable using cash of $6.0 million in the same period of 2020. In the first half of 2021, an increase in inventories used cash of ~~$6.0~~$42.8 million in the six months ended June 30, ~~2020~~2021 compared to ~~$24.1~~$6.7 million in the same period of ~~2019.~~2020. An increase in ~~inventories used~~accounts payable and accrued expenses provided cash of ~~$6.7~~$34.6 million ~~in the six months ended June 30, 2020~~ compared to a ~~decrease in inventories providing cash of $13.4 million in the same period of 2019. A~~ decrease in accounts payable and accrued expenses ~~used~~using cash of $49.8 million in the ~~six months ended June 30, 2020 compared to an increase in accounts payable and accrued expenses providing cash of $4.0 million in the~~ same period of ~~2019.~~2020.

Cash Flows from Investing Activities. Investing activities in the six months ended June 30, ~~2020~~2021 used cash of ~~$44.2 million primarily related to capital expenditures of $44.6~~$68.7 million. In the ~~six months ended June 30, 2020,~~first half of 2021, capital expenditures were $87.4 million and included the Peace River recovery boiler rebuild, which was financed with insurance proceeds of $20.0 million, capacity expansion projects at the Stendal mill, the substantial completion of the Phase II expansion and optimization project at our Friesau sawmill ~~additional land for fiber storage at the Stendal mill~~ and other smaller maintenance and optimization projects. In the six months ended June 30, ~~2019,~~2020, investing activities used cash of ~~$45.2~~$44.2 million primarily related to capital expenditures of $44.4 million. In the 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.expenditures.

Cash Flows from Financing Activities. In the first half of 2021, financing activities used cash of $16.8 million. In the six months ended June 30, 2021, we repaid $57.1 million of our credit facilities, received net proceeds from the Refinancing after giving effect to the Redemption of $50.4 million, we paid note issuance costs of $14.4 million related to the issuance of the 2029 Senior Notes and paid $4.3 million of dividends. In the six months ended June 30, 2021, we received $8.5 million in government grants to partially finance innovation and greenhouse gas emission reduction capital projects at our Canadian mills. In the first half of 2020, financing activities provided cash of $4.9 million primarily from $25.6 million of borrowings under our revolving credit facilities. In the six months ended June 30, 2020 we paid dividends of $9.0 million and used $0.2 million to repurchase common shares. In the first half of 2019, financing activities used cash of $68.7 million primarily to repay $58.4 million under our revolving credit facilities. In the six months ended June 30, 2019, we received $6.3 million of government grants to finance greenhouse gas reduction capital projects at the Peace River 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 of the dates indicated:

	June 30,		December 31,		June 30,		December 31,
	2020		2019		2021		2020
	(in thousands)				(in thousands)
Cash and cash equivalents	$	303,334	$	351,085	$	384,534	$	361,098
Working capital	$	586,682	$	588,385	$	672,237	$	663,056
Total assets	$	1,973,609	$	2,065,720	$	2,214,698	$	2,129,126
Long-term liabilities	$	1,282,395	$	1,259,005	$	1,345,200	$	1,316,303
Total equity	$	494,260	$	550,403
Total shareholders' equity					$	604,134	$	601,027

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:

	Six Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2021		2020
	(in thousands)				(in thousands)
Capital expenditures(1)	$	44,562	$	44,368	$	87,386	$	44,562
Cash paid for interest expense⁽¹⁾⁽²⁾	$	38,228	$	22,885	$	40,110	$	38,228
Interest expense⁽²⁾⁽³⁾	$	40,192	$	36,920	$	36,149	$	40,192

As of June 30, ~~2020~~2021 we had cash and cash equivalents of ~~$303.3~~$384.5 million and approximately ~~$263.5~~$310.4 million available under our revolving credit facilities and as a result aggregate liquidity of about ~~$566.8~~$694.9 million.

As of June 30, 2021, we have received approximately $15.8 million in government grants to partially finance greenhouse gas emission reduction capital projects and innovation at our Canadian mills. These projects include upgrades to the woodrooms at such mills which are also expected to reduce fiber costs. As a result of such new woodroom projects, our expected 2021 capital expenditures, excluding amounts financed by government grants and expected insurance proceeds, will be approximately $185 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.~~2020.

As of June 30, ~~2020,~~2021, we were in full compliance with all of the covenants of our indebtedness.

At June 30, ~~2020,~~2021, 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 six months ended June 30, ~~2020.~~2021.

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 of June 30, ~~2020,~~2021, we recorded a net non-cash decrease of ~~$30.8~~$17.6 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 income (loss) and as a decrease to our total equity. As a result, our accumulated other comprehensive loss increased to ~~$147.3~~$44.8 million.

Based upon the exchange rate as of June 30, ~~2020,~~2021, the dollar ~~was flat~~has strengthened by approximately 3% against the euro and has ~~strengthened~~weakened by approximately 5%3% against the Canadian dollar since December 31, ~~2019.~~2020. 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"~~“S&P”.

In ~~July 2020 Moody's~~June 2021, S&P revised its outlook to stable from negative and confirmed its rating on our ~~Senior~~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"~~“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.~~2020. 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.~~2020.

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.~~2020. 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~~2011 and ~~2019,~~2021, European list prices for NBSK pulp have fluctuated between a low of approximately $760 per ADMT in 2012 to a high of ~~$1,230~~$1,345 per ADMT in ~~2018.~~2021. 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~~$1,350 per ADMT in ~~2018.~~2021.

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.~~2020. 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~~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 and its subsequent spread globally through 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.

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.

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-19pandemic 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, has also 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 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 was subject to market conditions, applicable legal requirements and other factors.None.

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.)

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

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	%

2026 Senior Notes		2029 Senior Notes
12 Month Period Beginning	Percentage	12 Month Period Beginning	Percentage
January 15, 2021	102.750%	February 1, 2024	102.563%
January 15, 2022	101.375%	February 1, 2025	101.281%
January 15, 2023 and thereafter	100.000%	February 1, 2026 and thereafter	100.000%

	Number of PSUs
Outstanding as of January 1, ~~2020~~2021		~~1,764,976~~2,364,848
Granted		~~1,140,834~~1,007,912
Vested and issued		(~~194,948~~120,271	)
Forfeited		(~~319,780~~498,017	)
Outstanding as of June 30, ~~2020~~2021		~~2,391,082~~2,754,472


☒	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

		June 30,			December 31,
	Maturity	2021			2020
Senior notes (a)
5.500% senior notes	2026	$	300,000		$	300,000
5.125% senior notes	2029		875,000			0
6.500% senior notes	2024		0			250,000
7.375% senior notes	2025		0			550,000

Credit arrangements
€200 million joint revolving credit facility (b)	2023		0			0
C$60 million revolving credit facility (c)	2024		0			21,992
C$60 million revolving credit facility (d)	2023		0			32,988
€2.6 million demand loan (e)			0			0
			1,175,000			1,154,980
Less: unamortized premium and issuance costs, net			(17,127	)		(9,686	)
		$	1,157,873		$	1,145,294

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

	Number of Restricted Shares
Outstanding as of January 1, ~~2020~~2021		~~31,405~~68,140
Granted		~~68,140~~49,195
Vested		(~~31,405~~68,140	)
Outstanding as of June 30, ~~2020~~2021		~~68,140~~49,195

	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	)
Other comprehensive loss before reclassifications		(30,792	)		—			(30,792	)
Amounts reclassified from accumulated other comprehensive loss		—			23			23
Other comprehensive income (loss), net of taxes		(30,792	)		23			(30,769	)
Balance as of June 30, 2020	$	(145,501	)	$	(1,828	)	$	(147,329	)

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

	Fair value measurements as of June 30, 2020 using:
Description	Level 1		Level 2		Level 3		Total
Revolving credit facilities	$	—	$	24,949	$	—	$	24,949
Senior Notes		—		1,074,928		—		1,074,928
	$	—	$	1,099,877	$	—	$	1,099,877

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

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 June 30, ~~2020~~2021 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 Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2020~~2021 has been formatted in Inline XBRL.

	MERCER INTERNATIONAL INC.

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